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EXHIBIT 1.2
WARRANT AGREEMENT
BY AND BETWEEN
C2i SOLUTIONS, INC.
AND
SOUTHWALL CAPITAL CORP.
DATED AS OF _________ __, 199[8]
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WARRANT AGREEMENT
WARRANT AGREEMENT dated as of ___________ __, 199[8] by and between
C2i SOLUTIONS, INC., a Delawarecorporation (the "Company"), and SOUTHWALL
CAPITAL CORP. (the "Representative") (the Company and the Representative are
referred to collectively herein as the "Parties").
The Company proposes to issue to the Representative warrants as
hereinafter described (the "Warrants") to purchase up to an aggregate of 100,000
shares of the Company's Common Stock, $0.001 par value per share (the "Common
Stock"), subject to adjustment as provided in Section 8 hereof (such 100,000
shares, as adjusted, being hereinafter referred to as the "Shares"), each
warrant entitling the holder ("Holder") thereof to purchase one Common Share.
All capitalized terms used herein and not otherwise defined herein shall have
the same meanings as in that certain underwriting agreement, of even date
herewith, by and between the Company and the Representative (the "Underwriting
Agreement").
NOW, THEREFORE, in consideration of the following promises and
mutual agreements and for other good and valuable consideration, the Parties
agree as follows:
1. ISSUANCE OF WARRANTS; FORM OF WARRANT. On the Closing Date the
Company will issue, sell and deliver the Warrants to the Representative or its
bona fide officers for an aggregate price of $100. The Warrants shall be issued
to the Representative or such designees in the amounts set forth on Schedule I
attached hereto. The form of the Warrant and of the form of election to purchase
Shares to be attached thereto shall be substantially as set forth on Exhibit A
attached hereto. The Warrants shall be executed on behalf of the Company by the
manual or facsimile signature of the present or any future President or any Vice
President of the Company, under its corporate seal, affixed or in facsimile, and
attested by the manual or facsimile signature of the present or any future
Secretary or Assistant Secretary of the Company. The Representative and each
other Holder, severally and not jointly, represents and warrants to the Company
that (i) such Holder is acquiring the Warrants, and any Shares acquired upon
exercise of any Warrants, for such Holder's own account and not with a view to,
or for sale in connection with, any distribution of the Warrants or any shares
of Common Stock, unless such distribution is registered or exempt from
registration under the Securities Act of 1933, as amended (the "Act"), and any
applicable state and foreign securities or blue sky laws and (ii) such Holder is
aware that the Warrants and the Shares have not been registered under the Act or
the securities or blue sky laws of any state or other jurisdiction, and that the
Warrants may not be exercised and the Warrants and the Shares may not be resold
(and the Holder covenants not to resell them) unless they are registered under
applicable Federal and state securities laws or unless exemptions from all such
applicable registration requirements are available, and that the Warrants and
the Shares will be legended to indicate the foregoing restrictions.
2. REGISTRATION. The Warrants shall be numbered and shall be
registered in a Warrant register (the "Warrant Register"). The Company shall be
entitled to treat the registered holder of any Warrant on the Warrant Register
as the owner in fact thereof for all purposes and shall not be bound to
recognize any equitable or other claim to or interest in such Warrant on the
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part of any other person, and shall not be liable for any registration or
transfer of Warrants which are registered or are to be registered in the name of
a fiduciary or the nominee of a fiduciary. The Warrants shall be registered
initially in the name of the Representative in such denominations as the
Representative may request in writing from the Company; provided, however, that
the Representative may designate that all or a portion of the Warrants be issued
in varying amounts directly to its bona fide officers and not to the
Representative. Such designation will only be made by the Representative if it
determines that such issuances would not violate the interpretation of the Board
of Governors of the National Association of Securities Dealers, Inc. (the
"NASD"), relating to the review of corporate financing arrangements.
3. TRANSFER OF WARRANTS. The Warrants will not be sold, transferred,
assigned or hypothecated, in part or in whole, prior to the first anniversary of
the effective date of the Registration Statement (the "Effective Date"), and
thereafter only to bona fide officers, directors, shareholders, employees or
registered representatives of the Representative or of securities broker-dealers
that participated in the Offering, upon written request to the Company
(including a certificate of the Holder that the transferee is a permitted
transferee under this Section 3) delivered in accordance with Section 12 hereof
and upon delivery of the Warrant Certificate to the Company with the form of
assignment at the end thereof duly endorsed by the Holder or by its duly
authorized attorney or representative. In all cases of transfer by an attorney,
the original power of attorney, duly approved, or an official copy thereof, duly
certified, shall be deposited with the Company. In case of transfer by
executors, administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced, and may be required
to be deposited with the Company in its discretion. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the persons
entitled thereto. Any of the Warrants may be exchanged at the option of its
Holder for other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of shares of
Common Stock upon surrender of the Warrants to the Company or its duly
authorized agent. The Company may require payment of a sum sufficient to cover
all taxes and other governmental charges that may be imposed in connection with
any transfer, exchange or other disposition of the Warrants or Shares. However,
the Company shall have no obligation to cause Warrants or Shares to be
transferred on its books to any person, if such transfer would violate the Act,
the rules and regulations promulgated thereunder (the "Rules and Regulations")
or applicable state securities laws, rules and regulations.
4. TERM OF WARRANTS; EXERCISE OF WARRANTS.
(a) TERM OF WARRANTS. Each Warrant entitles the registered owner
thereof to purchase one fully paid and nonassessable Share at a purchase price
of $[7.50] per Share (as adjusted from time to time pursuant to the provisions
hereof, the "Exercise Price") at any time from the first anniversary of the
Effective Date until 5:00 p.m., New York City time, on _________ __, 200[2] (the
"Warrant Expiration Date").
(b) EXERCISE OF WARRANTS. The Exercise Price and the Shares
issuable upon exercise of Warrants are subject to adjustment upon the occurrence
of certain events, pursuant to the provisions of Section 8 of this Agreement.
Subject to the provisions of this Agreement, and in addition to the right to
surrender Warrants without any cash payment as set forth in subsection (c)
below, each Holder shall have the right, which may be exercised as set forth in
such Warrants, to
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purchase from the Company (and the Company shall issue and sell to such Holder)
the number of fully-paid and nonassessable Shares specified in such Warrants,
upon surrender to the Company, or its duly authorized agent, of such Warrants,
with the form of election to purchase attached thereto duly completed and
signed, with signatures guaranteed by a member firm of a national securities
exchange, a commercial bank (not a savings bank or savings and loan association)
or trust company located in the United States or a member of the NASD and upon
payment to the Company of the Exercise Price, as adjusted in accordance with the
provisions of Section 8 of this Agreement, for the number of Shares in respect
of which such Warrants are then exercised and upon compliance with the
requirements of the Act, the Rules and Regulations and applicable state
securities laws, rules and regulations. No adjustment shall be made for any cash
dividends paid to shareholders of record before the date on which the Warrants
are exercised. Upon each surrender of Warrants, payment of the Exercise Price
and compliance with the requirements of the Act, the Rules and Regulations and
applicable state securities laws, rules and regulations, the Company shall issue
and cause to be delivered with all reasonable dispatch, but in no event later
than seven (7) trading days following such surrender, to or (subject to Section
3) upon the written order of the Holder of such Warrants and (subject to Section
3) in such name or names as such Holder may designate, a certificate or
certificates for the number of full Shares so purchased upon the exercise of
such Warrants, together with cash, as provided in Section 9 of this Agreement,
in respect of any fractional Shares otherwise issuable upon such surrender. Such
certificate or certificates shall be deemed to have been issued and any person
so designated to be named therein shall be deemed to have become a holder of
record of such Shares as of the date of the surrender of Warrants, payment of
the Exercise Price and compliance with the requirements of the Act, the Rules
and Regulations and applicable state securities laws, rules and regulations as
aforesaid; provided, however, that if, at the date of surrender of such
Warrants, the transfer books for the Common Stock or other class of securities
issuable upon the exercise of such Warrants shall be closed, the certificates
for the Shares shall be issuable as of the date on which such books shall next
be opened (whether before, on or after the Warrant Expiration Date) and until
such date the Company shall be under no duty to deliver any certificate for such
Shares; provided, further, however, that the transfer books of record, unless
otherwise required by law, shall not be closed at any one time for a period
longer than twenty (20) days. The rights of purchase represented by the Warrants
shall be exercisable, at the election of the Holder(s) thereof, either in full
or from time to time in part and, in the event that any Warrant is exercised in
respect of less than all of the Shares issuable upon such exercise at any time
prior to the Warrant Expiration Date, a new Warrant or Warrants will be issued
for the remaining number of Shares specified in the Warrant so surrendered.
(c) PAYMENT OF EXERCISE PRICE. Payment of the Exercise Price may
be made in cash, by wire transfer of immediately available funds or by certified
check or official bank check payable to the order of the Company.
(d) CASHLESS EXERCISE. In lieu of any cash payment, the Holder of
the Warrants shall have the right at any time and from time to time to exercise
the Warrants in full or in part by surrendering the Warrants in exchange for the
number of Shares equal to the product of (x) the number of shares as to which
the Warrants are being exercised multiplied by (y) a fraction, the numerator of
which is the Market Price (as defined in Section 8(d) below) of the Shares less
the Exercise Price and the denominator of which is the Market Price of the
Shares.
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5. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the issuance of Shares upon the exercise of
Warrants; provided, however, that the Company shall not be required to pay any
taxes payable in respect of any transfer involved in the issue or delivery of
any certificates for Shares in a name other than that of the Holder of Warrants
in respect of which such Shares are issued, which taxes shall be paid by the
Holder.
6. MUTILATED OR MISSING WARRANTS. In case any of the Warrants shall
be mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest, but only
upon receipt of evidence reasonably satisfactory to the Company of ownership of
such Warrant and of such mutilation, loss, theft or destruction of such Warrant
and indemnity and affidavit of loss, if requested, reasonably satisfactory to
the Company. An applicant for such substitute Warrants shall also comply with
such other reasonable regulations and pay such other reasonable charges and
expenses as the Company may prescribe.
7. RESERVATION OF SHARES, ETC. The Company has reserved, and shall
at all times keep reserved, out of the authorized and unissued shares of Common
Stock, a number of shares sufficient to provide for the exercise of the rights
of purchase represented by the outstanding Warrants. The transfer agent for the
Common Stock and any transfer agent for the Company's securities issuable upon
the exercise of the Warrants ("Transfer Agent") will be irrevocably authorized
and directed at all times until the Warrant Expiration Date to reserve such
number of authorized and unissued shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with each Transfer Agent.
The Company will supply each Transfer Agent with duly executed certificates for
such purpose and will itself provide or make available any cash distributable as
provided in Section 9 of this Agreement. All Warrants surrendered in the
exercise in compliance with this Agreement of the rights thereby evidenced shall
be canceled, and such canceled Warrants shall constitute sufficient evidence of
the number of Shares that are issuable upon the exercise of such Warrants. No
shares of Common Stock shall be subject to reservation in respect of unexercised
Warrants after the Warrant Expiration Date.
8. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise
Price and the number and kind of securities issuable upon exercise of each
Warrant shall be subject to adjustment from time to time upon the happening of
certain events, as follows:
(a) If the Company (i) declares a dividend on its Common Stock in
Common Stock or makes a distribution to all holders of its Common Stock in
Common Stock without charge to such holders, (ii) subdivides its outstanding
Common Stock, (iii) combines its outstanding Common Stock into a smaller number
of Common Stock or (iv) issues by reclassification of its Common Stock other
securities of the Company (including any such reclassification in connection
with a consolidation or merger in which the Company is the surviving entity, but
excluding those referred to in paragraph (b) below), the number and kind of
shares of Common Stock purchasable upon exercise of each Warrant immediately
prior thereto shall be adjusted so that the Holder of each Warrant shall be
entitled to receive the kind and number of shares of Common Stock or other
securities of the Company which such Holder would have owned or have been
entitled to receive after the happening of any of the events described above,
had such Warrant been exercised immediately prior to the happening of such event
or any
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record date with respect thereto. Such adjustment shall be made whenever any of
the events listed above shall occur. An adjustment made pursuant to this
paragraph (a) shall become effective immediately after the effective date of
such event retroactive to immediately after the record date, if any, for such
event.
(b) If the Company issues rights, options or warrants to all
holders of its Common Stock, without any charge to such holders, entitling them
to subscribe for or to purchase shares of Common Stock at a price per share
lower than the then current Market Price per Common Share at the record date
mentioned below (as defined in paragraph (d) below), the Holders of unexercised
Warrants as of such record date, upon exercise of such Warrants, shall receive
the same rights, options or warrants which such Holder would have received or
have been entitled to receive after such issuance, had such Warrants been
exercised immediately prior to such issuance or any record date with respect
thereto. Such adjustment shall be made whenever such rights, options or warrants
are issued as described above, and shall become effective retroactively to
immediately after the record date for the determination of shareholders entitled
to receive such rights, options or warrants.
(c) If the Company distributes to all holders of its Common
Stock, without any charge to such holders, shares of its stock other than Common
Stock or evidences of its indebtedness or assets (excluding cash dividends and
dividends or distributions referred to in paragraph (a) or (b) above) or rights,
options or warrants or convertible or exchangeable securities containing the
right to subscribe for or purchase shares of Common Stock (excluding those
referred to in paragraph (a) or (b) above), then in each case the Holders of
unexercised Warrants as of the record date mentioned below, upon exercise of
such warrants, shall receive the same distribution which such Holder would have
received or have been entitled to receive after such distribution, had such
Warrants been exercised immediately prior to such distribution or any record
date with respect thereto. Such adjustment shall be made whenever any such
distribution is made as described above, and shall become effective on the date
of distribution retroactive to immediately after the record date for the
determination of shareholders entitled to receive such distribution.
(d) For the purpose of any computation under paragraph (b) of
this Section 8, the current "Market Price" per Common Share at any date shall be
the average of the daily closing prices for fifteen (15) consecutive trading
days commencing twenty (20) trading days before the date of such computation.
The closing price for each day shall be the last reported sale price regular way
or, in case no such reported sale takes place on such day, the average of the
closing bid and asked prices regular way for such day, in either case on the
principal national securities exchange on which the shares are listed or
admitted to trading, or if they are not listed or admitted to trading on any
national securities exchange, but are traded in the over-the-counter market, the
closing sale price of the Common Stock or, in case no sale is publicly reported,
the average of the representative closing bid and asked quotations for the
Common Stock on The Nasdaq National or SmallCap Market or any comparable system,
or if the Common Stock is not listed on The Nasdaq Stock Market or a comparable
system, the closing sale price of the Common Stock or, in case no sale is
publicly reported, the average of the closing bid and asked prices as furnished
by two members of the NASD selected from time to time by the Company for that
purpose.
(e) No adjustment in the number of Shares purchasable hereunder
shall be required unless such adjustment would require an increase or decrease
of at least one percent
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(1%) in the number of Shares purchasable upon the exercise of each Warrant;
provided, however, that any adjustments which by reason of this paragraph (e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment but not later than three (3) years after the happening
of the specified event or events. All calculations shall be made to the nearest
one thousandth of a share.
(f) Whenever the number of Shares purchasable upon exercise of
each Warrant is adjusted, as herein provided, the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of Shares
purchasable upon the exercise of each Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of shares so
purchasable immediately thereafter.
(g) For the purpose of this Section 8, the term "Common Stock"
shall mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Agreement or (ii) any other class of stock resulting from
successive changes or reclassifications of such shares consisting solely of
changes in par value, or from no par value to par value, or from par value to no
par value. If at any time, as a result of an adjustment made pursuant to
paragraph (a) above, the Holders become entitled to purchase any shares of
capital stock of the Company other than Common Stock, thereafter the number of
such other shares so purchasable upon exercise of each Warrant and the Exercise
Price of such shares 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 Shares contained in paragraphs (a) through (f), inclusive, and
paragraphs (h) through (m), inclusive, of this Section 8, and the provisions of
Sections 4, 5, 7 and 10 hereof, with respect to the Shares, shall apply on like
terms to any such other shares.
(h) Upon the expiration of any rights, options, warrants or
conversion rights or exchange privileges that caused adjustments under this
Section 8, such adjustments with respect to any Warrants that have not been
exercised shall, upon such expiration, be readjusted and shall thereafter be
such as they would have been had such rights, options, warrants or conversion
rights or exchange privileges never existed.
(i) The Company may, at its option at any time during the term of
the Warrants, reduce the then current Exercise Price to any amount deemed
appropriate by the Board of Directors of the Company.
(j) Whenever the number of Shares issuable upon the exercise of
each Warrant or the Exercise Price of such Shares is adjusted, as herein
provided, the Company shall promptly mail by first class-mail, postage prepaid,
to each Holder notice of such adjustment or adjustments. No failure to mail such
notice nor any defect therein or in the mailing thereof shall affect the
validity thereof except as to the Holder to whom the Company failed to mail such
notice or whose notice was defective. A certificate of an officer of the
Company, on behalf of the Company, that such notice has been mailed shall be
prima facie evidence of the facts stated therein. After any such adjustment, the
Company shall prepare a certificate setting forth the number of Shares issuable
upon the exercise of each Warrant and the Exercise Price of such Warrant after
such adjustment, setting forth a brief statement of the facts requiring such
adjustment. Such certificate shall, except as provided below, be conclusive as
to the correctness of such adjustment and each Holder shall have the right to
inspect such certificate during reasonable business hours. Any
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determination as to whether an adjustment is required pursuant to this Section
8, or as to the amount of any such adjustment, shall be initially made in good
faith by the Board of Directors of the Company. If the Holders of a majority of
the then outstanding Warrants shall, in the exercise of their discretion, object
to such determination, the amount of such adjustment shall be made by an
independent accounting or investment banking firm selected by the Holders of a
majority of the then outstanding Warrants and reasonably acceptable to the
Company.
(k) Except as provided in this Section 8, no adjustment in
respect of any dividends shall be made during the term of a xxxxxx or upon the
exercise of a Warrant.
(l) If the Company consolidates with or merges into another
corporation or if the Company sells or conveys all or substantially all its
property to another corporation, or if the Company enters into a statutory share
exchange with another Company pursuant to which its Common Stock is exchanged
for, or changed into, securities or property of another Company, the Company or
such successor or purchasing corporation (or an affiliate of such successor or
purchasing corporation), as the case may be, agrees that each Holder shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of each Warrant the kind and
amount of shares and other securities and property (including cash) which such
Holder would have owned or been entitled to receive after the happening of the
consolidation, merger, sale, conveyance or share exchange had such Warrant been
exercised immediately prior to such action. The provisions of this paragraph (l)
shall apply to successive consolidations, mergers, sales, conveyances or share
exchanges.
(m) Notwithstanding any adjustment in the Exercise Price or the
number or kind of shares purchasable upon the exercise of the Warrants pursuant
to this Agreement, certificates for Warrants issued prior or subsequent to such
adjustment may continue to express the same price and number and kind of shares
as are initially issuable pursuant to this Agreement.
9. FRACTIONAL INTERESTS. The Company shall not be required to
issue fractions of Shares on the exercise of Warrants. If more than one Warrant
is presented for exercise in full at the same time by the same Holder, the
number of Shares issuable upon the exercise thereof shall be computed on the
basis of the aggregate number of Shares issuable on exercise of the Warrants so
presented. If any fraction of a Share would, except for the provisions of this
Section 9, be issuable on the exercise of any Warrants (or specified portions
thereof), the Company shall purchase such fraction for an amount in cash equal
to the same fraction of the current Market Price per share of Common Stock
(determined as provided in Section 8(d) of this Agreement) on the date of
exercise.
10. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS.
(i) The Company covenants and agrees with the Representative
and any other or subsequent Holders of the Registrable Securities (as
defined in paragraph (f) of this Section 10) that, upon the written
request of the then Holder(s) of Warrants, Registrable Securities, or
both, representing at least a majority of the shares of Common Stock
underlying the Warrants originally issued to the Representative or its
designees, made at any time within the period
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commencing one (1) year and ending five (5) years after the Effective
Date, the Company will file as promptly as practicable and, in any
event, within 60 days after receipt of such written request, at its
expense (other than (x) all underwriters', broker-dealers', placement
agents' and similar selling discounts, commissions and fees relating to
the sale of the Holder's Registrable Shares, (y) any costs and expenses
of counsel, accountants or other advisors retained by the Holder and
(z) all transfer, franchise, capital stock and other taxes, if any,
applicable to the Holder's Registrable Shares (collectively, "Holders'
Expenses"), all of which shall be paid by the Holder(s)), no more than
once (except as otherwise provided below), a post-effective amendment
(the "Amendment") to the Company's Registration Statement on Form S-1,
Registration No. 333------ as filed with the Securities and Exchange
Commission on November 4, 1997, or a new registration statement on an
appropriate form under the Act, registering or qualifying the
Registrable Securities for sale in accordance with the intended method
of sale or other disposition described in such request. Within fifteen
(15) days after receiving any such notice, the Company shall give
notice to the other Holders of the outstanding Warrants or Registrable
Securities advising that the Company is proceeding with such Amendment
or registration statement and offering to include the Registrable
Securities of such Holders. The Company shall not be obligated to any
other such Holder unless that other Holder accepts such offer by notice
in writing to the Company within twenty (20) days thereafter. The
Company will use its best efforts, through its officers, directors,
auditors and counsel in all matters necessary or advisable, to file and
cause such Amendment or registration statement to become effective as
promptly as practicable (but in any event within 90 days of the initial
filing of such Amendment or registration statement) and for a period of
12 months thereafter to reflect in the Amendment or registration
statement financial statements which are prepared in accordance with
Section 10(a)(3) of the Act and any facts or events arising that,
individually, or in the aggregate, represent a fundamental or material
change in the information set forth in the Amendment or registration
statement to enable Holders of the Registrable Securities registered to
sell such Registrable Securities. If any registration pursuant to this
paragraph (a) is an underwritten offering, the Holders of a majority of
the Registrable Securities to be included in such registration shall be
entitled to select the underwriter or managing underwriter (in the case
of a syndicated offering) of such offering, subject to the Company's
approval (not to be unreasonably withheld.)
(ii) Anything in this Section 10(a) to the contrary
notwithstanding, if the Company's securities proposed to be registered
for sale are to be distributed in an underwritten offering and the
managing underwriter shall advise the Company in writing that, in its
opinion, the amount of securities to be offered should be limited in
order to assure a successful offering, the amount of Registrable Shares
to be included in such Amendment or registration statement shall be so
limited and shall be allocated among the persons selling such
securities in the following order of priority: (1) first to be
registered will be the securities subject to any demand or piggyback
registration rights granted by the Company before the Effective Date,
(2) next to be registered will be the Registrable Shares in proportion,
as nearly as practicable, to the number of Registrable Shares desired
and eligible to be sold by each Holder of such Registrable Shares and
(3) next to be registered will be any other shares of Common Stock
subject to similar demand or piggyback registration rights granted by
the Company in proportion, as nearly as practicable, to the number of
shares of Common Stock desired and eligible to be sold by
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each holder of such Common Stock. In the event that, (x) pursuant to
the preceding sentence, the managing underwriter limits the number of
Registrable Shares that the Holders desire to have registered, and (y)
the Company does not thereafter effect a registration to include the
Registrable Shares that the Holders were not then permitted to sell
within 180 days after the effective date of the Amendment or
registration statement from which the Holders have been excluded, then,
at any time after such 180-day period until the period ending five
years after the Effective Date, the Holders of a majority of such
Registrable Securities not so included may make a request to the
Company for registration under the Act of all or part of such
Registrable Securities not so included in accordance with Section
10(a)(ii).
(iii) Notwithstanding anything in this Section 10(a) to the
contrary, the Company will not be required to file an Amendment or
registration statement (i) at a time when the audited financial
statements required to be included therein are not available, which
time shall be limited to the period commencing 135 days after the end
of the Company's third quarter and ending 90 days after the end of such
fiscal year, or (ii) for the period beginning with the filing of a
registration statement under the Act with respect to a public offering
by the Company of its securities and ending 180 days after the closing
of such public offering, or (iii) if in the reasonable opinion of the
Company it would adversely impact the Company in its capital raising
plans or otherwise (in which latter case filing may be delayed for up
to 135 days).
(b) PIGGYBACK REGISTRATION RIGHTS. The Company covenants and agrees
with the Representative and any other Holders or subsequent Holders of the
Registrable Securities that if, at any time within the period commencing one (1)
year and ending five (5) years after the Effective Date, it proposes to file a
new registration statement with respect to the public sale of Common Stock for
cash (other than in connection with an offering to the Company's employees, an
acquisition, merger or similar transaction, an employee benefit plan, an
exchange offer or a dividend reinvestment plan) under the Act in a primary
registration on behalf of the Company and/or in a secondary registration on
behalf of holders of such securities and the registration form to be used may be
used for registration of the Registrable Securities, the Company will give
written notice at least 30 days prior to the date by which holders of the
Registrable Securities must elect to participate in the registration of
securities to the Holders of Warrants or Registrable Securities (regardless
whether some of the Holders have theretofore availed themselves of the right
provided in Section 10(a) of this Agreement) at the addresses appearing on the
records of the Company of its intention to file a registration statement and
will offer to use its reasonable efforts to include in such registration
statement any of the Registrable Securities, subject to paragraphs (i) and (ii)
of this paragraph (b), such number of Registrable Securities with respect to
which the Company has received written requests for inclusion therein within
twenty (20) days after the giving of notice by the Company. All registrations
requested pursuant to this paragraph (b) are referred to herein as "Piggyback
Registrations". All Piggyback Registrations pursuant to this paragraph (b) will
be made solely at the Company expense, except
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for the Holders' Expenses, which shall be paid by the Holder. If the securities
or blue sky laws of any jurisdiction in which the securities so registered are
proposed to be offered would require the Holder's payment of greater
registration expenses than those otherwise required by this Section 10 and if
the Company shall determine, in good faith, that the offering of such securities
in such jurisdiction is necessary for the successful consummation of the
registered offering, then the Holder shall either agree to pay the portion of
the registration expenses required by the securities or blue sky laws of such
jurisdiction to be paid by the Holder or withdraw his request for inclusion of
his Registrable Shares in such registration.
(i) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is part of an underwritten primary registration for the
Company, and the managing underwriter(s) for such offering advise(s)
the Company in writing that, in its opinion, the amount of
securities to be offered should be limited in order to assure a
successful offering, the amount of Registrable Shares to be included
in such registration statement shall be so limited and shall be
allocated among the persons selling such securities in the following
order of priority: (1) first to be registered will be the securities
the Company proposes to sell, (2) next to be registered will be the
securities subject to any demand or other piggyback registration
rights granted by the Company before the Effective Date, (3) next to
be registered will be the Registrable Shares in proportion, as
nearly as practicable, to the number of Registrable Shares desired
and eligible to be sold by each Holder of such Registrable Shares
and (4) next to be registered will be any other shares of Common
Stock subject to similar demand or piggyback registration rights
granted by the Company in proportion, as nearly as practicable, to
the number of shares of Common Stock desired and eligible to be sold
by each holder of such shares of Common Stock.
(ii) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is part of an underwritten secondary registration for
holders of securities of the Company (other than pursuant to Section
10(a)) and not a primary registration for the Company, and the
managing underwriter(s) for such offering advise(s) the Company in
writing that, in its opinion, the amount of securities to be offered
should be limited in order to assure a successful offering, the
amount of Registrable Shares to be included in such registration
statement shall be so limited and shall be allocated among the
persons selling such securities in the following order of priority:
(1) first to be registered will be the securities subject to any
demand or other piggyback registration rights granted by the Company
before the Effective Date, (2) next to be registered will be the
Registrable Shares in proportion, as nearly as practicable, to the
number of Registrable Shares desired and eligible to be sold by each
Holder of such Registrable Shares and (3) next to be registered will
be any other shares of Common Stock subject to similar demand or
piggyback registration rights granted by the Company in proportion,
as nearly as practicable, to the number of shares of Common Stock
desired and eligible to be sold by each holder of such shares of
Common Stock.
Notwithstanding the provisions of this Section 10(b), the Company
shall have the right at any time and for any reason or for no reason after it
shall have given written notice pursuant to
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this Section 10(b) (irrespective of whether a written request for inclusion of
any such securities has been made) to elect not to file any such proposed
registration statement, or to withdraw the same after the filing but before the
effective date thereof and, thereupon, shall be relieved from its obligation to
proceed with such registration. If any registration pursuant to this paragraph
(b) is an underwritten offering, the Company shall be entitled to select the
underwriter or managing underwriter(s) (in the case of a syndicated offering) of
such offering.
(c) OTHER REGISTRATION RIGHTS. In addition to the rights above
provided, during the period commencing one (1) year and ending five (5) years
after the Effective Date, the Company will cooperate with the then Holders of
the Registrable Securities in preparing and signing one (but not more than one)
registration statement, in addition to the registration statements discussed
above, required in order to sell or transfer the Registrable Securities and will
supply all information required therefor, but the then Holders shall pay the
costs and expenses of such additional registration (including all of the
Company's reasonable out-of-pocket costs and expenses); provided, however, that
if the Company elects to register or qualify additional shares of Common Stock,
the cost and expense of such registration statement will be pro rated between
the Company and the Holders of the Registrable Securities according to the
aggregate sales price of the securities being issued. However, the Company will
not be required to file a registration statement pursuant to this paragraph
(c)(i) at a time when the audited financial statements required to be included
therein are not available, which time shall be limited to the period commencing
135 days after the end of the Company's third quarter and ending 90 days after
the end of such fiscal year, or (ii) for the period beginning with the filing of
a registration statement under the Act with respect to a public offering by the
Company of its securities and ending 180 days after the closing of such public
offering, or (iii) if in the reasonable opinion of the Company it would
adversely impact the Company in its capital raising plans or otherwise (in which
latter case filing may be delayed for up to 135 days).
(d) ACTION TO BE TAKEN BY THE COMPANY. In connection with the
registration of Registrable Securities in accordance with paragraphs (a), (b) or
(c) of this Section 10, the Company agrees to:
(i) Bear the expenses of any registration or qualification
under paragraphs (a) or (b) of this Section 10, including, but not
limited to, legal, accounting and printing fees; provided, however,
that in no event shall the Company be obligated to pay any of the
Holders' Expenses, which shall be paid by the Holders; and
(ii) Use its reasonable efforts to register or qualify the
Registrable Securities included in an Amendment or registration
statement for offer or sale under state securities or Blue Sky laws
of such jurisdictions in which the Underwriters or such Holders
shall reasonably request and do all other acts or things necessary
or advisable to effect the registration or qualification of the
Registrable Securities covered by such Amendment or registration
statement in the various states; provided, however, that no
registration or qualification shall be required in any jurisdiction
where, as a result thereof, the Company would be subject to service
of general process, to taxation as a foreign corporation doing
business in such jurisdiction, to any requirement that it qualify
generally to do business as a foreign corporation in such
jurisdiction, or to any requirement that it
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agree to restrictions on future actions by the Company to which it
is not then subject.
(e) ACTION TO BE TAKEN BY THE HOLDERS. Any written request to
exercise registration rights pursuant to paragraphs (a) or (b) of this Section
10 shall contain, as applicable, (i) a description of the proposed plan of
distribution of the Registrable Securities, including the name of any
underwriters, the amounts underwritten and any material relationship between any
proposed underwriter and the Company, (ii) the full name and address of the
Holder, the number of Warrants, Registrable Securities and other securities of
the Company owned by such Holder and the number proposed to be registered and
(iii) a description of any position, office, or other material relationship
which the Holder has had within the past three years with the Company or any of
its predecessors or affiliates.
In addition, in connection with the registration of Registrable
Securities in accordance with paragraphs (a), (b) or (c) of this Section 10, the
Company's obligation shall be conditioned as to each such public offering upon a
timely receipt by the Company in writing of:
(i) Information as to participating Holders (to the extent
required by the Rules and Regulations) and the terms of such public
offering furnished by or on behalf of each Holder intending to make
a public offering of such Holder's Registrable Securities;
(ii) Such other information as the Company may reasonably
require from such Holders, or any underwriter for any of them, for
inclusion in such Registration Statement; and
(iii) All documents reasonably requested by any underwriter in
connection with the offering and any other documents customary in
similar offerings, signed and delivered by such Holder, including,
without limitation, underwriting agreements, custody agreements,
powers of attorney, indemnification agreements, and agreements
restricting other sales of securities.
(f) For purposes of this Section 10, (i) the term "Holder" shall
include holders of Registrable Shares received upon exercise of Warrants (but
excluding a holder all of whose Registrable Shares could be sold in reliance
upon the exemption from registration under the Act afforded by Rule 144), and
(ii) the term "Registrable Securities" shall mean the Shares, if issued (but
excluding Shares already sold on a public market), until five years after the
Effective Date.
(g) The Holders agree that, upon receipt of any notice from the
Company of the happening of any of the following: (i) the issuance by the
Securities and Exchange Commission of any stop order denying or suspending the
effectiveness of any Amendment or registration statement covering Registrable
Shares or the initiation or threatening of any proceeding for that purpose, (ii)
the Company's receipt of any stop order denying registration or suspending the
qualification of the Registrable Securities for sale or the initiation or
threatening of any proceeding for such purpose or (iii) the happening of any
event that makes any statement made in such Amendment or registration statement,
the related prospectus or any document incorporated by reference therein untrue
or that requires any change in such Amendment or registration statement,
prospectus or document incorporated by reference therein to make the
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statements not include an untrue statement of material fact or not omit any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, the Holders
shall discontinue the disposition of Registrable Securities until the Holders
receive a supplemental or amended prospectus from the Company or until the
Company advises such Holders in writing that the Holders may resume the use of
such prospectus, and have received copies of any additional or supplemental
filings which are incorporated by reference in the prospectus. If the Company so
directs, such Holders will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in the Holders' possession, of the
prospectus covering the Registrable Securities at the time the Holders received
the notice. Upon the occurrence of such event, the Company shall immediately
take such action, by amendment or otherwise, as may be necessary in order that
the ability to resume sale of the Registrable Securities and the use of such
prospectus is promptly restored.
11. NOTICES TO HOLDERS.
(a) Nothing in this Agreement or in any Warrants shall be construed
as conferring upon the Holders the right to vote or to receive dividends or to
consent or to receive notice as shareholders in respect of the meetings of
shareholders or the election of directors of the Company or any other matter, or
any rights whatsoever as shareholders of the Company prior to the exercise
hereof and such Holder becoming a holder of record of Shares; provided, however,
that in the event that any meeting of shareholders shall be called, the Company
shall cause a notice thereof to be sent by first-class mail, postage prepaid, at
least twenty (20) days prior to the date fixed as a record date or the date of
closing the transfer books in relation to such meeting, to each registered
Holder of Warrants at such Holder's address appearing on the Warrant Register.
(b) If the Company intends to make any distribution on its shares of
Common Stock (or other securities which may be issuable in lieu thereof upon the
exercise of Warrants), including, without limitation, any such distribution to
be made in connection with a consolidation or merger in which the Company is the
surviving entity, or to issue subscription rights or warrants to holders of its
shares of Common Stock, the Company shall cause a notice of its intention to
make such distribution to be sent by first-class mail, postage prepaid, at least
twenty (20) days prior to the date fixed as a record date or the date of closing
the transfer books in relation to such distribution, to each registered Holder
of Warrants at such Holder's address appearing on the Warrant Register, but
failure to mail or to receive such notice or any defect therein or in the
mailing thereof shall not affect the validity of any action taken in connection
with such distribution.
12. NOTICES. Any notice pursuant to this Agreement to be given by
the Holder of any Warrant or the holder of any Share to the Company shall be
sufficiently given or made three business days after sent by first-class mail,
postage prepaid, addressed as follows or to such other address as the Company
may designate by notice given in accordance with this Section 12, to the Holders
of Warrants or the holders of Shares:
C2i Solutions, Inc.
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx Xxxxxx, Xx., President
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Notices or demands authorized by this Agreement to be given or made
by the Company to or on the Holder of any Warrant or the holder of any Share
shall be sufficiently given or made (except as otherwise provided in this
Agreement) if sent by first-class mail, postage prepaid, addressed to such
Holder or such holder of Shares at the address of such Holder or such holder of
Shares as shown on the Warrant Register or the books of the Company, as the case
may be.
13. SECURITIES LAW RESTRICTIONS. (1) The Holder acknowledges that
the Warrant and the shares to be issued upon exercise thereof are being acquired
solely for the Holder's own account and not as a nominee for any other party,
and for investment, and that the Holder will not offer, sell, transfer, assign
or otherwise dispose of this Warrant or any of those shares except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended (the "Act"), or any state securities laws. Upon exercise of this
Warrant, the Holder shall, if requested by the Company, confirm in writing, in a
form satisfactory to the Company, that the shares issuable upon its exercise are
being acquired solely for the Holder's own account and not as a nominee for any
other party, for investment, and not with a view toward distribution or resale.
Any certificate evidencing a Warrant or shares issued upon exercise of a Warrant
may be stamped or imprinted with legends setting forth the restrictions on
transfer arising under applicable federal and state securities laws.
14. GOVERNING LAW. This Agreement and each Warrant issued hereunder
shall be governed by and construed in accordance with the substantive laws of
the State of New York. The Company hereby agrees to accept service of process by
notice given to it pursuant to the provisions of Section 12 hereof.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
such counterparts together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
duly executed as of the day, month and year first above written.
C2I SOLUTIONS, INC.
By:
----------------------------------
Its:
------------------------------
SOUTHWALL CAPITAL CORP.
By:
----------------------------------
Its:
------------------------------
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SCHEDULE I
NAME OF
INITIAL HOLDER NUMBER OF
-------------- WARRANTS
---------
SouthWall Capital Corp. 100,000
Total 100,000
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EXHIBIT A
FORM OF WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE OR
OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION IS AVAILABLE AND AN
OPINION OF COUNSEL TO SUCH EFFECT REASONABLY ACCEPTABLE TO THE ISSUER IS
DELIVERED.
Void after 5:00 p.m. New York, New York Time, on _______ __, 200[2].
WARRANT TO PURCHASE
SHARES OF
COMMON STOCK
OF
C2i SOLUTIONS, INC.
This is to certify that, FOR VALUE RECEIVED, SOUTHWALL CAPITAL CORP.
or its registered assigns pursuant to Section (d) hereof ("Holder"), is entitled
to purchase, subject to the provisions of this Warrant, from C2i SOLUTIONS,
INC., a Delaware corporation (the "Company"), 100,000 fully paid, validly issued
and nonassessable shares of Common Stock, par value $.001 per share ("Common
Stock"), at the exercise price of $[7.50] per share until _______ __, 200[2].
The number of shares of Common Stock to be received upon the exercise of this
Warrant and the price to be paid for each share of Common Stock are subject to
adjustment from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Shares," and the exercise price
for a share of Common Stock, as adjusted from time to time, is hereinafter
sometimes referred to as the "Exercise Price."
(a) EXERCISE OF WARRANT. The Warrant may be exercised in whole or in
part at any time or from time to time commencing on _________ __, 199[8] and
continuing until 5:00 P.M. New York time on ________ __, 200[2] (the "Expiration
Date"), provided, however, that if either such day is a day on which banking
institutions in the State of New York are authorized by law to close, then on
the next succeeding day which shall not be such a day. The Warrant may be
exercised by presentation and surrender to the Company at its principal office,
or at the office of its stock transfer agent, if any, with the Purchase Form
annexed hereto, duly executed (with signature guaranteed if required by the
Company or, if any, its stock transfer agent) and accompanied by payment of the
Exercise Price for the number of Warrant Shares specified in such form and any
applicable taxes. The purchase price
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for any Warrant Shares purchased pursuant to the exercise of this Warrant shall
be paid in full upon such exercise in cash, by certified or bank check or by
wire transfer of immediately available funds. Alternatively, this Warrant may be
exchanged for Warrant Shares as described in Section (k) hereof. As soon as
practicable after each such exercise of this Warrant, but not later than seven
(7) business days from the date of such exercise, the Company shall issue and
deliver to the Holder a certificate or certificates for the Warrant Shares
issuable upon such exercise, registered in the name of the Holder or the
Holder's designee (subject to the terms of this Warrant). If the Warrant should
be exercised in part only, the Company shall, upon surrender of the Warrant for
cancellation, execute and deliver a new Warrant evidencing the rights of the
Holder thereof to purchase the balance of the Warrant Shares purchasable
thereunder. Upon receipt by the Company of the Warrant at its office, or by the
stock transfer agent of the Company at its office, in proper form for exercise,
together with the exercise price thereof and taxes as aforesaid in cash, by
certified or bank check or by wire transfer of immediately available funds and
the investment letter described below, the Holder shall be deemed to be the
holder of record of the Warrant Shares issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such Warrant Shares shall not then be
physically delivered to the Holder. Each stock certificate so delivered shall be
in such denomination as may be reasonably requested by the Holder hereof and
shall be registered in the name of the Holder or such other name as shall be
designated by the Holder (subject to the terms of this Warrant). The Company
shall pay all expenses, taxes and other charges payable in connection with the
preparation, execution and delivery of stock certificates pursuant to this
Section (a), except that, in case such stock certificates shall be registered in
a name or names other than the name of the Holder of this Warrant, funds
sufficient to pay all stock transfer taxes which shall be payable upon the
execution and delivery of such stock certificate or certificates shall be paid
by the Holder hereof to the Company.
In order to assure the availability of an exemption from
registration under the federal or applicable state securities laws, the Company
may condition the exercise of this Warrant upon the Holder delivering to the
Company an investment letter in the form as customarily used by the Company from
time to time in connection with the exercise of unregistered options and
warrants issued by the Company. It is further understood that certificates for
the Warrant Shares, if any, to be issued upon exercise of the Warrant may
contain a restrictive legend in accordance with Section (j) hereof.
(b) RESERVATION OF SHARES. The Company shall at all times reserve
for issuance and/or delivery upon exercise of this Warrant such number of shares
of its Common Stock as shall be required for issuance and delivery upon exercise
of this Warrant.
(c) FRACTIONAL SHARES. Fractional shares or scrip representing
fractional shares may be issued upon the exercise of this Warrant.
Alternatively, the Company may, at its option, with respect to any fraction of a
share issuable upon any exercise hereof, pay to the Holder an amount in cash
equal to such fraction multiplied by the greater of (i) the initial Exercise
Price per share or (ii) the current market value of the shares of the Company's
Common Stock. The "current market value" of a share of Common Stock for this
purpose shall be the average of the daily closing prices for fifteen (15)
consecutive trading days
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commencing twenty (20) trading days before the date of such computation. The
closing price for each day shall be the last reported sale price regular way or,
in case no such reported sale takes place on such day, the average of the
closing bid and asked prices regular way for such day, in either case on the
principal national securities exchange on which the shares are listed or
admitted to trading, or if they are not listed or admitted to trading on any
national securities exchange, but are traded in the over-the-counter market, the
closing sale price of the Common Stock or, in case no sale is publicly reported,
the average of the representative closing bid and asked quotations for the
Common Stock on The Nasdaq National or SmallCap Market or any comparable system,
or if the Common Stock is not listed on The Nasdaq Stock Market or a comparable
system, the closing sale price of the Common Stock or, in case no sale is
publicly reported, the average of the closing bid and asked prices as furnished
by two members of the NASD selected from time to time by the Company for that
purpose.
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant
is exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for a number (reasonably requested by the Holder) of Warrants of
lesser denominations entitling the Holder thereof to purchase in the aggregate
the same number of shares of Common Stock purchasable hereunder. Subject to
Section (j) hereof, the Holder may transfer or assign this Warrant, in whole or
in part and from time to time. Upon surrender of this Warrant to the Company at
its principal office or at the office of its stock transfer agent, if any, with
the Assignment Form annexed hereto duly executed (with signature guaranteed, if
required by the Company or its stock transfer agent) and funds sufficient to pay
any transfer tax, the Company shall, without charge, execute and deliver a new
Warrant in the name of the assignee or assignees named in such instrument of
assignment and this Warrant shall promptly be canceled. This Warrant may be
divided into or combined with other Warrants which carry the same rights upon
presentation at the principal office of the Company or at the office of its
stock transfer agent, if any, together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed by the
Holder hereof. The term "Warrant" as used herein includes any Warrants into
which this Warrant may be divided or exchanged, and the term "Holder" includes
any subsequent holder or holders of this Warrant or any warrant for which this
Warrant is exchanged or into which it is divided. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and in the case of loss, theft or destruction, of reasonable
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor, date and amount. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not the original Warrant shall be at any time enforceable by anyone.
(e) RIGHTS OF THE HOLDER. Subject to the provisions of Section (l),
the Holder shall not, by virtue hereof, be entitled to any rights of a
shareholder in the Company, either at law or equity (including, without
limitation, any rights to dividends) and the rights of the Holder with respect
to the shares of Common Stock purchasable pursuant to this Warrant
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are limited to those expressed in the Warrant and are not enforceable against
the Company except to the extent set forth herein.
(f) ANTI-DILUTION PROVISIONS. So long as this Warrant shall be
outstanding, the Exercise Price in effect at any time and the number and kind of
securities purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the happening of certain events as provided in
the Warrant Agreement of even date herewith ("Warrant Agreement") pursuant to
which this Warrant was issued.
(g) REGISTRATION RIGHTS. The Company shall register Warrant Shares
under the Securities Act of 1933 in accordance with the provisions of the
Warrant Agreement.
(h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (i) if the Company shall declare any dividend or make any
distribution upon the Common Stock, or (ii) if the Company shall generally offer
to the holders of the Common Stock, whether or not pursuant to any holders'
right of first refusal with respect to the purchase of new securities issued by
the Company, for subscription or purchase by them any shares of any class of the
Company's capital stock or any other rights to purchase shares of the Company's
capital stock, or (iii) if the Company proposes to register under the Securities
Act of 1933, as amended, any shares of its Common Stock pursuant to one or more
demand, piggyback or incidental registration rights granted to its stockholders,
or (iv) if any capital reorganization of the Company, reclassification of the
capital stock of the Company, consolidation or merger of the Company with or
into another corporation, sale, lease or transfer of all or substantially all of
the property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall be
effected, then in any such case, the Company shall cause to be mailed by
certified mail to the Holder of this Warrant, at least 30 days prior to the date
specified in (x), (y) or (z) below, as the case may be, a notice containing a
brief description of the proposed action and stating the date on which (x) a
record is to be taken for the purpose of such dividend, distribution or offer
for subscription or purchase, (y) such reorganization, reclassification,
consolidation, merger, sale, lease, transfer, dissolution, liquidation or
winding up is to take place and the date, if any is to be fixed, as of which the
holders of the Common Stock or other capital stock of the Company shall receive
cash or other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up, or
(z) the date by which holders of the Warrant Shares must elect to exercise their
right to participate in the registration of securities pursuant to clause (iii)
above, or purchase securities by the Company pursuant to the offering referred
to in clause (ii) above.
(i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, conversion or capital reorganization of outstanding shares of
the Common Stock of the Company, or in case of any consolidation or merger of
the Company with or into another corporation (other than a merger with another
corporation in which merger the Company is the continuing corporation and which
does not result in any reclassification or capital reorganization of outstanding
shares of Common Stock of the Company issuable upon exercise of this Warrant) or
in case of any sale, lease or conveyance to another corporation of
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the property of the Company substantially as an entirety, the Company shall, as
a condition precedent to such transaction, cause effective provisions to be made
so that the Holder shall have the right thereafter by exercising this Warrant at
any time prior to the expiration of this Warrant, to purchase the kind and
amount of shares of stock and other securities and property receivable upon such
reclassification or capital reorganization and consolidation, merger, sale or
conveyance which would have been deliverable to the Holder of this Warrant on
the effective date of the reclassification, reorganization or merger had the
Holder exercised the Warrant immediately prior to the event described in this
Section (i). Any such provision shall include provision for subsequent
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section (i) shall similarly apply to successive reclassifications or capital
reorganizations of shares of the Common Stock and to successive consolidations,
mergers, sales or conveyances. In the event that in connection with any such
capital reorganization or reclassification, consolidation, merger, sale or
conveyance, additional shares of Common Stock shall be issued in exchange,
conversion, substitution or payment, in whole or in part, for a security of the
Company other than Common Stock, any such issue shall be treated as an issue of
Common Stock covered by the provisions of paragraph (1) of Section (f) hereof.
(j) SECURITIES LAW COMPLIANCE.
(1) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the Warrant Shares to be
issued upon exercise hereof are being acquired solely for the
Holder's own account and not as a nominee for any other party,
and for investment, and that the Holder will not offer, sell,
transfer, assign or otherwise dispose of this Warrant or any
Warrant Shares to be issued upon exercise hereof except under
circumstances that will not result in a violation of the
Securities Act of 1933, as amended (the "Act"), or any state
securities laws. Upon exercise of this Warrant, the Holder
shall, if requested by the Company, confirm in writing, in a
form satisfactory to the Company, that the shares of Common
Stock so purchased are being acquired solely for the Holder's
own account and not as a nominee for any other party, for
investment, and not with a view toward distribution or resale.
(2) If deemed necessary by counsel to the Company, this Warrant,
and all Warrant Shares issued upon exercise hereof shall be
stamped or imprinted with legends setting forth the restrictions
on transfer arising under applicable federal and state
securities laws.
(k) CASHLESS EXERCISE OF WARRANT.
(1) RIGHT TO CONVERT. As an alternative to payment of the
Exercise Price in cash, the Holder shall have the right at any
time and from time to time to convert this Warrant into shares
of Common Stock (the "Conversion Right"). Upon exercise of the
Conversion Right, the Company shall deliver to the Holder
(without payment by the Holder of any Exercise Price or of any
other cash or other consideration) that number of shares of
Common Stock which is
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equal to the product of (x) the number of shares as to which the
Warrants are being exercised multiplied by (y) a fraction, the
numerator of which is the current market price of that number of
shares less the Exercise Price and the denominator of which is
the current market price of that number of shares. For purposes
hereof, the current market value of the shares of the Company's
Common Stock shall be determined in accordance with Section (c)
hereof.
(2) METHOD OF EXERCISE. The Conversion Right may be exercised by
the Holder by the surrender of this Warrant at the principal
office of the Company together with a written statement
specifying that the Holder thereby intends to exercise the
Conversion Right. Certificates for the shares of Common Stock
issuable upon exercise of the Conversion Right, together with a
replacement Warrant evidencing the unconverted balance, shall be
delivered to the Holder within five (5) days following the
Company's receipt of this Warrant together with the aforesaid
written statement.
(l) REPRESENTATIONS OF THE HOLDER.
(i) The Holder hereby represents and warrants to the Company
that it has substantial knowledge, skill and experience in
making investment decisions of the type represented by this
Warrant and the Warrant Shares, it is capable of evaluating the
risk of its investment in this Warrant and the Warrant Shares
and is able to bear the economic risk of such investment,
including the risk of losing the entire investment, that it is
acquiring this Warrant and the Warrant Shares for its own
account, and that this Warrant and the Warrant Shares are being
acquired by it for investment and not with a present view to any
distribution thereof in violation of applicable securities law.
If the Holder should in the future decide to dispose of any of
this Warrant and the Warrant Shares, it is understood that it
may do so only in compliance with the Act and appliance state
securities laws. The Holder represents and warrants that it is
an "accredited investor" as defined in Rule 501(a) under the
Act.
(ii) The Holder understands that (i) this Warrant and the
Warrant Shares have not been registered under the Act by reason
of their issuance in a transaction exempt from the registration
requirements of the Act, (ii) this Warrant and the Warrant
Shares must be held indefinitely unless a subsequent disposition
thereof is registered under the Act and applicable state
securities laws or is exempt from such registrations (and
evidence satisfactory to the Company is provided by such Holder
of the availability of such exemptions, including the delivery
to the Company of opinions of counsel to such Holder, which
opinions and counsel is satisfactory to the Company), and (iii)
this Warrant and the Warrant Shares may bear a legend to such
effect.
(m) AMENDMENTS. Neither the Warrant nor any term hereof may be
changed, waived, discharged or terminated without the prior written consent of
the Holder.
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(n) NO IMPAIRMENT. The Company will not avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of any
Holder.
(o) GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of New York.
(p) NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first class mail,
postage prepaid, addressed (a) if to the Holder; to SouthWall Capital Corp., 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: President, or (b) if to the
Company, to C2i Solutions, Inc., 0000 Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxx,
Xxxxxxxxxx 00000, Attention: Xxxx Xxxxxxx Xxxxxx, Xx., President and Chief
Executive Officer, or at such other address as the Company shall have furnished
to the Holder in writing.
IN WITNESS WHEREOF, C2i Solutions, Inc. has caused this Warrant to
be executed by its officer thereunto duly authorized.
Dated: _________ __, 199[7]
C2i SOLUTIONS, INC.
By:
-------------------------------
Name: Xxxx Xxxxxxx Xxxxxx, Xx.
Title: President and Chief
Executive Officer
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PURCHASE FORM
Dated _____________, ____ The undersigned hereby irrevocably elects
to exercise its rights pursuant to this Warrant to the extent of purchasing
________________ shares of Common Stock of C2i Solutions, Inc., and hereby makes
payment of $________________, in cash, in payment of the exercise price thereof.
OR
The undersigned hereby irrevocably elects to exercise its rights
pursuant to this Warrant to the extent of converting this Warrant (or the
appropriate portion thereof as the case may be) into ______________ shares of
Common Stock.
--------------------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
--------------------------------------------------------------------------------
(Please typewrite or print in block letters)
Address
--------------------------------------------------------------------------------
Signature
--------------------------------------------------------------------------------
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ASSIGNMENT FORM
FOR VALUE RECEIVED, ______________________________________ hereby
sells, assigns and transfers unto
Name
--------------------------------------------------------------------------------
(Please typewrite or print in block letters)
Address
--------------------------------------------------------------------------------
the right to purchase Common Stock of C2i Solutions, Inc. (the "Company"),
represented by this Warrant to the extent of __________ shares as to which such
right is exercisable and does hereby irrevocably constitute and appoint as
Attorney, to transfer the same on the books of the Company with full power of
substitution in the premises.
Date________________, ___
Signature__________________________________
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