EXHIBIT 10.25
Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote
omissions.
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This Agreement is entered into as of October 19, 1998 (the
"Effective Date") between Spyglass, Inc., a Delaware corporation
having a principal place of business at 0000 X. Xxxxx Xxxx, 0xx
Xxxxx, Xxxxxxxxxx, XX 00000 (the "Company"), and General Instrument
Corporation, a Delaware corporation having a place of business at 000
Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxxx 00000 (the "Purchaser"). The
Company and the Purchaser are hereinafter sometimes referred to
individually as a "Party" and collectively as the "Parties."
WHEREAS, contemporaneously with the execution of this Agreement,
the Company and the Purchaser are entering into a Digital Software
Integration Center Sourcing Agreement (the "Sourcing Agreement");
WHEREAS, contemporaneously with the execution of this Agreement,
the Company has organized Spyglass DSIC, Inc. (the "Subsidiary") for
the purpose of operating and managing a Digital Software Integration
Center in accordance with the terms of the Sourcing Agreement:
WHEREAS, contemporaneously with the execution of this Agreement,
the Company, the Subsidiary and the Purchaser are entering into an
Operating Agreement for the purpose of establishing certain rights
and obligations with respect to the Subsidiary; and
WHEREAS, the Company and the Purchaser desire to enter into this
Agreement for the purpose of providing for the purchase and sale of
certain securities of the Company and establishing certain rights and
obligations with respect to such securities;
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Purchaser, each intending to be
legally bound, hereby agree as follows:
1. Purchase and Sale of Securities.
1.1 Purchase and Sale of Shares. Subject to the terms and
conditions of this Agreement, at the Closing (as defined below) the
Company will issue and sell to the Purchaser, and the Purchaser will
purchase, 700,000 shares of common stock, $.01 par value per share,
of the Company ("Common Stock") for the purchase price of $10.56 per
share. The shares of Common Stock being sold under this Agreement
are referred to as the "Shares."
1.2 Warrants. The Company will issue to the Purchaser at
the Closing three warrants, covering a total of 700,000 shares of
Common Stock, which warrants shall be in the form attached hereto as
Exhibit A, Exhibit B and Exhibit C, respectively (the "Warrants").
2. The Closing. The closing ("Closing") of the transactions
contemplated by this Agreement shall take place at the offices of
Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx at 10:00
a.m. (or at such other time and place as may be agreed by the
Parties) on the date of this Agreement (the "Closing Date"). At the
Closing:
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(1) the Company shall deliver to the Purchaser a
certificate, as of the most recent practicable date, as to the
corporate good standing of the Company issued by the Secretary of
State of the State of Delaware;
(2) the Company shall deliver to the Purchaser the
Certificate of Incorporation of the Company, as amended and in effect
as of the Closing Date, certified by the Secretary of State of the
State of Delaware;
(3) the Company shall deliver to the Purchaser a
certificate of the Secretary of the Company certifying as to the
Company's By-laws and resolutions of the Company's Board of Directors
relating to the issuance and sale of the Shares and the Warrants;
(4) the Company shall deliver to the Purchaser a
certificate for the Shares being purchased by the Purchaser,
registered in the name of the Purchaser and dated as of the Closing
date;
(5) the Purchaser shall pay to the Company the purchase
price for the Shares, by wire transfer of immediately available
funds;
(6) the Company and the Purchaser shall execute and
deliver a Cross-Receipt with respect to the purchase and sale of the
Shares;
(7) the Company shall execute and deliver to the Purchaser
the Warrants; and
(8) the Company shall deliver to the Purchaser an opinion
of counsel in substantially the form attached hereto as Exhibit D.
3. Representations of the Company. The Company hereby
represents and warrants to the Purchaser as follows:
3.1 Organization and Standing. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company is duly
qualified to do business as a foreign corporation and is in good
standing in any jurisdiction in which the failure to so qualify would
have a material adverse effect on the business, properties, assets,
operations or condition (financial or otherwise) of the Company.
3.2 Capitalization. The authorized capital stock of the
Company at the Closing will consist of (a) 50,000,000 shares of
common stock, $.01 par value per share, of which 13,935,007 shares
were issued and outstanding as of the close of business on October
13, 1998, and (b) 2,000,000 shares of Preferred Stock, $.01 par value
per share, none of which are issued or outstanding. All of the
issued and outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and
nonassessable. The Company has not issued or granted any options,
warrants or other securities exercisable for or convertible into
capital stock of the Company, except pursuant to the employee and/or
director stock plans described in, or as otherwise disclosed in, the
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Company Reports (as defined in Section 3.5 below). All of the
Shares, and all of the shares of Common Stock issued upon exercise of
the Warrants (the "Warrant Shares"), will be, when issued in
accordance with this Agreement or the Warrants, as the case may be,
duly authorized, validly issued, fully paid and nonassessable.
3.3 Authorization of Transaction. The Company has all
requisite power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution and delivery
of this Agreement by the Company and the consummation of the
transactions contemplated hereby by the Company have been duly and
validly authorized by all necessary corporate action on the part of
the Company. The issuance, sale and delivery of the Shares in
accordance with this Agreement, and the issuance and delivery of the
shares of Common Stock issuable upon exercise of the Warrants, have
been duly authorized by all necessary corporate action on the part of
the Company, and all such shares have been duly reserved for
issuance. This Agreement has been duly and validly executed and
delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against it in accordance with
its terms.
3.4 Noncontravention. Neither the execution and delivery
of this Agreement by the Company, nor the consummation by the Company
of the transactions contemplated hereby, will (a) conflict with or
violate any provision of the Certificate of Incorporation or By-laws
of the Company, (b) require on the part of the Company any filing
with, or permit, authorization, consent or approval of, any
governmental entity, (c) conflict with, result in breach of,
constitute a default under, or require any notice, consent or waiver
under, any contract, agreement or other instrument to which the
Company is a party or by which it is bound (other than any consent or
waiver which has already been obtained), or (d) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to
the Company.
3.5 Reports and Financial Statements. The Company has
previously furnished or made available to the Purchaser complete and
accurate copies, as amended or supplemented, of its (i) Annual Report
on Form 10-K for the fiscal year ended September 30, 1997, as filed
with the Securities and Exchange Commission (the "SEC"), (ii) its
Quarterly Reports on Form 10-Q for the quarter ended December 31,
1997, March 31, 1998 and June 30, 1998, as filed with the SEC, (iii)
its Current Report on Form 8-K dated November 14, 1997, as amended by
a Form 8-K/A dated December 23, 1997, as filed with the SEC and (iv)
all other reports or statements filed by the Company with the SEC
since September 30, 1997 (such reports and statements are
collectively referred to herein as the "Company Reports"). The
Company Reports constitute all of the documents required to be filed
by the Company under Section 13 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), with the SEC since September
30, 1997. As of their respective dates, the Company Reports did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading. The audited financial statements and
unaudited interim financial statements of the Company included in the
Company Reports (i) comply as to form in all material respects with
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applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, (ii) have been prepared
in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods covered thereby (except
as may be indicated therein or in the notes thereto, and in the case
of quarterly financial statements, as permitted by Form 10-Q under
the Exchange Act), (iii) fairly present the consolidated financial
condition, results of operations and cash flows of the Company as of
the respective dates thereof and for the periods referred to therein,
and (iv) are consistent with the books and records of the Company.
3.6 Absence of Material Adverse Changes. Except as
disclosed by the Company to the Purchaser prior to the date hereof,
since June 30, 1998, there has not been any material adverse change
in the assets, business, financial condition or results of operations
of the Company.
3.7 Litigation. Except as may be disclosed in the Company
Reports, there is no action, suit or proceeding, or governmental
inquiry or investigation, pending, or, to the best of the Company's
knowledge, following reasonable inquiry, any threat thereof, against
the Company, which questions the validity of this Agreement or the
right of the Company to enter into it, or which might result, either
individually or in the aggregate, in any material adverse change in
the assets, business, financial condition or results of operations of
the Company.
3.8 Compliance with Laws. The Company, its properties and
assets, and the operation of its business as currently conducted, do
not violate any law, rule or regulation applicable to them, or
violate any judgment, writ, injunction, decree or order of any court,
governmental agency or regulatory body, except for any violation
which would not reasonably be expected to have a material adverse
effect on the business, properties, assets, operations or condition
(financial or otherwise) of the Company.
4. Representations of the Purchaser. The Purchaser represents
and warrants to the Company as follows:
4.1 Organization and Standing. The Purchaser is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
4.2 Authorization of Transaction. The Purchaser has all
requisite power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution and delivery
of this Agreement by the Purchaser and the consummation of the
transactions contemplated hereby by the Purchaser have been duly and
validly authorized by all necessary corporate action on the part of
the Purchaser. This Agreement has been duly and validly executed and
delivered by the Purchaser and constitutes a valid and binding
obligation of the Purchaser, enforceable against it in accordance
with its terms.
4.3 Noncontravention. Neither the execution and delivery
of this Agreement by the Purchaser, nor the consummation by the
Purchaser of the transactions contemplated hereby, will (a) conflict
with or violate any provision of the Certificate of Incorporation or
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By-laws of the Purchaser, (b) require on the part of the Purchaser
any filing with, or permit, authorization, consent or approval of,
any governmental entity, (c) conflict with, result in breach of,
constitute a default under, or require any notice, consent or waiver
under, any contract, agreement or other instrument to which the
Purchaser is a party or by which it is bound (other than any consent
or waiver which has already been obtained), or (d) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to
the Purchaser.
4.4 Investment Matters.
(1) The Purchaser is purchasing the Shares and the
Warrants, and will purchase the Warrant Shares, for its own account
for investment only, and not with a view to, or for sale in
connection with, any distribution of such securities in violation of
the Securities Act of 1933, as amended (the "Securities Act"), or any
rule or regulation under the Securities Act.
(2) The Purchaser has had such opportunity as it has
deemed adequate to obtain from representatives of the Company such
information as is necessary to permit it to evaluate the merits and
risks of its investment in the Company.
(3) The Purchaser has sufficient experience in business,
financial and investment matters to be able to evaluate the risks
involved in the purchase of the Shares, the Warrants and the Warrant
Shares and to make an informed investment decision with respect to
such purchase.
(4) The Purchaser can afford a complete loss of the value
of the Shares and is able to bear the economic risk of holding the
Shares for an indefinite period.
(5) The Purchaser understands that (i) neither the Shares,
the Warrants nor the Warrant Shares have been registered under the
Securities Act and they are "restricted securities" within the
meaning of Rule 144 under the Securities Act, (ii) neither the
Shares, the Warrants nor the Warrant Shares can be sold, transferred
or otherwise disposed of unless they are subsequently registered
under the Securities Act or an exemption from registration is then
available; (iii) in any event, the exemption from registration under
Rule 144 or otherwise may not be available for at least one year and
even then will not be available unless the terms and conditions of
Rule 144 are complied with; and (iv) there is now no registration
statement on file with the Securities and Exchange Commission with
respect to the Shares, the Warrants or the Warrant Shares and the
Company has no obligation or current intention to register such
securities under the Securities Act.
(6) A legend substantially in the following form may be
placed on the certificate representing the Shares, the Warrants and
the Warrant Shares:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold,
transferred or otherwise disposed of in the absence of an effective
registration statement under such Act or an opinion of counsel
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Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote
omissions.
satisfactory to the corporation to the effect that such registration
is not required."
(7) The Purchaser is an "accredited investor" as that term
is defined in Rule 501 of Regulation D promulgated under the
Securities Act.
(8) During the 30-day period immediately preceding the
date of this Agreement, the Purchaser has not (i) bought or sold any
shares of Common Stock or any "put" or "call" options or other
derivative securities with respect thereto, (ii) made any "short
sales" of shares of Common Stock or (iii) otherwise taken, directly
or indirectly, any action to manipulate or affect the market price of
the Common Stock.
5. Covenants of the Company.
5.1 Inspection. So long as the Purchaser (or any of its
Affiliates, as defined below) holds at least 25% of the Shares
originally issued pursuant to this Agreement, the Company shall (a)
permit the Purchaser, or any authorized representative thereof, to
visit and inspect the properties of the Company, including its
corporate and financial records, and to discuss its business and
finances with officers of the Company, at least twice per year
following reasonable notice, subject to the confidentiality
obligations of Section 9.2 hereof, and (b) provide the Purchaser, as
well as any registered holder of the Warrants, with copies of all
reports filed by the Company with the SEC or otherwise distributed
generally to its stockholders. For purposes of this Agreement, an
"Affiliate" of a party means any person or entity that controls, is
controlled by, or is under common control with, such party.
5.2 Reservation of Common Stock. The Company shall
reserve and maintain a sufficient number of shares of Common Stock
for issuance upon exercise of the Warrants.
6. Transfer of Securities.
6.1 Restriction on Transfer. The Purchaser may not sell,
transfer or otherwise dispose of any of the Shares, or any other
shares of capital stock of the Company issued in respect of the
Shares (as a result of stock splits, stock dividends,
reclassifications, recapitalizations, or similar events), without the
prior written consent of the Company, during the *** period
following the date of this Agreement. Notwithstanding the foregoing,
this restriction on transfer shall terminate upon the consummation of
(i) a merger, consolidation, reorganization, recapitalization or
tender offer involving the Company, immediately following which the
individuals and entities who were the beneficial owners of the Common
Stock of the Company immediately prior to such transaction
beneficially own, directly or indirectly, less than 60% of the
combined voting power of the then-outstanding securities entitled to
vote generally in the election of directors of the Company or the
resulting or acquiring corporation in such transaction, (ii) the sale
of all or substantially all of the assets of the Company, or
(iii) the acquisition by any of the companies listed on Exhibit C to
the Operating Agreement of beneficial ownership (within the meaning
of Section 13(d) of the Securities Exchange Act of 1934) of shares of
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Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote
omissions.
common stock of the Company representing 20% or more of the
outstanding common stock of Spyglass (a "Spyglass Change in
Control").
6.2 Restricted Securities.
(1) "Restricted Securities" means the Shares and any other
shares of capital stock of the Company issued in respect of the
Shares (as a result of stock splits, stock dividends,
reclassifications, recapitalizations, or similar events); provided,
however, that shares of Common Stock which are Restricted Securities
shall cease to be Restricted Securities (i) upon any sale pursuant to
a registration statement under the Securities Act, Section 4(1) of
the Securities Act or Rule 144 under the Securities Act, or (ii) at
such time as they become eligible for sale under Rule 144(k) under
the Securities Act.
(2) Restricted Securities shall not be sold or transferred
unless either (a) they first shall have been registered under the
Securities Act, or (b) the Company first shall have been furnished
with an opinion of legal counsel, reasonably satisfactory to the
Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Securities Act.
7. Indemnification.
7.1 Indemnification by the Company. The Company shall
defend, indemnify and hold harmless the Purchaser, its Affiliates and
each of their respective employees, officers and directors against
any losses, claims, damages or liabilities (including reasonable
attorneys' fees and amounts paid in settlement) to which they may
become subject as a result of any breach by the Company of a
representation, warranty or covenant of the Company contained in this
Agreement. Any party seeking to assert rights to indemnification
under this Section 7.1 shall give the Company prompt written
notification of any loss, claim, damage or liability for which
indemnification may be sought; shall give the Company the opportunity
to assume the defense of any lawsuit or other proceeding relating
thereto; and shall not settle or consent to an entry of judgment with
respect to any such matter without the prior written consent of the
Company, which consent shall not be unreasonably withheld.
7.2 Survival. The indemnification provided in this
Section 7 shall survive the Closing and continue for a period of ***
thereafter.
8. Registration Rights.
8.1 Definitions. For purposes of this Section 8:
(1) "Eligible Shares" means (i) the Shares, (ii) any
shares of Common Stock issued or issuable upon the exercise of the
Warrants and (iii) any other shares of common stock issued in respect
of any such shares as a result of stock splits, stock dividends,
reclassifications, recapitalizations, mergers or similar events;
provided, however, that shares which are Eligible Shares shall cease
to be Eligible Shares upon (i) any sale pursuant to a registration
statement under the Securities Act or Rule 144 under the Securities
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Act or (ii) becoming eligible for sale by the holder thereof pursuant
to Rule 144(k) under the Securities Act.
(2) "Registration Statement" means a registration
statement filed by the Company with the SEC for a public offering and
sale of securities of the Company (other than a registration
statement on Form S-8 or Form S-4, or their successors, or any other
form for a similar limited purpose, or any registration statement
covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
(3) "Holder" means the Purchaser or any other person or
entity holding or having the right to acquire Eligible Shares to
which rights under this Section 8 are transferred in accordance with
Section 8.8.
(4) "Selling Stockholder" means a Holder whose Eligible
Shares are included in a Registration Statement pursuant to this
Section 8.
8.2 Registration of Eligible Sharesof Eligible Shares.
(1) At any time after the first anniversary of the Closing
Date, or upon a Spyglass Change in Control, Holders may submit to the
Company a written request (a "Registration Request") that the Company
file a Registration Statement under the Securities Act covering
Eligible Shares held by them which represent at least 20% of the
Eligible Shares then outstanding (or a lesser percentage if the
anticipated aggregate offering price, net of underwriting discounts
and commissions, would exceed $500,000). Such Registration Request
shall state the intended manner of sale or other disposition of such
Eligible Shares (including whether such Eligible Shares are to be
sold in an underwritten offering). Within 10 days after receipt of a
Registration Request, the Company shall give written notice of such
proposed registration to all Holders. Such Holders shall have the
right to have included in such Registration Statement such of their
Eligible Shares as such Holders may request in a written notice
delivered to the Company within 20 days after receipt of the
Company's notice referred to in the preceding sentence. Promptly
following the expiration of such 20-day period, the Company shall use
its best efforts to effect, as expeditiously as possible and in any
event within 90 days after the expiration of such 20-day period, the
registration under the Securities Act of all Eligible Shares which
the Company has been requested to so register, in order to permit the
public sale or other disposition of such Eligible Shares in the
manner specified in the Registration Request.
(2) Whenever the Company proposes to file, after the first
anniversary of the Closing Date, a Registration Statement covering
shares of its Common Stock (other than a Registration Statement filed
pursuant to Section 8.2(a)), it will, prior to such filing, give
written notice to all Holders of its intention to do so, which notice
shall state whether such the shares to be offered by the Company are
to be sold in an underwritten offering. Such Holders shall have the
right to have included in such Registration Statement such of their
Eligible Shares as such Holders may request in a written notice
delivered to the Company within 20 days after receipt of the
Company's notice referred to in the preceding sentence. The Company
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shall use its best efforts to effect the registration under the
Securities Act of all Eligible Shares which the Company has been
requested to so register, in order to permit the public sale or other
disposition of such Eligible Shares in the manner specified in the
notice by the Company to such Holders; provided that the Company
shall have the right to postpone or withdraw any registration
effected pursuant to this Section 8.2(b) without obligation to any
Holder.
(3) If any registration effected pursuant to this
Section 8.2 relates to an underwritten offering
(1) any Holder including Eligible Shares in such
registration shall, as a condition to including
their Eligible Shares in such registration, agree
to be bound by the terms and restrictions
relating to such offering, as required by the
underwriters; and
(2) notwithstanding any other provision of this
Section 8, if the managing underwriter determines
that the inclusion in such registration of all
Eligible Shares requested to be registered under
this Section 8.2 would jeopardize the success of
the offering, the Company may limit the number of
shares of Common Stock (including Eligible
Shares) to be included in such registration by
selling stockholders, with the number of such
shares of Common Stock (if any) included in such
registration allocated among all selling
stockholders requesting registration in
proportion, as nearly as practicable, to the
respective number of shares of Common Stock held
by such selling stockholders.
(4) Notwithstanding the other provisions of this
Section 8.2, the Company shall not be required to effect the
registration under the Securities Act of Eligible Shares requested by
the Holder thereof to be registered pursuant to this Section 8.2 if,
at the time of such request, all such Eligible Shares may be
immediately sold by such Holder pursuant to Rule 144 under the
Securities Act without exceeding the volume limitations in paragraph
(e) of Rule 144.
8.3 Registration Procedures. If and whenever the Company
is required by the provisions of this Section 8 to use its best
efforts to effect the registration of any Eligible Shares under the
Securities Act, the Company shall:
(1) prepare and file with the SEC a Registration Statement
with respect to such Eligible Shares and use its best efforts to
cause that Registration Statement to become effective;
(2) prepare and file with the SEC any amendments and
supplements to such Registration Statement and the prospectus
included in such Registration Statement as may be necessary to comply
with the provisions of the Securities Act (including the anti-fraud
provisions thereof) and to keep such Registration Statement effective
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for 120 days from the effective date or until all such Eligible
Shares covered thereby have been sold;
(3) subject to the provisions of Section 8.4, upon the
happening of any event which results in such Registration Statement
containing an untrue statement of a material fact or omitting to
state a material fact required to be stated therein, the Company
shall promptly notify the Selling Stockholders of such occurrence and
shall prepare and file with the SEC, as promptly as practicable
thereafter, a supplement or amendment to such Registration Statement
so that it will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein not misleading. If the Company has delivered preliminary or
final prospectuses to the Selling Stockholders and after having done
so the prospectus is amended or supplemented pursuant to this
paragraph, the Company shall promptly notify the Selling Stockholders
and, if requested by the Company, the Selling Stockholders shall
immediately cease making offers or sales of shares under such
Registration Statement and return all prospectuses to the Company.
The Company shall promptly provide the Selling Stockholders with
revised prospectuses and, following receipt of the revised
prospectuses, the Selling Stockholders shall be free to resume making
offers and sales under such Registration Statement;
(4) furnish to each Selling Stockholder such reasonable
numbers of copies of the Prospectus, including any preliminary
Prospectus, in conformity with the requirements of the Securities
Act;
(5) use its best efforts to register or qualify the
Eligible Shares covered by such Registration Statement under the
securities or Blue Sky laws of such states as the Selling
Stockholders shall reasonably request, provided, however, that the
Company shall not be required in connection with this paragraph (e)
to qualify as a foreign corporation or execute a general consent to
service of process in any jurisdiction;
(6) as expeditiously as possible following the
effectiveness of such Registration Statement, notify each seller of
such Eligible Shares of any request by the SEC for the amending or
supplementing of such Registration Statement or Prospectus; and
(7) in the case of an underwritten offering, furnish, at
the request of any Holder, on the date such Eligible Shares are
delivered to the underwriters for sale in connection with such
Registration Statement pursuant to this Section 8, (i) an opinion of
counsel representing the Company for the purpose of such
registration, addressed to the underwriters, dated such date, in form
and substance customarily given by company counsel in underwritten
public offerings, and (ii) a letter from the independent certified
public accountants of the Company, dated such date, in form and
substance customarily given by independent certified public
accountants in underwritten public offerings.
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8.4 Limitations on Registration Rightson Registration Rights.
(1) The Company shall not be required to effect more than
three registrations pursuant to Section 8.2(a) above. In addition,
the Company shall not be required to file any Registration Statement
under Section 8.2 within the earlier to occur of (i) 180 days after
the filing of any other Registration Statement by the Company or
(ii) 120 days after the effective date of any other Registration
Statement filed by the Company.
(2) The Company may, by written notice to the Holders
whose Eligible Shares are included or are to be included in a
Registration Statement pursuant to Section 8.2, (i) delay (for a
period not to exceed 90 days) the filing or effectiveness of such
Registration Statement or (ii) suspend (for a period not to exceed 90
days) such Registration Statement after effectiveness and require
that the Selling Stockholders immediately cease (for a period not to
exceed 90 days) sales of shares pursuant to such Registration
Statement, in the event that (A) the Company is preparing to file a
Registration Statement with the SEC for a public offering of its
securities, subject to the rights of the Holders to include Eligible
Shares in such registration statement, as provided in Section 8.2, or
(B) the Company is engaged in any activity or transaction or
preparations or negotiations for any activity or transaction and the
Board of Directors of the Company determines in good faith that the
filing of such Registration Statement (or the public disclosure
required as a result thereof) would have a material adverse effect on
such activity or transaction, or the preparations or negotiations
therefor.
(3) If the Company delays or suspends a Registration
Statement or requires Selling Stockholders to cease sales of shares
pursuant to paragraph (b) above, the Company shall, as promptly as
practicable following the termination of the circumstance which
entitled the Company to do so, take such actions as may be necessary
to file or reinstate the effectiveness of such Registration Statement
and/or give written notice to all Selling Stockholders authorizing
them to resume sales pursuant to such Registration Statement. If as
a result thereof the prospectus included in such Registration
Statement has been amended to comply with the requirements of the
Securities Act, the Company shall enclose such revised prospectus
with the notice to Selling Stockholders given pursuant to this
paragraph (c), and the Selling Stockholders shall make no offers or
sales of shares pursuant to such Registration Statement other than by
means of such revised prospectus.
8.5 Requirements of Selling Stockholdersof Selling
Stockholders.
(1) The Company shall not be required to include any
Eligible Shares in a Registration Statement unless the Selling
Stockholder owning such shares furnishes to the Company in writing
such information regarding such Selling Stockholder and the proposed
sale of Eligible Shares by such Selling Stockholder as the Company
may reasonably request in writing in connection with such
Registration Statement or as shall be required in connection
therewith by the SEC or any state securities law authorities.
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(2) Each Holder shall:
(1) indemnify the Company and each of its directors
and officers against, and hold the Company and each of its directors
and officers harmless from, any losses, claims, damages, expenses or
liabilities (including reasonable attorneys fees) to which the
Company or such directors and officers may become subject by reason
of any statement or omission in a Registration Statement made in
reliance upon, or in conformity with, written information furnished
by such Holder pursuant to this Section 8.5; and
(2) report to the Company sales made pursuant to a
Registration Statement.
8.6 Indemnification. The Company agrees to indemnify and
hold harmless each Selling Stockholder, each of its directors and
officers, any other person who controls (within the meaning of the
Securities Act or the Securities Exchange Act of 1934) such Selling
Stockholder, and any underwriter for such Selling Stockholder,
against any losses, claims, damages, expenses or liabilities to which
they may become subject by reason of any untrue statement or alleged
untrue statement of a material fact contained in a Registration
Statement or any omission or alleged omission to state therein a fact
required to be stated therein or necessary to make the statements
therein not misleading, or any violation or alleged violation of law
by the Company in connection with the registration of the Eligible
Shares of such Selling Stockholder, except insofar as such losses,
claims, damages, expenses or liabilities arise out of or are based
upon information furnished to the Company by or on behalf of a
Selling Stockholder for use in such Registration Statement. In
addition, the Company shall reimburse any such indemnified party for
any legal or other expenses reasonable incurred by them in connection
with investigating or defending any such losses, claims, damages,
expenses or liabilities. The Company shall have the right to assume
the defense and settlement of any claim or suit for which the Company
may be responsible for indemnification under this Section 8.6.
8.7 Expenses. The Company will pay all expenses incurred
by the Company in complying with this Agreement, including, without
limitation, all registration and filing fees with the SEC or the
National Association of Securities Dealers, Inc., state Blue Sky fees
and expenses, printing expenses, and the fees and expenses of counsel
and auditors for the Company, but excluding (i) underwriting
discounts and selling commissions applicable to the sale of the
Eligible Shares and (ii) the fees and expenses of counsel for the
Selling Stockholders.
8.8 Assignment of Rightsof Rights. The Purchaser may not
assign any of its rights under this Section 8 except in connection
with the transfer of at least 20% of the Eligible Shares then
outstanding, provided that, prior to the effectiveness of such
assignment, such transferee must agree in a written instrument
delivered to the Company to be bound by the provisions of this
Section 8.
9. Miscellaneous.
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9.1 Successors and Assigns. This Agreement, and the
rights and obligations of the parties hereunder, shall be binding
upon their successors and assigns.
9.2 Confidentiality. The Purchaser agrees that it will
keep confidential and will not disclose or divulge any confidential,
proprietary or secret information which the Purchaser may obtain from
the Company pursuant to financial statements, reports and other
materials submitted by the Company to the Purchaser pursuant to this
Agreement, or pursuant to visitation or inspection rights granted
hereunder, unless such information is known, or until such
information becomes known, to the public; provided, however, that the
Purchaser may disclose such information (i) to its attorneys,
accountants, consultants and other professionals to the extent
necessary to obtain their services in connection with its investment
in the Company, (ii) to any prospective purchaser of any Shares from
the Purchaser as long as such prospective purchaser agrees in writing
to be bound by the provisions of this Section, or (iii) to any
Affiliate of the Purchaser; subject to the agreement of such party to
keep such information confidential as set forth herein.
9.3 Survival of Representations, Warranties and Covenants.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Closing and
continue for a period of two years after the Closing. All covenants
shall survive indefinitely, except as limited in accordance with
their terms.
9.4 Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and in the
English language, and shall be delivered by any lawful means, to the
following address:
If to the Company, at Spyglass, Inc., Xxx Xxxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000, Attn: Chief Financial Officer, or at
such other address or addresses as may have been furnished in writing
by the Company to the Purchaser; or
If to the Purchaser, at 000 Xxxxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxxxxxx 00000, Attn: Executive Vice President, Business
Development, with a copy to the Senior Vice President and General
Counsel, or at such other address or addresses as may have been
furnished in writing by the Purchaser to the Company.
Any such notices, requests, consents and other communications
shall be deemed delivered upon receipt by the addressee.
9.5 Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter.
9.6 Amendments and Waivers. Except as otherwise expressly
set forth in this Agreement, any term of this Agreement may be
amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either
retroactively or prospectively), with the written consent of the
Company and the Purchaser. Any amendment or waiver effected in
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Accordance with this Section 9.6 shall be binding upon each holder of
any Shares (including shares of Common Stock into which such Shares
have been converted), each future holder of all such securities and
the Company. No waivers of or exceptions to any term, condition or
provision of this Agreement, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any
such term, condition or provision.
9.7 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an
original, but all of which shall be one and the same document.
9.8 Severability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
9.9 Costs and Expenses. Except as provided in Section
8.7, all costs and expenses (including without limitation fees and
expenses of attorneys, brokers, agents or finders) incurred by any
Party in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs
and expenses, whether or not the transactions contemplated by this
Agreement are consummated.
9.10 Titles. The section headings of this Agreement are
for convenience of reference only and shall not be considered in
construing this Agreement.
9.11 Cooperation. Each Party shall, at the request and
expense of the other Party, at any time and from time to time
following the execution of this Agreement, execute and deliver to the
other Party such further instruments and take such further
administrative and ministerial actions as may be reasonably necessary
or appropriate to carry out the purposes and intent of this
Agreement.
9.12 No Third Party Beneficiaries. Nothing expressed or
implied in this Agreement or shall be construed to confer upon any
person or entity, other than the Parties and their respective
successors and permitted assigns, any rights or remedies under or in
connection with this Agreement.
9.13 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives as of the Effective
Date.
SPYGLASS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
GENERAL INSTRUMENT CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
(print name and title)
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT A
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 5 OF THIS WARRANT
Date of Issuance: October 19, 1998 Number of Shares: ***
(subject to adjustment)
SPYGLASS, INC.
Common Stock Purchase Warrant
Spyglass, Inc., a Delaware corporation (the "Company"), for
value received, hereby certifies that General Instrument Corporation
(the "Registered Holder") is entitled, subject to the terms set forth
below, to purchase from the Company, at any time or from time to time
on or after the date of issuance and on or before 5:00 p.m. (Boston,
Massachusetts time) on the Expiration Date (as defined below), ***
shares of Common Stock, $.01 par value per share, of the Company, at
a purchase price of *** per share. The shares purchasable upon
exercise of this Warrant, and the purchase price per share, each as
adjusted from time to time pursuant to the provisions of this
Warrant, are hereinafter referred to as the "Warrant Shares" and the
"Purchase Price," respectively. The "Expiration Date" shall mean
December 31, 2003, or (if applicable) such later date as is provided
for in Section 1(c) below.
1. Vesting Schedule.
(a) This Warrant will become exercisable ("vest") as to
all of the Warrant Shares on October 1, 2003.
(b) Notwithstanding the foregoing vesting schedule, this
Warrant shall become immediately vested in full on the date (the
"Acceleration Date") 10 days following the date (if any) on which the
Registered Holder has paid to the Company (or a subsidiary or
affiliate (as defined in Rule 405 under the Securities Act of
1933) of the Company) an aggregate of *** under the Digital Software
Integration Center Sourcing Agreement dated October 19, 1998 between
the Company and the Registered Holder (the "Sourcing Agreement").
(c) In the event that any of the companies listed on
Exhibit C to the Operating Agreement dated October 19, 1998 between
the Company, the Registered Holder and Spyglass DSIC, Inc. (the
"Operating Agreement") acquire beneficial ownership (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934) of
shares of Common Stock of the Company representing 20% or more of the
outstanding Common Stock of the Company and either (i) the Registered
Holder exercises its right to terminate the Sourcing Agreement or
(ii) the Registered Holder exercises its purchase option under the
Operating Agreement, this Warrant shall become immediately vested in
full.
(d) In the event of the acceleration of vesting of this
Warrant under Section 1(b) or 1(c) above, the Expiration Date shall
be the later of December 31, 2003 and the date three years following
the Acceleration Date.
2. 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
Purchase Price payable in respect of the number of Warrant Shares
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 this Warrant shall have been surrendered to the Company as
provided in Section 2(a) above. At such time, the person or persons
in whose name or names any certificates for Warrant Shares shall be
issuable upon such exercise as provided in Section 2(c) below shall
be deemed to have become the holder or holders of record of the
Warrant Shares 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 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
Warrant Shares to which the Registered Holder shall be entitled upon
such exercise plus, in lieu of any fractional share to which the
Registered Holder would otherwise be entitled, cash in an amount
determined pursuant to Section 4 hereof; 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 Warrant
Shares 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.
(d) The Company shall be responsible for any and all taxes
arising from the granting and/or exercise of this Warrant (other than
taxes on the transfer of this Warrant or on the income of the
Registered Holder), including, but not limited to, all documentary
and stamp taxes.
3. Antidilution Provisions.
3.1 Adjustment of Number of Shares Purchasable. Upon any
adjustment of the Purchase Price as provided in Section 3.2(a), the
Registered Holder shall thereafter be entitled to purchase, at the
Purchase Price resulting from such adjustment, the number of Warrant
Shares (calculated to the nearest 1/100th of a share) obtained by
multiplying the Purchase Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable hereunder
immediately prior to such adjustment and dividing the product thereof
by the Purchase Price resulting from such adjustment.
3.2 Adjustment of Purchase Price. The Purchase Price
shall be subject to adjustment from time to time as hereinafter set
forth.
(a) Stock Dividends, Subdivisions and Combinations.
In the event that the Company subsequent to the date hereof shall:
(i) declare a dividend upon, or make any
distribution in respect of, any of its Common Stock, payable in
Common Stock, Convertible Securities or Stock Purchase Rights, or
(ii) subdivide its outstanding shares of Common
Stock into a larger number of shares of Common Stock, or
(iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock,
then the Purchase Price shall be adjusted to that price determined by
multiplying the Purchase Price per share of Common Stock immediately
prior to such event by a fraction (A) the numerator of which shall be
the total number of outstanding shares of Common Stock of the Company
immediately prior to such event and (B) the denominator of which
shall be the total number of outstanding shares of Common Stock of
the Company immediately after such event. For purposes of this
Section 3.2, all shares of Common Stock issuable upon conversions or
exchanges of Convertible Securities and exercises of Stock Purchase
Rights shall be treated as outstanding. "Convertible Securities"
means evidences of indebtedness, shares of stock or other
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
securities which are convertible into or exchangeable for, with or
without payment of additional consideration, shares of Common Stock,
either immediately or upon the arrival of a specified date or the
happenings of a specified event. "Stock Purchase Rights" means any
warrants, options or other rights to subscribe for, purchase or
otherwise acquire any shares of Common Stock or any Convertible
Securities.
(b) Issuance of Additional Shares of Common Stock.
In the event that the Company shall issue or sell any shares of
Common Stock after the date hereof for a consideration less than ***
of the then Fair Value (as defined below) per share immediately prior
to such issue or sale, the Purchase Price in effect immediately prior
to such issuance or sale shall be adjusted by: multiplying the then
existing Purchase Price by a fraction the numerator of which is (A)
the sum of (1) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by the Fair Value
per share of Common Stock immediately prior to such issue or sale
plus (2) the consideration received by the Company upon such issue or
sale, divided by (B) the total number of shares of Common Stock
outstanding immediately after such issue or sale, and the denominator
of which shall be the Fair Value per share of Common Stock
immediately prior to such issue or sale.
The provisions of this Subsection (b) shall not apply to any
shares of Common Stock which are distributed to holders of Common
Stock pursuant to a stock dividend or subdivision for which an
adjustment is provided for under Subsection (a) of this Section 3.2.
No adjustment of the Purchase Price shall be made under this
Subsection upon the issuance of any shares of Common Stock which are
issued pursuant to the exercise of any Stock Purchase Rights or
pursuant to the conversion or exchange of any Convertible Securities
if an adjustment shall previously have been made upon the issuance of
such Stock Purchase Rights or Convertible Securities pursuant to
Subsection (a), (c) or (d) of this Section 3.2.
For purposes of this Warrant, "Fair Value" per share of Common
Stock means the following:
(i) if the Common Stock is listed on a national
securities exchange, the Nasdaq National Market or another nationally
recognized exchange or trading system as of the date on which a
determination of Fair Value is to be made, the Fair Value per share
of Common Stock shall be deemed to be the last reported sale price
per share of Common Stock thereon on the trading day immediately
preceding such date; and
(ii) if the Common Stock is not listed on a
national securities exchange, the Nasdaq National Market or another
nationally recognized exchange or trading system as of the date on
which a determination of Fair Value is to be made, the Fair Value per
share of Common Stock shall be as agreed upon by the Company and the
Registered Holder.
Whenever the Company shall issue any of its Common Stock, Stock
Purchase Rights or Convertible Securities as consideration for a
merger, the purchase of stock or assets from or similar transaction
with a bona fide third party, such shares will be deemed for all
purposes hereunder to be issued for Fair Value.
(c) Issuance of Stock Purchase Rights. In the event
that the Company shall issue or sell any Stock Purchase Rights and
the consideration per share for which shares of Common Stock may at
any time thereafter be issuable upon exercise thereof (or, in the
case of Stock Purchase Rights exercisable for the purchase of
Convertible Securities, upon the subsequent conversion or exchange of
such Convertible Securities) shall be less than the Fair Value per
share of Common Stock immediately prior to the issuance of such Stock
Purchase Rights, the Purchase Price shall be adjusted as provided in
Subsection (b) of this Section 3.2 on the basis that (i) the maximum
number of shares of Common Stock issuable upon exercise of such Stock
Purchase Rights (or upon conversion or exchange of such Convertible
Securities following such exercise) shall be deemed to have been
issued as of the date of the issuance of such Stock Purchase Rights
as hereinafter provided and (ii) the aggregate consideration received
for such shares of Common Stock shall be deemed to be the minimum
consideration received or receivable by the Company in connection
with the issuance and exercise of such Stock Purchase Rights (or upon
conversion or exchange of such Convertible Securities). For the
purposes of this Subsection (c), the date as of which such Stock
Purchase Rights shall be deemed to be issued shall be the earlier of
(A) the date on which the Company shall enter into a firm contract
for the issuance of such Stock Purchase Rights, or (B) the date of
actual issuance of such Stock Purchase Rights.
(d) Issuance of Convertible Securities. In the event
that the Company shall issue or sell any Convertible Securities and
the consideration per share for which shares of Common Stock may at
any time thereafter be issuable pursuant to the terms of such
Convertible Securities shall be less than the Fair Value per share of
Common Stock immediately prior to the issuance of such Convertible
Securities, the Purchase Price shall be adjusted as provided in
Subsection (b) of this Section 3.2 on the basis that (i) the maximum
number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities shall be deemed to have
been issued as of the date of issuance of such Convertible Securities
as hereinafter provided and (ii) the aggregate consideration received
for such shares of Common Stock shall be deemed to be equal to the
minimum consideration received or receivable by the Company in
connection with the issuance and conversion or exchange of such
Convertible Securities. For the purposes of this Subsection (d), the
date as of which such Convertible Securities shall be deemed to be
issued shall be the earlier of (A) the date on which the Company
shall enter into a firm contract for the issuance of such Convertible
Securities, or (B) the date of actual issuance of such Convertible
Securities. No adjustment of the Purchase Price shall be made under
this Subsection upon the issuance of any Convertible Securities which
are issued pursuant to the exercise of any Stock Purchase Rights, if
an adjustment shall previously have been made upon the issuance of
such Stock Purchase Rights pursuant to Subsection (c) of this Section
3.2.
(e) Minimum Adjustment. In the event any adjustment
of the Purchase Price pursuant to this Section 3.2 shall result in an
adjustment of less than $.01 per share of Common Stock, no such
adjustment shall be made, but any such lesser adjustment shall be
carried forward and shall be made at the time and together with the
next subsequent adjustment which, together with any adjustments so
carried forward, shall amount to $.01 or more per share of Common
Stock; provided, however, that upon any adjustment of the Purchase
Price pursuant to Subsection 3.2(a), the foregoing figure of $.01 per
share (or such figure last adjustment) shall be proportionately
adjusted and provided further that upon the exercise of this Warrant,
the Company shall make all necessary adjustments (to the nearest .001
of a cent) not theretofore made to the Purchase Price up to an
including the date upon which this Warrant is exercised.
(f) Readjustment of Purchase Price and Warrant
Shares. In the event (i) the purchase price payable for any Stock
Purchase Rights or Convertible Securities referred to in Subsection
(c) or (d) above, (ii) the additional consideration, if any, payable
upon exercise of such Stock Purchase Rights or upon the conversion or
exchange of such Convertible Securities or (iii) the rate at which
any Convertible Securities are convertible into or exchangeable for
shares of Common Stock shall change, the Purchase Price in effect at
the time of such change shall forthwith be readjusted to the Purchase
Price which would have been in effect at such time had such Stock
Purchase Rights or Convertible Securities provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold. On the
expiration of any such Stock Purchase Rights not exercised or of any
such Convertible Securities not converted or exchanged, the Purchase
Price then in effect shall forthwith be increased to the Purchase
Price which would have been in effect at the time of such expiration
or termination had such Stock Purchase Rights or Convertible
Securities never been issued. No readjustment of the Purchase Price
pursuant to this Subsection (f) shall have the effect of increasing
the Purchase Price by an amount in excess of the adjustment
originally made to the Purchase Price in respect of the issue, sale
or grant of the applicable Stock Purchase Rights or Convertible
Securities.
(g) Reorganization, Reclassification or
Recapitalization of Company. In the event of (i) any capital
reorganization or reclassification or recapitalization of the capital
stock of the Company (other than in the cases referred to in
Subsection (a) of this Section 3.2), or (ii) the consolidation or
merger of the Company with or into another corporation or the sale or
transfer of all or substantially all of the assets of the Company in
which the Common Stock is converted into or exchanged for securities
or other property, there shall thereafter be deliverable upon the
exercise of this Warrant or any portion thereof the amount of
securities or property which the holder of the number of shares of
Common Stock which would otherwise have been deliverable upon the
exercise of this Warrant or any portion thereof would have been
entitled to receive upon such capital reorganization,
reclassification, recapitalization, consolidation, merger or sale,
and at the same aggregate Purchase Price.
Prior to and as a condition of the consummation of any
transaction described in the preceding sentence, the Company shall
made equitable, written adjustments in the application of the
provisions herein set forth with respect to the rights and interests
of the Registered Holder so that the provisions set forth herein
shall thereafter be applicable, as nearly as possible, in relation to
any securities or other property thereafter deliverable upon exercise
of this Warrant. Any such adjustment shall be made by and set forth
in a supplemental instrument executed by the Company and/or the
successor entity, as applicable, which agreement shall bind each such
entity.
(h) Other Dilutive Events. If any event shall occur
as to which the other provisions of this Section 3 are not strictly
applicable but as to which the failure to make an adjustment of the
nature provided for in this Section 3 would not fairly protect the
purchase rights represented by this Warrant in accordance with the
essential intent and principles hereof, then, in each such case, the
Company shall appoint a firm of independent public accountants of
recognized national standing (which may be the regular auditors of
the Company), which shall give their opinion as to the adjustment, if
any, on a basis consistent with the essential intent and principles
established in this Section 3, necessary to preserve, without
dilution, the purchase rights represented by this Warrant. Upon
receipt of such opinion, the Company will promptly mail a copy
thereof to the Registered Holder and shall make the adjustments
described therein.
(i) Determination of Consideration. For purposes of
this Section 3, the consideration received or receivable by the
Company for the issuance, sale, grant or assumption of shares of
Common Stock, Stock Purchase Rights or Convertible Securities,
irrespective of the accounting treatment of such consideration, shall
be valued as follows:
(1) Cash Payment. In the case of cash, the net
amount received by the Company before deduction of any underwriting
commissions or similar concessions paid or allowed by the Company.
(2) Securities or Other Property. In the case
of securities or other property, the fair market value as determined
in good faith by the Board of Directors of the Company; provided that
a determination with respect to any securities for which a public
trading market exists shall be based upon the most recent public
trading price of such securities.
(3) Allocation Related to Common Stock. In the
event shares of Common Stock are issued or sold together with other
securities or other assets of the Company for a consideration which
covers both, the consideration received (computed as provided in
clauses (1) and (2) above) shall be allocable to such shares of
Common Stock as determined in good faith by the Board of Directors of
the Company.
(4) Allocation Related to Stock Purchase Rights
and Convertible Securities. In the event that any Stock Purchase
Rights or Convertible Securities shall be issued or sold together
with other securities or other assets of the Company, together
comprising one integral transaction in which no specific
consideration is allocated to the Stock Purchase Rights or
Convertible Securities, the consideration received shall be allocable
to such Stock Purchase Rights and Convertible Securities as
determined in good faith by the Board of Directors of the Company.
(5) Dividends on Securities. In the event that
the Company shall declare a dividend or make any other distribution
upon any stock of the Company (other than Common Stock) payable in
either case in Common Stock, Convertible Securities or Stock Purchase
Rights, such Common Stock, Convertible Securities or Stock Purchase
Rights, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
(6) Stock Purchase Rights and Convertible
Securities. The consideration for which shares of Common Stock shall
be deemed to be issued upon the issuance of any Stock Purchase Rights
or Convertible Securities shall be determined by dividing (i) the
total consideration, if any, received or receivable by the Company as
consideration for the granting of such Stock Purchase Rights or the
issuance of such Convertible Securities, plus the minimum aggregate
amount of additional consideration payable to the Company upon the
exercise of such Stock Purchase Rights or the conversion or exchange
of such Convertible Securities or, in the case of Stock Purchase
Rights for Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the exercise of such
Stock Purchase Rights and the conversion or exchange of such
Convertible Securities, in each case before deducting any
underwriting commissions or similar concessions paid or allowed by
the Company, by (ii) the maximum number of shares of Common Stock
issuable upon the exercise of such Stock Purchase Rights or upon the
conversion or exchange of such Convertible Securities.
(j) Record Date. In the event that the Company shall
take a record of the holders of the Common Stock for the purpose of
entitling them (i) to receive a dividend or other distribution
payable in Common Stock, Convertible Securities or Stock Purchase
Rights or (ii) to subscribe for or purchase Common Stock, Convertible
Securities or Stock Purchase Rights, then all references in this
Section 3 to the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may
be, shall be deemed to be references to such record date.
(k) Shares Outstanding. The number of shares of
Common Stock deemed to be outstanding at any given time shall not
include (i) shares of Common Stock in the treasury of the Company or
owned by any wholly-owned subsidiary of the Company and (ii) except
where shares are described on a "fully diluted basis" or in a similar
manner, any of the Warrant Shares.
(l) Maximum Purchase Price. At no time shall the
Purchase Price per share of Common Stock exceed the amount set forth
in the first paragraph of the preamble of this Warrant except
pursuant to adjustments made pursuant to Subsection (a) or (g) of
this Section 3.2.
(m) Application. Except as otherwise provided
herein, all Subsections of this Section 3.2 are intended to operate
independently of one another, but without duplication. If an event
occurs that requires the application of more than one Subsection, all
applicable Subsections shall be given independent effect; provided,
however, that no adjustment shall be made which duplicates an
adjustment already made pursuant to some other Subsection of this
Section 3.
(n) No Adjustments under Certain Circumstances.
Anything herein to the contrary notwithstanding, the Company shall
not be required to make any adjustment of the Purchase Price in the
case of:
(i) the issuance of shares of Common Stock
pursuant to a rights offering in which the Registered Holder is
granted an opportunity to participate under the provisions of
Section 3.3.; or
(ii) the issuance of options or shares of Common
Stock to employees, directors or consultants pursuant to an
employment agreement, a stock option agreement or a plan approved by
the Board of Directors of the Company.
3.3 Rights Offering. In the event the Company shall
effect an offering of Common Stock pro rata among its stockholders
then the Registered Holder shall be entitled, at its option, to elect
to participate in such offering as if this Warrant had been exercised
and the Registered Holder were at the time of such rights offering a
holder of that number of shares of Common Stock to which the
Registered Holder is then entitled on the exercise hereof.
3.4 Certificates and Notices.
(a) Adjustments to Purchase Price. Upon any
adjustment under this Section 3 of the number of shares of Common
Stock purchasable upon exercise of this Warrant or of the Purchase
Price, a certificate, signed (i) by a Vice President or the Treasurer
of the Company, or (ii) by any independent firm of certified public
accountants of recognized national standing selected by, and at the
expense of the Company (which may be the Company's outside auditing
firm), setting forth in reasonable detail the events requiring the
adjustment and the method by which such adjustment was calculated and
specifying the adjusted Purchase Price and the number of shares of
Common Stock or other property purchasable upon exercise of this
Warrant after giving effect to such adjustment, shall be mailed to
the Registered Holder.
The certificate of any independent firm of certified public
accountants of recognized national standing selected by the Board of
Directors of the Company shall be conclusive evidence of the
correctness of any computation made under this Section 3, absent
manifest error.
(b) Extraordinary Corporate Events. In the event
that the Company after the date hereof shall propose to (i) pay any
dividend payable in stock to the holders of shares of Common Stock or
to make any other distribution to the holders of shares of Common
Stock (other than a stock split effected by means of a Common Stock
dividend), (ii) offer to the holders of shares of Common Stock rights
to subscribe for or purchase any shares of any class of stock or any
other rights or options or (iii) effect any reclassification of the
Common Stock (other than a reclassification involving merely the
subdivision or combination of outstanding shares of Common Stock) or
any capital reorganization or any consolidation or merger (other than
a merger in which no distribution of securities or other property is
to be made to holders of shares of Common Stock), or any sale,
transfer or other disposition of all or substantially all of its
assets, or the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall mail to the Registered
Holder notice of such proposed action, which shall specify the date
on which the stock transfer books of the Company shall close, or a
record shall be taken, for determining the holders of Common Stock
entitled to receive such stock dividends or other distribution or
such rights or options, or the date on which such reclassification,
reorganization, consolidation, merger, sale, transfer, other
disposition, liquidation, dissolution or winding up shall take place
or commence, as the case may be, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to
receive securities or other property deliverable upon such action, if
any such date is to be fixed. Such notice shall be mailed in the
case of any action covered by clause (i) or (ii) above at least 10
days prior to the record date for determining holders of Common Stock
for purposes of receiving such payment or offer, or in the case of
any action covered by clause (iii) above at least 30 days prior to
the date upon which such action takes place and 20 days prior to any
record date to determine holders of Common Stock entitled to receive
such securities or other property.
(c) Effect of Failure. Failure to file any
certificate or notice or to mail any notice, or any defect in any
certificate or notice pursuant to this Section 3.4 shall not affect
the legality or validity of the adjustment of the Purchase Price or
the number of shares purchasable upon exercise of this Warrant, or
any transaction giving rise thereto.
13. Fractional Shares. The Company shall not be required upon
the exercise of this Warrant to issue any fractional shares, but
shall make an adjustment therefor in cash on the basis of the fair
market value per share of Common Stock, as determined in good faith
by the Board of Directors of the Company.
14. Transfer Restrictions.
14.1 This Warrant may not be sold or transferred without
the prior written consent of the Company, which shall not be
unreasonably withheld; provided that the Company's consent shall not
be required in the event of the sale of all or substantially all of
the assets of the Registered Holder. Any permitted transfer shall be
effected by surrendering this Warrant, along with a properly executed
assignment, at the principal office of the Company.
14.2 The Warrant Shares may not be sold or transferred
unless either (i) they first shall have been registered under the
Securities Act of 1933, as amended (the "Act"), or (ii) the Company
first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the effect that such sale
or transfer is exempt from the registration requirements of the Act.
14.3 Each certificate representing Warrant Shares shall
bear a legend substantially in the following form:
"The securities represented by this certificate
have not been registered under the Securities Act
of 1933, as amended, and may not be offered, sold
or otherwise transferred unless and until such
securities are registered under such Act or an
opinion of counsel satisfactory to the Company is
obtained to the effect that such registration is
not required."
The foregoing legend shall be removed from the certificates
representing any Warrant Shares, at the request of the holder
thereof, at such time as they become eligible for resale pursuant to
Rule 144(k) under the Act.
15. No Impairment. The Company will not, by amendment of its
charter or through reorganization, consolidation, merger,
dissolution, sale of assets or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of
this Warrant.
16. Liquidating Dividends. If the Company pays a dividend or
makes a distribution on the Common Stock (other than one payable in
(i) cash out of earnings or earned surplus (determined in accordance
with generally accepted accounting principles) or (ii) shares of
Common Stock) (a "Liquidating Dividend"), then the Company will pay
or distribute to the Registered Holder of this Warrant, upon the
exercise hereof, in addition to the Warrant Shares purchased upon
such exercise, the Liquidating Dividend which would have been paid to
such Registered Holder if he had been the owner of record of such
Warrant Shares immediately prior to the date on which a record is
taken for such Liquidating 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.
17. 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 number of Warrant Shares and other
stock, securities and property, as from time to time shall be
issuable upon the exercise of this Warrant.
18. 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.
19. No Rights as Stockholder. 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.
Notwithstanding the foregoing, in the event (i) the Company effects
a split of the Common Stock by means of a stock dividend and the
exercise price of and the number of shares subject to this Warrant
are adjusted as of the date of the distribution of the dividend
(rather than as of the record date for such dividend), and (ii) the
Registered Holder exercises this Warrant between the record date and
the distribution date for such stock dividend, the Registered Holder
shall be entitled to receive, on the distribution date, the stock
dividend with respect to the shares of Common Stock acquired upon
such exercise, notwithstanding the fact that such shares were not
outstanding as of the close of business on the record date for such
stock dividend.
20. Change or Waiver. Any term of this Warrant may be changed
or waived only by an instrument in writing signed by the party
against which enforcement of the change or waiver is sought.
21. Headings. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of
any provision of this Warrant.
22. Governing Law. This Warrant will be governed by and
construed in accordance with the laws of the State of Delaware.
[Remainder of Page Intentionally Left Blank]
Executed as of the date first written above.
SPYGLASS, INC.
By:________________________________
Title:_____________________________
ATTEST:
_________________________
EXHIBIT I
PURCHASE FORM
To:_________________ Dated:______________
The undersigned, pursuant to the provisions set forth in the
attached Warrant (No. ___), hereby irrevocably elects to purchase
_____ shares of the Common Stock covered by such Warrant. The
undersigned herewith makes payment of $____________, in lawful money
of the United States, representing the full purchase price for such
shares at the price per share provided for in such Warrant.
Signature:__________________________
Address:____________________________
____________________________
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT B
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 5 OF THIS WARRANT
Date of Issuance: October 19, 1998 Number of Shares: ***
(subject to adjustment)
SPYGLASS, INC.
Common Stock Purchase Warrant
Spyglass, Inc., a Delaware corporation (the "Company"), for
value received, hereby certifies that General Instrument Corporation
(the "Registered Holder") is entitled, subject to the terms set forth
below, to purchase from the Company, at any time or from time to time
on or after the date of issuance and on or before 5:00 p.m. (Boston,
Massachusetts time) on the Expiration Date (as defined below), ***
shares of Common Stock, $.01 par value per share, of the Company, at
a purchase price of *** per share. The shares purchasable upon
exercise of this Warrant, and the purchase price per share, each as
adjusted from time to time pursuant to the provisions of this
Warrant, are hereinafter referred to as the "Warrant Shares" and the
"Purchase Price," respectively. The "Expiration Date" shall mean
December 31, 2003, or (if applicable) such later date as is provided
for in Section 1(c) below.
1. Vesting Schedule.
(a) This Warrant will become exercisable ("vest") as to
all of the Warrant Shares on October 1, 2003.
(b) Notwithstanding the foregoing vesting schedule, this
Warrant shall become immediately vested in full on the date (the
"Acceleration Date") 10 days following the date (if any) on which the
Registered Holder has paid to the Company (or a subsidiary or
affiliate (as defined in Rule 405 under the Securities Act of
1933) of the Company) an aggregate of *** under the Digital
Software Integration Center Sourcing Agreement dated October 19, 1998
between the Company and the Registered Holder (the "Sourcing
Agreement").
(c) In the event that any of the companies listed on
Exhibit C to the Operating Agreement dated October 19, 1998 between
the Company, the Registered Holder and Spyglass DSIC, Inc. (the
"Operating Agreement") acquire beneficial ownership (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934) of
shares of Common Stock of the Company representing 20% or more of the
outstanding Common Stock of the Company and either (i) the Registered
Holder exercises its right to terminate the Sourcing Agreement or
(ii) the Registered Holder exercises its purchase option under the
Operating Agreement, this Warrant shall become immediately vested in
full.
(d) In the event of the acceleration of vesting of this
Warrant under Section 1(b) or 1(c) above, the Expiration Date shall
be the later of December 31, 2003 and the date three years following
the Acceleration Date.
2. 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
Purchase Price payable in respect of the number of Warrant Shares
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 this Warrant shall have been surrendered to the Company as
provided in Section 2(a) above. At such time, the person or persons
in whose name or names any certificates for Warrant Shares shall be
issuable upon such exercise as provided in Section 2(c) below shall
be deemed to have become the holder or holders of record of the
Warrant Shares 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 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
Warrant Shares to which the Registered Holder shall be entitled upon
such exercise plus, in lieu of any fractional share to which the
Registered Holder would otherwise be entitled, cash in an amount
determined pursuant to Section 4 hereof; 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 Warrant
Shares 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.
(d) The Company shall be responsible for any and all taxes
arising from the granting and/or exercise of this Warrant (other than
taxes on the transfer of this Warrant or on the income of the
Registered Holder), including, but not limited to, all documentary
and stamp taxes.
3. Antidilution Provisions.
3.1 Adjustment of Number of Shares Purchasable. Upon any
adjustment of the Purchase Price as provided in Section 3.2(a), the
Registered Holder shall thereafter be entitled to purchase, at the
Purchase Price resulting from such adjustment, the number of Warrant
Shares (calculated to the nearest 1/100th of a share) obtained by
multiplying the Purchase Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable hereunder
immediately prior to such adjustment and dividing the product thereof
by the Purchase Price resulting from such adjustment.
3.2 Adjustment of Purchase Price. The Purchase Price
shall be subject to adjustment from time to time as hereinafter set
forth.
(a) Stock Dividends, Subdivisions and Combinations.
In the event that the Company subsequent to the date hereof shall:
(i) declare a dividend upon, or make any
distribution in respect of, any of its Common Stock, payable in
Common Stock, Convertible Securities or Stock Purchase Rights, or
(ii) subdivide its outstanding shares of Common
Stock into a larger number of shares of Common Stock, or
(iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock,
then the Purchase Price shall be adjusted to that price determined by
multiplying the Purchase Price per share of Common Stock immediately
prior to such event by a fraction (A) the numerator of which shall be
the total number of outstanding shares of Common Stock of the Company
immediately prior to such event and (B) the denominator of which
shall be the total number of outstanding shares of Common Stock of
the Company immediately after such event. For purposes of this
Section 3.2, all shares of Common Stock issuable upon conversions or
exchanges of Convertible Securities and exercises of Stock Purchase
Rights shall be treated as outstanding. "Convertible Securities"
means evidences of indebtedness, shares of stock or other securities
which are convertible into or exchangeable for, with or without
payment of additional
Confidential Materials omitted and filed
separately with the Securities and Exchange Commission. Asterisks
denote omissions.
consideration, shares of Common Stock, either immediately or upon the
arrival of a specified date or the happenings of a specified event.
"Stock Purchase Rights" means any warrants, options or other rights
to subscribe for, purchase or otherwise acquire any shares of Common
Stock or any Convertible Securities.
(b) Issuance of Additional Shares of Common Stock.
In the event that the Company shall issue or sell any shares of
Common Stock after the date hereof for a consideration less than ***
of the then Fair Value (as defined below) per share immediately prior
to such issue or sale, the Purchase Price in effect immediately prior
to such issuance or sale shall be adjusted by: multiplying the then
existing Purchase Price by a fraction the numerator of which is (A)
the sum of (1) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by the Fair Value
per share of Common Stock immediately prior to such issue or sale
plus (2) the consideration received by the Company upon such issue or
sale, divided by (B) the total number of shares of Common Stock
outstanding immediately after such issue or sale, and the denominator
of which shall be the Fair Value per share of Common Stock
immediately prior to such issue or sale.
The provisions of this Subsection (b) shall not apply to any
shares of Common Stock which are distributed to holders of Common
Stock pursuant to a stock dividend or subdivision for which an
adjustment is provided for under Subsection (a) of this Section 3.2.
No adjustment of the Purchase Price shall be made under this
Subsection upon the issuance of any shares of Common Stock which are
issued pursuant to the exercise of any Stock Purchase Rights or
pursuant to the conversion or exchange of any Convertible Securities
if an adjustment shall previously have been made upon the issuance of
such Stock Purchase Rights or Convertible Securities pursuant to
Subsection (a), (c) or (d) of this Section 3.2.
For purposes of this Warrant, "Fair Value" per share of Common
Stock means the following:
(i) if the Common Stock is listed on a national
securities exchange, the Nasdaq National Market or another nationally
recognized exchange or trading system as of the date on which a
determination of Fair Value is to be made, the Fair Value per share
of Common Stock shall be deemed to be the last reported sale price
per share of Common Stock thereon on the trading day immediately
preceding such date; and
(ii) if the Common Stock is not listed on a
national securities exchange, the Nasdaq National Market or another
nationally recognized exchange or trading system as of the date on
which a determination of Fair Value is to be made, the Fair Value per
share of Common Stock shall be as agreed upon by the Company and the
Registered Holder.
Whenever the Company shall issue any of its Common Stock, Stock
Purchase Rights or Convertible Securities as consideration for a
merger, the purchase of stock or assets from or similar transaction
with a bona fide third party, such shares will be deemed for all
purposes hereunder to be issued for Fair Value.
(c) Issuance of Stock Purchase Rights. In the event
that the Company shall issue or sell any Stock Purchase Rights and
the consideration per share for which shares of Common Stock may at
any time thereafter be issuable upon exercise thereof (or, in the
case of Stock Purchase Rights exercisable for the purchase of
Convertible Securities, upon the subsequent conversion or exchange of
such Convertible Securities) shall be less than the Fair Value per
share of Common Stock immediately prior to the issuance of such Stock
Purchase Rights, the Purchase Price shall be adjusted as provided in
Subsection (b) of this Section 3.2 on the basis that (i) the maximum
number of shares of Common Stock issuable upon exercise of such Stock
Purchase Rights (or upon conversion or exchange of such Convertible
Securities following such exercise) shall be deemed to have been
issued as of the date of the issuance of such Stock Purchase Rights
as hereinafter provided and (ii) the aggregate consideration received
for such shares of Common Stock shall be deemed to be the minimum
consideration received or receivable by the Company in connection
with the issuance and exercise of such Stock Purchase Rights (or upon
conversion or exchange of such Convertible Securities). For the
purposes of this Subsection (c), the date as of which such Stock
Purchase Rights shall be deemed to be issued shall be the earlier of
(A) the date on which the Company shall enter into a firm contract
for the issuance of such Stock Purchase Rights, or (B) the date of
actual issuance of such Stock Purchase Rights.
(d) Issuance of Convertible Securities. In the event
that the Company shall issue or sell any Convertible Securities and
the consideration per share for which shares of Common Stock may at
any time thereafter be issuable pursuant to the terms of such
Convertible Securities shall be less than the Fair Value per share of
Common Stock immediately prior to the issuance of such Convertible
Securities, the Purchase Price shall be adjusted as provided in
Subsection (b) of this Section 3.2 on the basis that (i) the maximum
number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities shall be deemed to have
been issued as of the date of issuance of such Convertible Securities
as hereinafter provided and (ii) the aggregate consideration received
for such shares of Common Stock shall be deemed to be equal to the
minimum consideration received or receivable by the Company in
connection with the issuance and conversion or exchange of such
Convertible Securities. For the purposes of this Subsection (d), the
date as of which such Convertible Securities shall be deemed to be
issued shall be the earlier of (A) the date on which the Company
shall enter into a firm contract for the issuance of such Convertible
Securities, or (B) the date of actual issuance of such Convertible
Securities. No adjustment of the Purchase Price shall be made under
this Subsection upon the issuance of any Convertible Securities which
are issued pursuant to the exercise of any Stock Purchase Rights, if
an adjustment shall previously have been made upon the issuance of
such Stock Purchase Rights pursuant to Subsection (c) of this Section
3.2.
(e) Minimum Adjustment. In the event any adjustment
of the Purchase Price pursuant to this Section 3.2 shall result in an
adjustment of less than $.01 per share of Common Stock, no such
adjustment shall be made, but any such lesser adjustment shall be
carried forward and shall be made at the time and together with the
next subsequent adjustment which, together with any adjustments so
carried forward, shall amount to $.01 or more per share of Common
Stock; provided, however, that upon any adjustment of the Purchase
Price pursuant to Subsection 3.2(a), the foregoing figure of $.01 per
share (or such figure last adjustment) shall be proportionately
adjusted and provided further that upon the exercise of this Warrant,
the Company shall make all necessary adjustments (to the nearest .001
of a cent) not theretofore made to the Purchase Price up to an
including the date upon which this Warrant is exercised.
(f) Readjustment of Purchase Price and Warrant
Shares. In the event (i) the purchase price payable for any Stock
Purchase Rights or Convertible Securities referred to in Subsection
(c) or (d) above, (ii) the additional consideration, if any, payable
upon exercise of such Stock Purchase Rights or upon the conversion or
exchange of such Convertible Securities or (iii) the rate at which
any Convertible Securities are convertible into or exchangeable for
shares of Common Stock shall change, the Purchase Price in effect at
the time of such change shall forthwith be readjusted to the Purchase
Price which would have been in effect at such time had such Stock
Purchase Rights or Convertible Securities provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold. On the
expiration of any such Stock Purchase Rights not exercised or of any
such Convertible Securities not converted or exchanged, the Purchase
Price then in effect shall forthwith be increased to the Purchase
Price which would have been in effect at the time of such expiration
or termination had such Stock Purchase Rights or Convertible
Securities never been issued. No readjustment of the Purchase Price
pursuant to this Subsection (f) shall have the effect of increasing
the Purchase Price by an amount in excess of the adjustment
originally made to the Purchase Price in respect of the issue, sale
or grant of the applicable Stock Purchase Rights or Convertible
Securities.
(g) Reorganization, Reclassification or
Recapitalization of Company. In the event of (i) any capital
reorganization or reclassification or recapitalization of the capital
stock of the Company (other than in the cases referred to in
Subsection (a) of this Section 3.2), or (ii) the consolidation or
merger of the Company with or into another corporation or the sale or
transfer of all or substantially all of the assets of the Company in
which the Common Stock is converted into or exchanged for securities
or other property, there shall thereafter be deliverable upon the
exercise of this Warrant or any portion thereof the amount of
securities or property which the holder of the number of shares of
Common Stock which would otherwise have been deliverable upon the
exercise of this Warrant or any portion thereof would have been
entitled to receive upon such capital reorganization,
reclassification, recapitalization, consolidation, merger or sale,
and at the same aggregate Purchase Price.
Prior to and as a condition of the consummation of any
transaction described in the preceding sentence, the Company shall
made equitable, written adjustments in the application of the
provisions herein set forth with respect to the rights and interests
of the Registered Holder so that the provisions set forth herein
shall thereafter be applicable, as nearly as possible, in relation to
any securities or other property thereafter deliverable upon exercise
of this Warrant. Any such adjustment shall be made by and set forth
in a supplemental instrument executed by the Company and/or the
successor entity, as applicable, which agreement shall bind each such
entity.
(h) Other Dilutive Events. If any event shall occur
as to which the other provisions of this Section 3 are not strictly
applicable but as to which the failure to make an adjustment of the
nature provided for in this Section 3 would not fairly protect the
purchase rights represented by this Warrant in accordance with the
essential intent and principles hereof, then, in each such case, the
Company shall appoint a firm of independent public accountants of
recognized national standing (which may be the regular auditors of
the Company), which shall give their opinion as to the adjustment, if
any, on a basis consistent with the essential intent and principles
established in this Section 3, necessary to preserve, without
dilution, the purchase rights represented by this Warrant. Upon
receipt of such opinion, the Company will promptly mail a copy
thereof to the Registered Holder and shall make the adjustments
described therein.
(i) Determination of Consideration. For purposes of
this Section 3, the consideration received or receivable by the
Company for the issuance, sale, grant or assumption of shares of
Common Stock, Stock Purchase Rights or Convertible Securities,
irrespective of the accounting treatment of such consideration, shall
be valued as follows:
(1) Cash Payment. In the case of cash, the net
amount received by the Company before deduction of any underwriting
commissions or similar concessions paid or allowed by the Company.
(2) Securities or Other Property. In the case
of securities or other property, the fair market value as determined
in good faith by the Board of Directors of the Company; provided that
a determination with respect to any securities for which a public
trading market exists shall be based upon the most recent public
trading price of such securities.
(3) Allocation Related to Common Stock. In the
event shares of Common Stock are issued or sold together with other
securities or other assets of the Company for a consideration which
covers both, the consideration received (computed as provided in
clauses (1) and (2) above) shall be allocable to such shares of
Common Stock as determined in good faith by the Board of Directors of
the Company.
(4) Allocation Related to Stock Purchase Rights
and Convertible Securities. In the event that any Stock Purchase
Rights or Convertible Securities shall be issued or sold together
with other securities or other assets of the Company, together
comprising one integral transaction in which no specific
consideration is allocated to the Stock Purchase Rights or
Convertible Securities, the consideration received shall be allocable
to such Stock Purchase Rights and Convertible Securities as
determined in good faith by the Board of Directors of the Company.
(5) Dividends on Securities. In the event that
the Company shall declare a dividend or make any other distribution
upon any stock of the Company (other than Common Stock) payable in
either case in Common Stock, Convertible Securities or Stock Purchase
Rights, such Common Stock, Convertible Securities or Stock Purchase
Rights, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
(6) Stock Purchase Rights and Convertible
Securities. The consideration for which shares of Common Stock shall
be deemed to be issued upon the issuance of any Stock Purchase Rights
or Convertible Securities shall be determined by dividing (i) the
total consideration, if any, received or receivable by the Company as
consideration for the granting of such Stock Purchase Rights or the
issuance of such Convertible Securities, plus the minimum aggregate
amount of additional consideration payable to the Company upon the
exercise of such Stock Purchase Rights or the conversion or exchange
of such Convertible Securities or, in the case of Stock Purchase
Rights for Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the exercise of such
Stock Purchase Rights and the conversion or exchange of such
Convertible Securities, in each case before deducting any
underwriting commissions or similar concessions paid or allowed by
the Company, by (ii) the maximum number of shares of Common Stock
issuable upon the exercise of such Stock Purchase Rights or upon the
conversion or exchange of such Convertible Securities.
(j) Record Date. In the event that the Company shall
take a record of the holders of the Common Stock for the purpose of
entitling them (i) to receive a dividend or other distribution
payable in Common Stock, Convertible Securities or Stock Purchase
Rights or (ii) to subscribe for or purchase Common Stock, Convertible
Securities or Stock Purchase Rights, then all references in this
Section 3 to the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may
be, shall be deemed to be references to such record date.
(k) Shares Outstanding. The number of shares of
Common Stock deemed to be outstanding at any given time shall not
include (i) shares of Common Stock in the treasury of the Company or
owned by any wholly-owned subsidiary of the Company and (ii) except
where shares are described on a "fully diluted basis" or in a similar
manner, any of the Warrant Shares.
(l) Maximum Purchase Price. At no time shall the
Purchase Price per share of Common Stock exceed the amount set forth
in the first paragraph of the preamble of this Warrant except
pursuant to adjustments made pursuant to Subsection (a) or (g) of
this Section 3.2.
(m) Application. Except as otherwise provided
herein, all Subsections of this Section 3.2 are intended to operate
independently of one another, but without duplication. If an event
occurs that requires the application of more than one Subsection, all
applicable Subsections shall be given independent effect; provided,
however, that no adjustment shall be made which duplicates an
adjustment already made pursuant to some other Subsection of this
Section 3.
(n) No Adjustments under Certain Circumstances.
Anything herein to the contrary notwithstanding, the Company shall
not be required to make any adjustment of the Purchase Price in the
case of:
(i) the issuance of shares of Common Stock
pursuant to a rights offering in which the Registered Holder is
granted an opportunity to participate under the provisions of
Section 3.3.; or
(ii) the issuance of options or shares of Common
Stock to employees, directors or consultants pursuant to an
employment agreement, a stock option agreement or a plan approved by
the Board of Directors of the Company.
3.3 Rights Offering. In the event the Company shall
effect an offering of Common Stock pro rata among its stockholders
then the Registered Holder shall be entitled, at its option, to elect
to participate in such offering as if this Warrant had been exercised
and the Registered Holder were at the time of such rights offering a
holder of that number of shares of Common Stock to which the
Registered Holder is then entitled on the exercise hereof.
3.4 Certificates and Notices.
(a) Adjustments to Purchase Price. Upon any
adjustment under this Section 3 of the number of shares of Common
Stock purchasable upon exercise of this Warrant or of the Purchase
Price, a certificate, signed (i) by a Vice President or the Treasurer
of the Company, or (ii) by any independent firm of certified public
accountants of recognized national standing selected by, and at the
expense of the Company (which may be the Company's outside auditing
firm), setting forth in reasonable detail the events requiring the
adjustment and the method by which such adjustment was calculated and
specifying the adjusted Purchase Price and the number of shares of
Common Stock or other property purchasable upon exercise of this
Warrant after giving effect to such adjustment, shall be mailed to
the Registered Holder.
The certificate of any independent firm of certified public
accountants of recognized national standing selected by the Board of
Directors of the Company shall be conclusive evidence of the
correctness of any computation made under this Section 3, absent
manifest error.
(b) Extraordinary Corporate Events. In the event
that the Company after the date hereof shall propose to (i) pay any
dividend payable in stock to the holders of shares of Common Stock or
to make any other distribution to the holders of shares of Common
Stock (other than a stock split effected by means of a Common Stock
dividend), (ii) offer to the holders of shares of Common Stock rights
to subscribe for or purchase any shares of any class of stock or any
other rights or options or (iii) effect any reclassification of the
Common Stock (other than a reclassification involving merely the
subdivision or combination of outstanding shares of Common Stock) or
any capital reorganization or any consolidation or merger (other than
a merger in which no distribution of securities or other property is
to be made to holders of shares of Common Stock), or any sale,
transfer or other disposition of all or substantially all of its
assets, or the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall mail to the Registered
Holder notice of such proposed action, which shall specify the date
on which the stock transfer books of the Company shall close, or a
record shall be taken, for determining the holders of Common Stock
entitled to receive such stock dividends or other distribution or
such rights or options, or the date on which such reclassification,
reorganization, consolidation, merger, sale, transfer, other
disposition, liquidation, dissolution or winding up shall take place
or commence, as the case may be, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to
receive securities or other property deliverable upon such action, if
any such date is to be fixed. Such notice shall be mailed in the
case of any action covered by clause (i) or (ii) above at least 10
days prior to the record date for determining holders of Common Stock
for purposes of receiving such payment or offer, or in the case of
any action covered by clause (iii) above at least 30 days prior to
the date upon which such action takes place and 20 days prior to any
record date to determine holders of Common Stock entitled to receive
such securities or other property.
(c) Effect of Failure. Failure to file any
certificate or notice or to mail any notice, or any defect in any
certificate or notice pursuant to this Section 3.4 shall not affect
the legality or validity of the adjustment of the Purchase Price or
the number of shares purchasable upon exercise of this Warrant, or
any transaction giving rise thereto.
26. Fractional Shares. The Company shall not be required upon
the exercise of this Warrant to issue any fractional shares, but
shall make an adjustment therefor in cash on the basis of the fair
market value per share of Common Stock, as determined in good faith
by the Board of Directors of the Company.
27. Transfer Restrictions.
27.1 This Warrant may not be sold or transferred without
the prior written consent of the Company, which shall not be
unreasonably withheld; provided that the Company's consent shall not
be required in the event of the sale of all or substantially all of
the assets of the Registered Holder. Any permitted transfer shall be
effected by surrendering this Warrant, along with a properly executed
assignment, at the principal office of the Company.
27.2 The Warrant Shares may not be sold or transferred
unless either (i) they first shall have been registered under the
Securities Act of 1933, as amended (the "Act"), or (ii) the Company
first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the effect that such sale
or transfer is exempt from the registration requirements of the Act.
27.3 Each certificate representing Warrant Shares shall
bear a legend substantially in the following form:
"The securities represented by this certificate
have not been registered under the Securities Act
of 1933, as amended, and may not be offered, sold
or otherwise transferred unless and until such
securities are registered under such Act or an
opinion of counsel satisfactory to the Company is
obtained to the effect that such registration is
not required."
The foregoing legend shall be removed from the certificates
representing any Warrant Shares, at the request of the holder
thereof, at such time as they become eligible for resale pursuant to
Rule 144(k) under the Act.
28. No Impairment. The Company will not, by amendment of its
charter or through reorganization, consolidation, merger,
dissolution, sale of assets or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of
this Warrant.
29. Liquidating Dividends. If the Company pays a dividend or
makes a distribution on the Common Stock (other than one payable in
(i) cash out of earnings or earned surplus (determined in accordance
with generally accepted accounting principles) or (ii) shares of
Common Stock) (a "Liquidating Dividend"), then the Company will pay
or distribute to the Registered Holder of this Warrant, upon the
exercise hereof, in addition to the Warrant Shares purchased upon
such exercise, the Liquidating Dividend which would have been paid to
such Registered Holder if he had been the owner of record of such
Warrant Shares immediately prior to the date on which a record is
taken for such Liquidating 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.
30. 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 number of Warrant Shares and other
stock, securities and property, as from time to time shall be
issuable upon the exercise of this Warrant.
31. 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.
32. No Rights as Stockholder. 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.
Notwithstanding the foregoing, in the event (i) the Company effects
a split of the Common Stock by means of a stock dividend and the
exercise price of and the number of shares subject to this Warrant
are adjusted as of the date of the distribution of the dividend
(rather than as of the record date for such dividend), and (ii) the
Registered Holder exercises this Warrant between the record date and
the distribution date for such stock dividend, the Registered Holder
shall be entitled to receive, on the distribution date, the stock
dividend with respect to the shares of Common Stock acquired upon
such exercise, notwithstanding the fact that such shares were not
outstanding as of the close of business on the record date for such
stock dividend.
33. Change or Waiver. Any term of this Warrant may be changed
or waived only by an instrument in writing signed by the party
against which enforcement of the change or waiver is sought.
34. Headings. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of
any provision of this Warrant.
35. Governing Law. This Warrant will be governed by and
construed in accordance with the laws of the State of Delaware.
[Remainder of Page Intentionally Left Blank]
Executed as of the date first written above.
SPYGLASS, INC.
By:________________________________
Title:_____________________________
ATTEST:
_________________________
EXHIBIT I
PURCHASE FORM
To:_________________ Dated:______________
The undersigned, pursuant to the provisions set forth in the
attached Warrant (No. ___), hereby irrevocably elects to purchase
_____ shares of the Common Stock covered by such Warrant. The
undersigned herewith makes payment of $____________, in lawful money
of the United States, representing the full purchase price for such
shares at the price per share provided for in such Warrant.
Signature:__________________________
Address:____________________________
____________________________
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT C
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 5 OF THIS WARRANT
Date of Issuance: October 19, 1998 Number of Shares: ***
(subject to adjustment)
SPYGLASS, INC.
Common Stock Purchase Warrant
Spyglass, Inc., a Delaware corporation (the "Company"), for
value received, hereby certifies that General Instrument Corporation
(the "Registered Holder") is entitled, subject to the terms set forth
below, to purchase from the Company, at any time or from time to time
on or after the date of issuance and on or before 5:00 p.m. (Boston,
Massachusetts time) on the Expiration Date (as defined below), ***
shares of Common Stock, $.01 par value per share, of the Company, at
a purchase price of *** per share. The shares purchasable upon
exercise of this Warrant, and the purchase price per share, each as
adjusted from time to time pursuant to the provisions of this
Warrant, are hereinafter referred to as the "Warrant Shares" and the
"Purchase Price," respectively. The "Expiration Date" shall mean
December 31, 2003, or (if applicable) such later date as is provided
for in Section 1(c) below.
1. Vesting Schedule.
(a) This Warrant will become exercisable ("vest") as to
all of the Warrant Shares on October 1, 2003.
(b) Notwithstanding the foregoing vesting schedule, this
Warrant shall become immediately vested in full on the date (the
"Acceleration Date") 10 days following the date (if any) on which the
Registered Holder has paid to the Company (or a subsidiary or
affiliate (as defined in Rule 405 under the Securities Act of
1933) of the Company) an aggregate of *** under the Digital
Software Integration Center Sourcing Agreement dated October 19, 1998
between the Company and the Registered Holder (the "Sourcing
Agreement").
(c) In the event that any of the companies listed on
Exhibit C to the Operating Agreement dated October 19, 1998 between
the Company, the Registered Holder and Spyglass DSIC, Inc. (the
"Operating Agreement") acquire beneficial ownership (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934) of
shares of Common Stock of the Company representing 20% or more of the
outstanding Common Stock of the Company and either (i) the Registered
Holder exercises its right to terminate the Sourcing Agreement or
(ii) the Registered Holder exercises its purchase option under the
Operating Agreement, this Warrant shall become immediately vested in
full.
(d) In the event of the acceleration of vesting of this
Warrant under Section 1(b) or 1(c) above, the Expiration Date shall
be the later of December 31, 2003 and the date three years following
the Acceleration Date.
2. 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
Purchase Price payable in respect of the number of Warrant Shares
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 this Warrant shall have been surrendered to the Company as
provided in Section 2(a) above. At such time, the person or persons
in whose name or names any certificates for Warrant Shares shall be
issuable upon such exercise as provided in Section 2(c) below shall
be deemed to have become the holder or holders of record of the
Warrant Shares 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 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
Warrant Shares to which the Registered Holder shall be entitled upon
such exercise plus, in lieu of any fractional share to which the
Registered Holder would otherwise be entitled, cash in an amount
determined pursuant to Section 4 hereof; 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 Warrant
Shares 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.
(d) The Company shall be responsible for any and all taxes
arising from the granting and/or exercise of this Warrant (other than
taxes on the transfer of this Warrant or on the income of the
Registered Holder), including, but not limited to, all documentary
and stamp taxes.
3. Antidilution Provisions.
3.1 Adjustment of Number of Shares Purchasable. Upon any
adjustment of the Purchase Price as provided in Section 3.2(a), the
Registered Holder shall thereafter be entitled to purchase, at the
Purchase Price resulting from such adjustment, the number of Warrant
Shares (calculated to the nearest 1/100th of a share) obtained by
multiplying the Purchase Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable hereunder
immediately prior to such adjustment and dividing the product thereof
by the Purchase Price resulting from such adjustment.
3.2 Adjustment of Purchase Price. The Purchase Price
shall be subject to adjustment from time to time as hereinafter set
forth.
(a) Stock Dividends, Subdivisions and Combinations.
In the event that the Company subsequent to the date hereof shall:
(i) declare a dividend upon, or make any
distribution in respect of, any of its Common Stock, payable in
Common Stock, Convertible Securities or Stock Purchase Rights, or
(ii) subdivide its outstanding shares of Common
Stock into a larger number of shares of Common Stock, or
(iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock,
then the Purchase Price shall be adjusted to that price determined by
multiplying the Purchase Price per share of Common Stock immediately
prior to such event by a fraction (A) the numerator of which shall be
the total number of outstanding shares of Common Stock of the Company
immediately prior to such event and (B) the denominator of which
shall be the total number of outstanding shares of Common Stock of
the Company immediately after such event. For purposes of this
Section 3.2, all shares of Common Stock issuable upon conversions or
exchanges of Convertible Securities and exercises of Stock Purchase
Rights shall be treated as outstanding. "Convertible Securities"
means evidences of indebtedness, shares of stock or other
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
securities which are convertible into or exchangeable for, with or
without payment of additional consideration, shares of Common Stock,
either immediately or upon the arrival of a specified date or the
happenings of a specified event. "Stock Purchase Rights" means any
warrants, options or other rights to subscribe for, purchase or
otherwise acquire any shares of Common Stock or any Convertible
Securities.
(b) Issuance of Additional Shares of Common Stock.
In the event that the Company shall issue or sell any shares of
Common Stock after the date hereof for a consideration less than ***
of the then Fair Value (as defined below) per share immediately prior
to such issue or sale, the Purchase Price in effect immediately prior
to such issuance or sale shall be adjusted by: multiplying the then
existing Purchase Price by a fraction the numerator of which is (A)
the sum of (1) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by the Fair Value
per share of Common Stock immediately prior to such issue or sale
plus (2) the consideration received by the Company upon such issue or
sale, divided by (B) the total number of shares of Common Stock
outstanding immediately after such issue or sale, and the denominator
of which shall be the Fair Value per share of Common Stock
immediately prior to such issue or sale.
The provisions of this Subsection (b) shall not apply to any
shares of Common Stock which are distributed to holders of Common
Stock pursuant to a stock dividend or subdivision for which an
adjustment is provided for under Subsection (a) of this Section 3.2.
No adjustment of the Purchase Price shall be made under this
Subsection upon the issuance of any shares of Common Stock which are
issued pursuant to the exercise of any Stock Purchase Rights or
pursuant to the conversion or exchange of any Convertible Securities
if an adjustment shall previously have been made upon the issuance of
such Stock Purchase Rights or Convertible Securities pursuant to
Subsection (a), (c) or (d) of this Section 3.2.
For purposes of this Warrant, "Fair Value" per share of Common
Stock means the following:
(i) if the Common Stock is listed on a national
securities exchange, the Nasdaq National Market or another nationally
recognized exchange or trading system as of the date on which a
determination of Fair Value is to be made, the Fair Value per share
of Common Stock shall be deemed to be the last reported sale price
per share of Common Stock thereon on the trading day immediately
preceding such date; and
(ii) if the Common Stock is not listed on a
national securities exchange, the Nasdaq National Market or another
nationally recognized exchange or trading system as of the date on
which a determination of Fair Value is to be made, the Fair Value per
share of Common Stock shall be as agreed upon by the Company and the
Registered Holder.
Whenever the Company shall issue any of its Common Stock, Stock
Purchase Rights or Convertible Securities as consideration for a
merger, the purchase of stock or assets from or similar transaction
with a bona fide third party, such shares will be deemed for all
purposes hereunder to be issued for Fair Value.
(c) Issuance of Stock Purchase Rights. In the event
that the Company shall issue or sell any Stock Purchase Rights and
the consideration per share for which shares of Common Stock may at
any time thereafter be issuable upon exercise thereof (or, in the
case of Stock Purchase Rights exercisable for the purchase of
Convertible Securities, upon the subsequent conversion or exchange of
such Convertible Securities) shall be less than the Fair Value per
share of Common Stock immediately prior to the issuance of such Stock
Purchase Rights, the Purchase Price shall be adjusted as provided in
Subsection (b) of this Section 3.2 on the basis that (i) the maximum
number of shares of Common Stock issuable upon exercise of such Stock
Purchase Rights (or upon conversion or exchange of such Convertible
Securities following such exercise) shall be deemed to have been
issued as of the date of the issuance of such Stock Purchase Rights
as hereinafter provided and (ii) the aggregate consideration received
for such shares of Common Stock shall be deemed to be the minimum
consideration received or receivable by the Company in connection
with the issuance and exercise of such Stock Purchase Rights (or upon
conversion or exchange of such Convertible Securities). For the
purposes of this Subsection (c), the date as of which such Stock
Purchase Rights shall be deemed to be issued shall be the earlier of
(A) the date on which the Company shall enter into a firm contract
for the issuance of such Stock Purchase Rights, or (B) the date of
actual issuance of such Stock Purchase Rights.
(d) Issuance of Convertible Securities. In the event
that the Company shall issue or sell any Convertible Securities and
the consideration per share for which shares of Common Stock may at
any time thereafter be issuable pursuant to the terms of such
Convertible Securities shall be less than the Fair Value per share of
Common Stock immediately prior to the issuance of such Convertible
Securities, the Purchase Price shall be adjusted as provided in
Subsection (b) of this Section 3.2 on the basis that (i) the maximum
number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities shall be deemed to have
been issued as of the date of issuance of such Convertible Securities
as hereinafter provided and (ii) the aggregate consideration received
for such shares of Common Stock shall be deemed to be equal to the
minimum consideration received or receivable by the Company in
connection with the issuance and conversion or exchange of such
Convertible Securities. For the purposes of this Subsection (d), the
date as of which such Convertible Securities shall be deemed to be
issued shall be the earlier of (A) the date on which the Company
shall enter into a firm contract for the issuance of such Convertible
Securities, or (B) the date of actual issuance of such Convertible
Securities. No adjustment of the Purchase Price shall be made under
this Subsection upon the issuance of any Convertible Securities which
are issued pursuant to the exercise of any Stock Purchase Rights, if
an adjustment shall previously have been made upon the issuance of
such Stock Purchase Rights pursuant to Subsection (c) of this Section
3.2.
(e) Minimum Adjustment. In the event any adjustment
of the Purchase Price pursuant to this Section 3.2 shall result in an
adjustment of less than $.01 per share of Common Stock, no such
adjustment shall be made, but any such lesser adjustment shall be
carried forward and shall be made at the time and together with the
next subsequent adjustment which, together with any adjustments so
carried forward, shall amount to $.01 or more per share of Common
Stock; provided, however, that upon any adjustment of the Purchase
Price pursuant to Subsection 3.2(a), the foregoing figure of $.01 per
share (or such figure last adjustment) shall be proportionately
adjusted and provided further that upon the exercise of this Warrant,
the Company shall make all necessary adjustments (to the nearest .001
of a cent) not theretofore made to the Purchase Price up to an
including the date upon which this Warrant is exercised.
(f) Readjustment of Purchase Price and Warrant
Shares. In the event (i) the purchase price payable for any Stock
Purchase Rights or Convertible Securities referred to in Subsection
(c) or (d) above, (ii) the additional consideration, if any, payable
upon exercise of such Stock Purchase Rights or upon the conversion or
exchange of such Convertible Securities or (iii) the rate at which
any Convertible Securities are convertible into or exchangeable for
shares of Common Stock shall change, the Purchase Price in effect at
the time of such change shall forthwith be readjusted to the Purchase
Price which would have been in effect at such time had such Stock
Purchase Rights or Convertible Securities provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold. On the
expiration of any such Stock Purchase Rights not exercised or of any
such Convertible Securities not converted or exchanged, the Purchase
Price then in effect shall forthwith be increased to the Purchase
Price which would have been in effect at the time of such expiration
or termination had such Stock Purchase Rights or Convertible
Securities never been issued. No readjustment of the Purchase Price
pursuant to this Subsection (f) shall have the effect of increasing
the Purchase Price by an amount in excess of the adjustment
originally made to the Purchase Price in respect of the issue, sale
or grant of the applicable Stock Purchase Rights or Convertible
Securities.
(g) Reorganization, Reclassification or
Recapitalization of Company. In the event of (i) any capital
reorganization or reclassification or recapitalization of the capital
stock of the Company (other than in the cases referred to in
Subsection (a) of this Section 3.2), or (ii) the consolidation or
merger of the Company with or into another corporation or the sale or
transfer of all or substantially all of the assets of the Company in
which the Common Stock is converted into or exchanged for securities
or other property, there shall thereafter be deliverable upon the
exercise of this Warrant or any portion thereof the amount of
securities or property which the holder of the number of shares of
Common Stock which would otherwise have been deliverable upon the
exercise of this Warrant or any portion thereof would have been
entitled to receive upon such capital reorganization,
reclassification, recapitalization, consolidation, merger or sale,
and at the same aggregate Purchase Price.
Prior to and as a condition of the consummation of any
transaction described in the preceding sentence, the Company shall
made equitable, written adjustments in the application of the
provisions herein set forth with respect to the rights and interests
of the Registered Holder so that the provisions set forth herein
shall thereafter be applicable, as nearly as possible, in relation to
any securities or other property thereafter deliverable upon exercise
of this Warrant. Any such adjustment shall be made by and set forth
in a supplemental instrument executed by the Company and/or the
successor entity, as applicable, which agreement shall bind each such
entity.
(h) Other Dilutive Events. If any event shall occur
as to which the other provisions of this Section 3 are not strictly
applicable but as to which the failure to make an adjustment of the
nature provided for in this Section 3 would not fairly protect the
purchase rights represented by this Warrant in accordance with the
essential intent and principles hereof, then, in each such case, the
Company shall appoint a firm of independent public accountants of
recognized national standing (which may be the regular auditors of
the Company), which shall give their opinion as to the adjustment, if
any, on a basis consistent with the essential intent and principles
established in this Section 3, necessary to preserve, without
dilution, the purchase rights represented by this Warrant. Upon
receipt of such opinion, the Company will promptly mail a copy
thereof to the Registered Holder and shall make the adjustments
described therein.
(i) Determination of Consideration. For purposes of
this Section 3, the consideration received or receivable by the
Company for the issuance, sale, grant or assumption of shares of
Common Stock, Stock Purchase Rights or Convertible Securities,
irrespective of the accounting treatment of such consideration, shall
be valued as follows:
(1) Cash Payment. In the case of cash, the net
amount received by the Company before deduction of any underwriting
commissions or similar concessions paid or allowed by the Company.
(2) Securities or Other Property. In the case
of securities or other property, the fair market value as determined
in good faith by the Board of Directors of the Company; provided that
a determination with respect to any securities for which a public
trading market exists shall be based upon the most recent public
trading price of such securities.
(3) Allocation Related to Common Stock. In the
event shares of Common Stock are issued or sold together with other
securities or other assets of the Company for a consideration which
covers both, the consideration received (computed as provided in
clauses (1) and (2) above) shall be allocable to such shares of
Common Stock as determined in good faith by the Board of Directors of
the Company.
(4) Allocation Related to Stock Purchase Rights
and Convertible Securities. In the event that any Stock Purchase
Rights or Convertible Securities shall be issued or sold together
with other securities or other assets of the Company, together
comprising one integral transaction in which no specific
consideration is allocated to the Stock Purchase Rights or
Convertible Securities, the consideration received shall be allocable
to such Stock Purchase Rights and Convertible Securities as
determined in good faith by the Board of Directors of the Company.
(5) Dividends on Securities. In the event that
the Company shall declare a dividend or make any other distribution
upon any stock of the Company (other than Common Stock) payable in
either case in Common Stock, Convertible Securities or Stock Purchase
Rights, such Common Stock, Convertible Securities or Stock Purchase
Rights, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
(6) Stock Purchase Rights and Convertible
Securities. The consideration for which shares of Common Stock shall
be deemed to be issued upon the issuance of any Stock Purchase Rights
or Convertible Securities shall be determined by dividing (i) the
total consideration, if any, received or receivable by the Company as
consideration for the granting of such Stock Purchase Rights or the
issuance of such Convertible Securities, plus the minimum aggregate
amount of additional consideration payable to the Company upon the
exercise of such Stock Purchase Rights or the conversion or exchange
of such Convertible Securities or, in the case of Stock Purchase
Rights for Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the exercise of such
Stock Purchase Rights and the conversion or exchange of such
Convertible Securities, in each case before deducting any
underwriting commissions or similar concessions paid or allowed by
the Company, by (ii) the maximum number of shares of Common Stock
issuable upon the exercise of such Stock Purchase Rights or upon the
conversion or exchange of such Convertible Securities.
(j) Record Date. In the event that the Company shall
take a record of the holders of the Common Stock for the purpose of
entitling them (i) to receive a dividend or other distribution
payable in Common Stock, Convertible Securities or Stock Purchase
Rights or (ii) to subscribe for or purchase Common Stock, Convertible
Securities or Stock Purchase Rights, then all references in this
Section 3 to the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may
be, shall be deemed to be references to such record date.
(k) Shares Outstanding. The number of shares of
Common Stock deemed to be outstanding at any given time shall not
include (i) shares of Common Stock in the treasury of the Company or
owned by any wholly-owned subsidiary of the Company and (ii) except
where shares are described on a "fully diluted basis" or in a similar
manner, any of the Warrant Shares.
(l) Maximum Purchase Price. At no time shall the
Purchase Price per share of Common Stock exceed the amount set forth
in the first paragraph of the preamble of this Warrant except
pursuant to adjustments made pursuant to Subsection (a) or (g) of
this Section 3.2.
(m) Application. Except as otherwise provided
herein, all Subsections of this Section 3.2 are intended to operate
independently of one another, but without duplication. If an event
occurs that requires the application of more than one Subsection, all
applicable Subsections shall be given independent effect; provided,
however, that no adjustment shall be made which duplicates an
adjustment already made pursuant to some other Subsection of this
Section 3.
(n) No Adjustments under Certain Circumstances.
Anything herein to the contrary notwithstanding, the Company shall
not be required to make any adjustment of the Purchase Price in the
case of:
(i) the issuance of shares of Common Stock
pursuant to a rights offering in which the Registered Holder is
granted an opportunity to participate under the provisions of
Section 3.3.; or
(ii) the issuance of options or shares of Common
Stock to employees, directors or consultants pursuant to an
employment agreement, a stock option agreement or a plan approved by
the Board of Directors of the Company.
3.3 Rights Offering. In the event the Company shall
effect an offering of Common Stock pro rata among its stockholders
then the Registered Holder shall be entitled, at its option, to elect
to participate in such offering as if this Warrant had been exercised
and the Registered Holder were at the time of such rights offering a
holder of that number of shares of Common Stock to which the
Registered Holder is then entitled on the exercise hereof.
3.4 Certificates and Notices.
(a) Adjustments to Purchase Price. Upon any
adjustment under this Section 3 of the number of shares of Common
Stock purchasable upon exercise of this Warrant or of the Purchase
Price, a certificate, signed (i) by a Vice President or the Treasurer
of the Company, or (ii) by any independent firm of certified public
accountants of recognized national standing selected by, and at the
expense of the Company (which may be the Company's outside auditing
firm), setting forth in reasonable detail the events requiring the
adjustment and the method by which such adjustment was calculated and
specifying the adjusted Purchase Price and the number of shares of
Common Stock or other property purchasable upon exercise of this
Warrant after giving effect to such adjustment, shall be mailed to
the Registered Holder.
The certificate of any independent firm of certified public
accountants of recognized national standing selected by the Board of
Directors of the Company shall be conclusive evidence of the
correctness of any computation made under this Section 3, absent
manifest error.
(b) Extraordinary Corporate Events. In the event
that the Company after the date hereof shall propose to (i) pay any
dividend payable in stock to the holders of shares of Common Stock or
to make any other distribution to the holders of shares of Common
Stock (other than a stock split effected by means of a Common Stock
dividend), (ii) offer to the holders of shares of Common Stock rights
to subscribe for or purchase any shares of any class of stock or any
other rights or options or (iii) effect any reclassification of the
Common Stock (other than a reclassification involving merely the
subdivision or combination of outstanding shares of Common Stock) or
any capital reorganization or any consolidation or merger (other than
a merger in which no distribution of securities or other property is
to be made to holders of shares of Common Stock), or any sale,
transfer or other disposition of all or substantially all of its
assets, or the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall mail to the Registered
Holder notice of such proposed action, which shall specify the date
on which the stock transfer books of the Company shall close, or a
record shall be taken, for determining the holders of Common Stock
entitled to receive such stock dividends or other distribution or
such rights or options, or the date on which such reclassification,
reorganization, consolidation, merger, sale, transfer, other
disposition, liquidation, dissolution or winding up shall take place
or commence, as the case may be, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to
receive securities or other property deliverable upon such action, if
any such date is to be fixed. Such notice shall be mailed in the
case of any action covered by clause (i) or (ii) above at least 10
days prior to the record date for determining holders of Common Stock
for purposes of receiving such payment or offer, or in the case of
any action covered by clause (iii) above at least 30 days prior to
the date upon which such action takes place and 20 days prior to any
record date to determine holders of Common Stock entitled to receive
such securities or other property.
(c) Effect of Failure. Failure to file any
certificate or notice or to mail any notice, or any defect in any
certificate or notice pursuant to this Section 3.4 shall not affect
the legality or validity of the adjustment of the Purchase Price or
the number of shares purchasable upon exercise of this Warrant, or
any transaction giving rise thereto.
39. Fractional Shares. The Company shall not be required upon
the exercise of this Warrant to issue any fractional shares, but
shall make an adjustment therefor in cash on the basis of the fair
market value per share of Common Stock, as determined in good faith
by the Board of Directors of the Company.
40. Transfer Restrictions.
40.1 This Warrant may not be sold or transferred without
the prior written consent of the Company, which shall not be
unreasonably withheld; provided that the Company's consent shall not
be required in the event of the sale of all or substantially all of
the assets of the Registered Holder. Any permitted transfer shall be
effected by surrendering this Warrant, along with a properly executed
assignment, at the principal office of the Company.
40.2 The Warrant Shares may not be sold or transferred
unless either (i) they first shall have been registered under the
Securities Act of 1933, as amended (the "Act"), or (ii) the Company
first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the effect that such sale
or transfer is exempt from the registration requirements of the Act.
40.3 Each certificate representing Warrant Shares shall
bear a legend substantially in the following form:
"The securities represented by this certificate
have not been registered under the Securities Act
of 1933, as amended, and may not be offered, sold
or otherwise transferred unless and until such
securities are registered under such Act or an
opinion of counsel satisfactory to the Company is
obtained to the effect that such registration is
not required."
The foregoing legend shall be removed from the certificates
representing any Warrant Shares, at the request of the holder
thereof, at such time as they become eligible for resale pursuant to
Rule 144(k) under the Act.
41. No Impairment. The Company will not, by amendment of its
charter or through reorganization, consolidation, merger,
dissolution, sale of assets or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of
this Warrant.
42. Liquidating Dividends. If the Company pays a dividend or
makes a distribution on the Common Stock (other than one payable in
(i) cash out of earnings or earned surplus (determined in accordance
with generally accepted accounting principles) or (ii) shares of
Common Stock) (a "Liquidating Dividend"), then the Company will pay
or distribute to the Registered Holder of this Warrant, upon the
exercise hereof, in addition to the Warrant Shares purchased upon
such exercise, the Liquidating Dividend which would have been paid to
such Registered Holder if he had been the owner of record of such
Warrant Shares immediately prior to the date on which a record is
taken for such Liquidating 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.
43. 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 number of Warrant Shares and other
stock, securities and property, as from time to time shall be
issuable upon the exercise of this Warrant.
44. 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.
45. No Rights as Stockholder. 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.
Notwithstanding the foregoing, in the event (i) the Company effects
a split of the Common Stock by means of a stock dividend and the
exercise price of and the number of shares subject to this Warrant
are adjusted as of the date of the distribution of the dividend
(rather than as of the record date for such dividend), and (ii) the
Registered Holder exercises this Warrant between the record date and
the distribution date for such stock dividend, the Registered Holder
shall be entitled to receive, on the distribution date, the stock
dividend with respect to the shares of Common Stock acquired upon
such exercise, notwithstanding the fact that such shares were not
outstanding as of the close of business on the record date for such
stock dividend.
46. Change or Waiver. Any term of this Warrant may be changed
or waived only by an instrument in writing signed by the party
against which enforcement of the change or waiver is sought.
47. Headings. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of
any provision of this Warrant.
48. Governing Law. This Warrant will be governed by and
construed in accordance with the laws of the State of Delaware.
[Remainder of Page Intentionally Left Blank]
Executed as of the date first written above.
SPYGLASS, INC.
By:________________________________
Title:_____________________________
ATTEST:
_________________________
EXHIBIT I
PURCHASE FORM
To:_________________ Dated:______________
The undersigned, pursuant to the provisions set forth in the
attached Warrant (No. ___), hereby irrevocably elects to purchase
_____ shares of the Common Stock covered by such Warrant. The
undersigned herewith makes payment of $____________, in lawful money
of the United States, representing the full purchase price for such
shares at the price per share provided for in such Warrant.
Signature:__________________________
Address:____________________________
____________________________
