THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. IT HAS BEEN ACQUIRED FOR INVESTMENT
PURPOSES ONLY, WITHOUT A VIEW TO RESALE OR DISTRIBUTION AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD, MADE SUBJECT TO A SECURITY INTEREST, OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
This Warrant is issued this 26th day of September, 1997, by PAYSYS
INTERNATIONAL, INC., a Florida corporation (the "Company"), to SIRROM CAPITAL
CORPORATION, a Tennessee corporation (SIRROM CAPITAL CORPORATION and any
subsequent assignee or transferee hereof are hereinafter referred to
collectively as "Holder" or "Holders").
AGREEMENT:
1. Issuance of Warrant; Term. For and in consideration of SIRROM CAPITAL
CORPORATION making a loan to the Company in an amount of Four Million and
no/100ths Dollars ($4,000,000) pursuant to the terms of a secured promissory
note of even date herewith (the "Note") and related loan agreement of even date
herewith (the "Loan Agreement"), and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company hereby
grants to Holder the right to purchase 7,532 shares of the Company's common
stock (the "Common Stock"), which the Company represents equals 0.4% of the
capital stock of the Company on the date hereof, calculated on a fully diluted
basis after exercise ("Base Amount"), provided that in the event that the
indebtedness evidenced by the Note is outstanding on the following dates, the
Base Amount shall be increased to the corresponding number set forth below:
Date Base Amount
---------------- --------------------------------------------------
February 1, 1998 11,320 shares of Common Stock, which the Company
represents equals 0.6% of the capital stock of the
Company on the date hereof calculated on a fully
diluted basis after exercise.
May 1, 1998 13,220 shares of Common Stock, which the
Company represents equals 0.7% of the capital
stock of the Company on the date hereof calculated
on a fully diluted basis after exercise.
August 1, 1998 15,124 shares of Common Stock, which the
Company represents equals 0.8% of the capital
stock of the Company on the date hereof calculated
on a fully diluted basis after exercise.
November 1, 1998 17,032 shares of Common Stock, which the
Company represents equals 0.9% of the capital
stock of the Company on the date hereof calculated
on a fully diluted basis after exercise.
February 1, 1999 18,944 shares of Common Stock, which the
Company represents equals 1.0% of the capital
stock of the Company on the date hereof calculated
on a fully diluted basis after exercise.
September 26, 2000 38,274 shares of Common Stock, which the
Company represents equals 2.0% of the capital
stock of the Company on the date hereof calculated
on a fully diluted basis after exercise.
September 26, 2001 58,004 shares of Common Stock, which the
Company represents equals 3.0% of the capital
2
stock of the Company on the date hereof calculated
on a fully diluted basis after exercise.
September 26, 2002 78,144 shares of Common Stock, which the
Company represents equals 4.0% of the capital
stock of the Company on the date hereof calculated
on a fully diluted basis after exercise.
Notwithstanding the foregoing to the contrary, each of the foregoing Base
Amounts shall be increased by 99,126 shares of Common Stock, which the Company
represents equals 5.0% of the capital stock of the Company on the date hereof
calculated on a fully diluted basis after exercise, if the Company fails to
repay the Note within 30 days of the Company successfully completing an
underwritten public offering of its Common Stock with proceeds of the Company
equal to or greater than $10,000,000 ("IPO"). The shares of Common Stock
issuable upon exercise of this Warrant are hereinafter referred to as the
"Shares." This Warrant shall be exercisable at any time and from time to time
from the date hereof until October 26, 2002. For purposes of this Warrant the
term "fully diluted basis" shall be determined in accordance with generally
accepted accounting principles as of the date hereof.
2. Exercise Price. The exercise price (the "Exercise Price") per share
for which all or any of the Shares may be purchased pursuant to the terms of
this Warrant shall be One Cent ($.01).
3. Exercise. This Warrant may be exercised by the Holder hereof (but
only on the conditions hereinafter set forth) as to all or any increment or
increments of One Hundred (100) Shares (or the balance of the Shares if less
than such number), upon delivery of written notice of intent to exercise to the
Company at the following address: Xxx Xxxx Xxx, Xxxxxxxx, Xxxxxxx 00000 or such
other address as the Company shall designate in a written notice to the Holder
hereof, together with this Warrant and payment to the Company of the aggregate
Exercise Price of the Shares so purchased. The Exercise Price shall be payable,
at the option of the Holder, (i) by certified or bank check, (ii) by the
surrender of the Note or portion thereof having an outstanding principal balance
equal to the aggregate Exercise Price or (iii) by the surrender of a portion of
this Warrant having a fair market value equal to the aggregate Exercise Price.
Upon exercise of this Warrant as aforesaid, the Company shall as promptly as
practicable, and in any event within fifteen (15) days thereafter, execute and
deliver to the Holder of this
3
Warrant a certificate or certificates for the total number of whole Shares for
which this Warrant is being exercised in such names and denominations as are
requested by such Holder. If this Warrant shall be exercised with respect to
less than all of the Shares, the Holder shall be entitled to receive a new
Warrant covering the number of Shares in respect of which this Warrant shall not
have been exercised, which new Warrant shall in all other respects be identical
to this Warrant. The Company covenants and agrees that it will pay when due any
and all state and federal issue taxes which may be payable in respect of the
issuance of this Warrant or the issuance of any Shares upon exercise of this
Warrant.
4. Covenants and Conditions. The above provisions are subject to the
following:
(a) Neither this Warrant nor the Shares have been registered under
the Securities Act of 1933, as amended ("Securities Act") or any state
securities laws ("Blue Sky Laws"). This Warrant has been acquired for
investment purposes and not with a view to distribution or resale and may
not be pledged, hypothecated, sold, made subject to a security interest, or
otherwise transferred without (i) an effective registration statement for
such Warrant under the Securities Act and such applicable Blue Sky Laws, or
(ii) an opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to the Company and its counsel, that registration is not
required under the Securities Act or under any applicable Blue Sky Laws
(the Company hereby acknowledges that Bass, Xxxxx & Xxxx is acceptable
counsel). Transfer of the shares issued upon the exercise of this Warrant
shall be restricted in the same manner and to the same extent as the
Warrant and the certificates representing such Shares shall bear
substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES
LAW AND MAY NOT BE TRANSFERRED UNTIL (I) A REGISTRATION
STATEMENT UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES
LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR
(II) IN THE OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY,
REGISTRATION UNDER SUCH SECURITIES ACTS OR SUCH APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH
SUCH PROPOSED TRANSFER.
4
The Holder hereof and the Company agree to execute such other documents and
instruments as counsel for the Company reasonably deems necessary to effect the
compliance of the issuance of this Warrant and any shares of Common Stock issued
upon exercise hereof with applicable federal and state securities laws.
(b) The Company covenants and agrees that all Shares which may be
issued upon exercise of this Warrant will, upon issuance and payment
therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive rights,
if any, with respect thereto or to the issuance thereof. The Company shall
at all times reserve and keep available for issuance upon the exercise of
this Warrant such number of authorized but unissued shares of Common Stock
as will be sufficient to permit the exercise in full of this Warrant.
(c) The Company covenants and agrees that it shall not sell or issue
any shares of the Company's capital stock at a price below the fair market
value of such shares, without the prior written consent of the Holder
hereof, except pursuant to the exercise of warrants, options or other
rights to purchase capital stock outstanding on the date hereof and
disclosed to the initial Holder. In the event that the Company sells
shares of the Company's capital stock in violation of this Section 4(c),
the number of shares issuable upon exercise of this Warrant shall be equal
to the product obtained by multiplying the number of shares issuable
pursuant to this Warrant prior to such sale by the quotient obtained by
dividing (i) the fair market value of the shares issued in violation of
this Section 4(c) by (ii) the price at which such shares were sold.
5. Transfer of Warrant. Subject to the provisions of Section 4 hereof,
this Warrant may be transferred, in whole or in part, to any person or business
entity, by presentation of the Warrant to the Company with written instructions
for such transfer provided that at any time this Warrant may not be held in part
by more than three persons. Upon such presentation for transfer, the Company
shall promptly execute and deliver a new Warrant or Warrants in the form hereof
in the name of the assignee or assignees and in the denominations specified in
such instructions. The Company shall pay all expenses incurred by it in
connection with the preparation, issuance and delivery of Warrants under this
Section, provided, however, that the Company shall not be liable to pay any
transfer taxes.
6. Warrant Holder Not Shareholder; Rights Offering; Preemptive Rights;
Preference Rights. Except as otherwise provided herein, this Warrant does not
confer upon the Holder, as
5
such, any right whatsoever as a shareholder of the Company. Notwithstanding the
foregoing, if the Company should offer to all of the Company's shareholders the
right to purchase any securities of the Company, then all shares of Common Stock
that are subject to this Warrant shall be deemed to be outstanding and owned by
the Holder and the Holder shall be entitled to participate in such rights
offering. The Company shall not grant any preemptive rights with respect to any
of its capital stock without the prior written consent of the Holder. The
Company shall not issue any securities which entitle the holder thereof to
obtain any preference over holders of Common Stock upon the dissolution,
liquidation, winding-up, sale, merger, or reorganization of the Company without
the prior written consent of the Holder.
7. Observation Rights. A representative of the Holders of this Warrant
appointed by the Holders of a majority in interest in this Warrant (the
"Representative") shall (a) receive notice of and be entitled to attend or may
send a representative to attend all meetings of the Company's Board of Directors
in a non-voting observation capacity, (b) receive copies of all notices,
packages and documents provided to members of the Company's Board of Directors
for each board of directors meeting, and (c) receive copies of all actions taken
by written consent by the Company's Board of Directors, from the date hereof
until such time as the indebtedness evidenced by the Note has been paid in full.
6
8. Adjustment Upon Changes in Stock.
(a) If all or any portion of this Warrant shall be exercised
subsequent to any stock split, stock dividend, recapitalization,
combination of shares of the Company, or other similar event, occurring
after the date hereof, then the Holder exercising this Warrant shall
receive, for the aggregate price paid upon such exercise, the aggregate
number and class of shares which such Holder would have received if this
Warrant had been exercised immediately prior to such stock split, stock
dividend, recapitalization, combination of shares, or other similar event.
If the cumulative adjustments under this Section 8(a) would create a
fractional share of Common Stock or a right to acquire a fractional share
of Common Stock, such fractional share shall be disregarded and the number
of shares subject to this Warrant shall be the next higher number of
shares, rounding all fractions upward. Whenever there shall be an
adjustment pursuant to this Section 8(a), the Company shall forthwith
notify the Holder or Holders of this Warrant of such adjustment, setting
forth in reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated.
(b) If all or any portion of this Warrant shall be exercised
subsequent to any merger, consolidation, exchange of shares, separation,
reorganization or liquidation of the Company, or other similar event,
occurring after the date hereof, as a result of which shares of Common
Stock shall be changed into the same or a different number of shares of the
same or another class or classes of securities of the Company or another
entity, then the Holder exercising this Warrant shall receive, for the
aggregate price paid upon such exercise, the aggregate number and class of
shares which such Holder would have received if this Warrant had been
exercised immediately prior to such merger, consolidation, exchange of
shares, separation, reorganization or liquidation, or other similar event.
If any adjustment under this Section 8(b) would create a fractional share
of Common Stock or a right to acquire a fractional share of Common Stock,
such fractional share shall be disregarded and the number of shares subject
to this Warrant shall be the next higher number of shares, rounding all
fractions upward. Whenever there shall be an adjustment pursuant to this
Section 8(b), the Company shall forthwith notify the Holder or Holders of
this Warrant of such adjustment, setting forth in reasonable detail the
event requiring the adjustment and the method by which such adjustment was
calculated.
7
9. Put Agreement.
(a) The Company hereby irrevocably grants and issues to Holder the
right and option to sell to the Company (the "Put") this Warrant for a
period of 30 days immediately prior to the expiration thereof, at a
purchase price (the "Purchase Price") equal to the Fair Market Value (as
hereinafter defined) of the shares of Common Stock issuable to Holder upon
exercise of this Warrant. The Put shall terminate if Company successfully
completes the IPO and repays the Note in full.
(b) The Company shall pay to the Holder, in cash or certified or
cashier's check, the Purchase Price in exchange for the delivery to the
Company of this Warrant within thirty (30) days of the receipt of written
notice, addressed as set forth in Section 3 hereto, from the Holder of its
intention to exercise the Put.
(c) The Fair Market Value of the shares of Common Stock of the
Company issuable pursuant to this Warrant shall be determined as follows:
(i) The Company and the Holder shall each appoint an
independent, experienced appraiser who is a member of a recognized
professional association of business appraisers. The two appraisers
shall determine the value of the shares of Common Stock which would be
issued upon the exercise of the Warrant, taking into consideration
that such shares would constitute a minority interest, and would lack
liquidity, and further assuming that the sale would be between a
willing buyer and a willing seller, both of whom have full knowledge
of the financial and other affairs of the Company, and neither of whom
is under any compulsion to sell or to buy.
(ii) If the highest of the two appraisals is not more than 10%
more than the lowest of the appraisals, the Fair Market Value shall be
the average of the two appraisals. If the highest of the two
appraisals is 10% or more than the lowest of the two appraisals, then
a third appraiser shall be appointed by the two appraisers, and if
they cannot agree on a third appraiser, the American Arbitration
Association shall appoint the third appraiser. The third appraiser,
regardless of who appoints him or her, shall have the same
qualifications as the first two appraisers.
8
(iii) The Fair Market Value after the appointment of the third
appraiser shall be the mean of the three appraisals.
(iv) The fees and expenses of the appraisers shall be paid
one-half by the Company and one-half by the Holder.
10. Registration.
(a) The Company and the holders of the Shares agree that if at any
time after the date hereof the Company shall propose to file a registration
statement with respect to a secondary offering of its Common Stock on a
suitable form, it will give notice in writing to such effect to the
registered holder(s) of the Shares at least thirty (30) days prior to such
filing, and, at the written request of any such registered holder, made
within ten (10) days after the receipt of such notice, will include therein
at the Company's cost and expense (including the fees and expenses of
counsel to such holder(s), but excluding underwriting discounts,
commissions and filing fees attributable to the Shares included therein)
such of the Shares (but not less than 1000 Shares) as such holder(s) shall
request; provided, however, that if the offering being registered by the
Company is underwritten then the selling Holders shall enter into any
underwriting agreement and other customary agreements as described in
Section 10(b)(vii) and if the representative of the underwriters certifies
in writing that the inclusion therein of the Shares would materially and
adversely affect the sale of the securities to be sold by the Company
thereunder, then the Company shall be required to include in the offering
only that number of securities, including the Shares, which the
underwriters determine in their sole discretion will not jeopardize the
success of the offering (the securities so included to be apportioned pro
rata among all selling shareholders according to the total amount of
securities entitled to be included therein owned by each selling
shareholder, but in no event shall the total number of Shares included in
the offering be less than the number of securities included in the offering
by any other single selling shareholder).
9
(b) Whenever the Company undertakes to effect the registration of any
of the Shares, the Company shall, as expeditiously as reasonably possible:
(i) Prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement covering such Shares and
use its best efforts to cause such registration statement to be
declared effective by the Commission as expeditiously as possible and
to keep such registration effective until the earlier of (A) the date
when all Shares covered by the registration statement have been sold
or (B) two hundred seventy (270) days from the effective date of the
registration statement; provided, that before filing a registration
statement or prospectus or any amendment or supplements thereto, the
Company will furnish to each Holder of Shares covered by such
registration statement and the underwriters, if any, copies of all
such documents proposed to be filed (excluding exhibits, unless any
such person shall specifically request exhibits), which documents will
be subject to the review of such Holders and underwriters, and the
Company will not file such registration statement or any amendment
thereto or any prospectus or any supplement thereto (including any
documents incorporated by reference therein) with the Commission if
(A) the underwriters, if any, shall reasonably object to such filing
or (B) if information in such registration statement or prospectus
concerning a particular selling Holder has changed and such Holder or
the underwriters, if any, shall reasonably object.
(ii) Prepare and file with the Commission such amendments and
post-effective amendments to such registration statement as may be
necessary to keep such registration statement effective during the
period referred to in Section 10(b)(i) and to comply with the
provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement, and cause the
prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed with the Commission pursuant to
Rule 424 under the Securities Act.
(iii) Furnish to the selling Holder(s) such numbers of copies of
such registration statement, each amendment thereto, the prospectus
included in such registration statement (including each preliminary
prospectus), each supplement thereto and such other
10
documents as they may reasonably request in order to facilitate the
disposition of the Shares owned by them.
(iv) Use its best efforts to register and qualify under such
other securities laws of such jurisdictions as shall be reasonably
requested by any selling Holder and do any and all other acts and
things which may be reasonably necessary or advisable to enable such
selling Holder to consummate the disposition of the Shares owned by
such Holder, in such jurisdictions; provided, however, that the
Company shall not be required in connection therewith or as a
condition thereto to qualify to transact business or to file a general
consent to service of process in any such states or jurisdictions.
(v) Promptly notify each selling Holder of the happening of any
event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not
misleading and, at the request of any such Holder, the Company will
prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Shares, such prospectus
will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not
misleading.
(vi) Provide a transfer agent and registrar for all such Shares
not later than the effective date of such registration statement.
(vii) Enter into such customary agreements (including
underwriting agreements in customary form for a primary offering) and
take all such other actions as the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such
Shares (including, without limitation, effecting a stock split or a
combination of shares).
(viii) Make available for inspection by any selling Holder or
any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent
retained by any such selling Holder or underwriter, all financial and
other records, pertinent corporate documents and properties of the
Company, and cause the officers, directors, employees and independent
accountants of the Company to supply all information reasonably
11
requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement.
(ix) Promptly notify the selling Holder(s) and the underwriters,
if any, of the following events and (if requested by any such person)
confirm such notification in writing: (A) the filing of the
prospectus or any prospectus supplement and the registration statement
and any amendment or post-effective amendment thereto and, with
respect to the registration statement or any post-effective amendment
thereto, the declaration of the effectiveness of such documents, (B)
any requests by the Commission for amendments or supplements to the
registration statement or the prospectus or for additional
information, (C) the issuance or threat of issuance by the Commission
of any stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that purpose, and
(D) the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threat of initiation of any
proceeding for such purposes.
(x) Make every reasonable effort to prevent the entry of any
order suspending the effectiveness of the registration statement and
obtain at the earliest possible moment the withdrawal of any such
order, if entered.
(xi) Cooperate with the selling Holder(s) and the underwriters,
if any, to facilitate the timely preparation and delivery of
certificates representing the Shares to be sold and not bearing any
restrictive legends, and enable such Shares to be in such lots and
registered in such names as the underwriters may request at least two
(2) business days prior to any delivery of the Shares to the
underwriters.
(xii) Provide a CUSIP number for all the Shares not later than
the effective date of the registration statement.
(xiii) Prior to the effectiveness of the registration statement
and any post-effective amendment thereto and at each closing of an
underwritten offering, (A) make such representations and warranties to
the selling Holder(s) and the underwriters, if any, with respect to
the Shares and the registration
12
statement as are customarily made by issuers in primary underwritten
offerings; (B) use its best efforts to obtain "cold comfort" letters
and updates thereof from the Company's independent certified public
accountants addressed to the selling Holders and the underwriters, if
any, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters by underwriters in
connection with primary underwritten offerings; (C) deliver such
documents and certificates as may be reasonably requested (1) by the
holders of a majority of the Shares being sold, and (2) by the
underwriters, if any, to evidence compliance with clause (A) above and
with any customary conditions contained in the underwriting agreement
or other agreement entered into by the Company; and (D) obtain
opinions of counsel to the Company and updates thereof (which counsel
and which opinions shall be reasonably satisfactory to the
underwriters, if any), covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as
may be reasonably requested by the selling Holders and underwriters or
their counsel. Such counsel shall also state that no facts have come
to the attention of such counsel which cause them to believe that such
registration statement, the prospectus contained therein, or any
amendment or supplement thereto, as of their respective effective or
issue dates, contains any untrue statement of any material fact or
omits to state any material fact necessary to make the statements
therein not misleading (except that no statement need be made with
respect to any financial statements, notes thereto or other financial
data or other expertized material contained therein). If for any
reason the Company's counsel is unable to give such opinion, the
Company shall so notify the Holders of the Shares and shall use its
best efforts to remove expeditiously all impediments to the rendering
of such opinion.
(xiv) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act, no later than
forty-five (45) days after the end of any twelve-month period (or
ninety (90) days, if such period is a fiscal year) (A) commencing at
the end of any fiscal quarter in which the Shares are sold to
underwriters in a firm or best efforts underwritten offering, or (B)
if not sold to underwriters in such an
13
offering, beginning with the first month of the first fiscal quarter
of the Company commencing after the effective date of the registration
statement, which statements shall cover such twelve-month periods.
(c) After the date hereof, the Company shall not grant to any holder
of securities of the Company any registration rights which have a priority
greater than or equal to those granted to Holders pursuant to this Warrant
without the prior written consent of the Holder(s).
(d) The Company's obligations under Section 10(a) above with respect
to each holder of Shares are expressly conditioned upon such holder's
furnishing to the Company in writing such information concerning such
holder and the terms of such holder's proposed offering as the Company
shall reasonably request for inclusion in the registration statement. If
any registration statement including any of the Shares is filed, then the
Company shall indemnify each holder thereof (and each underwriter for such
holder and each person, if any, who controls such underwriter within the
meaning of the Securities Act) from any loss, claim, damage or liability
arising out of, based upon or in any way relating to any untrue statement
of a material fact contained in such registration statement or any omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, except for any such
statement or omission based on information furnished in writing by such
holder of the Shares expressly for use in connection with such registration
statement; and such holder shall indemnify the Company (and each of its
officers and directors who has signed such registration statement, each
director, each person, if any, who controls the Company within the meaning
of the Securities Act, each underwriter for the Company and each person, if
any, who controls such underwriter within the meaning of the Securities
Act) and each other such holder against any loss, claim, damage or
liability arising from any such statement or omission which was made in
reliance upon information furnished in writing to the Company by such
holder of the Shares expressly for use in connection with such registration
statement.
(e) For purposes of this Section 10, all of the Shares shall be
deemed to be issued and outstanding.
14
11. Certain Notices. In case at any time the Company shall propose to:
(a) declare any cash dividend upon its Common Stock;
(b) declare any dividend upon its Common Stock payable in stock or
make any special dividend or other distribution to the holders of its
Common Stock;
(c) offer for subscription to the holders of any of its Common Stock
any additional shares of stock in any class or other rights;
(d) reorganize, or reclassify the capital stock of the Company, or
consolidate, merge or otherwise combine with, or sell all or substantially
all of its assets to, another corporation; or
(e) voluntarily or involuntarily dissolve, liquidate or wind up the
affairs of the Company;
then, in any one or more of said cases, the Company shall give to the
Holder of the Warrant, by certified or registered mail, (i) at least twenty
(20) 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 such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, at least twenty (20) days' prior
written notice of the date when the same shall take place. Any notice
required by 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 any notice required
by clause (ii) shall 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.
12. Rights of Co-Sale.
(a) Co-Sale Right. Neither Intelligent Systems Corporation, Xxxxx &
Xxxxxxxx Ltd., nor GW Investments, Ltd. (individually a "Selling
Shareholder" and collectively the "Selling Shareholders") shall enter into
any transaction
15
that would result in the sale by it of any Common Stock now or hereafter
owned by it, unless prior to such sale the Selling Shareholder shall give
notice to Holder of its intention to effect such sale in order that Holder
may exercise its rights under this Section 12 as hereinafter described.
Such notice shall set forth (i) the number of shares to be sold by the
Selling Shareholder, (ii) the principal terms of the sale, including the
price at which the shares are intended to be sold, and (iii) an offer by
the Selling Shareholder to use its best efforts to cause to be included
with the shares to be sold by it in the sale, on a share-by-share basis and
on the same terms and conditions, the Shares issuable or issued to Holder
pursuant this Warrant. The co-sale rights hereunder shall terminate if the
Company successfully completes the IPO and repays the Note in full and
shall not be effective with respect to the sale by any Selling Shareholder
in the IPO.
(b) Rejection of Co-Sale Offer. If Holder has not accepted such
offer in writing within a period of ten (10) days from the date of receipt
of the notice, then the Selling Shareholder shall thereafter be free for a
period of ninety (90) days to sell the number of shares specified in such
notice, at a price no greater than the price set forth in such notice and
on otherwise no more favorable terms to the Selling Shareholder than as set
forth in such notice, without any further obligation to Holder in
connection with such sale. In the event that the Selling Shareholder fails
to consummate such sale within such ninety-day period, the shares specified
in such notice shall continue to be subject to this Section.
(c) Acceptance of Co-Sale Offer. If Holder accepts such offer in
writing within ten (10) day period, such acceptance shall be irrevocable
unless the Selling Shareholder shall be unable to cause to be included in
his sale the number of Shares of stock held by Holder and set forth in the
written acceptance. In that event, the Selling Shareholder and Holder
shall participate in the sale pro rata, with the Selling Shareholder and
Holder each selling half the total number of such shares to be sold in the
sale.
13. Stock Option Plan. Notwithstanding anything contained herein to the
contrary, the Company may grant options to purchase up to sixteen percent
of the Company's Common Stock outstanding on the date hereof to employees
and directors of the Company pursuant to the Company's 1995 Stock Incentive
Plan (the "1995 Plan"), and the Company may issue shares of the Company's
Common Stock or grant options to purchase
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shares of the Company's Common Stock (up to a maximum of six percent of the
Common Stock outstanding on the date hereof) to key employees, officers and
directors of the Company pursuant to the 1997 Stock Incentive Plan (the
"1997 Plan") (the 1995 Plan and the 1997 Plan are sometimes collectively
referred to as the "Plans"); provided, however, that the exercise price per
share under each option granted under the Plans shall in no event be less
than 100% of the fair market value of the Common Stock on the date such
option is granted.
14. Equity Participation. This Warrant is issued in connection with the
Loan Agreement. It is intended that this Warrant constitute an equity
participation under and pursuant to T.C.A. Section 00-00-000, et seq. and
that such equity participation be permitted under said statutes and not
constitute interest on the Note. If under any circumstances whatsoever,
fulfillment of any obligation of this Warrant, the Loan Agreement, or any
other agreement or document executed in connection with the Loan Agreement,
shall violate the lawful limit of any applicable usury statute or any other
applicable law with regard to obligations of like character and amount,
then the obligation to be fulfilled shall be reduced to such lawful limit,
such that in no event shall there occur, under this Warrant, the Loan
Agreement, or any other document or instrument executed in connection with
the Loan Agreement, any violation of such lawful limit, but such obligation
shall be fulfilled to the lawful limit. If any sum is collected in excess
of the lawful limit, such excess shall be applied to reduce the principal
amount of the Note.
15. Governing Law. This warrant shall be governed by the laws of the
State of Tennessee applicable to agreements made entirely within the State.
16. Severability. If any provision(s) of this Warrant or the
application thereof to any person or circumstances shall
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be invalid or unenforceable to any extent, the remainder of this Warrant
and the application of such provisions to other persons or circumstances
shall not be affected thereby and shall be enforced to the greatest extent
permitted by law.
17. Counterparts. This Warrant may be executed in any number of
counterparts and be different parties to this Warrant in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
Warrant.
18. Jurisdiction and Venue. The Company hereby consents to the
jurisdiction of the courts of the State of Tennessee and the United States
District Court for the Middle District of Tennessee, as well as to the
jurisdiction of all courts from which an appeal may be taken from such
courts, for the purpose of any suit, action or other proceeding arising out
of any of its obligations arising under this Agreement or with respect to
the transactions contemplated hereby, and expressly waives any and all
objections it may have as to venue in any such courts.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the date
first above written.
PAYSYS INTERNATIONAL, INC., a
Florida corporation
By:____________________________
Title:_______________________
SIRROM CAPITAL CORPORATION, a
Tennessee corporation
By:____________________________
Title:_________________________
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The undersigned Shareholders join in the execution of this Warrant for the
purposes of acknowledging and agreeing to be bound by Section 12 hereof.
INTELLIGENT SYSTEMS CORPORATION
_______________________________
By:____________________________
Title:_________________________
XXXXX & XXXXXXXX, LTD.
________________________________
By:_____________________________
Title:__________________________
GW INVESTMENTS, LTD.
________________________________
By:____________________________,
By:_____________________________
Title:__________________________
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