Contract
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”), OR ANY STATE SECURITIES LAWS. THE SALE TO THE HOLDER OF
THIS SECURITY OF THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
SECURITY ARE NOT COVERED BY A REGISTRATION STATEMENT UNDER THE ACT OR
REGISTRATION UNDER STATE SECURITIES LAWS. THIS SECURITY HAS BEEN
ACQUIRED, AND SUCH SHARES OF COMMON STOCK MUST BE ACQUIRED, FOR INVESTMENT ONLY
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF REGISTRATION OF
THE RESALE THEREOF OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE IN FORM, SCOPE
AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
No.
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Right to
Purchase ____________ Shares of Common Stock of Vertical Computer
Systems,
Inc.
VERTICAL
COMPUTER SYSTEMS, INC.
Common
Stock Purchase Warrant (the “Warrant”)
VERTICAL COMPUTER SYSTEMS, INC., a
Delaware corporation (the “Company”), hereby certifies that, for value received,
_______________, or registered assigns (the “Holder”), is entitled, subject to
the terms set forth below, to purchase from the Company at any time or from time
to time up to and including the day that is Three (3) years after the date that
is the earlier of ____________, _________ or the last day of employment of the
Holder, ________________________ thousand (__________) fully paid and
nonassessable shares of Common Stock, $.00001 par value, of the Company
(hereinafter the “Warrants”) at an Exercise Price per share initially equal to
$_______. The number of such shares of Common Stock and the Exercise Price are
subject to adjustment as provided in this Warrant.
1. Conditions and
Rights of Holder to Exercise Warrants.
(a) If,
from time to time, the Holder acquires any shares of stock pursuant to this
Common Stock Purchase Warrant, the Holder accepts and agrees to the terms of the
Lock Up Agreement, attached hereto as Exhibit A, and incorporated herein by this
reference.
(b) The
Warrants shall vest in equal amounts on a monthly basis over a one (1) year
period so long as the Holder is employed by company.
(c) This
Warrant may be exercised by the Holder hereof in full or in part at any time or
from time to time during the exercise period specified in the first paragraph
hereof, by surrender of this Warrant and the subscription form annexed hereto
(duly executed) by such Holder to the Company and by making payment, in cash or
by certified or official bank check payable to the order of the Company or wire
transfer to the Company’s account or, with the prior written consent of the
Company, through the surrender of previously acquired shares of Common Stock at
their fair market value on the exercise date or through the execution of a
promissory note collateralized by the shares underlying the
Warrant, in the amount obtained by multiplying (a) the number of
shares of Common Stock designated by the Holder in the subscription form by (b)
the Exercise Price then in effect. On any partial exercise the
Company will forthwith issue and deliver to or upon the order of the Holder
hereof a new Warrant or Warrants of like tenor, in the name of the Holder hereof
or as such Holder (upon payment by such Holder of any applicable transfer taxes)
may request, providing in the aggregate on the face or faces thereof for the
purchase of the number of shares of Common Stock for which such Warrant or
Warrants may still be exercised.
2. Delivery of Stock
Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant, and in any event within five
business days thereafter, the Company at its expense (including the payment by
it of any applicable issue or stamp taxes) will cause to be issued in the name
of and delivered to the Holder hereof, or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of fully paid and nonassessable shares of Common
Stock to which such Holder shall be entitled on such exercise, in such
denominations as may be requested by such Holder, plus, in lieu of any
fractional share to which such Holder would otherwise be entitled, cash equal to
such fraction multiplied by the then current fair market value of one full
share, together with any other stock or other securities any property (including
cash, where applicable) to which such Holder is entitled upon such exercise
pursuant to Section 1 or otherwise.
3. Dilution.
a. Dividends,
Etc. If the Company shall pay to the holders of its Common
Stock a dividend in shares of Common Stock or in securities convertible into
Common Stock, the Exercise Price in effect immediately prior to the record date
fixed for the determination of the holders of Common Stock entitled to such
dividend shall be proportionately decreased, effective at the opening of
business on the next following full business day.
b. Splits, Combinations,
Etc. If the Company shall split the outstanding shares of its
Common Stock into a greater number of shares or combine the outstanding shares
into a smaller number, the Exercise Price in effect immediately prior to such
action shall be proportionately decreased in the case of a split or increased in
the case of a combination, effective at the opening of business on the full
business day next following the day such action becomes
effective.
4. Protection in Case or
Reclassification, Etc. In case of any reclassification or
change of the terms of the outstanding shares of the class of Common Stock
issuable upon the exercise of this Warrant, then upon exercise of this Warrant
(other than a change relating to par value, or as a result of a subdivision or
combination), or in case of any consolidation or merger of the Company with or
into another company (other than a merger in which the Company is the continuing
company or which does not result in any reclassification or change of
outstanding shares of Common Stock of the class issuable upon exercise of this
Warrant, other than a split or combination of shares), or in case of any sale or
conveyance to any other person or entity of all or substantially all of the
assets of the Company, the Company shall use its best efforts to execute an
agreement providing that the holder of this Warrant shall have the right
thereafter to exercise this Warrant for the kind and amount of shares of stock
and other securities and property receivable upon such reclassification, change,
dividend, distribution, consolidation, merger, sale or conveyance by a holder of
the number of shares of Common Stock of the Company for which this Warrant might
have been exercised immediately prior to such reclassification, change,
dividend, distribution, consolidation, merger, sale or
conveyance. This Section 4 shall apply to successive
reclassifications and changes of and dividends and distributions on shares of
Common Stock and to successive consolidations, mergers, sales or
conveyances. Notice of the execution of any agreement pertaining to
such reclassification, change, dividend, distribution, consolidation, merger,
sale or conveyance shall be given to the holder of this Warrant as soon as
practicable and in any event not less than ten (10) business days before any
such transaction is consummated.
5. Reservation of Stock, etc.,
Issuable on Exercise of Warrants. The Company will
at all times reserve and keep available, solely for issuance and delivery on the
exercise of this Warrant, all shares of Common Stock from time to time issuable
on the exercise of this Warrant.
6. Register of
Warrants. The Company shall
maintain, at the principal office of the Company (or such other office as it may
designate by notice to the Holder hereof), a register in which the Company shall
record the name and address of the person in whose name this Warrant has been
issued, as well as the name and address of each successor and prior owner of
such Warrant. The Company shall be entitled to treat the person in
whose name this Warrant is so registered as the sole and absolute owner of this
Warrant for all purposes.
7. Exchange of
Warrant. This Warrant is
exchangeable, upon the surrender hereof by the Holder hereof at the office or
agency of the Company referred to in Section 6, for one or more new Warrants of
like tenor representing in the aggregate the right to subscribe for and purchase
the number of shares of Common Stock which may be subscribed for purchase
hereunder, each of such new Warrants to represent the right to subscribe for and
purchase such number of shares as shall be designated by said Holder hereof at
the time of such surrender.
8. Replacement of
Warrant. On receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation, on surrender and cancellation of this Warrant, the Company at
its expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
9. Warrant Agent. The Company will act as the
exercise agent for the purpose of issuing Common Stock on the exercise of this
Warrant pursuant to Section 1. The Company may, by written notice to
the Holder, appoint an agent having an office in the United States of America,
for the purpose of issuing Common Stock on the exercise of this Warrant pursuant
to Section 1, redeeming this Warrant pursuant to Section 2, exchanging this
Warrant pursuant to Section 7, and replacing this Warrant pursuant to Section 8,
or any of the foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by such
agent.
10. No Rights or Liabilities as
a Stockholder. This Warrant
shall not entitle the Holder hereof to any voting rights or other rights as a
stockholder of the Company, until properly exercised.
11. Notices. All
notices and other communications from the Company to the registered Holder of
this Warrant shall be mailed by first class certified mail, postage prepaid, at
such address as may have been furnished to the Company in writing by such Holder
or at the address shown for such Holder on the register of Warrants referred to
in Section 6.
12.
Miscellaneous. This Warrant and any terms hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement or such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance
with and governed by the internal laws of the State of Delaware. The
headings in this Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision.
13. “Piggy-Back”
Registration.
x. Xxxxx
of Right. The Holder of this Warrant shall have the right for a
period of five years from the date of grant of this Warrant to include all or
any part of this Warrant and the shares of Common Stock underlying this Warrant
(collectively, the “Registrable Securities”) as part of any registration of
securities filed by the Company (other than in connection with a transaction
contemplated by Rule 145(a) promulgated under the Act); provided, however, that
if, in the written opinion of the Company’s managing underwriter or
underwriters, if any, for such offering determines that marketing factors
require a limitation of the number of shares to be underwritten, the managing
underwriter in its sole discretion may limit the number of Registrable
Securities to be included in the registration, or may exclude Registrable
Securities entirely from such registration. In such case, the Company
shall so advise Holder whose Registrable Securities otherwise would be included
in such registration and underwritten offering shall be allocated among other
selling shareholders requesting registration in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by Holder
and registrable shares each of such other selling shareholders at the date of
filing of the Registration Statement. If Xxxxxx disapproves of the
terms and conditions of the underwritten offering, Xxxxxx may withdraw therefrom
by written notice to the Company and the managing underwriter(s). Any
Registrable Securities excluded or withdrawn from such underwritten offering
shall be withdrawn from such registration.
b. Lock
Up. Holder hereby agrees that, if requested by the Company and the
managing underwriter(s), it will enter into a customary form of “lock-up”
agreement with the Company and the managing underwriter(s) with respect to any
Registrable Securities then held by Holder, which agreement shall contain such
Registrable Securities than those contained in any other such agreements then
entered into by the Company and the managing underwriter(s) with other
comparable holders of the Company’s Common Stock.
c. Terms.
The Company shall bear all fees and expenses attendant to registering the
Registrable Securities, including any filing fees payable to the National
Association of Securities Dealers, Inc. (NASD), but the Holder shall pay any and
all underwriting commissions and the expenses of any legal counsel selected by
the Holder to represent it in connection with the sale of the Registrable
Securities. In the event of such a proposed registration, the Company
shall furnish the then Holder of outstanding Registrable Securities with prompt
written notice prior to the proposed date of filing of such registration
statement. Such notice to the Holder shall continue to be given for
each registration statement filed by the Company until such time as all of the
Registrable Securities have been sold by the Holder. The Holder of
the Registrable Securities shall exercise the “piggy-back” rights provided for
herein by giving written notice, within twenty days of the receipt of the
Company’s notice of its intention to file a registration
statement. Nothing contained in this Warrant shall be construed as
requiring any Holder to exercise this Warrant or any part thereof prior to the
initial filing of any registration statement or the effectiveness
thereof. The Company shall have the right to terminate or withdraw
any registration initiated by the Company under this Section 5 prior to the
effectiveness of such registration whether or not Holder has elected to include
Registrable Securities in such registration.
IN
WITNESS WHEREOF, Vertical Computer Systems, Inc. has caused this Warrant to be
executed on its behalf by one of its officers thereunto duly
authorized.
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Dated:
_________2, 200___
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VERTICAL
COMPUTER SYSTEMS, INC.
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By:
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Xxxxxxx Xxxx,
President
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FORM OF
SUBSCRIPTION
OF
VERTICAL COMPUTER SYSTEMS, INC.
(To be
signed only on exercise of Warrant)
TO:
VERTICAL COMPUTER SYSTEMS, INC.
0000 Xxxxxxxx Xxxxxxxxx
Los Angeles, California
90048
1.
The undersigned Holder of the attached original, executed Warrant hereby elects
to exercise its purchase right under such Warrant with respect to ________
shares of Common Stock, as defined in the Warrant, of Vertical Systems, Inc., a
Delaware corporation (the “Company”).
2. The
undersigned Holder pays the aggregate purchase price for such shares of
Common Stock (i) by lawful money of the United States or the enclosed
certified or official bank check payable in United States dollars to the order
of the
Company in the amount of $___________, or (ii) by wire transfer of United
States
funds to the account of the Company in the amount of $____________, which
transfer has been made before or simultaneously with the delivery of this
Form of
Subscription pursuant to the instructions of the Company.
3.
Please issue a stock certificate or certificates representing the appropriate
number of shares of Common Stock in the name of the undersigned or in such other
names as is specified below:
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Name:
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Address:
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Dated:
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(Signature
must conform to name of Xxxxxx as
specified
on the face of the Warrant)
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Exhibit
A
LOCK-UP
AGREEMENT
The
undersigned individual hereby agrees, for a period of twelve (12) months from
__________, ___, 200__ (the “LOCK-UP PERIOD”), not to offer to sell, contract to
sell, or otherwise sell, dispose of, loan, pledge or grant any rights with
respect to (collectively, a “DISPOSITION”) any shares of VERTICAL COMPUTER
SYSTEMS, INC. (“Company”), Common Stock (“Common Stock”), any options or
warrants to purchase any shares of Common Stock or any securities convertible
into or exchangeable for shares of Common Stock (collectively, “SECURITIES”),
now owned or hereafter acquired directly by the undersigned individual or with
respect to which undersigned individual has or hereafter acquires the power of
disposition pursuant to the warrant, dated, “Date of Grant» (the “Warrant”),
otherwise than:
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(i)
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as
a bona fide gift or gifts, provided the donee or donees thereof agree to
be bound by these Lock-Up
provisions;
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(ii)
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as
a distribution to limited partners or shareholders of the undersigned,
provided that the distributees thereof agree in writing to be bound by the
terms of these Lock-Up provisions;
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(iii)
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in
a brokerage transaction, for all persons holding shares subject to these
Lock-Up Provisions, of (a) no more on any trading day than ______ shares
(which amount is calculated by dividing the number of shares, __________
shares currently held by the undersigned employee pursuant to the Warrant
by the number of trading days in a 12 month period [240 days], and
multiplying that resultant by three), and no more during any calendar
month than (b)__________ shares (which amount is calculated by dividing
the __________ shares currently held by undersigned individual by 12
months); in the event that Grantee does not sell shares above the monthly
limit in any one month, these remaining amounts shall be cumulative and
carry on to subsequent months thereby increasing the allowable amounts to
be sold; however, in the event that these shares are subject to a stock
split or a reverse stock split, the restrictions set forth in this
paragraph shall be adjusted proportionately;
or
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(iv)
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with
the prior written consent of the
Company.
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The
foregoing restriction is expressly agreed to preclude the holder of the
Securities from engaging in any hedging or other transaction which is designed
to or reasonably expected to lead to or result in a Disposition of Securities
during the Lock-Up Period, even if such Securities would be disposed of by
someone other than the undersigned individual. Such prohibited
hedging or other transactions would include without limitation any short sale
(whether or not against the box) or any purchase, sale or grant of any right
(including without limitation any put or call option) with respect to any
Securities or with respect to any security (other than a broad-based market
basket or index) that includes, relates to or derives any significant part of
its value from the Securities.
The undersigned individual hereby
agrees and consents: (i) to the entry of stop transfer instructions
with the Company’s transfer agent against the transfer of the Securities held by
the undersigned except in compliance with this Agreement, and (ii) to furnish
the Company brokerage account statements or trade confirmations which evidence
compliance with this Agreement.
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Dated: ______________,
2002
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[NAME]
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