Execution Copy
THIS OFFER AND SALE OF THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
QUALIFIED UNDER ANY STATE OR NON-U.S. SECURITIES LAWS. THE WARRANT IS BEING
OFFERED AND SOLD IN RELIANCE ON THE EXEMPTIONS AFFORDED BY REGULATION D
PROMULGATED UNDER THE SECURITIES ACT. THE WARRANT MAY NOT BE TRANSFERRED OR
RESOLD WITHOUT REGISTRATION AND QUALIFICATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE AND NON-U.S. SECURITIES LAWS, UNLESS AN EXEMPTION FROM
REGISTRATION AND QUALIFICATION UNDER THE SECURITIES ACT AND SUCH LAWS IS THEN
AVAILABLE.
THIS WARRANT AGREEMENT HAS NOT BEEN FILED WITH OR REVIEWED OR APPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR BY THE ATTORNEY GENERAL OR SECURITIES
AGENCY OF ANY STATE OR NON-U.S. JURISDICTION. NONE OF THE FOREGOING HAS PASSED
UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE WARRANT. ANY REPRESENTATION
TO THE CONTRARY IS ILLEGAL.
WARRANT AGREEMENT
between
L-3 COMMUNICATIONS CORPORATION,
as the Investor
and
INNOVATIVE MICRO TECHNOLOGY, INC.,
as the Company
Dated as of Xxxxxx 0, 0000
XXXXXXX AGREEMENT dated as of August 1, 2002 (the "Warrant Agreement"),
between L-3 Communications Corporation, a Delaware corporation (the "Investor"),
and Innovative Micro Technology, Inc., a Delaware corporation (the "Company").
R E C I T A L S:
- - - - - - - --
WHEREAS, the Company and the Investor are parties to a Stock Purchase
Agreement dated as of August 1, 2002 (as modified and supplemented and in effect
from time to time, the "Purchase Agreement") that provides for the issuance and
sale by the Company to the Investor at the Closing (as defined therein), of
935,000 shares of the Company's common stock, par value $0.0001 per share (the
"Common Stock"); and
WHEREAS, it is a condition to the obligations of the Investor pursuant to
the Purchase Agreement that the parties execute and deliver this Agreement,
providing for the issuance and delivery to the Investor of warrants for the
purchase of (i) a warrant for the purchase of up to 167,000 additional shares of
Common Stock at $5.35 per share, for a period of 18 months from the date hereof
(the "18-Month Warrant") and (ii) a warrant for the purchase of up to 700,000
additional shares of Common Stock at $7.29 per share, for a period of three
years from the date hereof (the "Three-Year Warrant" and, collectively with the
18-Month Warrant and warrants issued in substitution or on subdivision of either
of them, the "Warrants").
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties made herein and other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the
parties hereto agree as follows:
Article I
DEFINITIONS
Section 1.1 Definitions. The terms defined in this Agreement, whenever used
in herein, shall have the respective meanings indicated below for all purposes
of this Agreement. Capitalized terms used in this Agreement without definition
shall have the respective meanings given to them in the Purchase Agreement.
Article II
GRANT OF THE WARRANTS
Section 2.1 Grant of Warrants. The Company hereby grants to the Investor
(i) the 18-Month Warrant, providing for the purchase of up to 167,000 shares of
Common Stock at $5.35 per share at any time prior to February 1, 2004 third
anniversary of the date of this Warrant Agreement, representing on the date of
this Agreement approximately 2.28 percent of the outstanding Common Stock after
exercise of the Warrant and issuance of the Common Stock as provided in the
Purchase Agreement, and assuming issuance of all shares of Common Stock pursuant
to any options, warrants, convertible securities, subscription rights or
otherwise which are in existence or outstanding as of the date of this Agreement
plus shares of Common Stock issuable upon the issuance and exercise of all
unissued stock options available for grant under the Company's Stock Option
Plan, but not the exercise of the Three-Year Warrant; and (ii) the Three-Year
Warrant, providing for the purchase of up to 700,000 shares of Common Stock at
$7.29 per share at any time prior to August 1, 2005 (the "Expiration Date"),
representing on the date of this Agreement approximately 7.87 percent of the
outstanding Common Stock after exercise of the Warrant and issuance of the
Common Stock as provided in the Purchase Agreement, and assuming issuance of all
shares of Common Stock pursuant to any options, warrants, convertible
securities, subscription rights or otherwise which are in existence or
outstanding as of the date of this Agreement plus shares of Common Stock
issuable upon the issuance and exercise of all unissued stock options available
for grant under the Company's Stock Option Plan, but not the exercise of the
18-Month Warrant. The shares of Common Stock deliverable to the Investor upon
exercise of the Warrants are sometimes collectively referred to as the "Warrant
Shares". The last day for exercise of each of the respective warrants is
referred to xxxxx as the "Expiration Date."
Section 2.2 Forms of Warrant. The Warrants will be in the form of Annex A
and Annex B to this Agreement. On the date hereof the Company shall deliver to
the Investor a single certificate representing each of the Warrants registered
in the name of the Investor, except that, if the Investor shall notify the
Company in writing at any time following such issuance that it desires
certificates representing the Warrant in other denominations or registered in
the name or names of any nominee or nominees for its benefit, then subject to
Section 2.3 certificates representing the Warrant shall be issued to the
Investor in the denominations and registered in the name or names specified in
such notice.
Section 2.3 Securities Act Compliance. The Investor understands that the
Company has not registered the Warrants or the Warrant Shares under the
Securities Act and the Investor agrees that neither the Warrants nor the Warrant
Shares shall be sold, transferred or offered for sale without registration under
the Securities Act or the availability of an exemption therefrom.
Section 2.4 Investor Representations and Warranties. The Investor hereby
represents and warrants to the Company that:
Purchase Entirely for Own Account. The Warrants and the Common Stock
issuable upon exercise thereof (collectively, the "Securities") are being
acquired for investment for the Investor's own account not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that the Investor has no present intention of selling, granting any
participation in, or otherwise distributing same.
(a) Disclosure of Information. The Investor believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Securities. The Investor further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Securities and the business,
properties, prospects and financial condition of the Company.
(b) Investment Experience. The Investor is an investor in securities of
companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Securities. The Investor also
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represents it has not been organized for the purpose of acquiring the
Securities. Such Investor acknowledges that any investment in the Securities
involves a high degree of risk, and represents that it is able, without
materially impairing its financial condition, to hold the Securities for an
indefinite period of time and to suffer a complete loss of its investment.
(c) Accredited Investor. The Investor is an "accredited investor" within
the meaning of Rule 501 of Regulation D under the Securities Act, as presently
in effect; the Investor is a corporation not formed for the specific purpose of
acquiring the Securities, with total assets in excess of $5,000,000.
(d) Restricted Securities. The Investor understands that the Securities it
is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act only in certain limited circumstances. In this connection, the Investor
represents that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act. THE INVESTOR
UNDERSTANDS AND ACKNOWLEDGES HEREIN THAT AN INVESTMENT IN THE COMPANY'S
SECURITIES INVOLVES AN EXTREMELY HIGH DEGREE OF RISK AND MAY RESULT IN A
COMPLETE LOSS OF ITS INVESTMENT. The Investor understands that the Securities
have not been and will not be registered under the Securities Act and have not
been and will not be registered or qualified in any state in which they are
offered, and thus the Investor will not be able to resell or otherwise transfer
the Securities unless they are registered under the Act and registered or
qualified under applicable state securities laws, or an exemption from such
registration or qualification is available. The Investor has no immediate need
for liquidity in connection with this investment and does not anticipate that
the Investor will be required to the Securities in the foreseeable future.
(e) Further limitations on Disposition. Without in any way limiting the
representations set forth above, the Investor further agrees not to make any
disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 2.4.
(f) Legends. The Securities shall bear legends substantially as shown in
the Form of Warrant attached hereto.
(g) No Reliance on Others. The Investor acknowledges that it is not relying
upon any person, firm or corporation, other than the Company and its officers
and directors, in making its investment or decision to invest in the Company.
Article III
MISCELLANEOUS
Section 3.1 Severability. If any provision of this Agreement, including any
phrase, sentence, clause, Section or subsection is inoperative or unenforceable
for any reason, such circumstances shall not have the effect of rendering the
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provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatsoever.
Section 3.2 Notices. All notices, requests, demands, approvals, consents,
waivers and other communications required or permitted to be given under this
Agreement (each, a "Notice") shall be in writing and shall be (a) delivered
personally, (b) mailed by first-class or certified mail, return receipt
requested, postage prepaid, (c) sent by next-day or overnight mail or delivery,
or (d) sent by facsimile transmission, provided that the original copy thereof
also is sent by first class or certified mail or by overnight delivery.
(a) if to the Investor, to:
L-3 Communications Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxxx, Esq.
(b) if to the Company, to:
Innovative Micro Technology, Inc.
00 Xxxxx Xxxx Xxxx
Xxxxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx, President
with a copy to (which shall not comprise Notice) to:
Xxxxx X. Xxxxx, Esq.
Sheppard, Mullin, Xxxxxxx & Hampton LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
or, in each case, at such other address as may be specified in a Notice to the
other party hereto. All Notices shall be deemed effective and given upon
receipt.
Section 3.3 Attorneys' Fees. If any party hereto initiates any legal action
arising out of or in connection with this Agreement, the prevailing party shall
be entitled to recover from the other party all reasonable attorneys' fees,
expert witness fees and expenses incurred by the prevailing party in connection
therewith.
Section 3.4 Liability for Transfer Taxes. The Company shall be responsible
for and pay in a timely manner all sales, use, value added, documentary, stamp,
gross receipts, registration, transfer, conveyance, excise, recording, license
and other similar taxes and fees ("Transfer Taxes"), arising out of or in
connection with or attributable to the transactions effected pursuant to this
Agreement. Each party hereto shall prepare and timely file all Tax Returns
required to be filed in respect of Transfer Taxes that are the primary
4
responsibility of such party under applicable law; provided, however, that such
party's preparation of any such Tax Returns shall be subject to the other
party's approval, which approval shall not be withheld or delayed unreasonably.
Section 3.5 Headings The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
Section 3.6 Entire Agreement. This Agreement (including the Annexes hereto)
and the Stock Purchase Agreement constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
Section 3.7 Counterparts. This Agreement may be executed (including by
facsimile transmission) with counterpart signature pages or in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
Section 3.8 GOVERNING LAW, ETC.
(a) THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING AS TO
VALIDITY, INTERPRETATION AND EFFECT, BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS RULES THEREOF.
(b) EACH OF THE INVESTOR AND THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE FEDERAL
COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE CITY OF NEW YORK SOLELY IN
RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND OF THE DOCUMENTS REFERRED TO IN THIS AGREEMENT, AND HEREBY WAIVE,
AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR THE
INTERPRETATION OR ENFORCEMENT HEREOF OR OF ANY SUCH DOCUMENT, THAT IT IS NOT
SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS
NOT MAINTAINABLE IN SAID COURTS OR THAT THE VENUE THEREOF MAY NOT BE APPROPRIATE
OR THAT THIS AGREEMENT OR ANY OF SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SAID
COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO
SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH A NEW YORK STATE
OR FEDERAL COURT. EACH OF THE INVESTOR AND THE COMPANY HEREBY CONSENTS TO AND
GRANTS ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE
SUBJECT MATTER OF ANY SUCH DISPUTE AND AGREES THAT MAILING OF PROCESS OR OTHER
PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED
IN SECTION 3.2, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE
VALID AND SUFFICIENT SERVICE THEREOF.
(c) JURY TRIAL WAIVER. THE INVESTOR AND THE COMPANY EACH WAIVE ALL RIGHTS
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INSTITUTED BY EITHER OF THEM
AGAINST THE OTHER THAT PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE
WARRANT, ANY ALLEGED TORTIOUS CONDUCT BY THE INVESTOR OR THE COMPANY, OR IN ANY
WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP
BETWEEN INVESTOR AND COMPANY.
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Section 3.9 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
Section 3.10 Assignment. This Agreement shall not be assignable or
otherwise transferable by any party hereto without the prior written consent of
the other parties hereto.
Section 3.11 Amendment; Waivers, etc. No discharge of this Agreement, and
no waiver hereunder, shall be valid or binding unless set forth in writing and
duly executed by the holders of Warrants evidencing two-thirds in number of the
total number of Stock Units at the time purchasable upon the exercise of all
then outstanding Warrants. For the purpose of determining whether the holders of
outstanding Warrants entitled to purchase a requisite number of Stock Units at
any time have taken any action authorized by this Warrant, any Warrants owned by
the Company or any Affiliate of the Company shall be deemed not to be
outstanding. The terms and conditions at this Warrant Agreement may be waived or
discharged only in writing. Any such waiver shall constitute a waiver only with
respect to the specific matter described in such writing and shall in no way
impair the rights of the party granting such waiver in any other respect or at
any other time. Neither the waiver by any of the parties hereto of a breach of
or a default under any of the provisions of this Agreement, nor the failure by
any of the parties, on one or more occasions, to enforce any of the provisions
of this Agreement or to exercise any right or privilege hereunder, shall be
construed as a waiver of any other breach or default of a similar nature, or as
a waiver of any of such provisions, rights or privileges hereunder. No amendment
or modification of this Agreement shall be effective unless in a writing
executed by the holders of two-thirds of the Warrant Shares.
Section 3.12 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Warrant
Agreement as of the date first above written.
L-3 COMMUNICATIONS CORPORATION
By:_________________________
Name:
Title:
INNOVATIVE MICRO TECHNOLOGY, INC.
By:_________________________
Name:
Title:
ANNEX A
Form of Warrant
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAW OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR UNLESS SOLD PURSUANT
TO RULE 144 UNDER THE ACT OR ANY OTHER LEGAL EXEMPTION UNDER THE ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCK PURCHASE
AGREEMENT BETWEEN INNOVATIVE MICRO TECHNOLOGY, INC. (THE "COMPANY") AND L-3
COMMUNICATIONS CORPORATION, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY. NO TRANSFER, SALE, ASSIGNMENT, EXCHANGE, LICENSE, MORTGAGE, PLEDGE,
CREATION OF A SECURITY INTEREST IN OR LIEN UPON, HYPOTHECATION OR OTHER
VOLUNTARY OR INVOLUNTARY DISPOSITION (EACH, A "TRANSFER") OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF THE STOCK PURCHASE AGREEMENT. THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL THE PROVISIONS OF SUCH
STOCK PURCHASE AGREEMENT.
WARRANT
to purchase Common Stock, par value $0.0001 per share, of
INNOVATIVE MICRO TECHNOLOGY, INC.
Commencing August 1, 2002 and expiring February 1, 2004
THIS IS TO CERTIFY THAT L-3 COMMUNICATIONS CORPORATION, or registered
assigns, is entitled to purchase from INNOVATIVE MICRO TECHNOLOGY, INC., a
Delaware corporation (the "Company"), at any time on and after August 1, 2002
but not later than 5:00 P.M., New York Time, on February 1, 2004 (the
"Expiration Date"), 167,000 Stock Units, in whole or in part, at a purchase
price of $5.35 per share of Common Stock (the "Exercise Price"), or $893,450 in
the aggregate, all on the terms and conditions hereinbelow provided.
Article I
CERTAIN DEFINITIONS
Section 1.1 Certain Definitions. As used in this Warrant, unless the
context otherwise requires:
"Additional Shares of Common Stock": means all shares of Common Stock
issued by the Company after the date hereof, other than (i) the Warrant Shares,
(ii) shares issued upon the exercise of any options, warrants or other rights
presently outstanding to subscribe for or purchase any shares of Common Stock or
Convertible securities, or (iii) shares which may be granted or issued upon the
exercise of any options which may hereafter be granted or exercised under the
Company's 2001 Stock Incentive Plan or under any other employee benefit plan of
the Company approved by the Company's Board of Directors; or (iv) any shares of
Common Stock sold to the public or the underwriter in a public offering, or upon
exercise of warrants comprising or underlying any units sold in the Company's
initial public offering, including any shares or warrants underlying the
underwriter's warrants or securities purchase option. The shares of Common Stock
and warrants to be issued pursuant to the Company's Third Amended Plan or
Reorganization Under Chapter 11 of the Bankruptcy Code, dated as of September
24, 2001, and any securities to be issued on exercise or conversion thereof,
regardless of the actual date of issuance, shall not be deemed Additional Shares
of Common Stock.
"Affiliate": of a specified Person means a Person that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified Person or a member of such specified
Person's immediate family. "Control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
Person, whether through the ownership of voting securities, by contract or
credit arrangement, as trustee or executor, or otherwise.
"Board": means the Board of Directors of the Company.
"Business Day": means any day which is not a Saturday, Sunday or day on
which banks are authorized by law to be closed in the State of New York.
"Common Stock": means the Company's authorized Common Stock, par value
$0.0001 per share, irrespective of class unless otherwise specified, as
constituted on the date of original issuance of this Warrant, and any stock into
which such Common Stock may thereafter be changed, and also shall include stock
of the Company of any other class which is not preferred as to dividends or
assets over any other class of stock of the Company and which is not subject to
redemption that the Company hereafter may issue.
"Convertible Securities": means evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for Additional
Shares of Common Stock, either immediately or upon the arrival of a specified
date or the happening of a specified event.
"Current Market Value": is defined in Section 4.2.
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"Exercise Price": per share of Common Stock, means, for the purpose of any
provision of this Warrant, $5.35 on the Original Issue Date and, at any
subsequent date, $5.35 per share as adjusted pursuant to Section 4.11 hereof.
"holder": in respect of any security at any time means the Person then
registered on the books of the Company as the owner of such security.
"Original Issue Date": means August 1, 2002.
"Person": means any natural person, firm, partnership, association,
corporation, company, limited liability company, trust, business trust,
governmental authority or other entity.
"Securities Act": means the Securities Act of 1933, as amended, or any
successor or similar law then in force.
"Stock Purchase Agreement": means that certain Stock Purchase Agreement
between L-3 Communications Corporation and the Company dated as of August 1,
2002, as amended or modified from time to time.
"Stock Unit": means one share of Common Stock, as such Common Stock was
constituted on the date of original issue of this Warrant, and thereafter shall
mean such number of shares (including any fractional shares) of Common Stock and
other securities, cash or other property, if any, as shall result from the
adjustments specified in Article IV hereof.
"Subsidiaries": means each corporation or other Person in which a Person
owns or controls, directly or indirectly, capital stock or other equity
interests representing more than 50% of the outstanding voting stock or other
equity interests.
"Warrant": means the Warrant dated as of the Original Issue Date,
originally issued by the Company to L-3 Communications Corporation pursuant to
the Stock Purchase Agreement, evidencing rights to purchase Stock Units, and all
Warrants issued upon transfer, division or combination of, or in substitution
therefor. All Warrants shall at all times be identical as to terms and
conditions and date, except as to the number of Stock Units for which they may
be exercised.
"Warrant Agreement": means the Warrant Agreement dated as of August 1, 2002
between the Company and L-3 Communications Corporation for the purchase of
Common Shares at $5.35 per share, as such Warrant Agreement shall be modified
and supplemented and in effect from time to time.
"Warrant Shares": means the shares of Common Stock purchasable by the
holders of the Warrant upon the exercise thereof.
Article II
EXERCISE OF WARRANT
Section 2.1 Procedure for Exercise. Subject to the provisions of Section
2.2, the holder of this Warrant may, at any time on and after August 1, 2002,
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but not later than the Expiration Date, exercise this Warrant in whole at any
time or in part from time to time for the number of Stock Units which such
holder is then entitled to purchase hereunder. In order to exercise this
Warrant, in whole or in part, the holder hereof shall deliver to the Company, at
its office maintained for such purpose pursuant to Section 11.1 hereof, (a) a
written notice of such holder's election to exercise this Warrant (a
"Subscription Notice"), which shall specify (i) the number of Stock Units to be
purchased and delivered to the holder, provided that such number shall be at
least the lesser of 1,000 or the total number of Stock Units for which the
Warrant may be exercised, (ii) the aggregate Exercise Price therefor, (iii) the
denomination or denominations of the certificates for Warrant Shares to be
delivered to the holder and (iv) the name or names in which such certificates
are to be issued, (b) payment of the aggregate Exercise Price by certified or
official bank check payable to the order of the Company or by wire transfer of
immediately available funds to the account designated by the Company, and (c)
this Warrant. Such notice may be in the form of the Subscription Notice set out
at the end of this Warrant.
Section 2.2 Fulfillment by the Company. Upon receipt of a Subscription
Notice, payment of the aggregate Exercise Price and receipt of such other
information reasonably required by the Company or its transfer agent, the
Company shall, as promptly as practicable and in any event within five Business
Days thereafter, cause to be executed and delivered to the holder: (i) a
certificate or certificates representing the aggregate number of fully paid and
nonassessable Warrant Shares issuable upon such exercise, free from all taxes,
liens and charges with respect to the issuance thereof (except income tax
liability of the holder, if any), (ii) in the case of partial exercise,
statement of total number of Stock Units still eligible for exercise under the
warrant (i.e., 167,000 less number already exercised), and (iii) any other
documentation reasonably required by the Investor.
Section 2.3 Names and Denominations of Issuance. The stock certificate or
certificates for Warrant Shares so delivered shall be in such denominations as
may be specified in the Subscription Notice and shall be registered in the name
of such holder or such other name or names as shall be designated in the
Exercise Notice. Such certificate or certificates shall be deemed to have been
issued and such holder or any other person so designated to be named therein
shall be deemed to have become a holder of record of such shares, including to
the extent permitted by law the right to vote such shares or to consent or to
receive notice as a stockholder, as of the time the Subscription Notice is
received by the Company as aforesaid. If this Warrant shall have been exercised
only in part, the Company shall, at the time of delivery of said certificate or
certificates, either (i) deliver to such holder a new Warrant dated the date it
is issued, evidencing the rights of such holder to purchase the remaining Stock
Units called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant, or (ii), at the request of such holder,
appropriate notation may be made on this Warrant and the same returned to such
holder.
Section 2.4 No Fractional Shares; Current Market Value. The Company shall
not be required to issue fractions of shares, upon exercise of this Warrant or
otherwise, or to distribute certificates that evidence fractional shares. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the holder an amount in cash equal to such fraction
multiplied by the "Current Market Value," determined as follows:
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(1) If the Common Stock is listed on a national securities exchange or
listed for trading on the Nasdaq National Market System ("NMS"), the
Current Market Value shall be the average of the last reported sale price
of the Common Stock on such exchange on each of the last ten business days
prior to the date of determination, or for any day which no such sale is
made or no closing sale price is quoted, the average of the closing bid and
asked prices for such day on such exchange or system; or
(2) If the Common Stock is not listed, the Current Market Value shall
be an amount determined in such reasonable manner as may be prescribed in
good faith by the Board of Directors of the Company.
Article III
TRANSFER, DIVISION AND COMBINATION
Section 3.1 Warrant Transferrable. Subject to Sections 5.3, 5.4 and 5.5 of
the Stock Purchase Agreement and the Securities Act restrictions referred to in
Section 3.1 of this Warrant, this Warrant and all rights hereunder are
transferable, in whole or in part, on the books of the Company to be maintained
for such purpose, upon surrender of this Warrant at the office of the Company
maintained for such purpose pursuant to Section 10.1 hereof, together with a
written assignment of this Warrant duly executed by the holder hereof or its
agent or attorney and payment of funds sufficient to pay any stock transfer
taxes payable upon the making of such transfer. Upon such surrender and payment
the Company shall, execute and deliver a new Warrant or Warrants in the name of
the assignee or assignees and in the denominations specified in such instrument
of assignment, and this Warrant shall promptly be canceled.
Section 3.2 Division and Combination. This Warrant may, subject to Sections
5.3, 5.4 and 5.5 of the Stock Purchase Agreement and the Securities Act
restrictions referred to in Section 3.1 of this Warrant, be divided or combined
with other Warrants upon presentation at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the holder hereof or its agent or
attorney. Subject to compliance with the next preceding paragraph and with any
applicable Securities Act restrictions,, 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.
Article IV
ADJUSTMENT OF STOCK UNIT AND EXERCISE PRICE
Section 4.1 Adjustment Generally. The number of shares of Common Stock
comprising a Stock Unit and the Exercise Price at which a share of Common Stock
may be purchased upon exercise of this Warrant shall each be subject to
adjustment from time to time as set forth in this Article IV.
Section 4.2 Stock Dividends, Subdivisions and Combinations. In case at any
time or from time to 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
5
in, or other distribution 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 the number of shares of Common Stock comprising a Stock Unit
immediately after the happening of any such event shall be adjusted so as to
consist of the number of shares of Common Stock which a record holder of the
number of shares of Common Stock comprising a Stock Unit immediately prior to
the happening of such event would own or be entitled to receive after the
happening of such event.
Section 4.3 Certain Other Dividends and Distributions. In case at any time
or from time to 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 (other than a cash dividend or distribution payable out of funds
legally available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Company, to the extent, but only to the
extent, that the aggregate of all such dividends paid or declared after the date
hereof, does not exceed the consolidated net income of the Company and its
consolidated Subsidiaries, if any, earned subsequent to the date hereof
determined in accordance with generally accepted accounting principles); or
(b) any evidence of its indebtedness (other than Convertible Securities),
any shares of its stock (other than Additional Shares of Common Stock) or any
other securities or property of any nature whatsoever (other than cash and other
than 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 (other than Convertible Securities), any shares of its stock
(other than Additional Shares of Common Stock) or any other securities or
property of any nature whatsoever (other than cash and other than Convertible
Securities or Additional Shares of Common Stock), then the number of shares of
Common Stock thereafter comprising a Stock Unit shall be adjusted to that number
determined by multiplying the number of shares of Common Stock comprising a
Stock Unit immediately prior to such adjustment by a fraction (i) the numerator
of which shall be the Exercise Price at the date of taking such record, and (ii)
the denominator of which shall be such Exercise Price per share minus the
portion applicable to one share of Common Stock of any such cash so
distributable and of the fair value of any and all such evidences of
indebtedness, shares of stock, other securities or property, or warrants or
other subscription or purchase rights, so distributable. Such fair value shall
be determined in good faith by the Board, provided that if such determination is
objected to by the holders of Warrants entitled to purchase a majority of the
Stock Units covered by all Warrants, such determination shall be made by an
independent appraiser selected by the Board and not objected to by such holders.
A reclassification of the Common Stock 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 4.3 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, shall be deemed a subdivision or combination, as
the case may be, of the outstanding shares of Common Stock within the meaning of
Section 4.2 hereof.
6
Section 4.4 Issuance of Additional Shares of Common Stock. In case at any
time or from time to time the Company shall (except as hereinafter provided)
issue any Additional Shares of Common Stock for a consideration per share less
than the Current Market Value, then the number of shares of Common Stock
thereafter comprising a Stock Unit shall be adjusted to that number determined
by multiplying the number of shares of Common Stock comprising a Stock Unit
immediately prior to such adjustment by a fraction (i) the numerator of which
shall be the number of shares of Common Stock outstanding immediately prior to
the issuance of such Additional Shares of Common Stock plus the number of such
Additional Shares of Common Stock so issued, and (ii) the denominator of which
shall be the number of shares of Common Stock outstanding immediately prior to
the issuance of such Additional Shares of Common Stock plus the number of shares
of Common Stock which the aggregate consideration for the total number of such
Additional Shares of Common Stock so issued would purchase at the then current
Exercise Price. For purposes of this Section 4.4, the date as of which the
Current Market Value shall be computed shall be the earlier of (1) the date on
which the Company shall enter into a firm contract for the issuance of such
Additional Shares of Common Stock and (2) the date of actual issuance of such
Additional Shares of Common Stock. This Section 4.4 shall not apply to any
issuance of Additional Shares of Common Stock for which an adjustment is
provided under Section 4.2 hereof. No adjustment of the number of shares of
Common Stock comprising a Stock Unit shall be made under this Section 4.4 upon
the issuance of any Additional Shares of Common Stock which are issued pursuant
to the exercise of any warrants or other subscription or purchase rights or
pursuant to the exercise of any conversion or exchange rights in any Convertible
Securities, if any such adjustment shall previously have been made upon the
issuance of such warrants or other rights or upon the issuance of such
Convertible Securities (or upon the issuance of any warrant or other rights
therefor) pursuant to Section 4.5 hereof.
Section 4.5 Issuance of Warrants or Other Rights. In case at any time or
from time to time the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a distribution of, or shall
otherwise issue, any warrants or other rights to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Securities and the
consideration per share for which additional shares of Common Stock may at any
time thereafter be issuable pursuant to such warrants or other rights or
pursuant to the terms of such Convertible Securities shall be less than the
Current Market Value, then the number of shares of Common Stock thereafter
comprising a Stock Unit shall be adjusted as provided in Section 4.4 hereof on
the basis that (i) the maximum number of Additional Shares of Common Stock
issuable pursuant to all such warrants or other rights or necessary to effect
the conversion or exchange of all such Convertible Securities shall be deemed to
have been issued as of (and, accordingly, the date as of which the Exercise
Price shall be computed shall be) the computation date specified in the last
sentence of this Section 4.5, and (ii) the aggregate consideration for such
maximum number of Additional Shares of Common Stock shall be deemed to be the
minimum consideration received and receivable by the Company for the issuance of
such Additional Shares of Common Stock pursuant to such warrants or other rights
or pursuant to the terms of such Convertible Securities. For purposes of this
Section 4.5, the computation date for clause (i) above shall be the earliest of
(A) the date on which the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive any such warrants or
other rights, (B) the date on which the Company shall enter into a firm contract
7
for the issuance of such warrants or other rights, and (C) the date of actual
issuance of such warrants or other rights.
Section 4.6 Issuance of Convertible Securities. In case at any time or from
time to time the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a distribution of, or shall
otherwise issue, any Convertible Securities and the consideration per share for
which Additional Shares of Common Stock may at any time thereafter be issuable
pursuant to the terms of such Convertible Securities shall be less than the
Current Market Value, then the number of shares of Common Stock thereafter
comprising a Stock Unit shall be adjusted as provided in Section 4.4 hereof on
the basis that (i) the maximum number of Additional Shares of Common Stock
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued as of the computation date
specified in the penultimate sentence of this Section 4.6, and (ii) the
aggregate consideration for such maximum number of Additional Shares of Common
Stock shall be deemed to be the minimum consideration received and receivable by
the Company for the issuance of such Additional Shares of Common Stock pursuant
to the terms of such Convertible Securities. For purposes of this Section 4.6,
the computation date for clause (i) above shall be the earliest of (A) the date
on which the Company shall take a record of the holders of its Common Stock for
the purpose of entitling them to receive any such Convertible Securities, (B)
the date on which the Company shall enter into a firm contract for the issuance
of such Convertible Securities, and (C) the date of actual issuance of such
Convertible Securities. No adjustment of the number of shares of Common Stock
comprising a Stock Unit shall be made under this Section 4.6 upon the issuance
of any Convertible Securities which are issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if any such
adjustment shall previously have been made upon the issuance of such warrants or
other rights pursuant to Section 4.5 hereof.
Section 4.7 Superseding Adjustment of Stock Unit. If, at any time after any
adjustment of the number of shares comprising a Stock Unit shall have been made
pursuant to Sections 4.5 or 4.6 hereof on the basis of the issuance of warrants
or other rights or the issuance of other Convertible Securities, or after any
new adjustment of the number of shares comprising a Stock Unit shall have been
made pursuant to this Section 4.7, (a) such warrants or rights or the right of
conversion or exchange in such other Convertible Securities shall expire, and a
portion of such warrants or rights, or the right of conversion or exchange in
respect of a portion of such other Convertible Securities, as the case may be,
shall not have been exercised and (b) the consideration per share, for which
shares of Common Stock are issuable pursuant to such warrants or rights or the
terms of such other Convertible Securities, shall be increased solely by virtue
of provisions therein contained for an automatic increase in such consideration
per share upon the arrival of a specified date or the happening of a specified
event, such previous adjustment in the Warrants shall be rescinded and annulled
and the Additional Shares of Common Stock which were deemed to have been issued
by virtue of the computation made in connection with the adjustment so rescinded
and annulled shall no longer be deemed to have been issued by virtue of such
computation. Thereupon, a recomputation shall be made of the effect of such
rights or options or other Convertible Securities on the basis of treating the
number of Additional Shares of Common Stock, if any, theretofore actually issued
or issuable pursuant to the previous exercise of such warrants or rights or such
right of conversion or exchange, as having been issued on the date or dates of
such issuance as determined for purposes of such previous adjustment and for the
8
consideration actually received and receivable therefor, and treating any such
warrants or rights or any such other Convertible Securities which then remain
outstanding as having been granted or issued immediately after the time of such
increase of the consideration per share for such shares of Common Stock are
issuable under such warrants or rights or other Convertible Securities, and, if
and to the extent called for by the foregoing provisions of this Article IV on
the basis aforesaid, a new adjustment of the number of shares comprising a Stock
Unit shall be made, which new adjustment shall supersede the previous adjustment
so rescinded and annulled.
Section 4.8 Other Provisions Applicable to Adjustments Under this Article
IV. The following provisions shall be applicable to the making of adjustments of
the number of shares of Common Stock comprising a Stock Unit hereinbefore
provided for in this Article IV:
(a) Treasury Stock. The sale or other disposition of any issued shares of
Common Stock owned or held by or for the account of the Company shall be deemed
an issuance thereof for the consideration paid at the time of such sale or
disposition.
(b) Computation of Consideration. To the extent that any Additional Shares
of Common Stock or any Convertible Securities or any warrants or other rights to
subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Securities shall be issued for a cash consideration, the
consideration received by the Company therefor shall be deemed to be the amount
of cash received by the Company therefor, or, if such Additional Shares of
Common Stock or Convertible Securities are offered by the Company for
subscription, the subscription price, or, if such Additional Shares of Common
Stock or Convertible Securities are sold to underwriters or dealers for public
offering without a subscription offering, the initial public offering price, in
any such case excluding any amounts paid or receivable for accrued interest or
accrued dividends and without deduction of any compensation, discounts or
expenses paid or incurred by the Company for and in the underwriting of, or
otherwise in connection with, the issue thereof. To the extent that such
issuance shall be for a consideration other than cash, then, except as herein
otherwise expressly provided, the amount of such consideration shall be deemed
to be the fair value of such consideration at the time of such issuance as
determined in good faith by the Board, provided that if such determination is
reasonably objected to by the holders of Warrants entitled to purchase a
majority of the Stock Units covered by all Warrants, such determination shall be
made by an independent appraiser selected by the Board and not reasonably
objected to by such holders. The consideration for any Additional Shares of
Common Stock issuable pursuant to any warrants or other rights to subscribe for
or purchase the same shall be the consideration received or receivable by the
Company for issuing such warrant or other rights, plus the additional
consideration payable to the Company upon the exercise of such warrants or other
rights. The consideration for any Additional Shares of Common Stock issuable
pursuant to the terms of any Convertible Securities shall be the consideration
received or receivable by the Company for issuing any warrants or other rights
to subscribe for or purchase such Convertible Securities, plus the consideration
paid or payable to the Company in respect of the subscription for or purchase of
such Convertible Securities, plus the additional consideration, if any, payable
to the Company upon the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of any Additional
Shares of Common Stock or Convertible Securities in payment or satisfaction of
9
any dividend upon any class of stock other than Common Stock, the Company shall
be deemed to have received for such Additional Shares of Common Stock or
Convertible Securities a consideration equal to the amount of such dividend so
paid or satisfied.
(c) When Adjustments to Be Made. The adjustments required by the foregoing
provisions of this Article IV shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that no adjustment
of the number of shares of Common Stock comprising a Stock Unit that would
otherwise be required shall be made (except in the case of a subdivision or
combination of shares of Common Stock, as provided for in Section 4.2 hereof)
unless and until such adjustment, either by itself or with other adjustments not
previously made, adds or subtracts at least $0.05 to the Exercise Price, as
determined in good faith by the Board, provided that, in any event such
adjustment shall be made if such adjustment either by itself or with other
adjustments not previously made adds or subtracts at least 1/20th of a share to
or from the number of shares of Common Stock comprising a Stock Unit immediately
prior to the making of such adjustment. Any adjustment representing a change of
less than such minimum amount (except as aforesaid) shall be carried forward and
made as soon as such adjustment, together with other adjustments required by
this Article IV and not previously made, would result in a minimum adjustment.
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.
(d) Fractional Interests. In computing adjustments under this Article IV,
fractional interests in Common Stock shall be taken into account to the nearest
one-thousandth of a share.
Section 4.9 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 thereof to stockholders, 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.
Section 4.10 Merger, Consolidation or Disposition of Assets. In case the
Company shall merge or consolidate into another corporation, or shall sell,
transfer or otherwise dispose of all or substantially all of its property,
assets or business to another corporation and pursuant to the terms of such
merger, consolidation or disposition of assets, shares of common stock of the
successor or acquiring corporation are to be received by or distributed to the
holders of Common Stock of the Company, then the holder of the Warrant shall
have the right thereafter to receive, upon exercise of the Warrant, Stock Units
each comprising the number of shares of common stock of the successor or
acquiring corporation receivable upon or as a result of such merger,
consolidation or disposition of assets by a holder of the number of shares of
Common Stock comprising a Stock Unit immediately prior to such event. If,
pursuant to the terms of such merger, consolidation or disposition of assets,
any cash, shares of stock or other securities or property of any nature
whatsoever (including without limitation warrants or other subscription or
purchase rights) are to be received by or distributed to the holders of Common
Stock of the Company in addition to common stock of the successor or acquiring
corporation, there shall be a reduction of the purchase price per Stock Unit
equal to the amount applicable to the number of shares of Common Stock then
10
comprising a Stock Unit of any such cash and of the fair value of any and all
such shares of stock or of other securities or property to be received by or
distributed to the holders of Common Stock of the Company. Such fair value shall
be determined in good faith by the Board, provided that if such determination is
reasonably objected to by the holders of Warrants entitled to purchase a
majority of the Stock Units covered by all Warrants, such determination shall be
made by an independent appraiser selected by such Board and not reasonably
objected to by such holders. In case of any such merger, consolidation or
disposition of assets, the successor acquiring corporation 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 of the obligations and liabilities hereunder, subject to such
modification as shall be necessary to provide for adjustments of Stock Units
which shall be as nearly equivalent as practicable to the adjustments provided
for in this Article IV. For the purposes of this Article IV "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 4.10 shall similarly
apply to successive mergers, consolidations or dispositions of assets.
Section 4.11 Adjustment of Exercise Price. Whenever the number of shares of
Common Stock comprising a Stock Unit purchasable upon the exercise of this
Warrant is adjusted as herein provided, the Exercise Price payable upon exercise
of this Warrant also shall be adjusted by multiplying such Exercise Price
immediately prior to such adjustment by a fraction, the numerator of which shall
be the number of shares of Common Stock comprising a Stock Unit purchasable upon
the exercise of this Warrant immediately prior to such adjustment, and the
denominator of which shall be the number of shares of Common Stock comprising a
Stock Unit so purchasable immediately thereafter.
Section 4.12 Other Action Affecting Common Stock. In case at any time or
from time to time the Company shall take any action affecting its Common Stock,
other than an action described in any of the foregoing Sections 4.2 through
4.10, inclusive, then, unless in the opinion of the Board such action will not
have a materially adverse effect upon the rights of the holders of the Warrants,
the number of shares of Common Stock or other stock comprising a Stock Unit, or
the Current Warrant Price, shall be adjusted in such manner and at such time as
the Board may in good faith determine to be equitable in the circumstances.
Article V
NOTICE TO WARRANT HOLDERS
Section 5.1 Notice of Adjustment of Stock Unit or Exercise Price. Whenever
the number of shares of Common Stock comprising a Stock Unit, or the price at
which a Stock Unit may be purchased upon exercise of their Warrants, shall be
adjusted pursuant to Article IV hereof, the Company shall forthwith obtain a
certificate signed by Chief Financial Officer or independent accountants of
recognized national standing selected by the Company and reasonably acceptable
to the holders entitled to purchase the majority of the Stock Units covered by
11
all Warrants, setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated (including
without limitation a statement of the Current Market Value when determined by
the Board pursuant to Section 2.4(2), of any evidences of indebtedness, shares
of stock, other securities or property or warrants or other subscription or
purchase rights referred to in Sections 4.3, 4.8(b) or 4.11 hereof) and
specifying the number of shares of Common Stock comprising a Stock Unit and (if
such adjustment was made pursuant to Sections 4.10 or 4.11 hereof) describing
the number and kind of any other shares of stock comprising a Stock Unit, and
any change in the Exercise Price, after giving effect to such adjustment or
change. The Company shall promptly, and in any case within 45 days after the
making of such adjustment, cause a signed copy of such certificate to be
delivered to each holder of a Warrant in accordance with Section 10.2 hereof.
The Company shall keep at its office or agency, maintained for the purpose
pursuant to Section 10.1 hereof, copies of all such certificates and cause the
same to be available for inspection at said office during normal business hours
by any holder of a Warrant or any prospective purchaser of a Warrant designated
by a holder thereof.
Section 5.2 Notice of Certain Corporate Action. In case the Company shall
propose (a) to pay any dividend payable in stock of any class to the holders of
its Common Stock or to make any other distribution to the holders of its Common
Stock, or (b) to offer to the holders of its Common Stock rights to subscribe
for or to purchase any Additional Shares of Common Stock or shares of stock of
any class or any other securities, rights or options, or (c) to effect any
reclassification of its Common Stock (other than a reclassification involving
only the subdivision, or combination, of outstanding shares of Common Stock), or
(d) to effect any capital reorganization, or (e) to effect any consolidation,
merger or sale, transfer or other disposition of all or substantially all of its
property, assets or business, or (f) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Warrant, in accordance with Section 10.2 hereof, a notice of
such proposed action, which shall specify the date on which a record is to be
taken for the purposes of such stock dividend, distribution or rights, or the
date on which such reclassification, reorganization, consolidation, merger,
sale, transfer, disposition, liquidation, dissolution or winding up is to take
place and the date of participation therein by the holders of Common Stock, if
any such date is to be fixed, and shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such action
on the Common Stock and the number and kind of any other shares of stock which
will comprise a Stock Unit, and the purchase price or prices thereof, after
giving effect to any adjustment which will be required as a result of such
action. Such notice shall be so given in the case of any action covered by
clause (a) or (b) above at least 20 days prior to the record date for
determining holders of the Common Stock for purposes of such action, and in the
case of any other such action, at least 20 days prior to the date of the taking
of such proposed action or the date of participation therein by the holders of
Common Stock, whichever shall be the earlier.
Section 5.3 Notice of Expiration Date. The Company shall give to each
holder of a Warrant notice of the Expiration Date. Such notice may be given by
the Company not less than 30 days but not more than 60 days prior to the
Expiration Date.
12
Article VI
CERTAIN COVENANTS
Section 6.1 Reservation and Authorization of Common Stock; Registration
with or Approval of any Governmental Authority.
(a) The Company shall at all times reserve and keep available for issue
upon the exercise of these Warrants such number of its authorized but unissued
shares of Common Stock as shall be sufficient to permit the exercise in full of
all outstanding Warrants. The Company shall not amend its charter in any respect
relating to the Common Stock other than to increase or decrease the number of
shares of authorized capital stock (subject to the provisions of the preceding
sentence) or to decrease the par value of any shares of Common Stock. All shares
of Common Stock that shall be so issuable, when issued upon exercise of any
Warrant and payment in full of the Exercise Price, shall be duly and validly
issued and fully-paid and nonassessable.
(b) Before taking any action which would result in an adjustment in the
number of shares of Common Stock comprising a Stock Unit or in the Exercise
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.
(c) If any shares of Common Stock required to be reserved for issue upon
exercise of Warrants require registration with any governmental authority under
any federal or state law before such shares may be so issued, the Company shall
in good faith and as expeditiously as possible and at its expense endeavor to
cause such shares to be duly registered.
Article VII
TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
Section 7.1 Taking of Record, etc. 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 Article IV hereof refers to the taking of a record of
such holders, the Company shall in each such case take such a record and shall
take such record as of the close of business on a Business Day. The Company
shall not at any time, except upon dissolution, liquidation or winding up, close
its stock transfer books or Warrant transfer books so as to result in preventing
or delaying the exercise or transfer of any Warrant.
Section 7.2 Replacement of Instruments. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any certificate or instrument evidencing any
Warrants, and (a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it, or (b) in the case of mutilation, upon surrender
or cancellation thereof, the Company, at its expense, shall execute, register
and deliver, in lieu thereof, a new certificate or instrument for (or covering
the purchase of) an equal number of Warrants.
13
Article VIII
EXPENSES, TRANSFER TAXES AND OTHER CHARGES
Section 8.1 Expenses, etc. The Company shall pay any and all expenses,
transfer taxes and other charges, including, without limitation, all costs
associated with the preparation, issue and delivery of stock or warrant
certificates, that may be incurred in respect of the issuance or delivery of
shares of Common Stock upon exercise of this Warrant pursuant to Article II
hereof, or in connection with any transfer, division or combination of Warrants
pursuant to Article III hereof. The Company shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock in a name other than that in which
this Warrant is registered, and no such issue or delivery shall be made unless
and until the Person requesting such issue has paid to the Company the amount of
any such tax, or has established, to the satisfaction of the Company, that such
tax has been paid.
Article IX
NO VOTING RIGHTS
Section 9.1 No Voting Rights. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of the Company.
Article X
MISCELLANEOUS
Section 10.1 Office of the Company. So long as any of the Warrants remains
outstanding, the Company shall maintain an office in the continental United
States of America where the Warrants may be presented for exercise, transfer,
division or combination as in this Warrant provided. Such office shall be at
Company's office unless and until the Company shall designate and maintain some
other office for such purposes and give notice thereof to the Holders of all
outstanding Warrants. The Company shall maintain at such office books for the
registration and transfer of the Warrants.
Section 10.2 Notices. All notices, requests, demands, approvals, consents,
waivers and other communications required or permitted to be given under this
Warrant (each, a "Notice") shall be in writing and shall be (a) delivered
personally, (b) mailed by first-class mail or certified mail, return receipt
requested, postage prepaid, (c) sent by next-day or overnight mail or delivery
or (d) sent by facsimile transmission, provided that a confirmation statement is
retained by sender.
(a) if to holder, to:
L-3 Communications Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxxx, Esq.
(b) if to Company, to:
Innovative Micro Technology, Inc.
00 Xxxxx Xxxx Xxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx, President
14
with a copy, which shall not constitute notice, to:
Xxxxx X. Xxxxx, Esq.
Sheppard, Mullin, Xxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
or, in each case, at such other address as may be specified in a Notice to the
other party hereto from time to time. All Notices shall be deemed effective and
given upon receipt.
Section 10.3 Amendments. The terms of this Warrant and all other Warrants
may be amended, and the observance of any term therein may be waived, but only
with the written consent of the holders of Warrants evidencing two-thirds in
number of the total number of Stock Units at the time purchasable upon the
exercise of all then outstanding Warrants. For the purposes of determining
whether the holders of outstanding Warrants entitled to purchase a requisite
number of Stock Units at any time have taken any action authorized by this
Warrant, any Warrants owned by the Company or any Affiliate of the Company shall
be deemed not to be outstanding.
Section 10.4 Restrictions on Transferability. The Warrants and the Warrant
Shares shall be transferable only upon compliance with the conditions specified
in Sections 5.3, 5.4 and 5.5 of the Stock Purchase Agreement, Section 8.1 of the
Warrant and applicable Securities Act restrictions referred to in Section 3.1 of
this Warrant, which conditions are intended to ensure compliance with the
provisions of the Securities Act in respect of the transfer of any Warrant or
any Warrant Shares, and any holder of this Warrant shall be bound by the
provisions of (and entitled to the benefits of) Section 3.1 and the remainder of
this Warrant.
Section 10.5 Governing Law. This Warrant shall be governed by, and
construed in accordance with, the law of the State of New York.
Section 10.6 JURY TRIAL WAIVER. THE HOLDER AND THE COMPANY EACH WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INSTITUTED BY EITHER OF THEM
AGAINST THE OTHER THAT PERTAINS DIRECTLY OR INDIRECTLY TO THIS WARRANT, ANY
ALLEGED TORTIOUS CONDUCT BY THE HOLDER OR THE COMPANY, OR IN ANY WAY, DIRECTLY
OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP BETWEEN HOLDER AND
COMPANY.
Section 10.7 Limitation of Liability. No provision hereof, in the absence
of affirmative action by the holder hereof to purchase shares of Common Stock,
and no mere enumeration herein of the rights or privileges of the holder hereof,
15
shall give rise to any liability of such holder for the purchase price or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
[Signature Page Follows]
16
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name by a duly authorized officer and attested by its Secretary or an
Assistant Secretary.
Dated: INNOVATIVE MICRO TECHNOLOGY, INC.
By:____________________________
Xxxx Xxxxxx
Chief Executive Officer
ATTEST:
-------------------------------
Xxxxx X. Xxxxxxxxx
Secretary
ANNEX B
Form of Warrant
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAW OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR UNLESS SOLD PURSUANT
TO RULE 144 UNDER THE ACT OR ANY OTHER LEGAL EXEMPTION UNDER THE ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCK PURCHASE
AGREEMENT BETWEEN INNOVATIVE MICRO TECHNOLOGY, INC. (THE "COMPANY") AND L-3
COMMUNICATIONS CORPORATION, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY. NO TRANSFER, SALE, ASSIGNMENT, EXCHANGE, LICENSE, MORTGAGE, PLEDGE,
CREATION OF A SECURITY INTEREST IN OR LIEN UPON, HYPOTHECATION OR OTHER
VOLUNTARY OR INVOLUNTARY DISPOSITION (EACH, A "TRANSFER") OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF THE STOCK PURCHASE AGREEMENT. THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL THE PROVISIONS OF SUCH
STOCK PURCHASE AGREEMENT.
WARRANT
to purchase Common Stock, par value $0.0001 per share, of
INNOVATIVE MICRO TECHNOLOGY, INC.
Commencing August ___, 2002 and expiring August ___, 2005
THIS IS TO CERTIFY THAT L-3 COMMUNICATIONS CORPORATION, or registered
assigns, is entitled to purchase from INNOVATIVE MICRO TECHNOLOGY, INC., a
Delaware corporation (the "Company"), at any time on and after August ___, 2002
but not later than 5:00 P.M., New York Time, on August ___, 2005 (the
"Expiration Date"), 700,000 Stock Units, in whole or in part, at a purchase
price of $7.29 per share of Common Stock (the "Exercise Price"), or $5,103,000
in the aggregate, all on the terms and conditions hereinbelow provided.
Article I
CERTAIN DEFINITIONS
Section 1.1 Certain Definitions. As used in this Warrant, unless the
context otherwise requires:
"Additional Shares of Common Stock": means all shares of Common Stock
issued by the Company after the date hereof, other than (i) the Warrant Shares,
(ii) shares issued upon the exercise of any options, warrants or other rights
presently outstanding to subscribe for or purchase any shares of Common Stock or
Convertible securities, or (iii) shares which may be granted or issued upon the
exercise of any options which may hereafter be granted or exercised under the
Company's 2001 Stock Incentive Plan or under any other employee benefit plan of
the Company approved by the Company's Board of Directors; or (iv) any shares of
Common Stock sold to the public or the underwriter in a public offering, or upon
exercise of warrants comprising or underlying any units sold in the Company's
initial public offering, including any shares or warrants underlying the
underwriter's warrants or securities purchase option. The shares of Common Stock
and warrants to be issued pursuant to the Company's Third Amended Plan or
Reorganization Under Chapter 11 of the Bankruptcy Code, dated as of September
24, 2001, and any securities to be issued on exercise or conversion thereof,
regardless of the actual date of issuance, shall not be deemed Additional Shares
of Common Stock.
"Affiliate": of a specified Person means a Person that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified Person or a member of such specified
Person's immediate family. "Control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
Person, whether through the ownership of voting securities, by contract or
credit arrangement, as trustee or executor, or otherwise.
"Board": means the Board of Directors of the Company.
"Business Day": means any day which is not a Saturday, Sunday or day on
which banks are authorized by law to be closed in the State of New York.
"Common Stock": means the Company's authorized Common Stock, par value
$0.0001 per share, irrespective of class unless otherwise specified, as
constituted on the date of original issuance of this Warrant, and any stock into
which such Common Stock may thereafter be changed, and also shall include stock
of the Company of any other class which is not preferred as to dividends or
assets over any other class of stock of the Company and which is not subject to
redemption that the Company hereafter may issue.
"Convertible Securities": means evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for Additional
Shares of Common Stock, either immediately or upon the arrival of a specified
date or the happening of a specified event.
"Current Market Value": is defined in Section 4.2.
2
"Exercise Price": per share of Common Stock, means, for the purpose of any
provision of this Warrant, $7.29 on the Original Issue Date and, at any
subsequent date, $7.29 per share as adjusted pursuant to Section 4.11 hereof.
"holder": in respect of any security at any time means the Person then
registered on the books of the Company as the owner of such security.
"Original Issue Date": means August __, 2002.
"Person": means any natural person, firm, partnership, association,
corporation, company, limited liability company, trust, business trust,
governmental authority or other entity.
"Securities Act": means the Securities Act of 1933, as amended, or any
successor or similar law then in force.
"Stock Purchase Agreement": means that certain Stock Purchase Agreement
between L-3 Communications Corporation and the Company dated as of August ___,
2002, as amended or modified from time to time.
"Stock Unit": means one share of Common Stock, as such Common Stock was
constituted on the date of original issue of this Warrant, and thereafter shall
mean such number of shares (including any fractional shares) of Common Stock and
other securities, cash or other property, if any, as shall result from the
adjustments specified in Article IV hereof.
"Subsidiaries": means each corporation or other Person in which a Person
owns or controls, directly or indirectly, capital stock or other equity
interests representing more than 50% of the outstanding voting stock or other
equity interests.
"Warrant": means the Warrant dated as of the Original Issue Date,
originally issued by the Company to L-3 Communications Corporation pursuant to
the Stock Purchase Agreement, evidencing rights to purchase Stock Units, and all
Warrants issued upon transfer, division or combination of, or in substitution
therefor. All Warrants shall at all times be identical as to terms and
conditions and date, except as to the number of Stock Units for which they may
be exercised.
"Warrant Agreement": means the Warrant Agreement dated as of August ___,
2002 between the Company and L-3 Communications Corporation for the purchase of
Common Shares at $7.29 per share, as such Warrant Agreement shall be modified
and supplemented and in effect from time to time.
"Warrant Shares": means the shares of Common Stock purchasable by the
holders of the Warrant upon the exercise thereof.
3
Article II
EXERCISE OF WARRANT
Section 2.1 Procedure for Exercise. Subject to the provisions of Section
2.2, the holder of this Warrant may, at any time on and after August ___, 2002,
but not later than the Expiration Date, exercise this Warrant in whole at any
time or in part from time to time for the number of Stock Units which such
holder is then entitled to purchase hereunder. In order to exercise this
Warrant, in whole or in part, the holder hereof shall deliver to the Company, at
its office maintained for such purpose pursuant to Section 11.1 hereof, (a) a
written notice of such holder's election to exercise this Warrant (a
"Subscription Notice"), which shall specify (i) the number of Stock Units to be
purchased and delivered to the holder, provided that such number shall be at
least the lesser of 1,000 or the total number of Stock Units for which the
Warrant may be exercised, (ii) the aggregate Exercise Price therefor, (iii) the
denomination or denominations of the certificates for Warrant Shares to be
delivered to the holder and (iv) the name or names in which such certificates
are to be issued, (b) payment of the aggregate Exercise Price by certified or
official bank check payable to the order of the Company or by wire transfer of
immediately available funds to the account designated by the Company, and (c)
this Warrant. Such notice may be in the form of the Subscription Notice set out
at the end of this Warrant.
Section 2.2 Fulfillment by the Company. Upon receipt of a Subscription
Notice, payment of the aggregate Exercise Price and receipt of such other
information reasonably required by the Company or its transfer agent, the
Company shall, as promptly as practicable and in any event within five Business
Days thereafter, cause to be executed and delivered to the holder: (i) a
certificate or certificates representing the aggregate number of fully paid and
nonassessable Warrant Shares issuable upon such exercise, free from all taxes,
liens and charges with respect to the issuance thereof (except income tax
liability of the holder, if any), (ii) in the case of partial exercise,
statement of total number of Stock Units still eligible for exercise under the
warrant (i.e., 700,000 less number already exercised), and (iii) any other
documentation reasonably required by the Investor.
Section 2.3 Names and Denominations of Issuance. The stock certificate or
certificates for Warrant Shares so delivered shall be in such denominations as
may be specified in the Subscription Notice and shall be registered in the name
of such holder or such other name or names as shall be designated in the
Exercise Notice. Such certificate or certificates shall be deemed to have been
issued and such holder or any other person so designated to be named therein
shall be deemed to have become a holder of record of such shares, including to
the extent permitted by law the right to vote such shares or to consent or to
receive notice as a stockholder, as of the time the Subscription Notice is
received by the Company as aforesaid. If this Warrant shall have been exercised
only in part, the Company shall, at the time of delivery of said certificate or
certificates, either (i) deliver to such holder a new Warrant dated the date it
is issued, evidencing the rights of such holder to purchase the remaining Stock
Units called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant, or (ii), at the request of such holder,
appropriate notation may be made on this Warrant and the same returned to such
holder.
Section 2.4 No Fractional Shares; Current Market Value. The Company shall
not be required to issue fractions of shares, upon exercise of this Warrant or
otherwise, or to distribute certificates that evidence fractional shares. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the holder an amount in cash equal to such fraction
multiplied by the "Current Market Value," determined as follows:
4
(1) If the Common Stock is listed on a national securities exchange or
listed for trading on the Nasdaq National Market System ("NMS"), the
Current Market Value shall be the average of the last reported sale price
of the Common Stock on such exchange on each of the last ten business days
prior to the date of determination, or for any day which no such sale is
made or no closing sale price is quoted, the average of the closing bid and
asked prices for such day on such exchange or system; or
(2) If the Common Stock is not listed, the Current Market Value shall
be an amount determined in such reasonable manner as may be prescribed in
good faith by the Board of Directors of the Company.
Article III
TRANSFER, DIVISION AND COMBINATION
Section 3.1 Warrant Transferrable. Subject to Sections 5.3, 5.4 and 5.5 of
the Stock Purchase Agreement and the Securities Act restrictions referred to in
Section 3.1 of this Warrant, this Warrant and all rights hereunder are
transferable, in whole or in part, on the books of the Company to be maintained
for such purpose, upon surrender of this Warrant at the office of the Company
maintained for such purpose pursuant to Section 10.1 hereof, together with a
written assignment of this Warrant duly executed by the holder hereof or its
agent or attorney and payment of funds sufficient to pay any stock transfer
taxes payable upon the making of such transfer. Upon such surrender and payment
the Company shall, execute and deliver a new Warrant or Warrants in the name of
the assignee or assignees and in the denominations specified in such instrument
of assignment, and this Warrant shall promptly be canceled.
Section 3.2 Division and Combination. This Warrant may, subject to Sections
5.3, 5.4 and 5.5 of the Stock Purchase Agreement and the Securities Act
restrictions referred to in Section 3.1 of this Warrant, be divided or combined
with other Warrants upon presentation at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the holder hereof or its agent or
attorney. Subject to compliance with the next preceding paragraph and with any
applicable Securities Act restrictions,, 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.
Article IV
ADJUSTMENT OF STOCK UNIT AND EXERCISE PRICE
Section 4.1 Adjustment Generally. The number of shares of Common Stock
comprising a Stock Unit and the Exercise Price at which a share of Common Stock
may be purchased upon exercise of this Warrant shall each be subject to
adjustment from time to time as set forth in this Article IV.
Section 4.2 Stock Dividends, Subdivisions and Combinations. In case at any
time or from time to time the Company shall (a) take a record of the holders of
5
its Common Stock for the purpose of entitling them to receive a dividend payable
in, or other distribution 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 the number of shares of Common Stock comprising a Stock Unit
immediately after the happening of any such event shall be adjusted so as to
consist of the number of shares of Common Stock which a record holder of the
number of shares of Common Stock comprising a Stock Unit immediately prior to
the happening of such event would own or be entitled to receive after the
happening of such event.
Section 4.3 Certain Other Dividends and Distributions. In case at any time
or from time to 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 (other than a cash dividend or distribution payable out of funds
legally available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Company, to the extent, but only to the
extent, that the aggregate of all such dividends paid or declared after the date
hereof, does not exceed the consolidated net income of the Company and its
consolidated Subsidiaries, if any, earned subsequent to the date hereof
determined in accordance with generally accepted accounting principles); or
(b) any evidence of its indebtedness (other than Convertible Securities),
any shares of its stock (other than Additional Shares of Common Stock) or any
other securities or property of any nature whatsoever (other than cash and other
than 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 (other than Convertible Securities), any shares of its stock
(other than Additional Shares of Common Stock) or any other securities or
property of any nature whatsoever (other than cash and other than Convertible
Securities or Additional Shares of Common Stock), then the number of shares of
Common Stock thereafter comprising a Stock Unit shall be adjusted to that number
determined by multiplying the number of shares of Common Stock comprising a
Stock Unit immediately prior to such adjustment by a fraction (i) the numerator
of which shall be the Exercise Price at the date of taking such record, and (ii)
the denominator of which shall be such Exercise Price per share minus the
portion applicable to one share of Common Stock of any such cash so
distributable and of the fair value of any and all such evidences of
indebtedness, shares of stock, other securities or property, or warrants or
other subscription or purchase rights, so distributable. Such fair value shall
be determined in good faith by the Board, provided that if such determination is
objected to by the holders of Warrants entitled to purchase a majority of the
Stock Units covered by all Warrants, such determination shall be made by an
independent appraiser selected by the Board and not objected to by such holders.
A reclassification of the Common Stock 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 4.3 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, shall be deemed a subdivision or combination, as
the case may be, of the outstanding shares of Common Stock within the meaning of
Section 4.2 hereof.
6
Section 4.4 Issuance of Additional Shares of Common Stock. In case at any
time or from time to time the Company shall (except as hereinafter provided)
issue any Additional Shares of Common Stock for a consideration per share less
than the Current Market Value, then the number of shares of Common Stock
thereafter comprising a Stock Unit shall be adjusted to that number determined
by multiplying the number of shares of Common Stock comprising a Stock Unit
immediately prior to such adjustment by a fraction (i) the numerator of which
shall be the number of shares of Common Stock outstanding immediately prior to
the issuance of such Additional Shares of Common Stock plus the number of such
Additional Shares of Common Stock so issued, and (ii) the denominator of which
shall be the number of shares of Common Stock outstanding immediately prior to
the issuance of such Additional Shares of Common Stock plus the number of shares
of Common Stock which the aggregate consideration for the total number of such
Additional Shares of Common Stock so issued would purchase at the then current
Exercise Price. For purposes of this Section 4.4, the date as of which the
Current Market Value shall be computed shall be the earlier of (1) the date on
which the Company shall enter into a firm contract for the issuance of such
Additional Shares of Common Stock and (2) the date of actual issuance of such
Additional Shares of Common Stock. This Section 4.4 shall not apply to any
issuance of Additional Shares of Common Stock for which an adjustment is
provided under Section 4.2 hereof. No adjustment of the number of shares of
Common Stock comprising a Stock Unit shall be made under this Section 4.4 upon
the issuance of any Additional Shares of Common Stock which are issued pursuant
to the exercise of any warrants or other subscription or purchase rights or
pursuant to the exercise of any conversion or exchange rights in any Convertible
Securities, if any such adjustment shall previously have been made upon the
issuance of such warrants or other rights or upon the issuance of such
Convertible Securities (or upon the issuance of any warrant or other rights
therefor) pursuant to Section 4.5 hereof.
Section 4.5 Issuance of Warrants or Other Rights. In case at any time or
from time to time the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a distribution of, or shall
otherwise issue, any warrants or other rights to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Securities and the
consideration per share for which additional shares of Common Stock may at any
time thereafter be issuable pursuant to such warrants or other rights or
pursuant to the terms of such Convertible Securities shall be less than the
Current Market Value, then the number of shares of Common Stock thereafter
comprising a Stock Unit shall be adjusted as provided in Section 4.4 hereof on
the basis that (i) the maximum number of Additional Shares of Common Stock
issuable pursuant to all such warrants or other rights or necessary to effect
the conversion or exchange of all such Convertible Securities shall be deemed to
have been issued as of (and, accordingly, the date as of which the Exercise
Price shall be computed shall be) the computation date specified in the last
sentence of this Section 4.5, and (ii) the aggregate consideration for such
maximum number of Additional Shares of Common Stock shall be deemed to be the
minimum consideration received and receivable by the Company for the issuance of
such Additional Shares of Common Stock pursuant to such warrants or other rights
or pursuant to the terms of such Convertible Securities. For purposes of this
Section 4.5, the computation date for clause (i) above shall be the earliest of
(A) the date on which the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive any such warrants or
other rights, (B) the date on which the Company shall enter into a firm contract
7
for the issuance of such warrants or other rights, and (C) the date of actual
issuance of such warrants or other rights.
Section 4.6 Issuance of Convertible Securities. In case at any time or from
time to time the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a distribution of, or shall
otherwise issue, any Convertible Securities and the consideration per share for
which Additional Shares of Common Stock may at any time thereafter be issuable
pursuant to the terms of such Convertible Securities shall be less than the
Current Market Value, then the number of shares of Common Stock thereafter
comprising a Stock Unit shall be adjusted as provided in Section 4.4 hereof on
the basis that (i) the maximum number of Additional Shares of Common Stock
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued as of the computation date
specified in the penultimate sentence of this Section 4.6, and (ii) the
aggregate consideration for such maximum number of Additional Shares of Common
Stock shall be deemed to be the minimum consideration received and receivable by
the Company for the issuance of such Additional Shares of Common Stock pursuant
to the terms of such Convertible Securities. For purposes of this Section 4.6,
the computation date for clause (i) above shall be the earliest of (A) the date
on which the Company shall take a record of the holders of its Common Stock for
the purpose of entitling them to receive any such Convertible Securities, (B)
the date on which the Company shall enter into a firm contract for the issuance
of such Convertible Securities, and (C) the date of actual issuance of such
Convertible Securities. No adjustment of the number of shares of Common Stock
comprising a Stock Unit shall be made under this Section 4.6 upon the issuance
of any Convertible Securities which are issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if any such
adjustment shall previously have been made upon the issuance of such warrants or
other rights pursuant to Section 4.5 hereof.
Section 4.7 Superseding Adjustment of Stock Unit. If, at any time after any
adjustment of the number of shares comprising a Stock Unit shall have been made
pursuant to Sections 4.5 or 4.6 hereof on the basis of the issuance of warrants
or other rights or the issuance of other Convertible Securities, or after any
new adjustment of the number of shares comprising a Stock Unit shall have been
made pursuant to this Section 4.7, (a) such warrants or rights or the right of
conversion or exchange in such other Convertible Securities shall expire, and a
portion of such warrants or rights, or the right of conversion or exchange in
respect of a portion of such other Convertible Securities, as the case may be,
shall not have been exercised and (b) the consideration per share, for which
shares of Common Stock are issuable pursuant to such warrants or rights or the
terms of such other Convertible Securities, shall be increased solely by virtue
of provisions therein contained for an automatic increase in such consideration
per share upon the arrival of a specified date or the happening of a specified
event, such previous adjustment in the Warrants shall be rescinded and annulled
and the Additional Shares of Common Stock which were deemed to have been issued
by virtue of the computation made in connection with the adjustment so rescinded
and annulled shall no longer be deemed to have been issued by virtue of such
computation. Thereupon, a recomputation shall be made of the effect of such
rights or options or other Convertible Securities on the basis of treating the
number of Additional Shares of Common Stock, if any, theretofore actually issued
or issuable pursuant to the previous exercise of such warrants or rights or such
right of conversion or exchange, as having been issued on the date or dates of
such issuance as determined for purposes of such previous adjustment and for the
8
consideration actually received and receivable therefor, and treating any such
warrants or rights or any such other Convertible Securities which then remain
outstanding as having been granted or issued immediately after the time of such
increase of the consideration per share for such shares of Common Stock are
issuable under such warrants or rights or other Convertible Securities, and, if
and to the extent called for by the foregoing provisions of this Article IV on
the basis aforesaid, a new adjustment of the number of shares comprising a Stock
Unit shall be made, which new adjustment shall supersede the previous adjustment
so rescinded and annulled.
Section 4.8 Other Provisions Applicable to Adjustments Under this Article
IV. The following provisions shall be applicable to the making of adjustments of
the number of shares of Common Stock comprising a Stock Unit hereinbefore
provided for in this Article IV:
(a) Treasury Stock. The sale or other disposition of any issued shares of
Common Stock owned or held by or for the account of the Company shall be deemed
an issuance thereof for the consideration paid at the time of such sale or
disposition.
(b) Computation of Consideration. To the extent that any Additional Shares
of Common Stock or any Convertible Securities or any warrants or other rights to
subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Securities shall be issued for a cash consideration, the
consideration received by the Company therefor shall be deemed to be the amount
of cash received by the Company therefor, or, if such Additional Shares of
Common Stock or Convertible Securities are offered by the Company for
subscription, the subscription price, or, if such Additional Shares of Common
Stock or Convertible Securities are sold to underwriters or dealers for public
offering without a subscription offering, the initial public offering price, in
any such case excluding any amounts paid or receivable for accrued interest or
accrued dividends and without deduction of any compensation, discounts or
expenses paid or incurred by the Company for and in the underwriting of, or
otherwise in connection with, the issue thereof. To the extent that such
issuance shall be for a consideration other than cash, then, except as herein
otherwise expressly provided, the amount of such consideration shall be deemed
to be the fair value of such consideration at the time of such issuance as
determined in good faith by the Board, provided that if such determination is
reasonably objected to by the holders of Warrants entitled to purchase a
majority of the Stock Units covered by all Warrants, such determination shall be
made by an independent appraiser selected by the Board and not reasonably
objected to by such holders. The consideration for any Additional Shares of
Common Stock issuable pursuant to any warrants or other rights to subscribe for
or purchase the same shall be the consideration received or receivable by the
Company for issuing such warrant or other rights, plus the additional
consideration payable to the Company upon the exercise of such warrants or other
rights. The consideration for any Additional Shares of Common Stock issuable
pursuant to the terms of any Convertible Securities shall be the consideration
received or receivable by the Company for issuing any warrants or other rights
to subscribe for or purchase such Convertible Securities, plus the consideration
paid or payable to the Company in respect of the subscription for or purchase of
such Convertible Securities, plus the additional consideration, if any, payable
to the Company upon the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of any Additional
Shares of Common Stock or Convertible Securities in payment or satisfaction of
9
any dividend upon any class of stock other than Common Stock, the Company shall
be deemed to have received for such Additional Shares of Common Stock or
Convertible Securities a consideration equal to the amount of such dividend so
paid or satisfied.
(c) When Adjustments to Be Made. The adjustments required by the foregoing
provisions of this Article IV shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that no adjustment
of the number of shares of Common Stock comprising a Stock Unit that would
otherwise be required shall be made (except in the case of a subdivision or
combination of shares of Common Stock, as provided for in Section 4.2 hereof)
unless and until such adjustment, either by itself or with other adjustments not
previously made, adds or subtracts at least $0.05 to the Exercise Price, as
determined in good faith by the Board, provided that, in any event such
adjustment shall be made if such adjustment either by itself or with other
adjustments not previously made adds or subtracts at least 1/20th of a share to
or from the number of shares of Common Stock comprising a Stock Unit immediately
prior to the making of such adjustment. Any adjustment representing a change of
less than such minimum amount (except as aforesaid) shall be carried forward and
made as soon as such adjustment, together with other adjustments required by
this Article IV and not previously made, would result in a minimum adjustment.
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.
(d) Fractional Interests. In computing adjustments under this Article IV,
fractional interests in Common Stock shall be taken into account to the nearest
one-thousandth of a share.
Section 4.9 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 thereof to stockholders, 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.
Section 4.10 Merger, Consolidation or Disposition of Assets. In case the
Company shall merge or consolidate into another corporation, or shall sell,
transfer or otherwise dispose of all or substantially all of its property,
assets or business to another corporation and pursuant to the terms of such
merger, consolidation or disposition of assets, shares of common stock of the
successor or acquiring corporation are to be received by or distributed to the
holders of Common Stock of the Company, then the holder of the Warrant shall
have the right thereafter to receive, upon exercise of the Warrant, Stock Units
each comprising the number of shares of common stock of the successor or
acquiring corporation receivable upon or as a result of such merger,
consolidation or disposition of assets by a holder of the number of shares of
Common Stock comprising a Stock Unit immediately prior to such event. If,
pursuant to the terms of such merger, consolidation or disposition of assets,
any cash, shares of stock or other securities or property of any nature
whatsoever (including without limitation warrants or other subscription or
purchase rights) are to be received by or distributed to the holders of Common
Stock of the Company in addition to common stock of the successor or acquiring
corporation, there shall be a reduction of the purchase price per Stock Unit
equal to the amount applicable to the number of shares of Common Stock then
comprising a Stock Unit of any such cash and of the fair value of any and all
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such shares of stock or of other securities or property to be received by or
distributed to the holders of Common Stock of the Company. Such fair value shall
be determined in good faith by the Board, provided that if such determination is
reasonably objected to by the holders of Warrants entitled to purchase a
majority of the Stock Units covered by all Warrants, such determination shall be
made by an independent appraiser selected by such Board and not reasonably
objected to by such holders. In case of any such merger, consolidation or
disposition of assets, the successor acquiring corporation 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 of the obligations and liabilities hereunder, subject to such
modification as shall be necessary to provide for adjustments of Stock Units
which shall be as nearly equivalent as practicable to the adjustments provided
for in this Article IV. For the purposes of this Article IV "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 4.10 shall similarly
apply to successive mergers, consolidations or dispositions of assets.
Section 4.11 Adjustment of Exercise Price. Whenever the number of shares of
Common Stock comprising a Stock Unit purchasable upon the exercise of this
Warrant is adjusted as herein provided, the Exercise Price payable upon exercise
of this Warrant also shall be adjusted by multiplying such Exercise Price
immediately prior to such adjustment by a fraction, the numerator of which shall
be the number of shares of Common Stock comprising a Stock Unit purchasable upon
the exercise of this Warrant immediately prior to such adjustment, and the
denominator of which shall be the number of shares of Common Stock comprising a
Stock Unit so purchasable immediately thereafter.
Section 4.12 Other Action Affecting Common Stock. In case at any time or
from time to time the Company shall take any action affecting its Common Stock,
other than an action described in any of the foregoing Sections 4.2 through
4.10, inclusive, then, unless in the opinion of the Board such action will not
have a materially adverse effect upon the rights of the holders of the Warrants,
the number of shares of Common Stock or other stock comprising a Stock Unit, or
the Current Warrant Price, shall be adjusted in such manner and at such time as
the Board may in good faith determine to be equitable in the circumstances.
Article V
NOTICE TO WARRANT HOLDERS
Section 5.1 Notice of Adjustment of Stock Unit or Exercise Price. Whenever
the number of shares of Common Stock comprising a Stock Unit, or the price at
which a Stock Unit may be purchased upon exercise of their Warrants, shall be
adjusted pursuant to Article IV hereof, the Company shall forthwith obtain a
certificate signed by Chief Financial Officer or independent accountants of
recognized national standing selected by the Company and reasonably acceptable
to the holders entitled to purchase the majority of the Stock Units covered by
all Warrants, setting forth, in reasonable detail, the event requiring the
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adjustment and the method by which such adjustment was calculated (including
without limitation a statement of the Current Market Value when determined by
the Board pursuant to Section 2.4(2), of any evidences of indebtedness, shares
of stock, other securities or property or warrants or other subscription or
purchase rights referred to in Sections 4.3, 4.8(b) or 4.11 hereof) and
specifying the number of shares of Common Stock comprising a Stock Unit and (if
such adjustment was made pursuant to Sections 4.10 or 4.11 hereof) describing
the number and kind of any other shares of stock comprising a Stock Unit, and
any change in the Exercise Price, after giving effect to such adjustment or
change. The Company shall promptly, and in any case within 45 days after the
making of such adjustment, cause a signed copy of such certificate to be
delivered to each holder of a Warrant in accordance with Section 10.2 hereof.
The Company shall keep at its office or agency, maintained for the purpose
pursuant to Section 10.1 hereof, copies of all such certificates and cause the
same to be available for inspection at said office during normal business hours
by any holder of a Warrant or any prospective purchaser of a Warrant designated
by a holder thereof.
Section 5.2 Notice of Certain Corporate Action. In case the Company shall
propose (a) to pay any dividend payable in stock of any class to the holders of
its Common Stock or to make any other distribution to the holders of its Common
Stock, or (b) to offer to the holders of its Common Stock rights to subscribe
for or to purchase any Additional Shares of Common Stock or shares of stock of
any class or any other securities, rights or options, or (c) to effect any
reclassification of its Common Stock (other than a reclassification involving
only the subdivision, or combination, of outstanding shares of Common Stock), or
(d) to effect any capital reorganization, or (e) to effect any consolidation,
merger or sale, transfer or other disposition of all or substantially all of its
property, assets or business, or (f) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Warrant, in accordance with Section 10.2 hereof, a notice of
such proposed action, which shall specify the date on which a record is to be
taken for the purposes of such stock dividend, distribution or rights, or the
date on which such reclassification, reorganization, consolidation, merger,
sale, transfer, disposition, liquidation, dissolution or winding up is to take
place and the date of participation therein by the holders of Common Stock, if
any such date is to be fixed, and shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such action
on the Common Stock and the number and kind of any other shares of stock which
will comprise a Stock Unit, and the purchase price or prices thereof, after
giving effect to any adjustment which will be required as a result of such
action. Such notice shall be so given in the case of any action covered by
clause (a) or (b) above at least 20 days prior to the record date for
determining holders of the Common Stock for purposes of such action, and in the
case of any other such action, at least 20 days prior to the date of the taking
of such proposed action or the date of participation therein by the holders of
Common Stock, whichever shall be the earlier.
Section 5.3 Notice of Expiration Date. The Company shall give to each
holder of a Warrant notice of the Expiration Date. Such notice may be given by
the Company not less than 30 days but not more than 60 days prior to the
Expiration Date.
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Article VI
CERTAIN COVENANTS
Section 6.1 Reservation and Authorization of Common Stock; Registration
with or Approval of any Governmental Authority.
(a) The Company shall at all times reserve and keep available for issue
upon the exercise of these Warrants such number of its authorized but unissued
shares of Common Stock as shall be sufficient to permit the exercise in full of
all outstanding Warrants. The Company shall not amend its charter in any respect
relating to the Common Stock other than to increase or decrease the number of
shares of authorized capital stock (subject to the provisions of the preceding
sentence) or to decrease the par value of any shares of Common Stock. All shares
of Common Stock that shall be so issuable, when issued upon exercise of any
Warrant and payment in full of the Exercise Price, shall be duly and validly
issued and fully-paid and nonassessable.
(b) Before taking any action which would result in an adjustment in the
number of shares of Common Stock comprising a Stock Unit or in the Exercise
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.
(c) If any shares of Common Stock required to be reserved for issue upon
exercise of Warrants require registration with any governmental authority under
any federal or state law before such shares may be so issued, the Company shall
in good faith and as expeditiously as possible and at its expense endeavor to
cause such shares to be duly registered.
Article VII
TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
Section 7.1 Taking of Record, etc. 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 Article IV hereof refers to the taking of a record of
such holders, the Company shall in each such case take such a record and shall
take such record as of the close of business on a Business Day. The Company
shall not at any time, except upon dissolution, liquidation or winding up, close
its stock transfer books or Warrant transfer books so as to result in preventing
or delaying the exercise or transfer of any Warrant.
Section 7.2 Replacement of Instruments. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any certificate or instrument evidencing any
Warrants, and (a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it, or (b) in the case of mutilation, upon surrender
or cancellation thereof, the Company, at its expense, shall execute, register
and deliver, in lieu thereof, a new certificate or instrument for (or covering
the purchase of) an equal number of Warrants.
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Article VIII
EXPENSES, TRANSFER TAXES AND OTHER CHARGES
Section 8.1 Expenses, etc. The Company shall pay any and all expenses,
transfer taxes and other charges, including, without limitation, all costs
associated with the preparation, issue and delivery of stock or warrant
certificates, that may be incurred in respect of the issuance or delivery of
shares of Common Stock upon exercise of this Warrant pursuant to Article II
hereof, or in connection with any transfer, division or combination of Warrants
pursuant to Article III hereof. The Company shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock in a name other than that in which
this Warrant is registered, and no such issue or delivery shall be made unless
and until the Person requesting such issue has paid to the Company the amount of
any such tax, or has established, to the satisfaction of the Company, that such
tax has been paid.
Article IX
NO VOTING RIGHTS
Section 9.1 No Voting Rights. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of the Company.
Article X
MISCELLANEOUS
Section 10.1 Office of the Company. So long as any of the Warrants remains
outstanding, the Company shall maintain an office in the continental United
States of America where the Warrants may be presented for exercise, transfer,
division or combination as in this Warrant provided. Such office shall be at
Company's office unless and until the Company shall designate and maintain some
other office for such purposes and give notice thereof to the Holders of all
outstanding Warrants. The Company shall maintain at such office books for the
registration and transfer of the Warrants.
Section 10.2 Notices. All notices, requests, demands, approvals, consents,
waivers and other communications required or permitted to be given under this
Warrant (each, a "Notice") shall be in writing and shall be (a) delivered
personally, (b) mailed by first-class mail or certified mail, return receipt
requested, postage prepaid, (c) sent by next-day or overnight mail or delivery
or (d) sent by facsimile transmission, provided that a confirmation statement is
retained by sender.
(a) if to holder, to:
L-3 Communications Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxxx, Esq.
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(b) if to Company, to:
Innovative Micro Technology, Inc.
00 Xxxxx Xxxx Xxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx, President
with a copy, which shall not constitute notice, to:
Xxxxx X. Xxxxx, Esq.
Sheppard, Mullin, Xxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
or, in each case, at such other address as may be specified in a Notice to the
other party hereto from time to time. All Notices shall be deemed effective and
given upon receipt.
Section 10.3 Amendments. The terms of this Warrant and all other Warrants
may be amended, and the observance of any term therein may be waived, but only
with the written consent of the holders of Warrants evidencing two-thirds in
number of the total number of Stock Units at the time purchasable upon the
exercise of all then outstanding Warrants. For the purposes of determining
whether the holders of outstanding Warrants entitled to purchase a requisite
number of Stock Units at any time have taken any action authorized by this
Warrant, any Warrants owned by the Company or any Affiliate of the Company shall
be deemed not to be outstanding.
Section 10.4 Restrictions on Transferability. The Warrants and the Warrant
Shares shall be transferable only upon compliance with the conditions specified
in Sections 5.3, 5.4 and 5.5 of the Stock Purchase Agreement, Section 8.1 of the
Warrant and applicable Securities Act restrictions referred to in Section 3.1 of
this Warrant, which conditions are intended to ensure compliance with the
provisions of the Securities Act in respect of the transfer of any Warrant or
any Warrant Shares, and any holder of this Warrant shall be bound by the
provisions of (and entitled to the benefits of) Section 3.1 and the remainder of
this Warrant.
Section 10.5 Governing Law. This Warrant shall be governed by, and
construed in accordance with, the law of the State of New York.
Section 10.6 JURY TRIAL WAIVER. THE HOLDER AND THE COMPANY EACH WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INSTITUTED BY EITHER OF THEM
AGAINST THE OTHER THAT PERTAINS DIRECTLY OR INDIRECTLY TO THIS WARRANT, ANY
ALLEGED TORTIOUS CONDUCT BY THE HOLDER OR THE COMPANY, OR IN ANY WAY, DIRECTLY
OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP BETWEEN HOLDER AND
COMPANY.
Section 10.7 Limitation of Liability. No provision hereof, in the absence
of affirmative action by the holder hereof to purchase shares of Common Stock,
and no mere enumeration herein of the rights or privileges of the holder hereof,
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shall give rise to any liability of such holder for the purchase price or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its
name by a duly authorized officer and attested by its Secretary or an Assistant
Secretary.
Dated:
INNOVATIVE MICRO TECHNOLOGY, INC.
By:___________________________________
Xxxx Xxxxxx
Chief Executive Officer
ATTEST:
-------------------------------
Xxxxx X. Xxxxxxxxx
Secretary
