1
EXHIBIT 4.9
ANNEX E
TERMS OF THE "WARRANTS" OF THE COMPANY
1. General
The Warrants are issuable in bearer form and have the benefit of and are subject
to the provisions for the exercise thereof contained in the Warrant Agency
Agreement to be dated as of August 8, 1997 between the Company and Banca del
Gottardo (the "Warrant Agent" or the "Standing Agent" as the case may be) which
will be available for inspection at the office in Lugano of the Warrant Agent or
its successor as Warrant Agent. The holders of the Warrants (the "Holders") are
deemed to have knowledge of the provisions of such Agreement, all of which will
be binding on them, provided however that the rights of such Holders hereunder
shall be governed by the terms hereof.
The Standing Agent or the Warrant Agent may resign in its duties and be
discharged from all further duties as Agent or Warrant Agent in accordance with
the terms of the Warrant Agency Agreement. In such event a successor Standing
Agent or Warrant Agent, which will have the same duties as its predecessor and
will agree to be bound by the terms of the Warrant Agency by the Agreement, will
be appointed Company or if the Company shall fail to appoint such successor
Standing Agent or Warrant Agent by a court of competent jurisdiction.
The Global Warrant may be exchanged as a whole or in part for appropriate
definitive Warrants, in bearer form not earlier than 40 days after August 11,
1997 (the "Payment Date"). Such exchange shall be made upon certification that
the beneficial owners of the Warrants are not United States persons or U.S.
persons or are financial institutions (as defined in United States Treasury
Regulation Section 1, 165-12(c)(l)(v)) located outside the United States that
are not United States persons and that the beneficial owners have not purchased
such Warrants for resale during the Restricted Period and that the beneficial
owners certify that they have not acquired the Warrants for purposes of resale
directly or indirectly to a United States person or to a person within the
United States. A beneficial owner of Warrants must exchange its share of the
Global Warrant for definitive Warrants before such Warrants may be transferred
or shares may be delivered upon exercise of the Warrants.
For purposes hereof (i) the term "Restricted Period" means the period beginning
on the Payment Date and ending on the date forty (40) days after the Payment
Date (ii) the term "United States" means the United States of America (including
the States and the District of Columbia), its possessions its territories and
other
1
2
areas subject to its jurisdiction. (iii) the term "United States person" means a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate the income of which is subject to
United States federal income taxation regardless of its source or a trust if a
court within the United States is able to exercise primary jurisdiction over the
administration of the trust and one or more United States fiduciaries has the
authority to control all substantial decisions of the trust and (iv) the term
"U.S. person" has the meaning set forth in Sections 230.901 through .904 of
Title 17 of the United States Code of Federal Regulations ("Regulation S").
2. Duration
The right to subscribe for and purchase shares of Warrant Stock represented by
the Warrants shall commence subject to Section 8 hereof on November 1, 1997 and
shall expire August 11, 2002 at 5:00 P.M. US Eastern Time, provided, however,
that it, on such expiration date, the Company is then required, pursuant to an
effective request therefor, to effect, or is in the process of effecting, a
registration under the Securities Act for an underwritten public offering in
which shares of Warrant Stock are, pursuant to this Warrant, entitled to be
included, or if the Company is in default of any obligations created by this
Warrant, said right to subscribe for and purchase shares of Warrant Stock shall
expire at 5:00 P.M. US Eastern Time, on the 30th day following the date on which
such registration shall have become effective (but in no event longer than 180
days beyond the date this Warrant otherwise would have expired) or on the 30th
day following the date all of such defaults have been cured, as the case may be.
3. Warrant Price: Method of Exercise; Payment: Issuance of New
Warrant: Transfer and Exchange
The exercise price shall initially be USD 3.25 (such price hereinafter called
the "Warrant Price").
The purchase right represented by this Warrant may be exercised at any time and
from to time prior to expiration subject to Section 8 hereof.
In order to exercise the Warrants and receive certificates for Shares legally
issuable on such exercise, the Holder shall deposit at least 5,000 Warrants or
more with the Warrant Agent at its office in Lugano and accompanied by a written
notice the form of which being obtainable at the office of the Warrant Agent
(which notice must contain a certification of non-U.S. beneficial ownership)
signed by or on behalf of the Holder to the effect that such Holder elects to
exercise the Warrants and payment of
2
3
the Warrant Price (the "Warrant Consideration Amount"). As a further condition
precedent to the exercise of the Warrants, the Holder must pay all stamp, issue,
registration or other taxes and duties arising upon exercise in Switzerland or
payable in any jurisdiction upon the issue or delivery of Shares, if any, to the
exercising Holder or to the order of a person other than the exercising Holder.
The date on which these conditions precedent to exercise as stated above have
been verified and recognized by the Warrant Agent as being fulfilled in
hereafter called the "Deposit Date". The Common Stock Warrant shall be treated
as exercised at the close of business in New York on the Exercise Date. The
"Exercise Date" for the Warrant means the business days in New York immediately
following the Deposit Date. The "Exercise Date" for the Common Stock Warrant
shall not be later than the Termination Date.
The Company shall not be obligated to issue any fraction of a Share upon the
exercise of any Warrant or make any payment for a fraction of a Share. If more
than one Warrant shall be exercised at one time by the same Holder, the number
of full Shares which shall be issuable upon exercise thereof shall be computed
on the basis of the aggregate number of shares issuable upon the exercise of all
the Warrants exercised by such Holder. Any Shares issued upon the exercise of
the Common Stock Warrants shall be delivered in accordance with the instructions
of the Holder.
In the event of any exercise of the rights represented by this Warrant
certificates for the shares of Warrant Stock so purchased shall be dated the
date of such exercise and delivered to the Holder hereof within a reasonable
time, not exceeding five Business Days after such exercise, and the Holder
hereof shall be deemed for all purposes to be the Holder of the shares of
Warrant Stock so purchased as of the date of such exercise.
Neither this Warrant nor any Warrant Stock has been registered under the
Securities Act. Accordingly, neither this Warrant nor any Warrant Stock is
transferable except as permitted under various exemptions contained in the
Securities Act, or upon satisfaction of the registration and prospectus delivery
requirements of the Securities Act.
4. Stock Fully Paid; Reservation of Shares
The Company covenants and agrees that all shares of Warrant Stock which may be
issued upon the exercise of this Warrant and payment of the Warrant Price will,
upon issuance, be fully paid and non-assessable and free from all taxes, liens
and charges with respect to issuance. The Company further covenants and agrees
that during the period within which this Warrant may be
3
4
exercised, the Company will at all times have authorized and reserved for the
purpose of the issue upon exercise of the subscription rights evidenced by this
Warrant a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant. If the Warrant Price is at any time less than the par
value of the Warrant Stock or if the Warrant at any time is exercisable by its
delivery alone and without payment of any additional consideration, the Company
also covenants and agrees to cause to be taken such action (whether by
decreasing the par value of the Warrant Stock, the conversion of the Warrant
Stock from par value to no par value, or otherwise) as will permit the exercise
of this Warrant without any additional payment by the Holder hereof (other than
payment of the Warrant Price, if any, and applicable transfer taxes, if any),
and the issuance of the Warrant Stock, which Warrant Stock, upon such issuance,
will be fully paid and non-assessable.
The Company shall not by any action including, without limitation, amending its
certificate of incorporation 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 of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking if all such actions as may be
necessary or appropriate to protect the rights of the Holders hereof against
impairment. Without limiting the generality of the foregoing, the Company will
(a) not increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and non-assessable shares of Common Stock, free and clear of
any liens, claims, encumbrances and restrictions (other than as provided herein)
upon the exercise of this Warrant, and (c) use its best efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to perform
its obligations under this Warrant.
5. Adjustment of Purchase Price and Number of Shares
The number and kind of securities purchasable upon the exercise of this Warrant
and the payment of the Warrant Price shall be subject to adjustment from time to
time upon the happening of certain events as follows:
a) Recapitalization, Reorganization, Reclassification,
Consolidation, Merger or Sale
In case of any recapitalization or reorganization of the Company
4
5
or any reclassification or change of outstanding Securities issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value or as a result of a subdivision
or combination), or in case of any consolidation or merger of the Company with
or into another corporation (other than a merger with another corporation in
which the Company is the surviving corporation and which does not result in any
reclassification 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 - of outstanding Securities issuable upon exercise of
this Warrant), or in case of any sale or transfer to another corporation of the
Property of the Company as an entirety or substantially as an entirety in
connection with a liquidation or dissolution of the Company, the Company or such
successor or purchasing corporation therefor, issue a new Warrant, providing
that the Holder(s) of this Warrant shall have the right to exercise such new
Warrant and procure upon such exercise in lieu of each share of Warrant Stock
theretofore issuable upon exercise of this Warrant the kind and the highest
amount of shares of Stock, other securities, money and property receivable upon
such recapitalization, reorganization, reclassification, change, consolidation,
merger, sale or transfer by a Holder of one share of Common Stock issuable upon
exercise of this Warrant had it been exercised immediately prior to such
recapitalization, reorganization, reclassification, change, consolidation,
merger sale or transfer. Such new Warrant shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section 5. The provisions of this subsection (a) shall similarly
apply to successive recapitalizations, reorganizations, reclassifications,
changes, consolidations, mergers, sales and transfers.
b) Subdivision or Combination of Shares
If the Company, at any time while this Warrant is outstanding, shall
subdivide or combine any class or classes of its Common. (i) in case of
subdivision of shares, the Warrant Price shall be proportionately reduced (as at
the effective date of such subdivision of, if the Company shall take a record of
Holders of its Common for the purpose of so subdividing, as at the applicable
record date, whichever is earlier) to reflect the increase in the total number
of shares of Common outstanding as a result of such subdivision, or (ii) in the
case of a combination of shares, the Warrant Price shall be proportionately
increased (as at the effective date of such combination, or, if the Company
shall take a record of Holders of its Common for the purpose of so combining, as
at the applicable record date, whichever is earlier) to reflect the reduction in
the total number of shares of Common outstanding as a result of such
combination.
5
6
c) Certain Dividends and Distributions
If the Company, at any time while this Warrant is outstanding shall:
(i) Stock Dividends
Pay a dividend in, or make any other distribution of, shares
of any class or classes of Common, the Warrant Price shall be adjusted, as at
the date the Company shall take a record of the holders of such class or classes
of Common, for the purpose of receiving such dividend or other distribution (or
if no such record is taken, as at the date of such payment or other
distribution), to that price determined by multiplying the Warrant Price in
effect immediately prior to such record date (or if no such record is taken,
then immediately prior to such payment or other distribution), by a fraction (I)
the numerator of which shall be the total number of shares of Common outstanding
immediately prior to such dividend or distribution, and (2) the denominator of
which shall be the total number of shares of Common outstanding immediately
after such dividend or distribution (plus in the event that the Company paid
cash for fractional shares, the number of additional shares which would have
been outstanding had the Corporation issued fractional shares in connection with
said dividends), or
(ii) Liquidating Dividends, etc.
Make a distribution of its Property to the holders of its
Common as a dividend in liquidation or partial liquidation or by way of return
of capital other than as a dividend payable out of funds legally available for
dividends under the laws of the State of Delaware, the Holder of this Warrant
shall, upon exercise and payment of the Warrant Price, be entitled to receive.
in addition to the number of shares of Warrant Stock receivable thereupon. and
without payment of any additional consideration therefor, a sum equal to the
amount of such Property as would have been payable to such Holder as owner of
that number of shares of Warrant Stock of the receivable by exercise of this
Warrant, had such Holder been the holder of record of such Warrant Stock on the
record date for such distribution. and an appropriate provision therefor shall
be made a part of any such distribution.
d) Issuance of Additional Shares of Common
If the Company, at any time while this Warrant is outstanding,
shall issue any Additional Shares of Common (otherwise than as provided in the
foregoing subsections (a) through (c) of this Section 4), at a price per share
less than the Warrant Price then in effect or without consideration. then
6
7
the Warrant Price upon each such issuance shall be adjusted to that price
determined by multiplying the Warrant Price BV a fraction:
the numerator of which shall be the number of shares of Common
outstanding immediately prior to the issuance of such Additional Shares of
Common plus the number of shares of Common which the aggregate consideration for
the total number of such Additional Shares of Common so issued would purchase at
the Warrant Price, and
the denominator of which shall be the number of shares of
Common outstanding immediately after the issuance of such Additional Shares of
Common.
7
8
The provisions of this subsection (d) shall not apply under any of the
circumstances for which an adjustment is provided in subsections (a), (b) or (c)
of this Section 5. No adjustment of the Warrant Price shall be made under this
subsection (d) upon the issuance of any Additional Shares of Common which are
issued pursuant to any Common Stock Equivalent if upon the issuance of such
Common Stock Equivalent (1) any adjustment shall have been made pursuant to
subsection (e) of this Section 5 or (2) no adjustment was required pursuant to
subsection (e) of this Section 5.
e) Issuance of Common Stock Equivalents
In case the Company shall at any time while this Warrant is
outstanding, issue any Common Stock Equivalent and the price per share of Common
for which Additional Shares of Common may be issuable thereafter pursuant to
such Common Stock Equivalent shall be less than the Warrant Price then in effect
on the date of issuance of such Common Stock Equivalent or if, after any such
issuance of Common Stock Equivalents, the price per share for which Additional
Shares of Common may be issuable thereafter is amended (other than as a result
of the operation of anti-dilution provisions of or relating to Common Stock
Equivalents outstanding as of the date hereof pursuant to events or
circumstances which would also result in an adjustment in the Warrant Price),
and such price as so amended shall be less than the Warrant Price in effect at
the time of such amendment, then the Warrant Price upon each such issuance or
amendment shall be adjusted as provided in the first sentence of subsection (d)
of this Section 4 on the basis that (1) the maximum number of Additional Shares
of Common issuable pursuant to all such Common Stock Equivalents shall be deemed
to have been issued (whether or not such Common Stock Equivalents are actually
then exercisable, convertible or exchangeable in whole or in part) as of the
earlier of (A) the date on which the Company shall enter into a firm contract
for the issuance of such Common Stock Equivalent, or (B) the date of actual
issuance of such Common Stock Equivalent, and (2) the aggregate consideration
for such maximum number of Additional Shares of Common shall be deemed to be the
minimum consideration received and receivable by the Company for the issuance of
such Additional Shares of Common pursuant to such Common Stock Equivalent. No
adjustment of the Warrant Price shall be made under this subsection (e) upon the
issuance of any Convertible Securities which is issued pursuant to the exercise
of any warrants or other subscription or purchase rights therefor. if any
adjustment shall previously have been made in the Warrant Price then in effect
LI upon the issuance of such warrants or other rights pursuant to this
subsection (e).
f) Other Provisions Applicable to Adjustments Under this
Section A
The following provisions shall be applicable to the
8
9
making of adjustments in the Warrant Price hereinbefore provided in this Section
5:
(i) Computation of Consideration
The consideration received by the Company shall be deemed to
be the following: (a) to the extent that any Additional Shares of Common or any
Common Stock Equivalents shall be issued for a cash consideration. the
consideration received by the Company the re for, or (b) if such Additional
Shares of Common or Common Stock Equivalents are offered by the Company for
subscription, the subscription price, or, (c) if such Additional Shares of
Common or Common Stock Equivalents are sold to underwriters or dealers for
public offering without a subscription offering, the initial public offering
price. in any such case excluding any amounts paid or receivable for accrued
interest or accrued dividends and without deduction of any compensation,
discounts, commissions, or expenses paid or incurred by the Company for or in
connection with the underwriting thereof or otherwise in connection with the
issue thereof; (d) to the extent that such issuance shall be for a consideration
other than cash, then, except as herein othervise expressly provided, the fair
market value of such consideration at the time of such issuance as determined in
good faith by the Board. The consideration for any Additional Shares of Common
issuable pursuant to any Common Stock Equivalents shall be the consideration
received by the Corporation for issuing such Common Stock Equivalents, plus the
additional consideration payable to the Corporation upon the exercise,
conversion or exchange of such Common Stock Equivalents. In case of the issuance
at any time of any Additional Shares of Common or Common Stock Equivalents in
payment or satisfaction of any dividend upon any class of Stock other than
Common, the Corporation shall be deemed to have received for such Additional
Shares of Common or Common Stock Equivalents a consideration equal to the mount
of such dividend so paid or satisfied. In any case in which the consideration to
be received or paid shall be other than cash, the Board shall notify the Holder
of this Warrant through Banca del Gottardo of its determination of the fair
market value of such consideration prior to payment or accepting receipt
thereof. If, within thirty days after receipt of said notice, the Holders of
Warrants exercisable for at least a majority of Warrant Stock then unissued
shall notify the Board in writing of their objection to such determination, a
determination of fair market value of such consideration shall be made by
arbitration in accordance with the Rules of the American Arbitration Association
by an arbitrator in the Borough of Manhattan, City of New York, State of New
York.
(ii) Readjustment of Warrant Price
Upon the expiration of the right to convert. exchange or
exercise any Common Stock Equivalent the issuance of which
9
10
effected an adjustment in the Warrant Price, if such Common Stock Equivalent
shall not have been converted, exercised or exchanged, the number of shares of
Common Stock deemed to be issued and outstanding by reason of the fact that they
were issuable upon conversion, exchange or exercise of any such Common Stock
Equivalent shall no longer be computed as set forth above, and the Warrant Price
shall forthwith be readjusted and thereafter be the price which it would have
been (but reflecting any other adjustments in the Warrant Price made pursuant to
the provisions of this Section 5 after the issuance of such Common Stock
Equivalent) had the adjustment of the Warrant Price been made in accordance with
the issuance or sale of the number of Additional Shares of Common actually
issued upon conversion, exchange or issuance of such Common Stock Equivalent and
thereupon only the number of Additional Shares of Common actually so issued
shall be deemed to have been issued and only the consideration actually received
by the Company (computed as in clause (i) of this subsection (g)) shall be
deemed to have been received by the Company.
(iii) Treasury Shares
The number of shares of Common at any time outstanding shall
not include any shares thereof then directly or indirectly owned or held by or
for the account of the Company or any of its Subsidiaries.
g) Other Action Affecting Common
In case after the date hereof the Company shall take any
action affecting its common, other than an action described in any of the
foregoing subsections (a) through (f) of this Section 5, inclusive, and the
failure to make any adjustment would not protect the purchase rights represented
BV this Warrant in accordance with the essential intent and principle of this
Section 5, then the Warrant Price shall be adjusted in such manner and at such
time as the Board may in good faith determine to be equitable in the
circumstances.
h) Adjustment of Number of Shares
Upon each adjustment in the Warrant Price pursuant to any
provision of this Section 5, the number of shares of Warrant Stock purchasable
hereunder shall be adjusted, to the nearest whole share, to the product obtained
by multiplying such number of shares purchasable immediately prior to such
adjustment in the Warrant Price by a fraction, the numerator of which shall be
the Warrant Price immediately prior to such adjustment and the denominator of
which shall be the Warrant Price immediately thereafter. If the Company shall be
in default under any provision contained in the last sentence of Section 5 of
this Warrant so that shares issued at the Warrant price adjusted in
10
11
accordance with this Section 5 would not be validly issued, the adjustment of
number of shares provided for in the foregoing sentence shall nonetheless be
made and the Holder of this Warrant shall be entitled to purchase such greater
number of shares at the lowest price at which such shares may then be validly
issued under applicable law. Such exercise shall not constitute a waiver of any
claim arising against the Company by reason of its default under Section 5 of
this Warrant.
i) Notwithstanding anything in this Section 5 to the contrary
neither the number of shares of Warrant Stock purchasable hereunder nor the
Warrant Price shall be adjusted with respect to any Common Stock Equivalents (i)
issued and outstanding as of the date of the issuance of this Warrant, or the
issuance of any Securities upon exercise or conversion of any such Common Stock
Equivalent, including, without limitation, any Securities issued from time to
time pursuant to the exercise of options outstanding as of the date of issuance
of the Warrant and held by present or former directors, officers or employees of
the Company or
(ii) issued under any stock option plan currently approved by
the shareholders of the Company.
6. Notice of Adjustments
Whenever the Warrant Price or number of Warrant Shares purchasable upon exercise
of this Warrant shall be adjusted pursuant to Section 5 hereof, the Company
shall deliver to Banca del Gottardo for certification to the Holder(s) of the
Warrant a certificate (the "Adjustment Certificate") setting forth, in
reasonable detail, the event requiring the adjustment, the amount of by which
the adjustment, the method such adjustment was calculated (including a
description of the basis on which the Board made any determination hereunder),
and the Warrant Price and number of Warrant Shares purchasable hereunder after
giving effect to such adjustment, and shall cause copies of such certificate to
be mailed (by first class mail postage prepaid) to the Holder(s) of this Warrant
promptly after each adjustment, provided, however, that in the event that any
Holder disagrees with the calculations, amounts or other information with
respect to the adjustments set forth in the Adjustment Certificate, such Holder
shall within 10 Business Days after receipt of such Adjustment Certificate
request that the Company cause the independent accounting firm then regularly
engaged by it to audit its financial statements to propose and execute and
promptly deliver to the Holder(s) a certificate with respect to each of the
items set forth in the Adjustment Certificate. Such determination as to
adjustments of the accounting firm shall be final and binding in the absence of
manifest error.
11
12
7. Fractional Shares
No fractional shares of Warrant Stock will be issued in connection with any
exercise hereof, but in lieu of such fractional shares, the Company shall cause
the payment therefor equal in amount to the product of the applicable fraction
multiplied by the Warrant Price then in effect.
8. Definitions
For the purposes of this Warrant, the following terms have the following
meanings:
"Additional Shares of Common" shall mean all shares of Common issued by the
Corporation after the date hereof except Warrant Stock.
"Board" shall mean the Board of Directors of the Corporation.
"Business Day" shall mean any day except a Saturday, a Sunday or a legal holiday
in New York City.
"Closing Date" shall mean the date of the closing of the sale and delivery of
the Notes.
"Commission" shall mean the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"Common" shall mean the Common Stock and any capital stock of the Company of any
class which shall be authorized at any time after the date of this Warrant and
which shall have the right to participate in the distribution of earnings and
assets of the Company without limitation as to amount.
"Common Stock Equivalent" shall mean any Convertible Security or warrant, option
or other right to subscribe for or purchase any Additional Shares of Common or
any Convertible Securities.
"Company" shall mean Bitwise Designs, Inc., a Delaware corporation, and its
successors and assigns.
"Convertible Securities" shall mean evidences of Indebtedness, shares of Stock
or other Securities which are or may be at any time convertible into or
exchangeable for Additional Shares of Common. The term "Convertible Security"
shall mean one of the Convertible Securities.
"Current Market Price" means with respect to any Trading Day the last sale price
(regular way) of the Common on such day as reported on the New York Stock
Exchange Consolidated Tape (as published in the Wall Street Journal), or, if
such Common is not
12
13
listed on the New York Stock Exchange, Inc. or reported on such Consolidated
Tape, then the last sale price on such day on the principal domestic stock
exchange on which such stock is then listed or admitted to trading, or, if no
sale takes place on such day on such exchange, the average of the closing bid
and asked prices on such day as officially quoted on such exchange, or, if such
Common is not then listed or admitted to trading on any domestic stock exchange
but is quoted in the National Market System ("NMS/NASDAQ") of the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ"),
then the Current Market Price for each such Trading Day shall be the last sale
price on such day as quoted by NMS/NASDAQ, or, if no sale takes place on such
day or if such Common is neither listed or admitted to trading on any domestic
stock exchange nor quoted on such National Market System, then the Current
Market Price for each such Trading Day shall be the average of the reported
closing bid and asked price quotations on such day in the over-the-counter
market, as reported by NASDAQ, or, if not so reported, as furnished BV the
National Quotation Bureau, Inc., or, if such firm at the time is not engaged in
the business of reporting such prices, as furnished BV any similar firm then
engaged in such business as selected by the Company, or if there is no such
firm, as furnished BV any member of the National Association of Securities
Dealers, Inc. selected by the Company with the written approval of the Holders
of Warrants execrable for a majority of the shares of Warrant Stock usable under
then outstanding Warrants. If at any time such Common is not listed on any
domestic exchange or quoted in the domestic over-the-counter market, the Current
Market Price shall be deemed to be an amount mutually agreed upon in writing
between the Corporation and the Holder of this Warrant within fifteen days
immediately following the date on which the Current Market Price is to be
determined. If no agreement as to Current Market Price is determined as stated
herein, (i) the Holder of this Warrant shall select an independent appraiser who
shall determine the fair market value per share of the Common which shall be the
Current Market Price, provided the Company shall agree to such Current Market
Price. If the Company shall not agree to the Current Market Price as determined
in the preceding sentence then (ii) the Company and Banca del Gottardo shall
each select an independent appraiser who shall, independently of the other
appraiser, determine the fair market value of the Common of the Company. If the
value determined by the appraiser whose determination is the higher of the two
appraisals does not exceed by more than ten percent (10%) the average of the
values determined by each appraiser, then the Current Market Price shall be the
average of the values determined by the two appraisers. If the value determined
by the appraiser whose determination is the higher of the two appraisals does
exceed by more than ten percent (10%) the average of the value determined by
each appraiser, then the two appraisers shall select a third independent
appraiser who shall, independently of the other appraisals, determine the fair
market
13
14
value of the Common. The value determined by the appraiser whose determination
is the most discrepant from the average of the three appraisals shall be
discarded, and the Current Market Price shall equal the average of the remaining
two appraisals except that in the event that the highest and lowest appraisals
are equally discrepant from the average of the three appraisals the Current
Market Price shall be such average. The Company shall bear the expenses of all
appraisals.
"Governmental Body" shall mean any federal, state, county, city, town, village,
municipal or other governmental department commission, board, bureau, agency
authority or instrumentality, domestic or foreign.
"Holders" shall mean the Persons who shall from time to time own of record any
Warrant. The term "Holder" shall mean one of the Holders.
"Material Adverse Effect" means any change or changes or effect or effects that
individually or in the aggregate are or are likely to be materially adverse to
(i) the assets, business, operations, income, prospects or condition (financial
or otherwise) of the Company and its Subsidiaries taken as a whole, (ii) the
legality validity or enforceability of the Warrants and (iii) the ability of the
Corporation to fulfill its obligations under the Warrants.
"Note Purchase Agreement" shall mean the Note and Warrant Purchase, Paying and
Conversion Exercise Agency Agreement dated as of August 8, 1997, by and between
the Company and Banca del Gottardo as such Agreement may hereafter from time to
time be amended, modified or supplemented in accordance with the terms thereof.
"Notes" shall mean collectively the Convertible Notes (each as defined in the
Note Purchase Agreement).
"Person" shall mean and include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization or a government or any
department or agency thereof.
"Property" with respect to any Person shall mean any interest in any kind of
property or asset, whether real, personal or mixed, tangible or intangible, of
such Person.
"Registrable Securities" shall mean (a) any Warrant Stock or other Securities
issued or issuable upon exercise of any Warrants, and (b) any Securities issued
or issuable with respect to any such Warrant Stock or other Securities by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise. As
to any particular Registrable
14
15
Securities, once issued such shares or securities shall cease to be registrable
securities hen (i) a registration statement with respect to the sale of such
Securities shall have become effective under the Securities Act and such
Securities shall have been disposed of in accordance with such registration
statement, (ii) they shall have been distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act, (iii) they shall have
been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of them shall not require registration or qualification
of them under the Securities act or any similar state law then in force (iv)
they shall have ceased to be outstanding or (v) the Company agrees to remove the
legend restricting transferability in accordance with applicable law on the
certificates evidencing such Securities.
"Registration Expenses" shall mean all expenses incident to the Company's
performance of or compliance with Section 4, including, without limitation, all
registration, filing and National Association of Securities Dealers fees all
fees and expenses of complying with securities or blue sky laws, all word
processing duplicating and printing expenses, messenger and delivery expenses,
the fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and compliance the
reasonable fees and disbursements of not more than one firm of attorneys
retained BV the holders of the Registrable Securities being registered, premiums
and other costs of policies of insurance against liabilities arising out of the
public offering of the Registrable Securities being registered and any fees and
disbursements of underwriters customarily paid BV issuers or sellers of
securities but excluding underwriting discounts and commissions and transfer
taxes if any provided that, in any case whereby the Registration Expenses are
not to be borne by the Company, such expenses shall not include salaries of
Company personnel or general overhead expenses of the Company, auditing fees,
premiums or other expenses relating to liability insurance required by
underwriters of the Company or other expenses for the preparation of financial
statements or other data normally prepared by the Corporation in the ordinary
course of its business or which the Company would have incurred in any event.
15
16
"Securities" shall mean any debt or equity securities of the Company whether now
or hereafter authorized, and any instrument convertible into or exchangeable for
Securities or a Security.
"Security" shall mean one of the Securities.
"Securities Act" shall mean as of any date the Securities Act of 1933, as
amended or any similar Federal statute then in effect.
"Stock" shall include any and all shares, interests or other equivalents
(however designated) of, or participation in the capital stock of a corporation
of any class.
"Subsidiary" shall mean with respect to any Person, any corporation or other
entity of which at least a majority of the outstanding Voting Stock is at the
time directly or indirectly owned or controlled by such Person or by one or more
of any entities directly, or indirectly owned or controlled by such Person.
"Trading Day" shall mean any day on which equity securities are traded on any
national securities exchange or on NASDAQ.
"Voting Stock", as applied to the Stock of any corporation, shall mean Stock of
any class or classes (however designated) having ordinary voting power for the
election of a majority of the members of the Board of Directors (or other
governing body) of such corporation, other than Stock having such power only by
reason of the happening of a contingency.
"Warrant Price" shall mean the price specified in the first paragraph of this
Warrant and such other prices as shall result from the adjustments specified in
Section 4 hereof.
"Warrant Stock" shall mean the Common Stock issuable upon exercise of any
Warrant or Warrants.
"Warrants" shall mean the Warrants issued and sold pursuant to the Note Purchase
Agreement, including, without limitation this Warrant.
9. Amendment and Waiver: Assignees
Any term, covenant, agreement or condition in this Warrant may be amended, or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), by a written instrument or written
instruments executed by the Company and Banca del Gottardo provided however,
that no such amendment or waiver shall reduce the number of shares of Warrant
Stock issuable under the Warrants, increase the Warrant Price, shorten the
period during which the Warrants may be exercised or modified any provision of
this Section 9 without the consent of the Holders of all Warrants then
outstanding.
16
17
10. Loss or Mutilation
Upon receipt by the Warrant Agent of evidence satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of any Warrant and
(in the case of loss, theft or destruction) of indemnity satisfactory to it, and
(in the case of mutilation) upon surrender and cancellation thereof, the Warrant
Agent shall execute and deliver in lieu thereof a new Warrant entitling the
Holder to acquire without further consideration the same number of Shares upon
the same terms as the Warrant so lost, stolen or destroyed or so surrendered and
canceled. Any such substitute Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen or
destroyed Warrant shall be at any time enforceable by any one. Applicants for a
substitute Warrant shall also comply with such other reasonable regulations and
pay such other reasonable charges as the Warrant Agent may prescribe.
11. Notices and Publications
All notices to the Holders shall be deemed to have been duly given if provided
by the Company to Banca del Gottardo and if published by Banca del Gottardo on
behalf of the Company in the
Feuille Officielle Suisse du Commerce and in a daily newspaper in Lugano and
Zurich.
12. Governing Law
The terms, conditions and form of the Warrants and the Warrant Agency Agreement
shall be governed by and construed in accordance with Swiss law. The issuance of
the Common Stock upon exercise of the Warrants shall be governed by and
construed in accordance with the laws of the State of Delaware.
Any action or proceedings against the Company relating to the Warrants may be
brought and enforced in the ordinary courts of the Canton of Ticino, venue being
in the City of Lugano, or if such courts fail to grant jurisdiction in the
ordinary courts of the Canton of Basle-City, venue being in the city of Basle
and the Company hereby irrevocably submits to the jurisdiction of such courts in
respect of any such action or proceeding in either case with the right to
appeal, as provided by law, to the Swiss Federal Court in Lausanne, the judgment
of which shall be final. Solely for that purpose, the Company hereby elects
legal and special domicile at the principal office of Banca del Gottardo, Xxxxx
Xxxxxxx Xxxxxxxxx 0, 0000 Xxxxxx, Xxxxxxxxxxx. The Company covenants that so
long as any Warrants are outstanding it will maintain an agent for service of
process in Switzerland. The aforementioned jurisdiction shall also be valid for
the cancellation and replacement of lost, stolen, defaced, mutilated or
destroyed Warrants. Issuance of Common Stock to a Holder who
17
18
has been identified as the legitimate Holder by a final judgment of a Swiss
Court shall release the Company from its obligations under such Warrants.
18
19
ANNEX F
FORM OF WARRANT
(FACE)
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, DELIVERED OR
EXERCISED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO, OR FOR THE
BENEFIT OF, ANY U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) EXCEPT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN EXEMPTION
FROM REGISTRATION UNDER SAID ACT.
WARRANT
No. Warrant to Purchase one Share of Common Stock
(subject to adjustment)
BITWISE DESIGNS, INC.
Incorporated Under the Laws of the State of Delaware
This Warrant entitles the holder hereof (the "Holder") to subscribe for and
purchase, during the period specified in this Warrant, one share (subject to
adjustment as hereinafter provided) of duly authorized, validly issued, fully
paid and non-assessable Common Stock, par value USD 0.001 per share ("Common
Stock") of BITWISE DESIGNS, INC., a Delaware corporation (the "Company"), at an
initial exercise price per share as determined pursuant to Section 3 of the
terms of the Warrants, subject, however, to the provisions and upon the terms
and conditions hereinafter set forth (such exercise price, as from time to time
adjusted in accordance with the terms hereof, being hereinafter called the
"Warrant Price"). 5,000 Warrants or more are required for any exercise.
Reference is hereby made to the further provisions of this Warrant set forth on
the reverse hereof and such further provisions shall for all purposes have the
same effect as though fully set forth at this place.
IN WITNESS WHEREOF, BITWISE DESIGNS, INC. has caused this Warrant to be signed
in its name by the facsimile signature of its Chief Executive Officer and
President or one of its Vice Presidents.
Dated: August 11, 1997
19
20
Swiss Security no.: 667.088
BITWISE DESIGNS. INC
By: __________________________
Xxxx X. Xxxxx
Chief Executive Officer
and President
20
21
ANNEX G
(to be typed on security paper)
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIE5 ACT") AND MAY NOT BE OFFERED, SOLD, DELIVERED OR
EXERCISED, DIRECTLY OR INDIRECTLY IN THE UNITED STATES OR TO, OR FOR THE BENEFIT
OF, ANY U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) EXCEPT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN EXEMPTION
FROM REGISTRATION UNDER SAID ACT.
GLOBAL WARRANT
BITWISE DESIGNS INC.
Incorporated Under the Laws of the State of Delaware
This Global Warrant is a Global Warrant in respect of a duly authorized issue of
400'000 Warrants, each entitling the holder to subscribe for and purchase,
during the period specified in this Warrant, 400'000 shares (subject to
adjustment as hereinafter provided) of duly authorized, validly issued, fully
paid and non-assessable Common Stock par value USD 0.001 per share ("Common
Stock") of BITWISE DESIGNS INC. a Delaware corporation (the "Company"), at an
initial exercise per share as determined pursuant to Section 3 of the terms of
the Warrants subject however, to the provisions and upon the terms and
conditions hereinafter set forth (such exercise price, as from time to time
adjusted in accordance with the terms hereof being hereinafter called the
"Warrant Price"). 5'000 Warrants or more are required for any exercise.
The Warrants are issued pursuant to the Note and Warrant Purchase, Paying and
Conversion/Exercise Agency Agreement dated as of Angust 8, 1997 between the
Company as issuer of the Warrants and Banca del Gottardo (the "Agreement").
The Global Warrant may be exchanged as a whole or in part for appropriate
definitive Warrants, in bearer form, not earlier than 40 days after the later of
the date on which the Warrants are first offered or the Payment Date. Such
exchange shall be made upon certification that the beneficial owners of the
Warrants are not United States persons or U.S. persons or are financial
institutions (as defined in United States Treasury Regulation Section 1.165-1
2(c)(I)(v)) located outside the United States that are not United States persons
and that the beneficial owners have not purchased such Warrants for resale
during the Restricted Period and that the beneficial owners certify that they
have not acquired the Warrants for purposes of resale directly or indirectly to
a United States person or to a person within the United States. A beneficial
owner of Warrants must exchange its
21
22
share of the Global Warrant for definitive Warrants before such Warrants may be
transferred or shares may be delivered upon exercise of the Warrants in respect
of the Warrants will be made.
For purposes hereof, (i) the term "Restricted Period" means the period beginning
on August 11, 1997 (the "Payment Date") and ending on the date forty (40) days
after the Payment Date, (ii) the term "United States" means the United States of
America (including the States and the District of Columbia), its possessions,
its territories and other areas subject to its jurisdiction. (iii) the term
"United States person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, or an estate the
income of which is subject to United States federal income taxation regardless
of its source or a trust if a court within the United States is able to exercise
primary jurisdiction over the administration of the trust and one or more United
States fiduciaries has the authority to control all substantial decisions of the
trust and (iv) the term "U.S. person" has the meaning set forth in Sections
230.901 through .904 of Title 17 of the United States Code of Federal
Regulations ("Regulation S"). Until so exchanged, this Global Warrant shall have
the same rights and benefits as the definitive Warrants.
The Terms of the Warrants set forth in Annex E of the Agreement are hereby
incorporated by reference herein mutatis mutandis and, except as otherwise
provided herein, shall be binding on the Company and the holder hereof as if
fully set forth herein. Except as otherwise provided herein, the Company shall
meet all its obligations hereunder as and when provided in the Terms of the
Warrants and shall be bound by all its covenants set forth herein.
This Global Warrant shall be governed by and construed in accordance with the
laws of Switzerland.
IN WITNESS WHEREOF, the Company has caused this Global Warrant to be duly
executed under its corporate seal as of August 11, 1997.
Dated: Xxxxxx 00, 0000
Xxxxx Security no.: 667.088
BITWISE DESIGNS, INC.
By: ________________________
Xxxx X. Xxxxx
Chief Executive Officer
and President
22
23
This Global Warrant shall not become valid for any purpose until this Global
Warrant has been authenticated by any two officers of Banca del Gottardo.
By: _________________________ By: _________________________
Authorized Officer Authorized Officer
23
