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EXHIBIT 10.2
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT.
HYPERCOM CORPORATION
COMMON STOCK PURCHASE WARRANT
No. X-0 Xxxxxx 0, 0000
Xxxxxxx to Purchase 375,000
Shares of Common Stock
Hypercom Corporation, a Delaware corporation (the "Company"), for value
received, hereby certifies that ABLECO HOLDING LLC, a Delaware limited liability
company, or its registered assigns (the "Holder"), is entitled to purchase from
the Company 375,000 duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock (the "Initial Warrant Shares"), plus any
Additional Warrant Shares (as defined herein) (such Additional Warrant Shares
and the Initial Warrant Shares, being referred to herein collectively as the
"Warrant Shares"), at a purchase price per share equal to $4.00 (the "Purchase
Price"), at any time or from time to time on or after August 2, 2001, but prior
to 5:00 P.M., Central Daylight Time, on August 1, 2006 (the "Expiration Date"),
all subject to the terms, conditions and adjustments set forth below in this
Warrant.
This Warrant (the "Warrant") is issued pursuant to the terms of a
certain Loan and Security Agreement, dated as of the date hereof, as amended or
otherwise modified from time to time, between the Company and certain of its
subsidiaries, and an affiliate of the Holder, as lender (the "Loan and Security
Agreement"). This Warrant initially evidences the Holder's right to purchase up
to 375,000 shares of the Company's Common Stock subject to adjustment as
provided herein. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned such terms in the Loan and Security Agreement.
1. DEFINITIONS. As used herein, unless the context otherwise requires,
the following terms shall have the meanings indicated:
"Additional Shares of Common Stock" shall mean all shares (including
treasury shares) of Common Stock issued or sold (or, pursuant to Section 3.3 or
3.4, deemed to be issued) by the Company after the date hereof, whether or not
subsequently reacquired or retired by the Company, other than
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(a) (i) This Warrant and shares issued upon the exercise of
this Warrant and (ii) such number of additional shares as may become
issuable upon the exercise of this Warrant by reason of adjustments
required pursuant to the anti-dilution provisions applicable to this
Warrant as in effect on the date hereof,
(b) (i) Options and shares issued upon the exercise of Options
or the conversion of Convertible Securities issued by the Company
before the date hereof, and (ii) such additional number of shares as
may become issuable by reason of adjustments required pursuant to
anti-dilution provisions applicable to such Options or Convertible
Securities, as in effect on the date hereof,
(c) (i) Options and shares issued upon the exercise of Options
granted by the Company to any of its directors, officers, employees,
consultants or agents or their affiliates after the date hereof
pursuant to any compensation or benefit plan approved by the Company's
board of directors or, if not pursuant to any such plan, then pursuant
to any other resolution of the board of directors of the Company;
provided in each such case that the exercise or purchase price for any
such share shall not be less than 85% of the fair market value
(determined in good faith by the Company's Board of Directors) of the
Common Stock on the date of grant (whether or not the grant is
conditioned on other events, such as shareholder approval), and (ii)
such additional number of shares as may become issuable upon the
exercise of any such Options by reason of adjustments required pursuant
to anti-dilution provisions applicable to such Options,
(d) Options or Common Stock issued to third-party strategic or
joint venture partners of, or licensors to, the Company, as approved by
the board of directors of the Company, not to exceed shares
representing in the aggregate 10% of the Company's Common Stock on a
fully diluted basis,
(e) Options or Common Stock issued to third parties in
connection with the purchase of assets or businesses, whether by
merger, consolidation, purchase of assets or stock or otherwise, as
approved by the board of directors of the Company,
(f) Common Stock issued to Xxxxxxxx Investments LLC pursuant
to that certain Stock Purchase Agreement, dated July 31, 2001, between
the Company and Xxxxxxxx Investments LLC, and
(g) Common Stock issued to Norton Family Living Trust UTD
2-4-91, Norton Family Living Trust UTD 2-15-96, Xxxxxxxxx Family Living
Trust UTD 7/1/97, JR Norton Ventures Limited Partnership, Xxxxxxx X.
Xxxxxx, Xxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxxx pursuant to that
certain Stock Purchase Agreement, dated July 30, 2001, between the
Company and such parties.
"Additional Warrant Shares" shall mean, for every six months that
elapses from and after the date hereof, so long as there are amounts outstanding
in respect of the Term Loans, an additional 350,000 shares of the Company's
Common Stock, but in no event greater than permitted under Section 25.
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"Business Day" shall mean any day other than a Saturday or a Sunday or
a day on which commercial banking institutions in the New York, New York or in
Chicago, Illinois are authorized by law to be closed. Any reference to "days"
(unless Business Days are specified) shall mean calendar days.
"Commission" shall mean the Securities and Exchange Commission or any
successor agency having jurisdiction to enforce the Securities Act.
"Common Stock" shall mean the company's common stock, par value per
share, $0.001, such term to include any stock into which such Common Stock shall
have been changed or any stock resulting from any reclassification of such
Common Stock, and all other stock of any class or classes (however designated)
of the Company the holders of which have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference.
"Company" shall have the meaning assigned to it in the introduction to
this Warrant, such term to include any corporation or other entity which shall
succeed to or assume the obligations of the Company hereunder in compliance with
Section 4.
"Company Indemnified Parties" shall have the meaning assigned to it in
Section 16.
"Convertible Securities" shall mean any evidences of indebtedness,
shares of stock (other than Common Stock) or other securities directly or
indirectly convertible into or exchangeable for Additional Shares of Common
Stock.
"Current Market Price" shall mean, on any date specified herein, the
average of the daily Market Price during the 10 consecutive trading days before
such date (except with respect to the exercise of any Option granted by the
Company pursuant to any Company Option plan or agreement, in which case "Current
Market Price" or any similar term shall be as defined in such plan or
agreement), except that, if on any such date the shares of Common Stock are not
listed or admitted for trading on any national securities exchange or quoted in
the over-the-counter market, the Current Market Price shall be the Market Price
on such date.
"Deferral Period" shall have the meaning assigned to it in Section 16.
"Distribution Date" shall have the meaning assigned to it in Section
3.10.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"Expiration Date" shall have the meaning assigned to it in the
introduction to this Warrant.
"Fair Value" shall mean, on any date specified herein (i) in the case
of cash, the dollar amount thereof, (ii) in the case of a security, the Current
Market Price, and (iii) in all other cases, the fair value thereof (as of a date
which is within 20 days of the date as of which the determination is to be made)
determined jointly by the Company and the Holder; provided,
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however, that if such parties are unable to reach agreement within a reasonable
period of time, the Fair Value shall be determined in good faith, by an
independent investment banking firm selected jointly by the Company and the
Holder or, if that selection cannot be made within ten days, by an independent
investment banking firm selected by the American Arbitration Association in
accordance with its rules, and provided further, that the Company shall pay all
of the fees and expenses of any third parties incurred in connection with
determining the Fair Value.
"Holder" shall have the meaning assigned to it in the introduction to
this Warrant.
"Holder Indemnified Parties" shall have the meaning assigned to it in
Section 16.
"Loan and Security Agreement" shall have the meaning assigned to it in
the introduction to this Warrant.
"Market Price" shall mean, on any date specified herein, the amount per
share of the Common Stock, equal to (i) the last reported sale price of such
Common Stock, regular way, on such date or, in case no such sale takes place on
such date, the average of the closing bid and asked prices thereof regular way
on such date, in either case as officially reported on the principal national
securities exchange on which such Common Stock is then listed or admitted for
trading, (ii) if such Common Stock is not then listed or admitted for trading on
any national securities exchange but is designated as a national market system
security by the NASD, the last reported trading price of the Common Stock on
such date, (iii) if there shall have been no trading on such date or if the
Common Stock is not so designated, the average of the closing bid and asked
prices of the Common Stock on such date as shown by the NASD automated quotation
system, or (iv) if such Common Stock is not then listed or admitted for trading
on any national exchange or quoted in the over-the-counter market, the fair
value thereof (as of a date which is within 20 days of the date as of which the
determination is to be made) determined jointly by the Company and the Holder;
provided, however, that if such parties are unable to reach agreement within a
reasonable period of time, the Market Price shall be determined in good faith by
an independent investment banking firm selected jointly by the Company and the
Holder or, if that selection cannot be made within ten days, by an independent
investment banking firm selected by the American Arbitration Association in
accordance with its rules, and provided further, that the Company shall pay all
of the fees and expenses of any third parties incurred in connection with
determining the Market Price.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Option" means any right, warrant or option to subscribe for or
purchase shares of Common Stock or Convertible Securities.
"Other Securities" shall mean any stock (other than Common Stock) and
other securities of the Company or any other Person (corporate or otherwise)
which the Holder at any time shall be entitled to receive, or shall have
received, upon the exercise of this 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 4 or otherwise.
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"Person" shall mean any individual, firm, partnership, corporation,
trust, joint venture, association, joint stock company, limited liability
company, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof, and shall
include any successor (by merger or otherwise) of such entity.
"Purchase Price" shall have the meaning assigned to it in the
introduction of this Warrant, subject to adjustment and readjustment from time
to time as provided in Section 3, and, as so adjusted or readjusted, shall
remain in effect until a further adjustment or readjustment thereof is required
by Section 3.
"Registration Statement" shall have the meaning assigned to it in
Section 16.
"Restricted Securities" shall mean (i) this Warrant, (ii) any shares of
Common Stock (or Other Securities) issued or issuable upon the exercise of this
Warrant which are (or, upon issuance, will be) evidenced by a certificate or
certificates bearing the applicable legend set forth in such Section, and (iii)
any shares of Common Stock (or Other Securities) issued subsequent to the full
or any partial exercise of this Warrant as a dividend or other distribution with
respect to, or resulting from a subdivision of the outstanding shares of Common
Stock (or other Securities) into a greater number of shares by reclassification,
stock splits or otherwise, or in exchange for or in replacement of the Common
Stock (or Other Securities) issued upon such exercise, which are evidenced by a
certificate or certificates bearing the applicable legend set forth in such
Section.
"Rights" shall have the meaning assigned to it in Section 3.10.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time, and the rules and regulations thereunder, or any successor
statute.
"Term Loan" shall have the meaning assigned to it in the Loan and
Security Agreement.
"Transfer Agent" shall have the meaning assigned to it in Section 14.
"Violation" shall have the meaning assigned to it in Section 16.
"Warrant" shall have the meaning assigned to it in the introduction to
this Warrant.
"Warrant Register" shall have the meaning assigned to it in Section
15.1
"Warrant Shares" shall have the meaning assigned it in the introduction
to this Warrant.
2. EXERCISE OF WARRANT.
2.1 Manner of Exercise; Payment of the Purchase Price.
(a) This Warrant may be exercised by the Holder hereof, in
whole or in part, at any time or from time to time on or after August
2, 2001, but prior to the Expiration Date, by surrendering to the
Company at its principal office this Warrant, with the form of Election
to Purchase Shares attached hereto as Exhibit A (or a reasonable
facsimile
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thereof) duly executed by the Holder and accompanied by payment of the
Purchase Price for the number of shares of Common Stock specified in
such form. Any exercise by the Holder of this Warrant must be for the
purchase of a minimum of 50,000 Warrant Shares (before giving effect to
any share adjustment provided hereunder), except in the event that less
than 50,000 Warrant Shares are issuable at such time of exercise, in
which event such exercise must be for the purchase of all of such
Warrant Shares issuable.
(b) Payment of the Purchase Price may be made as follows (or
by any combination of the following): (i) in United States currency by
cash or delivery of a certified check or bank draft payable to the
order of the Company or by wire transfer to the Company, (ii) by
cancellation of all or any part of the unpaid principal amount of the
then outstanding Obligations (as defined in the Loan and Security
Agreement), (iii) by cancellation of such number of the shares of
Common Stock otherwise issuable to the Holder upon such exercise as
shall be specified in such Election to Purchase Shares, such that the
excess of the aggregate Current Market Price of such specified number
of shares on the date of exercise over the portion of the Purchase
Price attributable to such shares shall equal the Purchase Price
attributable to the shares of Common Stock to be issued upon such
exercise, in which case such amount shall be deemed to have been paid
to the Company and the number of shares issuable upon such exercise
shall be reduced by such specified number, or (iv) by surrender to the
Company for cancellation certificates representing shares of Common
Stock of the Company owned by the Holder (properly endorsed for
transfer in blank) having a Current Market Price on the date of Warrant
exercise equal to the Purchase Price. Notwithstanding the foregoing, so
long as a Registration Statement is effective, and such Registration
Statement is not subject to any Deferral Period, stop order or similar
restriction, Section 2(b)(iii) above shall not apply; provided,
however, that nothing herein shall preclude the Holder from effecting a
cashless exercise (i.e., obtaining a short-term loan) through its
broker or dealer if such transaction is otherwise in compliance with
applicable securities laws.
2.2 When Exercise Effective. Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the Business Day on which this Warrant shall have been surrendered to, and
the Purchase Price shall have been received by, the Company as provided in
Section 2.1, and at such time the Person or Persons in whose name or names any
certificate or certificates for shares of Common Stock (or Other Securities)
shall be issuable upon such exercise as provided in Section 2.3 shall be deemed
to have become the holder or holders of record thereof for all purposes.
2.3 Delivery of Stock Certificates, etc.; Charges, Taxes and
Expenses.
(a) As soon as practicable after each exercise of this
Warrant, in whole or in part, and in any event within three Business
Days thereafter, the Company shall cause to be issued in the name of
and delivered to the Holder hereof or as the Holder may direct,
(i) a certificate or certificates for the number of
shares of Common Stock (or Other Securities) to which the
Holder shall be entitled upon such exercise plus, in lieu of
issuance of any fractional share to which the Holder would
otherwise be entitled, if any, a check for the amount of cash
equal to the
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same fraction multiplied by the Exercise Price per share on
the date of Warrant exercise, and
(ii) in case such exercise is for less than all of
the shares of Common Stock purchasable under this Warrant, a
new Warrant or Warrants of like tenor, for the balance of the
shares of Common Stock purchasable hereunder.
(b) Issuance of certificates for shares of Common Stock upon
the exercise of this Warrant shall be made without charge to the Holder
hereof for any issue or transfer tax or other incidental expense, in
respect of the issuance of such certificates, all of which such taxes
and expenses shall be paid by the Company; provided, however, that the
Company shall not be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the issue of any
Warrants or any certificates for shares of Common Stock in a name other
than that of the Holder, and the Company shall not be required to issue
or deliver such Warrant or shares of Common Stock unless or until the
person or persons requesting the issuance thereof shall have paid to
the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
2.4 Company to Reaffirm Obligations. The Company shall, at the
time of each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge in writing its continuing obligation to afford to such Holder all
rights to which such Holder shall continue to be entitled after such exercise in
accordance with the terms of this Warrant, provided that if the Holder of this
Warrant shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford such rights to the Holder.
3. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE.
3.1 Adjustment of Number of Shares.
Upon each adjustment of the Purchase Price as a result of the
calculations made in this Section 3, this Warrant shall thereafter evidence the
right to receive, at the adjusted Purchase Price, that number of shares of
Common Stock (calculated to the nearest one-hundredth) obtained by dividing (i)
the product of the aggregate number of shares covered by this Warrant
immediately prior to such adjustment and the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price by (ii) the Purchase
Price in effect immediately after such adjustment of the Purchase Price. For
purposes of determining any adjustments pursuant to this Article 3, any
Additional Warrant Shares that become issuable upon exercise of this Warrant
shall be deemed, on a retroactive basis, to have been covered by this Warrant
immediately prior to each adjustment hereunder, and the Purchase Price and
number of shares covered hereby shall be recalculated accordingly, but without
duplication of any other adjustments hereunder.
3.2 Adjustment of Purchase Price.
3.2.1 Issuance of Additional Shares of Common Stock.
In case the Company at any time or from time to time after the date hereof shall
issue or sell Additional Shares of Common Stock (including Additional Shares of
Common Stock deemed to be issued pursuant to Section 3.3 or 3.4 but excluding
Additional Shares of Common Stock purchasable
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upon exercise of Rights referred to in Section 3.10) without consideration or
for a consideration per share less than the Current Market Price in effect
immediately prior to such issue or sale, then, and in each such case, subject to
Section 3.8, the Purchase Price shall be reduced, concurrently with such issue
or sale, to a price (calculated to the nearest .001 of a cent) determined by
multiplying such Purchase Price by a fraction
(a) the numerator of which shall be the sum of (i) the number
of shares of Common Stock outstanding immediately prior to such issue
or sale and (ii) the number of shares of Common Stock which the
aggregate consideration received by the Company for the total number of
such Additional Shares of Common Stock so issued or sold would purchase
at such Current Market Price, and
(b) the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such issue or sale, provided
that, for the purposes of this Section 3.2.1, (x) immediately after any
Additional Shares of Common Stock are deemed to have been issued
pursuant to Section 3.3 or 3.4, such Additional Shares shall be deemed
to be outstanding, and (y) treasury shares shall not be deemed to be
outstanding.
3.2.2 Extraordinary Dividends and Distributions. In
case the Company at any time or from time to time after the date hereof shall
declare, order, pay or make a dividend or other distribution (including, without
limitation, any distribution of other or additional stock or other securities or
property or Options by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement) on the Common Stock other
than (a) a dividend payable in Additional Shares of Common Stock or (b) a
dividend of Rights referred to in Section 3.10 hereof, then, in each such case,
subject to Section 3.8, the Purchase Price in effect immediately prior to the
close of business on the record date fixed for the determination of holders of
any class of securities entitled to receive such dividend or distribution shall
be reduced, effective as of the close of business on such record date, to a
price determined by multiplying such Purchase Price by a fraction
(x) the numerator of which shall be the
Current Market Price in effect on such record date or, if the
Common Stock trades on an ex-dividend basis, on the date prior
to the commencement of ex-dividend trading, less the Fair
Value of such dividend or distribution applicable to one share
of Common Stock, and
(y) the denominator of which shall be such
Current Market Price,
provided that, in the event that the amount
of such dividend as so determined is equal to or greater than
10% of such Current Market Price or in the event that such
fraction is less than 9/10ths, in lieu of the foregoing
adjustment, the Company shall, if reasonably feasible, make
adequate provision so that the Holder shall receive, upon
Warrant exercise, a pro rata share of such dividend based upon
the maximum number of shares of Common Stock at the time
issuable to the Holder (determined without regard to whether
the Warrant is exercisable at such time.)
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3.3 Treatment of Options and Convertible Securities. In case
the Company at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities of the Company entitled to receive, any
Options or Convertible Securities (whether or not the rights thereunder are
immediately exercisable), then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue, sale, grant or assumption or,
in case such a record date shall have been fixed, as of the close of business on
such record date (or, if the Common Stock trades on an ex-dividend basis, on the
date prior to the commencement of ex-dividend trading), provided that such
Additional Shares of Common Stock shall not be deemed to have been issued unless
(i) the consideration per share (determined pursuant to Section 3.5) of such
shares would be less than the Current Market Price in effect on the date of and
immediately prior to such issue, sale, grant or assumption or immediately prior
to the close of business on such record date (or, if the Common Stock trades on
an ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), as the case may be, and (ii) such Additional Shares of Common Stock
are not purchasable pursuant to Rights referred to in Section 3.10, and
provided, further, that in any such case in which Additional Shares of Common
Stock are deemed to be issued
(a) whether or not the Additional Shares of Common Stock
underlying such Options or Convertible Securities are deemed to be
issued, no further adjustment of the Purchase Price shall be made upon
the subsequent issue or sale of Convertible Securities or shares of
Common Stock upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, except in the case of any such
Options or Convertible Securities which contain provisions requiring an
adjustment, subsequent to the date of the issue or sale thereof, of the
number of Additional Shares of Common Stock issuable upon the exercise
of such Options or the conversion or exchange of such Convertible
Securities by reason of (x) a change of control of the Company, (y) the
acquisition by any Person or group of Persons of any specified number
or percentage of the voting securities of the Company or (z) any
similar event or occurrence, each such case to be deemed hereunder to
involve a separate issuance of Additional Shares of Common Stock,
Options or Convertible Securities, as the case may be;
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of
Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise), the
Purchase Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or date
prior to the commencement of ex-dividend trading, as the case may be,
with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects
such Options, or the rights of conversion or exchange under such
Convertible Securities, which are outstanding at such time;
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(c) upon the expiration (or purchase by the Company and
cancellation or retirement) of any such Options which shall not have
been exercised or the expiration of any rights of conversion or
exchange under any such Convertible Securities which (or purchase by
the Company and cancellation or retirement of any such Convertible
Securities the rights of conversion or exchange under which) shall not
have been exercised, the Purchase Price computed upon the original
issue, sale, grant or assumption thereof (or upon the occurrence of the
record date, or date prior to the commencement of ex-dividend trading,
as the case may be, with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case may be), be recomputed as if:
(i) in the case of Options for Common Stock or
Convertible Securities, the only Additional Shares of Common
Stock issued or sold were the Additional Shares of Common
Stock, if any, actually issued or sold upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the
consideration actually received by the Company for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus the consideration actually received by the
Company upon such exercise, or for the issue or sale of all
such Convertible Securities which were actually converted or
exchanged, plus the additional consideration, if any, actually
received by the Company upon such conversion or exchange, and
(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually
issued or sold upon the exercise of such Options were issued
at the time of the issue or sale, grant or assumption of such
Options, and the consideration received by the Company for the
Additional Shares of Common Stock deemed to have then been
issued was the consideration actually received by the Company
for the issue, sale, grant or assumption of all such Options,
whether or not exercised, plus the consideration deemed to
have been received by the Company (pursuant to Section 3.5)
upon the issue or sale of such Convertible Securities with
respect to which such Options were actually exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above
shall have the effect of increasing the Purchase Price by an amount in
excess of the amount of the adjustment thereof originally made in
respect of the issue, sale, grant or assumption of such Options or
Convertible Securities; and
(e) in the case of any such Options which expire by their
terms not more than 45 days after the date of issue, sale, grant or
assumption thereof, no adjustment of the Purchase Price shall be made
until the expiration or exercise of all such Options, whereupon such
adjustment shall be made in the manner provided in subdivision (c)
above; and
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(f) this Section 3.3 shall not apply to the assumption of
Options or Convertible Securities in connection with the acquisition of
a business, whether by merger, consolidation, exchange of stock or
otherwise.
3.4 Treatment of Stock Dividends, Stock Splits, etc. In case
the Company at any time or from time to time after the date hereof shall declare
or pay any dividend on the Common Stock payable in Common Stock, or shall effect
a subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock), then, and in each such case, Additional Shares of
Common Stock shall be deemed to have been issued (a) in the case of any such
dividend, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend, or (b) in the case of any such subdivision, at the close of business
on the day immediately prior to the day upon which such corporate action becomes
effective.
3.5 Computation of Consideration. For the purposes of this
Section 3,
(a) the consideration for the issue or sale of any Additional
Shares of Common Stock shall, irrespective of the accounting treatment
of such consideration,
(i) insofar as it consists of cash, be computed at
the amount of cash received by the Company, without deducting
any expenses paid or incurred by the Company or any
commissions or compensations paid or concessions or discounts
allowed to underwriters, dealers or others performing similar
services in connection with such issue or sale,
(ii) insofar as it consists of property (including
securities) other than cash, be computed at the Fair Value
thereof at the time of such issue or sale, and
(iii) in case Additional Shares of Common Stock are
issued or sold together with other stock or securities or
other assets of the Company for a consideration which covers
both, be the portion of such consideration so received,
computed as provided in clauses (i) and (ii) above, allocable
to such Additional Shares of Common Stock, such allocation to
be determined in the same manner that the Fair Value of
property not consisting of cash or securities is to be
determined as provided in the definition of 'Fair Value'
herein;
(b) Additional Shares of Common Stock deemed to have been
issued pursuant to Section 3.3, relating to Options and Convertible
Securities, shall be deemed to have been issued for a consideration per
share determined by dividing
(i) the total amount, if any, received and receivable
by the Company as consideration for the issue, sale, grant or
assumption of the Options or Convertible Securities in
question, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for
a subsequent adjustment of such consideration to protect
against dilution) payable to the Company upon the exercise in
full of such Options or the conversion or exchange of such
Convertible
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Securities or, in the case of Options for Convertible
Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible
Securities, in each case computing such consideration as
provided in the foregoing subdivision (a),
by
(ii) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment
of such number to protect against dilution) issuable upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities; and
(c) Additional Shares of Common Stock deemed to have been
issued pursuant to Section 3.4, relating to stock dividends, stock
splits, etc., shall be deemed to have been issued for no consideration.
3.6 Adjustments for Combinations, etc. In case the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Purchase Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
3.7 Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of the Company (or
any issuer of Other Securities or any other Person referred to in Section 4) or
to subscription, purchase or other acquisition pursuant to any Options issued or
granted by the Company (or any such other issuer or Person) for a consideration
such as to dilute, on a basis consistent with the standards established in the
other provisions of this Section 3, the purchase rights granted by this Warrant,
then, and in each such case, the computations, adjustments and readjustments
provided for in this Section 3 with respect to the Purchase Price and the number
of shares purchasable upon Warrant exercise shall be made as nearly as possible
in the manner so provided and applied to determine the amount of Other
Securities from time to time receivable upon the exercise of this Warrant, so as
to protect the Holder against the effect of such dilution.
3.8 De Minimis Adjustments. If the amount of any adjustment of
the Purchase Price per share required pursuant to this Section 3 would be less
than one tenth (1/10) of one percent (1%) of the Purchase Price, such amount
shall be carried forward and adjustment with respect thereto made at the time of
and together with any subsequent adjustment which, together with such amount and
any other amount or amounts so carried forward, shall aggregate a change in the
Purchase Price of at least one tenth (1/10) of one percent (1%) of such Purchase
Price. All calculations under this Warrant shall be made to the nearest .001 of
a cent or to the nearest one-hundredth of a share, as the case may be.
3.9 Abandoned Dividend or Distribution. If the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or
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other distribution (which results in an adjustment to the Purchase Price under
the terms of this Warrant) and shall, thereafter, and before such dividend or
distribution is paid or delivered to shareholders entitled thereto, legally
abandon its plan to pay or deliver such dividend or distribution, then any
adjustment made to the Purchase Price and number of shares of Common Stock
purchasable upon Warrant exercise by reason of the taking of such record shall
be reversed, and any subsequent adjustments, based thereon, shall be recomputed.
3.10 Shareholder Rights Plan. Notwithstanding the foregoing,
in the event that the Company shall distribute "poison pill" rights pursuant to
a "poison pill" shareholder rights plan (the "Rights"), the Company shall, in
lieu of making any adjustment pursuant to Section 3.2.1 or Section 3.2.2 hereof,
make proper provision so that each Holder who exercises a Warrant after the
record date for such distribution and prior to the expiration or redemption of
the Rights shall be entitled to receive upon such exercise, in addition to the
shares of Common Stock issuable upon such exercise, a number of Rights to be
determined as follows: (i) if such exercise occurs on or prior to the date for
the distribution to the holders of Rights of separate certificates evidencing
such Rights (the "Distribution Date"), the same number of Rights to which a
holder of a number of shares of Common Stock equal to the number of shares of
Common Stock issuable upon such exercise at the time of such exercise would be
entitled in accordance with the terms and provisions of and applicable to the
Rights; and (ii) if such exercise occurs after the Distribution Date, the same
number of Rights to which a holder of the number of shares into which the
Warrant so exercised was exercisable immediately prior to the Distribution Date
would have been entitled on the Distribution Date (after giving effect to any
adjustments required pursuant to this Section 3) in accordance with the terms
and provisions of and applicable to the Rights.
4. CONSOLIDATION, MERGER, ETC.
4.1 Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc.
(a) In case the Company after the date hereof (i) shall
consolidate with or merge into any other Person and shall not be the
continuing or surviving corporation of such consolidation or merger, or
(ii) shall permit any other Person to consolidate with or merge into
the Company and the Company shall be the continuing or surviving Person
but, in connection with such consolidation or merger, the Common Stock
or Other Securities shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, or
(iii) shall transfer all or substantially all of its properties or
assets to any other Person, or (iv) shall effect a capital
reorganization or reclassification of the Common Stock or Other
Securities (other than a capital reorganization or reclassification
resulting in the issue or Additional Shares of Common Stock for which
adjustment in the Purchase Price is provided in Section 3.2.1 or
3.2.2), then, and in the case of each such transaction, proper
provision shall be made so that, upon the basis and the terms and in
the manner provided in this Warrant, the Holder of this Warrant, upon
the exercise hereof at any time after the consummation of such
transaction, shall be entitled to receive (at the aggregate Purchase
Price in effect at the time of such consummation for all Common Stock
or Other Securities issuable upon such exercise immediately prior to
such consummation), in lieu of the Common Stock or Other
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Securities issuable upon such exercise prior to such consummation, the
highest amount of securities, cash or other property to which such
Holder would actually have been entitled as a shareholder upon such
consummation if such Holder had exercised this Warrant immediately
prior thereto, subject to adjustments (subsequent to such consummation)
as nearly equivalent as possible to the adjustments provided for in
Sections 3 through 5.
(b) If the Company undertakes a consolidation or merger with
or into another corporation, a reverse triangular merger or any other
transaction or series of related transactions pursuant to which all
Shareholders receive 100% cash consideration for their shares of Common
Stock (which transaction may exclude Xxxxxx Xxxxxxx or Xxxx Xxxxxxx or
any affiliates or associates thereof), then at the Option of the Person
acquiring all of such shares of Common Stock, the Holder shall receive
in connection with the completion of such transaction(s), without
exercise and upon surrender of this Warrant, cash in an amount equal to
(a) the per share acquisition price payable by the acquiring Person to
the Shareholders for their shares of Common Stock minus the Exercise
Price determined as of the date of completion of such transaction(s),
multiplied by (b) the number of Warrant Shares that are eligible for
issuance under this Warrant on such date of completion (which, in the
case of a series of related transactions, shall be the date of
completion of the final transaction in such series). Upon payment of
such amount to the Holder, this Warrant shall automatically expire and
the rights hereunder shall be of no further force or effect.
4.2 Assumption of Obligations. Notwithstanding anything
contained in this Warrant or in the Loan and Security Agreement to the contrary,
the Company shall not effect any of the transactions described in clauses (a)
through (d) of Section 4.1 unless, prior to the consummation thereof, each
Person (other than the Company) which may be required to deliver any stock,
securities, cash or property upon the exercise of this Warrant as provided
herein shall assume by written instrument (a) the obligations of the Company
under this Warrant (and if the Company shall survive the consummation of such
transaction, such assumption shall be in addition to, and shall not release the
Company from, any continuing obligations of the Company under this Warrant), (b)
the obligation to deliver to the Holder such shares of stock, securities, cash
or property as, in accordance with the foregoing provisions of this Section 3,
the Holder may be entitled to receive. Nothing in this Section 4 shall be deemed
to authorize the Company to enter into any transaction not otherwise permitted
by the Loan and Security Agreement.
5. OTHER DILUTIVE EVENTS. In case any event shall occur as to which the
provisions of Section 3 or Section 4 hereof are not strictly applicable or if
strictly applicable would not, in the reasonable judgment of the board of
directors of the Company, fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles of such Sections,
then, in each such case, the board of directors of the Company shall, in good
faith, make an adjustment in the application of such provisions, in accordance
with the essential intent and principles hereof so as to preserve, without
dilution, the purchase rights represented by this Warrant.
6. NO DILUTION OR IMPAIRMENT. The Company shall not, by amendment of
its certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid
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the observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder of this Warrant against dilution or other impairment.
Without limiting the generality of the foregoing, the Company (a) shall not
permit the par value of any shares of stock receivable upon the exercise of this
Warrant to exceed the amount payable therefor upon such exercise, (b) shall take
all such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of stock, free
from all issuance, stamp or similar taxes, liens, security interests,
encumbrances, preemptive rights and charges on the exercise of this Warrant from
time to time outstanding, and (c) shall not take any action which results in any
adjustment of the Purchase Price if the total number of shares of Common Stock
(or Other Securities) issuable after the action upon the exercise of this
Warrant would exceed the total number of shares of Common Stock (or Other
Securities) then authorized by the Company's certificate of incorporation and
available for the purpose of issue upon such exercise.
7. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable upon
the exercise of this Warrant, the Company at its expense shall promptly compute
such adjustment or readjustment in accordance with the terms of this Warrant and
prepare a certificate, signed by the Chairman of the Board, President or one of
the Vice Presidents of the Company, and by the Chief Financial Officer, the
Treasurer or one of the Assistant Treasurers of the Company, setting forth such
adjustment or readjustment and showing in reasonable detail the method of
calculation thereof and the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration received or to be received
by the Company for any Additional Shares of Common Stock issued or sold or
deemed to have been issued, (b) the number of shares of Common Stock outstanding
or deemed to be outstanding, and (c) the Purchase Price in effect immediately
prior to such issue or sale and as adjusted and readjusted (if required by
Section 3) on account thereof. The Company shall forthwith mail a copy of such
certificate to the Holder and shall, upon the written request at any time of the
Holder, furnish to the Holder a like certificate. The Company shall also keep
copies of such certificates at its principal office and shall cause the same to
be available for inspection at such office during normal business hours by the
Holder or any prospective purchaser of this Warrant designated by the Holder.
8. NOTICES OF CORPORATE ACTION. In the event of:
(a) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution,
or any right to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or property, or to
receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company, any consolidation or merger involving the Company and any
other Person, any transaction or series of transactions in which more
than 50% of the voting securities of the Company are transferred to
another Person, or any transfer, sale or other disposition of all or
substantially all the assets of the Company to any other Person, or
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(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company shall mail to the Holder a notice specifying (i) the date or
expected date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right, and (ii) the date or expected date on which any such
reorganization, reclassification, recapitalization, consolidation, merger,
transfer, sale, disposition, dissolution, liquidation or winding-up is to take
place and the time, if any such time is to be fixed, as of which the holders of
record of Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or Other Securities) for the securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed at least 30 days prior to the date
therein specified; provided, however, that the failure by the Company to provide
any such notice within the time prescribed herein or otherwise in a timely
manner shall have no effect on any of the transactions contemplated herein.
9. REGISTRATION OF COMMON STOCK. If any shares of Common Stock required
to be reserved for purposes of exercise of this Warrant require registration
with or approval of any governmental authority under any federal or state law
(other than the Securities Act) before such shares may be issued upon exercise,
the Company shall, at its expense and as expeditiously as possible, use its best
efforts to cause such shares to be duly registered or approved, as the case may
be. At any such time as Common Stock is listed on any national securities
exchange, the Company shall, at its expense, obtain promptly and maintain the
approval for listing on each such exchange, upon official notice of issuance,
the shares of Common Stock issuable upon exercise of this Warrant and maintain
the listing of such shares after their issuance; and the Company shall also list
on such national securities exchange, shall register under the Exchange Act and
shall maintain such listing of, any Other Securities that at any time are
issuable upon exercise of this Warrant, if and at the time that any securities
of the same class shall be listed on such national securities exchange by the
Company.
10. RESTRICTIONS ON TRANSFER.
10.1 Restrictive Legends. Except as otherwise permitted by
this Section 10, this Warrant (including any Warrant issued upon the transfer of
this Warrant or any replacement Warrant issued in connection with the partial
exercise of this Warrant or the loss or destruction of this Warrant) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THIS WARRANT AND ANY SECURITIES ACQUIRED
UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAW OF ANY STATE, AND MAY
NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION TO THE
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REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS
WARRANT AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS
SPECIFIED IN THIS WARRANT."
Except as otherwise permitted by this Section 10, each certificate for Common
Stock (or Other Securities) issued upon the exercise of this Warrant, and each
certificate issued upon the transfer of any such Common Stock (or Other
Securities), shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAW OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND SUCH LAWS. SUCH SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN CERTAIN
COMMON STOCK PURCHASE WARRANTS ISSUED BY THE COMPANY
PURSUANT TO THE LOAN AND SECURITY AGREEMENT, DATED
AUGUST 2, 2001, BETWEEN THE COMPANY AND CERTAIN OF
ITS SUBSIDIARIES AS BORROWERS AND AN AFFILIATE OF THE
HOLDER. A COMPLETE AND CORRECT COPY OF THE FORM OF
SUCH WARRANT IS AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICE OF THE COMPANY OR AT THE OFFICE OR
AGENCY MAINTAINED BY THE COMPANY AS PROVIDED IN SUCH
WARRANTS AND WILL BE FURNISHED TO THE HOLDER OF SUCH
SECURITIES UPON WRITTEN REQUEST AND WITHOUT CHARGE."
10.2 Transfer to Comply With the Securities Act. Restricted
Securities may not be sold, assigned, pledged, hypothecated, encumbered or in
any manner transferred or disposed of, in whole or in part, except in compliance
with the provisions of the Securities Act and state securities or Blue Sky laws
and the terms and conditions hereof. Any transfer by the Holder of this Warrant
(or any part hereof) must be in respect of a minimum of 50,000 Warrant Shares
(before giving effect to any share adjustment provided hereunder), except in the
event that less than 50,000 Warrant Shares are issuable at such time of
transfer, in which event such transfer must be in respect of all of such Warrant
Shares issuable. Prior to effecting any such sale, assignment, pledge,
hypothecation, encumbrance, transfer or disposition, the Holder shall inform the
Company and, upon the Company's request, deliver to the Company an opinion of
counsel,
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reasonably satisfactory to the Company, to the effect that such transfer does
not require registration under the Securities Act and is otherwise in compliance
with the Securities Act and any applicable state securities or Blue Sky laws.
Notwithstanding the foregoing, the last two sentences of this Section 10.2 shall
not apply in connection with any transfer (without consideration) of this
Warrant to an affiliate of the Holder.
10.3 Termination of Restrictions. The restrictions imposed by
this Section 10 on the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities (a) when a registration
statement with respect to the sale of such securities shall have been declared
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (b) when such securities are
sold pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act, or (c) when, in the opinion of both counsel for the Holder and
counsel for the Company, such restrictions are no longer required or necessary
in order to protect the Company against a violation of the Securities Act upon
any sale or other disposition of such securities without registration
thereunder. Whenever such restrictions shall cease and terminate as to any
Restricted Securities, the Holder shall be entitled to receive from the Company,
without expense, new stock certificates of like tenor representing such
Restricted Securities which shall not bear the applicable legends required by
Section 10.1.
11. REPRESENTATIONS OF COMPANY.
11.1 Organization and Qualification. The Company is a
corporation duly organized and validly existing in good standing under the laws
of the jurisdiction in which it is incorporated, and has the requisite corporate
power to own its properties and to carry on its business as now being conducted.
The Company is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except where such failure to
qualify or to be in good standing would not have a material adverse effect on
the business or assets of the Company, taken as a whole.
11.2 Authorization; Enforcement; Compliance with Other
Instruments. (a) The Company has the requisite corporate power and authority to
enter into and perform its obligations under this Warrant and to issue the
Warrant Shares in accordance with this Warrant, (b) the execution and delivery
of this Warrant by the Company and the consummation by it of the transactions
contemplated hereby, including, without limitation, the issuance of this Warrant
and the reservation for issuance and the issuance of the Warrant Shares, upon
exercise of this Warrant, have been duly authorized by the Company's board of
directors and no further consent or authorization is required by the Company,
its board of directors or its stockholders, (c) this Warrant has been duly
executed and delivered by the Company, and (d) this Warrant constitutes the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies.
11.3 Capitalization and Indebtedness. As of the date hereof,
the authorized capital stock of the Company consists of 100,000,000 shares of
Common Stock, par value $.001
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per share, of which as of May 9, 2001, 34,388,445 shares are issued and
outstanding. All of the outstanding shares of Common Stock have been validly
issued and are fully paid and nonassessable. No shares of Common Stock are
subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company. Except as contemplated by
this Warrant or as previously disclosed to the Holder in writing (including in
the Loan and Security Agreement), as of the date hereof, (i) there are no
outstanding Options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries or
Options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, and (ii)
there are no agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of their securities under
the Securities Act. There are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
this Warrant or, upon exercise of this Warrant, the issuance of Warrant Shares,
except for anti-dilution provisions which have been validly waived on or prior
to the date hereof in respect of the issuance of this Warrant and, upon exercise
of this Warrant, the issuance of Warrant Shares.
11.4 Issuance of Warrants and Warrant Shares. This Warrant is
duly authorized and, upon issuance in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable, free from all issuance, stamp or
similar taxes, liens and charges with respect to the issue thereof, and shall
not be subject to preemptive rights or other similar rights of stockholders of
the Company. The Warrant Shares have been duly authorized and reserved for
issuance upon exercise of this Warrant, and upon such exercise and full payment
therefor, will be validly issued, fully paid and nonassessable, free from all
issuance, stamp or similar taxes, liens and charges with respect to the issue
thereof, and will not be subject to preemptive rights or other similar rights of
stockholders of the Company.
11.5 No Conflicts. The execution, delivery and performance of
this Warrant by the Company, and the consummation by the Company of the
transactions contemplated hereby (including, without limitation, the issuance of
the Warrant Shares) will not (i) result in a violation of any organizational
documents governing the Company or (ii) violate or conflict with, or result in a
breach of any provision of, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its subsidiaries
or by which any property or asset of the Company or any of its subsidiaries is
bound or affected. Except for filing required pursuant to applicable securities
laws, the Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental or
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by Warrant in accordance
with the terms hereof or thereof. All consents, authorizations, orders, filings
and registrations which the Company is required to obtain pursuant to the
preceding sentence on or prior to the date hereof have been obtained or effected
on or prior to the date hereof.
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12. Representations Of The Holder.
Upon issuance of this Warrant, the Holder represents and warrants to
Sections 12.1 through 12.9 below, and upon exercise of this Warrant, the Holder
represents and warrants to Sections 12.2, 12.3 and 12.4 below.
12.1 Purchase for Own Account. This Warrant is, and the
Warrant Shares to be received by the Holder upon exercise hereof will be,
acquired for investment for the Holder's own account and not with a view to the
resale or distribution of any part thereof, and the Holder has no present
intention of selling, granting any participation in, or otherwise distributing
this Warrant, the Warrant Shares or any part thereof. The Holder does not have
any contract, undertaking, agreement or arrangement with any Person to sell,
transfer or grant participation to such Person with respect to this Warrant, the
Warrant Shares or any part thereof.
12.2 Disclosure of Information. The Holder is aware of the
Company's business affairs and financial condition, has received and reviewed
all information (including all reports, registrations and other documents) filed
by the Company with the Commission up to the date hereof) it considers necessary
or appropriate for making an informed and knowledgeable decision as to whether
to acquire this Warrant and further represents that it has had sufficient
opportunity to ask questions and receive answers from the Company regarding the
nature and affairs of the Company, including its business, properties, prospects
and financial condition.
12.3 Investment Experience. The Holder is an investor in
securities of companies and acknowledges that it is capable of bearing the
economic risk of its investment in this Warrant and the Warrant Shares,
including the risk of total loss of any or all of such investments, and has such
knowledge and experience in financial or business matters that is capable of
evaluating the merits and risks of such investments.
12.4 Accredited Investor. The Holder is an "accredited
investor" within the meaning of Commission Rule 501 of Regulation D, as
presently in effect.
12.5 Restricted Securities. The Holder understands and hereby
acknowledges that (i) the Warrant Shares it may purchase pursuant to the
provisions of this Warrant may not initially be registered under the Securities
Act, and in such event will be issued in reliance upon a specific exemption from
the registration requirements under the Securities Act, which exemption depends
upon, among other things, the bona fide nature of the Holder's investment intent
as expressed herein, and (ii) the Warrant Shares must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
form registration is otherwise available.
12.6 Rule 144 Restrictions. The Holder is aware of the
provisions of Rule 144, promulgated under the Securities Act, which, in
substance, permit limited public resale of "restricted securities" acquired,
directly or indirectly, from the issuer thereof (or from an affiliate of such
issuer), in a non-public offering subject to the satisfaction of certain
conditions, if applicable, including, among other things: (i) the availability
of certain public information about the Company; (ii) the resale occurring not
less than one (1) year after the party has purchased and paid for the securities
to be sold, unless such securities are registered; (iii) the sale being
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made through a broker in an unsolicited "broker transaction" or in transactions
directly with a market maker (as said term is defined under the Exchange Act),
(iv) the amount of securities being sold during any three-month period not
exceeding the specified limitations stated therein, and (v) the filing of Form
144 with the Commission.
12.7 Rule 144 Limitations. The Holder understands and
acknowledges that at the time it wishes to sell some or all of the Warrant
Shares there may not be an active public market upon which to make such a sale.
The Holder further understands that if all the requirements of Rule 144 are not
satisfied, registration under the Securities Act, compliance with Regulation A
or Regulation S under the Securities Act or some other registration exemption
will be required to permit the Holder to sell the Warrant Shares.
12.8 No Related Transactions. The Holder is not in any way
affiliated with (i) Xxxxxxxx Investments LLC, (ii) Norton Family Living Trust
UTD 2-4-91, (iii) Norton Family Living Trust UTD 2-15-96, (iv) Xxxxxxxxx Family
Trust UTD 7-1-97, (v) JR Ventures Limited Partnership, (vi) Xxxxxx X. Xxxxxxxx,
or (vii) Xxxxxxx Xxxxxx, and the issuance of this Warrant is not, and any
exercise will not be, related to the above-described parties purchase of shares
of Common Stock, or securities exercisable into, convertible into or
exchangeable for such shares.
12.9 Ownership of Company Common Stock. Immediately prior to
the date hereof, the Holder (and its affiliates) own less than 1,600,000 shares
of the Company's Common Stock.
13. AVAILABILITY OF INFORMATION. So long as the Company shall not have
filed a registration statement pursuant to Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act, the
Company shall, at any time and from time to time, upon the request of any holder
of Restricted Securities and upon the request of any Person designated by such
holder as a prospective purchaser of any Restricted Securities, furnish in
writing to such holder or such prospective purchaser, as the case may be, a
statement as of a date not earlier than 12 months prior to the date of such
request of the nature of the business of the Company and the products and
services it offers and copies of the Company's most recent balance sheet and
profit and loss and retained earnings statements, together with similar
financial statements for such part of the two preceding fiscal years as the
Company shall have been in operation, all such financial statements to be
audited to the extent audited statements are reasonable available, provided
that, in any event the most recent financial statements so furnished shall
include a balance sheet as of a date less than 16 months prior to the date of
such request, statements of profit and loss and retained earnings for the 12
months preceding the date of such balance sheet, and, if such balance sheet is
not as of a date less than six months prior to the date of such request,
additional statements of profit and loss and retained earnings for the period
from the date of such balance sheet to a date less than six months prior to the
date of such request. If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Exchange Act or a registration
statement pursuant to the requirements of the Securities Act, the Company shall
use reasonable best efforts to timely file the reports required to be filed by
it under the Securities Act and the Exchange Act (including, but not limited to,
the reports under Sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c) of Rule 144 adopted by the Commission under the Securities
Act)) and will take such further action as any holder of Restricted Securities
may reasonably request, all to the
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extent required from time to time to enable such holder to sell Restricted
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
rules may be amended from time to time, or (b) any successor rule or regulation
hereafter adopted by the Commission.
14. RESERVATION OF STOCK, ETC. The Company shall at all times reserve
and keep available, solely for issuance and delivery upon exercise of this
Warrant, the number of shares of Common Stock (or Other Securities) from time to
time issuable upon exercise of this Warrant at the time outstanding. All shares
of Common Stock (or Other Securities) issuable upon exercise of this Warrant
shall be duly authorized and, when issued upon such exercise, shall be validly
issued and, in the case of shares, fully paid and nonassessable with no
liability on the part of the holders thereof, and, in the case of all
securities, shall be free from all issuance, stamp or similar taxes, liens,
security interests, encumbrances, preemptive rights and charges. The transfer
agent for the Common Stock, which may be the Company ("Transfer Agent"), and
every subsequent Transfer Agent for any shares of the Company's capital stock
issuable upon the exercise of any of the purchase rights represented by this
Warrant, are hereby irrevocably authorized and directed at all times until the
Expiration Date to reserve such number of authorized and unissued shares as
shall be requisite for such purpose. The Company shall keep copies of this
Warrant on file with the Transfer Agent for the Common Stock and with every
subsequent Transfer Agent for any shares of the Company's capital stock issuable
upon the exercise of the rights of purchase represented by this Warrant. The
Company shall supply such Transfer Agent with duly executed stock certificates
for such purpose. All Certificates surrendered upon the exercise of the rights
thereby evidenced shall be canceled, and such canceled Warrants shall constitute
sufficient evidence of the number of shares of stock which have been issued upon
the exercise of such Warrants. Subsequent to the Expiration Date, no shares of
stock need be reserved by the Company in respect of this Warrant.
15. REGISTRATION AND TRANSFER OF WARRANTS, ETC.
15.1 Warrant Register; Ownership of Warrants. This Warrant
shall be numbered and shall be registered in a warrant register (the "Warrant
Register") as it is issued and transferred, which Warrant Register shall be
maintained by the Company at its principal office or, at the Company's election
and expense, by a warrant agent or the Transfer Agent. The Company shall be
entitled to treat the registered Holder of this Warrant on the Warrant Register
as the owner in fact thereof for all purposes and shall not be bound to
recognize any equitable or other claim to or interest in this Warrant on the
part of any other Person, and shall not be affected by any notice to the
contrary, except that, if and when this Warrant is properly assigned in blank,
the Company may (but shall not be obligated to) treat the bearer thereof as the
owner of this Warrant for all purposes. Subject to Section 10, a Warrant, if
properly assigned, may be exercised by a new holder without a new Warrant first
having been issued.
15.2 Transfer of Warrants. Subject to Section 10, this Warrant
shall be freely transferable to any affiliate of the Holder. In addition,
subject to compliance with Section 10, if applicable, this Warrant and all
rights hereunder are transferable in whole or in part, without charge to the
Holder hereof, upon surrender of this Warrant with a properly executed Form of
Assignment attached hereto as Exhibit B at the principal office of the Company.
Upon any partial transfer, the Company shall at its expense issue and deliver to
the Holder a new Warrant
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of like tenor, in the name of the Holder, which shall be exercisable for such
number of shares of Common Stock with respect to which rights under this Warrant
were not so transferred.
15.3 Replacement of Warrants. On receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender of such Warrant to the Company at its principal office
and cancellation thereof, the Company at its expense shall execute and deliver,
in lieu thereof, a new Warrant of like tenor.
15.4 Adjustments To Purchase Price and Number of Shares.
Notwithstanding any adjustment in the Purchase Price or in the number or kind of
shares of Common Stock purchasable upon exercise of this Warrant, any Warrant
theretofore or thereafter issued may continue to express the same number and
kind of shares of Common Stock as are stated in this Warrant, as initially
issued.
15.5 Fractional Shares. Notwithstanding any adjustment
pursuant to Section 3 in the number of shares of Common Stock covered by this
Warrant or any other provision of this Warrant, the Company shall not be
required to issue fractions of shares upon exercise of this Warrant or to
distribute certificates which evidence fractional shares. In lieu of fractional
shares, the Company shall make payment to the Holder, at the time of exercise of
this Warrant as herein provided, in an amount in cash equal to such fraction
multiplied by the Current Market Price of a share of Common Stock.
16. REGISTRATION RIGHTS.
16.1 Registration.
(a) Initial Registration Statement. Within forty five (45)
days after the date hereof, the Company shall prepare and file a
registration statement under the Securities Act (a "Registration
Statement") for the registration of (i) the Initial Warrant Shares,
(ii) the Additional Warrant Shares (assuming that the maximum number of
such Additional Warrant Shares will be issued to the Holder) and (iii)
at the Company's option, shares of Common Stock issued or issuable to
other security holders of the Company. The Company shall use best
efforts to cause such Registration Statement to become effective within
ninety (90) days after the date hereof.
(b) Piggyback Registration. If at any time during the
five-year period commencing the date hereof, the Company determines to
register for its own account or the account of others under the
Securities Act any of its Common Stock for cash, other than on Form S-4
or Form S-8 or their then equivalents, the Company shall send to each
Holder written notice of such determination and, if within ten (10)
days after receipt of such notice, such Holder shall so request in
writing, the Company shall include in such Registration Statement all
or any part of the Warrant Shares that the Holder requests to be
registered provided that, in the case of shares that have not yet been
issued upon exercise, the Holder includes an irrevocable commitment to
exercise the Warrant immediately
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prior to effectiveness of the Registration Statement. In the event that
the managing underwriter for an offering advises the Company that the
inclusion of such securities in the offering would be detrimental to
the Company's offering, such securities shall be reduced pro rata among
all Persons (including the Company) that are selling securities subject
to such Registration Statement. A Registration Statement under this
Section 16.1(b) shall remain effective for a period of at least 30 days
from effectiveness.
(c) Termination. The obligations under this Section 16.1,
including the obligations to maintain the effectiveness of a
Registration Statement pursuant to Section 16.1(a) and to grant
piggyback registration rights with respect to other Company
registrations pursuant to Section 16.1(b), shall terminate upon the
earlier of (i) the resale by the Holder of all Warrant Shares, (ii)
such time as any Holder may resell all of its Warrant Shares without
restriction (including, without limitation, as to volume) without
registration under the Securities Act or (iii) seven (7) years from the
date of original issuance of this Warrant.
16.2 Holder Information; Registration Expenses. The Holder
shall promptly supply the Company with all such information as the Company may
reasonably request for preparation of a Registration Statement and any
amendments or supplements thereto. All expenses incurred in connection with the
preparation and filing of a Registration Statement, including, without
limitation, all federal and "blue sky" registration and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the
Company, listing fees of any securities exchange or automated trading or
quotation system on which the Common Stock is listed or traded and the legal
fees and related disbursements of Holder's legal counsel, but excluding brokers'
discounts and commissions, shall be borne by the Company.
16.3 Registration Related Covenants of Company. In connection
with the registration obligations of the Company provided in this Section 16,
the Company hereby covenants that it shall:
(a) provide to the Holder such number of copies as the Holder
may reasonably request of (i) a Registration Statement, (ii) each
amendment and supplement thereto, and (iii) the prospectus included
therein, to facilitate the Holder's disposition of the Warrant Shares
contemplated by a Registration Statement;
(b) prepare and file with the Commission any amendment or
supplement to a Registration Statement or the prospectus included
therein as may be necessary to correct any statement or omission or to
update any material information therein (with due regard to the
Company's potential need to maintain in confidence undisclosed
information relating to pending transactions or other corporate
matters);
(c) use best efforts, once a Registration Statement is
declared effective, to keep the Registration Statement effective
(subject to subsections 16.1(b) and 16.3(d)) until the earlier of (i)
the date on which all of the Warrant Shares have been sold, and (ii)
the date on which all of the Warrant Shares may be immediately sold
without restriction (including, without limitation, as to volume by
each holder thereof) without registration under the Securities Act;
provided, however, that in no event shall the Company be
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required to keep in effect the Registration Statement hereunder beyond
(i) with respect to the registration contemplated by Section 16.1(a),
the earliest of the dates set forth in Section 16.1(c) and (ii) with
respect to a registration under Section 16.1(b), the thirty (30) day
period set forth therein;
(d) promptly notify the Holder of any period (a "Deferral
Period") during which the Holder must discontinue its use or
dissemination of the prospectus included in a Registration Statement
(including by reason of the fact that there is a material event or
development involving the Company, that the Company intends to effect a
primary offering of securities, or that the information in the
prospectus needs to be amended or supplemented); provided, however,
that the Company shall use best efforts to ensure that (i) no Deferral
Period runs for more than 30 consecutive days, and (ii) the aggregate
number of days in all Deferral Periods does not exceed 60 days in any
12-month period; and
(e) notify the Holder promptly after the Company receives
notice of the issuance of any stop order by the Commission suspending
the effectiveness of a Registration Statement, or the threat or
initiation of any proceeding for such purpose, and use commercially
reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued.
16.4 Indemnification.
(a) By the Company. With respect to a Registration Statement, to the
extent permitted by law, the Company will indemnify and hold harmless the
Holder, the legal counsel and accountants for the Holder and each Person, if
any, who controls the Holder within the meaning of the Securities Act or the
Exchange Act (collectively, the "Holder Indemnified Parties"), against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto;
(ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any federal or state securities law
or any rule or regulation promulgated under the Securities Act, the
Exchange Act or any federal or state securities law in connection with
the offering covered by a Registration Statement;
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and the Company will reimburse such Holder Indemnified Parties for any legal or
other expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided however, that the indemnity agreement contained in this subsection 16.4
(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a Violation which
(i) occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any of such Holder
Indemnified Parties with respect to the Holder or (ii) arises out of the
Holder's failure to satisfy prospectus delivery or other distribution
requirements in connection with such registration.
(b) By the Holder. With respect to a Registration Statement,
to the extent permitted by law, the Holder will indemnify and hold
harmless the Company, each of its directors, each of its officers who
has signed the Registration Statement, each Person, if any, who
controls the Company within the meaning of the Securities Act, legal
counsel and accountants for the Company and other shareholders of the
Company against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer,
controlling Person or other shareholder (collectively, the "Company
Indemnified Parties") may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by the Holder with
respect to such Holder expressly for use in connection with such
registration; and the Holder will reimburse any legal or other expenses
reasonably incurred by any Company Indemnified Party in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in
this subsection 16.4(b) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement
is effected without the consent of the Holder (which consent shall not
be unreasonably withheld); and provided further, that in no event shall
the Holder's cumulative, aggregate liability under this subsection
16.4(b) or under subsection 16.4(d), or under such subsections
together, exceed the net proceeds received by the Holder in the
registered offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party
under this Section 16.4 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party
under this Section 16.4, deliver to the indemnifying party a written
notice of the commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly
noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified
party (together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the right to
retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the
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counsel retained by the indemnifying party would be inappropriate due
to actual or potential conflict of interests between such indemnified
party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action,
shall not relieve such indemnifying party of any liability to the
indemnified party under this Section 16.4.
(d) Contribution. If the indemnification provided for in this
Section 16.4 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,
liability, claim, damage, or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage,
or expense in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions that
resulted in such loss, liability, claim, damage, or expense as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access
to information, and opportunity to correct or prevent such statement or
omission; provided, however, that (A) in no event shall the Holder's
cumulative, aggregate liability under subsection 16.4(b) or under this
subsection 16.4(d) hereof, or under such subsections together, exceed
the net proceeds from the offering received by such Holder; and (B) no
Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) will be entitled to contribution
from any Person who was not guilty of such fraudulent
misrepresentation. Notwithstanding anything to the contrary herein, no
party shall be liable for contribution under this subsection 16.4(d),
except to the extent and under the circumstances as such party would
have been liable to indemnify under subsection 16.4(a) or subsection
16.4(b) hereof, as the case may be, if such indemnification were
enforceable under applicable law.
(e) Survival. The obligations of the Company and the Holder
under this Section 16.4 shall survive the completion of any offering of
Warrant Shares under the Registration Statement or otherwise.
16.5 Rule 144 Reporting. With a view to making available to
the Holder the benefits of certain rules and regulations of the Commission which
may at any time permit the sale of the Warrant Shares to the public without
registration, after such time as a public market exists for the Common Stock and
so long as the Holder owns any Warrant Shares, the Company agrees to:
(a) furnish to the Holder forthwith upon request (i) a written
statement by the Company (A) as to its compliance with the reporting
requirements of said Rule 144, and of the Securities Act and the
Exchange Act (for so long as it is subject to the reporting
requirements of the Exchange Act), or (B) that it qualifies as a
registrant whose securities
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may be resold pursuant to Form S-3 (at any time after it so qualifies
after the date hereof), (ii) a copy of the most recent annual or
quarterly report of the Company, and (iii) such other reports and
documents of the Company and information as the Holder may reasonably
request in availing itself of any rule or regulation of the Commission
allowing the Holder to sell any such securities without registration or
pursuant to Form S-3 (for so long as the Company is subject to the
reporting requirements of the Exchange Act).
17. REMEDIES; SPECIFIC PERFORMANCE. The Company stipulates that there
would be no adequate remedy at law to the Holder of this Warrant in the event of
any default or threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant and accordingly, the Company
agrees that, in addition to any other remedy to which the Holder may be entitled
at law or in equity, the Holder shall be entitled to seek to compel specific
performance of the obligations of the Company under this Warrant, without the
posting of any bond, in accordance with the terms and conditions of this Warrant
in any court of the United States or any State thereof having jurisdiction, and
if any action should be brought in equity to enforce any of the provisions of
this Warrant, the Company shall not raise the defense that there is an adequate
remedy at law. Except as otherwise provided by law, a delay or omission by the
Holder hereto in exercising any right or remedy accruing upon any such breach
shall not impair the right or remedy or constitute a waiver of or acquiescence
in any such breach. No remedy shall be exclusive of any other remedy. All
available remedies shall be cumulative.
18. NO RIGHTS OR LIABILITIES AS SHAREHOLDER. Nothing contained in this
Warrant shall be construed as conferring upon the Holder hereof any rights as a
shareholder of the Company or as imposing any obligation on the Holder to
purchase any securities or as imposing any liabilities on the Holder as a
shareholder of the Company, whether such obligation or liabilities are asserted
by the Company or by creditors of the Company.
19. NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in made in writing by hand delivery,
telecopier, any courier guaranteeing overnight delivery or first class
registered or certified mail, return receipt requested, postage prepaid,
addressed to:
If to the Holder:
Ableco Holding LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
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If to the Company:
Hypercom Corporation
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Fax: 000-000-0000
With a copy to:
Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax: 000-000-0000
All such notices and communications (and deliveries) shall be deemed to
have been duly given: at the time delivered by hand, if personally delivered;
when receipt is acknowledged, if telecopied; on the next Business Day, if timely
delivered to a courier guaranteeing overnight delivery; and five days after
being deposited in the mail, if sent first class or certified mail, return
receipt requested, postage prepaid; provided, that the exercise of this Warrant
shall be effective in the manner provided in Section 2.
20. AMENDMENTS. This Warrant and any term hereof may not be amended,
modified, supplemented or terminated, and waivers or consents to departures from
the provisions hereof may not be given, except by written instrument duly
executed by the Company and a majority in interest of the Holders of Series C
Warrants (including any Warrants issued upon the partial assignment and transfer
of this Warrant).
21. DESCRIPTIVE HEADINGS, ETC. The headings in this Warrant are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Warrant otherwise
requires: (1) words of any gender shall be deemed to include each other gender;
(2) words using the singular or plural number shall also include the plural or
singular number, respectively; (3) the words "hereof," "herein," and "hereunder"
and words of similar import when used in this Warrant shall refer to this
Warrant as a whole and not to any particular provision of this Warrant, and
Section and paragraph references are to the Sections and paragraphs of this
Warrant unless otherwise specified; (4) the word "including" and words of
similar import when used in this Warrant shall mean "including, without
limitation," unless otherwise specified; (5) "or" is not exclusive; and (6)
provisions apply to successive events and transactions.
22. GOVERNING LAW. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without giving effect to the
conflict of laws principles thereof).
23. COSTS AND ATTORNEYS' FEES. In the event that any action, suit or
other proceeding is instituted concerning or arising out of this Warrant, the
Company shall pay all of
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the Holder's costs and reasonable attorneys' fees incurred in each and every
such action, suit or other proceeding, including any and all appeals or
petitions therefrom.
24. JUDICIAL PROCEEDINGS. Any legal action, suit or proceeding brought
against the Company or the Holder with respect to this Warrant shall be brought
in any federal or state court in the State of Delaware, and by execution and
delivery of this Warrant, the Company and the Holder hereby irrevocably and
unconditionally waive any claim (by way of motion, as a defense or otherwise) of
improper venue, that it is not subject personally to the jurisdiction of such
court, that such courts are an inconvenient forum or that this Warrant or the
subject matter may not be enforced in or by such court. The Company and the
Holder hereby irrevocably and unconditionally consent to the service of process
of any of the aforementioned courts in any such action, suit or proceeding by
the mailing of copies thereof by registered or certified mail, postage prepaid,
at its address set forth or provided for in Section 17, such service to become
effective 10 days after such mailing. Nothing herein contained shall be deemed
to affect the right of any party to serve process in any manner permitted by law
or commence legal proceedings or otherwise proceed against any other party in
any other jurisdiction to enforce judgments obtained in any action, suit or
proceeding brought pursuant to this Section.
25. EFFECTIVENESS AND SHAREHOLDER APPROVAL. The Additional Warrant
Shares shall be deemed to be granted, and may only be exercised by the Holder,
upon approval of the shareholders of the Company to the extent required by
applicable law, rule or regulation (including of any exchange upon which the
Common Stock is traded). In the event that it is determined that shareholder
approval is so required, the Company shall promptly take all commercially
reasonable steps necessary to seek to obtain such approval, including the
preparation, filing and distribution to shareholders of any necessary proxy or
consent solicitation statement.
HYPERCOM CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------------------------
Title: Executive Vice President
and Chief Operating Officer
--------------------------------------
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ELECTION TO PURCHASE SHARES
The undersigned hereby irrevocably elects to exercise the Warrant to
purchase ____ shares of Common Stock, par value $.0001 per share ("Common
Stock"), of Hypercom Corporation and hereby [makes payment of $________
therefor] [or] [makes payment therefor by application pursuant to Section
2.1(b)(ii) of the Warrant of $_______ aggregate principal amount of Term Loans
(as defined in the Warrant)] [or] [makes payment therefor by reduction pursuant
to Section 2.1(b)(iii) of the Warrant of the number of shares of Common Stock
otherwise issuable to the Holder upon Warrant exercise by ___ shares] [or]
[makes payment therefor by delivery of the following Common Stock Certificates
of the Company (properly endorsed for transfer in blank) for cancellation by the
Company pursuant to Section 2.1(b)(iv) of the Warrant, certificates of which are
attached hereto for cancellation ___________ [list certificates by number and
amount]]. The undersigned hereby requests that certificates for such shares be
issued and delivered as follows:
ISSUE TO:
-----------------------------------------------------------------------
(NAME)
--------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
--------------------------------------------------------------------------------
(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
DELIVER TO:
---------------------------------------------------------------------
(NAME)
--------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
If the number of shares of Common Stock purchased (and/or reduced)
hereby is less than the number of shares of Common Stock covered by the Warrant,
the undersigned requests that a new Warrant representing the number of shares of
Common Stock not so purchased (or reduced) be issued and delivered as follows:
ISSUE TO:
-----------------------------------------------------------------------
(NAME OF HOLDER)
--------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
DELIVER TO:
---------------------------------------------------------------------
(NAME OF HOLDER)
--------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
Dated: , 200 HOLDER
------------- -
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
32
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto the Assignee named below all of the rights of the undersigned to
purchase Common Stock, par value $.0001 per share ("Common Stock") of HYPERCOM
Corporation represented by the Warrant, with respect to the number of shares of
Common Stock set forth below:
NAME OF ASSIGNEE ADDRESS NUMBER OF SHARES
---------------- ------- ----------------
---------------------- ---------------------- -------------------------------
---------------------- ---------------------- -------------------------------
---------------------- ---------------------- -------------------------------
---------------------- ---------------------- -------------------------------
---------------------- ---------------------- -------------------------------
and does hereby irrevocably constitute and appoint Hypercom Corporation to make
such transfer on its books maintained for that purpose, with full power of
substitution in the premises.
Dated: , 200 ABLECO HOLDING LLC
--------------- -
Signature Guaranteed
By:
------------------------------- -----------------------------------------
Name:
------------------------------- ---------------------------------------
Title:
--------------------------------------
NOTICE: The signature to this Assignment must correspond with the name upon the
face of the within Warrant in every particular, without alteration or
enlargement or any change whatever.
