NEITHER THIS WARRANT NOR THE COMMON STOCK WHICH MAY BE ACQUIRED UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("ACT"), OR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
WITH RESPECT THERETO UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR
UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED. THE COMPANY'S SUBSCRIPTION AGREEMENT
WITH THE HOLDER CONTAINS ADDITIONAL PROVISIONS RESTRICTING THE TRANSFER OF THIS
WARRANT. A COPY OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION AT THE COMPANY'S
OFFICE.
For the Purchase of
No. [__] [__] shares of
Common Stock
WARRANT FOR THE PURCHASE OF
SHARES OF COMMON STOCK
OF
AUGMENT SYSTEMS, INC.
(A Delaware Corporation)
Augment Systems, Inc., a Delaware corporation ("Company"), hereby
certifies that [___], or his, her or its registered assigns ("Registered
Holder"), is entitled, subject to the terms set forth below, to purchase from
the Company, at any time or from time to time during the period commencing
January 30, 1998 ("Commencement Date") and ending on January 30, 2003
("Expiration Date"), 50,000 shares of Common Stock, $.01 par value, of the
Company ("Common Stock"), at an initial exercise price equal to $1.00 per share
(subject to adjustment as provided below). The number of shares of Common Stock
purchasable upon exercise of this Warrant, and the exercise price per share,
each as adjusted from time to time pursuant to the provisions of this Warrant,
are hereinafter referred to as the "Warrant Stock" and the "Exercise Price,"
respectively.
1. EXERCISE.
(a) This Warrant may be exercised by the Registered Holder, in whole
or in part, by surrendering this Warrant, with the purchase form appended hereto
as Exhibit I duly executed by such Registered Holder, at the principal office of
the Company, or at such other office or agency as the Company may designate,
accompanied by payment in full, in lawful money of the United States, of the
Exercise Price payable in respect of the number of shares of Warrant Stock being
purchased upon such exercise.
(b) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which the
Warrant shall have been surrendered to the Company as provided in subsection
1(a) above. At such time, the person or persons in whose name or names any
certificates for Warrant Stock shall be issuable upon such exercise as provided
in subsection 1(c) below shall be deemed to have become the holder or holders of
record of the Warrant Stock represented by such certificates.
(c) As soon as practicable after the exercise of this Warrant in full
or in part the Company at its expense will cause to be issued in the name of,
and delivered to, the Registered Holder, or, subject to the terms and conditions
hereof, as such Holder (upon payment by such Holder of any applicable transfer
taxes) may direct:
(i) a certificate or certificates for the number of full shares
of Warrant Stock to which such Registered Holder shall be entitled upon
such exercise, and
(ii) in case such exercise is in part only, a new warrant or
warrants (dated the date hereof) of like tenor, calling in the aggregate on
the face or faces thereof for the number of shares of Warrant Stock equal
(without giving effect to any adjustment therein) to the number of such
shares called for on the face of this Warrant, minus the number of such
shares purchased by the Registered Holder upon such exercise as provided in
subsection 1(a) above.
(d) In lieu of the payment of the Exercise Price in the manner
required by Section 1(a), the Holder shall have the right (but not the
obligation) to pay the Exercise Price for the shares of Common Stock being
purchased with this Warrant upon exercise by the surrender to the Company of any
exercisable but unexercised portion of this Warrant having a "Value" (as defined
below), at the close of trading on the last trading day immediately preceding
the exercise of this Warrant, equal to the Exercise Price multiplied by the
number of shares of Common Stock being purchased upon exercise ("Cashless
Exercise Right"). The sum of (x) the number of shares of Common Stock being
purchased upon exercise of the non-surrendered portion of this Warrant pursuant
to this Cashless Exercise Right and (y) the number of shares of Common Stock
underlying the portion of this Warrant being surrendered, shall not in any event
be greater than the total number of shares of Common Stock purchasable upon the
complete exercise of this Warrant if the Exercise Price were paid in cash. The
"Value" of the portion of the Warrant being surrendered shall equal the
remainder derived from subtracting (x) the Exercise Price multiplied by the
number of shares of Common Stock underlying the portion of this Warrant being
surrendered from (y) the Market Price of a share of Common Stock multiplied by
the number of shares of Common Stock underlying the portion of this Warrant
being surrendered. As used in this Warrant, the term "Market Price" at any date
shall be deemed to be the last reported sale price of the Common Stock on such
date, or, in case no such reported sale takes place on such day, the average of
the last reported sale price for the immediately preceding three trading days,
in either case as officially reported by the national securities exchange on
which the
2
Common Stock is trading, or, if the Common Stock is not principally traded on
any national securities exchange, the last reported sale price as furnished by
the NASD through the Nasdaq National Market or SmallCap Market, or, if
applicable, the OTC Bulletin Board, or if the Common Stock is not listed or
admitted to trading on the Nasdaq National Market or SmallCap Market or OTC
Bulletin Board or similar organization, as determined in good faith by
resolution of the Board of Directors of the Company, based on the best
information available to it. The Cashless Exercise Right may be exercised by the
Holder on any business day on or after the Commencement Date and not later than
the Expiration Date by delivering the Warrant with a duly executed exercise form
attached hereto with the cashless exercise section completed to the Company,
exercising the Cashless Exercise Right and specifying the total number of shares
of Common Stock being purchased pursuant to such Cashless Exercise Right.
2. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.
(a) If the outstanding shares of the Company's Common Stock shall be
subdivided or split into a greater number of shares, or a dividend in Common
Stock shall be paid in respect of Common Stock, the Exercise Price in effect
immediately prior to such subdivision or at the record date of such dividend
shall simultaneously with the effectiveness of such subdivision or split or
immediately after the record date of such dividend be proportionately reduced.
If the outstanding shares of Common Stock shall be combined or reverse-split
into a smaller number of shares, the Exercise Price in effect immediately prior
to such combination or reverse-split shall, simultaneously with the
effectiveness of such combination or reverse-split, be proportionately
increased.
(b) If there shall occur any capital reorganization or
reclassification of the Company's Common Stock (other than a change in par value
or a subdivision or combination as provided for in subsection 2(a) above), or
any consolidation or merger of the Company with or into another corporation, or
a transfer of all or substantially all of the assets of the Company, or the
payment of a liquidating distribution, then, as part of any such reorganization,
reclassification, consolidation, merger, sale or liquidating distribution,
lawful provision shall be made so that the Registered Holder of this Warrant
shall have the right thereafter to receive upon the exercise hereof (to the
extent, if any, still exercisable) the kind and amount of shares of stock or
other securities or property which such Registered Holder would have been
entitled to receive if, immediately prior to any such reorganization,
reclassification, consolidation, merger, sale or liquidating distribution, as
the case may be, such Registered Holder had held the number of shares of Common
Stock which were then purchasable upon the exercise of this Warrant. In any such
case, appropriate adjustment (as reasonably determined by the Board of Directors
of the Company) shall be made in the application of the provisions set forth
herein with respect to the rights and interests thereafter of the Registered
Holder of this Warrant such that the provisions set forth in this Section 2
(including provisions with respect to adjustment of the Exercise Price) shall
thereafter be applicable, as nearly as practicable, in relation to any shares of
stock or other securities or property thereafter deliverable upon the exercise
of this Warrant.
3
(c) When any adjustment is required to be made in the Exercise Price,
the number of shares of Warrant Stock purchasable upon the exercise of this
Warrant shall be changed to the number determined by dividing (i) an amount
equal to the number of shares issuable upon the exercise of this Warrant
immediately prior to such adjustment, multiplied by the Exercise Price in effect
immediately prior to such adjustment, by (ii) the Exercise Price in effect
immediately after such adjustment.
(d) No adjustment in the per share Exercise Price shall be required
unless such adjustment would require an increase or decrease in the Exercise
Price of at least $0.01; provided, however, that any adjustments which by reason
of this paragraph are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section 2
shall be made to the nearest cent or to the nearest 1/100th of a share, as the
case may be. Anything in this Section 2 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the per share Exercise
Price, in addition to those required by this Section 2 as in its discretion it
shall deem to be advisable in order that any stock dividend, subdivision of
shares or distribution rights to purchase stock or securities convertible or
exchangeable for stock hereafter made by the Company to its stockholders shall
not be taxable.
3. FRACTIONAL SHARES. The Company shall not be required to issue
certificates representing fractions of shares of Common Stock or Warrants upon
the exercise or transfer of the Purchase Option, nor shall it be required to
issue scrip or pay cash in lieu of any fractional interests, it being the intent
of the parties that all fractional interests shall be eliminated by rounding any
fraction up to the nearest whole number of Warrants, shares of Common Stock or
other securities, properties or rights.
4. LIMITATION ON SALES, etc. Each holder of this Warrant acknowledges that
this Warrant and the Warrant Stock have not been registered under the Securities
Act of 1933, as now in force or hereafter amended, or any successor legislation
("Act"), and agrees not to sell, pledge, distribute, offer for sale, transfer or
otherwise dispose of this Warrant or any Warrant Stock issued upon its exercise
in the absence of (a) an effective registration statement under the Act as to
this Warrant and the Warrant Stock issued upon its exercise and registration or
qualification of this Warrant or such Warrant Stock under any applicable Blue
Sky or state securities law then in effect, or (b) an opinion of counsel,
satisfactory to the Company, that such registration and qualification are not
required.
Without limiting the generality of the foregoing, unless the offering and
sale of the Warrant Stock to be issued upon the exercise of the Warrant shall
have been effectively registered under the Act, the Company shall be under no
obligation to issue the shares covered by such exercise unless and until the
Registered Holder shall have executed an investment letter in form and substance
reasonably satisfactory to the Company, including a warranty at the time of such
exercise that it is acquiring such shares for its own account, for investment
and not with a view to, or for sale in connection with, the distribution of any
such shares, in which event the Registered Holder shall be bound by the
provisions of a legend or legends to such effect which shall be endorsed upon
the certificate(s) representing the Warrant Stock issued pursuant to such
exercise.
5
5. CERTAIN DIVIDENDS. If the Company pays a dividend or makes a
distribution on the Common Stock payable otherwise than in cash out of earnings
or earned surplus (determined in accordance with generally accepted accounting
principles) except for a stock dividend payable in shares of Common Stock
("Property Dividend"), then the Company will pay or distribute to the Registered
Holder of this Warrant, upon the exercise hereof, in addition to the Warrant
Stock purchased upon such exercise, the Property Dividend which would have been
paid to such Registered Holder if the Registered Holder had been the owner of
record of such shares of Warrant Stock immediately prior to the date on which a
record is taken for such Property Dividend or, if no record is taken, the date
as of which the record holders of Common Stock entitled to such dividends or
distribution are to be determined.
6. REGISTRATION RIGHTS OF WARRANT HOLDER.
(a) The Holders shall have the right until the Expiration Date to
include the Warrant Stock as part of any other registration of securities filed
by the Company (other than in connection with a transaction contemplated by Rule
145(a) promulgated under the Act or pursuant to Form S-8 or any equivalent
form), subject to the discretion of the underwriter(s), if any, to limit the
number of shares of Warrant Stock, including zero shares, to be included in the
registration.
(b) The Company shall bear all fees and expenses attendant to
registering the Warrant Stock, but the Holders shall pay any and all
underwriting commissions and the expenses of any legal counsel selected by the
Holders to represent them in connection with the sale of the Warrant Stock. The
Company agrees to use its best efforts to cause the filing required herein to
become effective promptly and to qualify or register the Warrant Stock in such
States as are reasonably requested by the Holder(s); provided, however, that in
no event shall the Company be required to register the Warrant Stock in a State
in which such registration would cause (i) the Company to be obligated to
register or license to do business in such State, or (ii) the principal
stockholders of the Company to be obligated to escrow their shares of capital
stock of the Company. The Company shall cause any registration statement filed
pursuant to the rights granted under this Section 6 to remain effective until
the earliest of (i) the Expiration Date, (ii) the date by which all of the
Warrant Stock have been sold pursuant to the registration statement, or (iii)
the date by which all of the Warrant Stock are eligible for resale without
restriction pursuant to Rule 144(K) promulgated under the Act.
(c) The Company shall indemnify the Holder(s) of the Warrant Stock to
be sold pursuant to any registration statement hereunder and each person, if
any, who controls such Holders within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), against all loss, claim, damage, expense or liability (including all
reasonable attorneys' fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim
5
whatsoever) to which any of them may become subject under the Act, the Exchange
Act or otherwise, arising from such registration statement. The Holder(s) of the
Warrant Stock to be sold pursuant to such registration statement, and their
successors and assigns, shall severally, and not jointly, indemnify the Company,
against all loss, claim, damage, expense or liability (including all reasonable
attorneys' fees and other expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, in
writing, for specific inclusion in such registration statement.
(d) Nothing contained in this Warrant shall be construed as requiring
the Holder(s) to exercise their Warrants prior to or after the initial filing of
any registration statement or the effectiveness thereof.
(e) The Company shall furnish to each Holder participating in any of
the foregoing offerings and to each underwriter of any such offering, if any, a
signed counterpart, addressed to such Holder or underwriter, of (i) an opinion
of counsel to the Company, dated the effective date of such registration
statement (and, if such registration includes an underwritten public offering,
an opinion dated the date of the closing under any underwriting agreement
related thereto), and (ii) a "cold comfort" letter dated the effective date of
such registration statement (and, if such registration includes an underwritten
public offering, a letter dated the date of the closing under the underwriting
agreement) signed by the independent public accountants who have issued a report
on the Company's financial statements included in such registration statement,
in each case covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the case of
such accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities. The Company shall also deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriter copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with respect
to the registration statement and permit each Holder and underwriter to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. ("NASD"). Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any such Holder
shall reasonably request.
(f) Each of the Holder(s) participating in any of the foregoing
offerings shall furnish to the Company a completed and executed questionnaire
provided by the Company requesting information customarily sought of selling
securityholders.
6
7. RESERVATION OF STOCK. The Company will at all times reserve and
keep available, solely for issuance and delivery upon the exercise of this
Warrant, such shares of Warrant Stock and other stock, securities and property,
as from time to time shall be issuable upon the exercise of this Warrant.
8. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
9. TRANSFERS, etc. The Company will maintain a register containing the
names and addresses of the Registered Holders of this Warrant and of the holders
of other warrants of like tenor issued simultaneously hereunder. Any Registered
Holder may change its, his or her address as shown on the warrant register by
written notice to the Company requesting such change.
Until any transfer of this Warrant is made in the warrant register,
the Company may treat the Registered Holder of this Warrant as the absolute
owner hereof for all purposes; provided, however, that if and when this Warrant
is properly assigned in blank, the Company may (but shall not be obligated to)
treat the bearer hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.
10. MAILING OF NOTICES, etc. All notices and other communications from
the Company to the Registered Holder of this Warrant shall be mailed by
first-class certified or registered mail, postage prepaid, sent by reputable
overnight delivery or by facsimile to the address furnished to the Company in
writing by the last Registered Holder of this Warrant who shall have furnished
an address to the Company in writing. All notices and other communications from
the Registered Holder of this Warrant or in connection herewith to the Company
shall be mailed by first-class certified or registered mail, postage prepaid,
sent by reputable overnight delivery or by facsimile to the Company at its
offices at, 0 Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxxxxxxxx 00000 or such other address
as the Company shall so notify the Registered Holder, with copies to Warner &
Xxxxxxxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attn: Xxxxxxx X.
Xxxxxx, Esq., facsimile number (000) 000-0000.
11. NO RIGHTS AS STOCKHOLDERS. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company.
12. CHANGE OR WAIVER. Any term of this Warrant may be changed or
waived only by an instrument in writing signed by the party against whom
enforcement of the change or waiver is sought.
13. HEADINGS. The headings of this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.
7
14. GOVERNING LAW. This Warrant will be governed by and construed in
accordance with the law of the Commonwealth of Massachusetts without regard to
the principles of conflict of law.
15. VENUE. The Company (a) agrees that any legal suit, action or
proceeding arising out of or relating to this Warrant shall be instituted
exclusively in Massachusetts Courts, Suffolk County or in the Xxxxxxx Xxxxxxxx
Xxxxx xx Xxxxxxxxxxxxx, Xxxxxxx Xxxxxxxx, (x) waives any objection to the venue
of any such suit, action or proceeding and the right to assert that such forum
is not a convenient forum, and (c) irrevocably consents to the jurisdiction of
the Massachusetts Courts, Suffolk County, and the Federal District Court in
Massachusetts, Eastern District any such suit, action or proceeding. The Company
further agrees to accept and acknowledge service of any and all process which
may be served in any such suit, action or proceeding in the Massachusetts
Courts, Suffolk County, or in the Federal District Court in Massachusetts,
Eastern District and agrees that service of process upon it mailed by certified
mail to its address shall be deemed in every respect effective service of
process upon it in any such suit, action or proceeding.
Dated: January 30, 1998 AUGMENT SYSTEMS, INC.
By:____________________________________
Xxxxx X. Xxxx, Chief Financial Officer
8
EXHIBIT I
PURCHASE FORM
To: AUGMENT SYSTEMS, INC.
======================
______________________
______________________
______________________
Dated:________________________________________________
In accordance with the provisions set forth in the attached Warrant
(No. __), the undersigned hereby irrevocably elects to purchase ________ shares
of the Common Stock covered by such Warrant and herewith makes payment of
$_______, representing the full Exercise Price for such shares at the price per
share provided for in such Warrant.
or
The undersigned hereby elects irrevocably to purchase _________ shares
of Common Stock of Augment Systems, Inc. by surrender of the unexercised portion
of such Warrant (with a "Value" of $__________ based on a "Market Price" of
$___________).
The undersigned has had the opportunity to ask questions of and receive
answers from the officers of the Company regarding the affairs of the Company
and related matters, and has had the opportunity to obtain additional
information necessary to verify the accuracy of all information so obtained.
The undersigned understands that the shares have not been registered
under the Securities Act of 1933, as amended, or the securities laws of any
other jurisdiction, and hereby represents to the Company that the undersigned is
acquiring the shares for its own account, for investment, and not with a view
to, or for sale in connection with, the distribution of any such shares.
Signature____________________________________
Address____________________________________
____________________________________
