EXHIBIT 4.1
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
May NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND
REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS WARRANT.
No. of Shares of Common Stock: 45,000
Warrant No. 1
WARRANT
To Purchase Common Stock of
DynamicWeb Enterprises, Inc.
THIS IS TO CERTIFY THAT The Shaar Fund Ltd., or
registered assigns, is entitled, at any time from the Closing
Date (as hereinafter defined) to the Expiration Date (as
hereinafter defined), to purchase from DynamicWeb Enterprises,
Inc., a New Jersey corporation (the "Company"), 45,000 shares of
Common Stock (as hereinafter defined and subject to adjustment as
provided herein), in whole or in part, including fractional
parts, at a purchase price per share equal to $8.93, all on the
terms and conditions and pursuant to the provisions hereinafter
set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the
respective meanings set forth below:
"Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Company after the Closing
Date, other than Warrant Stock.
"Book Value" shall mean, in respect of any share of
Common Stock on any date herein specified, the consolidated book
value of the Company as of the last day of any month immediately
preceding such date, divided by the number of Fully Diluted
Outstanding shares of Common Stock as determined in accordance
with GAAP (assuming the payment of the exercise prices for such
shares) by Xxxxxxx X. Xxxxxx & Company, LLP any other firm of
independent certified public accountants of recognized national
standing selected by the Company and reasonably acceptable to the
Holder.
"Business Day" shall mean any day that is not a
Saturday or Sunday or a day on which banks are required or
permitted to be closed in the State of New York.
"Closing Date" shall mean February 12, 1999.
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency then administering the
Securities Act and other federal securities laws.
"Common Stock" shall mean (except where the context
otherwise indicates) the Common Stock, $.0001 par value, of the
Company as constituted on the Closing Date, and any capital stock
into which such Common Stock may thereafter be changed, and shall
also include (i) capital stock of the Company of any other class
(regardless of how denominated) issued to the holders of shares
of Common Stock upon any reclassification thereof which is also
not preferred as to dividends or assets over any other class of
stock of the Company and which is not subject to redemption and
(ii) shares of common stock of any successor or acquiring
corporation received by or distributed to the holders of Common
Stock of the Company in the circumstances contemplated by
Section 4.4.
"Convertible Securities" shall mean evidences of
indebtedness, shares of stock or other securities which are
convertible into or exchangeable, with or without payment of
additional consideration in cash or property, for shares of
Common Stock, either immediately or upon the occurrence of a
specified date or a specified event.
"Current Market Price" on any date of determination
means the closing bid price of a Common Stock on such day as
reported on the NASD/BBS.
"Current Warrant Price" shall mean, in respect of a
share of Common Stock at any date herein specified, the price at
which a share of Common Stock may be purchased pursuant to this
Warrant on such date.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, or any successor federal statute, and the
rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time.
"Exercise Period" shall mean the period during which
this Warrant is exercisable pursuant to Section 2.1.
"Expiration Date" shall mean a date five (5) years from
the date hereof.
"Fully Diluted Outstanding" shall mean, when used with
reference to Common Stock, at any date as of which the number of
shares thereof is to be determined, all shares of Common Stock
Outstanding at such date and all shares of Common Stock issuable
in respect of this Warrant, outstanding on such date, and other
options or warrants to purchase, or securities convertible into,
shares of Common Stock outstanding on such date which would be
deemed outstanding in accordance with GAAP for purposes of
determining book value or net income per share.
"GAAP" shall mean generally accepted accounting
principles in the United States of America as from time to time
in effect.
"Holder" shall mean the Person in whose name the
Warrant or Warrant Stock set forth herein is registered on the
books of the Company maintained for such purpose.
"Market Price" per Common Stock means the average of
the closing prices of the Common Stock as reported on the
NASD/BBS, or, if such security is not listed or admitted to
trading on the NASD/BBS, on the principal national security
exchange or quotation system on which such security is quoted or
listed or admitted to trading, or, if not quoted or listed or
admitted to trading on any national securities exchange or
quotation system, the closing bid price of such security on the
over-the-counter market on the day in question as reported by the
National Quotation Bureau Incorporated, or a similar generally
accepted reporting service, or if not so available, in such
manner as furnished by any Nasdaq member firm of the National
Association of Securities Dealers, Inc. selected from time to
time by the Board of Directors of the Company for that purpose,
or a price determined in good faith by the Board of Directors of
the Company as being equal to the fair market value thereof, as
the case may be, for the five (5) Trading Days immediately
preceding the Closing Date.
"NASD/BBS" shall mean the National Association of
Securities Dealers, Inc. Over the Counter Bulletin Board System.
"Other Property" shall have the meaning set forth in
Section 4.4.
"Outstanding" shall mean, when used with reference to
Common Stock, at any date as of which the number of shares
thereof is to be determined, all issued shares of Common Stock,
except shares then owned or held by or for the account of the
Company or any subsidiary thereof, and shall include all shares
issuable in respect of outstanding scrip or any certificates
representing fractional interests in shares of Common Stock.
"Person" shall mean any individual, sole proprietor-
ship, partnership, joint venture, trust, incorporated
organization, association, corporation, institution, public
benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or
department thereof).
"Registration Rights Agreement" shall mean the
Registration Rights Agreement dated a date even herewith by and
between the Company and The Shaar Fund Ltd., as it may be amended
from time to time.
"Restricted Common Stock" shall mean shares of Common
Stock which are, or which upon their issuance on the exercise of
this Warrant would be, evidenced by a certificate bearing the
restrictive legend set forth in Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933,
as amended, or any successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall
be in effect at the time.
"Securities Purchase Agreement" shall mean the
Securities Purchase Agreement dated as of a date even herewith by
and between the Company and The Shaar Fund, Ltd. as it may be
amended from time to time.
"Transfer" shall mean any disposition of any Warrant or
Warrant Stock or of any interest in either thereof, which would
constitute a sale thereof within the meaning of the Securities
Act.
"Transfer Notice" shall have the meaning set forth in
Section 9.2.
"Warrants" shall mean this Warrant and all warrants
issued upon transfer, division or combination of, or in
substitution for, any thereof. All Warrants shall at all times
be identical as to terms and conditions and date, except as to
the number of shares of Common Stock for which they may be
exercised.
"Warrant Price" shall mean an amount equal to (i) the
number of shares of Common Stock being purchased upon exercise of
this Warrant pursuant to Section 2.1, multiplied by (ii) the
Current Warrant Price as of the date of such exercise.
"Warrant Stock" shall mean the shares of Common Stock
purchased by the holders of the Warrants upon the exercise
thereof.
2. EXERCISE OF WARRANT
2.1. Manner of Exercise. From and after the Closing
Date and until 5:00 P.M., New York time, on the Expiration Date,
Holder may exercise this Warrant, on any Business Day, for all or
any part of the number of shares of Common Stock purchasable
hereunder.
In order to exercise this Warrant, in whole or in part,
Holder shall deliver to the Company at its principal office at
Fairfield Commons, 271 Route 00 Xxxx, Xxxxxxxx X, Xxxxx 000,
Xxxxxxxxx, Xxx Xxxxxx 00000 or at the office or agency designated
by the Company pursuant to Section 12, (i) a written notice of
Holder's election to exercise this Warrant, which notice shall
specify the number of shares of Common Stock to be purchased,
(ii) to the extent such exercise is not being effected
through a Cashless Exercise, by payment of the Warrant Price in
cash or by wire transfer or cashier's check drawn on a United
States bank and (iii) this Warrant. Such notice shall be
substantially in the form of the subscription form appearing at
the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Upon receipt of the items referred to in
clauses (i), (ii) and (iii) above, the Company shall, as promptly
as practicable, and in any event within five (5) Business Days
thereafter, execute or cause to be executed and deliver or cause
to be delivered to Holder a certificate or certificates
representing the aggregate number of full shares of Common Stock
issuable upon such exercise, together with cash in lieu of any
fraction of a share, as hereinafter provided. The stock
certificate or certificates so delivered shall be, to the extent
possible, in such denomination or denominations as Holder shall
request in the notice and shall be registered in the name of
Holder or, subject to Section 9, such other name as shall be
designated in the notice. This Warrant shall be deemed to have
been exercised and such certificate or certificates shall be
deemed to have been issued, and Holder or any other Person so
designated to be named therein shall be deemed to have become a
holder of record of such shares for all purposes, as of the date
the notice, together with the cash or check or checks and this
Warrant, is received by the Company as described above and all
taxes required to be paid by Holder, if any, pursuant to
Section 2.2 prior to the issuance of such shares have been paid.
If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates
representing Warrant Stock, deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the unpurchased
shares of Common Stock called for by this Warrant, which new
Warrant shall in all other respects be identical with this
Warrant, or, at the request of Holder, appropriate notation may
be made on this Warrant and the same returned to Holder.
Notwithstanding any provision herein to the contrary, the Company
shall not be required to register shares in the name of any
Person who acquired this Warrant (or part hereof) or any Warrant
Stock otherwise than in accordance with this Warrant.
Simultaneously with the exercise of this Warrant,
payment in full of the Warrant Price may be made, at the option
of the holder, (i) by payment of the Warrant Price in cash or by
wire transfer or cashier's check drawn on a United States bank,
(ii) by the surrender (which surrender shall be evidenced by
cancellation of the number of Warrants represented by any
certificate(s) evidencing the Warrants (the "Warrant
Certificate") presented in connection with a Cashless Exercise of
a Warrant or Warrants (represented by one or more Warrant
Certificates), and without payment of the Warrant Price in cash,
for such number of shares equal to the product of (1) the number
of shares for which such Warrant is exercisable with payment in
cash of the Warrant Price as of the date of exercise and (2) the
Cashless Exercise Ratio or (iii) by any combination of (i) and
(ii). For purposes of this Agreement, the "Cashless
Exercise Ratio" shall equal a fraction, the numerator of which is
the excess of the Current Market Price per share of the Common
Stock on the date of exercise over the Warrant Price per share as
of the date of exercise and the denominator of which is the
Current Market Price per share of the Common Stock on the date of
exercise. An exercise of a Warrant in accordance with the
immediately preceding sentences is herein called a "Cashless
Exercise". Upon surrender of a Warrant Certificate representing
more than one Warrant in connection with the holder's option to
elect a Cashless Exercise, the number of shares deliverable upon
a Cashless Exercise shall be equal to the Cashless Exercise Ratio
multiplied by the product of (a) the number of Warrants that the
holder specifies is to be exercised pursuant to a Cashless
Exercise and (b) the number of shares for which such Warrant is
then exercisable (without giving effect to the Cashless Exercise
option). All provisions of this Agreement shall be applicable
with respect to an exercise of a Warrant Certificate pursuant to
a Cashless Exercise for less than the full number of Warrants
represented thereby.
2.2. Payment of Taxes and Charges. All shares of
Common Stock issuable upon the exercise of this Warrant pursuant
to the terms hereof shall be validly issued, fully paid and
nonassessable, freely tradeable and without any preemptive
rights. The Company shall pay all expenses in connection with,
and all taxes and other governmental charges that may be imposed
with respect to, the issue or delivery thereof, unless such tax
or charge is imposed by law upon Holder, in which case such taxes
or charges shall be paid by Holder. The Company shall not be
required, however, to pay any tax or other charge imposed in
connection with any transfer involved in the issue of any
certificate for shares of Common Stock issuable upon exercise of
this Warrant in any name other than that of Holder, and in such
case the Company shall not be required to issue or deliver any
stock certificate until such tax or other charge has been paid or
it has been established to the satisfaction of the Company that
no such tax or other charge is due.
2.3. Fractional Shares. The Company shall not be
required to issue a fractional share of Common Stock upon
exercise of any Warrant. As to any fraction of a share which
Holder would otherwise be entitled to purchase upon such
exercise, the Company shall pay a cash adjustment in respect of
such final fraction in an amount equal to the same fraction of
the Market Price per share of Common Stock.
2.4. Continued Validity. A holder of shares of Common
Stock issued upon the exercise of this Warrant, in whole or in
part (other than a holder who acquires such shares after the same
have been publicly sold pursuant to a Registration Statement
under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such
shares to all rights to which it would have been entitled as
Holder under Sections 9, 10 and 14 of this Warrant. The
Company will, at the time of exercise of this Warrant, in whole
or in part, upon the request of Holder, acknowledge in writing,
in form reasonably satisfactory to Holder, its continuing
obligation to afford Holder all such rights; provided, however,
that if Holder shall fail to make any such request, such failure
shall not affect the continuing obligation of the Company to
afford to Holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1. Transfer. Subject to compliance with Section 9,
transfer of this Warrant and all rights hereunder, in whole or in
part, shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of this Warrant at
the principal office of the Company referred to in Section 2.1 or
the office or agency designated by the Company pursuant to
Section 12, together with a written assignment of this Warrant
substantially in the form of Exhibit B hereto duly executed by
Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon
such surrender and, if required, such payment, the Company shall,
subject to Section 9, execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly
be cancelled. A Warrant, if properly assigned in compliance with
Section 9, may be exercised by a new Holder for the purchase of
shares of Common Stock without having a new Warrant issued.
3.2. Division and Combination. Subject to Section 9,
this Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office or agency of the
Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by
Holder or its agent or attorney. Subject to compliance with
Section 3.1 and with Section 9, as to any transfer which may be
involved in such division or combination, the Company shall
execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with
such notice.
3.3. Expenses. The Company shall prepare, issue and
deliver at its own expense (other than transfer taxes) the new
Warrant or Warrants under this Section 3.
3.4. Maintenance of Books. The Company agrees to
maintain, at its aforesaid office or agency, books for the
registration and the registration of transfer of the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this
Warrant is exercisable, or the price at which such shares may be
purchased upon exercise of this Warrant, shall be subject to
adjustment from time to time as set forth in this Section 4. The
Company shall give Holder notice of any event described below
which requires an adjustment pursuant to this Section 4 at the
time of such event.
4.1. Stock Dividends, Subdivisions and Combinations.
If at any time the Company shall:
(a) take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend
payable in, or other distribution of, Additional Shares of
Common Stock,
(b) subdivide its outstanding shares of Common Stock
into a larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this
Warrant is exercisable immediately after the occurrence of any
such event shall be adjusted to equal the number of shares of
Common Stock which a record holder of the same number of shares
of Common Stock for which this Warrant is exercisable immediately
prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current
Warrant Price shall be adjusted to equal (A) the Current Warrant
Price multiplied by the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to the
adjustment divided by (B) the number of shares for which this
Warrant is exercisable immediately after such adjustment.
4.2. Certain Other Distributions. If at any time the
Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive any dividend or
other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of
its stock or any other securities or property of any nature
whatsoever (other than cash, Convertible Securities or
Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of
its stock or any other securities or property of any nature
whatsoever (other than cash, Convertible Securities or
Additional Shares of Common Stock),
then Holder shall be entitled to receive such dividend or
distribution as if Holder had exercised the Warrant. A reclassi-
fication of the Common Stock (other than a change in par value,
or from par value to no par value or from no par value to par
value) into shares of Common Stock and shares of any other class
of stock shall be deemed a distribution by the Company to the
holders of its Common Stock of such shares of such other class of
stock within the meaning of this Section 4.2 and, if the
outstanding shares of Common Stock shall be changed into a larger
or smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of
Common Stock within the meaning of Section 4.1.
4.3. Other Provisions Applicable to Adjustments under
this Section. The following provisions shall be applicable to
the making of adjustments of the number of shares of Common Stock
for which this Warrant is exercisable and the Current Warrant
Price provided for in this Section 4:
(a) When Adjustments to Be Made. The adjustments
required by this Section 4 shall be made whenever and as
often as any specified event requiring an adjustment shall
occur. For the purpose of any adjustment, any specified
event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(b) Fractional Interests. In computing adjustments
under this Section 4, fractional interests in Common Stock
shall be taken into account to the nearest 1/10th of a
share.
(c) When Adjustment Not Required. If the Company
shall take a record of the holders of its Common Stock for
the purpose of entitling them to receive a dividend or
distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights,
then thereafter no adjustment shall be required by reason of
the taking of such record and any such adjustment previously
made in respect thereof shall be rescinded and annulled.
(d) Challenge to Good Faith Determination. Whenever
the Board of Directors of the Company shall be required to
make a determination in good faith of the fair value of any
item under this Section 4, such determination may be
challenged in good faith by the Holder, and any dispute
shall be resolved by an investment banking firm of
recognized national standing selected by the Company and
acceptable to the Holder.
4.4. Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets. In case the Company
shall reorganize its capital, reclassify its capital
stock, consolidate or merge with or into another corporation
(where the Company is not the surviving corporation or where
there is a change in or distribution with respect to the Common
Stock of the Company), or sell, transfer or otherwise dispose of
all or substantially all its property, assets or business to
another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or
disposition of assets, shares of common stock of the successor or
acquiring corporation, or any cash, shares of stock or other
securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to
or in lieu of common stock of the successor or acquiring
corporation ("Other Property"), are to be received by or
distributed to the holders of Common Stock of the Company, then
Holder shall have the right thereafter to receive, upon exercise
of the Warrant, the number of shares of common stock of the
successor or acquiring corporation or of the Company, if it is
the surviving corporation, and Other Property receivable upon or
as a result of such reorganization, reclassification, merger,
consolidation or disposition of assets by a holder of the number
of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganiza-
tion, reclassification, merger, consolidation or disposition of
assets, the successor or acquiring corporation (if other than the
Company) shall expressly assume the due and punctual observance
and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the
obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by
resolution of the Board of Directors of the Company) in order to
provide for adjustments of shares of Common Stock for which this
Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 4.
For purposes of this Section 4.4, "common stock of the successor
or acquiring corporation" shall include stock of such corporation
of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is
not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights
to subscribe for or purchase any such stock. The foregoing
provisions of this Section 4.4 shall similarly apply to
successive reorganizations, reclassifications, mergers,
consolidations or dispositions of assets.
4.5. Other Action Affecting Common Stock. In case at
any time or from time to time the Company shall take any action
in respect of its Common Stock, other than any action described
in this Section 4, which would have a materially adverse effect
upon the rights of the Holder, the number of shares of Common
Stock and/or the purchase price thereof shall be adjusted in such
manner as may be equitable in the circumstances, as
determined in good faith by the Board of Directors of the
Company.
4.6. Certain Limitations. Notwithstanding anything
herein to the contrary, the Company agrees not to enter into any
transaction which, by reason of any adjustment hereunder, would
cause the Current Warrant Price to be less than the par value per
share of Common Stock.
5. NOTICES TO HOLDER
5.1. Notice of Adjustments. Whenever the number of
shares of Common Stock for which this Warrant is exercisable, or
whenever the price at which a share of such Common Stock may be
purchased upon exercise of the Warrants, shall be adjusted
pursuant to Section 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the
Company setting forth, in reasonable detail, the event requiring
the adjustment and the method by which such adjustment was
calculated (including a description of the basis on which the
Board of Directors of the Company determined the fair value of
any evidences of indebtedness, shares of stock, other securities
or property or warrants or other subscription or purchase rights
referred to in Section 4.2), specifying the number of shares of
Common Stock for which this Warrant is exercisable and (if such
adjustment was made pursuant to Section 4.4 or 4.5) describing
the number and kind of any other shares of stock or Other Prop-
erty for which this Warrant is exercisable, and any change in the
purchase price or prices thereof, after giving effect to such
adjustment or change. The Company shall promptly cause a signed
copy of such certificate to be delivered to the Holder in
accordance with Section 15.2. The Company shall keep at its
office or agency designated pursuant to Section 12 copies of all
such certificates and cause the same to be available for
inspection at said office during normal business hours by the
Holder or any prospective purchaser of a Warrant designated by
the Holder.
5.2. Notice of Corporate Action. If at any time
(a) the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them to
receive a dividend or other distribution, or any right to
subscribe for or purchase any evidences of its indebtedness,
any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) there shall be any capital reorganization of the
Company, any reclassification or recapitalization of the
capital stock of the Company or any consolidation or merger
of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets
or business of the Company to, another corporation, or
(c) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to
Holder (i) at least 30 days' prior written notice of the date on
which a record date shall be selected for such dividend,
distribution or right or for determining rights to vote in
respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution,
liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up, at
least 30 days' prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing
clause also shall specify (i) the date on which any such record
is to be taken for the purpose of such dividend, distribution or
right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the
amount and character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up is
to take place and the time, if any such time is to be fixed, as
of which the holders of Common Stock shall be entitled to
exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
merger, consolidation, sale, transfer, disposition, dissolution,
liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of
Holder appearing on the books of the Company and delivered in
accordance with Section 15.2.
6. NO IMPAIRMENT
The Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through
any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of
any of the terms of 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 actions as may be necessary or appropriate to
protect the rights of Holder against impairment. Without
limiting the generality of the foregoing, the Company will
(a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be
necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant, and (c) use its best
efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
Upon the request of Holder, the Company will at any
time during the period this Warrant is outstanding acknowledge in
writing, in form satisfactory to Holder, the continuing validity
of this Warrant and the obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK
From and after the Closing Date, the Company shall at
all times reserve and keep available for issue upon the exercise
of Warrants such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full
of all outstanding Warrants. All shares of Common Stock which
shall be so issuable, when issued upon exercise of any Warrant
and payment therefor in accordance with the terms of such
Warrant, shall be duly and validly issued and fully paid and
nonassessable, and not subject to preemptive rights.
Before taking any action which would cause an
adjustment reducing the Current Warrant Price below the then par
value, if any, of the shares of Common Stock issuable upon
exercise of the Warrants, the Company shall take any corporate
action which may be necessary in order that the Company may
validly and legally issue fully paid and non-assessable shares of
such Common Stock at such adjusted Current Warrant Price.
Before taking any action which would result in an
adjustment in the number of shares of Common Stock for which this
Warrant is exercisable or in the Current Warrant Price, the
Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by
the Company to the holders of its Common Stock with respect to
which any provision of Section 4 refers to the taking of a record
of such holders, the Company will in each such case take such a
record and will take such record as of the close of business on a
Business Day. The Company will not at any time, except upon
dissolution, liquidation or winding up of the Company, close its
stock transfer books or Warrant transfer books so as to result in
preventing or delaying the exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be
transferred, hypothecated or assigned before satisfaction of the
conditions specified in this Section 9, which conditions are
intended to ensure compliance with the provisions of the
Securities Act with respect to the Transfer of any
Warrant or any Warrant Stock. Holder, by acceptance of this
Warrant, agrees to be bound by the provisions of this Section 9.
9.1. Restrictive Legend. (a) The Holder by accepting
this Warrant and any Warrant Stock agrees that this Warrant and
the Warrant Stock issuable upon exercise hereof may not be
assigned or otherwise transferred unless and until (i) the
Company has received an opinion of counsel for the Holder that
such securities may be sold pursuant to an exemption from
registration under the Securities Act of 1933, as amended (the
"Securities Act") or (ii) a registration statement relating to
such securities has been filed by the Company and declared
effective by the Commission.
Each certificate for Warrant Stock issuable hereunder
shall bear a legend as follows unless such securities have been
sold pursuant to an effective registration statement under the
Securities Act:
"The securities represented by this certificate
have not been registered under the Securities Act of
1933, as amended (the "Act"). The securities may not
be offered for sale, sold or otherwise transferred
except (i) pursuant to an effective registration
statement under the Act or (ii) pursuant to an
exemption from registration under the Act in respect of
which the Company has received an opinion of counsel
satisfactory to the Company to such effect. Copies of
the agreement covering both the purchase of the
securities and restricting their transfer may be
obtained at no cost by written request made by the
holder of record of this certificate to the Secretary
of the Company at the principal executive offices of
the Company."
(b) Except as otherwise provided in this Section 9,
the Warrant shall be stamped or otherwise imprinted with a legend
in substantially the following form:
"This Warrant and the securities represented
hereby have not been registered under the Securities
Act of 1933, as amended, and may not be transferred in
violation of such Act, the rules and regulations
thereunder or the provisions of this Warrant."
9.2. Notice of Proposed Transfers. Prior to any
Transfer or attempted Transfer of any Warrants or any shares of
Restricted Common Stock, the Holder shall give ten days' prior
written notice (a "Transfer Notice") to the Company of Holder's
intention to effect such Transfer, describing the manner and
circumstances of the proposed Transfer, and obtain from counsel
to Holder who shall be reasonably satisfactory to the Company, an
opinion that the proposed Transfer of such Warrants or such
Restricted Common Stock may be effected without
registration under the Securities Act. After receipt of the
Transfer Notice and opinion, the Company shall, within five days
thereof, notify the Holder as to whether such opinion is
reasonably satisfactory and, if so, such holder shall thereupon
be entitled to Transfer such Warrants or such Restricted Common
Stock, in accordance with the terms of the Transfer Notice. Each
certificate, if any, evidencing such shares of Restricted Common
Stock issued upon such Transfer shall bear the restrictive legend
set forth in Section 9.1(a), and the Warrant issued upon such
Transfer shall bear the restrictive legend set forth in
Section 9.1(b), unless in the opinion of such counsel such legend
is not required in order to ensure compliance with the Securities
Act. The Holder shall not be entitled to Transfer such Warrants
or such Restricted Common Stock until receipt of notice from the
Company under this Section 9.2(a) that such opinion is reasonably
satisfactory.
9.3. Required Registration. Pursuant to the terms and
conditions set forth in the Registration Rights Agreement, the
Company shall prepare and file with the Commission not later than
the 45th day after the Closing Date, a Registration Statement
relating to the offer and sale of the Common Stock issuable upon
exercise of the Warrants and shall use its best efforts to cause
the Commission to declare such Registration Statement effective
under the Securities Act as promptly as practicable but no later
than 120 days after the Closing Date.
9.4. Termination of Restrictions. Notwithstanding the
foregoing provisions of Section 9, the restrictions imposed by
this Section upon the transferability of the Warrants, the
Warrant Stock and the Restricted Common Stock (or Common Stock
issuable upon the exercise of the Warrants) and the legend
requirements of Section 9.1 shall terminate as to any particular
Warrant or share of Warrant Stock or Restricted Common Stock (or
Common Stock issuable upon the exercise of the Warrants) (i) when
and so long as such security shall have been effectively
registered under the Securities Act and disposed of pursuant
thereto or (ii) when the Company shall have received an opinion
of counsel reasonably satisfactory to it that such shares may be
transferred without registration thereof under the Securities
Act. Whenever the restrictions imposed by Section 9 shall
terminate as to this Warrant, as hereinabove provided, the Holder
hereof shall be entitled to receive from the Company upon written
request of the Holder, at the expense of the Company, a new
Warrant bearing the following legend in place of the restrictive
legend set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF
THE WITHIN WARRANT CONTAINED IN Section 9
HEREOF TERMINATED ON ________, 19__, AND ARE
OF NO FURTHER FORCE AND EFFECT."
All Warrants issued upon registration of transfer, division or
combination of, or in substitution for, any Warrant or Warrants
entitled to bear such legend shall have a similar legend endorsed
thereon. Whenever the restrictions imposed by this Section shall
terminate as to any share of Restricted Common Stock, as
hereinabove provided, the holder thereof shall be entitled to
receive from the Company, at the Company's expense, a new
certificate representing such Common Stock not bearing the
restrictive legend set forth in Section 9.1(a).
9.5. Listing on Securities Exchange. If the Company
shall list any shares of Common Stock on any securities exchange,
it will, at its expense, list thereon, maintain and, when
necessary, increase such listing of, all shares of Common Stock
issued or, to the extent permissible under the applicable
securities exchange rules, issuable upon the exercise of this
Warrant so long as any shares of Common Stock shall be so listed
during any such Exercise Period.
10. SUPPLYING INFORMATION
The Company shall cooperate with Holder in supplying
such information as may be reasonably necessary for Holder to
complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale
of any Warrant or Restricted Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from Holder of evidence
reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of this Warrant and indemnity
reasonably satisfactory to it (it being understood that the
written agreement of the Holder shall be sufficient indemnity),
and in case of mutilation upon surrender and cancellation hereof,
the Company will execute and deliver in lieu hereof a new Warrant
of like tenor to Holder; provided, in the case of mutilation, no
indemnity shall be required if this Warrant in identifiable form
is surrendered to the Company for cancellation.
12. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the
Company shall maintain an office or agency (which may be the
principal executive offices of the Company) where the Warrants
may be presented for exercise, registration of transfer, division
or combination as provided in this Warrant.
13. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative
action by Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of Holder hereof,
shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a stockholder of the
Company, whether such liability is asserted by the Company or by
creditors of the Company.
14. MISCELLANEOUS
14.1. Nonwaiver and Expenses. No course of dealing or
any delay or failure to exercise any right hereunder on the part
of Holder shall operate as a waiver of such right or otherwise
prejudice Holder's rights, powers or remedies. If the Company
fails to make, when due, any payments provided for hereunder, or
fails to comply with any other provision of this Warrant, the
Company shall pay to Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to,
reasonable attorneys' fees, including those of appellate
proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.
14.2. Notice Generally. Except as may be otherwise
provided herein, any notice or other communication or delivery
required or permitted hereunder shall be in writing and shall be
delivered personally or sent by certified mail, postage prepaid,
or by a nationally recognized overnight courier service, and
shall be deemed given when so delivered personally or by
overnight courier service, or, if mailed, three (3) days after
the date of deposit in the United States mails, as follows:
(1) if to the Company, to:
DYNAMICWEB ENTERPRISES, INC.
Fairfield Commons
271 Route 00 Xxxx
Xxxxxxxx X, Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Xx.
Chief Executive Officer
with a copy to:
Xxxxxxx & Xxx
0000 Xxxxxxxx Xxxx
X.X. Xxx 000
Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
(2) if to the Holder, to:
THE SHAAR FUND LTD.
c/x XXXXXXXX CAPITAL MANAGEMENT, LLC
0 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
The Company or the Holder may change the foregoing address by
notice given pursuant to this Section 14.2.
14.3. Indemnification. The Company agrees to
indemnify and hold harmless Holder from and against any
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses and
disbursements of any kind which may be imposed upon, incurred by
or asserted against Holder in any manner relating to or arising
out of any failure by the Company to perform or observe in any
material respect any of its covenants, agreements, undertakings
or obligations set forth in this Warrant; provided, however, that
the Company will not be liable hereunder to the extent that any
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses or
disbursements are found in a final non-appealable judgment by a
court to have resulted from Holder's gross negligence, bad faith
or willful misconduct in its capacity as a stockholder or
warrantholder of the Company.
14.4. Remedies. Holder in addition to being entitled
to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights
under Section 9 of this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of
Section 9 of this Warrant and hereby agrees to waive the defense
in any action for specific performance that a remedy at law would
be adequate.
14.5. Successors and Assigns. Subject to the
provisions of Sections 3.1 and 9, this Warrant and the rights
evidenced hereby shall inure to the benefit of and be binding
upon the successors of the Company and the successors and assigns
of Holder. The provisions of this Warrant are intended to be for
the benefit of all Holders from time to time of this Warrant and,
with respect to Section 9 hereof, holders of Warrant Stock, and
shall be enforceable by any such Holder or holder of Warrant
Stock.
14.6. Amendment. This Warrant and all other Warrants
may be modified or amended or the provisions hereof waived with
the written consent of the Company and the Holder.
14.7. Severability. Wherever possible, each provision
of this Warrant shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this
Warrant.
14.8. Headings. The headings used in this Warrant are
for the convenience of reference only and shall not, for any
purpose, be deemed a part of this Warrant.
14.9. Governing Law. This Warrant shall be governed
by the laws of the State of New York, without regard to the
provisions thereof relating to conflict of laws.
IN WITNESS WHEREOF, the Company has caused this Warrant
to be duly executed and its corporate seal to be impressed hereon
and attested by its Secretary or an Assistant Secretary.
Dated: February 12, 1999
DYNAMICWEB ENTERPRISES, INC.
By:/S/ Xxxxxx X. Xxxxxxxxxx, Xx.
Name: Xxxxxx X. Xxxxxxxxxx, Xx.
Title: Chief Executive Officer
Attest:
By:______________________
Name:
Title:
PAGE 19
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant
irrevocably exercises this Warrant for the purchase of ______
Shares of Common Stock of DynamicWeb Enterprises, Inc. and
herewith makes payment therefor, all at the price and on the
terms and conditions specified in this Warrant and requests that
certificates for the shares of Common Stock hereby purchased (and
any securities or other property issuable upon such exercise) be
issued in the name of and delivered to _____________ whose
address is _________________ and, if such shares of Common Stock
shall not include all of the shares of Common Stock issuable as
provided in this Warrant, that a new Warrant of like tenor and
date for the balance of the shares of Common Stock issuable
hereunder be delivered to the undersigned.
___________________________________
(Name of Registered Owner)
___________________________________
(Signature of Registered Owner)
___________________________________
(Street Address)
___________________________________
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with
the name as written upon the face of the within Warrant
in every particular, without alteration or enlargement
or any change whatsoever.
PAGE 20
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of
this Warrant hereby sells, assigns and transfers unto the
Assignee named below all of the rights of the undersigned under
this Warrant, with respect to the number of shares of Common
Stock set forth below:
Name and Address of Assignee No. of Shares of
Common Stock
and does hereby irrevocably constitute and appoint _______
________________ attorney-in-fact to register such transfer on
the books of ___________________ maintained for the purpose, with
full power of substitution in the premises.
Dated:________________ Print Name:_______________________
Signature:________________________
Witness:__________________________
NOTICE: The signature on this assignment must correspond with
the name as written upon the face of the within Warrant
in every particular, without alteration or enlargement
or any change whatsoever.
