EXHIBIT 4.2
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") OR THE
SECURITIES LAWS OF ANY STATE; THEREFORE, THIS WARRANT AND THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF MAY NOT BE SOLD OR TRANSFERRED EXCEPT UPON SUCH
REGISTRATION OR UPON DELIVERY TO THE CORPORATION OF AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT REQUIRED FOR SUCH SALE
OR TRANSFER.
WARRANT TO PURCHASE COMMON STOCK
OF
APPLIED VOICE RECOGNITION, INC., D/B/A X-XXXX.XXX
VOID AFTER AUGUST 31, 2003
This certifies that GREENWICH, AG ("Greenwich"), is entitled to
purchase four hundred thousand (400,000) shares (the "Shares") of fully paid and
nonassessable shares of Common Stock, $0.001 par value (the "Common Stock"), of
Applied Voice Recognition, Inc., a Delaware corporation doing business as
x-XXXX.xxx (the "Company"), at a price equal to $1.25 per share. Shares may be
purchased at any time, in whole or in part, until the expiration of this
Warrant. This Warrant is issued pursuant to that certain Applied Voice
Recognition, Inc., d/b/a x-XXXX.xxx Series E Preferred Stock and Warrant
Purchase Agreement dated of even date herewith (the "Purchase Agreement"). This
Warrant and the Common Stock issuable upon exercise of this Warrant is subject
to the terms of a Registration Rights Agreement dated August 10, 1999 between
Greenwich and the Company which agreement provides certain piggyback and demand
registration rights in favor of Greenwich.
The purchase price per share of Common Stock from time to time in
effect under this Warrant, and the number and character of shares covered
hereby, shall be subject to adjustments from time to time in certain instances
as follows, and the term "Exercise Price" shall mean the price per share
originally set forth in this Warrant or any price resulting from adjustments
pursuant to the terms hereof. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant Stock". The term "Holder" shall refer to Greenwich or any person
or entity holding this Warrant in accordance with the terms hereof.
(a) EXERCISE OF WARRANT.
(1) Subject to and in accordance with the provisions hereof, this
Warrant may be exercised in whole or in part after the date appearing
above the signature of the Company below (the "Effective Date"), but not
later than 5:00 p.m., Houston time, on
August 31, 2003; or if such day is a day on which United States
government offices are closed, then on the next succeeding day which
shall not be such a day, by presentation and surrender hereof to the
Company or at the office of its stock transfer agent, if any, with the
Purchase Form annexed hereto duly executed and accompanied by payment of
the Exercise Price for the number of shares specified in such form,
together with all applicable federal and state taxes. If this Warrant
should be exercised in part only, the Company shall, upon surrender of
this Warrant for cancellation, execute and deliver a new Warrant
evidencing the right of the Holder to purchase the balance of the shares
purchasable hereunder. Upon receipt by the Company of this Warrant at
the office or agency of the Company, in proper form for exercise and
pursuant to compliance herewith, together with payment of the Exercise
Price, the Holder shall be deemed to be the holder of record, for all
purposes, of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then
be closed or that certificates representing such shares of Common Stock
shall not then be actually delivered to the Holder. Upon receipt of the
required deliveries, the Company shall, as promptly as practicable, and
in any event within ten days thereafter, cause to be issued and
delivered to the Holder hereof or the transferee designated in the
Purchase Form a certificate or certificates representing the aggregate
number of full shares of Common Stock issuable upon such exercise
registered in the name of the Holder hereof, or the name of the
transferee so designated, as the case may be.
(2) In addition to the method of payment set forth in paragraph
(1) above and in lieu of any cash payment required thereunder, the
Holder shall have the right at any time and from time to time to
exercise this Warrant in full or in part by surrendering this Warrant in
the manner specified in paragraph (1) above in exchange for the number
of shares of Common Stock equal to the product of (x) the number of
shares to which this Warrant is being exercised multiplied by (y) a
fraction, the numerator of which is the Market Price (as herein defined)
of the Common Stock less the Exercise Price (as herein defined) and the
denominator of which is such Market Price. Solely for the purposes of
this paragraph (2), Market Price shall be calculated either (i) on the
date on which the Purchase Form attached hereto is deemed to have been
sent to the Company pursuant to paragraph (1) hereof ("Notice Date") or
(ii) as the average of the Market Price for each of the fifteen trading
days preceding the Notice Date, whichever of (i) or (ii) is greater.
(b) NO IMPAIRMENT. The Company hereby agrees that (i) at all times there
shall be reserved for issuance and delivery upon exercise of this Warrant such
number of shares of its Common Stock as shall be required for issuance and
delivery upon exercise of this Warrant, and (ii) it will take all action as may
be necessary in order that all shares of stock as may be issued pursuant to this
Warrant shall, upon issuance, be duly and validly issued, fully paid,
non-assessable and free from all taxes, liens and charges with respect to the
issuance thereof.
(c) FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, after
payment of the Exercise Price for such fractional share by the
Holder, the Company shall round the number of shares issued upon the exercise of
this Warrant to the next highest full share.
(d) ASSIGNMENT OF WARRANT OR WARRANT STOCK OR LOSS OF WARRANT.
(1) This Warrant may not be sold, transferred, assigned or
hypothecated at any time after its execution and delivery, except upon
compliance with the requirements of this Warrant and any applicable
state or federal securities laws. Shares of Common Stock issued pursuant
to this Warrant shall be subject to the same holding period as shares of
Common Stock issued upon conversion of the Series E Preferred Stock of
the Company, which holding period is described in the Purchase
Agreement.
(2) Any sale, assignment, transfer or hypothecation of this
Warrant shall be made by surrender of this Warrant to the Company or at
the office of its stock transfer agent, if any, with the Assignment Form
annexed hereto duly executed and accompanied with funds sufficient to
pay any transfer tax; whereupon, the Company shall, after first
receiving such evidence as the Company may reasonably require as to
compliance with this Warrant, without charge, execute and deliver a new
Warrant in the name of the assignee named in such instrument of
assignment and this Warrant shall promptly be canceled.
(3) The term "Warrant" as used herein includes any Warrant issued
in substitution for or replacement of this Warrant. Upon receipt by the
Company of evidence of the loss, theft, destruction or mutilation of
this Warrant, and upon surrender and cancellation of this Warrant, if
mutilated, the Company will at its expense execute and deliver a new
Warrant of like tenor and date. When authorizing the execution and
delivery of a new Warrant to replace a Warrant lost, stolen or
destroyed, the Board of Directors of the Company may, in its sole
discretion and as a condition precedent thereto, require the Holder to
deliver an affidavit in a form satisfactory to the Board of Directors of
the Company and to indemnify the Company against any claim that may be
made against the Company with respect to such lost, stolen or destroyed
Warrant.
(e) ANTI-DILUTION AND ADJUSTMENT PROVISIONS. The purchase price per
share of Common Stock from time to time in effect under this Warrant, and the
number and character of shares covered hereby, shall be subject to adjustments
from time to time in certain instances as follows, and the term "Exercise Price"
shall mean the price per share originally set forth in this Warrant or any price
resulting from adjustments pursuant to the terms hereof.
(1) In case the Company shall subdivide its outstanding shares of
Common Stock into a greater number of shares or shall issue in exchange
for its outstanding shares of Common Stock a greater number of shares of
Common Stock, then in each such case from and after the record date for
such subdivision or exchange, the number of shares of Common Stock
covered by this Warrant shall be increased in proportion to such
increase in the number of outstanding shares of Common Stock and the
Exercise Price then in effect shall be correspondingly decreased; and in
the case the Company shall reduce
the number of shares of its Common Stock by a combination of shares or
shall issue in exchange for its outstanding shares of Common Stock a
lesser number of shares of Common Stock, then in each such case from and
after the record date for such combination or exchange, the number of
shares of Common Stock covered by this Warrant shall be decreased in
proportion to such reduction in the number of outstanding shares of
Common Stock, and the then prevailing Exercise Price shall be
correspondingly increased.
(2) In case the Company shall declare and pay a dividend upon its
Common Stock payable in Common Stock, then in each such case from and
after the record date for determining the stockholders entitled to
receive such dividend, the number of shares of Common Stock covered by
this Warrant shall be increased in proportion to the increase in the
number of outstanding shares of Common Stock through such stock
dividend, and the then prevailing Exercise Price shall be
correspondingly decreased.
(3) In case of any reclassification or change of outstanding
shares of Common Stock (other than as a result of a subdivision,
combination or stock dividend) or in case of the consolidation or merger
of the Company with or into any other corporation (other than a merger
in which the Company is the continuing corporation and which does not
result in any reclassification or change in its outstanding shares of
Common Stock), or in case of any sale by the Company of all or
substantially all of its assets to another corporation, the Holder shall
have the right thereafter to receive upon exercise of this Warrant the
amount and kind of shares of capital stock and other securities and
property entitled to be received upon such reclassification, change,
consolidation, merger or sale by a holder of the number of shares of
Common Stock of the Company covered by this Warrant at the then
prevailing Exercise Price, subject to subsequent adjustments as provided
herein.
(f) NOTICES TO HOLDER. So long as this Warrant shall be outstanding and
unexercised (i) if the Company shall pay any dividend or make any distribution
upon the Common Stock, or (ii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then, in any such case, the Company shall
cause to be delivered to the Holder, at least ten days prior to the date
specified in (x) and at least thirty days prior to the date specified in (y)
below, as the case may be, a notice containing a brief description of the
proposed action and stating the date on which (x) a record is to be taken for
the purpose of such dividend, distribution or rights, or (y) such
reclassification reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and at least twenty days
prior notice as to the date, if any is to be fixed, as of which the holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation, or
winding up.
(g) TRANSFER TO COMPLY WITH THE SECURITIES ACT.
(1) This Warrant or the Warrant Stock or any other security
issued or issuable upon exercise of this Warrant may not be offered or
sold except in conformity with the Securities Act, and then only against
receipt of an agreement of such person to whom such offer of sale is
made to comply with the provisions of this Section (g) with respect to
any resale or other disposition of such securities.
(2) The Company may cause the legends set forth at the top of the
first page hereof to be set forth on each Warrant and the following
legends to be set forth on each certificate representing Warrant Stock,
unless counsel for the Company is of the opinion as to any such
certificate that such legend is unnecessary:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE OR THE
SECURITIES LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED EXCEPT UPON SUCH REGISTRATION OR UPON DELIVERY TO THE
CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT REGISTRATION IS NOT REQUIRED FOR SUCH SALE OR
TRANSFER.
(h) APPLICABLE LAW. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
(i) NOTICE. Any notices or certificates by the Company to the Holder and
by the Holder to the Company shall be deemed delivered if in writing and
delivered personally or five (5) days after being sent by certified mail or
registered mail, return receipt requested, to the Holder. For purposes hereof,
the address of the Holder shall be Xxxxx Xxxx 00, 00000 Xxxxxxx, Xxxxxxx,
Attention: Xxxxxx Xxxxxxx, and the address of the Company shall be 0000 Xxxx Xxx
Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, Attention: Chief Financial Officer;
provided, however, either address may be changed by notice given in accordance
herewith.
(j) NONWAIVER. No course of dealing or any delay or failure to exercise
any right, power or remedy hereunder on the part of the Holder hereof shall
operate as a waiver of or otherwise prejudice such Holder's rights, powers or
remedies.
(k) HOLDER NOT A STOCKHOLDER. Prior to the exercise of this Warrant as
hereinbefore provided, the Holder hereof shall not, by virtue of its ownership
of this Warrant, except as specifically provided herein, be entitled to any of
the rights of a stockholder of the Company including, without limitation, the
right as a stockholder to (a) vote on or consent to any proposed action of the
Company or (b) receive notice of or attend any meetings of stockholders of the
Company or notice of any other proceedings of the Company.
(l) SUCCESSORS AND ASSIGNS. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and assigns of
the Company, the Holder hereof and the Holder of the shares of Common Stock
issued upon the exercise hereof, and shall be enforceable by any such Holder.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed effective as of August 18, 1999.
APPLIED VOICE RECOGNITION, INC.,
By: /s/ XXXXXXX X. XXXXXXX
XXXXXXX X. XXXXXXX, CHIEF
