EXHIBIT 4.1
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED
BY SUCH SECURITIES.
VERSO TECHNOLOGIES, INC.
WARRANT
Warrant No. _____________ Date of Original Issuance: February 24, 2004
VERSO TECHNOLOGIES, INC., a Minnesota corporation (the "COMPANY"),
hereby certifies that, for value received, __________ or its registered assigns
(the "HOLDER"), is entitled to purchase from the Company up to a total of
_____________ shares of common stock, par value $0.01 per share (the "COMMON
STOCK"), of the Company (each such share, a "WARRANT SHARE" and all such shares,
the "WARRANT SHARES") at an exercise price equal to $2.30 per share (as adjusted
from time to time as provided in Section 9, the "EXERCISE PRICE"), at any time
and from time to time from and after the date hereof and through and including
February 23, 2011 (the "EXPIRATION DATE"), and subject to the following terms
and conditions:
1. Definitions. In addition to the terms defined elsewhere in
this Warrant, capitalized terms that are not otherwise defined herein shall have
the meanings given to such terms in the Securities Purchase Agreement, dated as
of February 20, 2004, to which the Company and the original Holder are parties
(the "PURCHASE AGREEMENT").
2. Registration of Warrant. The Company shall register this
Warrant, upon records to be maintained by the Company for that purpose (the
"WARRANT REGISTER"), in the name of the record Holder hereof from time to time.
The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, absent actual notice to the contrary.
3. Registration of Transfers. The Company shall register the
transfer of any portion of this Warrant in the Warrant Register, upon surrender
of this Warrant, with the Form of Assignment attached hereto duly completed and
signed, to the Company at its address specified herein. The Holder agrees that
it may not transfer this Warrant as to more than the number of Warrant Shares
then outstanding as shown on the most updated Exercise Log, and any purported
transfer in excess of such number of Warrant Shares shall have no effect. Upon
any such registration or transfer, a new Warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new Warrant, a "NEW WARRANT"),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a holder
of a Warrant.
4. Exercise and Duration of Warrants. This Warrant shall be
exercisable by the registered Holder at any time and from time to time on or
after the date hereof to and including the Expiration Date. At 6:30 p.m., New
York City time on the Expiration Date, the portion of this Warrant not exercised
prior thereto shall be and become void and of no value. The Company may not call
or redeem all or any portion of this Warrant without the prior written consent
of the Holder.
5. Delivery of Warrant Shares.
(a) To effect exercises hereunder, the Holder shall not
be required to physically surrender this Warrant unless the aggregate Warrant
Shares represented by this Warrant is being exercised. Upon delivery of the
Exercise Notice to the Company (with the attached Warrant Shares Exercise Log)
at its address for notice set forth herein and upon payment of the Exercise
Price multiplied by the number of Warrant Shares that the Holder intends to
purchase hereunder, the Company shall promptly (but in no event later than three
Trading Days after the Date of Exercise (as defined herein)) issue and deliver
to the Holder, a certificate for the Warrant Shares issuable upon such exercise,
which, unless otherwise required by the Purchase Agreement, shall be free of
restrictive legends. The Company shall, upon request of the Holder and
subsequent to the date on which a registration statement covering the resale of
the Warrant Shares has been declared effective by the Securities and Exchange
Commission, use its best efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established
clearing corporation performing similar functions, if available, provided, that,
the Company may, but will not be required to change its transfer agent if its
current transfer agent cannot deliver Warrant Shares electronically through the
Depository Trust Corporation. A "DATE OF EXERCISE" means the date on which the
Holder shall have delivered to Company: (i) the Exercise Notice (with the
Warrant Exercise Log attached to it), appropriately completed and duly signed
and (ii) if such Holder is not utilizing the cashless exercise provisions set
forth in this Warrant, payment of the Exercise Price for the number of Warrant
Shares so indicated by the Holder to be purchased.
(b) If by the third Trading Day after a Date of Exercise
the Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to Section 5(a), then the Holder will have the right to
rescind such exercise.
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(c) If by the third Trading Day after a Date of Exercise
the Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to Section 5(a), and if after such third Trading Day and prior
to the receipt of such Warrant Shares, the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a "BUY-IN"), then the Company shall (1) pay in cash to the
Holder the amount by which (x) the Holder's total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares
that the Company was required to deliver to the Holder in connection with the
exercise at issue by (B) the closing bid price of the Common Stock at the time
of the obligation giving rise to such purchase obligation and (2) at the option
of the Holder, either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored or deliver to the
Holder the number of shares of Common Stock that would have been issued had the
Company timely complied with its exercise and delivery obligations hereunder.
The Holder shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In.
(d) The Company's obligations to issue and deliver
Warrant Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other Person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of Warrant Shares. Nothing herein shall limit a Holder's right to
pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.
6. Charges, Taxes and Expenses. Issuance and delivery of
certificates for shares of Common Stock upon exercise of this Warrant shall be
made without charge to the Holder for any issue or transfer tax, withholding
tax, transfer agent fee or other incidental tax or expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be paid by
the Company; provided, however, that the Company shall not be required to pay
any tax which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or Warrants in a name other
than that of the Holder. The Holder shall be responsible for all other tax
liability that may arise as a result of holding or transferring this Warrant or
receiving Warrant Shares upon exercise hereof.
7. Replacement of Warrant. If this Warrant is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation hereof, or in lieu of and
substitution for this Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity (which shall not include a surety bond), if
requested. Applicants for a New Warrant under such circumstances shall also
comply with such other
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reasonable regulations and procedures and pay such other reasonable third-party
costs as the Company may prescribe. If a New Warrant is requested as a result of
a mutilation of this Warrant, then the Holder shall deliver such mutilated
Warrant to the Company as a condition precedent to the Company's obligation to
issue the New Warrant.
8. Reservation of Warrant Shares. The Company covenants that it
will at all times reserve and keep available out of the aggregate of its
authorized but unissued and otherwise unreserved Common Stock, solely for the
purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as
herein provided, the number of Warrant Shares which are then issuable and
deliverable upon the exercise of this entire Warrant, free from preemptive
rights or any other contingent purchase rights of persons other than the Holder
(taking into account the adjustments and restrictions of Section 9). The Company
covenants that all Warrant Shares so issuable and deliverable shall, upon
issuance and the payment of the applicable Exercise Price in accordance with the
terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable.
9. Certain Adjustments. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 9.
(a) Stock Dividends and Splits. If the Company, at any
time while this Warrant is outstanding, (i) pays a stock dividend on its Common
Stock or otherwise makes a distribution on any class of capital stock that is
payable in shares of Common Stock, (ii) subdivides outstanding shares of Common
Stock into a larger number of shares, or (iii) combines outstanding shares of
Common Stock into a smaller number of shares, then in each such case the
Exercise Price shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made pursuant to clause
(i) of this paragraph shall become effective immediately after the record date
for the determination of stockholders entitled to receive such dividend or
distribution, and any adjustment pursuant to clause (ii) or (iii) of this
paragraph shall become effective immediately after the effective date of such
subdivision or combination. If any event requiring an adjustment under this
paragraph occurs during the period that an Exercise Price is calculated
hereunder, then the calculation of such Exercise Price shall be adjusted
appropriately to reflect such event.
(b) Fundamental Transactions. If, at any time while this
Warrant is outstanding, (1) the Company effects any merger or consolidation of
the Company with or into another Person, (2) the Company effects any sale of all
or substantially all of its assets in one or a series of related transactions,
(3) any tender offer or exchange offer (whether by the Company or another
Person) is completed pursuant to which holders of Common Stock are permitted to
tender or exchange their shares for other securities, cash or property, or (4)
the Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into
or exchanged for other securities, cash or property (in any such case, a
"FUNDAMENTAL TRANSACTION"), then the Holder shall have the right thereafter to
receive, upon exercise of this Warrant, the same amount and kind of securities,
cash or property as it would have been entitled to receive upon the occurrence
of such Fundamental
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Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant (the "ALTERNATE CONSIDERATION"). For purposes of any such
exercise, the determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such
Fundamental Transaction, and the Company shall apportion the Exercise Price
among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any exercise of this
Warrant following such Fundamental Transaction. The terms of any agreement
pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the provisions
of this Section 9(b) and ensuring that the Warrant (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous
to a Fundamental Transaction.
(c) Subsequent Equity Sales.
(i) If the Company or any subsidiary thereof, as
applicable with respect to Common Stock Equivalents (as defined below), at any
time while this Warrant is outstanding, shall issue any securities of the
Company or any Subsidiary which entitle the holder thereof to acquire Common
Stock at any time, including without limitation, any debt, preferred stock,
rights, options, warrants or any other instrument that is at any time
convertible into or exchangeable for, or otherwise entitles the holder thereof
to receive, Common Stock or other securities that entitle the holder to receive,
directly or indirectly, Common Stock ("COMMON STOCK EQUIVALENTS") entitling any
Person to acquire shares of Common Stock, at a price per share less than the
Exercise Price (if the holder of the Common Stock or Common Stock Equivalent so
issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise,
or due to warrants, options or rights issued in connection with such issuance,
be entitled to receive shares of Common Stock at a price less than the Exercise
Price, such issuance shall be deemed to have occurred for less than the Exercise
Price), then the Exercise Price shall be multiplied by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding immediately
prior to the issuance of such Common Stock or Common Stock Equivalents plus the
number of shares of Common Stock which the offering price for such shares of
Common Stock or Common Stock Equivalents would purchase at the Exercise Price
then in effect, and the denominator of which shall be the sum of the number of
shares of Common Stock outstanding immediately prior to such issuance plus the
number of shares of Common Stock so issued or issuable, provided, that for
purposes hereof, all shares of Common Stock that are issuable upon conversion,
exercise or exchange of Common Stock Equivalents shall be deemed outstanding
immediately after the issuance of such Common Stock Equivalents. Such adjustment
shall be made whenever such Common Stock or Common Stock Equivalents are issued;
provided, however, upon the expiration of any Common Stock Equivalents the
issuance of which resulted in an adjustment to the Exercise Price pursuant to
this Section, if any such Common Stock Equivalents shall expire and none of the
Common Stock Equivalent in question shall have been exercised, then the Exercise
Price shall immediately upon such expiration be increased to the price which it
would have been (but reflecting any other adjustments in the Exercise Price made
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pursuant to the provisions of this Section after the issuance of such Common
Stock Equivalents) had the adjustment of the Exercise Price made upon the
issuance of such Common Stock Equivalents been made on the basis of offering for
subscription or purchase only that number of shares of Common Stock actually
purchased upon exercise of Common Stock Equivalents actually exercised. The
Company shall notify the Holder in writing, no later than the Trading Day
following the issuance of any Common Stock or Common Stock Equivalent subject to
this section, indicating therein the applicable issuance price, or of applicable
reset price, exchange price, conversion price and other pricing terms.
Notwithstanding the foregoing, no adjustment will be made under this Section
9(c) in respect of:
(A) Any grant of an option or warrant for Common Stock or
issuance of any shares of Common Stock upon the exercise of any options or
warrants to employees, officers and directors of or consultants to the Company
pursuant to any stock option plan, employee stock purchase plan or similar plan
or incentive or consulting arrangement approved by the Company's board of
directors; and
(B) Any restricted stock awards approved by the Company's
Board of Directors;
(C) Any Common Stock or Common Stock Equivalents issued
in connection with equipment leases or real property leases, provided that not
more than $250,000 of securities is so issuable and such leases are otherwise on
customary terms;
(D) Any Common Stock issued as a dividend or distribution
on the Company's Common Stock or in a transaction described in Section 9(a);
(E) Any Common Stock or Common Stock Equivalents issued
as part of the purchase price of the acquisition of another corporation or
entity by the Company by consolidation, merger, purchase of all or substantially
all of the assets, or other reorganization in which the Company acquires, in a
single transaction or a series of related transactions, all or substantially all
of the assets of such other corporation or entity; provided, that such
transaction is not primarily a financing transaction; or
(F) Any rights or agreements to purchase Common Stock
Equivalents outstanding on the date hereof and as specified in Schedule 3.1(g)
to the Purchase Agreement (but not as to any amendments or other modifications
to the number of Common Stock issuable thereunder, the terms set forth therein,
or the exercise price set forth therein).
(ii) If, at any time while this Warrant is
outstanding, the Company or any Subsidiary issues Common Stock Equivalents at a
price per share that floats or resets or otherwise varies or is subject to
adjustment based on market prices of the Common Stock (a "FLOATING PRICE
SECURITY"), then for purposes of applying the preceding paragraph in connection
with any subsequent exercise, the Exercise Price will be determined separately
on each Exercise Date and will be deemed to equal the lowest price per share at
which any holder of such Floating Price Security is entitled to acquire shares
of Common Stock on such Exercise Date (regardless of whether any such holder
actually acquires any shares on such date).
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(d) Number of Warrant Shares. Simultaneously with any
adjustment to the Exercise Price pursuant to paragraph (a) of this Section, the
number of Warrant Shares that may be purchased upon exercise of this Warrant
shall be increased or decreased proportionately, so that after such adjustment
the aggregate Exercise Price payable hereunder for the adjusted number of
Warrant Shares shall be the same as the aggregate Exercise Price in effect
immediately prior to such adjustment.
(e) Calculations. All calculations under this Section 9
shall be made to the nearest cent or the nearest 1/100th of a share, as
applicable. The number of shares of Common Stock outstanding at any given time
shall not include shares owned or held by or for the account of the Company, and
the disposition of any such shares shall be considered an issue or sale of
Common Stock.
(f) Notice of Adjustments. Upon the occurrence of each
adjustment pursuant to this Section 9, the Company at its expense will promptly
compute such adjustment in accordance with the terms of this Warrant and prepare
a certificate setting forth such adjustment, including a statement of the
adjusted Exercise Price and adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing
the transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company's Transfer Agent.
(g) Notice of Corporate Events. If the Company (i)
declares a dividend or any other distribution of cash, securities or other
property in respect of its Common Stock, including without limitation any
granting of rights or warrants to subscribe for or purchase any capital stock of
the Company or any Subsidiary, (ii) authorizes or approves, enters into any
agreement contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company (but only to the extent such disclosure
would not result in the dissemination of material, non-public information to the
Holder), then the Company shall deliver to the Holder a notice describing the
material terms and conditions of such transaction, at least 10 calendar days
prior to the applicable record or effective date on which a Person would need to
hold Common Stock in order to participate in or vote with respect to such
transaction, and the Company will take all steps reasonably necessary in order
to insure that the Holder is given the practical opportunity to exercise this
Warrant prior to such time so as to participate in or vote with respect to such
transaction; provided, however, that the failure to deliver such notice or any
defect therein shall not affect the validity of the corporate action required to
be described in such notice.
10. Payment of Exercise Price. The Holder may pay the Exercise
Price in one of the following manners:
(a) Cash Exercise. The Holder may deliver immediately
available funds; or
(b) Cashless Exercise. If an Exercise Notice is delivered
after the Effectiveness Date (as defined in the Registration Rights Agreement
among the original Holder and the Company in connection with this Warrant) and a
registration statement permitting the Holder to resell the Warrant Shares is not
then effective or the prospectus forming a part thereof
7
is not then available to the Holder for the resale of the Warrant Shares, then
and only then, the Holder may notify the Company in an Exercise Notice of its
election to utilize cashless exercise, in which event the Company shall issue to
the Holder the number of Warrant Shares determined as follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be
issued to the Holder.
Y = the number of Warrant Shares with
respect to which this Warrant is being
exercised.
A = the average of the closing prices for
the five Trading Days immediately prior to
(but not including) the Exercise Date.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued.
11. Company Right to Purchase. Effective after the two year
anniversary of the Closing, the Holder hereby grants to the Company the right to
purchase this Warrant (in whole only and not in part) for cash (the "CALL
OPTION") at a purchase price equal to $0.001 per share of Common Stock for which
this Warrant is then exercisable (the "CALL PRICE"); provided, however, that the
Call Option shall only be exercisable (i) if the VWAP of the Common Stock for
twenty-five (25) consecutive Trading Days equals or exceeds 250% per share of
the then-current Exercise Price and (ii) if a registration statement under the
Securities Act is effective on the Call Date (as hereinafter defined) that
registers the resale of the Warrant Shares. As used herein, "CALL DATE" means
the Business Day fixed by the Company upon which this Warrant shall be called in
accordance with this Section 11. As used herein, "VWAP" means, as determined by
the first of the following clauses that applies: (i) if the Common Stock is
listed on a Trading Market during a Trading Day, the daily volume weighted
average price of the Common Stock for such Trading Day (or, if there be no such
price on such Trading Day, the nearest preceding Trading Day) on the Trading
Market on which the Common Stock is then listed, as reported by Bloomberg
Financial L.P. using the VAP function; (ii) if the Common Stock is not then
listed on a Trading Market, but is eligible for priced quotations on the OTC
Bulletin Board (or, if there be no such priced quotation on such Trading Day,
the nearest preceding Trading Day), as reported by Bloomberg Financial L.P.
using the VAP function; (iii) if the Common Stock is not then eligible for
priced quotations on the OTC Bulletin Board, but its prices are then reported in
the "Pink Sheets" published by the Pink Sheets LLC (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported; or (iv) in all other cases, the
fair market value of a share of Common Stock as determined by a nationally
recognized-independent appraiser selected in good faith by the Investors holding
a majority of the then-outstanding Shares.
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(a) Notice to Holder. If the Company elects to exercise
its Call Option pursuant to this Section 11, then at least fifteen (15) Business
Days but not more than sixty (60) Business Days before the Call Date, the
Company shall mail or cause to be mailed a redemption notice (the "REDEMPTION
NOTICE") to Holder. The Redemption Notice shall state: (i) the Call Date; (ii)
the Call Price; (iii) the Exercise Price; (iv) that this Warrant must be
presented and surrendered to the warrant agent (as set forth in Section 15
hereof) to collect the Call Price; (v) that this Warrant may be exercised at any
time before the close of business on the fifth (5th) Business Day immediately
preceding the Call Date (the "EXERCISE TERMINATION DATE"); (vi) that, if the
Holder wishes to exercise this Warrant, the Holder must satisfy the requirements
of Section 5 and Section 12 hereof prior to the Exercise Termination Date; and
(vii) that, unless the Company defaults in making the payment of the Call Price,
the only remaining right of Holder after the Exercise Termination Date shall be
to receive payment of the Call Price upon presentation and surrender of this
Warrant to the warrant agent.
(b) Payment upon Surrender of Warrant. If the Company
elects to exercise its Call Option pursuant to this Section 11, and the Holder
does not exercise this Warrant prior to the Exercise Termination Date, then the
Company shall pay the Call Price to the Holder in accordance with the Redemption
Notice upon presentation and surrender by the Holder of this Warrant to the
warrant agent.
12. Limitations on Exercise. (a) Notwithstanding anything to the
contrary contained herein, the number of shares of Common Stock that may be
acquired by the Holder upon any exercise of this Warrant (or otherwise in
respect hereof) shall be limited to the extent necessary to insure that,
following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Holder and its Affiliates and any
other Persons whose beneficial ownership of Common Stock would be aggregated
with the Holder's for purposes of Section 13(d) of the Exchange Act, does not
exceed 4.999% of the total number of issued and outstanding shares of Common
Stock (including for such purpose the shares of Common Stock issuable upon such
exercise). For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. This provision shall not restrict the number of shares
of Common Stock which a Holder may receive or beneficially own in order to
determine the amount of securities or other consideration that such Holder may
receive in the event of a Fundamental Transaction as contemplated in Section 9
of this Warrant. By written notice to the Company, the Holder may waive the
provisions of this Section but any such waiver will not be effective until the
61st day after such notice is delivered to the Company.
(b) Notwithstanding anything to the contrary contained
herein, the number of shares of Common Stock that may be acquired by the Holder
upon any exercise of this Warrant (or otherwise in respect hereof) shall be
limited to the extent necessary to insure that, following such exercise (or
other issuance), the total number of shares of Common Stock then beneficially
owned by such Holder and its Affiliates and any other Persons whose beneficial
ownership of Common Stock would be aggregated with the Holder's for purposes of
Section 13(d) of the Exchange Act, does not exceed 9.999% of the total number of
issued and outstanding shares of Common Stock (including for such purpose the
shares of Common Stock issuable upon such exercise). For such purposes,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. This
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provision shall not restrict the number of shares of Common Stock which a Holder
may receive or beneficially own in order to determine the amount of securities
or other consideration that such Holder may receive in the event of a
Fundamental Transaction as contemplated in Section 9 of this Warrant. This
restriction may not be waived.
13. No Fractional Shares. No fractional shares of Warrant Shares
will be issued in connection with any exercise of this Warrant and in lieu
thereof, any fractional shares shall be rounded down to the nearest whole.
14. Notices. Any and all notices or other communications or
deliveries hereunder (including, without limitation, any Exercise Notice or
Redemption Notice) shall be in writing and shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
prior to 5:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading
Day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number specified in this Section on a day that is
not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (iii) the Trading Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The addresses for such
communications shall be: (i) if to the Company, to Verso Technologies Inc.,
Attn: Chief Financial Officer, Facsimile No.: (000) 000-0000, or (ii) if to the
Holder, to the address or facsimile number appearing on the Warrant Register or
such other address or facsimile number as the Holder may provide to the Company
in accordance with this Section.
15. Warrant Agent. The Company shall serve as warrant agent under
this Warrant. Upon 30 days' notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.
16. Miscellaneous.
(a) This Warrant shall be binding on and inure to the
benefit of the parties hereto and their respective successors and assigns.
Subject to the preceding sentence, nothing in this Warrant shall be construed to
give to any Person other than the Company and the Holder any legal or equitable
right, remedy or cause of action under this Warrant. This Warrant may be amended
only in writing signed by the Company and the Holder and their successors and
assigns.
(b) All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations,
10
enforcement and defense of this Warrant and the transactions herein contemplated
("PROCEEDINGS") (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the "NEW
YORK COURTS"). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any Proceeding, any claim that it is not personally subject to the jurisdiction
of any New York Court, or that such Proceeding has been commenced in an improper
or inconvenient forum. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such Proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Warrant or the transactions
contemplated hereby. If either party shall commence a Proceeding to enforce any
provisions of this Warrant, then the prevailing party in such Proceeding shall
be reimbursed by the other party for its attorney's fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Proceeding.
(c) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(d) In case any one or more of the provisions of this
Warrant shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
(e) Subject to the provisions of Section 9 of this
Warrant, prior to exercise of this Warrant, the holder hereof shall not, by
reason of by being a holder hereof, be entitled to any rights of a stockholder
with respect to the Warrant Shares, including (without limitation) the right to
vote such Warrant Shares, receive dividends or other distributions thereon,
exercise preemptive rights or be notified of stockholder meetings, and such
holder shall not be entitled to any notice or other communication concerning the
business or affairs of the Company.
(f) This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.
[REMAINDER OF XXXX INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
11
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
VERSO TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxx
---------------------------------
Name: Xxxxxx X. Xxxx
Title: Chairman of the Board and
Chief Executive Officer
VERSO TECHNOLOGIES, INC.
WARRANT ORIGINALLY ISSUED FEBRUARY 24, 2004
WARRANT NO. ______________
EXERCISE NOTICE
To VERSO TECHNOLOGIES, INC.:
The undersigned hereby irrevocably elects to purchase _____________
shares of Common Stock pursuant to the above captioned Warrant, and, if such
Holder is not utilizing the cashless exercise provisions set forth in the
Warrant, encloses herewith $________ in cash, certified or official bank check
or checks or other immediately available funds, which sum represents the
aggregate Exercise Price (as defined in the Warrant) for the number of shares of
Common Stock to which this Exercise Notice relates, together with any applicable
taxes payable by the undersigned pursuant to the Warrant.
By its delivery of this Exercise Notice, the undersigned represents and
warrants to the Company that in giving effect to the exercise evidenced hereby
the Holder will not beneficially own in excess of the number of shares of Common
Stock (determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934) permitted to be owned under Section 12(a) and (b) of this Warrant
to which this notice relates.
The undersigned hereby represents and warrants to the Company that the
undersigned is an "accredited investor" under Rule 501(a) promulgated under the
Securities Act of 1933, as amended.
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
(Please print name and address)
Warrant Shares Exercise Log
Number of
Number of Warrant Warrant Shares
Shares Available to be Number of Warrant Shares Remaining to
Date Exercised Exercised be Exercised
--------------------------------------------------------------------------------------------
VERSO TECHNOLOGIES, INC.
WARRANT ORIGINALLY ISSUED FEBRUARY 24, 2004
WARRANT NO. ______________
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the
above-captioned Warrant to purchase ____________ shares of Common Stock to which
such Warrant relates and appoints ________________ attorney to transfer said
right on the books of the Company with full power of substitution in the
premises.
Dated: _______________, ____
_________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
_________________________________________
Address of Transferee
_________________________________________
_________________________________________
In the presence of:
_______________________
