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EXHIBIT 10.25
June 30, 1997
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE
AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THE SALE
OR OTHER TRANSFER OF THIS WARRANT IS ALSO SUBJECT TO THE RESTRICTIONS
ON TRANSFER SET FORTH IN SECTION 11.3 OF THE "PURCHASE AGREEMENT" (AS
HEREINAFTER DEFINED).
No. A-4 Warrant to Purchase 160,000
Shares of Common Stock
FULCRUM DIRECT, INC.
COMMON STOCK PURCHASE WARRANT
Void after October 21, 2006
FULCRUM DIRECT, INC. (the "Company" ), a Delaware corporation, hereby
certifies that for value received, Whitney Subordinated Debt Fund, L.P. or
assigns (the "Holder"), is entitled to purchase, subject to the terms and
conditions hereinafter set forth, an aggregate of 160,00 fully paid and
nonassessable shares of Common Stock (as hereinafter defined) of the Company, at
an exercise price of $.01 per share (the "Purchase Price"), subject to
adjustment as provided herein, at any time or from time to time beginning on the
date hereof and prior to 5:00 P.M., New York City time, on October 21, 2006 (the
"Expiration Date").
This Warrant is issued pursuant to the Securities Purchase Agreement
(the "Purchase Agreement"), dated as of the date hereof, among the Company,
Whitney Subordinated Debt Fund, L.P., Whitney Equity Partners, L.P., Xxxxxx
Xxxxxxxxx and Xxxxxxx X. Xxxxxxxx and is subject to the terms thereof.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned such terms in the Purchase Agreement. The Holder is entitled to the
rights and subject to the obligations contained in the Purchase Agreement and
the Stockholders Agreement relating to this Warrant and the shares of Common
Stock issuable upon exercise of this Warrant.
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1. Definitions. For the purposes of this Warrant, the following terms
shall have the meanings indicated:
"Applicable Price" shall mean the higher of (a) the Current Market
Price per share of Common Stock on the applicable record or other relevant date
and (b) the Dilution Price.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
"Change of Control" means (i) any transaction or series of
transactions in which any Person (as such term is defined in Section 13(d)(3) of
the Exchange Act) or group, other than Xxxxxxxx and/or Budoff, becomes the
direct or indirect beneficial owner (as such term is defined in Rule 13d-3 as
promulgated under the Exchange Act) of more of the then outstanding Common Stock
than that beneficially owned in the aggregate by Xxxxxxxx and Budoff, (ii) any
transaction or series of transactions in which Xxxxxxxx and Budoff together
cease to be the direct or indirect beneficial owners of at least 50% of the then
outstanding Common Stock, (iii) the sale of all or substantially all of the
Borrower's assets, (iv) the liquidation of the Borrower, (v) the election of a
majority of the Board of Directors who were not placed in nomination for that
office by the Board of Directors, or (vi) the combination of Borrower with
another company, as a result of which the shareholders of Borrower hold less
than 50.01% of the total of all voting shares outstanding or Borrower's
directors constitute less than a majority of the Board of Directors of the
combined entity.
"Cancellation Portion" has the meaning ascribed to such term in
Subsection 2(b).
"Closing Price" shall mean, with respect to each share of Common
Stock for any day, (a) the last reported sale price regular way or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices regular way, in either case as reported on the principal national
securities exchange on which the Common Stock is listed or admitted for trading
or (b) if the Common Stock is not listed or admitted for trading on any national
securities exchange, the last reported sale price or, in case no such sale takes
place on such day, the average of the highest reported bid and the lowest
reported asked quotation for the Common Stock, in either case as reported on the
NASDAQ or a similar service if NASDAQ is no longer reporting such information.
"Common Stock" means the common stock, par value $.01 per share, of
the Company, and any class of stock resulting from successive changes or
reclassification of such Common Stock.
"Company" has the meaning ascribed to such term in the first
paragraph of this Warrant.
"Current Market Price" shall be determined in accordance with
Subsection 3(e).
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"Dilution Price" shall mean, with respect to each share of Common
Stock, $4.82, subject to appropriate adjustment for events described in
Subsection 3(a).
"Exercise Date" has the meaning ascribed to such term in Subsection
2(d).
"Expiration Date" has the meaning ascribed to such term in the first
paragraph of this Warrant.
"Fair Market Value" with respect to a security shall mean the
average of the closing prices of such security's sales on the principal
securities exchanges on which such security may at the time be listed, or, if
there has been no sales on any such exchange on any day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on any day such security is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M.,
New York time, or, if on any day such security is not quoted in the NASDAQ
System, the average of the highest bid and lowest asked prices on such day in
the domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization, in each such case
averaged over a period of 21 days consisting of the day as of which "Fair Market
Value" is being determined and the 20 consecutive business days prior to such
day.
"Holder" has the meaning ascribed to such term in the first
paragraph of this Warrant.
"Initial Public Offering" means the sale by either the Company or
any of its Subsidiaries of its capital stock pursuant to a registration
statement on Form S-1 or otherwise under the Securities Act in which the Company
or any of its Subsidiaries receives at least $20,000,000 of Net Cash Proceeds.
"NASDAQ" shall mean the Automatic Quotation System of the National
Association of Securities Dealers, Inc.
"Net Cash Proceeds" means (X) the cash proceeds received by the
Borrower or any of its Subsidiaries from an Initial Public Offering minus (Y)
reasonable brokerage commissions or underwriting fees and other reasonable fees
and expenses (including, without limitation, reasonable fees, charges and
disbursements of counsel and accountants and reasonable fees and expenses of
investment bankers) relating to an Initial Public Offering.
"Notes" shall mean the Senior Subordinated Promissory Notes, dated
the date hereof, with the Company as the maker thereof, and the Purchasers (as
defined in the Purchase Agreement) as the payee thereof.
"Person" shall mean any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or
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political subdivision thereof) or other entity of any kind, and shall include
any successor (by merger or otherwise) of such entity.
"Purchase Agreement" has the meaning ascribed to such term in the
second paragraph of this Warrant.
"Purchase Price" has the meaning ascribed to such term in the first
paragraph of this Warrant.
"Stockholders Agreement" means the Stockholders Agreement as defined
in the Purchase Agreement.
"Subsidiary" shall mean, with respect to any Person, a corporation
or other entity of which 50% or more of the voting power of the voting equity
securities or equity interests is owned, directly or indirectly, by such Person.
"Warrant" shall mean this Warrant and any subsequent Warrant issued
pursuant to Subsection 2(c).
"Warrant Register" has the meaning ascribed to such term in
Subsection 10(d).
2. Exercise of Warrant.
(a) Exercise. This Warrant may be exercised, in whole or in part, at
any time or from time to time during the period beginning on the earliest to
occur of (i) four years from the date hereof, (ii) a Change of Control, (iii)
(x) the Holder receiving an "Outside Sale Notice" (as such term is defined in
subsection 3(c) of the Stockholders Agreement) or (y) the Holder receiving a
registration notice pursuant to Section 7 of the Stockholders Agreement, but
only pursuant to clauses (iii)(x) or (iii)(y) to the extent such Holder has the
right to participate in the sale of Shares (as such term is defined in Section 1
of the Stockholders Agreement), and ending on the Expiration Date, by
surrendering to the Company at its principal office this Warrant, with the form
of Election to Purchase Shares (the "Election to Purchase Shares") attached
hereto as Exhibit A duly executed by the Holder and accompanied by payment of
the Purchase Price for the number of shares of Common Stock specified in such
form. Notwithstanding anything to the contrary in this Section 2(a), following
the first anniversary of the date hereof, if the Company has consummated an
initial public offering and if the Holder desires to exercise the Warrant in
order to distribute the underlying shares to its limited partners or to sell
such shares in order to distribute the proceeds thereof to such limited
partners, then it may request that the Board of Directors of the Company amend
this Warrant to provide for immediate exercise of this Warrant (the "Request
Date") and in the event such request is not granted within 15 days following the
Request Date the Holder shall have the right to require the Company to purchase
this Warrant 45 days following the Request Date at a price equal to the Fair
Market Value of the Common Stock into which this Warrant is exercisable less the
Purchase
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Price in respect of such Common Stock. The failure to purchase the Warrant
within 45 days following a request by the Holder shall constitute an Event of
Default pursuant to Section 6(a)(xi) of the 10.101% Senior Subordinated
Promissory Note due October 21, 2003 and Section 6(a)(xi) of the 10.101% Senior
Subordinated Promissory Note due October 21, 2003.
(b) Delivery of Shares; Payment of Purchase Price. As soon as
practicable after surrender of this Warrant and receipt of payment, the Company
shall promptly issue and deliver to the Holder a certificate or certificates for
the number of shares of Common Stock set forth in the Election to Purchase
Shares, in such name or names as may be designated by such Holder, along with a
check for the amount of cash to be paid in lieu of issuance of fractional
shares, if any. Payment of the Purchase Price may be made as follows (or by any
combination of the following): (i) in United States currency by cash or delivery
of a certified check, bank draft or postal or express money order payable to the
order of the Company, (ii) by assigning to the Company all or any part of the
unpaid principal amount of the Notes held by the Holder in a principal amount
equal to the Purchase Price, (iii) by surrender of a number of shares of Common
Stock held by the Holder equal to the quotient obtained by dividing (A) the
Purchase Price payable with respect to the portion of this Warrant then being
exercised by (B) the Current Market Price per share of Common Stock on the
Exercise Date, or (iv) by cancellation of any portion of this Warrant (the
"Cancellation Portion") with respect to the number of shares of Common Stock
equal to the quotient obtained by dividing (A) the sum of the Purchase Price
payable with respect to the portion of this Warrant then being exercised by
cancellation of the Cancellation Portion and the Purchase Price that would be
payable with respect to the Cancellation Portion if such portion was being
exercised rather than canceled by (B) the Current Market Price per share of
Common Stock on the Exercise Date.
(c) Partial Exercise. If this Warrant is exercised for less than all
of the shares of Common Stock purchasable under this Warrant, the Company shall
cancel this Warrant upon surrender hereof and shall execute and deliver to the
Holder a new Warrant of like tenor for the balance of the shares of Common Stock
purchasable hereunder.
(d) When Exercise Effective. The exercise of this Warrant shall be
deemed to have been effective immediately prior to the close of business on the
Business Day on which this Warrant is surrendered to and the Purchase Price is
received by the Company as provided in this Section 2 (the "Exercise Date") and
the Person in whose name any certificate for shares of Common Stock shall be
issuable upon such exercise, as provided in Subsection 2(b), shall be deemed to
be the record holder of such shares of Common Stock for all purposes on the
Exercise Date.
(e) Continued Validity. A Holder of shares of Common Stock issued
upon the exercise of this Warrant, in whole or in part, shall continue to be
entitled to all of the rights and subject to all of the obligations set forth in
Section 10.
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3. Adjustment of Purchase Price and Number of Shares. The Purchase
Price and the number of shares of Common Stock issuable upon exercise of this
Warrant shall be adjusted from time to time upon the occurrence of the following
events:
(a) Dividend, Subdivision, Combination or Reclassification of Common
Stock. If the Company shall, at any time or from time to time, (i) declare a
dividend on the Common Stock payable in shares of its capital stock (including
Common Stock), (ii) subdivide the outstanding Common Stock into a larger number
of shares of Common Stock, (iii) combine the outstanding Common Stock into a
smaller number of shares of its Common Stock, or (iv) issue any shares of its
capital stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then in each such case, the Purchase
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date shall be
proportionately adjusted so that the Holder of any Warrant exercised after such
date shall be entitled to receive, upon payment of the same aggregate amount as
would have been payable before such date, the aggregate number and kind of
shares of capital stock which, if such Warrant had been exercised immediately
prior to such date, such Holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. Any such adjustment shall become effective immediately after
the record date of such dividend or the effective date of such subdivision,
combination or reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur. If a dividend is declared and such
dividend is not paid, the Purchase Price shall again be adjusted to be the
Purchase Price in effect immediately prior to such record date.
(b) Issuance of Rights to Purchase Common Stock Below Current Market
Price or Dilution Price. If the Company shall, at any time or from time to time,
fix a record date for the issuance of rights, options or warrants to all holders
of Common Stock entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Common Stock, or securities
convertible into Common Stock at a price per share of Common Stock or having a
conversion price per share of Common Stock if a security is convertible into
Common Stock (determined in either such case by dividing (x) the total
consideration payable to the Company upon exercise, conversion or exchange of
such rights, options, warrants or other securities convertible into Common Stock
by (y) the total number of shares of Common Stock covered by such rights,
options, warrants or other securities convertible into Common Stock) lower than
either the Current Market Price per share of Common Stock on such record date
(or, if an ex-dividend date has been established for such record date, on the
day next preceding such ex-dividend date) or the Dilution Price, then, the
Purchase Price shall be reduced to the price determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the sum of the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of Common
Stock which the aggregate offering price of the total number of shares of Common
Stock so to be offered (or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at the Applicable Price
and the denominator of which
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shall be the number of shares of Common Stock outstanding on such record date
plus the number of additional shares of Common Stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such price for subscription or
purchase may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be determined in good
faith by the Board of Directors of the Company. Any such adjustment shall become
effective immediately after the record date for such rights or warrants. Such
adjustment shall be made successively whenever such a record date is fixed. If
such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to the Purchase Price in effect immediately prior to such record date.
(c) Certain Distributions. If the Company shall, at any time or from
time to time, fix a record date for the distribution to all holders of Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing corporation) of evidences of
indebtedness, assets or other property (other than regularly scheduled cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends payable in capital stock for which adjustment is made under
Subsection 3(a)) or subscription rights, options or warrants (excluding those
referred to in Subsection 3(b)), then the Purchase Price shall be reduced to the
price determined by multiplying the Purchase Price in effect immediately prior
to such record date by a fraction (which shall in no event be less than zero),
the numerator of which shall be the Current Market Price per share of Common
Stock on such record date (or, if an ex-dividend date has been established for
such record date, on the next day preceding such ex-dividend date), less the
fair market value (as determined in good faith by the Board of Directors of the
Company) of the portion of the assets, evidences of indebtedness, other
property, subscription rights or warrants so to be distributed applicable to one
share of Common Stock and the denominator of which shall be such Current Market
Price per share of Common Stock. Any such adjustment shall become effective
immediately after the record date for such distribution. Such adjustments shall
be made successively whenever such a record date is fixed. In the event that
such distribution is not so made, the Purchase Price shall be adjusted to the
Purchase Price in effect immediately prior to such record date.
(d) Issuance of Common Stock Below Current Market Price or Dilution
Price. If the Company shall, at any time and from time to time, after the date
hereof, directly or indirectly, sell or issue shares of Common Stock (regardless
of whether originally issued or from the Company's treasury), or rights,
options, warrants or convertible or exchangeable securities containing the right
to subscribe for or purchase shares of Common Stock (excluding shares issued (i)
in any of the transactions described in Subsections 3(a), (b) and (c) hereof,
(ii) upon exercise of this Warrant, (iii) upon the exercise or conversion of
options, warrants or any other securities convertible into or exchangeable for
shares of Common Stock outstanding as of the date hereof, and (iv) to the
Company's or its Subsidiaries' employees under bona fide employee benefit plans
approved or adopted by the Company's Board of Directors which, in the aggregate,
shall not be convertible or exercisable into more than five percent (5%) of the
fully diluted capital stock of the Company (and provided that the same shall be
exercisable at the then Current Market Price), and (v) in any arm's
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length institutional financing of debt and equity to persons other than Budoff,
Xxxxxxxx or their Affiliates in which shares of Common Stock or rights, options,
warrants or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock are issued as part of a unit,
if such shares would otherwise be included in this Section 3(d)) at a price per
share of Common Stock (determined, in the case of rights, options, warrants or
convertible or exchangeable securities, by dividing (x) the total consideration
received or receivable by the Company in consideration of the sale or issuance
of such rights, options, warrants or convertible or exchangeable securities,
plus the total consideration payable to the Company upon exercise or conversion
or exchange thereof, by (y) the total number of shares of Common Stock covered
by such rights, options, warrants or convertible or exchangeable securities)
lower than either the Current Market Price per share of Common Stock or the
Dilution Price immediately prior to such sale or issuance, then the Purchase
Price shall be reduced to a price determined by multiplying the Purchase Price
in effect immediately prior thereto by a fraction, the numerator of which shall
be the sum of the number of shares of Common Stock outstanding immediately prior
to such sale or issuance plus the number of shares of Common Stock which the
aggregate consideration received (determined as provided below) for such sale or
issuance would purchase at the Applicable Price and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
after such sale or issuance. Such adjustment shall be made successively whenever
such sale or issuance is made. For the purposes of such adjustments, the shares
of Common Stock which the holder of any such rights, options, warrants, or
convertible or exchangeable securities shall be entitled to subscribe for or
purchase shall be deemed to be issued and outstanding as of the date of such
sale or issuance and the consideration "received" by the Company therefor shall
be deemed to be the consideration actually received or receivable by the Company
(plus any underwriting discounts or commissions in connection therewith) for
such rights, options, warrants or convertible or exchangeable securities, plus
the consideration stated in such rights, options, warrants or convertible or
exchangeable securities to be payable to the Company for the shares of Common
Stock covered thereby. If the Company shall sell or issue shares of Common Stock
for a consideration consisting, in whole or in part, of property other than cash
or its equivalent, then in determining the "price per share of Common Stock" and
the "consideration" received or receivable by or payable to the Company for
purposes of the first sentence and the immediately preceding sentence of this
Subsection 3(d), the fair value of such property shall be determined in good
faith by the Board of Directors of the Company. The determination of whether any
adjustment is required under this Subsection 3(d) by reason of the sale and
issuance of rights, options, warrants or convertible or exchangeable securities
and the amount of such adjustment, if any, shall be made only at the time of
such issuance or sale and not at the subsequent time of issuance of shares of
Common Stock upon the exercise of such rights to subscribe or purchase.
(e) Determination of Current Market Price. For the purpose of any
computation under Subsections (b), (c) or (d) of this Section 3 or any other
provision of this Warrant, the Current Market Price per share of Common Stock on
any date shall be deemed to be the average of the daily Closing Prices per share
of Common Stock for the 10 consecutive trading days commencing 15 trading days
before such date. If on any such date the shares of Common Stock are not listed
or
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admitted for trading on any national securities exchange or quoted by NASDAQ or
a similar service, then the Company, on the one hand, and WSDF on the other
hand, shall each promptly appoint as an appraiser an individual who shall be a
member of a nationally recognized investment banking firm. Each appraiser shall
be instructed to, within 30 days of appointment, determine the Current Market
Price per share of Common Stock which shall be deemed to be equal to the fair
market value per share of Common Stock as of such date. If the two appraisers
are unable to agree on the Current Market Price per share of Common Stock within
such 30 day period, then the two appraisers, within 10 days after the end of
such 30 day period shall jointly select a third appraiser. The third appraiser
shall, within 30 days of its appointment, determine, in good faith, the Current
Market Price per share of Common Stock and such determination shall be
controlling. If any party fails to appoint an appraiser or if one of the two
initial appraisers fails after appointment to submit its appraisal within the
required period, the appraisal submitted by the remaining appraiser shall be
controlling. The cost of the foregoing appraisals shall be shared one-half by
the Company and one-half by WSDF, provided, however, in the event a third
appraiser is utilized and one of the two initial appraisals (but not the other
initial appraisal) is greater than or less than the appraisal by such third
appraiser by 10% or more, then the cost of all of the foregoing appraisals shall
be borne by the party who appointed the appraiser who made such initial
appraisal.
(f) De Minimis Adjustments. No adjustment in the Purchase Price
shall be made if the amount of such adjustment would result in a change in the
Purchase Price per share of less than $0.05, but in such case any adjustment
that would otherwise be required to be made shall be carried forward and shall
be made at the time of and together with the next subsequent adjustment, which
together with any adjustment so carried forward, would result in a change in the
Purchase Price of $0.05 per share or more. If the Company shall, at any time or
from time to time, issue Common Stock by way of dividends on any stock of the
Company or subdivide or combine the outstanding shares of the Common Stock, such
amount of $0.05 (as theretofore increased or decreased, if such amounts shall
have been adjusted in accordance with the provisions of this clause) shall
forthwith be proportionately increased in the case of a combination or decreased
in the case of a subdivision or stock dividend so as appropriately to reflect
the same. Notwithstanding the provisions of the first sentence of this
Subsection 3(f), any adjustment postponed pursuant to this Subsection 3(f) shall
be made no later than the earlier of (i) three years from the date of the
transaction that would, but for the provisions of the first sentence of this
Section 3(f), have required such adjustment, (ii) an Exercise Date or (iii) the
Expiration Date.
(g) Adjustments to Other Shares. In the event that at any time, as a
result of an adjustment made pursuant to Subsection 3(a), the Holder shall
become entitled to receive, upon exercise of this Warrant, any shares of capital
stock of the Company other than shares of Common Stock, the number of such other
shares so receivable upon exercise of this Warrant 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 Subsections 3(a), (b), (c) and (d), inclusive, and the provisions
of Sections 2, 5, 6 and 7 with respect to the shares of Common Stock shall apply
on like terms to any such other shares.
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(h) Adjustment of Number of Shares Issuable Upon Exercise. Upon each
adjustment of the Purchase Price as a result of the calculations made in
Subsections 3(a), (b), (c) or (d), this Warrant shall thereafter evidence the
right to receive, at the adjusted Purchase Price, that number of shares of
Common Stock (calculated to the nearest one-hundredth) obtained by dividing (x)
the product of the aggregate number of shares of Common Stock covered by this
Warrant immediately prior to such adjustment and the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price by (y) the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
4. Reorganization, Reclassification, Merger and Sale of Assets. If
there occurs any capital reorganization or any reclassification of the Common
Stock of the Company, the consolidation or merger of the Company with or into
another Person (other than a merger or consolidation of the Company in which the
Company is the continuing corporation and which does not result in any
reclassification or change of outstanding shares of its Common Stock) or the
sale or conveyance of all or substantially all of the assets of the Company to
another Person, then the Holder will thereafter be entitled to receive, upon the
exercise of this Warrant in accordance with the terms hereof, the same kind and
amounts of securities (including shares of stock) or other assets, or both,
which were issuable or distributable to the holders of outstanding Common Stock
of the Company upon such reorganization, reclassification, consolidation,
merger, sale or conveyance, in respect of that number of shares of Common Stock
then deliverable upon the exercise of this Warrant if this Warrant had been
exercised immediately prior to such reorganization, reclassification,
consolidation, merger, sale or conveyance; and, in any such case, appropriate
adjustments (as determined in good faith by the Board of Directors of the
Company) shall be made to assure that the provisions hereof (including
provisions with respect to changes in, and other adjustments of, the Purchase
Price) shall thereafter be applicable, as nearly as reasonably may be
practicable, in relation to any securities or other assets thereafter
deliverable upon exercise of this Warrant.
5. Certificate as to Adjustments. Whenever the Purchase Price and the
number of shares of Common Stock issuable, or the securities or other property
deliverable, upon the exercise of this Warrant shall be adjusted pursuant to the
provisions hereof, the Company shall promptly give written notice thereof to the
Holder, in accordance with Section 14, in the form of a certificate signed by
the Chairman of the Board, President or one of the Vice Presidents of the
Company, and by the Chief Financial Officer, Treasurer or one of the Assistant
Treasurers of the Company, stating the adjusted Purchase Price, the number of
shares of Common Stock issuable, or the securities or other property
deliverable, upon exercise of the Warrant calculated to the nearest cent or the
nearest one-hundredth of a share and setting forth in reasonable detail the
method of calculation and the facts requiring such adjustment and upon which
such calculation is based. Each adjustment shall remain in effect until a
subsequent adjustment is required.
6. Fractional Shares. Notwithstanding an adjustment pursuant to Section
3(h) in the number of shares of Common Stock covered by this Warrant or any
other provision of this Warrant, the Company shall not be required to issue
fractions of shares upon exercise of this Warrant or to
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distribute certificates which evidence fractional shares. In lieu of fractional
shares, the Company may make payment to the Holder, at the time of exercise of
this Warrant as herein provided, of an amount in cash equal to such fraction
multiplied by the greater of the Current Market Price of a share of Common Stock
on the Exercise Date and the Dilution Price.
7. Notice of Proposed Actions. In case the Company shall propose at any
time or from time to time (a) to declare or pay any dividend payable in stock of
any class to the holders of Common Stock or to make any other distribution to
the holders of Common Stock (other than a regularly scheduled cash dividend),
(b) to offer to the holders of Common Stock rights or warrants to subscribe for
or to purchase any additional shares of Common Stock or shares of stock of any
class or any other securities, rights or options, (c) to effect any
reclassification of its Common Stock, (d) to effect any consolidation, merger or
sale, transfer or other disposition of all or substantially all of the property,
assets or business of the Company which would, if consummated, adjust the
Purchase Price or the securities issuable upon exercise of the Warrants, (e) to
effect the liquidation, dissolution or winding up of the Company, or (f) to take
any other action that would require a vote of the Company's stockholders, then,
in each such case, the Company shall give to the Holder, in accordance with
Section 14, a written notice of such proposed action, which shall specify (i)
the record date for the purposes of such stock dividend, distribution of rights
or warrants or vote of the stockholders of the Company, or if a record is not to
be taken, the date as of which the holders of shares of Common Stock of record
to be entitled to such dividend, distribution of rights or warrants, or vote is
to be determined, or (ii) the date on which such reclassification,
consolidation, merger, sale, transfer, disposition, liquidation, dissolution or
winding up is expected to become effective, and such notice shall be so given as
promptly as possible but in any event at least ten (10) Business Days prior to
the applicable record, determination or effective date specified in such notice.
8. No Dilution or Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against
dilution or other impairment. Without limiting the generality of the foregoing,
the Company (a) will not increase the par value of any shares of stock
receivable on the exercise of this Warrant above the amount payable therefor on
such exercise, (b) will at all times reserve and keep available the maximum
number of its authorized shares of Common Stock, free from all preemptive rights
therein, which will be sufficient to permit the full exercise of this Warrant,
and (c) will take all such action as may be necessary or appropriate in order
that all shares of Common Stock as may be issued pursuant to the exercise of
this Warrant will, upon issuance, be duly and validly issued, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof.
9. Replacement of Warrant. On receipt by the Company of an affidavit of
an authorized representative of the Holder stating the circumstances of the
loss, theft, destruction or mutilation of
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this Warrant (and in the case of any such mutilation, on surrender and
cancellation of such Warrant), the Company at its expense will promptly execute
and deliver, in lieu thereof, a new Warrant of like tenor.
10. Restrictions on Transfer.
(a) The term "Holder" as used herein shall also include any
transferee of this Warrant whose name has been recorded by the Company in the
Warrant Register (as hereinafter defined). Each transferee of this Warrant or
the Common Stock issuable upon the exercise thereof acknowledges that this
Warrant or the Common Stock issuable upon the exercise thereof has not been
registered under the Securities Act and may be transferred only pursuant to an
effective registration under the Securities Act or pursuant to an applicable
exemption from the registration requirements of the Securities Act, subject to
the restrictions on transfer set forth in this Section 10 and in Section 11.3 of
the Purchase Agreement.
(b) With respect to a transfer that should occur prior to the time
that the Warrant or the Common Stock issuable upon the exercise thereof is
registered under the Securities Act, such Holder shall request an opinion of
counsel (which shall be rendered by counsel reasonably acceptable to the
Company) that the proposed transfer may be effected without registration or
qualification under any Federal or state securities or blue sky law. Counsel
shall, as promptly as practicable, notify the Company and the Holder of such
opinion and of the terms and conditions, if any, to be observed in such
transfer, whereupon the Holder shall be entitled to transfer this Warrant or
such shares of Common Stock (or portion thereof), subject to any other
provisions and limitations of this Warrant. In the event this Warrant shall be
exercised as an incident to such transfer, such exercise shall relate back and
for all purposes of this Warrant be deemed to have occurred as of the date of
such notice regardless of delays incurred by reason of the provisions of this
Section 10 which may result in the actual exercise on any later date.
(c) The Company shall maintain a register (the "Warrant Register")
in its principal office for the purpose of registering the Warrant and any
transfer thereof, which register shall reflect and identify, at all times, the
ownership of any interest in the Warrant. Upon the issuance of this Warrant, the
Company shall record the name of the initial purchaser of this Warrant in the
Warrant Register as the first Holder. Upon surrender for registration of
transfer or exchange of this Warrant together with a properly executed Form of
Assignment attached hereto as Exhibit B at the principal office of the Company,
the Company shall, at its expense, execute and deliver one or more new Warrants
of like tenor which shall be exercisable for a like aggregate number of shares
of Common Stock, registered in the name of the Holder or a transferee or
transferees.
11. No Rights or Liability as a Stockholder. This Warrant does not
entitle the Holder hereof to any voting rights or other rights as a stockholder
of the Company. No provisions hereof, in the absence of affirmative action by
the Holder hereof to purchase Common Stock, and no
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enumeration herein of the rights or privileges of the Holder shall give rise to
any liability of such Holder as a stockholder of the Company.
12. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the Holder hereof for any issue or transfer tax, or other incidental expense, in
respect of the issuance or delivery of such certificates or the securities
represented thereby, all of which taxes and expenses shall be paid by the
Company.
13. Amendment or Waiver. This Warrant and any term hereof may be
amended, waived, discharged or terminated only by and with the written consent
of the Company and the Holder.
14. Notices. Any notice or other communication (or delivery) required
or permitted hereunder shall be made in writing and shall be by registered mail,
return receipt requested, telecopier, courier service or personal delivery to
the Company at its principal office as specified in Section 11.2 of the Purchase
Agreement and to the Holder at its address as it appears in the Warrant
Register. All such notices and communications (and deliveries) shall be deemed
to have been duly given: when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial overnight courier service; five
Business Days after being deposited in the mail, postage prepaid, if mailed; and
when receipt is acknowledged, if telecopied.
15. Certain Remedies. The Holder shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Warrant and to enforce
specifically the terms and provisions of this Warrant in any court of the United
States or any state thereof having jurisdiction, this being in addition to any
other remedy to which such Holder may be entitled at law or in equity.
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16. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the state of New York, without regard to the
principles of conflicts of law of such State.
17. Headings. The headings in this Warrant are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
FULCRUM DIRECT, INC.
By: ______________________________
Name:Xxxxx X. Xxxxxx
Title:President & COO
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Exhibit A to Common
Stock Purchase Warrant
[FORM OF]
ELECTION TO PURCHASE SHARES
The undersigned hereby irrevocably elects to exercise the
Warrant to purchase _____ shares of Common Stock, par value $____ per share
("Common Stock"), of FULCRUM DIRECT, INC. (the "Company") and hereby [makes
payment of $_______ therefor] [or] [makes payment therefor by assignment to the
Company pursuant to Section 2(b)(ii) of the Warrant of $_____________ aggregate
principal amount of Notes (as defined in the Warrant)] [or] [makes payment
therefore by surrendering pursuant to Section 2(b)(iii) _____ shares of Common
Stock of the Company] [or] [makes payment therefor by cancellation pursuant to
Section 2(b)(iv) of a portion of the Warrant with respect to _________ shares of
Common Stock]. The undersigned hereby requests that certificates for such shares
be issued and delivered as follows:
ISSUE TO: ______________________________________________________________________
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
________________________________________________________________________________
(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
DELIVER TO: ____________________________________________________________________
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
If the number of shares of Common Stock purchased hereby is
less than the number of shares of Common Stock covered by the Warrant, the
undersigned requests that a new Warrant representing the number of shares of
Common Stock not purchased be issued and delivered as follows:
ISSUE TO: ______________________________________________________________________
(NAME OF HOLDER(1))
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
DELIVER TO: ____________________________________________________________________
(NAME OF HOLDER(1))
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
Dated: ________________________ [NAME OF HOLDER(1)]
By: ___________________________
Name:
Title:
___________
(1) Name of Holder must conform in all respects to name of Holder as
specified on the face of the Warrant.
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Exhibit B to Common
Stock Purchase Warrant
[FORM OF] ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto the Assignee named below all of the rights of the undersigned to
purchase Common Stock, par value $___ per share ("Common Stock"), of FULCRUM
DIRECT, INC. represented by the Warrant, with respect to the number of shares of
Common Stock set forth below:
Name of Assignee Address No. of Shares
and does hereby irrevocably constitute and appoint ____________________________
Attorney to make such transfer on the books of FULCRUM DIRECT, INC. maintained
for that purpose, with full power of substitution in the premises.
Dated: __________________________ [NAME OF HOLDER(1)]
By: _____________________________
Name:
Title:
_________
(1) Name of Holder must conform in all respects to name of Holder as
specified on the face of the Warrant.
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