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EXHIBIT 4.1
STOCK PURCHASE WARRANT
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This Warrant is issued this 30th day of June, 1997, by MERGE
TECHNOLOGIES INCORPORATED, a Wisconsin corporation (the "Company"), to SIRROM
CAPITAL CORPORATION, a Tennessee corporation (SIRROM CAPITAL CORPORATION and
any subsequent assignee or transferee hereof are hereinafter referred to
collectively as "Holder" or "Holders").
AGREEMENT:
1. ISSUANCE OF WARRANT; TERM. For and in consideration of SIRROM
CAPITAL CORPORATION making a loan to the Company in the amount of Two Million
and no/l00ths Dollars $2,000,000) pursuant to the terms of a secured
promissory note of even date herewith (the "Note") and related loan agreement
of even date herewith (the "Loan Agreement"), and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company hereby grants to Holder the right to purchase 21,449 shares of the
Company's common stock (the "Common Stock"), which the Company represents to
equal 3.25% the shares of capital stock outstanding on the date hereof,
calculated on a fully diluted basis and assuming exercise of this Warrant
("Base Amount"), provided that in the event that any portion of the indebtedness
evidenced by the Note is outstanding on the following dates, the Base Amount
shall be increased to the corresponding number set forth below:
DATE BASE AMOUNT
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June 30, 2000 30,087 shares, which the Company
represents to equal 4.5% of the shares of
the Company's capital stock outstanding on
the date hereof calculated on a fully diluted
basis after exercise of this Warrant
June 30, 2001 38,955 shares, which the Company
represents to equal 5.75% of the shares of
the Company's capital stock outstanding on
the date hereof calculated on a fully diluted
basis after exercise of this Warrant
June 30, 2002 48,061 shares, which the Company
represents to equal 7% of the shares of
the Company's capital stock outstanding on
the date hereof calculated on a fully diluted
basis after exercise of this Warrant
For purposes of the foregoing paragraph, "shares outstanding on a fully
diluted basis" constitutes a total of 638,528 shares (i.e. 576,327 outstanding
shares and 62,201 shares issuable pursuant to vested
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options) shall not include employee stock options outstanding on the date
hereof in favor of current or former employees of the Company that are not
vested on the date hereof or that expire on or before June 30, 1997. The
shares of Common Stock issuable upon exercise of this Warrant are hereinafter
referred to as the "Shares." This Warrant shall be exercisable at any time and
from time to time from the date hereof until July , 2002, and if not exercised
or "put" back to the Company pursuant to Section 9 hereof by such date, it
shall be deemed to have expired, and thereafter shall be null and void in all
respects.
2. EXERCISE PRICE. The exercise price (the "Exercise Price") per
share for which all or any of the Shares may be purchased pursuant to the
terms of this Warrant shall be One Cent ($.01).
3. Exercise. This Warrant may be exercised by the Holder hereof (but
only on the conditions hereinafter set forth) as to all or any increment
or increments of One Hundred (100) Shares (or the balance of the Shares if
less than such number), upon delivery of written notice of intent to
exercise to the Company at the following address: 0000 Xxxxx 00xx Xxxxxx,
Xxxxx X-000X, Xxxxxxxxx, Xxxxxxxxx 00000 or such other address as the
Company shall designate in a written notice to the Holder hereof, together
with this Warrant and payment to the Company of the aggregate Exercise
Price of the Shares so purchased. The Exercise Price shall be payable, at
the option of the Holder, (i) by certified or bank check, (ii) by the
surrender of the Note or portion thereof having an outstanding principal
balance equal to the aggregate Exercise Price or (iii) by the surrender of
a portion of this Warrant where the Shares subject to the portion of this
Warrant that is surrendered have a fair market value equal to the
aggregate Exercise Price. Upon exercise of this Warrant as aforesaid, the
Company shall as promptly as practicable, and in any event within fifteen
(15) days thereafter, execute and deliver to the Holder of this Warrant a
certificate or certificates for the total number of whole Shares for which
this Warrant is being exercised in such names and denominations as are
requested by such Holder. If this Warrant shall be exercised with respect
to less than all of the Shares, the Holder shall be entitled to receive a
new Warrant covering the number of Shares in respect of which this Warrant
shall not have been exercised, which new Warrant shall in all other
respects be identical to this Warrant. The Company covenants and agrees
that it will pay when due any and all state and federal issue taxes which
may be payable in respect of the issuance of this Warrant or the issuance
of any Shares upon exercise of this Warrant.
4. COVENANTS AND CONDITIONS. The above provisions are subject to the
following:
(a) Neither this Warrant nor the Shares have been registered
under the Securities Act of 1933, as amended ("Securities Act") or
any state securities laws ("Blue Sky Laws"). This Warrant has been
acquired for investment purposes and not with a view to distribution
or resale and may not be sold or otherwise transferred without (i) an
effective registration statement for such Warrant under the
Securities Act and such applicable Blue Sky Laws, or (ii) an opinion
of counsel, which opinion and counsel shall be reasonably
satisfactory to the Company and its counsel, that registration is not
required under the Securities Act or under any applicable Blue Sky
Laws (the Company hereby acknowledges that Xxxxxxxx & Xxxxxxxx, P.C.
is acceptable counsel). Transfer of the shares issued upon the
exercise of this Warrant shall be
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restricted in the same manner and to the same extent as the Warrant and the
certificates representing such Shares shall bear substantially the following
legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE
STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (I)
A REGISTRATION STATEMENT UNDER THE ACT AND SUCH
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (II) IN THE OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER
SUCH SECURITIES ACTS AND SUCH APPLICABLE STATE SECURITIES
LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED
TRANSFER.
The Holder hereof and the Company agree to execute such other documents and
instruments as counsel for the Company reasonably deems necessary to effect
the compliance of the issuance of this Warrant and any shares of Common
Stock issued upon exercise hereof with applicable federal and state
securities laws.
(b) The Company covenants and agrees that all Shares which may be
issued upon exercise of this Warrant will, upon issuance and payment
therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive rights, if
any, with respect thereto or to the issuance thereof. The Company shall at
all times reserve and keep available for issuance upon the exercise of this
Warrant such number of authorized but unissued shares of Common Stock as
will be sufficient to permit the exercise in full of this Warrant.
(c) The Company covenants and agrees that it shall not sell any shares
of the Company's capital stock at a price per share below the fair market
value of such shares, without the prior written consent of the Holder
hereof. In the absence of an established public market for the shares of
stock sold by the Company, fair market value shall be established by the
Company's board of directors in a commercially reasonable manner. The basis
for determination shall be provided in writing to the Holder hereof. In the
event that the Company sells shares of the Company's capital stock in
violation of this Section 4(C), the number of shares issuable upon exercise
of this Warrant shall be equal to the product obtained by multiplying the
number of shares issuable pursuant to this Warrant prior to such sale by the
quotient obtained by dividing (i) the fair market value of the shares issued
in violation of this Section 4(c) by (ii) the price at which such shares
were sold. Notwithstanding the foregoing, the Company may issue up to
200,000 shares of Common Stock pursuant to the stock option plan in place on
the date hereof; provided that the exercise price per share of such options
is at least the fair market value of a share of Common Stock on the date of
grant and provided further that the Company not grant options to purchase
more than 50,000 shares of Common Stock per year.
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5. TRANSFER OF WARRANT. Subject to the provisions of Section 4 hereof,
this Warrant may be transferred, in whole or in part, to any person or business
entity, by presentation of the Warrant to the Company with written instructions
for such transfer. Upon such presentation for transfer, the Company shall
promptly execute and deliver a new Warrant or Warrants in the form hereof in
the name of the assignee or assignees and in the denominations specified in
such instructions. The Company shall pay all expenses incurred by it in
connection with the preparation, issuance and delivery of Warrants under this
Section.
6. WARRANT HOLDER NOT SHAREHOLDER: RIGHTS OFFERING; PREEMPTIVE RIGHTS.
Except as otherwise provided herein, this Warrant does not confer upon the
Holder, as such, any right whatsoever as a shareholder of the Company.
Notwithstanding the foregoing, if the Company should offer to all of the
Company's shareholders the right to purchase any securities of the Company,
then all shares of Common Stock that are subject to this Warrant shall be deemed
to be outstanding and owned by the Holder and the Holder shall be entitled to
participate in such rights offering. The Company shall not grant any preemptive
rights with respect to any of its capital stock without the prior written
consent of the Holder.
7. OBSERVATION RIGHTS. The Holder of this Warrant shall receive notice
of and be entitled to attend or may send a representative to attend all
meetings of the Company's Board of Directors in a non-voting observation
capacity and shall receive a copy of all correspondence and information
delivered to the Company's Board of Directors, from the date hereof until such
time as the indebtedness evidenced by the Note has been paid in full.
8. ADJUSTMENT UPON CHANGES IN STOCK.
(a) If all or any portion of this Warrant shall be exercised
subsequent to any stock split, stock dividend, recapitalization,
combination of shares of the Company, or other similar event, occurring after
the date hereof, then the Holder exercising this Warrant shall receive, for the
aggregate price paid upon such exercise, the aggregate number and class of
shares which such Holder would have received if this Warrant had been exercised
immediately prior to such stock split, stock dividend, recapitalization,
combination of shares, or other similar event. If any adjustment under this
Section 8(a), would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares subject to this Warrant shall be the next
higher number of shares, rounding all fractions upward. Whenever there shall be
an adjustment pursuant to this Section 8(a), the Company shall forthwith notify
the Holder or Holders of this Warrant of such adjustment, setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated.
(b) If all or any portion of this Warrant shall be exercised
subsequent to any merger, consolidation, exchange of shares, separation,
reorganization or liquidation of the Company, or other similar event, occurring
after the date hereof, as a result of which shares of Common Stock shall be
changed into the same or a different number of shares of the same or another
class or classes of securities of the Company or another entity, or the holders
of Common
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Stock are entitled to receive cash or other property, then the Holder
exercising this Warrant shall receive, for the aggregate price paid upon such
exercise, the aggregate number and class of shares, cash or other property
which such Holder would have received if this Warrant had been exercised
immediately prior to such merger, consolidation, exchange of shares,
separation, reorganization or liquidation, or other similar event. If any
adjustment under this Section 8(b) would create a fractional share of Common
Stock or a right to acquire a fractional share of Common Stock, such fractional
share shall be disregarded and the number of shares subject to this Warrant
shall be the next higher number of shares, rounding all fractions upward.
Whenever there shall be an adjustment pursuant to this Section 8(b), the
Company shall forthwith notify the Holder or Holders of this Warrant of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
9. PUT AGREEMENT
(a) The Company hereby irrevocably grants and issues to Holder the right
and option to sell to the Company (the "Put") this Warrant for a period of 30
days immediately prior to the expiration thereof, at a purchase price (the
"Purchase Price") equal to the Fair Market Value (as hereinafter defined) of
the shares of Common Stock issuable to Holder upon exercise of this Warrant.
(b) The Company shall pay to the Holder, in cash or certified or cashier's
check, the Purchase Price in exchange for the delivery to the Company of this
Warrant within thirty (30) days of the receipt of (i) written notice, addressed
as set forth in Section 3 hereto, from the Holder of its intention to exercise
the Put, or (ii) determination of the Fair Market Value, whichever is later.
(c) The Fair Market Value of the shares of Common Stock of the Company
issuable pursuant to this Warrant shall be determined as agreed to by the
Company and the Holder, or if they shall fail to agree within five (5) days
following delivery of notice of exercise of the Put, then as follows:
(i) The Company and the Holder shall each appoint an independent,
experienced appraiser who is a member of a recognized professional
association of business appraisers. The two appraisers shall determine the
value of the shares of Common Stock which would be issued upon the exercise
of the Warrant, assuming that the sale would be between a willing buyer and
a willing seller, both of whom have full knowledge of the financial and other
affairs of the Company, and neither of whom is under any compulsion to sell
or to buy. In the event the Common Stock is publicly traded, in valuing the
shares issuable to Holder, the appraisers shall take into account the
liquidity of the public market and the anticipated impact on the value that
could be realized for such shares if they were all offered for sale on the
public market.
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(ii) If the higher of the two appraisals is not more than 10% more than
the lower of the appraisals, the Fair Market Value shall be the average of
the two appraisals. If the higher of the two appraisals is greater than 10%
more than the lower of the two appraisals, then a third appraiser shall be
appointed by the two appraisers, and if they cannot agree on a third
appraiser, the American Arbitration Association shall appoint the third
appraiser. The third appraiser, regardless of who appoints him or her, shall
have the same qualifications as the first two appraisers.
(iii) The Fair Market Value after the appointment of the third
appraiser shall be the mean of the three appraisals.
(iv) The fees and expenses of the appraisers shall be paid one-half by
the Company and one-half by the Holder.
(v) Notwithstanding anything to the contrary contained herein,
should the Company and Holder agree upon a Fair Market Value for the
shares subject to the Put, then such agreed value will apply in lieu of the
appraised value set forth above.
10. REGISTRATION.
(a) The Company and the holders of the Shares agree that if at any time
after the date hereof the Company shall propose to file a registration
statement with respect to any of its Common Stock on a form suitable for a
secondary offering, it will give notice in writing to such effect to the
registered holder(s) of the Shares at least thirty (30) days prior to such
filing, and, at the written request of any such registered holder, made within
ten (10) days after the receipt of such notice, will include therein at the
Company's cost and expense (including the fees and expenses of counsel to such
holder(s) not to exceed in the aggregate 25% of the fees payable to the
Company's counsel for such registration, and, excluding from payment for the
benefit of such holders all underwriting discounts, commissions and filing
fees attributable to the Shares included therein) such of the Shares as such
holder(s) shall request; provided, however, that if the offering being
registered by the Company is underwritten and if the representative of the
underwriters certifies in writing that the inclusion therein of the Shares
would materially and adversely affect the sale of the securities to be sold by
the Company thereunder, then the Company shall be required to include in the
offering only that number of securities, including the Shares, which the
underwriters determine in their sole discretion will not jeopardize the
success of the offering (the securities so included to be apportioned pro rata
among all selling shareholders according to the total amount of securities
entitled to be included therein owned by each selling shareholder).
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(b) Whenever the Company undertakes to effect the registration of any
of the Shares, the Company shall, as expeditiously as reasonably possible:
(i) Prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement covering such Shares and use
its best efforts to cause such registration statement to be declared
effective by the Commission as expeditiously as possible and to keep such
registration effective until the earlier of (A) the date when all Shares
covered by the registration statement have been sold or (B) two hundred
seventy (270) days from the effective date of the registration statement;
provided, that before filing a registration statement or prospectus or any
amendment or supplements thereto, the Company will furnish to each Holder
of Shares covered by such registration statement and the underwriters, if
any, copies of all such documents proposed to be filed (excluding exhibits,
unless any such person shall specifically request exhibits), which
documents will be subject to the review of such Holders and underwriters,
and the Company will not file such registration statement or any amendment
thereto or any prospectus or any supplement thereto (including any
documents incorporated by reference therein) with the Commission if (A) the
underwriters, if any, shall reasonably object to such filing or (B) if
information in such registration statement or prospectus concerning a
particular selling holder has changed and such holder or the underwriters,
if any, shall reasonably object.
(ii) Prepare and file with the Commission such amendments and
post-effective amendments to such registration statement as may be
necessary to keep such registration statement effective during the period
referred to in Section lO(b)(i) and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement, and cause the prospectus to be supplemented by
any required prospectus supplement, and as so supplemented to be filed with
the Commission pursuant to Rule 424 under the Securities Act.
(iii) Furnish to the selling holder(s) such numbers of copies of such
registration statement, each amendment thereto, the prospectus
included in such registration statement (including each preliminary
prospectus), each supplement thereto and such other documents as they may
reasonably request in order to facilitate the disposition of the Shares
owned by them.
(iv) Use its best efforts to register and qualify under such other
securities laws of such jurisdictions as shall be reasonably requested
by any selling holder and do any and all other acts and things which may be
reasonably necessary or advisable to enable such selling Holder to
consummate the disposition of the Shares owned by such Holder, in such
jurisdictions, provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to transact
business or to file a general consent to service of process in any such
states or jurisdictions.
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(v) Promptly notify each selling holder of the happening of any
event as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any
fact necessary to make the statements therein not misleading and, at the
request of any such Holder, the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Shares, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading.
(vi) Provide a transfer agent and registrar for all such Shares not
later than the effective date of such registration statement.
(vii) Enter into such customary agreements (including underwriting
agreements in customary form for a primary offering) and take all such other
actions as the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of such Shares (including, without limitation,
effecting a stock split or a combination of shares).
(viii) Make available for inspection by any selling holder or any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
selling Holder or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the officers,
directors, employees and independent accountants of the Company to supply
all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement.
(ix) Promptly notify the selling holder(s) and the underwriters, if
any, of the following events and (if requested by any such person) confirm
such notification in writing: (A) the filing of the prospectus or any
prospectus supplement and the registration statement and any amendment or
post-effective amendment thereto and, with respect to the registration
statement or any post-effective amendment thereto, the declaration of the
effectiveness of such documents, (B) any requests by the Commission for
amendments or supplements to the registration statement or the prospectus or
for additional information, (C) the issuance or threat of issuance by the
Commission of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that purpose
and (D) the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any jurisdiction
or the initiation or threat of initiation of any proceeding for such
purposes.
(x) Make every reasonable effort to prevent the entry of any order
suspending the effectiveness of the registration statement and obtain at the
earliest possible moment the withdrawal of any such order, if entered.
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(xi) Cooperate with the selling holder(s) and the underwriters, if
any, to facilitate the timely preparation and delivery of certificates
representing the Shares to be sold and not bearing any restrictive legends,
and enable such Shares to be in such lots and registered in such names as
the underwriters may request at least two (2) business days prior to any
delivery of the Shares to the underwriters.
(xii) Provide a CUSIP number for all the Shares not later than the
effective date of the registration statement.
(xiii) Prior to the effectiveness of the registration statement and any
post-effective amendment thereto and at each closing of an underwritten
offering, (A) make such representations and warranties to the selling
holder(s) and the underwriters, if any, with respect to the Shares and the
registration statement as are customarily made by issuers in primary
underwritten offerings; (B) use its best efforts to obtain "cold comfort"
letters and updates thereof from the Company's independent certified public
accountants addressed to the selling holders and the underwriters, if any,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters by underwriters in connection
with primary underwritten offerings; (C) deliver such documents and
certificates as may be reasonably requested (1) by the holders of a majority
of the Shares being sold, and (2) by the underwriters, if any, to evidence
compliance with clause (A) above and with any customary conditions contained
in the underwriting agreement or other agreement entered into by the
Company; and (D) obtain opinions of counsel to the Company and updates
thereof (which counsel and which opinions shall be reasonably satisfactory
to the underwriters, if any), covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as may
be reasonably requested by the selling Holders and underwriters or their
counsel. Such counsel shall also state that no facts have come to the
attention of such counsel which cause them to believe that such registration
statement, the prospectus contained therein, or any amendment or supplement
thereto, as of their respective effective or issue dates, contains any
untrue statement of any material fact or omits to state any material fact
necessary to make the statements therein not misleading (except that no
statement need be made with respect to any financial statements, notes
thereto or other financial data or other expertized material contained
therein). If for any reason the Company's counsel is unable to give such
opinion, the Company shall so notify the holders of the Shares and shall use
its best efforts to remove expeditiously all impediments to the rendering of
such opinion.
(xiv) Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to
its security holders earnings statements satisfying the provisions of
Section 11 (a) of the Securities Act, no later than forty-five (45) days
after the end of any twelve-month period (or ninety (90) days, if such
period is a fiscal year) (A) commencing at the end of any fiscal quarter in
which the Shares are sold to underwriters in a firm or best efforts
underwritten offering, or (B) if not sold to underwriters in such an
offering, beginning with the first month of
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the first fiscal quarter of the Company commencing after the
effective date of the registration statement, which statements
shall cover such twelve-month periods.
(c) After date hereof, the Company shall not grant to any holder of
securities of the Company any registration rights which have a priority greater
than or equal to those granted to Holders pursuant to this Warrant without the
prior written consent of the Holder(s).
(d) The Company's obligations under Section l0(a) above with respect to
each holder of Shares are expressly conditioned upon such holder's furnishing
to the Company in writing such information concerning such holder and the
terms of such holder's proposed offering as the Company shall reasonably
request for inclusion in the registration statement. If any registration
statement including any of the Shares is filed, then the Company shall
indemnify each holder thereof (and each underwriter for such holder and each
person, if any, who controls such underwriter within the meaning of the
Securities Act) from any loss, claim, damage or liability arising out of, based
upon or in any way relating to any untrue statement of a material fact
contained in such registration statement or any omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except for any such statement or omission based on
information furnished in writing by such holder of the Shares expressly for use
in connection with such registration statement; and such holder shall indemnify
the Company (and each of its officers and directors who has signed such
registration statement, each director, each person, if any, who controls the
Company within the meaning of the Securities Act, each underwriter for the
Company and each person, if any, who controls such underwriter within the
meaning of the Securities Act) and each other such holder against any loss,
claim, damage or liability arising from any such statement or omission which
was made in reliance upon information furnished in writing to the Company by
such holder of the Shares expressly for use in connection with such
registration statement.
(e) For purposes of this Section l0, all of the Shares shall be deemed
to be issued and outstanding.
11. CERTAIN NOTICES. In case at any time the Company shall propose to:
(a) declare any cash dividend upon its Common Stock;
(b) declare any dividend upon its Common Stock payable in stock or make
any special dividend or other distribution to the holders of its Common Stock;
(c) offer for subscription to the holders of any of its Common Stock any
additional shares of stock in any class or other rights;
(d) reorganize, or reclassify the capital stock of the Company, or
consolidate, merge or otherwise combine with, or sell of all or substantially
all of its assets to, another corporation;
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(e) voluntarily or involuntarily dissolve, liquidate or wind up of the
affairs of the Company; or
(f) redeem or purchase any shares of its capital stock or securities
convertible into its capital stock;
then, in any one or more of said cases, the Company shall give to the
Holder of the Warrant, by certified or registered mail, (i) at least twenty
(20) days' prior written notice of the date on which the books of the Company
shall close or a record shall be taken for such dividend, distribution or
subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, and (ii) in the case of such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, at least twenty (20) days' prior written notice of the date when
the same shall take place. Any notice required by clause (i) shall also
specify, in the case of any such dividend, distribution or subscription rights,
the date on which the holders of Common Stock shall be entitled thereto, and
any notice required by clause (ii) shall specify the date on which the holders
of Common Stock shall be entitled to exchange their Common Stock for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, as the
case may be.
12. Rights of Co-Sale.
(a) Co-Sale Right. None of Xxxxxxx Xxxxxxxxx nor Xxxxxx Xxxxx ("Management
Shareholders") shall enter into any transaction that would result in the sale
by it of any Common Stock now or hereafter owned by him, unless prior to such
sale such Management Shareholder shall give notice to holder of his intention
to effect such sale in order that holder may exercise its rights under this
Section 12 as hereinafter described. Such notice shall set forth (i) the
number of shares to be sold by such Management Shareholder, (ii) the principal
terms of the sale, including the price at which the shares are intended to be
sold, and (iii) an offer by such Management Shareholder to use his best
efforts to cause to be included with the shares to be sold by it in the sale,
on a pro rata basis and on the same terms and conditions, the Shares issuable
or issued to holder pursuant to this Warrant.
(b) Rejection of Co-Sale Offer. If holder has not accepted such offer in
writing within a period of ten (10) days from the date of receipt of the
notice, then such Management Shareholder shall thereafter be free for a period
of ninety (90) days to sell the number of shares specified in such notice, at
a price no greater than the price set forth in such notice and on otherwise no
more favorable terms to such Management Shareholder than as set forth in such
notice, without any further obligation to Holder in connection with such sale.
In the event that such Management Shareholder fails to consummate such sale
within such ninety-day period, the shares specified in such notice shall
continue to be subject to this Section.
(c) Acceptance of Co-Sale Offer. If Holder accepts such offer in writing
within ten (10) day period, such acceptance shall be irrevocable unless such
Management Shareholder
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shall be unable to cause to be included in his sale the number of Shares
of stock held by Holder and set forth in the written acceptance. In that event,
such Management Shareholder and Holder shall participate in the sale pro rata,
with such Management Shareholder and Holder each selling that percentage of the
shares offered for sale which is equal to their respective percentages of
shares of Common Stock owned by them compared to the sum of Holder's Common
Stock plus the selling Management Shareholder's Common Stock.
13. ARTICLE AND SECTION HEADINGS. Numbered and titled article and section
headings are for convenience only and shall not be construed as amplifying or
limiting any of the provisions of this Warrant.
14. NOTICE. Any and all notices, elections or demands permitted or
required to be made under this Warrant shall be in writing, signed by the
party giving such notice, election or demand and shall be delivered personally,
telecopied, telexed, or sent by certified mail or overnight via nationally
recognized courier service (such as Federal Express), to the other party at the
address set forth below, or at such other address as may be supplied in writing
and of which receipt has been acknowledged in writing. The date of personal
delivery or telecopy or two (2) business days after the date of mailing (or the
next business day after delivery to such courier service), as the case may be,
shall be the date of such notice, election or demand. For the purposes of this
Warrant:
The Address of Holder is: Sirrom Capital Corporation
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telecopy No. 615/726- 120S
with a copy to: Xxxxxxxx & Xxxxxxxx
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx-Xxxx Xxxxxxxx, Esq.
Telecopy No. 615/256-9958
The Address of Company is: Merge Technologies Incorporated
0000 Xxxxx 00xx Xxxxxx
Xxxxx X-000X
Xxxxxxxxx, X0 00000
Attention: Xxxxxxx Xxxxxxxxx
with a copy to: Xxxxxxx & Xxxxxxxx, Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
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15. SEVERABILITY. If any provisions(s) of this Warrant or the application
thereof to any person or circumstances shall be invalid or unenforceable to any
extent, the remainder of this Warrant and the application of such provisions to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
16. ENTIRE AGREEMENT. This Warrant between the Company and Holder
represents the entire agreement between the parties concerning the subject
matter hereof, and all oral discussions and prior agreement are merged herein.
17. GOVERNING LAW AND AMENDMENTS. This Warrant shall be construed and
enforced under the laws of the State of Tennessee applicable to contracts
to be wholly performed in such State. No amendment or modification hereof shall
be effective except in a writing executed by each of the parties hereto.
18. COUNTERPARTS. This Warrant may be executed in any number of
counterparts and be different parties to this Warrant in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Warrant.
19. JURISDICTION AND VENUE. The Company hereby consents to the
jurisdiction of the courts of the State of Tennessee and the United States
District Court for the Middle District of Tennessee, as well as to the
jurisdiction of all courts from which an appeal may be taken from such courts,
for the purpose of any suit, action or other proceeding arising out of any of
its obligations arising under this Agreement or with respect to the
transactions contemplated hereby, and expressly waives any and all objections it
may have as to venue in any of such courts.
20. EQUITY PARTICIPATION. This Warrant is issued in connection with the
Loan Agreement. It is intended that this Warrant constitute an equity
participation under and pursuant to T.C.A. Section 00-00-000, et seq. and that
equity participation be permitted under said statutes and not constitute
interest on the Note. If under any circumstances whatsoever, fulfillment of any
obligation of this Warrant, the Loan Agreement, or any other agreement or
document executed in connection with the Loan Agreement, shall violate the
lawful limit of any applicable usury statue or any other applicable law with
regard to obligations of like character and amount, then the obligation to be
fulfilled shall be reduced to such lawful limit, such that in no event shall
there occur, under this Warrant, the Loan Agreement, or any other document or
instrument executed in connection with the Loan Agreement, any violation of
such lawful limit, but such obligation shall be fulfilled to the lawful limit.
If any sum is collected in excess of the lawful limit, such excess shall be
applied to reduce the principal amount of the Note.
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IN WITNESS WHEREOF, the parties hereto have set their hands as of the date
first above written.
COMPANY: MERGE TECHNOLOGIES INCORPORATED,
-------- a Wisconsin corporation
By: /s/Xxxxxxx Xxxx
----------------------------
Title: Chief Financial Officer
HOLDER: SIRROM CAPITAL CORPORATION, a Tennessee
------- corporation
By: /s/Xxxx Dryslin
----------------------------
Title: Vice President
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Warrant to be executed as of the date first above written for the purpose of
agreeing to the terms and conditions of Section 12 hereof.
MANAGEMENT
----------
SHAREHOLDER: /s/ Xxxxxxx Xxxxxxxxx
------------ ----------------------------
Xxxxxxx Xxxxxxxxx
/s/ Xxxxxx Xxxxx
----------------------------
Xxxxxx Xxxxx
Xxxxxx Xxxxx
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