Exhibit 4(f)
EXECUTION VERSION
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT 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 TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT.
FRONTSTEP, INC.
AMENDED AND RESTATED COMMON SHARE PURCHASE WARRANT
No. W-1 November , 2001
Warrant to Purchase 550,000 Common Shares
FRONTSTEP, INC., an Ohio corporation (the "Company"), for
value received, hereby certifies that FOOTHILL CAPITAL CORPORATION, a California
corporation, or its registered assigns (the "Holder"), is entitled to purchase
from the Company 550,000 shares of duly authorized, validly issued, fully paid
and nonassessable common shares, no par value, of the Company (the "Common
Shares"), at a purchase price equal to the Purchase Price (this "Warrant"), at
any time or from time to time but prior to 5:00 P.M., New York City time, on
July 17, 2006 (the "Expiration Date"), all subject to the terms, conditions and
adjustments set forth below in this Warrant. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned such terms in the
Loan Agreement.
This Warrant amends and restates in its entirety the Warrant
issued to the Holder as of July 17, 2001 (the "Original Warrant"), pursuant to
the Loan Agreement.
1. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms shall have the meanings indicated:
"ADDITIONAL COMMON SHARES" shall mean all Common Shares
(including treasury shares) issued or sold (or, pursuant to Section 3.3 or 3.4,
deemed to be issued) by the Company after July 17, 2001, whether or not
subsequently reacquired or retired by the Company, other than
(a) shares issued upon the exercise of this Warrant,
(b) such number of additional shares as may become issuable
upon the exercise of this Warrant by reason of adjustments required pursuant to
the anti-dilution provisions applicable to this Warrant as in effect on the date
hereof,
(c) shares, warrants, options and other securities issued by
the Company at any time to the Holder or any Affiliate thereof,
(d) (i) Common Shares or options exercisable therefor, issued
or to be issued under the Company's existing employee stock option and purchase
plans and stock option plan for outside directors, each as may be amended from
time to time or under any other employee stock option or purchase plan or plans,
or pursuant to compensatory or incentive agreements, for officers, directors,
employees or consultants of the Company or any of its Subsidiaries, in each case
adopted or assumed after such date by the Company's Board of Directors; PROVIDED
in each case that the exercise or purchase price for any such share shall not be
less than 90% of the fair market value (determined in good faith by the
Company's Board of Directors) of the Common Shares on the date of the grant, and
(ii) such additional number of shares as may become issuable pursuant to the
terms of any such plans by reason of adjustments required pursuant to
antidilution provisions applicable to such securities in order to reflect any
subdivision or combination of Common Shares, by reclassification or otherwise,
or any dividend on Common Shares payable in Common Shares,
(e) (i) Common Shares issued upon the exercise of any warrants
or options, or upon conversion of any preferred shares of the Company
outstanding on July 17, 2001 and (ii) such additional number of shares as may
become issuable upon the exercise or conversion of any such securities by reason
of adjustments required pursuant to anti-dilution provisions applicable to such
securities as in effect on July 17, 2001, and
(f) Common Shares (not to exceed 500,000 Common Shares in the
aggregate as constituted on July 17, 2001 (and subject to adjustment for stock
splits, subdivisions, stock dividends and similar such transactions)) issued in
connection with acquisitions of assets and/or securities of another Person in a
transaction or series of transactions, each of which is approved by the Board of
Directors of the Company.
"BUSINESS DAY" shall mean any day other than a Saturday or a
Sunday or any day on which national banks are authorized or required by law to
close. Any reference to "days" (unless Business Days are specified) shall mean
calendar days.
"COMMISSION" shall mean the Securities and Exchange Commission
or any successor agency having jurisdiction to enforce the Securities Act.
"COMMON SHARES" shall have the meaning assigned to it in the
introduction to this Warrant, such term to include any stock into which such
Common Shares shall have been changed or any stock resulting from any
reclassification of such Common Shares, and all other stock of any class or
classes (however designated) of the Company the holders of which have the right,
without limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference.
"COMPANY" shall have the meaning assigned to it in the
introduction to this Warrant, such term to include any corporation or other
entity which shall succeed to or assume the obligations of the Company hereunder
in compliance with Section 4.
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"CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares of stock (other than Common Shares) or other securities
directly or indirectly convertible into or exchangeable for Additional Common
Shares.
"CURRENT MARKET PRICE" shall mean, on any date specified
herein, the average of the daily Market Price during the 10 consecutive trading
days before such date, except that, if on any such date the Common Shares are
not listed or admitted for trading on any national securities exchange or quoted
in the over-the-counter market, the Current Market Price shall be the Market
Price on such date.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"EXPIRATION DATE" shall have the meaning assigned to it in the
introduction to this Warrant.
"FAIR VALUE" shall mean, on any date specified herein (i) in
the case of cash, the dollar amount thereof, (ii) in the case of a security, the
Current Market Price, and (iii) in all other cases, the fair value thereof (as
of a date which is within 20 days of the date as of which the determination is
to be made) determined in good faith by the Company's Board of Directors.
"HOLDER" shall have the meaning assigned to it in the
introduction to this Warrant.
"INITIAL HOLDER" shall mean Foothill Capital Corporation.
"LOAN AGREEMENT" shall mean that certain Loan and Security
Agreement, dated as of July 17, 2001, among the Company, certain subsidiaries of
the Company, the Lender parties thereto and Foothill Capital Corporation, as the
Arranger and Administrative Agent, as amended by Amendment No. 1, dated as of
November 15, 2001.
"MARKET PRICE" shall mean, on any date specified herein, the
amount per Common Share, equal to (i) the last reported sale price of such
Common Shares, regular way, on such date or, in case no such sale takes place on
such date, the average of the closing bid and asked prices thereof regular way
on such date, in either case as officially reported on the principal national
securities exchange on which such Common Shares are then listed or admitted for
trading, (ii) if such Common Shares are not then listed or admitted for trading
on any national securities exchange but is designated as a national market
system security by the NASD, the last reported trading price of the Common
Shares on such date, (iii) if there shall have been no trading on such date or
if the Common Shares are not so designated, the average of the closing bid and
asked prices of the Common Shares on such date as shown by the NASD automated
quotation system, or (iv) if such Common Shares are not then listed or admitted
for trading on any national exchange or quoted in the over-the-counter market,
the fair value thereof (as of a date which is within 20 days of the date as of
which the determination is to be made) determined in good faith by the Company's
Board of Directors.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
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"OPTIONS" shall mean any rights, options or warrants to
subscribe for, purchase or otherwise acquire either Additional Common Shares or
Convertible Securities.
"OTHER SECURITIES" shall mean any stock (other than Common
Shares) and other securities of the Company or any other Person (corporate or
otherwise) which the holders of the Warrants at any time shall be entitled to
receive, or shall have received, upon the exercise of the Warrants, in lieu of
or in addition to Common Shares, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Shares or Other
Securities pursuant to Section 4 or otherwise.
"PERSON" shall mean any individual, firm, partnership,
corporation, trust, joint venture, association, joint stock company, limited
liability company, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof,
and shall include any successor (by merger or otherwise) of such entity.
"PURCHASE PRICE" shall mean initially $3.36 per share, subject
to adjustment and readjustment from time to time as provided in Section 3, and,
as so adjusted or readjusted, shall remain in effect until a further adjustment
or readjustment thereof is required by Section 3.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration
Rights Agreement, dated as of July 17, 2001 between the Company and the Initial
Holder.
"RESTRICTED SECURITIES" shall mean (i) any Warrants bearing
the applicable legend set forth in Section 9.1, (ii) any Common Shares (or Other
Securities) issued or issuable upon the exercise of Warrants which are (or, upon
issuance, will be) evidenced by a certificate or certificates bearing the
applicable legend set forth in such Section, and (iii) any Common Shares (or
Other Securities) issued subsequent to the exercise of any of the Warrants as a
dividend or other distribution with respect to, or resulting from a subdivision
of the outstanding Common Shares (or other Securities) into a greater number of
shares by reclassification, stock splits or otherwise, or in exchange for or in
replacement of the Common Shares (or Other Securities) issued upon such
exercise, which are evidenced by a certificate or certificates bearing the
applicable legend set forth in such Section.
"RIGHTS" shall have the meaning assigned to it in Section
3.10.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"WARRANT" shall have the meaning assigned to it in the
introduction to this Warrant.
"WARRANT SHARES" means (a) the Common Shares issued or
issuable upon exercise of this Warrant in accordance with Section 2, (b) all
other securities or other property issued or issuable upon any such exercise or
exchange in accordance with this Warrant and (c) any securities of the Company
distributed with respect to the securities referred to in the preceding clauses
(a) and (b).
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2. EXERCISE OF WARRANT.
2.1. MANNER OF EXERCISE; PAYMENT OF THE PURCHASE PRICE. (a)
This Warrant may be exercised by the Holder hereof, in whole or in part, at any
time or from time to time prior to the Expiration Date, by surrendering to the
Company at its principal office this Warrant, with a completed Election to
Purchase Shares in the form attached hereto as Exhibit A (or a reasonable
facsimile thereof) duly executed by the Holder and accompanied by payment of the
Purchase Price for the number of Common Shares specified in such form (the
"Aggregate Purchase Price"). Any partial exercise of this Warrant shall be for a
whole number of Warrant Shares only.
(b) Payment of the Aggregate 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 or bank draft payable to the order of
the Company or by wire transfer to the Company, (ii) by cancellation of all or
any part of the unpaid principal amount, plus accrued interest thereon, of the
then-outstanding Obligations (as defined in the Loan Agreement) in an amount
equal to the Aggregate Purchase Price; PROVIDED, that any such cancellations
shall be applied in accordance with Section 2.4(b) of the Loan Agreement, (iii)
by cancellation of such number of Common Shares otherwise issuable to the Holder
upon such exercise as shall be specified for cancellation in such Election to
Purchase Shares, such that the excess of the aggregate Current Market Price of
such specified number of shares on the date of exercise over the portion of the
Aggregate Purchase Price attributable to such shares shall equal the Aggregate
Purchase Price attributable to the Common Shares to be issued upon such
exercise, in which case such excess amount shall be deemed to have been paid to
the Company and the number of shares issuable upon such exercise shall be
reduced by such number specified for cancellation, or (iv) by surrender to the
Company for cancellation certificates representing Common Shares of the Company
owned by the Holder (properly endorsed for transfer in blank) having a Current
Market Price on the date of Warrant exercise equal to the Aggregate Purchase
Price.
2.2. WHEN EXERCISE EFFECTIVE. Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the Business Day on which this Warrant shall have been surrendered to, and
the Purchase Price shall have been received by, the Company as provided in
Section 2.1, and, to the extent permitted by law, at such time the Person or
Persons in whose name or names any certificate or certificates for Common Shares
(or Other Securities) shall be issuable upon such exercise as provided in
Section 2.3 shall be deemed to have become the holder or holders of record
thereof for all purposes.
2.3. DELIVERY OF STOCK CERTIFICATES, ETC.; CHARGES, TAXES AND
EXPENSES. (a) As soon as practicable after each exercise of this Warrant, in
whole or in part, and in any event within five Business Days thereafter, the
Company shall cause to be issued in the name of and delivered to the Holder
hereof or, subject to Section 9, as the Holder may direct,
(i) a certificate or certificates for the whole number of
Common Shares (or Other Securities) to which the Holder shall be
entitled upon such exercise, and
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(ii) in case such exercise is for less than all of the Common
Shares purchasable under this Warrant, a new Warrant or Warrants of
like tenor, for the balance of the Common Shares purchasable hereunder.
(b) Issuance of certificates for Common Shares upon the
exercise of this Warrant shall be made without charge to the Initial Holder
hereof for any issue or transfer tax or other incidental expense, in respect of
the issuance of such certificates, all of which such taxes and expenses shall be
paid by the Company; PROVIDED, HOWEVER, that the Company shall not be required
to pay any tax that may be payable in respect of any issuance of any Warrant or
any certificate for, or any other evidence of ownership of, Warrant Shares in a
name other than that of the Initial Holder of this Warrant being exercised or
exchanged.
2.4. TAX BASIS. The Company and the Holder shall mutually
agree as to the tax basis of this Warrant as of the date of issuance of this
Warrant, for purposes of the Internal Revenue Code of 1986, as amended, and the
treatment of this Warrant under such Code by each of the Company and the Holder
shall be consistent with such agreement.
3. ADJUSTMENT OF PURCHASE PRICE AND COMMON SHARES ISSUABLE
UPON EXERCISE.
3.1. ADJUSTMENT OF NUMBER OF SHARES.
Upon each adjustment of the Purchase Price as a result of the
calculations made in this Section 3, this Warrant shall thereafter evidence the
right to receive, at the adjusted Purchase Price, that number of Common Shares
(calculated to the nearest one-hundredth) obtained by dividing (i) the product
of the aggregate number of shares 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 (ii) the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
3.2. ADJUSTMENT OF PURCHASE PRICE.
3.2.1. ISSUANCE OF ADDITIONAL COMMON SHARES. In case the
Company at any time or from time to time after July 17, 2001 shall issue or sell
Additional Common Shares (including Additional Common Shares deemed to be issued
pursuant to Section 3.3 or 3.4 but excluding Additional Common Shares
purchasable upon exercise of Rights referred to in Section 3.10) without
consideration or for a consideration per share less than the greater of the
Purchase Price and the Current Market Price in effect immediately prior to such
issue or sale, then, and in each such case, subject to Section 3.8, the Purchase
Price shall be reduced concurrently with such issue or sale, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such
Purchase Price by a fraction
(a) The numerator of which shall be the sum of (i) the number
of Common Shares outstanding immediately prior to such issue or sale and (ii)
the number of Common Shares which the aggregate consideration received by the
Company for the total number of such Additional Common Shares so issued or sold
would purchase at the greater of such Purchase Price and such Current Market
Price, and
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(b) The denominator of which shall be the number of Common
Shares outstanding immediately after such issue or sale, provided that, for the
purposes of this Section 3.2.1, (x) immediately after any Additional Common
Shares are deemed to have been issued pursuant to Section 3.3 or 3.4, such
Additional Shares shall be deemed to be outstanding, and (y) treasury shares
shall not be deemed to be outstanding.
3.2.2. EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS. In the case
the Company at any time or from time to time after July 17, 2001 shall declare,
order, pay or make a dividend or other distribution (including, without
limitation, any distribution of other or additional stock or other securities or
property or Options by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement) on the Common Shares other
than (a) a dividend payable in Additional Common Shares or (b) a regularly
scheduled cash dividend (at a rate not in excess of 110% of the rate of the last
regularly scheduled cash dividend theretofore paid) payable out of consolidated
earnings or earned surplus, determined in accordance with generally accepted
accounting principles, or (c) a dividend of Rights referred to in Section 3.10
hereof then, in each such case, subject to Section 3.8, the Purchase Price in
effect immediately prior to the close of business on the record date fixed for
the determination of holders of any class of securities entitled to receive such
dividend or distribution shall be reduced, effective as of the close of business
on such record date, to a price determined by multiplying such Purchase Price by
a fraction
(x) the numerator of which shall be the Current Market Price
in effect on such record date or, if the Common Shares trade on an
ex-dividend basis, on the date prior to the commencement of ex-dividend
trading, less the Fair Value of such dividend or distribution
applicable to one Common Share, and
(y) the denominator of which shall be such Current Market
Price.
PROVIDED that, in the event that the amount of such dividend as so determined is
equal to or greater than 10% of such Current Market Price or in the event that
such fraction is less than 9/10ths, in lieu of the foregoing adjustment,
adequate provision shall be made so that the Holder shall receive, upon Warrant
exercise, a pro rata share of such dividend based upon the maximum number of
Common Shares at the time issuable to the Holder (determined without regard to
whether the Warrant is exercisable at such time.)
3.3. TREATMENT OF OPTIONS AND CONVERTIBLE SECURITIES. In case
the Company at any time or from time to time after July 17, 2001 shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities of the Company entitled to receive, any
Options or Convertible Securities (whether or not the rights thereunder are
immediately exercisable), then, and in each such case, the maximum number of
Additional Common Shares (as set forth in the instrument relating thereto,
without regard to any provisions contained therein for a subsequent adjustment
of such number) issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Common Shares issued as
of the time of such issue, sale, grant or assumption or, in case such a record
date shall have been fixed, as of the close of business on such record date (or,
if the Common Shares trade on an ex-dividend basis, on the date prior to the
commencement of ex-dividend trading),
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PROVIDED that such Additional Common Shares shall not be deemed to have been
issued unless (i) the consideration per share (determined pursuant to Section
3.5) of such shares would be less than the Current Market Price in effect on the
date of and immediately prior to such issue, sale, grant or assumption or
immediately prior to the close of business on such record date (or, if the
Common Shares trade on an ex-dividend basis, on the date prior to the
commencement of ex-dividend trading), as the case may be, and (ii) such
Additional Common Shares are not purchasable pursuant to Rights referred to in
Section 3.10, and PROVIDED, FURTHER, that in any such case in which Additional
Common Shares are deemed to be issued:
(a) whether or not the Additional Common Shares underlying
such Options or Convertible Securities are deemed to be issued, no further
adjustment of the Purchase Price shall be made upon the subsequent issue or sale
of Convertible Securities or Common Shares upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, except in the case of
any such Options or Convertible Securities which contain provisions requiring an
adjustment, subsequent to the date of the issue or sale thereof, of the number
of Additional Common Shares issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities by reason of (x) a change
of control of the Company, (y) the acquisition by any Person or group of Persons
of any specified number or percentage of the voting securities of the Company or
(z) any similar event or occurrence, each such case to be deemed hereunder to
involve a separate issuance of Additional Common Shares, Options or Convertible
Securities, as the case may be;
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of Additional
Common Shares issuable, upon the exercise, conversion or exchange thereof (by
change of rate or otherwise), the Purchase Price computed upon the original
issue, sale, grant or assumption thereof (or upon the occurrence of the record
date, or date prior to the commencement of ex-dividend trading, as the case may
be, with respect thereto), and any subsequent adjustments based thereon, shall,
upon any such increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options, or the rights of
conversion or exchange under such Convertible Securities, which are outstanding
at such time;
(c) upon the expiration (or purchase by the Company and
cancellation or retirement) of any such Options which shall not have been
exercised or the expiration of any rights of conversion or exchange under any
such Convertible Securities which (or purchase by the Company and cancellation
or retirement of any such Convertible Securities the rights of conversion or
exchange under which) shall not have been exercised, the Purchase Price computed
upon the original issue, sale, grant or assumption thereof (or upon the
occurrence of the record date, or date prior to the commencement of ex-dividend
trading, as the case may be, with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration (or such cancellation or
retirement, as the case may be), be recomputed as if:
(i) in the case of Options for Common Shares or Convertible
Securities, the only Additional Common Shares issued or sold were the
Additional Common Shares, if any, actually issued or sold upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities and the consideration received therefor was the
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consideration actually received by the Company for the issue, sale,
grant or assumption of all such Options, whether or not exercised, plus
the consideration actually received by the Company upon such exercise,
or for the issue or sale of all such Convertible Securities which were
actually converted or exchanged, plus the additional consideration, if
any, actually received by the Company upon such conversion or exchange,
and
(ii) in the case of Options for Convertible Securities, only
the Convertible Securities, if any, actually issued or sold upon the
exercise of such Options were issued at the time of the issue or sale,
grant or assumption of such Options, and the consideration received by
the Company for the Additional Common Shares deemed to have then been
issued was the consideration actually received by the Company for the
issue, sale, grant or assumption of all such Options, whether or not
exercised, plus the consideration deemed to have been received by the
Company (pursuant to Section 3.5) upon the issue or sale of such
Convertible Securities with respect to which such Options were actually
exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above
shall have the effect of decreasing the Purchase Price by an amount in excess of
the amount of the adjustment thereof originally made in respect of the issue,
sale, grant or assumption of such Options or Convertible Securities; and
(e) in the case of any such Options which expire by their
terms not more than 30 days after the date of issue, sale, grant or assumption
thereof, no adjustment of the Purchase Price shall be made until the expiration
or exercise of all such Options, whereupon such adjustment shall be made in the
manner provided in subdivision (c) above.
3.4. TREATMENT OF STOCK DIVIDENDS, STOCK SPLITS, ETC. In case
the Company at any time or from time to time after July 17, 2001 shall declare
or pay any dividend on the Common Shares payable in Common Shares, or shall
effect a subdivision of the outstanding Common Shares into a greater number of
Common Shares (by reclassification or otherwise than by payment of a dividend in
Common Shares), then, and in each such case, Additional Common Shares shall be
deemed to have been issued (a) in the case of any such dividend, immediately
after the close of business on the record date for the determination of holders
of any class of securities entitled to receive such dividend, or (b) in the case
of any such subdivision, at the close of business on the day immediately prior
to the day upon which such corporate action becomes effective.
3.5. COMPUTATION OF CONSIDERATION. For the purposes of this
Section 3,
(a) the consideration for the issue or sale of any Additional
Common Shares shall, irrespective of the accounting treatment of such
consideration,
(i) insofar as it consists of cash, be computed at the gross
cash proceeds to the Company, without deducting any expenses paid or
incurred by the Company or any commissions or compensations paid or
concessions or discounts allowed to underwriters, dealers or others
performing similar services in connection with such issue or sale,
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(ii) insofar as it consists of property (including securities)
other than cash, be computed at the Fair Value thereof at the time of
such issue or sale, and
(iii) in case Additional Common Shares are issued or sold
together with other stock or securities or other assets of the Company
for a consideration which covers both, be the portion of such
consideration so received, computed as provided in clauses (i) and (ii)
above, allocable to such Additional Common Shares, such allocation to
be determined in the same manner that the Fair Value of property not
consisting of cash or securities is to be determined as provided in the
definition of 'Fair Value' herein;
(b) Additional Common Shares deemed to have been issued
pursuant to Section 3.3, relating to Options and Convertible Securities, shall
be deemed to have been issued for a consideration per share determined by
dividing
(i) the total amount, if any, received and receivable by the
Company as consideration for the issue, sale, grant or assumption of
the Options or Convertible Securities in question, plus the minimum
aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such consideration to protect
against dilution) payable to the Company upon the exercise in full of
such Options or the conversion or exchange of such Convertible
Securities or, in the case of Options for Convertible Securities, the
exercise of such Options for Convertible Securities and the conversion
or exchange of such Convertible Securities, in each case computing such
consideration as provided in the foregoing subdivision (a),
by
(ii) the maximum number of Common Shares (as set forth in the
instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number to protect against
dilution) issuable upon the exercise of such Options or the conversion
or exchange of such Convertible Securities; and
(c) Additional Common Shares deemed to have been issued
pursuant to Section 3.4, relating to stock dividends, stock splits, etc., shall
be deemed to have been issued for no consideration.
3.6. ADJUSTMENTS FOR COMBINATIONS, ETC. In case the
outstanding Common Shares shall be combined or consolidated, by reclassification
or otherwise, into a lesser number of Common Shares, the Purchase Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately decreased.
3.7. DILUTION IN CASE OF OTHER SECURITIES. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of the Company (or
any issuer of Other Securities or any other Person referred to in Section 4) or
to subscription, purchase or other acquisition pursuant to any Options issued or
granted by the Company (or any such other issuer or Person) for a consideration
such
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as to dilute, on a basis consistent with the standards established in the other
provisions of this Section 3, the purchase rights, if any, with respect to such
Other Securities, granted by this Warrant, then, and in each such case, the
computations, adjustments and readjustments provided for in this Section 3 with
respect to the Purchase Price shall be made as nearly as possible in the manner
so provided and applied to determine the amount of Other Securities from time to
time receivable upon the exercise of the Warrants, so as to protect the holders
of the Warrants against the effect of such dilution.
3.8. DE MINIMIS ADJUSTMENTS. If the amount of any adjustment
of the Purchase Price required pursuant to this Section 3 would be less than one
tenth (1/10) of one percent (1%) of the Purchase Price in effect at the time
such adjustment is otherwise so required to be made, such amount shall be
carried forward and adjustment with respect thereto made at the time of and
together with any subsequent adjustment which, together with such amount and any
other amount or amounts so carried forward, shall aggregate a change in the
Purchase Price of at least one tenth (1/10) of one percent (1%) of such Purchase
Price. All calculations under this Warrant shall be made to the nearest
one-hundredth of a share.
3.9. ABANDONED DIVIDEND OR DISTRIBUTION. If the Company shall
take a record of the holders of its Common Shares for the purpose of entitling
them to receive a dividend or other distribution (which results in an adjustment
to the Purchase Price under the terms of this Warrant) and shall, thereafter,
and before such dividend or distribution is paid or delivered to shareholders
entitled thereto, legally abandon its plan to pay or deliver such dividend or
distribution, then any adjustment made to the Purchase Price by reason of the
taking of such record shall be reversed, and any subsequent adjustments, based
thereon, shall be recomputed.
3.10. SHAREHOLDER RIGHTS PLAN. Notwithstanding the foregoing,
in the event that the Company shall distribute "poison pill" rights pursuant to
a "poison pill" shareholder rights plan (the "Rights"), the Company shall, in
lieu of making any adjustment pursuant to Section 3.2.1 or Section 3.2.2 hereof,
make proper provision so that each Holder who exercises a Warrant after the
record date for such distribution and prior to the expiration or redemption of
the Rights shall be entitled to receive upon such exercise, in addition to the
Common Shares issuable upon such exercise, a number of Rights to be determined
as follows: (i) if such exercise occurs on or prior to the date for the
distribution to the holders of Rights of separate certificates evidencing such
Rights (the "Distribution Date"), the same number of Rights to which a holder of
a number of Common Shares equal to the number of Common Shares issuable upon
such exercise at the time of such exercise would be entitled in accordance with
the terms and provisions of and applicable to the Rights; and (ii) if such
exercise occurs after the Distribution Date, the same number of Rights to which
a holder of the number of shares into which the Warrant so exercised was
exercisable immediately prior to the Distribution Date would have been entitled
on the Distribution Date in accordance with the terms and provisions of and
applicable to the Rights.
4. CONSOLIDATION, MERGER, ETC.
4.1. ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS,
REORGANIZATION, ETC. In case the Company after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving corporation of such consolidation or merger,
11
or (b) shall permit any other Person to consolidate with or merge into the
Company and the Company shall be the continuing or surviving Person but, in
connection with such consolidation or merger, the Common Shares or Other
Securities shall be changed into or exchanged for stock or other securities of
any other Person or cash or any other property, or (c) shall transfer all or
substantially all of its properties or assets to any other Person, or (d) shall
effect a capital reorganization or reclassification of the Common Shares or
Other Securities (other than (i) a capital reorganization or reclassification
resulting in the issue of Additional Common Shares for which adjustment in the
Purchase Price is provided in Section 3.2.1 or 3.2.2 or (ii) issuances or sales
of shares or other securities by the Company which by the terms of this Warrant
are excluded from the definition of Additional Common Shares), then, and in the
case of each such transaction, proper provision shall be made so that, upon the
basis and the terms and in the manner provided in this Warrant, the Holder of
this Warrant, upon the exercise hereof at any time after the consummation of
such transaction, shall be entitled to receive (at the aggregate Purchase Price
in effect at the time of such consummation for all Common Shares or Other
Securities issuable upon such exercise immediately prior to such consummation),
in lieu of the Common Shares or Other Securities issuable upon such exercise
prior to such consummation, the highest amount of securities, cash or other
property to which such Holder would actually have been entitled as a shareholder
upon such consummation if such Holder had exercised this Warrant immediately
prior thereto, subject to adjustments (subsequent to such consummation) as
nearly equivalent as possible to the adjustments provided for in Sections 3
through 5, PROVIDED that if a purchase, tender or exchange offer shall have been
made to and accepted by the holders of more than 50% of the outstanding Common
Shares, and if the Holder so designates in a notice given to the Company on or
before the date immediately preceding the date of the consummation of such
transaction, the Holder of this Warrant shall be entitled to receive the highest
amount of securities, cash or other property to which it would actually have
been entitled as a shareholder if the Holder of this Warrant had exercised this
Warrant prior to the expiration of such purchase, tender or exchange offer and
accepted such offer, subject to adjustments as provided for in Section 3 through
5 hereof until the date of consummation of such purchase, tender or exchange
offer.
4.2. ASSUMPTION OF OBLIGATIONS. Notwithstanding anything
contained in this Warrant or in the Loan Agreement to the contrary, the Company
shall not effect any of the transactions described in clauses (a) through (d) of
Section 4.1 unless, prior to the consummation thereof, each Person (other than
the Company) which may be required to deliver any stock, securities, cash or
property upon the exercise of this Warrant as provided herein shall assume, by
written instrument delivered to, and reasonably satisfactory to, the Holder of
this Warrant, (a) the obligations of the Company under this Warrant (and if the
Company shall survive the consummation of such transaction, such assumption
shall be in addition to, and shall not release the Company from, any continuing
obligations of the Company under this Warrant), (b) the obligations of the
Company under the Registration Rights Agreement and (c) the obligation to
deliver to the Holder such shares of stock, securities, cash or property as, in
accordance with the foregoing provisions of this Section 4, the Holder may be
entitled to receive. Nothing in this Section 4 shall be deemed to authorize the
Company to enter into any transaction not otherwise permitted by the Loan
Agreement.
12
5. NO DILUTION OR IMPAIRMENT. The Company shall not, by
amendment of its certificate of incorporation or through any consolidation,
merger, reorganization, transfer of assets, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking 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) shall not permit the
par value of any shares of stock receivable upon the exercise of this Warrant to
exceed the amount payable therefor upon such exercise, (b) shall take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of stock, free from all
liens, security interests, encumbrances (in each of the foregoing cases, other
than those imposed by the Holder), taxes, preemptive rights and charges on the
exercise of the Warrants from time to time outstanding, and (c) shall not take
any action which results in any adjustment of the Purchase Price if the total
number of Common Shares (or Other Securities) issuable after the action upon the
exercise of all of the Warrants would exceed the total number of Common Shares
(or Other Securities) then authorized by the Company's certificate of
incorporation and available for the purpose of issue upon such exercise.
6. ACCOUNTANTS' REPORT. In each case of any adjustment or
readjustment in the number of Common Shares (or Other Securities) issuable upon
the exercise of this Warrant or in the Purchase Price, the Company at its sole
expense shall promptly compute such adjustment or readjustment in accordance
with the terms of this Warrant and cause independent certified public
accountants of recognized national standing (which may be the regular auditors
of the Company) selected by the Company to verify such computation (other than
any computation of the Fair Value of property) and prepare a report setting
forth such adjustment or readjustment and showing in reasonable detail the
method of calculation thereof and the facts upon which such adjustment or
readjustment is based, including a statement of (a) the consideration received
or to be received by the Company for any Additional Common Shares issued or sold
or deemed to have been issued, (b) the number of Common Shares outstanding or
deemed to be outstanding, and (c) the Purchase Price in effect immediately prior
to such issue or sale and as adjusted and readjusted (if required by Section 3)
on account thereof. The Company shall forthwith mail a copy of each such report
to each holder of a Warrant. The Company shall also keep copies of all such
reports at its principal office and shall cause the same to be available for
inspection at such office during normal business hours by any holder of a
Warrant or any prospective purchaser of a Warrant designated by the holder
thereof.
7. NOTICES OF CORPORATE ACTION. In the event of:
(a) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
consolidation or merger involving the Company and any other Person, any
transaction or series of transactions in which more than 50%
13
of the voting securities of the Company are transferred to another Person, or
any transfer, sale or other disposition of all or substantially all the assets
of the Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company shall mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, and (ii) the date or expected date on which any
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, sale, disposition, dissolution, liquidation or winding-up is to take
place and the time, if any such time is to be fixed, as of which the holders of
record of Common Shares (or Other Securities) shall be entitled to exchange
their Common Shares (or Other Securities) for the securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 20 days prior to the date therein specified.
8. REGISTRATION OF COMMON SHARES. If any Common Shares
required to be reserved for purposes of exercise of this Warrant require
registration with or approval of any governmental authority under any federal or
state law (other than the Securities Act) before such shares may be issued upon
exercise, the Company shall, at its expense and as expeditiously as possible,
use its best efforts to cause such shares to be duly registered or approved, as
the case may be, PROVIDED, that the Company shall not be obligated to make any
filing in any particular jurisdiction in which the Company would be required to
execute a general consent to service of process in order to effect such
registration or approval unless the Company is already subject to service in
such jurisdiction in the reasonable opinion of the Company's counsel. At any
such time as Common Shares is listed on any national securities exchange, the
Company shall, at its expense, obtain promptly and maintain the approval for
listing on each such exchange, upon official notice of issuance, the Common
Shares issuable upon exercise of the then outstanding Warrants and maintain the
listing of such shares after their issuance; and the Company shall also list on
such national securities exchange, shall register under the Exchange Act and
shall maintain such listing of, any Other Securities that at any time are
issuable upon exercise of the Warrants, if and at the time that any securities
of the same class shall be listed on such national securities exchange by the
Company.
9. RESTRICTIONS ON TRANSFER.
9.1. RESTRICTIVE LEGENDS. Except as otherwise permitted by
this Section 9, each Warrant (including each Warrant issued upon the transfer of
any Warrant) shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF
THIS WARRANT 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
14
STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND
SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT.
Except as otherwise permitted by this Section 9, each certificate for Common
Shares (or Other Securities) issued upon the exercise of any Warrant, and each
certificate issued upon the transfer of any such Common Shares (or Other
Securities), shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE 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 TO THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND SUCH LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS
SPECIFIED IN THE AMENDED AND RESTATED COMMON SHARE PURCHASE WARRANT
ISSUED BY FRONTSTEP, INC., PURSUANT TO THE LOAN AND SECURITY AGREEMENT
DATED AS OF JULY __, 2000 AMONG THE COMPANY, CERTAIN SUBSIDIARIES OF
THE COMPANY, THE LENDERS PARTY THERETO AND FOOTHILL CAPITAL
CORPORATION, AS ARRANGER AND ADMINISTRATIVE AGENT, AS AMENDED BY
AMENDMENT NO. 1, DATED AS OF NOVEMBER _, 2001, A COMPLETE AND CORRECT
COPY OF EACH OF WHICH IS AVAILABLE FOR INSPECTION AT THE COMPANY'S
PRINCIPAL OFFICE AND WILL BE FURNISHED TO THE HOLDER OF SUCH SECURITIES
UPON WRITTEN REQUEST AND WITHOUT CHARGE."
9.2. TRANSFER TO COMPLY WITH THE SECURITIES ACT. Restricted
Securities may not be sold, assigned, pledged, hypothecated, encumbered or in
any manner transferred or disposed of (a "Transfer"), in whole or in part,
except in compliance with the provisions of the Securities Act and state
securities or Blue Sky laws and the terms and conditions hereof.
9.3. NOTICE OF TRANSFER. Each Holder shall, prior to any
Transfer of any Warrants, give written notice to the Company of such Holder's
intention to Transfer.
9.4. TERMINATION OF RESTRICTIONS. The restrictions imposed by
this Section 9 on the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities (a) when a registration
statement with respect to the sale of such securities shall have been declared
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement and applicable state
securities and blue sky laws, (b) when such securities are sold pursuant to Rule
144 (or any similar provision
15
then in force) under the Securities Act and applicable state securities and blue
sky laws, or (c) when, in the reasonable opinion of both counsel for the Holder
and counsel for the Company, such restrictions are no longer required or
necessary in order to protect the Company against a violation of the Securities
Act or applicable state securities and blue sky laws upon any sale or other
disposition of such securities without registration thereunder. Whenever such
restrictions shall cease and terminate as to any Restricted Securities, the
Holder shall be entitled to receive from the Company, without expense, new
securities of like tenor not bearing the applicable legends required by Section
9.1.
9.5. EXEMPT TRANSFERS. The restrictions on the transfer of
this Warrant or the Warrant Shares set forth in this Section 9 shall not apply
to any transfer made in compliance with applicable state and federal securities
laws.
10. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Holder that: (i) no event or transaction
has occurred, or is deemed to have occurred pursuant to the terms of this
Warrant, between the date of issuance of the Original Warrant through and
including the date of issuance of this Warrant that, with or without the passage
of time, would have resulted in a change in the Purchase Price or the number of
Common Shares issuable upon exercise in full of the Warrant and (ii) the Company
has not been and is not currently in breach or default under any terms of the
Original Warrant or the Registration Rights Agreement.
11. RESERVATION OF STOCK, ETC. The Company shall at all times
reserve and keep available, solely for issuance and delivery upon exercise of
this Warrant, the number of Common Shares (or Other Securities) from time to
time issuable upon exercise of this Warrant. All Common Shares (or Other
Securities) issuable upon exercise of any Warrant shall be duly authorized and,
when issued upon such exercise, shall be validly issued and, in the case of
shares, fully paid and nonassessable, with no liability on the part of the
holders thereof, and, in the case of all securities, shall be free from all
liens, security interests, encumbrances (in each of the foregoing cases, other
than those imposed by the Holder), taxes, preemptive rights and charges. The
transfer agent for the Common Shares, and every subsequent Transfer Agent for
any shares of the Company's capital stock issuable upon the exercise of any of
the purchase rights represented by this Warrant, are hereby irrevocably
authorized and directed at all times until the Expiration Date to reserve such
number of authorized and unissued shares as shall be requisite for such purpose.
The Company shall keep copies of this Warrant on file with the Transfer Agent
for the Common Shares and with every subsequent Transfer Agent for any shares of
the Company's capital stock issuable upon the exercise of the rights of purchase
represented by this Warrant. The Company shall supply such Transfer Agent with
duly executed stock certificates for such purpose. All Warrant Certificates
surrendered upon the exercise of the rights thereby evidenced shall be canceled,
and such canceled Warrants shall constitute sufficient evidence of the number of
shares of stock which have been issued upon the exercise of such Warrants.
Subsequent to the Expiration Date, no shares of stock need be reserved in
respect of any unexercised Warrant.
16
12. REGISTRATION AND TRANSFER OF WARRANTS, ETC.
12.1. WARRANT REGISTER; OWNERSHIP OF WARRANTS. Each Warrant
issued by the Company shall be numbered and shall be registered in a warrant
register (the "Warrant Register") as it is issued and transferred, which Warrant
Register shall be maintained by the Company at its principal office or, at the
Company's election and expense, by a Warrant Agent or the Transfer Agent. The
Company shall be entitled to treat the registered Holder of any Warrant on the
Warrant Register as the owner in fact thereof for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in such Warrant
on the part of any other Person, and shall not be affected by any notice to the
contrary, except that, if and when any Warrant is properly assigned in blank,
the Company may (but shall not be obligated to) treat the bearer thereof as the
owner of such Warrant for all purposes. Subject to Section 9, a Warrant, if
properly assigned, may be exercised by a new holder without a new Warrant first
having been issued.
12.2. TRANSFER OF WARRANTS. Subject to compliance with Section
9, if applicable, this Warrant and all rights hereunder are transferable in
whole or in part, without charge to the Holder hereof, upon surrender of this
Warrant with a properly executed Form of Assignment attached hereto as Exhibit B
at the principal office of the Company. Upon any partial transfer, the Company
shall at its expense issue and deliver to the Holder a new Warrant of like
tenor, in the name of the Holder, which shall be exercisable for such number of
Common Shares with respect to which rights under this Warrant were not so
transferred. Prior to effecting any transfer of this Warrant or any part hereof,
each prospective transferee shall represent in writing to the Company that:
(i) such transferee is acquiring the Warrant
hereunder for its own account, without a view to the distribution
thereof;
(ii) such transferee is an "accredited investor"
within the meaning of Regulation D under the Securities Act and was not
organized for the specific purpose of acquiring the Warrant or the
Warrant Shares;
(iii) such transferee has sufficient knowledge and
experience in investing in companies similar to the Company so as to be
able to evaluate the risks and merits of its investment in the
transferee and is able financially to bear the risks thereof; and
(iv) if applicable, such transferee understands that
(i) this Warrant and the Warrant Shares have not been registered under
the Securities Act in reliance upon an exemption from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof or
Rule 506 promulgated under such act and under applicable state
securities laws, (ii) this Warrant and the Warrant Shares must be held
indefinitely unless a subsequent disposition thereof is registered
under the Securities Act and under applicable state securities laws or
is exempt from such registration, (iii) this Warrant and the Warrant
Shares will bear a legend to such effect, and (iv) the Company will
make a notation on its transfer books to such effect.
17
12.3. REPLACEMENT OF WARRANTS. On receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender of such Warrant to the Company at its principal office
and cancellation thereof, the Company at its expense shall execute and deliver,
in lieu thereof, a new Warrant of like tenor.
12.4. ADJUSTMENTS TO PURCHASE PRICE AND NUMBER OF SHARES.
Notwithstanding any adjustment in the Purchase Price or in the number or kind of
Common Shares purchasable upon exercise of this Warrant, any Warrant theretofore
or thereafter issued may continue to express the same number and kind of Common
Shares as are stated in this Warrant, as initially issued.
12.5. FRACTIONAL SHARES. Notwithstanding any adjustment
pursuant to Section 3 in the number of Common Shares 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 distribute certificates
which evidence fractional shares. In lieu of fractional shares, the Company
shall make payment to the Holder, at the time of exercise of this Warrant as
herein provided, in an amount in cash equal to such fraction multiplied by the
Current Market Price of a Common Share on the date of Warrant exercise.
13. REMEDIES; SPECIFIC PERFORMANCE. The Company stipulates
that there would be no adequate remedy at law to the Holder of this Warrant in
the event of any default or threatened default by the Company in the performance
of or compliance with any of the terms of this Warrant and accordingly, the
Company agrees that, in addition to any other remedy to which the Holder may be
entitled at law or in equity, the Holder shall be entitled to seek to compel
specific performance of the obligations of the Company under this Warrant,
without the posting of any bond, in accordance with the terms and conditions of
this Warrant in any court of the United States or any State thereof having
jurisdiction, and if any action should be brought in equity to enforce any of
the provisions of this Warrant, the Company shall not raise the defense that
there is an adequate remedy at law. Except as otherwise provided by law, a delay
or omission by the Holder hereto in exercising any right or remedy accruing upon
any such breach shall not impair the right or remedy or constitute a waiver of
or acquiescence in any such breach. No remedy shall be exclusive of any other
remedy. All available remedies shall be cumulative.
14. NO RIGHTS OR LIABILITIES AS SHAREHOLDER. Nothing contained
in this Warrant shall be construed as conferring upon the Holder hereof any
rights as a shareholder of the Company or as imposing any obligation on the
Holder to purchase any securities or as imposing any liabilities on the Holder
as a shareholder of the Company, whether such obligation or liabilities are
asserted by the Company or by creditors of the Company.
15. NOTICES. All notices and other communications (and
deliveries) provided for or permitted hereunder shall be made in writing by hand
delivery, telecopier, any
18
nationally-recognized courier guaranteeing overnight delivery or first class
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Company: Frontstep, Inc.
0000 Xxxxxxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Fax No. 000-000-0000
with copies to: Vorys, Xxxxx Xxxxxxx & Xxxxx LLP
00 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax No. 000-000-0000
If to Holder: Foothill Capital Corporation
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, XX 00000
Attn: Business Finance Division Manager
Fax No. 000-000-0000
with copies to: Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
Fax No. (000) 000-0000
All such notices and communications (and deliveries) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; when receipt is acknowledged, if telecopied; on the next Business
Day, if timely delivered to a courier guaranteeing overnight delivery; and five
days after being deposited in the mail, if sent first class or certified mail,
return receipt requested, postage prepaid; PROVIDED, that the exercise of any
Warrant shall be effective in the manner provided in Section 2.
16. AMENDMENTS. This Warrant and any term hereof may not be
amended, modified, supplemented or terminated, and waivers or consents to
departures from the provisions hereof may not be given, except by written
instrument duly executed by the party against which enforcement of such
amendment, modification, supplement, termination or consent to departure is
sought.
17. DESCRIPTIVE HEADINGS, ETC. The headings in this Warrant
are for convenience of reference only and shall not limit or otherwise affect
the meaning of terms contained herein. Unless the context of this Warrant
otherwise requires: (1) words of any gender shall be deemed to include each
other gender; (2) words using the singular or plural number shall also include
the plural or singular number, respectively; (3) the words "hereof", "herein"
and "hereunder" and words of similar import when used in this Warrant shall
refer to
19
this Warrant as a whole and not to any particular provision of this Warrant, and
Section and paragraph references are to the Sections and paragraphs of this
Warrant unless otherwise specified; (4) the word "including" and words of
similar import when used in this Warrant shall mean "including, without
limitation," unless otherwise specified; (5) "or" is not exclusive; and (6)
provisions apply to successive events and transactions.
18. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of New York.
19. REGISTRATION RIGHTS AGREEMENT. The Common Shares (and
Other Securities) issuable upon exercise of this Warrant (or upon conversion of
any Common Shares issued upon such exercise) shall constitute Registrable
Securities (as such term is defined in the Registration Rights Agreement). Each
holder of this Warrant shall be entitled to all of the benefits afforded to a
Holder of any such Registrable Securities under the Registration Rights
Agreement and such Holder, by its acceptance of this Warrant, agrees to be bound
by and to comply with the terms and conditions of the Registration Rights
Agreement applicable to such holder as a Holder of such Registrable Securities.
20. EXPIRATION. The right to exercise this Warrant shall
expire at 5:00 p.m., New York City time, on July 17, 2006.
21. COSTS AND ATTORNEYS' FEES. In the event that any action,
suit or other proceeding is instituted concerning or arising out of this
Warrant, the Company agrees and the Holder, by taking and holding this Warrant
agrees, that the prevailing party shall recover from the non-prevailing party
all of such prevailing party's costs and reasonable attorneys' fees incurred in
each and every such action, suit or other proceeding, including any and all
appeals or petitions therefrom.
22. MOST FAVORED HOLDER. So long as the Loan Agreement or any
extension thereof remains in effect or any Obligations thereunder remain unpaid,
the Company agrees that if at any time or from time to time after July 17, 2001
and prior to the Expiration Date it enters into any agreement with, or issues
Options or Convertible Securities to, any Person other than a Holder of this
Warrant, which provides such Person with more favorable terms of the type set
forth in Sections 3, 4, 5 and 6 of this Warrant, then the Company shall issue to
the Holder a new Warrant in exchange for this Warrant, which shall contain such
terms, effective from the date such agreement is consummated or Option or
Convertible Security is issued until the Expiration Date. Notwithstanding the
foregoing, no additional rights of any or all of the Holders by reason of this
provision shall be created or triggered by the existence and/or exercise of any
rights of the holders of the Company's presently outstanding preferred shares
and/or warrants which arise under the Investors' Rights Agreement dated May 10,
2000 among the Company, Xxxxxx Xxxxxxx Xxxx Xxxxxx Venture Partners IV, L.P. and
the other investors identified on the signature pages thereto (the "Rights
Agreement"), or which inure solely to the benefit of such investors in the
Amended Articles of Incorporation, as amended, of the Company, the Regulations,
as amended, of the Company and the terms and provisions of such outstanding
warrants solely to the extent provided under such Rights Agreement, Articles,
Regulations and warrants as of July 17, 2001.
20
23. LIMITATION ON NUMBER OF WARRANT SHARES. The Company shall
not be obligated to issue Warrant Shares upon exercise of this Warrant only to
the extent that the issuance of such Common Shares would cause the Company to
exceed that number of Common Shares which the Company may issue upon exercise of
this Warrant (the "Exchange Cap") without breaching the Company's obligations
under the rules or regulations of the Commission, the NASDAQ Stock Market, Inc.
or any other national securities exchange or automated quotation system that
regulates the Company, except that such limitation shall not apply in the event
that the Company (a) obtains the approval of its stockholders as required by the
Principal Market (or any successor rule or regulation) for issuances of Common
Shares in excess of such amount or (b) obtains a written opinion from outside
counsel to the Company that such approval is not required, which opinion shall
be reasonably satisfactory to the holder of this Warrant. Until such approval or
written opinion is obtained, the holder of this Warrant shall not be issued,
upon exercise of this Warrant, Warrant Shares in an amount greater than the
number that may be issued without such approval or written opinion. The Company
shall use its reasonable best efforts to obtain the required stockholder
approval of such issuance at its next stockholders meeting after determining
that it is subject to the Exchange Cap. The Company shall continue to comply
with the shareholder approval requirements under the NASDAQ Stock Market, Inc.
rules in connection with the issuance of Common Shares under this Warrant during
the term of this Warrant even if the Common Shares are no longer listed on the
NASDAQ automated quotation system.
24. REDEMPTION. In the event the Company is prohibited from
issuing additional Warrant Shares as required under the adjustment provisions
contained in Section 3 hereof, then, at any time prior to submitting the matter
to shareholders of the Company for their approval, upon the written request of
the Holder, the Company shall redeem for cash those Warrant Shares which can not
be issued, at a price equal to the excess, if any, of the Market Price of the
Common Shares above the Exercise Price of such Warrant Shares as of the date of
the attempted exercise.
21
25. LIMITATION ON EXERCISE. Notwithstanding any provision to
the contrary contained herein, in no event shall the Holder be entitled to
exercise this Warrant, nor will the Company recognize such exercise, such that
upon giving effect to such exercise, the aggregate number of Common Shares then
beneficially owned by the Holder and its "affiliates" as defined in Rule 144 of
the Securities Act would exceed 4.99% of the total issued and outstanding shares
of the Common Shares following such exercise; PROVIDED, HOWEVER, that Holder may
elect to waive this restriction upon not less than sixty-one (61) days prior
written notice to the Company. For purposes of this Section, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act.
FRONTSTEP, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Title: Vice President, Chief Financial
Officer and Secretary
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22
EXHIBIT A to
COMMON SHARES PURCHASE WARRANT
FORM OF
ELECTION TO PURCHASE SHARES
The undersigned hereby irrevocably elects to exercise the
Warrant to purchase ____ common shares, no par value ("Common Shares"), of
FRONTSTEP, INC. and hereby makes payment of $________ therefor [or] makes
payment therefor by application pursuant to Section 2.1(b)(ii) of the Warrant of
$_______ aggregate principal amount and accrued interest thereon of the
then-outstanding Obligations (as provided in Section 2.4(b) in the Loan
Agreement) [or] makes payment by reduction pursuant to Section 2.1(b)(iii) of
the Warrant of the number of Common Shares otherwise issuable to the Holder upon
Warrant exercise by ___ shares [or] makes payment therefor by delivery of the
following Common Shares Certificates of the Company (properly endorsed for
transfer in blank) for cancellation by the Company pursuant to Section
2.1(b)(iv) of the Warrant, certificates of which are attached hereto for
cancellation ______________________ [list certificates by number and amount].
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 Common Shares purchased (and/or reduced)
hereby is less than the number of Common Shares covered by the Warrant, the
undersigned requests that a new Warrant representing the number of Common Shares
not so purchased (or reduced) be issued and delivered as follows:
ISSUE TO:
-----------------------------------------------------------------------
(NAME OF HOLDER
--------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
DELIVER TO:
---------------------------------------------------------------------
(NAME OF HOLDER)
-------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
Dated: _____________, 20__ [NAME OF HOLDER]
By
----------------------------------
Name:
Title:
23
EXHIBIT B to
COMMON SHARES 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 Shares, no par value ("Common Shares") of FRONTSTEP, INC.
represented by the Warrant, with respect to the number of Common Shares 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 maintained for that purpose, with full power of
substitution in the premises.
Dated: _______________, 20__ NAME OF HOLDER
By
-----------------------------------
Name:
Title:
