Exhibit 10.3
THIS WARRANT AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED PURSUANT
TO THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND SUCH SECURITIES MAY NOT
BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT AND THE RULES AND
REGULATIONS THEREUNDER.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE
SUBJECT TO THE TERMS AND CONDITIONS OF A PURCHASE AGREEMENT DATED DECEMBER
___, 2004, BY AND AMONG THE COMPANY AND THE PURCHASERS NAMED THEREIN. A
COPY OF SUCH AGREEMENT WILL BE FURNISHED TO THE RECORD HOLDER OF THIS
WARRANT WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL
PLACE OF BUSINESS.
THE SECURITIES REPRESENTED HEREBY MAY BE SUBJECT TO THE TERMS AND
CONDITIONS OF AN AMENDED AND RESTATED SHAREHOLDERS AGREEMENT WHICH MAY
PLACE CERTAIN RESTRICTIONS ON THE VOTING OF SUCH SECURITIES (INCLUDING THE
GRANT OF AN IRREVOCABLE PROXY RELATIVE TO VOTING MATTERS). A COPY OF SUCH
AGREEMENT WILL BE FURNISHED TO THE RECORD HOLDER OF THIS SECURITY WITHOUT
CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF
BUSINESS.
THIS WARRANT MAY NOT BE EXERCISED PRIOR TO SHAREHOLDER APPROVAL, AS
DESCRIBED HEREIN.
NO. VOID AFTER EXPIRATION DATE
(AS DEFINED BELOW)
WARRANT
TO PURCHASE COMMON STOCK OF
MTM TECHNOLOGIES, INC.
Dated December __, 2004
THIS WARRANT CERTIFIES THAT, for value received, [_______________] or
its permitted transferees (the "Holder") is entitled to purchase from MTM
TECHNOLOGIES, INC., a New York corporation (the "Company"), up to the number of
fully paid and nonassessable shares (the "Shares") of Common Stock, $.001 par
value per share, of the Company, as further described and defined below.
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in that certain Purchase Agreement, dated December ____,
2004, by and among the Company, the Holder and the purchasers named therein (the
"Purchase Agreement").
Section 1. Number of Shares. The maximum number of shares of Common Stock which
may be purchased upon the exercise of this Warrant is [______].
Section 2. Exercise Price. The price per share at which the Holder may purchase
the Common Stock shall be $4.06 per share (the "Exercise Price"), as adjusted
from time to time in accordance with Section 6 hereof.
Section 3. Expiration Date. This Warrant shall expire at 5:00 p.m. New York Time
on December ___, 2008 (the "Expiration Date"). Upon the Expiration Date, all
rights of the Holder to purchase Common Stock pursuant to this Warrant shall
immediately terminate.
Section 4. Exercise and Payment.
Section 4.1 Exercise. The purchase rights represented by this Warrant
may be exercised by the Holder, in whole or in part at any time following the
Shareholder Approval and from time to time, by the surrender of this Warrant
(together with a duly executed notice of exercise in the form attached hereto as
Exhibit A-1) at the principal office of the Company, and by the payment to the
Company, by wire transfer of immediately available funds, of an amount equal to
the aggregate Exercise Price of the Shares being purchased.
Section 4.2 Net Issue Election. The Holder may elect to receive,
without the payment by the Holder of any additional consideration, shares equal
to the value of this Warrant or any portion hereof by the surrender of this
Warrant or such portion (together with a duly executed notice of exercise in the
form attached hereto as Exhibit A-2) at the principal office of the Company.
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Thereupon, the Company shall issue to the Holder such number of shares of Common
Stock as is computed using the following formula:
X = Y (A-B)
------
A
Where
X= the number of shares of Common Stock to be issued to the
Holder pursuant to this Section 4.2.
Y= the number of shares of Common Stock covered by this
Warrant in respect of which the net issue election is made
pursuant to this Section 4.2.
A= the Fair Market Value of one share of Common Stock, as
determined in accordance with Section 7 herein, as at the
time the net issue election is made pursuant to this Section
4.2.
B= the Exercise Price in effect under this Warrant at the
time the net issue election is made pursuant to this Section
4.2.
Section 4.3 Stock Certificates. In the event of the exercise of all or
any portion of this Warrant, certificates for the shares of Common Stock so
purchased shall be delivered to the Holder by the Company at the Company's own
expense (including the payment by the Company of any applicable issue taxes or
governmental charges imposed in connection with the issuance or delivery of the
Common Stock) within a reasonable time, which shall in no event be later than
ten (10) days thereafter and, unless this Warrant has been fully exercised or
has expired, a new Warrant representing the Shares with respect to which this
Warrant shall not have been exercised shall also be issued to the Holder within
such time.
If this Warrant shall be surrendered for exercise within any period
during which the transfer books for shares of the Common Stock or other
securities purchasable upon the exercise of this Warrant are closed for any
purpose, the Company shall not be required to make delivery of certificates for
the securities purchasable upon such exercise until the date of the reopening of
said transfer books.
Section 5. Stock Fully Paid; Reservation of Shares. All of the Shares issuable
upon the exercise of this Warrant will, upon issuance and receipt of the
Exercise Price therefor, be duly authorized, validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership thereof, and
free and clear of all taxes, liens, encumbrances and charges with respect to the
issue thereof. During the period within which this Warrant may be exercised, the
Company shall at all times have authorized and reserved for issuance sufficient
shares of its Common Stock to provide for the exercise of this Warrant.
3
Section 6. Adjustment of Exercise Price and Number of Shares. The number and
kind of securities purchasable upon the exercise of this Warrant and the
Exercise Price therefor shall be subject to adjustment from time to time upon
the occurrence of certain events, as follows:
Section 6.1 Adjustments for Subdivisions of Common Stock. If the number
of shares of Common Stock outstanding at any time is increased by a stock
dividend payable in shares of Common Stock or by a subdivision or split up of
stock, then the Exercise Price then in effect shall, concurrently with the
effectiveness of such dividend, subdivision or split up, be proportionately
decreased and the number of shares of Common Stock issuable upon exercise of
this Warrant shall be increased in proportion to such increase of outstanding
shares of Common Stock.
Section 6.2 Adjustments for Combinations Common Stock. If the number of
shares of Common Stock outstanding at any time is decreased by a combination of
the outstanding shares of Common Stock, then the Exercise Price then in effect
shall, concurrently with the effectiveness of such combination, be
proportionately increased and the number of shares of Common Stock issuable upon
exercise of this Warrant shall be decreased in proportion to such decrease in
outstanding shares of Common Stock.
Section 6.3 Adjustments for Reclassification, Exchange and
Substitution. Upon a Notice Event (as defined below), if the Common Stock
issuable upon exercise of this Warrant shall be changed into the same or a
different number of shares of any other class or classes of stock, whether by
capital reorganization, merger, reclassification or otherwise (other than a
subdivision or combination of shares provided for above) this Warrant shall
thereafter be exercisable into, in lieu of the number of shares of Common Stock
which the Holder would otherwise have been entitled to receive, a number of
shares of such other class or classes of stock equivalent to the number of
shares of Common Stock that would have been subject to receipt by the Holder
upon exercise of this Warrant immediately before that change.
Section 6.4 Notice of Certain Events. In the event (each, a "Notice
Event"): (a) the Company authorizes the issuance to all holders of Common Stock
rights or warrants to subscribe for or purchase shares of its capital stock, or
any other subscription rights or warrants; (b) the Company authorizes the
distribution to all holders of Common Stock evidences of indebtedness or assets
or other securities; (c) of any capital reorganization or reclassification of
Common Stock, other than a subdivision or combination of the outstanding Common
Stock and other than a change in par value of the Common Stock; (d) of any
liquidation or merger to which the Company is a party and for which approval of
any of the Company's holders of Common Stock is required, other than a
consolidation or merger in which the Company is the continuing corporation and
that does not result in any reclassification or change of the shares of Common
Stock issuable upon the exercise of this Warrant; (e) of the conveyance or
transfer of the Company's properties and assets, substantially as an entirety;
or (f) of the Company's voluntary or involuntary dissolution, liquidation or
winding-up; then, in each case, the Company shall cause to be mailed by
certified mail to the Holder, at least 10 days prior to the applicable record or
4
effective date hereinafter specified, a notice stating the material terms
relating to the exercise of the Warrants, the name, title and telephone number
of a Company representative who shall be available to answer any questions
relating to such exercise and the dates as of which (i) the holders of Common
Stock of record will be entitled to receive any such rights, warrants or
distributions are to be determined, (ii) such Notice Event is expected to become
effective and (iii) that Holders of record of Warrants shall be entitled to
exchange or sell their shares of Common Stock issuable upon the exercise of this
Warrant for securities or other property, if any, deliverable upon such Notice
Event. In addition, if the Company receives written notice that a purchase,
tender or exchange offer has been made to the holders of more than 50% of the
outstanding Common Stock, the Company shall give the Holder reasonable notice
(but will not be required to give not more than 10 days notice) thereof.
Section 7. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder. In lieu of such fractional
shares the Company shall make a cash payment therefor based upon the fair market
value of the Common Stock on such date as determined by the board of directors
of the Company (the "Board of Directors").
Section 8. Preemptive Rights.
(a) The Holder shall be entitled to purchase its pro rata share
(calculated by multiplying the number of securities issued in such equity
offering including those issued pursuant to this Section 8 by a fraction, the
numerator of which is the number of shares equal to the sum of (x) the number of
issued and outstanding shares of Common Stock then held by the Holder, plus (y)
the total number of shares of Common Stock issuable upon the exercise,
conversion or exchange of all warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock or
security convertible into or exchangeable for Common Stock (such warrants,
rights or options being called "Options" and such convertible or exchangeable
stock or securities being called "Convertible Securities") that are issued and
outstanding at such time that are then held by the Holder (the sum of (x) and
(y), a "Fully Diluted Basis") and the denominator of which is the number of
shares of Common Stock held by all such holders of securities of the Company on
a Fully Diluted Basis) of any future private equity offering by the Company.
(b) Notwithstanding anything contained in this Section 8(a) to the
contrary, the preemptive rights of the Holder shall not apply to (a) shares of
Common Stock sold to, or options to purchase Common Stock granted by the Company
to, employees, consultants, officers, or directors of the Company pursuant to
any option plan, agreement or other arrangement duly adopted by the Company and
approved by a majority of the Board of Directors; (b) any shares of Common Stock
upon the conversion of shares of Series A Preferred Stock; (c) any shares of
Common Stock pursuant to which the Series A Conversion Price (as such term is
defined in the Existing Certificate) is adjusted under Section 6; (d) any shares
of Common Stock issued pursuant to the exchange, conversion or exercise of any
Options or Convertible Securities that have previously been incorporated into
5
computations hereunder on the date when such Options or Convertible Securities
were issued; (e) the issuance and sale of securities in connection with a
strategic investment or similar transaction approved by a majority of the Board
of Directors; (f) securities issued for consideration other than cash pursuant
to a merger, consolidation or similar business combination or acquisition of
assets as approved by a majority of the Board of Directors; (g) the issuance of
shares in connection with a firm commitment underwritten public offering of
Common Stock with a nationally recognized investment banking firm at a price per
share offered to the public of at least $5.00 per share of Common Stock which
results in gross cash proceeds to the Company of at least $25,000,000; (h) any
shares of Series A Preferred Stock issued in the form of a dividend to any
holder of Series A Preferred Stock; or (i) any shares of Common Stock issued on
exercise of any warrants issued by the Company on or prior to December ___, 2004
and warrants issued in connection with the issuance of Series A-4 First Tranche
Notes or Series A-4 Preferred Stock.
Section 9. Restrictions on Transfer.
Section 9.1 Transfer. The Holder may transfer this Warrant and the
shares of Common Stock issuable upon exercise of this Warrant, and the rights
and obligations attached thereto, so long as (a) any such transfer(s) comply
with applicable securities laws and (b) unless such securities have been
registered in accordance with applicable securities laws and transferred
pursuant to a non-private, open market transaction on the securities exchange on
which the Company's Common Stock is listed, if such transferee is not a United
States citizen or an entity formed under the laws of a U.S. jurisdiction, the
Holder obtains the Company's consent for such transfer (which shall not be
unreasonably withheld).
Section 9.2 Restrictive Legend. Unless a registration statement is in
effect with respect thereto, each certificate representing (i) the Shares and
(ii) any other securities issued in respect of the Shares upon any stock split,
stock dividend or recapitalization (collectively, the "Restricted Securities"),
shall be endorsed as follows:
THIS WARRANT AND THE SHARES OF COMMON STOCK WHICH MAY BE
PURCHASED PURSUANT TO THE EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT AND THE
RULES AND REGULATIONS THEREUNDER.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
WARRANT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A PURCHASE
AGREEMENT DATED DECEMBER ___, 2004, BY AND AMONG THE COMPANY AND
6
THE PURCHASERS NAMED THEREIN. A COPY OF SUCH AGREEMENT WILL BE
FURNISHED TO THE RECORD HOLDER OF THIS WARRANT WITHOUT CHARGE
UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF
BUSINESS.
THE SECURITIES REPRESENTED HEREBY MAY BE SUBJECT TO THE TERMS AND
CONDITIONS OF An AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
WHICH MAY PLACE CERTAIN RESTRICTIONS ON THE VOTING OF SUCH
SECURITIES (INCLUDING THE GRANT OF AN IRREVOCABLE PROXY RELATIVE
TO VOTING MATTERS). A COPY OF SUCH AGREEMENT WILL BE FURNISHED TO
THE RECORD HOlDER OF THIS SECURITY WITHOUT CHARGE UPON WRITTEN
REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.
THIS WARRANT MAY NOT BE EXERCISED PRIOR TO SHAREHOLDER APPROVAL,
AS DESCRIBED HEREIN.
Section 10. No Rights of Stockholders. This Warrant does not entitle the Holder
to any voting rights as a stockholder of the Company prior to the exercise of
the Warrant. Nothing in this Warrant shall obligate the Holder to exercise this
Warrant, it being understood that the decision as to whether to exercise the
Warrant shall be made exclusively by the Holder.
Section 11. No Impairment. The Company will not, by amendment of its Certificate
of Incorporation, as amended and restated, or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but it will at all times in good faith assist in the carrying out of
all of the provisions of this Warrant and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against impairment.
Section 12. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will make
and deliver a new Warrant of like tenor and dated as of such cancellation, in
lieu of this Warrant.
7
Section 13. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.
Section 14. Miscellaneous.
Section 14.1 Governing Law. This Warrant shall be governed by and
construed in all respects in accordance with the laws of the State of New York,
without giving effect to the conflicts of laws provisions thereof.
Section 14.2 Entire Agreement; Amendment. Each party hereby
acknowledges that no other party or any other person or entity has made any
promises, warranties, understandings or representations whatsoever, express or
implied, not contained in the Transaction Documents and acknowledges that it has
not executed this Warrant in reliance upon any such promises, representations,
understandings or warranties not contained herein or therein and that the
Transaction Documents supersede all prior agreements and understandings between
the parties with respect thereto. There are no promises, covenants or
undertakings other than those expressly set forth or provided for in the
Transaction Documents. Neither this Warrant nor any term hereof may be amended,
waived, discharged, or terminated other than by a written instrument signed by a
Majority in Interest Additional Purchasers and the Company. Any amendment,
waiver, discharge or termination so made or effected shall be binding upon all
of the Holders.
Section 14.3 Successors and Assigns. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the permitted successors and assigns, heirs, executors, and administrators
of the Company and the Holder.
Section 14.4 Severability. Whenever possible, each provision of this
Warrant will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Warrant will be
reformed, construed and enforced in such jurisdiction to the greatest extent
possible to carry out the intentions of the parties hereto.
Section 14.5 Notices, etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be mailed by
registered or certified mail, postage prepaid, by overnight courier, or
otherwise delivered by hand or by messenger or sent by facsimile and confirmed
by mail, addressed:
(i) if to the Company, at to MTM Technologies, Inc., 000 Xxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, Attention: Chief Executive Officer; and
8
(ii) if to the Holder, at the address of such Holder set forth
on the signature page of this Warrant.
All notices shall be effective upon receipt.
Section 14.6 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 14.7 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Warrant as of the date
first above written.
9
MTM TECHNOLOGIES, INC.
By:____________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
10
WARRANT HOLDER:
______________________________
By: _________________________,
By: __________________________
Name: ______________
Title:______________
with a copy to:
________________________
11
THE EXERCISE OF THIS WARRANT IS SUBJECT TO THE APPLICABLE
PROVISIONS OF THE XXXX-XXXXX-XXXXXX ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED
EXHIBIT A-1
-----------
NOTICE OF EXERCISE
------------------
TO: MTM Technologies, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Executive Officer
1. The undersigned hereby elects to purchase _________ shares of Common
Stock, par value $.001 per share, of MTM TECHNOLOGIES, INC. pursuant to the
terms of this Warrant, and tenders herewith payment of the purchase price of
such shares in full.
2. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
_______________________________
(Name)
_______________________________
_______________________________
(Address)
__________________________________
(Signature)
Title:____________________________
__________________________
(Date)
A-1
THE EXERCISE OF THIS WARRANT IS SUBJECT TO THE APPLICABLE
PROVISIONS OF THE XXXX-XXXXX-XXXXXX ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED
EXHIBIT A-2
-----------
NET ISSUE NOTICE OF EXERCISE
----------------------------
TO: MTM Technologies, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Executive Officer
1. The undersigned hereby elects to purchase _________ shares of Common
Stock, par value $.001 per share, of MTM TECHNOLOGIES, INC. pursuant to the
terms of this Warrant, and hereby elects under Section 4.2 of this Warrant to
surrender the right to purchase _______ shares of Common Stock pursuant to this
Warrant for a net issue exercise with respect to ________ shares of Common
Stock.
2. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
_______________________________
(Name)
_______________________________
_______________________________
(Address)
__________________________________
(Signature)
Title:____________________________
__________________________
(Date)
A-2
EXHIBIT B
---------
ASSIGNMENT FORM
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________________________, whose address is _____________________, the
right represented by the attached Warrant to purchase _________ shares of Common
Stock of MTM TECHNOLOGIES, INC., to which the attached Warrant relates.
Dated:____________________
____________________________________________
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant)
____________________________________________
(Address)
Signed in the presence of:
____________________________________
B-1
