Exhibit 4.3
NEITHER THIS WARRANT NOR ISSUANCE OF THE SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF TO THE HOLDER HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
QUALIFIED OR REGISTERED UNDER STATE SECURITIES OR BLUE SKY LAWS. NEITHER THIS
WARRANT NOR SUCH SECURITIES MAY BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE SECURITIES
ACT OF 1933, APPLICABLE STATE SECURITIES OR BLUE SKY LAWS AND THE APPLICABLE
RULES AND REGULATIONS THEREUNDER.
THIS WARRANT MAY NOT BE TRANSFERRED EXCEPT AS PROVIDED IN SECTION 24.
No. SF- ___ Right to Purchase __________ Shares of
Common Stock of Direct Insite Corp.
DIRECT INSITE CORP.
Common Stock Purchase Warrant
DIRECT INSITE CORP., a Delaware corporation, hereby certifies that, for
value received, _______________ or registered assigns (the "Holder"), is
entitled, subject to the terms set forth below, to purchase from the Company at
any time or from time to time on or after the Exercisability Date until 5:00
p.m., New York City time, on the Expiration Date (such capitalized term and all
other capitalized terms used herein having the respective meanings provided
herein), __________ fully paid and nonassessable shares of Common Stock at a
purchase price per share equal to the Purchase Price. The number of such shares
of Common Stock and the Purchase Price are subject to adjustment as provided in
this Warrant.
As used herein the following capitalized terms, unless the context
otherwise requires, have the following respective meanings:
"Aggregate Purchase Price" means at any time an amount equal to the product
obtained by multiplying (x) the Purchase Price times (y) the number of shares of
Common Stock for which this Warrant may be exercised at such time.
"AMEX" means the American Stock Exchange, Inc.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
or executive order to remain closed.
"Closing Date" shall have the meaning provided in the Securities Purchase
Agreement.
"Common Stock" includes the Company's Common Stock, par value $.0001 per
share (and any purchase rights issued with respect to the Common Stock in the
future), as authorized on the date hereof, and any other securities into which
or for which the Common Stock (and any such rights issued with respect to the
Common Stock) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise and any
stock (other than Common Stock) and other securities of the Company or any other
Person which the Holder at any time shall be entitled to receive, or shall have
received, on the exercise of this Warrant, in lieu of or in addition to Common
Stock.
"Common Stock Equivalents" means any warrant, option, subscription or
purchase right with respect to shares of Common Stock, any security convertible
into, exchangeable for, or otherwise entitling the holder thereof to acquire,
shares of Common Stock or any warrant, option, subscription or purchase right
with respect to any such convertible, exchangeable or other security.
"Company" shall include Direct Insite Corp., a Delaware corporation, and
any corporation that shall succeed to or assume the obligations of Direct Insite
Corp. hereunder in accordance with the terms hereof.
"Current Fair Market Value" means when used with respect to the Common
Stock as of a specified date with respect to each share of Common Stock, the
average of the closing prices of the Common Stock sold on all securities
exchanges (including the Nasdaq, the Nasdaq SmallCap and the Over-the-Counter
Bulletin Board) on which the Common Stock may at the time be listed, or, if
there have been no sales on any such exchange on such day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on such day the Common Stock is not so listed, the closing price on
such day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization, in each
such case averaged over a period of five Trading Days consisting of the day as
of which the Current Fair Market Value of Common Stock is being determined (or
if such day is not a Trading Day, the Trading Day next preceding such day) and
the four consecutive Trading Days prior to such day. If on the date for which
Current Fair Market Value is to be determined the Common Stock is not listed on
any securities exchange or quoted in the NASDAQ System or the over-the-counter
market, the Current Fair Market Value of Common Stock shall be the highest price
per share which the Company could then obtain from a willing buyer (not an
employee or director of the Company at the time of determination) in an
arms'-length transaction for shares of Common Stock sold by the Company, from
authorized but unissued shares, as determined in good faith by the Board of
Directors.
2
"Exercisability Date" shall mean the date on which the warrants issued in
the Follow-on Financing become exercisable or as may otherwise be agreed between
the Company and Holder in connection with the Follow-on Financing, or, if the
Follow-on Financing does not occur by May 13, 2005, then the Exercisability Date
shall be May 13, 2005 (unless a later date is agreed to in writing by the
Company and Holder).
"Expiration Date" means March 28, 2012.
"Follow-on Financing" shall mean a private placement consummated by the
Company within 45 days after the Closing Date, or such longer period as agreed
in writing between the Company and Sigma, pursuant to which Sigma is the lead
investor and Sigma and its Affiliates and appointees invest between $2,500,000
and $3,500,000.
"Issuance Date" means the date of original issuance of this Warrant.
"Nasdaq" means the Nasdaq National Market.
"Nasdaq SmallCap" means the Nasdaq SmallCap Market.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"1933 Act" means the Securities Act of 1933, as amended.
"Notes" means any of the Senior Subordinated Secured Notes issued by the
Company pursuant to the Securities Purchase Agreement.
"NYSE" means the New York Stock Exchange, Inc.
"Other Securities" means any stock (other than Common Stock) and other
securities of the Company or any other Person which the Holder at any time shall
be entitled to receive, or shall have received, on 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.
"Other Warrants" means the Common Stock Purchase Warrants (other than this
Warrant) issued or issuable by the Company pursuant to the Securities Purchase
Agreement.
"Person" means an individual, partnership, corporation, limited liability
company, trust, unincorporated organization, business trust, association, joint
stock company, joint venture, pool, syndicate, sole proprietorship, governmental
agency or any other form of entity not specifically listed herein.
"Purchase Price" means $.90, except that if the Follow-on Financing occurs,
the Purchase Price shall be as agreed between the Company and Holder in
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connection with the Follow-on Financing, subject to the same antidilution
adjustments as provided in the warrants issued in connection with the Follow-on
Financing, or, if the Follow-on Financing is not consummated within 45 days of
the Closing Date or such later date as agreed to in writing by the Company and
Holder, then the Purchase Price shall be $.01 effective 45 days after the
Closing Date or such later date as agreed to in writing by the Company and
Holder. In the event that the Purchase Price is adjusted to $.01, it shall not
be subject to further adjustment except as required by Section 5 and 9 hereof.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registration Period" shall have the meaning provided in the Securities
Purchase Agreement.
"Registration Statement" shall have the meaning provided in the Securities
Purchase Agreement.
"Restricted Securities" means securities that are not eligible for resale
pursuant to Rule 144(k) under the 1933 Act (or any successor provision).
"Reorganization Event" means the occurrence of any one or more of the
following events:
(i) any consolidation, merger or similar transaction of the Company or any
Subsidiary with or into another entity (other than a merger or consolidation or
similar transaction of a Subsidiary into the Company or a wholly-owned
Subsidiary); or the sale or transfer of all or substantially all of the assets
of the Company and the Subsidiaries in a single transaction or a series of
related transactions; or
(ii) the occurrence of any transaction or event in connection with which
all or substantially all the Common Stock shall be exchanged for, converted
into, acquired for or constitute the right to receive securities of any other
Person (whether by means of a Tender Offer, liquidation, consolidation, merger,
share exchange, combination, reclassification, recapitalization, or otherwise);
or
(iii) the acquisition by a Person or group of Persons acting in concert as
a partnership, limited partnership, syndicate or group, as a result of a tender
or exchange offer, open market purchases, privately negotiated purchases or
otherwise, of beneficial ownership of securities of the Company representing 50%
or more of the combined voting power of the outstanding voting securities of the
Company ordinarily (and apart from rights accruing in special circumstances)
having the right to vote in the election of directors;
provided that there shall be excluded from the definition of Reorganization
Event any event described in (i), (ii), or (iii) above that is consummated with
a publicly traded company with a market capitalization in excess of $100 million
and so long as the Holder has received at least ten Business Days prior notice
of same (a "$100M event").
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"Rule 144A" means Rule 144A as promulgated under the 1933 Act.
"Securities Purchase Agreement" means the Securities Purchase Agreement,
dated as of March 29, 2005, by and between the Company and the investors named
therein.
"SEC" means the Securities and Exchange Commission.
"SEC Effective Date" shall have the meaning provided in the Securities
Purchase Agreement.
"Sigma" means Sigma Opportunity Fund, LLC.
"Subsidiary" means any corporation or other entity of which a majority of
the capital stock or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other Persons performing similar
functions are at the time directly or indirectly owned by the Company.
"Tender Offer" means a tender offer, exchange offer or other offer by the
Company to repurchase outstanding shares of its capital stock.
"Trading Day" means at any time a day on which any of a national securities
exchange, Nasdaq or such other securities market as at such time constitutes the
principal securities market for the Common Stock is open for general trading of
securities.
"Warrant Shares" means the shares of Common Stock issuable upon exercise of
this Warrant.
1. Exercise of Warrant.
(a) Exercise. This Warrant may be exercised by the Holder in whole at any
time or in part from time to time on or before the Expiration Date by (x)
surrendering this Warrant to the Company, (y) giving a subscription form in the
form of Exhibit 1 to this Warrant (duly executed by the Holder) to the Company,
and (z) making payment, in cash or by certified or official bank check payable
to the order of the Company, or by wire transfer of funds to the account of the
Company, in any such case, in the amount obtained by multiplying (a) the number
of shares of Common Stock designated by the Holder in the subscription form by
(b) the Purchase Price then in effect. On any partial exercise the Company will
forthwith issue and deliver to or upon the order of the Holder a new Warrant or
Warrants of like tenor, in the name of the Holder or as the Holder (upon payment
by the Holder of any applicable transfer taxes) may request, providing in the
aggregate on the face or faces thereof for the purchase of the number of shares
of Common Stock for which such Warrant or Warrants may still be exercised. The
subscription form may be surrendered by telephone line facsimile transmission to
such telephone number for the Company as shall have been specified in writing to
the Holder by the Company; provided, however, that if the subscription form is
given to the Company by telephone line facsimile transmission the Holder shall
send an original of such subscription form to the Company within ten Business
Days after such subscription form is so given to the Company; provided further,
however, that any failure or delay on the part of the Holder in giving such
original of any subscription form shall not affect the validity or the date on
which such subscription form is so given by telephone line facsimile
transmission.
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(b) Net Exercise. The Holder may elect to exercise this Warrant, in whole
at any time or in part from time to time, by receiving shares of Common Stock
equal to the net issuance value (as determined below) of this Warrant, or any
part hereof, upon surrender of the subscription form annexed hereto (duly
executed by the Holder) to the Company (followed by surrender of this Warrant to
the Company within three Trading Days after surrender of such subscription
form), in which event the Company shall issue to the Holder a number of shares
of Common Stock computed using the following formula:
X = Y x (A - B)
A
where,
X = the number of shares of Common Stock to be issued to the Holder
Y = the number of shares of Common Stock as to which this Warrant is to
be exercised
A = the Current Fair Market Value of one share of Common Stock
calculated as of the last Trading Day immediately preceding the
exercise of this Warrant
B = the Purchase Price
2. Delivery of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant and in any event within five
Trading Days thereafter, upon the terms and subject to the conditions of this
Warrant, the Company at its expense (including the payment by it of any
applicable issue or stamp taxes) will cause to be issued in the name of and
delivered to the Holder, or as the Holder (upon payment by the Holder of any
applicable transfer taxes) may direct, a certificate or certificates for the
number of fully paid and nonassessable shares of Common Stock (or Other
Securities) to which the Holder shall be entitled on such exercise, in such
denominations as may be requested by the Holder, plus, in lieu of any fractional
share to which the Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then Current Fair Market Value of one full share,
together with any other stock or Other Securities or any property (including
cash, where applicable) to which the Holder is entitled upon such exercise
pursuant to Section 1 or otherwise. The Company shall pay any taxes and other
governmental charges that may be imposed under the laws of the United States of
America or any political subdivision or taxing authority thereof or therein in
respect of the issue or delivery of shares of Common Stock (or Other Securities)
or payment of cash upon exercise of this Warrant (other than income taxes
imposed on the Holder). The Company shall not be required, however, to pay any
tax or other charge imposed in connection with any transfer involved in the
issue of any certificate for shares of Common Stock (or Other Securities)
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issuable upon exercise of this Warrant or payment of cash to any Person other
than the Holder, and in case of such transfer or payment the Company shall not
be required to deliver any certificate for shares of Common Stock (or Other
Securities) upon such exercise or pay any cash until such tax or charge has been
paid or it has been established to the Company's reasonable satisfaction that no
such tax or charge is due. Upon exercise of this Warrant as provided herein, the
Company's obligation to issue and deliver the certificates for Common Stock
shall be absolute and unconditional, irrespective of the absence of any action
by the Holder to enforce the same, any waiver or consent with respect to any
provision hereof, the recovery of any judgment against any Person or any action
to enforce the same, any failure or delay in the enforcement of any other
obligation of the Company to the Holder, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any violation or
alleged violation of law by the Holder or any other Person, and irrespective of
any other circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with such exercise. If the Company fails to
issue and deliver the certificates for the Common Stock to the Holder pursuant
to the first sentence of this paragraph as and when required to do so, in
addition to any other liabilities the Company may have hereunder and under
applicable law, the Company shall pay or reimburse the Holder on demand for all
out-of-pocket expenses, including, without limitation, fees and expenses of
legal counsel, incurred by the Holder as a result of such failure.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time on or after the
Issuance Date, all the holders of Common Stock (or Other Securities) shall have
received, or (on or after the record date fixed for the determination of
stockholders eligible to receive) shall have become entitled to receive, without
payment therefor,
(a) other or additional stock, rights, warrants or other securities or
property (other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of earnings or
earned surplus of the Company), or
(c) other or additional stock, rights, warrants or other securities or
property (including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement,
otherthan (i) additional shares of Common Stock (or Other Securities) issued as
a stock dividend or in a stock-split (adjustments in respect of which are
provided for in Section 5) and (ii) rights or warrants to subscribe for Common
Stock at less than the Current Fair Market Value (adjustments in respect of
which are provided in Section 6), then and in each such case the Holder, on the
exercise hereof as provided in Section 1, shall be entitled to receive the
amount of stock, rights, warrants and Other Securities and property (including
cash in the cases referred to in subdivisions (b) and (c) of this Section 3)
which the Holder would hold on the date of such exercise if on the date thereof
the Holder had been the holder of record of the number of shares of Common Stock
7
called for on the face of this Warrant and had thereafter, during the period
from the date thereof to and including the date of such exercise, retained such
shares and all such other or additional stock, rights, warrants and Other
Securities and property (including cash in the case referred to in subdivisions
(b) and (c) of this Section 3) receivable by the Holder as aforesaid during such
period, giving effect to all adjustments called for during such period by
Section 4.
4. Exercise upon a Reorganization Event. In case of any Reorganization
Event, and except to the extent that the Purchase Price has been adjusted to
$.01 as provided herein and so long as the Holder has received at least ten
Business Days notice prior to the consummation of the Reorganization Event, the
Company shall, as a condition precedent to the consummation of the transactions
constituting, or announced as, such Reorganization Event, cause effective
provisions to be made so that the Holder shall have the right thereafter, by
exercising this Warrant (in lieu of the shares of Common Stock of the Company
and Other Securities or property purchasable and receivable upon exercise of the
rights represented hereby immediately prior to such transaction) to purchase the
kind and amount of shares of stock and Other Securities and property (including
cash) receivable upon such Reorganization Event by a holder of the number of
shares of Common Stock that might have been received upon exercise of this
Warrant immediately prior to such Reorganization Event. Any such provision shall
include provisions for adjustments in respect of such shares of stock and Other
Securities and property that shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Warrant. The provisions of this Section
4 shall apply to successive Reorganization Events.
5. Adjustment for Certain Extraordinary Events. In the event that on or
after the Issuance Date the Company shall (i) issue additional shares of the
Common Stock as a dividend or other distribution on outstanding Common Stock,
(ii) subdivide or reclassify its outstanding shares of Common Stock, or (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
of Common Stock, then, in each such event, the Purchase Price shall,
simultaneously with the happening of such event, be adjusted by multiplying the
Purchase Price in effect immediately prior to such event by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 5.
The Holder shall thereafter, on the exercise hereof as provided in Section 1, be
entitled to receive that number of shares of Common Stock determined by
multiplying the number of shares of Common Stock which would be issuable on such
exercise immediately prior to such issuance by a fraction of which (i) the
numerator is the Purchase Price in effect immediately prior to such issuance and
(ii) the denominator is the Purchase Price in effect on the date of such
exercise.
6. [Reserved]
7. [Reserved]
8. [Reserved]
9. Effect of Reclassification, Consolidation, Merger or Sale. (a) If any of
the following events occur, namely (i) any reclassification or change of the
outstanding shares of Common Stock (other than a change in par value, or from
8
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination), (ii) any consolidation, merger or combination of
the Company with another corporation as a result of which holders of Common
Stock shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, or (iii)
any sale or conveyance of the properties and assets of the Company as, or
substantially as, an entirety to any other Person as a result of which holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such Common Stock,
then the Company or the successor or purchasing Person, as the case may be,
shall execute with the Holder a written agreement providing that (x) this
Warrant shall thereafter entitle the Holder to purchase the kind and amount of
shares of stock and Other Securities or property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by the holder of a number of shares of Common
Stock issuable upon exercise of this Warrant (assuming, for such purposes, a
sufficient number of authorized shares of Common Stock available to exercise
this Warrant) immediately prior to such reclassification, change, consolidation,
merger, combination, sale or conveyance assuming such holder of Common Stock did
not exercise such holder's rights of election, if any, as to the kind or amount
of securities, cash or other property receivable upon such consolidation,
merger, statutory exchange, sale or conveyance (provided that, if the kind or
amount of securities, cash or other property receivable upon such consolidation,
merger, statutory exchange, sale or conveyance is not the same for each share of
Common Stock in respect of which such rights of election shall not have been
exercised ("non-electing share"), then for the purposes of this Section 9 the
kind and amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance for each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares), (y) in the case of any such
successor or purchasing Person, upon such consolidation, merger, combination,
sale or conveyance such successor or purchasing Person shall be jointly and
severally liable with the Company for the performance of all of the Company's
obligations under this Warrant and the Securities Purchase Agreement and (z) if
registration or qualification is required under the 1933 Act or applicable state
law for the public resale by the Holder of such shares of stock and Other
Securities so issuable upon exercise of this Warrant, such registration or
qualification shall be completed prior to such reclassification, change,
consolidation, merger, combination or sale. Such written agreement shall provide
for adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. If, in the case of any such
reclassification, change, consolidation, merger, combination, sale or
conveyance, the stock or other securities and assets receivable thereupon by a
holder of shares of Common Stock includes shares of stock or other securities
and assets of a corporation other than the successor or purchasing corporation,
as the case may be, in such reclassification, change, consolidation, merger,
combination, sale or conveyance, then such written agreement shall also be
executed by such other corporation and shall contain such additional provisions
to protect the interests of the Holder as the Board of Directors shall
reasonably consider necessary by reason of the foregoing.
(b) The above provisions of this Section 9 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
(c) If Section 4 applies to any event or occurrence, this Section 9 shall
not apply to such event or occurrence. Further this Section 9 shall not apply to
a $100M event.
9
10. Tax Adjustments. The Company may make such reductions in the Purchase
Price, in addition to those required by Sections 3, 4, 5, 6, 7 and 8, as the
Board of Directors considers to be advisable to avoid or diminish any income tax
to holders of Common Stock or rights to purchase Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes.
11. Minimum Adjustment. (a) No adjustment in the Purchase Price (and no
related adjustment in the number of shares of Common Stock which may thereafter
be purchased upon exercise of this Warrant) shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11 are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All such calculations under this Warrant shall be
made by the Company and shall be made to the nearest cent or to the nearest one
hundredth of a share, as the case may be.
(b) No adjustment need be made for a change in the par value of the Common
Stock or from par value to no par value or from no par value to par value.
12. Notice of Adjustments. Whenever the Purchase Price is adjusted as
herein provided, the Company shall promptly, but in no event later than five
Trading Days thereafter, give a notice to the Holder setting forth the Purchase
Price and number of shares of Common Stock which may be purchased upon exercise
of this Warrant after such adjustment and setting forth a brief statement of the
facts requiring such adjustment but which such statement shall not include any
information which would be material non-public information for purposes of the
1934 Act. Failure to deliver such notice shall not affect the legality or
validity of any such adjustment.
13. Further Assurances. The Company will take all action that 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 taxes, liens and
charges with respect to the issue thereof, on the exercise of all or any portion
of this Warrant from time to time outstanding.
14. Notice to Holder Prior to Certain Actions. In case on or after the
Issuance Date:
(a) the Company shall declare a dividend (or any other distribution) on its
Common Stock (other than in cash out of retained earnings); or
(b) the Company shall authorize the granting to the holders of its Common
Stock of rights or warrants to subscribe for or purchase any share of any class
or any other rights or warrants; or
(c) the Board of Directors shall authorize any reclassification of the
Common Stock (other than a subdivision or combination of its outstanding Common
Stock, or a change in par value, or from par value to no par value, or from no
par value to par value), or any consolidation or merger or other business
10
combination transaction to which the Company is a party and for which approval
of any stockholders of the Company is required, or the sale or transfer of all
or substantially all of the assets of the Company; or
(d) there shall be pending the voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
the Company shall give the Holder, as promptly as possible but in any event at
least ten Trading Days prior to the applicable date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution or 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, distribution or rights are to be determined, or (y) the date
on which such reclassification, consolidation, merger, other business
combination transaction, sale, transfer, dissolution, liquidation or winding-up
is expected to become effective or occur, and the date as of which it is
expected that holders of Common Stock of record who shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, other business combination
transaction, sale, transfer, dissolution, liquidation or winding-up shall be
determined. Such notice shall not include any information which would be
material non-public information for purposes of the 1934 Act. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
such dividend, distribution, reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up. In the case of any such action
of which the Company gives such notice to the Holder or is required to give such
notice to the Holder, the Holder shall be entitled to give a subscription form
to exercise this Warrant in whole or in part that is contingent on the
completion of such action.
15. Reservation of Stock, etc., Issuable on Exercise of Warrants. The
Company will at all times reserve and keep available out of its authorized but
unissued shares of capital stock, solely for issuance and delivery on the
exercise of this Warrant, a sufficient number of shares of Common Stock (or
Other Securities) to effect the full exercise of this Warrant and the exercise,
conversion or exchange of any other warrant or security of the Company
exercisable for, convertible into, exchangeable for or otherwise entitling the
holder to acquire shares of Common Stock (or Other Securities), and if at any
time the number of authorized but unissued shares of Common Stock (or Other
Securities) shall not be sufficient to effect such exercise, conversion or
exchange, the Company shall take such action as may be necessary to increase its
authorized but unissued shares of Common Stock (or Other Securities) to such
number as shall be sufficient for such purposes.
16. Transfer of Warrant. This Warrant shall inure to the benefit of the
successors to and assigns of the Holder. This Warrant and all rights hereunder,
in whole or in part, are registrable at the office or agency of the Company
referred to below by the Holder in Person or by his duly authorized attorney,
upon surrender of this Warrant properly endorsed accompanied by an assignment
form in the form attached to this Warrant, or other customary form, duly
executed by the transferring Holder.
17. Register of Warrants. The Company shall maintain, at the principal
office of the Company (or such other office as it may designate by notice to the
Holder), a register in which the Company shall record the name and address of
the Person in whose name this Warrant has been issued, as well as the name and
address of each successor and prior owner of such Warrant. The Company shall be
entitled to treat the Person in whose name this Warrant is so registered as the
sole and absolute owner of this Warrant for all purposes.
11
18. Exchange of Warrant. This Warrant is exchangeable, upon the surrender
hereof by the Holder at the office or agency of the Company referred to in
Section 16, for one or more new Warrants of like tenor representing in the
aggregate the right to subscribe for and purchase the number of shares of Common
Stock which may be subscribed for and purchased hereunder, each of such new
Warrants to represent the right to subscribe for and purchase such number of
shares as shall be designated by the Holder at the time of such surrender.
19. Replacement of Warrant. On receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and (a) in the case of loss, theft or
destruction, of indemnity from the Holder reasonably satisfactory in form to the
Company (and without the requirement to post any bond or other security), or (b)
in the case of mutilation, upon surrender and cancellation of this Warrant, the
Company will execute and deliver to the Holder a new Warrant of like tenor
without charge to the Holder.
20. Warrant Agent. The Company may, by written notice to the Holder,
appoint the transfer agent and registrar for the Common Stock as the Company's
agent for the purpose of issuing Common Stock (or Other Securities) on the
exercise of this Warrant pursuant to Section 1, and the Company may, by written
notice to the Holder, appoint an agent having an office in the United States of
America for the purpose of exchanging this Warrant pursuant to Section 18, and
replacing this Warrant pursuant to Section 19, or any of the foregoing, and
thereafter any such exchange or replacement, as the case may be, shall be made
at such office by such agent.
21. Remedies. The Company stipulates that the remedies at law of the Holder
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 are not and
will not be adequate, and that such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
22. No Rights or Liabilities as a Stockholder. This Warrant shall not
entitle the Holder to any voting rights or other rights as a stockholder of the
Company. Nothing contained in this Warrant shall be construed as conferring upon
the Holder the right to vote or to consent or to receive notice as a stockholder
of the Company on any matters or with respect to any rights whatsoever as a
stockholder of the Company. No dividends or interest shall be payable or accrued
in respect of this Warrant or the interest represented hereby or the Common
Stock (or Other Securities) purchasable hereunder until, and only to the extent
that, this Warrant shall have been exercised in accordance with its terms.
23. Notices, etc. All notices and other communications from the Company to
the Holder shall be mailed by first class certified mail, postage prepaid, at
such address as may have been furnished to the Company in writing by the Holder
or at the address shown for the Holder on the register of Warrants referred to
in Section 16.
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24. Transfer Restrictions. This Warrant has not been and is not being
registered under the provisions of the 1933 Act or any state securities laws and
this Warrant may not be transferred unless (1) the transferee is an "accredited
investor" (as defined in Regulation D under the 0000 Xxx) or a QIB in a transfer
that meets the requirements of Rule 144A and (2) the Holder shall have delivered
to the Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that this Warrant may be sold or
transferred without registration under the 1933 Act. Prior to any such transfer,
such transferee shall have represented in writing to the Company that such
transferee has requested and received from the Company all information relating
to the business, properties, operations, condition (financial or other), results
of operations or prospects of the Company deemed relevant by such transferee;
that such transferee has been afforded the opportunity to ask questions of the
Company concerning the foregoing and has had the opportunity to obtain and
review the Registration Statement (as defined in the Securities Purchase
Agreement) and the prospectus included therein, each as amended or supplemented
to the date of transfer to such transferee, and the reports and other
information concerning the Company which at the time of such transfer have been
filed by the Company with the SEC pursuant to the 1934 Act and which are
incorporated by reference in such prospectus as of the date of such transfer. If
such transfer is intended to assign the rights and obligations under Sections 5,
8, 9 and 10 of the Securities Purchase Agreement, such transfer shall otherwise
be made in compliance with Section 10(j) of the Securities Purchase Agreement.
The Company shall provide such assistance as reasonably necessary to allow a
transfer of this Warrant.
25. Rule 144A Information Requirement. Within the period prior to the
expiration of the holding period applicable to sales hereof under Rule 144(k)
under the 1933 Act (or any successor provision), the Company covenants and
agrees that it shall, during any period in which it is not subject to Section 13
or 15(d) under the 1934 Act, make available to the Holder and the holder of any
shares of Common Stock issued upon exercise of this Warrant which continue to be
Restricted Securities in connection with any sale thereof and any prospective
purchaser of this Warrant from the Holder, the information required pursuant to
Rule 144A(d)(4) under the 1933 Act upon the request of the Holder and it will
take such further action as the Holder may reasonably request, all to the extent
required from time to time to enable the Holder to sell this Warrant without
registration under the 1933 Act within the limitation of the exemption provided
by Rule 144A, as Rule 144A may be amended from time to time. Upon the request of
the Holder, the Company will deliver to the Holder a written statement as to
whether it has complied with such requirements.
26. Legend. Unless theretofore registered for resale under the 1933 Act,
each certificate for shares issued upon exercise of this Warrant shall bear the
following legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"). The
securities have been acquired for investment and may not be resold,
transferred or assigned in the absence of an effective registration
statement for the securities under the 1933 Act, or an opinion of counsel
13
reasonably satisfactory in form, scope and substance to the Company and its
counsel that registration is not required under the 1933 Act.
27. Amendment; Waiver. This Warrant and any terms hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought.
28. Miscellaneous. This Warrant shall be construed and enforced in
accordance with and governed by the internal law of the State of New York. The
headings, captions and footers in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
29. Attorneys' Fees. In any litigation, arbitration or court proceeding
between the Company and Holder relating hereto, the prevailing party shall be
entitled to attorneys' fees and expenses and all costs of proceedings incurred
in enforcing this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
on its behalf by one of its officers thereunto duly authorized.
Dated: March 29, 2005 DIRECT INSITE CORP.
By:
Name:
Title:
14
ASSIGNMENT
For value __________________hereby sell(s), assign(s) and transfer(s) unto
________________________(Please insert social security or other Taxpayer
Identification Number of assignee: _____________________) the attached original,
executed Warrant to purchase share of Common Stock of Direct Insite Corp., a
Delaware corporation (the "Company"), and hereby irrevocably constitutes and
appoints ____________________________ attorney to transfer the Warrant on the
books of the Company, with full power of substitution in the premises.
In connection with any transfer of the Warrant within the period prior to
the expiration of the holding period applicable to sales thereof under Rule
144(k) under the 1933 Act (or any successor provision) (other than any transfer
pursuant to a registration statement that has been declared effective under the
1933 Act), the undersigned confirms that such Warrant is being transferred:
[ ] To the Company or a subsidiary thereof; or
[ ] To a QIB pursuant to and in compliance with Rule 144A; or
[ ] To an "accredited investor" (as defined in Regulation D under the 0000
Xxx) pursuant to and in compliance with the 1933 Act; or
[ ] Pursuant to and in compliance with Rule 144 under the 1933 Act;
and unless the box below is checked, the undersigned confirms that, to the
knowledge of the undersigned, such Warrant is not being transferred to an
"affiliate" (as defined in Rule 144 under the 0000 Xxx) of the Company.
[ ] The transferee is an affiliate of the Company.
Capitalized terms used in this Assignment and not defined in this
Assignment shall have the respective meanings provided in the Warrant.
Dated: NAME: __________________________________
_________________________________________
Signature(s)
Exhibit 1
FORM OF SUBSCRIPTION
DIRECT INSITE CORP.
(To be signed only on exercise of Warrant)
TO: Direct Insite Corp.
00 Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Facsimile No.: (631) _____________
1. The undersigned Holder of the attached original, executed Warrant hereby
elects to exercise its purchase right under such Warrant with respect to shares
(the "Exercise Shares") of Common Stock, as defined in the Warrant, of Direct
Insite Corp., a Delaware corporation (the "Company").
2. The undersigned Holder (check one):
[ ] [ ] (a) elects to pay the Aggregate Purchase Price for such shares of
Common Stock (i) in lawful money of the United States or by the enclosed
certified or official bank check payable in United States dollars to the order
of the Company in the amount of $ , or (ii) by wire transfer of United States
funds to the account of the Company in the amount of $ , which transfer has been
made before or simultaneously with the delivery of this Form of Subscription
pursuant to the instructions of the Company;
or
[ ] [ ] (b) elects to receive shares of Common Stock having a value equal
to the value of the Warrant calculated in accordance with Section 1(b) of the
Warrant.
3. Please issue a stock certificate or certificates representing the
appropriate number of shares of Common Stock in the name of the undersigned or
in such other name(s) as is specified below:
Name:________________________________________
Address: ____________________________________
____________________________________
Social Security or Tax Identification Number (if any):
_____________________________________
Dated:________________ ______________________________________________
(Signature must conform to name of Holder as
specified on the face of the Warrant)
______________________________________________
______________________________________________
Address
