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EXHIBIT 4.1
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
THIS WARRANT IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN
INVESTMENT BANKING AGREEMENT OF EVEN DATE (THE "AGREEMENT").
THE TRANSFERABILITY OF THIS WARRANT IS
RESTRICTED AS PROVIDED IN SECTION 2
No. W- February 23, 1998
DIGITAL SOLUTIONS, INC.
COMMON STOCK PURCHASE WARRANT
For good and valuable consideration, the receipt of which is hereby
acknowledged by Digital Solutions, Inc., a New Jersey corporation (the
"Company"), Xxxxxxx Xxxxx & Associates, Inc. is hereby granted the right to
purchase, at any time from the date hereof until 5:00 P.M., New York City time,
on February 5, 2003 (the "Warrant Exercise Term"), up to 25,000 paid and
non-assessable shares (the "Warrant Shares") of the Company's Common Stock,
$.001 par value per share ("Common Stock").
This Warrant is exercisable at a per share price of $2.0563 (the
"Exercise Price") payable in cash or by certified or official bank check in New
York Clearing House funds, subject to adjustment as provided in Section l
hereof. Upon surrender of this Warrant with the annexed Subscription Form duly
executed, together with payment of the Exercise Price for the shares of Common
Stock purchased at the Company's principal executive offices (presently located
at 000 Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxxxx 008873) the registered holder of the
Warrant ("holder") shall be entitled to receive a certificate or certificates
for the shares of Common
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Stock so purchased.
1. Exercise of Warrant.
1.1 (a) The purchase rights represented by this Warrant are
exercisable at the option of the holder hereof, in whole or in part (but not as
to fractional shares of the Common Stock) during any period in which this
Warrant may be exercised as set forth above. In the case of the purchase of
less than all the shares of Common Stock purchasable under this Warrant, the
Company shall cancel this Warrant upon the surrender thereof and shall execute
and deliver a new Warrant of like tenor for the balance of the shares of Common
Stock purchasable hereunder.
1.1 (b) Cashless Exercise. At any time during the Warrant Exercise
Term, the Holder may, at its option, exchange the Warrants represented by such
Holder's Warrant Certificate, in whole or in part (a "Warrant Exchange"), into
the number of fully paid and non-assessable Warrant Shares determined in
accordance with this Section 1.1 (b), by surrendering such Warrant Certificate
at the principal office of the Company or at the office of its transfer agent,
accompanied by a notice stating such Holder's intent to effect such exchange,
the number of Warrants (the "Total Share Number") to be exchanged and the date
on which the Holder requests that such Warrant Exchange occur (the "Notice of
Exchange"). The Warrant Exchange shall take place on the date specified in the
Notice of Exchange, or, if later, the date the Notice of Exchange is received
by the Company (the "Exchange Date"). Effective upon the Exchange Date, the
Warrant Certificate shall be deemed to represent the right to receive, and
shall be exchanged for (I) the number of Warrant Shares (rounded to the nearest
integer) equal to (A) the Total Share Number less (B) the number of Warrant
Shares equal to the quotient obtained by dividing (i) the product of the Total
Share Number and the then current Exercise Price per Warrant Share by (ii) the
current Market Price (as hereafter defined) of a share of Common Stock; and
(II) if applicable, a new Warrant Certificate of like tenor evidencing the
balance of the Warrant Shares remaining subject to the Holder's Warrant.
Certificates for the Warrant Shares issuable upon such Warrant Exchange and, if
applicable, a new Warrant Certificate of like tenor evidencing the balance of
the Warrant Shares remaining subject to the Holder's Warrant Certificate (the
"New Warrant Certificate"), shall be issued as of the Exchange Date and
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delivered to the Holder within five (5) business days following the Exchange
Date.
As used herein, the phrase "Market Price" at any date shall be deemed
to be the last reported sale price for the date preceding the Exchange Date,
or, in case no such reported sale takes place on such day, the average of the
last reported sale prices for the preceding three trading days, in either case
as officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading or as reported in the Nasdaq National
Market System, or, if the Common Stock is not listed or admitted to trading on
any national securities exchange or quoted on the Nasdaq National Market
System, the last reported sale price as furnished by the National Association
of Securities Dealers, Inc. through Nasdaq or similar organization if Nasdaq is
no longer reporting such information, or if the Common Stock is not quoted on
Nasdaq, as determined in good faith by resolution of the Board of Directors of
the Company, based on the best information available to it.
1.2 The issuance of certificates for shares of Common Stock upon the
exercise of this Warrant shall be made without charge to the holder hereof
including, without limitation, any tax which may be payable in respect of the
issuance thereof, and such certificates shall be issued in the name of, or in
such names as may be directed by, the holder hereof; provided, however, that
the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of such
certificate in a name other than that of the holder and the Company shall not
be required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
1.3 In case at any time or from time to time the Company shall
subdivide as a whole, split or combine (reverse split) its Common Stock or
issue a dividend payable in shares, this Warrant shall be adjusted so that
immediately thereafter the holder shall be entitled to receive upon exercise
the number of shares of Common Stock or other securities which the holder would
have owned or been entitled to receive after the happening of any such event if
the holder had exercised this Warrant immediately prior to the
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happening of such event (or the record date thereof, if there shall be one),
and the Warrant Exercise Price then in effect shall be correspondingly adjusted
so that the aggregate price payable upon the exercise of the Warrant shall be
the same as it was immediately prior to the adjustment.
1.4 In case of any reclassification or change of outstanding shares
of Common Stock issuable upon exercise of this Warrant (other than change in
par value, or from par value to no par value, or from no par value to par
value, or as a result or a subdivision or combination), or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger in which the Company is the continuing corporation and which does
not result in any reclassification or change of outstanding shares of Common
Stock, other than a change in number of the shares issuable upon exercise of
the Warrant) or in case of any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially as an entirety, the
holder of this Warrant shall have the right thereafter to exercise this Warrant
into the kind and amount of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Common Stock of the Company
for which the Warrant might have been exercised immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance, and the
Exercise Price per share shall be correspondingly adjusted so that the
aggregate price payable upon the exercise of the Warrant shall be the same as
it was immediately prior to the adjustment. The above provisions of this
Section l.4 shall similarly apply to successive reclassifications and changes
of shares of Common Stock and to successive consolidations, mergers, sales or
conveyances.
1.5 The Company shall not be required to issue fractional shares of
Common Stock upon exercise of the Warrant but shall pay for any such fraction
of a share an amount in cash equal to the then Current Market Price Per Share
of one share of common Stock multiplied by such fraction.
1.6 The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of this Warrant as herein provided, such number of
shares of Common Stock as shall
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then be issuable upon the exercise of this Warrant. The Company covenants that
all shares of Common Stock which shall be so issuable shall be duly and validly
issued and fully-paid and non-assessable.
2. Restrictions on Transfer.
(a) The holder acknowledges that he has been advised by the Company
that this Warrant and the Warrant Shares (collectively the "Securities") have
not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), that the Warrant is being issued, and the shares issuable
upon exercise of the Warrant will be issued, on the basis of the statutory
exemption provided by section 4(2) of the Securities Act relating to
transactions by an issuer not involving any public offering, and that the
Company's reliance upon this statutory exemption is based in part upon the
representations made by the holder contained herein. The holder acknowledges
that he has been informed by the Company of, or is otherwise familiar with, the
nature of the limitations imposed by the Securities Act and the rules and
regulations thereunder on the transfer of securities. In particular, the holder
agrees that no sale, assignment or transfer of the Securities shall be valid or
effective, and the Company shall not be required to give any effect to any such
sale, assignment or transfer, unless (i) the sale, assignment or transfer of
the Securities is registered under the Securities Act, and the Company has no
obligations or intention to so register the Securities, or (ii) the Securities
are sold, assigned or transferred in accordance with all the requirements and
limitations of Rule 144 under the Securities Act or such sale, assignment, or
transfer is otherwise exempt from registration under the Securities Act. The
holder represents and warrants that he has acquired this Warrant and will
acquire the Securities for his own account for investment and not with a view
to the sale or distribution thereof or the granting of any participation
therein, and that he has no present intention of distributing or selling to
others any of such interest or granting any participation therein. The holder
acknowledges that the securities shall bear the following legend:
"These securities have not been registered under the Securities Act
of 1933. Such securities may not be sold or offered for sale,
transferred, hypothecated or otherwise
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assigned except pursuant to an effective registration statement with
respect thereto under such Act or an opinion of counsel to the
Company that an exemption from registration for such sale, offer,
transfer, hypothecation or other assignment is available under such
Act."
3. Registration Rights.
3.1 The Company shall advise the Holder of this Warrant or of the
Warrant Shares or any then holder of Warrants or Warrant Shares (such persons
being collectively referred to herein as "holders") by written notice at least
four weeks prior to the filing of any registration statement under the
Securities Act of 1933 (the "Act") covering securities of the Company, except
on Forms S-4 or S-8, and upon the request of any such holder within ten days
after the receipt of such notice, include in any such registration statement
all of the Warrant Shares issuable to any holder requesting the inclusion of
its Warrant Shares in such registration and such information as may be required
to permit a public offering of the Warrant Shares. The Company shall supply
prospectuses and other documents as the Holder may request in order to
facilitate the public sale or other disposition of the Warrant Shares, qualify
the Warrant Shares for sale in such states as any such holder designates and do
any and all other acts and things which may be necessary or desirable to enable
such Holders to consummate the public sale or other disposition of the Warrant
Shares, and furnish indemnification in the manner as set forth in Subsection
3.2 of this Section 3. Such holders shall furnish information and
indemnification as set forth in Subsection 3.2 of this Section 3. For the
purpose of the foregoing, inclusion of the Warrant Shares in a Registration
Statement pursuant to this sub-paragraph 3.l under a condition that the offer
and/or sale of such Warrant Shares not commence until a date not to exceed 90
days from the effective date of such registration statement, if so requested by
the underwriters of a firm commitment public offering, shall be deemed to be in
compliance with this sub-paragraph 3.l. If the registration statement is for a
shelf registration, the Company shall keep such registration statement
effective until the earlier of (i) the date all the Warrant Shares shall have
been sold, or (ii) the date which is 90 days after the commencement of such
sales shall be permitted under such registration statement.
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3.2 The following provisions of this Section 3 shall also be
applicable to the exercise of the registration rights granted under this
Section 3.l:
(A) The foregoing registration rights shall be contingent on the
holders furnishing the Company with such appropriate information (relating to
the intentions of such holders) as the Company shall reasonably request in
writing. Following the effective date of such registration, the Company shall
upon the request of any owner of Warrants and/or Warrant Shares forthwith
supply such number of prospectuses meeting the requirements of the Act as shall
be requested by such owner to permit such holder to make a public offering of
all Warrant Shares from time to time offered or sold to such holder, provided
that such holder shall from time to time furnish the Company with such
appropriate information (relating to the intentions of such holder) as the
Company shall request in writing. The Company shall also use its best efforts
to qualify the Warrant Shares for sale in such states as such holder shall
reasonably designate.
(B) The Company shall bear the entire cost and expense of any
registration of securities initiated by it under Subsection 3.l of this Section
3 notwithstanding that Warrant Shares subject to this Warrant may be included
in any such registration. Any holder whose Warrant Shares are included in any
such registration statement pursuant to this Section 3 shall, however, bear the
fees of his own counsel and any registration fees, transfer taxes or
underwriting discounts or commissions applicable to the Warrant Shares sold by
him pursuant thereto.
(C) The Company shall indemnify and hold harmless each such holder
and each underwriter, within the meaning of the Act, who may purchase from or
sell for any such holder any Warrant Shares from and against any and all
losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereto or any registration statement
under the Act or any prospectus included therein required to be filed or
furnished by reason of this Section 3 or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading except insofar as such
losses, claims, damages or liabilities are caused by any such
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untrue statement or alleged untrue statement or omission or alleged omission
based upon information furnished or required to be furnished as set forth in
the Company's written request in writing to the Company by such holder or
underwriter expressly for use therein, which indemnification shall include each
person, if any, who controls any such holder or any such underwriter within the
meaning of such Act; provided, however, that the Company shall not be obliged
so to indemnify any such holder or underwriter or controlling person unless
such holder or underwriter shall at the same time agree to indemnify the
Company, its directors, each officer signing the related registration statement
and each person, if any, who controls the Company within the meaning of such
Act, from and against any and all losses, claims, damages and liabilities
caused by any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or any prospectus required to be filed
or furnished by reason of this Section 3 or caused by any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each such case, insofar as such losses,
claims, damages or liabilities are caused by any untrue statement or alleged
untrue statement or omission which shall be based upon information furnished in
writing to the Company by any such holder or underwriter expressly for use
therein.
(D) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this subsection 3.2
is due in accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Company or the applicable
sellers, as the case may be, shall contribute to the aggregate losses, claims,
damages and liabilities incurred (including legal or other expenses reasonably
incurred in connection with the investigation or defending of same) by the
other and for which such indemnification was sought. In determining the amount
of contribution to which the respective parties are entitled, there shall be
considered the relative benefits received by each party from the offering of
the securities included in the registration statement (taking into account the
portion of the proceeds of the offering realized by each), the parties'
relative knowledge and access to information concerning the matter with respect
to which the claim was asserted, the opportunity to correct and prevent any
statement or omission, and any other equitable considerations appropriate in
the circumstances; provided, however, that (i) in no case shall any
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seller of Warrant Shares be required to contribute any amount in excess of the
total public offering price of the Warrant Shares sold by such seller and (ii)
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this subsection
3.2, each person who controls any seller of Warrant Shares or the Company shall
have the same rights to contribution as such seller of the Company.
4. Miscellaneous.
4.1 All the covenants and agreements made by the Company in this
Warrant shall bind its successors and assigns.
4.2 No recourse shall be had for the payment of the principal of or
the interest of premium, if any, on this Warrant or for any claim based hereon
or otherwise in any manner in respect hereof, against any incorporator,
stockholder, officer or director, past, present or future, of the Company or of
any predecessor corporation, whether by virtue of any constitutional provision
or statute or rule of law, or by the enforcement of any assessment or penalty
or in any other manner, all such liability being expressly waived and released
by the acceptance hereof and as part of the consideration for the issue hereof.
4.3 No course of dealing between the Company and the holder hereof
shall operate as a waiver of any right of any holder hereof, and no delay on
the part of the holder in exercising any right hereunder shall so operate.
4.4 This Warrant may be amended only by a written instrument executed
by the Company and the holder hereof. Any amendment shall be endorsed upon this
Warrant, and all future holders shall be bound thereby.
4.5 All communications provided for herein shall be sent, except as
may be otherwise specifically provided, by registered or certified mail: if to
the holder of this Warrant, to the address shown on the books of the Company;
and if to the Company, to 000 Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxxxx 00000,
attention of the President, or to such other address as the Company may advise
the holder of this Warrant in writing. Notices shall be
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deemed given when mailed.
4.6 The provisions of this Warrant shall in all respects be
constructed according to, and the rights and liabilities of the parties hereto
shall in all respects be governed by, the laws of the State of New Jersey. This
Warrant shall be deemed a contract made under the laws of the State of New
Jersey and the validity of this Warrant and all rights and liabilities
hereunder shall be determined under the laws of said State.
4.7 The headings of the Sections of this Warrant are inserted for
convenience only and shall not be deemed to constitute a part of this Warrant.
IN WITNESS WHEREOF, DIGITAL SOLUTIONS, INC. has caused this Warrant
to be executed in its corporate name by its President, and its seal to be
affixed hereto.
Dated: February 23, 1998
DIGITAL SOLUTIONS, INC.
[SEAL] By:
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Xxxxxx X. Xxxxxxx
President
Attest:
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Secretary
SUBSCRIPTION FORM
TO: Digital Solutions, Inc.
000 Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
The undersigned holder hereby irrevocably elects to exercise the right
to purchase shares of Common Stock covered by this Warrant
according to the conditions hereof and
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herewith makes full payment of the Exercise Price of such shares.
Kindly deliver to the undersigned a certificate representing the Shares.
INSTRUCTIONS FOR DELIVERY
Name:
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(please typewrite or print in block letters)
Address:
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Dated:
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Signature
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