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EXHIBIT 10.3
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT.
HYPERCOM CORPORATION
COMMON STOCK PURCHASE WARRANT
No. D-1 July 31, 2001
Warrant to Purchase 312,477
Shares of Common Stock
Hypercom Corporation, a Delaware corporation (the "Company"),
for value received, hereby certifies that XXXX CAPITAL PARTNERS LLC, or its
registered assigns (the "Holder"), is entitled to purchase from the Company
312,477 duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock (the "Warrant Shares"), at a purchase price per share equal to
$5.33 (the "Purchase Price"), at any time or from time to time on or after July
31, 2001 but prior to 5:00 P.M., Central Daylight Time, on July 30, 2006 (the
"Expiration Date"), all subject to the terms, conditions and adjustments set
forth below in this Warrant.
This Warrant initially evidences the Holder's right to
purchase up to 312,477 shares of the Company's Common Stock subject to
adjustment as provided herein. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned such terms in the Loan and
Security Agreement.
1. DEFINITIONS. As used herein, unless the context
otherwise requires, the following terms shall have the meanings indicated:
"Additional Shares of Common Stock" shall mean all shares
(including treasury shares) of Common Stock issued or sold (or, pursuant to
Section 3.3 or 3.4, deemed to be issued) by the Company after the date hereof,
whether or not subsequently reacquired or retired by the Company, other than
(a) (i) This Warrant and shares issued upon the exercise
of this Warrant and (ii) such number of additional shares as may become
issuable upon the exercise of this Warrant by reason of adjustments
required pursuant to the anti-dilution provisions applicable to this
Warrant as in effect on the date hereof,
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(b) (i) Options and shares issued upon the exercise of
Options or the conversion of Convertible Securities issued by the
Company pursuant to the Loan and Security Agreement or otherwise before
the date hereof, and (ii) such additional number of shares as may
become issuable by reason of adjustments required pursuant to
anti-dilution provisions applicable to such Options or Convertible
Securities, as in effect on the date hereof,
(c) (i) Options and shares issued upon the exercise of
Options granted by the Company to any of its directors, officers,
employees, consultants or agents or their affiliates after the date
hereof pursuant to any compensation or benefit plan approved by the
Company's board of directors or, if not pursuant to any such plan, then
pursuant to any other resolution of the board of directors of the
Company; provided in each such case that the exercise or purchase price
for any such share shall not be less than 85% of the fair market value
(determined in good faith by the Company's Board of Directors) of the
Common Stock on the date of grant (whether or not the grant is
conditioned on other events, such as shareholder approval), and (ii)
such additional number of shares as may become issuable upon the
exercise of any such Options by reason of adjustments required pursuant
to anti-dilution provisions applicable to such Options,
(d) Options or Common Stock issued to third-party
strategic or joint venture partners of, or licensors to, the Company,
as approved by the board of directors of the Company, not to exceed
shares representing in the aggregate 10% of the Company's Common Stock
on a fully diluted basis,
(e) Options or Common Stock issued to third parties in
connection with the purchase of assets or businesses, whether by
merger, consolidation, purchase of assets or stock or otherwise, as
approved by the board of directors of the Company,
(f) Common Stock issued to Xxxxxxxx Investments LLC
pursuant to that certain Stock Purchase Agreement, dated July 31, 2001,
between the Company and Xxxxxxxx Investments LLC, and
(g) Common Stock issued to Norton Family Living Trust UTD
2-4-91, Norton Family Living Trust UTD 2-15-96, Xxxxxxxxx Family Living
Trust UTD 7/1/97, JR Norton Ventures Limited Partnership, Xxxxxxx X.
Xxxxxx, Xxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxxx pursuant to that
certain Stock Purchase Agreement, dated July 30, 2001 between the
Company and such parties.
"Business Day" shall mean any day other than a Saturday or a
Sunday or a day on which commercial banking institutions in the New York, New
York or in Chicago, Illinois are authorized by law to be closed. Any reference
to "days" (unless Business Days are specified) shall mean calendar days.
"Commission" shall mean the Securities and Exchange Commission
or any successor agency having jurisdiction to enforce the Securities Act.
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"Common Stock" shall mean the company's common stock, par
value per share, $0.001, such term to include any stock into which such Common
Stock shall have been changed or any stock resulting from any reclassification
of such Common Stock, and all other stock of any class or classes (however
designated) of the Company the holders of which have the right, without
limitation as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference.
"Company" shall have the meaning assigned to it in the
introduction to this Warrant, such term to include any corporation or other
entity which shall succeed to or assume the obligations of the Company hereunder
in compliance with Section 4.
"Company Indemnified Parties" shall have the meaning assigned
to it in Section 16.
"Convertible Securities" shall mean any evidences of
indebtedness, shares of stock (other than Common Stock) or other securities
directly or indirectly convertible into or exchangeable for Additional Shares of
Common Stock.
"Current Market Price" shall mean, on any date specified
herein, the average of the daily Market Price during the 10 consecutive trading
days before such date (except with respect to the exercise of any Option granted
by the Company pursuant to any Company Option plan or agreement, in which case
"Current Market Price" or any similar term shall be as defined in such plan or
agreement), except that, if on any such date the shares of Common Stock are not
listed or admitted for trading on any national securities exchange or quoted in
the over-the-counter market, the Current Market Price shall be the Market Price
on such date.
"Deferral Period" shall have the meaning assigned to it in
Section 16.
"Distribution Date" shall have the meaning assigned to it in
Section 3.10.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"Expiration Date" shall have the meaning assigned to it in the
introduction to this Warrant.
"Fair Value" shall mean, on any date specified herein (i) in
the case of cash, the dollar amount thereof, (ii) in the case of a security, the
Current Market Price, and (iii) in all other cases, the fair value thereof (as
of a date which is within 20 days of the date as of which the determination is
to be made) determined jointly by the Company and the Holder; provided, however,
that if such parties are unable to reach agreement within a reasonable period of
time, the Fair Value shall be determined in good faith, by an independent
investment banking firm selected jointly by the Company and the Holder or, if
that selection cannot be made within ten days, by an independent investment
banking firm selected by the American Arbitration Association in accordance with
its rules, and provided further, that the Company shall pay all of
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the fees and expenses of any third parties incurred in connection with
determining the Fair Value.
"Holder" shall have the meaning assigned to it in the
introduction to this Warrant.
"Holder Indemnified Parties" shall have the meaning assigned
to it in Section 16.
"Loan and Security Agreement" means that certain Loan and
Security Agreement, dated as of the date hereof, as amended or otherwise
modified from time to time, between the Company and certain of its subsidiaries,
and Foothill Capital Corporation, as agent, together with the other lender(s)
signatory thereto.
"Market Price" shall mean, on any date specified herein, the
amount per share of the Common Stock, equal to (i) the last reported sale price
of such Common Stock, regular way, on such date or, in case no such sale takes
place on such date, the average of the closing bid and asked prices thereof
regular way on such date, in either case as officially reported on the principal
national securities exchange on which such Common Stock is then listed or
admitted for trading, (ii) if such Common Stock is not then listed or admitted
for trading on any national securities exchange but is designated as a national
market system security by the NASD, the last reported trading price of the
Common Stock on such date, (iii) if there shall have been no trading on such
date or if the Common Stock is not so designated, the average of the closing bid
and asked prices of the Common Stock on such date as shown by the NASD automated
quotation system, or (iv) if such Common Stock is not then listed or admitted
for trading on any national exchange or quoted in the over-the-counter market,
the fair value thereof (as of a date which is within 20 days of the date as of
which the determination is to be made) determined jointly by the Company and the
Holder; provided, however, that if such parties are unable to reach agreement
within a reasonable period of time, the Market Price shall be determined in good
faith by an independent investment banking firm selected jointly by the Company
and the Holder or, if that selection cannot be made within ten days, by an
independent investment banking firm selected by the American Arbitration
Association in accordance with its rules, and provided further, that the Company
shall pay all of the fees and expenses of any third parties incurred in
connection with determining the Market Price.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Option" means any right, warrant or option to subscribe for
or purchase shares of Common Stock or Convertible Securities.
"Other Securities" shall mean any stock (other than Common
Stock) and other securities of the Company or any other Person (corporate or
otherwise) which the Holder at any time shall be entitled to receive, or shall
have received, upon the exercise of this Warrant, in lieu of or in addition to
Common Stock, or which at any time shall be issuable or shall have been issued
in exchange for or in replacement of Common Stock or Other Securities pursuant
to Section 4 or otherwise.
"Person" shall mean any individual, firm, partnership,
corporation, trust, joint venture, association, joint stock company, limited
liability company, unincorporated organization
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or any other entity or organization, including a government or agency or
political subdivision thereof, and shall include any successor (by merger or
otherwise) of such entity.
"Purchase Price" shall have the meaning assigned to it in the
introduction of this Warrant, subject to adjustment and readjustment from time
to time as provided in Section 3, and, as so adjusted or readjusted, shall
remain in effect until a further adjustment or readjustment thereof is required
by Section 3.
"Registration Statement " shall have the meaning assigned to
it in Section 16.
"Restricted Securities" shall mean (i) this Warrant, (ii) any
shares of Common Stock (or Other Securities) issued or issuable upon the
exercise of this Warrant which are (or, upon issuance, will be) evidenced by a
certificate or certificates bearing the applicable legend set forth in Section
10.1, and (iii) any shares of Common Stock (or Other Securities) issued
subsequent to the full or any partial exercise of this Warrant as a dividend or
other distribution with respect to, or resulting from a subdivision of the
outstanding shares of Common Stock (or other Securities) into a greater number
of shares by reclassification, stock splits or otherwise, or in exchange for or
in replacement of the Common Stock (or Other Securities) issued upon such
exercise, which are evidenced by a certificate or certificates bearing the
applicable legend set forth in such Section.
"Rights" shall have the meaning assigned to it in Section
3.10.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"Transfer Agent" shall have the meaning assigned to it in
Section 14
"Violation" shall have the meaning assigned to it in Section
16.
"Warrant" shall have the meaning assigned to it in the
introduction to this Warrant.
"Warrant Register" shall have the meaning assigned to it in
Section 15.1
"Warrant Shares" shall have the meaning assigned it in the
introduction to this Warrant.
2. EXERCISE OF WARRANT.
2.1. Manner of Exercise; Payment of the Purchase
Price. (a) This Warrant may be exercised by the Holder hereof, in whole or in
part, at any time or from time to time on or after July 31, 2001 but prior to
the Expiration Date, by surrendering to the Company at its principal office this
Warrant, with the form of Election to Purchase Shares attached hereto as Exhibit
A (or a reasonable facsimile thereof) duly executed by the Holder and
accompanied by payment of the Purchase Price for the number of shares of Common
Stock specified in such form. Any exercise by the Holder of this Warrant must be
for the purchase of a minimum of 50,000 Warrant Shares (before giving effect to
any share adjustment provided hereunder), except
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in the event that less than 50,000 Warrant Shares are issuable at such time of
exercise, in which event such exercise must be for the purchase of all of such
Warrant Shares issuable.
(b) Payment of the Purchase Price may be made as
follows (or by any combination of the following): (i) in United States currency
by cash or delivery of a certified check or bank draft payable to the order of
the Company or by wire transfer to the Company, (ii) by cancellation of such
number of the shares of Common Stock otherwise issuable to the Holder upon such
exercise as shall be specified in such Election to Purchase Shares, such that
the excess of the aggregate Current Market Price of such specified number of
shares on the date of exercise over the portion of the Purchase Price
attributable to such shares shall equal the Purchase Price attributable to the
shares of Common Stock to be issued upon such exercise, in which case such
amount shall be deemed to have been paid to the Company and the number of shares
issuable upon such exercise shall be reduced by such specified number, or (iii)
by surrender to the Company for cancellation certificates representing shares of
Common Stock of the Company owned by the Holder (properly endorsed for transfer
in blank) having a Current Market Price on the date of Warrant exercise equal to
the Purchase Price. Notwithstanding the foregoing, so long as a Registration
Statement is effective, and such Registration Statement is not subject to any
Deferral Period, stop order or similar restriction, Section 2(b)(ii) above shall
not apply; provided, however, that nothing herein shall preclude the Holder from
effecting a cashless exercise (i.e., obtaining a short-term loan) through its
broker or dealer if such transaction is otherwise in compliance with applicable
securities laws.
2.2. When Exercise Effective. Each exercise of
this Warrant shall be deemed to have been effected immediately prior to the
close of business on the Business Day on which this Warrant shall have been
surrendered to, and the Purchase Price shall have been received by, the Company
as provided in Section 2.1, and at such time the Person or Persons in whose name
or names any certificate or certificates for shares of Common Stock (or Other
Securities) shall be issuable upon such exercise as provided in Section 2.3
shall be deemed to have become the holder or holders of record thereof for all
purposes.
2.3. Delivery of Stock Certificates, etc.;
Charges, Taxes and Expenses. (a) As soon as practicable after each exercise of
this Warrant, in whole or in part, and in any event within three Business Days
thereafter, the Company shall cause to be issued in the name of and delivered to
the Holder hereof or as the Holder may direct,
(i) a certificate or certificates for
the number of shares of Common Stock (or Other Securities) to which the
Holder shall be entitled upon such exercise plus, in lieu of issuance
of any fractional share to which the Holder would otherwise be
entitled, if any, a check for the amount of cash equal to the same
fraction multiplied by the Purchase Price per share on the date of
Warrant exercise, and
(ii) in case such exercise is for less
than all of the shares of Common Stock purchasable under this Warrant,
a new Warrant or Warrants of like tenor, for the balance of the shares
of Common Stock purchasable hereunder.
(b) Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the Holder hereof for any issue or
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transfer tax or other incidental expense, in respect of the issuance of such
certificates, all of which such taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any transfer involved in the issue of
any Warrants or any certificates for shares of Common Stock in a name other than
that of the Holder, and the Company shall not be required to issue or deliver
such Warrant or shares of Common Stock unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
2.4. Company to Reaffirm Obligations. The Company
shall, at the time of each exercise of this Warrant, upon the request of the
Holder hereof, acknowledge in writing its continuing obligation to afford to
such Holder all rights to which such Holder shall continue to be entitled after
such exercise in accordance with the terms of this Warrant, provided that if the
Holder of this Warrant shall fail to make any such request, such failure shall
not affect the continuing obligation of the Company to afford such rights to the
Holder.
3. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE.
3.1. Adjustment of Number of Shares.
Upon each adjustment of the Purchase Price as a
result of the calculations made in this Section 3, this Warrant shall thereafter
evidence the right to receive, at the adjusted Purchase Price, that number of
shares of Common Stock (calculated to the nearest one-hundredth) obtained by
dividing (i) the product of the aggregate number of shares covered by this
Warrant immediately prior to such adjustment and the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price by (ii) the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
3.2. Adjustment of Purchase Price.
3.2.1. Issuance of Additional Shares of Common
Stock. In case the Company at any time or from time to time after the date
hereof shall issue or sell Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section 3.3 or
3.4 but excluding Additional Shares of Common Stock purchasable upon exercise of
Rights referred to in Section 3.10) without consideration or for a consideration
per share less than the Current Market Price in effect immediately prior to such
issue or sale, then, and in each such case, subject to Section 3.8, the Purchase
Price shall be reduced, concurrently with such issue or sale, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such
Purchase Price by a fraction
(a) the numerator of which shall be the sum of
(i) the number of shares of Common Stock outstanding immediately prior
to such issue or sale and (ii) the number of shares of Common Stock
which the aggregate consideration received by the Company for the total
number of such Additional Shares of Common Stock so issued or sold
would purchase at such Current Market Price, and
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(b) the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such issue or
sale, provided that, for the purposes of this Section 3.2.1, (x)
immediately after any Additional Shares of Common Stock are deemed to
have been issued pursuant to Section 3.3 or 3.4, such Additional Shares
shall be deemed to be outstanding, and (y) treasury shares shall not be
deemed to be outstanding.
3.2.2. Extraordinary Dividends and Distributions.
In case the Company at any time or from time to time after the date hereof shall
declare, order, pay or make a dividend or other distribution (including, without
limitation, any distribution of other or additional stock or other securities or
property or Options by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement) on the Common Stock other
than (a) a dividend payable in Additional Shares of Common Stock or (b) a
dividend of Rights referred to in Section 3.10 hereof, then, in each such case,
subject to Section 3.8, the Purchase Price in effect immediately prior to the
close of business on the record date fixed for the determination of holders of
any class of securities entitled to receive such dividend or distribution shall
be reduced, effective as of the close of business on such record date, to a
price determined by multiplying such Purchase Price by a fraction
(x) the numerator of which shall be the
Current Market Price in effect on such record date or, if the
Common Stock trades on an ex-dividend basis, on the date prior
to the commencement of ex-dividend trading, less the Fair
Value of such dividend or distribution applicable to one share
of Common Stock, and
(y) the denominator of which shall be
such Current Market Price,
provided that, in the event that the amount
of such dividend as so determined is equal to or greater than
10% of such Current Market Price or in the event that such
fraction is less than 9/10ths, in lieu of the foregoing
adjustment, the Company shall, if reasonably feasible, make
adequate provision so that the Holder shall receive, upon
Warrant exercise, a pro rata share of such dividend based upon
the maximum number of shares of Common Stock at the time
issuable to the Holder (determined without regard to whether
the Warrant is exercisable at such time.)
3.3. Treatment of Options and Convertible
Securities. In case the Company at any time or from time to time after the date
hereof shall issue, sell, grant or assume, or shall fix a record date for the
determination of holders of any class of securities of the Company entitled to
receive, any Options or Convertible Securities (whether or not the rights
thereunder are immediately exercisable), then, and in each such case, the
maximum number of Additional Shares of Common Stock (as set forth in the
instrument relating thereto, without regard to any provisions contained therein
for a subsequent adjustment of such number) issuable upon the exercise of such
Options or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional
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Shares of Common Stock issued as of the time of such issue, sale, grant or
assumption or, in case such a record date shall have been fixed, as of the close
of business on such record date (or, if the Common Stock trades on an
ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), provided that such Additional Shares of Common Stock shall not be
deemed to have been issued unless (i) the consideration per share (determined
pursuant to Section 3.5) of such shares would be less than the Current Market
Price in effect on the date of and immediately prior to such issue, sale, grant
or assumption or immediately prior to the close of business on such record date
(or, if the Common Stock trades on an ex-dividend basis, on the date prior to
the commencement of ex-dividend trading), as the case may be, and (ii) such
Additional Shares of Common Stock are not purchasable pursuant to Rights
referred to in Section 3.10, and provided, further, that in any such case in
which Additional Shares of Common Stock are deemed to be issued
(a) whether or not the Additional Shares of
Common Stock underlying such Options or Convertible Securities are
deemed to be issued, no further adjustment of the Purchase Price shall
be made upon the subsequent issue or sale of Convertible Securities or
shares of Common Stock upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, except in the
case of any such Options or Convertible Securities which contain
provisions requiring an adjustment, subsequent to the date of the issue
or sale thereof, of the number of Additional Shares of Common Stock
issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities by reason of (x) a change of
control of the Company, (y) the acquisition by any Person or group of
Persons of any specified number or percentage of the voting securities
of the Company or (z) any similar event or occurrence, each such case
to be deemed hereunder to involve a separate issuance of Additional
Shares of Common Stock, Options or Convertible Securities, as the case
may be;
(b) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any
increase in the consideration payable to the Company, or decrease in
the number of Additional Shares of Common Stock issuable, upon the
exercise, conversion or exchange thereof (by change of rate or
otherwise), the Purchase Price computed upon the original issue, sale,
grant or assumption thereof (or upon the occurrence of the record date,
or date prior to the commencement of ex-dividend trading, as the case
may be, with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming effective,
be recomputed to reflect such increase or decrease insofar as it
affects such Options, or the rights of conversion or exchange under
such Convertible Securities, which are outstanding at such time;
(c) upon the expiration (or purchase by the
Company and cancellation or retirement) of any such Options which shall
not have been exercised or the expiration of any rights of conversion
or exchange under any such Convertible Securities which (or purchase by
the Company and cancellation or retirement of any such Convertible
Securities the rights of conversion or exchange under which) shall not
have been exercised, the Purchase Price computed upon the original
issue, sale, grant or assumption thereof (or upon the occurrence of the
record date, or date prior to the commencement of
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ex-dividend trading, as the case may be, with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration (or
such cancellation or retirement, as the case may be), be recomputed as
if:
(i) in the case of Options for Common
Stock or Convertible Securities, the only Additional Shares of
Common Stock issued or sold were the Additional Shares of
Common Stock, if any, actually issued or sold upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities and the consideration received therefor
was the consideration actually received by the Company for the
issue, sale, grant or assumption of all such Options, whether
or not exercised, plus the consideration actually received by
the Company upon such exercise, or for the issue or sale of
all such Convertible Securities which were actually converted
or exchanged, plus the additional consideration, if any,
actually received by the Company upon such conversion or
exchange, and
(ii) in the case of Options for
Convertible Securities, only the Convertible Securities, if
any, actually issued or sold upon the exercise of such Options
were issued at the time of the issue or sale, grant or
assumption of such Options, and the consideration received by
the Company for the Additional Shares of Common Stock deemed
to have then been issued was the consideration actually
received by the Company for the issue, sale, grant or
assumption of all such Options, whether or not exercised, plus
the consideration deemed to have been received by the Company
(pursuant to Section 3.5) upon the issue or sale of such
Convertible Securities with respect to which such Options were
actually exercised;
(d) no readjustment pursuant to subdivision (b)
or (c) above shall have the effect of increasing the Purchase Price by
an amount in excess of the amount of the adjustment thereof originally
made in respect of the issue, sale, grant or assumption of such Options
or Convertible Securities; and
(e) in the case of any such Options which expire
by their terms not more than 45 days after the date of issue, sale,
grant or assumption thereof, no adjustment of the Purchase Price shall
be made until the expiration or exercise of all such Options, whereupon
such adjustment shall be made in the manner provided in subdivision (c)
above; and
(f) this Section 3.3 shall not apply to the
assumption of Options or Convertible Securities in connection with the
acquisition of a business, whether by merger, consolidation, exchange
of stock or otherwise.
3.4. Treatment of Stock Dividends, Stock Splits,
etc. In case the Company at any time or from time to time after the date hereof
shall declare or pay any dividend on the Common Stock payable in Common Stock,
or shall effect a subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in Common Stock), then, and in each such case,
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Additional Shares of Common Stock shall be deemed to have been issued (a) in the
case of any such dividend, immediately after the close of business on the record
date for the determination of holders of any class of securities entitled to
receive such dividend, or (b) in the case of any such subdivision, at the close
of business on the day immediately prior to the day upon which such corporate
action becomes effective.
3.5. Computation of Consideration. For the
purposes of this Section 3,
(a) the consideration for the issue or sale of
any Additional Shares of Common Stock shall, irrespective of the
accounting treatment of such consideration,
(i) insofar as it consists of cash, be
computed at the amount of cash received by the Company,
without deducting any expenses paid or incurred by the Company
or any commissions or compensations paid or concessions or
discounts allowed to underwriters, dealers or others
performing similar services in connection with such issue or
sale,
(ii) insofar as it consists of property
(including securities) other than cash, be computed at the
Fair Value thereof at the time of such issue or sale, and
(iii) in case Additional Shares of Common
Stock are issued or sold together with other stock or
securities or other assets of the Company for a consideration
which covers both, be the portion of such consideration so
received, computed as provided in clauses (i) and (ii) above,
allocable to such Additional Shares of Common Stock, such
allocation to be determined in the same manner that the Fair
Value of property not consisting of cash or securities is to
be determined as provided in the definition of `Fair Value'
herein;
(b) Additional Shares of Common Stock deemed to
have been issued pursuant to Section 3.3, relating to Options and
Convertible Securities, shall be deemed to have been issued for a
consideration per share determined by dividing
(i) the total amount, if any, received
and receivable by the Company as consideration for the issue,
sale, grant or assumption of the Options or Convertible
Securities in question, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments
relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such consideration to
protect against dilution) payable to the Company upon the
exercise in full of such Options or the conversion or exchange
of such Convertible Securities or, in the case of Options for
Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities, in each case computing such
consideration as provided in the foregoing subdivision (a),
by
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(ii) the maximum number of shares of
Common Stock (as set forth in the instruments relating
thereto, without regard to any provision contained therein for
a subsequent adjustment of such number to protect against
dilution) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities; and
(c) Additional Shares of Common Stock deemed to
have been issued pursuant to Section 3.4, relating to stock dividends,
stock splits, etc., shall be deemed to have been issued for no
consideration.
3.6. Adjustments for Combinations, etc. In case
the outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Purchase Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
3.7. Dilution in Case of Other Securities. In
case any Other Securities shall be issued or sold or shall become subject to
issue or sale upon the conversion or exchange of any stock (or Other Securities)
of the Company (or any issuer of Other Securities or any other Person referred
to in Section 4) or to subscription, purchase or other acquisition pursuant to
any Options issued or granted by the Company (or any such other issuer or
Person) for a consideration such as to dilute, on a basis consistent with the
standards established in the other provisions of this Section 3, the purchase
rights granted by this Warrant, then, and in each such case, the computations,
adjustments and readjustments provided for in this Section 3 with respect to the
Purchase Price and the number of shares purchasable upon Warrant exercise shall
be made as nearly as possible in the manner so provided and applied to determine
the amount of Other Securities from time to time receivable upon the exercise of
this Warrant, so as to protect the Holder against the effect of such dilution.
3.8. De Minimis Adjustments. If the amount of any
adjustment of the Purchase Price per share required pursuant to this Section 3
would be less than one tenth (1/10) of one percent (1%) of the Purchase Price,
such amount shall be carried forward and adjustment with respect thereto made at
the time of and together with any subsequent adjustment which, together with
such amount and any other amount or amounts so carried forward, shall aggregate
a change in the Purchase Price of at least one tenth (1/10) of one percent (1%)
of such Purchase Price. All calculations under this Warrant shall be made to the
nearest .001 of a cent or to the nearest one-hundredth of a share, as the case
may be.
3.9. Abandoned Dividend or Distribution. If the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend or other distribution (which results in
an adjustment to the Purchase Price under the terms of this Warrant) and shall,
thereafter, and before such dividend or distribution is paid or delivered to
shareholders entitled thereto, legally abandon its plan to pay or deliver such
dividend or distribution, then any adjustment made to the Purchase Price and
number of shares of Common Stock purchasable upon Warrant exercise by reason of
the taking of such record shall be reversed, and any subsequent adjustments,
based thereon, shall be recomputed.
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3.10. Shareholder Rights Plan. Notwithstanding the
foregoing, in the event that the Company shall distribute "poison pill" rights
pursuant to a "poison pill" shareholder rights plan (the "Rights"), the Company
shall, in lieu of making any adjustment pursuant to Section 3.2.1 or Section
3.2.2 hereof, make proper provision so that each Holder who exercises a Warrant
after the record date for such distribution and prior to the expiration or
redemption of the Rights shall be entitled to receive upon such exercise, in
addition to the shares of Common Stock issuable upon such exercise, a number of
Rights to be determined as follows: (i) if such exercise occurs on or prior to
the date for the distribution to the holders of Rights of separate certificates
evidencing such Rights (the "Distribution Date"), the same number of Rights to
which a holder of a number of shares of Common Stock equal to the number of
shares of Common Stock issuable upon such exercise at the time of such exercise
would be entitled in accordance with the terms and provisions of and applicable
to the Rights; and (ii) if such exercise occurs after the Distribution Date, the
same number of Rights to which a holder of the number of shares into which the
Warrant so exercised was exercisable immediately prior to the Distribution Date
would have been entitled on the Distribution Date (after giving effect to any
adjustments required pursuant to this Section 3) in accordance with the terms
and provisions of and applicable to the Rights.
4. CONSOLIDATION, MERGER, ETC.
4.1. Adjustments for Consolidation, Merger, Sale
of Assets, Reorganization, etc. (a) In case the Company after the date hereof
(i) shall consolidate with or merge into any other Person and shall not be the
continuing or surviving corporation of such consolidation or merger, or (ii)
shall permit any other Person to consolidate with or merge into the Company and
the Company shall be the continuing or surviving Person but, in connection with
such consolidation or merger, the Common Stock or Other Securities shall be
changed into or exchanged for stock or other securities of any other Person or
cash or any other property, or (iii) shall transfer all or substantially all of
its properties or assets to any other Person, or (iv) shall effect a capital
reorganization or reclassification of the Common Stock or Other Securities
(other than a capital reorganization or reclassification resulting in the issue
of Additional Shares of Common Stock for which adjustment in the Purchase Price
is provided in Section 3.2.1 or 3.2.2), then, and in the case of each such
transaction, proper provision shall be made so that, upon the basis and the
terms and in the manner provided in this Warrant, the Holder of this Warrant,
upon the exercise hereof at any time after the consummation of such transaction,
shall be entitled to receive (at the aggregate Purchase Price in effect at the
time of such consummation for all Common Stock or Other Securities issuable upon
such exercise immediately prior to such consummation), in lieu of the Common
Stock or Other Securities issuable upon such exercise prior to such
consummation, the highest amount of securities, cash or other property to which
such Holder would actually have been entitled as a shareholder upon such
consummation if such Holder had exercised this Warrant immediately prior
thereto, subject to adjustments (subsequent to such consummation) as nearly
equivalent as possible to the adjustments provided for in Sections 3 through 5.
(b) If the Company undertakes a consolidation or
merger with or into another corporation, a reverse triangular merger or any
other transaction or series of related
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transactions pursuant to which all Shareholders receive 100% cash consideration
for their shares of Common Stock (which transaction may exclude Xxxxxx Xxxxxxx
or Xxxx Xxxxxxx or any affiliates or associates thereof), then at the Option of
the Person acquiring all of such shares of Common Stock, the Holder shall
receive in connection with the completion of such transaction(s), without
exercise and upon surrender of this Warrant, cash in an amount equal to (a) the
per share acquisition price payable by the acquiring Person to the Shareholders
for their shares of Common Stock minus the Purchase Price determined as of the
date of completion of such transaction(s), multiplied by (b) the number of
Warrant Shares that are eligible for issuance under this Warrant on such date of
completion (which, in the case of a series of related transactions, shall be the
date of completion of the final transaction in such series). Upon payment of
such amount to the Holder, this Warrant shall automatically expire and the
rights hereunder shall be of no further force or effect.
4.2. Assumption of Obligations. Notwithstanding
anything contained in this Warrant to the contrary, the Company shall not effect
any of the transactions described in clauses (i) through (iv) of Section 4.1(a)
unless, prior to the consummation thereof, each Person (other than the Company)
which may be required to deliver any stock, securities, cash or property upon
the exercise of this Warrant as provided herein shall assume by written
instrument (a) the obligations of the Company under this Warrant (and if the
Company shall survive the consummation of such transaction, such assumption
shall be in addition to, and shall not release the Company from, any continuing
obligations of the Company under this Warrant), (b) the obligation to deliver to
the Holder such shares of stock, securities, cash or property as, in accordance
with the foregoing provisions of this Section 4, the Holder may be entitled to
receive.
5. OTHER DILUTIVE EVENTS. In case any event shall occur
as to which the provisions of Section 3 or Section 4 hereof are not strictly
applicable or if strictly applicable would not, in the reasonable judgment of
the board of directors of the Company, fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and
principles of such Sections, then, in each such case, the board of directors of
the Company shall, in good faith, make an adjustment in the application of such
provisions, in accordance with the essential intent and principles hereof so as
to preserve, without dilution, the purchase rights represented by this Warrant.
6. NO DILUTION OR IMPAIRMENT. The Company shall not, by
amendment of its certificate of incorporation or through any consolidation,
merger, reorganization, transfer of assets, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Holder of this Warrant against dilution or other impairment. Without
limiting the generality of the foregoing, the Company (a) shall not permit the
par value of any shares of stock receivable upon the exercise of this Warrant to
exceed the amount payable therefor upon such exercise, (b) shall 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 stock, free from all
issuance, stamp or similar taxes, liens, security interests, encumbrances,
preemptive rights and charges on the exercise of this Warrant from time to time
outstanding, and (c) shall not take any action which
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results in any adjustment of the Purchase Price if the total number of shares of
Common Stock (or Other Securities) issuable after the action upon the exercise
of this Warrant would exceed the total number of shares of Common Stock (or
Other Securities) then authorized by the Company's certificate of incorporation
and available for the purpose of issue upon such exercise.
7. CERTIFICATE AS TO ADJUSTMENTS. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable upon the exercise of this Warrant, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms of
this Warrant and prepare a certificate, signed by the Chairman of the Board,
President or one of the Vice Presidents of the Company, and by the Chief
Financial Officer, the Treasurer or one of the Assistant Treasurers of the
Company, setting forth such adjustment or readjustment and showing in reasonable
detail the method of calculation thereof and the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or to be received by the Company for any Additional
Shares of Common Stock issued or sold or deemed to have been issued, (b) the
number of shares of Common Stock outstanding or deemed to be outstanding, and
(c) the Purchase Price in effect immediately prior to such issue or sale and as
adjusted and readjusted (if required by Section 3) on account thereof. The
Company shall forthwith mail a copy of such certificate to the Holder and shall,
upon the written request at any time of the Holder, furnish to the Holder a like
certificate. The Company shall also keep copies of such certificates at its
principal office and shall cause the same to be available for inspection at such
office during normal business hours by the Holder or any prospective purchaser
of this Warrant designated by the Holder.
8. NOTICES OF CORPORATE ACTION. In the event of:
(a) any taking by the Company of a record of the
holders of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the
Company, any consolidation or merger involving the Company and any
other Person, any transaction or series of transactions in which more
than 50% of the voting securities of the Company are transferred to
another Person, or any transfer, sale or other disposition of all or
substantially all the assets of the Company to any other Person, or
(c) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
the Company shall mail to the Holder a notice specifying (i) the date or
expected date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right, and (ii) the date or expected date on which any such
reorganization, reclassification, recapitalization, consolidation, merger,
transfer, sale, disposition, dissolution, liquidation or winding-up is to take
place and the time, if any such time is to be fixed, as of which the holders of
record of Common Stock (or Other Securities)
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shall be entitled to exchange their shares of Common Stock (or Other Securities)
for the securities or other property deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up. Such notice shall be mailed at least 30
days prior to the date therein specified; provided, however, that the failure by
the Company to provide any such notice within the time prescribed herein or
otherwise in a timely manner shall have no effect on any of the transactions
contemplated herein.
9. REGISTRATION OF COMMON STOCK. If any shares of Common
Stock required to be reserved for purposes of exercise of this Warrant require
registration with or approval of any governmental authority under any federal or
state law (other than the Securities Act) before such shares may be issued upon
exercise, the Company shall, at its expense and as expeditiously as possible,
use its best efforts to cause such shares to be duly registered or approved, as
the case may be. At any such time as Common Stock is listed on any national
securities exchange, the Company shall, at its expense, obtain promptly and
maintain the approval for listing on each such exchange, upon official notice of
issuance, the shares of Common Stock issuable upon exercise of this Warrant and
maintain the listing of such shares after their issuance; and the Company shall
also list on such national securities exchange, shall register under the
Exchange Act and shall maintain such listing of, any Other Securities that at
any time are issuable upon exercise of this Warrant, if and at the time that any
securities of the same class shall be listed on such national securities
exchange by the Company.
10. RESTRICTIONS ON TRANSFER.
10.1. Restrictive Legends. Except as otherwise
permitted by this Section 10, this Warrant (including any Warrant issued upon
the transfer of this Warrant or any replacement Warrant issued in connection
with the partial exercise of this Warrant or the loss or destruction of this
Warrant) shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAW OF ANY STATE, AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT."
Except as otherwise permitted by this Section 10, each certificate for Common
Stock (or Other Securities) issued upon the exercise of this Warrant, and each
certificate issued upon the transfer of any such Common Stock (or Other
Securities), shall be stamped or otherwise imprinted with a legend in
substantially the following form:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAW OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND SUCH LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS
SPECIFIED IN CERTAIN COMMON STOCK PURCHASE WARRANTS ISSUED BY THE
COMPANY. A COMPLETE AND CORRECT COPY OF THE FORM OF SUCH WARRANT IS
AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY OR AT
THE OFFICE OR AGENCY MAINTAINED BY THE COMPANY AS PROVIDED IN SUCH
WARRANTS AND WILL BE FURNISHED TO THE HOLDER OF SUCH SECURITIES UPON
WRITTEN REQUEST AND WITHOUT CHARGE."
10.2. Transfer to Comply With the Securities Act.
Restricted Securities may not be sold, assigned, pledged, hypothecated,
encumbered or in any manner transferred or disposed of, in whole or in part,
except in compliance with the provisions of the Securities Act and state
securities or Blue Sky laws and the terms and conditions hereof. Any transfer by
the Holder of this Warrant (or any part hereof) must be in respect of a minimum
of 50,000 Warrant Shares (before giving effect to any share adjustment provided
hereunder), except in the event that less than 50,000 Warrant Shares are
issuable at such time of transfer, in which event such transfer must be in
respect of all of such Warrant Shares issuable. Prior to effecting any such
sale, assignment, pledge, hypothecation, encumbrance, transfer or disposition,
the Holder shall inform the Company and, upon the Company's request, deliver to
the Company an opinion of counsel, reasonably satisfactory to the Company, to
the effect that such transfer does not require registration under the Securities
Act and is otherwise in compliance with the Securities Act and any applicable
state securities or Blue Sky laws. Notwithstanding the foregoing, the last two
sentences of this Section 10.2 shall not apply in connection with any transfer
(without consideration) of this Warrant to an affiliate of the Holder.
10.3. Termination of Restrictions. The
restrictions imposed by this Section 10 on the transferability of Restricted
Securities shall cease and terminate as to any particular Restricted Securities
(a) when a registration statement with respect to the sale of such securities
shall have been declared effective under the Securities Act and such securities
shall have been disposed of in accordance with such registration statement, (b)
when such securities are sold pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act, or (c) when, in the opinion of both
counsel for the Holder and counsel for the Company, such restrictions are no
longer required or necessary in order to protect the Company against a violation
of the Securities Act upon any sale or other disposition of such securities
without registration thereunder. Whenever such restrictions shall cease and
terminate as to any Restricted Securities, the Holder shall be entitled to
receive from the Company, without expense, new stock certificates of like tenor
representing such Restricted Securities which shall not bear the applicable
legends required by Section 10.1.
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11. REPRESENTATIONS OF COMPANY.
11.1 Organization and Qualification. The Company
is a corporation duly organized and validly existing in good standing under the
laws of the jurisdiction in which it is incorporated, and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted. The Company is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the nature of the
business conducted by it makes such qualification necessary, except where such
failure to qualify or to be in good standing would not have a material adverse
effect on the business or assets of the Company, taken as a whole.
11.2 Authorization; Enforcement; Compliance with
Other Instruments. (a) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Warrant and to
issue the Warrant Shares in accordance with this Warrant, (b) the execution and
delivery of this Warrant by the Company and the consummation by it of the
transactions contemplated hereby, including, without limitation, the issuance of
this Warrant and the reservation for issuance and the issuance of the Warrant
Shares, upon exercise of this Warrant, have been duly authorized by the
Company's board of directors and no further consent or authorization is required
by the Company, its board of directors or its stockholders, (c) this Warrant has
been duly executed and delivered by the Company, and (d) this Warrant
constitutes the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies.
11.3 Capitalization and Indebtedness. As of the
date hereof, the authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, par value $.001 per share, of which as of May 9, 2001,
34,388,445 shares are issued and outstanding. All of the outstanding shares of
Common Stock have been validly issued and are fully paid and nonassessable. No
shares of Common Stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company. Except
as contemplated by this Warrant or as previously disclosed to the Holder in
writing (including in the Loan and Security Agreement, which was reviewed by the
Holder), as of the date hereof, (i) there are no outstanding Options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its subsidiaries or Options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, and (ii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated to
register the sale of any of their securities under the Securities Act. There are
no securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of this Warrant or, upon exercise of this
Warrant, the issuance of Warrant Shares, except for anti-dilution provisions
which have been validly waived on or
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prior to the date hereof in respect of the issuance of this Warrant and, upon
exercise of this Warrant, the issuance of Warrant Shares.
11.4 Issuance of Warrants and Warrant Shares.
This Warrant is duly authorized and, upon issuance in accordance with the terms
hereof, will be validly issued, fully paid and non-assessable, free from all
issuance, stamp or similar taxes, liens and charges with respect to the issue
thereof, and shall not be subject to preemptive rights or other similar rights
of stockholders of the Company. The Warrant Shares have been duly authorized and
reserved for issuance upon exercise of this Warrant, and upon such exercise and
full payment therefor, will be validly issued, fully paid and non-assessable,
free from all issuance, stamp or similar taxes, liens and charges with respect
to the issue thereof, and will not be subject to preemptive rights or other
similar rights of stockholders of the Company.
11.5 No Conflicts. The execution, delivery and
performance of this Warrant by the Company, and the consummation by the Company
of the transactions contemplated hereby (including, without limitation, the
issuance of the Warrant Shares) will not (i) result in a violation of any
organizational documents governing the Company or (ii) violate or conflict with,
or result in a breach of any provision of, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which the
Company or any of its subsidiaries is a party, or result in a violation of any
law, rule, regulation, order, judgment or decree applicable to the Company or
any of its subsidiaries or by which any property or asset of the Company or any
of its subsidiaries is bound or affected. Except for filing required pursuant to
applicable securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental or regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by Warrant in
accordance with the terms hereof or thereof. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence on or prior to the date hereof have been
obtained or effected on or prior to the date hereof.
12. Representations Of The Holder.
Upon issuance of this Warrant, the Holder represents and
warrants to Sections 12.1 through 12.9 below, and upon exercise of this Warrant,
the Holder represents and warrants to Sections 12.2, 12.3 and 12.4 below.
12.1 Purchase for Own Account. This Warrant is,
and the Warrant Shares to be received by the Holder upon exercise hereof will
be, acquired for investment for the Holder's own account and not with a view to
the resale or distribution of any part thereof, and the Holder has no present
intention of selling, granting any participation in, or otherwise distributing
this Warrant, the Warrant Shares or any part thereof. The Holder does not have
any contract, undertaking, agreement or arrangement with any Person to sell,
transfer or grant participation to such Person with respect to this Warrant, the
Warrant Shares or any part thereof.
12.2 Disclosure of Information. The Holder is
aware of the Company's business affairs and financial condition, has received
and reviewed all information (including all
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reports, registrations and other documents) filed by the Company with the
Commission up to the date hereof) it considers necessary or appropriate for
making an informed and knowledgeable decision as to whether to acquire this
Warrant and further represents that it has had sufficient opportunity to ask
questions and receive answers from the Company regarding the nature and affairs
of the Company, including its business, properties, prospects and financial
condition.
12.3 Investment Experience. The Holder is an
investor in securities of companies and acknowledges that it is capable of
bearing the economic risk of its investment in this Warrant and the Warrant
Shares, including the risk of total loss of any or all of such investments, and
has such knowledge and experience in financial or business matters that is
capable of evaluating the merits and risks of such investments.
12.4 Accredited Investor. The Holder is an
"accredited investor" within the meaning of Commission Rule 501 of Regulation D,
as presently in effect.
12.5 Restricted Securities. The Holder
understands and hereby acknowledges that (i) the Warrant Shares it may purchase
pursuant to the provisions of this Warrant may not initially be registered under
the Securities Act, and in such event will be issued in reliance upon a specific
exemption from the registration requirements under the Securities Act, which
exemption depends upon, among other things, the bona fide nature of the Holder's
investment intent as expressed herein, and (ii) the Warrant Shares must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption form registration is otherwise available.
12.6 Rule 144 Restrictions. The Holder is aware
of the provisions of Rule 144, promulgated under the Securities Act, which, in
substance, permit limited public resale of "restricted securities" acquired,
directly or indirectly, from the issuer thereof (or from an affiliate of such
issuer), in a non-public offering subject to the satisfaction of certain
conditions, if applicable, including, among other things: (i) the availability
of certain public information about the Company; (ii) the resale occurring not
less than one (1) year after the party has purchased and paid for the securities
to be sold, unless such securities are registered; (iii) the sale being made
through a broker in an unsolicited "broker transaction" or in transactions
directly with a market maker (as said term is defined under the Exchange Act),
(iv) the amount of securities being sold during any three-month period not
exceeding the specified limitations stated therein, and (v) the filing of Form
144 with the Commission.
12.7 Rule 144 Limitations. The Holder understands
and acknowledges that at the time it wishes to sell some or all of the Warrant
Shares there may not be an active public market upon which to make such a sale.
The Holder further understands that if all the requirements of Rule 144 are not
satisfied, registration under the Securities Act, compliance with Regulation A
or Regulation S under the Securities Act or some other registration exemption
will be required to permit the Holder to sell the Warrant Shares.
12.8 No Related Transactions. The Holder is not
in any way affiliated with (i) Xxxxxxxx Investments LLC, (ii) Norton Family
Living Trust UTD 2-4-91, (iii) Norton Family Living Trust UTD 2-15-96, (iv)
Xxxxxxxxx Family Trust UTD 7-1-97, (v) JR Ventures Limited Partnership, (vi)
Xxxxxx X. Xxxxxxxx, or (vii) Xxxxxxx Xxxxxx, and the issuance of this
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Warrant is not, and any exercise will not be, related to the above-described
parties purchase of shares of Common Stock, or securities exercisable into,
convertible into or exchangeable for such shares.
12.9 Ownership of Company Common Stock.
Immediately prior to the date hereof, the Holder (and its affiliates) own less
than 1,600,000 shares of the Company's Common Stock.
13. AVAILABILITY OF INFORMATION. So long as the Company
shall not have filed a registration statement pursuant to Section 12 of the
Exchange Act or a registration statement pursuant to the requirements of the
Securities Act, the Company shall, at any time and from time to time, upon the
request of any holder of Restricted Securities and upon the request of any
Person designated by such holder as a prospective purchaser of any Restricted
Securities, furnish in writing to such holder or such prospective purchaser, as
the case may be, a statement as of a date not earlier than 12 months prior to
the date of such request of the nature of the business of the Company and the
products and services it offers and copies of the Company's most recent balance
sheet and profit and loss and retained earnings statements, together with
similar financial statements for such part of the two preceding fiscal years as
the Company shall have been in operation, all such financial statements to be
audited to the extent audited statements are reasonable available, provided
that, in any event the most recent financial statements so furnished shall
include a balance sheet as of a date less than 16 months prior to the date of
such request, statements of profit and loss and retained earnings for the 12
months preceding the date of such balance sheet, and, if such balance sheet is
not as of a date less than six months prior to the date of such request,
additional statements of profit and loss and retained earnings for the period
from the date of such balance sheet to a date less than six months prior to the
date of such request. If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Exchange Act or a registration
statement pursuant to the requirements of the Securities Act, the Company shall
use reasonable best efforts to timely file the reports required to be filed by
it under the Securities Act and the Exchange Act (including but not limited to
the reports under Sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c) of Rule 144 adopted by the Commission under the Securities
Act)) and will take such further action as any holder of Restricted Securities
may reasonably request, all to the extent required from time to time to enable
such holder to sell Restricted Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
under the Securities Act, as such rules may be amended from time to time, or (b)
any successor rule or regulation hereafter adopted by the Commission.
14. RESERVATION OF STOCK, ETC. The Company shall at all
times reserve and keep available, solely for issuance and delivery upon exercise
of this Warrant, the number of shares of Common Stock (or Other Securities) from
time to time issuable upon exercise of this Warrant at the time outstanding. All
shares of Common Stock (or Other Securities) issuable upon exercise of this
Warrant shall be duly authorized and, when issued upon such exercise, shall be
validly issued and, in the case of shares, fully paid and nonassessable with no
liability on the part of the holders thereof, and, in the case of all
securities, shall be free from all issuance, stamp or similar taxes, liens,
security interests, encumbrances, preemptive rights and charges. The transfer
agent for the Common Stock, which may be the
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Company ("Transfer Agent"), and every subsequent Transfer Agent for any shares
of the Company's capital stock issuable upon the exercise of any of the purchase
rights represented by this Warrant, are hereby irrevocably authorized and
directed at all times until the Expiration Date to reserve such number of
authorized and unissued shares as shall be requisite for such purpose. The
Company shall keep copies of this Warrant on file with the Transfer Agent for
the Common Stock and with every subsequent Transfer Agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by this Warrant. The Company shall supply such Transfer Agent with
duly executed stock certificates for such purpose. All Certificates surrendered
upon the exercise of the rights thereby evidenced shall be canceled, and such
canceled Warrants shall constitute sufficient evidence of the number of shares
of stock which have been issued upon the exercise of such Warrants. Subsequent
to the Expiration Date, no shares of stock need be reserved by the Company in
respect of this Warrant.
15. REGISTRATION AND TRANSFER OF WARRANTS, ETC.
15.1. Warrant Register; Ownership of Warrants.
This Warrant shall be numbered and shall be registered in a warrant register
(the "Warrant Register") as it is issued and transferred, which Warrant Register
shall be maintained by the Company at its principal office or, at the Company's
election and expense, by a warrant agent or the Transfer Agent. The Company
shall be entitled to treat the registered Holder of this Warrant on the Warrant
Register as the owner in fact thereof for all purposes and shall not be bound to
recognize any equitable or other claim to or interest in this Warrant on the
part of any other Person, and shall not be affected by any notice to the
contrary, except that, if and when this Warrant is properly assigned in blank,
the Company may (but shall not be obligated to) treat the bearer thereof as the
owner of this Warrant for all purposes. Subject to Section 10, a Warrant, if
properly assigned, may be exercised by a new holder without a new Warrant first
having been issued.
15.2. Transfer of Warrants. Subject to Section 10,
this Warrant shall be freely transferable to any affiliate of the Holder. In
addition, subject to compliance with Section 10, if applicable, this Warrant and
all rights hereunder are transferable in whole or in part, without charge to the
Holder hereof, upon surrender of this Warrant with a properly executed Form of
Assignment attached hereto as Exhibit B at the principal office of the Company.
Upon any partial transfer, the Company shall at its expense issue and deliver to
the Holder a new Warrant of like tenor, in the name of the Holder, which shall
be exercisable for such number of shares of Common Stock with respect to which
rights under this Warrant were not so transferred.
15.3. Replacement of Warrants. On receipt by the
Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss,
theft or destruction of this Warrant, on delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation, on surrender of such Warrant to the Company at its principal
office and cancellation thereof, the Company at its expense shall execute and
deliver, in lieu thereof, a new Warrant of like tenor.
15.4. Adjustments To Purchase Price and Number of
Shares. Notwithstanding any adjustment in the Purchase Price or in the number or
kind of shares of Common Stock purchasable upon exercise of this Warrant, any
Warrant theretofore or thereafter
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issued may continue to express the same number and kind of shares of Common
Stock as are stated in this Warrant, as initially issued.
15.5. Fractional Shares. Notwithstanding any
adjustment pursuant to Section 3 in the number of shares of Common Stock covered
by this Warrant or any other provision of this Warrant, the Company shall not be
required to issue fractions of shares upon exercise of this Warrant or to
distribute certificates which evidence fractional shares. In lieu of fractional
shares, the Company shall make payment to the Holder, at the time of exercise of
this Warrant as herein provided, in an amount in cash equal to such fraction
multiplied by the Current Market Price of a share of Common Stock.
16. REGISTRATION RIGHTS.
16.1 Registration.
(a) Initial Registration Statement.
Within forty five (45) days after the date hereof, the Company shall
prepare and file a registration statement under the Securities Act (a
"Registration Statement") for the registration of (i) the Warrant
Shares and (ii) at the Company's option, shares of Common Stock issued
or issuable to other security holders of the Company. The Company shall
use best efforts to cause such Registration Statement to become
effective within ninety (90) days after the date hereof.
(b) Piggyback Registration. If at any
time during the five-year period commencing the date hereof, the
Company determines to register for its own account or the account of
others under the Securities Act any of its Common Stock for cash, other
than on Form S-4 or Form S-8 or their then equivalents, the Company
shall send to each Holder written notice of such determination and, if
within ten (10) days after receipt of such notice, such Holder shall so
request in writing, the Company shall include in such Registration
Statement all or any part of the Warrant Shares that the Holder
requests to be registered provided that, in the case of shares that
have not yet been issued upon exercise, the Holder includes an
irrevocable commitment to exercise the Warrant immediately prior to
effectiveness of the Registration Statement. In the event that the
managing underwriter for an offering advises the Company that the
inclusion of such securities in the offering would be detrimental to
the Company's offering, such securities shall be reduced pro rata among
all Persons (including the Company) that are selling securities subject
to such Registration Statement. A Registration Statement under this
Section 16.1(b) shall remain effective for a period of at least 30 days
from effectiveness.
(c) Termination. The obligations under
this Section 16.1, including the obligations to maintain the
effectiveness of a Registration Statement pursuant to Section 16.1(a)
and to grant piggyback registration rights with respect to other
Company registrations pursuant to Section 16.1(b), shall terminate upon
the earlier of (i) the resale by the Holder of all Warrant Shares, (ii)
such time as any Holder may resell all of its Warrant Shares without
restriction (including, without limitation, as to volume) without
registration under the Securities Act or (iii) seven (7) years from the
date of original issuance of this Warrant.
16.2 Holder Information; Registration Expenses.
The Holder shall promptly supply the Company with all such information as the
Company may reasonably request
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for preparation of a Registration Statement and any amendments or supplements
thereto. All expenses incurred in connection with the preparation and filing of
a Registration Statement, including, without limitation, all federal and "blue
sky" registration and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company, listing fees of any securities
exchange or automated trading or quotation system on which the Common Stock is
listed or traded and the legal fees and related disbursements of Holder's legal
counsel, but excluding brokers' discounts and commissions, shall be borne by the
Company.
16.3 Registration Related Covenants of Company.
In connection with the registration obligations of the Company provided in this
Section 16, the Company hereby covenants that it shall:
(a) provide to the Holder such number of copies
as the Holder may reasonably request of (i) a Registration Statement,
(ii) each amendment and supplement thereto, and (iii) the prospectus
included therein, to facilitate the Holder's disposition of the Warrant
Shares contemplated by a Registration Statement;
(b) prepare and file with the Commission any
amendment or supplement to a Registration Statement or the prospectus
included therein as may be necessary to correct any statement or
omission or to update any material information therein (with due regard
to the Company's potential need to maintain in confidence undisclosed
information relating to pending transactions or other corporate
matters);
(c) use best efforts, once a Registration
Statement is declared effective, to keep the Registration Statement
effective (subject to subsections 16.1(b) and 16.3(d)) until the
earlier of (i) the date on which all of the Warrant Shares have been
sold, and (ii) the date on which all of the Warrant Shares may be
immediately sold without restriction (including, without limitation, as
to volume by each holder thereof) without registration under the
Securities Act; provided, however, that in no event shall the Company
be required to keep in effect the Registration Statement hereunder
beyond (i) with respect to the registration contemplated by Section
16.1(a), the earliest of the dates set forth in Section 16.1(c) and
(ii) with respect to a registration under Section 16.1(b), the thirty
(30) day period set forth therein;
(d) promptly notify the Holder of any period (a
"Deferral Period") during which the Holder must discontinue its use or
dissemination of the prospectus included in a Registration Statement
(including by reason of the fact that there is a material event or
development involving the Company, that the Company intends to effect a
primary offering of securities, or that the information in the
prospectus needs to be amended or supplemented); provided, however,
that the Company shall use best efforts to ensure that (i) no Deferral
Period runs for more than 30 consecutive days, and (ii) the aggregate
number of days in all Deferral Periods does not exceed 60 days in any
12-month period; and
(e) notify the Holder promptly after the Company
receives notice of the issuance of any stop order by the Commission
suspending the effectiveness of a Registration Statement, or the threat
or initiation of any proceeding for such purpose,
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and use commercially reasonable efforts to prevent the issuance of any
stop order or to obtain its withdrawal if such stop order should be
issued.
16.4 Indemnification.
(a) By the Company. With respect to a
Registration Statement, to the extent permitted by law, the Company will
indemnify and hold harmless the Holder, the legal counsel and accountants for
the Holder and each Person, if any, who controls the Holder within the meaning
of the Securities Act or the Exchange Act (collectively, the "Holder Indemnified
Parties"), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the Exchange
Act or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"):
(i) any untrue statement or alleged
untrue statement of a material fact contained in a
Registration Statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or
supplements thereto;
(ii) 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, or
(iii) any violation or alleged violation
by the Company of the Securities Act, the Exchange Act, any
federal or state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any
federal or state securities law in connection with the
offering covered by a Registration Statement;
and the Company will reimburse such Holder Indemnified Parties for any legal or
other expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided however, that the indemnity agreement contained in this subsection 16.4
(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a Violation which
(i) occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any of such Holder
Indemnified Parties with respect to the Holder or (ii) arises out of the
Holder's failure to satisfy prospectus delivery or other distribution
requirements in connection with such registration.
(b) By the Holder. With respect to a
Registration Statement, to the extent permitted by law, the Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, each Person, if any, who
controls the Company within the meaning of the Securities Act, legal counsel and
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accountants for the Company and other shareholders of the Company against any
losses, claims, damages or liabilities (joint or several) to which the Company
or any such director, officer, controlling Person or other shareholder
(collectively, the "Company Indemnified Parties") may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by the Holder with respect to such Holder
expressly for use in connection with such registration; and the Holder will
reimburse any legal or other expenses reasonably incurred by any Company
Indemnified Party in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this subsection 16.4(b) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld); and provided further, that in no event shall the
Holder's cumulative, aggregate liability under this subsection 16.4(b) or under
subsection 16.4(d), or under such subsections together, exceed the net proceeds
received by the Holder in the registered offering out of which such Violation
arises.
(c) Notice. Promptly after receipt by an
indemnified party under this Section 16.4 of notice of the commencement of any
action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 16.4, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party (together with all other indemnified parties which may
be represented without conflict by one counsel) shall have the right to retain
its own counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
conflict of interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, shall not relieve such indemnifying party of any liability to
the indemnified party under this Section 16.4.
(d) Contribution. If the indemnification
provided for in this Section 16.4 is held by a court of competent jurisdiction
to be unavailable to an indemnified party with respect to any loss, liability,
claim, damage, or expense referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party hereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such loss,
liability, claim, damage, or expense in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
that resulted in such loss, liability, claim, damage, or expense as well as any
other relevant equitable considerations. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties'
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relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission; provided, however, that (A) in no event
shall the Holder's cumulative, aggregate liability under subsection 16.4(b) or
under this subsection 16.4(d) hereof, or under such subsections together, exceed
the net proceeds from the offering received by such Holder; and (B) no Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Notwithstanding anything to the
contrary herein, no party shall be liable for contribution under this subsection
16.4(d), except to the extent and under the circumstances as such party would
have been liable to indemnify under subsection 16.4(a) or subsection 16.4(b)
hereof, as the case may be, if such indemnification were enforceable under
applicable law.
(e) Survival. The obligations of the Company and
the Holder under this Section 16.4 shall survive the completion of any offering
of Warrant Shares under the Registration Statement or otherwise.
16.5 Rule 144 Reporting. With a view to making
available to the Holder the benefits of certain rules and regulations of the
Commission which may at any time permit the sale of the Warrant Shares to the
public without registration, after such time as a public market exists for the
Common Stock and so long as the Holder owns any Warrant Shares, the Company
agrees to:
(a) furnish to the Holder forthwith upon request
(i) a written statement by the Company (A) as to its compliance with the
reporting requirements of said Rule 144, and of the Securities Act and the
Exchange Act (for so long as it is subject to the reporting requirements of the
Exchange Act), or (B) that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies after the date
hereof), (ii) a copy of the most recent annual or quarterly report of the
Company, and (iii) such other reports and documents of the Company and
information as the Holder may reasonably request in availing itself of any rule
or regulation of the Commission allowing the Holder to sell any such securities
without registration or pursuant to Form S-3 (for so long as the Company is
subject to the reporting requirements of the Exchange Act).
17. REMEDIES; SPECIFIC PERFORMANCE. The Company
stipulates that there would be no adequate remedy at law to the Holder of this
Warrant in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant and
accordingly, the Company agrees that, in addition to any other remedy to which
the Holder may be entitled at law or in equity, the Holder shall be entitled to
seek to compel specific performance of the obligations of the Company under this
Warrant, without the posting of any bond, in accordance with the terms and
conditions of this Warrant in any court of the United States or any State
thereof having jurisdiction, and if any action should be brought in equity to
enforce any of the provisions of this Warrant, the Company shall not raise the
defense that there is an adequate remedy at law. Except as otherwise provided by
law, a delay or omission by the Holder hereto in exercising any right or remedy
accruing upon any such
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breach shall not impair the right or remedy or constitute a waiver of or
acquiescence in any such breach. No remedy shall be exclusive of any other
remedy. All available remedies shall be cumulative.
18. NO RIGHTS OR LIABILITIES AS SHAREHOLDER. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof any rights as a shareholder of the Company or as imposing any obligation
on the Holder to purchase any securities or as imposing any liabilities on the
Holder as a shareholder of the Company, whether such obligation or liabilities
are asserted by the Company or by creditors of the Company.
19. NOTICES. All notices and other communications
provided for or permitted hereunder shall be made in made in writing by hand
delivery, telecopier, any courier guaranteeing overnight delivery or first class
registered or certified mail, return receipt requested, postage prepaid,
addressed to:
If to the Holder:
Xxxx Capital Partners LLC
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx, Managing Director
Fax: (000)000-0000
If to the Company:
Hypercom Corporation
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Fax: (000) 000-0000
With a copy to:
Xxxxx & Xxxxxx LLP
Xxx Xxxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
All such notices and communications (and deliveries) shall be deemed to
have been duly given: at the time delivered by hand, if personally delivered;
when receipt is acknowledged, if telecopied; on the next Business Day, if timely
delivered to a courier guaranteeing overnight delivery; and five days after
being deposited in the mail, if sent first class or certified mail, return
receipt requested, postage prepaid; provided, that the exercise of this Warrant
shall be effective in the manner provided in Section 2.
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20. AMENDMENTS. This Warrant and any term hereof may not
be amended, modified, supplemented or terminated, and waivers or consents to
departures from the provisions hereof may not be given, except by written
instrument duly executed by the Company and a majority in interest of the
Holders of Series D Warrants (including any Warrants issued upon the partial
assignment and transfer of this Warrant).
21. DESCRIPTIVE HEADINGS, ETC. The headings in this
Warrant are for convenience of reference only and shall not limit or otherwise
affect the meaning of terms contained herein. Unless the context of this Warrant
otherwise requires: (1) words of any gender shall be deemed to include each
other gender; (2) words using the singular or plural number shall also include
the plural or singular number, respectively; (3) the words "hereof", "herein"
and "hereunder" and words of similar import when used in this Warrant shall
refer to this Warrant as a whole and not to any particular provision of this
Warrant, and Section and paragraph references are to the Sections and paragraphs
of this Warrant unless otherwise specified; (4) the word "including" and words
of similar import when used in this Warrant shall mean "including, without
limitation," unless otherwise specified; (5) "or" is not exclusive; and (6)
provisions apply to successive events and transactions.
22. GOVERNING LAW. This Warrant shall be governed by, and
construed in accordance with, the laws of the State of Delaware (without giving
effect to the conflict of laws principles thereof).
23. COSTS AND ATTORNEYS' FEES. In the event that any
action, suit or other proceeding is instituted concerning or arising out of this
Warrant, the Company shall pay all of the Holder's costs and reasonable
attorneys' fees incurred in each and every such action, suit or other
proceeding, including any and all appeals or petitions therefrom.
24. JUDICIAL PROCEEDINGS. Any legal action, suit or
proceeding brought against the Company or the Holder with respect to this
Warrant shall be brought in any federal or state court in the State of Delaware,
and by execution and delivery of this Warrant, the Company and the Holder hereby
irrevocably and unconditionally waive any claim (by way of motion, as a defense
or otherwise) of improper venue, that it is not subject personally to the
jurisdiction of such court, that such courts are an inconvenient forum or that
this Warrant or the subject matter may not be enforced in or by such court. The
Company and the Holder hereby irrevocably and unconditionally consent to the
service of process of any of the aforementioned courts in any such action, suit
or proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, at its address set forth or provided for in Section 17, such
service to become effective 10 days after such mailing. Nothing herein contained
shall be deemed to affect the right of any party to serve process in any manner
permitted by law or commence legal proceedings or otherwise proceed against any
other party in any other jurisdiction to enforce judgments obtained in any
action, suit or proceeding brought pursuant to this Section.
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HYPERCOM CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------------------
Title: Executive Vice President and
Chief Operating Officer
-------------------------------
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EXHIBIT A to
Common Stock Purchase Warrant
ELECTION TO PURCHASE SHARES
The undersigned hereby irrevocably elects to exercise the
Warrant to purchase ____ shares of Common Stock, par value $.001 per share
("Common Stock"), of Hypercom Corporation and hereby [makes payment of $________
therefor] [or] [makes payment therefor by reduction pursuant to Section
2.1(b)(ii) of the Warrant of the number of shares of Common Stock otherwise
issuable to the Holder upon Warrant exercise by ___ shares] [or] [makes payment
therefor by delivery of the following Common Stock Certificates of the Company
(properly endorsed for transfer in blank) for cancellation by the Company
pursuant to Section 2.1(b)(iii) of the Warrant, certificates of which are
attached hereto for cancellation [list certificates by number and amount]]. The
undersigned hereby requests that certificates for such shares be issued and
delivered as follows:
ISSUE TO:_______________________________________________________________________
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
________________________________________________________________________________
(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
DELIVER TO:_____________________________________________________________________
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
If the number of shares of Common Stock purchased (and/or
reduced) hereby is less than the number of shares of Common Stock covered by the
Warrant, the undersigned requests that a new Warrant representing the number of
shares of Common Stock not so purchased (or reduced) be issued and delivered as
follows:
ISSUE TO:_______________________________________________________________________
(NAME OF HOLDER)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
DELIVER TO:_____________________________________________________________________
(NAME OF HOLDER)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
Dated: _____________, 200_ HOLDER
By ____________________________
Name:
Title:
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EXHIBIT A to
Common Stock Purchase Warrant
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto the Assignee named below all of the rights of the undersigned to
purchase Common Stock, par value $.001 per share ("Common Stock") of HYPERCOM
Corporation represented by the Warrant, with respect to the number of shares of
Common Stock set forth below:
Name of Assignee Address No. of Shares
and does hereby irrevocably constitute and appoint Hypercom Corporation to make
such transfer on its books maintained for that purpose, with full power of
substitution in the premises.
Dated: _______________, 200_ XXXX CAPITAL PARTNERS LLC
Signature Guaranteed
_____________________________
_____________________________ By _____________________________
Name:
Title:
NOTICE: The signature to this Assignment must correspond with the name upon the
face of the within Warrant in every particular, without alteration or
enlargement or any change whatever.
