EXHIBIT 10.46
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE
EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO,
(ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, (iii) RECEIPT OF A NO-
ACTION LETTER(S) FROM THE APPROPRIATE GOVERNMENTAL AUTHORITY(IES), OR (iv)
OTHERWISE COMPLYING WITH THE PROVISIONS OF SECTION 7 OF THIS WARRANT.
BANYAN SYSTEMS INCORPORATED
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WARRANT TO PURCHASE 75,000 SHARES (subject to adjustment)
OF COMMON STOCK (this "Warrant")
BANYAN SYSTEMS INCORPORATED, a Massachusetts corporation (the
"Company"), hereby certifies that, for value received, Foothill Capital
Corporation, a California corporation ("Foothill"), or registered assigns, is
the registered holder of warrants (the "Warrants") to subscribe for and purchase
Seventy-Five Thousand (75,000) shares of the fully paid and nonassessable Common
Stock (as adjusted pursuant to Section 4 hereof, the "Shares") of the Company,
at the price of Two and Nine-Thirty Seconds Dollars ($2.28125), or as adjusted
under the Securities Issuance Agreement per share (such price and such other
price as shall result, from time to time, from the adjustments specified in
Section 4 hereof is herein referred to as the "Warrant Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth. As used
herein, (a) the term "Common Stock" shall mean the Company's presently
authorized Common Stock, $.01 par value per share, and any stock into or for
which such Common Stock may hereafter be converted or exchanged, and (b) the
term "Other Warrants" shall mean any warrant issued upon transfer or partial
exercise of this Warrant. The term "Warrant" as used herein shall be deemed to
include Other Warrants unless the context hereof or thereof clearly requires
otherwise. This Warrant is issued pursuant to that certain Securities Issuance
Agreement dated as of September 4, 1997 (as amended from time to time, the
"Securities Issuance Agreement") between the Company and Foothill, and this
Warrant or the holder hereof is entitled to the benefits and subject to the
terms and conditions stated therein.
1. Term. The purchase right represented by this Warrant is
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exercisable, in whole or in part, at any time and from time to time from the
date of issuance of this Warrant (the "Date of Grant") through September 4,
2007.
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to
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Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part and from time to time, by
the surrender of this Warrant (with the notice of exercise form attached hereto
as Exhibit A duly executed) at the principal office of the Company and by the
payment to the Company of an amount equal to the then applicable Warrant
Price multiplied by the number of Shares then being purchased (in same-day
funds, by certified bank check or wire transfer). The person or persons in whose
name(s) any certificate(s) representing shares of Common Stock shall be issuable
upon exercise of this Warrant shall be deemed to have become the holder(s) of
record of, and shall be treated for all purposes as the record holder(s) of, the
shares represented thereby (and such shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. In the event of any exercise of the rights represented by
this Warrant, certificates for the shares of stock so purchased shall be
delivered to the holder hereof as soon as possible and in any event within
thirty (30) days after such exercise (upon payment of any transfer tax required
by law to be paid by the holder of this Warrant) and, unless this Warrant has
been fully exercised or expired, a new Warrant representing the portion of the
Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof as soon as possible and in
any event within such thirty (30) day period.
3. Stock Fully Paid; Reservation of Shares. All Shares that may be
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issued upon the exercise of the rights represented by this Warrant will, upon
issuance pursuant to the terms and conditions herein, be fully paid and
nonassessable, and free from all taxes, liens, charges, and pre-emptive rights
with respect to the issue thereof. The Company shall pay all transfer taxes, if
any, attributable to the issuance of Shares upon the exercise of the Warrants
(other than those required by law to be paid by the holder of this Warrant).
During the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized, and reserved for the
purpose of the issue upon exercise of the purchase rights evidenced by this
Warrant, a sufficient number of shares of its Common Stock to provide for the
exercise of the rights represented by this Warrant.
4. Adjustment of Warrant Price and Number of Shares. The number and
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kind of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
a. Reclassification or Merger. In case of any
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reclassification, change or conversion of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), or in case of any merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company
is the acquiring and the surviving corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant) (a "Merger"), or in case of any sale of all or substantially all
of the assets of the Company (an "Asset Sale"), the Company, or such successor
or purchasing corporation, as the case may be, shall duly execute and deliver to
the holder of this Warrant a new Warrant (in form and substance reasonably
satisfactory to the holder of this Warrant), so that the holder of this Warrant
shall have the right to receive, at a total purchase price not to exceed that
payable upon the exercise of the unexercised portion of this Warrant, and in
lieu of the shares of Common Stock theretofore issuable upon exercise of this
Warrant, the kind and amount of shares of stock, other securities, money and
property receivable upon such reclassification, change or merger by a holder of
the number of shares of Common Stock then purchasable under this Warrant. Such
new Warrant shall provide for adjustments that shall be as nearly equivalent as
may be practicable to the
adjustments provided for in this Section 4. The provisions of this subparagraph
(a) shall similarly apply to successive reclassifications, changes, mergers and
transfers. Notwithstanding the foregoing, at the option of the Company, the
holder hereof shall exercise (or, in the sole discretion of the holder hereof,
surrender) this Warrant upon any Merger or Asset Sale which is entered into by
the Company with an unrelated third party on an arm's length basis.
b. Subdivision or Combination of Shares. If the Company at any
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time while this Warrant remains outstanding and unexpired shall subdivide or
combine its outstanding shares of Common Stock, the Warrant Price shall be
proportionately decreased in the case of a subdivision or increased in the case
of a combination, effective at the close of business on the date the subdivision
or combination becomes effective.
c. Stock Dividends and Other Distributions. If the Company at
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any time while this Warrant is outstanding and unexpired shall (i) pay a
dividend with respect to Common Stock payable in Common Stock, or (ii) make any
other distribution with respect to Common Stock (except any distribution
specifically provided for in the foregoing sub paragraphs (a) and (b)) of
Common Stock, then the Warrant Price shall be adjusted, from and after the date
of determination of shareholders entitled to receive such dividend or
distribution, to that price determined by multiplying the Warrant Price in
effect immediately prior to such date of determination by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution.
d. Special Distributions. In case the Company shall fix a
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record date for the making of a distribution to all holders of shares of Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the surviving corporation) or evidences of
indebtedness or assets (other than dividends and distributions referred to in
subparagraphs (b) and (c) above and other than cash dividends) or of
subscription rights, options, warrants, or exchangeable or convertible
securities containing the right to subscribe for or purchase shares of any class
of equity securities of the Company, the Warrant Price to be in effect on and
after such record date shall be adjusted by multiplying the Warrant Price in
effect immediately prior to such record date by a fraction (i) the numerator of
which shall be the fair market value per share of Common Stock on such record
date, less the fair value (as determined by the Board of Directors of the
Company in good faith as set forth in a duly adopted board resolution certified
by the Company's Clerk or Assistant Clerk) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights,
options, warrants, or exchangeable or convertible securities applicable to one
(1) share of the Common Stock outstanding as of such record date, and (ii) the
denominator of which shall be such fair market value per share of Common Stock.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such distribution is not so made, the Warrant Price shall
again be adjusted to be the Warrant Price which would then be in effect if such
record date had not been fixed, but such subsequent adjustment shall not affect
the number of Shares issued upon any exercise of Warrants prior to the date such
subsequent adjustment was made.
e. Other Issuances of Securities. In case the Company or any
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subsidiary shall issue shares of Common Stock, or rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock (excluding (i) shares, rights, options,
warrants, or convertible or exchangeable securities described in subparagraphs
(f) or (g) of Section 8 of the Securities Issuance Agreement or issued in any of
the transactions described in subparagraphs (b), (c) or (d) above, (ii) shares
issued upon the exercise of such rights, options or warrants or upon conversion
or exchange of such convertible or exchangeable securities, (iii) the Warrants
and any shares issued upon exercise thereof, (iv) shares of Common Stock, or
other securities convertible or exercisable therefor, issued to employees,
directors, consultants or advisors to the Company (for serving in such
capacities) under any plan or agreement, provided that the annual aggregate of
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such shares or other securities issued at below fair market value does not
exceed 500,000 shares of Common Stock, on a fully converted and exercised basis
(it being understood that the limitation contained in this proviso does not
apply to shares or other securities issued at or above fair market value), and
(v) shares of Common Stock, or other securities convertible into or exchangeable
or exercisable therefor, issued to employees, directors, consultants, or
advisors to the Company upon the exercise of any right, option, warrant, or
conversion or exchange feature of any security, to the extent that such right,
option, warrant, or convertible or exchangeable security was issued prior to
September 4, 1997 to any such employee, director, consultant, or advisor (for
serving in any such capacity) under any plan or agreement that existed prior to
September 4, 1997), at a price per share of Common Stock (determined in the case
of such rights, options, warrants, or convertible or exchangeable securities by
dividing (x) the total amount receivable by the Company in consideration of the
sale and issuance of such rights, options, warrants, or convertible or
exchangeable securities, plus the total minimum consideration payable to the
Company upon exercise, conversion, or exchange thereof by (y) the total maximum
number of shares of Common Stock covered by such rights, options, warrants, or
convertible or exchangeable securities) lower than the fair market value per
share of Common Stock on the date the Company fixes the offering price of such
shares, rights, options, warrants, or convertible or exchangeable securities,
then the Warrant Price shall be adjusted so that it shall equal the price
determined by multiplying the Warrant Price in effect immediately prior thereto
by a fraction (i) the numerator of which shall be the sum of (A) the number of
shares of Common Stock outstanding immediately prior to such sale and issuance
plus (B) the number of shares of Common Stock which the aggregate consideration
received (determined as provided below) for such sale or issuance would purchase
at such fair market value per share, and (ii) the denominator of which shall be
the total number of shares of Common Stock outstanding immediately after such
sale and issuance. Such adjustment shall be made successively whenever such an
issuance is made. For the purposes of such adjustment, the maximum number of
shares of Common Stock which the holder of any such rights, options, warrants or
convertible or exchangeable securities shall be entitled to subscribe for or
purchase shall be deemed to be issued and outstanding as of the date of such
sale and issuance and the consideration received by the Company therefor shall
be deemed to be the aggregate consideration received by the Company for such
rights, options, warrants, or convertible or exchangeable securities, plus the
minimum aggregate consideration or premium stated in such rights, options,
warrants, or convertible or exchangeable securities to be paid for the shares of
Common Stock covered thereby (without regard to any provision contained therein
for a subsequent adjustment of such consideration or premium). In case the
Company shall sell and issue shares of Common Stock, or rights, options,
warrants, or
convertible or exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock for a consideration consisting, in whole or in
part, of property other than cash or its equivalent, then in determining the
price per share of Common Stock and the consideration received by the Company
for purposes of the first sentence of this subparagraph (e), the Board of
Directors of the Company shall determine, in good faith, the fair value of said
property, and such determination shall be described in a duly adopted board
resolution certified by the Company's Clerk or Assistant Clerk. In case the
Company shall sell and issue rights, options, warrants, or convertible or
exchangeable securities containing the right to subscribe for or purchase shares
of Common Stock together with one or more other securities as a part of a unit
at a price per unit, then in determining the price per share of Common Stock and
the consideration received by the Company for purposes of the first sentence of
this subparagraph (e), the Board of Directors of the Company shall determine, in
good faith, which determination shall be described in a duly adopted board
resolution certified by the Company's Clerk or Assistant Clerk, the fair value
of the rights, options, warrants, or convertible or exchangeable securities then
being sold as part of such unit. Such adjustment shall be made successively
whenever such an issuance occurs, and in the event that such rights, options,
warrants, or convertible or exchangeable securities expire or cease to be
convertible or exchangeable before they are exercised, converted, or exchanged
(as the case may be), then the Warrant Price shall again be adjusted to the
Warrant Price that would then be in effect if such sale and issuance had not
occurred, but such subsequent adjustment shall not affect the number of Shares
issued upon any exercise of Warrants prior to the date such subsequent
adjustment is made.
f. Adjustment of Number of Shares. Upon each adjustment in the
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Warrant Price, the number of Shares of Common Stock purchasable hereunder shall
be adjusted, to the nearest whole share, to the product obtained by multiplying
the number of Shares purchasable immediately prior to such adjustment in the
Warrant Price by a fraction, the numerator of which shall be the Warrant Price
immediately prior to such adjustment and the denominator of which shall be the
Warrant Price immediately thereafter; provided that any adjustments pursuant to
Section 4(a) shall be made in accordance with the terms of such Section rather
than the terms of this Section 4(f).
g. Determination of Fair Market Value. For purposes of this
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Section 4, "fair market value" of a share of Common Stock as of a particular
date (the "Determination Date") shall mean (i) if shares of Common Stock are
traded on a national securities exchange (an "Exchange"), the average of the
closing prices of a share of the Common Stock of the Company on the last twenty
(20) trading days prior to the Determination Date reported on such Exchange as
reported in The Wall Street Journal; or (ii) if shares of Common Stock are not
traded on an Exchange but trade in the over-the-counter market and such shares
are quoted on the Nasdaq National Market System or the Nasdaq Small-Cap Market
(either, "NASDAQ"), (A) the average of the last sale prices reported on NASDAQ
or (B) if such shares are an issue for which last sale prices are not reported
on NASDAQ, the average of the closing bid and ask prices, in each case on the
last twenty (20) trading days (or if the relevant price or quotation did not
exist on any of such days, the relevant price or quotation on the next preceding
business day on which there was such a price or quotation) prior to the
Determination Date as reported in The Wall Street Journal; or (iii) if no price
can be determined on the basis of the above methods of valuation, then the
judgment of valuation shall be determined in good faith by the Board of
Directors of the
Company, which determination shall be described in a duly adopted board
resolution certified by the Company's Clerk or Assistant Clerk; provided,
however, that solely for the purpose of determining whether a below "fair market
value" issuance has occurred that could result in adjustments to the Warrant
Price pursuant to Section 4(e) (and expressly not with respect to calculating
the adjustments as could result therefrom), such fair market value shall be the
lesser of (x) the fair market value determined in accordance with the foregoing
paragraph, and (y) the fair market value as would be determined in accordance
with the foregoing paragraph if a standard of one (1) trading day rather than
the average of twenty (20) trading days were the basis for the calculations
therein.
5. Notice of Adjustments. Whenever the Warrant Price or the number
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of Shares purchasable hereunder shall be adjusted pursuant to Section 4 hereof,
the Company shall make a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the Warrant Price and the number of Shares purchasable hereunder after
giving effect to such adjustment, which shall be mailed (without regard to
Section 13 hereof, by first class mail, postage prepaid) to the holder of this
Warrant.
6. Fractional Shares. No fractional shares of Common Stock will be
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issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor based on the fair market
value (as determined in accordance with Section 4(g) above) of a share of Common
Stock on the date of exercise.
7. Compliance with Securities Act; Disposition of Warrant or Shares
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of Common Stock.
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a. Compliance with Securities Act. The holder of this Warrant,
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by acceptance hereof, agrees that this Warrant, the shares of Common Stock to be
issued upon exercise hereof are being acquired for investment and that such
holder will not offer, sell or otherwise dispose of this Warrant, or any shares
of Common Stock to be issued upon exercise hereof except under circumstances
which will not result in a violation of the Securities Act of 1933, as amended
(the "Act"). Upon exercise of this Warrant, the holder hereof shall confirm in
writing, by executing the form attached as Schedule 1 to Exhibit A hereto, that
the shares of Common Stock so purchased are being acquired for investment and
not with a view toward distribution or resale. This Warrant and all shares of
Common Stock issued upon exercise of this Warrant (unless registered under the
Act) shall be stamped or imprinted with a legend in substantially the following
form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE
OR DISPOSITION MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS REQUIRED,
(iii) RECEIPT OF A NO-ACTION LETTER(S) FROM THE APPROPRIATE GOVERNMENTAL
AUTHORITY(IES), OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF
SECTION 7 OF THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED DIRECTLY
OR INDIRECTLY."
In addition, in connection with the issuance of this Warrant, the
holder specifically represents to the Company by acceptance of this Warrant as
follows:
(1) The holder is aware of the Company's business affairs and
financial condition, and has acquired information about the Company sufficient
to reach an informed and knowledgeable decision to acquire this Warrant. The
holder is acquiring this Warrant for its own account for investment purposes
only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Act.
(2) The holder understands that this Warrant and the Shares have not
been registered under the Act in reliance upon a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of the
holder's investment intent as expressed herein. In this connection, the holder
understands that, in the view of the Securities and Exchange Commission (the
"SEC"), the statutory basis for such exemption may be unavailable if the
holder's representation was predicated solely upon a present intention to hold
the Warrant and the Shares for the minimum capital gains period specified under
applicable tax laws, for a deferred sale, for or until an increase or decrease
in the market price of the Warrant and the Shares, or for a period of one (1)
year or any other fixed period in the future.
(3) The holder further understands that this Warrant and the Shares
must be held indefinitely unless subsequently registered under the Act and any
applicable state securities laws, or unless exemptions from registration are
otherwise available.
(4) The holder is aware of the provisions of Rule 144 and 144A,
promulgated under the Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: the availability of certain public information about the Company, the
resale occurring not less than one (1) year after the party has purchased and
paid for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended) and the amount of securities being sold during any three-month period
not exceeding the specified limitations stated therein.
(5) The holder further understands that at the time it wishes to sell
this Warrant and the Shares there may be no public market upon which to make
such a sale, and that, even if such a public market then exists, the Company may
not be satisfying the current public information requirements of Rule 144 and
144A, and that, in such event, the holder may be precluded from selling this
Warrant and the Shares under Rule 144 and 144A even if the one-year minimum
holding period had been satisfied.
(6) The holder further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the Act,
compliance with
Regulation A, or some other registration exemption will be required; and that,
notwithstanding the fact that Rule 144 and 144A is not exclusive, the Staff of
the SEC has expressed its opinion that persons proposing to sell private
placement securities other than in a registered offering and otherwise than
pursuant to Rule 144 and 144A will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
b. Disposition of Warrant or Shares. With respect to any
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offer, sale or other disposition of this Warrant, or any Shares acquired
pursuant to the exercise of this Warrant prior to registration of such Warrant
or Shares, the holder hereof and each subsequent holder of this Warrant agrees
to give written notice to the Company prior thereto, describing briefly the
manner thereof, together with a written opinion of such holder's counsel (which
shall be reasonably acceptable to the Company and knowledgeable regarding
securities matters, including without limitation Xxxxxxx, Xxxxxxx & Xxxxxxxx
LLP), if reasonably requested by the Company, to the effect that such offer,
sale or other disposition may be effected without registration or qualification
(under the Act as then in effect or any federal or state law then in effect) of
this Warrant or such Shares and indicating whether or not under the Act
certificates for this Warrant or such Shares to be sold or otherwise disposed of
require any restrictive legend as to applicable restrictions on transferability
in order to ensure compliance with applicable law. Promptly upon receiving such
written notice and reasonably satisfactory opinion, if so requested, the
Company, as promptly as practicable, shall notify such holder that such holder
may sell or otherwise dispose of this Warrant or such Shares, all in accordance
with the terms of the notice delivered to the Company. If a determination has
been made pursuant to this subsection (b) that the opinion of counsel for the
holder is not reasonably satisfactory to the Company, the Company shall so
notify the holder promptly after such determination has been made. The
foregoing notwithstanding, this Warrant or such Shares may, as to such federal
laws, be offered, sold or otherwise disposed of in accordance with Rule 144 and
144A under the Act, provided that the Company shall have been furnished with
such information as the Company and its counsel may reasonably request to
provide a reasonable assurance that the provisions of Rule 144 and 144A have
been satisfied. Each certificate representing this Warrant or the Shares thus
transferred (except a transfer pursuant to Rule 144) shall bear a legend as to
the applicable restrictions on transferability in order to ensure compliance
with such laws, unless in the aforesaid opinion of counsel for the holder, such
legend is not required in order to ensure compliance with such laws. The Company
may issue stop transfer instructions to its transfer agent or, if acting as its
own transfer agent, the Company may stop transfer on its corporate books, in
connection with such restrictions. Notwithstanding any other provision herein
to the contrary, this Warrant and/or any Shares acquired pursuant to the
exercise of this Warrant may be sold or otherwise transferred by Foothill to any
person or entity in compliance with applicable law, but if and to the extent
that any such sale or transfer of such Warrant or Shares is to a person or
entity that is not also a purchaser or transferee of all or part of Foothill's
rights and obligations under the Loan Agreement, such sale or transfer to such
person or entity shall be free of, and shall not carry with it, the put rights
set forth in Section 10.4 hereof.
8. Rights as Shareholders; Information. No holder of this Warrant,
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as such, shall be entitled to vote or receive dividends or be deemed the holder
of Common Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof for
any purpose, nor shall anything contained herein be construed to confer upon the
holder of this Warrant, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of the directors or upon any
matter submitted to shareholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein. The foregoing
notwithstanding, the Company will use its reasonable best efforts to transmit to
the holder of this Warrant such information, documents and reports as are
generally distributed to the holders of any class or series of the securities of
the Company concurrently with the distribution thereof to the shareholders.
9. Registration Rights. The holder of this Warrant shall be
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entitled to registration rights as set forth in the Securities Issuance
Agreement.
10. Additional Rights.
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10.1 Mergers. In the event that the Company undertakes to (i)
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sell, lease, exchange, convey or otherwise dispose of all or substantially all
of its property or business, or (ii) merge into or consolidate with any other
corporation (other than a wholly-owned subsidiary of the Company), or effect any
transaction (including a merger or other reorganization) or series of related
transactions, in which more than 50% of the voting power of the Company is
disposed of, the Company will use its reasonable best efforts to provide at
least thirty (30) days notice prior to the proposed effective date of the
transaction of the terms and conditions of the proposed transaction. The
foregoing notwithstanding, the provisions of this Section 10.1 shall not require
the Company to take any action which would, in the good faith determination of
the Company after consultation with counsel, constitute a violation of, or
create liability for the Company under, Federal or state securities laws or the
rules of any securities exchange or NASDAQ on which the Company is then listed.
10.2 Right to Convert Warrant into Common Stock; Net Issuance.
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a. Right to Convert. In addition to and without limiting the
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rights of the holder under the terms of this Warrant, the holder shall have the
right to convert this Warrant or any portion thereof (the "Conversion Right")
into shares of Common Stock as provided in this Section 10.2 at any time or from
time to time during the term of this Warrant. Upon exercise of the Conversion
Right with respect to a particular number of shares subject to this Warrant (the
"Converted Warrant Shares"), the Company shall deliver to the holder (without
payment by the holder of any exercise price or any cash or other consideration)
that number of shares of fully paid and nonassessable Common Stock equal to the
quotient obtained by dividing (i) the value of this Warrant (or the specified
portion hereof) on the Conversion Date (as defined in subsection (b) hereof),
which value shall be equal to (A) the aggregate fair market value of the
Converted Warrant Shares issuable upon exercise of this Warrant (or the
specified portion hereof) on the Conversion Date less (B) the aggregate Warrant
Price of the Converted Warrant Shares immediately prior to the exercise of the
Conversion Right by (ii) the fair market value of one share of Common Stock on
the Conversion Date.
Expressed as a formula, such conversion shall be computed as follows:
X= A - B
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Y
Where: X = the number of shares of Common Stock that shall be
issued to holder
Y = the fair market value (FMV) of one share of Common
Stock
A = the aggregate FMV (i.e., FMV x Converted Warrant
Shares)
B = the aggregate Warrant Price (i.e., Converted
Warrant Shares x Warrant Price)
No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date. For purposes of Section 5 of the
Securities Issuance Agreement, shares issued pursuant to the Conversion Right
shall be treated as if they were issued upon the exercise of this Warrant.
b. Method of Exercise. The Conversion Right may be exercised
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by the holder by the surrender of this Warrant at the principal office of the
Company together with a written statement specifying that the holder thereby
intends to exercise the Conversion Right and indicating the number of shares
subject to this Warrant which are being surrendered (referred to in subsection
(a) hereof as the Converted Warrant Shares) in exercise of the Conversion Right.
Such conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"). Certificates for the shares issuable
upon exercise of the Conversion Right and, if applicable, a new warrant
evidencing the balance of the shares remaining subject to this Warrant, shall be
issued as of the Conversion Date and shall be delivered to the holder within
thirty (30) days following the Conversion Date.
c. Determination of Fair Market Value. For purposes of this
----------------------------------
Section 10.2, "fair market value" of a share of Common Stock shall have the
meaning set forth in Section 4(g) above.
10.4 Put Rights.
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a. Upon and after a Put Triggering Event (as defined below),
each holder of Warrants or Shares (the Warrants and the Shares are referred to
herein, collectively, as the "Securities") shall have the right, in such
holder's sole discretion, to require the Company to repurchase ("put") such
holder's Securities at a purchase price of $3.28125 per share (the "Put
Purchase Price") of Common Stock purchased or purchasable by such holder upon
exercise of Warrant(s) (less any Warrant Price payable with respect to any then
outstanding Warrants). A "Put Triggering Event" means any of the following
events: (i) an Event of Default as defined under the Loan Agreement (to the
extent any applicable cure period has expired; and, provided that, to the extent
--------
that any Event of Default is permanently waived by Foothill, any Put Triggering
Event premised on such permanently waived Event of Default shall cease, and, to
the extent that any Event of Default is temporarily waived by Foothill, any Put
Triggering Event premised on such temporarily waived Event of Default shall be
suspended and postponed for the duration of such waiver); (ii) the maturity of
the Obligations (whether scheduled, accelerated or otherwise); (iii) repayment
in full of the Obligations in connection with a refinancing of the Obligations
by the Company with any party other than Foothill; (iv) the sale or other
disposition of all or substantially all of the assets of the Company, or (v) the
consummation by the Company of any merger, consolidation or other reorganization
(other than as permitted under the Loan Agreement or as otherwise permitted by
Foothill pursuant to a written waiver). For the purposes of this Warrant, the
terms "Loan Agreement" and "Obligations" shall have the same meanings for such
terms as are defined (or incorporated by reference) in the Securities Issuance
Agreement.
b. Such put right shall be exercisable by written notice (the
"Put Notice") given to the Company. The Company shall effect the repurchase of
the Securities pursuant to the Put Notice by paying the purchase price therefor
in cash to the holder not more than thirty (30) days after receipt by the
Company of the Put Notice, but only as and to the extent the Company has funds
legally available therefore; and at such time the holder shall deliver to the
Company the Securities to be repurchased, properly endorsed for transfer.
Anything herein to the contrary notwithstanding, if the put right provided for
herein has not been exercised by the date that is two years after the earlier of
(y) the date that the Loan Agreement is terminated and Foothill has no further
obligations thereunder, and (z) the date that all Obligations of the Company to
Foothill have become due and payable, whether in accordance with their terms, by
reason of acceleration, or otherwise, and if Foothill has not been stayed or
enjoined from exercising such put right (whether by reason of the provisions of
the United States Bankruptcy Code or otherwise), then such put right shall
expire at the close of business on such date first referred to in this sentence.
c. Upon each adjustment in the Warrant Price pursuant to
Section 4 hereof, (i) with respect to the unexercised portion of this Warrant,
the Put Purchase Price shall be adjusted as if such Put Purchase Price were
subject to adjustment by the terms of Section 4 in the same manner as the
Warrant Price, and (ii) with respect to Shares after exercise of all or the
applicable portion of the Warrant, the Put Purchase Price shall be adjusted as
if such Put Purchase Price were subject to adjustment by the terms of Sections
4(a) and 4(b) (and not Sections 4(c) though (e)) in the same manner as the
Warrant Price.
10.5 Call Rights.
-----------
a. At any time, the Company shall have the right, in its sole
discretion, to repurchase ("call") the Shares, if and to the extent then owned
by Foothill (and not its assigns or transferees, except for a private assignee
or transferee that continues to have put rights and registration rights
hereunder), and the Warrant, regardless of ownership thereof, at a purchase
price of $5.28125 per share (the "Call Purchase Price") of Common Stock
purchased or purchasable upon exercise of the Warrant (less any Warrant Price
payable with respect to any portion of the Warrant then outstanding). Such call
right shall be exercisable by written notice (the "Call Notice") given to
Foothill (and any applicable assigns). The Company shall effect the repurchase
of the all of the Securities (as defined in the Securities Purchase Agreement)
pursuant to the Call Notice by paying the purchase price therefor in cash to
Foothill (and its assigns, as applicable) not less than ten (10) nor more than
thirty (30) days after delivery by the Company of the Call Notice; and at such
time each holder shall deliver to the Company the Securities to be repurchased,
properly endorsed for transfer. Without limiting the generality of the
foregoing provisions of this paragraph, once any Shares have been sold or
transferred pursuant to Rule 144 promulgated under the Act, or pursuant to an
effective registration statement under the Act, the Company shall have no
further call rights with respect to such Shares. Any certificate representing
Shares subject to the call right provided for herein shall bear the following
legend: "THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A CALL RIGHT IN FAVOR OF THE
ISSUER HEREOF PURSUANT TO A SECURITIES ISSUANCE AGREEMENT, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION BY WRITTEN REQUEST TO THE COMPANY FROM ANY HOLDER OF
THESE SHARES." If the Shares evidenced by any certificate bearing the foregoing
legend cease to be subject to the call right provided for herein, the Company
upon request and upon presentation by the holder thereof of the certificate
bearing such legend will reissue a certificate for such Shares without such a
legend.
b. Upon each adjustment in the Warrant Price pursuant to
Section 4 hereof, (i) with respect to the unexercised portion of this Warrant,
the Call Purchase Price shall be adjusted as if such Call Purchase Price were
subject to adjustment by the terms of Section 4 in the same manner as the
Warrant Price, and (ii) with respect to Shares after exercise of all or the
applicable portion of the Warrant, the Call Purchase Price shall be adjusted as
if such Call Purchase Price were subject to adjustment by the terms of Sections
4(a) and 4(b) (and not Sections 4(c) though (e)) in the same manner as the
Warrant Price.
11. Representations and Warranties. The Company represents and
------------------------------
warrants to the holder of this Warrant as follows:
a. This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and other
equitable remedies;
b. The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable;
c. The rights, preferences, privileges and restrictions granted
to or imposed upon the Common Stock and the holders thereof are as set forth in
the certificate of incorporation of the Company, as amended to the date hereof
(as so amended, the "Charter"), a true and complete copy of which has been
delivered to the original holder of this Warrant;
d. The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Charter or by-laws of the
Company, do not and will not contravene, in any material respect, any
governmental rule or regulation, judgment or order applicable to the Company,
and do not and will not conflict with or contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument of which the Company is a party or by which it is bound or require
the consent or approval of, the giving of notice to, the registration or filing
with or the taking of any action in respect of or by, any Federal, state or
local government authority or agency or other person, except for the filing of
notices pursuant to federal and state securities laws, which filings will be
effected by the time required thereby, in each case except as would not have a
material adverse effect on the Company; and
e. Except as set forth in the Loan Agreement (as defined in the
Securities Issuance Agreement), there are no actions, suits, audits,
investigations or proceedings pending or, to the knowledge of the Company,
threatened against the Company in any court or before any governmental
commission, board or authority which, if adversely determined, will have a
material adverse effect on the ability of the Company to perform its obligations
under this Warrant.
12. Modification and Waiver. This Warrant and any provision hereof
-----------------------
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
13. Notices. Any notice, request, communication or other document
-------
required or permitted to be given or delivered to the holder hereof or the
Company shall be delivered, or shall be sent by private courier or certified or
registered mail, postage prepaid, to each such holder at its address as shown on
the books of the Company or to the Company at the address indicated therefor on
the signature page of this Warrant.
14. Binding Effect on Successors. This Warrant shall be binding upon
----------------------------
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets, and all of the obligations
of the Company relating to the Common Stock issuable upon the exercise or
conversion of this Warrant shall survive the exercise, conversion and
termination of this Warrant and all of the covenants and agreements of the
Company shall inure to the benefit of the successors and assigns of the holder
hereof. The Company will, at the time of the exercise or conversion of this
Warrant, in whole or in part, upon request of the holder hereof but at the
Company's expense, acknowledge in writing its continuing obligation to the
holder hereof in respect of any rights to which the holder hereof shall continue
to be entitled after such exercise or conversion in accordance with this
Warrant; provided, that the failure of the holder hereof to make any such
request shall not affect the continuing obligation of the Company to the holder
hereof in respect of such rights.
15. Lost Warrants or Stock Certificates. The Company covenants to
-----------------------------------
the holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any loss, theft or destruction, upon
receipt of an executed lost securities bond or indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant or stock certificate, the Company
will make and deliver a new Warrant or stock certificate, of like tenor, in lieu
of the lost, stolen, destroyed or mutilated Warrant or stock certificate.
16. Descriptive Headings. The descriptive headings of the several
--------------------
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
17. Governing Law. This Warrant shall be construed and enforced in
-------------
accordance with, and the rights of the parties shall be governed by, the laws of
the Commonwealth of Massachusetts.
18. Survival of Representations, Warranties and Agreements. All
------------------------------------------------------
representations and warranties of the Company and the holder hereof contained
herein shall survive the issuance hereof, the exercise or conversion of this
Warrant (or any part hereof) or the termination or expiration of rights
hereunder. All agreements of the Company and the holder hereof contained herein
shall survive indefinitely until, by their respective terms, they are no longer
operative.
19. Remedies. In case any one or more of the covenants and
--------
agreements contained in this Warrant shall have been breached, the holder hereof
(in the case of a breach by the Company), or the Company (in the case of a
breach by a holder), may proceed to protect and enforce its rights either by
suit in equity and/or by action at law, including, but not limited to, an action
for damages as a result of any such breach and/or an action for specific
performance of any such covenant or agreement contained in this Warrant.
20. Acceptance. Receipt of this Warrant by the holder hereof shall
----------
constitute acceptance of and agreement to the foregoing terms and conditions.
21. No Impairment of Rights. The Company will not, by amendment of
-----------------------
its Charter or through any other means, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
holder of this Warrant against impairment.
[Balance of page intentionally omitted]
IN WITNESS WHEREOF, this Warrant is issued on September 4, 1997
BANYAN SYSTEMS INCORPORATED
By:
Title:
Address:
EXHIBIT A
NOTICE OF EXERCISE
To: BANYAN SYSTEMS INCORPORATED
1. The undersigned hereby elects to purchase _______ shares of
Common Stock of BANYAN SYSTEMS INCORPORATED pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name or names as are
specified below:
--------------------------------------
(Name)
--------------------------------------
--------------------------------------
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
In support thereof, the undesigned has executed an Investment Representation
Statement attached hereto as Schedule 1.
-----------------------------------
(Signature)
------------------
(Date)
Schedule 1
----------
INVESTMENT REPRESENTATION STATEMENT
Purchaser:
Company: BANYAN SYSTEMS INCORPORATED
Security: Common Stock
Amount:
Date:
In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to the Company as
follows:
(a) The Purchaser is aware of the Company's business affairs and
financial condition, and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities. The
Purchaser is purchasing the Securities for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as amended
(the "Act").
(b) The Purchaser understands that the Securities have not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the
Purchaser's investment intent as expressed herein. In this connection, the
Purchaser understands that, in the view of the Securities and Exchange
Commission ("SEC"), the statutory basis for such exemption may be unavailable if
the Purchaser's representation was predicated solely upon a present intention to
hold these Securities for the minimum capital gains period specified under
applicable tax laws, for a deferred sale, for or until an increase or decrease
in the market price of the Securities, or for a period of one year or any other
fixed period in the future.
(c) The Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Act or unless an exemption
from registration is otherwise available. In addition, the Purchaser
understands that the certificate evidencing the Securities will be imprinted
with the legend referred to in the Warrant under which the Securities are being
purchased.
(d) The Purchaser is aware of the provisions of Rule 144 and 144A,
promulgated under the Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: The availability of certain public information about the Company, the
resale occurring not less than one (1) year after the party has purchased and
paid for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended) and the amount of securities being sold during any three-month period
not exceeding the specified limitations stated therein.
(e) The Purchaser further understands that at the time it wishes to
sell the Securities there may be no public market upon which to make such a
sale, and that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144 and 144A, and
that, in such event, the Purchaser may be precluded from selling the Securities
under Rule 144 and 144A even if the one-year minimum holding period had been
satisfied.
(f) The Purchaser further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the Act,
compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden or proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
Purchaser:
______________________________
Date: ________________________
