EXHIBIT 10.1
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT ("AGREEMENT"), dated as of April 24, 2003, is
by and among ARI Network Services, Inc., a Wisconsin corporation, with
headquarters located at 00000 Xxxx Xxxx Xxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxx 00000
(the "COMPANY"), ARI Network Services Partners, with headquarters located at
0000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000, Dolphin Offshore Partners,
LP, with headquarters located at 0000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx
00000, and SDS Merchant Fund, LP, with headquarters located at 0000 Xxxx Xxxxxxx
Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 (hereinafter collectively referred to as the
"BUYERS").
WHEREAS:
RGC International Investors, LDC, a Cayman Islands corporation ("RGC"), pursuant
to that certain Securities Purchase Agreement, dated April 25, 2000, by and
between the Company and RGC (the "SECURITIES PURCHASE AGREEMENT"), (i) purchased
for an aggregate purchase price of Four Million Dollars ($4,000,000) (a) a
convertible debenture of the Company in the aggregate principal amount of Four
Million Dollars ($4,000,000) (the "DEBENTURE"), convertible into shares of
common stock, $.001 par value per share, of the Company (the "COMMON STOCK"),
(b) a warrant to purchase Six Hundred Thousand (600,000) shares of Common Stock
(the "WARRANT") and (c) an investment option to purchase Eight Hundred Thousand
(800,000) shares of Common Stock (the "INVESTMENT OPTION"), and (ii) entered
into a certain Registration Rights Agreement, dated April 25, 2000, with the
Company (the "REGISTRATION RIGHTS AGREEMENT") and the Company issued an
irrevocable authorization and direction, dated April 25, 2000 ("IRREVOCABLE
AUTHORIZATION") to American Stock Transfer Trust Company (the "TRANSFER AGENT")
with respect thereto.
A. Pursuant to a Securities Transfer Agreement dated as of
September 27, 2002, among RGC and the Buyers (the "SECURITIES TRANSFER
AGREEMENT"), the Buyers purchased from RGC, and RGC assigned and sold to the
Buyers, the Debenture, the Warrants and the Registration Rights Agreement and
the rights of RGC thereunder (the Debenture, the Warrants, the Securities
Purchase Agreement, and the Registration Rights Agreement are hereinafter
collectively referred to as the "INVESTMENT DOCUMENTS").
B. Certain claims have been asserted and certain suits have been
filed by ARI against RGC relating to actions taken by RGC in connection with the
Securities Transfer Agreement (the "RGC CLAIMS").
C. On April 16, 2003, the Company and the Buyers entered into a
Settlement Agreement, pursuant to which the parties agreed to the material terms
of a transaction pursuant to which (i) the Buyers will (a) transfer and assign
to the Company all of Buyers' right, title and interest in and to the Investment
Documents and the Securities Transfer Agreement and (b) assign to the Company
all claims, suits, rights and causes of action, if any, that the Buyers have
against RGC, Xxxx Xxxx, Capital Management, LP, RGC General Partner Corp. and
their affiliates relating directly or indirectly to the Securities Transfer
Agreement or the RGC Claims, and (ii) as consideration therefore, the Company
will (a) pay to or as directed by the Buyers the aggregate sum of $500,000 on
the date hereof; (b) issue to or as directed by the Buyers promissory notes in
the aggregate principal amount of $3,900,000; and (c) issue to or as directed
by the Buyers warrants to purchase an aggregate of 250,000 shares of Common
Stock.
D. The Company and the Buyers wish to provide in this Agreement
for the transactions described in the foregoing Paragraph C.
E. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration under the
Securities Act of 1933, as amended (the "1933 ACT") or the rules and regulations
promulgated thereunder by the Securities and Exchange Commission (the "SEC").
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
a. PURCHASE AND SALE OF DEBENTURES AND WARRANTS.
b. TRANSFER OF INVESTMENT DOCUMENTS AND RIGHTS
THEREUNDER; ASSIGNMENT. Subject to Section 1(c), below, by and upon the signing
of this Agreement and the payment by the Company of the consideration therefor
as recited in Section 1(b), below, the Buyers hereby (i) irrevocably transfer
and assign to the Company any and all of their collective, and each and all of
their individual, right, title and interest in and to the Investment Documents
and the Securities Transfer Agreement and (ii) assign all of their collective
and individual claims, suits, rights and causes of action that the Buyers have
against RGC, Xxxx Xxxx Capital Management, LP, RGC General Partner Corp. or
their affiliates relating directly or indirectly to the Securities Transfer
Agreement or the RGC Claims. To give further effect to the foregoing, at the
Closing (as hereinafter defined), the Buyers shall do all of the following:
i. Surrender Investment Documents. Assign and
surrender to the Company each of the original Debenture, the three
Debenture assignment agreements from RGC, the original Warrant, the
three assignment agreements from RGC and deliver such forms of
assignment as reasonably requested by the Company and such evidence of
assignments as is reasonably acceptable to the Company;
ii. Surrender and Assignment of Securities
Purchase Agreement and Securities Transfer Agreement. Assign to the
Company all of their collective and individual rights under the
Securities Purchase Agreement, the other Investment Documents and the
Securities Transfer Agreement (which assignment shall occur
automatically upon signing of this Agreement) to the Company; and
iii. Assignment of RGC Claims. Execute and
deliver to the Company an assignment of their collective and individual
claims, suits, rights and causes of action against RGC, Xxxx Xxxx
Capital Management, LP, RGC General Partner Corp. or their affiliates
relating directly or indirectly to the Securities Transfer Agreement or
the RGC Claims in the form attached hereto as EXHIBIT C (the
"ASSIGNMENT").
iv. Execution of New Notes and New Warrants.
Execute, each for its own part, the New Note (hereinafter defined) and
the New Warrant (hereinafter defined) issued thereto and cause each
"Holder" (as therein defined) to execute for its own part the New Note
and the New Warrant issued thereto in accordance with Schedules II and
III hereto.
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PAYMENT OF CONSIDERATION BY COMPANY. At the Closing (as hereinafter defined),
the Company shall do all of the following:
i. Payment. Pay to each Buyer and to each
Person listed on SCHEDULE I attached hereto (hereinafter a
"PAYEE") the amount (aggregating Five Hundred Thousand and
00/100 dollars) set forth opposite such Payee's name in
SCHEDULE I.
ii. Issue New Notes. Issue a promissory note in
the form attached hereto as EXHIBIT A to each "Holder" (as
defined therein) in the principal amount (aggregating Three
Million Nine Hundred and 00/100 Dollars ($3,900,000.00)) set
forth opposite such Holder's name in SCHEDULE II attached
hereto. Such promissory notes are hereinafter referred to
individually as a "NEW NOTE" and collectively as the "NEW
NOTES". The New Notes will have quarterly principal payments
due (i) on March 31, 2004 through December 31, 2005 in the
amounts set forth on SCHEDULE II A and (ii) on March 31, 2006
and thereafter until the New Notes are paid in full in the
amounts set forth on SCHEDULE II B.
iii. Issue New Warrants. Issue a warrant in the
form attached hereto as EXHIBIT B to each "Holder" (as defined
therein) representing the right to purchase the number of
shares of Common Stock (aggregating Two Hundred Fifty Thousand
(250,000) shares) set forth opposite such Holder's name in
SCHEDULE III attached hereto. Such warrants are hereinafter
referred to individually as a "NEW WARRANT" and collectively
as the "NEW WARRANTS".
iv. Payment of Legal Expenses. Pay the sum of
Seventy Five Thousand and 00/100 Dollars ($75,000.00) for
certain legal expenses of the Buyers as set forth in Section
4.b.
c. NO RELEASE OF RGC CLAIMS. Notwithstanding any
implication or provision to the contrary contained herein, the Company does not
release, surrender, waive or abandon any claims, rights, obligations or rights
of action (including, but not limited to, the RGC Claims) that the Company may
have (or may obtain as a result of the Assignment) against RGC, Xxxx Xxxx
Capital Management, LP, RGC General Partner Corp. or their affiliates.
d. CLOSING DATE. The consummation of the transactions
contemplated by this Agreement (the "CLOSING DATE") shall be on April 24, 2003,
or such other mutually agreed upon time. The closing of the transactions
contemplated by this Agreement (the "CLOSING") shall occur on the Closing Date
at the offices of Xxxxx Xxxxxxxxxxx Xxxxx S.C., 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxxxx, Wisconsin, or at such other location as may be agreed to by the
parties.
e. NOTICE TO TRANSFER AGENT. The parties agree (a) that
the furnishing of a copy of this Agreement to the Transfer Agent shall
constitute notice to the Transfer Agent of the revocation of any instructions
inconsistent with this Agreement, and (b) to promptly sign and deliver to the
Transfer Agent such further documents as may be required by the Transfer Agent
to
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effect the same. The parties agree that the Transfer Agent will be issued new
instructions consistent with the provisions of this Agreement and the New
Warrants.
f. BUYERS' REPRESENTATIONS AND WARRANTIES. The Buyers
(and each of them) jointly and severally represent and warrant to the Company
that:
a. AUTHORIZATION; ENFORCEMENT. The execution and
delivery thereby of this Agreement, the New Notes, the New Warrants and the
Assignment have been duly and validly authorized by each of the Buyers and, in
the case of each New Notes and New Warrants issued to a "Holder" (as defined
therein) other than the Buyers, has been duly and validly authorized by each of
such Holders. This Agreement, the New Notes, the New Warrants and the Assignment
have been duly executed and delivered on behalf of each of the Buyers and, in
the case of each New Notes and New Warrants issued to a "Holder" (as defined
therein) other than the Buyers, has been duly and validly executed and delivered
on behalf of each of such Holders. This Agreement, the New Notes, the New
Warrants and the Assignment constitutes the valid and binding agreement of each
of the Buyers (and, in the case of each New Note and New Warrant issued to a
"Holder" (as defined therein) other than the Buyers, constitutes the valid and
binding agreement of each of such Holders) enforceable in accordance with their
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors rights generally or general
principles of equity.
b. TITLE AND OWNERSHIP. Pursuant to the Securities
Transfer Agreement, the Buyers purchased from RGC, and RGC assigned and sold to
the Buyers, the Investment Documents subject to the right, title and interest,
if any, of the Company in such Investment Documents. To the extent that such
right, title and interest was transferred to them pursuant to the Securities
Transfer Agreement: (i) the Buyers are the beneficial owners of all right, title
and interest in and to the Investment Documents and (ii) at the Closing will
deliver to the Company good and marketable title to the Investment Documents,
free and clear of all liens, security interests, claims, charges, equities and
encumbrances of any kind whatsoever. Prior to acquisition of the Investment
Documents, Buyers had no knowledge of the arrangements the Company had made to
purchase the Investment Documents from RGC or the Company's understanding that
it had an agreement with RGC for such a purchase.
g. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Buyers that:
ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized and
validly existing under the laws of the jurisdiction in which it is incorporated,
with full corporate power and authority to own, lease, use and operate its
properties and to carry on its business as and where now owned, leased, used,
operated and conducted.
h. AUTHORIZATION; ENFORCEMENT. (i) The Company has all
requisite corporate power and authority to enter into and perform this
Agreement, the New Notes and the New Warrants and to consummate the transactions
contemplated hereby and thereby and to issue and deliver the New Notes and the
New Warrants, in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement, the New Notes and the New Warrants by
the Company and the consummation by it of the transactions contemplated hereby
and
4
thereby have been duly authorized by the Company's Board of Directors and no
further consent or authorization of the Company, its Board of Directors, or its
stockholders is required (other than consent and authorization relating to a
seat on the Company's Board of Directors), (iii) this Agreement, the New Notes
and the New Warrants have been duly executed and delivered by the Company, and
(iv) this Agreement constitutes, and upon execution and delivery by the Company
of the New Notes and the New Warrants, such instruments will constitute, a
legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting creditors
rights generally or general principles of equity.
i. COVENANTS.
RULE 144 TACKING. The Company will not challenge Buyers' position that the
Buyers' holding period of the New Warrants should be tacked onto the previous
period RGC and the Buyers held the Warrant for purposes of Rule 144 promulgated
under the 1933 Act (or a successor rule) ("RULE 144") and that, as a result, the
holding period for the New Warrant commenced on April 27, 2000. The Company will
not challenge Buyers' position that the Buyers' holding period of the shares of
Common Stock issuable upon exercise of or otherwise pursuant to the New Warrant
("WARRANT SHARES") should be tacked to the holding period of the New Warrant and
the Warrant for purposes of Rule 144, provided each New Warrant is exercised in
accordance with paragraph 1(i) or (ii) of the New Warrant. The Company further
agrees that it will take reasonable actions to assist the Buyers under Rule 144,
in tacking onto the holding period of the New Warrant the previous period RGC
and the Buyers held the Warrant and to effect sales of the Warrant Shares under
Rule 144 in a manner consistent with such tacked holding period.
j. EXPENSES. The Company shall pay Seventy-five Thousand
Dollars ($75,000) of the legal fees and expenses owed by the Buyers to
Xxxxxxxxx-Xxxxxxx-Xxxxxx-Xxxxxxx and Fox, Carpenter, X'Xxxxx that were incurred
by the Buyers in connection with (i) the controversy and litigation between the
Company and the Buyers and (ii) the negotiation and preparation of the
Settlement Agreement, this Agreement, the New Note, the New Warrant and the
Assignment. The Company shall make such payment directly to
Xxxxxxxxx-Xxxxxxx-Xxxxxx-Xxxxxxx who will distribute funds to Fox, Carpenter,
X'Xxxxx as appropriate. Except as set forth above in this Section 4(b), each of
the parties to this Agreement shall bear their own expenses in connection with
the preparation, negotiation and execution of this Agreement and the
transactions contemplated hereby.
k. GOVERNING LAW; MISCELLANEOUS.
GOVERNING LAW. This Agreement shall be governed by and construed in accordance
with the laws of the State of Wisconsin applicable to agreements made and to be
performed in the State of Wisconsin (without regard to principles of conflict of
laws). Both parties irrevocably consent to the exclusive jurisdiction of the
United States federal courts and the state courts located in Wisconsin with
respect to any suit or proceeding based on or arising under this Agreement, the
agreements entered into in connection herewith or the transactions contemplated
hereby or thereby and irrevocably agree that all claims in respect of such suit
or proceeding may be determined in such courts. Both parties irrevocably waive
the defense of an inconvenient forum to the maintenance of such suit or
proceeding. Both parties further agree that service of process
5
upon a party mailed by first class mail shall be deemed in every respect
effective service of process upon the party in any such suit or proceeding.
Nothing herein shall affect either party's right to serve process in any other
manner permitted by law. Both parties agree that a final non-appealable judgment
in any such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
l. COUNTERPARTS; SIGNATURES BY FACSIMILE. This Agreement
may be executed in one or more counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
m. HEADINGS. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
n. SEVERABILITY. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
o. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the New
Notes, the New Warrants and the Assignment contain the entire understanding of
the parties with respect to the matters covered herein and therein and, except
as specifically set forth herein or therein, neither the Company nor the Buyers
make any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the party to be charged with enforcement.
p. NOTICES. Any notices required or permitted to be
given under the terms of this Agreement shall be sent by certified or registered
mail (return receipt requested) or delivered personally or by courier (including
a recognized overnight delivery service) or by facsimile and shall be effective
five days after being placed in the mail, if mailed by regular United States
mail, or upon receipt, if delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile, in each case addressed
to a party. The addresses for such communications shall be:
If to the Company:
ARI Network Services, Inc.
00000 X. Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
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With copy to:
Xxxx X. Xxxx, Esq.
Xxxxxxx & Xxxx
000 X. Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
If to Buyers:
c/o Taglich Brothers, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
With copy to:
Xxxxxx Xxxxxxxx, Esq.
Xxxxxxxxx-Xxxxxxx-Xxxxxx-Xxxxxxx
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
Each party shall provide notice to the other party of any change in
address.
q. SUCCESSORS AND ASSIGNS. The Buyers may not assign any
of their rights or delegate any of their obligations hereunder without the prior
written consent of the Company, and any such assignment or delegation without
such consent shall be void. This Agreement shall be binding upon and inure to
the benefit of the parties and their permitted successors and assigns.
r. THIRD PARTY BENEFICIARIES. This Agreement is intended
for the benefit of the parties hereto and their respective successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
s. SURVIVAL. The representations and warranties of the
parties set forth herein and the agreements and covenants set forth herein shall
survive the Closing notwithstanding any due diligence investigation conducted by
or on behalf of the parties hereto.
t. FURTHER ASSURANCES. Each party shall do and perform,
or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby, including, but not limited to, the execution
and delivery of any documents, instruments or filings necessary to give effect
to the Assignment.
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u. NO STRICT CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
IN WITNESS WHEREOF, the undersigned Buyers and the Company have caused
this Agreement to be duly executed as of the date first above written.
COMPANY: BUYERS:
ARI NETWORK SERVICES, INC. ARI NETWORK SERVICES PARTNERS
By: TAGLICH BROTHERS, INC.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxxxx Xxxxxxx
------------------------------------- ----------------------------
Xxxxx Xxxxxxx, Xxxxxxx Xxxxxxx
Chairman and Chief Executive Officer Managing Partner
DOLPHIN OFFSHORE PARTNERS, LP
By: /s/ Xxxxx X. Xxxxx
---------------------------
Name: Xxxxx X. Xxxxx
Title: General Partner
SDS MERCHANT FUND, LP
By: /s/ Xxxxx Xxxxx
---------------------------
Name: Xxxxx Xxxxx
Title: Managing Member
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SCHEDULE I
SCHEDULE OF PAYEES AND AMOUNTS PURSUANT TO SECTION 1.b.i. OF EXCHANGE AGREEMENT
PAYEE AMOUNT
------------------------------ -------------
1. Xxxxxxx, Xxxx $ 20,562.75
2. Dolphin Offshore Partners, LP $ 184,036.75
3. SDS Merchant Fund, LP $ 102,813.84
4. Taglich Brothers, Inc. $ 25,000.35
5. Dragon Coer LLC $ 41,125.50
6. Shadow Capital LLC $ 20,562.75
7. E. Xxxxxxx Xxxx $ 23,647.16
8. Xxxxxx, Xxxxxxx $ 20,562.75
9. Xxxxxx, Xxxxxx $ 20,562.75
10. Xxxxxxx, Xxxxxxx $ 19,791.63
11. Xxxxxxx, Xxxxxx $ 19,791.63
12. Xxxxxxx, Xxxxxxx $ 514.05
13. Oh, Xxxxxxx $ 1,028.09
TOTAL $ 500,000.00
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SCHEDULE II
SCHEDULE OF HOLDERS AND PRINCIPAL AMOUNTS OF NEW NOTES ISSUED PURSUANT TO
SECTION 1.b.ii. OF EXCHANGE AGREEMENT
PRINCIPAL AMOUNT OF
HOLDER NEW NOTE
------------------------------ ----------------------
1. Xxxxxxx, Xxxx $ 164,502.00
2. Dolphin Offshore Partners, LP $ 1,472,294.00
3. SDS Merchant Fund, LP $ 822,510.76
4. Dragon Coer LLC $ 329,004.00
5. Shadow Capital LLC $ 164,502.00
6. E. Xxxxxxx Xxxx $ 189,177.30
7. Xxxxxx, Xxxxxxx $ 164,502.00
8. Xxxxxx, Xxxxxx $ 164,502.00
9. Xxxxxxx, Xxxxxxx $ 206,461.08
10. Xxxxxxx, Xxxxxx $ 206,458.00
11. Xxxxxxx, Xxxxxxx $ 5,362.36
12. Oh, Xxxxxxx $ 10,724.50
--------------
TOTAL $ 3,900,000.00
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SCHEDULE II A
SCHEDULE OF HOLDERS AND AMOUNT OF QUARTERLY PRINCIPAL PAYMENTS FROM
MARCH 31, 2004 THROUGH DECEMBER 31, 2005 ON NEW NOTES ISSUED PURSUANT TO
SECTION 1.b.ii. OF EXCHANGE AGREEMENT
HOLDER AMOUNT OF PAYMENT
----------------------------- -----------------
1. Xxxxxxx, Xxxx $ 8,436.00
2. Dolphin Offshore Partners, LP $ 75,502.26
3. SDS Merchant Fund, LP $ 42,180.04
4. Dragon Coer LLC $ 16,872.00
5. Shadow Capital LLC $ 8,436.00
6. E. Xxxxxxx Xxxx $ 9,701.40
7. Xxxxxx, Xxxxxxx $ 8,436.00
8. Xxxxxx, Xxxxxx $ 8,436.00
9. Xxxxxxx, Xxxxxxx $ 10,587.75
10. Xxxxxxx, Xxxxxx $ 10,587.59
11. Xxxxxxx, Xxxxxxx $ 274.99
12. Oh, Xxxxxxx $ 549.97
-----------
TOTAL $200,000.00
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SCHEDULE II B
SCHEDULE OF HOLDERS AND AMOUNT OF QUARTERLY PRINCIPAL PAYMENTS BEGINNING ON
MARCH 31, 2006 ON NEW NOTES ISSUED PURSUANT TO SECTION 1.b.ii. OF EXCHANGE
AGREEMENT
HOLDER AMOUNT OF PAYMENT
----------------------------- -----------------
1. Xxxxxxx, Xxxx $ 12,654.00
2. Dolphin Offshore Partners, LP $113,253.39
3. SDS Merchant Fund, LP $ 63,270.06
4. Dragon Coer LLC $ 25,308.00
5. Shadow Capital LLC $ 12,654.00
6. E. Xxxxxxx Xxxx $ 14,552.10
7. Xxxxxx, Xxxxxxx $ 12,654.00
8. Xxxxxx, Xxxxxx $ 12,654.00
9. Xxxxxxx, Xxxxxxx $ 15,881.62
10. Xxxxxxx, Xxxxxx $ 15,881.39
11. Xxxxxxx, Xxxxxxx $ 412.49
12. Oh, Xxxxxxx $ 824.96
-----------
TOTAL $300,000.00
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SCHEDULE III
SCHEDULE OF HOLDERS AND NUMBER OF SHARES OF COMMON STOCK COVERED BY NEW
WARRANTS ISSUED PURSUANT TO SECTION 1.b.iii. OF EXCHANGE AGREEMENT
NUMBER OF SHARES OF
COMMON STOCK
COVERED BY NEW
PAYEE WARRANT
----------------------------- -------------------
1. Xxxxxxx, Xxxx 10,823
2. Dolphin Offshore Partners, LP 96,861
3. SDS Merchant Fund, LP 54,113
4. Dragon Coer LLC 21,645
5. Shadow Capital LLC 10,823
6. E. Xxxxxxx Xxxx 12,446
7. Xxxxxx, Xxxxxxx 10,823
8. Xxxxxx, Xxxxxx 10,823
9. Xxxxxxx, Xxxxxxx 10,414
10. Xxxxxxx, Xxxxxx 10,417
11. Xxxxxxx, Xxxxxxx 271
12. Oh, Xxxxxxx 541
-------
TOTAL 250,000
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EXHIBIT B TO
EXCHANGE AGREEMENT
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
EXCEPT AS OTHERWISE SET FORTH HEREIN OR IN THAT EXCHANGE AGREEMENT
DATED AS OF APRIL 24, 2003 BY AND AMONG THE PARTIES REFERENCED BELOW,
NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE
AND SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE
TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
Right to Purchase
Shares of Common Stock,
$.001 par value
ARI NETWORK SERVICES, INC.
COMMON STOCK PURCHASE WARRANT
--------------------------------------------------------------------------------
HOLDER
--------------------------------------------------------------------------------
HOLDER'S ADDRESS
--------------------------------------------------------------------------------
HOLDER'S COUNSEL None.
--------------------------------------------------------------------------------
NUMBER OF WARRANT SHARES
--------------------------------------------------------------------------------
THIS CERTIFIES THAT, for value received, the Holder named above
("HOLDER"), or its registered and permitted assigns, is entitled to purchase
from ARI Network Services, Inc., a Wisconsin corporation (the "COMPANY"), at any
time or from time to time during the Exercise Period (as defined in Section
2(a)), that number of whole shares set forth above opposite the term "Number of
Warrant Shares" of the Company's Common Stock, $.001 par value per share (the
"COMMON STOCK"), at an exercise price of $1.00 per share (the "EXERCISE PRICE").
The term "WARRANT SHARES," as used herein, refers to the shares of Common Stock
purchasable hereunder. The Warrant Shares and the Exercise Price are subject to
adjustment as provided in Section 6 hereof. This Warrant is one of a series of
Warrants providing for the purchase by the Holders of such Warrants of an
aggregate of 250,000 Warrant Shares, issued pursuant to that certain Exchange
Agreement, dated April 24, 2003, by and among the Company and ARI Network
Services Partners, Dolphin Offshore Partners, LP, SDS Merchant Fund, LP and
Taglich Brothers, Inc. (the "EXCHANGE AGREEMENT").
This Warrant is subject to the following terms, provisions, and
conditions:
1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR
SHARES. Subject to the provisions hereof, this Warrant may be exercised by the
Holder, in whole or in part, by the
surrender of this Warrant, together with a completed exercise agreement in the
form attached hereto (the "EXERCISE AGREEMENT"), to the Company during normal
business hours on any business day at the Company's principal executive offices
(or such other office or agency of the Company as it may designate by notice to
the Holder), and upon (i) delivery to the Company of a written notice of an
election to effect a Debt Retirement Exercise (as defined in Section 2(b)) for
the Warrant Shares specified in the Exercise Agreement; (ii) delivery to the
Company of a written notice of an election to effect a Cashless Exercise (as
defined in Section 2(c)) for the Warrant Shares specified in the Exercise
Agreement; or (iii) by payment in cash, by certified or official bank check or
by wire transfer for the account of the Company of the Exercise Price for the
Warrant Shares specified in the Exercise Agreement (a "CASH EXERCISE"). The
Warrant Shares so purchased shall be deemed to be issued to the Holder, as the
record owner of such shares, as of the close of business on the date on which
this Warrant shall have been surrendered, the completed Exercise Agreement shall
have been delivered, and payment shall have been made for such shares (or when a
Debt Retirement Exercise or a Cashless Exercise has been made) as set forth
above. Certificates for the Warrant Shares so purchased, representing the
aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the Holder within a reasonable time, not exceeding five (5)
business days, after this Warrant shall have been so exercised. The certificates
so delivered shall be in such denominations as may be requested by the Holder
and shall be registered in the name of the Holder. If this Warrant shall have
been exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates, deliver to
the holder a new Warrant representing the number of shares with respect to which
this Warrant shall not then have been exercised.
2. EXERCISE.
(a) EXERCISE PERIOD. This Warrant is exercisable at any
time or from time to time on or after the date on which this Warrant is issued
and delivered pursuant to the terms of the Exchange Agreement (the "ISSUE DATE")
and before 5:00 p.m., Milwaukee, Wisconsin time on the third (3rd) anniversary
of the earliest date on which all outstanding principal and interest due under
the Promissory Note issued by the Company to the Holder named above on April 24,
2003 (whether or not such Promissory Note has been assigned) pursuant to the
Exchange Agreement on the date hereof pursuant to the Exchange Agreement (the
"NOTE") is paid in full (the "EXERCISE PERIOD").
(b) DEBT RETIREMENT EXERCISE. Notwithstanding anything to
the contrary contained in this Warrant, this Warrant may be exercised by
presentation and surrender of this Warrant to the Company at its principal
executive offices with a written notice of the Holder's intention to retire an
amount of outstanding principal owed to the Holder by the Company under
Promissory Note issued pursuant to the Exchange Agreement which is owned (either
by original issuance or assignment) by the Holder, which amount shall be equal
to the Exercise Price, in lieu of paying the Exercise Price in cash (a "DEBT
RETIREMENT EXERCISE"). In the event of a Debt Retirement Exercise, the Holder
shall so indicate in the Exercise Agreement and surrender this Warrant to the
Company.
(c) CASHLESS EXERCISE. Notwithstanding anything to the
contrary contained in this Warrant, this Warrant may be exercised by
presentation and surrender of this Warrant to the Company at its principal
executive offices with a written notice of the Holder's intention to effect
a cashless exercise, including a calculation of the number of shares of Common
Stock to be issued upon such exercise in accordance with the terms hereof (a
"CASHLESS EXERCISE"). In the event of a Cashless Exercise, in lieu of paying the
Exercise Price in cash, the Holder shall surrender this Warrant for that number
of shares of Common Stock determined by multiplying the number of Warrant Shares
to which it would otherwise be entitled by a fraction, the numerator of which
shall be the difference between the then current Market Price (as defined below)
per share of the Common Stock and the Exercise Price, and the denominator of
which shall be the then current Market Price per share of Common Stock. "MARKET
PRICE", as of any date, means: (i) the average of the last reported sale prices
for the shares of Common Stock on the Over-the-Counter Bulletin Board (the "OTC
BB") for the five (5) trading days immediately preceding such date as reported
by Bloomberg Financial Markets or an equivalent reliable reporting service
mutually acceptable to and hereafter designated by the Holder and the Company
("BLOOMBERG"), or (ii) if the OTC BB is not the principal trading market for the
shares of Common Stock, the average of the last reported sale prices on the
principal securities exchange or trading market where the Common Stock is listed
or traded during the same period as reported by Bloomberg, or (iii) if no last
sale price of the Common Stock is available in any of the foregoing manners, the
average of the bid prices of any market makers for the Common Stock that are
listed in the "pink sheets" by the National Quotation Bureau, Inc. or (iv) if
market value cannot be calculated as of such date on any of the foregoing bases,
the Market Price shall be the fair market value as reasonably determined in good
faith by the Board of Directors of the Company.
(d) NO FRACTIONAL SHARES. No fractional shares of Common
Stock are to be issued upon the exercise of this Warrant, but the Company shall
pay a cash adjustment in respect of any fractional share which would otherwise
be issuable in an amount equal to the same fraction of the Market Price of a
share of Common Stock on the date of such exercise.
(e) MODES OF EXERCISE MAY BE COMBINED. Nothing in this
Warrant shall prevent the Holder from effecting, in the same transaction or in a
series of transactions, a Debt Retirement Exercise, a Cashless Exercise, or a
Cash Exercise, or a combination of any of the foregoing, provided, that in each
case such exercise is effected otherwise in accordance with all of the terms and
provisions hereof.
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby
covenants and agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares will,
upon issuance in accordance with the terms of this Warrant, be validly issued,
fully paid, and, subject to Wisconsin Statute Section 180.0622(2)(b),
nonassessable and free from all taxes, liens, and charges with respect to the
issue thereof.
(b) RESERVATION OF SHARES. During the Exercise Period,
the Company shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of Common
Stock to provide for the exercise of this Warrant.
(c) CERTAIN ACTIONS PROHIBITED. The Company will not, by
amendment of its charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue
or sale of securities, or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed or performed
by it hereunder, but will at all times in good faith assist in the carrying out
of all the provisions of this Warrant. The Company will take all such actions
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and, subject to Wisconsin Statute Section
180.0622(2)(b), nonassessable shares of Common Stock upon the exercise of this
Warrant.
(d) SUCCESSORS AND ASSIGNS. This Warrant will be binding
upon any entity succeeding to the Company by merger, consolidation, or
acquisition of all or substantially all the Company's assets.
4. REPRESENTATIONS AND WARRANTIES OF HOLDER. Holder represents
and warrants to the Company that:
(a) INVESTMENT PURPOSE. As of the date hereof, the Holder
is obtaining this Warrant and the Warrant Shares for its own account and not
with a present view towards the public sale or distribution thereof, except
pursuant to sales registered or exempted from registration under the Securities
Act of 1933, as amended the ("1933 ACT"); provided, however, that by making the
representations herein, Holder does not agree to hold this Warrant or the
Warrant Shares, for any minimum or other specific term and reserves the right to
dispose of this Warrant and the Warrant Shares at any time in accordance with or
pursuant to an exemption under the 1933 Act and subject to the provisions set
forth in Section 9.
(b) TRANSFER OR RE-SALE. Holder understands that (i) the
sale or re-sale of this Warrant and the Warrant Shares has not been and is not
being registered under the 1933 Act or any applicable state securities laws, and
the Warrant and the Warrant Shares may not be transferred except in compliance
with the provisions of Section 9 and (ii) this Warrant, and certificates
representing the Warrant Shares issued upon exercise of this Warrant, shall bear
a legend as provided in Section 9(b) until such legend is removed pursuant to
such Section.
(c) AUTHORIZATION; ENFORCEMENT. The execution and
delivery of this Warrant has been duly and validly authorized by the Holder.
This Warrant has been duly executed and delivered on behalf of the Holder, and
this Warrant constitutes the valid and binding agreement of the Holder
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors rights generally or general principles of equity.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Holder that:
(a) ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized and validly existing under the laws of the
jurisdiction in which it is incorporated, with full corporate power and
authority to own, lease, use and operate its properties and to carry on its
business as and where now owned, leased, used, operated and conducted.
(b) AUTHORIZATION; ENFORCEMENT. (i) The Company has all
requisite corporate power and authority to enter into and perform this Warrant
and to consummate the transactions contemplated hereby and to issue and deliver
this Warrant in accordance with the terms hereof,
(ii) the execution and delivery of this Warrant by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by the Company through its Board of Directors, (iii) this Warrant has
been duly executed and delivered by the Company, and (iv) this Warrant
constitutes, and upon execution and delivery by the Company of this Warrant,
such instrument will constitute, a legal, valid and binding obligations of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors rights generally or general principles of
equity.
6. ANTIDILUTION PROVISIONS. During the Exercise Period, the
Exercise Price and the Number of Warrant Shares shall be subject to adjustment
from time to time as provided in this Section 6. In the event that any
adjustment of the Exercise Price as required herein results in a fraction of a
cent, such Exercise Price shall be rounded up to the nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES
UPON ISSUANCE OF COMMON STOCK. Except as otherwise provided in Section 6(c),
below, and except as set forth in Section 6(b)(vi), below, if and whenever on or
after the Issue Date, the Company issues or sells any shares of Common Stock for
no consideration or for a consideration per share (before deduction of
reasonable expenses, commissions, underwriting discounts or allowances in
connection therewith) less than the Exercise Price in effect on the date of
issuance of such Common Stock (a "DILUTIVE ISSUANCE"), then immediately upon the
Dilutive Issuance, the Exercise Price will be reduced to a price determined by
multiplying the Exercise Price in effect immediately prior to the Dilutive
Issuance by a fraction (i) the numerator of which is an amount equal to the sum
of (x) the number of shares of Common Stock actually outstanding immediately
prior to the Dilutive Issuance, plus (y) the quotient of the aggregate
consideration (as calculated pursuant to Section 6(b)(v), below) received by the
Company upon such Dilutive Issuance divided by the Exercise Price in effect
immediately prior to the Dilutive Issuance, and (ii) the denominator of which is
the total number of shares of Common Stock outstanding immediately after the
Dilutive Issuance.
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For
purposes of determining the adjusted Exercise Price under Section 6(a) hereof,
the following will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the
Company in any manner issues or grants any warrants, rights or options, whether
or not immediately exercisable, to subscribe for or to purchase Common Stock or
other securities convertible into or exchangeable for Common Stock ("Convertible
Securities") (such warrants, rights and options to purchase Common Stock or
Convertible Securities are hereinafter referred to as "Options") and the price
per share for which Common Stock is issuable upon the exercise of such Options
is less than the Exercise Price on the date of issuance or grant of such
Options, then the maximum total number of shares of Common Stock issuable upon
the exercise of such Options will, as of the date of the issuance or grant of
such Options, be deemed to be outstanding and to have been issued and sold by
the Company for such price per share. For purposes of the preceding sentence,
the "price per share for which Common Stock is issuable upon the exercise of
such Options" is determined by dividing (i) the total amount, if any, received
or receivable by the Company as consideration for the issuance or granting of
all such Options, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the exercise of all such Options, plus, in
the
case of Convertible Securities issuable upon the exercise of such Options, the
minimum aggregate amount of additional consideration payable upon the conversion
or exchange thereof at the time such Convertible Securities first become
convertible or exchangeable, by (ii) the maximum total number of shares of
Common Stock issuable upon the exercise of all such Options (assuming full
conversion of Convertible Securities, if applicable). No further adjustment to
the Exercise Price will be made upon the actual issuance of such Common Stock
upon the exercise of such Options or upon the conversion or exchange of
Convertible Securities issuable upon exercise of such Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the
Company in any manner issues or sells any Convertible Securities, whether or not
immediately convertible (other than where the same are issuable upon the
exercise of Options) and the price per share for which Common Stock is issuable
upon such conversion or exchange is less than the Exercise Price on the date of
issuance of such Convertible Securities, then the maximum total number of shares
of Common Stock issuable upon the conversion or exchange of all such Convertible
Securities will, as of the date of the issuance of such Convertible Securities,
be deemed to be outstanding and to have been issued and sold by the Company for
such price per share. For the purposes of the preceding sentence, the "price per
share for which Common Stock is issuable upon such conversion or exchange" is
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange thereof at the time
such Convertible Securities first become convertible or exchangeable, by (ii)
the maximum total number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities. No further adjustment to the
Exercise Price will be made upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE.
If there is a change at any time in (i) the amount of additional consideration
payable to the Company upon the exercise of any Options; (ii) the amount of
additional consideration, if any, payable to the Company upon the conversion or
exchange of any Convertible Securities; or (iii) the rate at which any
Convertible Securities are convertible into or exchangeable for Common Stock
(other than under or by reason of provisions designed to protect against
dilution), the Exercise Price in effect at the time of such change will be
readjusted to the Exercise Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
CONVERTIBLE SECURITIES. If, in any case, the total number of shares of Common
Stock issuable upon exercise of any Option or upon conversion or exchange of any
Convertible Securities is not, in fact, issued and the rights to exercise such
Option or to convert or exchange such Convertible Securities shall have expired
or terminated, the Exercise Price then in effect will be readjusted to the
Exercise Price which would have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination (other than in respect of
the actual number of shares of Common Stock issued upon exercise or conversion
thereof), never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If
any Common Stock, Options or Convertible Securities are issued, granted or sold
for cash, the consideration received therefor for purposes of this Warrant will
be the amount received by the Company therefor, before deduction of reasonable
commissions, underwriting discounts, allowances or other reasonable expenses
paid or incurred by the Company in connection with such issuance, grant or sale.
In case any Common Stock, Options or Convertible Securities are issued or sold
for a consideration part or all of which shall be other than cash, the amount of
the consideration other than cash received by the Company will be the fair value
of such consideration, except where such consideration consists of securities,
in which case the amount of consideration received by the Company will be the
Market Price thereof as of the date of receipt. Subject to Section 6(b)(vi),
below, in case any Common Stock, Options or Convertible Securities are issued in
connection with any acquisition, merger or consolidation in which the Company is
the surviving corporation, the amount of consideration therefor will be deemed
to be the fair value of such portion of the net assets and business of the
non-surviving corporation as is attributable to such Common Stock, Options or
Convertible Securities, as the case may be. The fair value of any consideration
other than cash or securities will be determined in good faith by the Board of
Directors of the Company.
(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE.
No adjustment to the Exercise Price or the number of Warrant Shares issuable
upon exercise of this Warrant will be made (i) upon the exercise of any
warrants, options or convertible securities granted, issued and outstanding on
the date of issuance of this Warrant; (ii) upon the grant or exercise of any
stock or options which may hereafter be granted or exercised under the ARI
Network Services, Inc. 2000 Stock Option Plan (the "2000 Plan") or any other
employee benefit plan of the Company now existing or to be implemented in the
future, so long as the issuance of such stock or options pursuant to a plan
other than the 2000 Plan is approved by a majority of the independent members of
the Board of Directors of the Company or a majority of the members of a
committee of independent directors established for such purpose; (iii) upon the
exercise of any Warrants issued pursuant to the Exchange Agreement; (iv) upon
issuance of securities in a firm commitment underwritten public offering
(excluding a continuous offering pursuant to Rule 415 under the 0000 Xxx); and
(v) upon issuance of securities as consideration for a merger, consolidation or
purchase of assets, or in connection with any strategic alliance, relationship,
partnership or joint venture (the primary purpose of which is not to raise
equity capital), or in connection with the disposition or acquisition of a
business, product or license by the Company.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the
Company at any time subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) the shares of
its Common Stock into a greater number of shares, then, after the date of record
for effecting such subdivision, the Exercise Price in effect immediately prior
to such subdivision will be proportionately reduced. If the Company at any time
combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) the shares of its Common Stock into a smaller
number of shares, then, after the date of record for effecting such combination,
the Exercise Price in effect immediately prior to such combination will be
proportionately increased.
(d) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Section 6, the number
of shares of Common Stock
issuable upon exercise of this Warrant shall be adjusted by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by
the number of shares of Common Stock issuable upon exercise of this Warrant
immediately prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Price.
(e) RECAPITALIZATIONS AND CERTAIN DISTRIBUTIONS. If at
any time or from time to time (i) there shall be a recapitalization of the
Common Stock (other than a subdivision or combination provided for in Section
6), or (ii) the Company shall declare a distribution payable in securities of
the Company or of other persons, evidences of indebtedness issued by the Company
or other persons, assets (excluding cash dividends) or options or rights, then,
in each such case, provision shall be made so that the Holder shall thereafter
be entitled to receive upon the exercise of this Warrant for the purchase of all
or any of the Warrant Shares, to receive the amount of such shares of stock or
other securities or property of the Company or such other person which would
have been payable to the Holder had the Holder been the holder of such Warrant
Shares on the record date fixed for the determination of the holders of Common
Stock entitled to receive such distribution.
7. COSTS AND EXPENSES OF ISSUANCE AND ISSUANCE TAXES. The Company
shall bear any issuance tax or other costs in respect of the issuance of
certificates for Warrant Shares to Holder upon the exercise of this Warrant, and
such issuance shall be made without charge to the Holder or such Warrant Shares
therefor. Notwithstanding the foregoing, the Company shall not be required to
bear any issuance tax or other costs that may be payable in respect of (i) any
transfer of this Warrant or (ii) any issuance of Warrant Shares upon the
exercise hereof in a name other than that of the Holder named above and, in such
case, the Company may condition its consent to such transfer, or condition its
issuance of Warrant Shares in a name other than that of the Holder named above,
upon the proper payment of or provision for such taxes and costs.
8. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall
not entitle the Holder to any voting rights or other rights as a shareholder of
the Company. No provision of this Warrant, in the absence of affirmative action
by the Holder to purchase Warrant Shares, and no mere enumeration herein of the
rights or privileges of the Holder, shall give rise to any liability of the
Holder for the Exercise Price or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
9. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
(a) LEGAL RESTRICTIONS ON TRANSFER. The sale or resale of
this Warrant and the Warrant Shares has not been and is not being registered
under the 1933 Act or any applicable state securities laws, and the Warrant and
the Warrant Shares may not be transferred unless (a) the Holder shall have
delivered to the Company an opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the Warrant and the Warrant Shares may be sold
or transferred pursuant to an exemption from the registration requirements of
the 1933 Act; or (b) the Warrant and the Warrant Shares are sold or transferred
to an "affiliate" (as defined in Rule 144 promulgated under the 1933 Act or a
successor rule ("RULE 144")) of the Holder who agrees to sell or otherwise
transfer the Warrant and the Warrant Shares only in accordance with this Section
9(a) and who is an Accredited Investor under the 1933 Act; or (c) the Holder
shall have delivered to the Company
an opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
the Warrant and the Warrant Shares may be sold or transferred without
registration under Rule 144. Any sale of the Warrant and the Warrant Shares made
in reliance on Rule 144 may be made only in accordance with the terms of said
Rule and further, if said Rule is not applicable, any resale of the Warrant and
the Warrant Shares under circumstances in which the seller (or the person
through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the 0000 Xxx) may require compliance with some other exemption
under the 1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
(b) LEGENDS. Until such time as the Warrant and the
Warrant Shares have been registered under the 1933 Act or otherwise may be sold
pursuant to Rule 144 without any restriction as to the number of securities as
of a particular date that can then be immediately sold, the Warrant and the
Warrant Shares shall bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of the
certificates for such Warrant Shares):
"The securities represented by this instrument have not been
registered under the Securities Act of 1933, as amended. The
securities may not be sold, transferred or assigned in the
absence of an effective registration statement for the
securities under said Act, or an opinion of counsel, in form,
substance and scope customary for opinions of counsel in
comparable transactions, that (i) registration is not required
under said Act or (ii) the securities may be sold without
registration pursuant to Rule 144 under said Act."
The legend set forth above shall be removed and the Company shall issue the
Warrant Shares upon which it is stamped without such legend to the Holder, if,
unless otherwise required by applicable state securities laws: (i) such Warrant
Shares are registered for sale under an effective registration statement filed
under the 1933 Act; or (ii) the Holder provides (at the Holder's expense) the
Company with an opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that (a) a re-sale
or transfer of the Warrant Shares may be made without registration under the
1933 Act or (b) the Warrant Shares may be sold pursuant to Rule 144 without any
restrictions as to the number of securities as of a particular date that can
then be immediately sold.
(c) FURTHER RESTRICTION ON TRANSFER. This Warrant and the
rights of Holder hereunder, are transferable, in whole or in part (and if in
part, subject to the second proviso appearing at the end of this sentence), upon
surrender of this Warrant to the Company for cancellation, together with a
properly executed assignment in a form approved by the Company, at the office or
agency of the Company referred to in Section 10, provided, however, that any
transfer or assignment shall be subject to the conditions set forth in Section
9(a), provided, further, that the Holder may effect a partial transfer or
assignment of this Warrant only upon the express written consent of the Company,
which consent shall not be unreasonably withheld.
(d) REPLACEMENT OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant and, in the case of any such loss, theft, or
destruction, upon delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
(e) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at the
time of the surrender of this Warrant in connection with any exercise, transfer,
or exchange of this Warrant, this Warrant (or, in the case of any exercise, the
Warrant Shares issuable hereunder), shall not be registered for resale under the
Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such exercise, transfer, or
exchange, (i) that the holder or transferee of this Warrant, as the case may be,
furnish to the Company a written opinion of counsel, which opinion and counsel
are acceptable to the Company, to the effect that such exercise, transfer, or
exchange may be made without registration under said Act and under applicable
state securities or blue sky laws, (ii) that the holder or transferee execute
and deliver to the Company an investment letter in form and substance acceptable
to the Company and (iii) that the transferee be an "accredited investor" as
defined in Rule 501(a) promulgated under the Securities Act; provided, however,
that no such opinion or letter described in Section 9(e)(i) or (ii), above,
shall be required with respect to a Cashless Exercise or a Debt Retirement
Exercise of this Warrant if the Holder of this Warrant obtained prior to such
exercise an opinion of counsel described in (and in compliance with) Section
9(a), above, to the effect that this Warrant may be sold or transferred without
registration under the 1933 Act.
(f) DEFINITION OF HOLDER UPON TRANSFER. Upon any transfer
of this Warrant permitted hereunder, the term "Holder" as used hereunder shall
mean the transferee holder of this Warrant (or portion of this Warrant if
permitted by the Company as set forth above); provided, that notwithstanding any
transfer of this entire Warrant or a portion hereof, the term "Holder named
above" used in this Warrant always shall mean the Holder identified by name in
the table on the first page of this Warrant.
10. NOTICES. Any notices required or permitted to be given under
the terms of this Warrant shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five (5) days
after being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile, in each case addressed to a party. The
addresses for such communications shall be:
(a) IF TO THE COMPANY:
ARI Network Services, Inc.
00000 X. Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
With copy to:
Xxxx X. Xxxx, Esq.
Xxxxxxx & Xxxx
000 X. Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
(b) IF TO HOLDER: To the Holder's Address set forth on
the first page hereof, and, if a name and address of Holder's Counsel is set
forth on the first page hereof, a copy to such Holder's Counsel.
(c) NOTICE OF ADDRESS CHANGE. Each party shall provide
written notice to the other party of any change in address.
11. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF WISCONSIN APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED IN THE STATE OF WISCONSIN (WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS). THE PARTIES IRREVOCABLY CONSENT TO THE EXCLUSIVE
JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN WISCONSIN WITH
RESPECT TO ANY SUIT OR PROCEEDING BASED ON OR ARISING UNDER THIS AGREEMENT, THE
AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY AND IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH SUIT
OR PROCEEDING MAY BE DETERMINED IN SUCH COURTS. THE PARTIES IRREVOCABLY WAIVE
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR
PROCEEDING. THE PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY
MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL
AFFECT ANY PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
THE PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER.
12. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof may
only be amended by an instrument in writing signed by the Company and the
Holder.
(b) DESCRIPTIVE HEADINGS. The descriptive headings of the
several Sections of this Warrant are inserted for purposes of reference only,
and shall not affect the meaning or construction of any of the provisions
hereof.
(c) REMEDIES CUMULATIVE. The remedies provided in this
Warrant shall be cumulative and in addition to all other remedies available
under this Warrant, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance giving rise to such remedy and nothing herein
shall limit the Holder's right to pursue actual damages for any failure by the
Company to comply with the terms of this Warrant. The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to the
Holder and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees, in the event of any such breach or threatened breach,
the Holder shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required.
(d) TRANSFER AGENT INSTRUCTIONS. The Company shall issue
irrevocable instructions to its transfer agent to issue certificates, registered
in the name of the Holders, for the Warrant Shares in such amounts as specified
from time to time by the Holder to the Company upon exercise of this Warrant
(the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"). The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 12(d), and stop transfer instructions to give effect to Section
1(b) of the Exchange Agreement (prior to registration of the Warrant Shares
under the 1933 Act or the date on which the Warrant Shares are sold pursuant to
Rule 144), will be given by the Company to its transfer agent and that the
Warrant Shares shall otherwise be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement. If the Holder
provides the Company with an opinion of counsel, in form, substance and scope
customary for opinions in comparable transactions, to the effect that a public
sale or transfer of such Warrant Shares are made without registration under the
1933 Act and such sale or transfer is effected, the Company shall permit the
transfer, and promptly instruct its transfer agent to issue one or more
certificates, free from any restrictive legend, in such name and in such
denominations as specified by the Holder.
(e) SURVIVAL. The representations and warranties of the
parties set forth herein and the agreements and covenants set forth herein shall
survive the date of this Warrant notwithstanding any due diligence investigation
conducted by or on behalf of the parties hereto.
(f) SIGNATURES BY FACSIMILE. This Warrant, once executed
by a party, may be delivered to the other party hereto by facsimile transmission
of a copy of this Warrant bearing the signature of the party so delivering this
Warrant.
(g) SEVERABILITY. If any provision of this Warrant shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Warrant or the validity or enforceability of this Warrant in
any other jurisdiction.
(h) SUCCESSORS AND ASSIGNS. This Warrant shall be binding
upon and inure to the benefit of the parties and their permitted successors and
assigns.
(i) THIRD PARTY BENEFICIARIES. This Warrant is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
(j) FURTHER ASSURANCES. Each party shall do and perform,
or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Warrant and the consummation of the
transactions contemplated hereby.
(k) NO STRICT CONSTRUCTION. The language used in this
Warrant will be deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied against any
party.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
ARI NETWORK SERVICES, INC.
a Wisconsin corporation
By: _________________________________
Xxxxx Xxxxxxx,
Chairman and Chief Executive Officer
Acknowledged and agreed to: Dated as of April 24, 2003
____________________________________ (HOLDER)
By: ________________________________
Name: ______________________________
Title ______________________________
EXHIBIT B TO
EXCHANGE AGREEMENT
FORM OF EXERCISE AGREEMENT
Dated:_____, 200_
To: ARI Network Services, Inc.
The undersigned Holder, pursuant to the provisions set forth in the
within Warrant, hereby agrees to purchase ________ shares of Common Stock
covered by such Warrant, and makes payment herewith in full therefor at the
price per share provided by such Warrant:
(please check the appropriate blank)
- ________ by retirement of $__________ of principal under the
Note;
- ________ in cash or by certified or official bank check in the
amount of $________;
- ________ or, by surrender of securities issued by the Company
(including a portion of the Warrant) having a market value (in
the case of a portion of this Warrant, determined in
accordance with the Warrant) equal to $_________.
Please issue a certificate or certificates for such shares of Common
Stock in the name of and pay any cash for any fractional share to:
Name:____________________________________
Signature: ______________________________
Address: ________________________________
_________________________________________
Note: The above signature should
correspond exactly with the name on
the face of the within Warrant.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned covering the balance of the shares purchasable thereunder
less any fraction of a share paid in cash.
____________________________________ (HOLDER)
By: ________________________________
Name: ______________________________
Title ______________________________
