WARRANT
This Warrant and the shares of Common Stock (as defined below)
issuable upon exercise of this Warrant are subject to the terms and conditions
of a Convertible Subordinated Loan and Warrant Purchase Agreement dated February
15, 2000 among ImageMax, Inc. (the "Company") and holders of certain shares or
holders having rights to acquire shares of the outstanding capital stock of the
Company, as amended by a First Amendment to Convertible Subordinated Loan and
Warrant Purchase Agreement dated as of the date hereof. Copies of such agreement
may be obtained at no cost by written request made by the holder of record of
this Warrant to the Company.
Neither this Warrant nor the shares of Common Stock (as defined below)
issuable upon exercise of this Warrant have been registered under the Securities
Act of 1933, as amended (the "Act"), and neither may be offered, sold or
otherwise transferred, pledged or hypothecated unless and until registered under
the Act or unless the Company has received an opinion of counsel or other
evidence satisfactory to the Company and its counsel that such registration is
not required.
No.: 2002-_A Warrant to Subscribe
Date of Issuance: June 13, 2002 for ________
Shares of Common Stock
STOCK SUBSCRIPTION WARRANT
To Subscribe for and Purchase Common Stock
IMAGEMAX, INC.
IMAGEMAX, INC., a Pennsylvania corporation (the "Company"), for value
received, hereby certifies and agrees that ___________________________
("Holder") or its registered assigns, is entitled to subscribe for, at any time
and from time to time during the Exercise Period (as defined in Section 2 below)
______________________ (_________) duly authorized, validly issued, fully paid
and nonassessable shares of the Company's common stock, no par value ("Common
Stock") subject to adjustment as set forth in Section 4 and Section 5 hereof
(the "Warrant Shares"), at the Exercise Price (as defined, and subject to
adjustment as set forth in, Section 1(b) below), as provided herein. This
Warrant was originally issued in connection with a loan transaction (the "Loan")
among the Company and several investors (the "Investors") pursuant to which the
Investors loaned the Company an aggregate of Six Million Dollars ($6,000,000)
pursuant to a Convertible Subordinated Loan and Warrant Purchase Agreement dated
February 15, 2000, among the Company and the Investors, as amended by a First
Amendment to Convertible Subordinated Loan and Warrant Purchase Agreement dated
as of the date hereof (as the same may hereafter be amended and/or restated the
"Loan Agreement"), and several convertible subordinated promissory notes dated
February 15, 2000, in the aggregate original principal amount of $6,000,000,
delivered by the Company and its Subsidiary to the Investors in connection
therewith, as amended and restated as of the date hereof (as the same may
hereafter be amended and/or restated the "Notes").
This Warrant is subject to the following provisions, terms and
conditions.
1. Exercise of Warrant.
(a) Optional Exercise; Issuance of Certificates; Payment for Shares;
Additional Warrants. The rights represented by this Warrant may be exercised by
the Holder hereof, in whole or in part (but not as to a fractional share of
Common Stock), by the surrender of this Warrant (properly endorsed if required)
(or, in the event that such Warrant has been lost, stolen or destroyed, the
Holder shall execute an agreement reasonably satisfactory to the Company to
indemnify the Company from any loss incurred by it resulting from the fact that
such Warrant has been lost, stolen or destroyed), together with a completed
Exercise Agreement in the form attached hereto as Exhibit A (the "Exercise
Agreement") at the office of the Company at 000 Xxxxxxxxxxxx Xxxxxx, Xxxxx 000,
Xxxx Xxxxxxxxxx, XX 00000 (or such other office or agency of the Company as it
may designate by notice in writing to the Holder hereof at the address of such
Holder appearing on the books of the Company at any time within the Exercise
Period) and upon (i) payment to the Company of the purchase price for such
shares in cash, check or wire transfer of immediately available funds; (ii) in
the case of exercise during an Exercise Period commencing as described in
Section 2(a)(i)(B) or 2(a)(iii) hereof, payment to the Company of the purchase
price for such shares by delivery of an executed note (an "Exercise Note")
substantially in the form of Exhibit B attached hereto and an executed pledge
agreement (an "Exercise Pledge Agreement") substantially in the form of Exhibit
C attached hereto; or (iii) by delivery to the Company of a completed Exercise
Agreement indicating the Holder's intention to effect a Cashless Exercise (as
defined in, and in accordance with the provisions of, Section 1(c) below), for
the number of Warrant Shares indicated in the Exercise Agreement. The Company
agrees that the Warrant Shares so purchased shall be and are deemed to be issued
to the Holder hereof as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for such shares as aforesaid (the "Exercise Date"). Certificates
for the shares of stock so purchased shall be delivered to the Holder hereof at
the address specified by the Holder within a reasonable time, not exceeding ten
days, after the Exercise Date, and, unless this Warrant has expired, a new
Warrant representing the number of shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be delivered to the Holder
hereof within such time.
(b) Exercise Price; Adjustments to Exercise Price.
(1) The exercise price of the Warrant Shares pursuant to this
Warrant shall be the lesser of (i) $0.25 per share, subject to adjustments as
set forth in Section 5 below or (ii) eighty percent (80%) of the Market Price at
the time of exercise or, if the Common Stock does not then have a Market Price,
eighty percent (80%) of the Appraised Value (each as hereinafter defined) (the
"Exercise Price").
"Market Price" shall mean, per share of Common Stock, the closing
price per share of Common Stock on the Exercise Date as published in The Wall
Street Journal or, if no such closing price on such date is published in The
Wall Street Journal, then the average of the reported closing bid and asked
prices on such date, as officially reported on the principal national securities
exchange (including for this purpose, without limitation, The Nasdaq Stock
Market, Inc.) on which the Common Stock is then listed or admitted to trading.
If the Common Stock is
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not then listed or admitted to trading on any such national securities exchange,
then the Common Stock shall be deemed to have no "Market Price".
"Appraised Value" shall mean the value of a share of the Company's
Common Stock on the Exercise Date as determined, at the Company's expense, by an
investment banker satisfactory to the Company and the Holder.
(c) Cashless Exercise. Notwithstanding anything to the contrary
contained in this Warrant, this Warrant may be exercised by presentation and
surrender of this Warrant to the Company at its principal executive offices with
a completed Exercise Agreement, indicating the Holder's intention to effect a
cashless exercise, including a calculation (to the extent then calculable) of
the number of shares of Common Stock to be issued upon such exercise in
accordance with the terms hereof (a "Cashless Exercise"). In the event of a
Cashless Exercise, in lieu of paying the Exercise Price in cash, check or
immediately available funds, the Holder shall surrender this Warrant for that
number of shares of Common Stock determined by multiplying the number Warrant
Shares by a fraction, the numerator of which shall be the difference, if any, of
the average Market Price for the twenty (20) trading day period preceding the
Exercise Date of the Exercise Agreement (or, if there is no such Market Price,
the Appraised Value on the Exercise Date), less the Exercise Price in effect as
of such date, and the denominator of which shall be such average Market Price
for such twenty (20) trading day period (or, if there is no such Market Price,
the Appraised Value on the Exercise Date).
2. Exercise Period; Governmental Approvals.
(a) This Warrant shall only be exercisable, if at all, at any time
and from time to time during the period commencing on the earlier to occur of
the following: (i) if the Company has elected to exercise the Extension Right
under the Note held by the Holder of this Warrant (A) and prior to the Company
exercising such Extension Right, the Holder did not exercise, in whole or in
part, the right to convert such Note into shares of the Company's Common Stock,
the date the Company defaults in the payment of any amounts due and payable
under the Notes, whether by acceleration or otherwise; (B) and prior to the
Company exercising such Extension Right, the Holder did exercise, in whole or in
part, the right to convert such Note into shares of the Company's Common Stock,
the date the Company defaults in the payment of any amounts due and payable
under the Notes, whether by acceleration or otherwise; (ii) if the Company has
elected to exercise the Extension Right under the Note held by the Holder of
this Warrant and prior to the Company exercising such Extension Right, the
Holder did not exercise, in whole or in part, the right to convert such Note
into shares of the Company's Common Stock, the date the Company pays in full all
amounts due and payable under the Note subject to Section 4 hereof; or (iii) if
the Company has not elected to exercise the Extension Right under the Note held
by the Holder of this Warrant, the date the Company defaults in the payment of
any amount due and payable under such Note, whether by acceleration or otherwise
and continuing for a period of (A) in the case of (i)(A), (i)(B) or (iii) above,
(2) years thereafter and (B) in the case of (ii) above, for a period ending two
(2) years after the date the Extension Right was exercised (such period shall
herein be referred to as the "Exercise Period").
(b) The Company covenants that if any registrations, filings or
approvals are required pursuant to United States or state law or applicable
governing rules ("Government
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Approvals") before any Warrant Shares may be issued upon exercise, the Company
will in good faith and as expeditiously as possible endeavor to cause such
Government Approvals to be obtained; provided, however, that in no event shall
such Warrant Shares be issued, and the Company is hereby authorized to suspend
the exercise of all Warrants, for the period during which such Government
Approvals are required but not in effect. If the Exercise Period of the Warrants
expires during any time that the exercise of the Warrants has been suspended,
the right to exercise the Warrants shall not expire until thirty (30) days after
the Company has notified the Holder thereof (by first class mail, postage
prepaid) that the required Government Approvals are in effect, and that the
aforementioned suspension is no longer in effect.
3. No Fractional Shares. No fractional shares of Common Stock or scrip
representing fractional shares shall be issued upon exercise of this Warrant. If
any fractional share of Common Stock would be issuable upon the exercise of this
Warrant, then the Company shall make an adjustment therefor in cash at the
Exercise Price.
4. Adjustments to Number of Warrant Shares. If the Exercise Period
commences in accordance with Section 2(a)(ii) above, the number of Warrant
Shares purchasable hereunder shall decrease to ____________.
5. Adjustments. The Exercise Price and the number of shares purchasable
hereunder are subject to adjustment from time to time as follows:
(a) Anti-Dilution.
(i) Subject to Section 5(a)(v) below, in the event the
Company shall hereafter issue additional shares of Common Stock, options or
other securities convertible into or exchangeable for Common Stock at a price or
conversion or exercise price (as the case may be) which is less than the
Exercise Price (the "Additional Shares"), the Exercise Price shall be
automatically lowered to a price equal to the price or conversion price or
exercise price (as the case may be) for such Additional Shares.
(ii) If the Company at any time and in any manner issues or
sells any stock, warrants, rights or options pursuant to which the recipient may
subscribe for or purchase Common Stock ("Options") the "price or the conversion
or exercise price (as the case may be)" in accordance with Section 5(a)(i) shall
be determined by dividing (i) the total amount, if any, received or receivable
by the Company as consideration for the issuance or granting of all such
Options, plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of all such Options, plus, in the case
of Convertible Securities issuable upon the exercise of such Options, the
minimum aggregate amount of additional consideration payable upon the exercise,
conversion or exchange thereof at the time such Convertible Securities first
become exercisable, convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the exercise of all such Options
(assuming full conversion of Convertible Securities, if applicable). No further
adjustment to the Exercise Price will be made upon the actual issuance of such
Common Stock upon the exercise of such Options or upon the exercise, conversion
or exchange of Convertible Securities issuable upon exercise of such Options.
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(iii) (A) If the Company at any time and in any manner
issues or sells any securities which are exercisable for, convertible into or
exchangeable for, Common Stock ("Convertible Securities"), whether or not
immediately convertible (other than where such Convertible Securities are
issuable upon the exercise of Options), the "price or the conversion or exercise
price (as the case may be)" in accordance with Section 5(a)(i) shall be
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the exercise, conversion or exchange thereof at
the time such Convertible Securities first become exercisable, convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities. No further adjustment to the Exercise Price will be made upon the
actual issuance of such Common Stock upon exercise, conversion or exchange of
such Convertible Securities.
(B) If the Company in any manner issues or sells any
Convertible Securities with a variable conversion or exercise price or exchange
ratio, then the price per share for which Common Stock is issuable upon such
exercise, conversion or exchange for purposes of the calculation contemplated by
Section 5(a)(iii)(A) shall be deemed to be the lowest price per share which
would be applicable (assuming all holding period and other conditions to any
discounts contained in such Convertible Security have been satisfied).
(iv) If the total number of shares of Common Stock issuable
upon exercise of Options or upon exercise, conversion or exchange of Convertible
Securities, in each case for which an adjustment was made pursuant to Section
5(a), is not, in fact issued and the rights to exercise such Options or to
exercise, convert or exchange such Convertible Securities shall have expired or
terminated, the Exercise Price then in effect shall be readjusted to the
Exercise Price which would have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination (other than in respect of
the actual number of shares of Common Stock issued upon exercise, conversion or
exchange thereof), never been issued.
(v) No adjustment to the Exercise Price will be made under
this Section 5(a) upon (i) the exercise of any of the Options for 465,000 shares
of Common Stock outstanding prior to February 15, 2000; (ii) the issuance, grant
or exercise of any stock or Options, which have been or may hereafter be issued,
granted or exercised under the plan in existence on February 15, 2000 relating
to employees, directors or independent contractors of the Company; provided that
the maximum number of shares of Common Stock so issued or issuable upon the
exercise of such Options shall not exceed one million one hundred thirty-five
thousand (1,135,000) shares (135,000 shares under the existing plan plus an
additional one million shares); or (iii) the exercise of any of the Warrants or
conversion of any of the Notes.
(vi) Upon each adjustment of the Exercise Price pursuant to
the provisions of this Section 5(a), the number of shares of Common Stock
issuable upon exercise of this Warrant shall be adjusted by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by
the number of shares of Common Stock issuable upon exercise of this Warrant
immediately prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Price.
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(b) Stock Dividend, Split or Subdivision of Shares. If the number of
shares of Common Stock outstanding at anytime after the date hereof is increased
or deemed increased by a stock dividend payable in shares of Common Stock or
other securities convertible into or exchangeable for shares of Common Stock
("Equivalents") or by a subdivision or split-up of shares of Common Stock or
Equivalents (other than a change in par value, from par value to no par value or
from no par value to par value), then, following the effective date fixed for
the determination of holders of Common Stock or Equivalents entitled to receive
such stock dividend, subdivision or split-up, the Exercise Price shall be
appropriately decreased and the number of Warrant Shares shall be increased in
proportion to such increase in outstanding shares (on a fully diluted basis if
the dividend is payable in Equivalents).
(c) Combination of Shares. If, at any time after the date hereof, the
number of shares of Common Stock outstanding is decreased by a combination of
the outstanding shares of Common Stock (other than a change in par value, from
par value to no par value or from no par value to par value), then, following
the effective date for such combination, the Exercise Price shall be
appropriately increased and the number of Warrant Shares shall be decreased in
proportion to such decrease in outstanding shares.
(d) Reorganizations, Consolidations, etc. In the event, at any time
after the date hereof, of any capital reorganization, or any reclassification of
the capital stock of the Company (other than a change in par value or from par
value to no par value or from no par value to par value or as a result of a
stock dividend or subdivision, split-up or combination of shares), or the
consolidation or merger of the Company with or into another person (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any change in the powers, designations, preferences and
rights, or the qualifications, limitations or restrictions, if any, of the
capital stock of the Company as amended from time to time) or of the sale or
other disposition of all or substantially all the properties and assets of the
Company in its entirety to any other person (any such transaction, an
"Extraordinary Transaction"), then this Warrant shall be exercisable for the
kind and number of shares of stock or other securities or property of the
Company, or of the corporation resulting from or surviving such Extraordinary
Transaction, that a Holder of the number of shares of Common Stock deliverable
(immediately prior to the effectiveness of the Extraordinary Transaction) upon
exercise of this Warrant would have been entitled to receive upon such
Extraordinary Transaction. The provisions of this Section 5(d) shall similarly
apply to successive Extraordinary Transactions.
(e) Calculations. All calculations under this Section 5 shall be made
to the nearest cent ($.01) or to the nearest share, as the case may be.
(f) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 5, the Company at its own
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each the Holder hereof a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Company shall, upon the
written request, at any time, of any such Holder, furnish or cause to be
furnished to such Holder a like certificate setting forth: (i) such adjustments
and readjustments; (ii) the Exercise Price at
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the time in effect; and (iii) the number of shares and the amount, if any, of
other property that at the time would be received upon the exercise of the
Warrant.
6. Shares to be Fully Paid; Reservation of Shares. The Company covenants
and agrees that all of the Warrant Shares, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof. The Company further covenants and
agrees that during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of issue or transfer upon exercise of the subscription
rights evidenced by this Warrant, a sufficient number of shares of its Common
Stock to provide for the exercise of the rights represented by this Warrant.
7. Notices. In case at any time:
(a) the Company shall declare any cash dividend upon its Common
Stock;
(b) the Company shall declare any dividend upon its Common Stock
payable in stock or make any special dividend or other distribution (other than
regular cash dividends) to the holders of Common Stock;
(c) the Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or other rights;
(d) there shall be any capital reorganization, or reclassification of
the capital stock of the Company, or consolidation or merger of the Company
with, or sale of all or substantially all of its assets to, another corporation;
or
(e) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the Holder of this Warrant at the address of
such Holder as shown on the books of the Company, (i) at least 10 days prior
written notice of the date on which the books of the Company shall close or a
record shall be taken for such dividend, distribution or subscription rights or
for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, and (ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 10
days prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (i) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto, and such notice in
accordance with the foregoing clause (ii) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
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8. Restriction on Transfer.
(a) This Warrant and the rights granted to the Holder are
transferable, in whole or in part, upon surrender of this Warrant, together with
a properly executed assignment in the form attached hereto as Exhibit B, at the
office or agency of the Company referred to Section 1 above, provided, however,
that any transfer or assignment shall be subject to the conditions set forth in
Section 8(b) hereof and Section 11.2 of the Loan Agreement. Until due
presentment for registration of transfer on the books of the Company, the
Company may treat the registered holder hereof as the owner and holder hereof
for all purposes, and the Company shall not be affected by any notice to the
contrary.
(b) Exercise or Transfer Without Registration. If, at the time of the
surrender of this Warrant in connection with any exercise, transfer, or exchange
of this Warrant, this Warrant (or, in the case of any exercise, the Warrant
Shares issuable hereunder) shall not be registered under the Act and under
applicable state securities or blue sky laws, the Company may require, as a
condition of allowing such exercise, transfer, or exchange, that the holder or
transferee of this Warrant, as the case may be, furnish to the Company a written
opinion of counsel, in form, substance and scope customary to opinions typically
delivered in transactions of this nature, to the effect that such exercise,
transfer, or exchange may be made without registration under the Act and under
applicable state securities or blue sky laws.
9. No Rights or Liabilities as a Shareholder. This Warrant shall not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company. No provision of this Warrant, in the absence of affirmative action by
the Holder to purchase Warrant Shares, and no mere enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
such holder for the Exercise Price or as a shareholder of the Company, whether
such liability is asserted by the Company or by creditors of the Company.
10. Issue Tax. The issuance of certificates for Warrant Shares shall be
made without charge to the holders of the Warrant for any issuance tax in
respect thereof, provided that the Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the Holder of the
Warrant exercised.
11. Closing of Books. The Company will at no time close its transfer books
against the transfer of any Warrant or of any Warrant Shares in any manner which
interferes with the timely exercise of this Warrant.
12. Descriptive Headings and Governing Law. The descriptive headings of
the several paragraphs of this Warrant are inserted for convenience only and do
not constitute a part of this Warrant. This Warrant is being delivered and is
intended to be performed in the Commonwealth of Pennsylvania and shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the law of such Commonwealth.
13. Waiver of Trial by Jury. THE COMPANY AND HOLDER HEREBY WAIVE TRIAL BY
JURY IN ANY ACTION, PROCEEDING, CLAIMS OR COUNTERCLAIMS,
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WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY
RELATING TO THIS WARRANT.
IN WITNESS WHEREOF, IMAGEMAX, INC. has caused this Warrant to be
signed by its duly authorized officers and dated the day and year first above
written.
IMAGEMAX INC.
By:_________________________________
Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
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