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EXHIBIT 10.11
@XXX.xxx
WARRANT PURCHASE AGREEMENT
THIS AGREEMENT is made as of September 30, 1999, by and between @XXX.xxx,
a Delaware corporation (the "Company"), and American Express Travel Related
Services Company, Inc. ("Purchaser").
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto mutually agree as follows:
SECTION 1. AUTHORIZATION AND SALE OF THE SECURITIES.
1.1 AUTHORIZATION. The Company has, or before the Closing (as
hereinafter deemed) will have, authorized the sale and issuance of a warrant
(the "Warrant") to purchase 400,000 shares of its Common Stock (the "Shares")
in the form attached hereto as Exhibit A.
1.2 ISSUANCE OF THE WARRANT. Subject to the terms and conditions hereof
and in reliance upon the representations and agreements contained herein, at
the Closing, the Company will issue and sell to Purchaser and Purchaser will
purchase from the Company the Warrant, in exchange for the sum of $100.
SECTION 2. CLOSING DATE; DELIVERY
2.1 CLOSING. The closing for the issuance of the Warrant hereunder (the
"Closing") shall be held at the offices of the Purchaser, on September 30,
1999, at 10:00 a.m., or at such other time and place as the Company and
Purchaser mutually agree (such date is hereinafter referred to as the "Closing
Date").
2.2 DELIVERY. At the Closing, subject to the terms and conditions
hereof, the Company will deliver the Warrant to Purchaser.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser as follows:
3.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware. The Company has all requisite corporate power to own and operate its
properties and assets, and to carry on its business as presently conducted and
as proposed to be conducted. The Company is qualified to do business as a
foreign corporation in each jurisdiction in which such qualification is required
and where the failure to be so qualified would have a material adverse effect on
the Company's business. The Company has delivered to Purchaser copies of its
Amended and Restated Certificate of Incorporation ("Amended Certificate") and
Bylaws. Said copies are true, correct and complete and contain all amendments
through the date of this Agreement.
3.2 CORPORATE POWER. The Company has all requisite legal and corporate
power to execute and deliver this Agreement and any other agreement
contemplated hereby, to sell and
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issue the Warrant, to sell and issue the Shares upon exercise of the Warrant
upon the terms of the Warrant, and to carry out and perform its obligations
under the terms of this Agreement and any other agreement contemplated hereby
or thereby.
3.3 AUTHORIZATION. All corporate action on the part of the Company, its
directors and stockholders necessary for the authorization, sale and issuance
of the Warrant and the Shares, and the performance of the Company's obligations
hereunder, under the Warrant and under each of the other agreements
contemplated hereby. This Agreement and the Warrant and the other agreements
contemplated hereby and thereby are valid and binding obligations of the
Company, enforceable in accordance with their respective terms. The Shares,
when issued in compliance with the provisions of the Warrant and this Agreement
will be validly issued and will be fully paid and nonassessable and will be
free and clear of any preemptive rights, security interests, claims, liens,
encumbrances and restrictions created by the Company.
3.4 DULY AUTHORIZED. The Shares have been duly authorized and reserved
for issuance by the Company upon exercise of the Warrant.
3.5 NO INCONSISTENCY. The execution and delivery of this Agreement and
the Warrant are not, and the issuance of the Shares upon exercise of the
Warrant in accordance with the terms hereof will not be inconsistent with the
Restated Certificate or the Company's Bylaws, do not and will not contravene
any law, governmental rule or regulation, judgment or order applicable to the
Company, and do not and will not conflict with or contravene any provision of,
or constitute a default under, any indenture, mortgage, contract or other
instrument of which the Company is a party or by which it is bound or require
the consent or approval of, the giving of notice to, the registration or filing
with or the taking of any action in respect of or by, any Federal, state or
local government authority or agency or other person.
3.6 NO SUITS. There are not actions, suits, audits, investigations or
proceedings pending or, to the knowledge of the Company, threatened against the
Company in any court or before any governmental commission, board or authority
which, if adversely determined, could have a material adverse effect on the
Company or on the ability of the Company to perform its obligations under this
Agreement or the Warrant.
3.7 REPRESENTATIONS AND WARRANTIES IN SEC FILINGS. The representations
and warranties of the Company contained in the Company's Form 10-K for the year
ended December 31, 1998, and in its Form 10-Q for the quarter ended March 31,
1999 and June 30, 1999, are true, correct and complete.
3.8 DISCLOSURE. Neither this Agreement nor any schedule hereto, nor any
written disclosure document furnished by or on behalf of the Company to
Purchaser or counsel to Purchaser in connection with the transactions
contemplated by this Agreement, when read together, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
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SECTION 4. PURCHASER REPRESENTATION
Purchaser hereby represents and warrants only to the Company with respect
to this purchase as follows:
4.1 AUTHORIZATION. Purchaser has all the requisite power and is duly
authorized to exercise and deliver this Agreement and the Warrant and each other
agreement contemplated hereby and thereby and has taken all necessary action to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Warrant and each other agreement contemplated hereby and thereby have been
duly executed and delivered by Purchaser and constitute valid and binding
obligations of Purchase, enforceable in accordance with their respective terms.
4.2 EXPERIENCE. Purchaser is experienced in evaluating and investing in
high technology companies such as the Company and is an "accredited investor" as
such term is defined in Rule 501 under the Securities Act.
SECTION 5. CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING
Purchaser's obligations to purchase the Warrant at the Closing are subject
to the fulfillment on or prior to the Closing Date of all of the conditions set
forth below in this Section 5 to the extent not waived by Purchaser.
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made in Section 3 hereof shall be true and correct when made, and
shall be true and correct on the Closing Date.
5.2 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all respects.
5.3 OPINION OF THE COMPANY'S COUNSEL. At the Closing Purchaser shall have
received from Wilson, Sonsini, Xxxxxxxx & Xxxxxx, counsel to the Company, a
favorable opinion addressed to it, dated the Closing Date, in the form attached
hereto as Exhibit B.
5.4 COMPLIANCE CERTIFICATE. The Company shall have delivered to Purchaser
a certificate, executed by the President of the Company, dated the Closing Date,
certifying to the fulfillment of the conditions specified in Sections 5.1 and
5.2 of this Agreement.
5.5 PROCEEDINGS AND DATE. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
and instruments incident to such transactions shall be reasonably satisfactory
in substance and form to Purchaser, and Purchaser shall have received all such
counterpart originals or certified or other copies of such documents as
Purchaser may reasonably request.
5.6 DUE DILIGENCE. The Purchaser shall have been satisfied, in its sole
discretion, as to its due diligence investigation of the Company.
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5.7 PILOT PROGRAM AGREEMENT. The Pilot Program Agreement, in the form of
Exhibit C, shall have been executed and delivered by all parties who are
signatories thereto.
SECTION 6. CONDITIONS TO COMPANY'S OBLIGATIONS AT CLOSING
The Company's obligation to sell the Warrant at the Closing is subject to
the fulfillment on or prior to the Closing Date of the following conditions to
the extent not waived by the Company:
6.1 REPRESENTATIONS CORRECT. The representations made by Purchaser in
Section 4 hereof shall be true and correct when made, and shall be true and
correct on the Closing Date.
6.2 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by Purchaser on or prior to the Closing Date shall
have been performed or complied with in all respects.
SECTION 7. COVENANTS OF THE COMPANY
The Company hereby covenants and agrees as follows:
7.1 UPDATING. If Purchaser decides to exercise the Warrant in full and
decides that, in connection with such exercise, Purchaser desires to receive an
updated set of the representations and warranties in Section 3 hereof, and an
updated opinion of counsel in the form of Exhibit B, then at least fourteen
(14) days prior to Purchaser's planned exercise, Purchaser shall notify the
Company in writing of its election to exercise the Warrant subject to approving
the updated representations warranties and opinion, as well as its desire to
receive such updates and the planned date of such exercise. Upon receipt of
such notice, the Company shall prepare or cause to be prepared such updates and
deliver proposed final drafts thereof to Purchaser at least seven (7) days
prior to the planned date of exercise.
7.2 BOARD OBSERVATION RIGHTS. In the event Purchaser exercises Tranche 2,
Tranche 3 or Tranche 4 of the Warrant (as defined in Section 1 of the Warrant),
then Purchaser shall have the following rights:
(a) The Company shall give a representative of Purchaser copies of
all notices, minutes, consents, and other material that it provides to its
directors at or about the same time as delivered to the directors; provided,
however, that the Company reserves the right to exclude such representative
from access to any material or portion thereof if the Company believes that
such exclusion is reasonably necessary to preserve the attorney-client
privilege or to protect highly confidential proprietary information. The
representative of the Purchaser shall have the right to attend in a non-voting
observer status all meetings of the Board of Directors of the Company and all
meetings of any material nature of the committees of the Board.
(b) The rights described herein shall terminate and be of no further
force or effect at such time as Purchaser or its affiliates hold less than
100,000 shares of Common Stock of the Company as adjusted for stock splits,
stock dividends, and the like, or fourteen (14) months from the date of this
Agreement, whichever is earlier.
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7.3 BOARD SEAT. In the event that the Purchaser exercises at least two
Tranches referenced in Section 1 of the Warrant (other than Tranche 1), then
Purchaser shall have the right to appoint one member to the Company's Board of
Directors, and the Company shall take all steps required to procedurally effect
such election. This Board seat right shall be effective for at least 14 months
after Purchaser's designee has become a Board member.
7.4 NO DUTY. The Company and the Purchaser each acknowledge and agree
that neither party nor any of their affiliates shall have a duty to refrain
from any of the following: (a) engaging in the same or similar activities or
lines of business as the other party, (b) doing business with any client or
customer of the other party, (c) investing in or developing relationships with
other persons or entities in the same or similar businesses as that of the
other party, and (d) pursuing opportunities or transactions that may be of
interest to the other party. In the event that either party or any officer,
director, employee or affiliate of either party acquires knowledge of a
potential transaction or matter which may be a corporate opportunity for both
Purchaser and the Company, neither party nor its officers, directors, employees
or affiliates shall have any duty or obligation to communicate or offer such
corporate opportunity to the other party, and neither party nor its officers,
directors, employees or affiliates shall be liable to the other party or its
stockholders for breach of any fiduciary duty, as a stockholder or otherwise, by
reason of the fact that such party or its officers, directors or affiliates
pursue or acquire such opportunity for itself or themselves, directs such
corporate opportunity to another person or entity, or does not communicate such
corporate opportunity or information regarding such corporate opportunity to the
other party. The Company also acknowledges that Purchaser's observer on the
Board will be sharing information concerning the Company with other employees
and officers of Purchaser in connection with Purchaser's investment in and other
business activities with the Company, if the Board observation right provision
in Section 7.2 is exercised by Purchaser.
7.5 TREATMENT OF WARRANT. The parties and their affiliates will not treat
or report for any purpose the Warrant or the Shares obtained upon exercise of
the Warrant as being or having been granted or issued as property transferred
in connection with the performance of services or otherwise as compensation
for services rendered. The parties and their affiliates also will not take any
position inconsistent with the foregoing undertaking. If the Company or any
affiliate receives an inquiry from a taxing authority as to the Warrant or the
Shares obtained upon exercise of the Warrant, the Company shall promptly notify
the Purchaser of the same and shall respond thereto in accordance with the
Purchaser's reasonable specifications.
SECTION 8. RIGHT OF FIRST REFUSAL
8.1 FIRST REFUSAL. Subject to Section 8.4, before the Company shall issue,
sell or exchange, agree or obligate itself to issue, sell or exchange, or
reserve or set aside for issuance, sale or exchange, any (i) shares of Common
Stock, (ii) any other equity security of the Company, including without
limitation, shares of Preferred Stock, (iii) any debt security of the Company
which by its terms is convertible into or exchangeable for any equity security
of the Company, (iv) any security of the Company that is a combination of debt
and equity, or (v) any option, warrant or other right to subscribe for, purchase
or otherwise acquire any such equity security or any such debt security of the
Company, the Company shall, in each case, first offer to sell five percent (5%)
of such securities (the "Offered Securities") to Purchaser, at a price and on
such
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other terms as shall have been specified by the Company in a written notice
delivered to the Purchaser (the "Offer"), which Offer by its terms shall remain
open and irrevocable for a period of 21 days from the notice of the Offer.
8.2 NOTICE OF ACCEPTANCE. Notice of Purchaser's intention to accept, in
whole or in part, any Offer made pursuant to Section 8.1 shall be evidenced by
a writing signed by such Purchaser and delivered to the Company prior to the
end of the 21 day period of such Offer, setting forth the number of shares or
securities such Purchaser elects to purchase. The closing of the purchase shall
occur simultaneously with the purchase of the other securities to be sold by
the Company.
8.3 TERMINATION. The rights of the Purchaser under this Section 8 shall
terminate two (2) years after the date hereof.
8.4 EXCEPTION. The rights of the Purchaser under this Section 8 shall
not apply to:
(a) Common Stock issued as a stock dividend to holders of Common
Stock or upon any subdivision of shares of Common Stock;
(b) options for Common Stock of the Company issued to directors,
officers, employees or consultants of the Company pursuant to any stock option
plan, employee stock ownership plan, employee benefit plan, stock plan, or such
other options, arrangements, agreements or plans intended principally as a means
of providing compensation or incentive compensation for employment or services,
approved by the Board of Directors of the Company; or
(c) Securities issued in connection with an acquisition by the
Company; or
(d) Securities issued in connection with any public offering of
securities.
SECTION 9. MISCELLANEOUS
9.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
between New York residents entered into and to be performed entirely within the
State of New York, without regard to conflicts of law principles.
9.2 SURVIVAL. The representations, warranties, covenants and agreements
made by the parties herein shall survive any investigation by Purchaser or the
Company and shall survive the closing of the transactions contemplated hereby.
9.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties thereto.
9.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Warrant and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof. Any term of this Agreement
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or the Warrant may be amended and the observance of any term of this Agreement
or the Warrant may be waived (either generally or in a particular instance and
either retroactively or prospectively), with the written consent of the Company
and Purchaser.
9.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be effective three (3)
business days after mailed by first-class mail, three (3) business days after
mailed paid registered or certified mail, return receipt requested, one (1)
business day after mailed overnight express mail, the day of transmission of a
facsimile (provided such facsimile was confirmed telephonically on the date of
transmission), or upon delivery if delivered by hand or by messenger or a
courier delivery service, addressed (a) if to Purchaser, at the address set
forth below Purchaser's name on the signature page to this Agreement or at such
other address as Purchaser shall have furnished to the Company in writing, or
(b) if to the Company, at the address set forth below the Company's name on the
signature page to this Agreement or at such other address as the Company shall
have furnished to Purchaser in writing.
9.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right, power
or remedy accruing to any holder of the Warrant upon any breach or default of
the Company under this Agreement shall impair any such right, power or remedy of
such holder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein or of or in any similar breach or default
thereunder occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any holder of any breach or default under this Agreement, or any
waiver on the part of any holder of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, or by law or otherwise afforded to any holder, shall be cumulative
and not alternative.
9.7 EXPENSES. The Company, payable by wire transfer upon exercise of
Tranche I as referred to in Section 1(a) of the Warrant, shall pay to counsel
to Purchaser the sum of $26,000 for legal related expenses incurred in
connection with this transaction.
9.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
9.9 SEVERABILITY. In the case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
9.10 BROKER'S FEES. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, loses or expenses incurred by such
other party as a result of any such fee or commission payable by such
indemnifying party.
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9.11 ATTORNEYS' FEES. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any of the provisions
of this Agreement, the successful or prevailing party or parties shall be
entitled to recover reasonable attorneys' fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it or they may
be entitled.
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The foregoing Agreement is hereby executed as of the date first above
written.
@XXX.xxx
By: /s/ XXXXX X. XXXXXXX
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Title: CFO & V.P. Operations
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Address:
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AMERICAN EXPRESS TRAVEL RELATED SERVICES
COMPANY, INC.
By: /s/ [Signature Illegible]
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Title:
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Address:
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Exhibit A
Warrant
A-1
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@XXX.xxx
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
THIS CERTIFIES THAT, for values received, American Express Travel Related
Services Company, Inc. and its permitted assignees are entitled to subscribe
for and purchase 400,000 shares of the fully paid and nonassessable Common
Stock (as adjusted pursuant to Section 5 hereof, the "Shares") of @XXX.xxx (the
"Company"), at the price and terms set forth below. As used herein, the term
"Date of Grant" shall mean the Date of Grant listed on the signature page
hereof.
1. Amount of Shares, Exercise Price and Terms:
(a) This Warrant is exercisable in four branches, for the following
amounts, Exercise Price and terms:
TRANCHE NUMBER OF SHARES EXERCISE PRICE PER SHARE LAST DAY TO EXERCISE WITH RESPECT
------- ---------------- ------------------------ TO THESE SHARES (EAST COAST TIME)
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Tranche 1 100,000 $6.00 Midnight, February 16, 2000
Tranche 2 100,000 $7.50 Midnight, August 16, 2000
Tranche 3 100,000 $8.50 Midnight, February 15, 2001
Tranche 4 100,000 $13.50 Midnight, August 15, 2001
(b) The Shares shall be registered under the Securities Act of 1933
and under state securities laws if necessary, so the Shares shall be freely
tradable without restriction.
(c) If fully exercised with respect to all tranches, the amounts set
forth in Section 1 represent a number of shares equal to 4.54% of the Company's
outstanding capitalization (on a fully diluted basis) post exercise of this
Warrant.
2. Warrant Price. The price at which this Warrant may be exercised shall
be as set forth in Section 1, and such other price as shall result, from time
to time, from the adjustments specified in Section 5 hereof is herein referred
to as the "Warrant Price" or "Warrant Prices".
3. Method of Exercise; Payment; Issuance of New Warrant. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part and from time to time
(provided, however, that all shares of a particular tranche must be exercised
if the holder hereof desires to obtain shares of the particular tranche), at
the election of the holder hereof, by (a) the surrender of this Warrant (with
the notice of exercise substantially in the form attached hereto as Exhibit A
duly completed and executed) at the principal office of the Company and by the
payment to the Company, by certified or bank check, by wire transfer to an
account designated by the Company (a "Wire Transfer"), or by the cancellation
by the holder hereof of indebtedness or other obligations of the Company to
such holder of an amount equal to the then applicable Warrant Price multiplied
by the number of Shares then being purchased, or (b) if in connection with a
registered public offering of the Company's securities, the surrender of this
Warrant (with the notice of exercise form attached hereto as Exhibit 1 duly
completed and executed) at the principal office of the Company together with
notice of arrangements reasonably satisfactory to the Company for payment to
the Company either by certified or bank check or Wire Transfer from the
proceeds of the sale of shares to be sold by the holder in such public offering
of an amount equal to the then applicable Warrant Price per share multiplied by
the number of Shares then being purchased or (c) exercise of the right provided
for in Section 10 hereof. The person or persons in whose name(s) any
certificate(s) representing shares of Common Stock shall be issuable upon
exercise of this Warrant shall be deemed to have become the holder(s) of record
of, and shall be treated for all purposes as the record holder(s) of, the
shares represented thereby (and such shares shall be deemed to have been
issued) immediately prior to the close of business on the date or dates upon
which this Warrant is exercised. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares of stock so purchased
shall be delivered to the holder hereof by the Company at the Company's expense
as soon as possible and in any event within thirty (30) days after such
exercise and, unless this Warrant has been fully exercised or expired, a new
Warrant representing the portion of the Shares, if any, with respect to which
this Warrant shall not then have been exercised shall also be issued to the
holder hereof as soon as possible and in any event within such thirty-day
period.
4. Stock Fully Paid; Reservation of Shares. All Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance pursuant to the terms and conditions herein, be duly authorized,
validly issued, fully paid and nonassessable, and free from all taxes, liens
and charges with respect to the issue thereof. During the period within which
the rights represented by this Warrant may be exercised, the Company will at
all times have authorized, and reserved for the purpose of the issue upon
exercise of the purchase rights evidenced by this Warrant, a sufficient number
of shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant and from time to time, will take all steps
necessary to amend its Certificate of Incorporation to provide sufficient
reserves of shares of Common Stock issuable upon exercise of the Warrant (and
shares of its Common Stock for issuance on exercise of this Warrant.
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5. Adjustment of Warrant Price and Number of Shares. The number and kind
of securities purchasable upon the exercise of this Warrant and the Warrant
Prices shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Reclassification of Merger. In case of any reclassification or
change of securities of the class issuable upon exercise of this Warrant (other
than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), or in case
of any merger of the Company with or into another corporation (other than a
merger with another corporation in which the Company is the acquiring and the
surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the
Company, or such successor or purchasing corporation, as the case may be, shall
duly execute and deliver to the holder of this Warrant a new Warrant (in form
and substance satisfactory to the holder of this Warrant), so that the holder
of this Warrant shall have the right to receive, at a total purchase price not
to exceed that payable upon the exercise of the unexercised portion of this
Warrant, and in lieu of the shares of Common Stock theretofore issuable upon
exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification, change or
merger that a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such reclassification, change or merger
if this Warrant had been exercised immediately before such reclassification,
change or merger, all subject to further adjustment as provided in this Section
5. Such new Warrant shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section 5 and, in the case of a new Warrant issuable after the amendment of the
terms of the anti-dilution protection of the Common Stock, shall provide for
anti-dilution protection that shall be as nearly equivalent as may be
practicable to the anti-dilution provisions applicable to the Common Stock on
the Date of Grant. The provisions of this subparagraph (a) shall similarly
apply to successive reclassifications, changes, mergers and transfers.
(b) Subdivision or Combination of Shares. If the Company at any time
while this Warrant, or any portion thereof, remains outstanding and unexpired
shall split, subdivide or combine the securities as to which purchase rights
under this Warrant exist, into a different number of securities of the same
class, the Warrant Price shall be proportionately decreased in the case of a
split or subdivision or increased in the case of a combination, effective at
the close of business on the date the subdivision or combination becomes
effective.
(c) Stock Dividends and Other Distributions. If the Company at any
time while this Warrant is outstanding and unexpired shall (i) pay a dividend
with respect to Common Stock payable in Common Stock, or (ii) make any other
distribution with respect to Common Stock of Common Stock, then the Warrant
Price shall be adjusted, from and after the date of determination of
shareholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Warrant Price in effect immediately prior to such
date of determination by a fraction (i) the numerator of which shall be the
total number of shares of Common Stock outstanding immediately prior to such
dividend or distribution, and (ii) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such dividend or
distribution.
(d) Adjustment of Number of Shares. Upon each adjustment in the
Warrant Price, the number of Shares of Common Stock purchasable hereunder shall
be adjusted, to the nearest whole share, to the product obtained by multiplying
the number of Shares purchasable immediately prior to such adjustment in the
Warrant Price by a fraction, the numerator of which shall be the Warrant Price
immediately prior to such adjustment and the denominator of which shall be the
Warrant Price immediately thereafter.
(e) Rights. The rights applicable to the Shares of Common Stock
purchasable hereunder are set forth in the Company's Certificate of
Incorporation, as amended through the Date of Grant, a true and complete copy
of which has been supplied to the holder of this Warrant (the "Charter"). The
Company shall promptly provide the holder hereof with any restatement,
amendment, modification or waiver of the Charter promptly after the same has
been made.
6. Notification of Adjustments. Whenever the Warrant Price or the number
of Shares purchasable hereunder shall be adjusted pursuant to Section 5 hereof,
the Company shall make a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the Warrant Price and the number of Shares purchasable hereunder after
giving effect to such adjustment, and shall cause copies of such certificate to
be mailed (without regard to Section 13 hereof, by first class mail, postage
prepaid) to the holder of this Warrant. In addition, whenever the conversion
price or conversion ratio of the Common Stock shall be adjusted, the Company
shall make a certificate signed by its chief financial officer setting forth,
in reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the
conversion price or ratio of the Common Stock after giving effect to such
adjustment, and shall cause copies of such certificate to be mailed (without
regard to Section 13 hereof, by first class mail, postage prepaid) to the
holder of this Warrant.
7. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company shall make a cash payment therefor based on the
fair market value of the Common Stock on the date of exercise as reasonably
determined in good faith by the Company's Board of Directors.
8. Rights as Stockholders' Information. No holder of this Warrant, as
such, shall be entitled to vote or receive dividends or be deemed the holder of
Common Stock or any other securities of this Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the holder of this Warrant, as such, any of
the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until
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this Warrant shall have been exercised and the Shares purchasable upon the
exercise hereof shall have become deliverable as provided herein.
Notwithstanding the foregoing, the Company will transmit to the holder of this
Warrant such information, documents and reports as are generally distributed to
the holders of any class or series of the securities of the Company concurrently
with the distribution thereof to the stockholders.
9. Mergers. The Company shall provide the holder of this Warrant with at
least thirty (30) days' notice of the terms and conditions of any of the
following potential transactions: (i) the sale, lease, exchange, conveyance or
other disposition of all or substantially all of the Company's property or
business, or (ii) its merger into or consolidation with any other corporation
(other than a wholly-owned subsidiary of the Company), or any transaction
(including a merger or other reorganization) or series of related transactions,
in which more than 50% of the voting power of the Company is disposed of. The
Company will cooperate with the holder in arranging the sale of this Warrant
with any such transaction.
10. Right to Convert Warrant into Stock; Net Issuance.
(a) Right to Convert. In addition to and without limiting the rights
of the holder under the terms of this Warrant, the holder shall have the right
to convert this Warrant or any portion thereof (the "Conversion Right") into
shares of Common Stock as provided in this Section 10 at any time or from time
to time during the term of this Warrant. Upon exercise of the Conversion Right
with respect to a particular number of shares subject to the Warrant (the
"Converted Warrant Shares"), the Company shall deliver to the holder (without
payment by the holder of any exercise price or any cash or other consideration)
(X) that number of shares of fully paid and nonassessable Common Stock equal to
the quotient obtained by dividing the value of this Warrant (or the specified
portion hereof) on the Conversion Date (as defined in subsection (b) hereof),
which value shall be determined by subtracting (A) the aggregate Warrant Price
of the Converted Warrant Shares immediately prior to the exercise of the
Conversion Right from (B) the aggregate fair market value of the Converted
Warrant Shares issuable upon exercise of this Warrant (or the specified portion
hereof) on the Conversion Date (as herein defined) by (Y) the fair market value
of one share of Common Stock on the Conversion Date (as herein defined).
Examples as a formula, such conversion shall be computed as follows:
X = B - A
-----
Y
Where: X = the number of shares of Common Stock that may be issued to
holder
Y = the fair market value (FMV) of one share of Common Stock
A = the aggregate Warrant Price (i.e., Converted Warrant
Shares x Warrant Price)
B = the aggregate FMV (i.e., FMV x Converted Warrant Shares)
No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined). For purposes
of this Warrant, shares issued pursuant to the Conversion Right shall be treated
as if they were issued upon the exercise of this Warrant.
(b) 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 and indicating the number of shares subject to
this Warrant which are being surrendered (referred to in Section 10(a) hereof as
the Converted Warrant Shares) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"). Certificates for the shares issuable
upon exercise of the Conversion Right and, if applicable, a new warrant
evidencing the balance of the shares remaining subject to the Warrant, shall be
issued as of the Conversion Date and shall be delivered to the holder within
thirty (30) days following the Conversion Date.
(c) Determination of Fair Market Value. For purposes of this Section 10,
"fair market value" of a share of Common Stock as of a particular date (the
"Determination Date") shall mean:
(i) If traded on a securities exchange, the fair market value of the
Common Stock shall be deemed to be the average of the closing prices of
the Common Stock on such exchange over the 30-day period ending five
business days prior to the Determination Date, and the fair market value
of the Common Stock shall be deemed to be such fair market value of the
Common Stock multiplied by the number of shares of Common Stock into which
each share of Common Stock is then convertible;
(ii) If traded over-the-counter, the fair market value of the Common
Stock shall be deemed to be the average of the closing bid prices of the
Common Stock over the 30-day period ending five business days prior to the
Determination Date, and the fair market value of the Common Stock shall be
deemed to be such fair market value of the
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Common Stock multiplied by the number of shares of Common Stock into
which each share of Common Stock is then convertible; and
(iii) If there is no public market for the Common Stock, then fair
market value shall be determined by mutual agreement of the holder of
this Warrant and the Company.
11. Representations and Warranties. The Company represents and warrants
to the holder of this Warrant that the representations and warranties of the
Company contained in that certain Warrant Purchase agreement between the
Company and the initial holder dated the date hereof are true, complete and
correct.
12. Modification and Waiver. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
13. Notices. Any notice, request, communication or other document
required or permitted to be given or delivered to the holder hereof or the
Company shall be delivered, or shall be sent by certified or registered mail,
postage prepaid, to each such holder at the address as shown on the books of
the Company or to the Company at the address indicated thereof on the signature
page of this Warrant.
14. Binding Effect on Successors. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets, and all of the obligations
of the Company relating to the Common Stock issuable upon the exercise or
conversion of this Warrant shall survive the exercise, conversion and
termination of this Warrant and all of the covenants and agreements of the
Company shall inure to the benefit of the successors and assigns of the holder
hereof. The Company will, at the time of the exercise or conversion of this
Warrant, in whole or in part, upon request of the holder hereof but at the
Company's expense, acknowledge in writing its continuing obligation to the
holder hereof in respect of any rights (including, without limitation, any
right to registration of the Shares) to which the holder hereof shall continue
to be entitled after such exercise or conversion in accordance with this
Warrant; provided, that the failure of the holder hereof to make any such
request shall not affect the continuing obligation of the Company to the holder
hereof in respect of such rights. This Warrant is assignable by the holder of
this Warrant with the consent of the Company, which consent shall not be
unreasonably withheld or delayed.
15. Lost Warrants or Stock Certificates. The Company covenants to the
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
16. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.
17. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws
of the State of New York, with regard to the conflicts of law principles.
18. Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the holder hereof contained
herein shall survive the Date of Grant, the exercise of conversion of this
Warrant (or any part hereof) or the termination or expiration of rights
hereunder. All agreements of the Company and the holder hereof contained herein
shall survive indefinitely until, by their respective terms, they are no longer
operative.
19. Remedies. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the holders hereof (in the
case of a breach by the Company), or the Company (in the case of a breach by a
holder), may proceed to protect and enforce their or its rights either by suit
in equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific
performance of any such covenant or agreement contained in this Warrant.
20. No Impairment of Rights. The Company will not, by amendment of its
Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights
of the holder of this Warrant against impairment.
21. Severability. The invalidity or unenforceability of any provision
of this Warrant in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction, or affect any other
provision of this Warrant, which shall remain in full force and effect.
22. Recovery of Litigation Costs. If any legal action or other
proceeding is brought for the enforcement of this Warrant, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any
of the provisions of this Warrant, the successful or prevailing party or
parties shall be entitled to recover reasonable attorneys' fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it or they may be entitled
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00
00. Entire Agreement Modification. This Warrant constitutes the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
@XXX.xxx
By /s/ XXXXX X. XXXXXXX
----------------------------------
Title CFO & V.P. Operations
------------------------------
Address:
----------------------------
----------------------------
----------------------------
Date of Grant:
----------------------
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EXHIBIT 1
NOTICE OF EXERCISE
To: @XXX.xxx
1. The undersigned hereby:
(a) elects to purchase __________shares of Common Stock of @XXX.xxx
pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price of such shares in full, or
(b) elects to exercise its net issuance rights pursuant to Section 10
of the attached Warrant with respect to ____ shares of Common
Stock.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are
specified below:
-----------------------
(Name)
-----------------------
-----------------------
(Address)
-----------------------
(Signature)
-----------------------
(Date)
17
Exhibit B
Opinion of Company Counsel
The opinion of Company counsel shall be in form and substance acceptable
to Purchaser, and shall cover the following matters:
1. The Company is duly organized, validly existing and in good standing.
2. The Warrant Agreement and the Warrant have been duly authorized,
executed and delivered and are valid, binding and enforceable obligations of
the Company, subject to standard enforceability exceptions.
3. That the shares obtainable upon exercise of the Warrant have been
reserved for issuance, and upon exercise of the Warrant in accordance with its
terms, the shares will be duly authorized, validly existing, non-assessable and
free of any liens, encumbrances or restrictions on transfer.
4. Such other opinions as are customary for transactions of this nature.
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Exhibit C
Pilot Program Agreement
C-1
