EXHIBIT 4.30
WARRANT AGREEMENT dated as of April 3, 2000, by and between HOME
DIRECTOR, INC., a Delaware corporation (the "Company"), and XXXXXXX XXXXX
SECURITIES, INCORPORATED (the "Agent").
W I T N E S S E T H
WHEREAS, the Company proposes to sell to the Agent and/or its designees
warrants ("Warrants") to purchase shares of Series B Convertible Preferred
Stock, par value $.00l per share, of the Company ("Preferred Stock") in an
amount equal to twenty percent (20%) of the number of shares of Preferred Stock
contained in the Units (as defined in the Placement Agency Agreement (as defined
below)) sold by the Agent and
WHEREAS, the Agent has agreed pursuant to the Placement Agency
Agreement, dated April 10, 2000, between the Agent and the Company (the
"Placement Agency Agreement") to act as the placement agent in connection with
the Company's proposed private placement of up to 200 (subject to increase to
240 or such greater amount as the Company and the Placement Agent agree) Units
(the "Offering"); and
WHEREAS, the Warrants to be sold pursuant to this Agreement will be
issued on one or more Closing Dates (as such term is defined in the Placement
Agency Agreement) by the Company to the Agent in consideration for, and as part
of the Agent's compensation in connection with, the Agent acting as the
placement agent pursuant to the Placement Agency Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Agent to the Company of ONE DOLLAR, the agreements herein set forth and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. GRANT. The Holders (as defined below) are hereby granted the right to
purchase, at any time from the date hereof until 5:30 p.m., New York time, on
the earlier of (a) the tenth anniversary of the Final Closing (as defined in the
Placement Agency Agreement) and (b) the third anniversary of the closing date of
the initial public offering of the Company's Common Stock occurring within such
ten-year period (the "Warrant Exercise Term"), a number of shares of Preferred
Stock equal to twenty percent (20%) of the number of shares of Preferred Stock
contained in the Units sold in the Offering at the initial exercise price
(subject to adjustment as provided in Section 8 hereof) of $1.00 per share of
Preferred Stock, subject to the terms and conditions of this Agreement.
2. WARRANT CERTIFICATES. The Warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in EXHIBIT A, attached hereto and made a part hereof with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
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3. EXERCISE WARRANT.
3.1 METHOD OF EXERCISE. The Warrants are initially exerciseable at an
initial exercise price (subject to adjustment as provided in Section 8 hereof)
per share of Preferred Stock set forth in Section 5 hereof payable by certified
or official bank check in New York Clearing House funds, subject to adjustment
as provided in Section 8 hereof. Upon surrender of a Warrant Certificate with
the annexed Form of Election to Purchase duly executed, together with payment of
the Exercise Price (as hereinafter defined) for the shares of Preferred Stock
issuable upon exercise of the Warrants (the `Warrant Shares") at the Company's
principal offices, currently at 000 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxxxx,
Xxxxx Xxxxxxxx 00000, the registered holder of a Warrant Certificate ("Holder"
or "Holders") shall be entitled to receive a certificate or certificates for the
shares of Preferred Stock so purchased. The purchase rights represented by each
Warrant Certificate are exerciseable at the option of the Holder thereof; in
whole or in part (but not as to fractional shares of the Preferred Stock
underlying the Warrants). Warrants may be exercised to purchase all or part of
the shares of Preferred Stock represented thereby. In the case of purchase of
less than all the shares of Preferred Stock purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the shares of Preferred Stock.
3.2 EXERCISE BY SURRENDER OF Warrant. In addition to the method of
payment set forth in Section 3.1 and in lieu of any cash payment required
thereunder, the Holder(s) of the Warrant shall have the right at any time and
from time to time, provided that the Preferred Stock and/or the Company's Common
Stock, par value S.00l per share ("Common Stock"), underlying the Preferred
Stock (collectively the N Stock") is registered under the Securities Exchange
Act of 1934 (the "Exchange Act"), to exercise the Warrants in full or in part by
surrendering the Warrant Certificate in the manner specified in Section 3.1 in
exchange for the number of shares of Preferred Stock equal to the product of (x)
the number of shares as to which the Warrants are being exercised multiplied by
(y) a fraction, the numerator of which is the Market Price (as defined in
Section 8.1 (vi) hereof) of the Stock less the Exercise Price and the
denominator of which is such Market Price
Solely for the purposes of this Section 3.2, Market Price shall be
calculated either (i) on the date on which the annexed Form of Election is
deemed to have been sent to the Company pursuant to Section 13 hereof ("Notice
Date") or (ii) as the average of the Market Price for each of the five (5)
trading days preceding the Notice Date, whichever of (i) or (ii) is greater.
4. ISSUANCE OF CERTIFICATES. Upon the exercise of the Warrants,
certificates for shares of Preferred Stock or other securities, properties or
rights underlying such Warrants, shall be issued forthwith (and in any event
such issuance shall be made within five business days) without charge to the
Holder thereof including, without limitation, any tax which may be payable in
respect of the issuance thereof, and such certificates shall (subject to the
provisions of Section 5 hereof) be issued in the name of, or in such names as
may be directed by, the Holder thereof, provided, however, that the Company
shall not be required to pay any tax which may be payable in respect to any
transfer involved in the issuance and delivery of any such certificates in a
name other than that of the Holder and the Company shall not be required to
issue or deliver such certificates unless or until the person or people
requesting the issuance thereof shall have paid to
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the Company the amount of such tax or it shall be established to the
satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the shares
of Preferred Stock (and/or other securities, property or rights issuable upon
exercise of the Warrants) shall be executed on behalf of the Company by the
manual or facsimile signature of the then present Chairman or Vice Chairman of
the Board of Directors or President or Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the then present Secretary or Assistant Secretary of the Company.
Warrant Certificates shall be dated the date of execution by the Company upon
initial issuance, division, exchange, substitution or transfer.
5. EXERCISE PRICE.
5.1 INITIAL AND ADJUSTED EXERCISE PRICE. Except as otherwise provided
in Section 8 hereof the Warrants shall be exerciseable to purchase Preferred
Stock at a price of $1.00 per share. The adjusted exercise price shall be the
price which shall result from time to time from any and all adjustments of the
initial exercise price in accordance with the provisions of Section 8 hereof.
5.2 EXERCISE PRICE. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
6. REGISTRATION RIGHT.
6.1 REGISTRATION UNDER THE SECURITIES ACT OF 1933. Neither the
Warrants, the Warrant Shares nor the shares of Common Stock underlying the
Warrant Shares (collectively, the "Warrant Securities") have been registered
under the Securities Act of 1933 (the "Act") for public resale. The Warrants,
and any securities issuable upon exercise of the Warrants shall bear the
following legends:
The Securities represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act") and may not be offered, 50
pledged or otherwise transferred except pursuant to (i) an effective
registration statement under the Act, or (ii) to the extent applicable,
Rule 144 under the Act (or any similar rule under the Act relating to
the disposition of securities), provided that the issuer of this
certificate is provided with an opinion of counsel reasonably
satisfactory to the issuer, that an exemption from registration under
such Act is available.
The transfer or exchange of the securities represented by this
certificate is restricted in accordance with the warrant agreement
referred to herein.
6.2 PIGGYBACK REGISTRATION. If, at any tine commencing after the date
hereof until the expiration of the Warrant Exercise Term, the Company proposes
to register any of its securities under the Act on a registration statement that
may be used for the registration of the Warrant Securities (other than in
connection with a merger, pursuant to Form S8, 54 or comparable registration
statement, in connection with a registration requested pursuant to
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Section 6.3 hereof or in connection with an exchange offer or an offering of
securities solely to the Company's existing stockholders) it will give written
notice by registered mail, at least thirty (30) business days prior to the
filing of each such registration statement, to the Agent and to all other
Holders of the Warrant Securities of its intention to do so. If the Agent or
other Holders of the Warrant Securities notify the Company within twenty (20)
days after receipt of any such notice of its or their desire to include any
Warrant Securities in such proposed registration statement, the Company shall
afford the Agent and such Holders of the Warrant Securities the opportunity to
have any such Warrant Securities registered under such registration statement.
Notwithstanding the provisions of this Section 6.2, (A) the Company
shall have the right any time after it shall have given written notice pursuant
to this Section 6.2 (irrespective of whether a written request for inclusion of
any such securities shall have been made) to elect to postpone or not to file
any such proposed registration statement, or to withdraw the same after filing
but prior to the effective date thereof and ( if the underwriter or
underwriters, if any, of any such proposed public offering shall be of the
reasonable opinion that the total amount or kind of securities held by the
holders of Warrant Securities and any other persons or entities entitled to be
included in such Public Offering would adversely affect the success of such
public offering then the amount of securities to be offered for the accounts of
holders of Warrant Securities shall be reduced pro rata to the extent necessary
to reduce the total amount of securities to be included in such public offering
to the amount reasonably recommended by the underwriter or underwriters thereof,
whereupon the Company shall only be obligated to register such limited portion
(which may be none) of the Warrant Securities with respect to which such holder
has provided notice pursuant to this Section 6.2. in no event shall the Company
be required pursuant to this Section 6.2 to reduce the amount of securities to
be registered by it.
6.3 DEMAND REGISTRATION.
(a) So long as the Company shall have any of its securities registered
under the Act or the Exchange Act, at any time commencing after the date hereof
until expiration of the Warrant Exercise Term, the Holders of the Warrant
Securities representing a "Majority" (as hereinafter defined) of such Warrant
Securities (assuming the exercise of all of the then outstanding Warrants) shall
have the right (which right is in addition to the registration rights under
Section 6.2 hereof), exerciseable by written notice to the Company, to have the
Company prepare and file with the Securities and Exchange Commission (the
"Commission"), on two (2) occasions, a registration statement and such other
documents, including a prospectus, as may be necessary in the opinion of both
counsel for the Company and the counsel for the Agent and Holders, in order to
comply with the provisions of the Act, so as to permit a public offering and
sale of their respective Warrant Securities for no less than one hundred twenty
(120) days by such Holder and any other Holders of the Warrant Securities who
notify the Company within ten (10) days after receiving notice front the Company
of such request.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 6.3 by any Holder or Holders to all
other registered Holders of the Warrant Securities within fifteen (15) days from
the date of the receipt of any such registration request; PROVIDED that the
Company shall have the right to delay the effectiveness of such registration
request (A) for such reasonable period of time until the Company receives or
prepares financial statements for the fiscal period most recently ended prior
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to such written request, if necessary to avoid the use of stale financial
statements or (B) if the Company would be required to divulge in such
registration statement the existence of any fact relating to a material business
situation, transaction or negotiation not otherwise required to be disclosed or
if the Board of Directors of the Company shall determine in good faith that the
registration to be effected would not be in the best interest of the Company, in
which case the Company shall have the right to delay such filing for a period of
no longer than one hundred (120) days.
(c) All expenses (other than underwriting discounts and commissions)
incurred in connection with registration, filing or qualification pursuant to
the first registration request made pursuant to the subsection (a) of this
Section 6.3, including, without limitation, all registration, listing, filing
and qualification fees, printers and accounting fees and the fees anti
disbursements of counsel for the Holders shall be borne by the Company. Upon a
second registration request pursuant to subsection (a) of this Section 6.3, the
Holders requesting registration shall bear such costs on a pro-rata basis with
respect to the Warrant Securities in respect of which they are requesting
registration.
(d) Notwithstanding anything to the contrary contained herein, if the
Company shall not have filed a registration statement for the Warrant Securities
within the time period specified in Section 6.4 (a) hereof pursuant to the
written notice specified in Section 6.3 (a) of a Majority of the Holders of the
Warrants and/or Warrant Securities, the Company agrees that upon the written
notice of election of a Majority of the Holders of the Warrants and/or Warrant
Securities it shall repurchase (i) any and all Warrant Securities at the higher
of the Market Price as defined in Section 8.1 (vi) per share of Stock on (x) the
date of the notice sent pursuant to Section 63 (a) or (y) the expiration of the
one-hundred-twenty-day (120-day) period specified in Section 6.4 (a) and (ii)
any and all Warrants at such Market Price less the exercise price of such
Warrant. Such repurchase shall be in immediately available funds and shall close
within two (2) days after the later of (i) the expiration of the period
specified in Section 6.4 (a) or (ii) the delivery of the written notice of
election specified in this Section 6.3(d).
6.4 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. In
connection with any registration under Sections 6.2 or 6.3 hereof the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement as soon as practicable and shall use its best efforts to have any
registration statement declared effective at the earliest possible time, and
shall furnish each Holder desiring to sell Warrant Securities such number of
prospectuses as shall reasonably be requested.
(b) Except as provided in Section 6.3(c) above, the Company shall pay
all costs (excluding fees and expenses of Holder(s)' counsel and any
underwriting or selling commissions or other charges of any broker-dealer acting
on behalf of Holder(s)), fees and expenses in connection with all registration
statements filed pursuant to Section 6.2 and 63 (a) hereof including, without
limitation, the Company's legal and accounting fees, printing expenses, blue sky
fees and expenses. The Holders(s) will pay all costs, fees and expenses in
connection with any registration statement filed pursuant to Section 6.3(c).
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(c) The Company will take all necessary action which may be required in
qualifying or registering the Warrant Securities included in the registration
statement for offering and sale under the securities or blue sky laws of such
states as reasonably are requested by the Holder(s) in writing, provided that
the Company shall not be obligated to qualify to do business in any jurisdiction
where it is not then so qualified or to take any action that would subject it to
general service of process where it is not so subject or would subject the
Company to any tax in any jurisdiction where it is not then so subject.
(d) The Company shall indemnify the Holder(s) of the Warrant Securities
to be sold pursuant to any registration statement and each person, if any, who
controls such Holders within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against all loss, claim, damage, expense ox liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
to the same extent and with the same effect as the provisions pursuant to which
the Company has agreed to indemnify the Agent contained in Section 7 of the
Placement Agency Agreement.
(e) The Holder(s) of the Warrant Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 (a) of the Exchange Act, against all loss, claim, damage or expense
or liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such a registration statement to the same extent and with
the same effect as the provision contained in Section 7 of the Placement Agency
Agreement pursuant to which the Agent has agreed to indemnify the Company.
(f) Nothing contained in this Agreement shall be construed as requiring
the Holder(s) to exercise their Warrants prior to the initial filing of any
registration statement or the effectiveness thereof.
(g) The Company shall prepare and file with the SEC such amendments and
post-effective amendments to the registration statement as may be necessary to
keep the Registration effective until all such Warrant Securities are sold;
cause the prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the Securities
Act; and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof as set forth in such registration statement
or supplement to the prospectus.
(h) The Company shall furnish to each Holder participating in an
offering including Warrant Securities pursuant to Sections 6.1 or 6.3 hereof,
and to each underwriter, if any, a signed counterpart, addressed to such Holder
or underwriter, of (i) an opinion of counsel to the Company, dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, an opinion dated the date of the
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closing under the underwriting agreement), and (ii) a "cold comfort" letter
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of securities
(i) The Company shall, as soon as practicable after the effective date
of a registration statement relating to any Warrant Securities pursuant to
Section 6.2 or 6.3 hereof, and in any event within fifteen (15) months
thereafter, use its reasonable efforts to make "generally available to its
security holders" (within the meaning of Rule 15S under the Act) an earnings
statement (which need not be audited) complying with Section 11(a) of the Act
and covering a period of at least twelve (12) consecutive months beginning after
the effective date of the registration statement.
(j) The Company shall deliver promptly to each Holder participating in
an offering including any Warrant Securities pursuant to Sections 61 or 6.3
hereof who so requests and to the managing underwriter copies of all
correspondence between the Commission and the Company, its counsel or auditors
and all memoranda relating to discussions with the Commission or its staff with
respect to the registration statement, and shall permit each underwriter to do
such investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. ("NASD"). Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any such
underwriter shall reasonably request as it deems necessary to comply with
applicable securities laws and NASD rules.
(k) With respect to a registration pursuant to Section 6.3 hereof, the
Company shall enter into an underwriting agreement with the managing underwriter
selected for such underwriting by Holders holding a Majority of the Warrant
Securities requested to be included in such underwriting. Such managing
underwriter(s) shall be satisfactory to the Company and each Holder and such
agreement shall be satisfactory in form and substance to the Company, each
Holder and such managing underwriters, and shall contain such representations,
warranties and covenants by the Company and such other terms as are customarily
contained in agreements of that type used by the managing underwriter. The
Holders shall be parties to any underwriting agreement relating to an
underwritten sale of their Warrant Securities and may, at their option, require
that any or all the representations, warranties arid covenants of the Company to
or for the benefit of such underwriters shall also be made to and for the
benefit of such Holders. Such Holders shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters except as they may relate to such Holders and their intended
methods of distribution.
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(l) Intentionally deleted.
(m) For purposes of this Agreement, the term "Majority" in reference to
the Holders of Warrants or Warrant Securities, shall mean in excess of fifty
percent (50%) of the outstanding Warrants or Warrant Securities that (i) are not
held by the Company, an affiliate (excluding the Agent and any affiliate of the
Agent), officer, creditor, employee or agent thereof or any of their respective
affiliates, members of their family, persons acting as nominees or in
conjunction therewith or (ii) have not been resold to the public pursuant to a
registration statement filed with the Commission under the Act.
7. Intentionally deleted.
8. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.
8.1 COMPUTATION OF ADJUSTED EXERCISE PRICE. Except as hereinafter
provided, in case the Company shall at any time after the date hereof issue or
sell any shares of its Stock (as defined in Section 8.5), other than the
issuance or sales referred to in Section 8.6 hereof including shares held in the
Company's treasury and shares of Stock issued `upon the exercise of any options,
rights or warrants, to subscribe for shares of Stock issued upon the direct or
indirect conversion or exchange of securities for shares of Stock, for a
consideration per share less than the Exercise Price in effect immediately prior
to the issuance or sale of such shares or the "Market Price," as defined in
Section 8.1(vi), hereof per share of Stock on the date immediately prior to the
issuance or sale of such shares, or without consideration, then forthwith upon
such issuance or sale, the Exercise Price shall (until another such issuance or
sale) be reduced to the price (calculated to the nearest full cent) equal to the
quotient derived by dividing (A) an amount equal to the sum of (X) the product
of (a) the tower of (i) the Exercise Price in effect immediately prior to such
issuance or sale and (ii) the Market Price per share of Stock on the date
immediately prior to the issuance or sale of such shares, in either event,
reduced, but not to a number which is below .001, by the positive difference, if
any, between the (u) Market Price per share of Stock on the date immediately
prior to the issuance or sale and (v) the amount per share received in
connection with such issuance or sale, multiplied by (b) the total number of
shares of Stock outstanding immediately prior to such issuance or sale, plus (Y)
the aggregate of the amount of all consideration, if any received by the Company
upon such issuance or sale, by (B) the total number of shares of Stock
outstanding immediately after such issuance or sale; provided, however, that in
no event shall the Exercise Price be adjusted pursuant to this computation to an
amount in excess of the Exercise Price in effect immediately prior to such
computation, except in the case of a combination of outstanding shares of Stock,
as provided by Section 8.3 hereof.
For the purposes of this Section 8 the term Exercise Price shall mean
the Exercise Price per share of Preferred Stock set forth in Section 5 hereof as
adjusted from time to time pursuant to the provisions of this Section 8.
For purposes of any computation to be made in accordance with this
Section 8.1, the following provisions shall be applicable:
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(i) In case of the issuance or sale of shares of Stock for a
consideration part or all of which shall be cash, the amount of the cash
consideration, shall be deemed to be the amount of cash received by the Company
for such shares (or, if shares of Stock are offered by the Company for
subscription, the subscription price, or, if either of such securities shall be
sold to underwriters or dealers for public offering without a subscription
price, the public offering price, before deducting therefrom any compensation
paid or discount allowed in the sale, underwriting or purchase thereof by
underwriters or dealers or other persons or entities performing similar
services), or any expenses incurred in connection therewith and less any amounts
payable to security holders or any affiliate thereof, including, without
limitation, any employment agreement, royalty, consulting agreement, covenant
not to compete, earnout or contingent payment right or similar arrangement,
agreement or understanding, whether oral or written; all such amounts shall be
valued at the aggregate amount payable thereunder whether such payments are
absolute or contingent and irrespective of the period or uncertainty of payment,
the rate of interest, if any, or the contingent nature thereof.
(ii) In case of the issuance or sale (otherwise than as a dividend or
other distribution on any stock of the Company) of shares of Stock for a
consideration part or all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be the value of such
consideration as determined in good faith by the Board of Directors of the
Company.
(iii) Shares of Stock issuable by way of dividend or other distribution
on any capital stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of stockholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(iv) The reclassification of securities of the Company other than
shares of Stock into securities including shares of Stock shall be deemed to
involve the issuance of such shares of Stock for consideration other than cash
immediately prior to the close of business on the date fixed for the
determination of security holders entitled to receive such shares, and the value
of the consideration allocable to such shares of Stock shall be determined as
provided in subsection (ii) of this Section 8.1.
(v) The number of shares of Stock at any one time outstanding shall
include the aggregate number of shares issued or issuable (subject to
readjustment upon the actual issuance thereof) upon the exercise of then
outstanding options, rights, warrants and upon the conversion or exchange of
then outstanding convertible or exchangeable securities.
(vi) As used herein, the phrase "Market Price" at any date shall be
deemed to be the last reported sale price, or, in case no such reported sale
takes place on such day, the average of the last reported sale prices for the
last three (3) trading days, in either case as officially reported by the
principal securities exchange on which the Stock is listed or admitted to
trading, or, if the Stock is not listed or admitted to trading on any national
securities exchange, the average closing bid price as furnished by the NASD
through NASDAQ or similar organization if NASDAQ is no longer reporting such
information, or if the Stock is not quoted on NASDAQ as determined in
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good faith by resolution of the Board of Directors of the Company, based on the
best information available to it.
8.2 OPTIONS, RIGHTS, WARRANTS AND CONVERTIBLE AND EXCHANGEABLE
SECURITIES.
In case the Company shall at any time after the date hereof issue
options, rights or warrants to subscribe for shares of Stock, or issue any
securities convertible into or exchangeable for shares of Stock, for a
consideration per share less than the Exercise Price in effect or the Market
Price immediately prior to the issuance of such options, rights, warrants or
such convertible or exchangeable securities, or without consideration, the
Exercise Price in effect immediately prior to the issuance of such options,
rights, warrants or such convertible or exchangeable securities, as the case may
be, shall be reduced to a price determined by making a computation in accordance
with the provisions of Section 8.1 hereof, provided that:
(a) The aggregate maximum number of shares of Stock, as the case maybe,
issuable under such options, rights or warrants shall be deemed to be issued and
outstanding at the time such options, rights or warrants were issued, for a
consideration equal to the minimum purchase price per share provided for in such
options, rights or warrants at the time of issuance, plus the consideration
(determined in the same manner as consideration received on the issue or sale of
shares in accordance with the terms of the Warrants), if any, received by the
Company for such options, rights or warrants.
(b) The aggregate maximum number of shares of Stock issuable upon
conversion or exchange of any convertible or exchangeable securities shall be
deemed to be issued and outstanding at the time of issuance of such securities,
and for a consideration equal to the consideration (determined in the same
manner as consideration received on the issue or sale of shares of Stock in
accordance with the terms of the Warrants) received by the Company for such
securities, plus the minimum consideration, if any, receivable by the Company
upon the conversion or exchange thereof.
(c) If any change shall occur in the price per share provided for in
any of the options, rights or warrants referred to in subsection (a) of this
Section 8.2, or in the price per share at which the securities referred to in
subsection (b) of this Section 8.2 are convertible or exchangeable, such
options, rights or warrants or conversion or exchange rights, as the case may
be, shall be deemed to have expired or terminated on the date when such price
change became effective in respect to shares not thereto issued pursuant to the
exercise or conversion or exchange thereof and the Company shall be deemed to
have issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.
8.3 SUBDIVISION AND COMBINATION. In case the Company shall at any time
subdivide or combine the outstanding shares of Stock, the Exercise Price shall
forthwith be proportionately decreased in the case of subdivision or increased
in the case of combination.
8.4 ADJUSTMENT IN NUMBER OF SECURITIES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 8, the number of
securities issuable upon
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the exercise of each Warrant shall be adjusted to the nearest full amount by
multiplying a number equal to the Exercise Price in effect immediately prior to
such adjustment by the number of Warrant Securities issuable upon exercise of
the Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
8.5 DEFINITION OF STOCK. For the purpose of this Agreement, the term
"Stock" shall mean (i) the class of stock designated as Common Stock or Series B
Preferred Stock in the Certificate of Designations of the Company as may be
amended as of the date hereof, or (ii) any other class of stock resulting from
successive changes or reclassifications of such Stock consisting solely of
changes in par value, or from par value to no par value, or from no par value to
par value. In the event that the Company shall after the date hereof issue
securities with greater or superior voting rights than the shares of Stock
outstanding as of the date hereof, the Holders, at their option, may receive
upon exercise of any Warrants either shares of Stock or a like number of such
securities with greater or superior voting rights.
8.6 MERGER OR CONSOLIDATION. In case of any consolidation of the
Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Stock), the corporation
formed by such consolidation or merger shall execute and deliver to the Holder a
supplemental warrant agreement providing that the holder of each Warrant then
outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon exercise of such warrant, the kind
and amount of shares of stock and other securities and property receivable upon
such consolidation or merger, by a holder of the number of shares of Stock of
the Company for which such warrant might have been exercised immediately prior
to such consolidation, merger, sale or transfer. Such supplemental warrant
agreement shall provide for adjustments which shall be identical to the
adjustments provided in Section 8. The above provision of this Subsection shall
similarly apply to successive consolidations or mergers.
8.7 NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment of
the Exercise Price shall be made:
(a) Upon issuance or sale of the Warrants or the shares of Stock
issuable upon the exercise of the Warrants.
(b) Upon conversion of Preferred Stock or other options, warrants and
convertible securities outstanding as of the date hereof into shares of Common
Stock.
(c) Upon issuance of options, and Common Stock granted thereunder,
granted to employees of the Company issued under one or more stock options plans
that have an exercise price equal to the fair market value of the Common Stock
as determined in good faith by the Board of Directors.
(d) Upon issuance of shares of Common Stock as a result of the
antidilution rights attributable to the Series B Convertible Preferred Stock.
(e) If the amount of said adjustment shall be less than two cents
($0.02) per security issuable upon exercise of the Warrants, PROVIDED, HOWEVER,
that in such case
11
any adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to at least two cents ($.02) per security issuable upon exercise of the
Warrants.
8.8 DIVIDENDS AND OTHER DISTRIBUTIONS. In the event that the Company
shall at any time prior to the exercise of all Warrants declare a dividend
(other than a dividend consisting solely of shares of Stock) or otherwise
distribute to its stockholders any assets, properties, rights, evidence of
indebtedness, securities (other than shares of Stock), whether issued by the
Company or by another, or any other thing of value, the Holders of the
unexercised Warrants shall thereafter be entitled, in addition to the shares of
Stock or other securities and property receivable upon the exercise thereof, to
receive, upon the exercise of such Warrants, the same property, assets, rights,
evidences of indebtedness, securities or any other thing of value that they
would have been entitled to receive at the time of such dividend or distribution
as if the Warrants had been, exercised immediately prior to such dividend or
distribution. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this Subsection 8.8.
9. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal office of the Company, for a new Warrant
Certificate of like form, tenor and date representing in the aggregate the tight
to purchase the same number of securities in such denominations as shall be
designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
form and tenor in lieu thereof.
10. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be
required to issue certificates representing fractions of shares of Preferred
Stock upon the exercise of the Warrants, nor shaft it be required to issue
script or pay cash in lieu of fractional interests, it being the intent of the
parties that all fractional interests shall be eliminated by rounding any
fraction up to the nearest whole number or shares of Preferred Stock
11. RESERVATION AND LISTING OF SECURITIES. The Company shall at all
times reserve and keep available out of its authorized shares of Preferred
Stock, solely for the purpose of issuance upon the exercise of the Warrants,
such number of shares of Preferred Stock or other securities, properties or
rights as shall be issuable upon the exercise thereof. The Company shall at
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the conversion of the Preferred Stock
underlying the Warrants, such number of shares of Common Stock or other
securities, properties or rights as shall be issuable upon the exercise thereof.
The Company covenants and agrees that, upon exercise of the Warrants and payment
of the Exercise Price therefor, all shares of Preferred Stock and other
securities issuable upon such exercise shall be duly and validly issued, fully
paid, non-assessable and not subject to
12
the preemptive rights of any stockholder. As long as the Warrants shall be
outstanding and the Company shall have a class of its securities registered
under the Act or the Exchange Act, the Company shall use its best efforts to
cause all shares of Stock issuable upon the exercise of the Warrants to be
listed (subject to official notice of issuance) on all security exchanges on
which the Preferred Stock issued to the public in connection herewith may then
be listed and/or quoted.
12. NOTICES TO WARRANT HOLDERS. Nothing contained in this Agreement
shall be constructed as conferring upon the Holders the right to vote or to
consent or to receive notice to stockholders in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) the Company shall take a record of the holders of its shares of
Preferred Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Preferred Stock
any additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any option
right or warrant to subscribe therefor, or
(c) a dissolution, liquidation or winding up of the Company (other than
in connection with a consolidation or merger) or a sale of all or substantially
all of its property, assets and business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date for the dividend or the date of closing the transfer books for the
determination of the issuance of any convertible or exchangeable securities or
subscription rights, options or warrants or for the determination of the persons
or entitled to vote on such proposed dissolution, liquidation, winding up or
sale. Such notice shall specify such record date or the date of closing the
transfer books, as the case may be. Failure to give such notice or any defect
therein shall not affect the validity of any action taken in connection with the
declaration or payment of any such dividend, or the issuance of any convertible
or exchangeable securities or subscription rights, options or warrants, or any
proposed dissolution, liquidation winding up or sale.
13. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder of the Warrants, to the address of such
Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 hereof or
to such other address as the Company may designate by notice to the Holders.
13
With a copy to:
Xxxxxxxxxxx & Xxxxxxxx, LLP
1251 Avenue of the Americas, 00 Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
(c) if to the Agent, to the last known address of the Agent set forth
in the Placement Agency Agreement or to such other address as the Agent may
designate by notice to the Company and the Holders.
14. SUPPLEMENTS AND AMENDMENTS. The Company and the Agent may from time
to time supplement or amend this Agreement without the approval of any holders
of Warrant Certificates (other than the Agent) in order to cure any ambiguity,
to co or supplement any provision contained herein which may be defective or
inconsistent with any provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the Agent
may deem necessary or desirable and which the Company and the Agent deem shall
not adversely affect the interests of the Holders of Warrant Certificates. Other
amendments to this Agreement may be made only with the written consent of the
Holders of the Majority of the Warrant Securities.
15. SUCCESSORS. All the covenants and provisions of this Agreement
shall be binding upon and inure to the benefit of the Company, the Holders and
their respective successors and assigns hereunder.
16. TERMINATION. This Agreement shall terminate at the close of
business on the seventh anniversary of the initia1 Closing. Notwithstanding the
foregoing, the indemnification provisions of Section 6 shall survive such
termination until the close of business on the tenth anniversary of the date
hereof.
17. GOVERNING LAW: SUBMISSION TO JURISDICTION. This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing conflicts of laws.
The Company, the Agent and the Holders hereby agree that any action,
proceeding or claim against it arising out of, or relating in any way to, this
Agreement shall be brought and enforced in the courts of the Stave of New York,
and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company, the Agent and the Holders hereby irrevocably waive any
objection to such exclusive jurisdiction or inconvenient forum. Any such process
or summons to be served upon any of the Company, the Agent and the Holders (at
the option of the party bringing such action, proceeding or claim) may be served
by transmitting a copy thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address as set forth in
Section 13 hereof. Such mailing shall be deemed personal service and shall be
legal and binding upon the party so served in any action, proceeding or claim.
The Company, the Agent and the Holders agree that the prevailing party(ies) in
any such action or proceeding shall be entitled to recover from the other
party(ies) all of its/their
14
reasonable legal costs and expenses relating to such action or proceeding and/or
incurred in connection with the preparation therefor.
18. ENTIRE AGREEMENT MODIFICATION. This Agreement (including the
Placement Agency Agreement to the extent portions thereof are referred to
herein) contains the entire understanding between the parties hereto with
respect to the subject matter hereof and may not be modified or amended except
by a writing duly signed by the party against whom enforcement of the
modification or amendment is sought.
19. SEVERABILITY. If any provision of this Agreement shall be held to
be invalid and unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
20. CAPTIONS. The caption headings of the Sections of this Agreement
are for convenience of reference only and are not intended, nor should they be
construed, as a part of this Agreement and shall be given no substantive effect.
21. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shal1 be construed to
give to any person, entity or corporation other than the Company and the Agent
and any other registered Holders(s) of the Warrant Certificates or Warrant
Securities any legal or equitable right, remedy or claim under this Agreement
and this Agreement shall be for the sole and exclusive benefit of the Company
and the Agent and any other Holder(s) of the Warrant Certificates or Warrant
Securities.
22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterpart shall for all purposes be deemed to be
an original, and such counterparts shall together constitute but one and the
same instrument.
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written.
[SEAL] HOME DIRECTOR, INC.
By:________________________________
Xxxx X. Xxxxxx, President & CEO
Attest:
___________________________
Secretary
XXXXXXX XXXXX SECURITIES,
INCORPORATED
By:________________________
Authorized Officer
16
WARRANT CERTIFICATE
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON. EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS. AMENDED (THE "ACT"); AND MAY NOT BE OFFERED SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE, ACT, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR
RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), PROVIDED THAT THE
ISSUER OF THIS CERTIFICATE IS PROVIDED WTTH AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
No. 8,991,850 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that XXXXXXX XXXXX SECURITIES, or
its registered assigns, is the registered holder of 8,991,850 Warrants to
purchase initially, at any time after the date hereof until 5:30 p.m. New York
time on date (the "Expiration Date") that is the earlier of (a) the tenth
anniversary of the Final Closing (as defined in the Placement Agency Agreement
between HOME DIRECTOR, INC., a Delaware corporation (the "Company"), and Xxxxxxx
Xxxxx Securities, Incorporated ("Agent")) and (b) the third anniversary of the
closing date of the initial public offering of the Company's Common Stock
occurring within such ten-year period (the "Warrant Ex Term"), up to 8,991,850
fully paid and non-assessable shares of Series B Convertible Preferred Stock,
par value $0.001 per share ("Preferred Stock") of the Company, at the initial.
exercise price, subject to adjustment in certain events (the "Exercise Price"),
of $1.00 upon surrender of this Warrant Certificate and payment of the Exercise
Price at an office or agency of the Company, or by surrender of this Warrant
Certificate in lieu of cash payment, but subject to the conditions and
adjustments set forth herein and in the Warrant Agreement dated as of April 3,
2000 between the Company and the Agent (the "Warrant Agreement"). Payment of the
Exercise Price shall be made by certified or official bank check in New York
Clearing House funds payable to the order of the Company.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of' Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and to which reference is hereby made for a description of the
rights, limitations of rights, obligations, duties and immunities
17
thereunder of the Company and the holders (the words "holders" or "holder"
meaning the registered holder or registered holders) of the Warrants.
The Warrant Agreement provides-that, upon the occurrence of certain
events, the Exercise Price and the type and/or number of the Company securities
issuable upon their exercise may, subject to certain conditions, be adjusted. In
such event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in. the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter or otherwise impair the rights of the holder
as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate and the executed form of assignment attached hereto at an office or
agency of the Company, a new Warrant Certificate or Warrant Certificates of like
form and tenor and evidencing in the aggregate a like number of Warrants shall
be issued to the transferee(s) in exchange for this Warrant Certificate, subject
to the limitations provided herein and in the Warrant Agreement, without any
charge except for any tax or other governmental charge imposed in connection
with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall- have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the has caused this Warrant Certificate to be duly
executed under its corporate seal.
Dated as of April 3, 2000
HOME DIRECTOR, INC.
By_______________________
Xxxx X. Xxxxxx, President
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[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2]
The undersigned hereby irrevocably elects to exercise the right,
represented; by this Warrant Certificate, to purchase ____________ shares of
Preferred. Stock.
In accordance with the terms of Section 3.2of the Warrant Agreement
dated as of May 11, 2000 between HOME DIRECTOR, INC. and Xxxxxxx Xxxxx
Securities, Incorporated, the undersigned requests that a certificate for such
securities be registered in the name of ______________________ whose address is
______________________________ and that such Certificate be delivered to
_______________________whose address is
___________________________________.
Dated: , 2000
Signature ________________________________
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant
Certificate)
(Insert Social Security or Other Identifying Number of
Holder)
19
[FORM OF ASSIGNMENT]
(TOT BE EXECUTED BY THE RE HOLDER IF SUCH. HOLDER
DESIRES TO TRANSFER THE WARRANT CERTIFICATE)
FOR VALUE RECEIVED____________________hereby sells, assigns and
transfers unto _________________________________________
(PLEASE PRINT NAME AND ADDRESS OF TRANSFEREE)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint_____________ Attorney to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: , 2000
Signature ________________________________
(Signature must conform in all respects to name of holder as
specified on the face of the Warrant Certificate)
(Insert Social Security or Other Identifying Number of
Holder)
20
