EXHIBIT 99.3
Warrant No. CVI-
EXHIBIT B
to
Securities
Purchase
Agreement
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. EXCEPT AS OTHERWISE SET FORTH HEREIN OR IN A
SECURITIES PURCHASE AGREEMENT DATED AS OF OCTOBER 15, 1996,
NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD, OFFERED
FOR SALE, ASSIGNED, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF REGISTRATION UNDER SUCH ACT OR AN OPINION OF COUNSEL
THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SUCH ACT. ANY SUCH SALE, ASSIGNMENT
OR TRANSFER MUST ALSO COMPLY WITH APPLICABLE STATE SECURITIES
LAWS.
Right to
Purchase
225,000
Shares of
Common Stock,
$.01 par value
Date:
INTELLIGENT ELECTRONICS, INC.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, CAPITAL VENTURES
INTERNATIONAL or its registered assigns, is entitled to purchase from
INTELLIGENT ELECTRONICS, INC., a Pennsylvania corporation (the "Company"),
at any time or from time to time during the period specified in Paragraph 2
hereof, Two Hundred and Twenty-five Thousand (225,000) fully paid and
nonassessable shares of the Company's Common Stock, par value $.01 per
share (together with any rights attached thereto issued or issuable
pursuant to the Rights Plan (as defined herein), the "Common Stock"), at an
exercise price of $11.469 per share. The term "Warrant Shares", as used
herein, refers to the shares of Common Stock purchasable hereunder. The
Warrant Shares and the Exercise Price are subject to adjustment as provided
in Paragraph 4 hereof. The term "Warrants" means this Warrant and the
other warrants of the Company issued or to be issued pursuant to the
Securities Purchase Agreement (as hereinafter defined).
This Warrant is subject to the following terms, provisions, and
conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for Shares.
Subject to the provisions hereof, this Warrant may be exercised by the
holder hereof, in whole or in part, by the surrender of this Warrant,
together with a completed exercise agreement in the form attached hereto
(the "Exercise Agreement"), to the Company during normal business hours on
any business day at the Company's principal executive offices (or such
other office or agency of the Company as it may designate by notice to the
holder hereof), and upon (i) payment to the Company in cash, by certified
or official bank check or by wire transfer for the account of the Company
of the Exercise Price for the Warrant Shares specified in the Exercise
Agreement or (ii) if the resale of the Warrant Shares by the holder is not
registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), on or before
October 16, 1998, delivery to the Company of a written notice of an
election to effect a "Cashless Exercise" (as defined in Paragraph 11(c)
below) for the Warrant Shares specified in the Exercise Agreement. The
Warrant Shares so purchased shall be deemed to be issued to the holder
hereof or such holder's designee, as the record owner of such shares, as of
the close of business on the date on which this Warrant shall have been
surrendered, the completed Exercise Agreement shall have been delivered,
and payment shall have been made for such shares as set forth above.
Certificates for the Warrant Shares so purchased, representing the
aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the holder hereof within a reasonable time, not exceeding
three (3) business days, after this Warrant shall have been so exercised.
The certificates so delivered shall be in such denominations 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. If this
Warrant shall have been exercised only in part, then, unless this Warrant
has expired, the Company shall, at its expense, at the time of delivery of
such certificates, deliver to the holder a new Warrant representing the
number of shares with respect to which this Warrant shall not then have
been exercised.
If, at any time a holder of this Warrant submits this Warrant, an
Exercise Agreement and payment to the Company of the Exercise Price, and
the Company does not have sufficient authorized but unissued shares of
Common Stock available to effect such exercise in accordance with the
provisions of this Section 1 (an "Exercise Default"), the Company shall
issue to the holder all of the shares of Common Stock which are available
to effect such exercise and, within three (3) business days of the
attempted exercise of this Warrant, refund to the holder that portion of
the holder's payment of the Exercise Price allocable to the number of
shares of Common Stock included in the Exercise Agreement which exceeds the
amount which is then issuable by the Company (the "Excess Amount"). The
Excess Amount shall, notwithstanding anything to the contrary contained
herein, not be exercisable for Common Stock in accordance with the terms
hereof until (and at the holder's option on or at any time after) the date
additional shares of Common Stock are authorized by the Company to permit
such exercise. The Company shall pay to the holder payments ("Exercise
Default Payments") for an Exercise Default in the amount of (a) (N/365),
multiplied by (b) the difference between the Market Price (as defined in
Section 4(1) below) on the Exercise Default Date (as defined below) less
the Exercise Price, multiplied by (c) the Excess Amount on the date the
Exercise Agreement giving rise to the Exercise Default is transmitted in
accordance with this Section 1 (the "Exercise Default Date"), multiplied by
(d) .36, where N = the number of days from the Exercise Default Date to the
date (the "Authorization Date") that the Company authorizes a sufficient
number of shares of Common Stock to effect exercise of this Warrant in
full. The Company shall send notice to the holder of the authorization of
additional shares of Common Stock, the Authorization Date and the amount of
holder's accrued Exercise Default Payments. The accrued Exercise Default
Payment for each calendar month shall be paid in cash or shall be
convertible into Common Stock at the Exercise Price, at the holder's
option, as follows:
(a) In the event holder elects to take such payment in
cash, cash payment shall be made to holder by the third (3rd) day of the
month following the month in which it has accrued; and
(b) In the event holder elects to take such payment in
Common Stock, the holder may convert such payment amount into Common Stock
at the Exercise Price (as in effect at the time of conversion) at any time
after the fifth day of the month following the month in which it has
accrued in accordance with the terms contained in Article VI.A. of the
Statement with Respect to Shares governing the Company's Series B
Convertible Preferred Stock ("Statement with Respect to Shares").
Nothing herein shall limit the holder's right to pursue actual
damages for the Company's failure to maintain a sufficient number of
authorized shares of Common Stock as required pursuant to the terms of
Section 4(h) of the Securities Purchase Agreement (as defined below), and
each holder shall have the right to pursue all remedies available at law or
in equity (including a decree of specific performance and/or injunctive
relief).
Notwithstanding anything in this Warrant to the contrary, in no
event shall the Holder of this Warrant be entitled to exercise a number of
Warrants (or portions thereof) in excess of the number of Warrants (or
portions thereof) upon exercise of which the sum of (i) the number of
shares of Common Stock beneficially owned by the Holder and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned
through the ownership of the unexercised Warrants and the unconverted
portion of the Company's Series B Convertible Preferred Stock) and (ii) the
number of shares of Common Stock issuable upon exercise of the Warrants (or
portions thereof) with respect to which the determination described herein
is being made, would result in beneficial ownership by the Holder and its
affiliates of more than 4.9% of the outstanding shares of Common Stock.
For purposes of the immediately preceding sentence, beneficial ownership
shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13D-G thereunder, except
as otherwise provided in clause (i) hereof. The delivery by Holder to the
Company of an Exercise Agreement shall constitute the representation and
warranty of Holder to the Company that Holder is entitled to exercise this
Warrant in compliance with this Paragraph, upon which the Company shall be
entitled to rely without investigation.
2. Period of Exercise. This Warrant is exercisable at any time or
from time to time on or after the Vesting Date (as defined herein), and
before 5:00 p.m., New York City time on October 15, 2001 (the "Exercise
Period"). The term "Vesting Date" shall mean the date on which the Second
Closing (as defined in that certain Securities Purchase Agreement, dated as
of October 15, 1996, by and among the Company and the Buyer listed on the
execution page thereof (the "Securities Purchase Agreement") occurs or, if
earlier, the date on which the Securities Purchase Agreement is terminated
other than because of a breach by said Buyer of any of its representation
warranties or covenants set forth therein.
3. Certain Agreements of the Company. The Company hereby covenants
and agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly issued,
fully paid, and nonassessable and free from all taxes, liens, and charges
with respect to the issue thereof.
(b) Reservation of Shares. During the Exercise Period, the
Company shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of
Common Stock to provide for the exercise of this Warrant.
(c) Listing. The Company shall promptly secure the listing of
the shares of Common Stock issuable upon exercise of the 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.
(d) Certain Actions Prohibited. The Company will not, by
amendment of its charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed by it
hereunder, but will at all times in good faith assist in the carrying out
of all the provisions of this Warrant. Without limiting the generality of
the foregoing, the Company (i) will not increase the par value of any
shares of Common Stock receivable upon the exercise of this Warrant above
the Exercise Price then in effect, and (ii) will take all such actions as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant.
(e) Successors and Assigns. This Warrant will be binding upon
any entity succeeding to the Company by merger, consolidation, or
acquisition of all or substantially all the Company's assets.
4. Antidilution Provisions. During the Exercise Period, the
Exercise Price and the number of Warrant Shares shall be subject to
adjustment from time to time as provided in this Paragraph 4.
In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be
rounded up to the nearest cent.
(a) Adjustment of Exercise Price and Number of Shares upon
Issuance of Common Stock. Except as otherwise provided in Paragraphs 4(c)
and 4(e) hereof, if and whenever on or after October 16, 1996, the Company
issues or sells, or in accordance with Paragraph 4(b) hereof is deemed to
have issued or sold, any shares of Common Stock for no consideration or for
a consideration per share (before deduction of reasonable expenses or
commissions or underwriting discounts or allowances in connection
therewith) less than the Market Price (as hereinafter defined) on the date
of issuance (a "Dilutive Issuance"), then immediately upon the Dilutive
Issuance, the Exercise Price will be reduced to a price determined by
multiplying the Exercise Price in effect immediately prior to the Dilutive
Issuance by a fraction, (i) the numerator of which is an amount equal to
the sum of (x) the number of shares of Common Stock actually outstanding
immediately prior to the Dilutive Issuance, plus (y) the aggregate
consideration, calculated as set forth in Paragraph 4(b) hereof, received
by the Company upon such Dilutive Issuance, divided by the Market Price in
effect immediately prior to the Dilutive Issuance, and (ii) the denominator
of which is the total number of shares of Common Stock Deemed Outstanding
(as hereinafter defined) immediately after the Dilutive Issuance.
(b) Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Paragraph 4(a) hereof, the
following will be applicable:
(i) Issuance of Rights or Options. If the Company in any
manner issues or grants any warrants, rights or options, whether or not
immediately exercisable, to subscribe for or to purchase Common Stock or
other securities exercisable, convertible into or exchangeable for Common
Stock ("Convertible Securities") (such warrants, rights and options to
purchase Common Stock or Convertible Securities are hereinafter referred to
as "Options") and the price per share for which Common Stock is issuable
upon the exercise of such Options is less than the Market Price on the date
of issuance ("Below Market Options"), then the maximum total number of
shares of Common Stock issuable upon the exercise of all such Below Market
Options (assuming full exercise, conversion or exchange of Convertible
Securities, if applicable) will, as of the date of the issuance or grant of
such Below Market Options, be deemed to be outstanding and to have been
issued and sold by the Company for such price per share. For purposes of
the preceding sentence, the "price per share for which Common Stock is
issuable upon the exercise of such Below Market Options" is determined by
dividing (i) the total amount, if any, received or receivable by the
Company as consideration for the issuance or granting of all such Below
Market Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of all such
Below Market Options, plus, in the case of Convertible Securities issuable
upon the exercise of such Below Market Options, the minimum aggregate
amount of additional consideration payable upon the exercise, conversion or
exchange thereof at the time such Convertible Securities first become
exercisable, convertible or exchangeable, by (ii) the maximum total number
of shares of Common Stock issuable upon the exercise of all such Below
Market Options (assuming full conversion of Convertible Securities, if
applicable). No further adjustment to the Exercise Price will be made upon
the actual issuance of such Common Stock upon the exercise of such Below
Market Options or upon the exercise, conversion or exchange of Convertible
Securities issuable upon exercise of such Below Market Options.
(ii) Issuance of Convertible Securities.
(A) If the Company in any manner issues or sells any
Convertible Securities, whether or not immediately convertible (other than
where the same are issuable upon the exercise of Options but including upon
any Convertible Securities issued upon exercise of rights granted under
that certain Rights Agreement dated as of March 22, 1996 by and between the
Company and Chemical Mellon Shareholder Services L.L.C. or any successor
agreement (the "Rights Plan"), and the price per share for which Common
Stock is issuable upon such exercise, conversion or exchange (as determined
pursuant to Paragraph 4(b)(ii)(B) if applicable) is less than the Market
Price on the date of issuance, then the maximum total number of shares of
Common Stock issuable upon the exercise, conversion or exchange of all such
Convertible Securities will, as of the date of the issuance of such
Convertible Securities, be deemed to be outstanding and to have been issued
and sold by the Company for such price per share. For the purposes of the
preceding sentence, the "price per share for which Common Stock is issuable
upon such exercise, conversion or exchange" is determined by dividing (i)
the total amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the exercise, conversion or exchange thereof at
the time such Convertible Securities first become exercisable, convertible
or exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities. No further adjustment to the Exercise Price will be made upon
the actual issuance of such Common Stock upon exercise, conversion or
exchange of such Convertible Securities.
(B) If the Company in any manner issues or sells any
Convertible Securities with a variable conversion or exercise price or
exchange ratio (a "Variable Rate Convertible Security"), then the price per
share for which Common Stock is issuable upon such exercise, conversion or
exchange for purposes of the calculation contemplated by Paragraph
4(b)(ii)(A) shall be deemed to be the lowest price per share which would be
applicable (assuming all holding period and other conditions to any
discounts contained in such Convertible Security have been satisfied) if
the Market Price on the date of issuance of such Convertible Security were
75% of the actual Market Price on such date (the "Assumed Variable Market
Price"). Further, if the Market Price at any time or times thereafter is
less than or equal to the Assumed Variable Market Price last used for
making any adjustment under this Section 4 with respect to any Variable
Rate Convertible Security, the Exercise Price in effect at such time shall
be readjusted to equal the Exercise Price which would have resulted if the
Adjusted Variable Market Price at the time of issuance of the Variable Rate
Convertible Security had been 90% of the Market Price existing at the time
of the adjustment required by this sentence.
(iii) Change in Option Price or Conversion Rate. If
there is a change at any time in (i) the amount of additional consideration
payable to the Company upon the exercise of any Options; (ii) the amount of
additional consideration, if any, payable to the Company upon the exercise,
conversion or exchange of any Convertible Securities; or (iii) the rate at
which any Convertible Securities are convertible into or exchangeable for
Common Stock (other than under or by reason of provisions designed to
protect against dilution), the Exercise Price in effect at the time of such
change will be readjusted to the Exercise Price which would have been in
effect at such time had such Options or Convertible Securities still
outstanding provided for such changed additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued
or sold.
(iv) Treatment of Expired Options and Unexercised
Convertible Securities. If, in any case, the total number of shares of
Common Stock issuable upon exercise of any Option or upon exercise,
conversion or exchange of any Convertible Securities is not, in fact,
issued and the rights to exercise such Option or to exercise, convert or
exchange such Convertible Securities shall have expired or terminated, the
Exercise Price then in effect will be readjusted to the Exercise Price
which would have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, to the extent
outstanding immediately prior to such expiration or termination (other than
in respect of the actual number of shares of Common Stock issued upon
exercise, conversion or exchange thereof), never been issued.
(v) Calculation of Consideration Received. If any Common
Stock, Options or Convertible Securities are issued, granted or sold for
cash, the consideration received therefor for purposes of this Warrant will
be the amount received by the Company therefor, before deduction of
reasonable commissions, underwriting discounts or allowances or other
reasonable expenses paid or incurred by the Company in connection with such
issuance, grant or sale. In case any Common Stock, Options or Convertible
Securities are issued or sold for a consideration part or all of which
shall be other than cash, the amount of the consideration other than cash
received by the Company will be the fair value of such consideration,
except where such consideration consists of securities, in which case the
amount of consideration received by the Company will be the Market Price
thereof as of the date of receipt. The fair value of any consideration
other than cash or securities will be determined in good faith by an
investment banker or other appropriate expert of national reputation
selected by the Company and reasonably acceptable to the holder hereof,
with the costs of such appraisal to be borne by the Company.
(vi) Exceptions to Adjustment of Exercise Price. No
adjustment to the Exercise Price will be made under Section 4(a) or this
Section 4(b) (i) upon the exercise of any warrants, options or convertible
securities issued and outstanding on October 16, 1996 (other than rights
granted under the Rights Plan); (ii) upon the issuance, grant or exercise
of any stock or options which may hereafter be issued, granted or exercised
under any employee benefit plan, franchisee stock option plan or customer
stock option plan of the Company now existing or to be implemented in the
future, so long as the issuance of such stock or options is approved by the
Board of Directors of the Company or a committee of directors established
for such purpose; (iii) upon the exercise of the Warrants or issuance or
conversion of the Series B Preferred Stock (including, without limitation,
any Premium Amount (as defined in the Statement with Respect to Shares) or
any other issuance of securities pursuant to the Statement with Respect to
Shares); (iv) upon the issuance of any securities in connection with an
acquisition by the Company of or a merger of the Company with an entity (or
an interest therein) in exchange for securities of the Company, so long as
the aggregate purchase price or merger consideration to be paid to acquire
or merge with such entity (or interest therein) by the Company is approved
by the Board; (v) upon the issuance of any securities in an underwritten
public offering to the extent that the offering price of such Securities is
not less than 90% of the Market Price of such Securities on the date the
price of such public offering is determined; or (vi) in connection with the
exercise of rights granted under the Rights Plan to the extent such rights
became exercisable as a result of the Common Stock ownership of Capital
Ventures International, Susquehanna Financial Group, Inc. and/or their
respective affiliates.
(c) Subdivision or Combination of Common Stock. If the Company
at any time subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) the shares
of Common Stock acquirable hereunder into a greater number of shares, then,
after the date of record for effecting such subdivision, the Exercise Price
in effect immediately prior to such subdivision will be proportionately
reduced. If the Company at any time combines (by reverse stock split,
recapitalization, reorganization, reclassification or otherwise) the shares
of Common Stock acquirable hereunder into a smaller number of shares, then,
after the date of record for effecting such combination, the Exercise Price
in effect immediately prior to such combination will be proportionately and
equitably increased.
(d) Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Paragraph 4 (other than
an adjustment pursuant to Section 4(f) hereof), the number of shares of
Common Stock issuable upon exercise of this Warrant shall be adjusted by
multiplying a number equal to the Exercise Price in effect immediately
prior to such adjustment by the number of shares of Common Stock issuable
upon exercise of this Warrant immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.
(e) Consolidation, Merger or Sale. In case of any consolidation
of the Company with, or merger of the Company into any other corporation,
or in case of any sale or conveyance of all or substantially all of the
assets of the Company other than in connection with a plan of complete
liquidation of the Company, then as a condition of such consolidation,
merger or sale or conveyance, adequate provision will be made whereby the
holder of this Warrant will have the right to acquire and receive upon
exercise of this Warrant in lieu of the shares of Common Stock immediately
theretofore acquirable 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 shares of Common Stock immediately
theretofore acquirable and receivable upon exercise of this Warrant had
such consolidation, merger or sale or conveyance not taken place. In any
such case, the Company will make appropriate provision to insure that the
provisions of this Paragraph 4 hereof will thereafter be applicable as
nearly as may be in relation to any shares of stock or securities
thereafter deliverable upon the exercise of this Warrant. The Company will
not effect any consolidation, merger or sale or conveyance unless prior to
the consummation thereof, the successor corporation (if other than the
Company) assumes by written instrument the obligations under this Paragraph
4 and the obligations to deliver to the holder of this Warrant such shares
of stock, securities or assets as, in accordance with the foregoing
provisions, the holder may be entitled to acquire.
(f) Distribution of Assets. In case the Company shall declare
or make any distribution of its assets (or rights to acquire its assets) to
holders of Common Stock as a partial liquidating dividend, by way of return
of capital or otherwise (including any dividend or distribution to the
Company's shareholders of cash or shares (or rights to acquire shares) of
distribution to the Company' shareholders of cash or shares (or rights to
acquire shares) of capital stock of a subsidiary, including, but not
limited to XLConnect Solutions, Inc. (i.e. a spin-off, but excluding any
dividends payable in cash in the ordinary course out of retained earnings
consistent with the Company's past practices) (a "Distribution"), the
Exercise Price will be reduced, effective on the day immediately following
the date of record for determining shareholders entitled to such
Distribution, by an amount equal to the fair market value of the assets
distributable in such Distribution with respect to each share of the
Company's Common Stock then outstanding (calculated as if all shares of
Common Stock then issuable upon exercise, conversion or exchange of this
Warrant and of all other securities issued by the Company which contain a
provision affording the holders of such securities antidulution rights with
respect to such Distribution were outstanding). For purposes of
determining the fair market value of any assets to be so distributed, the
fair market value of any cash to be distributed shall be the amount of such
cash, the fair market value of any security to be distributed shall be the
Market Price of such security as determined pursuant to Section 4(l)(ii)
hereof and the fair market value of any other assets to be so distributed
shall be determined by an expert of national reputation in appraising the
value of assets of the type so distributed, which expert shall be selected
by the Company and be reasonably acceptable to the holder, with the costs
of such expert to be borne by the Company. No adjustment to the number of
shares issuable upon exercise of this Warrant shall be made as a result of
an adjustment to the Exercise Price in accordance with this Paragraph (f).
In the event there is any change after the effective date of any adjustment
required under this Section 4(f) in the type, quality or amount of any
assets included as part of any Distribution for which an adjustment under
this Section 4(f) was required (other than a change solely in the fair
market value of the assets comprising such Distribution), the Exercise
Price in effect at the effective time of such change will be readjusted to
the Exercise Price which would have been in effect at such time had the
adjustment initially made under this Section 4(f) been determined based on
the changed Distribution.
(g) Notice of Adjustment. Upon the occurrence of any event
which requires any adjustment of the Exercise Price, then, and in each such
case, the Company shall give notice thereof to the holder of this Warrant,
which notice shall state the Exercise Price resulting from such adjustment
and the increase or decrease in the number of Warrant Shares purchasable at
such price upon exercise, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. Such
calculation shall be certified by the chief financial officer of the
Company.
(h) Minimum Adjustment of Exercise Price. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise
Price in effect at the time such adjustment is otherwise required to be
made, but any such lesser adjustment shall be carried forward and shall be
made at the time and together with the next subsequent adjustment which,
together with any adjustments so carried forward, shall amount to not less
than 1% of such Exercise Price.
(i) No Fractional Shares. No fractional shares of Common Stock
are to be issued upon the exercise of this Warrant, but the Company shall
pay a cash adjustment in respect of any fractional share which would
otherwise be issuable in an amount equal to the same fraction of the Market
Price of a share of Common Stock on the date of such exercise.
(j) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon the Common
Stock payable in shares of stock of any class of the Company or make any
other distribution (other than dividends or distributions payable in cash
out of retained earnings consistent with the Company's past practices with
respect to declaring dividends and making distributions) to the holders of
the Common Stock;
(ii) the Company shall offer for subscription pro rata to
the holders of the Common Stock any additional shares of stock of any class
or other rights;
(iii) there shall be any capital reorganization of the
Company, or reclassification of the Common Stock, or consolidation or
merger of the Company with or into, or sale of all or substantially all its
assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder of this
Warrant (a) notice of the date on which the books of the Company shall
close or a record shall be taken for determining the holders of Common
Stock entitled to receive any such dividend, distribution, or subscription
rights or for determining the holders of Common Stock entitled to vote in
respect of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up and (b) in the case of
any such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up, notice of the date (or, if not then
known, a reasonable approximation thereof by the Company) when the same
shall take place. Such notice shall also specify the date on which the
holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for
stock or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least 20
days prior to the record date or the date on which the Company's books are
closed in respect thereto (but in no event more than 10 days prior to the
date notice of such event is to be given by the Company to the public).
Failure to give any such notice or any defect therein shall not affect the
validity of the proceedings referred to in clauses (i), (ii), (iii) and
(iv) above.
(k) Intentionally Omitted.
(l) Certain Definitions.
(i) "Common Stock Deemed Outstanding" shall mean the number
of shares of Common Stock actually outstanding (not including shares of
Common Stock held in the treasury of the Company), plus (x) pursuant to
Paragraph 4(b)(i) hereof, the maximum total number of shares of Common
Stock issuable upon the exercise of Options and the exercise, conversion or
exchange of Convertible Securities (including any Convertible Securities
issuable upon the exercise of Options), as of the date of such issuance or
grant of such Options, if any, and (y) pursuant to Paragraph 4(b)(ii)
hereof, the maximum total number of shares of Common Stock issuable upon
the exercise of Options and the exercise, conversion or exchange of
Convertible Securities (including any Convertible Securities issuable upon
the exercise of Options), as of the date of issuance of such Convertible
Securities, if any.
(ii) "Market Price," as of any date, (i) means the average
of the closing bid prices for the shares of Common Stock as reported by the
National Association of Securities Dealers Automated Quotation National
Market ("NASDAQ-NM") for the five (5) trading days immediately preceding
such date, or (ii) if the NASDAQ-NM is not the principal trading market for
the shares of Common Stock, the average of the last reported sale prices on
the principal trading market for the Common Stock during the same period,
or (iii) if market value cannot be calculated as of such date on any of the
foregoing bases, the Market Price shall be the average fair market value as
reasonably determined by a nationally recognized investment banking firm
selected by the Company and reasonably acceptable to the holder, with the
costs of the appraisal to be borne by the Company. The manner of
determining the Market Price of the Common Stock set forth in the foregoing
definition shall apply with respect to any other security in respect of
which a determination as to market value must be made hereunder.
(iii) "Common Stock," for purposes of this Paragraph 4,
includes the Common Stock, par value $.01 per share, and any additional
class of stock of the Company having no preference as to dividends or
distributions on liquidation, provided that the shares purchasable pursuant
to this Warrant shall include only shares of Common Stock, par value $.01
per share, in respect of which this Warrant is exercisable, or shares
resulting from any subdivision or combination of such Common Stock, or in
the case of any reorganization, reclassification, consolidation, merger, or
sale of the character referred to in Paragraph 4(e) hereof, the stock or
other securities or property provided for in such Paragraph.
5. Issue Tax. The issuance of certificates for Warrant Shares upon
the exercise of this Warrant shall be made without charge to the holder of
this Warrant or such shares for any issuance tax or other costs in respect
thereof, provided 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 the holder of this
Warrant.
6. No Rights or Liabilities as a Shareholder. This Warrant shall
not entitle the holder hereof to any voting rights or other rights as a
shareholder of the Company. No provision of this Warrant, in the absence
of affirmative action by the holder hereof to purchase Warrant Shares, 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 creditors of the Company.
7. Transfer, Exchange, and Replacement of Warrant.
(a) Restriction on Transfer. This Warrant and the rights
granted to the holder hereof are transferable, in whole or in part, upon
surrender of this Warrant, together with a properly executed assignment in
the form attached hereto, at the office or agency of the Company referred
to in Paragraph 7(e) below, provided, however, that any transfer or
assignment shall be subject to the conditions set forth in Paragraph 7(f)
hereof and to the applicable provisions of the Securities Purchase
Agreement. Until due presentment for registration of transfer on the books
of the Company, the Company may treat the registered holder hereof as the
owner and holder hereof for all purposes, and the Company shall not be
affected by any notice to the contrary. Notwithstanding anything to the
contrary contained herein, the registration rights described in Paragraph 8
are assignable only in accordance with the provisions of that certain
Registration Rights Agreement, dated as of October 16, 1996, by and among
the Company and the other signatory thereto (the "Registration Rights
Agreement").
(b) Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the holder hereof at
the office or agency of the Company referred to in Paragraph 7(e) below,
for new Warrants of like tenor representing in the aggregate the right to
purchase the number of shares of Common Stock which may be purchased
hereunder, each of such new Warrants to represent the right to purchase
such number of shares as shall be designated by the holder hereof at the
time of such surrender.
(c) Replacement of Warrant. Upon receipt 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,
upon delivery of an indemnity agreement and security (if any) reasonably
satisfactory in form and amount to the Company, or, in the case of any such
mutilation, upon surrender and cancellation of this Warrant, the Company,
at its expense, will execute and deliver, in lieu thereof, a new Warrant of
like tenor.
(d) Cancellation; Payment of Expenses. Upon the surrender of
this Warrant in connection with any transfer, exchange, or replacement as
provided in this Paragraph 7, this Warrant shall be promptly canceled by
the Company. The Company shall pay all taxes (other than securities
transfer taxes) and all other expenses (other than legal expenses, if any,
incurred by the Holder or transferees) and charges payable in connection
with the preparation, execution, and delivery of Warrants pursuant to this
Paragraph 7.
(e) Register. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.
(f) Exercise or Transfer Without Registration. If, at the time
of the surrender of this Warrant in connection with any exercise, transfer,
or exchange of this Warrant, this Warrant (or, in the case of any exercise,
the Warrant Shares issuable hereunder), shall not be registered under the
Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such exercise, transfer, or
exchange, (i) that the holder or transferee of this Warrant, as the case
may be, furnish to the Company a written opinion of counsel, in form,
substance and scope customary to opinions typically delivered in
transactions of this nature, to the effect that such exercise, transfer, or
exchange may be made without registration under said Act and under
applicable state securities or blue sky laws, (ii) that the holder or
transferee execute and deliver to the Company an investment letter in form
and substance acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a) promulgated under the
Securities Act; provided that no such opinion, letter or status as an
"accredited investor" shall be required in connection with a transfer
pursuant to Rule 144 under the Securities Act.
8. Registration Rights.
The initial holder of this Warrant (and certain assignees
thereof) is entitled to the benefit of such registration rights in respect
of the Warrant Shares as are set forth in the Registration Rights
Agreement.
9. Notices. All notices, requests, and other communications
required or permitted to be given or delivered hereunder to the holder of
this Warrant shall be in writing, and shall be personally delivered, or
shall be sent by certified or registered mail or by recognized overnight
mail courier, postage prepaid and addressed, to such holder at the address
shown for such holder on the books of the Company, or at such other address
as shall have been furnished to the Company by notice from such holder.
All notices, requests, and other communications required or permitted to be
given or delivered hereunder to the Company shall be in writing, and shall
be personally delivered, or shall be sent by certified or registered mail
or by recognized overnight mail courier, postage prepaid and addressed, to
the office of the Company at 000 Xxxxxxxxx Xxxxxxxxx, Xxxxx, Xxxxxxxxxxxx
00000, Attention: Chief Financial Officer, or at such other address as
shall have been furnished to the holder of this Warrant by notice from the
Company. Any such notice, request, or other communication may be sent by
facsimile, but shall in such case be subsequently confirmed by a writing
personally delivered or sent by certified or registered mail or by
recognized overnight mail courier as provided above. All notices,
requests, and other communications shall be deemed to have been given
either at the time of the receipt thereof by the person entitled to receive
such notice at the address of such person for purposes of this Paragraph 9,
or, if mailed by registered or certified mail or with a recognized
overnight mail courier upon deposit with the United States Post Office or
such overnight mail courier, if postage is prepaid and the mailing is
properly addressed, as the case may be.
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA WITHOUT REGARD TO THE BODY OF LAW CONTROLLING CONFLICTS OF
LAW. THE UNITED STATES FEDERAL COURTS LOCATED IN PHILADELPHIA,
PENNSYLVANIA SHALL HAVE EXCLUSIVE JURISDICTION WITH RESPECT TO ANY DISPUTE
ARISING UNDER THIS WARRANT.
11. Miscellaneous.
(a) Amendments. This Warrant and any provision hereof may only
be amended by an instrument in writing signed by the Company and the holder
hereof.
(b) Descriptive Headings. The descriptive headings of the
several paragraphs of this Warrant are inserted for purposes of reference
only, and shall not affect the meaning or construction of any of the provi-
sions hereof.
(c) Cashless Exercise. Notwithstanding anything to the contrary
contained in this Warrant, if the resale of the Warrant Shares by the
holder is not then registered pursuant to an effective registration
statement under the Securities Act on or before the later of (i)
October 15, 1998 and (ii) the date of any exercise of this Warrant, this
Warrant may be exercised by presentation and surrender of this Warrant to
the Company at its principal executive offices with a written notice of the
holder's intention to effect a cashless exercise, including a calculation
(to the extent then calculable) of the number of shares of Common Stock to
be issued upon such exercise in accordance with the terms hereof (a
"Cashless Exercise", and the date of such presentation and surrender being
herein referred to as the "Cashless Exercise Date"). In the event of a
Cashless Exercise, in lieu of paying the Exercise Price in cash, the holder
shall surrender this Warrant for that number of shares of Common Stock
determined by multiplying the number of Warrant Shares to which it would
otherwise be entitled by a fraction, the numerator of which shall be the
excess, if any, of the Market Price as of the Cashless Exercise Date over
the Exercise Price, and the denominator of which shall be the Market Price
as of the Cashless Exercise Date.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
INTELLIGENT ELECTRONICS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Sr. V.P. & CFO
FORM OF EXERCISE AGREEMENT
Dated: ________, ____.
To:_____________________________
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase ________ shares of Common Stock covered
by such Warrant, and makes payment herewith in full therefor at the price
per share provided by such Warrant in cash or by certified or official bank
check in the amount of, or, if the resale of such Common Stock by the
undersigned is not registered pursuant to an effective registration
statement under the Securities Act of 1933, as amended, on or before
October 16, 1998, by surrender of securities issued by the Company
(including a portion of the Warrant) having a market value (in the case of
a portion of this Warrant, determined in accordance with Section 11(c) of
the Warrant) equal to $_________. Please issue a certificate or certifi-
xxxxx for such shares of Common Stock in the name of and pay any cash for
any fractional share to:
Name:________________________________
Signature:___________________________
Address:_____________________________
_____________________________
Note: The above signature should
correspond exactly with the
name on the face of the within
Warrant.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the
name of said undersigned covering the balance of the shares purchasable
thereunder less any fraction of a share paid in cash.
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the within Warrant, with
respect to the number of shares of Common Stock covered thereby set forth
hereinbelow, to:
Name of Assignee Address No of Shares
, and hereby irrevocably constitutes and appoints ______________
________________________ as agent and attorney-in-fact to transfer said
Warrant on the books of the within-named corporation, with full power of
substitution in the premises.
Dated: _____________________, ____,
In the presence of
__________________
Name: ____________________________
Signature: _______________________
Title of Signing Officer or Agent (if
any): ___________________________
Address: ________________________
________________________
Note: The above signature should
correspond exactly with the
name on the face of the within
Warrant.
