EXHIBIT 4.26
"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES
SHALL NOT TRADE THE SECURITIES BEFORE AUGUST 26, 2002."
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO ADB SYSTEMS INTERNATIONAL INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.
--------------------------------------------------------------------------------
Right to Purchase 1,000,000 common shares of
Common Stock of ADB Systems International Inc.
(subject to adjustment as provided herein)
--------------------------------------------------------------------------------
COMMON SHARE STOCK PURCHASE WARRANT
No. 2002-1 Issue Date: April 25, 2002
ADB SYSTEMS INTERNATIONAL INC., a corporation organized under the laws of
Ontario, Canada (the "Company"), hereby certifies that, for value received,
XXXXXXXXXXX LIMITED PARTNERSHIP (the "Holder"), or assigns, is entitled, subject
to the terms set forth below, to purchase from the Company from and after the
Issue Date of this Warrant and at any time or from time to time before 5:00
p.m., New York time, through three (3) years after such date (the "Expiration
Date"), up to 1,000,000 fully paid and non assessable shares of Common Stock (as
hereinafter defined), no par value per share, of the Company at a per share
purchase price of $.35. (All references to dollars and cents in this Warrant
shall refer to lawful money of the United States.) The aforedescribed purchase
price per share, as adjusted from time to time as herein provided, is referred
to herein as the "Purchase Price". The number and character of such shares of
Common Stock and the Purchase Price are subject to adjustment as provided
herein.
As used herein the following terms, unless the context otherwise requires, have
the following respective meanings:
(a) The term "Company" shall include ADB Systems International Inc. and any
corporation which shall succeed or assume the obligations of ADB Systems
International Inc. hereunder.
(b) The term "Common Stock" includes (a) the Company's Common Shares, no par
value per share, as authorized on the date of the Subscription Agreement
referred to in Section 9 hereof, (b) any other capital stock of any class or
classes (however designated) of the Company, authorized on or after such date,
the holders of which shall 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, and the holders of which shall ordinarily, in the
absence of contingencies, be entitled to vote for the election of a majority of
directors of the Company (even if the right so to vote has been suspended by the
happening of such a contingency) and (c) any other securities
-2-
into which or for which any of the securities described in (a) or (b) may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other than Common Stock)
and other securities of the Company or any other person (corporate or otherwise)
which the holder of the Warrant at any time shall be entitled to receive, or
shall have received, on the exercise of the Warrant, in lieu of or in addition
to Common Stock, or which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or Other Securities
pursuant to Section 3 or otherwise.
1. Exercise of Warrant.
1.1. Number of Shares Issuable upon Exercise. From and after the date hereof
through and including the Expiration Date, the holder hereof shall be entitled
to receive, upon exercise of this Warrant in whole in accordance with the terms
of subsection 1.2 or upon exercise of this Warrant in part in accordance with
subsection 1.3, shares of Common Stock of the Company, subject to adjustment
pursuant to Section 4.
1.2. Full Exercise. This Warrant may be exercised in full by the holder hereof
by delivery of an original or facsimile copy of the form of subscription
attached as Exhibit A hereto (the "Subscription Form") duly executed by such
holder and surrender of the original Warrant within seven (7) days of exercise,
to the Company at its principal office or at the office of its Warrant Agent (as
provided hereinafter), accompanied by payment, in cash, wire transfer or by
certified or official bank check payable to the order of the Company, in the
amount obtained by multiplying the number of shares of Common Stock for which
this Warrant is then exercisable by the Purchase Price then in effect.
1.3. Partial Exercise. This Warrant may be exercised in part (but not for a
fractional share) by surrender of this Warrant in the manner and at the place
provided in subsection 1.2 except that the amount payable by the holder on such
partial exercise shall be the amount obtained by multiplying (a) the number of
shares of Common Stock designated by the holder in the Subscription Form by (b)
the Purchase Price then in effect. On any such partial exercise, the Company, at
its expense, will forthwith issue and deliver to or upon the order of the holder
hereof a new Warrant of like tenor, in the name of the holder hereof or as such
holder (upon payment by such holder of any applicable transfer taxes) may
request, the number of shares of Common Stock for which such Warrant may still
be exercised.
1.4. Fair Market Value. Fair Market Value of a share of Common Stock as of a
particular date (the "Determination Date") shall mean the Fair Market Value of a
share of the Company's Common Stock. Fair Market Value of a share of Common
Stock as of a Determination Date shall mean:
(a) If the Company's Common Stock is traded on an exchange or is quoted
on the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") National Market System, the NASDAQ SmallCap Market or
the American Stock Exchange, Inc., then the closing or last sale price,
respectively, reported for the last business day immediately preceding the
Determination Date.
(b) If the Company's Common Stock is not traded on an exchange or on the
NASDAQ National Market System, the NASDAQ SmallCap Market or the American
Stock Exchange, Inc., but is traded on the Toronto Stock Exchange or in
the over-the-counter market, then the mean of the closing bid and asked
prices or closing price, as applicable, reported for the last business day
immediately preceding the Determination Date.
(c) Except as provided in clause (d) below, if the Company's Common
Stock is not publicly traded, then as determined by the board of directors
of the Company.
-3-
(d) If the Determination Date is the date of a liquidation, dissolution
or winding up, or any event deemed to be a liquidation, dissolution or
winding up pursuant to the Company's charter, then all amounts to be
payable per share to holders of the Common Stock pursuant to the charter
in the event of such liquidation, dissolution or winding up, plus all
other amounts to be payable per share in respect of the Common Stock in
liquidation under the charter, assuming for the purposes of this clause
(d) that all of the shares of Common Stock then issuable upon exercise of
all of the Warrants are outstanding at the Determination Date.
1.5. Company Acknowledgment. The Company will, at the time of the exercise of
the Warrant, upon the request of the holder hereof acknowledge in writing its
continuing obligation to afford to such holder any rights to which such holder
shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant. If the holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Company to afford
to such holder any such rights.
1.6. Trustee for Warrant Holders. In the event that a bank or trust company
shall have been appointed as trustee for the holders of the Warrants pursuant to
Subsection 3.2, such bank or trust company shall have all the powers and duties
of a warrant agent (as hereinafter described) and shall accept, in its own name
for the account of the Company or such successor person as may be entitled
thereto, all amounts otherwise payable to the Company or such successor, as the
case may be, on exercise of this Warrant pursuant to this Section 1.
2.1 Delivery of Stock Certificates, etc. on Exercise. The Company agrees that
the shares of Common Stock purchased upon exercise of this Warrant shall be
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. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within seven (7) days thereafter, the Company at its expense (including
the payment by it of any applicable issue taxes) will cause to be issued in the
name of and delivered to the holder hereof, or as such holder (upon payment by
such holder of any applicable transfer taxes) may direct in compliance with
applicable securities laws, a certificate or certificates for the number of duly
and validly issued, fully paid and non assessable shares of Common Stock (or
Other Securities) to which such holder shall be entitled on such exercise, plus,
in lieu of any fractional share to which such holder would otherwise be
entitled, cash equal to such fraction multiplied by the then Fair Market Value
of one full share, together with any other stock or other securities and
property (including cash, where applicable) to which such holder is entitled
upon such exercise pursuant to Section 1 or otherwise. Notwithstanding anything
to the contrary herein contained, (a) in no event shall the Company be obligated
to issue shares upon the exercise of this Warrant until this Warrant certificate
(or the instruments and security contemplated by Section 8 hereof) has been
delivered to the Company and (b) the shares issuable upon exercise of this
Warrant shall bear the legend provided for in Section 1(e) of the Subscription
Agreement referred to in Section 9 hereof.
2.2. Cashless Exercise.
(a) Payment of the Purchase Price for this Warrant may be made either in
(i) cash or by certified or official bank check payable to the order of
the Company equal to the applicable aggregate Purchase Price, (ii) by
delivery of Common Stock issuable upon exercise of the Warrants in
accordance with Section (b) below or (iii) by a combination of any of the
foregoing methods, for the number of Common Shares specified in such form
(as such exercise number shall be adjusted to reflect any adjustment in
the total number of shares of Common Stock issuable to the holder per the
terms of this Warrant) and the holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities) determined as
provided herein.
-4-
(b) Notwithstanding any provisions herein to the contrary, if the Fair
Market Value of one share of Common Stock is greater than the Purchase
Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant for cash, upon consent of the Company, the holder
may elect to receive shares equal to the value (as determined below) of
this Warrant (or the portion thereof being cancelled) by surrender of this
Warrant at the principal office of the Company together with the properly
endorsed Subscription Form in which event the Company shall issue to the
holder a number of shares of Common Stock computed using the following
formula:
X = Y (A-B)
A
Where X = the number of shares of Common Stock to be issued to the
holder
Y = the number of shares of Common Stock purchasable under
the Warrant or, if only a portion of the Warrant is
being exercised, the portion of the Warrant being
exercised (at the date of such calculation)
A = the Fair Market Value of one share of the Company's
Common Stock (at the date of such calculation)
B = Purchase Price (as adjusted to the date of such
calculation)
(c) The Holder may not employ the cashless exercise feature described
above at any time that the Warrant Stock to be issued upon exercise is
included for unrestricted resale in an effective registration statement.
3. Adjustment for Reorganization, Consolidation, Merger, etc.
3.1. Reorganization, Consolidation, Merger, etc. In case at any time or from
time to time, the Company shall (a) effect a reorganization, (b) consolidate
with or merge into any other person or (c) transfer all or substantially all of
its properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, as a
condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the holder of this Warrant, on
the exercise hereof as provided in Section 1, at any time after the consummation
of such reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock (or
Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such holder had so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 4.
3.2. Dissolution. In the event of any dissolution of the Company following the
transfer of all or substantially all of its properties or assets, the Company,
prior to such dissolution, shall at its expense deliver or cause to be delivered
the stock and other securities and property (including cash, where applicable)
receivable by the holders of the Warrants after the effective date of such
dissolution pursuant
-5-
to this Section 3 to a bank or trust company having its principal office in New
York, NY, as trustee for the holder or holders of the Warrants.
3.3. Continuation of Terms. Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this
Section 3, this Warrant shall continue in full force and effect and the terms
hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 3. In the
event this Warrant does not continue in full force and effect after the
consummation of the transaction described in this Section 3, then only in such
event will the Company's securities and property (including cash, where
applicable) receivable by the holders of the Warrants be delivered to the
Trustee as contemplated by Section 3.2.
4. Extraordinary Events Regarding Common Stock. In the event that the Company
shall (a) issue additional shares of the Common Stock as a dividend or other
distribution on outstanding Common Stock, (b) subdivide its outstanding shares
of Common Stock or (c) combine its outstanding shares of the Common Stock into a
smaller number of shares of the Common Stock, then, in each such event, the
Purchase Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Purchase Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Purchase Price then in effect. The Purchase
Price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein in this Section 4. The number
of shares of Common Stock that the holder of this Warrant shall thereafter, on
the exercise hereof as provided in Section 1, be entitled to receive shall be
increased or decreased to a number determined by multiplying the number of
shares of Common Stock that would otherwise (but for the provisions of this
Section 4) be issuable on such exercise by a fraction of which (a) the numerator
is the Purchase Price that would otherwise (but for the provisions of this
Section 4) be in effect, and (b) the denominator is the Purchase Price in effect
on the date of such exercise.
5. Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding and (b) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such adjustment or readjustment and as adjusted
or readjusted as provided in this Warrant. The Company will forthwith mail a
copy of each such certificate to the holder of the Warrant and any Warrant Agent
of the Company (appointed pursuant to Section 12 hereof).
6. Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial
Statements. From and after the Issue Date of this Warrant, the Company will at
all times reserve and keep available, solely for issuance and delivery on the
exercise of the Warrants, all shares of Common Stock (or Other Securities) from
time to time issuable on the exercise of the Warrant.
-6-
7. Assignment; Exchange of Warrant. Subject to compliance with applicable
securities laws and the receipt of an opinion of counsel, in form and substance
reasonably satisfactory to the Company [see the legend on page 1], this Warrant,
and the rights evidenced hereby, may be transferred by any registered holder
hereof (a "Transferor") with respect to any or all of the Warrants. On the
surrender for exchange of this Warrant, with the Transferor's endorsement in the
form of Exhibit B attached hereto (the "Transferor Endorsement Form") and
together with evidence reasonably satisfactory to the Company demonstrating
compliance with applicable securities laws, the Company at its expense, but with
payment by the Transferor of any applicable transfer taxes) will issue and
deliver to or on the order of the Transferor thereof a new Warrant or Warrants
of like tenor, in the name of the Transferor and/or the transferee(s) specified
in such Transferor Endorsement Form (each a "Transferee"), calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
called for on the face or faces of the Warrant so surrendered by the Transferor.
8. Replacement of Warrant. On receipt 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 or security reasonably satisfactory in form and amount
to the Company or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
9. Registration Rights. The Holder of this Warrant has been granted certain
registration rights by the Company. These registration rights are set forth in a
Subscription Agreement entered into by the Company and a Subscriber of the
Company's Common Stock at or prior to the issue date of this Warrant. The terms
of the Subscription Agreement are incorporated herein by this reference. Upon
the occurrence of a Non-Registration Event, as defined in the Subscription
Agreement, in the event the Company is unable to issue Common Stock upon
exercise of this Warrant that has been registered in a Registration Statement
described in Section 8.1 of the Subscription Agreement, within the time periods
described in the Subscription Agreement, which Registration Statement must be
effective for the periods set forth in the Subscription Agreement, then upon
written demand made by the Holder, the Company will pay to the Holder of this
Warrant, in lieu of delivering Common Stock, a sum equal to the closing price of
the Company's Common Stock on the Principal Market (as defined in the
Subscription Agreement) or such other principal trading market for the Company's
Common Stock on the trading date immediately preceding the date notice is given
by the Holder, less the Purchase Price, for each share of Common Stock
designated in such notice from the Holder.
10. Maximum Exercise. The Holder shall not be entitled to exercise this
Warrant on an exercise date, in connection with that number of shares of Common
Stock which would be in excess of the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates on an exercise date,
and (ii) the number of shares of Common Stock issuable upon the exercise of this
Warrant with respect to which the determination of this limitation is being made
on an exercise date, which would result in beneficial ownership by the Holder
and its affiliates of more than 9.99% of the outstanding shares of Common Stock
of the Company on such date. For the purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3
thereunder. Subject to the foregoing, the Holder shall not be limited to
aggregate exercises which would result in the issuance of more than 9.99%. The
restriction described in this paragraph may be revoked upon seventy-five (75)
days prior notice from the Holder to the Company. The Holder may allocate which
of the equity of the Company deemed beneficially owned by the Subscriber shall
be included in the 9.99% amount described above and which shall be allocated to
the excess above 9.99%. The Company shall not be responsible for any exercise of
this Warrant in violation of this Section 10.
-7-
11. Warrant Agent. The Company may, by written notice to the each holder of
the Warrant, appoint an agent for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1, exchanging
this Warrant pursuant to Section 7, and replacing this Warrant pursuant to
Section 8, or any of the foregoing, and thereafter any such issuance, exchange
or replacement, as the case may be, shall be made at such office by such agent.
12. Transfer on the Company's Books. Until this Warrant is transferred on the
books of the Company, the Company may treat the registered holder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.
13. Notices. All notices and other communications from the Company to the
holder of this Warrant shall be mailed by first class registered or certified
mail, postage prepaid, at such address as may have been furnished to the Company
in writing by such holder or, until any such holder furnishes to the Company an
address, then to, and at the address of, the last holder of this Warrant who has
so furnished an address to the Company.
14. Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflicts of laws.
Any action concerning this Warrant shall be brought only in the state courts
located in the City of New York, State of New York or in the federal courts
located in the City of New York, State of New York. The Company and each holder
of this Warrant agree to submit to the jurisdiction of such courts and waive
trial by jury. The prevailing party shall be entitled to recover from the other
party its reasonable attorney's fees and costs. The headings in this Warrant are
for purposes of reference only, and shall not limit or otherwise affect any of
the terms hereof. The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision.
IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.
--------------------------------------------------------------------------------
ADB SYSTEMS INTERNATIONAL INC.
Witness: By:_______________________________
---------------------------
--------------------------------------------------------------------------------
-8-
EXHIBIT A
FORM OF SUBSCRIPTION
(to be signed only on exercise of Warrant)
TO: ADB SYSTEMS INTERNATIONAL INC.
The undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable box):
___ ________ shares of the Common Stock covered by such Warrant; or
___ the maximum number of shares of Common Stock covered by such Warrant
pursuant to the cashless exercise procedure set forth in Section 2.
The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant, which is
$___________. Such payment takes the form of (check applicable box or boxes):
___ $__________ in lawful money of the United States; and/or
___ the cancellation of such portion of the attached Warrant as is exercisable
for a total of _______ shares of Common Stock (using a Fair Market Value of
$_______ per share for purposes of this calculation); and/or
___ the cancellation of such number of shares of Common Stock as is necessary,
in accordance with the formula set forth in Section 2, to exercise this Warrant
with respect to the maximum number of shares of Common Stock purchasable
pursuant to the cashless exercise procedure set forth in Section 2.
The undersigned requests that the certificates for such shares be issued in the
name of, and delivered to _____________________________________________________
whose address is ______________________________________________________________
_______________________________________________________________________________
The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant shall
be made pursuant to registration of the Common Stock under the Securities Act of
1933, as amended (the "Securities Act"), or pursuant to an exemption from
registration under the Securities Act.
Dated:
--------------------------- --------------------------------------------
(Signature must conform to name of holder as
specified on the face of the Warrant)
--------------------------------------------
--------------------------------------------
(Address)
-9-
EXHIBIT B
FORM OF TRANSFEROR ENDORSEMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
unto the person(s) named below under the heading "Transferees" the right
represented by the within Warrant to purchase the percentage and number of
shares of Common Stock of ADB SYSTEMS INTERNATIONAL INC. to which the within
Warrant relates specified under the headings "Percentage Transferred" and
"Number Transferred," respectively, opposite the name(s) of such person(s) and
appoints each such person Attorney to transfer its respective right on the books
of ADB SYSTEMS INTERNATIONAL INC. with full power of substitution in the
premises.
Transferees Percentage Transferred Number Transferred
----------- ---------------------- ------------------
----------------------- ---------------------------- ------------------------
----------------------- ---------------------------- ------------------------
----------------------- ---------------------------- ------------------------
----------------------- ---------------------------- ------------------------
Dated: ,
---------------- ------------ -----------------------------------------
(Signature must conform to name of holder
as specified on the face of the warrant)
Signed in the presence of:
----------------------------------- -----------------------------------------
(Name) -----------------------------------------
(address)
ACCEPTED AND AGREED: -----------------------------------------
[TRANSFEREE] -----------------------------------------
(address)
-----------------------------------
(Name)
