EXHIBIT 10.4
EXHIBIT 10.4
FORM OF WARRANT AGREEMENT
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THIS WARRANT SHALL NOT CONSTITUTE AN OFFER
TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE
"RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE
ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
COMMON STOCK PURCHASE WARRANT
To Purchase Shares of No Par Value Common Stock ("Common Stock") of
MICROWARE SYSTEMS CORPORATION
THIS CERTIFIES that, for value received, * (the "INVESTOR") is entitled,
upon the terms and subject to the conditions hereinafter set forth, at any time
on or after the date hereof and on or prior to 8:00 p.m. New York City Time on
April 19, 2005 (the "TERMINATION DATE"), but not thereafter, to subscribe for
and purchase from MICROWARE SYSTEMS CORPORATION, an Iowa corporation (the
"COMPANY"), 43,750 shares of Common Stock (the "WARRANT SHARES") at an exercise
price (as adjusted from time to time pursuant to the terms hereof, the "EXERCISE
PRICE") equal to 115% of the Closing Price (as defined in Section 12(a) below).
The Exercise Price and the number of shares for which the Warrant is exercisable
shall be subject to adjustment as provided herein. This Warrant is being issued
in connection with the Securities Purchase Agreement dated April 19, 2000 (the
"PURCHASE AGREEMENT") entered into between the Company, the Investor and
Westgate International, L.P. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Purchase Agreement.
1. TITLE OF WARRANT. Prior to the expiration hereof and subject to compliance
with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company
by the Holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant together with (a) the Assignment Form annexed
hereto properly endorsed, and (b) any other documentation reasonably
necessary to satisfy the Company that such transfer is in compliance with
all applicable securities laws. The term "HOLDER" shall refer to the
Investor or any subsequent transferee of this Warrant.
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* One warrant agreement was issued to Xxxxxxx Associates, L.P. and a second
identical agreement was issued to Westgate International, L.P.
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2. AUTHORIZATION OF SHARES. The Company covenants that all shares of Common
Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant and
payment of the Exercise Price as set forth herein will be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens
and charges in respect of the issue thereof (other than taxes in respect of
any transfer occurring contemporaneously with such issue or otherwise
specified herein).
3. EXERCISE OF WARRANT.
(a) MECHANICS OF EXERCISE. The Holder may exercise this Warrant, in whole or in
part, at any time and from time to time, by delivering to the offices of
the Company or any transfer agent for the Common Stock this Warrant,
together with a Notice of Exercise in the form annexed hereto specifying
the number of Warrant Shares with respect to which this Warrant is being
exercised, together with payment to the Company of the Exercise Price
therefor.
In the event that the Warrant is not exercised in full, the number of
Warrant Shares shall be reduced by the number of such Warrant Shares for
which this Warrant is exercised and/or surrendered, and the Company, at its
expense, shall within three (3) Trading Days (as defined below) issue and
deliver to the Holder a new Warrant of like tenor in the name of the Holder
or as the Holder (upon payment by Holder of any applicable transfer taxes)
may request, reflecting such adjusted Warrant Shares.
Certificates for shares of Common Stock purchased hereunder shall be
delivered to the Holder hereof within two (2) Trading Days after the date
on which this Warrant shall have been exercised as aforesaid. The Holder
may withdraw its Notice of Exercise at any time if the Company fails to
timely deliver the relevant certificates to the Holder as provided in this
Agreement.
In lieu of delivering physical certificates representing the Warrant Shares
issuable upon conversion of this Warrant, provided the Company's transfer
agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer ("FAST") program, upon request of the Holder,
the Company shall use its best efforts to cause its transfer agent to
electronically transmit the Warrant Shares issuable upon exercise to the
Holder, by crediting the account of the Holder's prime broker with DTC
through its Deposit Withdrawal Agent Commission ("DWAC") system. The time
periods for delivery described above shall apply to the electronic
transmittals through the DWAC system. The Company agrees to coordinate with
DTC to accomplish this objective.
(b) CASHLESS EXERCISE. Notwithstanding the foregoing provision regarding
payment of the Exercise Price in cash, the Holder may elect to receive a
reduced number of Warrant Shares in lieu of tendering the Exercise Price in
cash. In such case, the number of Warrant Shares to be issued to the Holder
shall be computed using the following formula:
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X = Y x (A-B)
-------------
A
where: X = the number of Warrant Shares to be issued to the Holder;
Y = the number of Warrant Shares to be exercised under this
Warrant Certificate;
A = the Market Value (defined below) of one share of Common
Stock; and
B = the Exercise Price.
As used herein, "MARKET VALUE" refers to the closing bid price of the
Common Stock (as reported by Bloomberg, L.P.) on the Trading Day before the
Notice of Exercise and this Warrant are duly surrendered to the Company for
a full or partial exercise hereof. Notwithstanding the foregoing
definition, if the Common Stock is not listed on a national securities
exchange or quoted in the Nasdaq System at the time said Notice of Exercise
is submitted to the Company in the foregoing manner, the Market Value of
the Common Stock shall be as reasonably determined in good faith by the
Board of Directors of the Company and such Holder, unless the Company shall
become subject to a merger, acquisition, or other consolidation pursuant to
which the Company is not the surviving entity, in which case the Market
Value of the Common Stock shall be deemed to be the value received by the
Company's common shareholders pursuant to the Company's acquisition
(subject to Section 12 below).
(c) The term "TRADING DAY" means (x) if the Common Stock is not listed on the
New York or American Stock Exchange but sale prices of the Common Stock are
reported on Nasdaq National Market or another automated quotation system, a
day on which trading is reported on the principal automated quotation
system on which sales of the Common Stock are reported, (y) if the Common
Stock is listed on the New York Stock Exchange or the American Stock
Exchange, a day on which there is trading on such stock exchange, or (z) if
the foregoing provisions are inapplicable, a day on which quotations are
reported by National Quotation Bureau Incorporated.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. In
lieu of issuance of a fractional share upon any exercise hereunder, the
Company at its option will either round up to nearest whole number of
shares or pay the cash value of that fractional share calculated on the
basis of the Fair Market Value (as defined below).
5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares of Common
Stock upon the exercise of this Warrant shall be made without charge to the
Holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder of this Warrant or in such name or names
as may be directed by the Holder of this Warrant; PROVIDED, HOWEVER, that
in the event certificates for shares of Common Stock are to be issued in a
name other than the name of the Holder of this Warrant, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form
attached hereto duly executed by the Holder
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hereof; and PROVIDED FURTHER, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved
in the issuance of any Warrant certificates or any certificates for the
Warrant Shares other than the issuance of a Warrant Certificate to the
Holder in connection with the Holder's surrender of a Warrant Certificate
upon the exercise of all or less than all of the Warrants evidenced
thereby.
6. CLOSING OF BOOKS. The Company will at no time close its shareholder books
or records in any manner which interferes with the timely exercise of this
Warrant.
7. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. Subject to Section 12 of this
Warrant and the provisions of any other written agreement between the
Company and the Investor, the Investor shall not be entitled to vote or
receive dividends or be deemed the holder of Warrant Shares or any other
securities of the Company that may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Investor, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of
par value, or change of stock to no par value, consolidation, merger,
conveyance or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until the Warrant shall have
been exercised as provided herein. However, at the time of the exercise of
this Warrant pursuant to Section 3 hereof, the Warrant Shares so purchased
hereunder shall be deemed to be issued to such Holder as the record owner
of such shares as of the close of business on the date on which this
Warrant shall have been exercised.
8. ASSIGNMENT AND TRANSFER OF WARRANT. This Warrant may be assigned by the
surrender of this Warrant and the Assignment Form annexed hereto duly
executed at the office of the Company (or such other office or agency of
the Company or its transfer agent as the Company may designate by notice in
writing to the registered Holder hereof at the address of such Holder
appearing on the books of the Company); PROVIDED, HOWEVER, that this
Warrant may not be resold or otherwise transferred except (i) in a
transaction registered under the Securities Act of 1933, as amended (the
"ACT"), or (ii) in a transaction pursuant to an exemption, if available,
from registration under the Act and whereby, if reasonably requested by the
Company, an opinion of counsel reasonably satisfactory to the Company is
obtained by the Holder of this Warrant to the effect that the transaction
is so exempt. If this Warrant is duly assigned in accordance with the terms
hereof, then the Company agrees, upon the request of the assignee, to amend
or supplement promptly any effective registration statement covering the
Warrant Shares so that the direct assignee of the original holder is added
as a selling stockholder thereunder.
9. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT; EXCHANGE. The Company
represents warrants and covenants that (a) upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of any Warrant or stock certificate representing the Warrant
Shares, and in case of loss, theft or destruction, of
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indemnity reasonably satisfactory to it, and (b) upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of this Warrant or stock
certificate, without any charge therefor. This Warrant is exchangeable at
any time for an equal aggregate number of Warrants of different
denominations, as requested by the holder surrendering the same, or in such
denominations as may be requested by the Holder following determination of
the Exercise Price. No service charge will be made for such registration or
transfer, exchange or reissuance.
10. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for the
taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may
be taken or such right may be exercised on the next succeeding day not a
legal holiday.
11. EFFECT OF CERTAIN EVENTS. If at any time while this Warrant or any portion
thereof is outstanding and unexpired there shall be a transaction (by
merger or otherwise) in which more than 50% of the voting power of the
Company is disposed of (collectively, a "SALE OR MERGER TRANSACTION"), the
Holder of this Warrant shall have the right thereafter to purchase, by
exercise of this Warrant and payment of the aggregate Exercise Price in
effect immediately prior to such action, the kind and amount of shares and
other securities and property which it would have owned or have been
entitled to receive after the happening of such transaction had this
Warrant been exercised immediately prior thereto, subject to further
adjustment as provided in Section 12.
12. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The number of
and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as set
forth in this Section 12.
(a) SUBDIVISIONS, COMBINATIONS, STOCK DIVIDENDS AND OTHER ISSUANCES. If the
Company shall, at any time while this Warrant is outstanding, (A) pay a
stock dividend or otherwise make a distribution or distributions on any
equity securities (including instruments or securities convertible into or
exchangeable for such equity securities) in shares of Common Stock, (B)
subdivide outstanding shares of Common Stock into a larger number of
shares, or (C) combine outstanding Common Stock into a smaller number of
shares, then each Affected Exercise Price (as defined below) shall be
multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding before such event and the denominator of
which shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section 12(a) shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision or combination. As used herein, the Affected Exercise Prices
(each an "AFFECTED EXERCISE PRICE") shall refer to: (i) the Exercise Price
and (ii) each reported price for the Common Stock on the Principal Market
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(as defined in the Purchase Agreement) occurring on any Trading Day
included in the period used for determining the Closing Price, which
Trading Day occurred before the record date in the case of events referred
to in clause (A) of this subparagraph 12(a) and the effective date in the
case of the events referred to in clauses (B) and (C) of this subparagraph
12(a). "CLOSING PRICE" shall mean the average of the closing bid prices of
the Common Stock recorded on the Principal Market (as reported by the
Bloomberg Financial Network or any successor reporting source) for the five
(5) Trading Days immediately following the Closing Date (as defined in the
Purchase Agreement). The number of shares which may be purchased hereunder
shall be increased proportionately to any reduction in Exercise Price
pursuant to this paragraph 12(a), so that after such adjustments the
aggregate Exercise Price payable hereunder for the increased number of
shares shall be the same as the aggregate Exercise Price in effect just
prior to such adjustments.
(b) OTHER DISTRIBUTIONS. If at any time after the date hereof the Company
distributes to holders of its Common Stock, other than as part of its
dissolution, liquidation or the winding up of its affairs, any shares of
its capital stock, any evidence of indebtedness or any of its assets (other
than Common Stock), then the number of Warrant Shares for which this
Warrant is exercisable shall be increased to equal: (i) the number of
Warrant Shares for which this Warrant is exercisable immediately prior to
such event, (ii) multiplied by a fraction, (A) the numerator of which shall
be the Fair Market Value (as defined below) per share of Common Stock on
the record date for the dividend or distribution, and (B) the denominator
of which shall be the Fair Market Value price per share of Common Stock on
the record date for the dividend or distribution minus the amount allocable
to one share of Common Stock of the value (as jointly determined in good
faith by the Board of Directors of the Company and the Holder) of any and
all such evidences of indebtedness, shares of capital stock,
other securities or property, so distributed. For purposes of this Warrant,
"FAIR MARKET VALUE" shall equal the 5 Trading Day average closing trading
price of the Common Stock on the Principal Market (as defined in the
Purchase Agreement) for the 5 Trading Days preceding the date of
determination or, if the Common Stock is not listed or admitted to trading
on any Principal Market, and the average price cannot be determined as
contemplated above, the Fair Market Value of the Common Stock shall be as
reasonably determined in good faith by the Company's Board of Directors and
the Holder. The Exercise Price shall be reduced to equal: (i) the Exercise
Price in effect immediately before the occurrence of any event (ii)
multiplied by a fraction, (A) the numerator of which is the number of
Warrant Shares for which this Warrant is exercisable immediately before the
adjustment, and (B) the denominator of which is the number of Warrant
Shares for which this Warrant is exercisable immediately after the
adjustment.
(c) MERGER, ETC. If at any time after the date hereof there shall be a merger
or consolidation of the Company with or into or a transfer of all or
substantially all of the assets of the Company to another entity, then the
Holder shall be entitled to receive upon or after such transfer, merger or
consolidation becoming effective, and upon payment of the Exercise Price
then in effect, the number of shares or other securities or property of the
Company
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or of the successor corporation resulting from such merger or
consolidation, which would have been received by the Holder for the shares
of stock subject to this Warrant had this Warrant been exercised just prior
to such transfer, merger or consolidation becoming effective or to the
applicable record date thereof, as the case may be. The Company will not
merge or consolidate with or into any other corporation, or sell or
otherwise transfer its property, assets and business substantially as an
entirety to another corporation, unless the corporation resulting from such
merger or consolidation (if not the Company), or such transferee
corporation, as the case may be, shall expressly assume in writing the due
and punctual performance and observance of each and every covenant and
condition of this Warrant to be performed and observed by the Company.
(d) RECLASSIFICATION, ETC. If at any time after the date hereof there shall be
a reorganization or reclassification of the securities as to which purchase
rights under this Warrant exist into the same or a different number of
securities of any other class or classes, then the Holder shall thereafter
be entitled to receive upon exercise of this Warrant, during the period
specified herein and upon payment of the Exercise Price then in effect, the
number of shares or other securities or property resulting from such
reorganization or reclassification, which would have been received by the
Holder for the shares of stock subject to this Warrant had this Warrant at
such time been exercised.
(e) EXERCISE PRICE ADJUSTMENT. In the event that the Company issues or sells
any Common Stock or securities which are convertible into or exchangeable
for its Common Stock or any convertible securities, or any warrants or
other rights to subscribe for or to purchase or any options for the
purchase of its Common Stock or any such convertible securities (other than
shares or options issued or which may be issued pursuant to (i) the
Company's current employee option plans or shares issued upon exercise of
options, warrants or rights outstanding on the date of the Agreement and
listed in the Company's most recent periodic report filed under the
Exchange Act, or (ii) arrangements with the Investor) at an effective price
per share which is less than the greater of the Exercise Price then in
effect or the Fair Market Value (as described in Section 12(b) above) of
the Common Stock on the trading day next preceding such issue or sale, then
in each such case, the Exercise Price in effect immediately prior to such
issue or sale shall be reduced effective concurrently with such issue or
sale to an amount determined by multiplying the Exercise Price then in
effect by a fraction, (x) the numerator of which shall be the sum of (1)
the number of shares of Common Stock outstanding immediately prior to such
issue or sale, plus (2) the number of shares of Common Stock which the
aggregate consideration received by the Company for such additional shares
would purchase at such Fair Market Value or Exercise Price, whichever is
greater, then in effect; and (y) the denominator of which shall be the
number of shares of Common Stock of the Company outstanding immediately
after such issue or sale.
For the purposes of the foregoing adjustment, in the case of the issuance
of any convertible securities, warrants, options or other rights to
subscribe for or to purchase or exchange for, shares of Common Stock
("CONVERTIBLE SECURITIES"), the maximum number of shares of Common Stock
issuable upon exercise, exchange or conversion of
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such Convertible Securities shall be deemed to be outstanding, provided
that no further adjustment shall be made upon the actual issuance of Common
Stock upon exercise, exchange or conversion of such Convertible Securities.
The number of shares which may be purchased hereunder shall be increased
proportionately to any reduction in Exercise Price pursuant to this
paragraph 12(e), so that after such adjustments the aggregate Exercise
Price payable hereunder for the increased number of shares shall be the
same as the aggregate Exercise Price in effect just prior to such
adjustments.
In the event of any such issuance for a consideration which is less than
such Fair Market Value and also less than the Exercise Price then in
effect, than there shall be only one such adjustment by reason of such
issuance, such adjustment to be that which results in the greatest
reduction of the Exercise Price computed as aforesaid.
(f) (i) The terms of any reorganization, consolidation, merger, sale, transfer
or share exchange shall include such terms so as to continue to give to the
holder hereof the right to receive the securities or property set forth in
this Section 12 upon any exercise following any such reclassification,
consolidation, merger, sale, transfer or share exchange.
(ii) In the event of any adjustment in the number of Warrant Shares
issuable hereunder upon exercise, the Exercise Price shall be inversely
proportionately increased or decreased as the case may be, such that
aggregate purchase price for Warrant Shares upon full exercise of this
Warrant shall remain the same. Similarly, in the event of any adjustment in
the Exercise Price, the number of Warrant Shares issuable hereunder upon
exercise shall be inversely proportionately increased or decreased as the
case may be, such that aggregate purchase price for Warrant Shares upon
full exercise of this Warrant shall remain the same.
13. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at its option, at any
time during the term of this Warrant, reduce but not increase the then
current Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.
14. NOTICE OF ADJUSTMENT; NOTICE OF EVENTS. (i) Whenever the number of Warrant
Shares or number or kind of securities or other property purchasable upon
the exercise of this Warrant or the Exercise Price is adjusted, the Company
shall promptly mail to the Holder of this Warrant a notice setting forth
the number of Warrant Shares (and other securities or property) purchasable
upon the exercise of this Warrant and the Exercise Price of such Warrant
Shares after such adjustment and setting forth the computation of such
adjustment and a brief statement of the facts requiring such adjustment.
(ii) If: (A) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or (B) the Company shall declare a
special nonrecurring cash dividend on or a redemption of its Common Stock;
or (C) the Company shall authorize the granting to all holders of the
Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock
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of any class or of any rights; or (D) the approval of any
stockholders of the Company shall be required in connection with any
reclassification of the Common Stock of the Company, any consolidation or
merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share
exchange whereby the Common Stock is converted into other securities, cash
or property; or (E) the Company shall authorize the voluntary dissolution,
liquidation or winding up of the affairs of the Company, then the Company
shall cause to be mailed to each Warrant holder at their last addresses as
they shall appear upon the Warrant register of the Company, at least 30
calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined or (y)
the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and
the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding up.
15. AUTHORIZED SHARES. The Company covenants that during the period the Warrant
is outstanding and exercisable, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise of any and all purchase
rights under this Warrant. The Company further covenants that its issuance
of this Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute and issue
the necessary certificates for the Warrant Shares upon the exercise of the
purchase rights under this Warrant. The Company will take all such
reasonable action as may be necessary to assure that such Warrant Shares
may be issued as provided herein without violation of any applicable law,
regulation, or rule of any applicable market or exchange.
16. 9.99% LIMITATION.
(i) Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the holder upon
exercise pursuant to the terms hereof shall not exceed a number that, when
added to the total number of shares of Common Stock deemed beneficially
owned by such holder (other than by virtue of the ownership of securities
or rights to acquire securities that have limitations on the holder's right
to convert, exercise or purchase similar to the limitation set forth
herein), together with all shares of Common Stock deemed beneficially owned
by the holder's "affiliates" (as defined in Rule 144 of the Act)
("Aggregation Parties") that would be aggregated for purposes of
determining whether a group under Section 13(d) of the Securities Exchange
Act of 1934 as amended, exists, would exceed 9.99% of the total issued and
outstanding shares of the Common Stock (the "Restricted Ownership
Percentage"); PROVIDED that (w) each holder shall have the right at any
time and from time to time to reduce its Restricted
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Ownership Percentage immediately upon notice to the Company and (x) each
holder shall have the right (subject to waiver) at any time and from time
to time, to increase its Restricted Ownership Percentage immediately in the
event of the announcement as pending or planned, of a transaction or event
referred to in Section 5(m) of the Certificate.
(ii) Each time (a "COVENANT TIME") the holder or an Aggregation Party
makes a Triggering Acquisition (as defined below) of shares of Common Stock
(the "TRIGGERING SHARES"), the holder will be deemed to covenant that it
will not, during the balance of the day on which such Triggering
Acquisition occurs, and during the 61-day period beginning immediately
after that day, acquire additional shares of Common Stock pursuant to
rights-to-acquire existing at that Covenant Time, if the aggregate amount
of such additional shares so acquired (without reducing that amount by any
dispositions) would exceed (x) 9.99% of the number of shares of Common
Stock outstanding at that Covenant Time (including the Triggering Shares)
minus (y) the number of shares of Common Stock actually owned by the holder
at that Covenant Time (regardless of how or when acquired, and including
the Triggering Shares). A "TRIGGERING ACQUISITION" means the giving of a
Notice of Exercise or any other acquisition of Common Stock by the holder
or an Aggregation Party; PROVIDED, however, that with respect to the giving
of such Notice of Exercise, if the associated issuance of shares of Common
Stock does not occur, such event shall cease to be a Triggering Acquisition
and the related covenant under this paragraph shall terminate. At each
Covenant Time, the holder shall be deemed to waive any right it would
otherwise have to acquire shares of Common Stock to the extent that such
acquisition would violate any covenant given by the holder under this
paragraph. Notwithstanding anything to the contrary in the Transaction
Documents, in the event of a conflict between any covenant given under this
paragraph and any obligation of the holder to exercise this Warrant
pursuant to the Transaction Documents, the former shall supersede the
latter, and the latter shall be reduced accordingly. For the avoidance of
doubt:
(A) The covenant to be given pursuant to this paragraph will be given
at every Covenant Time and shall be calculated based on the
circumstances then in effect. The making of a covenant at one
Covenant Time shall not terminate or modify any prior covenants.
(B) The holder may therefore from time to time be subject to multiple
such covenants, each one having been made at a different Covenant
Time, and some possibly being more restrictive than others. The
holder must comply with all such covenants then in effect.
17. COMPLIANCE WITH SECURITIES LAWS. (a) The Holder hereof acknowledges that
the Warrant Shares acquired upon the exercise of this Warrant, if not
registered (or if no exemption from registration exists), will have
restrictions upon resale imposed by state and federal securities laws. Each
certificate representing the Warrant Shares issued to the Holder
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upon exercise (if not registered, for resale or otherwise, or if no
exemption from registration exists) will bear substantially the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
(b) Without limiting the Investor's right to transfer, assign or otherwise
convey the Warrant or Warrant Shares in compliance with all applicable
securities laws, the Investor of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the Warrant Shares to be issued upon
exercise hereof are being acquired solely for the Investor's own account
and not as a nominee for any other party, and that the Investor will not
offer, sell or otherwise dispose of this Warrant or any Warrant Shares to
be issued upon exercise hereof except under circumstances that will not
result in a violation of applicable federal and state securities laws.
18. MISCELLANEOUS.
(a) ISSUE DATE; CHOICE OF LAW; VENUE; JURISDICTION. THE PROVISIONS OF THIS
WARRANT SHALL BE CONSTRUED AND SHALL BE GIVEN EFFECT IN ALL RESPECTS AS IF
IT HAD BEEN ISSUED AND DELIVERED BY THE COMPANY ON THE DATE HEREOF. THIS
WARRANT SHALL BE BINDING UPON ANY SUCCESSORS OR ASSIGNS OF THE COMPANY.
THIS WARRANT WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT FOR MATTERS ARISING UNDER THE
ACT, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE
PARTIES CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE
COURTS SITTING IN THE COUNTY OF NEW YORK IN THE STATE OF NEW YORK IN
CONNECTION WITH ANY DISPUTE ARISING UNDER THIS WARRANT AND HEREBY WAIVES,
TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY
OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE, TO THE BRINGING OF ANY
SUCH PROCEEDING IN SUCH JURISDICTION. EACH PARTY HEREBY AGREES THAT IF THE
OTHER PARTY TO THIS WARRANT OBTAINS A JUDGMENT AGAINST IT IN SUCH A
PROCEEDING, THE PARTY WHICH OBTAINED SUCH JUDGMENT MAY ENFORCE SAME BY
SUMMARY JUDGMENT IN THE COURTS OF ANY
Page 12
COUNTRY HAVING JURISDICTION OVER THE PARTY AGAINST WHOM SUCH JUDGMENT WAS
OBTAINED, AND EACH PARTY HEREBY WAIVES ANY DEFENSES AVAILABLE TO IT UNDER
LOCAL LAW AND AGREES TO THE ENFORCEMENT OF SUCH A JUDGMENT. EACH PARTY TO
THIS WARRANT IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS IN ACCORDANCE WITH
SECTION 18(C). NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(b) MODIFICATION AND WAIVER. This Warrant and any provisions 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. Any
amendment effected in accordance with this paragraph shall be binding upon
the Investor, each future holder of this Warrant and the Company. No
waivers of, or exceptions to, any term, condition or provision of this
Warrant, 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.
(c) NOTICES. Any notice, request or other document required or permitted to be
given or delivered to the Investor or future holders hereof or the Company
shall be personally delivered or shall be sent by certified or registered
mail, postage prepaid, to the Investor or each such holder at its address
as shown on the books of the Company or to the Company at the address set
forth in the Purchase Agreement. All notices under this Warrant shall be
deemed to have been given when received.
A party may from time to time change the address to which notices to it are
to be delivered or mailed hereunder by notice in accordance with the
provisions of this Section 18(c).
(d) SEVERABILITY. Whenever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of any other provision of
this Warrant in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Warrant
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained
herein.
(e) NO IMPAIRMENT. The Company will not, by amendment of its Restated and
Amended Articles of Incorporation 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 of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking
of all such
Page 13
action as may be necessary or appropriate in order to protect the rights of
the Holder against impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any Warrant
Shares above the amount payable therefor on such exercise, and (b) will
take all such action as may be reasonably necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares on the exercise of this Warrant.
(f) SPECIFIC ENFORCEMENT. The Company and the Holder acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of
this Warrant were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall he
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Warrant and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which
either of them may be entitled by law or equity.
[SIGNATURE PAGE FOLLOWS]
Page 14
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officers thereunto duly authorized.
Dated: April 19, 2000
MICROWARE SYSTEMS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
ATTEST:
------------------------------
Name:
NOTICE OF EXERCISE
MICROWARE SYSTEMS CORPORATION
0000 X.X. 000xx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: ___________________
Attention: ___________________
This undersigned hereby elects to exercise the right of purchase represented by
the within Warrant ("Warrant") for _______________ shares of Common Stock*
("Warrant Shares") provided for therein, and to purchase such Warrant Shares by
(CHECK AS APPLICABLE):
/ / payment by cash, wire transfer or certified check,
/ / exercise of the within Warrant by cashless exercise pursuant to
Section 3(b) thereof, resulting in ______ shares of Common Stock
issuable upon surrender of the Warrant,
and requests that certificates for the Warrant Shares be issued as follows:
-------------------------------
Name
--------------------------------
Address
--------------------------------
and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares be issued.
In lieu of delivering physical certificates representing the Warrant Shares
purchasable upon exercise of this Warrant, provided the Company's transfer agent
is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer ("FAST") program, upon request of the Holder, the Company
shall use its best efforts to cause its transfer agent to electronically
transmit the Warrant Shares issuable upon conversion or exercise to the
undersigned, by crediting the account of the undersigned's prime broker with DTC
through its Deposit Withdrawal Agent Commission ("DWAC") system.
Dated:_______________________ Signature:______________________________
______________________________
Name (please print)
______________________________
--------------
* NOTE: If conversion of the Warrant is made by surrender of the Warrant and
the number of shares indicated exceeds the maximum number of shares to which
a holder is entitled, the Company will issue such maximum number of shares
purchasable upon exercise of the Warrant registered in the name of the
undersigned Warrantholder or the undersigned's Assignee as below indicated
and deliver same to the address stated below.
Address (please print)
______________________________
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the
warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
_______________________________________________ whose address is
__________________________________________________________________.
___________________________________________________________________
Dated: ______________,
Holder's Signature:_________________________
Holder's Address:___________________________
___________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
