EXHIBIT 10.11
EXECUTION COPY
WARRANT AGREEMENT
Dated as of April 18, 2000
by and between
DIGITALCONVERGENCE.:COM INC.
and
NBC-DCCI HOLDING, INC.
THIS WARRANT AGREEMENT (this "AGREEMENT") is made and entered into as
of April 18, 2000 by and between DIGITALCONVERGENCE.:COM INC., a Delaware
corporation (the "COMPANY"), and NBC-DCCI Holding, Inc., a California
corporation ("Holder").
WHEREAS, the Company agrees to issue Common Stock warrants as
hereinafter described (the "WARRANTS") to purchase shares of Common Stock (as
defined below), in such number and at such price determined in accordance with
this Agreement. Each Warrant entitles the holder thereof to purchase one Warrant
Share (as defined below).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, and for the purpose of defining the respective
rights and obligations of the Company and Holder, the parties hereto agree as
follows:
Section 1. CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the following respective meanings:
"ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of Common
Stock issued by the Company after the date hereof, other than shares of Common
Stock issued or issuable: (i) upon conversion of shares of Preferred Stock; (ii)
in a transaction described in Sections 11(a) and (b) hereof; (iii) pursuant to
any stock option plan, stock purchase plan, stock award plan or stock incentive
plan of the Company in any amount not more than fifteen percent (15%) of the
fully diluted capital stock of the Company; (iv) the issuance of Series B
Preferred or Series C Preferred pursuant to the Series B Preferred Purchase
Agreement and the Series C Preferred Purchase Agreement; (v) upon the exercise
or conversion of warrants or options outstanding on the date hereof; or (vi)
upon the exercise of the Warrants or any other warrants issued to Holder.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock, par value $.01 per share, of the
Company, and any other capital stock of the Company into which such common stock
may be converted or reclassified or that may be issued in respect of, in
exchange for, or in substitution for, such common stock by reason of any stock
splits, stock dividends, distributions, mergers, consolidations or other like
events.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any successor statute, and the rules and regulations promulgated thereunder.
"EXERCISE PRICE" means the purchase price to be paid upon the
exercise of the Warrants in accordance with the terms hereof, which price, in
the aggregate, shall initially be $18,762,225, subject to adjustment from
time to time pursuant to SECTION 11 hereof. The initial Exercise Price per
share shall be equal to $5.00, subject to adjustment from time to time
pursuant to Section 11 hereof.
"EXPIRATION DATE" means April 18, 2005, as the same may be extended
pursuant to SECTION 6 hereof.
"HOLDER" means NBC-DCCI Holding, Inc. and any other person who is the
owner of Warrants as shown on the Warrant register maintained by the Company.
"ISSUE DATE" means the date of the initial issuance of the Warrants,
which shall be the date of this Agreement.
"PREFERRED STOCK" shall mean, collectively, the Series A Convertible
Preferred Stock, $.01 par value per share, of the Company, the Series B
Preferred and the Series C Preferred.
"RULE 144" shall mean Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the Commission providing for offers and
sales of securities made in compliance therewith resulting in offers and sales
by subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
"RULE 144A" shall mean Rule 144A promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule (other than
Rule 144) or regulation hereafter
adopted by the Commission.
"SECURITIES ACT" means the Securities Act of 1933 or any successor
statute and the rules and regulations promulgated thereunder.
"SERIES B PREFERRED" shall mean the Series B Convertible Preferred
Stock, $.01 par value per share, of the Company.
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"SERIES B PREFERRED PURCHASE AGREEMENT" shall mean that certain Stock
Purchase Agreement, to be dated as of April 25, 2000, by and among the Company
and the investors party thereto, pursuant to which the investors have agreed,
subject to the satisfaction of certain terms and conditions, to purchase shares
of Series B Preferred.
"SERIES C PREFERRED" shall mean the Series C Convertible Preferred
Stock, $.01 par value per share, of the Company.
"SERIES C PREFERRED PURCHASE AGREEMENT" shall mean that certain Stock
Purchase Agreement, to be dated as of April 25, 2000, by and among the Company
and the investors party thereto, pursuant to which the investors have agreed,
subject to the satisfaction of certain terms and conditions, to purchase shares
of Series C Preferred.
"WARRANT SHARES" means the fully paid and non-assessable shares of
Common Stock issued or issuable upon the exercise of the Warrants.
Section 2. ISSUANCE OF WARRANTS; WARRANT CERTIFICATES.
(a) The Warrants will be issued in the form of definitive
certificates, substantially in the form of Exhibit A (the "WARRANT
CERTIFICATES"). Each Warrant shall provide that it shall represent the aggregate
amount of outstanding Warrants from time to time endorsed thereon and that the
aggregate amount of outstanding Warrants represented thereby may from time to
time be reduced or increased, as appropriate.
(b) The Warrants shall be initially issued on the Issue Date in
the aggregate amount of 3,752,445 shares of Common Stock, subject to adjustment
as herein provided, and shall be issued under one Warrant Certificate.
Section 3. EXECUTION OF WARRANT CERTIFICATES. Warrant
Certificates shall be signed on behalf of the Company by the Company's
President or a Vice President and by its Secretary or an Assistant Secretary
under its corporate seal. Each such signature upon the Warrant Certificates
may be in the form of a facsimile signature of the present or any future
President, Vice President, Secretary or Assistant Secretary and may be
imprinted or otherwise reproduced on the Warrant Certificates and for that
purpose the Company may adopt and use the facsimile signature of any person
who shall have been President, Vice President, Secretary or Assistant
Secretary, notwithstanding the fact that at the time the Warrant Certificates
shall be countersigned and delivered or disposed of, such person shall have
ceased to hold such office. The seal of the Company may be in the form of a
facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be countersigned and delivered or
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disposed of as though such person had not ceased to be such officer of the
Company; and any Warrant Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Warrant Certificate,
shall be a proper officer of the Company to sign such Warrant Certificate,
although at the date of the execution of this Warrant Agreement any such person
was not such officer.
Section 4. REGISTRATION. The Company shall number and register
the Warrant Certificates in a register as they are issued by the Company.
The Company may deem and treat the person in whose name any Warrant
is registered as the absolute owner(s) thereof, for all purposes, and the
Company shall not be affected by any notice to the contrary.
Section 5. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) TRANSFER AND EXCHANGE OF WARRANTS. When Warrants are presented
to the Company with a request to register their transfer; or to exchange such
Warrants for an equal number of Warrants of other authorized denominations, the
Company shall register the transfer or make the exchange as requested if the
Warrants presented or surrendered for registration of transfer or exchange shall
be duly endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Company, duly executed by the Holder thereof or by his
attorney-in-fact, duly authorized in writing.
(b) LEGENDS.
Each Warrant Certificate (and all Warrants issued in exchange
therefor or substitution thereof) and each certificate representing the
Warrant Shares shall bear a legend in
substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER XXXXXXX 0 XX XXX
XXXXXX XXXXXX SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY AND THE SECURITIES DELIVERED UPON EXERCISE
THEREOF MAY NOT BE EXERCISED, OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY AND THE SECURITIES
DELIVERED UPON THE EXERCISE THEREOF IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) SUCH
SECURITY AND THE SECURITIES DELIVERED UPON EXERCISE HEREOF MAY BE
EXERCISED, RESOLD, PLEDGED OR OTHERWISE
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TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A PERSON THAT IS NOT A
U.S. PERSON (AS DEFINED IN RULE 902 UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT, OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (IN THE CASE OF (b), (c) or (d),
UPON AN OPINION OF COUNSEL AND WRITTEN CERTIFICATION IF THE ISSUER,
REGISTRAR OR TRANSFER AGENT FOR THE SECURITIES SO REQUESTS), (2) TO THE
ISSUER OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY AND THE SECURITIES
DELIVERED UPON EXERCISE HEREOF OF THE RESALE RESTRICTIONS SET FORTH IN
(A) ABOVE."
(c) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
WARRANTS.
(i) To permit registrations of transfers and exchanges,
the Company shall execute in accordance with the provisions of SECTION
4 and this SECTION 5, Warrants as required pursuant to the provisions
of this SECTION 5. Notwithstanding anything to the contrary contained
herein, the Company shall refuse to register any transfer of the
Warrants not made in accordance with Regulation S promulgated under the
Securities Act, pursuant to registration under the Securities Act or
pursuant to an available exemption from the registration requirements
of the Securities Act; provided, however, that if a foreign law
prevents the Company from refusing to register securities transfers,
the Company shall implement other reasonable measures designed to
prevent transfers of the Warrants not made in accordance with
Regulation S, pursuant to registration under the Securities Act or
pursuant to an available exemption from the registration requirements
of the Securities Act.
(ii) All Warrants issued upon any registration of transfer
or exchange of Warrants shall be the valid obligations of the Company,
entitled to the same benefits under this Warrant Agreement, as the
Warrants surrendered upon such registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer
of any Warrant, the Company may deem and treat the person in whose name
any Warrant is registered as the absolute owner of such Warrant and the
Company shall not be affected by notice to the contrary.
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(iv) No service charge shall be made to a Holder for any
registration of transfer or exchange.
Section 6. TERMS OF WARRANTS; EXERCISE OF WARRANTS. Subject to
the terms of this Agreement, each Holder shall have the right, which may be
exercised at any time and from time to time, in whole or in part, commencing on
the date hereof and ending at 4:00 p.m., Dallas, Texas, time, on the Expiration
Date, to receive from the Company the number of fully paid and nonassessable
Warrant Shares which the Holder may at the time be entitled to receive on
exercise of such Warrants and payment of the Exercise Price then in effect for
such Warrant Shares; provided, however, that no Holder shall be entitled to
exercise such Holder's Warrants at any time, unless, at the time of exercise,
(i) a registration statement under the Securities Act relating to the Warrant
Shares has been filed with, and declared effective by, the Commission, and no
stop order suspending the effectiveness of such registration statement has been
issued by the Commission or (ii) the issuance of the Warrant Shares is permitted
pursuant to an exemption from the registration requirements of the Securities
Act. Subject to the provisions of the following paragraph of this SECTION 6,
each Warrant not exercised prior to 4:00 p.m., Dallas, Texas, time, on the
Expiration Date shall become void and all rights thereunder and all rights in
respect thereof under this Agreement shall cease as of such time. No adjustments
as to dividends will be made upon exercise of the Warrants.
The Company shall use its reasonable efforts to give notice not less
than 90, and not more than 120, days prior to the Expiration Date to the Holders
of all then outstanding Warrants to the effect that the Warrants will terminate
and become void as of 4:00 p.m., Dallas, Texas, time, on the Expiration Date.
Notwithstanding the Company's failure to give such notice, the Expiration Date
shall not be extended and, in no event will Holders be entitled to any damages
or other remedy for the Company's failure to give such notice.
A Warrant may be exercised upon surrender to the Company of the
certificate or certificates evidencing the Warrant to be exercised with the form
of election to purchase on the reverse thereof properly completed and signed,
and upon payment to the Company of the Exercise Price as adjusted as herein
provided, for each of the Warrant Shares in respect of which such Warrants are
then exercised. Payment of the aggregate Exercise Price shall be made in cash or
by certified or official bank check, payable to the order of the Company. In the
alternative, each Holder may exercise its right to receive Warrant Shares (i) on
a net basis, such that without the exchange of any funds, the Holder receives
that number of Warrant Shares otherwise issuable upon exercise of its Warrants
less that number of Warrant Shares having a current market value equal to the
aggregate Exercise Price that would otherwise have been paid by the Holder for
the Warrant Shares being issued, (ii) by any Holder to whom the Company is
indebted, by tendering indebtedness having an aggregate principal amount, plus
accrued but unpaid interest, if any, thereon, to the date of exercise equal to
the aggregate Exercise Price that would otherwise have been paid by the Holder
for the Warrant Shares being issued, or (iii) by a combination of the procedures
in clauses (i) and (ii). For purposes of the foregoing sentence, "current market
value" of the Warrant Shares shall be as determined in
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accordance with Section 11(f) hereof. The Company shall notify the Holder in
writing of any such determination of current market value.
Subject to the provisions of SECTION 7 hereof, upon surrender of
Warrants and payment of the Exercise Price as provided above, the Company shall
promptly transfer to the Holder of such Warrant a certificate or certificates
for the appropriate number of Warrant Shares or other securities or property
(including any money) to which the Holder is entitled, registered or otherwise
placed in, or payable to the order of, such name or names as may be directed in
writing by the Holder, and shall deliver such certificate or certificates
representing the Warrant Shares and any other securities or property (including
any money) to the person or persons entitled to receive the same, together with
an amount in cash in lieu of any fraction of a share as provided in SECTION 13.
Any such certificate or certificates representing the Warrant Shares shall be
deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a Holder of record of such Warrant Shares as of
the later of the date of the surrender of such Warrants and payment of the
Exercise Price.
The Warrants shall be exercisable commencing on the Issue Date, at the
election of the Holders thereof, either in full or from time to time in part
and, in the event that a certificate evidencing Warrants is exercised in respect
of fewer than all of the Warrant Shares issuable on such exercise at any time
prior to the date of expiration of the Warrants, a new certificate evidencing
the remaining Warrant or Warrants will be issued and delivered pursuant to the
provisions of this SECTION and of SECTION 3 hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled. Such canceled Warrant Certificates shall then be disposed of in
accordance with customary procedures.
Section 7. PAYMENT OF TAXES. The Company will pay all
documentary stamp taxes, if any, attributable to the issuance of the Warrant
Certificates or the initial issuance of Warrant Shares upon the exercise of
Warrants; provided, however, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issue of any certificates for Warrant Shares in a name other than that of the
Holder of a Warrant Certificate surrendered upon the exercise of a Warrant.
Section 8. MUTILATED OR MISSING WARRANT CERTIFICATES. In case
any of the Warrant Certificates shall be mutilated, lost, stolen or destroyed,
the Company may in its discretion issue in exchange and substitution for and
upon cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such Warrant Certificate and, if
requested, indemnity reasonably satisfactory to them. Applicants for such
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
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Section 9. RESERVATION OF WARRANT SHARES. The Company will at
all times reserve and keep available, free from any preemptive rights, out of
the aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The transfer agent for the Common Stock (the "TRANSFER AGENT") and
every subsequent transfer agent for any shares of the Company's capital stock
issuable upon the exercise of any of the rights of purchase aforesaid will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be required for such purpose. The Company will keep a
copy of this Agreement on file with the Transfer Agent and with every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrants. The Company will
supply such Transfer Agent with duly executed certificates for such purposes and
will provide or otherwise make available any cash which may be payable as
provided in SECTION 13. The Company will furnish such Transfer Agent a copy of
all notices of adjustments and certificates related thereto, transmitted to each
Holder of the Warrants pursuant to SECTION 14 hereof.
Before taking any action which would cause an adjustment pursuant to
SECTION 11 hereof that would reduce the Exercise Price below the then par value
(if any) of the Warrant Shares, the Company will take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares at the
Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may be issued
upon exercise of Warrants in accordance with the terms of this Agreement
(including the payment of the Exercise Price) will, upon issue, be duly and
validly issued, fully paid, nonassessable, and free of preemptive rights and
Liens.
Section 10. Intentionally Omitted.
Section 11. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES ISSUABLE. The number and kind of shares purchasable upon the exercise of
Warrants and the Exercise Price shall be subject to adjustment from time to time
(as set forth in the notices required by SECTION 14 hereof) as follows:
(a) STOCK SPLITS, COMBINATIONS, ETC. In case the Company shall
hereafter (A) pay a dividend or make a distribution on its Common Stock in
shares of its capital stock (whether shares of Common Stock or of capital stock
of any other class), (B) subdivide its outstanding shares of Common Stock, (C)
combine its outstanding shares of Common Stock into a smaller number of shares,
or (D) issue by reclassification of its shares of Common Stock any shares of
capital stock of the Company, the Exercise Price in effect and the number of
Warrant Shares issuable upon exercise
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of each Warrant immediately prior to such action shall be adjusted so that the
Holder of any Warrant thereafter exercised shall be entitled to receive the
number of shares of capital stock of the Company which such Holder would have
owned immediately following such action had such Warrant been exercised
immediately prior thereto. Any adjustment made pursuant to this paragraph shall
become effective immediately after the record date in the case of a dividend and
shall become effective immediately after the effective date in the case of a
subdivision, combination or reclassification. If, as a result of an adjustment
made pursuant to this paragraph, the Holder of any Warrant thereafter exercised
shall become entitled to receive shares of two or more classes of capital stock
of the Company, the Board of Directors of the Company (whose determination shall
be conclusive and evidenced by a Board resolution) shall determine the
allocation of the adjusted Exercise Price between or among shares of such
classes of capital stock.
(b) RECLASSIFICATION, COMBINATIONS, MERGERS, ETC. In case of any
reclassification or change of outstanding shares of Common Stock issuable upon
exercise of the Warrants (other than as set forth in PARAGRAPH (a) above and
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 in which the Company is the continuing
corporation and which does not result in any reclassification or change of the
then outstanding shares of Common Stock or other capital stock issuable upon
exercise of the Warrants) or in case of any sale or conveyance to another
corporation of all or substantially all of the assets of the Company, then, as a
condition of such reclassification, change, consolidation, merger, sale or
conveyance, the Company or such a successor or purchasing corporation, as the
case may be, shall forthwith make lawful and adequate provision whereby the
Holder of each Warrant then outstanding shall have the right thereafter to
receive on exercise of such Warrant the kind and amount of shares of stock and
other securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a Holder of the number of shares of
Common Stock issuable upon exercise of such Warrant immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance and enter
into a supplemental warrant agreement so providing. Such provisions shall
include provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this SECTION 11. If the issuer of
securities deliverable upon exercise of Warrants under the supplemental warrant
agreement is an affiliate of the formed, surviving or transferee corporation,
that issuer shall join in the supplemental warrant agreement. The Company shall
not effect any such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up or change of control unless,
prior to the consummation thereof, the successor corporation (if other than the
Company) resulting from such reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up or change of
control, shall assume, by written instrument executed and delivered to the
Holder, the obligation to deliver to the Holder such shares of stock, securities
or assets, which, in accordance with the foregoing provisions, such Holder shall
be entitled to purchase. The above provisions of this PARAGRAPH (b) shall
similarly apply to successive reclassifications and changes of shares of Common
Stock and to successive consolidations, mergers, sales or conveyances.
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(c) ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In the event
the Company shall, at any time or from time to time after the date hereof,
issue, sell, distribute or otherwise grant in any manner (including by
assumption) any Additional Shares of Common Stock without consideration or for a
price per share less than either (i) the Exercise Price, as adjusted, or (ii)
the current market price per share (as determined in accordance with Section
11(f) hereof) of Common Stock on the date of the issuance, sale, distribution or
granting of such Additional Shares of Common Stock, then, effective upon such
issuance or sale, (I) the Exercise Price shall be reduced to the price
(calculated to the nearest 1/1,000 of one cent) determined by multiplying the
Exercise Price in effect immediately prior to such issuance or sale by a
fraction, the numerator of which shall be the sum of (i) the number of shares of
Common Stock outstanding (exclusive of any treasury shares) immediately prior to
such issuance or sale multiplied by the greater of the Exercise Price or the
current market price per share of Common Stock on the date of such issuance or
sale plus (ii) the consideration, if any, received by the Company in respect of
such issuance or sale, and the denominator of which shall be the product of (A)
the total number of shares of Common Stock outstanding (exclusive of any
treasury shares) immediately after such issuance or sale multiplied by (B) the
greater of the Exercise Price or the current market price per share of Common
Stock on the record date for such issuance or sale and (II) the number of shares
of Common Stock purchasable upon the exercise of each Warrant shall be increased
to a number determined by multiplying the number of shares of Common Stock so
purchasable immediately prior to the record date for such issuance or sale by a
fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to the adjustment required by clause (I) of this sentence and
the denominator of which shall be the Exercise Price in effect immediately after
such adjustment.
(d) ISSUANCE OF OPTIONS OR CONVERTIBLE SECURITIES. In the event
the Company shall, at any time or from time to time after the date hereof,
issue, sell, distribute or otherwise grant in any manner (including by
assumption) any rights to subscribe for or to purchase, or any warrants or
options for the purchase of, Common Stock (other than shares pursuant to any
stock option plan, stock purchase plan, stock award plan or stock incentive plan
of the Company in any amount not more than fifteen percent (15%) of the fully
diluted capital stock of the Company) or any stock or securities convertible
into or exchangeable for Common Stock (any such rights, warrants or options
(other than any other warrants issued to Holder) being herein called "OPTIONS"
and any such convertible or exchangeable stock or securities (other than the
issuance of Series B Preferred or Series C Preferred pursuant to the Series B
Preferred Purchase Agreement and the Series C Preferred Purchase Agreement)
being herein called "CONVERTIBLE SECURITIES") or any Convertible Securities
(other than upon exercise of any Option), whether or not such Options or the
rights to convert or exchange such Convertible Securities are immediately
exercisable, and if the price per share at which Common Stock is issuable upon
the exercise of such Options or upon the conversion or exchange of such
Convertible Securities (determined by dividing (i) the aggregate amount, if any,
received or receivable by the Company as consideration for the issuance, sale,
distribution or granting of such Options or any such Convertible Security, plus
the minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of all such Options or upon conversion or exchange of
all such Convertible Securities, plus, in the case of Options to acquire
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable
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upon the conversion or exchange of all such Convertible Securities, by (ii) the
total maximum number of shares of Common Stock issuable upon the exercise of all
such Options or upon the conversion or exchange of all such Convertible
Securities or upon the conversion or exchange of all Convertible Securities
issuable upon the exercise of all such Options) shall be less than either (i)
the Exercise Price, as adjusted, or (ii) the current market price (as determined
in accordance with Section 11(f) hereof) per share of Common Stock on the date
for the issuance, sale, distribution or granting of such Options or Convertible
Securities (any such event being herein called a "DISTRIBUTION"), then,
effective upon such Distribution, (I) the Exercise Price shall be reduced to the
price (calculated to the nearest 1/1,000 of one cent) determined by multiplying
the Exercise Price in effect immediately prior to such Distribution by a
fraction, the numerator of which shall be the sum of (i) the number of shares of
Common Stock outstanding (exclusive of any treasury shares) immediately prior to
such Distribution multiplied by the greater of the Exercise Price or the current
market price per share of Common Stock on the date of such Distribution plus
(ii) the consideration, if any, received by the Company in respect of such
Distribution, and the denominator of which shall be the product of (A) the total
number of shares of Common Stock outstanding (exclusive of any treasury shares)
immediately after such Distribution multiplied by (B) the greater of the
Exercise Price or the current market price per share of Common Stock on the
record date for such Distribution and (II) the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be increased to a number
determined by multiplying the number of shares of Common Stock so purchasable
immediately prior to the record date for such Distribution by a fraction, the
numerator of which shall be the Exercise Price in effect immediately prior to
the adjustment required by clause (I) of this sentence and the denominator of
which shall be the Exercise Price in effect immediately after such adjustment.
For purposes of the foregoing, the total maximum number of shares of Common
Stock issuable upon exercise of all such Options or upon conversion or exchange
of all such Convertible Securities or upon the conversion or exchange of the
total maximum amount of the Convertible Securities issuable upon the exercise of
all such Options shall be deemed to have been issued as of the date of such
Distribution and thereafter shall be deemed to be outstanding and the Company
shall be deemed to have received as consideration therefor such price per share,
determined as provided above. Except as provided in PARAGRAPHS (j) AND (k)
below, no additional adjustment of the Exercise Price shall be made upon the
actual exercise of such Options or upon conversion or exchange of the
Convertible Securities or upon the conversion or exchange of the Convertible
Securities issuable upon the exercise of such Options.
(e) DIVIDENDS AND DISTRIBUTIONS. In the event the Company shall,
at any time or from time to time after the date hereof, distribute to all the
holders of Common Stock any dividend or other distribution of cash, evidences of
its indebtedness, other securities or other properties or assets (in each case
other than (i) dividends payable in Common Stock, Options or Convertible
Securities and (ii) any cash dividend that, when added to all other cash
dividends paid with respect to Common Stock in the one year prior to the
declaration date of such dividend (excluding any such other dividend included in
a previous adjustment of the Exercise Price pursuant to this PARAGRAPH (e) and
excluding any cash dividends or other cash distributions from current or
retained earnings), does not exceed 5% of the current market price per share of
Common Stock on such declaration date), or any options, warrants or other rights
to subscribe for or purchase any of the foregoing, then (A) the
11
Exercise Price shall be decreased to a price determined by multiplying the
Exercise Price then in effect by a fraction, the numerator of which shall be the
current market price per share of Common Stock on the record date for such
distribution less the sum of (X) the cash portion, if any, of such distribution
per share of Common Stock outstanding (exclusive of any treasury shares) on the
record date for such distribution plus (Y) the then current market value (as
determined in accordance with Section 11(f) hereof) per share of Common Stock
outstanding (exclusive of any treasury shares) on the record date for such
distribution of that portion, if any, of such distribution consisting of
evidences of indebtedness, other securities, properties, assets, options,
warrants or subscription or purchase rights, and the denominator of which shall
be such current market price per share of Common Stock and (B) the number of
shares of Common Stock purchasable upon the exercise of each Warrant shall be
increased to a number determined by multiplying the number of shares of Common
Stock so purchasable immediately prior to the record date for such distribution
by a fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to the adjustment required by clause (A) of this sentence and
the denominator of which shall be the Exercise Price in effect immediately after
such adjustment. The adjustments required by this PARAGRAPH (e) shall be made
whenever any such distribution occurs retroactive to the record date for the
determination of stockholders entitled to receive such distribution.
(f) CURRENT MARKET PRICE. For the purpose of any computation of
current market price under this Agreement, the current market price per share of
Common Stock at any date shall be the daily closing price the last full trading
day on the exchange or market specified in the second succeeding sentence prior
to the Time of Determination (as defined below). The term "TIME OF
DETERMINATION" as used herein shall be the time and date of the earlier to occur
of (A) the date as of which the current market price is to be computed and (B)
the last full trading day on such exchange or market before the commencement of
"ex-dividend" trading in the Common Stock relating to the event giving rise to
the adjustment required by PARAGRAPH (a), (b), (c), (d) OR (e) above. The
closing price for any day shall be the last reported sale price regular way or,
in case no such reported sale takes place on such day, the average of the
closing bid and asked prices regular way for such day, in each case (1) on the
principal national securities exchange on which the shares of Common Stock are
listed or to which such shares are admitted to trading or (2) if the Common
Stock is not listed or admitted to trading on a national securities exchange, in
the over-the-counter market as reported by Nasdaq National or SmallCap Markets
or any comparable system or (3) if the Common Stock is not listed on Nasdaq
National or SmallCap Markets or a comparable system but a public market for the
Common Stock exists, as furnished by two members of the NASD selected from time
to time in good faith by the Board of Directors of the Company for that purpose.
In the absence of all of the foregoing, or if for any other reason the current
market price per share cannot be determined pursuant to the foregoing provisions
of this PARAGRAPH (f), the current market price per share shall be the fair
market value thereof as determined in good faith by the Board of Directors of
the Company and evidenced by a resolution of such Board, subject to the
following dispute resolution right of the Holders of the Warrants. In the event
that Holders of a majority of the Warrants dispute the determination of the
Board of Directors, such Holders shall notify the Company and the current market
price shall be determined in a reasonably prompt manner as follows:
12
(1) The Company and Holders of a majority of the Warrants shall
each appoint an independent, experienced appraiser who is a member of a
recognized professional association of business appraisers. The two
appraisers shall determine the value of shares of Common Stock at the
relevant date, assuming a sale between a willing buyer and a willing
seller, both of whom have full knowledge of the financial and other
affairs of the Company, and neither of whom is under any compulsion to
sell or to buy.
(2) If the higher of the two appraisals is not more than 20% more
than the lower of the appraisals, the current market price per share
shall be the average of the two appraisals. If the higher of the two
appraisals is 20% or more than the lower of the two appraisals, then a
third appraiser shall be appointed by the two appraisers, and if they
cannot agree on a third appraiser, the American Arbitration Association
shall appoint the third appraiser. The third appraiser, regardless of
who appoints him or her, shall have the same qualifications as the
first two appraisers.
(3) The current market price per share after the appointment of
the third appraiser shall be the average of the two appraisals that are
closest in value to each other.
(4) The fees and expenses of the appraisers shall be paid one-half
by the Company and one-half by the Holders.
(g) CERTAIN DISTRIBUTIONS. If the Company shall pay a dividend or
make any other distribution payable in Options or Convertible Securities, then,
for purposes of PARAGRAPH (d) above, such Options or Convertible Securities
shall be deemed to have been initially issued or sold on such date without
consideration.
(h) CONSIDERATION RECEIVED. If any shares of Common Stock, Options
or Convertible Securities shall be issued, sold or distributed for a
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then
current market value of such consideration (as determined in accordance with
Section 11(f) hereof). If any Options shall be issued in connection with the
issuance and sale of other securities of the Company, together comprising one
integral transaction in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be deemed to have been issued
without consideration; provided, however, that if such Options have an exercise
price equal to or greater than the current market price of the Common Stock on
the date of issuance of such Options, then such Options shall be deemed to have
been issued for consideration equal to such exercise price.
(i) DEFERRAL OF CERTAIN ADJUSTMENTS. No adjustment to the Exercise
Price (including the related adjustment to the number of shares of Common Stock
purchasable upon the exercise of each Warrant) shall be required hereunder
unless such adjustment, together with other adjustments carried forward as
provided below, would result in an increase or decrease of at least one percent
of the Exercise Price; provided that any adjustments which by reason of this
PARAGRAPH (I) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. No
13
adjustment need be made for a change in the par value of the Common Stock. All
calculations under this SECTION shall be made to the nearest 1/1,000 of one cent
or to the nearest 1/1000 of a share, as the case may be.
(j) CHANGES IN OPTIONS AND CONVERTIBLE SECURITIES. If the exercise
price provided for in any Options referred to in PARAGRAPH (d) above, the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in PARAGRAPH (d) OR (e) above, or the rate at
which any Convertible Securities referred to in PARAGRAPH (d) OR (e) above are
convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution upon an event which results in a related adjustment pursuant to this
SECTION 11), the Exercise Price then in effect and the number of shares of
Common Stock purchasable upon the exercise of each Warrant shall forthwith be
readjusted (effective only with respect to any exercise of any Warrant after
such readjustment) to the Exercise Price and number of shares of Common Stock so
purchasable that would then be in effect had the adjustment made upon the
issuance, sale, distribution or granting of such Options or Convertible
Securities been made based upon such changed purchase price, additional
consideration or conversion rate, as the case may be, but only with respect to
such Options and Convertible Securities as then remain outstanding.
(k) EXPIRATION OF OPTIONS AND CONVERTIBLE SECURITIES. If, at any
time after any adjustment to the number of shares of Common Stock purchasable
upon the exercise of each Warrant shall have been made pursuant to PARAGRAPH
(d), (e) OR (j) above or this PARAGRAPH (k), any Options or Convertible
Securities shall have expired unexercised, the number of such shares so
purchasable shall, upon such expiration, be readjusted and shall thereafter be
such as they would have been had they been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (i) the only
shares of Common Stock deemed to have been issued in connection with such
Options or Convertible Securities were the shares of Common Stock, if any,
actually issued or sold upon the exercise of such Options or Convertible
Securities and (ii) such shares of Common Stock, if any, were issued or sold for
the consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale, distribution or granting of all such Options or Convertible
Securities, whether or not exercised; provided that no such readjustment shall
have the effect of decreasing the number of such shares so purchasable by an
amount (calculated by adjusting such decrease to account for all other
adjustments made pursuant to this SECTION 11 following the date of the original
adjustment referred to above) in excess of the amount of the adjustment
initially made in respect of the issuance, sale, distribution or granting of
such Options or Convertible Securities.
(l) OTHER ADJUSTMENTS. In the event that at any time, as a result
of an adjustment made pursuant to this SECTION 11, the Holders shall become
entitled to receive any securities of the Company other than shares of Common
Stock, thereafter the number of such other securities so receivable upon
exercise of the Warrants and the Exercise Price applicable to such exercise
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the shares of
Common Stock contained in this SECTION 11.
14
(m) IPO VALUATION. If the aggregate market value of the shares of
Common Stock of the Company outstanding immediately after the closing of the
Company's initial public offering, determined utilizing the per share offering
price in such offering (before deducting underwriting discounts and
commissions), is less than $350,000,000, then the aggregate Exercise Price for
the Warrants shall be reduced so that it is equal to 5% of such aggregate market
value, and the initial Exercise Price per share shall be equal to the result of
the aggregate Exercise Price divided by 3,752,445 (subject to adjustment from
time to time pursuant to Section 11 hereof). Such initial Exercise Price, as
determined pursuant to this Section 11(m), shall be further adjusted by any and
all adjustments which were, or should have been, made pursuant to this Section
11 during the period from the date of this Agreement through the Company's
initial public offering.
Section 12. STATEMENT ON WARRANTS. Irrespective of any
adjustment in the number or kind of shares issuable upon the exercise of the
Warrants or the Exercise Price, Warrants theretofore or thereafter issued may
continue to express the same number and kind of shares as are stated in the
Warrants initially issuable pursuant to this Agreement.
Section 13. FRACTIONAL INTEREST. The Company shall not be
required to issue fractional shares of Common Stock on the exercise of Warrants.
If more than one Warrant shall be presented for exercise in full at the same
time by the same Holder, the number of full shares of Common Stock which shall
be issuable upon such exercise shall be computed on the basis of the aggregate
number of shares of Common Stock acquirable on exercise of the Warrants so
presented. If any fraction of a share of Common Stock would, except for the
provisions of this SECTION, be issuable on the exercise of any Warrant (or
specified portion thereof), the Company shall direct the Transfer Agent to pay
an amount in cash calculated by it equal to (i) the then current market price
per share multiplied by such fraction computed to the nearest whole cent, less
(ii) an amount equal to the Exercise Price multiplied by such fraction computed
to the nearest whole cent. The Holders, by their acceptance of the Warrant
Certificates, expressly waive any and all rights to receive any fraction of a
share of Common Stock or a stock certificate representing a fraction of a share
of Common Stock.
Section 14. NOTICES TO HOLDERS. Upon any adjustment of the
Exercise Price pursuant to SECTION 11, the Company shall promptly thereafter
cause to be given to each of the registered Holders by first-class mail, postage
prepaid, a certificate executed by the Chief Financial Officer of the Company
setting forth the Exercise Price after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based and setting forth the number of Warrant Shares (or
portion thereof) issuable after such adjustment in the Exercise Price, upon
exercise of a Warrant and payment of the adjusted Exercise Price, which
certificate shall be conclusive evidence, absent manifest error, of the
correctness of the matters set forth therein.
15
In case:
(a) the Company shall authorize the issuance to all
holders of shares of Common Stock of rights, options or warrants to
subscribe for or purchase shares of Common Stock or of any other
subscription rights or warrants; or
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or
assets (other than cash dividends or cash distributions payable out of
consolidated earnings or earned surplus or dividends payable in shares
of Common Stock or distributions referred to in SECTION 11 hereof); or
(c) of any consolidation or merger to which the Company
is a party for which approval of any shareholders of the Company is
required and following which the shareholders of the Company before
such consolidation or merger no longer hold at least 50% of the
outstanding capital stock of the Company following the merger or
consolidation, or of the conveyance or transfer of all or substantially
all of the properties and assets of the Company, or of any
reclassification or change of Common Stock issuable upon exercise of
the Warrants (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 a tender offer or exchange offer for
shares of Common Stock, or other transaction that would result in a
change in control; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(e) the Company proposes to take any other action that
would require an adjustment of the Exercise Price or the number of
Warrant Shares pursuant to SECTION 11; then the Company shall cause to
be given to each of the registered Holders of the Warrants at such
Holder's address appearing on the Warrant register, at least 20 days
(or 10 days in any case specified in clauses (a) or (b) above) prior to
the applicable record date hereinafter specified, or promptly in the
case of events for which there is no record date, by first-class mail,
postage prepaid, a written notice stating (i) the date as of which the
holders of record of shares of Common Stock to be entitled to receive
any such rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in any tender
offer or exchange offer for shares of Common Stock, or (iii) the date
on which any such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up or change of control
is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common Stock
shall be entitled to exchange such shares for securities or other
property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up or change of control. The failure to give the notice
required by this SECTION 14 or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant,
consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up,
16
or change of control or the vote upon any action. Nothing contained in
this Agreement or in any of the Warrant Certificates shall be construed
as conferring upon the Holders thereof the right to vote or to consent
or to receive notice as shareholders in respect of the meetings of
shareholders or the election of Directors of the Company or any other
matter, or any rights whatsoever as shareholders of the Company.
Section 15. REGISTRATION. The Company acknowledge that Holders of
Warrants shall have the registration rights set forth in the First Amended and
Restated Registration Rights Agreement, dated as of even date herewith (the
"Registration Rights Agreement"), among the Company and the other parties
thereto, including Holder.
Section 16. REPORTS. For each fiscal quarter and each fiscal year
of the Company, the Company will transmit by mail to all Holders, as their
names and addresses appear in the register, without cost to such Holders,
unaudited quarterly and audited annual financial statements of the Company
prepared in accordance with GAAP. Beginning with the initial public offering
of the Company and thereafter, whether or not the Company is subject to
Section 13(a) or 15(d) of the Exchange Act, or any successor provision
thereto, the Company shall prepare the annual and quarterly reports and other
information, and documents ("SEC REPORTS") as the Commission shall prescribe
pursuant to such Section 13(a) or 15(d) and which the Company is or would be
(if they were so subject) required to file with the Commission pursuant to
such Section 13(a) or 15(d) or any successor provision thereto (on or prior to
the respective dates (the "REQUIRED FILING DATES") by which the Company is or
would (if they were so subject) be required so to file such SEC Reports) and
shall, within 15 days of the Required Filing Date transmit by mail to all
Holders, as their names and addresses appear in the register, without cost to
such Holders, copies of such annual and quarterly reports.
Section 17. NOTICES TO COMPANY. Any notice or demand authorized by
this Agreement to be given or made by the Holder of any Warrants to or on the
Company shall be sufficiently given or made when and if deposited in the mail,
first-class or certified, postage prepaid, or delivered via Federal Express
overnight delivery or by facsimile (with confirmation of receipt), addressed
(until another address is filed in writing by the Company), as follows:
DigitalConvergence.:Com Inc.
0000 X. Xxxxxxx Xxxxxxxxxx
0xx Xxxxx
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Chief Financial Officer
Any notice pursuant to this Agreement to be given by the Company to
the Holder shall be sufficiently given when and if deposited in the mail,
first-class or certified, postage prepaid, or
17
delivered via Federal Express overnight delivery or by facsimile (with
confirmation of receipt), addressed (until another address is filed in writing
with the Company) to:
NBC-DCCI Holding, Inc.
c/o National Broadcasting Company, Inc.
00 Xxxxxxxxxxx Xxxxx
00xx Xxxxx (0000X)
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Section 18. SUPPLEMENTS AND AMENDMENTS. The Company and Holder may
from time to time supplement or amend this Agreement without the approval of
any Holders of Warrants in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions
in regard to matters or questions arising hereunder which the Company and
Holder may deem necessary or desirable and which shall not in any way
adversely affect the interests of the Holders of Warrants. Any amendment or
supplement to this Agreement that has a material adverse effect on the
interests of Holders shall require the written consent of Holders representing
a majority of the then outstanding Warrants (excluding Warrants held by the
Company or any of its Affiliates); provided, however, that the consent of each
Holder of a Warrant affected shall be required for any amendment pursuant to
which the Exercise Price would be increased or the number of Warrant Shares
purchasable upon exercise of Warrants would be decreased (other than pursuant
to adjustments provided for in SECTION 11 hereof). Holder shall be entitled to
receive and shall be fully protected in relying upon an officer's certificate
and opinion of counsel as conclusive evidence that any such amendment or
supplement is authorized or permitted hereunder, that it does or does not, as
the case may be, require the written consent of Holders to be effective
hereunder, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company in accordance with its terms.
Section 19. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its respective successors and assigns hereunder.
18
Section 20. TERMINATION. This Agreement (other than any party's
obligations with respect to Warrants previously exercised and with respect to
indemnification) shall terminate at 4:00 p.m., Dallas, Texas, time on the
Expiration Date.
Section 21. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF DELAWARE AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF SAID STATE, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.
Section 22. BENEFITS OF THIS AGREEMENT.
(a) Nothing in this Agreement shall be construed to give to any
person other than the Company and the Holder of the Warrants any legal or
equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company and the Holder of
the Warrants from time to time.
(b) Prior to the exercise of the Warrants, no Holder of a
Warrants, as such, shall be entitled to any rights of a stockholder of a
Company, including, without limitation, the right to receive dividends or
subscription rights, the right to vote, to consent, to exercise any preemptive
right, to receive any notice of or to participate in meetings of stockholders
for the election of directors of the Company or any other matter or to receive
any notice of any proceedings of the Company, except as may be specifically
and expressly provided for herein. The Holders of the Warrants are not
entitled to share in the assets of the Company in the event of the
liquidation, dissolution or winding up of the Company's affairs.
(c) All rights of action in respect of this Agreement are vested
in the Holders of the Warrants, and any Holder of any Warrant, without the
consent of the Holder of any other Warrant, may, on such Holder's own behalf
and for such Holder's own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company suitable to enforce, or
otherwise in respect of, such Holder's rights hereunder, including the right
to exercise, exchange or surrender for purchase such Holder's Warrants in the
manner provided in this Agreement.
Section 23. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Holder as follows:
(a) CAPITALIZATION.
(i) As of the date hereof, the authorized, issued and
outstanding shares of capital stock of the Company are as set forth in
SCHEDULE 23(a).
(ii) Except as set forth on Schedule 23(a) hereto, (a)
there are no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character
19
whatsoever relating to, or securities or rights convertible into or
exercisable or exchangeable for, any shares of capital stock of the
Company, or arrangements by which the Company is or may become bound to
issue additional shares of capital stock, nor are any such issuances or
arrangements contemplated, (b) there are no agreements or arrangements
under which the Company is obligated to register the sale of any of its
securities under the Securities Act (except as provided hereunder), (c)
the Company has no obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any of its equity securities or any
interests therein or to pay any dividend or make any distribution in
respect thereof and (d) the Company has not reserved any shares of
capital stock for issuance pursuant to any stock option plan or similar
arrangement.
(iii) Copies of the certificate of incorporation of the
Company and certificate of incorporation for each of its Subsidiaries
(collectively, the "Certificate of Incorporation"), certified by the
Secretary of State of the jurisdiction of incorporation of each such
corporation, and of the by-laws of the Company and each of its
Subsidiaries (collectively, the "By-Laws"), certified by the Secretary
of each such corporation, heretofore delivered to the Holder are true
and complete copies of such instruments as amended to the date of this
Agreement. Such Certificates of Incorporation and By-Laws are in full
force and effect as of the date hereof. Neither the Company nor its
Subsidiaries is in violation of any provision of its Certificate of
Incorporation or By-Laws. The books and records, minute books, stock
record books, and other records of the Company, all of which have been
made available to the Holder, are complete and correct in all material
respects and have been maintained in accordance with sound business
practices. The minute book(s) of the Company, all of which have been
made available to the Holder, contains materially accurate and complete
records of meetings held of, and corporate action taken by, the
stockholders, the Board of Directors, and Committees of the Board of
Directors of the Company.
(iv) Each outstanding share of Series A Convertible
Preferred Stock, $.01 par value per share, of the Company was sold at a
per share purchase price of $3,150. On January 4, 2000, a 630 for one
stock split of Common Stock was effected by the Company. Each share of
Series C Preferred has been or will be sold at a per share purchase
price of $10.54. On or before April 25, 2000, the Company will have
sold at least $30,000,000 of its Series C Preferred at a per share
purchase price of $10.54.
(b) DUE ISSUANCE AND AUTHORIZATION OF CAPITAL STOCK. All of the
outstanding shares of capital stock of the Company have been validly issued,
are fully paid and nonassessable and, except as set forth in Schedule 23(b)
hereto, are free from preemptive rights.
(c) ORGANIZATION. The Company (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware, (ii) is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the nature of the property
owned or leased by it or the nature of the business conducted by it makes such
qualification
20
necessary, and (c) has all requisite corporate power and authority to own or
lease and operate its assets and carry on its business as presently being
conducted.
(d) CONSENTS. Neither the execution, delivery or performance of
this Agreement by the Company, nor the consummation by it of the obligations
and transactions contemplated hereby (including, without limitation, the
issuance, the reservation for issuance and the delivery of the Warrant Shares)
requires any consent of, authorization by, exemption from, filing with or
notice to any governmental authority or any other person.
(e) AUTHORIZATION; ENFORCEMENT. The Company has all requisite
corporate power and has taken all necessary corporate action required for the
due authorization, execution, delivery and performance by the Company of this
Agreement and to consummate the transactions contemplated hereby (including,
without limitation, the issuance of the Warrant Shares). The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby and thereby, have been
duly authorized by all necessary corporate action on the part of the Company.
This Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company enforceable against
it in accordance with its terms.
(f) NO CONFLICTS. The execution, delivery and performance, by
the Company of this Agreement and the consummation of the transactions
contemplated hereby (including, without limitation, the issuance and
reservation for issuance of the Warrant Shares) by the Company will not (a)
result in a violation of the Certificate of Incorporation or By-Laws, (b)
conflict with or result in the material breach of the terms, conditions or
provisions of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give rise to any right of
termination, acceleration or cancellation under, any material agreement,
lease, mortgage, license, indenture, instrument or other contract to which the
Company or any of its Subsidiaries is a party, (c) result in a violation of
any law, rule, regulation, order, judgment or decree (including, without
limitation, U.S. federal and state securities laws and regulations) applicable
to the Company or any of its Subsidiaries or by which any property or asset of
the Company or any Subsidiary is bound or affected, or (d) result in the
creation of any lien or encumbrance upon any of their assets.
Section 24. REPRESENTATIONS AND WARRANTIES OF THE HOLDER. Holder
represents and warrants to the Company as follows:
(a) CORPORATE EXISTENCE. The Holder is an entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
(b) ACKNOWLEDGMENT OF RISKS. The Holder has carefully reviewed
and understands the risks of, and other considerations relating to, this
Agreement, the Warrants and the Warrant Shares.
(c) ACQUISITION OF WARRANT SHARES. Upon exercise of the
Warrants, Holder will acquire the Warrant Shares for its own account or for
one or more separate accounts maintained by it and
21
without the view to the distribution thereof within the meaning of the
Securities Act or with any present intention of distributing or selling the
Warrant Shares except in compliance with the Securities Act.
(d) NO REGISTRATION. The Holder understands that (i) the
Warrants and the Warrant Shares (A) have not been registered under the
Securities Act or any state securities laws, (B) will be issued in reliance
upon an exemption from the registration and prospectus delivery requirements
of the Securities Act, (C) will be issued in reliance upon exemptions from the
registration and prospectus delivery requirements of state securities laws,
(ii) there is not currently any trading market for the Warrants or the Warrant
Shares and there can be no assurances that the Warrants and the Warrant Shares
will be listed on any exchange or quoted on any quotation system, and (iii)
the Holder must therefore bear the economic risk of such investment
indefinitely unless a subsequent disposition thereof is registered under the
Securities Act and applicable state securities laws or is exempt therefrom.
The Holder further understands that such exemption depends upon, among other
things, the bona fide nature of the investment intent of the Holder expressed
herein. Pursuant to the foregoing, the Holder acknowledges that any
certificate representing any Warrant Shares acquired by the Holder shall bear
the restrictive legends set forth in Section 5(b).
(e) INVESTMENT EXPERIENCE. The Holder, together with its
advisors, has knowledge, skill and experience in financial, business and
investment matters relating to an investment of this type and is capable of
evaluating the merits and risks of such investment and protecting the Holder's
interest in connection with the acquisition of the Warrants and any Warrant
Shares. The Holder understands that the acquisition of the Warrants and any
Warrant Shares is a speculative investment and involves substantial risks and
that the Holder could lose the Holder's entire investment in the Warrants and
any Warrant Shares. To the extent deemed necessary by the Holder, the Holder
has retained, at its own expense, and has relied upon appropriate professional
advice regarding the investment, tax and legal merits and consequences of
purchasing and owning the Warrants and any Warrant Shares. The Holder has the
ability to bear the economic risks of investment in the Company, including a
complete loss of the investment, and the Holder has no need for liquidity in
such investment.
(f) STATUS AS ACCREDITED INVESTOR. The Holder is an "Accredited
Investor" within the meaning of Rule 501 of Regulation D, promulgated by the
United States Securities and Exchange Commission pursuant to the Securities
Act.
Section 25. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
DIGITALCONVERGENCE.:COM INC.
By: /s/ XXXXXXX X. XXXXX
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Name: Xxxxxxx X. Xxxxx
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Title: E.V.P.
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NBC-DCCI HOLDING, INC.
By: /s/
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Name:
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Title:
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