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Exhibit 10.6
STOCK PURCHASE WARRANT
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE
BEEN ACQUIRED SOLELY FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS.
SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION, AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH SALE, OFFER, PLEDGE OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS.
Void after January 28, 2004
NO. 2000-1 XXXXXX ASSOCIATES, INC.
THIS CERTIFIES THAT, for value received Hewlett Packard Company (the
"Holder") is entitled, subject to the terms set forth below, to purchase from
Xxxxxx Associates, Inc., a Minnesota corporation (the "Company"), 750,000 shares
(as adjusted pursuant to Section 5 hereof) of the Company's fully paid and
nonassessable Common Stock, par value $0.01 per share (the "Common Stock"), at
the exercise price of twenty dollars ($20.00) per share (the "Exercise Price"),
subject to adjustment as provided in Section 5 hereof. This Warrant is issued in
connection with the transactions described in Section 1.2 of the Warrant
Purchase Agreement between the Company and Holder described therein, dated as of
January 28, 2000 (the "Warrant Purchase Agreement"). The holder of this Warrant
is subject to certain restrictions set forth in the Warrant Purchase Agreement
and shall be entitled to certain rights and privileges set forth therein.
1. Exercise Period. This Warrant shall be exercisable, in whole or
in part, commencing on the date hereof, and shall expire and no
longer be exercisable at 5:00 p.m., Minnesota local time, on
January 28, 2004.
2. Method of Exercise; Payment.
(a) Cash Exercise. The purchase rights represented by this
Warrant may be exercised by the Holder, in whole or in part, by the
surrender of this Warrant (with the notice of exercise form attached
hereto as Attachment A duly executed) at the principal office of the
Company, and by the payment to the Company, by certified, cashier's or
other check, of an amount equal to the aggregate Exercise Price for
the number of shares of Common Stock being purchased.
(b) Net Issue Exercise. In lieu of exercising this Warrant
pursuant to Section 2(a) above, the Holder may elect to receive,
without the payment by the Holder of any additional consideration,
shares of Common Stock equal to the value of this
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Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with notice of
such election, in which event the Company shall issue to the Holder a
number of shares of Common Stock of the Company computed using the
following formula:
X = Y(A-B)
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A
Where X = the number of shares of Common Stock to be issued to the Holder pursuant to the net issue
exercise.
Y = the number of shares in respect of which the net issue exercise is made.
A = the fair market value of one share of Common Stock at the time the net issue exercise is made.
B = the Exercise Price (as adjusted to the date of the net issue exercise).
(c) Fair Market Value. For purposes of Section 2(b), the fair
market value of one share of Common Stock as of a particular date
shall be determined as follows: (i) if traded on a securities exchange
or through the Nasdaq National Market, the value shall be deemed to be
the average of the closing prices, as quoted in the Central Edition of
the Wall Street Journal, of the securities on such exchange over the
ten (10) trading day period ending three (3) trading days prior to the
net issue exercise election; (ii) if traded over-the-counter, the
value shall be deemed to be the average of the closing bid or sale
prices (whichever is applicable), as quoted in the Central Edition of
the Wall Street Journal, over the ten (10) trading day period ending
three (3) trading days prior to the net exercise; and (iii) if there
is no active public market, the value shall be the fair market value
thereof, as determined in good faith by the Board of Directors of the
Company.
(d) Stock Certificates. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of
surrender for exercise as provided above, and the person entitled to
receive the shares of Common Stock issuable upon exercise shall be
treated for all purposes as the holder of record of such shares as of
the close of business on such date. In the event of any exercise of
purchase rights represented by this Warrant, certificates for the
number of shares of Common Stock so purchased shall be delivered to
the Holder as soon as practicable thereafter, and in any event within
thirty (30) days of the delivery of the exercise notice, and, unless
this Warrant has been fully exercised or has expired, a new Warrant
representing the shares with respect to which this Warrant shall not
have been exercised shall also be issued to the Holder within such
time.
3. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt
by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and in
case of loss, theft or destruction, of indemnity reasonably
satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and
cancellation of this Warrant,
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if mutilated, the Company will make and deliver a new Warrant of
like tenor and dated as of such cancellation, in lieu of this
Warrant.
4. Stock Fully Paid; Reservation of Shares. All of the Common Stock
issuable upon the exercise of the rights represented by this
Warrant will, upon issuance and receipt of the Exercise Price
therefor, be duly and validly issued, fully paid and
nonassessable, and free from all taxes, liens and charges with
respect to the issue thereof. During the period within which the
rights represented by this Warrant may be exercised, the Company
shall at all times have authorized and reserved for issuance a
sufficient number of shares of its Common Stock to provide for
the exercise of the rights represented by this Warrant.
5. Adjustment of Exercise Price and Number of Shares.
(a) In the event that the Company shall at any time prior to the
expiration of this Warrant subdivide the outstanding shares of Common
Stock or shall issue a stock dividend on its outstanding shares of
Common Stock payable in shares of Common Stock, then the number of
shares of Common Stock issuable upon exercise of this Warrant
immediately prior to such subdivision or to the issuance of such stock
dividend shall be proportionately increased, and the Exercise Price
shall be proportionately decreased, and in the event that the Company
shall at any time combine the outstanding shares of Common Stock then
the number of shares of Common Stock issuable upon exercise of this
Warrant immediately prior to such combination shall be proportionately
decreased, and the Exercise Price shall be proportionately increased,
effective at the close of business on the date of such subdivision,
stock dividend or combination, as the case may be.
(b) In the case of any reclassification, recapitalization or
change in the Common Stock (other than any action for which adjustment
is made pursuant to Section 5(a) hereof), the Company shall execute a
new warrant providing that the Holder of this Warrant shall have the
right to exercise such new warrant and to procure upon such exercise
and payment of the same aggregate Exercise Price, in lieu of the
shares of Common Stock theretofore exercisable upon exercise of this
Warrant, the kind and amount of shares, other securities, money or
property receivable upon such reclassification, recapitalization or
change of the Common Stock. In any such case appropriate provisions
shall be made with respect to the rights and interest of the Holder so
that the provisions hereof shall thereafter be applicable with respect
to any shares of stock or other securities and property deliverable
upon exercise hereof, and appropriate adjustments shall be made to the
purchase price per share payable hereunder, provided the aggregate
purchase price shall remain the same.
(c) No adjustment on account of cash dividends shall be made to
the Exercise Price under this Warrant.
(i) If at any time prior to the expiration of this Warrant
the Company shall issue any Common Stock or securities
exercisable for or convertible into Common Stock without
consideration or for a consideration per share less than
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the Exercise Price in effect immediately prior to the issuance of
such Common Stock (excluding stock dividends, subdivisions,
split-ups, combinations, dividends or recapitalizations which are
covered by Sections 5(a) and (b)), the Exercise Price in effect
after each such issuance shall thereafter (except as provided in
this Section 5(d)) be adjusted to a price equal to the quotient
obtained by dividing:
(A) an amount equal to the sum of
(1) the total number of shares of Common Stock
outstanding (including any shares of Common Stock
issuable upon exercise of this Warrant or deemed to have
been issued pursuant to subdivision (ii) (C) of this
clause (d) below) immediately prior to such issuance
multiplied by the Exercise Price in effect immediately
prior to such issuance, plus
(2) the consideration received by the Company
upon such issuance, by
(B) the total number of shares of Common Stock
outstanding (including any shares of Common Stock issuable
upon exercise of this Warrant or deemed to have been issued
pursuant to subdivision (ii) (C) of this clause (d) below)
immediately prior to such issuance plus the additional
shares of Common Stock or securities exercisable for or
convertible into Common Stock issued in such issuance (but
not including any additional shares of Common Stock deemed
to be issued as a result of any adjustment in the Exercise
Price resulting from such issuance).
(ii) For purposes of any adjustment of the Exercise Price
pursuant to this clause (d), the following provisions shall be
applicable:
(C) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of
cash paid therefor after deducting any discounts,
commissions or fees paid or incurred by the Company in
connection with the issuance and sale thereof.
(D) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair
market value thereof as determined by the Board of Directors
of the Company, irrespective of any accounting treatment;
provided, however, that if, at the time of such
determination, the Company's Common Stock is traded in the
over-the-counter market or on a national or regional
securities exchange, such fair market value as determined by
the Board of Directors of the Company shall not exceed the
aggregate fair market value of the shares of Common Stock
being issued as determined in accordance with the procedures
set forth in Section 2(c) hereof.
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(E) In the case of the issuance of (1) options to
purchase or rights to subscribe for Common Stock, (2)
securities by their terms convertible into or exchangeable
for Common Stock, or (3) options to purchase or rights to
subscribe for such convertible or exchangeable securities:
(a) the aggregate maximum number of shares of
Common Stock deliverable upon exercise of such options
to purchase or rights to subscribe for Common Stock
shall be deemed to have been issued at the time such
options or rights were issued and for a consideration
equal to the consideration (determined in the manner
provided in subdivisions (A) and (B) above), if any,
received by the Company upon the issuance of such
options or rights plus the minimum purchase price
provided in such options or rights for the Common Stock
covered thereby;
(b) the aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in
exchange for any such convertible or exchangeable
securities or upon the exercise of options to purchase
or rights to subscribe for such convertible or
exchangeable securities and subsequent conversion or
exchange thereof, shall be deemed to have been issued at
the time such securities were issued or such options or
rights were issued and for consideration equal to the
consideration received by the Company for any such
securities and related options or rights (excluding any
cash received on account of accrued interest or accrued
dividends), plus the minimum additional consideration,
if any, to be received by the Company upon the
conversion or exchange of such securities or the
exercise of any related options or rights (the
consideration in each case to be determined in the
manner provided in subdivisions (A) and (B) above);
(c) on any change in the number of shares of
Common Stock deliverable upon exercise of any such
options or rights or conversion of or exchange for such
convertible or exchangeable securities, or on any change
in the minimum purchase price of such options, rights or
securities, other than a change resulting from the
antidilution provisions of such options, rights or
securities, the Exercise Price shall forthwith be
readjusted to such Exercise Price as would have obtained
had the adjustment made upon the issuance of such
options, right or securities not exercised, converted or
exchanged prior to such change,
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as the case may be, been made upon the basis of such
change; and
(d) on the expiration of any such options or
rights, the termination of any such rights to convert or
exchange or the expiration of any options or rights
related to such convertible or exchangeable securities,
the Exercise Price shall forthwith be readjusted to such
Exercise Price as would have obtained had the adjustment
made upon the issuance of such options, rights,
convertible or exchangeable securities or options or
rights related to such convertible or exchangeable
securities, as the case may be, been made upon the basis
of the issuance of only the number of shares of Common
Stock actually issued upon the exercise of such options
or rights, upon the conversion or exchange of such
convertible or exchangeable securities or upon the
exercise of the options or rights related to such
convertible or exchangeable securities, as the case may
be.
(iii) Anything herein to the contrary notwithstanding, the
Company shall not be required to make any adjustments to the
Exercise Price upon the occurrence of any of the following
events:
(A) the issuance of Common Stock upon conversion of
warrants, options or other instruments or securities
directly or indirectly convertible or exchangeable for
Common Stock outstanding on the date of this Warrant;
(B) the issuance of shares of Common Stock upon
exercise of options granted or to be granted by the Company
to employees, officers, consultants and directors of the
Company;
(C) the issuance of shares of Common Stock in
accordance with the terms and conditions of the Company's
employee stock ownership plan; or
(D) the issuance of securities exercisable for or
convertible into Common Stock in the transaction disclosed
on Exhibit B to the Warrant Purchase Agreement.
(e) If at any time while this Warrant, or any portion hereof, is
outstanding and unexpired there shall be (i) a reorganization (other
than a combination, reclassification, exchange or subdivision of
shares otherwise provided for herein), (ii) a merger or consolidation
of the Company with or into another corporation in which the Company
is not the surviving entity, or a reverse triangular merger in which
the Company is the surviving entity but the shares of the Company's
capital stock outstanding immediately prior to the merger are
converted by virtue of the merger into other property, whether in
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the form of securities, cash, or otherwise, or (iii) a sale or
transfer of the Company's properties and assets as, or substantially
as, an entirety to any other person, then, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful
provision shall be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant,
during the period specified herein and upon payment of the Exercise
Price then in effect, the number of shares of stock or other
securities or property of the successor corporation resulting from
such reorganization, merger, consolidation, sale or transfer that a
holder of the shares deliverable upon exercise of this Warrant would
have been entitled to receive in such reorganization, consolidation,
merger, sale or transfer if this Warrant had been exercised
immediately before such reorganization, merger, consolidation, sale or
transfer, all subject to further adjustment as provided in this
Section 5. The foregoing provisions of this Section 5(e) shall
similarly apply to successive reorganizations, consolidations,
mergers, sales and transfers and to the stock or securities of any
other corporation that are at the time receivable upon the exercise of
this Warrant.
6. Notice of Adjustments. Whenever the number of shares of Common
Stock purchasable hereunder or the Exercise Price thereof shall
be adjusted pursuant to Section 5 hereof, the Company shall
provide notice to the Holder setting forth, in reasonable detail,
the event requiring the adjustment, the amount of the adjustment,
the method by which such adjustment was calculated, and the
number of shares of Common Stock which may be purchased and the
Exercise Price therefor after giving effect to such adjustment.
7. Fractional Shares. This Warrant may not be exercised for
fractional shares. In lieu of such fractional shares the Company
shall make a cash payment therefor on the basis of the Exercise
Price then in effect.
8. Charges, Taxes and Expenses. 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
certificate, all of which taxes and expenses shall be paid by the
Company, and such certificates shall be issued in the name of the
holder of this Warrant.
9. Representations of the Company. The Company represents that all
corporate actions on the part of the Company, its officers,
directors and shareholders necessary for the sale and issuance of
shares of Common Stock and the performance of the Company's
obligations hereunder were taken prior to and are effective as of
the effective date of this Warrant.
10. Restrictive Legend. The Common Stock issuable on exercise of this
Warrant shall (unless registered under the Act) be stamped or
imprinted with a legend in substantially the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY
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NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER SUCH ACT, AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT. THESE
SECURITIES MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS
OF THE WARRANT DATED JANUARY 28, 2000 PURSUANT TO WHICH THE
SECURITIES WERE ISSUED AND A WARRANT PURCHASE AGREEMENT, DATED
JANUARY 28, 2000, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY
OF THE COMPANY."
11. Restrictions Upon Transfer and Removal of Legend. The Company
need not register a transfer of this Warrant or shares of Common
Stock issued on exercise of this Warrant bearing the restrictive
legend set forth in Section 9 hereof, unless the conditions
specified in such legend are satisfied. The Company may also
instruct its transfer agent not to register the transfer of the
Shares unless one of the conditions specified in the legend
referred to in Section 9 hereof is satisfied.
12. No Rights as Stockholders. This Warrant does not entitle the
Holder to any additional voting rights or other rights as a
stockholder of the Company prior to the exercise of the Warrants.
13. Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when
given, and shall in any event be deemed to be given upon receipt
or, if earlier, (a) five (5) days after deposit with the U.S.
Postal Service or other applicable postal service, (b) upon
delivery, if delivered by hand, (c) two (2) business days after
the business day of deposit with Federal Express or similar
overnight courier, freight prepaid or (d) one (1) business day
after the business day of facsimile transmission, if delivered by
facsimile transmission with copy by first class mail, postage
prepaid, and shall be addressed (i) if to the Holder, at the
Holder's address as provided to the Company, and (ii) if to the
Company, at the address of its principal corporate offices
(attention: Xxxxx XxXxxxxxxx, Vice President, Secretary and
Corporate Counsel), or at such other address as the Company shall
have furnished to the other parties hereto in writing.
14. Amendments and Waivers. Any term of this Warrant may be amended
and the observance of any term of this Warrant may be waived
(either generally or in a particular instance and either
retroactively or prospectively), with the written consent of the
Company and the Holder.
15. Attorneys' Fees. If any action of law or equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing
party shall be entitled to its reasonable attorneys' fees, costs
and disbursements in addition to any other relief to which it may
be entitled.
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16. Headings. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of
this Warrant in construing or interpreting any provision hereof.
17. Governing Law. This Warrant and all actions arising out of or in
connection with this Agreement shall be governed by and construed
in accordance with the laws of the State of Minnesota without
regard to conflicts of law provisions.
18. Assignment. This Warrant and the rights represented by this
Warrant may not be transferred, assigned or pledged, in whole or
in part, without the prior written consent of the Company, except
that a transfer from the Holder to any other entity which
controls, is controlled by or is under common control with the
Holder, may be effected by delivery by the Holder of a form of
transfer attached hereto as Attachment B duly executed to the
principal office of the Company. The transfer shall be recorded
on the books of the Company upon the surrender of this Warrant,
properly endorsed, to the Company at its principal offices. In
the event of a partial transfer, the Company shall issue to the
holders one or more appropriate new warrants.
19. Successors and Assigns. The terms and provisions of this Warrant
and the Warrant Purchase Agreement shall inure to the benefit of,
and be binding upon, the Company and the Holders hereof and their
respective successors and permitted assigns.
20. Entire Agreement. This Warrant constitutes the entire agreement
among the parties hereto and supersedes in its entirety any prior
agreements, whether written or oral, among the parties hereto
with respect to the subject matter hereof.
Issued this 28th day of January, 2000.
XXXXXX ASSOCIATES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Its: Chief Executive Officer
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