EXHIBIT 5
EXECUTION COPY
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE ON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
Right to Purchase 5,000,000 Shares
of Common Stock of Vsource, Inc.
VSOURCE, INC.
Common Stock Purchase Warrant
VSOURCE, INC., a Delaware corporation (the "COMPANY"), hereby certifies
that, for value received, Quilvest Asian Equity Ltd., a company established
under the laws of the British Virgin Islands (the "HOLDER") is entitled, subject
to the terms set forth below, to purchase from the Company from time to time
during the Exercise Period (as defined below) five million (5,000,000) fully
paid and nonassessable shares of common stock of the Company (the "COMMON
STOCK") at a purchase price per share equal to the Purchase Price, as defined
herein. The number of such shares of Common Stock and the Purchase Price are
subject to adjustment as provided in this Warrant. The initial purchase price
for shares subject to this Warrant will be 01/100 Dollars (U.S.$0.01) per share
(the "INITIAL PURCHASE PRICE"), and will be adjusted from time to time as
provided herein. The Initial Purchase Price or, if such price has been adjusted,
the price per share of Common Stock as last adjusted pursuant to the terms
hereof is referred to as the "PURCHASE PRICE" herein.
The Exercise Period shall commence on April 1, 2003 at 9:00 a.m., Hong
Kong time, and end on March 30, 2006 at 5:00 p.m., Hong Kong time, but
notwithstanding anything to the contrary contained herein, this Warrant shall
only be exercisable during the Exercise Period if the Liquidity Date (as defined
below) has not occurred prior to March 30, 2003.
"LIQUIDITY DATE" means the earliest to occur of: (i) the date of registration
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document by the U.S. Securities
and Exchange Commission or, in connection with a Qualifying Offering (as defined
below) on an Authorized Exchange (as defined below) in a jurisdiction other than
the United States, any registration, qualification or completion of any
procedure in compliance with the applicable securities laws of such non-U.S.
jurisdiction undertaken or made to permit the unrestricted, lawful distribution
or resale of securities to
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members of the general public therein, of any of the Common Stock issuable upon
conversion of the Series 4-A Convertible Preferred Stock held by the Holder (the
"CONVERSION SHARES") following, or in conjunction with, the completion of a
Qualifying Offering (as defined below); (ii) the date on which the Holder is
able to publicly sell all of its issued or issuable Conversion Shares pursuant
to an effective registration statement covering such shares or in any three
month period pursuant to Rule 144, provided that a Qualifying Offering has
occurred; (iii) the date of the closing of a Qualifying Sale (as defined below);
and (iv) the date of the closing of a sale of all or substantially all of the
assets of the Company for consideration that results in distributions per share
to the Share Purchasers of proceeds from such sale equivalent to the
consideration that would be received in a Qualifying Sale.
"QUALIFYING OFFERING" means a firm commitment public offering, underwritten by
an internationally reputable investment bank selected by the Company's Board of
Directors, of the Company's Common Stock on an internationally recognized
exchange or quotation system, which exchange or quotation system shall have a
minimum market capitalization, based on the market value of all of the
securities listed thereon, of US$50,000,000,000, as quoted and reported within
the EMTK Function of Bloomberg Financial Markets or if not so quoted, based upon
statistics made publicly available on such exchange, or if such statistics are
not available, based upon the reasonable discretion of the Company's Board of
Directors (an "AUTHORIZED EXCHANGE") pursuant to an effective registration
statement under the Securities Act (other than a registration statement relating
either to the sale of securities to employees of the Company pursuant to its
stock option, stock purchase or similar plan or a transaction pursuant to Rule
145 under the Securities Act) or, in connection with a Qualifying Offering on an
Authorized Exchange in a jurisdiction other than the United States, pursuant to
any registration, qualification or completion of any procedure in compliance
with the applicable securities laws and exchange rules of such non-U.S.
jurisdiction undertaken or made to permit the unrestricted, lawful distribution
or resale of securities to members of the general public therein, the public
offering price per share (the "OFFERING PRICE") of which is not less than the
price that would yield an IRR (as defined below) of thirty percent (30%) to the
persons who on October 25, 2002 purchased shares of Series 4-A Convertible
Preferred Stock for cash consideration (such persons being referred to herein as
the "SHARE PURCHASERS" and such price being referred to herein as the "30% IRR
PRICE") and in which the aggregate net proceeds (after deductions of
underwriters' commissions and offering expenses) to the Company exceed
US$20,000,000 (or the equivalent in the applicable currency).
"IRR" means the discount rate that would make the present value of a stream of
Payments (as defined below) and Receipts (as defined below) equal zero where:
(i) cash payments (the "PAYMENTS") are:
(a) the purchase consideration paid by the Share Purchasers to the
Company for Series 4-A Convertible Preferred Stock purchased on October 25,
2002;
(b) the purchase consideration paid by the Share Purchasers to the
Company, if any, for Series 4-A Convertible Preferred Stock purchased after
October 25, 2002 pursuant to the Series 4-A Convertible Preferred Stock Purchase
Agreement dated as of
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October 23, 2002 by and among the Company, the Share Purchasers and the other
investors named therein; and
(c) the purchase consideration paid by the Share Purchasers to the
Company, if any, for Common Stock issued upon exercise of warrants which were
issued in connection with the Series 4-A Convertible Preferred Stock, including
this Warrant (the "WARRANT SHARES"); and
(ii) amounts received (the "RECEIPTS") are:
(a) dividend distributions and other cash payments, if any, received
by the Share Purchasers from the Company in respect of: (1) the Series 4-A
Convertible Preferred Stock and Warrant Shares and (2) any securities received
by the Share Purchasers in respect of the Series 4-A Convertible Preferred Stock
or Warrant Shares without additional consideration paid by the Share Purchasers;
and
(b) the value of Series 4-A Convertible Preferred Stock, Warrant
Shares and any securities received by the Share Purchasers in respect of the
Series 4-A Convertible Preferred Stock or Warrant Shares without additional
consideration paid by the Share Purchasers held by the Share Purchasers on the
Liquidity Date determined as (1) the aggregate value of the Series 4-A
Convertible Preferred Stock and Warrant Shares and such securities held by the
Share Purchasers on the Liquidity Date in the case of a Qualifying Offering
(determined as the offering price to the public per share of Common Stock times
the number of Warrant Shares and the number of issued or issuable Conversion
Shares); (2) the aggregate purchase price of the Series 4-A Convertible
Preferred Stock, Warrant Shares and/or such securities on the Liquidity Date in
the case of a Qualifying Sale; or (3) the proceeds distributable to the Share
Purchasers on the Liquidity Date in the case of a sale of assets; and
(iii) the first date in the measurement of the present value will be
October 25, 2002 and the last date will be the Liquidity Date.
"QUALIFYING SALE" means a sale of more than fifty percent (50%) of the Company's
Common Stock on a fully diluted basis (assuming full conversion and exercise of
all outstanding convertible, exchangeable and exercisable securities, including,
without limitation, securities granted under any employee share option plan
which have vested) for a purchase price per share at least equal to the 30% IRR
Price, provided however, that in the event the purchase price for such
securities is payable in marketable securities, such marketable securities shall
be valued at the average of the daily closing prices of such marketable
securities over the 180 consecutive trading days immediately preceding (and not
including) the date such marketable securities are received, and provided
further, that such purchase price is payable in full at the closing in cash or
marketable securities.
1. EXERCISE OF WARRANT.
(a) At any time during the Exercise Period, this Warrant may be exercised
by the Holder hereof in full or in part at any time or from time to time by
surrender of this Warrant
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and the subscription form annexed hereto (duly executed by the Holder), to the
Company, and by making payment in cash or by certified check, wire transfer or
any combination thereof, in the amount obtained by multiplying (i) the number of
shares of Common Stock designated by the Holder in the subscription form by (ii)
the Purchase Price then in effect. On any partial exercise the Company will
forthwith issue and deliver to or upon the order of the Holder hereof a new
Warrant of like tenor, in the name of the Holder hereof, providing in the
aggregate on the face or faces thereof for the purchase of the number of shares
of Common Stock for which such Warrant may still be exercised.
(b) At any time during the Exercise Period, in lieu of exercising this
Warrant as provided above, the Holder may elect to receive, without the payment
by the Holder of any additional consideration, shares of Common Stock equal to
the value of this Warrant (or the portion thereof being canceled) by surrender
of this Warrant at the principal office of the Company together with the
subscription form attached hereto indicating such election, in which event the
Company shall issue to the holder hereof a number of shares of Common Stock
computed using the following formula:
Y (A - B)
---------
X = A
Where: X = The number of shares of Common Stock to be issued to the
Holder pursuant to this net exercise;
Y = The number of shares of Common Stock designated by the
Holder in the subscription form;
A = The then fair market value of one share of Common Stock
as of the date the election is made;
B = The Purchase Price (as adjusted to the date of the
election).
For purposes of this Section 1(b), the fair market value of one share of Common
Stock as of a particular date shall be determined as follows: (i) if traded on a
securities exchange or through the Nasdaq National Market or SmallCap System,
the value shall be deemed to be the lower of the average of the closing bid
price of the securities on such exchange over the five (5) day period ending
three (3) days prior to the net exercise election and the closing bid price of
the securities on such exchange on the trading day ending three (3) days prior
to the net exercise election; (ii) if traded over-the-counter, the value shall
be deemed to be the lower of the average of the closing price over the five (5)
day period ending three (3) days prior to the net exercise and the closing bid
price on the trading day ending three (3) days prior to the net exercise
election; and (iii) if there is no active public market, the value shall be the
fair market value thereof, as determined in good faith by the Board of Directors
of the Company.
2. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon as practicable
after the exercise of this Warrant, the Company will cause to be issued in the
name of and delivered to the Holder hereof a certificate for the number of fully
paid and nonassessable shares of Common Stock (or Other Securities) to which the
Holder shall be entitled on such exercise,
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plus, in lieu of any fractional share to which the Holder would otherwise be
entitled, cash equal to such fraction multiplied by the then current fair market
value as determined pursuant to Section 1(b) above of one full share, together
with any other stock or other securities or property (including cash, where
applicable) to which the Holder is entitled upon such exercise. "Other
Securities" shall mean any stock (other than Common Stock) and other securities
of the Company or any other person (corporate or otherwise) which the Holder at
any time shall be entitled to receive, or shall have received, on the exercise
of this Warrant, in lieu of or in addition to Common Stock, or which at any time
shall be issuable or shall have been issued in exchange for or in replacement of
Common Stock or Other Securities pursuant to Section 3.
The Holder shall be deemed to become the holder of, and shall be treated
for all purposes as the record holder of, the Common Stock represented by such
certificate, and such Common Stock shall be deemed to have been issued,
immediately prior to the close of business on the date on which this Warrant and
notice of exercise are presented and payment made for such Common Stock,
notwithstanding that the stock transfer books of the Company shall then be
closed or that such certificates shall not then be actually delivered to the
Holder.
The issuance of Common Stock upon exercise of this Warrant shall be made
without charge to the Holder for any issuance tax with respect thereto or any
other cost incurred by the Company in connection with the exercise of this
Warrant and the related issuance of Common Stock. The Company shall pay all
expenses in connection with, and all taxes (other than stock transfer, income,
capital gain or similar taxes) and other governmental charges that may be
imposed in respect of, the issuance, sale and delivery of the Warrant and the
related Common Stock to the Holder.
3. ADJUSTMENT.
(a) Initial Purchase Price; Subsequent Adjustment of Price and Number of
Purchasable Shares. The Initial Purchase Price will be adjusted from time to
time as provided below; provided that, as set forth in and subject to Section 4,
in no event shall the Purchase Price per share be adjusted to a price which is
less than the par value of the Common Stock at such time. Upon each adjustment
of the Purchase Price, the Holder will thereafter be entitled to purchase, at
the Purchase Price resulting from such adjustment, the number of shares of
Common Stock obtained by multiplying the Purchase Price in effect immediately
before such adjustment by the number of shares of Common Stock purchasable
pursuant to this Warrant immediately before such adjustment and dividing the
product by the Purchase Price resulting from such adjustment.
(b) Adjustment for Stock Splits and Combinations. If the Company at any
time or from time to time after the date of this Warrant effects a subdivision
of the outstanding Common Stock, by stock split or otherwise, the Purchase Price
then in effect immediately before that subdivision shall be proportionately
decreased; and, conversely, if the Company at any time or from time to time
after the date of this Warrant combines the outstanding shares of Common Stock,
by reverse stock split or otherwise, the Purchase Price then in effect
immediately before that combination shall be proportionately increased. Any
adjustment under this Section 3(b) shall become effective at the close of
business on the date the
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subdivision or combination becomes effective.
(c) Adjustment for Certain Dividends and Distributions. In the event the
Company at any time or from time to time after the date of this Warrant either
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional
shares of Common Stock, then and in each such event the Purchase Price then in
effect shall be decreased as of the time of such issuance or, in the event such
a record date is fixed, as of the close of business on such record date, by
multiplying the Purchase Price then in effect by a fraction (1) the numerator of
which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance on the close of business on such
record date, and (2) the denominator of which shall be (i) the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus (ii) the number
of shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date is fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Purchase Price shall be recomputed accordingly as of the close of business
on such record date or date fixed therefor and thereafter the Purchase Price
shall be adjusted pursuant to this Section 3(c) as of the time of actual payment
of such dividend or distribution. For purposes of the foregoing formula, "the
total number of shares of Common Stock issued and outstanding" on a particular
date shall include shares of Common Stock issuable upon conversion of stock or
securities convertible into Common Stock and the exercise of warrants, options
or rights for the purchase of Common Stock (or stock or securities convertible
into Common Stock) which are outstanding on such date.
(d) Adjustments for Other Dividends and Distributions. In the event the
Company at any time or from time to time after the date of this Warrant makes,
or fixes a record date for the determination of holders of Common Stock entitled
to receive, a dividend or other distribution payable in securities of the
Company other than shares of Common Stock, then and in each such event,
provision shall be made so that the Holder shall receive upon exercise hereof,
in addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Company which it would have received had this
Warrant been converted into Common Stock as of the date of such event and had it
thereafter, during the period from the date of such event to and including the
date of exercise, retained such securities receivable by it as aforesaid during
such period, subject to all other adjustments called for during such period
under this Section 3 with respect to the rights of the Holder.
(e) Adjustment for Recapitalization, Reclassification, or Exchange. If the
Common Stock issuable upon the exercise of this Warrant is changed into the same
or a different number of shares of any class or classes of stock of the Company,
whether by recapitalization, reclassification or other exchange (other than a
subdivision or combination of shares, or a stock dividend or a reorganization,
merger, consolidation or sale of assets, provided for elsewhere in this Section
3), then and in any such event the Holder shall have the right thereafter to
exercise this Warrant to purchase the kind and amount of stock and other
securities and property receivable upon such recapitalization, reclassification
or other
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exchange by holders of the number of shares of Common Stock which might have
been purchased under this Warrant immediately prior to such recapitalization,
reclassification or other exchange, all subject to further adjustment as
provided herein.
(f) Reorganizations, Mergers, Consolidations or Sales of Assets. If at any
time or from time to time there is a capital reorganization of the Common Stock
(other than a subdivision or combination of shares or a stock dividend or a
recapitalization, reclassification or other exchange of shares, provided for
elsewhere in this Section 3) or a merger or consolidation of the Company with or
into another corporation, or the sale of all or substantially all of the
Company's assets to any other person, then, as a part of such capital
reorganization, merger, consolidation or sale, provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this Warrant
the number of shares of stock or other securities or property of the Company, or
of the successor corporation resulting from such capital reorganization, merger,
consolidation or sale, to which a holder of the number of shares of Common Stock
deliverable upon such exercise would have been entitled on such capital
reorganization, merger, consolidation or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 3
with respect to the rights of the Holder after the capital reorganization,
merger, consolidation or sale to the end that the provisions of this Section 3
(including the number of shares deliverable upon exercise of this Warrant) shall
continue to be applicable after that event and shall be as nearly equivalent to
the provisions hereof as may be practicable.
(g) Certificate of Adjustment. Upon the occurrence of each adjustment or
readjustment of the Purchase Price and/or the number of shares of Common Stock
subject to this Warrant, the Company at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof, and shall
prepare and furnish to the Holder a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based.
4. FURTHER ASSURANCES. The Company will take all action that may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of stock, free from all taxes, liens and charges with
respect to the issue thereof, on the exercise of all or any portion of this
Warrant from time to time outstanding. Subject to Section 13 herein, the Company
will not, by amendment of its organizational documents or through any
reorganization, corporate recapitalization, transfer of assets, consolidation,
merger, dissolution, issuance or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder under this Warrant
against impairment. Without limiting the generality of the foregoing, the
Company will not take any action which would result in the par value of Common
Stock exceeding the Purchase Price.
5. NOTICES OF RECORD DATE, ETC. In the event of:
(a) any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend on, or
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any right to subscribe for, purchase or otherwise acquire any shares of stock of
any class or any other securities or property, or to receive any other right
(other than in connection with the Reverse Stock Split (as defined below)), or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company (other than in connection
with the Reverse Stock Split (as defined below)) or any transfer of all or
substantially all of the assets of the Company to or the sale, consolidation or
merger of the Company with, to or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or winding-up of
the Company;
then and in each such event the Company will mail or cause to be sent to the
Holder, at least thirty (30) business days prior to such record date, a notice
specifying (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and stating the amount and character of
such dividend, distribution or right, (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock (or
Other Securities) shall be entitled to exchange their shares of Common Stock (or
Other Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up, and (iii) the amount and
character of any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made. Such notice shall also state that the action in
question or the record date is subject to the effectiveness of a registration
statement under the Securities Act or a favorable vote of stockholders if either
is required. The Holder shall use its best efforts to decide whether to exercise
this Warrant (if this Warrant is exercisable at such time) within ten (10) days
of its receipt of such notice.
6. REGISTER; REPLACEMENT. The Company shall keep at its principal executive
office a register in which, subject to such reasonable regulations as it may
prescribe, it shall provide for the registration, transfer and exchange of this
Warrant. The Company and any Company agent may treat the person in whose name
this Warrant is registered as the owner of this Warrant for all purposes
whatsoever, and neither the Company nor any Company agent shall be affected by
any notice to the contrary.
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant and (i) in the case of
any such loss, theft or destruction, upon delivery of indemnity reasonably
satisfactory to the Company in form and amount or (ii) in the case of any such
mutilation, upon surrender of such Warrant for cancellation at the principal
executive office, the Company, at its expense, shall promptly execute and
deliver, in lieu thereof, a new Warrant of like tenor.
All warrants issued upon any registration of transfer or exchange of this
Warrant shall be the valid obligations of the Company, evidencing the same
rights, and entitled to the same benefits, as the Warrant surrendered upon such
registration of transfer or exchange. Except as
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provided above, no service or other charge shall be imposed on the Holder for
any exchange of this Warrant.
7. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS. The Company
will at all times reserve and keep available out of its authorized but unissued
shares of capital stock, solely for issuance and delivery on the exercise of
this Warrant, a sufficient number of shares of Common Stock (or Other
Securities) to effect the full exercise of this Warrant and the exercise,
conversion or exchange of any other warrant or security of the Company
exercisable for, convertible into, exchangeable for or otherwise entitling the
Holder to acquire shares of Common Stock (or Other Securities), and if at any
time the number of authorized but unissued shares of Common Stock (or Other
Securities) shall not be sufficient to effect such exercise, conversion or
exchange, the Company shall take such action as may be necessary to increase its
authorized but unissued shares of Common Stock (or Other Securities) to such
number as shall be sufficient for such purposes.
8. TRANSFER OF WARRANT. This Warrant cannot be transferred in whole or in part
unless: (i) such transfer is to a Permitted Transferee as such term is defined
in that certain Stockholders Agreement dated as of October 25, 2002 among the
Company, the Holder and the other parties named therein (the "STOCKHOLDERS
AGREEMENT"), (ii) such Permitted Transferee agrees to be bound by the terms and
conditions of the Stockholders Agreement, (iii) such transfer is made in
connection with a concurrent transfer to the Permitted Transferee of a
proportional amount of the Holder's shares of Series 4-A Convertible Preferred
Stock or Common Stock issued upon conversion of those shares, provided, that if
the Holder on any occasion does not transfer, in connection with a partial
transfer of its Series 4-A Convertible Preferred Stock or Common Stock issued
upon conversion of the Series 4-A Convertible Preferred Stock, the full portion
of the Warrant that such Holder would be entitled to transfer at that time (the
"UNTRANSFERRED PORTION"), the Holder shall have the right to transfer, in any
subsequent transfer by such Holder of its Series 4-A Convertible Preferred Stock
or Common Stock issued upon conversion of the Series 4-A Convertible Preferred
Stock, the Untransferred Portion in addition to whatever portion of Warrants
such Holder would otherwise be entitled to transfer in accordance with this
subsection (iii) and (iv) such transfer complies with all applicable securities
laws.
9. NO RIGHTS AS A STOCKHOLDER. This Warrant shall not entitle the Holder hereof
to any voting rights or other rights as a stockholder of the Company.
10. NOTICES, ETC. All notices which are required to be given pursuant to this
Warrant shall be in writing and shall be delivered by certified mail, return
receipt requested, first class or air mail postage prepaid, or sent by overnight
express or similarly recognized overnight delivery with receipt acknowledged or
by facsimile, with a copy thereof sent by one of the other means. Notices shall
be deemed to have been given at the time delivered and shall be addressed as
follows or to such other address as a party may designate by proper notice
hereunder.
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If to Holder: Quilvest Asian Equity Ltd.
Xxxxx 0000
Xxxxxxx Xxxxx
00 Xxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Facsimile: (000) 0000-0000
with a copy to:
Address: Xxxxxxx X. Xxxx
Debevoise & Xxxxxxxx
13/F Entertainment Building
00 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Facsimile: (000) 0000-0000
If to the Company: Vsource, Inc.
00000 Xxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn.: CFO
Facsimile: 0 (000) 000-0000
with a copy to:
Vsource (Asia) Ltd
Xxxx 000, XXX Xxxxxx
000 Xxxxxxxxxx Xxxx, Xxxxxxx
Xxxx Xxxx
Attn: General Counsel
Facsimile: (000) 0000-0000
11. SECURITIES LAWS. By acceptance of this Warrant, the Holder represents to the
Company that the Holder is "accredited investor" within the meaning of Rule 501
of Regulation D adopted under the Securities Act, as presently in effect, or not
a "U.S. person" within the meaning of Rule 902 adopted under the Securities Act
and is acquiring the Securities in an "offshore transaction" as defined in Rule
902, that this Warrant is being acquired for the Holder's own account and for
the purpose of investment and not with a view to, or for sale in connection
with, the distribution thereof, nor with any present intention of
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distributing or selling the Warrant or the Common Stock issuable upon exercise
of the Warrant, and that it is an investor in securities of companies in the
development stage and acknowledges that it 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 shares subject to this Warrant. The Holder acknowledges and agrees that
this Warrant and the Common Stock issuable upon exercise of this Warrant (if
any) have not been (and at the time of acquisition by the Holder, will not have
been or will not be) registered under the Securities Act or under the securities
laws of any state, in reliance upon certain exemptive provisions of such
statutes. The Holder further recognizes and acknowledges that because this
Warrant and the Common Stock issuable upon exercise of this Warrant are
unregistered, they may not be eligible for resale, and may only be resold in the
future pursuant to an effective registration statement under the Securities Act
and any applicable state securities laws, or pursuant to a valid exemption from
such registration requirements and that the Holder may, therefore, be required
to bear the economic risk of such investment indefinitely.
12. LEGEND. Unless theretofore registered for resale under the Securities Act,
each certificate for shares issued upon exercise of this Warrant shall bear the
following or a similar legend, in addition to any other legends required by any
agreements entered into by the Company and the Holder:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
13. CANCELLATION AND ISSUANCE OF NEW WARRANT. Notwithstanding anything to the
contrary contained herein, this Warrant shall be deemed automatically cancelled
if the Company completes a reverse stock split of its issued and outstanding
Common Stock at an exchange ratio of twenty to one (the "REVERSE STOCK SPLIT")
by filing a Certificate of Amendment to its Certificate of Incorporation with
the Secretary of State of the State of Delaware to effect the Reverse Stock
Split (the "REVERSE STOCK SPLIT COMPLETION DATE").
Promptly after the Reverse Stock Split Completion Date, the Company shall
send a notice of such event to the Holder, and upon receipt of such notice, the
Holder shall thereafter promptly deliver the original, executed copy of this
Warrant to the Company for cancellation. Upon the Company's receipt of the
original, executed copy of this Warrant and in exchange therefor, the Company
will cause to be issued in the name of and delivered to the Holder hereof the
warrant attached hereto as Exhibit A (the "NEW WARRANT"). The issuance and
delivery of the New Warrant shall constitute full and complete consideration for
the cancellation of this Warrant.
For the avoidance of doubt, the number of shares of Common Stock and per
share
11
purchase price set forth on the first page of the New Warrant shall not be
adjusted as a result of the Reverse Stock Split.
The Holder shall be deemed to become the holder of, and shall be treated
for all purposes as the record holder of, the New Warrant, and such New Warrant
shall be deemed to have been issued, immediately upon the Reverse Stock Split
Completion Date, notwithstanding that the stock transfer books of the Company
shall then be closed or that the New Warrant shall not then be actually
delivered to the Holder.
The issuance of the New Warrant shall be made without charge to the Holder
for any issuance tax with respect thereto or any other cost incurred by the
Company in connection with the issuance of the New Warrant.
14. MISCELLANEOUS. This Warrant and any terms hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. If, in any action before any court or agency legally empowered to
enforce any term, any term is found to be unenforceable, then such term shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency, and if any term is not so curable, the unenforceability of such term
shall not affect the other provisions of this Warrant but this Warrant shall be
constructed as if such unenforceable term had never been contained herein. This
Warrant shall be construed and enforced in accordance with and governed by the
internal laws of the State of New York, without regard to conflict of laws
principles. The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision.
12
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on
its behalf by one of its officers thereunto duly authorized as of October 25,
2002.
VSOURCE, INC.
By:/s/ Xxxxxx Xxxxx
------------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
SIGNATURE PAGE TO COMMON STOCK PURCHASE WARRANT II
FORM OF SUBSCRIPTION
VSOURCE, INC.
(To be signed only on exercise of Warrant)
TO: VSOURCE, INC.
1. The undersigned Holder of the attached original, executed Warrant
hereby elects to exercise its purchase right under such Warrant with respect to
shares of Common Stock, as defined in the Warrant, of Vsource, Inc., a Delaware
corporation (the "Company").
2. The undersigned Holder is hereby paying the aggregate purchase price
for such shares of Common Stock (the "Exercise Shares") (i) by the enclosed
certified or official bank check payable in United States dollars to the order
of the Company in the amount of $___________, or (ii) by wire transfer of United
States funds to the account of the Company in the amount of $______________,
which transfer has been made before or simultaneously with the delivery of this
Form of Subscription pursuant to the instructions of the Company, or (iii)
electing to exercise the attached Warrant for _______ shares purchasable under
the Warrant pursuant to the net exercise provisions of Section 1(b) of such
Warrant.
3. Please issue a stock certificate or certificates representing the
appropriate number of shares of Common Stock in the name of the undersigned
Holder.
Dated:_______________________
__________________________
Signature of Holder
SIGNATURE PAGE TO COMMON STOCK PURCHASE WARRANT II
EXHIBIT A
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE ON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
Right to Purchase [250,000] Shares
of Common Stock of Vsource, Inc.
VSOURCE, INC.
Common Stock Purchase Warrant
VSOURCE, INC., a Delaware corporation (the "COMPANY"), hereby certifies
that, for value received, [Quilvest Asian Equity Ltd.] (the "HOLDER") is
entitled, subject to the terms set forth below, to purchase from the Company
from time to time during the Exercise Period (as defined below) [two hundred
fifty thousand (250,000)] fully paid and nonassessable shares of common stock of
the Company (the "COMMON STOCK") at a purchase price per share equal to the
Purchase Price, as defined herein. The number of such shares of Common Stock and
the Purchase Price are subject to adjustment as provided in this Warrant. The
initial purchase price for shares subject to this Warrant will be 01/100 Dollars
(U.S.$0.01) per share (the "INITIAL PURCHASE PRICE"), and will be adjusted from
time to time as provided herein. The Initial Purchase Price or, if such price
has been adjusted, the price per share of Common Stock as last adjusted pursuant
to the terms hereof is referred to as the "PURCHASE PRICE" herein.
This Warrant has been issued in exchange for the cancellation of the prior
warrant granted by the Company to the Holder dated October 25, 2002.
The Exercise Period shall commence on April 1, 2005 at 9:00 a.m., Hong
Kong time, and end on March 30, 2006 at 5:00 p.m., Hong Kong time, but
notwithstanding anything to the contrary contained herein, this Warrant shall
only be exercisable during the Exercise Period if neither of the following has
occurred: (i) the Company's consolidated Adjusted EBITDA (as defined below)
during any four consecutive fiscal quarters beginning with the fiscal quarter
ended October 31, 2002 up to and including the fiscal quarter ended January 31,
2004 equaled or exceeded U.S.$10 million, as shown in the Company's audited
financial statements for such period which shall be delivered to the Holder by
April 30, 2004, or (ii) the Liquidity Date (as defined below) has occurred prior
to January 31, 2005. "ADJUSTED
EBITDA" means net income or loss available to the Company's stockholders as
adjusted for the following items:
1. the addition (deduction if a net loss is available to stockholders) of
interest or other funding costs whether arising on bank debt, convertible notes
or other capital instruments or funding of the Company;
2. the deduction (addition if a net loss is available to stockholders) of
interest income earned on bank deposits or other liquid investments held by the
Company; provided, that interest income earned by the Company on client funds in
bank deposits held by the Company in connection with the Company's payroll and
expense claims services shall not be deducted (or added if a net loss is
available to stockholders);
3. the addition (deduction if a net loss is available to stockholders) of
taxation expense or the deduction (addition if a net loss is available to
stockholders) of any tax credit;
4. addition (deduction if a net loss is available to stockholders) of
depreciation of property and equipment or other fixed assets used by the
Company, including, for the prevention of doubt, any impairment charges against
the carrying value of such assets;
5. the addition (deduction if a net loss is available to stockholders) of
amortization of intangible assets including goodwill and, for the prevention of
doubt, any impairment charges against the carrying value of such assets;
6. the addition (deduction if a net loss is available to stockholders) of
any extraordinary loss and the deduction (addition if a net loss is available to
stockholders) of any extraordinary gain;
7. the addition (deduction if a net loss is available to stockholders) of
any beneficial conversion feature expense;
8. the addition (deduction if a net loss is available to stockholders) of
any loss arising on the extinguishment or conversion of any loan, debt, warrant
or other capital instrument of the Company and the deduction (addition if a net
loss is available to stockholders) of any gain arising on the extinguishment or
conversion of any loan, debt, warrant or capital instrument of the Company;
9. the addition (deduction if a net loss is available to stockholders) of
any non-cash stock-based compensation expense arising from any stock or option
grant made prior to October 25, 2002, up to U.S.$220,000;
10. the addition (deduction if a net loss is available to stockholders) of
any unrealized loss arising from the translation of foreign currency into U.S.
dollars and the deduction (addition if a net loss is available to stockholders)
of any unrealized gain arising from the translation of foreign currency into
U.S. dollars; and
11. the addition (deduction if a net loss is available to stockholders) of
any non-cash loss or expense recognized in the accounts of the Company to the
extent not already taken into account in one of the above adjustments and the
deduction (addition if a net loss is available to stockholders) of any non-cash
gain recognized in the accounts of the Company to the extent not already taken
into account in one of the above adjustments; provided, that any non-cash
stock-based compensation expense arising from any stock or option grant made
after October 25, 2002 shall not be added (or deducted if a net loss is
available). A "non-cash" loss or expense is an expense or loss recognized in the
accounts of the Company in accordance with United States generally accepted
accounting principles ("US GAAP") but which is not required to be settled or
paid in cash, and a "non-cash" gain is a gain recognized in the accounts of the
Company in accordance with US GAAP but for which the Company will not receive
cash.
"LIQUIDITY DATE" means the earliest to occur of: (i) the date of registration
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document by the U.S. Securities
and Exchange Commission or, in connection with a Qualifying Offering (as defined
below) on an Authorized Exchange (as defined below) in a jurisdiction other than
the United States, any registration, qualification or completion of any
procedure in compliance with the applicable securities laws of such non-U.S.
jurisdiction undertaken or made to permit the unrestricted, lawful distribution
or resale of securities to members of the general public therein, of any of the
Common Stock issuable upon conversion of the Series 4-A Convertible Preferred
Stock held by the Holder (the "CONVERSION SHARES") following, or in conjunction
with, the completion of a Qualifying Offering (as defined below); (ii) the date
on which the Holder is able to publicly sell all of its issued or issuable
Conversion Shares pursuant to an effective registration statement covering such
shares or in any three month period pursuant to Rule 144, provided that a
Qualifying Offering has occurred; (iii) the date of the closing of a Qualifying
Sale (as defined below); and (iv) the date of the closing of a sale of all or
substantially all of the assets of the Company for consideration that results in
distributions per share to the Share Purchasers of proceeds from such sale
equivalent to the consideration that would be received in a Qualifying Sale.
"QUALIFYING OFFERING" means a firm commitment public offering, underwritten by
an internationally reputable investment bank selected by the Company's Board of
Directors, of the Company's Common Stock on an internationally recognized
exchange or quotation system, which exchange or quotation system shall have a
minimum market capitalization, based on the market value of all of the
securities listed thereon, of US$50,000,000,000, as quoted and reported within
the EMTK Function of Bloomberg Financial Markets or if not so quoted, based upon
statistics made publicly available on such exchange, or if such statistics are
not available, based upon the reasonable discretion of the Company's Board of
Directors (an "AUTHORIZED EXCHANGE") pursuant to an effective registration
statement under the Securities Act (other than a registration statement relating
either to the sale of securities to employees of the Company pursuant to its
stock option, stock purchase or similar plan or a transaction pursuant to Rule
145 under the Securities Act) or, in connection with a Qualifying
Offering on an Authorized Exchange in a jurisdiction other than the United
States, pursuant to any registration, qualification or completion of any
procedure in compliance with the applicable securities laws and exchange rules
of such non-U.S. jurisdiction undertaken or made to permit the unrestricted,
lawful distribution or resale of securities to members of the general public
therein, the public offering price per share (the "OFFERING PRICE") of which is
not less than the price that would yield an IRR (as defined below) of thirty
percent (30%) to the persons who on October 25, 2002 purchased shares of Series
4-A Convertible Preferred Stock for cash consideration (such persons being
referred to herein as the "SHARE PURCHASERS" and such price being referred to
herein as the "30% IRR PRICE") and in which the aggregate net proceeds (after
deductions of underwriters' commissions and offering expenses) to the Company
exceed US$20,000,000 (or the equivalent in the applicable currency).
"IRR" means the discount rate that would make the present value of a stream of
Payments (as defined below) and Receipts (as defined below) equal zero where:
(i) cash payments (the "PAYMENTS") are:
(a) the purchase consideration paid by the Share Purchasers to the
Company for Series 4-A Convertible Preferred Stock purchased on October 25,
2002;
(b) the purchase consideration paid by the Share Purchasers to the
Company, if any, for Series 4-A Convertible Preferred Stock purchased after
October 25, 2002 pursuant to the Series 4-A Convertible Preferred Stock Purchase
Agreement dated as of October 23, 2002 by and among the Company, the Share
Purchasers and the other investors named therein; and
(c) the purchase consideration paid by the Share Purchasers to the
Company, if any, for Common Stock issued upon exercise of warrants which were
issued in connection with the Series 4-A Convertible Preferred Stock, including
this Warrant (the "WARRANT SHARES"); and
(ii) amounts received (the "RECEIPTS") are:
(a) dividend distributions and other cash payments, if any, received
by the Share Purchasers from the Company in respect of: (1) the Series 4-A
Convertible Preferred Stock and Warrant Shares and (2) any securities received
by the Share Purchasers in respect of the Series 4-A Convertible Preferred Stock
or Warrant Shares without additional consideration paid by the Share Purchasers;
and
(b) the value of Series 4-A Convertible Preferred Stock, Warrant
Shares and any securities received by the Share Purchasers in respect of the
Series 4-A Convertible Preferred Stock or Warrant Shares without additional
consideration paid by the Share Purchasers held by the Share Purchasers on the
Liquidity Date determined as (1) the aggregate value of the Series 4-A
Convertible Preferred Stock and Warrant Shares and such securities held by the
Share Purchasers on the Liquidity Date in the case of a Qualifying Offering
(determined as the offering price to the public per share of Common Stock times
the number of Warrant Shares and the number of issued or issuable Conversion
Shares); (2) the aggregate purchase price of the Series 4-A Convertible
Preferred Stock, Warrant Shares and/or such securities on the Liquidity Date in
the case of a Qualifying Sale; or (3) the proceeds distributable to the Share
Purchasers on the Liquidity Date in the case of a sale of assets; and
(iii) the first date in the measurement of the present value will be
October 25, 2002 and the last date will be the Liquidity Date.
"QUALIFYING SALE" means a sale of more than fifty percent (50%) of the Company's
Common Stock on a fully diluted basis (assuming full conversion and exercise of
all outstanding convertible, exchangeable and exercisable securities, including,
without limitation, securities granted under any employee share option plan
which have vested) for a purchase price per share at least equal to the 30% IRR
Price, provided however, that in the event the purchase price for such
securities is payable in marketable securities, such marketable securities shall
be valued at the average of the daily closing prices of such marketable
securities over the 180 consecutive trading days immediately preceding (and not
including) the date such marketable securities are received, and provided
further, that such purchase price is payable in full at the closing in cash or
marketable securities.
1. EXERCISE OF WARRANT.
(a) At any time during the Exercise Period, this Warrant may be exercised
by the Holder hereof in full or in part at any time or from time to time by
surrender of this Warrant and the subscription form annexed hereto (duly
executed by the Holder), to the Company, and by making payment in cash or by
certified check, wire transfer or any combination thereof, in the amount
obtained by multiplying (i) the number of shares of Common Stock designated by
the Holder in the subscription form by (ii) the Purchase Price then in effect.
On any partial exercise the Company will forthwith issue and deliver to or upon
the order of the Holder hereof a new Warrant of like tenor, in the name of the
Holder hereof, providing in the aggregate on the face or faces thereof for the
purchase of the number of shares of Common Stock for which such Warrant may
still be exercised.
(b) At any time during the Exercise Period, in lieu of exercising this
Warrant as provided above, the Holder may elect to receive, without the payment
by the Holder of any additional consideration, shares of Common Stock equal to
the value of this Warrant (or the portion thereof being canceled) by surrender
of this Warrant at the principal office of the Company together with the
subscription form attached hereto indicating such election, in which event the
Company shall issue to the holder hereof a number of shares of Common Stock
computed using the following formula:
Y (A - B)
---------
X = A
Where: X = The number of shares of Common Stock to be issued to the
Holder pursuant to this net exercise;
Y = The number of shares of Common Stock designated by the
Holder in the subscription form;
A = The then fair market value of one share of Common Stock
as of the date the election is made;
B = The Purchase Price (as adjusted to the date of the
election).
For purposes of this Section 1(b), the fair market value of one share of Common
Stock as of a particular date shall be determined as follows: (i) if traded on a
securities exchange or through the Nasdaq National Market or SmallCap System,
the value shall be deemed to be the lower of the average of the closing bid
price of the securities on such exchange over the five (5) day period ending
three (3) days prior to the net exercise election and the closing bid price of
the securities on such exchange on the trading day ending three (3) days prior
to the net exercise election; (ii) if traded over-the-counter, the value shall
be deemed to be the lower of the average of the closing price over the five (5)
day period ending three (3) days prior to the net exercise and the closing bid
price on the trading day ending three (3) days prior to the net exercise
election; and (iii) if there is no active public market, the value shall be the
fair market value thereof, as determined in good faith by the Board of Directors
of the Company.
2. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon as practicable
after the exercise of this Warrant, the Company will cause to be issued in the
name of and delivered to the Holder hereof a certificate for the number of fully
paid and nonassessable shares of Common Stock (or Other Securities) to which the
Holder shall be entitled on such exercise, plus, in lieu of any fractional share
to which the Holder would otherwise be entitled, cash equal to such fraction
multiplied by the then current fair market value as determined pursuant to
Section 1(b) above of one full share, together with any other stock or other
securities or property (including cash, where applicable) to which the Holder is
entitled upon such exercise. "Other Securities" shall mean any stock (other than
Common Stock) and other securities of the Company or any other person (corporate
or otherwise) which the Holder at any time shall be entitled to receive, or
shall have received, on the exercise of this Warrant, in lieu of or in addition
to Common Stock, or which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or Other Securities
pursuant to Section 3.
The Holder shall be deemed to become the holder of, and shall be treated
for all purposes as the record holder of, the Common Stock represented by such
certificate, and such Common Stock shall be deemed to have been issued,
immediately prior to the close of business on the date on which this Warrant and
notice of exercise are presented and payment made for such Common Stock,
notwithstanding that the stock transfer books of the Company shall then be
closed or that such certificates shall not then be actually delivered to the
Holder.
The issuance of Common Stock upon exercise of this Warrant shall be made
without charge to the Holder for any issuance tax with respect thereto or any
other cost incurred by the Company in connection with the exercise of this
Warrant and the related issuance of Common Stock. The Company shall pay all
expenses in connection with, and all taxes (other than stock
transfer, income, capital gain or similar taxes) and other governmental charges
that may be imposed in respect of, the issuance, sale and delivery of the
Warrant and the related Common Stock to the Holder.
3. ADJUSTMENT.
(a) Initial Purchase Price; Subsequent Adjustment of Price and Number of
Purchasable Shares. The Initial Purchase Price will be adjusted from time to
time as provided below; provided that, as set forth in and subject to Section 4,
in no event shall the Purchase Price per share be adjusted to a price which is
less than the par value of the Common Stock at such time. Upon each adjustment
of the Purchase Price, the Holder will thereafter be entitled to purchase, at
the Purchase Price resulting from such adjustment, the number of shares of
Common Stock obtained by multiplying the Purchase Price in effect immediately
before such adjustment by the number of shares of Common Stock purchasable
pursuant to this Warrant immediately before such adjustment and dividing the
product by the Purchase Price resulting from such adjustment.
(b) Adjustment for Stock Splits and Combinations. If the Company at any
time or from time to time after the date of this Warrant effects a subdivision
of the outstanding Common Stock, by stock split or otherwise, the Purchase Price
then in effect immediately before that subdivision shall be proportionately
decreased; and, conversely, if the Company at any time or from time to time
after the date of this Warrant combines the outstanding shares of Common Stock,
by reverse stock split or otherwise, the Purchase Price then in effect
immediately before that combination shall be proportionately increased. Any
adjustment under this Section 3(b) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(c) Adjustment for Certain Dividends and Distributions. In the event the
Company at any time or from time to time after the date of this Warrant either
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional
shares of Common Stock, then and in each such event the Purchase Price then in
effect shall be decreased as of the time of such issuance or, in the event such
a record date is fixed, as of the close of business on such record date, by
multiplying the Purchase Price then in effect by a fraction (1) the numerator of
which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance on the close of business on such
record date, and (2) the denominator of which shall be (i) the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus (ii) the number
of shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date is fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Purchase Price shall be recomputed accordingly as of the close of business
on such record date or date fixed therefor and thereafter the Purchase Price
shall be adjusted pursuant to this Section 3(c) as of the time of actual payment
of such dividend or distribution. For purposes of the foregoing formula, "the
total number of shares of Common Stock issued and outstanding" on a particular
date shall include shares of Common Stock issuable upon conversion of stock or
securities
convertible into Common Stock and the exercise of warrants, options or rights
for the purchase of Common Stock (or stock or securities convertible into Common
Stock) which are outstanding on such date.
(d) Adjustments for Other Dividends and Distributions. In the event the
Company at any time or from time to time after the date of this Warrant makes,
or fixes a record date for the determination of holders of Common Stock entitled
to receive, a dividend or other distribution payable in securities of the
Company other than shares of Common Stock, then and in each such event,
provision shall be made so that the Holder shall receive upon exercise hereof,
in addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Company which it would have received had this
Warrant been converted into Common Stock as of the date of such event and had it
thereafter, during the period from the date of such event to and including the
date of exercise, retained such securities receivable by it as aforesaid during
such period, subject to all other adjustments called for during such period
under this Section 3 with respect to the rights of the Holder.
(e) Adjustment for Recapitalization, Reclassification, or Exchange. If the
Common Stock issuable upon the exercise of this Warrant is changed into the same
or a different number of shares of any class or classes of stock of the Company,
whether by recapitalization, reclassification or other exchange (other than a
subdivision or combination of shares, or a stock dividend or a reorganization,
merger, consolidation or sale of assets, provided for elsewhere in this Section
3), then and in any such event the Holder shall have the right thereafter to
exercise this Warrant to purchase the kind and amount of stock and other
securities and property receivable upon such recapitalization, reclassification
or other exchange by holders of the number of shares of Common Stock which might
have been purchased under this Warrant immediately prior to such
recapitalization, reclassification or other exchange, all subject to further
adjustment as provided herein.
(f) Reorganizations, Mergers, Consolidations or Sales of Assets. If at any
time or from time to time there is a capital reorganization of the Common Stock
(other than a subdivision or combination of shares or a stock dividend or a
recapitalization, reclassification or other exchange of shares, provided for
elsewhere in this Section 3) or a merger or consolidation of the Company with or
into another corporation, or the sale of all or substantially all of the
Company's assets to any other person, then, as a part of such capital
reorganization, merger, consolidation or sale, provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this Warrant
the number of shares of stock or other securities or property of the Company, or
of the successor corporation resulting from such capital reorganization, merger,
consolidation or sale, to which a holder of the number of shares of Common Stock
deliverable upon such exercise would have been entitled on such capital
reorganization, merger, consolidation or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 3
with respect to the rights of the Holder after the capital reorganization,
merger, consolidation or sale to the end that the provisions of this Section 3
(including the number of shares deliverable upon exercise of this Warrant) shall
continue to be applicable after that event and shall be as nearly equivalent to
the provisions hereof as may be practicable.
(g) Certificate of Adjustment. Upon the occurrence of each adjustment or
readjustment of the Purchase Price and/or the number of shares of Common Stock
subject to this Warrant, the Company at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof, and shall
prepare and furnish to the Holder a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based.
4. FURTHER ASSURANCES. The Company will take all action that may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of stock, free from all taxes, liens and charges with
respect to the issue thereof, on the exercise of all or any portion of this
Warrant from time to time outstanding. The Company will not, by amendment of its
organizational documents or through any reorganization, corporate
recapitalization, transfer of assets, consolidation, merger, dissolution,
issuance or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder under this Warrant against impairment. Without
limiting the generality of the foregoing, the Company will not take any action
which would result in the par value of Common Stock exceeding the Purchase
Price.
5. NOTICES OF RECORD DATE, ETC. In the event of:
(a) any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend on, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or property, or
to receive any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all of the assets of the Company to or the sale, consolidation or
merger of the Company with, to or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or winding-up of
the Company;
then and in each such event the Company will mail or cause to be sent to the
Holder, at least thirty (30) business days prior to such record date, a notice
specifying (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and stating the amount and character of
such dividend, distribution or right, (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock (or
Other Securities) shall be entitled to exchange their shares of Common Stock (or
Other Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up, and (iii) the amount and
character of any stock
or other securities, or rights or options with respect thereto, proposed to be
issued or granted, the date of such proposed issue or grant and the persons or
class of persons to whom such proposed issue or grant is to be offered or made.
Such notice shall also state that the action in question or the record date is
subject to the effectiveness of a registration statement under the Securities
Act or a favorable vote of stockholders if either is required. The Holder shall
use its best efforts to decide whether to exercise this Warrant (if this Warrant
is exercisable at such time) within ten (10) days of its receipt of such notice.
6. REGISTER; REPLACEMENT. The Company shall keep at its principal executive
office a register in which, subject to such reasonable regulations as it may
prescribe, it shall provide for the registration, transfer and exchange of this
Warrant. The Company and any Company agent may treat the person in whose name
this Warrant is registered as the owner of this Warrant for all purposes
whatsoever, and neither the Company nor any Company agent shall be affected by
any notice to the contrary.
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant and (i) in the case of
any such loss, theft or destruction, upon delivery of indemnity reasonably
satisfactory to the Company in form and amount or (ii) in the case of any such
mutilation, upon surrender of such Warrant for cancellation at the principal
executive office, the Company, at its expense, shall promptly execute and
deliver, in lieu thereof, a new Warrant of like tenor.
All warrants issued upon any registration of transfer or exchange of this
Warrant shall be the valid obligations of the Company, evidencing the same
rights, and entitled to the same benefits, as the Warrant surrendered upon such
registration of transfer or exchange. Except as provided above, no service or
other charge shall be imposed on the Holder for any exchange of this Warrant.
7. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS. The Company
will at all times reserve and keep available out of its authorized but unissued
shares of capital stock, solely for issuance and delivery on the exercise of
this Warrant, a sufficient number of shares of Common Stock (or Other
Securities) to effect the full exercise of this Warrant and the exercise,
conversion or exchange of any other warrant or security of the Company
exercisable for, convertible into, exchangeable for or otherwise entitling the
Holder to acquire shares of Common Stock (or Other Securities), and if at any
time the number of authorized but unissued shares of Common Stock (or Other
Securities) shall not be sufficient to effect such exercise, conversion or
exchange, the Company shall take such action as may be necessary to increase its
authorized but unissued shares of Common Stock (or Other Securities) to such
number as shall be sufficient for such purposes.
8. TRANSFER OF WARRANT. This Warrant cannot be transferred in whole or in part
unless: (i) such transfer is to a Permitted Transferee as such term is defined
in that certain Stockholders Agreement dated as of October 25, 2002 among the
Company, the Holder and the other parties named therein (the "STOCKHOLDERS
AGREEMENT"), (ii) such Permitted Transferee agrees to be bound by the terms and
conditions of the Stockholders Agreement, (iii) such transfer is made in
connection with a concurrent transfer to the Permitted Transferee
of a proportional amount of the Holder's shares of Series 4-A Convertible
Preferred Stock or Common Stock issued upon conversion of those shares,
provided, that if the Holder on any occasion does not transfer, in connection
with a partial transfer of its Series 4-A Convertible Preferred Stock or Common
Stock issued upon conversion of the Series 4-A Convertible Preferred Stock, the
full portion of the Warrant that such Holder would be entitled to transfer at
that time (the "UNTRANSFERRED PORTION"), the Holder shall have the right to
transfer, in any subsequent transfer by such Holder of its Series 4-A
Convertible Preferred Stock or Common Stock issued upon conversion of the Series
4-A Convertible Preferred Stock, the Untransferred Portion in addition to
whatever portion of Warrants such Holder would otherwise be entitled to transfer
in accordance with this subsection (iii) and (iv) such transfer complies with
all applicable securities laws.
9. NO RIGHTS AS A STOCKHOLDER. This Warrant shall not entitle the Holder hereof
to any voting rights or other rights as a stockholder of the Company.
10. NOTICES, ETC. All notices which are required to be given pursuant to this
Warrant shall be in writing and shall be delivered by certified mail, return
receipt requested, first class or air mail postage prepaid, or sent by overnight
express or similarly recognized overnight delivery with receipt acknowledged or
by facsimile, with a copy thereof sent by one of the other means. Notices shall
be deemed to have been given at the time delivered and shall be addressed as
follows or to such other address as a party may designate by proper notice
hereunder.
If to Holder: Quilvest Asian Equity Ltd.
Xxxxx 0000
Xxxxxxx Xxxxx
00 Xxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Facsimile: (000) 0000-0000
with a copy to:
Address: Xxxxxxx X. Xxxx
Debevoise & Xxxxxxxx
13/F Entertainment Building
00 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Facsimile: (000) 0000-0000
If to the Company: Vsource, Inc.
00000 Xxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn.: CFO
Facsimile: 0 (000) 000-0000
with a copy to:
Vsource (Asia) Ltd
Xxxx 000, XXX Xxxxxx
000 Xxxxxxxxxx Xxxx, Xxxxxxx
Xxxx Xxxx
Attn: General Counsel
Facsimile: (000) 0000-0000
11. SECURITIES LAWS. By acceptance of this Warrant, the Holder represents to the
Company that the Holder is "accredited investor" within the meaning of Rule 501
of Regulation D adopted under the Securities Act, as presently in effect, or not
a "U.S. person" within the meaning of Rule 902 adopted under the Securities Act
and is acquiring the Securities in an "offshore transaction" as defined in Rule
902, that this Warrant is being acquired for the Holder's own account and for
the purpose of investment and not with a view to, or for sale in connection
with, the distribution thereof, nor with any present intention of distributing
or selling the Warrant or the Common Stock issuable upon exercise of the
Warrant, and that it is an investor in securities of companies in the
development stage and acknowledges that it 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 shares subject to this Warrant. The Holder acknowledges and agrees that
this Warrant and the Common Stock issuable upon exercise of this Warrant (if
any) have not been (and at the time of acquisition by the Holder, will not have
been or will not be) registered under the Securities Act or under the securities
laws of any state, in reliance upon certain exemptive provisions of such
statutes. The Holder further recognizes and acknowledges that because this
Warrant and the Common Stock issuable upon exercise of this Warrant are
unregistered, they may not be eligible for resale, and may only be resold in the
future pursuant to an effective registration statement under the Securities Act
and any applicable state securities laws, or pursuant to a valid exemption from
such registration requirements and that the Holder may, therefore, be required
to bear the economic risk of such investment indefinitely.
12. LEGEND. Unless theretofore registered for resale under the Securities Act,
each certificate for shares issued upon exercise of this Warrant shall bear the
following or a similar legend, in addition to any other legends required by any
agreements entered into by the Company and the Holder:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
13. MISCELLANEOUS. This Warrant and any terms hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. If, in any action before any court or agency legally empowered to
enforce any term, any term is found to be unenforceable, then such term shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency, and if any term is not so curable, the unenforceability of such term
shall not affect the other provisions of this Warrant but this Warrant shall be
constructed as if such unenforceable term had never been contained herein. This
Warrant shall be construed and enforced in accordance with and governed by the
internal laws of the State of New York, without regard to conflict of laws
principles. The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its
behalf by one of its officers thereunto duly authorized as of [ ], 2002.
VSOURCE, INC.
By:________________________________
Name:
Title:
FORM OF SUBSCRIPTION
VSOURCE, INC.
(To be signed only on exercise of Warrant)
TO: VSOURCE, INC.
4. The undersigned Holder of the attached original, executed Warrant
hereby elects to exercise its purchase right under such Warrant with respect to
shares of Common Stock, as defined in the Warrant, of Vsource, Inc., a Delaware
corporation (the "Company").
5. The undersigned Holder is hereby paying the aggregate purchase price
for such shares of Common Stock (the "Exercise Shares") (i) by the enclosed
certified or official bank check payable in United States dollars to the order
of the Company in the amount of $___________, or (ii) by wire transfer of United
States funds to the account of the Company in the amount of $______________,
which transfer has been made before or simultaneously with the delivery of this
Form of Subscription pursuant to the instructions of the Company, or (iii)
electing to exercise the attached Warrant for _______ shares purchasable under
the Warrant pursuant to the net exercise provisions of Section 1(b) of such
Warrant.
6. Please issue a stock certificate or certificates representing the
appropriate number of shares of Common Stock in the name of the undersigned
Holder.
Dated:_______________________
___________________________
Signature of Holder
EXECUTION COPY
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE ON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
Right to Purchase 20,000,000 Shares
of Common Stock of Vsource, Inc.
VSOURCE, INC.
Common Stock Purchase Warrant
VSOURCE, INC., a Delaware corporation (the "COMPANY"), hereby certifies
that, for value received, Capital International Asia CDPQ Inc., a company
established under the laws of the Province of Quebec, Canada (the "HOLDER") is
entitled, subject to the terms set forth below, to purchase from the Company
from time to time during the Exercise Period (as defined below) twenty million
(20,000,000) fully paid and nonassessable shares of common stock of the Company
(the "COMMON STOCK") at a purchase price per share equal to the Purchase Price,
as defined herein. The number of such shares of Common Stock and the Purchase
Price are subject to adjustment as provided in this Warrant. The initial
purchase price for shares subject to this Warrant will be 01/100 Dollars
(U.S.$0.01) per share (the "INITIAL PURCHASE PRICE"), and will be adjusted from
time to time as provided herein. The Initial Purchase Price or, if such price
has been adjusted, the price per share of Common Stock as last adjusted pursuant
to the terms hereof is referred to as the "PURCHASE PRICE" herein.
The Exercise Period shall commence on April 1, 2003 at 9:00 a.m., Hong
Kong time, and end on March 30, 2006 at 5:00 p.m., Hong Kong time, but
notwithstanding anything to the contrary contained herein, this Warrant shall
only be exercisable during the Exercise Period if the Liquidity Date (as defined
below) has not occurred prior to March 30, 2003.
"LIQUIDITY DATE" means the earliest to occur of: (i) the date of
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document by the U.S.
Securities and Exchange Commission or, in connection with a Qualifying Offering
(as defined below) on an Authorized Exchange (as defined below) in a
jurisdiction other than the United States, any registration, qualification or
completion of any procedure in compliance with the applicable securities laws of
such non-U.S. jurisdiction undertaken or made to permit the unrestricted, lawful
distribution or resale of securities to
1
members of the general public therein, of any of the Common Stock issuable upon
conversion of the Series 4-A Convertible Preferred Stock held by the Holder (the
"CONVERSION SHARES") following, or in conjunction with, the completion of a
Qualifying Offering (as defined below); (ii) the date on which the Holder is
able to publicly sell all of its issued or issuable Conversion Shares pursuant
to an effective registration statement covering such shares or in any three
month period pursuant to Rule 144, provided that a Qualifying Offering has
occurred; (iii) the date of the closing of a Qualifying Sale (as defined below);
and (iv) the date of the closing of a sale of all or substantially all of the
assets of the Company for consideration that results in distributions per share
to the Share Purchasers of proceeds from such sale equivalent to the
consideration that would be received in a Qualifying Sale.
"QUALIFYING OFFERING" means a firm commitment public offering,
underwritten by an internationally reputable investment bank selected by the
Company's Board of Directors, of the Company's Common Stock on an
internationally recognized exchange or quotation system, which exchange or
quotation system shall have a minimum market capitalization, based on the market
value of all of the securities listed thereon, of US$50,000,000,000, as quoted
and reported within the EMTK Function of Bloomberg Financial Markets or if not
so quoted, based upon statistics made publicly available on such exchange, or if
such statistics are not available, based upon the reasonable discretion of the
Company's Board of Directors (an "AUTHORIZED EXCHANGE") pursuant to an effective
registration statement under the Securities Act (other than a registration
statement relating either to the sale of securities to employees of the Company
pursuant to its stock option, stock purchase or similar plan or a transaction
pursuant to Rule 145 under the Securities Act) or, in connection with a
Qualifying Offering on an Authorized Exchange in a jurisdiction other than the
United States, pursuant to any registration, qualification or completion of any
procedure in compliance with the applicable securities laws and exchange rules
of such non-U.S. jurisdiction undertaken or made to permit the unrestricted,
lawful distribution or resale of securities to members of the general public
therein, the public offering price per share (the "OFFERING PRICE") of which is
not less than the price that would yield an IRR (as defined below) of thirty
percent (30%) to the persons who on October 25, 2002 purchased shares of Series
4-A Convertible Preferred Stock for cash consideration (such persons being
referred to herein as the "SHARE PURCHASERS" and such price being referred to
herein as the "30% IRR PRICE") and in which the aggregate net proceeds (after
deductions of underwriters' commissions and offering expenses) to the Company
exceed US$20,000,000 (or the equivalent in the applicable currency).
"IRR" means the discount rate that would make the present value of a
stream of Payments (as defined below) and Receipts (as defined below) equal zero
where:
(i) cash payments (the "PAYMENTS") are:
(a) the purchase consideration paid by the Share Purchasers to the
Company for Series 4-A Convertible Preferred Stock purchased on October 25,
2002;
(b) the purchase consideration paid by the Share Purchasers to the
Company, if any, for Series 4-A Convertible Preferred Stock purchased after
October 25, 2002 pursuant to the Series 4-A Convertible Preferred Stock Purchase
Agreement dated as of
2
October 23, 2002 by and among the Company, the Share Purchasers and the other
investors named therein; and
(c) the purchase consideration paid by the Share Purchasers to the
Company, if any, for Common Stock issued upon exercise of warrants which were
issued in connection with the Series 4-A Convertible Preferred Stock, including
this Warrant (the "WARRANT SHARES"); and
(ii) amounts received (the "RECEIPTS") are:
(a) dividend distributions and other cash payments, if any, received
by the Share Purchasers from the Company in respect of: (1) the Series 4-A
Convertible Preferred Stock and Warrant Shares and (2) any securities received
by the Share Purchasers in respect of the Series 4-A Convertible Preferred Stock
or Warrant Shares without additional consideration paid by the Share Purchasers;
and
(b) the value of Series 4-A Convertible Preferred Stock, Warrant
Shares and any securities received by the Share Purchasers in respect of the
Series 4-A Convertible Preferred Stock or Warrant Shares without additional
consideration paid by the Share Purchasers held by the Share Purchasers on the
Liquidity Date determined as (1) the aggregate value of the Series 4-A
Convertible Preferred Stock and Warrant Shares and such securities held by the
Share Purchasers on the Liquidity Date in the case of a Qualifying Offering
(determined as the offering price to the public per share of Common Stock times
the number of Warrant Shares and the number of issued or issuable Conversion
Shares); (2) the aggregate purchase price of the Series 4-A Convertible
Preferred Stock, Warrant Shares and/or such securities on the Liquidity Date in
the case of a Qualifying Sale; or (3) the proceeds distributable to the Share
Purchasers on the Liquidity Date in the case of a sale of assets; and
(iii) the first date in the measurement of the present value will be
October 25, 2002 and the last date will be the Liquidity Date.
"QUALIFYING SALE" means a sale of more than fifty percent (50%) of the
Company's Common Stock on a fully diluted basis (assuming full conversion and
exercise of all outstanding convertible, exchangeable and exercisable
securities, including, without limitation, securities granted under any employee
share option plan which have vested) for a purchase price per share at least
equal to the 30% IRR Price, provided however, that in the event the purchase
price for such securities is payable in marketable securities, such marketable
securities shall be valued at the average of the daily closing prices of such
marketable securities over the 180 consecutive trading days immediately
preceding (and not including) the date such marketable securities are received,
and provided further, that such purchase price is payable in full at the closing
in cash or marketable securities.
1. EXERCISE OF WARRANT.
(a) At any time during the Exercise Period, this Warrant may be exercised
by the Holder hereof in full or in part at any time or from time to time by
surrender of this Warrant
3
and the subscription form annexed hereto (duly executed by the Holder), to the
Company, and by making payment in cash or by certified check, wire transfer or
any combination thereof, in the amount obtained by multiplying (i) the number of
shares of Common Stock designated by the Holder in the subscription form by (ii)
the Purchase Price then in effect. On any partial exercise the Company will
forthwith issue and deliver to or upon the order of the Holder hereof a new
Warrant of like tenor, in the name of the Holder hereof, providing in the
aggregate on the face or faces thereof for the purchase of the number of shares
of Common Stock for which such Warrant may still be exercised.
(b) At any time during the Exercise Period, in lieu of exercising this
Warrant as provided above, the Holder may elect to receive, without the payment
by the Holder of any additional consideration, shares of Common Stock equal to
the value of this Warrant (or the portion thereof being canceled) by surrender
of this Warrant at the principal office of the Company together with the
subscription form attached hereto indicating such election, in which event the
Company shall issue to the holder hereof a number of shares of Common Stock
computed using the following formula:
Y (A - B)
---------
X = A
Where: X = The number of shares of Common Stock to be issued to the
Holder pursuant to this net exercise;
Y = The number of shares of Common Stock designated by the
Holder in the subscription form;
A = The then fair market value of one share of Common Stock as
of the date the election is made;
B = The Purchase Price (as adjusted to the date of the
election).
For purposes of this Section 1(b), the fair market value of one share of
Common Stock as of a particular date shall be determined as follows: (i) if
traded on a securities exchange or through the Nasdaq National Market or
SmallCap System, the value shall be deemed to be the lower of the average of the
closing bid price of the securities on such exchange over the five (5) day
period ending three (3) days prior to the net exercise election and the closing
bid price of the securities on such exchange on the trading day ending three (3)
days prior to the net exercise election; (ii) if traded over-the-counter, the
value shall be deemed to be the lower of the average of the closing price over
the five (5) day period ending three (3) days prior to the net exercise and the
closing bid price on the trading day ending three (3) days prior to the net
exercise election; and (iii) if there is no active public market, the value
shall be the fair market value thereof, as determined in good faith by the Board
of Directors of the Company.
2. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon as practicable
after the exercise of this Warrant, the Company will cause to be issued in the
name of and delivered to the Holder hereof a certificate for the number of fully
paid and nonassessable shares of Common Stock (or Other Securities) to which the
Holder shall be entitled on such exercise,
4
plus, in lieu of any fractional share to which the Holder would otherwise be
entitled, cash equal to such fraction multiplied by the then current fair market
value as determined pursuant to Section 1(b) above of one full share, together
with any other stock or other securities or property (including cash, where
applicable) to which the Holder is entitled upon such exercise. "Other
Securities" shall mean any stock (other than Common Stock) and other securities
of the Company or any other person (corporate or otherwise) which the Holder at
any time shall be entitled to receive, or shall have received, on the exercise
of this Warrant, in lieu of or in addition to Common Stock, or which at any time
shall be issuable or shall have been issued in exchange for or in replacement of
Common Stock or Other Securities pursuant to Section 3.
The Holder shall be deemed to become the holder of, and shall be treated
for all purposes as the record holder of, the Common Stock represented by such
certificate, and such Common Stock shall be deemed to have been issued,
immediately prior to the close of business on the date on which this Warrant and
notice of exercise are presented and payment made for such Common Stock,
notwithstanding that the stock transfer books of the Company shall then be
closed or that such certificates shall not then be actually delivered to the
Holder.
The issuance of Common Stock upon exercise of this Warrant shall be made
without charge to the Holder for any issuance tax with respect thereto or any
other cost incurred by the Company in connection with the exercise of this
Warrant and the related issuance of Common Stock. The Company shall pay all
expenses in connection with, and all taxes (other than stock transfer, income,
capital gain or similar taxes) and other governmental charges that may be
imposed in respect of, the issuance, sale and delivery of the Warrant and the
related Common Stock to the Holder.
3. ADJUSTMENT.
(a) Initial Purchase Price; Subsequent Adjustment of Price and Number of
Purchasable Shares. The Initial Purchase Price will be adjusted from time to
time as provided below; provided that, as set forth in and subject to Section 4,
in no event shall the Purchase Price per share be adjusted to a price which is
less than the par value of the Common Stock at such time. Upon each adjustment
of the Purchase Price, the Holder will thereafter be entitled to purchase, at
the Purchase Price resulting from such adjustment, the number of shares of
Common Stock obtained by multiplying the Purchase Price in effect immediately
before such adjustment by the number of shares of Common Stock purchasable
pursuant to this Warrant immediately before such adjustment and dividing the
product by the Purchase Price resulting from such adjustment.
(b) Adjustment for Stock Splits and Combinations. If the Company at any
time or from time to time after the date of this Warrant effects a subdivision
of the outstanding Common Stock, by stock split or otherwise, the Purchase Price
then in effect immediately before that subdivision shall be proportionately
decreased; and, conversely, if the Company at any time or from time to time
after the date of this Warrant combines the outstanding shares of Common Stock,
by reverse stock split or otherwise, the Purchase Price then in effect
immediately before that combination shall be proportionately increased. Any
adjustment under this Section 3(b) shall become effective at the close of
business on the date the
5
subdivision or combination becomes effective.
(c) Adjustment for Certain Dividends and Distributions. In the event the
Company at any time or from time to time after the date of this Warrant either
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional
shares of Common Stock, then and in each such event the Purchase Price then in
effect shall be decreased as of the time of such issuance or, in the event such
a record date is fixed, as of the close of business on such record date, by
multiplying the Purchase Price then in effect by a fraction (1) the numerator of
which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance on the close of business on such
record date, and (2) the denominator of which shall be (i) the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus (ii) the number
of shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date is fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Purchase Price shall be recomputed accordingly as of the close of business
on such record date or date fixed therefor and thereafter the Purchase Price
shall be adjusted pursuant to this Section 3(c) as of the time of actual payment
of such dividend or distribution. For purposes of the foregoing formula, "the
total number of shares of Common Stock issued and outstanding" on a particular
date shall include shares of Common Stock issuable upon conversion of stock or
securities convertible into Common Stock and the exercise of warrants, options
or rights for the purchase of Common Stock (or stock or securities convertible
into Common Stock) which are outstanding on such date.
(d) Adjustments for Other Dividends and Distributions. In the event the
Company at any time or from time to time after the date of this Warrant makes,
or fixes a record date for the determination of holders of Common Stock entitled
to receive, a dividend or other distribution payable in securities of the
Company other than shares of Common Stock, then and in each such event,
provision shall be made so that the Holder shall receive upon exercise hereof,
in addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Company which it would have received had this
Warrant been converted into Common Stock as of the date of such event and had it
thereafter, during the period from the date of such event to and including the
date of exercise, retained such securities receivable by it as aforesaid during
such period, subject to all other adjustments called for during such period
under this Section 3 with respect to the rights of the Holder.
(e) Adjustment for Recapitalization, Reclassification, or Exchange. If the
Common Stock issuable upon the exercise of this Warrant is changed into the same
or a different number of shares of any class or classes of stock of the Company,
whether by recapitalization, reclassification or other exchange (other than a
subdivision or combination of shares, or a stock dividend or a reorganization,
merger, consolidation or sale of assets, provided for elsewhere in this Section
3), then and in any such event the Holder shall have the right thereafter to
exercise this Warrant to purchase the kind and amount of stock and other
securities and property receivable upon such recapitalization, reclassification
or other exchange by holders of the number of shares of Common Stock which might
have been purchased under this Warrant immediately prior to such
recapitalization, reclassification or
6
other exchange, all subject to further adjustment as provided herein.
(f) Reorganizations, Mergers, Consolidations or Sales of Assets. If at any
time or from time to time there is a capital reorganization of the Common Stock
(other than a subdivision or combination of shares or a stock dividend or a
recapitalization, reclassification or other exchange of shares, provided for
elsewhere in this Section 3) or a merger or consolidation of the Company with or
into another corporation, or the sale of all or substantially all of the
Company's assets to any other person, then, as a part of such capital
reorganization, merger, consolidation or sale, provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this Warrant
the number of shares of stock or other securities or property of the Company, or
of the successor corporation resulting from such capital reorganization, merger,
consolidation or sale, to which a holder of the number of shares of Common Stock
deliverable upon such exercise would have been entitled on such capital
reorganization, merger, consolidation or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 3
with respect to the rights of the Holder after the capital reorganization,
merger, consolidation or sale to the end that the provisions of this Section 3
(including the number of shares deliverable upon exercise of this Warrant) shall
continue to be applicable after that event and shall be as nearly equivalent to
the provisions hereof as may be practicable.
(g) Certificate of Adjustment. Upon the occurrence of each adjustment or
readjustment of the Purchase Price and/or the number of shares of Common Stock
subject to this Warrant, the Company at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof, and shall
prepare and furnish to the Holder a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based.
4. FURTHER ASSURANCES. The Company will take all action that may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of stock, free from all taxes, liens and charges
with respect to the issue thereof, on the exercise of all or any portion of this
Warrant from time to time outstanding. Subject to Section 13 herein, the Company
will not, by amendment of its organizational documents or through any
reorganization, corporate recapitalization, transfer of assets, consolidation,
merger, dissolution, issuance or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder under this Warrant
against impairment. Without limiting the generality of the foregoing, the
Company will not take any action which would result in the par value of Common
Stock exceeding the Purchase Price.
5. NOTICES OF RECORD DATE, ETC. In the event of:
7
(a) any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend on, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or property, or
to receive any other right (other than in connection with the Reverse Stock
Split (as defined below)), or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company (other than in connection
with the Reverse Stock Split (as defined below)) or any transfer of all or
substantially all of the assets of the Company to or the sale, consolidation or
merger of the Company with, to or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or winding-up of
the Company;
then and in each such event the Company will mail or cause to be sent to
the Holder, at least thirty (30) business days prior to such record date, a
notice specifying (i) the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, (ii) the date on which any
such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding up is to take place,
and the time, if any is to be fixed, as of which the holders of record of Common
Stock (or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up, and (iii) the amount and
character of any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made. Such notice shall also state that the action in
question or the record date is subject to the effectiveness of a registration
statement under the Securities Act or a favorable vote of stockholders if either
is required. The Holder shall use its best efforts to decide whether to exercise
this Warrant (if this Warrant is exercisable at such time) within ten (10) days
of its receipt of such notice.
6. REGISTER; REPLACEMENT. The Company shall keep at its principal executive
office a register in which, subject to such reasonable regulations as it may
prescribe, it shall provide for the registration, transfer and exchange of this
Warrant. The Company and any Company agent may treat the person in whose name
this Warrant is registered as the owner of this Warrant for all purposes
whatsoever, and neither the Company nor any Company agent shall be affected by
any notice to the contrary.
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant and (i) in the case of
any such loss, theft or destruction, upon delivery of indemnity reasonably
satisfactory to the Company in form and amount or (ii) in the case of any such
mutilation, upon surrender of such Warrant for cancellation at the principal
executive office, the Company, at its expense, shall promptly execute and
deliver, in lieu thereof, a new Warrant of like tenor.
8
All warrants issued upon any registration of transfer or exchange of this
Warrant shall be the valid obligations of the Company, evidencing the same
rights, and entitled to the same benefits, as the Warrant surrendered upon such
registration of transfer or exchange. Except as provided above, no service or
other charge shall be imposed on the Holder for any exchange of this Warrant.
7. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS. The Company
will at all times reserve and keep available out of its authorized but unissued
shares of capital stock, solely for issuance and delivery on the exercise of
this Warrant, a sufficient number of shares of Common Stock (or Other
Securities) to effect the full exercise of this Warrant and the exercise,
conversion or exchange of any other warrant or security of the Company
exercisable for, convertible into, exchangeable for or otherwise entitling the
Holder to acquire shares of Common Stock (or Other Securities), and if at any
time the number of authorized but unissued shares of Common Stock (or Other
Securities) shall not be sufficient to effect such exercise, conversion or
exchange, the Company shall take such action as may be necessary to increase its
authorized but unissued shares of Common Stock (or Other Securities) to such
number as shall be sufficient for such purposes.
8. TRANSFER OF WARRANT. This Warrant cannot be transferred in whole or in
part unless: (i) such transfer is to a Permitted Transferee as such term is
defined in that certain Stockholders Agreement dated as of October 25, 2002
among the Company, the Holder and the other parties named therein (the
"STOCKHOLDERS AGREEMENT"), (ii) such Permitted Transferee agrees to be bound by
the terms and conditions of the Stockholders Agreement, (iii) such transfer is
made in connection with a concurrent transfer to the Permitted Transferee of a
proportional amount of the Holder's shares of Series 4-A Convertible Preferred
Stock or Common Stock issued upon conversion of those shares, provided, that if
the Holder on any occasion does not transfer, in connection with a partial
transfer of its Series 4-A Convertible Preferred Stock or Common Stock issued
upon conversion of the Series 4-A Convertible Preferred Stock, the full portion
of the Warrant that such Holder would be entitled to transfer at that time (the
"UNTRANSFERRED PORTION"), the Holder shall have the right to transfer, in any
subsequent transfer by such Holder of its Series 4-A Convertible Preferred Stock
or Common Stock issued upon conversion of the Series 4-A Convertible Preferred
Stock, the Untransferred Portion in addition to whatever portion of Warrants
such Holder would otherwise be entitled to transfer in accordance with this
subsection (iii) and (iv) such transfer complies with all applicable securities
laws.
9. NO RIGHTS AS A STOCKHOLDER. This Warrant shall not entitle the Holder
hereof to any voting rights or other rights as a stockholder of the Company.
10. NOTICES, ETC. All notices which are required to be given pursuant to this
Warrant shall be in writing and shall be delivered by certified mail, return
receipt requested, first class or air mail postage prepaid, or sent by overnight
express or similarly recognized overnight delivery with receipt acknowledged or
by facsimile, with a copy thereof sent by one of the other means. Notices shall
be deemed to have been given at the time delivered and shall be addressed as
follows or to such other address as a party may designate by proper notice
hereunder.
9
If to Holder: Capital International Asia CDPQ Inc.
0000 Xxxx-Xxxxxxxx Xxxx. Xxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx
X0X 0X0
Facsimile: c/o CDP Asia Investments, Inc
(000) 0000-0000
with a copy to:
Xxxxxxx X. Xxxx
Debevoise & Xxxxxxxx
13/F Entertainment Building
00 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Facsimile: (000) 0000-0000
If to the Company: Vsource, Inc.
00000 Xxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn.: CFO
Facsimile: 0 (000) 000-0000
with a copy to:
Vsource (Asia) Ltd
Xxxx 000, XXX Xxxxxx
000 Xxxxxxxxxx Xxxx, Xxxxxxx
Xxxx Xxxx
Attn: General Counsel
Facsimile: (000) 0000-0000
11. SECURITIES LAWS. By acceptance of this Warrant, the Holder represents to the
Company that the Holder is "accredited investor" within the meaning of Rule 501
of Regulation D adopted under the Securities Act, as presently in effect, or not
a "U.S. person" within the meaning of Rule 902 adopted under the Securities Act
and is acquiring the Securities in an "offshore transaction" as defined in Rule
902, that this Warrant is being acquired for the Holder's own account and for
the purpose of investment and not with a view to, or for sale in connection
with, the distribution thereof, nor with any present intention of distributing
or selling the Warrant or the Common Stock issuable upon exercise of the
10
Warrant, and that it is an investor in securities of companies in the
development stage and acknowledges that it 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 shares subject to this Warrant. The Holder acknowledges and agrees that
this Warrant and the Common Stock issuable upon exercise of this Warrant (if
any) have not been (and at the time of acquisition by the Holder, will not have
been or will not be) registered under the Securities Act or under the securities
laws of any state, in reliance upon certain exemptive provisions of such
statutes. The Holder further recognizes and acknowledges that because this
Warrant and the Common Stock issuable upon exercise of this Warrant are
unregistered, they may not be eligible for resale, and may only be resold in the
future pursuant to an effective registration statement under the Securities Act
and any applicable state securities laws, or pursuant to a valid exemption from
such registration requirements and that the Holder may, therefore, be required
to bear the economic risk of such investment indefinitely.
12. LEGEND. Unless theretofore registered for resale under the Securities Act,
each certificate for shares issued upon exercise of this Warrant shall bear the
following or a similar legend, in addition to any other legends required by any
agreements entered into by the Company and the Holder:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
13. CANCELLATION AND ISSUANCE OF NEW WARRANT. Notwithstanding anything to the
contrary contained herein, this Warrant shall be deemed automatically cancelled
if the Company completes a reverse stock split of its issued and outstanding
Common Stock at an exchange ratio of twenty to one (the "REVERSE STOCK SPLIT")
by filing a Certificate of Amendment to its Certificate of Incorporation with
the Secretary of State of the State of Delaware to effect the Reverse Stock
Split (the "REVERSE STOCK SPLIT COMPLETION DATE").
Promptly after the Reverse Stock Split Completion Date, the Company shall
send a notice of such event to the Holder, and upon receipt of such notice, the
Holder shall thereafter promptly deliver the original, executed copy of this
Warrant to the Company for cancellation. Upon the Company's receipt of the
original, executed copy of this Warrant and in exchange therefor, the Company
will cause to be issued in the name of and delivered to the Holder hereof the
warrant attached hereto as Exhibit A (the "NEW WARRANT"). The issuance and
delivery of the New Warrant shall constitute full and complete consideration for
the cancellation of this Warrant.
For the avoidance of doubt, the number of shares of Common Stock and per
share purchase price set forth on the first page of the New Warrant shall not be
adjusted as a result
11
of the Reverse Stock Split.
The Holder shall be deemed to become the holder of, and shall be treated
for all purposes as the record holder of, the New Warrant, and such New Warrant
shall be deemed to have been issued, immediately upon the Reverse Stock Split
Completion Date, notwithstanding that the stock transfer books of the Company
shall then be closed or that the New Warrant shall not then be actually
delivered to the Holder.
The issuance of the New Warrant shall be made without charge to the Holder
for any issuance tax with respect thereto or any other cost incurred by the
Company in connection with the issuance of the New Warrant.
14. MISCELLANEOUS. This Warrant and any terms hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. If, in any action before any court or agency legally empowered to
enforce any term, any term is found to be unenforceable, then such term shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency, and if any term is not so curable, the unenforceability of such term
shall not affect the other provisions of this Warrant but this Warrant shall be
constructed as if such unenforceable term had never been contained herein. This
Warrant shall be construed and enforced in accordance with and governed by the
internal laws of the State of New York, without regard to conflict of laws
principles. The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision.
12
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on
its behalf by one of its officers thereunto duly authorized as of October 25,
2002.
VSOURCE, INC.
By: /s/ Xxxxxx Xxxxx
----------------------------------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
SIGNATURE PAGE TO COMMON STOCK PURCHASE WARRANT
FORM OF SUBSCRIPTION
VSOURCE, INC.
(To be signed only on exercise of Warrant)
TO: VSOURCE, INC.
1. The undersigned Holder of the attached original, executed Warrant
hereby elects to exercise its purchase right under such Warrant with respect to
shares of Common Stock, as defined in the Warrant, of Vsource, Inc., a Delaware
corporation (the "Company").
2. The undersigned Holder is hereby paying the aggregate purchase price
for such shares of Common Stock (the "Exercise Shares") (i) by the enclosed
certified or official bank check payable in United States dollars to the order
of the Company in the amount of $___________, or (ii) by wire transfer of United
States funds to the account of the Company in the amount of $______________,
which transfer has been made before or simultaneously with the delivery of this
Form of Subscription pursuant to the instructions of the Company, or (iii)
electing to exercise the attached Warrant for _______ shares purchasable under
the Warrant pursuant to the net exercise provisions of Section 1(b) of such
Warrant.
3. Please issue a stock certificate or certificates representing the
appropriate number of shares of Common Stock in the name of the undersigned
Holder.
Dated:_______________________
_______________________________________
Signature of Holder
SIGNATURE PAGE TO COMMON STOCK PURCHASE WARRANT
EXHIBIT A
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE ON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
Right to Purchase [1,000,000] Shares
of Common Stock of Vsource, Inc.
VSOURCE, INC.
Common Stock Purchase Warrant
VSOURCE, INC., a Delaware corporation (the "COMPANY"), hereby certifies
that, for value received, [Capital International Asia CDPQ Inc.] (the "HOLDER")
is entitled, subject to the terms set forth below, to purchase from the Company
from time to time during the Exercise Period (as defined below) [one million
(1,000,000)] fully paid and nonassessable shares of common stock of the Company
(the "COMMON STOCK") at a purchase price per share equal to the Purchase Price,
as defined herein. The number of such shares of Common Stock and the Purchase
Price are subject to adjustment as provided in this Warrant. The initial
purchase price for shares subject to this Warrant will be 01/100 Dollars
(U.S.$0.01) per share (the "INITIAL PURCHASE PRICE"), and will be adjusted from
time to time as provided herein. The Initial Purchase Price or, if such price
has been adjusted, the price per share of Common Stock as last adjusted pursuant
to the terms hereof is referred to as the "PURCHASE PRICE" herein.
This Warrant has been issued in exchange for the cancellation of the prior
warrant granted by the Company to the Holder dated October 25, 2002.
The Exercise Period shall commence on April 1, 2005 at 9:00 a.m., Hong
Kong time, and end on March 30, 2006 at 5:00 p.m., Hong Kong time, but
notwithstanding anything to the contrary contained herein, this Warrant shall
only be exercisable during the Exercise Period if neither of the following has
occurred: (i) the Company's consolidated Adjusted EBITDA (as defined below)
during any four consecutive fiscal quarters beginning with the fiscal quarter
ended October 31, 2002 up to and including the fiscal quarter ended January 31,
2004 equaled or exceeded U.S.$10 million, as shown in the Company's audited
financial statements for such period which shall be delivered to the Holder by
April 30, 2004, or (ii) the Liquidity Date (as defined below) has occurred prior
to January 31, 2005. "ADJUSTED EBITDA" means net income or loss available to the
Company's stockholders as adjusted for the following items:
1. the addition (deduction if a net loss is available to stockholders) of
interest or other funding costs whether arising on bank debt, convertible notes
or other capital instruments or funding of the Company;
2. the deduction (addition if a net loss is available to stockholders) of
interest income earned on bank deposits or other liquid investments held by the
Company; provided, that interest income earned by the Company on client funds in
bank deposits held by the Company in connection with the Company's payroll and
expense claims services shall not be deducted (or added if a net loss is
available to stockholders);
3. the addition (deduction if a net loss is available to stockholders) of
taxation expense or the deduction (addition if a net loss is available to
stockholders) of any tax credit;
4. addition (deduction if a net loss is available to stockholders) of
depreciation of property and equipment or other fixed assets used by the
Company, including, for the prevention of doubt, any impairment charges against
the carrying value of such assets;
5. the addition (deduction if a net loss is available to stockholders) of
amortization of intangible assets including goodwill and, for the prevention of
doubt, any impairment charges against the carrying value of such assets;
6. the addition (deduction if a net loss is available to stockholders) of
any extraordinary loss and the deduction (addition if a net loss is available to
stockholders) of any extraordinary gain;
7. the addition (deduction if a net loss is available to stockholders) of
any beneficial conversion feature expense;
8. the addition (deduction if a net loss is available to stockholders) of
any loss arising on the extinguishment or conversion of any loan, debt, warrant
or other capital instrument of the Company and the deduction (addition if a net
loss is available to stockholders) of any gain arising on the extinguishment or
conversion of any loan, debt, warrant or capital instrument of the Company;
9. the addition (deduction if a net loss is available to stockholders) of
any non-cash stock-based compensation expense arising from any stock or option
grant made prior to October 25, 2002, up to U.S.$220,000;
10. the addition (deduction if a net loss is available to stockholders) of
any unrealized loss arising from the translation of foreign currency into U.S.
dollars and the deduction (addition if a net loss is available to stockholders)
of any unrealized gain arising from the translation of foreign currency into
U.S. dollars; and
11. the addition (deduction if a net loss is available to stockholders) of
any non-
cash loss or expense recognized in the accounts of the Company to the extent not
already taken into account in one of the above adjustments and the deduction
(addition if a net loss is available to stockholders) of any non-cash gain
recognized in the accounts of the Company to the extent not already taken into
account in one of the above adjustments; provided, that any non-cash stock-based
compensation expense arising from any stock or option grant made after October
25, 2002 shall not be added (or deducted if a net loss is available). A
"non-cash" loss or expense is an expense or loss recognized in the accounts of
the Company in accordance with United States generally accepted accounting
principles ("US GAAP") but which is not required to be settled or paid in cash,
and a "non-cash" gain is a gain recognized in the accounts of the Company in
accordance with US GAAP but for which the Company will not receive cash.
"LIQUIDITY DATE" means the earliest to occur of: (i) the date of
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document by the U.S.
Securities and Exchange Commission or, in connection with a Qualifying Offering
(as defined below) on an Authorized Exchange (as defined below) in a
jurisdiction other than the United States, any registration, qualification or
completion of any procedure in compliance with the applicable securities laws of
such non-U.S. jurisdiction undertaken or made to permit the unrestricted, lawful
distribution or resale of securities to members of the general public therein,
of any of the Common Stock issuable upon conversion of the Series 4-A
Convertible Preferred Stock held by the Holder (the "CONVERSION SHARES")
following, or in conjunction with, the completion of a Qualifying Offering (as
defined below); (ii) the date on which the Holder is able to publicly sell all
of its issued or issuable Conversion Shares pursuant to an effective
registration statement covering such shares or in any three month period
pursuant to Rule 144, provided that a Qualifying Offering has occurred; (iii)
the date of the closing of a Qualifying Sale (as defined below); and (iv) the
date of the closing of a sale of all or substantially all of the assets of the
Company for consideration that results in distributions per share to the Share
Purchasers of proceeds from such sale equivalent to the consideration that would
be received in a Qualifying Sale.
"QUALIFYING OFFERING" means a firm commitment public offering,
underwritten by an internationally reputable investment bank selected by the
Company's Board of Directors, of the Company's Common Stock on an
internationally recognized exchange or quotation system, which exchange or
quotation system shall have a minimum market capitalization, based on the market
value of all of the securities listed thereon, of US$50,000,000,000, as quoted
and reported within the EMTK Function of Bloomberg Financial Markets or if not
so quoted, based upon statistics made publicly available on such exchange, or if
such statistics are not available, based upon the reasonable discretion of the
Company's Board of Directors (an "AUTHORIZED EXCHANGE") pursuant to an effective
registration statement under the Securities Act (other than a registration
statement relating either to the sale of securities to employees of the Company
pursuant to its stock option, stock purchase or similar plan or a transaction
pursuant to Rule 145 under the Securities Act) or, in connection with a
Qualifying Offering on an Authorized Exchange in a jurisdiction other than the
United States, pursuant to any registration, qualification or completion of any
procedure in compliance with the
applicable securities laws and exchange rules of such non-U.S. jurisdiction
undertaken or made to permit the unrestricted, lawful distribution or resale of
securities to members of the general public therein, the public offering price
per share (the "OFFERING PRICE") of which is not less than the price that would
yield an IRR (as defined below) of thirty percent (30%) to the persons who on
October 25, 2002 purchased shares of Series 4-A Convertible Preferred Stock for
cash consideration (such persons being referred to herein as the "SHARE
PURCHASERS" and such price being referred to herein as the "30% IRR PRICE") and
in which the aggregate net proceeds (after deductions of underwriters'
commissions and offering expenses) to the Company exceed US$20,000,000 (or the
equivalent in the applicable currency).
"IRR" means the discount rate that would make the present value of a
stream of Payments (as defined below) and Receipts (as defined below) equal zero
where:
(i) cash payments (the "PAYMENTS") are:
(a) the purchase consideration paid by the Share Purchasers to the
Company for Series 4-A Convertible Preferred Stock purchased on October 25,
2002;
(b) the purchase consideration paid by the Share Purchasers to the
Company, if any, for Series 4-A Convertible Preferred Stock purchased after
October 25, 2002 pursuant to the Series 4-A Convertible Preferred Stock Purchase
Agreement dated as of October 23, 2002 by and among the Company, the Share
Purchasers and the other investors named therein; and
(c) the purchase consideration paid by the Share Purchasers to the
Company, if any, for Common Stock issued upon exercise of warrants which were
issued in connection with the Series 4-A Convertible Preferred Stock, including
this Warrant (the "Warrant Shares"); and
(ii) amounts received (the "RECEIPTS") are:
(a) dividend distributions and other cash payments, if any, received
by the Share Purchasers from the Company in respect of: (1) the Series 4-A
Convertible Preferred Stock and Warrant Shares and (2) any securities received
by the Share Purchasers in respect of the Series 4-A Convertible Preferred Stock
or Warrant Shares without additional consideration paid by the Share Purchasers;
and
(b) the value of Series 4-A Convertible Preferred Stock, Warrant
Shares and any securities received by the Share Purchasers in respect of the
Series 4-A Convertible Preferred Stock or Warrant Shares without additional
consideration paid by the Share Purchasers held by the Share Purchasers on the
Liquidity Date determined as (1) the aggregate value of the Series 4-A
Convertible Preferred Stock and Warrant Shares and such securities held by the
Share Purchasers on the Liquidity Date in the case of a Qualifying Offering
(determined as the offering price to the public per share of Common Stock times
the number of Warrant Shares and the number of issued or issuable Conversion
Shares); (2) the aggregate
purchase price of the Series 4-A Convertible Preferred Stock, Warrant Shares
and/or such securities on the Liquidity Date in the case of a Qualifying Sale;
or (3) the proceeds distributable to the Share Purchasers on the Liquidity Date
in the case of a sale of assets; and
(iii) the first date in the measurement of the present value will be
October 25, 2002 and the last date will be the Liquidity Date.
"QUALIFYING SALE" means a sale of more than fifty percent (50%) of the
Company's Common Stock on a fully diluted basis (assuming full conversion and
exercise of all outstanding convertible, exchangeable and exercisable
securities, including, without limitation, securities granted under any employee
share option plan which have vested) for a purchase price per share at least
equal to the 30% IRR Price, provided however, that in the event the purchase
price for such securities is payable in marketable securities, such marketable
securities shall be valued at the average of the daily closing prices of such
marketable securities over the 180 consecutive trading days immediately
preceding (and not including) the date such marketable securities are received,
and provided further, that such purchase price is payable in full at the closing
in cash or marketable securities.
1. EXERCISE OF WARRANT.
(a) At any time during the Exercise Period, this Warrant may be exercised
by the Holder hereof in full or in part at any time or from time to time by
surrender of this Warrant and the subscription form annexed hereto (duly
executed by the Holder), to the Company, and by making payment in cash or by
certified check, wire transfer or any combination thereof, in the amount
obtained by multiplying (i) the number of shares of Common Stock designated by
the Holder in the subscription form by (ii) the Purchase Price then in effect.
On any partial exercise the Company will forthwith issue and deliver to or upon
the order of the Holder hereof a new Warrant of like tenor, in the name of the
Holder hereof, providing in the aggregate on the face or faces thereof for the
purchase of the number of shares of Common Stock for which such Warrant may
still be exercised.
(b) At any time during the Exercise Period, in lieu of exercising this
Warrant as provided above, the Holder may elect to receive, without the payment
by the Holder of any additional consideration, shares of Common Stock equal to
the value of this Warrant (or the portion thereof being canceled) by surrender
of this Warrant at the principal office of the Company together with the
subscription form attached hereto indicating such election, in which event the
Company shall issue to the holder hereof a number of shares of Common Stock
computed using the following formula:
Y (A - B)
X = ---------
A
Where: X = The number of shares of Common Stock to be issued to the
Holder pursuant to this net exercise;
Y = The number of shares of Common Stock designated by the
Holder in the subscription form;
A = The then fair market value of one share of Common Stock as
of the date the election is made;
B = The Purchase Price (as adjusted to the date of the
election).
For purposes of this Section 1(b), the fair market value of one share of
Common Stock as of a particular date shall be determined as follows: (i) if
traded on a securities exchange or through the Nasdaq National Market or
SmallCap System, the value shall be deemed to be the lower of the average of the
closing bid price of the securities on such exchange over the five (5) day
period ending three (3) days prior to the net exercise election and the closing
bid price of the securities on such exchange on the trading day ending three (3)
days prior to the net exercise election; (ii) if traded over-the-counter, the
value shall be deemed to be the lower of the average of the closing price over
the five (5) day period ending three (3) days prior to the net exercise and the
closing bid price on the trading day ending three (3) days prior to the net
exercise election; and (iii) if there is no active public market, the value
shall be the fair market value thereof, as determined in good faith by the Board
of Directors of the Company.
2. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon as practicable
after the exercise of this Warrant, the Company will cause to be issued in the
name of and delivered to the Holder hereof a certificate for the number of fully
paid and nonassessable shares of Common Stock (or Other Securities) to which the
Holder shall be entitled on such exercise, plus, in lieu of any fractional share
to which the Holder would otherwise be entitled, cash equal to such fraction
multiplied by the then current fair market value as determined pursuant to
Section 1(b) above of one full share, together with any other stock or other
securities or property (including cash, where applicable) to which the Holder is
entitled upon such exercise. "Other Securities" shall mean any stock (other than
Common Stock) and other securities of the Company or any other person (corporate
or otherwise) which the Holder at any time shall be entitled to receive, or
shall have received, on the exercise of this Warrant, in lieu of or in addition
to Common Stock, or which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or Other Securities
pursuant to Section 3.
The Holder shall be deemed to become the holder of, and shall be treated
for all purposes as the record holder of, the Common Stock represented by such
certificate, and such Common Stock shall be deemed to have been issued,
immediately prior to the close of business on the date on which this Warrant and
notice of exercise are presented and payment made for such Common Stock,
notwithstanding that the stock transfer books of the Company shall then be
closed or that such certificates shall not then be actually delivered to the
Holder.
The issuance of Common Stock upon exercise of this Warrant shall be made
without charge to the Holder for any issuance tax with respect thereto or any
other cost incurred by the Company in connection with the exercise of this
Warrant and the related issuance of Common Stock. The Company shall pay all
expenses in connection with, and all taxes (other than stock
transfer, income, capital gain or similar taxes) and other governmental charges
that may be imposed in respect of, the issuance, sale and delivery of the
Warrant and the related Common Stock to the Holder.
3. ADJUSTMENT.
(a) Initial Purchase Price; Subsequent Adjustment of Price and Number of
Purchasable Shares. The Initial Purchase Price will be adjusted from time to
time as provided below; provided that, as set forth in and subject to Section 4,
in no event shall the Purchase Price per share be adjusted to a price which is
less than the par value of the Common Stock at such time. Upon each adjustment
of the Purchase Price, the Holder will thereafter be entitled to purchase, at
the Purchase Price resulting from such adjustment, the number of shares of
Common Stock obtained by multiplying the Purchase Price in effect immediately
before such adjustment by the number of shares of Common Stock purchasable
pursuant to this Warrant immediately before such adjustment and dividing the
product by the Purchase Price resulting from such adjustment.
(b) Adjustment for Stock Splits and Combinations. If the Company at any
time or from time to time after the date of this Warrant effects a subdivision
of the outstanding Common Stock, by stock split or otherwise, the Purchase Price
then in effect immediately before that subdivision shall be proportionately
decreased; and, conversely, if the Company at any time or from time to time
after the date of this Warrant combines the outstanding shares of Common Stock,
by reverse stock split or otherwise, the Purchase Price then in effect
immediately before that combination shall be proportionately increased. Any
adjustment under this Section 3(b) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(c) Adjustment for Certain Dividends and Distributions. In the event the
Company at any time or from time to time after the date of this Warrant either
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional
shares of Common Stock, then and in each such event the Purchase Price then in
effect shall be decreased as of the time of such issuance or, in the event such
a record date is fixed, as of the close of business on such record date, by
multiplying the Purchase Price then in effect by a fraction (1) the numerator of
which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance on the close of business on such
record date, and (2) the denominator of which shall be (i) the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus (ii) the number
of shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date is fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Purchase Price shall be recomputed accordingly as of the close of business
on such record date or date fixed therefor and thereafter the Purchase Price
shall be adjusted pursuant to this Section 3(c) as of the time of actual payment
of such dividend or distribution. For purposes of the foregoing formula, "the
total number of shares of Common Stock issued and outstanding" on a particular
date shall include shares of Common Stock issuable upon conversion of stock or
securities convertible into Common Stock and the exercise of warrants, options
or rights for the purchase of Common Stock (or stock or securities convertible
into Common Stock) which are outstanding on such date.
(d) Adjustments for Other Dividends and Distributions. In the event the
Company at any time or from time to time after the date of this Warrant makes,
or fixes a record date for the determination of holders of Common Stock entitled
to receive, a dividend or other distribution payable in securities of the
Company other than shares of Common Stock, then and in each such event,
provision shall be made so that the Holder shall receive upon exercise hereof,
in addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Company which it would have received had this
Warrant been converted into Common Stock as of the date of such event and had it
thereafter, during the period from the date of such event to and including the
date of exercise, retained such securities receivable by it as aforesaid during
such period, subject to all other adjustments called for during such period
under this Section 3 with respect to the rights of the Holder.
(e) Adjustment for Recapitalization, Reclassification, or Exchange. If the
Common Stock issuable upon the exercise of this Warrant is changed into the same
or a different number of shares of any class or classes of stock of the Company,
whether by recapitalization, reclassification or other exchange (other than a
subdivision or combination of shares, or a stock dividend or a reorganization,
merger, consolidation or sale of assets, provided for elsewhere in this Section
3), then and in any such event the Holder shall have the right thereafter to
exercise this Warrant to purchase the kind and amount of stock and other
securities and property receivable upon such recapitalization, reclassification
or other exchange by holders of the number of shares of Common Stock which might
have been purchased under this Warrant immediately prior to such
recapitalization, reclassification or other exchange, all subject to further
adjustment as provided herein.
(f) Reorganizations, Mergers, Consolidations or Sales of Assets. If at any
time or from time to time there is a capital reorganization of the Common Stock
(other than a subdivision or combination of shares or a stock dividend or a
recapitalization, reclassification or other exchange of shares, provided for
elsewhere in this Section 3) or a merger or consolidation of the Company with or
into another corporation, or the sale of all or substantially all of the
Company's assets to any other person, then, as a part of such capital
reorganization, merger, consolidation or sale, provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this Warrant
the number of shares of stock or other securities or property of the Company, or
of the successor corporation resulting from such capital reorganization, merger,
consolidation or sale, to which a holder of the number of shares of Common Stock
deliverable upon such exercise would have been entitled on such capital
reorganization, merger, consolidation or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 3
with respect to the rights of the Holder after the capital reorganization,
merger, consolidation or sale to the end that the provisions of this Section 3
(including the number of shares deliverable upon exercise of this Warrant) shall
continue to be applicable after that event and shall be as nearly equivalent to
the provisions hereof as may be practicable.
(g) Certificate of Adjustment. Upon the occurrence of each adjustment or
readjustment of the Purchase Price and/or the number of shares of Common Stock
subject to this Warrant, the Company at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof, and shall
prepare and furnish to the Holder a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based.
4. FURTHER ASSURANCES. The Company will take all action that may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of stock, free from all taxes, liens and charges
with respect to the issue thereof, on the exercise of all or any portion of this
Warrant from time to time outstanding. The Company will not, by amendment of its
organizational documents or through any reorganization, corporate
recapitalization, transfer of assets, consolidation, merger, dissolution,
issuance or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder under this Warrant against impairment. Without
limiting the generality of the foregoing, the Company will not take any action
which would result in the par value of Common Stock exceeding the Purchase
Price.
5. NOTICES OF RECORD DATE, ETC. In the event of:
(a) any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend on, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or property, or
to receive any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all of the assets of the Company to or the sale, consolidation or
merger of the Company with, to or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or winding-up of
the Company;
then and in each such event the Company will mail or cause to be sent to the
Holder, at least thirty (30) business days prior to such record date, a notice
specifying (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and stating the amount and character of
such dividend, distribution or right, (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock (or
Other Securities) shall be entitled to exchange their shares of Common Stock (or
Other Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up, and (iii) the amount and
character of any stock
or other securities, or rights or options with respect thereto, proposed to be
issued or granted, the date of such proposed issue or grant and the persons or
class of persons to whom such proposed issue or grant is to be offered or made.
Such notice shall also state that the action in question or the record date is
subject to the effectiveness of a registration statement under the Securities
Act or a favorable vote of stockholders if either is required. The Holder shall
use its best efforts to decide whether to exercise this Warrant (if this Warrant
is exercisable at such time) within ten (10) days of its receipt of such notice.
6. REGISTER; REPLACEMENT. The Company shall keep at its principal executive
office a register in which, subject to such reasonable regulations as it may
prescribe, it shall provide for the registration, transfer and exchange of this
Warrant. The Company and any Company agent may treat the person in whose name
this Warrant is registered as the owner of this Warrant for all purposes
whatsoever, and neither the Company nor any Company agent shall be affected by
any notice to the contrary.
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant and (i) in the case of
any such loss, theft or destruction, upon delivery of indemnity reasonably
satisfactory to the Company in form and amount or (ii) in the case of any such
mutilation, upon surrender of such Warrant for cancellation at the principal
executive office, the Company, at its expense, shall promptly execute and
deliver, in lieu thereof, a new Warrant of like tenor.
All warrants issued upon any registration of transfer or exchange of this
Warrant shall be the valid obligations of the Company, evidencing the same
rights, and entitled to the same benefits, as the Warrant surrendered upon such
registration of transfer or exchange. Except as provided above, no service or
other charge shall be imposed on the Holder for any exchange of this Warrant.
7. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS. The Company
will at all times reserve and keep available out of its authorized but unissued
shares of capital stock, solely for issuance and delivery on the exercise of
this Warrant, a sufficient number of shares of Common Stock (or Other
Securities) to effect the full exercise of this Warrant and the exercise,
conversion or exchange of any other warrant or security of the Company
exercisable for, convertible into, exchangeable for or otherwise entitling the
Holder to acquire shares of Common Stock (or Other Securities), and if at any
time the number of authorized but unissued shares of Common Stock (or Other
Securities) shall not be sufficient to effect such exercise, conversion or
exchange, the Company shall take such action as may be necessary to increase its
authorized but unissued shares of Common Stock (or Other Securities) to such
number as shall be sufficient for such purposes.
8. TRANSFER OF WARRANT. This Warrant cannot be transferred in whole or in
part unless: (i) such transfer is to a Permitted Transferee as such term is
defined in that certain Stockholders Agreement dated as of October 25, 2002
among the Company, the Holder and the other parties named therein (the
"STOCKHOLDERS AGREEMENT"), (ii) such Permitted Transferee agrees to be bound by
the terms and conditions of the Stockholders Agreement, (iii) such transfer is
made in connection with a concurrent transfer to the Permitted Transferee
of a proportional amount of the Holder's shares of Series 4-A Convertible
Preferred Stock or Common Stock issued upon conversion of those shares,
provided, that if the Holder on any occasion does not transfer, in connection
with a partial transfer of its Series 4-A Convertible Preferred Stock or Common
Stock issued upon conversion of the Series 4-A Convertible Preferred Stock, the
full portion of the Warrant that such Holder would be entitled to transfer at
that time (the "UNTRANSFERRED PORTION"), the Holder shall have the right to
transfer, in any subsequent transfer by such Holder of its Series 4-A
Convertible Preferred Stock or Common Stock issued upon conversion of the Series
4-A Convertible Preferred Stock, the Untransferred Portion in addition to
whatever portion of Warrants such Holder would otherwise be entitled to transfer
in accordance with this subsection (iii) and (iv) such transfer complies with
all applicable securities laws.
9. NO RIGHTS AS A STOCKHOLDER. This Warrant shall not entitle the Holder
hereof to any voting rights or other rights as a stockholder of the Company.
10. NOTICES, ETC. All notices which are required to be given pursuant to this
Warrant shall be in writing and shall be delivered by certified mail, return
receipt requested, first class or air mail postage prepaid, or sent by overnight
express or similarly recognized overnight delivery with receipt acknowledged or
by facsimile, with a copy thereof sent by one of the other means. Notices shall
be deemed to have been given at the time delivered and shall be addressed as
follows or to such other address as a party may designate by proper notice
hereunder.
If to Holder: Capital International Asia CDPQ Inc.
0000 Xxxx-Xxxxxxxx Xxxx. Xxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx
X0X 0X0
Facsimile: c/o CDP Asia
Investments, Inc
(000) 0000-0000
with a copy to:
Xxxxxxx X. Xxxx
Debevoise & Xxxxxxxx
13/F Entertainment Building
00 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Facsimile: (000) 0000-0000
If to the Company: Vsource, Inc.
00000 Xxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn.: CFO
Facsimile: 0 (000) 000-0000
with a copy to:
Vsource (Asia) Ltd
Xxxx 000, XXX Xxxxxx
000 Xxxxxxxxxx Xxxx, Xxxxxxx
Xxxx Xxxx
Attn: General Counsel
Facsimile: (000) 0000-0000
11. SECURITIES LAWS. By acceptance of this Warrant, the Holder represents to
the Company that the Holder is "accredited investor" within the meaning of Rule
501 of Regulation D adopted under the Securities Act, as presently in effect, or
not a "U.S. person" within the meaning of Rule 902 adopted under the Securities
Act and is acquiring the Securities in an "offshore transaction" as defined in
Rule 902, that this Warrant is being acquired for the Holder's own account and
for the purpose of investment and not with a view to, or for sale in connection
with, the distribution thereof, nor with any present intention of distributing
or selling the Warrant or the Common Stock issuable upon exercise of the
Warrant, and that it is an investor in securities of companies in the
development stage and acknowledges that it 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 shares subject to this Warrant. The Holder acknowledges and agrees that
this Warrant and the Common Stock issuable upon exercise of this Warrant (if
any) have not been (and at the time of acquisition by the Holder, will not have
been or will not be) registered under the Securities Act or under the securities
laws of any state, in reliance upon certain exemptive provisions of such
statutes. The Holder further recognizes and acknowledges that because this
Warrant and the Common Stock issuable upon exercise of this Warrant are
unregistered, they may not be eligible for resale, and may only be resold in the
future pursuant to an effective registration statement under the Securities Act
and any applicable state securities laws, or pursuant to a valid exemption from
such registration requirements and that the Holder may, therefore, be required
to bear the economic risk of such investment indefinitely.
12. LEGEND. Unless theretofore registered for resale under the Securities Act,
each certificate for shares issued upon exercise of this Warrant shall bear the
following or a similar legend, in addition to any other legends required by any
agreements entered into by the Company and the Holder:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
13. MISCELLANEOUS. This Warrant and any terms hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. If, in any action before any court or agency legally empowered to
enforce any term, any term is found to be unenforceable, then such term shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency, and if any term is not so curable, the unenforceability of such term
shall not affect the other provisions of this Warrant but this Warrant shall be
constructed as if such unenforceable term had never been contained herein. This
Warrant shall be construed and enforced in accordance with and governed by the
internal laws of the State of New York, without regard to conflict of laws
principles. The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its
behalf by one of its officers thereunto duly authorized as of [ ], 2002.
VSOURCE, INC.
By: _______________________________
Name:
Title:
FORM OF SUBSCRIPTION
VSOURCE, INC.
(To be signed only on exercise of Warrant)
TO: VSOURCE, INC.
4. The undersigned Holder of the attached original, executed Warrant hereby
elects to exercise its purchase right under such Warrant with respect to shares
of Common Stock, as defined in the Warrant, of Vsource, Inc., a Delaware
corporation (the "Company").
5. The undersigned Holder is hereby paying the aggregate purchase price for
such shares of Common Stock (the "Exercise Shares") (i) by the enclosed
certified or official bank check payable in United States dollars to the order
of the Company in the amount of $___________, or (ii) by wire transfer of United
States funds to the account of the Company in the amount of $______________,
which transfer has been made before or simultaneously with the delivery of this
Form of Subscription pursuant to the instructions of the Company, or (iii)
electing to exercise the attached Warrant for _______ shares purchasable under
the Warrant pursuant to the net exercise provisions of Section 1(b) of such
Warrant.
6. Please issue a stock certificate or certificates representing the
appropriate number of shares of Common Stock in the name of the undersigned
Holder.
Dated:_______________________
__________________________________
Signature of Holder
