SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT, dated October 12, 2000, is by and
between Contera Corporation, a Delaware corporation (the "Company") and
eAcceleration Corp., a Delaware corporation (the "Buyer").
RECITALS:
WHEREAS, the Buyer desires to purchase 10,000 shares (the "Initial Shares")
of the common stock, par value $.001 per share (the "Common Stock"), of the
Company, and 100,000 warrants (the "Initial Warrants") to purchase Common Stock,
on the date hereof;
WHEREAS, the Company desires to sell to the Buyer the Initial Shares and
the Initial Warrants on the date hereof;
WHEREAS, the Buyer desires to acquire the right to purchase 10,000
additional shares (the "Additional Shares", and together with the Initial
Shares, the "Shares") of Common Stock, and the right to purchase an additional
100,000 Warrants (the "Additional Warrants", and together with the Initial
Warrants, the "Warrants"), at the Buyer's sole discretion;
WHEREAS, the Company desires to sell to the Buyer the Additional Shares and
Additional Warrants; and
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties and covenants herein contained, and
other good and valuable consideration, the receipt and adequacy is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Sale and Purchase of Shares and Warrants.
(a) The Company hereby sells to the Buyer, and the Buyer hereby subscribes
for and purchases from the Company, (i) the Initial Shares and (ii) the Initial
Warrants on the date hereof, in accordance with the provisions of this Agreement
and applicable law. The Initial Warrants shall have an exercise price of $5.00
per share and shall have the terms of, and be evidenced by, a Warrant
certificate, the form of which is attached to this Agreement as Exhibit A.
(b) The Buyer shall have the right on a date to be determined by the Buyer
(the "Additional Closing Date"), in the sole discretion of the Buyer, to
purchase from the Company, (i) the Additional Shares and (ii) the Additional
Warrants in accordance with the provisions of this Agreement and applicable law.
The Additional Warrants shall have an exercise price of
$5.00 per share and shall have the terms of, and be evidenced by, a Warrant
certificate, the form of which is attached to this Agreement as Exhibit A.
2. Amount of Consideration.
(a) In consideration for (i) the issuance of the Initial Shares and the
Initial Warrants to the Buyer by the Company pursuant to Paragraph 1(a) above
and (ii) the right to purchase the Additional Shares and Additional Warrants, as
set forth in Paragraph 1(b) above, The Buyer shall pay and deliver to the
Company an aggregate of $50,000 on the date hereof.
(b) In consideration for the issuance of the Additional Shares and the
Additional Warrants to the Buyer by the Company on the Additional Closing Date
pursuant to Paragraph 1(b) above, the Buyer shall pay and deliver to the Company
an additional $50,000 on the Additional Closing Date.
3. Representations, Warranties and Covenants of the Company. The Company
represents and warrants to and covenants with the Buyer as follows:
(a) Corporate Status and Capitalization. The Company (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, (ii) has all necessary corporate power and authority to own,
operate or lease the properties and assets now owned, operated or leased by the
Company and to carry on the business of the Company, as it is now being
conducted, and (iii) is duly licensed or qualified and in good standing as a
foreign corporation authorized to do business in each jurisdiction wherein the
character of the properties owned or leased by the Company and/or the nature of
the activities conducted by the Company makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified and in good
standing would not prevent the Company from performing any of its material
obligations under this Agreement and would not have a material adverse effect on
the business, operations or financial condition of the Company (a "Material
Adverse Effect");
(b) Company Capital Structure. The authorized capital stock of the Company
consists of 3,000,000 shares of Common Stock, of which there are no more than
712,300 shares issued and outstanding as of the date of this Agreement. All
outstanding shares of Common Stock are duly authorized, validly issued, fully
paid and non-assessable and are not subject to preemptive rights created by
statute, the Certificate of Incorporation or Bylaws of the Company or any
agreement or document to which the Company is a party or by which it is bound.
Schedule 3(b) lists each outstanding option and warrant, if any, to acquire
shares of the Common Stock as of the date of this Agreement, the name of the
holder of such option or warrant, the number of shares subject to such option or
warrant, the exercise price of such option or warrant, the number of shares as
to which such option will have vested at such date and whether the
exercisability of such option or warrant will be accelerated in any way by the
transactions contemplated by this Agreement or for any other reason, and
indicate the extent of acceleration, if any.
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(c) Authority of Agreement. The Company has the power and authority to
accept, execute and deliver this Agreement and, to carry out its obligations
hereunder; the execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company;
this Agreement, constitutes the valid and legally binding obligation of the
Company enforceable against the Company in accordance with its terms; and the
shares of Common Stock to be issued hereunder, upon issuance thereof in
accordance with the terms hereof, and the shares (each, a "Warrant Share") of
Common Stock issuable upon exercise of the Warrants, upon issuance in accordance
with the terms of the Warrants, will be validly authorized, fully paid and
non-assessable;
(d) Consents and Approvals; No Conflict.
(i) The acceptance, execution and delivery of this Agreement by
the Company does not, and the performance by the Company of its obligations
hereunder, upon acceptance by the Company (in whole or part), will not,
require any consent, approval, authorization or other action by, or filing
with or notification to, any governmental or regulatory authority, other
than (A) in connection with state securities or "blue sky" laws (the "Blue
Sky laws") or (B) in connection with the filing with the Commission of a
registration statement under the Securities Act upon the due exercise of
the rights granted the Buyer pursuant to Section 6 of this Agreement,
except where failure to obtain such consent, approval, authorization or
action, or to make such filing or notification, would not prevent the
Company from performing any of its material obligations under this
Agreement and would not have a Material Adverse Effect; and
(ii) The acceptance, execution, delivery and performance of this
Agreement by the Company and the other agreements and documents to be
executed, delivered and performed by the Company pursuant hereto and the
consummation of the transactions contemplated hereby and thereby by the
Company do not and will not conflict with, violate or result in a breach or
termination of any provision of, or constitute a default under (or event
which with the giving of notice or lapse of time, or both, would become a
default under) the Certificate of Incorporation or By-laws of the Company
or, except as would not prevent the Company from performing any of its
material obligations under this Subscription Agreement and would not have a
Material Adverse Effect, any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to the Company or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any lien or encumbrance on
any of the assets or properties of the Company pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument relating to such assets or properties to which the
Company is a party or by which any of such assets or properties is bound;
(e) Absence of Litigation. No claim, action, proceeding or investigation is
pending which seeks to delay or prevent the consummation of the transactions
contemplated hereby or which
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would be reasonably likely to adversely affect the Company's ability to
consummate the transactions contemplated hereby or which would have a Material
Adverse Effect;
(f) Taxes. The Company (i) has filed or will file all federal, state and
local tax returns required to be filed or sent or has obtained extensions
thereof; (ii) has timely paid or made provision for all taxes shown as due and
payable on its tax returns required to be filed prior to the date hereof and all
assessments received by the Company; and (iii) will timely pay all taxes that
will be shown as due and payable on its tax returns required to be filed after
the date hereof, except to the extent that the Company is or shall be contesting
such taxes and assessments in good faith by appropriate proceedings;
(g) Extent of Offering by the Company. Subject in part to the truth and
accuracy of the Company's representations set forth in Section 4(d)-(j) of this
Agreement and the compliance by all agents of the Company with Rule 503(c) of
Regulation D ("Regulation D") promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), the offer, sale and issuance of the Shares and
Warrants, as contemplated by this Agreement, are exempt from the registration
requirements of the Securities Act and are exempt or the Company has complied
with registration requirements of each state's Blue Sky laws where the Shares
and Warrants are offered or sold, and the Company will not intentionally take,
or intentionally not take, any action hereafter that would cause the loss of
such exemption or registration;
(h) Financial Statements. The balance sheets of December 31, 1998 and 1999
and the related statements of operations, changes in stockholders' equity and
cash flows, each for each of the two years then ended (the "Financial
Statements"), as included as Schedule 3(h) hereto, are correct and complete and
fairly present the financial position of the Company as of the dates thereof and
the results of operations of the Company for the periods covered thereby.
(i) Absence of Undisclosed Liabilities. The Company has no material
liabilities or obligations, absolute or contingent (individually or in the
aggregate), except (x) as set forth in the Financial Statements or otherwise on
Schedule 3(h) or (y) as incurred in the ordinary course of business after the
date of the Audited Financial Statements;
(j) Intellectual Property Rights. Except as set forth in Schedule 3(j), the
Company has sufficient trademarks, trade names, patent rights, copyrights and
licenses to conduct its business as contemplated therein; and to the Company's
knowledge, neither the Company nor its products is infringing or will infringe
any trademark, trade name, patent right, copyright, license, trade secret or
other similar right of others currently in existence; and there is no claim
being made against the Company regarding any trademark, trade name, patent,
copyright, license, trade secret or other intellectual property right which
could have a Material Adverse Effect;
(k) Material Contracts. All material contracts of the Company are set forth
in Schedule 3(k). Except as expressly set forth in Schedule 3(k), the agreements
to which the Company is a party described therein are valid agreements, in full
force and effect; the Company is not in material
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breach or material default (with or without notice or lapse of time, or
both) under any of such agreements; and, to the Company's knowledge, the other
contracting party(ies) thereto are not in material breach or material default
(with or without notice or lapse of time, or both) under any of such agreements;
(l) Title to Assets. Except as set forth in Schedule 3(l), the Company has
good and marketable title to all properties and material assets described
therein as owned by it, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest other than such as are not material to
the business of the Company;
(m) Subsidiaries. The Company does not presently own or control, directly
or indirectly, any interest in any other corporation, partnership, association
or other business entity, except as set forth in Schedule 3(m); and
(n) Required Governmental Permits. The Company is in possession of and
operating in compliance with all authorizations, licenses, certificates,
consents, orders and permits from state, federal and other regulatory
authorities which are material to the conduct of its business, all of which are
valid and in full force and effect.
4. Representations, Warranties and Covenants of the Buyer. The Buyer hereby
represents, warrants and acknowledges to and covenants and agrees with the
Company as follows:
(a) Status. The Buyer is a corporation, validly existing and in good
standing under the laws of the State of Delaware with full power and authority
to execute, deliver and perform its obligations hereunder; and,
(b) Authority for Agreements. The Buyer has the power and authority to
execute and deliver this Agreement and to carry out its obligations hereunder;
and the execution, delivery and performance by the Buyer of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Buyer and this Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
against the Buyer in accordance with its terms;
(c) Consents and Approvals, No Conflicts.
(i) The execution and delivery of this Agreement by the Buyer do
not, and the performance by the Buyer's of its obligations hereunder will
not, require any consent, approval, authorization or other action by, or
filing with or notification to, any governmental or regulatory authority,
except where failure to obtain such consent, approval, authorization or
action, or to make such filing or notification, would not prevent the Buyer
from performing any of its material obligations under this Agreement; and
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(ii) The execution, delivery and performance of this Agreement by
the Buyer and the other agreements and documents to be executed, delivered
and performed by the Buyer pursuant hereto and the consummation of the
transactions contemplated hereby and thereby by the Buyer do not and will
not conflict with, violate or result in a breach or termination of any
provision of, or constitute a default under (or event which with the giving
of notice or lapse of time, or both, would become a default under) the
Certificate of Incorporation or By-laws of the Buyer, or, except as would
not prevent the Buyer from performing any of its material obligations under
this Agreement and would not have a material adverse effect on the
business, operations or financial condition of the Buyer, any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award applicable to the Buyer or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of
any lien or encumbrance on any of the assets or properties of the Buyer
pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument relating to such
assets or properties to which the Buyer is a party or by which any of such
assets or properties is bound;
(d) Investment Intent. The Buyer is acquiring the Shares and the Warrants,
and will acquire the and the shares of Common Stock issuable upon exercise of
such Warrants (the "Warrant Shares"), for the Buyer's own account, for
investment only and not with a view to, or for sale in connection with, a
distribution thereof or any part thereof, within the meaning of the Securities
Act, and the rules and regulations promulgated thereunder, or any applicable
state Blue Sky laws;
(e) Investor Status. The Buyer is an accredited investor as such term is
defined under Regulation D promulgated pursuant to the Securities Act
("Regulation D") and all of the representations and warranties of the Buyer set
forth herein are correct and complete as of the date of this Agreement and as of
the Additional Closing Date; and, if there should by any material change in such
information prior to the Additional Closing Date, the Buyer will immediately
furnish such revised or corrected information to the Company;
(f) Intent to Transfer. The Buyer is not a party or subject to or bound by
any contract, undertaking, agreement or arrangement with any person to sell,
transfer or pledge the Shares, Warrants and/or Warrant Shares or any part
thereof to any person, and has no present intention to enter into such a
contract, undertaking, agreement or arrangement;
(g) Sale Exempt from Registration; Company's Reliance.
(i) The Company has advised the Buyer that neither the Shares,
Warrants and/or Warrant Shares have been registered under the Securities
Act or under the laws of any state on the basis that the issuance thereof
is exempt from such registration; and
(ii) The Company's reliance on the availability of such exemption
is, in part, based upon the accuracy and truthfulness of the Buyer's
representations contained herein;
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(h) Securities to be Issued Without Registration; No Resale Without
Registration. The Buyer acknowledges, understands, covenants and agrees that:
(i) The Shares, Warrants and the Warrant Shares have not been
registered under the Securities Act or any applicable state Blue Sky laws;
(ii) As a result of such lack of registration, the Shares, Warrants
and Warrant Shares may not be resold or otherwise transferred or disposed
without registration pursuant to or an exemption therefrom available under the
Securities Act and such state Blue Sky laws;
(iii) In furtherance of the provisions of this Section 3(h), all of the
certificate(s) representing the Shares, Warrants and Warrant Shares shall bear
the restrictive legends substantially in the following forms:
If on the certificate(s) representing the Shares and/or Warrant Shares:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SHARES TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE
SECURITIES LAWS;"
If on the certificate(s) representing the Warrants:
"THE WARRANTS REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
WARRANTS HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH WARRANTS UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION
OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE WARRANTS TO THE EFFECT
THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE
SECURITIES LAWS;"
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(i) Sophistication of the Buyer. The Buyer has evaluated the merits and
risks of purchasing the Shares and the Warrants and has such knowledge and
experience in financial and business matters that the Buyer is capable of
evaluating the merits and risks of such purchase, is aware of and has considered
the financial risks and financial hazards of purchasing the Shares and the
Warrants, and is able to bear the economic risk of purchasing the Shares and the
Warrants, including the possibility of a complete loss with respect thereto; and
(j) Access to Information. The Buyer has had access to such information
regarding the business and finances of the Company, the Shares and the Warrants
and has been provided the opportunity to discuss with the Company's management
the business, affairs and financial condition of the Company and such other
matters with respect to the Company as would concern a reasonable person
considering the transactions contemplated by this Agreement and/or concerned
with the operation of the Company including, without limitation, pursuant to a
meeting and/or discussions with management of the Company;
5. Anti-Dilution Rights.
(a) Consents on Future Securities Issuances. The Company shall not issue
any shares of Common Stock, preferred stock or any options, warrants or other
securities of the Company that upon exercise or conversion would give any
present or future security holders thereof any rights to obtain any additional
shares of Common Stock that would total, when aggregated with all issued
securities of the Company on a fully diluted basis, more than one million shares
of Common Stock, without the prior written consent of the Buyer.
(b) Adjustments of Exercise Price, Number and Character of Warrant Shares,
and Number of Warrants. The exercise price and the number and kind of securities
purchasable upon the exercise of each of the Warrants shall be subject to
adjustment from time to time upon the happening of the events enumerated in
Section 3 of the certificate evidencing the Warrants, a form of which is
attached to this Agreement as Exhibit A.
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6. Registration Rights.
(a) Defined Terms. As used in this Section 6, terms defined elsewhere
herein shall have their assigned meanings and each of the following terms shall
have the following meanings (such definitions to be applicable to both the
plural and singular of the terms defined):
(i) Registerable Securities. The term "Registerable Securities"
shall mean any of the Shares and Warrant Shares, including any shares of
Common Stock or other securities received in connection with any stock
split, stock dividend, merger, reorganization, recapitalization,
reclassification or other distribution payable or issuable upon shares of
Common Stock. For the purposes of this Agreement, securities will cease to
be Registerable Securities when (A) a registration statement under the
Securities Act covering such Registerable Securities has been declared
effective and such Registerable Securities have been disposed of pursuant
to such effective registration statement, (B) such Registerable Securities
are distributed to the public pursuant to the Securities Act or pursuant to
an exemption from the registration requirements of the Securities Act,
including, but not limited to, Rules 144 and 144A promulgated under the
Securities Act, or (C) such Registerable Securities have been otherwise
transferred and the Company, in accordance with applicable law and
regulations, has delivered new certificates or other evidences of ownership
for such securities which are not subject to any stop transfer order or
other restriction on transfer.
(ii) Rightsholders. The term "Rightsholders" shall include the
Buyer, all successors and assigns of the Buyer, and all transferees of
Registerable Securities where such transfer affirmatively includes the
transfer and assignment of the rights of the transferor Rightsholder under
this Agreement with respect to the transferred Registerable Securities;
provided, however, the term "Rightsholders" shall not include any person or
entity who has sold, transferred or assigned all of such person's or
entity's Registerable Securities.
(iii) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Section 6 shall refer to this Section 6 as
a whole and not to any particular provision of this Section 6, and
subsection, paragraph, clause, schedule and exhibit references are to this
Section 6 unless otherwise specified.
(b) Demand Registration.
(i) Right to Demand. Subject to Section 6(b)(ii) hereof, at any
time on or after the date (the "Registration Right Exercise Commencement
Date") which is twelve months following the date on which a registration
statement filed by the Company with the Securities and Exchange Commission
(the "Commission") under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), with respect to the Common Stock is declared or
deemed effective under the Exchange Act, the Initiating Holders (as defined
in paragraph 6(b)(vi) below) may make a written request (each, a "Demand
Request") to the Company for registration under the Securities Act of all
or part of their Registerable Securities (each, a
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"Demand Registration"). Within ten days after receipt of a Demand Request,
the Company shall deliver a written notice (the "Notice") of such Demand
Request to all other Rightsholders. The Company will include in such
Demand Registration all Registerable Securities with respect to which the
Company has been given written requests (each, a "Tag-Along Request") for
inclusion therein within twenty days after the giving of the Notice. Each
and every Demand Request shall be required to specify the aggregate amount
of the Registerable Securities to be included in such Demand Registration
by the Initiating Holders, the amount of Registerable Securities to be
registered for each of the Initiating Holders and the intended method(s)
of disposition thereof, including whether or not such Demand Registration
or portion thereof is to relate to an underwritten offering, the
name of the managing underwriter(s), if any, and the terms of any such
underwriting. Each and every Tag-Along Request shall be required to
specify the amount of Registerable Securities to be registered in the
Demand Registration and the intended method(s) of disposition thereof,
including whether or not the Registerable Securities subject to such
Tag-Along Request or portion thereof is to relate to an underwritten
offering, the name of the managing underwriter(s), if any, and the terms of
any such underwriting.
(ii) Number of Demand Registrations; Expenses. Subject to the
provisions of Section 6(b)(iii) hereof, the holders of Registerable
Securities shall be entitled, in the aggregate, to one Demand Registration,
the Registration Expenses (as defined in Section 6(e) hereof) of which,
subject to the provisions of Section 6(e), shall be borne by the Company,
but the Company shall not be responsible for the payment of any
underwriter's discount, commission or selling concession in connection with
any of the Registerable Securities. The Company shall not be deemed to have
effected a Demand Registration unless and until such Demand Registration is
declared effective.
(iii) Priority on Demand Registrations.
(A) Whenever the Company shall effect a Demand
Registration in connection with an underwritten offering by one or
more Initiating Holders, no other securities, including other
Registerable Securities shall be included in such Demand Registration,
unless (1) the managing underwriter(s) with respect to such Demand
Registration shall have advised the Company and each Initiating Holder
whose Registerable Securities were included in the Demand Request, in
writing, that the inclusion of such other securities would not
adversely affect such underwritten offering or (2) the Initiating
Holders shall each have consented in writing to the inclusion of such
other securities. In the event of such written advice of the managing
underwriter(s) or unanimous consent by the Initiating Holders, the
Company will include in such Demand Registration securities of the
Company in the following order of priority until the maximum number of
securities included in the written advice of the managing
underwriter(s) or unanimous consent of such Initiating Holders shall
be reached: (1) first, pro rata (based upon the amount of Registerable
Securities) among the Registerable Securities included in the Demand
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Request which are subject to the underwritten offering, (2) second,
pro rata (based upon the amount of Registerable Securities) among the
Registerable Securities of the other holders (each, a "Rightsholder")
of registration rights granted by the Company in connection with the
sale of the Warrants who have given a Tag-Along Request with respect
to such Demand Registration where the method of distribution shall be
pursuant to an underwritten offering, (3) third, pro rata (based upon
the amount of Registerable Securities) among all other Registerable
Securities included in the Demand Request and Tag- Along Request(s)
and (4) fourth, pro rata (based upon the amount of securities owned
which carry registration rights) among all other securities to which
the Company has granted registration rights and for which a request
for inclusion in the Demand Registration shall have been made.
(B) Whenever the Company shall effect a Demand
Registration in connection with an offering of Registerable Securities
of Initiating Holders for which the intended method(s) of distribution
shall not include an underwritten offering, and the holders of a
majority of the Registerable Securities which were subject to the
Demand Request shall advise the Company in writing that, in the
opinion of such Initiating Holders, the number of securities proposed
to be sold in such Demand Registration would adversely affect such
offering, the Company will include in such Demand Registration
securities in the following order of priority until the maximum number
of securities included in the written advice of such Initiating
Holders shall be reached: (1) first, pro rata (based upon the amount
of Registerable Securities) among the Registerable Securities included
in the Demand Request, (2) second, pro rata (based upon the amount of
Registerable Securities) among the Registerable Securities of the
Rightsholders who have given a Tag-Along Request with respect to such
Demand Registration where the method of distribution shall be pursuant
to an underwritten offering, (3) third, pro rata (based upon the
amount of Registerable Securities) among all other Registerable
Securities included in the Demand Request and Tag-Along Request(s) and
(4) fourth, pro rata (based upon the amount of securities owned which
carry registration rights) among all other securities to which the
Company has granted registration rights and for which a request for
inclusion in the Demand Registration shall have been made.
(C) In the event that Initiating Holders and other
Rightsholders who have given a Tag-Along Request are unable to have
registered the full amount of Registerable Securities which they
requested to be registered pursuant to a Demand Request or Tag-Along
Request, pursuant to the provisions of this Section 6(b), such
Initiating Holders and other Rightsholders shall retain the right to
one Demand Registration with respect to such unregistered Registerable
Securities subject to such Demand Request and Tag-Along Request.
(iv) Delay in Effecting Demand Registration. Notwithstanding
anything in the foregoing to the contrary, the Company shall not be
obligated to effect a Demand
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Registration at any time when the Company, in the good faith judgment of
its Board of Directors made no later than 30 days after the giving of
the Demand Request with respect to such Demand Registration, reasonably
believes that the filing thereof at the time requested, or the
offering of securities pursuant thereto, would be detrimental to
the interests of Company or its stockholders. The effectuation
of a Demand Registration cannot be suspended, pursuant to the provisions
of the preceding sentence, for more than 60 days after the date of the
Board's determination referenced in the preceding sentence.
(v) Approval of Underwriter by the Company. If the Demand
Registration is to involve an underwritten offering, the managing
underwriter(s) and each selling agent selected by those Rightsholders
participating in each such underwritten offering shall be subject to the
written approval of the Company, which approval may not be unreasonably
withheld.
(vi) "Initiating Holders" Defined. For purposes of this
Subscription Agreement, the term "Initiating Holders" shall mean, on any
given date, those Rightsholders holding Registerable Securities and/or
Warrants which, if duly exercised in accordance with their terms, would
result in the issuance of Warrant Shares that would be deemed Registerable
Securities under Subsection 6(a)(i), which would aggregate 50% or more of
the total Registerable Securities and Warrants that would be outstanding on
such date.
(c) Piggy-Back Registration.
(i) If at any time, the Company proposes to file a registration
statement under the Securities Act with respect to an offering by the
Company or any other party of any class of equity security similar to any
Registerable Securities (other than a registration statement on Form S-4 or
S-8 or any successor form or a registration statement filed solely in
connection with an exchange offer, a business combination transaction or an
offering of securities solely to the existing stockholders or employees of
the Company), then the Company, on each such occasion, shall give written
notice (each, a "Company Piggy-Back Notice") of such proposed filing to all
of the Rightsholders owning Registerable Securities at least 30 days before
the anticipated filing date of such registration statement, and such
Company Piggy-Back Notice also shall be required to offer to such
Rightsholders the opportunity to register such aggregate number of
Registerable Securities as each such Rightsholder may request. Each such
Rightsholder shall have the right, exercisable for the twenty days
immediately following the giving of the Company Piggy-Back Notice, to
request, by written notice (each, a "Holder Notice") to the Company, the
inclusion of all or any portion of the Registerable Securities of such
Rightsholders in such registration statement. The Company shall use its
best efforts to cause the managing underwriter(s) of a proposed
underwritten offering to permit the inclusion of the Registerable
Securities which were the subject of all Holder Notices in such
underwritten offering on the same terms and conditions as any similar
securities of the Company included therein. Notwithstanding anything to the
contrary contained in this Section 6(c)(i), if the managing underwriter(s)
of such underwritten offering (or, in the case of an offering not being
underwritten, the Company) delivers a written opinion (or, in the
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case of the Company, a resolution of its Board of Directors certified by
the President or Secretary of the Company) to the Rightsholders of
Registerable Securities which were the subject of all Holder Notices that
the total amount and kind of securities which they, the Company and any
other person intend to include in such offering is such as to materially
and adversely affect the success of such offering, then the amount of
securities to be offered for the accounts of such Rightsholders and
persons other than the Company shall be eliminated or reduced pro rata
(based on the amount of securities owned by such Rightsholders and other
persons which carry registration rights) to the extent necessary to
reduce the total amount of securities to be included in such offering to
the amount recommended by such managing underwriter(s) in its written
opinion (or the Board of Directors in its resolution).
(ii) Number of Piggy-Back Registrations; Expenses. The
obligations of the Company under this Section 6(c) shall be unlimited with
respect to each Rightsholder. Subject to the provisions of Section 6(e)
hereof, the Company will pay all Registration Expenses in connection with
any registration of Registerable Securities effected pursuant to this
Section 6(c), but the Company shall not be responsible for the payment of
any underwriter's discount, commission or selling concession in connection
therewith.
(d) Registration Procedures.
(i) Obligations of the Company. The Company will, in connection
with any registration pursuant to Section 6(b) or (c) hereof, as
expeditiously as possible:
(A) prepare and file with the Commission a registration
statement under the Securities Act on any appropriate form chosen by
the Company, in its sole discretion, which shall be available for the
sale of all Registerable Securities in accordance with the intended
method(s) of distribution thereof set forth in all applicable Demand
Requests, Tag-Along Requests and Holder Notices, and use its
commercially reasonable best efforts to cause such registration
statement to become effective as soon thereafter as reasonably
practicable. After such filing, the Company shall, as diligently as
practicable, provide to each such Rightsholder such number of copies
of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus), all exhibits thereto and documents
incorporated by reference therein and such other documents as such
Rightsholder may reasonably request in order to facilitate the
disposition of the Registerable Securities owned by such Rightsholder
and included in such registration statement. The obligation of the
Company to effect such registration and/or cause such registration
statement to become effective, may be postponed for (1) such period of
time when the financial statements of the Company required to be
included in such registration statement are not available (due solely
to the fact that such financial statements have not been prepared in
the regular course of business of the Company) or (2) any other bona
fide corporate purpose, but then only for a period not to exceed 60
days;
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(B) prepare and file with the Commission such
amendments and post-effective amendments to a registration statement
as may be necessary to keep such registration statement effective for
up to nine months; and cause the related prospectus to be supplemented
by any required prospectus supplement, and as so supplemented to be
filed to the extent required pursuant to Rule 424 promulgated under
the Securities Act, during such nine-month period; and otherwise
comply with the provisions of the Securities Act with respect to the
disposition of all Registerable Securities covered by such
registration statement during the applicable period in accordance with
the intended method(s) of disposition of such Registerable Securities
set forth in such registration statement, prospectus or supplement to
such prospectus;
(C) notify the Rightsholders whose Registerable
Securities are included in such registration statement and the
managing underwriter(s), if any, of an underwritten offering of any of
the Registerable Securities included in such registration statement,
and confirm such advice in writing, (1) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and,
with respect to a registration statement or any post-effective
amendment, when the same has become effective, (2) of any request by
the Commission for amendments or supplements to a registration
statement or related prospectus or for additional information, (3) of
the issuance by the Commission of any stop order suspending the
effectiveness of a registration statement or the initiation of any
proceedings for that purpose, (4) if at any time the representations
and warranties of the Company contemplated by clause (1) of Section
6(d)(i)(J) hereof cease to be true and correct, (5) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of any of the Registerable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose and (6) of the happening of any event which makes any
statement made in the registration statement, the prospectus or any
document incorporated therein by reference untrue or which requires
the making of any changes in the registration statement or prospectus
so that such registration statement, prospectus or document
incorporated by reference will not contain any untrue statement of
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(D) make reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of such registration statement
at the earliest possible moment and to prevent the entry of such an
order;
(E) use reasonable efforts to register or qualify the
Registerable Securities included in such registration statement under
such other securities or Blue Sky laws of such jurisdictions as any
Rightsholder whose Registerable Securities are included in such
registration statement reasonably requests in writing and do any and
all other acts and things which may be necessary or advisable to
enable such Rightsholder to
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consummate the disposition in such jurisdictions of such
Registerable Securities; provided, that the Company will not be
required to (1) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this
Section 6(d)(i)(E), (2) subject itself to taxation in any such
jurisdiction or (3) take any action which would subject it to general
service of process in any such jurisdiction;
(F) make available for inspection by each Rightsholder
whose Registerable Securities are included in such registration, any
underwriter(s) participating in any disposition pursuant to such
registration statement, and any representative, agent or employee of
or attorney or accountant retained by any such Rightsholder or
underwriter(s) (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the
Company (collectively, the "Records") as shall be reasonably necessary
to enable them to exercise their due diligence responsibility (or
establish a due diligence defense), and cause the officers, directors
and employees of the Company to supply all information reasonably
requested by any such Inspector in connection with such registration
statement; provided, that records which the Company determines, in
good faith, to be confidential and which it notifies the Inspectors
are confidential shall not be disclosed by the Inspectors, unless (1)
the release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or (2) the disclosure of
such Records is required by any applicable law or regulation or any
governmental regulatory body with jurisdiction over such Rightsholder
or underwriter(s); provided, further, that such Rightsholder or
underwriter(s) agree that such Rightsholder or underwriter(s) will,
upon learning the disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to
prevent disclosure of the Records deemed confidential;
(G) cooperate with the Rightsholder whose Registerable
Securities are included in such registration statement and the
managing underwriter(s), if any, to facilitate the timely preparation
and delivery of certificates representing Registerable Securities to
be sold thereunder, not bearing any restrictive legends, and enable
such Registerable Securities to be in such denominations and
registered in such names as such Rightsholder or any managing
underwriter(s) may reasonably request at least two business days prior
to any sale of Registerable Securities;
(H) comply with all applicable rules and regulations of
the Commission and promptly make generally available to its security
holders an earnings statement covering a period of twelve months
commencing, (1) in an underwritten offering, at the end of any fiscal
quarter in which Registerable Securities are sold to underwriter(s),
or (2) in a non-underwritten offering, with the first month of the
Company's first fiscal quarter beginning after the effective date of
such registration
-15-
statement, which earnings statement in each case shall satisfy the
provisions of Section 11(a) of the Securities Act;
(I) provide a CUSIP number for all Registerable
Securities not later than the effective date of the registration
statement relating to the first public offering of Registerable
Securities of the Company pursuant hereto;
(J) enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other
actions reasonably requested by the Rightsholders holding a majority
of the Registerable Securities included in such registration statement
or the managing underwriter(s) in order to expedite and facilitate the
disposition of such Registerable Securities and in such connection,
whether or not an underwriting agreement is entered into and whether
or not the registration is an underwritten registration, (1) make such
representations and warranties, if any, to the holders of such
Registerable Securities and any underwriter(s) with respect to the
registration statement, prospectus and documents incorporated by
reference, if any, in form, substance and scope as are customarily
made by issuers to underwriter(s) in underwritten offerings and
confirm the same if and when requested, (2) obtain opinions of counsel
to the Company and updates thereof addressed to each such Rightsholder
and the underwriter(s), if any, with respect to the registration
statement, prospectus and documents incorporated by reference, if any,
covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such Rightsholders and underwriter(s), (3) obtain a "cold
comfort" letter and updates thereof from the Company's independent
certified public accountants addressed to such Rightsholders and to
the underwriter(s), if any, which letters shall be in customary form
and cover matters of the type customarily covered in "cold comfort"
letters by accountants in connection with underwritten offerings, and
(4) deliver such documents and certificates as may be reasonably
requested by the Rightsholders holding a majority of such Registerable
Securities and managing underwriter(s), if any, to evidence compliance
with any customary conditions contained in the underwriting agreement
or other agreement entered into by the Company; each such action
required by this Section 6(d)(i)(J) shall be done at each closing
under such underwriting or similar agreement or as and to the extent
required thereunder; and
(K) if requested by the holders of a majority of the
Registerable Securities included in such registration statement, use
its best efforts to cause all Registerable Securities which are
included in such registration statement to be listed, subject to
notice of issuance, by the date of the first sale of such Registerable
Securities pursuant to such registration statement, on each securities
exchange, if any, on which securities similar to the Registered
Securities are listed.
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(ii) Obligations of Rightsholders. In connection with any
registration of Registerable Securities of a Rightsholder pursuant to
Section 6(b) or (c) hereof:
(A) The Company may require that each Rightsholder
whose Registerable Securities are included in such registration
statement furnish to the Company such information regarding the
distribution of such Registerable Securities and such Rightsholder as
the Company may from time to time reasonably request in writing; and
(B) Each Rightsholder, upon receipt of any notice from
the Company of the happening of any event of the kind described in
clauses (2), (3), (5) and (6) of Section 6(d)(i)(C) hereof, shall
forthwith discontinue disposition of Registerable Securities pursuant
to the registration statement covering such Registerable Securities
until such Rightsholder's receipt of the copies of the supplemented or
amended prospectus contemplated by clause (1) of Section 6(d)(i)(C)
hereof, or until such Rightsholder is advised in writing (the
"Advice") by the Company that the use of the applicable prospectus may
be resumed, and until such Rightsholder has received copies of any
additional or supplemental filings which are incorporated by reference
in or to be attached to or included with such prospectus, and, if so
directed by the Company, such Rightsholder will deliver to the Company
(at the expense of the Company) all copies, other than permanent file
copies then in the possession of such Rightsholder, of the current
prospectus covering such Registerable Securities at the time of
receipt of such notice; the Company shall have the right to demand
that such Rightsholder or other holder verify its agreement to the
provisions of this Section 6(d)(ii)(B) in any Demand Request,
Tag-Along Request or Holder Notice of the Rightsholder or in a
separate document executed by the Rightsholder.
(e) Registration Expenses. All expenses incident to the performance of or
compliance with this Agreement by the Company, including, without imitation, all
registration and filing fees of the Commission, National Association of
Securities Dealers, Inc. and other agencies, fees and expenses of compliance
with federal securities or Blue Sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registerable Securities), rating agency fees, printing expenses, messenger and
delivery expenses, internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the fees and expenses incurred in connection with the
listing, if any, of the Registerable Securities on any securities exchange and
fees and disbursements of counsel for the Company and the Company's independent
certified public accountants (including the expenses of any special audit or
"cold comfort" letters required by or incidental to such performance),
Securities Act or other liability insurance (if the Company elects to obtain
such insurance), the fees and expenses of any special experts retained by the
Company in connection with such registration and the fees and expenses of any
other person retained by the Company (but not including any underwriting
discounts or commissions attributable to the sale of Registerable Securities or
other out-of-pocket expenses of the Rightsholders, or the agents who act on
their behalf, unless
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reimbursement is specifically approved by the Company) will be borne by the
Company. All such expenses are herein referred to as "Registration Expenses."
Notwithstanding the foregoing, the Company shall not be required to pay for any
Registration Expenses of any Demand Registration if such Demand Request is
subsequently withdrawn at the request of the holders of a majority of the
Registerable Securities included in such Demand Registration (in which case all
Rightsholders which requested the withdrawal of the Demand Registration shall
bear such expenses pro rata); provided that, if, at the time of such withdrawal,
such Rightsholders have learned of a material adverse change in the condition,
business or prospects of the Company from that known to such Rightsholders at
the time of their Demand Request, such Rightsholders shall not be required to
pay any of such expenses. In either event, if such Rightsholders pay in full the
expenses of such withdrawn Demand Registration, such Rightsholders shall retain
the right to one Demand Registration.
(f) Indemnification: Contribution.
(i) Indemnification by the Company. The Company agrees to
indemnify and hold harmless, to the full extent permitted by law, each
Rightsholder, its officers and directors and each person who controls such
Rightsholder (within the meaning of the Securities Act), if any, and any
agent thereof against all losses, claims, damages, liabilities and expenses
incurred by such party pursuant to any actual or threatened suit, action,
proceeding or investigation (including reasonable attorney's fees and
expenses of investigation) arising out of or based upon any untrue or
alleged untrue statement of a material fact contained in any registration
statement, prospectus or preliminary prospectus or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in
the light of the circumstances under which they were made) not misleading,
except insofar as the same arise out of or are based upon, any such untrue
statement or omission based upon information with respect to such
Rightsholder furnished in writing to the Company by such Rightsholder
expressly for use therein.
(ii) Indemnification by Rightsholder. In connection with any
registration statement in which a Rightsholder is participating, each such
Rightsholder will be required to furnish to the Company in writing such
information with respect to such Rightsholder as the Company reasonably
requests for use in connection with any such registration statement or
prospectus, and each Rightsholder agrees to the extent it is such a holder
of Registerable Securities included in such registration statement, and
each other such holder of Registerable Securities included in such
Registration Statement will be required to agree, to indemnify, to the full
extent permitted by law, the Company, the directors and officers of the
Company and each person who controls the Company (within the meaning of the
Securities Act) and any agent thereof, against any losses, claims, damages,
liabilities and expenses (including reasonable attorney's fees and expenses
of investigation) incurred by such party pursuant to any actual or
threatened suit, action, proceeding or investigation arising out of or
based upon any untrue or alleged untrue statement of a material fact or any
omission or alleged omission of a material fact necessary, to make the
statements therein (in the case of a prospectus, in
-18-
the light of the circumstances under which they are made) not misleading,
to the extent, but only to the extent, that such untrue statement or
omission is based upon information relating to such Rightsholder or other
holder furnished in writing to the Company expressly for use therein.
(iii) Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party under this Section 6(f) of written notice
of the commencement of any action, proceeding, suit or investigation or
threat thereof made in writing for which such indemnified party may claim
indemnification or contribution pursuant to this Agreement, such
indemnified party shall notify in writing the indemnifying party of such
commencement or threat; but the omission so to notify the indemnifying
party shall not relieve the indemnifying party from any liability which the
indemnifying party may have to any indemnified party (A) hereunder, unless
the indemnifying party is actually prejudiced thereby, or (B) otherwise
than under this Section 6(f). In case any such action, suit or proceeding
shall be brought against any indemnified party, and the indemnified party
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and the
indemnifying party shall assume the defense thereof, with counsel
reasonably satisfactory to the indemnified party, and the obligation to pay
all expenses relating thereto. The indemnified party shall have the right
to employ separate counsel in any such action, suit or proceeding and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (A) the
indemnifying party has agreed to pay such fees and expenses, (B) the
indemnifying party shall have failed to assume the defense of such action,
suit or proceeding or to employ counsel reasonably satisfactory to the
indemnified party therein or to pay all expenses relating thereto or (C)
the named parties to any such action or proceeding (including any impleaded
parties) include both the indemnified party and the indemnifying party and
the indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to the indemnified party which are
different from or additional to those available to the indemnifying party
and which may result in a conflict between the indemnifying party and such
indemnified party (in which case, if the indemnified party notifies the
indemnifying party in writing that the indemnified party elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action or
proceeding on behalf of the indemnified party; it being understood,
however, that the indemnifying party shall not, in connection with any one
such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the fees
and expenses of more than one separate firm of attorneys at any time for
the indemnified party, which firm shall be designated in writing by the
indemnified party).
(iv) Contribution. If the indemnification provided for in this
Section 6(f) from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then the indemnifying party, in
-19-
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses (A) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying
party on the one hand and the indemnified party on the other or (B) if
the allocation provided by clause (A) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits received by the indemnifying party on the
one hand and the indemnified party on the other but also the relative
fault of the indemnifying party and indemnified party, as well as
any other relevant equitable considerations. The relative fault of
such indemnifying party and the indemnified parties shall be determined
by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been made by,
or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses,
claims, damages. liabilities and expenses referred to above shall be deemed
to include, subject to the limitation set forth in Section 6(f)(v)
hereof, any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 6(f)(iv) were determined by pro
rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in clauses (A) and
(B) of the immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
(v) Limitation. Anything to the contrary contained in this
Section 6(f) or in Section 6(g) notwithstanding, no holder of Registerable
Securities shall be liable for indemnification and contribution payments
aggregating an amount in excess of the maximum amount received by such
holder in connection with any sale of Registerable Securities as
contemplated herein.
(g) Participation in Underwritten Registration. No Rightsholder may
participate in any underwritten registration hereunder unless such Rightsholder
(i) agrees to sell such holder's securities on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to approve
such arrangements and to comply with Regulation M under the Exchange Act and
(ii) completes and executes all questionnaires, appropriate and limited powers
of attorney, escrow agreements, indemnities, underwriting agreements and other
documents reasonably required under the terms of such underwriting arrangement;
provided, that all such documents shall be consistent with the provisions of
Section 6(e) hereof.
-20-
8. Conduct of Business. During the period from the date of this Agreement
until such time that the Buyer no longer holds at least five percent (5%) of the
outstanding Common Stock (such percentage to include the Buyer's right to
acquire shares of Common Stock through the exercise or conversion of any
derivative securities, including warrants, whether or not presently exercisable
or convertible), or until the Additional Closing Date, whichever is later, the
Company shall continue to carry on its business diligently and in accordance
with good commercial practice and to carry on its business in the usual, regular
and ordinary course, in substantially the same manner as heretofore conducted,
to pay its debts and taxes when due subject to good faith disputes over such
debts or taxes, to pay or perform other material obligations when due, and use
its commercially reasonable efforts consistent with past practices and policies
to preserve intact its present business organization, keep available the
services of its present officers and employees and preserve its relationships
with customers, suppliers, distributors, licensors, licensees, and others with
which it has business dealings. In furtherance of the foregoing and subject to
applicable law, the Company agrees to confer with the Buyer, as promptly as
practicable, prior to taking any material actions or making any material
management decisions with respect to the conduct of business. In addition,
without the prior written consent of the Buyer, not to be unreasonably withheld
or delayed, the Company shall not:
(a) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to intellectual property,
other than in the ordinary course of business;
(b) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a material portion of the assets of, or
by any other manner, any business or any corporation, partnership interest,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to the business of the Company, or enter into any joint venture,
strategic partnership or alliance, other than in the ordinary course of business
consistent with past practice; or
(c) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of the Company, except in the ordinary course of business
consistent with past practice.
9. Further Assurances. At any time and from time to time after the date
hereof, the Buyer shall, without further consideration, execute and deliver to
the Company, or such other party as the Company may direct, such other
instruments or documents and shall take such other actions as the Company may
reasonably request to carry out the transactions contemplated by this Agreement.
10. Indemnification. The Buyer acknowledges that the Buyer understands the
meaning and legal consequences of the representations, warranties, covenants and
agreements contained herein, and the Buyer hereby agrees to indemnify and hold
harmless the Company, and the Company's directors, officers, employees, agents
and controlling persons, from and against any and all loss, damage or
-21-
liability due to or arising out of a breach by the Buyer of any such
representations, warranties, covenants and agreements contained herein.
11. Miscellaneous. The Company and the Buyer may waive compliance by the
other with any of the provisions of this Agreement. No waiver of any provision
hereof shall be construed as a waiver of any other provision. Any waiver must be
in writing. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and may be amended only by a
writing executed both parties hereto. The Distribution Agreement by and between
the Company and the Buyer, dated as of March 24, 1999 is unaffected by this
Agreement. This Agreement may be executed in counterparts, each of which shall
be deemed an original, and all of which shall constitute one and the same
instrument. This Agreement shall be governed in all respects, including
validity, interpretation and effect, by the laws of the State of Washington,
without regard to its conflicts of laws principles. In connection with any legal
suit, action or proceeding arising hereunder, the parties consent to the
jurisdiction of the Court, County of Kitsap, and the United States District
Court for the Western District of Washington. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the successors and
assigns of the parties hereto. This Agreement shall not be assignable by either
party without the prior written consent of the other. The rights and obligations
contained in this Agreement are solely for the benefit of the parties hereto and
are not intended to benefit or be enforceable by any other party, under the
third party beneficiary doctrine or otherwise.
-22-
IN WITNESS WHEREOF, the Company and the Buyer have caused this Agreement to
be signed by themselves or their duly authorized respective officers, all as of
the date first written above.
CONTERA CORPORATION
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
EACCELERATION CORP.
By: /s/ Xxxxx Xxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxx
Title: CEO
EXHIBIT A
NEITHER THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE NOR THE
SHARES OF COMMON STOCK OR ANY OTHER SECURITIES ISSUABLE UPON EXERCISE
OF SUCH WARRANTS HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. SUCH WARRANTS HAVE BEEN ACQUIRED, AND ANY SHARES OF
COMMON STOCK OR ANY OTHER SECURITIES ISSUABLE UPON EXERCISE OF SUCH
WARRANTS ARE REQUIRED TO BE ACQUIRED, FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH WARRANTS AND/OR SUCH SHARES
OR OTHER SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY
TO THE ISSUER OF SUCH WARRANTS AND SUCH SHARES OR OTHER SECURITIES TO
THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH
STATE SECURITIES LAWS.
VOID AFTER 5:00 P.M. ON OCTOBER 11, 2020
CONTERA CORPORATION
WARRANT CERTIFICATE
100,000 COMMON STOCK PURCHASE WARRANTS
Frederick, Maryland
Warrant Certificate No. A-1 As of October 12, 2000
THIS IS TO CERTIFY THAT, for value received, eAcceleration Corp., or
registered assigns (the "Warrantholder") permitted by the terms of this Warrant
Certificate, is the registered owner of the number of Common Stock Purchase
Warrants (each, a "Warrant") set forth above, each Warrant entitling the owner
thereof to purchase from Contera Corporation, a Delaware corporation (the
"Company"), at any time on or prior to 5:00 P.M., New York City time, on October
11, 2020 (the "Expiration Time"), one duly authorized, validly issued, fully
paid and nonassessable share (each, a "Warrant Share") of the common stock, par
value $.001 per share ("Common Stock"), of the Company, at a purchase price of
$5.00 per share (the "Exercise Price"), all subject to the terms and conditions
contained herein. The number of Warrants evidenced by this Warrant Certificate
(and the number and kind of securities which may be purchased upon exercise
hereof) set forth above, and the Exercise Price per share set forth above, are
as of the date hereof.
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As provided herein, the Exercise Price and the number of shares of
Common Stock or other securities which may be purchased upon the exercise of the
Warrants evidenced by this Warrant Certificate are, upon the happening of
certain events, subject to modification and adjustment.
If any term, condition or provision of this Warrant Certificate shall be
declared, to any extent, invalid or unenforceable, including but not limited to
the length of time until the Expiration Time the ("Term"), the remainder of the
Warrant Certificate, other than the term, condition or provision held invalid or
unenforceable, shall not be affected thereby and shall be considered in full
force and effect and shall be valid and be enforced to the fullest extent
permitted by law. It is the intention of the parties that if the Term is for a
length of time which is not permitted by applicable law, or in any way construed
to be invalid, a court of competent jurisdiction shall construe and interpret or
reform this Warrant Certificate to provide for a Term having the maximum
enforceable time period.
This Warrant Certificate, together with any warrant certificate(s)
issued in replacement or substitution hereof (as provided for herein) evidencing
all or part of the Warrants evidenced hereby, are sometimes collectively
referred to herein as the "Warrant Certificates."
The rights of the registered holder of this Warrant Certificate shall
be subject to the following further terms and conditions:
1. EXERCISE OF WARRANTS.
(a) The Warrants may be exercised, in whole or in part, on or prior to
the Expiration Time by surrendering this Warrant Certificate, with the purchase
form provided for herein duly executed by the Warrantholder or by the
Warrantholder's duly authorized attorney- in-fact, at the principal office of
the Company, presently located at 0000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx
00000, or at such other office or agency in the United States as the Company may
designate by notice in writing to the Warrantholder (in either event, the
"Company Offices"), accompanied by payment in full, either in the form of cash,
bank cashier's check or certified check payable to the order of the Company, of
the Exercise Price payable in respect of the Warrants being exercised; provided,
however, that the shares of Common Stock must, at the time of exercise, be
listed or admitted for trading on a national securities exchange, or quoted on
The Nasdaq Stock Market or the Over-The-Counter Bulletin Board maintained by the
National Association of Securities Dealers, Inc. If fewer than all of the
Warrants are exercised, the Company shall, upon each exercise prior to the
Expiration Time, execute and deliver to the Warrantholder a new Warrant
Certificate (dated as of the date hereof) evidencing the balance of the Warrants
that remain exercisable.
(b) Notwithstanding Section 1(a) above, the Warrants may be exercised,
in whole or in part, on a "cashless" basis, by stating in the attached exercise
purchase form provided herein such intention and the maximum number (the
"Maximum Number") of shares of Common Stock the Warrantholder desires to
purchase (and lose the right to purchase) in consideration of cancellation of
Warrants in payment for such exercise. The number of shares of Common Stock
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the Warrantholder shall receive upon such exercise shall equal the
difference between the Maximum Number and the quotient that is obtained when the
product of the Maximum Number and the then current Exercise Price is divided by
the then Current Market Price per share (as hereinafter defined).
(c) On the date of exercise of the Warrants, the Warrantholder
exercising same shall be deemed to have become the holder of record for all
purposes of the Warrant Shares to which the exercise relates.
(d) As soon as practicable, but not in excess of ten days, after the
exercise of all or part of the Warrants evidenced by this Warrant Certificate,
the Company, at its expense (including the payment by it of any applicable issue
taxes), will cause to be issued in the name of and delivered to the
Warrantholder a certificate or certificates evidencing the number of duly
authorized, validly issued, fully paid and nonassessable Warrant Shares to which
the Warrantholder shall be entitled upon such exercise.
(e) No certificates for fractional Warrant Shares shall be issued upon
the exercise of any of the Warrants but, in lieu thereof, the Company shall,
upon exercise of all the Warrants, round up any fractional Warrant Share to the
nearest whole share of Common Stock.
2. ISSUANCE OF COMMON STOCK; RESERVATION OF SHARES.
(a) The Company covenants and agrees that all Warrant Shares which may
be issued upon the exercise of all or part of the Warrants will, upon issuance
in accordance with the terms hereof, be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.
(b) The Company further covenants and agrees that if any shares of
Common Stock to be reserved for the purpose of the issuance of Warrant Shares
upon the exercise of Warrants require registration with, or approval of, any
governmental authority under any federal or state law before such shares may be
validly issued or delivered upon exercise, then the Company will promptly use
its best efforts to effect such registration or obtain such approval, as the
case may be.
3. ADJUSTMENTS OF EXERCISE PRICE, NUMBER AND CHARACTER OF WARRANT SHARES, AND
NUMBER OF WARRANTS.
The Exercise Price and the number and kind of securities purchasable
upon the exercise of each Warrant shall be subject to adjustment from time to
time upon the happening of the events enumerated in this Section 3.
(a) Stock Dividends, Subdivisions and Combinations. In case the
Company shall at any time on or before the Expiration Time:
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(i) pay a dividend in shares of Common Stock or other stock
of the Company or make a distribution in shares of Common Stock or such
other stock to holders of all its outstanding shares of Common Stock;
(ii) subdivide or reclassify the outstanding shares of
Common Stock into a greater number of shares;
(iii) combine the outstanding shares of Common Stock into a
smaller number of shares of Common Stock; or
(iv) issue by reclassification of its shares of Common Stock
other securities of the Company (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing corporation),
then the number and kind of Warrant Shares purchasable upon exercise of each
Warrant outstanding immediately prior thereto shall be adjusted so that the
Warrantholder shall be entitled to receive the kind and number of shares of
Common Stock or other securities of the Company which the Warrantholder would
have owned or have been entitled to receive after the happening of any of the
events described above had such Warrant been exercised in full immediately prior
to the earlier of the happening of such event or any record date in respect
thereto. In the event of any adjustment of the number of Warrant Shares
purchasable upon the exercise of each then outstanding Warrants pursuant to this
Paragraph 3(a), the Exercise Price shall be adjusted to be the amount resulting
from dividing the number of shares of Common Stock (including fractional shares
of Common Stock) covered by such Warrant immediately after such adjustment into
the total amount payable upon exercise of such Warrant in full immediately prior
to such adjustment. An adjustment made pursuant to this Paragraph 3(a) shall
become effective immediately after the effective date of such event retroactive
to the record date for any such event. Such adjustment shall be made
successively whenever any event listed above shall occur.
(b) Extraordinary Dividends. In case the Company shall at any time on
or before the Expiration Time fix a record date for the issuance of rights,
options, or warrants to all holders of its outstanding shares of Common Stock,
entitling them (for a period expiring within 45 days after such record date) to
subscribe for or purchase shares of Common Stock (or securities exchangeable for
or convertible into shares of Common Stock) at a price per share of Common Stock
(or having an exchange or conversion price per share of Common Stock, with
respect to a security exchangeable for or convertible into shares of Common
Stock) which is lower than the current Market Price per share of Common Stock
(as defined in Paragraph 3(g) below) on such record date, then the Exercise
Price shall be adjusted by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, of which (i) the numerator shall be the
number of shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate offering price of the total number
of shares of Common Stock so to be offered (or the aggregate initial exchange or
conversion price of the exchangeable or convertible securities so to be offered)
would purchase at such current Market Price and (ii) the denominator shall be
the number of shares of Common Stock outstanding on
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such record date plus the number of additional shares of Common Stock to be
offered for subscription or purchase (or into which the exchangeable or
convertible securities so to be offered are initially exchangeable or
convertible). Such adjustment shall become effective at the close of business on
such record date; however, to the extent that shares of Common Stock (or
securities exchangeable for or convertible into shares of Common Stock) are not
delivered after the expiration of such rights, options, or warrants, the
Exercise Price shall be readjusted (but only with respect to Warrants exercised
after such expiration) to the Exercise Price which would then be in effect had
the adjustments made upon the issuance of such rights, options, or warrants been
made upon the basis of delivery of only the number of shares of Common Stock (or
securities exchangeable for or convertible into shares of Common Stock) actually
issued. In case any subscription price may be paid in a consideration part or
all of which shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the Company
and shall be described in a statement mailed to the Warrantholder. Shares of
Common Stock owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation.
(c) Extraordinary Distributions. In case the Company shall at any time
after the original date of issuance of the Warrants distribute to all holders of
its shares of Common Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the surviving
corporation) evidences of its indebtedness or assets (excluding cash dividends
and distributions payable out of consolidated net income or earned surplus in
accordance with Delaware law and dividends or distributions payable in shares of
stock described in Paragraph 3(a) above) or rights, options, or warrants or
exchangeable or convertible securities containing the right to subscribe for or
purchase shares of Common Stock (or securities exchangeable for or convertible
into shares of Common Stock), then the Exercise Price shall be adjusted by
multiplying the Exercise Price in effect immediately prior to the record date
for such distribution by a fraction, of which (i) the numerator shall be the
current Market Price per share of Common Stock (as defined in Paragraph 3(h)) on
such record date, less the fair market value (as determined by the Board of
Directors of the Company, whose determination shall be conclusive, and described
in a notice to the Warrantholders) of the portion of the evidences of
indebtedness or assets so to be distributed or of such rights, options or
warrants applicable to one share of Common Stock and (ii) the denominator shall
be such current Market Price per share of Common Stock. Such adjustment shall be
made whenever any such distribution is made, and shall become effective on the
date of distribution retroactive to the record date for such transaction.
(d) Issuances of Shares of Common Stock at less than Market Price or
Exercise Price. In case the Company shall at any time on or before the
Expiration Date issue shares of its Common Stock (excluding shares issued in any
of the transactions described in Paragraph 3(a), (b) or (c) above) for a
consideration per share less than (i) the current Market Price on the date the
Company fixes the offering price per share of Common Stock or (ii) the then
current Exercise Price in effect immediately prior to the issuance of such
shares, the Exercise Price shall be adjusted immediately thereafter so that such
adjusted Exercise Price shall equal the price determined by multiplying the
Exercise Price in effect immediately prior thereto by a fraction, the numerator
of which shall be the sum of the number of shares of Common Stock
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outstanding immediately prior to the issuance of such additional shares and
the number of shares of Common Stock which the aggregate consideration received
(determined as provided in Paragraph 3(g) below) for the issuance of such
additional shares would purchase at such current Market Price per share of
Common Stock or the then current Exercise Price, whichever is higher, and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after the issuance of such additional shares. Such adjustment shall
be made successively whenever such an issuance is made.
(e) Issuances of Derivative Securities at less than the Market Price
or Exercise Price. In case the Company shall issue any securities convertible
into or exchangeable for its Common Stock (excluding securities issued in
transactions described in Paragraphs 3(a), (b) or (c) above) for a consideration
per share of Common Stock initially deliverable upon conversion or exchange of
such securities (determined as provided in Paragraph 3(g) below) less than (i)
the current Market Price on the date the Company issues such securities or (ii)
the then current Exercise Price in effect immediately prior to the issuance of
such securities, the Exercise Price shall be adjusted immediately thereafter so
that it shall equal the price determined by multiplying the Exercise Price in
effect immediately prior thereto by a fraction, the numerator of which shall be
the sum of the number of shares of Common Stock outstanding immediately prior to
the issuance of such securities and the number of shares of Common Stock which
the aggregate consideration received (determined as provided in Paragraph 3(g)
below) for such securities would purchase at such current Market Price per share
of Common Stock or the Exercise Price in effect immediately prior to the
issuance of such securities, whichever is higher, and the denominator of which
shall be the sum of the number of shares of Common Stock outstanding immediately
prior to such issuance and the maximum number of shares of Common Stock of the
Company deliverable upon conversion of or in exchange for such securities at the
granted conversion or exchange price or rate. Such adjustment shall be made
successively whenever such an issuance is made. To the extent that shares of
Common Stock are not issued after the expiration of the conversion or exchange
feature of any such securities, the Exercise Price shall be readjusted to the
Exercise Price which would have then been in effect had the adjustments been
made upon the basis of the issuance of the securities which had in fact been
converted or exchanged.
(f) Whenever the Exercise Price payable upon exercise of the Warrants
is adjusted pursuant to Paragraphs 3(a), (b), (c), (d) and (e) above, the number
of the shares of Common Stock purchasable upon exercise of this Warrant
Certificate shall simultaneously be adjusted by multiplying the number of shares
of Common Stock initially issuable upon exercise of this Warrant Certificate by
the Exercise Price in effect on the date hereof and dividing the product so
obtained by the adjusted Exercise Price.
(g) For purposes of any computation respecting consideration received
pursuant to Subsections (d) and (e) above, the following shall apply:
(A) in the case of the issuance of shares of Common Stock for cash,
the consideration shall be the amount of such cash, provided that in no case
shall any deduction be
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made for any commissions, discounts or other expenses incurred by the
Company for any underwriting of the issue or otherwise in connection therewith;
(B) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined in good
faith by the Board of Directors of the Company (irrespective of the accounting
treatment thereof), whose determination shall be conclusive absent manifest
error; and
(C) in the case of the issuance of securities convertible into or
exchangeable for shares of Common Stock, the aggregate consideration received
therefor shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration, if any,
to be received by the Company upon the conversion or exchange thereof (the
consideration in each case to be determined in the same manner as provided in
clauses (A) and (B) of this Paragraph 3(g).
(h) Current Market Price Defined. For the purpose of any computation
under Paragraphs 3(b), (c), (d) and/or (e), the current Market Price per share
of Common Stock at any date shall be deemed to be the average daily Closing
Price of the shares of Common Stock for twenty consecutive trading days ending
within fifteen days before the date in question. The term "Closing Price" of the
shares of Common Stock for a day or days shall mean (i) if the shares of Common
Stock are listed or admitted for trading on a national securities exchange, the
last reported sales price regular way, or, in case no such reported sale takes
place on such day or days, the average of the reported closing bid and asked
prices regular way, in either case on the principal national securities exchange
on which the shares of the Common Stock are listed or admitted for trading, or
(ii) if the shares of Common Stock are not listed or admitted for trading on a
national securities exchange, (A) the last transaction price for the Common
Stock on The Nasdaq Stock Market ("Nasdaq") or, in the case no such reported
transaction takes place on such day or days, the average of the reported closing
bid and asked prices thereof quoted on Nasdaq, or (B) if the shares of Common
Stock are not quoted on Nasdaq, the average of the closing bid and asked prices
of the Common Stock as quoted on the Over-The-Counter Bulletin Board maintained
by the National Association of Securities Dealers, Inc. (the "Bulletin Board"),
or (C) if the shares of Common Stock are not quoted on Nasdaq nor on the
Bulletin Board, the average of the closing bid and asked prices of the common
stock in the over-the-counter market, as reported by Xxxxxxxxxx.xxx, Inc., or an
equivalent generally accepted reporting service, or (iii) if on any such trading
day or days the shares of Common Stock are not quoted by any such organization,
the fair market value of the shares of Common Stock on such day or days, as
determined in good faith by the Board of Directors of the Company, shall be
used.
(i) Minimum Adjustment. Except as hereinafter provided, no adjustment
of the Exercise Price hereunder shall be made if such adjustment results in a
change of the Exercise Price then in effect of less than five cents ($.05) per
share. Any adjustment of less than five cents ($.05) per share of any Exercise
Price shall be carried forward and shall be made at the time of and together
with any subsequent adjustment which, together with adjustment or adjustments so
carried forward, amounts to five cents ($.05) per share or more. However, upon
exercise of this
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Warrant Certificate, the Company shall make all necessary adjustments (to
the nearest cent) not theretofore made to the Exercise Price up to and including
the effective date upon which this Warrant Certificate is exercised.
(j) Notice of Adjustments. Whenever the Exercise Price shall be
adjusted pursuant to this Section 3, the Company shall promptly deliver a
certificate signed by the President or a Vice President and by the Chief
Financial Officer, Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Company, setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated (including a description of the basis on
which the Board of Directors of the Company made any determination hereunder),
by first class mail postage prepaid to each Warrantholder.
(k) Capital Reorganizations and Other Reclassifications. In case of
any capital reorganization of the Company, or of any reclassification of the
shares of Common Stock (other than a reclassification, subdivision or
combination of shares of Common Stock referred to in Paragraph 3(a)), or in case
of the consolidation of the Company with, or the merger of the Company with, or
merger of the Company into, any other corporation (other than a reclassification
of the shares of Common Stock referred to in Paragraph 3(a) or a consolidation
or merger which does not result in any reclassification or change of the
outstanding shares of Common Stock) or of the sale of the properties and assets
of the Company as, or substantially as, an entirety to any other corporation or
entity, each Warrant shall, after such capital reorganization, reclassification
of shares of Common Stock, consolidation, merger, or sale, be exercisable, upon
the terms and conditions specified in this Warrant Certificate, for the kind,
amount and number of shares or other securities, assets, or cash to which a
holder of the number of shares of Common Stock purchasable (at the time of such
capital reorganization, reclassification of shares of Common Stock,
consolidation, merger or sale) upon exercise of such Warrant would have been
entitled to receive upon such capital reorganization, reclassification of shares
of Common Stock, consolidation, merger, or sale; and in any such case, if
necessary, the provisions set forth in this Section 3 with respect to the rights
and interests thereafter of the Warrantholder shall be appropriately adjusted so
as to be applicable, as nearly equivalent as possible, to any shares or other
securities, assets, or cash thereafter deliverable on the exercise of the
Warrants. The Company shall not effect any such consolidation, merger, or sale,
unless prior to or simultaneously with the consummation thereof the successor
corporation or entity (if other than the Company) resulting from such
consolidation or merger or the corporation or entity purchasing such assets or
other appropriate corporation or entity shall assume, by written instrument, the
obligation to deliver to the Warrantholder such shares, securities, assets, or
cash as, in accordance with the foregoing provisions, such holders may be
entitled to purchase and the other obligations hereunder. The subdivision or
combination of shares of Common Stock at any time outstanding into a greater or
lesser number of shares shall not be deemed to be a reclassification of the
shares of Common Stock for purposes of this Paragraph 3(k).
(l) Adjustments to Other Securities. In the event that at any time, as
a result of an adjustment made pursuant to this Section 3, the Warrantholder
shall become entitled to purchase any shares or securities of the Company other
than the shares of Common Stock,
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thereafter the number of such other shares or securities so purchasable
upon exercise of each Warrant and the exercise price for such shares or
securities shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as possible to the provisions with respect to the
shares of Common Stock contained in Paragraphs 3(a) through (e), inclusive.
(m) Deferral of Issuance of Additional Shares in Certain
Circumstances. In any case in which this Section 3 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event issuing to the Warrantholder exercised after such record date the shares
of Common Stock, if any, issuable upon such exercise over and above the Warrant
Shares, if any, issuable upon such exercise on the basis of the Exercise Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver as soon as practicable to such holder a due xxxx or other appropriate
instrument provided by the Company evidencing such holder's right to receive
such additional shares of Common Stock upon the occurrence of the event
requiring such adjustment.
4. DEFINITION OF COMMON STOCK.
The Common Stock issuable upon exercise of the Warrants shall be the
Common Stock as constituted on the date hereof except as otherwise provided in
Section 3.
5. REPLACEMENT OF SECURITIES.
If this Warrant Certificate shall be lost, stolen, mutilated or
destroyed, the Company shall, on such terms as to indemnity or otherwise as the
Company may in its discretion reasonably impose, issue a new certificate of like
tenor or date representing in the aggregate the right to subscribe for and
purchase the number of shares of Common Stock which may be subscribed for and
purchased hereunder. Any such new certificate shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
6. REGISTRATION.
This Warrant Certificate, as well as all other warrant certificates
representing Warrants shall be numbered and shall be registered in a register
(the "Warrant Register") maintained at the Company Offices as they are issued.
The Warrant Register shall list the name, address and Social Security or other
Federal Identification Number, if any, of all Warrantholders. The Company shall
be entitled to treat the Warrantholder as set forth in the Warrant Register as
the owner in fact of the Warrants as set forth therein for all purposes and
shall not be bound to recognize any equitable or other claim to or interest in
such Warrants on the part of any other person, and shall not be liable for any
registration of transfer of Warrants that are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration of transfer, or with such knowledge of such facts
that its participation therein amounts to bad faith.
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7. TRAMSFER.
NEITHER THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE NOR THE SHARES
OF COMMON STOCK OR ANY OTHER SECURITIES ISSUABLE UPON EXERCISE OF SUCH WARRANTS
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH WARRANTS
HAVE BEEN ACQUIRED, AND ANY SHARES OF COMMON STOCK OR ANY OTHER SECURITIES
ISSUABLE UPON EXERCISE OF SUCH WARRANTS ARE REQUIRED TO BE ACQUIRED, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT
BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH WARRANTS AND/OR SUCH SHARES OR OTHER
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF SUCH
WARRANTS AND SUCH SHARES OR OTHER SECURITIES TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS.
8. EXCHANGE OF WARRANT CERTIFICATES.
This Warrant Certificate may be exchanged for another certificate or
certificates entitling the Warrantholder thereof to purchase a like aggregate
number of Warrant Shares as this Warrant Certificate entitles such Warrantholder
to purchase. A Warrantholder desiring to so exchange this Warrant Certificate
shall make such request in writing delivered to the Company, and shall surrender
this Warrant Certificate therewith. Thereupon, the Company shall execute and
deliver to the person entitled thereto a new certificate or certificates, as the
case may be, as so requested.
9. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given when delivered in person, against written receipt
therefor, or two days after being sent, by registered or certified mail, postage
prepaid, return receipt requested, and, if to the Warrantholder, at such address
as is shown on the Warrant Register or as may otherwise may have been furnished
to the Company in writing in accordance with this Section 9 by the Warrantholder
and, if to the Company, at the Company Offices or such other address as the
Company shall give notice thereof to the Warrantholder in accordance with this
Section 9.
10. REGISTRATION RIGHTS.
The Warrantholder shall have these registration rights with respect to
the Warrants as set forth in that certain Securities Purchase Agreement, dated
as of October 12, 2000, by and between the Company and eAcceleration Corp.
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11. MISCELLANEOUS.
This Warrant Certificate and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This certificate is deemed to have been delivered in the State of
Washington and shall be construed and enforced in accordance with and governed
by the laws of such State, without regard to its conflicts of laws principles.
The headings in this Warrant Certificate are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof.
12. EXPIRATION.
Unless as hereinafter provided, the right to exercise these Warrants
shall expire at the Expiration Time.
Dated: As of , 2000
-----------
CONTERA CORPORATION
By:
----------------------------------
Name:
Title:
ATTEST:
-----------------------------
Name:
Title
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EXERCISE FORM
Dated: ,
---------------- --------
TO: CONTERA CORPORATION:
The undersigned hereby irrevocably elects to exercise the within
Warrant, to the extent of purchasing _________________ shares of Common Stock,
and hereby makes payment of _____________ in payment of the actual Exercise
Price thereof $__________, including (i) $__________ and (ii) cancellation of
Warrants, to purchase ________ shares of Common Stock.
------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
---------------------------------------------------------
(Please type or print in block letters)
Taxpayer
Identification
Number:
---------------------------------------------------------
Address:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
------------------
Signature:
---------------------------------------------------------
(Signature must conform in all respects to the name of
the Warrantholder as set forth on the face of this
Warrant Certificate.)
ASSIGNMENT FORM
FOR VALUE RECEIVED,
--------------------------------------
(Please type or print in block letters)
hereby sells, assigns and transfers unto:
Name:
---------------------------------------------------------
(Please type or print in block letters)
Taxpayer
Identification
Number:
---------------------------------------------------------
Address:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
this Warrant Certificate and the Warrants represented by this Warrant
Certificate to the extent of ________________ Warrants and does hereby
irrevocably constitute and appoint ___________________________ Attorney-in-Fact,
to transfer the same on the books of the Company with full power of substitution
in the premises.
Dated:
---------------------------------------------
Signature:
----------------------------------------------------------
(Signature must conform in all respects to the name of
the Warrantholder as set forth on the face of this
Warrant Certificate.)
