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EXHIBIT 10.6
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.
STOCK PURCHASE WARRANT
THIS STOCK PURCHASE WARRANT CERTIFIES THAT, for the agreed upon value of
$10.00 and for other good and valuable consideration, INSIGHT INTERACTIVE, LLC
or its registered successors and assigns (collectively, the "Holder"), is
entitled to purchase fully paid and nonassessable shares of the $.001 par value
per share common stock (the "Common Stock") of SOURCE MEDIA, INC., a Delaware
corporation (the "Company") at $20.00 per share (the "Exercise Price") all as
set forth herein and as adjusted pursuant to Article 2 of this Warrant, subject
to the provisions and upon the terms and conditions set forth in this Warrant.
This Warrant allows the Holder to purchase 4,596,786 shares of Common Stock,
subject to adjustment as provided herein, and the shares so subject to purchase
hereunder shall be referred to herein as the "Warrant Shares". This Warrant is
issued pursuant to the terms of the Common Stock and Warrants Purchase
Agreement, dated as of July 29, 1999 (the "Purchase Agreement") between the
Company and the Holder, as well as pursuant to the terms of the Contribution
Agreement dated as of July 29, 1999 ("Contribution Agreement") among the Holder,
the Company and SourceSuite LLC ("SourceSuite") and the Limited Liability
Company Agreement of SourceSuite LLC ("Operating Agreement") which will be
executed and delivered at the Closing of the Contribution Agreement and which
was made and entered into by and between the Company and the Holder, pursuant to
which the Company and the Holder have agreed to form, capitalize and thereafter
manage SourceSuite to conduct certain specified businesses previously conducted
separately. Capitalized terms used herein but not otherwise defined herein shall
have the meanings set forth for such terms in the Purchase Agreement. The amount
and kind of securities receivable pursuant to the rights granted hereunder are
subject to adjustment pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
ARTICLE 1
EXERCISE
1.1 Method of Exercise. The Holder may exercise this Warrant in whole or in
part at any time and from time to time after the date of issuance up to and
including the fifth anniversary of the date of issuance (the "Expiration Date");
provided, however, that until (a) April 1, 2004, the Holder may exercise only
such portion of this Warrant that would entitle the Holder to own up to
forty-five percent (45%) of the Common Stock of the Company, on a Fully Diluted
basis and (b) June 24, 2000 the Holder may exercise only such portion of this
Warrant that would entitle the Holder to own up to 24.99% of the outstanding
Common Stock of the Company. Deferral of the exercise of a portion of this
Warrant shall not affect or limit in any manner the anti-dilution provisions of
Article 2, which shall apply as if this Warrant were exercisable at any time.
Between April 1, 2004 and the Expiration Date, the Holder may exercise this
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Warrant in whole or in part without restriction. The Holder may exercise this
Warrant by delivering a duly executed Notice of Exercise in substantially the
form attached as Appendix 1, to the principal office of the Company. The Holder
shall also deliver to the Company a check for the aggregate Exercise Price for
the Warrant Shares being purchased.
1.2 [Intentionally Omitted]
1.3 Share Coverage. The number of Warrant Shares for which this Warrant may
be exercised shall be 4,596,786 shares of Common Stock, subject to adjustment as
provided herein.
1.4 Fair Market Value. The fair market value of the Warrant Shares for
purposes of Section 2.1.1(a) below shall be the higher of (i) the average
closing price of the Warrant Shares reported for the five (5) Trading Days
immediately before the Holder delivers its Notice of Exercise to the Company, or
the date of the issuance of additional shares under Section 2.1.1(a) below, as
applicable; or (ii) the average closing price of the Warrant Shares reported for
the thirty (30) Trading Days immediately before the Holder delivers its Notice
of Exercise, or the date of the issuance of additional shares under Section
2.1.1(a) below, as applicable. The reported closing price for each day shall be
the reported closing price (and if no sales take place on any day, such day
shall not be a Trading Day), as reported in the principal consolidated or
composite transaction reporting system on the principal national securities
exchange on which such security is listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the Nasdaq
National Market or, if such security is not quoted on the Nasdaq National
Market, the average of the closing bid and asked prices on such day in the
over-the-counter market as reported by Nasdaq. As used herein, the term "Trading
Day" means a day on which the New York Stock Exchange, each national securities
exchange on which the Warrant Shares is listed and the Nasdaq National Market
are open for business. If the Warrant Shares are not then traded in a public
market, the Board of Directors of the Company shall propose the fair market
value in its reasonable good faith judgment. The foregoing notwithstanding, if
the Holder advises the Board of Directors in writing that the Holder disagrees
with such proposed fair market value, then each of the Company and the Holder
shall select a reputable investment banking firm, and the two firms so selected
shall promptly agree upon a third reputable investment banking firm, and the
three firms shall undertake such valuation. If the valuation of such investment
banking firms is greater than that determined by the Board of Directors, then
all fees and expenses of such investment banking firms shall be paid by the
Company. In all other circumstances, such fees and expenses shall be paid by the
Holder.
1.5 Delivery of Certificate and New Warrant. In the event of any exercise
of this Warrant, in whole or in part, certificates for the Warrant Shares so
purchased representing the aggregate number of shares specified in the Notice of
Exercise, shall be delivered to the Holder within a reasonable time, not
exceeding seven business days, after this Warrant shall have been so exercised.
If this Warrant shall have been exercised only in part, then, unless this
Warrant has expired, the Company shall, at its expense, at the time of delivery
of said certificates representing the Warrant Shares, deliver to the Holder a
new Warrant representing the Warrant Shares not so exercised. The Company will
pay all taxes and other expenses in connection with the preparation, execution
and delivery of the certificates except that, in the case such certificates are
to be registered in a name or names other than the Holder, the Holder will pay
any and all stock transfer taxes associated with such transfer.
1.6 Replacement of Warrants. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on
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delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company or, in the case of mutilation, on surrender and cancellation of this
Warrant, the Company at its expense shall execute and deliver in lieu of this
Warrant, a new warrant of like tenor.
ARTICLE 2
ADJUSTMENT TO THE WARRANT SHARES
2.1 Antidilution Provisions. The intent of this Article 2 is to insure
appropriate adjustment to the Exercise Price and/or number of Warrant Shares to
be acquired in the event of the exercise of this Warrant, in the event of future
issuances of capital stock or securities into which this Warrant may ultimately
be convertible in the instances described below, to the end that the provisions
set forth herein (including adjustments to the Exercise Price) shall be made to
provide the Holder the right to receive essentially the same proportion of
shares of capital stock (in relation to all shares of capital stock outstanding)
on the date of conversion, redemption or other exchange as the Holder would have
been entitled to had it initially been issued shares of Common Stock on the date
hereof. Simultaneously with each adjustment to the Exercise Price set forth in
this Article 2, an appropriate adjustment in the number of Warrant Shares
obtainable upon the exercise of this Warrant shall be made so that the holder of
this Warrant shall receive the same number and kind of securities and other
property such holder would have been entitled to receive had this Warrant been
exercised and converted into Warrant Shares immediately prior to the event or
occurrence giving rise to the adjustment to the Exercise Price.
2.1.1 Adjustments for Diluting Issuances.
(a) In the event the Company shall issue additional shares of capital
stock without consideration or for a consideration per share which is less
than both the Exercise Price for the Warrant Shares and the fair market
value for the Warrant Shares as determined pursuant to Section 1.4 above,
then and in each such event, the Exercise Price shall be reduced,
concurrently with such issue of shares, to an amount equal to the quotient
of: (a) the sum of (i) the number of shares of Common Stock outstanding (on
a Fully Diluted basis) immediately prior to such issuance multiplied by the
Exercise Price plus (ii) the aggregate consideration received by the
Company upon such issuance, divided by (b) the number of shares of Common
Stock outstanding (on a Fully Diluted basis) immediately after such
issuance. For purposes of this Section 2.1, the consideration received by
the Company for the issue of any additional shares of capital stock shall
be computed as follows: (i) insofar as such consideration consists of cash,
such consideration shall consist of the aggregate amount of cash received
by the Company excluding amounts paid or payable for accrued interest or
accrued dividends, and without deduction of any expenses incurred or
underwriting commissions or concessions paid or allowed by the Company;
(ii) insofar as such consideration consists of property other than cash,
such consideration shall be computed at the fair market value thereof at
the time of such issue, as determined in good faith by the Board of
Directors of the Company, except where such consideration consists of
securities, in which case the amount of consideration received by the
Company shall be the fair market value thereof (determined as provided in
Section 1.4 hereof) as of the date of receipt, but in each such case
without deduction therefrom of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith. In computing the market price of a note or other obligation that
is not listed or admitted to trading on any securities exchange or quoted
in the Nasdaq Stock Market or reported by the National Quotation Bureau,
Inc., or a similar reporting organization, the total consideration to be
received by the Company thereunder (including interest)
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shall be discounted to present value at the prime rate announced or
published in The Wall Street Journal under the caption "Money Rate" in
effect at the time the note or obligation is deemed to have been
issued; and (iii) in the event additional Shares of capital stock are
issued together with other securities or other assets of the Company
for consideration which covers both, such consideration shall be the
proportion of such consideration so received, computed as determined in
good faith by the Board of Directors of the Company.
(b) Treatment of Options and Convertible Securities.
(i) In the event the Company should ever grant rights to
subscribe for or purchase, or any options for the purchase of any
shares of its capital stock or securities convertible into or
exchangeable for capital stock (such rights and options herein
referred to as "Options", and such convertible or exchangeable
securities herein referred to as "Convertible Securities"), whether or
not such Options or rights to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for
which capital stock is issuable upon the exercise of such Option or
upon the conversion or exchange of such Convertible Securities shall
be less than the Exercise Price in effect immediately prior to the
time of the granting of such Options, then the total maximum number of
shares of capital stock issuable upon the exercise of such Options or
upon the conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options
shall (as of the date of granting of such Options) be deemed to be
outstanding and to have been issued and sold for such price per share
and the Exercise Price shall be reduced to the extent required by
Section 2.1.1(a). For purposes of this Section 2.1.1(b)(i), the price
per share for which such capital stock is issuable shall be determined
by dividing (x) the total amount, if any, received or receivable by
the Company as consideration for the granting of such Options, plus
the minimum aggregate amount of additional consideration payable to
the Company upon the exercise of such Options, plus, in the case of
any such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, other than such
Convertible Securities, payable to the Company upon the conversion or
exchange of such Convertible Securities, by (y) the total maximum
number of shares of capital stock issuable upon the exercise of such
Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No further
adjustments of the Exercise Price shall be made upon the actual issue
of such capital stock or of such Convertible Securities upon the
exercise of such Options or upon the actual issue of such capital
stock upon the conversion or exchange of such Convertible Securities.
(ii) If at any time the Company shall issue or sell Convertible
Securities, whether or not the rights to convert or exchange such
Convertible Securities are immediately exercisable, and the price per
share for which capital stock is issuable upon the conversion or
exchange of such Convertible Securities shall be less than the
Exercise Price in effect immediately prior to the time of the issue or
sale of such Convertible Securities, then the total maximum number of
shares of capital stock issuable upon the conversion or exchange of
all such Convertible Securities shall (as of the date of the issue or
sale of such Convertible Securities) be deemed to be outstanding and
to have been issued and sold for such price per share and the Exercise
Price shall be reduced to the extent required by Section 2.1.1(a),
provided that (a) except as provided in Section
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2.1.1(b)(vi) hereof, no further adjustments of the Exercise Price
shall be made upon the actual issue of such capital stock upon the
conversion or exchange of such Convertible Securities and (b) if any
such issue or sale of such Convertible Securities is made upon
exercise of any Options for which adjustments of the Exercise Price
have been or are to be made pursuant to other provisions of this
Section 2.1.1, no further adjustment of the Exercise Price shall be
made by reason of such issue or sale. For purposes of this Section
2.1.1(b)(ii), the price per share for which capital stock is issuable
shall be determined by dividing (x) the total amount received or
receivable by the Company as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, other than such Convertible
Securities, payable to the Company upon the conversion or exchange
thereof, by (y) the total maximum number of shares of capital stock
issuable upon the conversion or exchange of all such Convertible
Securities.
(iii) If at any time the Company shall pay a dividend or make any
other distribution upon the capital stock payable in capital stock or
Convertible Securities, any capital stock or Convertible Securities,
as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued without
consideration, and the Exercise Price shall be reduced as if the
Company had subdivided the outstanding shares of capital stock into a
greater number of shares as provided in Section 2.2 hereof.
(iv) In case at any time the Company shall take a record of the
holders of capital stock for the purpose of entitling them (a) to
receive a dividend or other distribution payable in capital stock or
Convertible Securities, or (b) to subscribe for or purchase capital
stock or Convertible Securities, then such record date shall be deemed
to be the date of the issue or sale of such capital stock or
Convertible Securities.
(v) If the purchase price provided for in any Option referred to
in Section 2.1.1(b)(i) hereof, or the price at which any Convertible
Securities referred to in Sections 2.1.1(b)(i) or (iii) hereof are
convertible into or exchangeable for capital stock, shall change at
any time (whether by reason of provisions designed to protect against
dilution or otherwise), the Exercise Price then in effect hereunder
shall forthwith be increased or decreased to such Exercise Price as
would have obtained had the adjustments made upon the issuance of such
Options or Convertible Securities been made upon the basis of (a) the
issuance of the number of shares of capital stock theretofore actually
delivered upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities, and the total consideration
received therefor, and (b) the number of shares of capital stock to be
issued for the consideration, if any, received by the Company therefor
and to be received on the basis of such changed price.
(vi) If any adjustment has been made in the Exercise Price
because of the issuance of Options or Convertible Securities and if
any of such Options or rights to convert or exchange such Convertible
Securities expire or otherwise terminate, then the Exercise Price
shall be readjusted to eliminate the adjustments previously made in
connection with the Options or rights to convert or exchange
Convertible Securities which have expired or terminated.
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(vii) The number of shares of capital stock outstanding at any
given time shall not include shares owned or held by or for the
account of the Company, and the disposition of any such treasury
shares shall be considered an issue or sale of capital stock.
(viii) Anything in Section 2.1.1 hereof to the contrary
notwithstanding, the Company shall not be required to make any
adjustment of the Exercise Price in the case of (A) the issuance of
the Warrants or any other warrant issued to the Holder, (B) the
issuance of shares of Common Stock upon exercise of the Warrants or
any other warrant issued to the Holder, (C) the granting of stock
options by the Company or any of its subsidiaries pursuant to the
option plans identified on Schedule 4.3 to the Purchase Agreement,
provided that the exercise price of such stock options is at least
equal to the fair market value of such shares of capital stock (as
determined by the appropriate plan) on the date such stock options are
granted, (D) the issuance of shares of capital stock upon the exercise
of the stock options referred to in clause (C) above, and (E) the
issuance of shares of capital stock upon the exercise, conversion, or
exchange of the securities which are set forth on Schedule 4.3 of the
Purchase Agreement, all of which were issued prior to or
simultaneously with the date of the original issue of this Warrant.
2.2. Adjustment for Subdivisions and Combinations. In the event at any time
the Company shall, by subdivision, stock split, reverse stock split, dividend,
combination or reclassification of any shares of its capital stock or otherwise
change any of the securities then issuable upon the exercise of this Warrant
into the same or a different number of securities of any class or classes, this
Warrant shall thereafter be exercisable, for the same period as the remaining
duration of the period during which this Warrant is exercisable, for the same
number and kind of securities which the holder hereof would have received had
this Warrant been exercised and converted into Warrant Shares immediately prior
to such change, whether by subdivision, stock split, reverse stock split,
dividend, combination or reclassification of any shares of its capital stock or
otherwise. In the event at any time the Company shall, by subdivision, dividend,
stock split, reclassification or otherwise, change the outstanding shares of
capital stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced, and
conversely, in case the outstanding shares of capital stock shall be combined
into a smaller number of shares, by reverse stock split, combination,
reclassification or otherwise, the Exercise Price in effect immediately prior to
such combination shall be proportionately increased. An adjustment made pursuant
to this Section 2.2 shall become effective immediately after the effective date
of such subdivision or combination.
2.3. Adjustment for Dividends and Distributions. If at any time the Company
shall pay a dividend or make a distribution to all holders of capital stock, as
such, which dividend or distribution is payable otherwise than in cash out of
earnings or earned surplus and otherwise than in capital stock, Convertible
Securities, or Options, then thereafter the Holder of this Warrant, upon the
exercise of this Warrant, shall be entitled to receive the number of shares of
Common Stock being purchased upon such exercise and, in addition thereto and
without further payment, the stock and other securities and property (including
cash) which such Holder would have received by way of dividends or distributions
(otherwise than in cash out of earnings or earned surplus or in capital stock,
Convertible Securities, or Options) as if continuously, since the date of the
original issue of this Warrant, such Holder (a) had been the record holder of
the number of shares of Common Stock then being purchased, and (b) had retained
all dividends and distributions in stock or other securities (other than capital
stock, Convertible Securities, or Options)
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which would have been paid in respect of such Common Stock or in respect of any
stock or other securities which would have been paid as dividends or
distributions on such Common Stock.
2.4 Repurchase on Sale, Merger, or Consolidation of the Company.
2.4.1 Acquisition. For the purpose of this Warrant, "Acquisition"
means any sale, license, or other disposition of all or substantially all of the
assets of the Company, or any reorganization, consolidation, or merger of the
Company where the holders of the Company's securities before the transaction
beneficially own less than fifty percent (50%) of the outstanding voting
securities of the surviving entity after the transaction.
2.4.2 Assumption of Warrant. If such Acquisition shall be effected in
such a way that the holders of Common Stock (or any other securities of the
Company then issuable upon the exercise of this Warrant) shall be entitled to
receive stock or other securities or property (including cash) with respect to
or in exchange for Common Stock (or such other securities), then lawful and
adequate provision shall be made whereby the Holder of this Warrant shall
thereafter have the right to purchase and receive upon the basis and upon the
terms and conditions specified in this Warrant, and in lieu of the shares of
Common Stock (or such other securities) immediately theretofore purchasable and
receivable upon the exercise hereof, such stock or other securities or property
(including cash) as may be issuable or payable with respect to or in exchange
for a number of outstanding shares of Common Stock (or such other securities)
equal to the number of shares of Common Stock (or such other securities)
immediately theretofore purchasable and receivable upon the exercise of this
Warrant, had such Acquisition not taken place. In any such case appropriate
provision shall be made with respect to the rights and interests of the Holder
to the end that the provisions hereof (including, without limitation, the
provisions for adjustments of the Exercise Price and of the number of Warrant
Shares purchasable upon exercise hereof) shall thereafter be applicable, as
nearly as reasonably may be, in relation to the stock or other securities or
property thereafter deliverable upon the exercise hereof. In the event of a
consolidation or merger of the Company with or into another corporation or
entity as a result of which a greater or lesser number of shares of common stock
of the surviving corporation or entity are issuable to holders of capital stock
in respect of the number of shares of capital stock outstanding immediately
prior to such consolidation or merger, then the Exercise Price in effect
immediately prior to such consolidation or merger shall be adjusted in the same
manner as though there were a subdivision or combination of the outstanding
shares of capital stock.
2.5 Reclassification, Exchange or Substitution. Upon any reclassification,
exchange, substitution, or other event that results in a change of the number
and/or class of the securities issuable upon exercise or conversion of this
Warrant, the Holder shall be entitled to receive, upon exercise or conversion of
this Warrant, the number and kind of securities and property that the Holder
would have received for the Warrant Shares if this Warrant had been exercised
immediately before such reclassification, exchange, substitution, or other
event. Such an event shall include any automatic conversion of the outstanding
or issuable securities of the Company of the same class or series as the Warrant
Shares to Common Stock pursuant to the terms of the Company's Certificate of
Incorporation upon the closing of a new registered public offering of the
Company's Common Stock. The Company or its successor shall promptly issue to the
Holder a new Warrant for such new securities or other property. The new Warrant
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 2 including, without
limitation, adjustments to the Exercise
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Price and to the number of securities or property issuable upon exercise of the
new Warrant. The provisions of this Section 2.5 shall similarly apply to
successive reclassifications, exchanges, substitutions, or other events.
2.6 Record Date Adjustments. In any case in which this Article 2 requires
that a downward adjustment of the Exercise Price shall become effective
immediately after a record date for an event, the Company may defer until the
occurrence of such event (a) issuing to the Holder of this Warrant (exercised
after such record date and before the occurrence of such event) the additional
Warrant Shares issuable upon such exercise by reason of the adjustment required
by such event over and above the Warrant Shares issuable upon such exercise
before giving effect to such adjustment and (b) paying to such Holder any amount
in cash in lieu of a fractional share pursuant to Section 2.8 hereof.
2.7 Minimum Adjustment of Exercise Price. No adjustment of the Exercise
Price shall be made in an amount less than $.05 per share in effect at the time
such adjustment is otherwise required to be made, but any such lesser adjustment
shall be carried forward and shall be made at the time and together with the
next subsequent adjustment which, together with any adjustments so carried
forward, shall amount to not less than $.05 per share. In case at any time the
Company shall issue capital stock by way of dividend on capital stock or
subdivide or combine the outstanding shares of capital stock, said amount of
$.05 per share (as theretofore increased or decreased, if the said amount shall
have been adjusted in accordance with the provisions of this Section 2.7) shall
forthwith be proportionately increased in the case of such a combination or
decreased in the case of such a subdivision or stock dividend so as
appropriately to reflect the same.
2.8 Fractional Shares. No fractional Shares shall be issuable upon exercise
or conversion of the Warrant and the number of Warrant Shares to be issued shall
be rounded down to the nearest whole Share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying the Holder an amount computed
by multiplying the fractional interest by the last reported sale price of the
Common Stock on the trading day immediately preceding the date of exercise.
2.9 Certificate as to Adjustments. Upon each adjustment of the Exercise
Price, the Company, at its expense, shall promptly compute such adjustment, and
furnish the Holder with a certificate of its Chief Financial Officer setting
forth such adjustment, and the corresponding adjustment in the number of Warrant
shares obtainable upon the exercise of this Warrant, and the facts upon which
such adjustments are based. The Company shall, upon written request, furnish the
Holder a certificate setting forth the Exercise Price in effect upon the date
thereof and the series of adjustments leading to such Exercise Price.
2.10 Certain Events. If any event occurs of the type contemplated by the
provisions of this Article 2 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then the Company's
Board of Directors shall make an appropriate adjustment in the number of Warrant
Shares obtainable upon exercise of this Warrant and in the Exercise Price so as
to protect the rights of the Holder of this Warrant; provided that no such
adjustment shall decrease the number of Warrant Shares obtainable as otherwise
determined pursuant to this Article 2.
2.11 Purchase Rights. If at any time the Company grants, issues or sells
any rights to purchase stock, warrants, securities or other property pro rata to
the record holders of any class of stock (the
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"Purchase Rights") then the Holder of this Warrant shall be entitled to obtain,
upon the same terms on which the holders of Common Stock are to receive such
Purchase Rights, the aggregate Purchase Rights which such Holder could have
acquired if such Holder had held the number of Warrant Shares acquirable upon
complete exercise of this Warrant immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.
ARTICLE 3
REPRESENTATIONS AND COVENANTS OF THE COMPANY
The Company hereby represents and warrants to the Holder as follows:
3.1 Title to Warrant Shares. All Warrant Shares which may be issued upon
the exercise of the rights represented by this Warrant, and all securities, if
any, issuable upon conversion of the Warrant Shares, shall, upon issuance be
duly authorized, validly issued, fully paid and nonassessable, and free of any
liens and encumbrances.
3.2 Reservation of Shares. During the period which this Warrant may be
exercised, the Company will at all times have authorized and reserved for
issuance a sufficient number of shares of Common Stock to cover such exercise.
3.3 No Impairment. The Company shall not, by amendment of its Certificate
of Incorporation or through a reorganization, transfer of assets, consolidation,
merger, dissolution, issue, or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed under this Warrant by the Company, but shall at all times
in good faith assist in carrying out all the provisions of this Warrant and in
taking all such action as may be necessary or appropriate to protect the
Holder's rights under this Warrant against impairment. If the Company takes any
action affecting the Shares or its Common Stock other than as provided for above
that adversely affects the Holder's rights under this Warrant, then the Company
shall make appropriate adjustment to the Exercise Price and/or the number of
Warrant Shares to carry out the intent of Article 2 as set forth in Section 2.1.
3.4 Notice of Certain Events. If the Company proposes at any time to (a)
declare any dividend or distribution upon its Common Stock, whether in cash,
property, stock or other securities and whether or not a regular cash dividend;
(b) offer for subscription pro rata to the holders of any class or series of
stock any additional shares of stock of any class or series or other rights; (c)
effect any reclassification or recapitalization of Common Stock; or (d) merge or
consolidate with or into any other corporation, or sell, lease, license, or
convey all or substantially all of its assets, or to liquidate, dissolve or wind
up, then, in connection with each such event, the Company shall give the Holder:
(1) at least twenty (20) days prior written notice of the date on which a record
will be taken for such dividend, distribution, or subscription rights (and
specifying the date on which the holders of Common Stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (c) and (d) above; and (2) in the case of the matters referred to
in (c) and (d) above at least twenty (20) days prior written notice of the date
when the same will take place (and specifying the date on which the holders of
Common Stock will be entitled to exchange their Common Stock for securities or
other property deliverable upon the occurrence of such event).
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3.5 Registration under the Securities Act of 1933.
3.5.1 Piggyback Rights. In the event that the Company files a
registration statement under the Securities Act of 1933, as amended (the
"Act") which relates to an offering of securities of the Company by the
Company or any holder of securities (except in connection with an offering
to or by employees), such registration statement and the prospectus
included therein shall also, at the written request to the Company by the
Holder, include and relate to, and meet the requirements of the Act with
respect to, the public offering of such Warrant Shares as the Holder
indicates it intends to exercise and offer under the registration statement
for sale and sell, so as to permit the public sale thereof in compliance
with the Act, and any related qualifications under blue sky laws or other
compliance or any underwriting involved therein shall also relate thereto.
The Company shall use its best efforts to effect such registration, any
such qualification, any such compliance and any such underwriting as soon
as practicable. The Company shall give prompt written notice to the Holder
of its intention to file a registration statement under the Act relating to
an offering of the aforesaid securities of the Company, but in no event
less than twenty-five (25) days prior to the filing of such registration
statement, and the written request provided for in the first sentence of
this Section shall be made by the Holder ten (10) or more days prior to the
date specified in the notice as the date on which it is intended to file
such registration statement. Neither the delivery of such notice by the
Company nor of such request pursuant to this Section 3.5.1 by the Holder
shall in any way obligate the Company to file any such registration
statement and, notwithstanding the filing of such registration statement,
the Company may, at any time prior to the effective date thereof, determine
not to offer the securities to which such registration statement relates,
without liability to the Holder, except that the Company shall pay such
expenses as are contemplated to be paid by it under Section 3.5.3 and by
the Holder pursuant to Section 3.5.3(d). Provided, that, anything above in
this Section 3.5.1 to the contrary notwithstanding, the inclusion of
Warrant Shares in any such registration will require the approval of the
underwriters, if any, but which approval shall not be unreasonably
withheld, and such inclusion shall be conditioned upon the provision by the
Holder to the Company of all information regarding the Holder reasonably
required to be included in the registration statement under applicable law
and the rules and regulations promulgated by the Securities and Exchange
Commission (the "SEC") pursuant to the Act. The "piggy-back" registration
rights granted hereunder shall terminate five (5) years from the date
hereof.
3.5.2 Demand Registration Rights.
(a) In addition, upon written notice at any time after the second
anniversary of the date of this Warrant, and on or before the
Expiration Date, upon written request from a holder or holders of
fifty percent (50%) or more of the securities issued or issuable upon
exercise of this Warrant, the Company, as promptly as possible after
the receipt of such notice, shall file a new registration statement
under the Act with respect to the Warrant Shares covered by such
notice and use its best efforts to effect such registration, all
qualifications under blue sky laws and all other compliance as soon as
practicable. Within ten (10) days after receiving any such notice, the
Company shall give notice to any other Holders of
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the Warrant Shares issued or issuable pursuant to this Warrant,
advising that the Company is proceeding with such registration
statement to include therein Warrant Shares of such Holders. The
Company shall not be obligated to any such other Holder unless such
other Holder shall accept such offer by notice in writing to the
Company within ten (10) days thereafter. The Company shall be required
to effect two (2) registrations of Warrant Shares pursuant to this
Section 3.5.2. The Holder agrees to become subject to a customary
lock-up agreement, for a reasonable period of time, if required by the
underwriter of a public offering by the Company during the period in
which the Holder is entitled to registration of the Warrant Shares
under this Section 3.5.2; provided, however, that the Expiration Date
shall be extended by the effective period of any such lock-up
agreement. The Company may postpone, one time, for up to ninety (90)
days the registration of Warrant Shares pursuant to this Section 3.5.2
if its Board of Directors determines in good faith that such
registration would have a material adverse effect on a significant
transaction proposed by the Company; provided, however, that the
Expiration Date shall be extended by the period of any such
postponement. The distribution of Warrant Shares covered by the
request of a Holder pursuant to this Section 3.5.2 shall be effected
by means of the method of distribution selected by such Holder. If
such distribution is effected by means of an underwriting, the Company
shall enter into an underwriting agreement in customary form with a
managing underwriter of nationally recognized standing selected for
such underwriting by the Holder and approved by the Company, which
approval shall not be unreasonably withheld. Notwithstanding any other
provision of this Section 3.5.2, if the managing underwriter advises
the Holder in writing that marketing factors require limitation of the
number of shares to be underwritten, then the underwriters may exclude
shares requested to be included in such registration. The number of
shares to be included in the registration and underwriting shall be
allocated first among the Holders who requested registration pursuant
to this Section 3.5.2 and then among other Holders who have requested
registration of securities in such registration and underwriting in
proportion as nearly as practicable to the respective amounts of
securities of the Company held by such Holders at the time of filing
the registration statement. No securities excluded from the
underwriting by reason of the managing underwriter's marketing
limitation shall be included in such registration. If any Holder
disapproves of the terms of the underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company, the managing
underwriter and the Holder requesting such registration pursuant to
this Section 3.5.2 and the securities so withdrawn shall also be
withdrawn from registration. If the distribution of the Warrant Shares
is being effected by means of an underwriting and if the managing
underwriter has not limited the number of securities to be
underwritten, the Company may include securities for its own account
in such registration if the managing underwriter so agrees and may
include securities for the account of holders of securities other than
Holders of the Warrant Shares issued or issuable upon exercise of this
Warrant. The inclusion of such securities by the Company or such other
holders shall be on the same terms as the registration of Warrant
Shares held by the Holders requesting registration pursuant to this
Section 3.5.2. In the event that the underwriters exclude some of the
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securities to be registered, the securities to be sold for the account
of the Company and any other holders shall be excluded in their
entirety prior to the exclusion of any Warrant Shares issued or
issuable pursuant to this Warrant.
(b) If the Company is a registrant for purposes of the Act which
is entitled to use Form S-3 (or any successor form to Form S-3) to
register securities for any registration requested pursuant to Section
3.5.2, at the request of a holder pursuant to Section 3.5.2, the
Company shall use its best efforts to cause the shares to be
registered on Form S-3.
(c) A holder requesting registration pursuant to Section 3.5.2
shall have the right to cancel a proposed registration pursuant to
Section 3.5.2 when, in its discretion, market conditions are so
unfavorable as to be seriously detrimental to an offering pursuant to
such registration. For the avoidance of doubt, such cancellation of a
registration shall not be counted as one of the two (2) registrations
pursuant to Section 3.5.2, subject to the condition that the canceling
Holder shall promptly reimburse the Company for its expenses
reasonably incurred in connection with the cancelled registration,
unless such registration was cancelled after having been deferred,
postponed or interrupted by the Company pursuant to Section 3.5.2, in
which case, such expense reimbursement shall not be required.
3.5.3 Agreements Related to Registrations. In each instance in which
pursuant to Sections 3.5.1 and 3.5.2 of this Section, the Company shall
take any action to permit a public offering or sale or other distribution
of the Warrant Shares, the Company shall:
(a) Supply to the Holders of Warrant Shares intending to make a
public distribution of their Warrant Shares a reasonable number of
copies of the preliminary, final and other prospectus in conformity
with requirements of the Act and the rules and regulations promulgated
thereunder and such other documents as the Holders shall reasonably
request.
(b) In regard to a registration under Section 3.5.2 only,
cooperate in taking such action as may be necessary to register or
qualify the Warrant Shares under such other securities acts or blue
sky laws of such jurisdictions as the Holders shall reasonably request
and to do any and all other acts and things which may be necessary or
advisable to enable the Holders of such Warrant Shares to consummate
such proposed sale or other disposition of the Warrant Shares in any
such jurisdiction.
(c) Keep effective all such registrations under the Act and
cooperate in taking such action as may be necessary to facilitate a
public sale or other disposition of such Warrant Shares by such
Holders.
(d) Pay all expenses of any registration under Section 3.5.2.
Each registration under Section 3.5.1 shall be at the Company's
expense, except for the direct, incremental costs attributable to the
"piggy-backed" Warrant Shares, which
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shall be paid by the Holders thereof. The Company shall not be
required to pay any underwriting discount or commission or applicable
transfer taxes relating to the disposition of the Warrant Shares.
(e) Indemnify and hold harmless each Holder with respect to which
registration, qualification or compliance has been effected pursuant
to this Agreement and any underwriter, within the meaning of the Act
who may purchase from or sell for any Holder any Warrant Shares, and
each of their respective officers, directors, partners and such
Holder's legal counsel and independent accountants, if any, and such
person controlling such persons, within the meaning of the Act, from
and against any and all losses, claims, damages, expenses and
liabilities (including, but not limited to, legal fees and expenses
and any and all expenses whatsoever reasonably incurred in
investigating, preparing, defending or settling any claim (including,
but not limited to, legal fees and expenses)) arising from or based on
(i) any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement furnished pursuant to
clause (a) of this Section, or any prospectus included therein or any
amendment or supplement thereto, (ii) any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading
(unless such untrue statement (or alleged untrue statement) or
omission (or alleged omission) was based upon and in conformity with
information furnished in writing, or required to be furnished, to the
Company by the Holder or underwriter expressly for use therein), or
(iii) any violation by the Company of any rule or regulation
promulgated under the Act or any state securities law applicable to
the Company and relating to action or inaction by the Company in
connection with any such registration, qualification or compliance.
(f) Each Holder which has securities included in any registration
pursuant to this Agreement shall indemnify and hold harmless the
Company and any underwriter, within the meaning of the Act, and each
of their respective officers, directors, partners, legal counsel and
independent accountants, and each person controlling such persons
within the meaning of the Act, from and against any and all losses,
claims, damages, expenses and liabilities (including, but not limited
to, legal fees and expenses and any and all expenses whatsoever
reasonably incurred in investigating, preparing, defending or settling
any claim (including, but not limited to, legal fees and expenses))
arising from or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement
furnished pursuant to clause (a) of this Section or any prospectus
included therein or any amendment or supplement thereto, or (ii) any
omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided, that the indemnity by such Holder
shall be limited to liability based upon information furnished in
writing, or required to be furnished, to the Company by such Holder
expressly for use therein. The indemnity agreement of the Company
herein shall not inure to the benefit of any such underwriter (or to
the benefit of any person who controls such underwriter) on account of
any losses, claims, damages, liabilities (or actions or proceedings in
respect thereof) arising from the sale of any
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of such Warrant Shares by such underwriter to any person if such
underwriter failed to send or give a copy of the prospectus furnished
pursuant to clause (a) of this Section, to such person with or prior
to the written confirmation of the sale involved. The obligation of
any Holder pursuant to this Section 3.5.3(f) shall be limited to an
amount equal to the net proceeds to such Holder from securities sold
in such registration pursuant to this Agreement.
(g) Each party entitled to indemnification hereunder (the
"Indemnifying Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall be approved by
the Indemnified Party (whose approval shall not be unreasonably
withheld). The Indemnified Party may participate in such defense at
such party's expense; provided, however, that the Indemnifying Party
shall bear the expense of such defense of the Indemnified Party if
representation of both parties by the same counsel would be
inappropriate due to actual or potential conflicts of interest. The
failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this
Agreement, unless and to the extent such failure is prejudicial to the
ability of the Indemnifying Party to defend the action. No
Indemnifying Party, in the defense of any such claim or litigation
shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in
respect of such claim or litigation.
(h) If the indemnification provided for in paragraphs (e) and (f)
above is unavailable or insufficient to hold harmless an Indemnified
Party, then each Indemnifying Party shall contribute to the amount
paid or payable by such Indemnified Party as a result of the expenses,
claims, losses, damages or liabilities (or actions or proceedings in
respect thereof) referred to in such paragraphs in such proportion as
is appropriate to reflect the relative fault of the Company, on the
one hand, and the holders of securities registered pursuant hereto, on
the other hand, in connection with the statement or omissions which
resulted in such losses, claims, damages, expenses and liabilities, as
well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or any such holder and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The Company and the Holder agree that it would not be just and
equitable if contributions pursuant to this paragraph (h) were to be
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable consideration referred to
in this paragraph. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f)
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of the Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(i) In addition, in connection with any registration requested
pursuant hereto, the Company shall:
(1) prepare and file with the SEC pursuant to the Act such
amendments and supplements to such registration statement and
prospectus included therein as may be necessary to effect and
maintain the effectiveness of such registration statement for a
period of 180 days or such longer period as may be required in
order to complete the distribution of the securities covered
thereby and furnish to the Holders of such securities copies of
any such supplement or amendment prior to it being used and/or
filed with the SEC and comply with the provisions of the Act with
respect to the disposition of all securities to be included in
such registration statement.
(2) provide the Holders, any underwriters in connection
therewith, one counsel for such underwriters and one counsel for
the Holders the opportunity to participate in the preparation of
such registration statement and each amendment and supplement
thereto.
(3) for a reasonable period prior to the filing of the
registration statement and throughout the period specified in
paragraph (1) above, make available for inspection by the parties
specified in paragraph (2) above such financial and other
information and books and records of the Company, and cause the
officers, directors, employees and representatives of the Company
to respond to such inquiries as shall be reasonably necessary to
conduct a reasonable investigation of the Company within the
meaning of the Act.
(4) promptly notify the holders of securities included in
such registration statement and the managing underwriter in
connection therewith (and confirm such advice in writing) (A)
when such registration statement or the prospectus included
therein or any prospectus amendment or supplement or post-
effective amendment has been filed, and, with respect to such
registration statement or any post-effective amendment, when the
same has become effective, (B) of any comments by the SEC and by
the blue sky or securities commissioner or regulator of any state
with respect thereto or any request by the SEC for amendments or
supplements to such registration statement or the prospectus or
for additional information, (C) of the issuance by the SEC of any
stop order suspending the effectiveness of such registration
statement or the initiation of any proceedings for that purpose,
(D) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the securities
for sale in any jurisdiction or the initiation of any proceeding
for such purpose, or (E) if it shall be the case, at any time
when a prospectus is required to be delivered under the Act, that
such registration statement, prospectus, or any document
incorporated by reference, in any of the foregoing contains an
untrue statement of a material fact or omits to state a material
fact required to be stated therein or
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necessary to make the statements therein not misleading in light
of the circumstances then existing, in which case such Holders of
securities covered by such registration statement shall suspend
sales of such securities until they have been advised by the
Company that an appropriate prospectus amendment or supplement or
post-effective amendment has been filed; provided, however, that
in such instance the Company shall use its best efforts to
promptly file such prospectus amendment or supplement or
post-effective amendment and the period during which such holders
shall be so required to suspend sales hereunder shall not exceed
30 days.
(5) use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of such registration statement
or any post-effective amendment thereto at the earliest
practicable date.
(6) enter into one or more underwriting agreements,
engagement letters, agency agreements, "best efforts"
underwriting agreements, lock-up agreements or similar
agreements, as appropriate, and take such other actions in
connection therewith as the Holders of securities registered
pursuant hereto shall reasonably request in order to expedite or
facilitate the disposition of such securities.
(7) whether or not an agreement of the type referred to in
the preceding paragraph is entered into and whether or not any
portion of the offering contemplated by such registration
statement is an underwritten offering, (A) make such
representations and warranties to the Holders of securities
registered pursuant hereto and any underwriters thereof, in form,
substance and scope as are customarily made in connection with
any offering of equity securities pursuant to any appropriate
agreement and/or to a registration statement filed on the form
applicable to such registration statement, (B) obtain an opinion
of counsel to the Company in customary form and covering such
matters of the type customarily covered by such an opinion as the
managing underwriters and Holders of securities registered
pursuant hereto may reasonably request, (C) obtain a "cold"
comfort letter or letters from the independent certified public
accountants of the Company addressed to the Holders and the
underwriters, if any, dated the effective date of such
registration statement , the effective date of any prospectus
supplement to the prospectus included in such registration
statement or post- effective amendment to such registration
statement and the date of any consummation of the sale of
securities pursuant hereto, such letter or letters to be in
customary form and covering such matters of the type customarily
covered by letters of such type, (D) deliver such documents and
certificates as may reasonably be requested by the holders of
securities covered by such registration statement and the
managing underwriter, if any, and (E) undertake such obligations
relating to expense reimbursement, indemnification and
contribution as are provided herein.
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(8) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and otherwise take
all actions as may reasonably be necessary to accomplish the
intentions and purposes of this Section 3.5.
3.6 Additional Covenants. The Company and Holder understand that the
possibility exists that in connection with the exercise (including certain
partial exercises) of this Warrant, each of the Company and Holder may be
required to make certain filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 ("HSR"). The Company covenants that it shall file with
the Federal Trade Commission and the Department of Justice the notification
form, together with all necessary materials and information, to attempt to
secure the expiration or termination of all applicable waiting period(s)
relating to any or all exercises of the Warrant hereunder as required on its
part under HSR (each an "HSR Warrant Consent"), in the event the Company is
notified by the Holder that the Holder has been advised by its counsel of the
necessity of making such filings. This covenant is in addition to any covenants
to obtain the HSR Consent under the Purchase Agreement. The Company agrees and
covenants that it shall use good faith commercially reasonable efforts to obtain
the HSR Warrant Consent to allow the Holder to exercise the Warrant, and shall
inform the Holder of all material developments in the Company's efforts to
obtain the HSR Warrant Consent, and that simultaneously with the transmittal to
third parties or to governmental agencies, it shall provide the Holder with
copies of all correspondence, filings or other written documentation related to
efforts to obtain the HSR Warrant Consent. If, notwithstanding the Company's
satisfaction of its obligations above, the Company fails to obtain the HSR
Warrant Consent, then the Company shall issue Warrant Shares in the maximum
number of shares permissible without obtaining HSR consent and in lieu of
issuing the remaining Warrant Shares in Common Stock (meaning those that cannot
be issued without HSR Consent), the Company shall issue an equivalent number of
shares of a new class of non-voting common stock of the Company ("Non-Voting
Stock") which shall be identical in all respects to the Common Stock, except
that shares of Non-Voting Stock shall not have the right to vote on any matters
presented to the Company's stockholders, unless otherwise required by law; and
by their terms the Non-Voting Stock shall automatically, without notice or any
other further action on the part of either the Company or the Holder, be
converted into shares of Common Stock if they are transferred by the Holder.
Thus, if HSR Warrant Consent shall not have been obtained, the Holder shall
continue to have the right to exercise this Warrant, as otherwise allowed in
accordance with the terms hereof; provided, that upon such exercise, in lieu of
receiving Warrant Shares, the Holder shall receive an equal number of shares of
Non-Voting Stock, to the extent of the affected Warrant Shares (i.e., if a
portion of the Warrant Shares can then be issued without HSR Warrant Consent,
the Non-Voting Stock shall be issued only with respect to the remainder of the
Warrant Shares then exercised as evidenced by this Warrant). The Amendment of
the Restated Certificate of Incorporation of the Company adopted pursuant to
Section 3.4 of the Purchase Agreement and which is attached thereto as Exhibit
B-1 authorized a number of shares of Non-Voting Stock equal to or greater than
the number of Warrant Shares.
The intent of this Section 3.6 is to place the Holder in the position most
nearly identical to the position that the Holder would have been in upon such
exercise if either the HSR Warrant Consent was not necessary or had been
obtained. The Company covenants that, at the cost and expense of the Holder, it
will use commercially reasonable efforts and continue to take all reasonable
steps to attempt to secure for the Holder the Warrant Shares or equivalents
which deliver to the Holder the voting rights and economic benefits bargained
for under the Purchase Agreement, which efforts shall include, but not be
limited to, appealing any decision of the Federal Trade Commission and/or
Justice Department which denies consent to the exercise in question if, in the
opinion of counsel to the Holder, there is a reasonable basis for such appeal.
In the event the Company is unable to issue the Non-Voting Stock as contemplated
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herein, the Company covenants that it will use commercially reasonable efforts
to secure for the Holder the benefits set forth herein.
ARTICLE 4
MISCELLANEOUS
4.1 Term. This Warrant is exercisable, in whole or in part, at any time and
from time to time on or before the Expiration Date set forth above.
4.2 Legends. This Warrant shall be imprinted with a legend in substantially
the following form:
NEITHER THIS SECURITY NOR THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF
UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
4.3 Compliance with Securities Laws on Transfer. This Warrant may not be
transferred or assigned by the Company. This Warrant may not be transferred or
assigned by the Holder in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by the Company). The Company shall not require the Holder to provide
an opinion of counsel if the transfer is to (a) an Affiliate of the Holder; (b)
the respective successors of the Holder in a merger or consolidation; (c) the
purchaser of all or substantially all of the assets of Holder; (d) the
shareholders of the Holder in the event the Holder is liquidated or dissolved;
or (e) any other person or entity with respect to whom such transfer has been
approved by the Company. If requested by the Company, and if the transfer is
other than a circumstance described above, the Holder shall provide a reasonable
opinion of counsel in connection with the transfer of the Warrant Shares
pursuant to Rule 144.
4.4 Transfer Procedure. Subject to the provisions of Section 4.3, the
Holder may transfer all or part of this Warrant or the Warrant Shares issuable
upon exercise of this Warrant (or the securities issuable, directly or
indirectly, upon conversion of the Warrant Shares, if any).
4.5 Notices. All notices and other communications from the Company to the
Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address set forth in the Purchase Agreement or as may have been
thereafter furnished to the Company or the Holder, as the case may be, in
writing by the Company or such the Holder from time to time.
4.6 Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
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4.7 Attorneys Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorney's fees.
4.8 Governing Law; Jurisdiction and Venue. This Warrant shall be governed
by, construed and enforced in accordance with the internal laws of the State of
Delaware, excluding the conflict of laws provisions thereof that would otherwise
require the application of the law of any other jurisdiction. The Company
acknowledges and agrees that the state and federal courts sitting in the State
of Delaware shall have jurisdiction in any matter arising out of this Warrant,
and the Company hereby consents to such jurisdiction and agrees that the venue
of any such matter shall also be proper in such state and federal courts sitting
in the State of Delaware.
Dated November 17, 1999.
SOURCE MEDIA, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
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