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EXHIBIT 2
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES ACT OF ANY STATE (COLLECTIVELY, THE "ACTS").
NEITHER THIS WARRANT NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT HERETO UNDER ALL OF THE APPLICABLE ACTS, OR
AN OPINION OF COUNSEL SATISFACTORY TO COMPUTER INTEGRATION CORP. TO THE EFFECT
THAT SUCH REGISTRATIONS ARE NOT REQUIRED.
COMPUTER INTEGRATION CORP.
COMMON STOCK PURCHASE WARRANT
THIS IS TO CERTIFY THAT, COMPUTER INTEGRATION CORP., a Delaware
corporation (the "Company"), hereby grants to Xxxxxxx X. Xxxxxx, a Warrant to
purchase 100,000 shares of the duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock, $.001 par value, of the Company (the
"Common Stock"), at a purchase price per share of $1.13 (the "Exercise Price"),
and to exercise the other appurtenant rights, powers and privileges hereinafter
set forth. The number of shares of the Common Stock purchasable hereunder and
the Exercise Price are subject to adjustment in accordance with Article III
hereof. This Warrant shall expire at 5:00 p.m., Dallas, Texas time, on June
30, 2004 (the "Maturity").
Certain capitalized terms used in this Warrant are defined in Article V
hereof.
ARTICLE I
EXERCISE OF WARRANT
1.1 Method of Exercise. This Warrant may be exercised in whole or in
part at any time or from time to time on or after the date hereof and prior to
Maturity on any date that is a Business Day; provided, however, that the
minimum number of shares of Common Stock for which this Warrant may be
exercised in part is 3,000 shares, which number is subject to adjustment in
accordance with Article III hereof. To exercise this Warrant, in whole or
part, the holder hereof shall deliver to the Company, at the Warrant Office
designated in Section 2.1, (a) a written notice in the form of the Subscription
Notice attached as Exhibit A hereto, stating therein the election of such
holder to exercise this Warrant in the manner provided in the Subscription
Notice, (b) payment in full of the Exercise Price (in the manner described
below) for all Warrant
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Shares purchased hereunder, and (c) this Warrant. This Warrant shall be deemed
to be exercised on the date of receipt by the Company of the Subscription
Notice, accompanied by payment for the Warrant Shares and surrender of this
Warrant, as aforesaid, and such date is referred to herein as the "Exercise
Date". Upon such exercise, the Company shall within three Business Days issue
and deliver to such holder a certificate for the full number of the Warrant
Shares or Other Securities purchased by such holder hereunder, against the
receipt by the Company of the total Exercise Price payable for all the Warrant
Shares so purchased. Payment of the Exercise Price shall be made by either (i)
certified or official bank check, (ii) cancellation of any debt owed by the
Company to the holder hereof, or (iii) surrendering of Warrant Shares or other
shares of Common Stock valued at the current Fair Market Value. If the holder
surrenders a combination of cash, cancellation of any debt, or Warrant Shares
or other shares of Common Stock, the holder shall specify the respective number
of Warrant Shares to be purchased with each form of consideration, and the
foregoing provisions shall be applied to each form of consideration with the
same effect as if this Warrant were being separately exercised with respect to
each form of consideration. The Person in whose name the certificate(s) for
Common Stock is to be issued shall be deemed to have become a holder of record
of such Common Stock on the Exercise Date. If this Warrant has been exercised
in part, the Company shall deliver to the holder a new Warrant evidencing the
rights of such holder to purchase a number of Warrant Shares with respect to
which this Warrant has not been exercised, which new Warrant shall, in all
other respects, be identical with this Warrant, or, at the option of the
Company, appropriate notation may be made on this Warrant and this Warrant
returned to such holder. The issuance of any Common Stock or Other Securities
upon the exercise of the Warrant shall be made without charge to any holder for
any tax, other than income taxes assessed on such holder, in respect of such
issuance.
1.2 Fractional Shares. In lieu of any fractional shares of Common
Stock which would otherwise be issuable upon exercise of this Warrant, the
Company shall issue a certificate for the next higher number of whole shares of
Common Stock for any fraction of a share which is one-half or greater. No
shares shall be issued for less than one-half of a share of Common Stock.
ARTICLE II
WARRANT OFFICE; TRANSFER
2.1 Warrant Office. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's office at 0000 Xxxxxxxxxx Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000, and may subsequently be such other office of the Company or of
any transfer agent of the Common Stock in the continental United States as to
which written notice has previously been given to the holder of this Warrant.
The Company shall maintain, at the Warrant Office, a register for the Warrant,
in which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
permitted assignee of the rights of the registered owner hereof.
2.2 Ownership of Warrant. The Company may deem and treat the person
in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall
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not be affected by any notice to the contrary, until presentation of this
Warrant for registration of transfer as provided in this Article II.
2.3 Transfer and Exchange. The Warrant and all options and rights
under the Warrant are transferable, as to all or any part of the number of
issuable Warrant Shares purchasable upon its exercise, by the holders of the
Warrants, in person or by duly authorized attorney, on the books of the Company
upon surrender of the Warrant at the principal offices of the Company, together
with the form of transfer authorization attached to the Warrant duly executed.
Absent any such transfer, the Company may deem and treat the registered holders
of the Warrant at any time as the absolute owners of the Warrants for all
purposes and shall not be affected by any notice to the contrary. If any
Warrant is transferred in part, the Company shall, at the time of surrender of
such Warrant, issue to the transferee a Warrant covering the number of issuable
Warrant Shares transferred and to the transferor a Warrant covering the number
of issuable Warrant Shares not transferred.
2.4 Restrictions on Exercise and Transfer of Warrants. The Company
agrees to maintain at the Warrant Office books for the registration and
transfer of this Warrant. The Company, from time to time, shall register the
transfer of this Warrant in such books upon surrender of this Warrant at the
Warrant Office properly endorsed or accompanied by appropriate instruments of
transfer and written instructions for transfer satisfactory to the Company.
2.5 Expenses of Delivery of Warrants. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issuance and delivery of Warrants and related Warrant Shares hereunder.
2.6 Compliance with Securities Laws. The holder hereof understands
and agrees that the following restrictions and limitations shall be applicable
to all Warrant Shares and resales or other transfers of such Warrant Shares
pursuant to the Securities Act:
(a) The holder hereof agrees that the Warrant Shares shall not
be sold or otherwise transferred unless the Warrant Shares are
registered under the Securities Act and state securities laws or are
exempt therefrom.
(b) Unless then covered by an effective registration statement
registering the resale of such Warrant Shares, upon issuance, a legend
in substantially the following form has been or shall be placed on the
certificate(s) evidencing the Warrant Shares:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any state securities
act. The shares have been acquired for investment and may not be sold,
transferred, pledged or hypothecated unless (i) they shall have been
registered under the Securities Act of 1933, as amended, and any
applicable state securities act, or (ii) Computer Integration Corp.
shall have been furnished with an opinion of counsel, satisfactory to
counsel for Computer Integration Corp., that registration is not
required under any of such acts."
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ARTICLE III
ANTI-DILUTION PROVISIONS
3.1 Adjustments to Number of Shares Purchasable.
(a) The Warrants shall be exercisable for the number of shares
of Common Stock in such manner that, following the complete and full
exercise of the Warrant of each holder, the amount of Common Stock
issued to all holders shall equal 100,000 shares of Common Stock, as
adjusted, to the extent necessary, to give effect to the following
events:
(i) In case at any time or from time to time, the
holders of any class of Common Stock or Common Stock Equivalent
have received, or (on or after the record date fixed for the
determination of shareholders eligible to receive) have become
entitled to receive, without payment therefor:
(A) consideration (other than cash) by way of
dividend or distribution; or
(B) consideration (including cash) by way of
spin-off, split-up, reclassification (including any
reclassification in connection with a consolidation or
merger in which the Company is the surviving corporation),
recapitalization, combination of shares into a smaller
number of shares, or similar corporate restructuring;
other than additional shares of Common Stock issued as a
stock dividend or in a stock-split (adjustments in respect of
which are provided for in Sections 3.1(a)(ii) and (iii)), then,
and in each such case, the holders, on the exercise of the
Warrants, shall be entitled to receive for each share of Common
Stock issuable under the Warrants as of the record date fixed for
such distribution, the greatest per share amount of consideration
received by any holder of any class of Common Stock or Common
Stock Equivalent or to which such holder is entitled. All such
consideration receivable upon exercise of the Warrant with
respect to such a distribution shall be deemed to be outstanding
and owned by such holder for purposes of determining the amount
of consideration to which such holder is entitled upon exercise
of the Warrant with respect to any subsequent distribution.
(ii) If at any time there occurs any stock split, stock
dividend, reverse stock split, or other subdivision of the Common
Stock, then the number of shares of Common Stock to be received
by the holder of the Warrant and the Exercise Price, subject to
the limitations set forth in this Agreement, shall be
proportionately adjusted.
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(iii) In case of any reclassification or change of
outstanding shares of any class of Common Stock or Common Stock
Equivalent (other than a change in par value, or from par value
to no par value, or from no par value to par value), or in the
case of any consolidation of the Company with, or merger or share
exchange of the Company with or into, another Person, or in case
of any sale of all or a majority of the property, assets,
business, income or revenue generating capacity, or goodwill of
the Company, the Company, or such successor or other Person, as
the case may be, shall provide that the Holder of the Warrant
shall thereafter be entitled to receive the highest per share
kind and amount of consideration received or receivable
(including cash) upon such reclassification, change,
consolidation, merger, share exchange, or sale by any holder of
any class of Common Stock or Common Stock Equivalent that the
Warrant entitles the holder to receive immediately prior to such
reclassification, change, consolidation, merger, share exchange,
or sale (as adjusted pursuant to Section 3.1(a)(i) and otherwise
in this Agreement). Any such successor Person, which thereafter
shall be deemed to be the Company for purposes of the Warrants,
shall provide for adjustments that are as nearly equivalent as
may be possible to the adjustments provided for by this Section
3.1.
(iv) If at any time the Company issues or sells any
shares of any Common Stock or any Common Stock Equivalent at a
per unit or share consideration (which consideration shall
include the price paid upon issuance plus the minimum amount of
any exercise, conversion, or similar payment made upon exercise
or conversion of any Common Stock Equivalent) less than the
Exercise Price or the then current Fair Market Value per share of
Common Stock immediately prior to the time such Common Stock or
Common Stock Equivalent is issued or sold, excluding (x) up to
1,800,000 shares of Common Stock issuable to employees performing
services for the Company pursuant to stock option, stock grant or
similar stock incentive plans or arrangements approved by the
Board of Directors, and (y) up to 1,261,434 shares of Common
Stock issuable upon conversion of 19,035.85 shares of Series D
Preferred Stock and 125 shares of Series E Preferred Stock issued
and outstanding on the date hereof (the "Additional Securities"),
then:
(A) the Exercise Price shall be reduced to the
lower of the prices calculated by:
(I) dividing (x) an amount equal to the
sum of (1) the number of shares of Common Stock
outstanding on a fully diluted basis immediately
prior to such issuance or sale multiplied by the
then existing Exercise Price plus (2) the aggregate
consideration, if any, received by the Company upon
such issuance or sale, by (y) the total number of
shares of Common Stock outstanding immediately
after such issuance or sale on a fully diluted
basis; and
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(II) multiplying the then existing
Exercise Price by a fraction, the numerator of
which is (x) the sum of (1) the number of shares of
Common Stock outstanding on a fully diluted basis
immediately prior to such issuance or sale,
multiplied by the Fair Market Value per share of
Common Stock immediately prior to such issuance or
sale, plus (2) the aggregate consideration received
by the Company upon such issuance or sale, (y)
divided by the total number of shares of Common
Stock outstanding on a fully diluted basis
immediately after such issuance or sale, and the
denominator of which is the Fair Market Value per
share of Common Stock immediately prior to such
issuance or sale (for purposes of this subsection
(II), the date as of which the Fair Market Value
per share of Common Stock shall be computed shall
be the earlier of the date upon which the Company
(aa) enters into a firm contract for the issuance
of such shares, or (bb) issues such shares); and
(B) the number of shares of Common Stock for
which any of the Warrants may be exercised at the Exercise
Price resulting from the adjustment described in
subsection (A) above shall be equal to the product of the
number of shares of Common Stock purchasable under such
Warrants immediately prior to such adjustment, multiplied
by a fraction, the numerator of which is the Exercise
Price in effect immediately prior to such adjustment and
the denominator of which is the Exercise Price resulting
from such adjustment.
(v) In case any event occurs as to which the preceding
Sections 3.1(a)(i) through (iv) are not strictly applicable, but
as to which the failure to make any adjustment would not fairly
protect the purchase rights represented by the Warrants in
accordance with the essential intent and principles of this
Agreement, then, in each such case, the holder may appoint an
independent investment bank or firm of independent public
accountants, which shall give its opinion as to the adjustment,
if any, on a basis consistent with the essential intent and
principles established in this Agreement, necessary to preserve
the purchase rights represented by the Warrants. Upon receipt of
such opinion, the Company shall promptly deliver a copy of such
opinion to the holder and shall make the adjustments described in
such opinion. The fees and expenses of such investment bank or
independent public accountants shall be borne by the Company.
(b) The Company shall not by any action including, without
limitation, amending, or permitting the amendment of, the charter
documents, bylaws, or similar instruments of the Company or through any
reorganization, reclassification, transfer of assets, consolidation,
merger, share exchange, dissolution, issue or sale of securities, or any
other similar voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Agreement or the Warrants, but
shall at all times in good faith assist in the carrying out of all such
terms and in the taking of all such actions as may be
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necessary or appropriate to protect the rights of the holders against
impairment or dilution. Without limiting the generality of the
foregoing, the Company shall (i) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock and
Other Securities, free and clear of all liens, encumbrances, equities,
and claims and (ii) use its best efforts to obtain all such
authorizations, exemptions, or consents from any public regulatory body
having jurisdiction as may be necessary to enable the Company to perform
its obligations under the Warrants. Without limiting the generality of
the foregoing, the Company represents and warrants that the board of
directors of the Company has determined the Exercise Price to be
adequate and the issuance of the Warrants to be in the best interests of
the Company.
(c) Any calculation under this Section 3.1 shall be made to
the nearest one ten-thousandth of a share and the number of issuable
Warrant Shares resulting from such calculation shall be rounded up to
the next whole share of Common Stock or Other Securities comprising
issuable Warrant Shares.
(d) The Company shall not, and shall not permit any Subsidiary
to, issue any Capital Stock other than, Common Stock and Common Stock
Equivalents.
3.2 Costs. The Company shall pay all documentary, stamp, transfer or
other transactional taxes attributable to the issuance or delivery of Warrant
Shares upon exercise of this Warrant.
3.3 Reservations of Shares. The Company shall reserve at all times
so long as this Warrant remains outstanding, free from preemptive rights, out
of its treasury Common Stock or its authorized but unissued shares of Common
Stock, or both, solely for the purposes of effecting the exercise of this
Warrant, sufficient shares of Common Stock to provide for the exercise hereof.
3.4 Valid Issuance. All shares of Common Stock which may be issued
upon exercise of this Warrant shall upon issuance by the Company be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof attributable to any act or
omission by the Company, and the Company shall take no action which shall cause
a contrary result (including without limitation, any action which would cause
the Exercise Price to be less than the par value, if any, of the Common Stock).
ARTICLE IV
REGISTRATION RIGHTS
4.1 Definitions.
As used in this Article IV, the following capitalized terms shall have
the following meanings:
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"Holder" shall mean Buyer and any of its permitted transferees who own
Registrable Securities.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments to the
Registration Statement of which such Prospectus is a part, and all material
incorporated by reference in such Prospectus.
"Registrable Securities" shall mean all Warrant Shares, but only so long
as they remain Restricted Securities.
"Registration Expenses" shall have the meaning assigned to such term in
Section 4.7.
"Registration Statement" means any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits, and
all material incorporated by reference in such Registration Statement.
"Restricted Securities" means the Registrable Securities, other than
those Registrable Securities (i) that have been effectively registered under
the Securities Act and disposed of in accordance with the Registration
Statement covering them or (ii) that are eligible in total for resale under
Rule 144 of the Securities Act (or any successor rule or regulation).
4.2 Securities Subject to Article IV. The securities entitled to the
benefits of this Article IV are the Registrable Securities.
4.3 Registration. Promptly following the Closing, the Company shall
(i) prepare and file a Registration Statement on the appropriate form then
available to the Company, and use its best efforts to effect the registration
for resale by the Holders thereof of all the Registrable Securities, and (ii)
prepare and file with the Nasdaq Stock Market an notification form for the
listing of additional securities for the purpose of listing the Shares on the
Nasdaq Stock Market. The Company shall use its best efforts to keep such
Registration Statement effective under Rule 415 under the Securities Act until
no Holders hold Registrable Securities. Each Holder agrees that if the Company
determines that there are material developments that require the filing of a
post-effective amendment to the Registration Statement, then each Holder
registering Registrable Securities thereunder agrees to refrain from selling
any Registrable Securities until the post-effective amendment is declared
effective. The Company agrees to file and attempt to have declared effective
such post-effective amendment as soon as possible.
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4.4 Piggyback Registration Rights.
(a) If the Company at any time or from time to time subsequent
to the date of this Agreement proposes to register any securities under
the Securities Act either for its own account or the account of any
selling stockholders (other than pursuant to Section 4.3 and other than
pursuant to a registration statement on Forms S-4 or S-8 or any
successor or similar forms), it shall give written notice to each of the
Holders of Registrable Securities of its intention at least 20 days in
advance of the filing of any registration statement with respect
thereto. Upon the written request of any of the Holders of Registrable
Securities given within 15 days after receipt of such notice, the
Company, subject to Section 4.4(b), shall cause the Registrable
Securities requested by the Holders to be registered, to be so
registered.
(b) Underwritten Offerings.
(i) In the case of an underwritten offering by the
Company of securities, the Company shall, with respect to
Registrable Securities that a Holder of Registrable Securities
then desires to sell, enter into an underwriting agreement with
the same underwriters engaged by the Company with respect to
securities being offered by the Company and cause such
underwriters to include in any such underwriting all of the
Securities that a Holder of Registrable Securities then desires
to sell; provided, however, that such underwriting agreement is
in substantially the same form as the underwriting agreement that
the Company enters into in connection with the primary offering
it is making.
(ii) If the managing underwriter with respect to an
offering pursuant to this Section 4.4 requests that the number of
shares of Registrable Securities of the Holder that are entitled
to be registered pursuant to this Section 4.4 be reduced because
of marketing factors, then the shares of Registrable Securities
of the Holders that they wish to register pursuant to this
Section 4.4 shall be reduced by such amount as the managing
underwriter may determine, which reduced number of shares of
Registrable Securities shall be included on a pro rata basis
among the Holders of Registrable Securities who are participating
in such offering.
(iii) Selection of Underwriters and Counsel. If any
registration hereunder is to be an underwritten offering with
respect to any issue of Registrable Securities, the Company shall
have the right to select the investment banker or bankers and
manager or managers to administer the related offering; provided
that, such investment banker(s) or manager(s) shall each be
either (i) nationally recognized investment banking firms, (ii)
regional investment banking firms nationally recognized for their
expertise and experience in financings of companies in the
computer distribution business or (iii) an investment banking
firm approved by a majority in interest of the Holders.
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4.5 Information. Upon making a request pursuant to Section 4.3 or
4.4, the Holder(s) of Registrable Securities shall specify the number of shares
of Registrable Securities to be registered and shall also specify the intended
method of disposition thereof. The Company may require the Holders to furnish
to the Company such information regarding themselves and the distribution of
Registrable Securities as the Company may from time to time reasonably request
in order to comply with the Securities Act. The Holders agree to notify the
Company as promptly as practicable of any inaccuracy or change in information
they have previously furnished to the Company.
4.6 Registration Procedures. If and whenever the Company is required
by the provisions of Section 4.3 or 4.4 to effect a registration under the
Securities Act, the Company shall, at its expense, as expeditiously as
practicable:
(a) In accordance with the Securities Act and the rules and
regulations of the SEC, prepare and file with the SEC as expeditiously
as possible (but in no event later than 30 days after the date of this
Warrant, in the case of registration under Section 4.3 or after request
from Holder(s) pursuant to the terms of Section 4.4) a Registration
Statement in the form of an appropriate registration statement with
respect to the Registrable Securities and use its best efforts to cause
such Registration Statement to become and remain continuously effective
until the all of the Registrable Securities covered by such Registration
Statement have been sold in accordance with the intended methods of
disposition of the seller or sellers set forth in such Registration
Statement. The Company shall prepare and file with the SEC such
amendments to such Registration Statement and supplements to the
Prospectus contained therein as may be necessary to keep such
Registration Statement effective and such Registration Statement and
Prospectus accurate and complete during such period;
(b) Furnish to the Holders participating in such registration
such reasonable number of copies of the Registration Statement and
Prospectus and such other documents as such Holders may reasonably
request in order to facilitate the public offering of the Registrable
Securities;
(c) Use its reasonable efforts to register or qualify the
Registrable Securities covered by such Registration Statement under such
state securities or blue sky laws of such jurisdictions as such Holders
may reasonably request, provided that the Company shall not be obligated
to file any general consent to service of process or to qualify as a
foreign corporation in any jurisdiction in which it is not so qualified
or to subject itself to taxation in connection with any such
registration or qualification of such Registrable Securities;
(d) Notify the Holders participating in such registration,
promptly after it receives notice thereof, of the date and time when
such Registration Statement and each post-effective amendment thereto
has become effective or a supplement to any Prospectus forming a part of
such Registration Statement has been filed;
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(e) Notify the Holders participating in such registration
promptly of any request by the SEC for the amending or supplementing of
such Registration Statement or Prospectus or for additional information;
(f) Prepare and promptly file with the SEC and promptly notify
the Holders participating in such registration of the filing of such
amendments or supplements to such Registration Statement or Prospectus
as may be necessary to correct any statements or omissions if, at the
time when a Prospectus relating to such Securities is required to be
delivered under the Securities Act, any event has occurred as the result
of which any such Prospectus or any other Prospectus then in effect may
include an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(g) Advise the Holders participating in such registration,
promptly after it receives notice or obtain knowledge thereof, of the
issuance of any stop order by the SEC suspending the effectiveness of
such Registration Statement or the initiation or threatening of any
proceeding for that purpose and promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued; and
(h) Otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to the Company's security holders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act, no
later than 45 days after the end of any 12-month period (or 90 days, if
such a period is a fiscal year) beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of
the applicable Registration Statement.
4.7 Expenses of Registration. All expenses of the Company incident to
the Company's performance of or compliance with the provisions of this Article
IV ("Registration Expenses") shall be borne by the Company including without
limitation:
(a) All registration and filing fees;
(b) Fees and expenses of compliance with all securities or
blue sky laws (including the reasonable fees and disbursements of
counsel for the Company in connection with blue sky qualifications of
the Registrable Securities; provided, however, that the Company shall
not be required to consent to general service of process in any such
state);
(c) Printing, messenger, telephone and delivery expenses; and
(d) Fees and disbursements of counsel for the Company and its
independent auditors.
Nothing in this Section 4.7 shall be deemed to require the Company to
pay any underwriting discounts, selling commissions or similar fees applicable
to Registrable Securities
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if the applicable registration results in an underwritten public offering of
all or any portion of the Registrable Securities.
In addition, the Company shall pay the reasonable fees and disbursements
of one counsel selected by the Holders registering Registrable Securities in
any such Registration Statement incurred in connection with the offering
contemplated by such Registration Statement.
4.8 Indemnification and Contribution.
(a) Indemnification by the Company. Whenever, pursuant to
Section 4.3 or 4.4, a Registration Statement relating to the Registrable
Securities is filed under the Securities Act, the Company shall (except
as to matters covered by Section 4.8(b) hereof) indemnify and hold
harmless each Holder participating in the registration, each of their
officers, directors and employees, and each person, if any, who controls
any such Person (collectively, the "Holder Indemnitees" and,
individually, a "Holder Indemnitee"), against any losses, claims,
damages or liabilities, joint or several, to which such Holder
Indemnitees may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such
Registration Statement, or Prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse each Holder Indemnitee for all legal or
other expenses reasonably incurred by it in connection with
investigating or defending against such loss, claim, damage, liability
or action.
(b) Indemnification by Holders. Each Holder participating in
such registration shall indemnify and hold harmless the Company, each of
its directors, each of its officers and each other person, if any, who
controls the Company, within the meaning of the Securities Act
(collectively, the "Company Indemnitees" and, individually, a "Company
Indemnitee") and each other Holder Indemnitee against all losses,
claims, damages or liabilities, joint or several, to which any of the
Company Indemnitees or the other Holder Indemnitees may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement, or Prospectus
contained therein, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, but only if, and to the extent that,
such statement or omission was in reliance upon and in conformity with
information furnished to the Company by such Holder for use in the
preparation thereof.
(c) Indemnification Procedures. Promptly after receipt by a
Holder Indemnitee or a Company Indemnitee (collectively, "Indemnitees"
and, individually, an "Indemnitee") under Section 4.8(a) or 4.8(b) of
notice of the commencement of any action, such Indemnitee shall, if a
claim in respect thereof is to be made against the
13
indemnifying party under such clause, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any
liability which it may have to any Indemnitee otherwise than under such
clauses except to the extent that the indemnifying party has been
prejudiced by the failure to receive such notice. In case any such
action shall be brought against any Indemnitee, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnitee, and after written notice from the indemnifying party to such
Indemnitee of its election to assume the defense thereof, the
indemnifying party shall not be liable to such Indemnitee under such
clause for any legal or other expenses subsequently incurred by such
Indemnitee in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the Indemnitee shall
have the right to employ one counsel to represent such Indemnitee if, in
the reasonable judgment of such Indemnitee (based on the written opinion
of counsel), it is advisable for such party to be represented by
separate counsel because a conflict of interest exists between such
indemnified and indemnifying party in respect of such claim, and in that
event the reasonable fees and expenses of such separate counsel shall be
paid by the indemnifying party. Notwithstanding the foregoing, if the
Company is an Indemnitee, the Company shall designate the one counsel,
and in all other circumstances, the one counsel shall be designated by a
majority in interest based upon the Registrable Securities of the
Indemnities. For purposes of this Section 4.8 the terms "control," and
"controlling person" have the meanings which they have under the
Securities Act.
(d) Contribution. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless an Indemnitee, then the
indemnifying party shall contribute to the amount paid or payable by the
Indemnitee as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and
the Indemnitee on the other from the registration or (ii) if the
allocation provided by clause (i) above is not permitted by applicable
law, or provides a lesser sum to the Indemnitee than the amount
hereinafter calculated, in such proportion as is appropriate to reflect
not only the relative benefits received by the indemnifying party on the
one hand and the Indemnitee on the other but also the relative fault of
the indemnifying party and the Indemnitee as well as any other relevant
equitable considerations. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
4.9 Transfer of Registration Rights. The rights under this Article
IV may be assigned by a Holder to a transferee or assignee of any of such
Holder's Restricted Securities.
4.10 Rule 144 Reporting. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Restricted Securities to the public without
registration, the Company agrees to use its best efforts to:
14
(a) Make and keep public information available, as these terms
are understood and defined in Rule 144 under the Securities Act at all
times after the Closing;
(b) File with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the
Exchange Act; and
(c) Furnish to Buyer forthwith upon Buyer's request (i) a
written statement by the Company as to its compliance with the public
information requirements of Rule 144 under the Act (ii) a copy of the
most recent annual or quarterly report of the Company, and (iii) such
other reports and documents as may be reasonably requested in availing
Buyer of any rule or regulation of the SEC permitting the sale of any
such securities without registration.
ARTICLE V
TERMS DEFINED
As used in this Warrant, unless the context otherwise requires, the
following terms have the respective meanings set forth below or in the Section
indicated:
Average Market Value -- The average of the Closing Price for the
security in question for the 20 trading days immediately preceding the date of
determination.
Board of Directors -- the Board of Directors of the Company.
Business Day -- any day that NASDAQ is open for trading.
Closing Price --
(a) If the primary market for the security in question is a
national securities exchange registered under the Exchange Act, the
National Association of Securities Dealers Automated Quotation System --
National Market System, or other market or quotation system in which
last sale transactions are reported on a contemporaneous basis, the last
reported sales price, regular way, of such security for such day, or, if
there has not been a sale on such trading day, the highest closing or
last bid quotation therefor on such trading day (excluding, in any case,
any price that is not the result of bona fide arm's length trading); or
(b) If the primary market for such security is not an exchange
or quotation system in which last sale transactions are
contemporaneously reported, the highest closing or last bona fide bid or
asked quotation by disinterested Persons in the over-the-counter market
on such trading day as reported by the National Association of
Securities Dealers through its Automated Quotation System or its
successor or such other generally accepted source of publicly reported
bid quotations as the holders of the Warrant or Warrant Shares
designate.
15
Common Stock -- shall mean and include the Company's Common Stock, par
value $.001 per share, authorized on the date of the original issue of this
Warrant and shall also include (i) in case of any reorganization,
reclassification, consolidation, merger, share exchange or sale, transfer or
other disposition of assets of the character referred to in Section 3.1(a)(iii)
hereof, the stock, securities or assets provided for in such Section
3.1(a)(iii), and (ii) any other shares of common stock of the Company into
which such shares of Common Stock may be converted.
Common Stock Equivalent -- any option, warrant, right, or similar
security exercisable into, exchangeable for, or convertible to Common Stock.
Exchange Act -- the Securities Exchange Act of 1934 and the rules and
regulations thereunder, all as the same shall be in effect at the time.
Fair Market Value -- (a) as to securities regularly traded in the
organized securities markets, the Average Market Value; and (b) as to all
securities not regularly traded in the securities markets and other property,
the fair market value of such securities or property as determined in good
faith by the Board of Directors of the Company at the time it authorizes the
transaction (a "Valuation Event") requiring a determination of Fair Market
Value under this Agreement.
Maturity -- 5:00 p.m., Dallas, Texas time, on June 30, 2004.
NASDAQ -- National Association of Securities Dealers Automated
Quotations System.
Other Securities -- any stock, other securities, property, or other
property or rights (other than Common Stock) that the holders become entitled
to receive upon exercise of the Warrants.
Outstanding -- when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, without duplication, shares
deemed issued pursuant to Article III) at such date, except shares then held in
the treasury of the Company.
Person -- any individual, corporation, partnership, trust, limited
liability company, organization, association or other entity or individual.
Securities Act -- the Securities Act of 1933 and the rules and
regulations thereunder, all as the same shall be in effect at the time.
Warrant -- this Warrant and any successor or replacement Warrant
delivered in accordance with Section 2.4 or 6.8.
Warrant Office -- as defined in Section 2.1.
16
Warrant Shares -- shall mean the shares of Common Stock or Other
Securities purchased or purchasable by the registered holder of this Warrant or
the permitted assignees of such holder upon exercise thereof pursuant to
Article I hereof.
ARTICLE VI
MISCELLANEOUS
6.1 Entire Agreement. This Warrant contains the entire agreement
between the holder hereof and the Company with respect to the shares
purchasable upon exercise hereof and the related transactions, and supersedes
all prior arrangements or understanding with respect thereto.
6.2 Governing Law. This Warrant shall be governed by and construed
in accordance with the laws of the State of Delaware.
6.3 Waiver and Amendment. Any term or provision of this Warrant may
be waived at any time by the party which is entitled to the benefits thereof
and any term or provision of this Warrant may be amended or supplemented at any
time by agreement of the holder hereof and the Company, except that any waiver
of any term or condition, or any amendment or supplementation, of this Warrant
must be in writing. A waiver of any breach or failure to enforce any of the
terms or conditions of this Warrant shall not in any way effect, limit or waive
a party's rights hereunder at any time to enforce strict compliance thereafter
with every term or condition of this Warrant.
6.4 Illegality. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provision exists, be in any way impaired.
6.5 Copy of Warrant. A copy of this Warrant shall be filed among the
records of the Company.
6.6 Notice. Any notice or other document required or permitted to be
given or delivered to the holder hereof shall be delivered at, or sent by
certified or registered mail to such holder at, the last address shown on the
books of the Company maintained at the Warrant Office for the registration of
this Warrant or at any more recent address of which the holder hereof shall
have notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to the Company, other than such notice or
documents required to be delivered to the Warrant Office, shall be delivered
at, or sent by certified or registered mail to, the office of the Company at
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, or such other
address within the continental United States of America as shall have been
furnished by the Company to the holder of this Warrant.
6.7 Limitation of Liability; Not Shareholders. No provision of this
Warrant shall be construed as conferring upon the holder hereof the right to
vote, consent, receive dividends or
17
receive notices other than as herein expressly provided in respect of meetings
of shareholders for the election of directors of the Company or any other
matter whatsoever as a shareholder of the Company. No provision hereof, in the
absence of affirmative action by the holder hereof to purchase shares of Common
Stock, and no mere enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of such holder for the purchase price
of any shares of Common Stock or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
6.8 Exchange, Loss, Destruction, etc. of Warrant. Upon receipt of
evidence satisfactory to the Company of the loss, theft, mutilation or
destruction of this Warrant, and in the case of any such loss, theft or
destruction upon delivery of a bond of indemnity in such form and amount as
shall be reasonably satisfactory to the Company, or in the event of such
mutilation upon surrender and cancellation of this Warrant, the Company shall
make and deliver a new Warrant of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of
this Section 6.8 in lieu of any Warrant alleged to be lost, destroyed or
stolen, or in lieu of any mutilated Warrant, shall constitute an original
contractual obligation on the part of the Company. This Warrant shall be
promptly canceled by the Company upon the surrender hereof in connection with
any exchange or replacement. The holder of this Warrant shall pay all taxes
and all other expenses and charges payable in connection with the preparation,
execution and delivery of Warrants pursuant to this Section 6.8.
6.9 Headings. The Article and Section and other headings herein are
for convenience only and are not a part of this Warrant and shall not affect
the interpretation thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name.
Dated: July 24, 1997.
COMPUTER INTEGRATION CORP.
By: /s/ Xxxxxx X. XxXxxxxxx
--------------------------
Its: Chief Executive Officer
-------------------------
19
EXHIBIT A
SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder _________________ shares of the Common Stock covered by said Warrant
and herewith makes payment in full therefor pursuant to Section 1.1 of such
Warrant as follows: ___________________________, and requests (a) that
certificates for such shares (and any securities or other property issuable
upon such exercise) be issued in the name of, and delivered to,
____________________________________________________ and (b) if such shares
shall not include all of the shares issuable as provided in said Warrant, that
a new Warrant of like tenor and date for the balance of the shares issuable
thereunder be delivered to the undersigned.
-----------------------------
Dated:______________
20
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES ACT OF ANY STATE (COLLECTIVELY, THE "ACTS").
NEITHER THIS WARRANT NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT HERETO UNDER ALL OF THE APPLICABLE ACTS, OR
AN OPINION OF COUNSEL SATISFACTORY TO COMPUTER INTEGRATION CORP. TO THE EFFECT
THAT SUCH REGISTRATIONS ARE NOT REQUIRED.
COMPUTER INTEGRATION CORP.
COMMON STOCK PURCHASE WARRANT
THIS IS TO CERTIFY THAT, COMPUTER INTEGRATION CORP., a Delaware
corporation (the "Company"), hereby grants to Xxxxxx Pounds a Warrant to
purchase 100,000 shares of the duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock, $.001 par value, of the Company (the
"Common Stock"), at a purchase price per share of $1.13 (the "Exercise Price"),
and to exercise the other appurtenant rights, powers and privileges hereinafter
set forth. The number of shares of the Common Stock purchasable hereunder and
the Exercise Price are subject to adjustment in accordance with Article III
hereof. This Warrant shall expire at 5:00 p.m., Dallas, Texas time, on June
30, 2004 (the "Maturity").
Certain capitalized terms used in this Warrant are defined in Article V
hereof.
ARTICLE I
EXERCISE OF WARRANT
1.1 Method of Exercise. This Warrant may be exercised in whole or in
part at any time or from time to time on or after the date hereof and prior to
Maturity on any date that is a Business Day; provided, however, that the
minimum number of shares of Common Stock for which this Warrant may be
exercised in part is 3,000 shares, which number is subject to adjustment in
accordance with Article III hereof. To exercise this Warrant, in whole or
part, the holder hereof shall deliver to the Company, at the Warrant Office
designated in Section 2.1, (a) a written notice in the form of the Subscription
Notice attached as Exhibit A hereto, stating therein the election of such
holder to exercise this Warrant in the manner provided in the Subscription
Notice, (b) payment in full of the Exercise Price (in the manner described
below) for all Warrant Shares purchased hereunder, and (c) this Warrant. This
Warrant shall be deemed to be exercised on the date of receipt by the Company
of the Subscription Notice, accompanied by payment for the Warrant Shares and
surrender of this Warrant, as aforesaid, and such date is referred to herein
21
as the "Exercise Date". Upon such exercise, the Company shall within three
Business Days issue and deliver to such holder a certificate for the full
number of the Warrant Shares or Other Securities purchased by such holder
hereunder, against the receipt by the Company of the total Exercise Price
payable for all the Warrant Shares so purchased. Payment of the Exercise Price
shall be made by either (i) certified or official bank check, (ii) cancellation
of any debt owed by the Company to the holder hereof, or (iii) surrendering of
Warrant Shares or other shares of Common Stock valued at the current Fair
Market Value. If the holder surrenders a combination of cash, cancellation of
any debt, or Warrant Shares or other shares of Common Stock, the holder shall
specify the respective number of Warrant Shares to be purchased with each form
of consideration, and the foregoing provisions shall be applied to each form of
consideration with the same effect as if this Warrant were being separately
exercised with respect to each form of consideration. The Person in whose name
the certificate(s) for Common Stock is to be issued shall be deemed to have
become a holder of record of such Common Stock on the Exercise Date. If this
Warrant has been exercised in part, the Company shall deliver to the holder a
new Warrant evidencing the rights of such holder to purchase a number of
Warrant Shares with respect to which this Warrant has not been exercised, which
new Warrant shall, in all other respects, be identical with this Warrant, or,
at the option of the Company, appropriate notation may be made on this Warrant
and this Warrant returned to such holder. The issuance of any Common Stock or
Other Securities upon the exercise of the Warrant shall be made without charge
to any holder for any tax, other than income taxes assessed on such holder, in
respect of such issuance.
1.2 Fractional Shares. In lieu of any fractional shares of Common
Stock which would otherwise be issuable upon exercise of this Warrant, the
Company shall issue a certificate for the next higher number of whole shares of
Common Stock for any fraction of a share which is one-half or greater. No
shares shall be issued for less than one-half of a share of Common Stock.
ARTICLE II
WARRANT OFFICE; TRANSFER
2.1 Warrant Office. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's office at 0000 Xxxxxxxxxx Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000, and may subsequently be such other office of the Company or of
any transfer agent of the Common Stock in the continental United States as to
which written notice has previously been given to the holder of this Warrant.
The Company shall maintain, at the Warrant Office, a register for the Warrant,
in which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
permitted assignee of the rights of the registered owner hereof.
2.2 Ownership of Warrant. The Company may deem and treat the person
in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any
notice to the contrary, until presentation of this Warrant for registration of
transfer as provided in this Article II.
22
2.3 Transfer and Exchange. The Warrant and all options and rights
under the Warrant are transferable, as to all or any part of the number of
issuable Warrant Shares purchasable upon its exercise, by the holders of the
Warrants, in person or by duly authorized attorney, on the books of the Company
upon surrender of the Warrant at the principal offices of the Company, together
with the form of transfer authorization attached to the Warrant duly executed.
Absent any such transfer, the Company may deem and treat the registered holders
of the Warrant at any time as the absolute owners of the Warrants for all
purposes and shall not be affected by any notice to the contrary. If any
Warrant is transferred in part, the Company shall, at the time of surrender of
such Warrant, issue to the transferee a Warrant covering the number of issuable
Warrant Shares transferred and to the transferor a Warrant covering the number
of issuable Warrant Shares not transferred.
2.4 Restrictions on Exercise and Transfer of Warrants. The Company
agrees to maintain at the Warrant Office books for the registration and
transfer of this Warrant. The Company, from time to time, shall register the
transfer of this Warrant in such books upon surrender of this Warrant at the
Warrant Office properly endorsed or accompanied by appropriate instruments of
transfer and written instructions for transfer satisfactory to the Company.
2.5 Expenses of Delivery of Warrants. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
issuance and delivery of Warrants and related Warrant Shares hereunder.
2.6 Compliance with Securities Laws. The holder hereof understands
and agrees that the following restrictions and limitations shall be applicable
to all Warrant Shares and resales or other transfers of such Warrant Shares
pursuant to the Securities Act:
(a) The holder hereof agrees that the Warrant Shares shall not
be sold or otherwise transferred unless the Warrant Shares are
registered under the Securities Act and state securities laws or are
exempt therefrom.
(b) Unless then covered by an effective registration statement
registering the resale of such Warrant Shares, upon issuance, a legend
in substantially the following form has been or shall be placed on the
certificate(s) evidencing the Warrant Shares:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any state securities
act. The shares have been acquired for investment and may not be sold,
transferred, pledged or hypothecated unless (i) they shall have been
registered under the Securities Act of 1933, as amended, and any
applicable state securities act, or (ii) Computer Integration Corp.
shall have been furnished with an opinion of counsel, satisfactory to
counsel for Computer Integration Corp., that registration is not
required under any of such acts."
23
ARTICLE III
ANTI-DILUTION PROVISIONS
3.1 Adjustments to Number of Shares Purchasable.
(a) The Warrants shall be exercisable for the number of shares
of Common Stock in such manner that, following the complete and full
exercise of the Warrant of each holder, the amount of Common Stock
issued to all holders shall equal 100,000 shares of Common Stock, as
adjusted, to the extent necessary, to give effect to the following
events:
(i) In case at any time or from time to time, the
holders of any class of Common Stock or Common Stock Equivalent
have received, or (on or after the record date fixed for the
determination of shareholders eligible to receive) have become
entitled to receive, without payment therefor:
(A) consideration (other than cash) by way of
dividend or distribution; or
(B) consideration (including cash) by way of
spin-off, split-up, reclassification (including any
reclassification in connection with a consolidation or
merger in which the Company is the surviving corporation),
recapitalization, combination of shares into a smaller
number of shares, or similar corporate restructuring;
other than additional shares of Common Stock issued as a
stock dividend or in a stock-split (adjustments in respect of
which are provided for in Sections 3.1(a)(ii) and (iii)), then,
and in each such case, the holders, on the exercise of the
Warrants, shall be entitled to receive for each share of Common
Stock issuable under the Warrants as of the record date fixed for
such distribution, the greatest per share amount of consideration
received by any holder of any class of Common Stock or Common
Stock Equivalent or to which such holder is entitled. All such
consideration receivable upon exercise of the Warrant with
respect to such a distribution shall be deemed to be outstanding
and owned by such holder for purposes of determining the amount
of consideration to which such holder is entitled upon exercise
of the Warrant with respect to any subsequent distribution.
(ii) If at any time there occurs any stock split, stock
dividend, reverse stock split, or other subdivision of the Common
Stock, then the number of shares of Common Stock to be received
by the holder of the Warrant and the Exercise Price, subject to
the limitations set forth in this Agreement, shall be
proportionately adjusted.
24
(iii) In case of any reclassification or change of
outstanding shares of any class of Common Stock or Common Stock
Equivalent (other than a change in par value, or from par value
to no par value, or from no par value to par value), or in the
case of any consolidation of the Company with, or merger or share
exchange of the Company with or into, another Person, or in case
of any sale of all or a majority of the property, assets,
business, income or revenue generating capacity, or goodwill of
the Company, the Company, or such successor or other Person, as
the case may be, shall provide that the Holder of the Warrant
shall thereafter be entitled to receive the highest per share
kind and amount of consideration received or receivable
(including cash) upon such reclassification, change,
consolidation, merger, share exchange, or sale by any holder of
any class of Common Stock or Common Stock Equivalent that the
Warrant entitles the holder to receive immediately prior to such
reclassification, change, consolidation, merger, share exchange,
or sale (as adjusted pursuant to Section 3.1(a)(i) and otherwise
in this Agreement). Any such successor Person, which thereafter
shall be deemed to be the Company for purposes of the Warrants,
shall provide for adjustments that are as nearly equivalent as
may be possible to the adjustments provided for by this Section
3.1.
(iv) If at any time the Company issues or sells any
shares of any Common Stock or any Common Stock Equivalent at a
per unit or share consideration (which consideration shall
include the price paid upon issuance plus the minimum amount of
any exercise, conversion, or similar payment made upon exercise
or conversion of any Common Stock Equivalent) less than the
Exercise Price or the then current Fair Market Value per share of
Common Stock immediately prior to the time such Common Stock or
Common Stock Equivalent is issued or sold, excluding (x) up to
1,800,000 shares of Common Stock issuable to employees performing
services for the Company pursuant to stock option, stock grant or
similar stock incentive plans or arrangements approved by the
Board of Directors, and (y) up to 1,261,434 shares of Common
Stock issuable upon conversion of 19,035.85 shares of Series D
Preferred Stock and 125 shares of Series E Preferred Stock issued
and outstanding on the date hereof (the "Additional Securities"),
then:
(A) the Exercise Price shall be reduced to the
lower of the prices calculated by:
(I) dividing (x) an amount equal to the
sum of (1) the number of shares of Common Stock
outstanding on a fully diluted basis immediately
prior to such issuance or sale multiplied by the
then existing Exercise Price plus (2) the aggregate
consideration, if any, received by the Company upon
such issuance or sale, by (y) the total number of
shares of Common Stock outstanding immediately
after such issuance or sale on a fully diluted
basis; and
25
(II) multiplying the then existing
Exercise Price by a fraction, the numerator of
which is (x) the sum of (1) the number of shares of
Common Stock outstanding on a fully diluted basis
immediately prior to such issuance or sale,
multiplied by the Fair Market Value per share of
Common Stock immediately prior to such issuance or
sale, plus (2) the aggregate consideration received
by the Company upon such issuance or sale, (y)
divided by the total number of shares of Common
Stock outstanding on a fully diluted basis
immediately after such issuance or sale, and the
denominator of which is the Fair Market Value per
share of Common Stock immediately prior to such
issuance or sale (for purposes of this subsection
(II), the date as of which the Fair Market Value
per share of Common Stock shall be computed shall
be the earlier of the date upon which the Company
(aa) enters into a firm contract for the issuance
of such shares, or (bb) issues such shares); and
(B) the number of shares of Common Stock for
which any of the Warrants may be exercised at the Exercise
Price resulting from the adjustment described in
subsection (A) above shall be equal to the product of the
number of shares of Common Stock purchasable under such
Warrants immediately prior to such adjustment, multiplied
by a fraction, the numerator of which is the Exercise
Price in effect immediately prior to such adjustment and
the denominator of which is the Exercise Price resulting
from such adjustment.
(v) In case any event occurs as to which the preceding
Sections 3.1(a)(i) through (iv) are not strictly applicable, but
as to which the failure to make any adjustment would not fairly
protect the purchase rights represented by the Warrants in
accordance with the essential intent and principles of this
Agreement, then, in each such case, the holder may appoint an
independent investment bank or firm of independent public
accountants, which shall give its opinion as to the adjustment,
if any, on a basis consistent with the essential intent and
principles established in this Agreement, necessary to preserve
the purchase rights represented by the Warrants. Upon receipt of
such opinion, the Company shall promptly deliver a copy of such
opinion to the holder and shall make the adjustments described in
such opinion. The fees and expenses of such investment bank or
independent public accountants shall be borne by the Company.
(b) The Company shall not by any action including, without
limitation, amending, or permitting the amendment of, the charter
documents, bylaws, or similar instruments of the Company or through any
reorganization, reclassification, transfer of assets, consolidation,
merger, share exchange, dissolution, issue or sale of securities, or any
other similar voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Agreement or the Warrants, but
shall at all times in good faith assist in the carrying out of all such
terms and in the taking of all such actions as may be
26
necessary or appropriate to protect the rights of the holders against
impairment or dilution. Without limiting the generality of the
foregoing, the Company shall (i) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock and
Other Securities, free and clear of all liens, encumbrances, equities,
and claims and (ii) use its best efforts to obtain all such
authorizations, exemptions, or consents from any public regulatory body
having jurisdiction as may be necessary to enable the Company to perform
its obligations under the Warrants. Without limiting the generality of
the foregoing, the Company represents and warrants that the board of
directors of the Company has determined the Exercise Price to be
adequate and the issuance of the Warrants to be in the best interests of
the Company.
(c) Any calculation under this Section 3.1 shall be made to
the nearest one ten-thousandth of a share and the number of issuable
Warrant Shares resulting from such calculation shall be rounded up to
the next whole share of Common Stock or Other Securities comprising
issuable Warrant Shares.
(d) The Company shall not, and shall not permit any Subsidiary
to, issue any Capital Stock other than, Common Stock and Common Stock
Equivalents.
3.2 Costs. The Company shall pay all documentary, stamp, transfer or
other transactional taxes attributable to the issuance or delivery of Warrant
Shares upon exercise of this Warrant.
3.3 Reservations of Shares. The Company shall reserve at all times
so long as this Warrant remains outstanding, free from preemptive rights, out
of its treasury Common Stock or its authorized but unissued shares of Common
Stock, or both, solely for the purposes of effecting the exercise of this
Warrant, sufficient shares of Common Stock to provide for the exercise hereof.
3.4 Valid Issuance. All shares of Common Stock which may be issued
upon exercise of this Warrant shall upon issuance by the Company be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof attributable to any act or
omission by the Company, and the Company shall take no action which shall cause
a contrary result (including without limitation, any action which would cause
the Exercise Price to be less than the par value, if any, of the Common Stock).
ARTICLE IV
REGISTRATION RIGHTS
4.1 Definitions.
As used in this Article IV, the following capitalized terms shall have
the following meanings:
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"Holder" shall mean Buyer and any of its permitted transferees who own
Registrable Securities.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments to the
Registration Statement of which such Prospectus is a part, and all material
incorporated by reference in such Prospectus.
"Registrable Securities" shall mean all Warrant Shares, but only so long
as they remain Restricted Securities.
"Registration Expenses" shall have the meaning assigned to such term in
Section 4.7.
"Registration Statement" means any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits, and
all material incorporated by reference in such Registration Statement.
"Restricted Securities" means the Registrable Securities, other than
those Registrable Securities (i) that have been effectively registered under
the Securities Act and disposed of in accordance with the Registration
Statement covering them or (ii) that are eligible in total for resale under
Rule 144 of the Securities Act (or any successor rule or regulation).
4.2 Securities Subject to Article IV. The securities entitled to the
benefits of this Article IV are the Registrable Securities.
4.3 Registration. Promptly following the Closing, the Company shall
(i) prepare and file a Registration Statement on the appropriate form then
available to the Company, and use its best efforts to effect the registration
for resale by the Holders thereof of all the Registrable Securities, and (ii)
prepare and file with the Nasdaq Stock Market an notification form for the
listing of additional securities for the purpose of listing the Shares on the
Nasdaq Stock Market. The Company shall use its best efforts to keep such
Registration Statement effective under Rule 415 under the Securities Act until
no Holders hold Registrable Securities. Each Holder agrees that if the Company
determines that there are material developments that require the filing of a
post-effective amendment to the Registration Statement, then each Holder
registering Registrable Securities thereunder agrees to refrain from selling
any Registrable Securities until the post-effective amendment is declared
effective. The Company agrees to file and attempt to have declared effective
such post-effective amendment as soon as possible.
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4.4 Piggyback Registration Rights.
(a) If the Company at any time or from time to time subsequent
to the date of this Agreement proposes to register any securities under
the Securities Act either for its own account or the account of any
selling stockholders (other than pursuant to Section 4.3 and other than
pursuant to a registration statement on Forms S-4 or S-8 or any
successor or similar forms), it shall give written notice to each of the
Holders of Registrable Securities of its intention at least 20 days in
advance of the filing of any registration statement with respect
thereto. Upon the written request of any of the Holders of Registrable
Securities given within 15 days after receipt of such notice, the
Company, subject to Section 4.4(b), shall cause the Registrable
Securities requested by the Holders to be registered, to be so
registered.
(b) Underwritten Offerings.
(i) In the case of an underwritten offering by the
Company of securities, the Company shall, with respect to
Registrable Securities that a Holder of Registrable Securities
then desires to sell, enter into an underwriting agreement with
the same underwriters engaged by the Company with respect to
securities being offered by the Company and cause such
underwriters to include in any such underwriting all of the
Securities that a Holder of Registrable Securities then desires
to sell; provided, however, that such underwriting agreement is
in substantially the same form as the underwriting agreement that
the Company enters into in connection with the primary offering
it is making.
(ii) If the managing underwriter with respect to an
offering pursuant to this Section 4.4 requests that the number of
shares of Registrable Securities of the Holder that are entitled
to be registered pursuant to this Section 4.4 be reduced because
of marketing factors, then the shares of Registrable Securities
of the Holders that they wish to register pursuant to this
Section 4.4 shall be reduced by such amount as the managing
underwriter may determine, which reduced number of shares of
Registrable Securities shall be included on a pro rata basis
among the Holders of Registrable Securities who are participating
in such offering.
(iii) Selection of Underwriters and Counsel. If any
registration hereunder is to be an underwritten offering with
respect to any issue of Registrable Securities, the Company shall
have the right to select the investment banker or bankers and
manager or managers to administer the related offering; provided
that, such investment banker(s) or manager(s) shall each be
either (i) nationally recognized investment banking firms, (ii)
regional investment banking firms nationally recognized for their
expertise and experience in financings of companies in the
computer distribution business or (iii) an investment banking
firm approved by a majority in interest of the Holders.
29
4.5 Information. Upon making a request pursuant to Section 4.3 or
4.4, the Holder(s) of Registrable Securities shall specify the number of shares
of Registrable Securities to be registered and shall also specify the intended
method of disposition thereof. The Company may require the Holders to furnish
to the Company such information regarding themselves and the distribution of
Registrable Securities as the Company may from time to time reasonably request
in order to comply with the Securities Act. The Holders agree to notify the
Company as promptly as practicable of any inaccuracy or change in information
they have previously furnished to the Company.
4.6 Registration Procedures. If and whenever the Company is required
by the provisions of Section 4.3 or 4.4 to effect a registration under the
Securities Act, the Company shall, at its expense, as expeditiously as
practicable:
(a) In accordance with the Securities Act and the rules and
regulations of the SEC, prepare and file with the SEC as expeditiously
as possible (but in no event later than 30 days after the date of this
Warrant, in the case of registration under Section 4.3 or after request
from Holder(s) pursuant to the terms of Section 4.4) a Registration
Statement in the form of an appropriate registration statement with
respect to the Registrable Securities and use its best efforts to cause
such Registration Statement to become and remain continuously effective
until the all of the Registrable Securities covered by such Registration
Statement have been sold in accordance with the intended methods of
disposition of the seller or sellers set forth in such Registration
Statement. The Company shall prepare and file with the SEC such
amendments to such Registration Statement and supplements to the
Prospectus contained therein as may be necessary to keep such
Registration Statement effective and such Registration Statement and
Prospectus accurate and complete during such period;
(b) Furnish to the Holders participating in such registration
such reasonable number of copies of the Registration Statement and
Prospectus and such other documents as such Holders may reasonably
request in order to facilitate the public offering of the Registrable
Securities;
(c) Use its reasonable efforts to register or qualify the
Registrable Securities covered by such Registration Statement under such
state securities or blue sky laws of such jurisdictions as such Holders
may reasonably request, provided that the Company shall not be obligated
to file any general consent to service of process or to qualify as a
foreign corporation in any jurisdiction in which it is not so qualified
or to subject itself to taxation in connection with any such
registration or qualification of such Registrable Securities;
(d) Notify the Holders participating in such registration,
promptly after it receives notice thereof, of the date and time when
such Registration Statement and each post-effective amendment thereto
has become effective or a supplement to any Prospectus forming a part of
such Registration Statement has been filed;
30
(e) Notify the Holders participating in such registration
promptly of any request by the SEC for the amending or supplementing of
such Registration Statement or Prospectus or for additional information;
(f) Prepare and promptly file with the SEC and promptly notify
the Holders participating in such registration of the filing of such
amendments or supplements to such Registration Statement or Prospectus
as may be necessary to correct any statements or omissions if, at the
time when a Prospectus relating to such Securities is required to be
delivered under the Securities Act, any event has occurred as the result
of which any such Prospectus or any other Prospectus then in effect may
include an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(g) Advise the Holders participating in such registration,
promptly after it receives notice or obtain knowledge thereof, of the
issuance of any stop order by the SEC suspending the effectiveness of
such Registration Statement or the initiation or threatening of any
proceeding for that purpose and promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued; and
(h) Otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to the Company's security holders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act, no
later than 45 days after the end of any 12-month period (or 90 days, if
such a period is a fiscal year) beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of
the applicable Registration Statement.
4.7 Expenses of Registration. All expenses of the Company incident to
the Company's performance of or compliance with the provisions of this Article
IV ("Registration Expenses") shall be borne by the Company including without
limitation:
(a) All registration and filing fees;
(b) Fees and expenses of compliance with all securities or
blue sky laws (including the reasonable fees and disbursements of
counsel for the Company in connection with blue sky qualifications of
the Registrable Securities; provided, however, that the Company shall
not be required to consent to general service of process in any such
state);
(c) Printing, messenger, telephone and delivery expenses; and
(d) Fees and disbursements of counsel for the Company and its
independent auditors.
Nothing in this Section 4.7 shall be deemed to require the Company to
pay any underwriting discounts, selling commissions or similar fees applicable
to Registrable Securities
31
if the applicable registration results in an underwritten public offering of
all or any portion of the Registrable Securities.
In addition, the Company shall pay the reasonable fees and disbursements
of one counsel selected by the Holders registering Registrable Securities in
any such Registration Statement incurred in connection with the offering
contemplated by such Registration Statement.
4.8 Indemnification and Contribution.
(a) Indemnification by the Company. Whenever, pursuant to
Section 4.3 or 4.4, a Registration Statement relating to the Registrable
Securities is filed under the Securities Act, the Company shall (except
as to matters covered by Section 4.8(b) hereof) indemnify and hold
harmless each Holder participating in the registration, each of their
officers, directors and employees, and each person, if any, who controls
any such Person (collectively, the "Holder Indemnitees" and,
individually, a "Holder Indemnitee"), against any losses, claims,
damages or liabilities, joint or several, to which such Holder
Indemnitees may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such
Registration Statement, or Prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse each Holder Indemnitee for all legal or
other expenses reasonably incurred by it in connection with
investigating or defending against such loss, claim, damage, liability
or action.
(b) Indemnification by Holders. Each Holder participating in
such registration shall indemnify and hold harmless the Company, each of
its directors, each of its officers and each other person, if any, who
controls the Company, within the meaning of the Securities Act
(collectively, the "Company Indemnitees" and, individually, a "Company
Indemnitee") and each other Holder Indemnitee against all losses,
claims, damages or liabilities, joint or several, to which any of the
Company Indemnitees or the other Holder Indemnitees may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement, or Prospectus
contained therein, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, but only if, and to the extent that,
such statement or omission was in reliance upon and in conformity with
information furnished to the Company by such Holder for use in the
preparation thereof.
(c) Indemnification Procedures. Promptly after receipt by a
Holder Indemnitee or a Company Indemnitee (collectively, "Indemnitees"
and, individually, an "Indemnitee") under Section 4.8(a) or 4.8(b) of
notice of the commencement of any action, such Indemnitee shall, if a
claim in respect thereof is to be made against the
32
indemnifying party under such clause, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any
liability which it may have to any Indemnitee otherwise than under such
clauses except to the extent that the indemnifying party has been
prejudiced by the failure to receive such notice. In case any such
action shall be brought against any Indemnitee, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnitee, and after written notice from the indemnifying party to such
Indemnitee of its election to assume the defense thereof, the
indemnifying party shall not be liable to such Indemnitee under such
clause for any legal or other expenses subsequently incurred by such
Indemnitee in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the Indemnitee shall
have the right to employ one counsel to represent such Indemnitee if, in
the reasonable judgment of such Indemnitee (based on the written opinion
of counsel), it is advisable for such party to be represented by
separate counsel because a conflict of interest exists between such
indemnified and indemnifying party in respect of such claim, and in that
event the reasonable fees and expenses of such separate counsel shall be
paid by the indemnifying party. Notwithstanding the foregoing, if the
Company is an Indemnitee, the Company shall designate the one counsel,
and in all other circumstances, the one counsel shall be designated by a
majority in interest based upon the Registrable Securities of the
Indemnities. For purposes of this Section 4.8 the terms "control," and
"controlling person" have the meanings which they have under the
Securities Act.
(d) Contribution. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless an Indemnitee, then the
indemnifying party shall contribute to the amount paid or payable by the
Indemnitee as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and
the Indemnitee on the other from the registration or (ii) if the
allocation provided by clause (i) above is not permitted by applicable
law, or provides a lesser sum to the Indemnitee than the amount
hereinafter calculated, in such proportion as is appropriate to reflect
not only the relative benefits received by the indemnifying party on the
one hand and the Indemnitee on the other but also the relative fault of
the indemnifying party and the Indemnitee as well as any other relevant
equitable considerations. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
4.9 Transfer of Registration Rights. The rights under this Article
IV may be assigned by a Holder to a transferee or assignee of any of such
Holder's Restricted Securities.
4.10 Rule 144 Reporting. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Restricted Securities to the public without
registration, the Company agrees to use its best efforts to:
33
(a) Make and keep public information available, as these terms
are understood and defined in Rule 144 under the Securities Act at all
times after the Closing;
(b) File with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the
Exchange Act; and
(c) Furnish to Buyer forthwith upon Buyer's request (i) a
written statement by the Company as to its compliance with the public
information requirements of Rule 144 under the Act (ii) a copy of the
most recent annual or quarterly report of the Company, and (iii) such
other reports and documents as may be reasonably requested in availing
Buyer of any rule or regulation of the SEC permitting the sale of any
such securities without registration.
ARTICLE V
TERMS DEFINED
As used in this Warrant, unless the context otherwise requires, the
following terms have the respective meanings set forth below or in the Section
indicated:
Average Market Value -- The average of the Closing Price for the
security in question for the 20 trading days immediately preceding the date of
determination.
Board of Directors -- the Board of Directors of the Company.
Business Day -- any day that NASDAQ is open for trading.
Closing Price --
(a) If the primary market for the security in question is a
national securities exchange registered under the Exchange Act, the
National Association of Securities Dealers Automated Quotation System --
National Market System, or other market or quotation system in which
last sale transactions are reported on a contemporaneous basis, the last
reported sales price, regular way, of such security for such day, or, if
there has not been a sale on such trading day, the highest closing or
last bid quotation therefor on such trading day (excluding, in any case,
any price that is not the result of bona fide arm's length trading); or
(b) If the primary market for such security is not an exchange
or quotation system in which last sale transactions are
contemporaneously reported, the highest closing or last bona fide bid or
asked quotation by disinterested Persons in the over-the-counter market
on such trading day as reported by the National Association of
Securities Dealers through its Automated Quotation System or its
successor or such other generally accepted source of publicly reported
bid quotations as the holders of the Warrant or Warrant Shares
designate.
34
Common Stock -- shall mean and include the Company's Common Stock, par
value $.001 per share, authorized on the date of the original issue of this
Warrant and shall also include (i) in case of any reorganization,
reclassification, consolidation, merger, share exchange or sale, transfer or
other disposition of assets of the character referred to in Section 3.1(a)(iii)
hereof, the stock, securities or assets provided for in such Section
3.1(a)(iii), and (ii) any other shares of common stock of the Company into
which such shares of Common Stock may be converted.
Common Stock Equivalent -- any option, warrant, right, or similar
security exercisable into, exchangeable for, or convertible to Common Stock.
Exchange Act -- the Securities Exchange Act of 1934 and the rules and
regulations thereunder, all as the same shall be in effect at the time.
Fair Market Value -- (a) as to securities regularly traded in the
organized securities markets, the Average Market Value; and (b) as to all
securities not regularly traded in the securities markets and other property,
the fair market value of such securities or property as determined in good
faith by the Board of Directors of the Company at the time it authorizes the
transaction (a "Valuation Event") requiring a determination of Fair Market
Value under this Agreement.
Maturity -- 5:00 p.m., Dallas, Texas time, on June 30, 2004.
NASDAQ -- National Association of Securities Dealers Automated
Quotations System.
Other Securities -- any stock, other securities, property, or other
property or rights (other than Common Stock) that the holders become entitled
to receive upon exercise of the Warrants.
Outstanding -- when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, without duplication, shares
deemed issued pursuant to Article III) at such date, except shares then held in
the treasury of the Company.
Person -- any individual, corporation, partnership, trust, limited
liability company, organization, association or other entity or individual.
Securities Act -- the Securities Act of 1933 and the rules and
regulations thereunder, all as the same shall be in effect at the time.
Warrant -- this Warrant and any successor or replacement Warrant
delivered in accordance with Section 2.4 or 6.8.
Warrant Office -- as defined in Section 2.1.
35
Warrant Shares -- shall mean the shares of Common Stock or Other
Securities purchased or purchasable by the registered holder of this Warrant or
the permitted assignees of such holder upon exercise thereof pursuant to
Article I hereof.
ARTICLE VI
MISCELLANEOUS
6.1 Entire Agreement. This Warrant contains the entire agreement
between the holder hereof and the Company with respect to the shares
purchasable upon exercise hereof and the related transactions, and supersedes
all prior arrangements or understanding with respect thereto.
6.2 Governing Law. This Warrant shall be governed by and construed
in accordance with the laws of the State of Delaware.
6.3 Waiver and Amendment. Any term or provision of this Warrant may
be waived at any time by the party which is entitled to the benefits thereof
and any term or provision of this Warrant may be amended or supplemented at any
time by agreement of the holder hereof and the Company, except that any waiver
of any term or condition, or any amendment or supplementation, of this Warrant
must be in writing. A waiver of any breach or failure to enforce any of the
terms or conditions of this Warrant shall not in any way effect, limit or waive
a party's rights hereunder at any time to enforce strict compliance thereafter
with every term or condition of this Warrant.
6.4 Illegality. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provision exists, be in any way impaired.
6.5 Copy of Warrant. A copy of this Warrant shall be filed among the
records of the Company.
6.6 Notice. Any notice or other document required or permitted to be
given or delivered to the holder hereof shall be delivered at, or sent by
certified or registered mail to such holder at, the last address shown on the
books of the Company maintained at the Warrant Office for the registration of
this Warrant or at any more recent address of which the holder hereof shall
have notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to the Company, other than such notice or
documents required to be delivered to the Warrant Office, shall be delivered
at, or sent by certified or registered mail to, the office of the Company at
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, or such other
address within the continental United States of America as shall have been
furnished by the Company to the holder of this Warrant.
6.7 Limitation of Liability; Not Shareholders. No provision of this
Warrant shall be construed as conferring upon the holder hereof the right to
vote, consent, receive dividends or
36
receive notices other than as herein expressly provided in respect of meetings
of shareholders for the election of directors of the Company or any other
matter whatsoever as a shareholder of the Company. No provision hereof, in the
absence of affirmative action by the holder hereof to purchase shares of Common
Stock, and no mere enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of such holder for the purchase price
of any shares of Common Stock or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
6.8 Exchange, Loss, Destruction, etc. of Warrant. Upon receipt of
evidence satisfactory to the Company of the loss, theft, mutilation or
destruction of this Warrant, and in the case of any such loss, theft or
destruction upon delivery of a bond of indemnity in such form and amount as
shall be reasonably satisfactory to the Company, or in the event of such
mutilation upon surrender and cancellation of this Warrant, the Company shall
make and deliver a new Warrant of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of
this Section 6.8 in lieu of any Warrant alleged to be lost, destroyed or
stolen, or in lieu of any mutilated Warrant, shall constitute an original
contractual obligation on the part of the Company. This Warrant shall be
promptly canceled by the Company upon the surrender hereof in connection with
any exchange or replacement. The holder of this Warrant shall pay all taxes
and all other expenses and charges payable in connection with the preparation,
execution and delivery of Warrants pursuant to this Section 6.8.
6.9 Headings. The Article and Section and other headings herein are
for convenience only and are not a part of this Warrant and shall not affect
the interpretation thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
37
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name.
Dated: July 24, 1997.
COMPUTER INTEGRATION CORP.
By: /s/ Xxxxxx X. XxXxxxxxx
-------------------------
Its: Chief Executive Officer
-------------------------
38
EXHIBIT A
SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder _________________ shares of the Common Stock covered by said Warrant
and herewith makes payment in full therefor pursuant to Section 1.1 of such
Warrant as follows: ___________________________, and requests (a) that
certificates for such shares (and any securities or other property issuable
upon such exercise) be issued in the name of, and delivered to,
____________________________________________________ and (b) if such shares
shall not include all of the shares issuable as provided in said Warrant, that
a new Warrant of like tenor and date for the balance of the shares issuable
thereunder be delivered to the undersigned.
---------------------------
Dated:______________
