Exhibit 10.2
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
DAMARK INTERNATIONAL, INC.
COMMON STOCK PURCHASE WARRANT
No. [W- ] September 29, 2000
Warrant to Purchase ________
Shares of Common Stock
DAMARK INTERNATIONAL, INC. a Minnesota corporation (the
"Company"), for value received, hereby certifies that [______] or registered
assigns (the "Holder"), is entitled to purchase from the Company [_________](1)
(the "Warrant Shares") duly authorized, validly issued, fully paid and
nonassessable shares of Class A Common Stock, par value $.01 per share, of the
Company (the "Common Stock"), at a purchase price equal to $16.17 per share (the
"Purchase Price"), at any time or from time to time on and after the date hereof
and prior to 5:00 P.M., New York City time, on September 29, 2003 (the
"Expiration Date"), all subject to the terms, conditions and adjustments set
forth below in this Warrant.
This Warrant is one of the Common Stock Purchase Warrants
(collectively, the "Warrants", such term to include any such warrants issued in
substitution therefor) originally issued pursuant to the terms of the Securities
Purchase Agreement, dated as of September 29, 2000, by and among the Company and
the Buyers signatory thereto (the "Purchase Agreement"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned such
terms in the Purchase Agreement.
----------------------------
(1) Insert 50% of the number of the number of Conversion Shares assuming
full conversion on the Closing Date.
1. DEFINITIONS. As used herein, unless the context
otherwise requires, the following terms shall have the meanings indicated:
"ADDITIONAL SHARES OF COMMON STOCK" shall mean, all shares
(including treasury shares) of Common Stock issued or sold (or, pursuant to
Section 3.3 or 3.4, deemed to be issued) by the Company after September 29,
2000, whether or not subsequently reacquired or retired by the Company other
than (i) shares of Common Stock issued upon exercise of the Warrants, (ii) such
number of additional shares of Common Stock as may become issuable by exercise
of the Warrants by reason of adjustments required pursuant to the anti-dilution
provisions applicable to the Warrants, (iii) shares of Common Stock issued
pursuant to Approved Stock Plans, (iv) shares of Common Stock issued upon
conversion of the Series D Preferred Shares, (v) Dividend Shares, (vi) shares of
Common Stock issued pursuant to any right to purchase such shares in existence
as of August 31, 2000 and as set forth in Schedule 3(c) to the Purchase
agreement (the "Existing Options"), and (vii) shares of Common Stock issued in
connection with a Strategic Financing.
"ANNIVERSARY DATE" shall mean September 29 of each calendar
year.
"APPROVED STOCK PLAN" shall mean any contract, plan or
agreement which has been or shall be approved by the Board of Directors of the
Company or a committee of the Board of Directors, pursuant to which the
Company's securities may be issued to any employee, officer, director,
consultant or other service provider of the Company in an aggregate amount that
does not exceed 1,500,000 shares of Common Stock (subject to appropriate
adjustment for any stock dividends, any subdivision or combination, or other
reorganization of the outstanding shares of Common Stock).
"AVERAGE MARKET PRICE" shall mean the average of the Closing
Bid Prices of the Common Stock for the ten (10) trading days immediately
preceding the applicable date, except in the case of the issuance of shares of
Common Stock in an Underwritten Public Offering in which case the public
offering price to the public.
"BUSINESS DAY" shall mean any day other than a Saturday or a
Sunday or a day on which commercial banking institutions in the City of New York
are authorized by law to be closed. Any reference to "days" (unless Business
Days are specified) shall mean calendar days.
"BUY IN ACTUAL DAMAGES" shall have the meaning assigned to it
in Section 2.6 of this Agreement.
"CLOSING BID PRICE" shall mean for any security as of any
date, the closing bid price of such security on the principal securities
exchange or trade market where such security is listed or traded as reported by
Bloomberg, L.P. ("BLOOMBERG"), or if the foregoing does not apply, the closing
bid price of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price is reported for such security by Bloomberg, the average of the bid prices
of any market makers for such security as reported in the "pink sheets" by the
-2-
National Quotation Bureau, Inc. If the Closing Bid Price cannot be calculated
for such security on such date, as set forth above, the Closing Bid Price of
such security shall be the fair market value as determined in good faith by an
investment banking firm selected jointly by the Company and the Holders, with
the fees and expenses of such determination borne solely by the Company.
"COMMISSION" shall mean the Securities and Exchange Commission
or any successor agency having jurisdiction to enforce the Securities Act.
"COMMON STOCK" shall have the meaning assigned to it in the
introduction to this Warrant, such term to include any stock into which such
Common Stock shall have been changed or any stock resulting from any
reclassification of such Common Stock, and all other stock of any class or
classes (however designated) of the Company the holders of which have the right,
without limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference.
"COMPANY" shall have the meaning assigned to it in the
introduction to this Warrant, such term to include any corporation or other
entity which shall succeed to or assume the obligations of the Company hereunder
in compliance with Section 4.
"CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares of stock (other than Common Stock) or other securities
directly or indirectly convertible into or exchangeable for Additional Shares of
Common.
"CURRENT MARKET PRICE" shall mean, on any date specified
herein, the average of the daily Closing Bid Prices for the Common Stock during
the 10 consecutive trading days commencing 15 trading days before such date,
except that, if on any such date the shares of Common Stock are not listed or
admitted for trading on any national securities exchange or quoted in the
over-the-counter market, the Current Market Price shall be the Fair Value on
such date.
"DIVIDEND SHARES" shall mean the shares of Common Stock issued
in respect of dividends on the Series D Preferred Shares.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"EXPIRATION DATE" shall have the meaning assigned to it in the
introduction to this Warrant.
"FAIR VALUE" shall mean, on any date specified herein (i) in
the case of cash, the dollar amount thereof, (ii) in the case of a security
admitted for trading on any national securities exchange or quoted in the
over-the-counter market, the Current Market Price, and (iii) in all other cases
as determined in good faith jointly by the Board of Directors of the Company and
the Holder; PROVIDED, HOWEVER, that if such parties are unable to reach
agreement within a reasonable period of time, the Fair Value shall be
-3-
determined in good faith by an independent investment banking firm selected
jointly by the Company and the Holder or, if that selection cannot be made
within ten days, by an independent investment banking firm selected by the
American Arbitration Association in accordance with its rules, and PROVIDED
FURTHER, that the Company shall pay all of the fees and expenses of any third
parties incurred in connection with determining the Fair Value.
"OPTIONS" shall mean any rights, options or warrants to
subscribe for, purchase or otherwise acquire either Additional Shares of Common
Stock or Convertible Securities other than pursuant to the Existing Options and
the Options under an Approved Stock Plan.
"OTHER SECURITIES" shall mean any stock (other than Common
Stock) and other securities of the Company or any other Person (corporate or
otherwise) which the holders of the Warrants at any time shall be entitled to
receive, or shall have received, upon the exercise of the Warrants, in lieu of
or in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.
"PERSON" shall mean any individual, firm, partnership,
corporation, trust, joint venture, association, joint stock company, limited
liability company, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof,
and shall include any successor (by merger or otherwise) of such entity.
"PURCHASE AGREEMENT" shall have the meaning assigned to it in
the introduction to this Warrant.
"PURCHASE PRICE" shall mean the amount per share indicated in
the introductory paragraph to this Warrant subject to adjustment and
readjustment from time to time as provided in Section 3, and, as so adjusted or
readjusted, shall remain in effect until a further adjustment or readjustment
thereof is required by Section 3.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration
Agreement dated as of September 29, 2000, substantially in the form of Exhibit C
to the Purchase Agreement.
"RIGHTS" shall have the meaning assigned to it in Section
3.10.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"STRATEGIC FINANCING" shall mean any future equity financing
whereby Common Stock or Convertible Securities are issued for consideration
other than cash or cash equivalents (e.g., notes) to any person or entity which
has or is proposed to have a material business, technology, lending, investment
or commercial relationship with the Company in addition to any equity financing
provided by such person or entity and it is determined by the Board of Directors
of the Company that such equity financing will
-4-
result in or further develop a material business, technology or commercial
relationship with the Company; PROVIDED, HOWEVER, that the aggregate number of
shares of Common Stock (including Convertible Securities and Options on a fully
diluted basis) that may be issued pursuant to Strategic Financings may not
exceed 750,000 shares.
"UNDERWRITTEN PUBLIC OFFERING" shall mean an offering of
shares of Common Stock through one or more investment banking firms that is
registered with the Commission in which the net proceeds received by the Company
exceeds $25 million.
"WARRANTS" shall have the meaning assigned to it in the
introduction to this Warrant.
2. EXERCISE OF WARRANT.
2.1. MANNER OF EXERCISE; PAYMENT OF THE PURCHASE PRICE.
(a) This Warrant may be exercised by the Holder, in whole or in part, at any
time or from time to time on and after the date hereof and prior to the
Expiration Date, by surrendering to the Company at its principal office (or such
other office or agency of the Company as the Company may designate in a written
notice to the Holder) this Warrant, together with the form of Election to
Purchase Shares attached hereto as Exhibit A (or a reasonable facsimile thereof)
duly executed by the Holder and accompanied by payment of the Purchase Price as
described below for the number of shares of Common Stock specified in such form.
(b) Payment of the Purchase Price may be made as follows
(or by any combination of the following): (i) in United States currency by cash
or delivery of a certified check or bank draft payable to the order of the
Company or by wire transfer to the account of the Company, (ii) by cancellation
of such number of the shares of Common Stock otherwise issuable to the Holder
upon such exercise as shall be specified in such Election to Purchase Shares,
such that the excess of the Current Market Price of such specified number of
shares on the date of exercise over the portion of the Purchase Price
attributable to such shares shall equal the Purchase Price attributable to the
shares of Common Stock to be issued upon such exercise, in which case upon
delivery of such notice such amount shall be deemed to have been paid to the
Company and the number of shares issuable upon such exercise shall be reduced by
such specified number, or (iii) by surrender to the Company for cancellation,
certificates representing shares of Common Stock of the Company owned by the
Holder (properly endorsed for transfer in blank) having a Current Market Price
on the date of Warrant exercise equal to the Purchase Price.
2.2. WHEN EXERCISE EFFECTIVE. Each exercise of this
Warrant shall be deemed to have been effected immediately prior to the close of
business on the Business Day on which this Warrant shall have been surrendered
to, and the Purchase Price shall have been received by, the Company as provided
in Section 2.1, and at such time the Person or Persons in whose name or names
any certificate or certificates for shares of Common Stock (or Other Securities)
shall be issuable upon such exercise as provided in
-5-
Section 2.3 shall be deemed to have become the holder or holders of record
thereof for all purposes.
2.3. DELIVERY OF STOCK CERTIFICATES, ETC.; CHARGES, TAXES
AND EXPENSES. Subject to Section 2.5 (a) as soon as practicable after each
exercise of this Warrant, in whole or in part, and in any event within three
Business Days thereafter, the Company shall cause to be issued in such
denominations as may be requested by Holder in the Election to Purchase Shares,
in the name of and delivered to the Holder or, subject the Purchase Agreement,
as the Holder may direct,
(i) a certificate or certificates, or, if then
permissible under the Securities Act, at a Holder's request to
electronically issue such shares (e.g., through DWAC or DTC), an
electronic issuance for the number of shares of Common Stock (or Other
Securities) to which the Holder shall be entitled upon such exercise
plus, in lieu of issuance of any fractional share to which the Holder
would otherwise be entitled, if any, a certified check for the amount
of cash equal to the same fraction multiplied by the Current Market
Price per share on the date of Warrant exercise, PROVIDED, HOWEVER,
that in the event sufficient funds are not legally available for the
payment of such amount, the number of shares of Common Stock for which
such certificate(s) represents shall be rounded up to the nearest whole
number, and
(ii) in case such exercise is for less than all of the
shares of Common Stock purchasable under this Warrant, a new Warrant or
Warrants of like tenor, for the balance of the shares of Common Stock
purchasable hereunder.
(b) Issuance of certificates for shares of Common Stock
upon the exercise of this Warrant shall be made without charge to the Holder
hereof for any issue or transfer tax or other incidental expense, in respect of
the issuance of such certificates, all of which such taxes and expenses shall be
paid by the Company.
2.4. COMPANY TO REAFFIRM OBLIGATIONS. The Company shall,
at the time of each exercise of this Warrant, upon the request of the Holder
hereof, acknowledge in writing its continuing obligation to afford to such
Holder all rights to which such Holder shall continue to be entitled after such
exercise in accordance with the terms of this Warrant, PROVIDED that if the
Holder of this Warrant shall fail to make any such request, such failure shall
not affect the continuing obligation of the Company to afford such rights to the
Holder.
2.5. EXERCISE DISPUTES. In the case of any dispute with
respect to the number of shares to be issued upon exercise of this Warrant, the
Company shall promptly issue such number of shares of Common Stock that is not
disputed and shall submit the disputed determinations or arithmetic calculations
to the Holder via facsimile within two (2) Business Days of receipt of the
Holder's Election to Purchase Shares. If the Holder and the Company are unable
to agree as to the determination of the Purchase Price within two (2) Business
Days of such disputed determination or arithmetic calculation being submitted to
the Holder, then the Company shall in accordance with this Section, submit
-6-
via facsimile the disputed determination to an independent reputable accounting
firm of national standing, selected jointly by the Company and the Holder. The
Company shall cause such accounting firm to perform the determinations or
calculations and notify the Company and the Holder of the results within two (2)
business days from the time it receives the disputed determinations of
calculations. Such accounting firm's determination shall be binding upon all
parties absent manifest error. The Company shall then on the next Business Day
issue certificate(s) representing the appropriate number of shares of Common
Stock in accordance with such accounting firm's determination and this Section.
All fees and expenses of such determination and calculation shall be borne by
the Company.
2.6. FAILURE TO DELIVER COMMON STOCK If, at any time, the
Holder of this Warrant submits this Warrant, an Election to Purchase Shares and
payment to the Company of the Purchase Price for each of the shares of Common
Stock specified in the Election to Purchase Shares in accordance with Section
2.1 above, and the Company, for any reason, fails to deliver, on or prior to the
last possible date which the Company could have issued such Common Stock to the
Holder without violating this Section 2, the number of shares of Common Stock
for which the Holder is entitled upon such exercise, the Company shall pay
damages to the Holder equal to the actual damages incurred by the Holder as a
result of the Holder's needing to "buy in" shares of Common Stock to the extent
necessary to satisfy its securities delivery requirements ("Buy In Actual
Damages")
3. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE.
3.1. ADJUSTMENT OF NUMBER OF SHARES.
Upon each adjustment of the Purchase Price as a
result of the calculations made in this Section 3, this Warrant shall thereafter
evidence the right to receive, at the adjusted Purchase Price, that number of
shares of Common Stock (calculated to the nearest one-hundredth) obtained by
dividing (i) the product of the aggregate number of shares covered by this
Warrant immediately prior to such adjustment and the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price by (ii) the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
3.2. ADJUSTMENT OF PURCHASE PRICE.
3.2.1. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In
case the Company at any time or from time to time after the date hereof shall
issue or sell Additional Shares of Common Stock (including Additional Shares of
Common Stock deemed to be issued pursuant to Section 3.3 or 3.4 but excluding
Additional Shares of Common Stock purchasable upon exercise of Rights referred
to in Section 3.10), without consideration or for a consideration per share less
than the Average Market Price as in effect immediately prior to such issue or
sale, then, and in each such case, subject to Section 3.8, the Purchase Price
shall be reduced, concurrently with such issue or sale, to a
-7-
price (calculated to the nearest .001 of a cent) determined by multiplying such
Purchase Price by a fraction
(a) the numerator of which shall be the sum of (i) the
number of shares of Common Stock outstanding immediately prior to such
issue or sale and (ii) the number of shares of Common Stock which the
gross consideration received by the Company for the total number of
such Additional Shares of Common Stock so issued or sold would purchase
at such Current Market Price, and
(b) the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such issue or
sale, PROVIDED that, for the purposes of this Section 3.2.1, (x)
immediately after any Additional Shares of Common Stock are deemed to
have been issued pursuant to Section 3.3 or 3.4, such Additional Shares
shall be deemed to be outstanding, and (y) treasury shares shall not be
deemed to be outstanding.
3.2.2. EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS. In case
the Company at any time or from time to time after the date hereof shall
declare, order, pay or make a dividend or other distribution (including, without
limitation, any distribution of other or additional stock or other securities or
property or Options by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement) on the Common Stock, other
than the ClickShip Distribution (as defined in Section 3.11), then, in each such
case, subject to Section 3.8, the Purchase Price in effect immediately prior to
the close of business on the record date fixed for the determination of holders
of any class of securities entitled to receive such dividend or distribution
shall be reduced, effective as of the close of business on such record date, to
a price determined by multiplying such Purchase Price by a fraction
(x) the numerator of which shall be the Current Market
Price in effect on such record date or, if the Common Stock trades on
an ex-dividend basis, on the date prior to the commencement of
ex-dividend trading, less the Fair Value of such dividend or
distribution applicable to one share of Common Stock, and
(y) the denominator of which shall be such Current Market
Price.
3.3. TREATMENT OF OPTIONS AND CONVERTIBLE SECURITIES. In
case the Company at any time or from time to time after the date hereof shall
issue, sell, grant or assume, or shall fix a record date for the determination
of holders of any class of securities of the Company entitled to receive, any
Options or Convertible Securities (whether or not the rights thereunder are
immediately exercisable) then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue, sale, grant or assumption or,
in case such a record date shall have been fixed, as of the close of business on
such record date (or, if the Common
-8-
Stock trades on an ex-dividend basis, on the date prior to the commencement of
ex-dividend trading), PROVIDED that such Additional Shares of Common Stock shall
not be deemed to have been issued unless (i) the consideration per share
(determined pursuant to Section 3.5) of such shares would be less than the
Average Market Price as in effect on the date of and immediately prior to such
issue, sale, grant or assumption or immediately prior to the close of business
on such record date (or, if the Common Stock trades on an ex-dividend basis, on
the date prior to the commencement of ex-dividend trading), as the case may be
and (ii) such Additional Shares of Common Stock are not purchasable pursuant to
Rights referred to in Section 3.10, and PROVIDED, FURTHER, that
(a) whether or not the Additional Shares of Common Stock
underlying such Options or Convertible Securities are deemed to be
issued, no further adjustment of the Purchase Price shall be made upon
the subsequent issue or sale of Convertible Securities or shares of
Common Stock upon the exercise of such Options or the conversion or
exchange of such Convertible Securities;
(b) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase
in the consideration payable to the Company, or decrease in the number
of Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise), the
Purchase Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or date
prior to the commencement of ex-dividend trading, as the case may be,
with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects
such Options, or the rights of conversion or exchange under such
Convertible Securities, which are outstanding at such time;
(c) upon the expiration or termination (or purchase by
the Company and cancellation or retirement) of any such Options which
shall not have been exercised or the expiration of any rights of
conversion or exchange under any such Convertible Securities which (or
purchase by the Company and cancellation or retirement of any such
Convertible Securities the rights of conversion or exchange under
which) shall not have been exercised, the Purchase Price computed upon
the original issue, sale, grant or assumption thereof (or upon the
occurrence of the record date, or date prior to the commencement of
ex-dividend trading, as the case may be, with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration (or
such cancellation or retirement, as the case may be), be recomputed as
if:
(i) in the case of Options for Common Stock or
Convertible Securities, the only Additional Shares of Common
Stock issued or sold were the Additional Shares of Common
Stock, if any, actually issued or sold upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the
consideration actually received by the Company for the issue,
sale,
-9-
grant or assumption of all such Options, whether or not
exercised, plus the consideration actually received by the
Company upon such exercise, or for the issue or sale of all
such Convertible Securities which were actually converted or
exchanged, plus the additional consideration, if any, actually
received by the Company upon such conversion or exchange, and
(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually
issued or sold upon the exercise of such Options were issued
at the time of the issue or sale, grant or assumption of such
Options, and the consideration received by the Company for the
Additional Shares of Common Stock deemed to have then been
issued was the consideration actually received by the Company
for the issue, sale, grant or assumption of all such Options,
whether or not exercised, plus the consideration deemed to
have been received by the Company (pursuant to Section 3.5)
upon the issue or sale of such Convertible Securities with
respect to which such Options were actually exercised;
(d) no readjustment pursuant to subdivision (b) or (c)
above shall have the effect of increasing the Purchase Price by an
amount in excess of the amount of the adjustment thereof originally
made in respect of the issue, sale, grant or assumption of such Options
or Convertible Securities; and
(e) in the case of any such Options which expire by their
terms not more than 30 days after the date of issue, sale, grant or
assumption thereof, no adjustment of the Purchase Price shall be made
until the expiration or exercise of all such Options, whereupon such
adjustment shall be made in the manner provided in subdivision (c)
above.
3.4. TREATMENT OF STOCK DIVIDENDS, STOCK SPLITS, ETC. In
case the Company at any time or from time to time after the date hereof shall
declare or pay any dividend on the Common Stock payable in Common Stock, or
shall effect a subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in Common Stock), then, and in each such case,
Additional Shares of Common Stock shall be deemed to have been issued (a) in the
case of any such dividend, immediately after the close of business on the record
date for the determination of holders of any class of securities entitled to
receive such dividend, or (b) in the case of any such subdivision, at the close
of business on the day immediately prior to the day upon which such corporate
action becomes effective.
3.5. COMPUTATION OF CONSIDERATION. For the purposes of
this Section 3,
(a) the consideration for the issue or sale of any
Additional Shares of Common Stock shall, irrespective of the accounting
treatment of such consideration,
-10-
(i) insofar as it consists of cash, be computed
at the amount of cash received by the Company, without
deducting any expenses paid or incurred by the Company or any
commissions or compensations paid or concessions or discounts
allowed to underwriters, dealers or others performing similar
services in connection with such issue or sale,
(ii) insofar as it consists of property
(including securities) other than cash, be computed at the
Fair Value thereof at the time of such issue or sale, and
(iii) in case Additional Shares of Common Stock
are issued or sold together with other stock or securities or
other assets of the Company for a consideration which covers
both, be the portion of such consideration so received,
computed as provided in clauses (i) and (ii) above, allocable
to such Additional Shares of Common Stock, such allocation to
be determined in the same manner that the Fair Value of
property not consisting of cash or securities is to be
determined as provided in the definition of 'Fair Value'
herein;
(b) Additional Shares of Common Stock deemed to have been
issued pursuant to Section 3.3, relating to Options and Convertible
Securities, shall be deemed to have been issued for a consideration per
share determined by dividing
(i) the total amount, if any, received and
receivable by the Company as consideration for the issue,
sale, grant or assumption of the Options or Convertible
Securities in question, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments
relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such consideration to
protect against dilution) payable to the Company upon the
exercise in full of such Options or the conversion or exchange
of such Convertible Securities or, in the case of Options for
Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities, in each case computing such
consideration as provided in the foregoing subdivision (a),
by
(ii) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent
adjustment of such number to protect against dilution)
issuable upon the exercise of such Options or the conversion
or exchange of such Convertible Securities; and
(c) Additional Shares of Common Stock deemed to have been
issued pursuant to Section 3.4, relating to stock dividends, stock
splits, etc., shall be deemed to have been issued for no consideration.
-11-
3.6. ADJUSTMENTS FOR COMBINATIONS, ETC. In case the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Purchase Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
3.7. DILUTION IN CASE OF OTHER SECURITIES. In case any
Other Securities shall be issued or sold or shall become subject to issue or
sale upon the conversion or exchange of any stock (or Other Securities) of the
Company (or any issuer of Other Securities or any other Person referred to in
Section 4) or to subscription, purchase or other acquisition pursuant to any
Options issued or granted by the Company (or any such other issuer or Person)
for a consideration such as to dilute, on a basis consistent with the standards
established in the other provisions of this Section 3, the purchase rights
granted by this Warrant, then, and in each such case, the computations,
adjustments and readjustments provided for in this Section 3 with respect to the
Purchase Price and the number of shares purchasable upon Warrant exercise shall
be made as nearly as possible in the manner so provided and applied to determine
the amount of Other Securities from time to time receivable upon the exercise of
the Warrants, so as to protect the holders of the Warrants against the effect of
such dilution.
3.8. DE MINIMIS ADJUSTMENTS. If the amount of any
adjustment of the Purchase Price per share required pursuant to this Section 3
would be less than $.01, such amount shall be carried forward and adjustment
with respect thereto made at the time of and together with any subsequent
adjustment which, together with such amount and any other amount or amounts so
carried forward, shall aggregate a change in the Purchase Price of at least $.01
per share. All calculations under this Warrant shall be made to the nearest .001
of a cent or to the nearest one-hundredth of a share, as the case may be.
3.9. ABANDONED DIVIDEND OR DISTRIBUTION. If the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or other distribution (which results in an
adjustment to the Purchase Price under the terms of this Warrant) and shall,
thereafter, and before such dividend or distribution is paid or delivered to
stockholders entitled thereto, legally abandon its plan to pay or deliver such
dividend or distribution, then any adjustment made to the Purchase Price and
number of shares of Common Stock purchasable upon Warrant exercise by reason of
the taking of such record shall be reversed, and any subsequent adjustments,
based thereon, shall be recomputed.
3.10. SHAREHOLDER RIGHTS PLAN. Notwithstanding the
foregoing, in the event that the Company shall distribute "poison pill" rights
pursuant to a "poison pill" shareholder rights plan (the "Rights"), the Company
shall, in lieu of making any adjustment pursuant to Section 3.2.1 or Section
3.2.2 hereof, make proper provision so that each Holder who exercises a Warrant
after the record date for such distribution and prior to the expiration or
redemption of the Rights shall be entitled to receive upon such exercise, in
addition to the shares of Common Stock issuable upon such exercise, a number of
Rights to be determined as follows: (i) if such exercise occurs on or prior to
the date for the distribution to the holders of Rights of separate certificates
evidencing
-12-
such Rights (the "Distribution Date"), the same number of Rights to which a
holder of a number of shares of Common Stock equal to the number of shares of
Common Stock issuable upon such exercise at the time of such exercise would be
entitled in accordance with the terms and provisions of and applicable to the
Rights; and (ii) if such exercise occurs after the Distribution Date, the same
number of Rights to which a holder of the number of shares into which the
Warrant so exercised was exercisable immediately prior to the Distribution Date
would have been entitled on the Distribution Date in accordance with the terms
and provisions of and applicable to the Rights, and in each case subject to the
terms and conditions of the Rights.
3.11. CLICKSHIP DIRECT DISTRIBUTION. In addition
to any other rights set forth herein, in the event that the Company distributes
the shares or assets of ClickShip Direct, Inc. ("ClickShip"), to the
shareholders of the Company or consummates any similar transaction (the
"ClickShip Distribution"), the Warrants shall remain the outstanding obligations
of the Company or its successor and the Purchase Price then in effect shall be
reduced by an amount equal to the greater of (i) the average of the Closing Bid
Prices of the principal securities of ClickShip that trade on the principal
exchange or market for such securities for the ten (10) trading days immediately
following the date of the ClickShip Distribution, (ii) the value per share to
the shareholders of the Company established by the Board for federal income tax
purposes as a result of the ClickShip Distribution and (iii) the difference
between (x) the average Closing Bid Prices of the Common Stock for the ten (10)
trading days ending on the trading day immediately preceding the date of the
ClickShip Distribution and (y) the average of the Closing Bid Prices for the ten
(10) trading days immediately following the date of the ClickShip Distribution.
In the event that the ClickShip Distribution or the ClickShip Disposition (as
defined in the Purchase Agreement) is not consummated by March 31, 2001, the
Conversion Price then in effect shall be reduced, but not increased, to an
amount equal to the lesser of (1) the average of the Closing Bid Prices for the
twenty (20) trading days prior to such date and (2) 101% of the Closing Bid
Price of the trading day prior to such date. An equivalent adjustment shall be
made on each subsequent September 30 and March 31 that the ClickShip
Distribution or the ClickShip Disposition has not been consummated.
4. CONSOLIDATION, MERGER, ETC.
4.1. ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF
ASSETS, REORGANIZATION, ETC. In case the Company after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving corporation of such consolidation or merger, or (b) shall permit
any other Person to consolidate with or merge into the Company and the Company
shall be the continuing or surviving Person but, in connection with such
consolidation or merger, the Common Stock or Other Securities shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (c) shall transfer all or substantially all of its
properties or assets to any other Person, or (d) shall effect a capital
reorganization or reclassification of the Common Stock or Other Securities
(other than a capital reorganization or reclassification resulting in the issue
of Additional Shares of Common Stock for which adjustment in the Purchase Price
is provided in Section 3.2.1 or 3.2.2),
-13-
then, and in the case of each such transaction, proper provision shall be made
so that, upon the basis and the terms and in the manner provided in this
Warrant, the Holder of this Warrant, upon the exercise hereof at any time after
the consummation of such transaction shall be entitled to receive (at the
aggregate Purchase Price in effect at the time of such consummation for all
Common Stock or Other Securities issuable upon such exercise immediately prior
to such consummation), in lieu of the Common Stock or Other Securities issuable
upon such exercise prior to such consummation, the amount of securities, cash or
other property to which such Holder would actually have been entitled as a
stockholder upon such consummation if such Holder had exercised this Warrant
immediately prior thereto, subject to adjustments (subsequent to such
consummation) as nearly equivalent as possible to the adjustments provided for
in Sections 3 through 5.
4.2. ASSUMPTION OF OBLIGATIONS. Notwithstanding anything
contained in the Warrants or in the Purchase Agreement to the contrary, the
Company shall not effect any of the transactions described in clauses (a)
through (d) of Section 4.1 unless, prior to the consummation thereof, each
Person (other than the Company) which may be required to deliver any stock,
securities, cash or property upon the exercise of this Warrant as provided
herein shall assume, by written instrument delivered to, and reasonably
satisfactory to, the Holder of this Warrant, (a) the obligations of the Company
under this Warrant (and if the Company shall survive the consummation of such
transaction, such assumption shall be in addition to, and shall not release the
Company from, any continuing obligations of the Company under this Warrant), (b)
the obligations of the Company under the Purchase Agreement and the Registration
Rights Agreement and (c) the obligation to deliver to the Holder such shares of
stock, securities, cash or property as, in accordance with the foregoing
provisions of this Section 4, the Holder may be entitled to receive. Nothing in
this Section 4 shall be deemed to authorize the Company to enter into any
transaction not otherwise permitted by the Purchase Agreement.
5. OTHER DILUTIVE EVENTS. In case any event shall occur
as to which the provisions of Section 3 or Section 4 hereof are not strictly
applicable or if strictly applicable would not fairly protect the purchase
rights of the Holder in accordance with the essential intent and principles of
such Sections, then, in each such case, the Board of Directors of the Company
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to preserve, without dilution,
the purchase rights represented by this Warrant.
6. NO DILUTION OR IMPAIRMENT. The Company shall not, by
amendment of its certificate of incorporation or through any consolidation,
merger, reorganization, transfer of assets, 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 of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be reasonably necessary or appropriate in order to protect
the rights of the Holder of this Warrant against dilution or other impairment.
Without limiting the generality of the foregoing, the Company (a) shall not
permit the par value of any shares of stock receivable upon the exercise of this
Warrant to exceed the amount payable therefor upon such exercise, (b) shall take
all
-14-
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of stock, free
from all taxes, liens, security interests, encumbrances, preemptive rights and
charges on the exercise of the Warrants from time to time outstanding, (c) shall
not take any action which results in any adjustment of the Purchase Price if the
total number of shares of Common Stock (or Other Securities) issuable after the
action upon the exercise of all of the Warrants would exceed the total number of
shares of Common Stock (or Other Securities) then authorized by the Company's
certificate of incorporation and available for the purpose of issue upon such
exercise, and (d) shall not issue any capital stock of any class which is
preferred as to dividends or as to the distribution of assets upon voluntary or
involuntary dissolution, liquidation or winding-up, unless the rights of the
holders thereof shall be limited to a fixed sum or percentage of par value or a
sum determined by reference to a formula based on a published index of interest
rates, an interest rate publicly announced by a financial institution or a
similar indicator of interest rates in respect of participation in dividends and
to a fixed sum or percentage of par value in any such distribution of assets.
7. CERTIFICATE AS TO ADJUSTMENTS. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable upon the exercise of this Warrant, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms of
this Warrant and prepare a certificate, signed by the Chairman of the Board,
President or one of the Vice Presidents of the Company, and by the Chief
Financial Officer, the Treasurer or one of the Assistant Treasurers of the
Company, setting forth such adjustment or readjustment and showing in reasonable
detail the method of calculation thereof and the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or to be received by the Company for any Additional
Shares of Common Stock issued or sold or deemed to have been issued, (b) the
number of shares of Common Stock outstanding or deemed to be outstanding, and
(c) the Purchase Price in effect immediately prior to such issue or sale and as
adjusted and readjusted (if required by Section 3) on account thereof. The
Company shall forthwith mail a copy of each such certificate to each holder of a
Warrant and shall, upon the written request at any time of any holder of a
Warrant, furnish to such holder a like certificate. The Company shall also keep
copies of all such certificates at its principal office and shall cause the same
to be available for inspection at such office during normal business hours by
any holder of a Warrant or any prospective purchaser of a Warrant designated by
the holder thereof. The Company shall, upon the request in writing of the Holder
(at the Company's expense), retain independent public accountants of recognized
national standing selected by the Board of Directors of the Company to make any
computation required in connection with adjustments under this Warrant, and a
certificate signed by such firm shall be conclusive evidence of the correctness
of such adjustment, which shall be binding on the Holder and the Company.
8. NOTICES OF CORPORATE ACTION. In the event of:
(a) any taking by the Company of a record of the holders
of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution,
or any right to subscribe for, purchase
-15-
or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company, any consolidation or merger involving the Company and any
other Person, any transaction or series of transactions in which more
than 50% of the voting securities of the Company are transferred to
another Person, or any transfer, sale or other disposition of all or
substantially all the assets of the Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation
or winding-up of the Company,
the Company shall mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, and (ii) the date or expected date on which any
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, sale, disposition, dissolution, liquidation or winding-up is to take
place and the time, if any such time is to be fixed, as of which the holders of
record of Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or Other Securities) for the securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed at least 20 days prior to the date
therein specified but in no event earlier than the public announcement of such
proposed transaction or event.
9. INTENTIONALLY OMITTED.
10. RESERVATION OF STOCK, ETC. The Company shall at all
times reserve and keep available, solely for issuance and delivery upon exercise
of the Warrants, the number of shares of Common Stock (or Other Securities) from
time to time issuable upon exercise of all Warrants at the time outstanding and
otherwise in accordance with the terms of the Purchase Agreement. All shares of
Common Stock (or Other Securities) issuable upon exercise of any Warrants shall
be duly authorized and, when issued upon such exercise, shall be validly issued
and, in the case of shares, fully paid and nonassessable with no liability on
the part of the holders thereof, and, in the case of all securities, shall be
free from all taxes, liens, security interests, encumbrances, preemptive rights
and charges. The transfer agent for the Common Stock, which may be the Company
(the "Transfer Agent"), and every subsequent Transfer Agent for any shares of
the Company's capital stock issuable upon the exercise of any of the purchase
rights represented by this Warrant, are hereby irrevocably authorized and
directed at all times until the Expiration Date to reserve such number of
authorized and unissued shares as shall be requisite for such purpose. The
Company shall keep copies of this Warrant on file with the Transfer Agent for
the Common Stock and with every subsequent Transfer Agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by this Warrant. The Company shall supply such Transfer Agent with
duly executed stock certificates for such purpose. All Warrant Certificates
-16-
surrendered upon the exercise of the rights thereby evidenced shall be canceled,
and such canceled Warrants shall constitute sufficient evidence of the number of
shares of stock which have been issued upon the exercise of such Warrants.
Subsequent to the Expiration Date, no shares of stock need be reserved in
respect of any unexercised Warrant.
11. REGISTRATION AND TRANSFER OF WARRANTS, ETC.
11.1. WARRANT REGISTER; OWNERSHIP OF WARRANTS. Each Warrant
issued by the Company shall be numbered and shall be registered in a warrant
register (the "Warrant Register") as it is issued and transferred, which Warrant
Register shall be maintained by the Company at its principal office or, at the
Company's election and expense, by a Warrant Agent or the Company's transfer
agent. The Company shall be entitled to treat the registered Holder of any
Warrant on the Warrant Register as the owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such Warrant on the part of any other Person, and shall not be affected by
any notice to the contrary, except that, if and when any Warrant is properly
assigned in blank, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes. A Warrant, if
properly assigned, may be exercised by a new holder without a new Warrant first
having been issued.
11.2. TRANSFER OF WARRANTS. This Warrant and all rights
hereunder are transferable in whole or in part, without charge to the Holder
hereof, upon surrender of this Warrant with a properly executed Form of
Assignment attached hereto as Exhibit B at the principal office of the Company
(or such other office or agency of the Company as it may in writing designate to
the Holder). Upon any partial transfer, the Company shall at its expense issue
and deliver to the Holder a new Warrant of like tenor, in the name of the
Holder, which shall be exercisable for such number of shares of Common Stock
with respect to which rights under this Warrant were not so transferred and to
the transferee a new Warrant of like tenor, in the name of the transferee, which
shall be exercisable for such number of shares of Common Stock with respect to
which rights under this Warrant were so transferred.
11.3. REPLACEMENT OF WARRANTS. On receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender of such Warrant to the Company at its principal office
and cancellation thereof, the Company at its expense shall execute and deliver,
in lieu thereof, a new Warrant of like tenor.
11.4. ADJUSTMENTS TO PURCHASE PRICE AND NUMBER OF SHARES.
Notwithstanding any adjustment in the Purchase Price or in the number or kind of
shares of Common Stock purchasable upon exercise of this Warrant, any Warrant
theretofore or thereafter issued may continue to express the same number and
kind of shares of Common Stock as are stated in this Warrant, as initially
issued.
-17-
11.5. FRACTIONAL SHARES. Notwithstanding any adjustment
pursuant to Section 3 in the number of shares of Common Stock covered by this
Warrant or any other provision of this Warrant, the Company shall not be
required to issue fractions of shares upon exercise of this Warrant or to
distribute certificates which evidence fractional shares. In lieu of fractional
shares, the Company shall make payment to the Holder, at the time of exercise of
this Warrant as herein provided, in an amount in cash equal to such fraction
multiplied by the Current Market Price of a share of Common Stock on the date of
Warrant exercise.
12. REDEMPTION The Company at any time after a Redemption
Event, upon thirty (30) days prior written notice delivered to the Holder within
three days of such Redemption Event, may redeem, in cash, the Warrants at a
redemption price of $.01 per Warrant. For purposes hereof, a "Redemption Event"
shall have occurred at such time as the Closing Bid Price for the Common Stock
is equal to no less than two times the Purchase Price on each of no less than
twenty (20) consecutive trading days for the Common Stock. The holder of the
Warrant shall be entitled to exercise this Warrant in the manner provided in
Section 2 hereof at any time after receipt of the redemption notice, but prior
to the redemption of this Warrant by the Company.
13. REMEDIES; SPECIFIC PERFORMANCE. The Company
stipulates that there would be no adequate remedy at law to the Holder of this
Warrant in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant and
accordingly, the Company agrees that, in addition to any other remedy to which
the Holder may be entitled at law or in equity, the Holder shall be entitled to
seek to compel specific performance of the obligations of the Company under this
Warrant, without the posting of any bond, in accordance with the terms and
conditions of this Warrant in any court of the United States or any State
thereof having jurisdiction, and if any action should be brought in equity to
enforce any of the provisions of this Warrant, the Company shall not raise the
defense that there is an adequate remedy at law. Except as otherwise provided by
law, a delay or omission by the Holder hereof in exercising any right or remedy
accruing upon any such breach shall not impair the right or remedy or constitute
a waiver of or acquiescence in any such breach. No remedy shall be exclusive of
any other remedy. All available remedies shall be cumulative.
14. NO RIGHTS OR LIABILITIES AS SHAREHOLDER. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof any rights as a stockholder of the Company or as imposing any obligation
on the Holder to purchase any securities or as imposing any liabilities on the
Holder as a stockholder of the Company, whether such obligation or liabilities
are asserted by the Company or by creditors of the Company.
15. NOTICES. Any notices, consents, waivers or other
communications required or permitted to be given hereunder must be in writing
and will be deemed to have been delivered (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile, (iii) three days after
being sent by U.S. certified mail, return receipt requested, or (iv) one
Business Day after deposit with a nationally
-18-
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
DAMARK International, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxx X. Xxxx, Chairman and Chief
Executive Officer
If to a Holder, to its address and facsimile number on the
register maintained by the Company. Each party shall provide five days' prior
written notice to the other party of any change in address or facsimile number.
Notwithstanding the foregoing, the exercise of any Warrant shall be effective in
the manner provided in Section 2.
16. AMENDMENTS. This Warrant and any term hereof may not
be amended, modified, supplemented or terminated, and waivers or consents to
departures from the provisions hereof may not be given, except by written
instrument duly executed by the party against which enforcement of such
amendment, modification, supplement, termination or consent to departure is
sought.
17. DESCRIPTIVE HEADINGS, ETC. The headings in this
Warrant are for convenience of reference only and shall not limit or otherwise
affect the meaning of terms contained herein. Unless the context of this Warrant
otherwise requires: (1) words of any gender shall be deemed to include each
other gender; (2) words using the singular or plural number shall also include
the plural or singular number, respectively; (3) the words "hereof", "herein"
and "hereunder" and words of similar import when used in this Warrant shall
refer to this Warrant as a whole and not to any particular provision of this
Warrant, and Section and paragraph references are to the Sections and paragraphs
of this Warrant unless otherwise specified; (4) the word "including" and words
of similar import when used in this Warrant shall mean "including, without
limitation," unless otherwise specified; (5) "or" is not exclusive; and (6)
provisions apply to successive events and transactions.
18. GOVERNING LAW. This Warrant shall be governed by, and
construed in accordance with, the laws of the State of New York (without giving
effect to the conflict of laws principles thereof).
19. JUDICIAL PROCEEDINGS. Any legal action, suit or
proceeding brought against the Company with respect to this Warrant may be
brought in any federal court of the Southern District of New York or any state
court located in New York County, State of New York, and by execution and
delivery of this Warrant, the Company
-19-
hereby irrevocably and unconditionally waives any claim (by way of motion, as a
defense or otherwise) of improper venue, that it is not subject personally to
the jurisdiction of such court, that such courts are an inconvenient forum or
that this Warrant or the subject matter may not be enforced in or by such court.
The Company hereby irrevocably and unconditionally consents to the service of
process of any of the aforementioned courts in any such action, suit or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, at its address set forth or provided for in Section 15, such
service to become effective 10 days after such mailing. Nothing herein contained
shall be deemed to affect the right of any party to serve process in any manner
permitted by law or commence legal proceedings or otherwise proceed against any
other party in any other jurisdiction to enforce judgments obtained in any
action, suit or proceeding brought pursuant to this Section. The Company
irrevocably submits to the exclusive jurisdiction of the aforementioned courts
in such action, suit or proceeding.
20. REGISTRATION RIGHTS AGREEMENT. The shares of Common
Stock (and Other Securities) issuable upon exercise of this Warrant (or upon
conversion of any shares of Common Stock issued upon such exercise) shall
constitute Registrable Securities (as such term is defined in the Registration
Rights Agreement). Each holder of this Warrant shall be entitled to all of the
benefits afforded to a holder of any such Registrable Securities under the
Registration Rights Agreement and such holder, by its acceptance of this
Warrant, agrees to be bound by and to comply with the terms and conditions of
the Registration Rights Agreement applicable to such holder as a holder of such
Registrable Securities.
21. LIMITATION ON EXERCISE. Notwithstanding any provision
to the contrary contained herein, in no event shall the Holder be entitled to
exercise this Warrant, nor will the Company recognize such exercise, such that
upon giving effect to such exercise, the aggregate number of shares of Common
Stock then beneficially owned by the Holder and its "affiliates" as defined in
Rule 144 of the Act would exceed 4.99% of the total issued and outstanding
shares of the Common Stock following such exercise; PROVIDED, HOWEVER, that
Holder may elect to waive this restriction upon not less than sixty-one (61)
days prior written notice to the Company. For purposes of this Section,
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act.
DAMARK INTERNATIONAL, INC.
By:________________________________________
Name: Xxxx X. Xxxx
Title: Chairman and CEO
-20-
EXHIBIT A
[FORM OF]
ELECTION TO PURCHASE SHARES
AND TRANSFER AGENT INSTRUCTIONS
The undersigned hereby irrevocably elects to exercise the
Warrant to purchase ____ shares of Common Stock, par value $.01 per share
("Common Stock"), of DAMARK INTERNATIONAL, INC. (the "Company") and hereby
[makes payment of $________ in consideration therefor] [or] [makes payment in
consideration therefor by reduction pursuant to Section 2.1(b)(iii) of the
Warrant of the number of shares of Common Stock otherwise issuable to the Holder
upon Warrant exercise by ______ shares] [or] [makes payment in consideration
therefor by delivery of the following Common Stock Certificates of the Company
pursuant to Section 2.1(b)(iv) of the Warrant, certificates of which are
attached hereto for cancellation _______ [list certificates by number and
amount]]. The undersigned hereby requests that certificates for such shares be
issued and delivered as follows:
ISSUE TO:_______________________________________________________________________
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
________________________________________________________________________________
(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
DELIVER TO:_____________________________________________________________________
(NAME)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
If the number of shares of Common Stock purchased hereby is
less than the number of shares of Common Stock covered by the Warrant, the
undersigned requests that a new Warrant representing the number of shares of
Common Stock not so purchased be issued and delivered as follows:
ISSUE TO:_______________________________________________________________________
(NAME OF HOLDER)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
DELIVER TO:_____________________________________________________________________
(NAME OF HOLDER)
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE)
Dated: _____________________ [NAME OF HOLDER]
By___________________________________________
Name:
Title:
__________________, as transfer agent and registrar of the Common
Stock, is hereby authorized and directed to issue the above number of shares of
Common Stock in
the name of the above referenced entity or person and to deliver
the certificates representing such shares using an overnight delivery service.
DAMARK INTERNATIONAL, INC.
By:____________________________
Name:
Title:
EXHIBIT B to
Common Stock Purchase Warrant
-----------------------------
[FORM OF] ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto the Assignee named below all of the rights of the undersigned to
purchase Common Stock, par value $.01 per share ("Common Stock") of DAMARK
INTERNATIONAL, INC., represented by the Warrant, with respect to the number of
shares of Common Stock set forth below:
Name of Assignee Address No. of Shares
---------------- ------- -------------
and does hereby irrevocably constitute and appoint ________ as Attorney to make
such transfer on the books of DAMARK INTERNATIONAL, INC. maintained for that
purpose, with full power of substitution in the premises.
Dated: ____________________ [NAME OF HOLDER]
By _________________________________________
Name:
Title:
