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EXHIBIT 10.25
WARRANT PURCHASE AGREEMENT
between
AUGMENT SYSTEMS, INC.
and
FLEET NATIONAL BANK
dated as of
October 9, 1997
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WARRANT PURCHASE AGREEMENT
This Agreement dated as of October 9, 1997 is entered into by and between
AUGMENT SYSTEMS, INC., a Delaware corporation (the "Company"), and FLEET
NATIONAL BANK (the "Purchaser").
As a material inducement to the Purchaser to enter into a Loan
Modification Agreement of even date herewith between the Company and the
Purchaser, and in consideration for the Purchaser's agreements therein,
including, without limitation, the extension of a bridge loan to the Company,
the Company is hereby agreeing to issue to the Purchaser a warrant to purchase
shares of the Company's Common Stock (as defined below), in the form attached
hereto as Exhibit A (the "Warrant", which term shall include any further warrant
or warrants issued upon transfer thereof, in exchange or replacement therefor or
upon partial exercise thereof) upon the terms and conditions set forth herein
and therein.
Now, therefore, in consideration of the mutual promises and covenants
contained herein, the parties hereby agree as follows:
1. Purchase and Sale.
1.1 The Closing. The closing of the sale and purchase of the Warrant under
this Agreement (the "Closing") shall take place at the offices Xxxxxxx & Xxxxxx,
000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, on the date hereof, or at such place
or on such other date as the Company and the Purchaser shall mutually agree (the
"Closing Date"). At the Closing, in consideration of the Purchaser entering into
the aforesaid Loan Modification Agreement, the Company shall issue to the
Purchaser the Warrant registered in the name of the Purchaser on the Company's
records.
1.2 Definitions. For all purposes of this Agreement, the following terms
shall have the following meanings:
Common Stock: The Common Stock, $0.01 par value, of the Company, as
constituted on the date hereof, any shares into which such Common Stock
shall be changed, or any shares resulting from any reclassification of
such Common Stock.
Material Adverse Effect: A material adverse effect on the business,
operations, prospects, financial condition or properties of the
Company, the ability of the Company to perform its obligations under
this Agreement, the Loan Agreement (as defined below) and the Warrant,
or the validity or enforceability of this Agreement, the Loan Agreement
or the Warrant.
Warrant Shares: (i) The Common Stock issued or issuable pursuant to the
exercise of the Warrant; (ii) any Common Stock or other securities
issued or issuable with respect to the Common Stock held by the
Purchaser pursuant to
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the preceding clause (i) upon any stock split, stock dividend,
recapitalization, or similar event; and (iii) securities issued in
replacement or exchange of any of the securities issued in clauses (i)
or (ii) above.
2. Representations of the Company. The Company hereby represents and
warrants to the Purchaser as follows:
2.1 Incorporation of Representations and Warranties. Except to the extent
affected by transactions occurring after the date thereof and permitted
thereunder and except as reflected in the attached updated item 2.1(b) and
2.1(e) of the Disclosure Schedule, the Company hereby confirms the
representations and warranties set forth in that certain letter agreement
between the Company and the Purchaser dated August 4, 1997, as amended (said
letter agreement, as so as amended, being referred to as the "Loan Agreement")
(which representations and warranties are incorporated herein by reference).
2.2 Capitalization.
(a) The capital structure of the Company, showing the authorized capital
stock of the Company as of the date hereof, is set forth in Exhibit B. All of
the issued and outstanding Common Stock of the Company has been duly authorized
and is validly issued, fully paid and nonassessable. There are no other
authorized or issued equity securities of the Company.
(b) Except as set forth in Exhibit C hereto or as provided in this
Agreement, (i) no subscription, warrant, option, convertible security or other
right (contingent or otherwise) to purchase or acquire any Common Stock or other
equity security of the Company is authorized or outstanding, (ii) there is no
commitment of the Company to issue any subscription, warrant, option,
convertible security or other such right to purchase any equity security of the
Company or to issue or distribute to holders of any of its Common Stock or other
equity securities any evidences of indebtedness or assets of the Company, and
(iii) the Company has no obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any of its Common Stock or other equity securities
or any interest therein or to pay any dividend or make any other distribution in
respect thereof. Except as set forth in Exhibit C or as provided in this
Agreement, no person or entity is entitled to (i) any preemptive right, catch-up
right, right of first refusal or similar right with respect to the issuance of
any Common Stock or other equity securities of the Company or (ii) any rights
with respect to the registration of any Common Stock or other equity securities
of the Company under the Securities Act (defined below). All of the issued and
outstanding Common Stock has been offered, issued and sold by the Company in
compliance with applicable federal and state securities laws and the rules and
regulations thereunder.
2.3 Certain Agreements. Except as set forth on Exhibit C, there are no
agreements, written or oral, between the Company and any holder of its Common
Stock or other equity securities, or, to the knowledge of the Company, among any
holders of its Common Stock or other equity securities, relating to the
acquisition, disposition or voting of the Common Stock of the Company.
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2.4 Issuance of Warrant and Warrant Shares. The issuance, sale and
delivery of the Warrant in accordance with this Agreement, and the issuance and
delivery of the Warrant Shares when sold and paid for in accordance with the
terms of this Agreement and the Warrant, have been and, in the case of the
Warrant Shares, will be, duly authorized by all necessary corporate action on
the part of the Company. The Warrant Shares have been duly and validly reserved
and, when sold and paid for in accordance with the terms of this Agreement and
the Warrant, will be duly and validly issued, fully paid and nonassessable. When
issued, the Warrant Shares will be free from any claims, liens or encumbrances
created or imposed by any act or omission on the part of the Company.
2.5 Authority. The execution, delivery and performance by the Company of
this Agreement and the Warrant and the consummation of the transactions
contemplated hereby and thereby is within the power and authority of the
Company, and have been duly authorized by all necessary corporate action on the
part of the Company. This Agreement and the Warrant constitute legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their respective terms. The execution and delivery of, and performance of
the transactions contemplated by, this Agreement and the Warrant, and compliance
with their provisions by the Company, (a) will not violate any provision of law
or regulation other than any law or regulation the violation of which would not
(singly or in the aggregate) have a Material Adverse Effect, (b) will not
conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, the Company's charter and by-laws,
each as amended to date and presently in effect, (c) will not conflict with or
result in any breach of any indenture, lease, mortgage, agreement or other
instrument to which the Company is a party or by which it or any of its
properties is bound, or any decree, judgment, order, statute, rule or regulation
applicable to the Company or its properties, which conflict or breach could have
a Material Adverse Effect, or (d) result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the assets or
properties of the Company.
2.6 Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
governmental authority is required on the part of the Company in connection with
the execution, delivery and performance of this Agreement and the Warrant and
the consummation of the transactions contemplated hereby and thereby or the
offer, issuance, sale and delivery of the Warrant and the Warrant Shares, except
(a) such filings as shall have been made prior to and shall be effective on and
as of the Closing Date, (b) any notices of sale required to be filed with the
Securities and Exchange Commission under Regulation D of the Securities Act or
with state securities administrators under applicable state securities laws,
which will be filed within the required time period therefor, or (c) such
filings, registrations and orders as may be required to effect any registration
of securities pursuant to Section 5 of this Agreement. Based upon the
representations made by the Purchaser in Section 3 of this Agreement, the offer
and sale of the Warrant to the Purchaser will be exempt from the registration
requirements of the Securities Act and the qualification requirements of any
applicable state securities laws.
2.7 Disclosures. Neither this Agreement nor any exhibit hereto nor any
certificate or instrument furnished or to be furnished to the Purchaser or its
counsel in connection with the
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transactions contemplated by this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading. The Company knows of no information or
fact which has or would have a Material Adverse Effect which has not been
disclosed to the Purchaser.
3. Representations of the Purchaser. The Purchaser represents and warrants
to the Company as follows:
3.1 Investment. The Purchaser is acquiring the Warrant for its own account
for investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same. The Purchaser understands that the Warrant has not been registered
under the Securities Act or qualified under any applicable state securities laws
in reliance upon exemptions from such requirements.
3.2 Authority. The execution, delivery and performance by the Purchaser of
this Agreement have been duly authorized by all necessary action on behalf of
the Purchaser. This Agreement constitutes the valid and binding obligation of
the Purchaser enforceable in accordance with its terms.
3.3 Sophisticated Investor. The Purchaser has not been organized,
reorganized or recapitalized specifically for the purpose of investing in the
Company. The Purchaser has sufficient business and financial knowledge and
experience so as to be capable of evaluating the merits and risks of its
investment in the Company.
4. Deliveries at Closing. At Closing, the Company will deliver to the
Purchaser:
(a) A certificate of the Company to the effect that each representation
and warranty contained in Section 2 is true and correct on and as of the Closing
Date.
(b) An opinion of counsel to the Company, in form and substance reasonably
satisfactory to the Purchaser, covering at least the matters set forth in
Exhibit D hereto.
(c) A copy of the currently-effective Certificate of Incorporation of the
Company, certified by the Secretary of State of Delaware.
(d) Certificates, as of the most recent practicable date, as to the legal
existence and good standing of the Company issued by the Secretary of State of
Delaware and as to the due qualification of the Company in Massachusetts issued
by the Secretary of State of Massachusetts.
(e) A Certificate of the Secretary of the Company, dated the Closing Date,
as to (i) the charter and by-laws of the Company, (ii) the signatures and
incumbency of the officers executing the Warrant and this Agreement, and (iii)
the resolutions of the Company's Board of Directors (and, if necessary, its
stockholders) approving the execution, delivery and performance of this
Agreement and the Warrant.
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5. Registration Rights.
5.1 Certain Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
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.
"Holder" shall mean any holder of the Warrant or of Registrable Securities
(as hereinafter defined), including any such holder to whom the rights granted
under this Section 5 are transferred as permitted by this Agreement.
The terms "register", "registered" and "registration" shall refer to a
registration for a public offering and sale of securities of the Company
effected by preparing and filing a registration statement in compliance with the
Securities Act and applicable rules and regulations thereunder, and the
declaration or ordering of the effectiveness of such registration statement.
"Registrable Securities" shall mean the Warrant Shares.
"Registration Expenses" shall mean all expenses incurred by the Company in
compliance with Section 5.2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company and one counsel for the selling Holders, blue sky fees
and expenses, and the expense of any special audits incident to or required by
any such registration (but excluding the compensation of regular employees of
the Company and expenses of regular annual and periodic audits, which shall be
paid in any event by the Company) and the expenses associated with the Company's
obligations under Section 5.4 hereof.
"Restricted Securities" shall refer collectively to all Registrable
Securities unless there is in effect a registration statement under the
Securities Act covering such Registrable Securities.
"Securities Act" shall mean the Securities Act of 1933, as amended, 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.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for any Holder not included in Registration Expenses.
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5.2 Piggyback Registration Rights.
(a) If the Company shall at any time or from time to time determine to
register any of its securities either for its own account or the account of any
security holder or holders, other than a registration relating solely to
employee benefit plans or a registration relating solely to a Rule 145
transaction, the Company shall:
(i) Promptly give to each Holder written notice thereof; and
(ii) Except as set forth in Section 5.2(b), include in such registration
(and any related qualification under state blue sky laws and other compliance
filings, and in any underwriting involved therein), all Registrable Securities
specified in a written request or requests, given by any Holder within thirty
(30) days after the written notice is given by the Company.
(b) If the registration of which the Company gives notice involves an
underwritten public offering, the Company shall so advise the Holders as part of
the written notice given pursuant to Section 5.2(a)(i). In such event, any
Holder may participate in such underwriting and such Holder's Registrable
Securities will be included in the underwriting to the extent provided herein.
All Holders proposing to distribute their securities through such underwriting
shall (together with the Company and the other persons distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected or approved by the
Company. Notwithstanding any other provision of this Section 5.2, if the
underwriter determines that marketing factors require a limitation on the number
of shares to be underwritten, the underwriter may (subject to the allocation
priority set forth below) exclude from such registration and underwriting some
or all of the Registrable Securities which would otherwise be underwritten
pursuant hereto, and the Company shall so advise all Holders of securities
requesting registration. The number of shares of Common Stock that are entitled
to be included in the registration and underwriting shall be allocated pro rata
among the Holders and all other holders of Common Stock requesting to be
included in the registration and underwriting on the basis of the respective
amounts of Common Stock entitled to inclusion in such registration statement. If
any Holder of Registrable Securities requesting registration disapproves of the
terms of any such underwriting, such person may elect to withdraw therefrom by
written notice to the Company and the underwriter. Any Registrable Securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration.
5.3 Expense of Registration. All Registration Expenses incurred on behalf
of Holders in connection with any registration, qualification or compliance
pursuant to this Section 5 shall be borne by the Company, and all Selling
Expenses shall be borne by the Holders of the securities so registered pro rata
on the basis of the number of their Warrant Shares so registered.
5.4 Registration Procedures. In the case of each registration effected by
the Company pursuant to this Section 5, the Company shall:
(a) prepare and file with the Commission a registration statement with
respect to such Registrable Securities in accordance with the Securities Act and
use its best efforts to effect the
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registration and sale of such Registrable Securities in accordance with the
intended method of disposition thereof;
(b) prepare and file with the Commission any amendments and supplements to
the registration statement and the prospectus included in the registration
statement as may be necessary to keep the registration statement effective for a
period of not less than ninety (90) days from the effective date;
(c) furnish to each selling Holder such number of copies of the
registration statement and prospectus, including a preliminary prospectus, as is
in conformity with the requirements of the Securities Act, and such other
documents as such Holder may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities owned by such
Holder;
(d) use its best efforts to register or qualify the Registrable Securities
covered by the registration statement under the securities or blue sky laws of
such jurisdictions as the selling Holders shall reasonably request, and do any
and all other acts and things that may be necessary or desirable to enable the
selling Holders to consummate the public sale or other disposition in each such
jurisdiction of the Registrable Securities owned by the selling Holders;
provided, however, that the Company shall not be required in connection with
this paragraph (d) to qualify as a foreign corporation or execute a general
consent to service of process in any jurisdiction;
(e) promptly notify each selling Holder and each underwriter, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus contained in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing and provide the
selling Holders with a revised prospectus or a supplemental prospectus; and,
each Holder agrees that upon receipt of any notice from the Company of the
happening of any event of the kind described in this paragraph (e), such Holder
shall not make any disposition of Registrable Securities until such Holder's
receipt of a revised or supplemented prospectus contemplated hereby or until
such time as the Company has filed with the Commission any report required by
the Exchange Act to disclose any such event; and
(f) make available for inspection by each selling Holder, any underwriter
participating in any distribution pursuant to such registration statement and
any attorney, accountant or other agent retained by a selling Holder or
underwriter, all financial and other records, pertinent corporate documents, and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any selling Holder,
underwriter, attorney, accountant or agent in connection with such registration
statement.
5.5 Indemnification.
(a) The Company shall indemnify each Holder, each Holder's officers,
directors, employees and partners, and each person controlling such Holder, with
respect to each registration, qualification or compliance that has been effected
pursuant to this Section 5, and
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each underwriter, and each person who controls any underwriter, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus or other
document (including any related registration statement, notification or the like
and any documents incorporated therein) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of the
Securities Act or Exchange Act or state securities laws, or any rule or
regulation thereunder applicable to the Company relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance. The Company shall reimburse each such Holder, each Holder's
officers, directors, employees and partners, and each person controlling such
Holder, each such underwriter and each person who controls any such underwriter,
for any legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action;
provided, however, that the Company shall not be liable to a Holder or such
Holder's officers, directors, employees or partners or to an underwriter or any
person who controls an underwriter in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Company by such Holder or such underwriter (as the case may be) and specifically
for use therein.
(b) Each Holder shall, if Registrable Securities held by it are included
in the securities as to which such registration, qualification or compliance is
being effected, severally and not jointly, indemnify the Company, each of its
directors, officers and employees and each underwriter, if any, of the Company's
Registrable Securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of the Securities
Act and the rules and regulations thereunder, each other such Holder and each
other security holder and each of their officers, directors and partners, and
each person controlling such other Holder or other security holder, against all
claims, losses, damages, and liabilities (or actions in respect thereof) of the
type and to the extent described in the last sentence of this Section 5.5(b)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact made by such Holder contained in any such registration
statement, prospectus or other document, or any omission (or alleged omission)
by such Holder to state therein a material fact necessary to make the statements
made therein not misleading. Each Holder shall, if Registrable Securities held
by it are included in the Registrable Securities as to which such registration,
qualification or compliance is being affected, reimburse the Company and each
other Holder, each other security holder and each of their respective directors,
officers, partners, persons, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action. A Holder's
obligation to indemnify and reimburse assumed under this Section 5.5(b) shall be
limited to an untrue statement or omission pertaining to such Holder made in
such registration statement, prospectus or other document in reliance upon and
in conformity with written information furnished to the Company by such Holder
and specifically for use therein; provided, however, that the obligations of
such Holder hereunder shall be limited to an amount equal to the proceeds to
such Holder of Registrable Securities sold as contemplated herein.
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(c) Each party entitled to indemnification under this Section 5.5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld or delayed), and the Indemnified Party may participate
in such defense at the Indemnified Party's expense, and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 5.5. No
Indemnifying Party, in the defense of any claim or litigation, shall, except
with the consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to each Indemnified Party of a
release from all liability in respect to such claim or litigation.
5.6 Information by Holder. Each Holder of Registrable Securities, and each
other person holding securities included in any registration, shall furnish to
the Company such information regarding such Holder or other person as the
Company may reasonably request in writing and as shall be reasonably required in
connection with any registration, qualification or compliance referred to in
this Section 5.
5.7 Limitations on Subsequent Registration Rights. From and after the date
of this Agreement, the Company shall not enter into any agreement with any
holder or prospective holder of any securities of the Company giving such holder
or prospective holder the right to require the Company to register any
securities of the Company unless, in the case of any piggyback registration
rights, the Holder shall have the right to participate in such registration to
the extent and in the manner specified in Section 5.2.
5.8 Rule 144 and Rule 144A Requirements. With a view to making available
the benefits of certain rules and regulations of the Commission which may permit
the sale of the Restricted Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to:
(a) Use its best efforts at all times to make and keep public information
available as those terms are understood and defined in Rule 144 under the
Securities Act;
(b) Use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities Act
and the Exchange Act at any time during which it is subject to such reporting
requirements;
(c) So long as a Holder owns any Restricted Securities, furnish to the
Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 and of the Securities Act
and the Exchange Act (at any time during which it is subject to such reporting
requirements), a copy of the most recent annual or quarterly
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report of the Company, and such other reports and documents so filed as a Holder
may reasonably request in availing itself of any rule or regulation of the
Commission allowing a Holder to sell any such securities without registration;
and
(d) Make available to each Holder and to any prospective purchaser of
Registrable Securities designated by a Holder, the information required by Rule
144A under the Securities Act.
5.9 Transfer of Registration Rights. The right to cause the Company to
register Registrable Securities under this Section 5 may be assigned by any
Holder to one or more transferees or assignees of Registrable Securities;
provided, however, that the Company is given written notice at the time of or
within a reasonable time after said transfer, stating the name and address of
said transferees or assignees and identifying the securities with respect to
which such registration rights are being assigned; and provided, further, that
the transferees or assignees of such rights assume the obligations of such
Holder under this Section 5. All transfers of Registrable Securities shall be
made in compliance with applicable state and federal securities laws.
Notwithstanding the foregoing, any Holder may assign its rights under this
Section 5 to any one or more transferees or assignees of all or any part of the
Registrable Securities if such transferee or assignee is an "affiliate" of the
Holder, as that term is defined in Rule 144 under the Securities Act.
5.10 "Market Stand-off" Agreement. Except for sales or transfers pursuant
to an effective registration statement or to persons who agree to be similarly
bound, each Holder agrees, if requested by the Company and the underwriter of
Common Stock (or other securities) of the Company, not to publicly sell or
otherwise publicly transfer or dispose of any Common Stock (or other securities)
of the Company held by it during the ninety (90) day period following the
effective date of any registration statement of the Company filed under the
Securities Act with respect to any underwritten public offering of securities by
the Company, provided that all holders of securities issued by the Company,
including officers and directors of the Company, shall enter into similar
agreements. Such agreement shall be in writing in a form satisfactory to the
Company and such underwriter. The Company may impose stop transfer instructions
with respect to the securities subject to the foregoing restrictions until the
end of said ninety (90) day period.
6. Covenants of the Company.
6.1 Additional Information. The Company shall deliver to each Holder (as
that term is defined in Section 5.1 of this Agreement), for as long as such
Holder continues to hold a Warrant or any Warrant Shares, all information
required to be delivered to the Purchaser, when and as required to be delivered,
pursuant to Section 3.6 of the Loan Agreement (as in effect at the date hereof
and without regard to any further amendment or termination of the Loan
Agreement).
6.2 Assignment of Rights. The Purchaser's rights set forth in this Section
6 are assignable to any one or more purchasers or transferees of the Warrants or
the Warrant Shares (or a portion of either of the foregoing).
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7. Successors and Assigns. The provisions of this Agreement shall be
binding upon, and inure to the benefit of, the respective successors and assigns
of the parties hereto.
8. Survival of Representations and Warranties; Loan Agreement. All
agreements, covenants, representations and warranties contained herein shall
survive the execution and delivery of this Agreement and the closing of the
transactions contemplated hereby. In the event the Loan Agreement is hereafter
terminated or expires, all terms, covenants and agreements therefrom which have
been incorporated herein by reference shall survive such termination or
expiration.
9. Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be given in accordance with
the terms of the Loan Agreement.
10. Brokers. The Company (i) represents and warrants to the Purchaser that
the Company has retained no finder or broker or taken any other action resulting
in the payment of any brokerage fee or sales commission in connection with the
transactions contemplated by this Agreement, and (ii) will indemnify and save
the Purchaser harmless from and against any and all claims, liabilities or
obligations with respect to brokerage or finders' fee or commissions, or
consulting fee in connection with the transactions contemplated by this
Agreement asserted by any person on the basis of any statement or representation
alleged to have been made by such indemnifying party.
11. Entire Agreement. This Agreement and the Warrant, and the exhibits and
schedules hereto and thereto embody the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersede all prior agreements and understandings relating to such subject
matter.
12. Amendments and Waivers. No term, condition or covenant of this
Agreement may be amended or waived (either generally or in a particular instance
and either retroactively or prospectively), without the prior written consent of
the Company and the holder of the Warrant. No waivers of or exceptions to any
term, condition or provision of this Agreement, in any one or more instances,
shall be deemed to be, or construed as, a further or continuing waiver of any
such term, condition or provision.
13. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14. Headings. The headings of the sections, subsections, and paragraphs of
this Agreement have been added for convenience only and shall not be deemed to
be a part of this Agreement.
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15. Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of The Commonwealth of Massachusetts without
regard for its principles of conflicts of laws.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands under
seal as of the day and year first above written.
COMPANY:
AUGMENT SYSTEMS, INC.
By:___________________________________
Name:
Title:
PURCHASER:
FLEET NATIONAL BANK
By:____________________________________
Name:
Title:
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14
EXHIBIT A
TO
WARRANT PURCHASE AGREEMENT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN
ACQUIRED FOR INVESTMENT AND NEITHER THIS WARRANT NOR SUCH SECURITIES HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND
ANY APPLICABLE STATE SECURITIES LAWS. THE TRANSFER OF THE SECURITIES REPRESENTED
HEREBY IS SUBJECT TO THE CONDITIONS SPECIFIED HEREIN.
WARRANT
Warrant No. W-1 Warrant to Purchase 100,000
Shares of Common Stock
AUGMENT SYSTEMS, INC.
This certifies that FLEET NATIONAL BANK, its nominees, successors or
assigns (the "Holder"), for value received, is entitled to purchase from AUGMENT
SYSTEMS, INC., a Delaware corporation (the "Company"), 100,000 fully paid and
nonassessable shares of the Company's Common Stock, $0.01 par value (the "Common
Stock"), at a price of $1.00 per share (the "Exercise Price"), at any time or
from time to time up to and including 5:00 p.m. (Boston time) on the Expiration
Date (as hereinafter defined), upon surrender to the Company at its principal
office at 0 Xxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000 (or at such other
location as the Company may advise the Holder in writing) of this Warrant
properly endorsed with the Form of Subscription attached hereto duly filled in
and signed and upon payment, in any manner set forth herein, of the aggregate
Exercise Price for the number of shares for which this Warrant is being
exercised determined in accordance with the provisions hereof. The Exercise
Price and the number of shares purchasable hereunder are subject to adjustment
as provided in Section 4 of this Warrant. This Warrant and the Warrant Shares
are being or will be issued pursuant to and are subject to the terms and
provisions of that certain Warrant Purchase Agreement of even date herewith
between the Company and Fleet National Bank (the "Agreement"). Capitalized terms
used and not otherwise defined herein shall have the respective meanings
ascribed to them in the Agreement.
This Warrant is subject to the following terms and conditions:
1. Exercise; Issuance of Certificates. This Warrant is exercisable by the
Holder of record hereof, at any time or from time to time, in whole or in part,
until 5:00 p.m., Boston time, on October 9, 2002 (the "Expiration Date"). The
Company agrees that the shares of Common Stock purchased under this Warrant
shall be deemed to be issued to the Holder hereof as the record owner of such
shares as of the close of business on the date on which this Warrant shall have
been properly surrendered for exercise, and the Holder shall be deemed for all
purposes
15
(including voting) to have become the record owner of such shares on such
exercise date. Certificates for the shares of Common Stock so purchased,
together with any other securities or property to which the Holder hereof is
entitled upon such exercise, shall be delivered to the Holder hereof by the
Company at the Company's expense within seven (7) days after the rights
represented by this Warrant have been so exercised. In case of the purchase of
less than all the shares which may be purchased under this Warrant, the Company
shall cancel this Warrant and within such seven-day period shall execute and
deliver to such Holder a new Warrant or Warrants of like tenor for the balance
of the shares purchasable under this Warrant. Each stock certificate so
delivered shall be in such denominations of Common Stock as may be requested by
the Holder hereof and shall be registered in the name of such Holder or such
other name as shall be designated by such Holder, subject to the limitations
contained in Section 9.
2. Shares to be Fully Paid; Reservation of Shares. The Company covenants
and agrees that all shares of Common Stock which may be issued upon the exercise
of the rights represented by this Warrant, upon issuance, shall be duly
authorized, validly issued and, upon payment of the Exercise Price, will be
fully paid and nonassessable and free from all preemptive rights of any
shareholder and free of all taxes, liens, charges or other encumbrances with
respect to the issue thereof. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company shall at all times have authorized and reserved, for the
purpose of issue or transfer upon exercise of the rights evidenced by this
Warrant, a sufficient number of shares of authorized but unissued Common Stock,
or other securities and property, when and as required to provide for the
exercise of the rights represented by this Warrant. The Company shall take all
such action as may be necessary to assure that such shares of Common Stock may
be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of any domestic securities exchange upon
which the Common Stock may be listed. The Company shall not take any action
which would result in any adjustment (pursuant to Section 4 hereof) of the
Exercise Price if the total number of shares of Common Stock issuable after such
action, together with all shares of Common Stock then outstanding and then
issuable upon exercise of all options and all similar rights and upon the
conversion of all convertible securities then outstanding, would exceed the
total number of shares of Common Stock then authorized by the Company's
Certificate of Incorporation.
3. Payment of Exercise Price. Payment of the Exercise Price may be made in
cash or by check.
4. Adjustment of Exercise Price and Number of Shares. The Exercise Price
and/or the number and kind of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events described in this Section 4. Upon each adjustment of the Exercise
Price, the Holder of this Warrant shall thereafter be entitled to purchase, at
the Exercise Price resulting from such adjustment, the number of shares obtained
by multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of shares purchasable pursuant hereto immediately prior to such
adjustment, and by dividing the product thereof by the Exercise Price resulting
from such adjustment.
- 2 -
16
4.1 Subdivision or Combination of Stock. In case the Company shall at any
time subdivide its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced and, conversely, in case the outstanding shares of
Common Stock of the Company shall be combined into a smaller number of shares,
the Exercise Price in effect immediately prior to such combination shall be
proportionately increased.
4.2 Dividends or Distributions in Common Stock, Other Stock, or Property.
If at any time or from time to time the holders of Common Stock (or any shares
of capital stock or other securities at the time receivable upon the exercise of
this Warrant) shall have received or shall become entitled to receive, without
payment therefor,
(a) Common Stock or any shares of stock or other securities which are at
any time directly or indirectly convertible into or exchangeable for
Common Stock, or any rights or options to subscribe for, purchase or
otherwise acquire any of the foregoing by way of dividend or other
distribution,
(b) any cash paid or payable otherwise than as a regular periodic cash
dividend at a rate which is substantially consistent with past
practice (or, in the case of an initial dividend, at a rate which is
substantially consistent with industry practice), or
(c) Common Stock or other or additional capital stock or other
securities or property (including cash) by way of spinoff, split-up,
or similar corporate distribution (other than shares of Common Stock
issued as a stock split, adjustments in respect of which shall be
covered by the terms of Section 4.1 above),
then, and in each such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and other property (including
cash in the cases referred to in clauses (b) and (c) above) which such Holder
would hold on the date of such exercise had it been the holder of record of such
Common Stock as of the date on which holders of Common Stock received or became
entitled to receive such Common Stock, additional capital stock, other
securities and/or other property.
4.3 Reorganization, Reclassification, Consolidation or Merger. If at any
time while this Warrant is outstanding there is effected any reorganization or
reclassification of the capital stock of the Company (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of a subdivision or combination of such capital stock), or any
consolidation or merger of the Company with or into another corporation or
entity (other than a consolidation or merger in which the Company is the
surviving corporation and in which there is no change in the Company's
outstanding Common Stock), or sale of all or substantially all of the Company's
assets, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provisions shall be made by
the Company whereby the Holder hereof shall thereafter have the right to
purchase and receive (in lieu of the shares of the
- 3 -
17
Common Stock of the Company immediately theretofore purchasable and receivable
upon the exercise of this Warrant) such shares of stock, securities, assets or
cash as may be issued or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
this Warrant. In any such case, appropriate provision shall be made by the
Company with respect to the rights and interests of the Holder of this Warrant
to the end that the provisions hereof (including, without limitation, provisions
for adjustments of the Exercise Price and of the number of shares purchasable
and receivable upon the exercise of this Warrant) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities,
assets or cash thereafter deliverable upon the exercise hereof. The Company will
not effect any such consolidation, merger or sale unless, prior to the
consummation thereof, the successor or surviving corporation (if other than the
Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument, executed and
delivered to the registered Holder hereof at the last address of such Holder
appearing on the books of the Company, the obligation to deliver to such Holder
such shares of stock, securities, assets or cash as, in accordance with the
foregoing provisions, such Holder may be entitled to purchase.
4.4 Notice of Adjustment. Upon any adjustment of the Exercise Price,
and/or any increase or decrease in the number of shares purchasable upon the
exercise of this Warrant, the Company shall obtain a certificate prepared by the
Company's independent accountants, stating the Exercise Price resulting from
such adjustment and/or the increase or decrease, if any, in the number of shares
purchasable upon the exercise of this Warrant, and setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based. The Company shall send a copy of such certificate to the Holder of this
Warrant, by first class mail, postage prepaid, at the address of such Holder as
shown on the books of the Company, promptly after the occurrence of the event
triggering an adjustment under this Section 4.
4.5 Other Notices. If at any time:
(a) the Company shall declare any cash dividend or distribution upon
shares of its Common Stock;
(b) the Company shall declare any dividend upon its Common Stock
payable in stock or make any special dividend or other distribution to the
holders of its Common Stock;
(c) the Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or other rights,
or shall offer any of its securities pursuant to a public offering;
(d) there shall be any capital reorganization or reclassification of
the capital stock of the Company, or consolidation or merger of the Company with
or into, or sale of all or substantially all of its assets to, another
corporation;
- 4 -
18
(e) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(f) the Company shall take or propose to take any other action
notice of which is actually provided (or is required to be provided, pursuant to
any written agreement) to holders of Common Stock;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the Holder of this Warrant at the address of
such Holder as shown on the books of the Company, written notice setting forth
the principal terms of such event (i) at least thirty (30) days prior to the
date on which the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining rights
to vote in respect of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up or with respect to any
other action described in clause (f) above and (ii) in the case of any such
public offering, reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up or, in the case of any other action
described in clause (f) above, at least thirty (30) days prior to the date when
the same shall take place. Any notice given in accordance with the foregoing
clause (i) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto. Any notice given in accordance with the foregoing clause (ii)
shall also specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up or upon any other action described
in clause (f) above, as the case may be.
4.6 Certain Events. If any change in the outstanding Common Stock of the
Company or any other event occurs as to which the other provisions of this
Section 4 are not strictly applicable or if strictly applicable would not fairly
protect the purchase rights of the Holder of this Warrant in accordance with the
essential intent and principles of such provisions, then the Board of Directors
of the Company shall make an adjustment in the number and class of shares
available under this Warrant and/or the Exercise Price and/or the application of
such provisions, in accordance with such essential intent and principles, so as
to protect such purchase rights as aforesaid.
5. Issue Tax. The issuance of certificates for shares of Common Stock upon
the exercise of this Warrant shall be made free of all liens and without charge
to the Holder of this Warrant for any issue or transfer taxes or other
incidental expenses in respect thereof (all of which taxes and expenses shall be
paid by the Company); provided, however, that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the then
Holder of the Warrant being exercised.
6. Closing of Books. The Company will at no time close its transfer books
against the transfer of this Warrant or of any shares of Common Stock issued or
issuable upon the exercise of this Warrant in any manner which interferes with
the timely exercise of this Warrant.
- 5 -
19
7. No Voting Rights; Limitation of Liability. Nothing contained in this
Warrant shall be construed as conferring upon the Holder hereof the right to
vote or to consent as a shareholder in respect of meetings of shareholders for
the election of directors of the Company or any other matters or any rights
whatsoever as a shareholder of the Company. No provisions hereof, in the absence
of affirmative action by the Holder to purchase shares of Common Stock, and no
mere enumeration herein of the rights or privileges of the Holder hereof, shall
give rise to any liability of such holder for the Exercise Price or as a
shareholder of the Company, whether such liability is asserted by the Company or
by its creditors.
8. Registration Rights. The Holder hereof shall be entitled to the
registration rights set forth in Section 5 of the Agreement and to all of the
other rights set forth in Section 6 thereof.
9. Transferability of Securities; Compliance with Securities Act.
9.1 Transferability. This Warrant and the Warrant Shares shall be
transferable, in whole or in part, without charge to the Holder hereof (except
for transfer taxes), upon surrender of this Warrant accompanied by a properly
executed assignment in the form attached hereto, subject to the conditions
specified in this Section 9, which conditions are intended to ensure compliance
with the provisions of the Securities Act. Each Holder of this Warrant or of the
Warrant Shares will cause any proposed transferee of the Warrant or Warrant
Shares to agree to take and hold such securities subject to the provisions and
upon the conditions specified in this Section 9. Each Person to whom this
Warrant is transferred, in whole or in part, shall, as a condition to such
transfer, deliver to the Company a written instrument by which such transferee
agrees to be bound by the obligations imposed upon a Holder. Each taker and
Holder of this Warrant, by taking or holding the same, consents and agrees that
this Warrant, when endorsed in blank, shall be deemed negotiable, and that the
Holder hereof, when this Warrant shall have been so endorsed, may be treated by
the Company and all other Persons dealing with this Warrant as the absolute
owner hereof for any purpose and as the Person entitled to exercise the rights
represented by this Warrant; but until the transfer hereof on the books of the
Company, the Company may treat the registered owner hereof as the owner for all
purposes.
9.2 Restrictive Legend. Each certificate representing (i) the Warrant
Shares and (ii) any other securities issued in respect of the Warrant Shares or
capital stock issued upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall (unless there is in effect a
registration statement under the Securities Act covering any proposed transfer
or such securities have been sold under Rule 144 or Rule 144A promulgated under
the Securities Act), be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to any legend required under
applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE OFFERED, SOLD OR
TRANSFERRED
- 6 -
20
IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE TRANSFER OF THE
SECURITIES REPRESENTED HEREBY IS SUBJECT TO THE CONDITIONS SPECIFIED
HEREIN.
9.3 Restrictions on Transfer. The Holder of this Warrant and each Person
to whom this Warrant is subsequently transferred represents and warrants to the
Company (by acceptance of such transfer) that it will not transfer the Warrant
(or securities issuable upon exercise hereof), except pursuant to (i) an
effective registration statement under the Securities Act or (ii) Rule 144 or
Rule 144A under the Securities Act (or any other rule under the Securities Act
relating to disposition of securities), or (iii) any applicable exemption from
registration under the Securities Act.
9.4 Rights and Obligations Survive Exercise of Warrant. The rights and
obligations of the holder of the Warrant Shares contained in Section 9 of this
Warrant and in the Agreement shall survive the exercise of this Warrant.
10. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
11. Notices. Any notice, request or other document required or permitted
to be given or delivered to the Holder hereof or the Company shall be delivered
or shall be sent by certified or registered mail, postage prepaid, to each such
Holder at its address as shown on the books of the Company or to the Company at
the address indicated in the first paragraph of this Warrant or shall be sent by
facsimile transmission to any number provided by a Holder or the Company for the
purposes of this Section 11 or the Agreement.
12. Binding Effect on Successors. This Warrant shall be binding upon any
corporation or other entity succeeding the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets. All of the
obligations of the Company relating to the Warrant Shares shall survive the
exercise and termination of this Warrant. All of the covenants and agreements of
the Company shall inure to the benefit of the successors and assigns of the
Holder hereof. The Company will, at the time of the exercise of this Warrant, in
whole or in part, upon request of the Holder hereof but at the Company's
expense, acknowledge in writing its continuing obligation to the Holder hereof
in respect of any rights (including, without limitation, any right to
registration of the shares of Warrant Shares) to which the Holder hereof shall
continue to be entitled after such exercise in accordance with this Warrant;
provided, that the failure of the Holder hereof to make any such request shall
not affect the continuing obligation of the Company to the Holder hereof in
respect of such rights.
13. Descriptive Headings and Governing Law. The descriptive headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a
- 7 -
21
part of this Warrant. This Warrant shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of The
Commonwealth of Massachusetts.
14. Lost Warrants or Stock Certificates. The Company represents and
warrants to the Holder hereof that upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
any Warrant or stock certificate and, in the case of any such loss, theft or
destruction, upon receipt of an indemnity reasonably satisfactory to the Company
(the unsecured agreement of indemnity of Fleet National Bank being satisfactory
for this purpose), or in the case of any such mutilation upon surrender and
cancellation of such Warrant or stock certificate, the Company at its expense
will make and deliver a new Warrant or stock certificate, of like tenor, in lieu
of the lost, stolen, destroyed or mutilated Warrant or stock certificate.
15. Fractional Shares. No fractional shares will be issued upon any
exercise of this Warrant and, in lieu thereof, the Holder will receive a sum in
cash equal to such fraction multiplied by the then fair market value of a share
of Common Stock of the Company, as reasonably determined by the Company's Board
of Directors.
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22
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized, as of the 9th day of
October, 1997.
AUGMENT SYSTEMS, INC.
By:__________________________________
Name:
Title:
- 9 -
23
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
TO:
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ( ) shares of Common Stock of Augment Systems, Inc.
and herewith makes payment of Dollars ($ ), such payment to be made by
[describe method of payment of Exercise Price], and requests that the
certificates for such shares be issued and delivered as follows:
_______________________________________
_______________________________________
_______________________________________
The undersigned represents that it is acquiring such Common Stock for its
own account for investment and not with a view to or for sale in connection with
any distribution thereof (subject, however, to any requirement of law that the
disposition thereof shall at all times be within its control).
DATED:_________________
_______________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant)
_______________________________
_______________________________
(Address)
24
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned, the holder of the within Warrant,
hereby sells, assigns and transfers all of the rights of the undersigned under
the within Warrant, with respect to the number of shares of Common Stock covered
thereby set forth hereinbelow, unto:
Name of Assignee(s) Address No. of Shares
------------------- ------- -------------
Dated:
_______________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant)
_______________________________
_______________________________
(Address)
