Exhibit 10.1
NOTE PURCHASE, MODIFICATION and FOREBEARANCE AGREEMENT, dated as of
July 25, 2001, by and between CellPoint Inc., a Nevada corporation ("CellPoint"
or the "Company"), and Castle Creek Technology Partners LLC (the "Purchaser").
WHEREAS, the Purchaser is the holder of outstanding convertible
promissory notes (the "Notes"), each dated as of December 6, 2000, in the
original aggregate principal amount of $10,000,000;
WHEREAS, the Purchaser has agreed to sell the outstanding Notes and
CellPoint has agreed to purchase those Notes on the terms set forth below.
WHEREAS, the Purchaser and the Company have also agreed, by
execution of this Note Purchase, Modification and Forebearance Agreement, to
amend certain provisions of the Notes.
WHEREAS, the Company is in default under the Notes because without
limitation it has failed to make interest payments due on June 30, 2001 and it
has failed to file a proxy statement relating to a stockholders meeting as
required under the Securities Purchase Agreement dated as of December 6, 2000
between the Company and the Purchaser, and the Purchaser is willing to forebear
from enforcing its rights under the Notes as provided below.
NOW, THEREFORE, intending to be legally bound, the Company and the
Purchaser hereby agree as follows:
1. PURCHASE AND SALE OF THE NOTES. CellPoint hereby agrees to purchase all
outstanding Notes and the Purchaser agrees to sell those Notes for an amount
equal to eighty-six percent (86%) of their outstanding principal amount as of
the date hereof. Closing shall occur no later than the following dates for the
following cash payments:
DATE AMOUNT
60 days from the date hereof $3,000,000 (the "First Purchase Payment")
90 days from the date hereof Balance of purchase price (the "Second
Purchase Payment")
The Trading Restriction Payment (as defined below) shall be credited
against the Second Purchase Payment if the First Purchase Payment and the
balance of the Second Purchase Payment are made in full on a timely basis and
CellPoint is in compliance with its other obligations under this Agreement in
all material respects. At the respective closing date, Purchaser shall surrender
to CellPoint for cancellation Notes in the appropriate principal amount upon
wire transfer to Purchaser's account of the applicable First Purchase Payment or
the Second Purchase Payment (collectively, the "Purchase Payments"). Purchaser's
obligations to sell Notes upon tender of the Purchase Payment shall be
conditional (which condition may be waived by Purchaser in whole or in part in
its sole discretion) upon CellPoint's being in compliance in all material
respects with its obligations under this Agreement at the applicable time. By
way of example only, if $9,500,000 of principal amount of the Notes were
outstanding, upon timely tender of the First Purchase Payment in the amount of
$3,000,000, the Purchaser shall surrender Notes in the aggregate principal
amount of $3,488,372 (86% of $3,488,372 equals $3,000,000) and upon tender of
the Second Purchase Payment ($4,170,000 in cash and credit of the $1,000,000
Trading Restriction Payment), the Purchaser shall surrender the balance of the
Notes in the aggregate principal amount of $6,011,628 (86% of $6,011,628 equals
$5,170,000).
Simultaneously with the payment of the Second Purchase Payment, CellPoint
shall pay to the Purchaser all accrued but unpaid interest (calculated at a
non-default rate notwithstanding any prior notice to the contrary from the
Purchaser to CellPoint) on the Notes from the date of issuance thereof through
the date of the Second Purchase Payment by either, at the option of CellPoint
(notified to the Purchaser ten days before the making of such payment) (a) the
payment in cash of the full amount of such accrued but unpaid interest, or (b)
(i) the payment of cash equal to (A) 50% of such accrued interest, less (B) an
amount equal to interest on the Trading Restriction Payment for the period from
the date hereof through the date of the Second Purchase Payment, calculated at
the applicable money market rate of interest paid by Bear Xxxxxxx on its money
market accounts for such period; and (ii) the issuance of a number of shares of
Common Stock of CellPoint equal to 50% of such accrued interest, divided by the
average of the closing stock prices of CellPoint's Common Stock for the ten
consecutive trading days prior to the date of the Second Purchase Payment. Such
shares, if issued, shall be registered with the SEC pursuant to a registration
statement filed pursuant to paragraph 8 of this Agreement.
2. TRADING RESTRICTIONS. From the date hereof until the purchase in full
of the Notes by CellPoint pursuant to this Agreement, neither the Purchaser nor
any of the Purchaser's principals, partners, members or controlled affiliates
shall, directly or indirectly, trade in CellPoint's securities (including,
without limitation, (I) any transaction constituting a "short sale" (as defined
in Rule 3b-3 under the Securities Exchange Act of 1934, as amended), or (II)
establishment of an open "put equivalent position" (within the meaning of Rule
16a-1(h) under the Securities Exchange Act of 1934, as amended), or (III) any
public announcement of the intention to do any of the foregoing). In
consideration of such trading restrictions, CellPoint shall pay to Purchaser,
contemporaneously with the execution of this Agreement, a payment in the amount
of One Million Dollars ($1,000,000) in cash (by wire transfer to Purchaser's
account) (the "Trading Restriction Payment") which the Purchaser shall be
entitled to retain in all events, subject to paragraph 1 hereof, regardless of
whether or to what extent the Notes are purchased under this Agreement . Within
seven days prior to the date on which a Purchase Payment is due
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hereunder, the Purchaser, shall, if requested by CellPoint, provide CellPoint
with a letter confirming that it is in compliance with the restrictions set
forth in this paragraph 2.
3. AMENDMENT OF THE NOTES; CONVERSION PRICE. The Notes shall remain in
effect without modification, except as provided herein. The Notes shall be
deemed amended as provided herein effective immediately. Effective immediately,
the outstanding Notes shall have a Fixed Conversion Price (as that term is
defined in the Notes) of $4.00, and such Fixed Conversion Price shall be the
Conversion Price for so long as CellPoint is in compliance in all material
respects with its obligations under this Agreement. Until the expiration of 90
days from the date hereof , the Purchaser shall not transfer any of the Notes or
any rights in the Notes to any person or entity, and any purported transfer in
violation of this provision shall be null and void.
4. SECURITY. As security for CellPoint's obligations under this Agreement
and the Notes, CellPoint hereby grants to the Purchaser a first priority
security interest in the tangible and intangible assets of CellPoint, including
inventory, accounts, equipment and general intangibles (including the stock of
CellPoint's subsidiaries), as such terms are defined in Article 9 of the Uniform
Commercial Code of the State of
New York, as the same may be amended, and other
applicable laws in jurisdictions where CellPoint or its subsidiaries have
assets. As soon as practicable after the date of this Agreement (but in any
event no later than thirty (30) days from the date hereof), CellPoint shall
execute and deliver to the Purchaser one or more security agreements, which
shall contain customary terms and conditions of a security interest of the type
granted herein and which agreements shall be in form and substance satisfactory
to the Purchaser (whose response shall not be unreasonably delayed). In
addition, as soon as practicable after the date hereof (but in any event no
later than thirty (30) days from the date hereof), CellPoint shall execute and
file financing statements and other documents to perfect the Purchaser's lien as
shall be reasonably satisfactory to the Purchaser (whose response shall not be
unreasonably withheld or delayed); provided, however, CellPoint shall be deemed
to have complied with this paragraph if CellPoint shall have prepared and filed
all applicable documentation with the appropriate governmental authorities,
though it shall not have then received evidence of such filings. The Purchaser
agrees that it will execute all such releases as shall be necessary in order to
release the lien on the assets and/or stock of Unwire in connection with a sale
of Unwire or its assets in a transaction on arms'length commercially reasonable
terms with an unaffiliated party, as to which the Purchaser has given its
consent (such consent shall not be unreasonably withheld or delayed to the
extent that CellPoint is in compliance in all material respects with its
obligations under this Agreement). The Purchaser agrees to release its security
interest and execute all necessary releases upon its receipt of the Second
Purchase Payment.
5. RELEASE AND NONDISPARAGEMENT. CellPoint acknowledges to the Purchaser
that disparaging public statements attributed (whether correctly or incorrectly)
to CellPoint's officers are not correct, and to the extent that such statements
were actually made by CellPoint's officers, CellPoint hereby retracts such
statements in their entirety. To the extent reasonably requested by the
Purchaser, CellPoint agrees that it shall issue a statement in which it shall
clarify, if necessary, any statements of which CellPoint is or becomes aware in
publications previously
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attributed (whether correctly or incorrectly) directly to CellPoint or its
officers with respect to the characterization of the Purchaser or the
transactions contemplated by the Securities Purchase Agreement. CellPoint hereby
agrees not to disparage the Purchaser or its affiliates or principals in the
future. The Purchaser hereby agrees not to disparage CellPoint or its officers
or directors in the future. CellPoint hereby releases the Purchaser and its
affiliates and principals with respect to all claims arising prior to the date
of this Agreement pursuant to the release in the form attached hereto as EXHIBIT
A being delivered by CellPoint to the Purchaser contemporaneously herewith.
Nothing in this paragraph 5 shall preclude CellPoint from pursuing its legal
remedies against the Purchaser in the event that the Purchaser breaches any of
its obligations under this Agreement.
6. FOREBEARANCE. The Purchaser agrees to forebear in enforcing its
remedies under the Notes, the Securities Purchase Agreement and the other
agreements and instruments contemplated thereby for breaches which have occurred
prior to the date hereof for so long as CellPoint is in compliance in all
material respects with its obligations under this Agreement.
7. WARRANTS. Contemporaneous with the execution of this Agreement,
CellPoint shall issue to the Purchaser five-year warrants (the "New Warrants")
to purchase 500,000 shares of CellPoint Common Stock at an exercise price equal
to 120% of the average of the closing prices of CellPoint's Common Stock on the
NASDAQ for the ten consecutive trading days prior to the date hereof in the form
attached hereto as EXHIBIT B. The New Warrants shall not be exercisable until
after the first anniversary of the date hereof, except as otherwise provided in
the New Warrants.
8. REGISTRATION. The Registration Rights Agreement dated as of December 6,
2000 between CellPoint and the Purchaser (the "Registration Rights Agreement")
is hereby amended to include shares issued upon exercise of the New Warrants
(the "New Warrant Shares") as "Warrant Shares", and the shares, if any, issued
pursuant to paragraph 1 shall be included as "Registrable Securities". Defined
terms used in this paragraph and not otherwise defined herein shall have the
meanings specified in the Registration Rights Agreement. The Registration Rights
Agreement is also hereby amended to require that CellPoint shall file with the
SEC a Registration Statement (which shall be a "Prepayment Registration
Statement") covering the resales of 120% of the New Warrant Shares and the
shares issued with respect to accrued interest pursuant to paragraph 1 hereof,
no later than October 31, 2001 (which shall be a "Filing Deadline") and shall
cause such Registration Statement to become effective no later than 90 days
after the filing date of such registration statement. CellPoint shall be
obligated to comply with its obligations under the Registration Rights
Agreement, as amended hereby, with respect to the New Warrant Shares and any
shares issued pursuant to paragraph 1, in all respects, including without
limitation the obligation to make payments in the event of a Registration
Failure or a Registration Suspension (provided, however, that CellPoint shall
not be subject to any obligation to make any payments in the event of a
Registration Failure for the failure of the Registration Statement to become
effective within such 90-day period if, at that time, CellPoint shall have made
all Purchase Payments in full on a timely basis and the accrued interest under
paragraph 1 shall have been paid fully in cash and such Registration Statement
is declared effective by the date the New Warrants first become exercisable) and
to file an amendment or new Registration
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Statement in accordance with the provisions of Section 3.b. of the Registration
Rights Agreement if the number of shares registered is insufficient.
9. FILING OF 8-K; COMPLIANCE WITH ALL OBLIGATIONS UNDER NOTES AND OTHER
AGREEMENTS. CellPoint shall file with the SEC a report on Form 8-K under Item 5
thereof with respect to the terms of this Agreement within seven days after the
date hereof, which Form 8-K shall attach this Agreement and its Exhibits as
exhibits to such Form 8-K. CellPoint shall provide the Purchaser with a copy of
the Form 8-K at least two days prior to its filing thereof, and shall include
any reasonable comments made by the Purchaser with respect to the description of
this Agreement, the Purchaser and the transactions contemplated hereby;
PROVIDED, HOWEVER, that if the Purchaser shall fail to respond within such
two-day period, then CellPoint shall file the Form 8-K in the form provided to
the Purchaser for review. Notwithstanding any provisions to the contrary
contained in the Notes, the Securities Purchase Agreement or any of the
agreements or instruments contemplated thereby, for so long as CellPoint is in
compliance in all material respects with its obligations under this Agreement,
(a) without limiting CellPoint's obligations under paragraph 11 of this
Agreement, CellPoint shall not be required to comply with the provisions of
clauses k., l., m., n., or o. of Section 4 of the Securities Purchase Agreement,
(b) CellPoint shall not be required to convert any Notes as to which a
conversion notice has not been given prior to the date hereof into Conversion
Shares, and (c) CellPoint shall not be required to issue any Prepayment Warrants
(as defined in the Notes) in connection with the transactions contemplated by
this Agreement. CellPoint, as one of its obligations under this Agreement, shall
comply in all material respects with its obligations under the Notes, as
amended, the Registration Rights Agreement, as amended, and all other
instruments to which CellPoint and the Purchaser are a party, except as
otherwise contemplated by this Agreement. The failure of CellPoint to comply in
all material respects with its obligations under this Agreement, including
without limitation the obligations under the preceding sentence and the
obligation to perfect security interests, unless such failure is explicitly
waived by the Purchasers in writing, shall terminate the Purchaser's obligations
under this Agreement, including without limitation the obligations to sell the
Notes and to restrict trading, conversion and transfer. Any such failure shall
not affect amendments to the Notes or the Registration Rights Agreement made
pursuant to this Agreement or limit other obligations of CellPoint, including
without limitation its obligations to purchase the Notes.
10. CONFESSION OF JUDGMENT. THE NOTES SHALL IMMEDIATELY BE AMENDED BY THE
ADDITION OF THE CONFESSION OF JUDGMENT PROVISION ATTACHED HERETO AS EXHIBIT C.
11. NEGATIVE COVENANTS. So long as any Notes are outstanding and without
derogation of any restrictions contained in the other agreements between
CellPoint and the Purchaser, CellPoint shall not (a) incur any debt that is
secured by any lien or is senior to or PARI PASSU with the Notes, (b) issue any
equity or equity equivalent securities at a price (on an as converted or an as
exercised basis, if applicable) more than 20% below the average of the closing
market prices (the "Market Price Average") on the NASDAQ of the CellPoint Common
Stock during the ten consecutive trading day period ending on the trading date
immediately preceding the date of the closing of the issuance of such equity or
equity-equivalent securities, and/or (c) issue any equity or equity equivalent
securities on other than a fixed price basis or with more
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than 50% warrant coverage; PROVIDED, HOWEVER, that the negative covenants in
this paragraph 11 shall not apply to any transaction pursuant to which CellPoint
raises funds, the proceeds of which (in whole or in part) are used to make the
Second Purchase Payment in full simultaneously with the closing of such
transaction; provided further that clause (b) above shall not be deemed violated
for any transaction completed within 60 days after the date hereof, if the price
at which the equity or equity equivalent securities are sold (on an as converted
or an as exercised basis, if applicable) is at least $3.00 and the Market Price
Average at the time of such sale does not exceed $5.00). Subject to the proviso
of the preceding sentence, the provisions of this paragraph 11 apply to any
transaction between CellPoint and any third party who acquires Notes hereunder,
including without limitation any restructuring of the Notes after acquisition.
CellPoint acknowledges that the restrictions of this paragraph 11 shall apply to
transactions in which CellPoint raises funds for the making of the Trading
Restriction Payment and the First Purchase Payment.
12. NOTICE OF NON-COMPLIANCE; OPPORTUNITY TO CURE. In the event of
material non-compliance by CellPoint with the provisions of this Agreement,
except with respect to the obligations of CellPoint to purchase the Notes, to
deliver shares upon conversions of the Notes that do not violate this Agreement
or to grant and perfect security interests or CellPoint's obligations under
paragraph 5 and 11, the Purchaser shall so notify CellPoint in writing of such
non-compliance, and the Purchaser shall provide CellPoint with a fifteen day
period of time to cure any such non-compliance to the extent such non-compliance
is reasonably capable of being cured during such period of time.
13. BINDING EFFECT; OTHER. Except as explicitly set forth herein, all
other agreements between the parties remain unchanged. Except as may otherwise
be required by applicable law, no press release regarding this Agreement shall
be issued without the prior approval of the Purchaser, which approval shall not
be unreasonably withheld or delayed. CellPoint may , in its sole discretion,
designate one or more additional parties to purchase the Notes, but such
designation shall not, in any way, relieve CellPoint of any of its obligations
under this Agreement, though performance by such designee shall constitute
performance by CellPoint hereunder. Each of CellPoint and the Purchaser
represents and warrants to the other party that the execution, delivery and
performance of this Agreement has been duly authorized and does not require any
consents or authorizations of any third parties (except to the extent that
CellPoint is required to make any filings with governmental authorities after
the date hereof with respect to the transactions contemplated hereby). This
Agreement shall be governed by and construed in accordance with the laws of the
State of
New York and, in any proceeding based on or arising under this
Agreement, the parties consent to the jurisdiction of
New York courts on the
same
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terms as provided in Section 9.6 of the Notes and agree that the other
provisions of Section 9.6 of the Notes shall be applicable to this Agreement.
AGREED TO:
CELLPOINT INC. CASTLE CREEK TECHNOLOGY
PARTNERS, LLC
By:/s/ XXXX XXXXXXXXX By: /s/ XXXXXXX XXXXXX
Name: Xxxx Xxxxxxxxx Name: Xxxxxxx Xxxxxx
Title: Exec. V.P. Title: Managing Director, Castle Creek
Partners, as Agent for Castle
Creek Technology Partners LLC
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EXHIBIT A
GENERAL RELEASE
KNOW ALL MEN BY THESE PRESENTS, That the undersigned, CellPoint, Inc., a
Nevada corporation (the "Company"), for and in consideration of the sum of Ten
Dollars ($10.00) in lawful money of the United States of America paid to it by
Castle Creek Technology Partners LLC ("CC") at the date hereof, receipt of which
is hereby acknowledged, and other good and valuable consideration, has remised,
released and forever discharged and, by these Presents, does, for itself and its
successors and assigns, irrevocably and unconditionally, remise, release and
forever discharge the said CC and its owners, subsidiaries, members,
predecessors, successors, assigns, officers, directors, agents, employees,
representatives, attorneys, affiliates and all persons acting by, through or in
concert with them (collectively the "Released Parties") of and from all manner
of actions, cause, and causes of action, suits, debts, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, controversies, agreements,
promises, variances, trespasses, damages, judgments, executions, claims and
demands of any nature whatsoever, in law or in equity, suspected or unsuspected,
known or unknown, fixed or contingent, and particularly, without limiting the
generality of the foregoing, any and all claims relating to or arising out of CC
investments in and purchases and sales of securities issued by the Company and
any related transactions, any and all agreements that CC has or may have or may
have had with the Company or any of its subsidiaries or predecessors, executed,
unexecuted or proposed, oral or written, or the termination of any such
agreements, which it now has against the Released Parties or ever had, or which
it or its successors or assigns, hereafter can, shall or may have, for, upon, or
by reason of any such matter, cause or thing, whatsoever, on or at any time
prior to the date of these Presents.
The undersigned has read and understands that this is a General Release,
has been advised by counsel as to the implications of granting a General Release
and intends to be legally bound by the same.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
General Release this 25th day of July, 2001.
CELLPOINT INC.
By:
---------------------------------------
Its: Chairman
EXHIBIT B TO THE
NOTE PURCHASE, MODIFICATION
AND
FORBEARANCE AGREEMENT
VOID AFTER 5:00 P.M.,
NEW YORK CITY TIME, ON THE FIFTH ANNIVERSARY
OF ISSUANCE
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY
NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.
Right to Purchase 500,000 Shares of
Common Stock, par value $.001 per share
Date: July 25, 2001
CELLPOINT INC.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, CASTLE CREEK TECHNOLOGY PARTNERS,
LLC, or its registered assigns, is entitled to purchase from
CELLPOINT INC., a
corporation organized under the laws of the State of Nevada (the "COMPANY"), at
any time or from time to time during the period specified in Section 2 hereof,
Five Hundred Thousand (500,000) fully paid and nonassessable shares of the
Company's common stock, par value $.001 per share (the "COMMON STOCK"), at an
exercise price per share (the "EXERCISE PRICE") equal to $3.14. The number of
shares of Common Stock purchasable hereunder (the "WARRANT SHARES") and the
Exercise Price are subject to adjustment as provided in Section 4 hereof. The
term "WARRANTS" means this Warrant which was issued pursuant to the Note
Purchase, Modification and Forbearance Agreement dated July 25, 2001 by and
between the Company and the other signatory thereto (the "
NOTE PURCHASE
AGREEMENT"). All references herein to monetary denominations shall refer to
lawful money of the United States of America.
This Warrant is subject to the following terms, provisions and conditions:
1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
Subject to the provisions hereof, including, without limitation, the limitations
contained in Sections 2 and 7 hereof, this Warrant may be exercised by the
holder hereof, in whole or in part, by the surrender of this Warrant, together
with a completed exercise agreement in the form attached hereto (the "EXERCISE
AGREEMENT"), to the Company by 5:59 p.m.
New York time on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof) and upon (i) payment
to the Company in cash, by certified or official bank check or by wire transfer
for the account of the Company, of the Exercise Price for the Warrant Shares
specified in the Exercise Agreement or (ii) upon delivery to the Company of a
written notice of an election to effect a Cashless Exercise (as defined in
Section 11(c) below) pursuant to Section 11(c) hereof for the Warrant Shares
specified in the Exercise Agreement. The Warrant Shares so purchased shall be
deemed to be issued to the holder hereof or such holder's designee, as the
record owner of such shares, as of the close of business on the date on which
this Warrant shall have been surrendered and the completed Exercise Agreement
shall have been delivered and payment shall have been made for such shares as
set forth above or, if such day is not a business day, on the next succeeding
business day. The Warrant Shares so purchased, representing the aggregate number
of shares specified in the Exercise Agreement, shall be delivered to the holder
hereof within three business days, after this Warrant shall have been so
exercised (the "DELIVERY PERIOD"). If the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, and so long as the certificates therefor do not bear a legend
and the holder is not obligated to return such certificate for the placement of
a legend thereon and the holder has provided the Company with information
required by DTC relating to the DTC Account of the holder or the holder's
nominee, the Company shall cause its transfer agent to electronically transmit
the Warrant Shares so purchased to the holder by crediting the account of the
holder or its nominee with DTC through its Deposit Withdrawal Agent Commission
system ("DTC TRANSFER"). If the aforementioned conditions to a DTC Transfer are
not satisfied, the Company shall deliver to the holder physical certificates
representing the Warrant Shares so purchased. Further, the holder may instruct
the Company in writing to deliver to the holder physical certificates
representing the Warrant Shares so purchased in lieu of delivering such shares
by way of DTC Transfer. Any certificates so delivered shall be in such
denominations as may be requested by the holder hereof, shall be registered in
the name of such holder or such other name as shall be designated by such
holder. Prior to the earlier of the date that the Warrant Shares may be sold
pursuant to Rule 144(k) promulgated under the Securities Act (or a successor
rule) or the date of the registration of the Warrant Shares pursuant to the
Note
Purchase Agreement, and the Registration Rights Agreement dated as of December
5, 2000, by and between the Company and the other signatories thereto (the
"REGISTRATION RIGHTS AGREEMENT"), the certificates evidencing the Warrant Shares
shall bear the restrictive legend required by the Securities Act. After the
earlier of the dates referred to in the preceding sentence, the certificates
evidencing the Warrant Shares shall not bear any restrictive legend. If this
Warrant shall have been exercised only in part, then the Company shall at the
time of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised.
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If, at any time, a holder of this Warrant submits this Warrant, an
Exercise Agreement and payment to the Company of the Exercise Price for each of
the Warrant Shares specified in the Exercise Agreement, and the Company fails
for any reason to deliver, on or prior to the fifth business day following the
expiration of the Delivery Period for such exercise, the number of shares of
Common Stock to which the holder is entitled upon such exercise (an "EXERCISE
DEFAULT"), then the Company shall pay to the holder payments ("EXERCISE DEFAULT
PAYMENTS") for an Exercise Default in the amount of (a) (N/365), multiplied by
(b) the amount by which the Market Price (as defined in Section 4(l) below) on
the date the Exercise Agreement giving rise to the Exercise Default is
transmitted in accordance with this Section 1 (the "EXERCISE DEFAULT DATE")
exceeds the Exercise Price in respect of such Warrant Shares, multiplied by (c)
the number of shares of Common Stock the Company failed to so deliver in such
Exercise Default, multiplied by (d) .24, where N = the number of days from the
Exercise Default Date to the date that the Company effects the full exercise of
this Warrant which gave rise to the Exercise Default. The accrued Exercise
Default Payment for each calendar month shall be paid in cash not later than the
fifth day of the month following the month in which it has accrued.
Nothing herein shall limit the holder's right to pursue actual damages
(but not consequential damages) for the Company's failure to comply with the
terms of this Warrant.
2. PERIOD OF EXERCISE. This Warrant is exercisable at any time or from
time to time on or after July 25, 2002 (provided that this Warrant may be
exercised immediately upon any breach by the Company of its obligations under
this Warrant or a material breach of the
Note Purchase Agreement) and before
5:59 p.m.,
New York City time, on July 25, 2006 (the "EXPIRATION DATE"). The
period beginning July 25, 2002 (or earlier as provided herein) and ending on the
Expiration Date shall be referred to herein as the "EXERCISE PERIOD").
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares will, upon issuance
in accordance with the terms of this Warrant, be validly issued, fully paid, and
nonassessable and free from all taxes, liens, claims and encumbrances.
(b) RESERVATION OF SHARES. During the Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise in full of this Warrant (without giving effect to the
limitations on exercise set forth in Section 7(g) hereof).
(c) LISTING. The Company shall promptly secure the listing of the
shares of Common Stock issuable upon exercise of this Warrant upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed or become listed (subject to official notice of
issuance upon exercise of this Warrant) and shall maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all shares of Common
Stock from time to time issuable upon the exercise of this Warrant; and the
Company shall so list on each national securities exchange or automated
quotation system, as the case may be, and shall maintain such listing of, any
other shares of capital stock of the Company
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issuable upon the exercise of this Warrant if and so long as any shares of the
same class shall be listed on such national securities exchange or automated
quotation system.
(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by amendment
of its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the economic benefit inuring to the holder hereof
and the exercise privilege of the holder of this Warrant against dilution or
other impairment, consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (i) will not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the lowest Exercise Price then in effect, and (ii) will take all
such actions as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant.
(e) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation, or acquisition of all
or substantially all of the Company's assets.
(f) BLUE SKY LAWS. The Company shall, on or before the date of
issuance of any Warrant Shares, take such actions as the Company shall
reasonably determine are necessary to qualify the Warrant Shares for, or obtain
exemption for the Warrant Shares for, sale to the holder of this Warrant upon
the exercise hereof under applicable securities or "blue sky" laws of the states
of the United States, and shall provide evidence of any such action so taken to
the holder of this Warrant prior to such date; PROVIDED, HOWEVER, that the
Company shall not be required in connection therewith or as a condition thereto
to (a) qualify to do business in any jurisdiction where it would not otherwise
be required to qualify but for this Section 3(f), (b) subject itself to general
taxation in any such jurisdiction, (c) file a general consent to service of
process in any such jurisdiction, (d) provide any undertakings that cause the
Company undue expense or burden, or (e) make any change in its charter or
bylaws, which in each case the Board of Directors of the Company determines to
be contrary to the best interests of the Company and its stockholders.
4. ANTIDILUTION PROVISIONS. So long as the Warrant is outstanding, the
Exercise Price and the number of Warrant Shares issuable hereunder shall be
subject to adjustment from time to time as provided in this Section 4.
In the event that any adjustment of the Exercise Price(s) as
required herein results in a fraction of a cent, such Exercise Price(s) shall be
rounded up or down to the nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE(S). Except as otherwise provided in
Sections 4(c) and 4(e) hereof, if and whenever during the period beginning on
July 20, 2001 (the "ISSUE DATE") and ending on the Expiration Date the Company
issues or sells, or in accordance with Section 4(b) hereof is deemed to have
issued or sold, any shares of Common Stock for no consideration or for a
consideration per share that is less than either the Market Price on the
12
Measurement Date (as such terms are hereinafter defined) or the Exercise Price
on the Measurement Date (a "DILUTIVE ISSUANCE"), then effective immediately upon
the Dilutive Issuance, the Exercise Price(s) will be reduced to the lowest
Exercise Price determined in accordance with the following:
If the Dilutive Issuance is at a price which is less than the Exercise
Price on the Measurement Date, then the Exercise Prices shall be an amount
equal to the consideration per share of Common Stock received or deemed
received by the Company in such issuance, determined as provided in this
Section 4; or
If the Dilutive Issuance is at a price which is less than the Market Price
on the Measurement Date, then the Exercise Price(s) will be adjusted in
accordance with the following formula:
E' = E x O + P/M
-------------
CSDO
where:
E' = the adjusted Exercise Price;
E = the Exercise Price on the Measurement Date;
M = the greater of the Market Price on the Measurement
Date or the Exercise Price on the Measurement Date;
O = the number of shares of Common Stock outstanding
immediately prior to the Dilutive Issuance;
P = the aggregate consideration, calculated as set
forth in Section 4(b) hereof, received by the
Company upon such Dilutive Issuance; and
CSDO = the total number of shares of Common Stock Deemed
Outstanding (as defined in Section 4(l)(i) below)
immediately after the Dilutive Issuance.
Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Section 4(a) if such adjustment would result in an increase in the Exercise
Price. Further, if the Dilutive Issuance is at a price which is less than both
the Exercise Price on the Measurement Date and the Market Price on the
Measurement Date, the Exercise Price shall be adjusted to the lowest price
determined as provided above.
(b) EFFECT ON EXERCISE PRICE(S) OF CERTAIN EVENTS. For purposes of
determining the adjusted Exercise Price(s) under Section 4(a) hereof, the
following will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in any
manner issues or grants any warrants, rights or options, whether or not
immediately exercisable, to subscribe for or to purchase Common Stock or other
securities exercisable, convertible into or exchangeable for Common Stock
("CONVERTIBLE SECURITIES") (such warrants, rights and options to purchase Common
Stock or Convertible Securities are hereinafter referred to as "OPTIONS") and
the price per share for which Common Stock is issuable upon the exercise of such
Options is
13
less than either the Market Price or the Exercise Price in effect on the
Measurement Date ("BELOW MARKET OPTIONS"), then the maximum total number of
shares of Common Stock issuable upon the exercise of all such Below Market
Options (assuming full exercise, conversion or exchange of Convertible
Securities, if applicable) will, as of the date of the issuance or grant of such
Below Market Options, be deemed to be outstanding and to have been issued and
sold by the Company for such price per share. For purposes of the preceding
sentence, the "price per share for which Common Stock is issuable upon the
exercise of such Below Market Options" is determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration for the
issuance or granting of all such Below Market Options, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the exercise of all such Below Market Options, plus, in the case of
Convertible Securities issuable upon the exercise of such Below Market Options,
the minimum aggregate amount of additional consideration payable upon the
exercise, conversion or exchange thereof at the time such Convertible Securities
first become exercisable, convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the exercise of all such Below
Market Options (assuming full conversion of Convertible Securities, if
applicable). No further adjustment to the Exercise Price(s) will be made upon
the actual issuance of such Common Stock upon the exercise of such Below Market
Options or upon the exercise, conversion or exchange of Convertible Securities
issuable upon exercise of such Below Market Options. If, in any case, the total
number of shares of Common Stock issuable upon exercise of any Below Market
Options or upon exercise, conversion or exchange of any Convertible Securities
is not, in fact, issued and the rights to exercise such option or to exercise,
convert or exchange such Convertible Securities shall have expired or
terminated, the Exercise Price then in effect will be readjusted to the Exercise
Price which would have been in effect at the time of such expiration or
termination had such Below Market Options or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination (other
than in respect of the actual number of shares of Common Stock issued upon
exercise or conversion thereof), never been issued.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES.
(A) If the Company in any manner issues or sells any
Convertible Securities, whether or not immediately convertible (other than where
the same are issuable upon the exercise of Options) and the price per share for
which Common Stock is issuable upon such exercise, conversion or exchange (as
determined pursuant to Section 4(b)(ii)(B) if applicable) is less than the
Market Price or the Exercise Price in effect on the Measurement Date, then the
maximum total number of shares of Common Stock issuable upon the exercise,
conversion or exchange of all such Convertible Securities will, as of the date
of the issuance of such Convertible Securities, be deemed to be outstanding and
to have been issued and sold by the Company for such price per share. For the
purposes of the preceding sentence, the "price per share for which Common Stock
is issuable upon such exercise, conversion or exchange" is determined by
dividing (i) the total amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such Convertible Securities
(taking into account the value of any warrants or other securities issued to the
purchasers of such Convertible Securities), plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise,
conversion or exchange thereof at the time such Convertible Securities first
become exercisable, convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the exercise, conversion or
exchange of all
14
such Convertible Securities. No further adjustment to the Exercise Price(s) will
be made upon the actual issuance of such Common Stock upon exercise, conversion
or exchange of such Convertible Securities.
(B) If the Company in any manner issues or sells any
Convertible Securities with a fluctuating conversion or exercise price or
exchange ratio (a "VARIABLE RATE CONVERTIBLE SECURITY"), then the "price per
share for which Common Stock is issuable upon such exercise, conversion or
exchange" for purposes of the calculation contemplated by Section 4(b)(ii)(A)
shall be deemed to be the price per share which would be applicable (assuming
all holding period and other conditions to any discounts contained in such
Convertible Security have been satisfied) if the Market Price on the Measurement
Date is assumed for purposes of this calculation to be 80% of the Market Price
on such date (the "ASSUMED VARIABLE MARKET PRICE"). Further, if the Market Price
at any time or times thereafter is less than or equal to the Assumed Variable
Market Price last used for making any adjustment under this Section 4 with
respect to any Variable Rate Convertible Security, the Exercise Price(s) in
effect at such time shall be readjusted to equal the Exercise Price(s) which
would have resulted if the Assumed Variable Market Price at the time of issuance
of the Variable Rate Convertible Security had been 80% of the Market Price
existing at the time of the adjustment required by this sentence.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If there is a
change at any time in (i) the amount of additional consideration payable to the
Company upon the exercise of any Options; (ii) the amount of additional
consideration, if any, payable to the Company upon the exercise, conversion or
exchange of any Convertible Securities; or (iii) the rate at which any
Convertible Securities are convertible into or exchangeable for Common Stock (in
each such case, other than under or by reason of provisions designed to protect
against dilution), the Exercise Price(s) in effect at the time of such change
will be readjusted to the Exercise Price(s) which would have been in effect at
such time had such Options or Convertible Securities still outstanding provided
for such changed additional consideration or changed conversion rate, as the
case may be, at the time initially granted, issued or sold.
(iv) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Options or Convertible Securities are issued, granted or sold for cash,
the consideration received therefor for purposes of this Warrant will be the
amount received by the Company therefor, before deduction of commissions,
underwriting discounts or allowances or other reasonable expenses paid or
incurred by the Company in connection with such issuance, grant or sale. In case
any Common Stock, Options or Convertible Securities are issued or sold for a
consideration part or all of which shall be other than cash, including, in the
case of a strategic or similar arrangement in which the other entity will
provide services to the Company, purchase services from the Company or otherwise
provide intangible consideration to the Company, the amount of the consideration
other than cash received by the Company (including the net present value of the
contribution expected by the Company for the provided or purchased services)
will be the fair market value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Company will be the Market Price thereof as of the date of
receipt. In case any Common Stock, Options or Convertible Securities are issued
in connection with any merger or consolidation in which the Company is the
surviving corporation, the amount of consideration therefor will be deemed to be
the fair market value of
15
such portion of the net assets and business of the non-surviving corporation as
is attributable to such Common Stock, Options or Convertible Securities, as the
case may be. The Company shall calculate, using standard commercial valuation
methods appropriate for valuing such assets, the fair market value of any
consideration other than cash or securities; PROVIDED, HOWEVER, that if the
holder hereof does not agree to such fair market value calculation within three
business days after receipt thereof from the Company, then such fair market
value will be determined in good faith by an investment banker or other
appropriate expert of national reputation selected by the Company and reasonably
acceptable to the holder hereof, with the costs of such appraisal to be borne by
the Company.
(v) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE(S). No
adjustment to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities issued and outstanding on the date
of issuance of this Warrant and set forth on Schedule 3(d) of the Securities
Purchase Agreement dated as of December 6, 2000 by and among the Company and the
other signatories thereto (the "SECURITIES PURCHASE AGREEMENT") in accordance
with the terms of such securities as of such date; (ii) upon the grant or
exercise of any stock or options which may hereafter be granted or exercised
under any employee benefit plan of the Company now existing or to be implemented
in the future, so long as the issuance of such stock, warrants or options is
approved in accordance with the terms of such employee benefit plan; (iii) upon
conversion of the Notes or exercise of the Warrants; or (iv) upon the issuance
of Common Stock in an underwritten public offering (an offering pursuant to an
equity line arrangement shall not be an underwritten public offering for this
purpose); or (v) upon the issuance of securities to a strategic investor (the
"STRATEGIC INVESTOR"), provided that, in the case of clause (v), such sale
satisfies the following conditions: (A) the sale of such securities was approved
by the non-employee members of the Board of Directors of the Company and, in the
good faith reasonable business judgment of the non-employee members of the Board
of Directors of the Company, such sale of the Company's securities to the
Strategic Investor will further the operational business interests of the
Company; and (B) the primary purpose of such sale is other than a financing
arrangement.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company, at
any time during the period beginning on the Issue Date and ending on the
Expiration Date, subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) its shares of
Common Stock into a greater number of shares, then, after the date of record for
effecting such subdivision, the Exercise Price(s) in effect immediately prior to
such subdivision will be proportionately reduced. If the Company, at any time
during the period beginning on the Issue Date and ending on the Expiration Date,
combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) its shares of Common Stock into a smaller number
of shares, then, after the date of record for effecting such combination, the
Exercise Price(s) in effect immediately prior to such combination will be
proportionately increased.
(d) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price(s) pursuant to the provisions of Section 4, the number of shares
of Common Stock issuable upon exercise of this Warrant at each such Exercise
Price shall be adjusted by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of shares of Common
Stock issuable upon exercise of this Warrant at such Exercise Price
16
immediately prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Price.
(e) CONSOLIDATION, MERGER OR SALE. In case of any consolidation of
the Company with, or merger of the Company into, any other corporation, or in
case of any sale or conveyance of all or substantially all of the assets of the
Company other than in connection with a plan of complete liquidation of the
Company at any time during the period beginning on the Issue Date and ending on
the Expiration Date, then as a condition of such consolidation, merger or sale
or conveyance, adequate provision will be made whereby the holder of this
Warrant will have the right to acquire and receive upon exercise of this Warrant
in lieu of the shares of Common Stock immediately theretofore acquirable upon
the exercise of this Warrant, such shares of stock, securities, cash or assets
as may be issued or payable with respect to or in exchange for the number of
shares of Common Stock immediately theretofore acquirable and receivable upon
exercise of this Warrant had such consolidation, merger or sale or conveyance
not taken place. In any such case, the Company will make appropriate provision
to insure that the provisions of this Section 4 hereof will thereafter be
applicable as nearly as may be in relation to any shares of stock or securities
thereafter deliverable upon the exercise of this Warrant. The Company will not
effect any consolidation, merger or sale or conveyance unless prior to the
consummation thereof, the successor corporation (if other than the Company)
assumes by written instrument the obligations under this Warrant and the
obligations to deliver to the holder of this Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the holder
may be entitled to acquire.
(f) DISTRIBUTION OF ASSETS. In case the Company shall declare or
make any distribution of its assets (or rights to acquire its assets) to holders
of Common Stock as a partial liquidating dividend, stock repurchase, by way of
return of capital or otherwise (including any dividend or distribution to the
Company's stockholders of cash or shares (or rights to acquire shares) of
capital stock of a subsidiary) (a "DISTRIBUTION"), at any time during the period
beginning on the Issue Date and ending on the Expiration Date, then the holder
of this Warrant shall be entitled upon exercise of this Warrant for the purchase
of any or all of the shares of Common Stock subject hereto, to receive the
amount of such assets (or rights) which would have been payable to the holder
had such holder been the holder of such shares of Common Stock on the record
date for the determination of stockholders entitled to such Distribution. If the
Company distributes rights, warrants, options or any other form of convertible
securities and the right to exercise or convert such securities would expire in
accordance with its terms prior to the exercise of the Warrants, then the terms
of such securities shall provide that such exercise or convertibility right
shall remain in effect until 30 days after the date the holders of the Warrants
receive such securities pursuant to the exercise hereof.
(g) NOTICE OF ADJUSTMENT. Upon the occurrence of any event which
requires any adjustment of the Exercise Price(s), then, and in each such case,
the Company shall give notice thereof to the holder of this Warrant, which
notice shall state the Exercise Price(s) resulting from such adjustment and the
increase or decrease in the number of Warrant Shares purchasable at each such
price upon exercise, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. The chief
financial officer of the Company shall certify such calculation.
17
(h) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of the
Exercise Price shall be made in an amount of less than $.01, but any such lesser
adjustment shall be carried forward and shall be made at the time and together
with the next subsequent adjustment which, together with any adjustments so
carried forward, shall amount to not less than $.01.
(i) NO FRACTIONAL SHARES. No fractional shares of Common Stock are
to be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.
(j) OTHER NOTICES. IN CASE AT ANY TIME:
(i) the Company shall declare any dividend upon the Common
Stock payable in shares of stock of any class or make any other distribution
(other than dividends or distributions payable in cash out of retained earnings
consistent with the Company's past practices with respect to declaring dividends
and making distributions) to the holders of the Common Stock;
(i) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any class or other
rights;
(ii) there shall be any capital reorganization of the Company,
or reclassification of the Common Stock, or consolidation or merger of the
Company with or into, or sale of all or substantially all of its assets to,
another corporation or entity; or
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date or estimated date on which the books of the Company shall
close or a record shall be taken for determining the holders of Common Stock
entitled to receive any such dividend, distribution, or subscription rights or
for determining the holders of Common Stock entitled to vote in respect of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable estimate
thereof by the Company) when the same shall take place. Such notice shall also
specify the date on which the holders of Common Stock shall be entitled to
receive such dividend, distribution, or subscription rights or to exchange their
Common Stock for stock or other securities or property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such notice shall be given at
least 30 days prior to the record date or the date on which the Company's books
are closed in respect thereto. Failure to give any such notice or any defect
therein shall not affect the validity of the proceedings referred to in clauses
(i), (ii), (iii) and (iv) above. Notwithstanding the foregoing, the Company
shall publicly disclose the substance of any notice delivered hereunder prior to
delivery of such notice to the holder of this Warrant.
18
(k) CERTAIN EVENTS. If, at any time during the period beginning on
the Issue Date and ending on the Expiration Date, any event occurs of the type
contemplated by the adjustment provisions of this Section 4 but not expressly
provided for by such provisions, the Company will give notice of such event as
provided in Section 4(g) hereof, and the Company's Board of Directors will make
an appropriate adjustment in the Exercise Price(s) and the number of shares of
Common Stock acquirable upon exercise of this Warrant at each such Exercise
Price so that the rights of the holder shall be neither enhanced nor diminished
by such event.
(l) CERTAIN DEFINITIONS.
(i) "COMMON STOCK DEEMED OUTSTANDING" shall mean the number of
shares of Common Stock actually outstanding (not including shares of Common
Stock held in the treasury of the Company), plus (x) in the case of any
adjustment required by Section 4(a) resulting from the issuance of any Options,
the maximum total number of shares of Common Stock issuable upon the exercise of
the Options for which the adjustment is required (including any Common Stock
issuable upon the conversion of Convertible Securities issuable upon the
exercise of such Options), and (y) in the case of any adjustment required by
Section 4(a) resulting from the issuance of any Convertible Securities, the
maximum total number of shares of Common Stock issuable upon the exercise,
conversion or exchange of the Convertible Securities for which the adjustment is
required, as of the date of issuance of such Convertible Securities, if any.
(iv) "MARKET PRICE", as of any date, (i) means the average of
the closing bid prices for the shares of Common Stock as reported on the NASDAQ
National Market ("NASDAQ") by Bloomberg Financial Markets (or a comparable
reporting service of national reputation selected by the Corporation and
reasonably acceptable to the holder) ("BLOOMBERG") for the five consecutive
trading days immediately preceding such date, or (ii) if NASDAQ is not the
principal trading market for the shares of Common Stock, the average of the last
reported bid prices as reported by Bloomberg on the principal trading market for
the Common Stock during the same period, or, if there is no bid price for such
period, the last reported sales price as reported by Bloomberg for such period,
or (iii) if market value cannot be calculated as of such date on any of the
foregoing bases, the Market Price shall be the average fair market value as
reasonably determined by an investment banking firm selected by the Company and
reasonably acceptable to the holder, with the costs of the appraisal to be borne
by the Company. The manner of determining the Market Price of the Common Stock
set forth in the foregoing definition shall apply with respect to any other
security in respect of which a determination as to market value must be made
hereunder.
(v) "COMMON STOCK", for purposes of this Section 4, includes
the Common Stock and any additional class of stock of the Company having no
preference as to dividends or distributions on liquidation, provided that the
shares purchasable pursuant to this Warrant shall include only Common Stock in
respect of which this Warrant is exercisable, or shares resulting from any
subdivision or combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Section 4(e) hereof, the stock or other securities or
property provided for in such Section.
19
(vi) "MEASUREMENT DATE" means (i) for purposes of any private
offering of securities under Section 4(2) of the Securities Act of 1933, as
amended, the date that the Company enters into legally binding definitive
agreements for the issuance and sale of such securities and (ii) for purposes of
any other issuance of securities, the date of issuance thereof.
5. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
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 and delivery of any
certificate in a name other than the holder of this Warrant.
6. NO RIGHTS OR LIABILITIES AS A STOCKHOLDER. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
7. TRANSFER, EXCHANGE AND REPLACEMENT OF WARRANT. (a) RESTRICTION ON
TRANSFER. This Warrant and the rights granted to the holder hereof are
transferable, in whole or in part, upon surrender of this Warrant, together with
a properly executed assignment in the form attached hereto, at the office or
agency of the Company referred to in Section 7(e) below, PROVIDED, HOWEVER, that
any transfer or assignment shall be subject to the prior written consent of the
Company, which consent may not be unreasonably withheld, and to the conditions
set forth in Sections 7(f) and (g) hereof and the provisions of Sections 2(f)
and 2(g) of the Securities Purchase Agreement.] Until due presentment for
registration of transfer on the books of the Company, the Company may treat the
registered holder hereof as the owner and holder hereof for all purposes, and
the Company shall not be affected by any notice to the contrary. Notwithstanding
anything to the contrary contained herein, the registration rights described in
Section 8 hereof are assignable only in accordance with the provisions of the
Registration Rights Agreement.
(b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
Warrant is exchangeable, upon the surrender hereof by the holder hereof at the
office or agency of the Company referred to in Section 7(e) below, for new
Warrants of like tenor of different denominations representing in the aggregate
the right to purchase the number of shares of Common Stock which may be
purchased hereunder, each of such new Warrants to represent the right to
purchase such number of shares (at the Exercise Price therefor) as shall be
designated by the holder hereof at the time of such surrender.
(c) REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
20
(d) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided in
this Section 7, this Warrant shall be promptly canceled by the Company. The
Company shall pay all taxes (other than securities transfer taxes) and all other
expenses (other than legal expenses, if any, incurred by the Holder or
transferees) and charges payable in connection with the preparation, execution,
and delivery of Warrants pursuant to this Section 7. The Company shall indemnify
and reimburse the holder of this Warrant for all losses and damages arising as a
result of or related to any breach of the terms of this Warrant, including costs
and expenses (including reasonable legal fees) incurred by such holder in
connection with the enforcement of its rights hereunder.
(e) WARRANT REGISTER. The Company shall maintain, at its
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose name
this Warrant has been issued, as well as the name and address of each transferee
and each prior owner of this Warrant.
(f) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at the time of
the surrender of this Warrant in connection with any exercise, transfer, or
exchange of this Warrant, this Warrant (or, in the case of any exercise, the
Warrant Shares issuable hereunder), shall not be registered under the Securities
Act and under applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such exercise, transfer, or exchange, (i)
that the holder or transferee of this Warrant, as the case may be, furnish to
the Company a written opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such exercise, transfer, or exchange may be
made without registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee execute and
deliver to the Company an investment letter in form and substance acceptable to
the Company and (iii) that the transferee be an "accredited investor" as defined
in Rule 501(a) promulgated under the Securities Act; PROVIDED that no such
opinion, letter, or status as an "accredited investor" shall be required in
connection with a transfer pursuant to Rule 144 under the Securities Act.
(g) NO FIVE PERCENT HOLDERS. Notwithstanding anything to the
contrary contained herein, this Warrant shall not be exercisable by the holder
to the extent (but only to the extent) that, if exercisable by the holder, the
holder would be the beneficial owner of more than 4.99% of the shares of Common
Stock. For the purposes of this paragraph, beneficial ownership and all
determinations and calculations, shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and all applicable
rules and regulations thereunder. For clarification, it is expressly a term of
this security that the limitations contained in this Section 7(g) shall apply to
each successive holder. The restriction contained in this Section 7(g), may not
be altered, amended, deleted or changed in any manner whatsoever unless the
holders of a majority of the outstanding Shares of Common Stock and the holder
hereof approve such alteration, amendment, deletion or change.
8. REGISTRATION RIGHTS. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the
Note Purchase Agreement
and the Registration Rights Agreement, including the right to assign such rights
to certain assignees, as set forth therein.
21
9. NOTICES. Any notices required or permitted to be given under the terms
of this Warrant shall be delivered personally or by courier or by confirmed
telecopy, and shall be effective upon receipt or refusal of receipt, if
delivered personally or by courier, or by confirmed telecopy, in each case
addressed to a party. The addresses for such communications shall be:
If to the Company:
CELLPOINT INC.
0000 Xxxxxxxxx Xxxxx
Hillswood Business Park
Chertsey,
Surrey KT16 0RS
Attention: Xxxx Xxxxxxxxx
Telecopy: 44 1 344 623 090
with a copy to:
Salans Xxxxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 000000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy: 000-000-0000
If to the holder, at such address as such holder shall have provided in writing
to the Company, or at such other address as such holder furnishes by notice
given in accordance with this Section 9.
10. GOVERNING LAW; JURISDICTION. This Warrant shall be governed by and
construed in accordance with the laws of the State of
New York. The Company and
the registered holder irrevocably consent to the jurisdiction of the United
States federal courts and state courts located in the State of
New York in any
suit or proceeding based on or arising under this Warrant and irrevocably agree
that all claims in respect of such suit or proceeding may be determined in such
courts. The Company and the registered holder irrevocably waive any objection to
the laying of venue and the defense of an inconvenient forum to the maintenance
of such suit or proceeding. The Company and the registered holder further agree
that service of process upon it mailed by certified or registered mail shall be
deemed in every respect effective service of process upon it in any such suit or
proceeding. Nothing herein shall affect the right of the Company or the
registered holder to serve process in any other manner permitted by law. The
Company and the registered holder agree that a final non-appealable judgment in
any such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
11. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof may only
be amended by an instrument in writing signed by the Company and the holder
hereof.
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(b) DESCRIPTIVE HEADINGS. The descriptive headings of the several
Sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.
(c) CASHLESS EXERCISE. Notwithstanding anything to the contrary
contained in this Warrant, this Warrant may be exercised at any time during the
Exercise Period by presentation and surrender of this Warrant to the Company at
its principal executive offices with a written notice of the holder's intention
to effect a cashless exercise, including a calculation of the number of shares
of Common Stock to be issued upon such exercise in accordance with the terms
hereof (a "CASHLESS EXERCISE"). In the event of a Cashless Exercise, in lieu of
paying the Exercise Price in cash, the holder shall surrender this Warrant for
that number of shares of Common Stock determined by multiplying the number of
Warrant Shares to which it would otherwise be entitled by a fraction, the
numerator of which shall be the difference between the Market Price per share of
the Common Stock on the date of exercise and the Exercise Price, and the
denominator of which shall be such Market Price per share of Common Stock.
(d) TRADING DAY. For purposes of this Warrant, the term "TRADING
DAY" means any day on which NASDAQ or, if the Common Stock is not then traded on
NASDAQ, the principal United States securities exchange or trading market where
the Common Stock is then listed or traded, is open for trading.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the Company has caused this Stock Purchase Warrant to
be signed by its duly authorized officer.
CELLPOINT INC.
By:
----------------------------------
Name: Xxxx Xxxxxxxxx
Title: Executive Vice President
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FORM OF EXERCISE AGREEMENT
(TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WARRANT)
To:
CELLPOINT INC.
0000 Xxxxxxxxx Xxxxx
Hillswood Business Park
Chertsey,
Surrey KT16 0RS
Attention:
-------------------
Telecopy:
-------------------
The undersigned hereby irrevocably exercises the right to purchase
_____________ shares of the Common Stock of
CELLPOINT INC., a corporation
organized under the laws of the State of Delaware (the "COMPANY"), evidenced by
the attached Warrant and [herewith makes payment of the Exercise Price with
respect to such shares in full] [hereby elects to effect a Cashless Exercise (as
defined in Section 11(c) of such Warrant], all in accordance with the conditions
and provisions of such Warrant.
The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws.
/ / The undersigned requests that the Company cause its transfer agent to
electronically transmit the Common Stock issuable pursuant to this
Exercise Agreement to the account of the undersigned or its nominee
(which is _________________) with DTC through its Deposit Withdrawal
Agent Commission System ("DTC TRANSFER"), provided that such transfer
agent participates in the DTC Fast Automated Securities Transfer
program.
/ / In lieu of receiving the shares of Common Stock issuable pursuant to
this Exercise Agreement by way of DTC Transfer, the undersigned hereby
requests that the Company cause its transfer agent to issue and deliver
to the undersigned physical certificates representing such shares of
Common Stock.
The undersigned requests that a Warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant, in the name of the Holder and
delivered to the undersigned at the address set forth below:
Dated:
----------------------------------
Signature of Holder
25
Name of Holder (Print)
Address:
26
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the within Warrant, with
respect to the number of shares of Common Stock covered thereby set forth herein
below, to:
NAME OF ASSIGNEE ADDRESS NO OF SHARES
, and hereby irrevocably constitutes and appoints ____________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Dated: ,
--------------------- ----
In the presence of
Name:
--------------------------------------
Signature:
---------------------------------
Title of Signing Officer or Agent (if any):
Address:
-----------------------------------
Note: The above signature should correspond
exactly with the name on the face of the
within Warrant.
27
EXHIBIT C
TO THE
NOTE PURCHASE, MODIFICATION AND
FORBEARANCE AGREEMENT
As further security for the repayment of the Note, the Corporation hereby (i)
confesses judgment (the "Confessed Judgment") in the sum of $1,000,000, plus
interest from December 6, 2000 at the rate of 15% per annum, plus the costs and
disbursements of an action to enter such judgment, and less any payments of the
principal amount of the Note made prior to the entry of such Confessed Judgment,
and (ii) simultaneously with the execution and delivery of that certain Note
Purchase, Modification and Forbearance Agreement dated as of July 25, 2001
between the Corporation and the holder (the "
Note Purchase Agreement") executes
and delivers to the holder an Affidavit of Confession of Judgment in the form
annexed hereto as Schedule 1. In the event the Corporation shall default under
(a) any provision of this Note, as amended by the Note Purchase, Modification
and Forbearance Agreement or (b) any provision of the Note Purchase,
Modification and Forbearance Agreement, then the holder shall be entitled to
enter judgment in accordance with the Confessed Judgment without further notice
or order.
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