THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. IT MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE WARRANT UNDER SAID ACT OR THE
AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION.
Warrant No. TTLP-1 For the Purchase of 627,500 Shares (as adjusted pursuant to
the provisions hereof)
THINKING TOOLS, INC.
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, Thinking Technologies, L.P.
(the "Investor"), or its successors or assigns (collectively, the "Warrant
Holder"), is entitled to subscribe for and purchase from Thinking Tools, Inc., a
California corporation (the "Company"), 627,500 shares of the Company's Common
Stock (as defined in Section 12(a) hereof) (the "Warrant Shares") at a price of
$0.80 (eighty cents) per share (the "Exercise Price"), as the number of Warrant
Shares and the Exercise Price shall be adjusted and readjusted from time to time
in accordance with Section 4 hereof.
1. Exercise of Warrant.
The rights represented by this Warrant may be exercised, at any time prior to
December 31, 2006, by the Warrant Holder, in whole or in part, by delivery of
(a) a duly executed notice of exercise in the form of Annex A hereto, and (b) a
check payable to (or wire transfer to the account of) the Company in an amount
equal to the produce of (x) the Exercise Price times (y) and the number of
Warrant Shares as to which this Warrant is being exercised, and (c) in the case
of any Warrant Holder other than the Investor by the surrender of this Warrant.
This Warrant shall be deemed to have been exercised immediately.prior to the
close of business on the date of delivery of a duly executed notice of exercise
and the amount payable upon exercise of this Warrant, and in the case of any
Warrant Holder other than the Investor, surrender of this Warrant (or, if the
Company shall have failed to discharge its obligations under Section 5 hereof
before such date, on the date on which such obligations are fully discharged),
and, as of such moment, (i) the rights of the Warrant Holder with respect to the
number of Warrant Shares as to which this Warrant is being exercised shall
cease, except for any continuing registration and indemnification rights
provided under Section 5, and (ii) such Warrant Holder shall be deemed to be the
record holder of the shares of Common Stock issuable upon such exercise. As soon
as practicable after the exercise, in whole or in part, of this Warrant, and in
any event within 10 Business Days thereafter, the Company at its expense
(including the payment by it of any applicable issuance taxes) will cause to be
issued in the name of and delivered to the Warrant Holder, or as the Warrant
Holder (upon payment by the Warrant Holder of any applicable transfer taxes) may
direct, a certificate or certificates for the number of fully paid and
nonassessable shares of Common Stock to which the Warrant Holder shall be
entitled upon such exercise. In the event of partial exercise of this Warrant by
the Investor as herein provided, the Warrant need not be surrendered to the
Company provided that the Investor agrees to make a notation of such partial
exercise on the Warrant. If the Warrant is assigned, in whole or in part,
pursuant to section 7 hereof, then the assigned hereof shall (a) upon exercise
of the Warrant or Warrants surrender the Warrant or Warrants to the Company and
(b) in the event of a partial exercise of the Warrant, surrender the Warrant or
Warrants to the Company and the Company shall execute and deliver a new Warrant
or Warrants reflecting such partial exercise. Upon exercise in full of the
Warrant by any Warrant Holder, such Warrant Holder shall surrender the Warrant
to the Company.
2. Investment Representation.
The Warrant Holder by accepting this Warrant represents that the Warrant Holder
is acquiring the Warrant for its own account for investment purposes and not
with the view to any offering or distribution and that the Warrant Holder will
not sell or otherwise dispose of the Warrant or the underlying Warrant Shares in
violation of applicable securities laws; provided, however, that the Investor
may transfer this Warrant, in whole or in part, to one of its general partners
(a "Partner").
3. Validity of Warrant and Issue of Shares.
The Company warrants that this Warrant is validly issued and represents and
agrees that all shares of Common Stock that may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be validly issued,
fully paid and nonassessable and free from all taxes and liens and options. The
Company further warrants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of shares of Common Stock
to provide for the exercise of the rights represented by this Warrant.
4. Antidilution Provisions
The terms of the Warrant shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a stock dividend or make a distribution to
holders of Common Stock in shares of its Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common stock into a smaller number of shares or (iv) issue by reclassification
of its shares of Common Stock any shares of capital stock of the Company, the
Exercise Price shall be increased or decreased, as the case may be, to an amount
which shall bear the same relation to the Exercise Price in effect immediately
prior to such action shall bear to the total number of shares outstanding
immediately after such action and, upon each such adjustment of the Exercise
Price, each Warrant outstanding prior to the adjustment in the Exercise Price
shall thereafter evidence the right to purchase the number of shares of Common
stock which the Warrant Holder would have owned after such action had the
Warrant been exercised immediately prior thereto. An adjustment made pursuant to
this subsection (a) shall become effective retroactively immediately after the
record date in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification.
(b) In case the Company shall fix a record date for the making of a distribution
to holders of Common Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the continuing
corporation) of (i) assets (other than cash dividends or cash distributions
payable out of consolidated net income or earned surplus or dividends payable in
Common Stock), (ii) evidences of indebtedness or other securities of the
Company, or of any corporation other than the Company (except for the Common
Stock of the Company) or (iii) subscription rights, options or warrants to
purchase any of the foregoing assets or securities (excluding those referred to
in Section 4(d)(3)), whether or not such rights, options or warrants are
immediately exercisable (hereinafter collectively called "Distributions on
Common Stock"), the Company shall make: provisions for the Warrant Holder to
receive upon exercise of a Warrant, a proportional amount (depending upon the
extent to which such Warrant is exercised) of such assets, evidences of
indebtedness, securities or such other rights, options or warrants, as if such
Warrant Holder had exercised the Warrant on or before such record date.
(c) Subject to the exception referred to in Section 4(f), in case the Company
shall at any time or from time to time after the date hereof issue any
additional shares of Common Stock ("Additional Common Stock") (Other than a
dividend or a distribution to holders of Common stock in shares of Common Stock)
for a consideration per share less than (i) the then current Market Price per
share of Common Stock (determined as provided in Section 4(g)) immediately prior
to the issuance of such Additional Common Stock or (ii) the then current
Exercise Price immediately prior to the issuance of such Additional Common
Stock, or without consideration, then, and thereafter successively upon each
such issuance, the current Exercise Price shall forthwith be reduced to a price
determined by multiplying such current Exercise Price by a fraction of which:
( 1 ) the numerator shall be (i) the number of shares of Common Stock
(other than Warrant Shares for which no adjustment is to be made pursuant to
Section 4(f)) outstanding immediately prior to such issuance of Additional
Common Stock plus (ii) the number of shares of Common Stock which the
consideration,, if any, received by the Company upon such issuance of such
Additional Common Stock would purchase at the higher of the then current
Exercise Price or the Market Price per share; and
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153211-1.WPD
(2) the denominator shall be (i) the number of shares of Common Stock
(Other than Warrant Shares for which no adjustment is to be made pursuant to
Section 4(f)) outstanding immediately prior to such issuance of Additional
Common Stock plus (ii) the number of shares of such Additional Common Stock
issued.
Upon each such adjustment of the Exercise Price and subject to the exception
referred to in Section 4(f), each warrant outstanding prior to the making of the
adjustment in the Exercise Price shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of Warrant Shares obtained
by multiplying the number of Warrant Shares which would have been issuable upon
exercise of the Warrant at the current Exercise Price by a fraction obtained by
dividing the Exercise Price immediately prior to the adjustment by the adjusted
Exercise Price; provided however, that such adjustments shall be made only if
the Exercise Price determined from the fraction set forth in subparagraphs (1)
and (2) shall be less than the Exercise Price in effect immediately prior to the
issuance of such Additional Common Stock.
(d) For purposes of any adjustment as provided in Section 4(c), the following
provisions shall also be applicable.
(1) ln case of the issuance of Additional Common Stock for cash, the
consideration received by the Company therefor shall be deemed to be the net
cash proceeds received by the Company for such Additional Common Stock before
deducting any commissions or other expenses paid or incurred by the Company for
any underwriting or placement of, or otherwise in connection with the issuance
of, such Additional Common Stock;
(2) In case of the issuance (otherwise than conversion of obligations
or shares of stock of the Company) of Additional Common Stock for consideration
other than cash, including securities acquired in exchange therefor, or
consideration a part of which shall be other than cash the amount of the
consideration other than cash so received or to be received by the Company shall
be deemed to be the value of such consideration at the time of its receipt by
the Company as determined in good faith by the Board of Directors of the
Company;
(3) In case of the issuance (other than by way of a Distribution on
Common Stock pursuant to Section 4(b)) whether by distribution or sale to
holders of its Common Stock or to other, by the Company of (i) any security that
is convertible into Common Stock or (ii) any rights, options or warrants to
purchase Common Stock other than Warrants, if inclusion thereof in calculating
for purposes of Section 4(c) would result in an Exercise Price lower than if
excluded, the Company shall be deemed to have issued, hr the consideration
described below, the number of shares of Common stock into which such
convertible security may be converted when first convertible, or in the number
of shares of Common stock deliverable upon the exercise of such rights, options
or warrants when first exercisable, as the case may be (and such shares shall be
deemed to be Additional Common Stock for purposes of Section 4(c)); provided
that if such number of shares is thereafter increased in accordance with the
terms of such convertible security rights, options or warrants, as a result of
the antidilution provisions of such convertible security, rights, options or
warrants, or otherwise, other than any increase due to an adjustment in the
Warrant or Warrant Shares pursuant to this Section 4, the Company shall be
deemed to have issued at that time such increase and at no consideration, the
additional shares of Common stock into which such convertible securities may be
converted as a result of such increase or the additional shares of Common Stock
for which such rights, options or warrants may be exercised as a result of such
increase, as the case may be. The consideration deemed to be received by the
Company at the time of the issuance of such convertible securities or such
rights, options or warrants shall be the consideration so received determined in
the manner provided in Section 4(d)( 1) and 4(d)(2) before deducting any
commissions or other expenses paid or incurred by the Company in connection with
the issuance of such convertible securities or rights, options or warrants, plus
(x) any consideration or adjustment payment to be received by the Company in
connection with such conversion, or (y) the aggregate price at which shares of
Common Stock are to be delivered upon the exercise of such rights, options-or
warrants when first exercisable or if no price is specified and such shares are
to be delivered at an option price related to the market value of the subject
Common Stock measured at the time of exercise, then the aggregate price at which
shares of Common stock would be delivered upon the exercise of such rights,
options or warrants, if the Market Price at such time were the same as the
Market Price of the subject Common Stock; measured at the time such rights,
options or warrants, if the Market Price at such time were the same as the
Market Price of the subject Common Stock measured at the time such rights,
options, or warrants were granted; provided that as to such
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rights, options or warrants further adjustment as shall be necessary on the
basis of the actual option price at the time of exercise shall be made at the
time of exercise if the actual option price is different from the aforesaid
assumed option price. No further adjustment of the Exercise Price shall be made
as a result of the actual issuance of shares of Common Stock of the Company
referred to in this paragraph (3). On the expiration or termination of such
rights, options, options or warrants, or rights to convert, the Exercise Price
hereunder shall be readjusted to such Exercise Price as would have obtained had
the adjustments made upon the issuance of such rights, options, warrants or
convertible securities Been made upon the basis of the deliver of only the
number of shares of Common Stock actually delivered upon the exercise of such
rights, options or warrants or upon the conversion of any such securities; and
(4) The number of shares of Common Stock at the time outstanding shall
exclude all shares of Common Stock then owned or held directly or indirectly by
or for the account of the Company but shall include the aggregate number of
shares of Common stock at the time deliverable in respect of the convertible
securities, rights, options and warrants referred to in Section 4(d)(3) and
Section 4(f); provided that, to the extent that such rights, options, warrants
or conversion privileges are not exercised, such shares of Common Stock shall be
deemed to be outstanding only until the expiration dates of the rights, options,
warrants or conversion privileges or the prior cancellation thereof.
(e) In the case of the either (x) any consolidation or merger or
recapitalization or reclassification to which the Company is a party, other than
a consolidation or a merger in which the Company is the continuing corporation
and which does not result in any reclassification of, or change (other than a
change in par value or from par value to no par value or from no par value to
par value, or as a result of a subdivision or combination) in outstanding shares
of the Common Stock, or (y) any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially as an entirety, then the
Warrant Holder shall have the right to purchase for the aggregate Exercise Price
the kind and amount of shares of stock and other securities and property
(including cash) receivable upon such consolidation, merger, reclassification,
recapitalization, sale or conveyance by a holder of the number of shares of
Common Stock issuable upon exercise in full of this Warrant immediately prior to
such consolidation, merger, reclassification, recapitalization, sale or
conveyance, subject to adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4 assuming, in the
case of any conveyance, such holder of Common Stock of the Company (i) is not a
person with or into which the Company consolidated or merged into the Company or
to which such sale or conveyance was made, as the case may be ("Constituent
Person") or an affiliate of a Constituent Person and (ii) failed to exercise his
rights-or election, if any, as to the kind or amount of shares of stock and
other securities and property (including cash) receivable upon such
consolidation, merger, reclassification, recapitalization, sale or conveyance is
not the same for each share of Common Stock of the Company held immediately
prior to such consolidation, merger, reclassification, recapitalization, sale or
conveyance by others than a Constituent Person or an affiliate thereof and in
respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this property (including cash)
receivable upon such consolidation, merger, reclassification,recapitalization,
sale or conveyance by each non-electing share shall be deemed to be the kind and
amount so receivable per share by a plurality of the non-electing shares). The
provisions of this subsection (e) shall similarly apply to successive
consolidations, mergers, reclassification, recapitalization, sales or
conveyances.
(f) No adjustment of the Exercise Price or the number of Warrant Shares shall be
made as a result of or in connection with the issuance of Warrant Shares upon
exercise of the Warrant.
(g) For the purpose of any computation under this Section 4, the current market
price (the "Market Price") per share of Common Stock on any date shall be deemed
to be the average of the daily closing prices for the ten consecutive trading
days before such date, provided that for purposes of the application of
subsection (c) to the issuance of Additional Common Stock pursuant to a public
offering registered under the Securities Act of 1933, as amended (the "1933
Act"), "Market Price" means the closing price per share for the trading day
preceding the effective date of the registration statement with respect to the
shares offered in such public offering. The closing price for each day shall be
the last reported sale price regular way or, in case no such sale takes place on
such day, the average of the closing bid and asked prices regular way, in either
case on the principal national securities
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exchange on which the Common Stock is listed or admitted to trading or, if the
Common Stock is not listed or admitted to trading on any national securities
exchange, the average of the Highest reported bid and lowest reported asked
price as furnished by the National Association of Securities Dealers, Inc.,
Automated Quotation System Level 1, or comparable system, or in the absence of
either, the per-share value of the Company determined by allocating ratably to
each share of Common Stock of the Company which is then issued and outstanding
the amount which is equal to the sum of (i) the value of the equity in all
Subsidiaries then owned by the Company, which shall be determined according to
GAAP for all Subsidiaries which are not Insurance Company Subsidiaries and
which, in the case of each Insurance Company Subsidiary, shall be the sum of its
Surplus plus its Discounted Value of Business in force, as determined by an
actuary or actuarial firm reasonably acceptable to the Investor (the costs and
expenses of such determination being borne by the Company) and (ii) the book
value of the other assets of the Company, all as calculated as of a date no
earlier than forty-five days prior to the date of determination.
(h) The Company shall have the right, at any time or from time to time,
voluntarily to reduce the current Exercise Price for such period or periods of
time as the Boards of Directors of the Company may determine; provided that each
such period shall be at least 30 days. In each such event the Company shall
prepare a certificate of an officer of the Company stating (x) the election of
the Company to reduce the current Exercise Price in accordance with this
subsection (h), (y) that such election is irrevocable during the period before
referred to, and (z) the period in which such reduced current Exercise Price
shall be in effect. A brief summary of the provisions of such certificate shall
be mailed by the Company at least 10 days prior to the date fixed for the
commencement of any period in which the reduced current price shall be in effect
in accordance with this subsection (h)to the Warrant Holder). Failure to receive
such notice by mail, or any defect therein, shall not affect the validity or the
reduction of the current price during such period. No reduction of the current
Exercise Price pursuant to the provisions of this subsection (h) shall be deemed
for the purposes of subsection 4(c) to alter or adjust the current Exercise
Price.
(i) The Company shall not be required upon the exercise of the Warrant to issue
any fraction of shares, but shall make any adjustment therefor by rounding the
number of shares obtainable upon exercise to the next highest whole number of
shares.
5. Registration Rights.
(a) Neither the Warrant nor the Warrant Shares have been registered with the
Securities and Exchange Commission (the "Commission") under the 1933 Act, or
qualified for sale pursuant to any state blue sky law, and may not be sold or
transferred without such registration or qualification, except pursuant to an
exemption therefrom. For purposes of this Section 5; (i) the term "Warrant
Holder" shall include, and the rights granted to the Warrant Holder pursuant to
this Section 5 shall extend to, the lawful holder of unregistered Warrant
Shares, provided that no rights shall be hereby granted which are in violation
of applicable securities laws or regulations; (ii) the terms Warrant and Warrant
Holder shall include any number of Warrants subsequently issued pursuant to
section 7 and the holders of those Warrants, respectively, together with any
securities issuable in exchange therefor in the event of a recapitalization,
stock split, merger, consolidation or other combination or exchange of shares;
and (iii) the terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the 1933 Act. (a "registration statement") and the declaration
or ordering of effectiveness of such registration statement under the 1933 Act.
(b) At any time after six (6) months from the date hereof, the holders
representing at least an aggregate of 50% of the then total of the Warrants
and/or Warrant Shares ("Fifty Percent Holders"), may, upon one (1) occasion,
make a written request to the Company requesting that the Company effect the
registration of all or a portion of the Warrant Shares (whether issued or
issuable) of such holders under the 1933 Act and specifying the intended method
or methods of disposition thereof. Any such requested registration may also
register other unregistered Common Stock held by such Warrant Holders or holders
of Warrant Shares. After receipt of such a request, the Company, shall promptly
notify all holders of Warrants and Warrant Shares in writing of the receipt of
such request and each such holder may elect (by written notice sent to the
Company within ten (10) business days from
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the date of such holder's receipt of the Company's notice to have its Warrant
Shares (whether issued or issuable) included in such registration pursuant to
this Section 5(b) Thereupon the Company shall, as expeditiously as is possible,
use its best efforts to effect the registration under the 1933 Act of all
Warrant Shares and other shares of Common Stock which the Company has been so
requested to register by such holders for sale, all to the extent required to
permit the disposition (in accordance with the intended method or methods
thereof, as aforesaid) of the Common Stock so registered.
(c) If the Company at any time proposes to file on its behalf and/or on behalf
of any of its security holders ("the demanding security holders") a registration
statement under the 1933 Act on any form (other than a Registration Statement on
Form S-4 or S-8 or any successor form for securities to be offered in a
transaction of the type referred to in Rule 145 under the 1933 Act or to
employees of the Company pursuant to any employee benefit plan, respectively)
for the general registration of any class of its Act of 1934, as amended) to be
sold for case, other than pursuant to a registration statement filed pursuant to
subsection 5(b) hereof, it will give written notice to all the holders of
Warrants and Warrant Shares at least sixty (60) days before the initial filing
with the Securities and Exchange Commission (the "Commission") of such
registration statement, which notice shall set forth the intended method of
disposition of the securities proposed to be registered by the Company. The
notice shall offer to include in such filing such shares of issued or issuable
Common Stock as such holders may request.
Each holder of Warrants or Warrant Shares desiring to have Common Stock (whether
issued or issuable) registered under this subsection 5(c) shall advise the
Company in writing within twenty (20) days after the date of receipt of such
offer from the Company, setting forth the amount of such Common Stock for which
registration is requested. The Company shall thereupon include in such filing
the number of shares Common Stock for which registration is so requested,
subject to the next sentence, and shall use its best efforts to effect
registration under the 1933 Act of such shares. If the managing underwriter of a
proposed underwritten public offering of Common Stock shall advise the Company
in writing that, in its opinion, the distribution of the common Stock requested
to be included in the registration concurrently with the securities being
registered by the Company or any demanding security holder would materially and
adversely affect the distribution of such securities by the Company or such
demanding security holder, then the number of shares of Common Stock determined
by such underwriter to be the maximum number capable of being included in such
registration shall be allocated as follows: (i) first, to the shares (if any)
sought to be included by the Company and the demanding security holders and (ii)
second, to the shares sought to be included by the holders of Warrants and/or
Warrant Shares, pro rata based upon the number of Warrants and/or Warrant Shares
held by each such holder. Alteratively, in the event of such advice by the
managing underwriter, any holder of the Common Stock may at its option delay its
offering and sale for a period not to exceed ninety (90) days after the
effective date of such registration as such managing underwriter shall
reasonably request. In the event of such delay, the Company shall use its best
efforts to effect any registration or qualification under the 1933 Act and the
securities or blue sky laws of any jurisdiction as may be necessary to permit
such holder to make its proposed offering and sale following the end of such
period of delay and shall pay all expenses related thereto in accordance with
Section 5(g).
(d) If at any time the Company is eligible to use Form S-3 for registration of
secondary sales of Common stock, then Fifty Percent Holders may, upon not more
than two (2) occasions, request in writing that the Company register shares of
Common Stock (whether issued or issuable) on such form. Upon receipt of such
request, the Company shall promptly notify all holders of Warrants and/or
Warrant Shares in writing of the receipt of such request and each such holder
may elect (by written notice sent to the Company within ten (10) business days
from the date of such holder's receipt of the Company's notice) to have its
Common Stock (issued or issuable) included in such registration pursuant to this
subsection 5(d). Thereupon the Company registration on Form S-3 of all Common
Stock which the Company has been so requested to register by such holders for
sale. Notwithstanding anything to the contrary contained in this Section 5(d),
the Company shall not be obligated to register shares of Common Stock under this
Section 5(d) on more than one (1) occasion if shares of Common Stock owned by
holders of Warrants or Warrant Shares have been registered on a pervious
occasion pursuant to either Section 5(b) or Section 5(c). The Company shall use
its best efforts to qualify for eligibility to use Form S-3 for such purposes at
all times following its Initial Public Offering of any its equity securities
pursuant to a registration statement filed with the Commission.
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(e) Whenever the Company is required by the provisions of Section 5(b), 5(c) or
5(d) hereof to use its best efforts to effect the registration of any of its
securities under the 1933 Act, the Company will, as expeditiously as is
possible:
(1) prepare and file with the Commission a registration statement with
respect to such securities in connection with which the Company will give each
seller, their underwriters, if any, their respective counsel and accountants,
the opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the Commission, and
each amendment thereof or supplement thereto, and will give each of them such
access to its books and records and such opportunities to discuss the business
of the Company with its officers and the independent public accountants which
have examined its financial statements as shall be necessary, in the opinion of
such sellers' and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the 1933 Act;
(2) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
the prospectus current and to comply with the provisions of the 1933 Act with
respect to the sale of all securities covered by such registration statement
wherever the seller of such securities shall desire to sell the same; provided,
however, the Company shall have no obligation to file any amendment or
supplement as its own expense more than ninety (90) days after the effective
date of such registration statement;
(3) furnish to each seller such numbers of copies of preliminary
prospectuses and prospectuses and each supplement or amendment thereto and such
other documents as each seller may reasonably request in order to facilitate the
sale or other disposition of the securities owned by such seller in conformity
with (i) the requirements of the 1933 Act and (ii) the seller's proposed method
of distribution;
(4) register or qualify the securities covered by such registration
statement under the securities or blue sky laws of such jurisdiction within the
United States as each seller shall reasonably request, and do such other
reasonable acts and things as may be required of it to enable each seller to
consummate the sale or other disposition in such jurisdictions of the securities
owned by such seller; provided, however, that the Company shall not be required
to (i) qualify as a foreign corporation or consent to a general and unlimited
service of process in any such jurisdictions, or (ii) qualify as a dealer in
securities;
(5) furnish, at the request of any seller on the date such securities
are delivered to the underwriters for sale pursuant to such registration or, if
such securities are not being sold through underwriters, on the date the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of counsel representing the Company for the purposes
of such registration, addressed to the underwriters, if any, and the seller
making such request, covering such legal matters with respect to the
registration in respect of which such opinion is being given as the seller of
such securities may reasonably request and are customarily included in such
opinions and (ii) the date such securities are delivered to the underwriters, if
any, for sale pursuant to such registration, from a firm of independent public
accountants of recognized national standing selected by the Company, addressed
to the underwriters, if any, and to the seller making such request, covering
such financial statistical and accounting matters with respect to the
registration in respect of which such letters are being given as the seller of
such securities may reasonably request and are customarily included in such
letters;
(6) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security holders as
soon as reasonably practicable, but not later than sixteen (16) months after the
effective date of registration statement, an earnings statement covering a
period of at least twelve (12) months beginning after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;
(7) enter into and perform an underwriting agreement with the managing
underwriter, if any, containing customary (i) terms of offer and sale of the
securities, payment provisions, underwriting discounts and commissions, and (ii)
representations, warranties, covenants, indemnities, terms and conditions; such
sellers shall
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not be required to make any representations or warranties to or agreements with
the Company or the underwriters other than representations, warranties or
agreements regarding such sellers and such sellers' intended method of
distribution and any other representation required by law;
(8) notify each seller at any time when a prospectus relating to the
registration is required to be delivered under the 1933 Act, upon discovery
that, or upon the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, and at the request of any
such seller promptly prepare and furnish to such seller a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that as thereafter delivered to the purchaser of such securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made; and
(9) keep each seller advised in writing as to the initiation and
progress of any registration under Section 5(b), 5(c) or 5(d) hereof.
(f) The Company agrees not to effect any public sale or distribution of
or otherwise dispose of any equity securities of the Company or securities
convertible into or exchangeable or exercisable for any of such equity
securities during the seven (7) days prior to or ninety (90) days after the date
any underwritten registration pursuant to Section 5(b) hereof has become
effective, except as part of such underwritten registration and except pursuant
to registrations on Form S-4 or S-8 or any successor or similar forms thereto,
and to use its best efforts to cause each person which purchases its equity
securities or any securities convertible into or exchangeable or exercisable for
any such equity securities at any time after the date of this Agreement (other
than in a public offering) to agree not to effect any such public sale or
distribution of such securities during such period.
(g) If the Company is required by the provisions of Section 5(b), 5(c)
or 5(d) to effect the registration or qualification under the 1933 Act or any
state securities or blue sky laws of any of the shares of Common Stock, the
Company shall pay all expenses in connection therewith, including, without
limitation, (i) all expenses incident to filing with the National Association of
Securities Dealers, Inc., (ii) registration fees, (iii) printing expenses, (iv)
accounting and legal fees and expenses, except to the extent the holder of
Common Stock elects to engage accountants or attorneys in addition to the
accountants and attorneys engaged by the Company, in which case such holder
shall pay the fees and expenses of such additional accountants and attorneys,
(v) expenses of any special audits incident to or required by any such
registration or qualification, (vi) premiums for insurance in such amount, if
any, deemed appropriate by the managing underwriter, and (vii) expenses of
complying with the securities or blue sky laws of any jurisdictions in
connection with such registration or qualification; provided, however. the
Company shall not be liable for (1) any discounts or commissions to any
underwriter attributable to the sale of Common Stock, (2) any stock transfer
taxes incurred in respect of the Common Stock sold by the sellers or (3) any
fees or expenses incurred by a holder of Common Stock in connection with such
registration which, according to the written instructions of any regulatory
authority, the Company is not permitted to pay.
(h) In connection with any registration or qualification of securities
under Section 5(b), 5(c) or 5(d) hereof, the Company agrees to indemnify each
holder of any shares of Common Stock seeking such registration and each
underwriter thereof, including each person, if any, who controls the holder or
such stockholder or underwriter within the meaning of Section 15 of the 1933
Act, against all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation) caused by any untrue, or alleged untrue,
statement of a material fact contained in any registration statement,
preliminary prospectus, prospectus or notification or offering circular (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or caused by any omission, or alleged omission, to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses are caused by any untrue statement or alleged
untrue statement or omission or alleged omission based upon information
furnished to the Company expressly for use therein in a writing signed by the
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holder of Common Stock or arising from an underwriter's or xxxxxx's failure to
deliver a prospectus to a purchaser when the delivery was required by law. The
Company and each officer, director and controlling person of the Company shall
be indemnified by the holder of any Common Stock for all such losses, claims,
damages, liabilities and expenses (including the costs of reasonable
investigation) caused by any such untrue, or alleged untrue, statement or any
such omission, or alleged omission, based upon information furnished to the
Company expressly for use therein in a writing signed by the holder of Common
Stock.
Promptly upon receipt by a party indemnified under this Section 5(h) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 5(h), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may have to any indemnified party otherwise than under this
Section 5(h) unless such failure shall materially adversely affect the defense
of such action. In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the indemnified party unless (i) the indemnifying party agrees
to pay the same, (ii) the indemnifying party fails to assume the defense of such
action with counsel reasonably satisfactory to the indemnified party or (iii)
the named parties to any such action (including any impleaded parties) have been
advised by such counsel that representation of such indemnified party and the
indemnifying party by the same counsel would be inappropriate under applicable
standards of professional conduct (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of such
indemnified party). No indemnifying party shall be liable for any settlement
entered into without its consent.
(i) If for any reason the indemnification provisions contemplated by
Section 5(h) are unavailable or insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages or liabilities referred to
therein, then the indemnifying party in respect of any losses, claims, damages
or liabilities referred to therein, shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages,
liabilities referred to therein, shall contribute to the amount paid or payable
by the indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified xxxxx as well as
any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party. In no event shall a holder of Common Stock be
required to contribute an amount greater than the dollar amount of the proceeds
received by such holder with respect to the sale of any Common Stock.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(i) were determined by pro rata
allocation (even if the holders or any underwriters or all of them were treated
as one entity for such purposes) or by any other method of allocation which does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1993 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The contribution provided for this Section 5(i) shall survive with
respect to the Company and a holder of Common Stock and shall remain in full
force and effect regardless of any investigation made by or on behalf of an'
indemnified party.
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(j) The indemnity agreement contained herein shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any indemnified party or by or on
behalf of the Company, its officers or directors or any other person controlling
the Company and (iii) acceptance of and payment for any of the Warrant Shares.
6. Voting Rights. The Warrant Holder shall be entitled to vote the
number of Warrants held hereunder as voting Common Stock of the Company as if
the.Warrant Shares were issued and outstanding as of the date of this
instrument.
7. Notice to Warrant Holder.
In case at any time:
(a) the Company shall take any action which would require an adjustment
in the Exercise price and/or in the number of Warrant Shares pursuant to Section
4; or
(b) the Company shall authorize the granting to the holders of its
Common Stock of any distributions on Common Stock as set forth in subsection
4(b), and notice thereof shall be given to holders of Common Stock; or
(c) the Company shall issue any Additional Common Stock or declare any
dividend (or any other distribution) other than a normal quarterly dividend on
its Common Stock; or
(d) there shall be any capital reorganization or reclassification of
the Common Stock (other than a change in par value or from par value to no par
value or from no par value to par value of the Common Stock), or any
consolidation or merger to which the Company is a party or any sale or transfer
of all or substantially all of the assets of the Company; or
(e) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, in any one or more of said cases, the Company shall give written
notice to the Warrant Holder, not less than 20 days before any record date or
other date set for definitive action, or of the date on which such
reorganization, reclassification, sale, consolidation, merger, dissolution,
liquidation, or winding up shall take place, as the case may be. Such notice
shall also set forth such facts as shall indicate the effect of such action (to
the extent such effect may be known at the date of such notice) on the current
Exercise price and the kind and amount of the Warrant Shares and other
securities and property deliverable upon exercise of the Warrant. Such notice
shall also specify the date as of which the holders of the Common Stock of
record shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, sale,
consolidation, merger, dissolution, liquidation or winding up, as the case may
be (on which date, in the event of voluntary or involuntary dissolution,
liquidation or winding up of the Company, the right to exercise the Warrant
shall terminate).
8. Transfer of Rights.
This Warrant is transferable, in whole or in part, to any Partner of
the Investor or to any other person; provided that no transfer hereof shall be
made which violates the 1993 Act or any applicable state blue sky law or which
would require registration or qualification by the Company of the Warrant
pursuant to the 1993 Act or any such blue sky law. The preceding sentence does
not affect the Company's obligations under Section 5. This Warrant may be
assigned, at the option of the Warrant Holder upon delivery of the Warrant
Assignment Form annexed as Annex B hereto duly executed and funds sufficient to
pay any transfer tax imposed in connection with such assignment (if any) and,
upon surrender of this Warrant to the Company. The Company shall execute and
deliver a new Warrant or Warrants in the form of this Warrant with appropriate
changes to reflect such
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assignment, in the name of the assignee or assignees named in such instrument of
assignment and, if the Warrant Xxxxxx's entire interest is not being transferred
or assigned, in the name of the Warrant Holder, and this Warrant shall promptly
be cancelled. Any transfer or exchange of this Warrant shall be without charge
to the Warrant Holder (except as provided above with respect to transfer taxes,
if any) and any new Warrant or Warrants issued shall be dated the date hereof.
The term "Warrant" as used herein includes all Warrants into which this Warrant
or any successor Warrant) may be exchanged or issued in connection with the
transfer or assignment of this Warrant (or any successor Warrant).
9. Lost, Mutilated or Missing Warrant.
Upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and, in the case of loss,
theft or destruction of satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.
10. Rights of the Warrant Holder.
The rights of the Warrant Holder are limited to those expressed in this
Warrant.
11. Availability of Information.
The Company shall comply with all applicable public information
reporting requirements of the Commission (including those required to make
available the benefits of Rule 144 under the 1993 Act) to which it may from time
to time be subject. The Company shall also cooperate with each Warrant Holder
and holder of any Warrant Shares in supplying such information concerning the
Company as may be necessary for such Warrant Holder or holder to complete and
file any information reporting forms currently or hereafter required by the
Commission as a condition to the availability of an exemption from the 1993 Act
for the sale of any Warrants or Warrant Shares.
I 2. Successors.
All the provisions of this Warrant by or for the benefit of the Company
or the Warrant Holder shall bind and inure to the benefit of their respective
successors and assigns.
1 3. Miscellaneous.
(a) As used herein, the term "Common Stock" shall mean and include the
Company's currently authorized Common Stock, no par value per share, stock of
any other class or other consideration into which such currently authorized
Common Stock may hereafter have been changed and stock of any class of capital
stock in distributions either of earnings or assets of the Company without limit
as to amount or percentage.
(b) As used herein, the term "Discounted Value of Business in Force"
shall mean as of any date the aggregate present value of the estimated "net gain
from operations after dividends to policyholders and federal income taxes
(excluding tax on capital gains)" to be earned after such date by all insurance
Company Subsidiaries with respect to insurance policies and annuities in effect
on such date in each calendar year (or portion thereof) ending after such date
and within seven years of such date, determined in accordance with actuarial
assumptions then in use and other reasonable assumptions not inconsistent
therewith, discounted annually at an interest rate per annum equal to the sum of
(i) 5% and (ii) the per annum interest rate, as of the last day of the preceding
calendar quarter (unless such day is the last day of a calendar quarter, in
which case as of such date) for U.S. Treasury
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securities having a seven year maturity, as published in the most recent version
of U.15(519) published by the Board of Governors of the Federal Reserve System
on or prior to the last day of such calendar quarter.
(c) As used herein, the term "Surplus" means, with respect to any
Insurance Company Subsidiary that issues insurance or annuity policies and as of
any date, the sum of (i) gross paid in and contributed capital and surplus and
(ii) unassigned funds (surplus) less treasury stock, at cost in each case as of
such date.
(d) This Warrant shall not entitle the Warrant Holder to any rights
except the rights herein expressed, and no such cash dividend paid out of
earnings or surplus shall be payable or accrue in respect of this Warrant or the
interest represented thereby or the shares which may be subscribed for and
purchased hereunder until and unless and except to the extent that the rights
represented by this Warrant shall be exercised.
(e) The issuance of certificates for Warrant Shares upon the exercise
of the Warrant shall be made without charge to the Warrant Holders of such
certificates, and such certificates shall be issued in the respective names of,
or in such names as may be directed by, the Warrant Holder; provided that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
(f) This Warrant shall be construed in accordance with and governed by
the law of the State of California.
(g) The caption headings used in this Warrant are for convenience of
reference only and shall not be construed in any way to affect the
interpretation of any provisions of this Warrant.
14. Notices.
All notices, requests and other communications to either party
hereunder shall be in writing (including bank wire, telecopy or similar writing)
and shall be given as follows:
For Notices to the Company:
Thinking Tools, Inc.
Xxx Xxxxx Xxxxxxxx Xxxxx, 1-250
Monterey, California 94940
For Notices to the Warrant Holder, to the address as shown on the books
of the Company. Each such Notice shall be effective 72 hours after deposited in
the United States mail for delivery within the United States.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer on this 1st day of July 1996.
THINKING TOOLS, INC.
Xx. Xxxxx Xxxxxxxx, its: President
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ANNEX A
COMMON STOCK PURCHASE WARRANT
Notice of Exercise
, 199
To: Thinking Tools, Inc.
The undersigned, pursuant to the provisions set forth in Warrant No. , hereby
irrevocably elects and agrees to purchase shares of the Company's Common
Stock covered by such Warrant, and makes payment herewith in full therefor of
the aggregate Warrant Price of $ in the following form:
The undersigned hereby represents that the undersigned is exercising
the Warrant for its own account or the account of an affiliate for investment
purposes and not with the view to any offering or distribution and that the
Warrant Holder will not sell or otherwise dispose of the Warrant or the
underlying Warrant Shares in violation of the applicable securities laws. If
said number of shares is less than all of the shares purchasable hereunder and
the undersigned is any Person other than the Investor or an affiliate of the
Investor, the undersigned requests that a new Warrant certificate representing
the remaining balance of the shares be registered in the name of
whose address is
Signature
Printed Name
Address
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