SERIES A-2 WARRANT NO. __
VISEON, INC.
(FORMERLY RSI SYSTEMS, INC.)
Common Stock Purchase Warrant
Dated as of March ____, 2004
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAW OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT AND IN THE REGISTRATION
RIGHTS AGREEMENT, DATED THE DATE HEREOF, BY AND BETWEEN RSI SYSTEMS, INC., AND
THE HOLDERS SPECIFIED THEREIN.
iii
Warrant No. W-1 - Page 1
VISEON, INC.
(FORMERLY RSI SYSTEMS, INC.)
Common Stock Purchase Warrant
Void On March __, 2009
Series A-2 Warrant Las Vegas, Nevada
No. A-2-_________ March __, 2004
VISEON, INC. (the "Company"), a Nevada corporation, for value received,
hereby certifies that _________________________ or registered assigns (the
"Holder"), is entitled to purchase from the Company _____________ (_____) shares
of Common Stock of the Company (the "Warrant Shares") duly authorized, validly
issued, fully paid and nonassessable shares of common stock, par value $0.01 per
share, of the Company (the "Common Stock") at the purchase price per share of
ONE DOLLAR AND TWENTY-SIX CENTS ($1.26) (the "Warrant Price"), at any time or
from time to time prior to 5:00 p.m. Central Standard time, on March __, 2009
(the "Expiration Date"), all subject to the terms, conditions and adjustments
set forth below in this Warrant.
This Warrant is the Warrant (the "Warrant", such term to include any
such warrants issued in substitution therefor) originally issued in connection
with the Purchase Agreement, dated as of the date hereof, by and among the
Company and the Holder (as amended or otherwise modified from time to time, the
"Purchase Agreement"). The Warrant originally so issued evidences the right to
purchase a number of shares of Common Stock equal to the Warrant Shares, subject
to adjustment as provided herein. Certain capitalized terms used in this Warrant
are defined in Section 10; references to an "Exhibit" are, unless otherwise
specified, to one of the Exhibits attached to this Warrant and references to a
"Section" are, unless otherwise specified, to one of the Sections of this
Warrant.
1. Exercise of Warrant.
1.1 Manner of Exercise. This Warrant may be exercised by the Holder, in
whole or in part, during normal business hours on any Business Day, by surrender
of this Warrant to the Company at its principal office, accompanied by the Form
of Subscription in substantially the form attached as Exhibit A to this Warrant
(or a reasonable facsimile thereof) duly executed by the Holder and accompanied
by payment, in cash, by wire transfer, certified or official bank check payable
to the order of the Company, or in the manner provided in Section 1.5 or Section
1.6 (or by any combination of such methods), in the amount obtained by
multiplying (a) the number of shares of Common Stock (adjusted as provided in
Sections 2 through 4) designated in such Form of Subscription by (b) the Warrant
Price, and such Holder shall thereupon be entitled to receive such number of
duly authorized, validly issued, fully paid and nonassessable shares of Common
Stock (or Other Securities).
1.2 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 the Company as
provided in Section 1.1. 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 Section 1.3,
shall be deemed to have become the Holder or holders of record thereof.
1.3 Delivery of Stock Certificates, etc. 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 at its expense (including the
payment by it of any applicable transfer taxes) will cause to be issued in the
name of and delivered to the Holder hereof or, subject to Section 9, as such
Holder (upon payment by such Holder of any applicable transfer taxes) may
direct,
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares,
including, if the Company so elects, fractional shares, of Common Stock
(or Other Securities) to which such Holder shall be entitled upon such
exercise plus, at the discretion of the Company, in lieu of any
fractional share to which such Holder would otherwise be entitled, cash
in an amount equal to the same fraction of the Closing Price per share
on the Business Day next preceding the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock equal (without giving
effect to any adjustment thereof) to the number of such shares called
for on the face of this Warrant minus the number of such shares
designated by the Holder upon such exercise as provided in Section 1.1.
In lieu of physical delivery of the shares being issued upon exercise, provided
that the Company's transfer agent is participating in the Depository Trust
Company ("DTC") Fast Automated Securities Transfer (FAST) program, upon request
of the Holder and in compliance with the provisions hereof, the Company shall
use its reasonable efforts to cause its transfer agent to electronically
transmit the shares being issued to the Holder by crediting the account of the
Holder's Prime Broker with DTC through its Deposit Withdrawal Agent Commission
system. The time period for delivery described herein shall apply to the
electronic transmittals described herein.
1.4 Company to Reaffirm Obligations. The Company will, at the time of
each exercise of this Warrant, upon the request of the Holder, acknowledge in
writing its continuing obligation to afford to such Holder all rights
(including, without limitation, any rights to registration of the shares of
Common Stock or Other Securities issued upon such exercise) 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 shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford such rights to such Holder.
1.5 Tax Basis. The Company and the Holder shall mutually agree as to
the tax basis of this Warrant for purposes of the Internal Revenue Code of 1986,
as amended (the "Code"), and the treatment of this Warrant under the Code by
each of the Company and the Holder shall be consistent with such agreement.
2. Adjustment of Common Stock Issuable Upon Exercise.
The Warrant Price and the Warrant Shares purchasable pursuant to each
Warrant shall be subject to adjustment from time to time as hereinafter set
forth in this Section 2:
2.1 Dividends and Subdivisions. In case, prior to the expiration of
this Warrant by exercise or by its terms, the Company shall issue any shares of
its Common Stock as a stock dividend or subdivide the number of outstanding
shares of its Common Stock into a greater number of shares, then in either of
such cases, the then applicable Warrant Price per Warrant Share purchasable
pursuant to this Warrant in effect at the time of such action shall be
proportionately reduced and the number of Warrant Shares at that time
purchasable pursuant to this Warrant shall be proportionately increased; and
conversely, in the event the Company shall reduce the number of outstanding
shares of Common Stock by combining such shares into a smaller number of shares,
then, in such case, the then applicable Warrant Price per Warrant Share
purchasable pursuant to this Warrant in effect at the time of such action shall
be proportionately increased and the number of Warrant Shares at that time
purchasable pursuant to this Warrant shall be proportionately decreased. If the
Company shall, at any time during the life of this Warrant, declare a dividend
payable in cash on its Common Stock and shall at substantially the same time
offer to its stockholders a right to purchase new Common Stock from the proceeds
of such dividend or for an amount substantially equal to the dividend, all
Common Stock so issued shall, for the purpose of this Warrant, be deemed to have
been issued as a stock dividend. Any dividend paid or distributed upon the
Common Stock in stock of any other class of securities convertible into shares
of Common Stock shall be treated as a dividend paid in Common Stock to the
extent that shares of Common Stock are issuable upon conversion thereof.
2.2 Recapitalizations, Mergers, Etc. In case, prior to the expiration
of this Warrant by exercise or by its terms, the Company shall be recapitalized
by reclassifying its outstanding Common Stock, (other than a change in par value
to no par value), or the corporation or a successor corporation shall
consolidate or merge with or convey all or substantially all of its or of any
successor corporation's property and assets to any other corporation or
corporations (any such other corporations being included within the meaning of
the term "successor corporation" hereinbefore used in the event of any
consolidation or merger of any such other corporation with, or the sale of all
or substantially all of the property of any such other corporation to, another
corporation or corporations), then, as a condition of such recapitalization,
consolidation, merger or conveyance, lawful and adequate provision shall be made
whereby the holder of this Warrant shall thereafter have the right to purchase,
upon the basis and on the terms and conditions specified in this Warrant, in
lieu of the Warrant Shares theretofore purchasable upon the exercise of this
Warrant, such shares of stock, securities or assets as may be issued or payable
with respect to, or in exchange for, the number of Warrant Shares theretofore
purchasable upon the exercise of this Warrant, had such recapitalization,
consolidation, merger, or conveyance not taken place; and in any such event, the
rights of the Warrant Holder to any adjustment in the number of Warrant Shares
purchasable upon the exercise of this Warrant, as herein provided, shall
continue and be preserved in respect of any stock which the Warrant Holder
becomes entitled to purchase.
2.3 Sale of Property, Liquidation, Etc. In case the Company at any time
while this Warrant shall remain unexpired and unexercised shall sell all or
substantially all of its property or dissolve, liquidate, or wind up its
affairs, lawful provision shall be made as part of the terms of any such sale,
dissolution, liquidation or winding up, so that the holder of this Warrant may
thereafter receive upon exercise hereof in lieu of each Warrant Share that it
would have been entitled to receive, the same kind and amount of any securities
or assets as may be issuable, distributable or payable upon any such sale,
dissolution, liquidation or winding up with respect to each share of Common
Stock of the Company, provided, however, that in any case of any such voluntary
sale or of dissolution, liquidation or winding up, the right to exercise this
Warrant shall terminate on a date fixed by the Company; such date so fixed to be
not earlier than 5:00 p.m., Central Standard Time, on the forty-fifth day
following the date on which a notice of such termination of the right to
exercise this Warrant has been given, by any method set forth in Section 13, to
the registered holder of this Warrant at its address as it appears on the books
of the Company.
2.4 Issuance of Additional Shares. If the Company, at any time
while this Warrant is outstanding:
-----------------------------
(i) issues or sells, or is deemed to have
issued or sold, any Common
Stock, other than Excluded Shares;
(ii) in any manner grants, issues or
sells any rights, options, warrants,
options to subscribe for or to purchase Common Stock or any stock or other
securities convertible into or exchangeable for Common Stock that, upon
conversion or exchange, would not constitute Excluded Shares (such rights,
options or warrants being herein called "Options" and such convertible or
exchangeable stock or securities being herein called "Convertible Securities");
or
(iii) in any manner issues or sells any
Convertible Securities that, upon
conversion, would not constitute Excluded Shares; for (a) with respect to
Section 2.4(i), above, a price per share, or (b) with respect to Sections
2.4(ii) or 2.4(iii), above, a price per share (including the consideration per
share paid on issuance of the Option or Convertible Securities) for which Common
Stock issuable upon the exercise of such Options or upon conversion or exchange
of such Convertible Securities is less than the then Warrant Price immediately
prior to such issuance, sale or grant, then, immediately after such issuance,
sale or grant, the Warrant Price shall be reduced to the amount determined by
dividing (1) the sum of (x) the product derived by multiplying the Warrant Price
in effect immediately prior to such issue or sale by the number of shares of
Common Stock Deemed Outstanding immediately prior to such issue or sale, plus
(y) the consideration, if any, received or deemed to have been received by the
Company upon such issue or sale, by (2) the number of shares of Common Stock
Deemed Outstanding immediately after such issue or sale. No modification of the
issuance terms shall be made upon the actual issuance of such Common Stock upon
exercise, conversion or exchange of such Options or Convertible Securities. If
there is a change at any time in (i) the exercise price provided for in any
Options, (ii) the additional consideration, if any, payable upon the issuance,
conversion or exchange of any Convertible Securities or (iii) the rate at which
any Convertible Securities are convertible into or exchangeable for Common
Stock, then immediately after such change the Warrant Price shall be adjusted to
the Warrant Price which would have been in effect at such time had such Options
or Convertible Securities still outstanding provided for such changed exercise
price, additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold; provided that no adjustment shall
be made if such adjustment would result in an increase of the Warrant Price then
in effect. However, upon the expiration of any such Options or Convertible
Securities, the issuance of which resulted in an adjustment in the Warrant Price
pursuant to this Section 2.4, if all or any portion of any such Options or
Convertible Securities shall not have been exercised, the Warrant Price shall
immediately upon such expiration be increased to the price which it would have
been after the issuance of such Options or Convertible Securities on the basis
of the Company offering for subscription, purchase, conversion, exchange or
acquisition only that number of shares of Common Stock (if any) actually
purchased upon the exercise of such Options or Convertible Securities actually
exercised. For the purposes of this Section 2.4, the term "Common Stock Deemed
Outstanding" means, at any given time, the sum of the number of shares of Common
Stock actually outstanding at such time plus the number of shares of Common
Stock issuable upon the exercise of all options, rights and warrants and the
conversion or exchange of convertible or exchangeable securities outstanding at
such time, whether or not such options, rights, or warrants, or convertible or
exchangeable securities are actually exercisable, convertible or exchangeable at
such time.
2.5 Computation of Consideration. For the purposes of this Section 2, the
consideration for the issue or sale of any securities of the Company shall,
irrespective of the accounting treatment of such consideration,
(i) insofar as it consists of cash, be computed at
the net 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, and
(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, as determined in
good faith by the Board of Directors of the Company,
2.6 Minimum Adjustment of Warrant Quantity. If the amount of any
adjustment of the number Warrant Shares required pursuant to this Section 2
would be less than one tenth (1/10) of one percent (1%) of the number Warrant
Shares in effect under this Warrant at the time such adjustment is otherwise so
required to be made, such amount shall be carried forward and adjustment with
respect thereto shall be 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 at least one tenth (1/10) of one percent (1%)
of such number of Warrant Shares. All calculations under this Warrant shall be
made to the nearest one-hundredth of a share.
2.7 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
Warrant Shares under the terms of this Warrant) and shall, thereafter, and
before such dividend or distribution is paid or delivered to shareholders
entitled thereto, legally abandon its plan to pay or deliver such dividend or
distribution, then any adjustment made to the Warrant Shares by reason of the
taking of such record shall be reversed, and any subsequent adjustments, based
thereon, shall be recomputed.
3. Other Dilutive Events. In case any event shall occur as to which the
provisions of Section 2 are not strictly applicable but the failure to make any
adjustment would not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles of such Section,
then, in each such case, the Company shall appoint a firm of independent
certified public accountants of recognized national standing (which may be the
regular auditors of the Company), which shall give their opinion upon the
adjustment, if any, on a basis consistent with the essential intent and
principles established in Sections 2, 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 Holder and shall make the
adjustments described therein.
4. No Dilution or Impairment. The Company will not, by amendment of its articles
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 necessary or
appropriate in order to protect the rights of the Holder 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) will take all 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) will not take any action which results in any
adjustment of the number of Warrant Shares 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)
will 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.
5. Accountants' Report 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 will promptly compute
such adjustment or readjustment in accordance with the terms of this Warrant and
cause independent certified public accountants of recognized national standing
(which may be the regular auditors of the Company) selected by the Company to
verify such computation (other than any computation of the fair value of
property as determined in good faith by the Board of Directors of the Company)
and prepare a report 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 number of Warrant Shares in effect under this Warrant immediately prior
to such issue or sale and as adjusted and readjusted (if required by Section 2)
on account thereof. The Company will forthwith mail a copy of each such report
to each Holder of a Warrant and will, upon the written request at any time of
any Holder of a Warrant, furnish to such Holder a like report setting forth the
number of Warrant Shares under this Warrant at the time in effect and showing in
reasonable detail how it was calculated. The Company will also keep copies of
all such reports at its principal office and will 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.
6. Financial and Business Information
6.1 Filings. During any period when the Company is a Public Company,
the Company will file on or before the required date all required regular or
periodic reports (pursuant to the Exchange Act) with the Commission and will
deliver to the Holder promptly upon their becoming available one copy of each
report, notice or proxy statement sent by the Company to its stockholders
generally, and of each regular or periodic report (pursuant to the Exchange Act)
and any registration statement, prospectus or written communication (other than
transmittal letters) (pursuant to the Securities Act), filed by the Company with
(i) the Commission or (ii) any securities exchange on which shares of Common
Stock are listed.
6.2 Listing of Shares. The Company shall promptly secure the listing of
the shares of Common Stock issuable upon exercise of this Warrant upon each
national securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed (subject to official notice of issuance
upon exercise of this Warrant) and shall maintain, so long as any other shares
of Common Stock shall be so listed, such listing of all shares of Common Stock
from time to time issuable upon the exercise of this Warrant; and the Company
shall so list on each national securities exchange or automated quotation
system, as the case may be, and shall maintain such listing of, any other shares
of capital stock of the Company issuable upon the exercise of this Warrant if
and so long as any shares of the same class shall be listed on such national
securities exchange or automated quotation system.
6.3 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 (other than a regular
periodic dividend payable in cash out of earned surplus in an amount
not exceeding the amount of the immediately preceding cash dividend for
such period) or other distribution, or any right to subscribe for,
purchase 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 or 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 will mail to the Holder 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, 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, sale, disposition, liquidation or winding-up.
Such notice shall be mailed at least 45 days prior to the date therein
specified.
7. Restrictions on Transfer.
7.1 Restrictive Legends. Except as otherwise permitted by this Section
7, each Warrant (including each Warrant issued upon the transfer of any Warrant)
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAW OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH
THE CONDITIONS SPECIFIED IN THIS WARRANT AND IN THE REGISTRATION RIGHTS
AGREEMENT BY AND BETWEEN VISEON, INC. AND THE HOLDERS SPECIFIED
THEREIN."
Except as otherwise permitted by this Section 7, until such time as the
Securities and Exchange Commission declares effective the registration statement
required by the terms of Section 2 of the Registration Rights Agreement between
the Company and the Holder, each certificate for Common Stock (or Other
Securities) issued upon the exercise of any Warrant, and each certificate issued
upon the transfer of any such Common Stock (or Other Securities), shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAW OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND SUCH LAWS."
7.2 Transfer to Comply With the Securities Act. Restricted Securities
may not be sold, assigned, pledged, hypothecated, encumbered or in any manner
transferred or disposed of, in whole or in part, except in compliance with the
provisions of the Securities Act and state securities or Blue Sky laws and the
terms and conditions hereof.
7.3 Termination of Restrictions. The restrictions imposed by this
Section 7 on the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities (a) when a registration
statement with respect to the sale of such securities shall have been declared
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (b) when such securities are
sold pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act, or (c) when, in the opinion of both counsel for the Holder and
counsel for the Company, such restrictions are no longer required or necessary
in order to protect the Company against a violation of the Securities Act upon
any sale or other disposition of such securities without registration
thereunder. Whenever such restrictions shall cease and terminate as to any
Restricted Securities, the Holder shall be entitled to receive from the Company,
without expense, new securities of like tenor not bearing the applicable legends
required by Section 7.1.
8. 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. 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
("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 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
that 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.
9. Registration and Transfer of Warrants, etc.
9.1 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. Subject to Section 7, a Warrant, if
properly assigned, may be exercised by a new holder without a new Warrant first
having been issued.
9.2 Transfer of Warrants. Subject to compliance with Section 7, if
applicable, 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. 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.
9.3 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.
9.4 Adjustments To Warrant Quantity. Notwithstanding any adjustment in
the number or kind of shares of Common Stock or other securities 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.
9.5 Fractional Shares. Notwithstanding any adjustment pursuant to
Section 2 in the number of shares of Common Stock covered by this Warrant or any
other provision of this Warrant, the Company may, but 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 Closing Price of a share of Common Stock on the date of
Warrant exercise.
10. Definitions. As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:
Affiliate: Any person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, the applicable person. For purposes of this definition, "control" has the
meaning specified in Rule 12b-2 under the Exchange Act.
Business Day: Any day other than a Saturday or a Sunday or a
day on which commercial banking institutions in the City of Nevada are
authorized by law to be closed. Any reference to "days" (unless Business Days
are specified) shall mean calendar days.
Closing Price: For any day, shall be (i) the last reported
sales price regular way of the Common Stock on such day on the principal
securities exchange on which the Common Stock is then listed or admitted to
trading or on Nasdaq, as applicable, (ii) if no sale takes place on such day on
any such securities exchange or system, the average of the closing bid and asked
prices, regular way, on such day for the Common Stock as officially quoted on
any such securities exchange or system, , (iii) if on such day such shares of
Common Stock are not then listed or admitted to trading on any securities
exchange or system, the last reported sale price, regular way, on such day for
the Common Stock, (iv)or if no sale takes place on such day the average of the
comparative bid and asked prices quoted for the Common Stock in the National
Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ") System as
of 4:00 P.M., New York City time on such day, or if such shares shall not be
quoted in the NASDAQ System, the average of the high and low bid and asked price
of the Common Stock on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any other successor
organization. If at any time such shares of Common Stock are not listed on any
domestic exchange or quoted in the NASDAQ System or the domestic
over-the-counter market, the Closing Price shall be the fair market value
thereof determined by the Board of Directors of the Company in good faith.
Code: As defined in Section 1.6.
Commission: The Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
Common Stock: As defined 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: As defined in the introduction to this Warrant, such
term to include any corporation, which shall succeed to or assume the
obligations of the Company hereunder.
Exchange Act: The Securities Exchange Act of 1934, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
Excluded Shares: (i) shares of Common Stock issued or issuable
pursuant to the Company's Series A Convertible Preferred Stock, specifically
including all conversion shares and all shares that may be issued as dividends
thereon, (ii) shares of Common Stock issuable upon the exercise of any options
or warrants outstanding on the date of this Warrant and listed in Schedule 3(b)
of the Purchase Agreement, (iii) shares of Common Stock issuable pursuant to or
upon the conversion of any note, debenture, debt instrument and all other
written agreements to which the Company is a party on the date of this Warrant
and listed in Schedule 3(b) of the Purchase Agreement (iv) shares of Common
Stock issued or issuable pursuant to the Company's Series A-1 Warrants issued
pursuant to the Purchase Agreement and (v) shares of Common Stock issued or
issuable pursuant to the Company's Series A-2 Warrants issued pursuant to the
Purchase Agreement.
Expiration Date: As defined in the introduction to this
Warrant.
---------------
Holder: As defined in the introduction to this Warrant.
------
NASD: The National Association of Securities Dealers, Inc.
----
Other Securities: 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 2 or otherwise.
Public Company: A company required to file periodic reports
under the Exchange Act.
---------------
Purchase Agreement : The Purchase Agreement dated as of the
date of this Warrant by and between the Company and the initial holder of this
Warrant.
Person: An individual, firm, partnership, corporation,
professional 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.
Registration Rights Agreement: The Registration Rights
Agreement dated the date hereof, by and between the Company and the holders
specified therein.
Restricted Securities: (a) any Warrants bearing the applicable
legend set forth in Section 7.1, (b) any shares of Common Stock (or Other
Securities) issued or issuable upon the exercise of Warrants which are evidenced
by a certificate or certificates bearing the applicable legend set forth in such
Section, and (c) any shares of Common Stock (or Other Securities) issued
subsequent to the exercise of any of the Warrants as a dividend or other
distribution with respect to, or resulting from a subdivision of the outstanding
shares of Common Stock (or other Securities) into a greater number of shares by
reclassification, stock splits or otherwise, or in exchange for or in
replacement of the Common Stock (or Other Securities) issued upon such exercise,
which are evidenced by a certificate or certificates bearing the applicable
legend set forth in such Section.
Securities Act: The Securities Act of 1933, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
Trading Day: A day on which the securities exchange,
association, or quotation system on which shares of Common Stock are listed for
trading shall be open for business or, if the shares of Common Stock shall not
be listed on such exchange, association, or quotation system for such day, a day
with respect to which trades in the United States domestic over the counter
market shall be reported.
Warrant: As defined in the introduction to this Warrant.
-------
Warrant Price: As defined in the first paragraph of this
Warrant.
-------------
Warrant Shares: As defined in the first paragraph of this
Warrant.
--------------
11. 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 hereto 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.
12. No Rights or Liabilities as Shareholder. Nothing contained in this Warrant
shall be construed as conferring upon the Holder hereof any rights as a
shareholder 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
shareholder of the Company, whether such obligation or liabilities are asserted
by the Company or by creditors of the Company.
13. Notices. Any notice or other communication required or permitted hereunder
shall be deemed given if in writing and delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally or sent by overnight air courier or facsimile transmission
or, if mailed, two days after the date of deposit in the United States mail, as
follows:
If to Holder:
With a copy to:
If to Viseon, Inc.:
Viseon, Inc.
Attn: President
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
With a copy to:
Xxxxxx X. Xxxxx, Xx.
Law Offices of Xxxxxx X. Xxxxx, Xx.
00000 X. Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: 000-000-0000
Any party may be given notice in accordance with this Section by any other party
at another address or person for receipt of notices, if such party so designates
such other person or address in writing in accordance with this Section 13. The
Company shall give Notice to any subsequent Holder at such address as it appears
in the Warrant Register.
All such notices and communications (and deliveries) shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; when
receipt is acknowledged, if telecopied; on the next Business Day, if timely
delivered to a courier guaranteeing overnight delivery; and five days after
being deposited in the mail, if sent first class or certified mail, return
receipt requested, postage prepaid; provided, that the exercise of any Warrant
shall be effective in the manner provided in Section 1.
14. 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.
15. 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.
16. Law Governing Agreement. This Agreement shall be interpreted, construed and
enforced and its construction and performance shall be governed by the laws of
the State of Nevada without regard to principles of conflicts of laws, except to
the extent that Federal law may apply.
17. 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.
18. Redemption. Commencing on the first Trading Day after the Securities and
Exchange Commission declares the registration statement filed by the Company
pursuant to Section 2 of the Registration Rights Agreement effective, the
Company has the right to redeem this Warrant for the Redemption Price of ten
cents ($0.10) per Warrant Share; provided that the average Closing Price of the
Company's Common Stock meets or exceeds the applicable minimum dollar amounts
within the specified period and for the length of time set forth hereinbelow and
that the average trading volume of the Company's Common Stock meets or exceeds
the applicable trading volumes within the specified period and for the length of
time set forth hereinbelow and provided further that following the occurrence of
any such event, the company gives the Holder fifteen (15) days prior written
notice of the Company's intention to redeem this Warrant (the "Redemption
Notice"), identifying a date, no earlier than fifteen days thereafter, on which
the Company will exercise such rights; subject to the Closing Price of the
Company's Common Stock sustaining the minimum levels throughout the time periods
set forth below:
(a) If the average Closing Price of the Company's Common Stock
for any twenty consecutive Trading Days is $2.50 or more and
the average trading volume of the shares of Common Stock has
been 125,000 shares or more during the same 20 consecutive
Trading Days at any time prior to the second anniversary of
the Issue Date (as defined in the Purchase Agreement).
(b) If the average Closing Price of the Company's Common Stock
for any twenty consecutive Trading Days is $3.50 or more and
the average trading volume of the shares of Common Stock has
been 125,000 shares or more during the same 20 consecutive
Trading Days, at any time beginning on the second anniversary
of the Issue Date (as defined in the Purchase Agreement)
through the Expiration Date.
The $2.50 amount set forth in clause (a) above and the $3.50 amount set forth in
clause (b) (each, a "Trigger Amount") shall be subject to adjustment in the
event that the Company shall (i) pay a dividend or make a distribution on its
Common Stock, each in shares of Common Stock, (ii) subdivide its outstanding
shares of Common Stock into a greater number of shares, or (iii) combine its
outstanding shares of Common Stock into a smaller number of shares, by
multiplying the Trigger Amount by a fraction, the numerator of which is the
number of outstanding shares of Common Stock immediately prior to giving effect
to such dividend, distribution, subdivision, or combination and the denominator
of which is the number of shares of Common Stock outstanding immediately after
giving effect to such dividend, distribution, subdivision, or combination.
The Holder may exercise this Warrant at any time before the date fixed for the
redemption of this Warrant in the Redemption Notice, however, at the final bell
signifying the close of the NYSE on the day preceding the date specified in the
Redemption Notice, any Warrant or portion thereof that remains unexercised shall
thereupon be no longer exercisable, exchangeable or convertible in any manner
for or into any Warrant Shares or other equity securities of the Company and the
only consideration payable by the Company thereon and in exchange therefore or
other obligation of the Company with respect thereto shall be the payment of the
Redemption Price upon surrender of the original Warrant at the principal place
of business of the company or at any other address or to the attention of any
agent as the Company may specify in the Redemption Notice.
19. Restriction on Exercise by the Holder. Notwithstanding anything herein to
the contrary, in no event shall the Holder have the right or be required to
exercise this Warrant to the extent, and only to the extent, that as a result of
such exercise, the aggregate number of shares of Common Stock beneficially owned
by such Holder, its Affiliates and any "group" (as defined in accordance with
Section 13(d) of the Exchange Act and the rules promulgated thereunder) of which
the Holder may be deemed to be a party would exceed 9.99% of the outstanding
shares of the Common Stock following such exercise. For purposes of this Section
19, beneficial ownership shall be calculated in accordance with Sections 13(d)
and Section 16(a) of the Exchange Act. The provisions of this Section 19 may be
waived by a Holder as to itself (and solely as to itself) upon not less than
sixty-five (65) days, prior written notice to the Company, and the provisions of
this Section 19 shall continue to apply until such 65th day (or later, if stated
in the notice of waiver). Nothing contained in this paragraph 19 or any other
provision hereof shall restrict, affect or limit in any manner the right of the
Company to redeem this Warrant in accordance with the provisions of paragraph 18
hereinabove.
Viseon, Inc.
(FORMERLY RSI SYSTEMS, INC.)
------------------------------------
By: Xxxx Xxxxxx
Its: Chief Executive Officer
Warrant No. W-Series-A-2 - Exhibit B
---------
Warrant No. W-Series-A-2 - Exhibit A
---------
Exhibit A
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To: Viseon, Inc.:
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, ________________* shares
of Common stock of Viseon, Inc. (Formerly RSI Systems, Inc.) and herewith
makes payment of $_________________ therefor, and requests that the
certificates for such shares be issued in the name of, and
delivered to _____________________________, whose address is
--------------------------------
-----------------------------------------------------------------------------.
Dated: _______________________
---------------------------------------
(Signature must conform in all
respects to the name of holder as
specified on the face of Warrant)
(Street Address)
(City)
(State) Zip Code)
Exhibit B
FORM OF ASSIGNMENT
[To be executed only upon assignment of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto
_________________________________________ the right represented by such Warrant
to purchase _________________________________________________ shares of Common
Stock of Viseon, Inc. (Formerly RSI Systems, Inc.), to which such Warrant
relates, and appoints _______________________________________, Attorney to make
such transfer on the books of Viseon, Inc. (Formerly RSI Systems, Inc.),
maintained for such purpose, with full power of substitution in the premises.
Dated: ___________________
-------------------------------------------
(Signature must conform in all respects
to the name of holder as specified on the
face of Warrant)
Street Address)
(City)
(State) Zip Code)
Signed in the presence of:
(printed name)
------------------------------------
------------------------------------
(printed name)
--------
* Insert here the number of shares called for on the face of this Warrant (or,
in the case of a partial exercise, the portion thereof as to which this
Warrant is being exercised), in either case without making any adjustment for
any other securities or property or cash which, pursuant to the adjustment
provisions of this Warrant, may be delivered upon exercise. In the case of
partial exercise, a new Warrant or Warrants will be issued and delivered,
representing the unexercised portion of the Warrant, to the holder
surrendering the Warrant.
