Exhibit 10.2
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
_________________, 2002
__________ shares Warrant No. 2002A3-__
LEVEL 8 SYSTEMS, INC.
STOCK PURCHASE WARRANT
Registered Owner: _________________
This certifies that, for value received, Level 8 Systems, Inc., a Delaware
corporation (the "Company"), grants the following rights to the Registered
Owner, or assigns, of this Warrant:
1. Issue. Upon tender (as defined in Section 5) to the Company, the
Company, within three (3) Business Days of the date thereof, shall
issue to the Registered Owner, or assigns, up to the number of shares
specified in Section 2 of fully paid and nonassessable shares of Common
Stock that the Registered Owner, or assigns, is otherwise entitled to
purchase.
2. Number of Shares. The total number of shares of Common Stock that the
Registered Owner, or assigns, of this Warrant is entitled to receive
upon exercise of this Warrant (the "Warrant Shares") is ______________
shares, subject to adjustment from time to time as set forth in Section
6. The Company shall at all times reserve and hold available sufficient
shares of Common Stock to satisfy all conversion and purchase rights
represented by outstanding convertible securities, options and
warrants, including this Warrant. The Company covenants and agrees that
all shares of Common Stock that may be issued upon the exercise of this
Warrant shall, upon issuance, be duly and validly issued, fully paid
and nonassessable, free from all taxes, liens and charges with respect
to the purchase and the issuance of the shares, and shall not have any
legend or restrictions on resale, except as required by Section 3.1(b)
of the Exchange Agreement.
3. Exercise Price. The initial per share exercise price of this Warrant,
representing the price per share at which the shares of stock issuable
upon exercise of this Warrant may be purchased, is $0.40 (the "Exercise
Price").
4. Exercise Period. This Warrant may be exercised from the Closing Date
(as defined in the Exchange Agreement) up to and including October 16,
2005 (the "Exercise Period"). If not exercised in compliance with
Section 5 during this period, this Warrant and all rights granted under
this Warrant shall expire and lapse.
5. Tender; Issuance of Certificates.
a. This Warrant may be exercised, in whole or in part, by (i) actual
delivery of (a) the Exercise Price in cash, (b) a duly executed
Warrant Exercise Form, a copy of which is attached to this
Warrant as Exhibit A, properly executed by the Registered Owner,
or assigns, of this Warrant, and (c) by surrender of this
Warrant, or (ii) if the resale of the Warrant Shares by the
Registered Owner is not then registered pursuant to an effective
registration statement under the Securities Act, delivery to the
Company of (i) the Warrant and (ii) a written notice of an
election to effect a "Cashless Exercise" (as defined below) for
the Warrant Shares specified in the Warrant Exercise Form. The
Warrant Shares so purchased shall be deemed to be issued to the
Registered Owner as of the close of business on the Business Day
on which this Warrant shall have been surrendered, the completed
Warrant Exercise Form shall have been delivered and payment shall
have been made for such shares as set forth above. Unless
otherwise directed in writing by the Company, the payment,
Warrant and Warrant Exercise Form must be delivered to the
principal office of the Company either in person or as set for in
Section 14.
b. Commencing sixty (60) days from the Filing Date (as defined in
the Registration Rights Agreement), if, and only if, at the time
of exercise of this Warrant, the Warrant Shares are not saleable
pursuant to an effective registration statement, then in addition
to the exercise of all or a part of this Warrant by payment of
the Exercise Price in cash as provided above, and in lieu of such
payment, the Registered Owner shall have the right to effect a
cashless exercise (a "Cashless Exercise"). In the event of a
Cashless Exercise, the Registered Owner may exercise this Warrant
in whole or in part by surrendering this Warrant, together with a
duly executed Warrant Exercise Form, in exchange for the number
of shares of Common Stock equal to the product of (x) the number
of shares as to which this Warrant is being exercised multiplied
by (y) a fraction, the numerator of which is the Per Share Market
Value of the Common Stock less the Exercise Price then in effect
and the denominator of which is the Per Share Market Value (in
each case adjusted for fractional shares as herein provided).
c. In lieu of physical delivery of the Warrant Shares, provided the
Company's transfer agent is participating in the Depositary Trust
Company ("DTC") Fast Automated Securities Transfer ("FAST")
program, upon request of the Registered Owner and in compliance
with the provisions hereof, the Company shall use its best
efforts to cause its transfer agent to electronically transmit
the Warrant Shares to the Registered Owner by crediting the
account of the Registered Owner's Prime Broker with DTC through
its Deposit Withdrawal Agent Commission system. The time period
for delivery described herein shall apply to the electronic
transmittals described herein. The Company and its transfer agent
shall be entitled to rely in good faith on the instructions which
reasonably appear on their face to be issued on behalf of the
Holder, and will have no liability with respect to any
misdelivery of Warrant Shares if such instructions are followed.
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d. Certificates for the Warrant Shares so purchased, representing
the aggregate number of shares specified in the Warrant Exercise
Form, shall be delivered to the Registered Owner within a
reasonable time, not exceeding three (3) Business Days, after
this Warrant shall have been so exercised. The certificates so
delivered shall be in such denominations as may be reasonably
requested by the Registered Owner and shall be registered in the
name of the Registered Owner or such other name as shall be
designated by such Registered Owner. If this Warrant shall have
been exercised only in part, then, unless this Warrant has
expired, the Company shall, at its expense, at the time of
delivery of such certificates, deliver to the Registered Owner a
new Warrant representing the number of shares with respect to
which this Warrant shall not then have been exercised.
6. Adjustment of Exercise Price.
a. Common Stock Dividends; Common Stock Splits; Reverse Common Stock
Splits. If the Company, at any time while this Warrant is
outstanding, (a) shall pay a stock dividend on its Common Stock,
(b) subdivide outstanding shares of Common Stock into a larger
number of shares, (c) combine outstanding shares of Common Stock
into a smaller number of shares or (d) issue by reclassification
of shares of Common Stock any shares of capital stock of the
Company, then the Exercise Price thereafter shall be determined
by multiplying the Exercise Price by a fraction the numerator of
which shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and the
denominator of which shall be the number of shares of Common
Stock outstanding after such event. Any adjustment made pursuant
to this paragraph (6)(a) shall become effective on the effective
date of any dividend, distribution, subdivision, combination or
re-classification.
b. Rights; Warrants. If the Company, at any time while this Warrant
is outstanding, shall issue rights or warrants to all of the
holders of Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than
the Exercise Price and similar rights are not concurrently
distributed to the Registered Holder, the Exercise Price shall
thereafter be determined by multiplying the Exercise Price by a
fraction, the denominator of which shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding
on the date of issuance of such rights or warrants plus the
number of additional shares of Common Stock offered for
subscription or purchase, and the numerator of which shall be the
number of shares of Common Stock (excluding treasury shares, if
any) outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering
price of the total number of shares so offered would purchase at
the Exercise Price. Such adjustment shall be made whenever such
rights or warrants are issued, and shall become effective
immediately after the record date for the determination of
shareholders entitled to receive such rights or warrants.
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c. Subscription Rights. If the Company, at any time while this
Warrant is outstanding, shall distribute to all of the holders of
Common Stock evidence of its indebtedness or assets or rights or
warrants to subscribe for or purchase any security (excluding
those referred to in paragraphs 6(a) and (b) above) and similar
rights are not concurrently distributed to the Registered Owner,
then in each such case the Exercise Price at which the Warrant
shall thereafter be exercisable shall be determined by
multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of shareholders entitled to
receive such distribution by a fraction, the denominator of which
shall be the Per Share Market Value of Common Stock determined as
of the record date mentioned above, and the numerator of which
shall be such Per Share Market Value of the Common Stock on such
record date less the then fair market value at such record date
of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock
as determined by the Board of Directors in good faith; provided,
however, that in the event of a distribution exceeding ten
percent (10%) of the net assets of the Company, such fair market
value shall be determined by one Appraiser selected in good faith
by the Registered Owner of the Warrant; and provided, further,
that the Company, after receipt of the determination by such
Appraiser shall have the right to select in good faith an
additional Appraiser meeting similar qualifications in which case
the fair market value shall be equal to the average of the
determinations by each such Appraiser. Such adjustment shall be
made whenever any such distribution is made and shall become
effective immediately after the record date mentioned above.
d. Rounding. All calculations under this Section 6 shall be made to
the nearest cent or the nearest l/l00th of a share, as the case
may be.
e. Notice of Adjustment. Whenever the Exercise Price is adjusted
pursuant to paragraphs 6(a), (b) or (c), the Company shall
promptly deliver to the Registered Owner a notice setting forth
the Exercise Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment.
f. Events Triggering Redemption. The following are "Redemption
Events" under this Section 6.(f): (A) any reclassification of the
Common Stock which would have a material adverse affect on the
rights of holders of the securities into which the Warrant is
exercisable, (B) any suspension from listing or delisting of the
Common Stock such that the Common Stock is not listed on Nasdaq
or any Subsequent Market for a period of ten consecutive Trading
Days, or (C) a breach by the Company of its obligations under
this Warrant, but only if such breach continues for a period of
at least 10 Trading Days after the Company is notified by any
Holder of such breach.
On and after notice of the occurrence of a Redemption Event, the Holder
shall have the option to require the Company to redeem (the "Redemption Right")
in cash and subject to the terms of payment provisions set forth in Section 5,
from funds legally available therefor at the time of such redemption, the
Holder's shares of Common Stock immediately theretofore acquirable and
receivable upon the exercise of such Holder's Warrant at a price per share equal
to the product of (i) the difference between (A) Average Price immediately
preceding the effective date, the date of the closing, date of occurrence or the
date of the announcement, as the case may be, of the Redemption Event triggering
such Redemption Right and (B) the Exercise Price, and (ii) the number of shares
of Common Stock that would have been issued upon the exercise of the Warrant
immediately prior to such Redemption Event.
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g. Notice of Certain Events. If:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
(iii) the Company shall authorize the granting to the holders of
the Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights; or
(iv) the approval of any shareholders of the Company shall be
required in connection with any reclassification of the Common Stock
of the Company, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets
of the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property; or
(v) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company;
then the Company shall cause to be filed at each office or agency
maintained for the purpose of exercise of this Warrant, and shall cause
to be delivered to the Registered Owner, at least 10 Business Days
prior to the applicable record or effective date hereinafter specified,
a notice stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution, redemption, rights or warrants,
or if a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date
as of which it is expected that holders of Common Stock of record shall
be entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided,
however, that the failure to mail such notice or any defect therein or
in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.
h. Adjustment of Number of Shares. Upon each adjustment of the
Exercise Price as a result of the calculations made in this
Section 6, this Warrant shall thereafter evidence the right to
receive, at the adjusted Exercise 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 Exercise Price in effect immediately prior to such adjustment
of the Exercise Price by (ii) the Exercise Price in effect
immediately after such adjustment of the Exercise Price.
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7. Optional Redemption.
a. Optional Redemption. This Warrant is redeemable in whole or in
part at the option of the Company at any time, subject to the
conditions herein, (the "Optional Redemption"):
(i) Commencing on the First Business Day immediately after the
first anniversary of the Closing Date, provided that the closing price
of the Company's Common Stock is greater than Five Dollars ($5.00) for
twenty (20) consecutive Trading Days and subject to the other
conditions set forth herein.
(ii) After the Original Issue Date, if the Warrants outstanding
represent less than 5% of the Warrant Shares to be issued upon
exercise of the Warrants issued on the Original Issue Date remain
unexercised, excluding from such calculation any Warrants held by an
Affiliate of the Company as of such date (other than any Holder or
transferees or successors or assigns thereof if such Holder is deemed
to be an Affiliate solely by reason of its holding of Preferred Stock
and Warrants).
b. Redemption Notice. Subject to the conditions set forth in Section
7(a), so long as (i) any Registration Statement required to be
filed and be effective pursuant to the Registration Rights
Agreement is then in effect and has been in effect and sales of
all of the Registrable Securities can be made thereunder for at
least twenty (20) days prior to the Redemption Notice Date (as
defined below) and (ii) the Company has a sufficient number of
authorized shares of Common Stock reserved for issuance upon full
exercise of the outstanding Warrants, upon ten (10) Business
Days' prior written notice to the Registered Owner (a "Redemption
Notice"), the Warrant may be redeemed by the Company, in whole or
in part, at a redemption price equal to $.001 per Warrant (the
"Redemption Price").
c. Mechanics of Redemption. The Company shall exercise its right to
redeem by delivering its Redemption Notice by facsimile and
overnight courier to each Registered Owner (such date that the
Redemption Notice is given on the "Redemption Notice Date"). Such
Redemption Notice shall indicate (A) the Redemption Price, (B)
each Registered Owner's pro rata allocation of such maximum
amount, and (C) a confirmation of the date that the Company shall
effect the redemption (the "Redemption Date"). The Redemption
Date shall be not less than ten (10) Business Days and not more
than sixty (60) calendar days after the Redemption Notice Date.
Notwithstanding anything in this Section 7(c), the Company shall
convert any Warrant pursuant to Section 5 if the Warrant Exercise
Form for a Warrant submitted for exercise is (i) received by the
Company, together with the Exercise Price in cash and the
Warrant, before the Redemption Date, (ii) for an Exercise Price
greater than or equal to the Redemption Price (appropriately
adjusted in accordance with the terms hereof) and (iii) in excess
of such Registered Owner's pro rata allocation of the maximum
Redemption Price indicated in its Redemption Notice.
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d. Payment of Redemption Price. The Company shall pay the applicable
Redemption Price to the Registered Owner of the Warrants being
redeemed in cash on the Redemption Date (or, if later, the
Business Day following the Business Day upon which the Company
receives the Warrant). If the Company shall fail to pay the
applicable Redemption Price to such Registered Owner on the
Redemption Date, in addition to any remedy such Registered Owner
may have under this Warrant, the Purchase Agreement and the
Exchange Agreement, such unpaid amount shall bear interest at the
rate of 2.0% per month until paid in full.
8. [Intentionally Deleted]
9. Restriction on Exercise by Either the Registered Owner or the Company.
Notwithstanding anything herein to the contrary, in no event shall any
Registered Owner have the right or be required to exercise this Warrant
if as a result of such conversion the aggregate number of shares of
Common Stock beneficially owned by such Registered Owner and its
Affiliates would exceed 4.99% of the outstanding shares of the Common
Stock following such exercise. The Company shall be entitled to rely on
a Notice of Exercise in the form of Exhibit A hereto in issuing shares
of Common Stock to a Registered Owner. For purposes of this Section 9,
beneficial ownership shall be calculated in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended. The
provisions of this Section 9 may be waived by a Registered Owner as to
itself (and solely as to itself) upon not less than 65 days prior
written notice to the Company.
10. Officer's Certificate. Whenever the number of shares purchasable upon
exercise shall be adjusted as required by the provisions of Section 6,
the Company shall forthwith file in the custody of its Secretary or an
Assistant Secretary at its principal office and with its stock transfer
agent, if any, an officer's certificate showing the adjusted number of
shares determined as herein provided, setting forth in reasonable
detail the facts requiring such adjustment and the manner of computing
such adjustment. Each such officer's certificate shall be signed by the
chairman, president or chief financial officer of the Company and by
the secretary or any assistant secretary of the Company. Each such
officer's certificate shall be made available at all reasonable times
for inspection by any Registered Owner of the Warrants and the Company
shall, forthwith after each such adjustment, deliver a copy of such
certificate to the each of the Registered Owners.
11. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Exchange
Agreement. As used in this Warrant, the following terms have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
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"Appraiser" shall mean a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing.
"Approved Stock Plan" shall mean any contract, plan or agreement which has
been approved by the Board of Directors of the Company, pursuant to which the
Company's securities may be issued to any employee, officer, director or
consultant.
"Average Price" has the meaning set forth in the Series A3 Certificate of
Designation.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the state of
New York generally are authorized or required by law or other government actions
to close.
"Closing" has the meaning set forth in Section 1.2(a) of the Exchange
Agreement.
"Closing Date" has the meaning set forth in the Exchange Agreement.
"Common Stock" means the shares of the Company's Common Stock, par value
$0.001 per share.
"Company" means Level 8 Systems, Inc., a Delaware corporation.
"Distribution Date" has the meaning assigned to it in Section 22.
"Exchange Agreement" means that certain Exchange Agreement dated as of
August 29, 2002 among the Company and the Holders as amended by that First
Amendment to Exchange Agreement dated as of _________, 2002.
"Exercise Period" has the meaning assigned to it the Section 4.
"Exercise Price" has the meaning assigned to it in Section 3.
"Holder" has the meaning assigned to it in the Exchange Agreement.
"Per Share Market Value" means on any particular date (i) the closing bid
price per share of the Common Stock on such date on the Nasdaq National Market
or other registered national stock exchange on which the Common Stock is then
listed or if there is no such price on such date, then the closing bid price on
such exchange or quotation system on the date nearest preceding such date, or
(ii) if the Common Stock is not listed then on the Nasdaq National Market or the
Nasdaq SmallCap Market or any registered national stock exchange, the closing
bid price for a share of Common Stock in the over-the-counter market, as
reported by the National Quotation Bureau Incorporated (or similar organization
or agency succeeding to its functions of reporting prices) at the close of
business on such date, or (iii) if the Common Stock is not then publicly traded
the fair market value of a share of Common Stock as determined by an Appraiser
selected in good faith by the holder of this Warrant; provided, however, that
the Company, after receipt of the determination by such Appraiser, shall have
the right to select, in good faith, an additional Appraiser, in which case the
fair market value shall be equal to the average of the determinations by each
such Appraiser; and provided, further that all determinations of the Per Share
Market Value shall be appropriately adjusted for any stock dividends, stock
splits or other similar transactions during such period.
8
"Preferred Stock" has the meaning assigned to it in the Exchange Agreement.
"Purchase Agreement" means that certain Securities Purchase Agreement,
dated as of June 28, 1999 among the Company and the Holders.
"Redemption Date" has the meaning assigned to it in Section 7(c).
"Redemption Event" has the meaning assigned to it in Section 6(f).
"Redemption Notice" has the meaning assigned to it in Section 7(b).
"Registered Owner" means the person identified on the face of this Warrant
as the registered owner hereof or such other person as shown on the records of
the Company as being the registered owner of this Warrant.
"Redemption Price" has the meaning assigned to it in Section 7(b) hereof.
"Registrable Securities" has the meaning assigned to it in the Registration
Rights Agreement.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated August 29, 2002 among the Company and the Holders, as amended
by that certain First Amendment to Registration Rights Agreement dated as of
____________, 2002.
"Rights" has the meaning assigned to it in Section 22.
"Series A3 Certificate of Designation" has the meaning assigned to it in
the Exchange Agreement.
"Series A3 Preferred Stock" means the Series A3 Convertible Redeemable
Preferred Stock of the Company.
"Series B3 Certificate of Designation" has the meaning assigned to it in
the Exchange Agreement.
"Trading Day(s)" means any day on which the primary market on which shares
of Common Stock are listed is open for trading.
"Underlying Shares" has the meaning assigned to it in Section 2.1(d) of the
Exchange Agreement.
"Warrant(s)" means the warrants issuable at the Closing.
9
12. Registration Rights. The Company will undertake the registration of the
Common Stock into which such Warrants are exercisable at such times and upon
such terms pursuant to the provisions of the Registration Rights Agreement.
13. Notices. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be deemed to have been received (a) upon
hand delivery (receipt acknowledged) or delivery by telex (with correct answer
back received), telecopy or facsimile (with transmission confirmation report) at
the address or number designated below (if received by 8:00 p.m. EST where such
notice is to be received), or the first Business Day following such delivery (if
received after 8:00 p.m. EST where such notice is to be received) or (b) on the
second Business Day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such communications are
(i) if to the Company to Level 8 Systems, Inc., 0000 Xxxxxxx Xxxxxxx, Xxxx,
Xxxxx Xxxxxxxx 00000, Telephone: (000) 000-0000, Facsimile: (000) 000-0000,
Attention: Xxxx X. Xxxxxxxxx, with copies to Xxxxxx, Xxxxxxxxx, Xxxxxx & Xxxxxx
LLP, 16th Floor, 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, XX 00000, Attention: Xxxxx X.
Xxxxx, Esq., Facsimile: (000)000-0000 and (ii) if to the Registered Owner to the
address set forth on Schedule II to the Exchange Agreement with copies to the
addressees set forth on Schedule II to the Registration Rights Agreement or such
other address as may be designated in writing hereafter, in the same manner, by
such person.
14. Compliance With Governmental Requirements. The Company covenants that if any
shares of Common Stock required to be reserved for purposes of exercise of
Warrants hereunder require registration with or approval of any governmental
authority under any Federal or state law, or any national securities exchange,
before such shares may be issued upon exercise, the Company will use its best
efforts to cause such shares to be duly registered or approved, as the case may
be.
15. Fractional Shares. Upon any exercise hereunder, the Company shall not be
required to issue stock certificates representing fractions of shares of the
Common Stock, but may if otherwise permitted make a cash payment in respect of
any final fraction of a share based on the Per Share Market Value at such time.
If the Company elects not, or is unable, to make such a cash payment, the
Registered Owner shall be entitled to receive, in lieu of the final fraction of
a share, one whole share of Common Stock.
16. Payment of Tax Upon Issue of Transfer. The issuance of certificates for
shares of the Common Stock upon exercise of the Warrants shall be made without
charge to the Registered Owners thereof for any documentary stamp or similar
taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate upon exercise in a name other than that of the
Registered Owner of such Warrant so converted and the Company shall not be
required to issue or deliver such certificates 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.
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17. Warrants Owned by Company Deemed Not Outstanding. In determining whether the
holders of the outstanding Warrants have concurred in any direction, consent or
waiver under this Warrant, Warrants which are owned by the Company or any other
obligor on the Warrants or by any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or any
other obligor on the Warrants shall be disregarded and deemed not to be
outstanding for the purpose of any such determination; provided that any
Warrants owned by the Holders shall be deemed outstanding for purposes of making
such a determination. Warrants so owned which have been pledged in good faith
may be regarded as outstanding if the pledgee establishes to the satisfaction of
the Company the pledgee's right so to act with respect to such Warrants and that
the pledgee is not the Company or any other obligor upon the Warrants or any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any other obligor on the Warrants.
18. Effect of Headings; References. The section headings herein are for
convenience only and shall not affect the construction hereof. References herein
to Sections are to Sections of this Warrant, unless otherwise expressly
provided.
19. No Rights as Stockholder. This Warrant shall not entitle the Registered
Owner to any rights as a stockholder of the Company, including without
limitation, the right to vote, to receive dividends and other distributions, or
to receive notice of, or to attend, meetings of stockholders or any other
proceedings of the Company, unless and to the extent exercised for shares of
Common Stock in accordance with the terms hereof.
20. Certain Actions Prohibited. The Company will not, by amendment of its
charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant. Without limiting the generality of the foregoing, the Company (i)
will not increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect, and (ii)
will take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
21. 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 6, make proper provision so that each Registered
Owner 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 to exercised was exercisable immediately prior to
the Distribution Date would have been entitled on the Distribution Date in
accordance with the terms and provisions of and applicable to the Rights, and in
each case subject to the terms and conditions of the Rights.
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22. Successors and Assigns. This Warrant shall be binding upon and inure to the
benefit of the Registered Owners and its assigns, and shall be binding upon any
entity succeeding to the Company by merger or acquisition of all or
substantially all the assets of the Company. The Company may not assign this
Warrant or any rights or obligations hereunder without the prior written consent
of the Registered Owner. The Registered Owner may assign this Warrant, in
compliance with applicable law, without the prior written consent of the
Company.
23. Governing Law. This Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of Delaware without regard to
the principles of conflicts of law thereof. Each party hereby irrevocably
submits to the nonexclusive jurisdiction of the state and federal courts sitting
in the City of New York, Borough of Manhattan, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Warrant and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of the date first set forth above.
LEVEL 8 SYSTEMS, INC.
By:
--------------------------------------
Xxxx X. Xxxxxxxxx
Chief Financial and Operating Officer,
Corporate Secretary
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EXHIBIT A
Warrant Exercise Form
TO: LEVEL 8 SYSTEMS, INC.
The undersigned hereby: (1) irrevocably subscribes for and offers to
purchase _______ shares of Common Stock of Level 8 Systems, Inc., pursuant to
Warrant No. ___ heretofore issued to ___________________ on ____________, 2001;
(2) encloses a payment of $__________ for these shares at a price of $____ per
share (as adjusted pursuant to the provisions of the Warrant); and (3) requests
that a certificate for the shares be issued in the name of the undersigned and
delivered to the undersigned at the address specified below.
The undersigned hereby certifies that the Common Stock issuable pursuant to
this Conversion Notice has been sold pursuant to a registration statement under
the Securities Act of 1933 which identifies the Holder as a selling security
holder. This must be checked for shares free of restrictive legends to be
issued.
Date:
--------------------------------------
Investor Name:
--------------------------------------
Taxpayer Identification
--------------------------------------
Number:
--------------------------------------
By:
--------------------------------------
Printed Name:
--------------------------------------
Title:
--------------------------------------
Address:
--------------------------------------
Note: The above signature should correspond exactly with the
name on the face of this Warrant Certificate or with the name
of assignee appearing in assignment form below.
AND, if said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant Certificate is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder less
any fraction of a share paid in cash and delivered to the address stated above.
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TO: The TRANSFER AGENT
The issuance of the shares of Common Stock set forth above is hereby
authorized and directed by the Company.
LEVEL 8 SYSTEMS INC.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
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