LATITUDE90, INC.
Warrant for the Purchase of Shares of Common Stock
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No. PP-99-2 160,000 Shares
June 7, 1999
FOR VALUE RECEIVED, LATITUDE90, INC., a California corporation (the
"Company"), hereby certifies that The Roman Arch Fund II L.P. or its permitted
assigns, is entitled to purchase from the Company, at any time or from time to
time commencing on the earliest of (i) December 7, 1999, (ii) the closing of a
"Qualified IPO" (as hereinafter defined) or (iii) the closing of a "Qualified
Private Placement" (as hereinafter defined) and prior to 5:00 P.M., Los Angeles,
California time, on the earlier of (i) June 7, 2005 or (ii) the fifth
anniversary of the commencement of trading of the Company's common stock in
connection with an initial public offering with gross proceeds to the Company of
at least $20,000,000 (a "Qualified IPO"), One Hundred Sixty Thousand (160,000)
fully paid and non-assessable shares of the common stock, $.01 par value per
share, of the Company for a purchase price equal to $1.60 per share; provided,
however, that (i) if, within six months of the date hereof, the Company closes a
private placement of equity securities to one or more independent third parties
that raises gross proceeds of at least $4,000,000 (a "Qualified Private
Placement"), the purchase price per share shall be adjusted to be equal to the
product of (A) the purchase price per share of common stock sold or the per
share price at which any convertible security is convertible into shares of
common stock and (B) 0.9; (ii) if no Qualified Private Placement shall close
within six months of the date hereof, but during such period the Company shall
close a Qualified IPO, the purchase price per share shall be adjusted to be
equal to the product of (A) the price per share in the Qualified IPO and (B)
0.5; and (iii) if during the six month period commencing on the date hereof the
Company closes neither a Qualified Private Placement nor a Qualified IPO, the
purchase price per share shall be $1.60 per share until a "Change of Control"
(as hereinafter defined) shall occur in which event the purchase price per share
shall be reduced, but not increased, to an amount equal to the product of (A)
the price per share received by stockholders of the Company in such Change of
Control transaction and (B) 0.5; provided, further, however that such price per
share shall not be reduced below $0.80 per share. All of the prices set forth
in the preceding sentence shall be subject to adjustment in accordance with
Section 3.
If, within the six months of the date hereof, the Company closes a
Qualified Private Placement or a Qualified IPO, upon such closing date and the
repayment by the Company of its obligation to the Roman Arch Fund, L.P. and the
Roman Arch Fund II, L.P. under the Senior Promissory Notes made as of June 7,
1999 (the "Notes"), the number of shares subject to this
Warrant shall be adjusted to an amount equal to the product of (A) the number of
shares then subject to this Warrant and (B) 0.625.
If, within three months of the date hereof, the Company closes a Qualified
Private Placement or a Qualified IPO, and within two months of the date hereof
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the Company had repaid its obligation to the Roman Arch Fund, L.P. and the Roman
Arch Fund II, L.P. under the Notes, the number of shares subject to this Warrant
shall be adjusted to an amount equal to the product of (A) the number of shares
then subject to this Warrant and (B) 0.3125.
Hereinafter, (i) said common stock, together with any other equity
securities which may be issued by the Company with respect thereto or in
substitution therefor, is referred to as the "Common Stock," (ii) the shares of
the Common Stock purchasable hereunder or under any other Warrant (as
hereinafter defined) are referred to individually as a "Warrant Share" and
collectively as the "Warrant Shares," (iii) the aggregate purchase price payable
for the Warrant Shares hereunder is referred to as the "Aggregate Warrant
Price," (iv) the price payable for each of the Warrant Shares hereunder is
referred to as the "Per Share Warrant Price," (v) this Warrant, all similar
Warrants issued on the date hereof and all Warrants hereafter issued in exchange
or substitution for this Warrant or such similar Warrants are referred to as the
"Warrants" and (vi) the holder of this Warrant is referred to as the "Holder"
and the holder of this Warrant and all other Warrants or Warrant Shares issued
upon the exercise of any Warrant are referred to as the "Holders." "Change of
Control" shall mean (i) a consolidation or merger of the Company with or into
any corporation or corporations that are unaffiliated with the Company on the
date hereof, (ii) a sale, lease or transfer of all or substantially all of the
assets of the Company, (iii) the sale of at least 51% of the outstanding equity
of the Company in a single transaction or series of related transactions or (iv)
the date on which Xxxx X. Xxxxx shall fail to own more than 51% of the Company's
common equity on a fully diluted basis.
The Per Share Warrant Price is also subject to adjustment as hereinafter
provided in Section 3; in the event of any adjustment to the Per Share Warrant
Price pursuant to the provisions of Section 3, the number of Warrant Shares
shall be adjusted by dividing the Aggregate Warrant Price by the Per Share
Warrant Price in effect immediately after such adjustment. The Aggregate
Warrant Price shall not be adjusted as a result of the application of the
provisions of Section 3.
1. Exercise or Exchange of Warrant. (a) The Holder may exercise
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this Warrant, in whole or in part, as follows:
(i) By presentation and surrender of this Warrant to the Company at
the address set forth in Subsection 10(a) hereof, with the Subscription
Form annexed hereto (or a reasonable facsimile thereof) duly executed and
accompanied by payment of the Per Share Warrant Price for each Warrant
Share to be purchased. Payment for Warrant Shares shall be made by
certified or official bank check payable to the order of the Company; or
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(ii) By presentation and surrender of this Warrant to the Company at
the address set forth in Subsection 10(a) hereof, with a Cashless Exercise
Form annexed hereto (or a reasonable facsimile thereof) duly executed (a
"Cashless Exercise"). Such presentation and surrender shall be deemed a
waiver of the Holder's obligation to pay all or any portion of the
Aggregate Warrant Price. In the event of a Cashless Exercise, the Holder
shall exchange its Warrant for that number of shares of Common Stock
determined by multiplying the number of Warrant Shares being exercised by a
fraction, the numerator of which shall be the difference between the then
current market price per share of the Common Stock and the Per Share
Warrant Price, and the denominator of which shall be the then current
market price per share of Common Stock. For purposes of any computation
under this Section 1(a)(ii), the then current market price per share of
Common Stock at any date shall be deemed to be the average for the five
consecutive business days immediately prior to the Cashless Exercise of the
daily closing prices of the Common Stock on the principal national
securities exchange on which the Common Stock is admitted to trading or
listed, or if not listed or admitted to trading on any such exchange, the
closing prices as reported by the Nasdaq National Market, or if not then
listed on the Nasdaq National Market, the average of the highest reported
bid and lowest reported asked prices as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System
("Nasdaq") or if not then publicly traded, the fair market price of the
Common Stock as determined by the Board of Directors.
(b) If this Warrant is exercised in part, this Warrant must be
exercised for a number of whole shares of the Common Stock, and the Holder is
entitled to receive a new Warrant covering the Warrant Shares which have not
been exercised and setting forth the proportionate part of the Aggregate Warrant
Price applicable to such Warrant Shares. Upon such surrender of this Warrant,
the Company will (i) issue a certificate or certificates, in such denominations
as are requested for delivery by the Holder, in the name of the Holder for the
largest number of whole shares of the Common Stock to which the Holder shall be
entitled and, if this Warrant is exercised in whole, in lieu of any fractional
share of the Common Stock to which the Holder shall be entitled, pay to the
Holder cash in an amount equal to the fair value of such fractional share
(determined in such reasonable manner as the Board of Directors of the Company
shall determine), and (ii) deliver the other securities and properties
receivable upon the exercise of this Warrant, or the proportionate part thereof
if this Warrant is exercisable in part, pursuant to the provisions of this
Warrant. The Holder shall be deemed to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder.
(c) Simultaneously with the issuance of this Warrant and an
identical Warrant to an affiliated holder for 240,000 shares of Common Stock, an
aggregate of 400,000 shares of Common Stock, the Company is also issuing to the
Holders of these Warrants warrants to purchase 100,000 shares of Common Stock
(the "Additional Warrants"). The Holder shall have the right, between the date
hereof and 180 days after the closing of a Qualified IPO, in its sole
discretion, to
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exchange this Warrant for Additional Warrants to purchase a number of shares of
Common Stock equal to twice the number of shares subject to this Warrant at the
time of exchange.
2. Reservation of Warrant Shares; Listing. The Company agrees that,
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prior to the expiration of this Warrant, the Company will at all times (a) have
authorized and in reserve, and will keep available, solely for issuance or
delivery upon the exercise of this Warrant, the shares of the Common Stock and
other securities and properties as from time to time shall be receivable upon
the exercise of this Warrant, free and clear of all restrictions on sale or
transfer and free and clear of all preemptive rights and rights of first refusal
and (b) if the Company hereafter lists its Common Stock on any national
securities exchange or on Nasdaq, keep the shares of the Common Stock receivable
upon the exercise of this Warrant authorized for listing.
3. Protection Against Dilution. (a) In case the Company shall
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hereafter (i) pay a dividend or make a distribution on its capital stock in
shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares or (iv) issue by reclassification of its
Common Stock any shares of capital stock of the Company, the Per Share Warrant
Price shall be adjusted so that the Holder upon the exercise hereof shall be
entitled to receive the number of shares of Common Stock or other capital stock
of the Company which he would have owned immediately following such action had
such Warrant been exercised immediately prior thereto. An adjustment made
pursuant to this Subsection 3(a) shall become effective immediately after the
record date in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification.
(b) If, at any time or from time to time after the date of this
Warrant, the Company shall issue or distribute to the holders of shares of
Common Stock evidences of its indebtedness, any other securities of the Company
or any cash, property or other assets (excluding a subdivision, combination or
reclassification, or dividend or distribution payable in shares of Common Stock,
referred to in Subsection 3(a), and also excluding cash dividends or cash
distributions paid out of net profits legally available therefor if the full
amount thereof, together with the value of other dividends and distributions
made substantially concurrently therewith or pursuant to a plan which includes
payment thereof, is equivalent to not more than 5% of the Company's net worth)
(any such nonexcluded event being herein called a "Special Dividend"), the Per
Share Warrant Price shall be adjusted by multiplying the Per Share Warrant Price
then in effect by a fraction, the numerator of which shall be the then current
market price of the Common Stock (defined as the average for the five
consecutive business days immediately prior to the record date of the daily
closing price of the Common Stock as reported by the national securities
exchange upon which the Common Stock is then listed or if not listed on any such
exchange, the average of the closing prices as reported by the Nasdaq National
Market, or if not then listed on the Nasdaq National Market, the average of the
highest reported bid and lowest reported asked prices as reported by Nasdaq, or
if not then publicly traded, the fair market price as determined by the
Company's Board of Directors) less the fair market value (as determined by the
Company's Board of Directors)
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of the evidences of indebtedness, cash, securities or property, or other assets
issued or distributed in such Special Dividend applicable to one share of Common
Stock and the denominator of which shall be such then current market price per
share of Common Stock. An adjustment made pursuant to this Subsection 3(b) shall
become effective immediately after the record date of any such Special Dividend.
(c) Except as provided in Subsection 3(e), in case the Company shall
hereafter issue or sell any shares of Common Stock for a consideration per share
less than the Per Share Warrant Price on the date of such issuance or sale, the
Per Share Warrant Price shall be adjusted as of the date of such issuance or
sale so that the same shall equal the price determined by dividing (i) the sum
of (A) the number of shares of Common Stock outstanding immediately prior to
such issuance or sale, including shares of Common Stock issuable upon the
exercise of options and warrants then exercisable, multiplied by the Per Share
Warrant Price plus (B) the consideration received by the Company upon such
issuance or sale by (ii) the total number of shares of Common Stock outstanding
after such issuance or sale including shares of Common Stock issuable upon the
exercise of options and warrants then exercisable.
(d) Except as provided in Subsections 3(b) and 3(e), in case the
Company shall hereafter issue or sell any rights, options, warrants or
securities convertible into Common Stock entitling the holders thereof to
purchase Common Stock or to convert such securities into Common Stock at a price
per share (determined by dividing (i) the total amount, if any, received or
receivable by the Company in consideration of the issuance or sale of such
rights, options, warrants or convertible securities plus the total
consideration, if any, payable to the Company upon exercise or conversion
thereof (the "Total Consideration") by (ii) the number of additional shares of
Common Stock issuable upon exercise or conversion of such securities) less than
the then current Per Share Warrant Price in effect on the date of such issuance
or sale, the Per Share Warrant Price shall be adjusted as of the date of such
issuance or sale so that the same shall equal the price determined by dividing
(i) the sum of (A) the number of shares of Common Stock outstanding on the date
of such issuance or sale (including shares of Common Stock issuable upon the
exercise of options and warrants then exercisable) multiplied by the Per Share
Warrant Price plus (B) the Total Consideration by (ii) the number of shares of
Common Stock outstanding on the date of such issuance or sale (including shares
of Common Stock issuable upon the exercise of options and warrants then
exercisable) plus the maximum number of additional shares of Common Stock
issuable upon exercise or conversion of such securities.
(e) No adjustment in the Per Share Warrant Price shall be required in
the case of (i) the issuance by the Company of options to purchase up to
2,500,000 shares of Common Stock reserved for issuance pursuant to the Company's
1999 Stock Incentive Plan (the "Plan"), and the exercise of such options, (ii)
the issuance by the Company of up to 935,000 shares of Common Stock upon the
exercise of options currently outstanding that were not granted under the Plan,
(iii) the issuance by the Company of up to 2,500,000 shares of Common Stock upon
the conversion of the Company's outstanding Series A Preferred Stock, (iv) the
issuance by the Company of up to 657,890
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shares of Common Stock upon exercise of warrants currently outstanding (other
than the Warrants and the Additional Warrants), and (v) the issuance by the
Company of shares of the Common Stock pursuant to the exercise of the Warrants
or the Additional Warrants. The number of shares of Common Stock set forth in
this Subsection 3(e) is subject to adjustment in accordance with any anti-
dilution provisions existing on the date hereof under the terms of the
instruments governing their issuance.
(f) If the Company issues shares of Common Stock or securities
convertible or exchangeable for shares of Common Stock in connection with (a) a
strategic alliance or licensing agreement or (b) the acquisition (by merger or
otherwise) of all or substantially all of the capital stock or assets of another
entity or business organization, the issuance of shares of Common Stock in
connection with any such transaction shall require the adjustment of the Per
Share Warrant Price unless the value of the Company at the time of such
transaction, as determined in good faith by a committee comprised of the
independent directors of the Board of Directors or, if no such committee has
been appointed, in consultation with the Holder and a majority of the shares
held by shareholders who are not officers, directors or otherwise employees of
the Company, is equal to or greater than the Per Share Warrant Price.
(g) In case of any capital reorganization or reclassification, or any
consolidation or merger to which the Company is a party other than a merger or
consolidation in which the Company is the continuing corporation, or in case of
any sale or conveyance to another entity of the property of the Company as an
entirety or substantially as an entirety, or in the case of any statutory
exchange of securities with another corporation (including any exchange effected
in connection with a merger of a third corporation into the Company), the Holder
of this Warrant shall have the right thereafter to receive on the exercise of
this Warrant the kind and amount of securities, cash or other property which the
Holder would have owned or have been entitled to receive immediately after such
reorganization, reclassification, consolidation, merger, statutory exchange,
sale or conveyance had this Warrant been exercised immediately prior to the
effective date of such reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance and in any such case, if necessary,
appropriate adjustment shall be made in the application of the provisions set
forth in this Section 3 with respect to the rights and interests thereafter of
the Holder of this Warrant to the end that the provisions set forth in this
Section 3 shall thereafter correspondingly be made applicable, as nearly as may
reasonably be, in relation to any shares of stock or other securities or
property thereafter deliverable on the exercise of this Warrant. The above
provisions of this Subsection 3(g) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, statutory
exchanges, sales or conveyances. The issuer of any shares of stock or other
securities or property thereafter deliverable on the exercise of this Warrant
shall be responsible for all of the agreements and obligations of the Company
hereunder. Notice of any such reorganization, reclassifi cation, consolidation,
merger, statutory exchange, sale or conveyance and of said provisions so
proposed to be made, shall be mailed to the Holders of the Warrants not less
than 15 days prior to such event. A sale of all or substantially all of the
assets of the Company for a consideration
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consisting primarily of securities shall be deemed a consolidation or merger for
the foregoing purposes.
(h) In case any event shall occur as to which the other provisions of
this Section 3 are not strictly applicable but as to which the failure to make
any adjustment would not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles hereof then, in
each such case, the Holders of Warrants representing the right to purchase a
majority of the Warrant Shares subject to all outstanding Warrants may appoint a
firm of independent public accountants of recognized national standing
reasonably acceptable to the Company, which shall give their opinion as to the
adjustment, if any, on a basis consistent with the essential intent and
principles established herein, necessary to preserve the purchase rights
represented by the Warrants. Upon receipt of such opinion, the Company will
promptly mail a copy thereof to the Holder of this Warrant and shall make the
adjustments described therein. The fees and expenses of such independent public
accountants shall be borne by the Company.
(i) No adjustment in the Per Share Warrant Price shall be required
unless such adjustment would require an increase or decrease of at least $0.01
per share of Common Stock; provided, however, that any adjustments which by
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reason of this Subsection 3(i) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment; provided further,
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however, that adjustments shall be required and made in accordance with the
provisions of this Section 3 (other than this Subsection 3(i)) not later than
such time as may be required in order to preserve the tax-free nature of a
distribution to the Holder of this Warrant or Common Stock issuable upon
exercise hereof. All calculations under this Section 3 shall be made to the
nearest cent or to the nearest 1/l00th of a share, as the case may be. Anything
in this Section 3 to the contrary notwithstanding, the Company shall be entitled
to make such reductions in the Per Share Warrant Price, in addition to those
required by this Section 3, as it in its discretion the Company shall deem to be
advisable in order that any stock dividend, subdivision of shares or
distribution of rights to purchase stock or securities convertible or
exchangeable for stock hereafter made by the Company to its stockholders shall
not be taxable.
(j) Whenever the Per Share Warrant Price is adjusted as provided in
this Section 3 and upon any modification of the rights of a Holder of Warrants
in accordance with this Section 3, the Company shall promptly obtain, at its
expense, a certificate of a firm of independent public accountants of recognized
standing selected by the Board of Directors (who may be the regular auditors of
the Company) setting forth the Per Share Warrant Price and the number of Warrant
Shares after such adjustment or the effect of such modification, a brief
statement of the facts requiring such adjustment or modification and the manner
of computing the same and cause copies of such certificate to be mailed to the
Holders of the Warrants.
(k) If the Board of Directors of the Company shall (i) declare any
dividend or other distribution with respect to the Common Stock, other than a
cash dividend subject to the first parenthetical in Subsection 3(b), (ii) offer
to the holders of shares of Common Stock any additional
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shares of Common Stock, any securities convertible into or exercisable for
shares of Common Stock or any rights to subscribe thereto, or (iii) propose a
dissolution, liquidation or winding up of the Company, the Company shall mail
notice thereof to the Holders of the Warrants not less than 15 days prior to the
record date fixed for determining stockholders entitled to participate in such
dividend, distribution, offer or subscription right or to vote on such
dissolution, liquidation or winding up.
(l) If, as a result of an adjustment made pursuant to this Section 3,
the Holder of any Warrant thereafter surrendered for exercise shall become
entitled to receive shares of two or more classes of capital stock or shares of
Common Stock and other capital stock of the Company, the Board of Directors
(whose determination shall be conclusive and shall be described in a written
notice to the Holder of any Warrant promptly after such adjustment) shall
determine the allocation of the adjusted Per Share Warrant Price between or
among shares or such classes of capital stock or shares of Common Stock and
other capital stock.
(m) If the Per Share Warrant Price shall be adjusted as a result of
one of the events set forth in the first paragraph of this Warrant, the
provisions of this Section 3 shall be applied as if such adjusted Per Share
Warrant Price had been in effect since the initial issuance of this Warrant.
4. Tag Along Rights. The Company understands that its controlling
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stockholder, Xxxx Xxxxx, has agreed to grant "tag along" rights to the Holder if
he shall sell more than one-third of his equity interest in the Company. The
Company agrees to place stop-transfer instructions on Xx. Xxxxx'x shares in
order to enforce this tag along right on behalf of the Holder.
5. Fully Paid Stock; Taxes. The Company agrees that the shares of
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the Common Stock represented by each and every certificate for Warrant Shares
delivered on the exercise of this Warrant shall, at the time of such delivery,
be validly issued and outstanding, fully paid and nonassessable, and not subject
to preemptive rights or rights of first refusal, and the Company will take all
such actions as may be necessary to assure that the par value or stated value,
if any, per share of the Common Stock is at all times equal to or less than the
then Per Share Warrant Price. The Company further covenants and agrees that it
will pay, when due and payable, any and all Federal and state stamp, original
issue or similar taxes which may be payable in respect of the issue of any
Warrant Share or certificate therefor.
6. Registration Under Securities Act of 1933
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(a) The Company agrees that if, at any time and from time to time
during the period commencing on the closing of a Qualified IPO and ending on
June 7, 2007, the Board of Directors of the Company shall authorize the filing
of a registration statement (any such registration statement being hereinafter
called a "Subsequent Registration Statement") under the Securities Act of 1933
(the "Act") (other than a registration statement on Form S-4, Form S-8 or other
form which does not include substantially the same information as would be
required in a form for the
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general registration of securities) in connection with the proposed offer of any
of its securities by it, the Company will (i) promptly notify the Holder and
each of the Holders, if any, of other Warrants and/or Warrant Shares not
previously sold pursuant to this Section 6 that such Subsequent Registration
Statement will be filed and that the Warrant Shares which are then held, and/or
which may be acquired upon the exercise of the Warrants, by the Holder and such
Holders, will, at the Holder's and such Holders' request, be included in such
Subsequent Registration Statement, (ii) upon the written request of a Holder
made within 15 days after the giving of such notice by the Company, include in
the securities covered by such Subsequent Registration Statement all Warrant
Shares which it has been so requested to include, (iii) use its best efforts to
cause such Subsequent Registration Statement to become effective as soon as
practicable and (iv) take all other action necessary under any Federal or state
law or regulation of any governmental authority to permit all Warrant Shares
which it has been so requested to include in such Subsequent Registration
Statement to be sold or otherwise disposed of, and will maintain such compliance
with each such Federal and state law and regulation of any governmental
authority for the period necessary for the Holder and such Holders to effect the
proposed sale or other disposition.
(b) Notwithstanding any other provision of this Section 6, if the
managing underwriter of an underwritten distribution advises the Company and the
Holders of the Warrant Shares participating in such registration in writing that
in its good faith judgment the number of Warrant Shares and the other securities
requested to be registered exceeds the number of Warrant Shares and other
securities which can be sold in such offering, then (i) the number of Warrant
Shares and other securities so requested to be included in the offering shall be
reduced to that number of shares which in the good faith judgment of the
managing underwriter can be sold in such offering, except for shares to be
issued by the Company, which shall have priority over the Warrant Shares, and
(ii) such reduced number of shares shall be allocated among all participating
Holders of Warrant Shares and the holders of other securities in proportion, as
nearly as practicable, to the respective number of Warrant Shares and other
securities held by such Holders and other holders at the time of filing the
registration statement.
(c) Whenever the Company is required pursuant to the provisions of
this Section 6 to include Warrant Shares in a registration statement, the
Company shall (i) furnish each Holder of any such Warrant Shares and each
underwriter of such Warrant Shares with such copies of the prospectus, including
the preliminary prospectus, conforming to the Act (and such other documents as
each such Holder or each such underwriter may reasonably request) in order to
facilitate the sale or distribution of the Warrant Shares, (ii) use its best
efforts to register or qualify such Warrant Shares under the blue sky laws (to
the extent applicable) of such jurisdiction or laws (to the extent applicable)
of such jurisdiction or jurisdictions as the Holders of any such Warrant Shares
and each underwriter of Warrant Shares being sold by such Holders shall
reasonably request (except that the Company shall not for any purpose be
required to execute a general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction where it is not so
qualified) and (iii) take such other actions as may be reasonably necessary or
advisable to enable such Holders and such underwriters to consummate the sale or
distribution in such jurisdiction or jurisdictions in
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which such Holders shall have reasonably requested that the Warrant Shares be
sold. Nothing contained in this Warrant shall be construed as requiring a Holder
to exercise its Warrant prior to the closing of an offering pursuant to a
registration statement referred to in Subsection 6(a).
(d) To the extent otherwise required and delivered pursuant to an
underwriting agreement, the Company shall furnish to each Holder participating
in an offering pursuant to a registration statement under this Section 6 and to
each underwriter, if any, a signed counterpart, addressed to such Holder or
underwriter, of (i) an opinion of counsel to the Company dated the date of the
closing under the underwriting agreement, and (ii) a "comfort" letter dated the
effective date of such registration statement and a letter dated the date of the
closing under the underwriting agreement signed by the independent public
accountants who have issued a report on the Company's financial statements
included in such registration statement, in each case covering substantially the
same matters with respect to such registration statement (and the prospectus
included therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.
(e) The Company shall pay all expenses incurred in connection with
any registration statement or other action pursuant to the provisions of this
Section 6, including the reasonable fees and expenses of one counsel
representing the Holders of Warrant Shares included in any such registration
statement, other than underwriting discounts and applicable transfer taxes
relating to the Warrant Shares.
(f) The Company agrees to indemnify and hold harmless each selling
Holder of Warrant Shares and each person who controls any such selling Holder
within the meaning of Section 15 of the Act, and each and all of them, from and
against any and all losses, claims, damages, liabilities or actions, joint or
several, to which any selling Holder of Warrant Shares or they or any of them
may become subject under the Act or otherwise and to reimburse the persons
indemnified as above for any reasonable legal or other expenses (including the
cost of any investigation and preparation) incurred by them in connection with
any litigation or threatened litigation, whether or not resulting in any
liability, but only insofar as such losses, claims, damages, liabilities or
actions arise out of, or are based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any registration statement
pursuant to which Warrant Shares were registered under the Act (hereinafter
called a "Registration Statement"), any preliminary prospectus, the final
prospectus or any amendment or supplement thereto (or in any application or
document filed in connection therewith) or document executed by the Company
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to register or qualify the Warrant Shares under the
securities laws thereof or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, (ii) any untrue statement or alleged untrue statement contained in
any representation or warranty made by the Company in an underwriting agreement
relating to such registration statement, or (iii) the employment by the
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Company of any device, scheme or artifice to defraud, or the engaging by the
Company in any act, practice or course of business which operates or would
operate as a fraud or deceit, or any conspiracy with respect thereto, in which
the Company shall participate, in connection with the issuance and sale of any
of the Warrant Shares; provided, however, that the indemnity agreement contained
-------- -------
in this Section 6(f) shall not extend to any selling Holder of Warrant Shares if
any such losses, claims, damages, liabilities or actions arising out of, or
based upon, any such untrue statement or alleged untrue statement, or any such
omission or alleged omission, if such statement or omission was based upon and
made in conformity with information furnished in writing to the Company by a
selling Holder of Warrant Shares specifically for use in connection with the
preparation of such Registration Statement, any final prospectus, any
preliminary prospectus or any such amendment or supplement thereto. The Company
agrees to pay any legal and other expenses for which it is liable under this
Section 6(f) from time to time (but not more frequently than monthly) within 30
days after its receipt of a bill therefor.
(g) Each selling Holder of Warrant Shares, severally and not jointly,
will indemnify and hold harmless the Company, its directors, its officers who
shall have signed the registration statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Act to the same
extent as the foregoing indemnity from the Company set forth in Section 6(f)
hereof, but in each case to the extent, and only to the extent, that any
statement in or omission from or alleged omission from such registration
statement, any final prospectus, any preliminary prospectus or any amendment or
supplement thereto was made in reliance upon information furnished in writing to
the Company by such selling Holder specifically for use in connection with the
preparation of the registration statement, any final prospectus or the
preliminary prospectus or any such amendment or supplement thereto; provided,
--------
however, that the obligation of any Holder of Warrant Shares to indemnify the
-------
Company under the provision of this Section 6(g) shall be limited to the excess
------
of (1) the product of (A) the number of Warrant Shares being sold by the selling
--
Holder and (B) the price at which such Warrant Shares are sold over (2) the
----
aggregate amount paid to the Company by such Holder in connection with the
issuance of such Warrant Shares. Each selling Holder of Warrant Shares agrees
to pay any legal and other expenses for which it is liable under this Section
6(g) from time to time (but not more frequently than monthly) within 30 days
after receipt of a bill therefor.
(h) If any action is brought against a person entitled to
indemnification pursuant to the foregoing Sections 6(f) or (g) (an "indemnified
party") in respect of which indemnity may be sought against a person granting
indemnification (an "indemnifying party") pursuant to such Sections, such
indemnified party shall promptly notify such indemnifying party in writing of
the commencement thereof; but the omission so to notify the indemnifying party
of any such action shall not release the indemnifying party from any liability
it may have to such indemnified party otherwise than on account of the indemnity
agreement contained in Section 6(f) or (g) hereof. In case any such action is
brought against an indemnified party and it notifies an indemnifying party of
the commencement thereof, the indemnifying party against which a claim is to be
made will be entitled to participate therein at its own expense and, to the
extent that it may wish, to assume at its own
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expense the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, that (i) if the defendants in any such
-------- -------
action include both the indemnified party and the indemnifying party, and the
indemnified party shall have reasonably concluded based upon advice of counsel
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party shall have the right to select
separate counsel to assume such legal defenses and otherwise to participate in
the defense of such action on behalf of such indemnified party or parties and
(ii) in any event, the indemnified party shall be entitled to have counsel
chosen by such indemnified party participate in, but not conduct, the defense at
the expense of the indemnifying party. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel (which
approval shall not be unreasonably withheld), the indemnifying party will not be
liable to such indemnified party under the indemnification provisions of this
Section 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (x) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with proviso (i) to the next
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel), (y) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (z) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. An indemnified party shall not be liable for
any settlement of any action or proceeding effected without its written consent.
(i) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreements provided for in Section 6(f) or
(g) hereof are unavailable in accordance with their respective terms, the
Company and any selling Holder of Warrant Shares shall contribute to the
aggregate losses, claims, damages and liabilities, of the nature contemplated by
said indemnity agreements, incurred by the Company and such selling Holder of
Warrant Shares, in such proportions as is appropriate to reflect the relative
fault of the Company on the one hand and of such selling Holder of Warrant
Shares on the other hand, in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company and such
selling Holder of Warrant Shares shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relate to
information supplied by the Company or such selling Holder of Warrant Shares and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission; provided, however, that the
-------- -------
obligation of any Holder of Warrant Shares to contribute to the Company under
the provisions of this Section 6(i) shall be limited to the excess of (1) the
------ --
product of (A) the number of Warrant Shares being sold by the selling Holder and
(B) the price at which such Warrant Shares are sold over (2) the aggregate
----
amount paid to the Company by such Holder in connection with the issuance of
such Warrant Shares.
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(j) The respective indemnity and contribution agreements by the
Company and the selling Holder of Warrant Shares in this Section 6 shall remain
operative and in full force and effect regardless of (i) any investigation made
by any selling Holder of Warrant Shares or by or on behalf of any person who
controls such selling Holder or by the Company or any controlling person of the
Company or the director or any officer of the Company, (ii) payment for any of
the Warrant Shares or (iii) any termination of this Agreement, and shall survive
the delivery of the Warrant Shares, and any successor of the Company, or of any
selling Holder of Warrant Shares, or of any person who controls the Company or
of any selling Holder of Warrant Shares, as the case may be, shall be entitled
to the benefit of such respective indemnity and contribution agreements. The
respective indemnity and contribution agreements by the Company and the selling
Holder of Warrant Shares contained in this Section 6 shall be in addition to any
liability which the company and the selling Holder of Warrant Shares may
otherwise have.
7. Limited Transferability. This Warrant may not be sold,
-----------------------
transferred, assigned or hypothecated by the Holder except in compliance with
the provisions of the Act. Furthermore, this Warrant may be sold, transferred,
assigned or hypothecated only to an officer, director or affiliate of The Roman
Arch Fund II L.P., unless the Holder first obtains the prior written consent of
the Company (which shall not be unreasonably withheld). The Company may treat
the registered Holder of this Warrant as he or it appears on the Company's books
at any time as the Holder for all purposes. The Company shall permit any Holder
of a Warrant or his duly authorized attorney, upon written request during
ordinary business hours, to inspect and copy or make extracts from its books
showing the registered holders of Warrants. All Warrants issued upon the
transfer or assignment of this Warrant will be dated the same date as this
Warrant, and all rights of the Holder thereof shall be identical to those of the
Holder.
8. Loss, etc., of Warrant. Upon receipt of evidence satisfactory to
----------------------
the Company of the loss, theft, destruction or mutilation of this Warrant, and
of indemnity reasonably satisfactory to the Company, if lost, stolen or
destroyed, and upon surrender and cancellation of this Warrant, if mutilated,
the Company shall execute and deliver to the Holder a new Warrant of like date,
tenor and denomination.
9. Warrant Holder Not Shareholder. Except as otherwise provided
------------------------------
herein, this Warrant does not confer upon the Holder any right to vote or to
consent to or receive notice as a stockholder of the Company, as such, in
respect of any matters whatsoever, or any other rights or liabilities as a
stockholder, prior to the exercise hereof.
10. Notices. All notices and other communications required or
-------
permitted to be given under this Warrant shall be in writing and shall be deemed
to have been duly given if delivered personally or by facsimile transmission, or
sent by recognized overnight courier or by certified mail, return receipt
requested, postage paid, to the parties hereto as follows:
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(a) if to the Company at1447 Xxxxxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxx Xxxxxx, Xxxxxxxxxx 00000, Att.: President, facsimile no. (310)
315-1369, or such other address as the Company has designated in
writing to the Holder, or
(b) if to the Holder at Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Att.: Xxxxxx Xxxxxxx, facsimile no. (000) 000-0000 or such
other address or facsimile number as the Holder has designated in
writing to the Company.
11. Headings. The headings of this Warrant have been inserted as a
--------
matter of convenience and shall not affect the construction hereof.
12. Applicable Law. This Warrant shall be governed by and construed
--------------
in accordance with the law of the State of California without giving effect to
the principles of conflicts of law thereof.
IN WITNESS WHEREOF, Latitude90, Inc. has caused this Warrant to be
signed by its President and its corporate seal to be hereunto affixed and
attested by its Secretary this 7th day of June, 1999.
LATITUDE90, INC.
By: /s/ Xxxx X. Xxxxx
______________________
Xxxx X. Xxxxx,
Chief Executive Officer
ATTEST:
/s/ X.X. Xxxxxxxxx
_________________________
Secretary
[Corporate Seal]
-14-
ASSIGNMENT
FOR VALUE RECEIVED ____________________________ hereby sells, assigns
and transfers unto __________________________ the foregoing Warrant and all
rights evidenced thereby, and does irrevocably constitute and appoint
_______________________, attorney, to transfer said Warrant on the books of
_________________________.
Dated: ____________________ Signature:___________________________
Address: ____________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED __________________________ hereby assigns and
transfers unto ____________________________ the right to purchase ______________
shares of the Common Stock of _________________________ covered by the foregoing
Warrant, and a proportionate part of said Warrant and the rights evidenced
thereby, and does irrevocably constitute and appoint _____________________,
attorney, to transfer that part of said Warrant on the books of
______________________________.
Dated: ____________________ Signature:___________________________
Address: ____________________________
-15-
SUBSCRIPTION FORM
(To be executed upon exercise of Warrant pursuant to Section 1 (a)(i))
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for, and to purchase thereunder,
______________ shares of Common Stock, as provided for in Section 1(a)(i), and
tenders herewith payment of the purchase price in full in the form of cash or a
certified or official bank check in the amount of $___________.
Please issue a certificate or certificates for such Common Stock in
the name of, and pay any cash for any fractional share to:
Name_________________
(Please Print Name, Address and Social
Security No.)
Address ______________
______________
Social________________
Security Number
Signature_______________
NOTE: The above signature should correspond
exactly with the name on the first
page of this Warrant or with the name
of the assignee appearing in the
assignment form below.
Date______________________
And if said number of shares shall not be all the shares purchasable
under the within Warrant, a new Warrant is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder.
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CASHLESS EXERCISE FORM
(To be executed upon exercise of Warrant
pursuant to Section 1(a)(ii))
The undersigned hereby irrevocably elects to surrender _________
shares purchasable under this Warrant for such shares of Common Stock issuable
in exchange therefor pursuant to the Cashless Exercise provisions of the within
Warrant, as provided for in Section 1(a)(ii) of such Warrant.
Please issue a certificate or certificates for such Common Stock in
the name of, and pay cash for fractional shares to:
Name ___________________
(Please Print Name, Address and Social
Security No.)
Address _________________
_________________
Social _________________
Security Number
Signature
NOTE: The above signature should correspond
exactly with the name on the first
page of this Warrant or with the name
of the assignee appearing in the
assignment form below.
Date_______________________
And if said number of shares shall not be all the shares exchangeable
or purchasable under the within Warrant, a new Warrant is to be issued in the
name of the undersigned for the balance remaining of the shares purchasable
thereunder.
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