Exhibit 4.4
Form of Note and Warrant Purchase Agreement
DIGITEC 2000, INC.
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
NOTE AND WARRANT PURCHASE AGREEMENT
Re:
$2,000,000 10% Six Month Notes
and
Warrants to Purchase Common Stock
As of September 1, 1998
To the Purchaser named in Schedule I
hereto which is a signatory of this Agreement
Gentlemen:
The undersigned, Digitec 2000, Inc., a Nevada corporation (the "Company"),
hereby agrees with you as follows:
SECTION 1. PURCHASE AND SALES OF NOTES.
1.1. Issue of Notes.
The Company has authorized the issue and sale of its 10% Six Month Notes
in the aggregate principal amount of up to $2,000,000 (the "Notes"), to be dated
the date of issue, to bear interest at the rate of 10% per annum prior to
maturity, which accrued interest shall be payable ninety (90) days after
issuance and at maturity, until the principal amount thereof shall be due and
payable, to bear interest on overdue principal (including any overdue required
or optional prepayment of principal) and premium, if any, and (to the extent
legally enforceable) on any overdue installment of interest at the rate of 18%,
with the unpaid principal thereof to mature on the one hundred eightieth (180th)
day after issuance, and to be substantially in the form attached hereto as
Exhibit A.
Interest on the Notes shall be computed on the basis of a 360-day year of
twelve 30-day months. The principal of the Notes and interest and any premium
thereon shall be payable in accordance with the terms set forth in the Notes,
subject to Section 4.1 of this Agreement. The Notes are not subject to
prepayment or redemption at the option of the Company prior to their expressed
maturity dates, except on the terms and conditions and in the amounts and with
the premium, if any, set forth in Section 4.1 of this Agreement. The terms
"Notes" and "Warrants" as used herein shall include all 10% Six Month Notes and
the Warrants, as hereinafter defined, of the Company delivered pursuant to this
Agreement and the separate Note and Warrant Purchase Agreements, in
substantially similar form, with the other purchasers named in Schedule I
thereto, true and correct copies of which separate agreements will be delivered
to you upon written request. You and such other purchasers are hereinafter
sometimes referred to as the "Purchasers" or "Holder".
1.2. The Closings.
Subject to the terms and conditions hereof and on the basis of the
representations and warranties hereinafter set forth, the Company agrees to
issue and sell to you, and you agree to purchase from the Company, the Note or
Notes at a price of 100% of the principal amount thereof, together with the
number of Warrants, as hereinafter defined, set forth opposite your name in
Schedule I.
Delivery of the respective Notes and Warrants to the Purchasers will be
made at the offices of Patterson, Belknap, Xxxx & Xxxxx LLP, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m., New York time, on such date
not later than September 15, 1998 as may be mutually agreed to by the Company
and the Purchasers against payment therefor in Federal Reserve funds current and
immediately available in New York, New York to an account designated by the
Company. Your commitment to purchase a Note or Notes shall expire on September
15, 1998. One or more Notes will be delivered to you registered in your name or
in the name of such nominee as may be specified in Schedule I hereto. The date
agreed upon for delivery of Notes and Warrants to the Purchasers shall be
referred to as a "Closing Date", and in each instance the consummation of the
purchase of Notes and Warrants by any Purchaser of Notes and Warrants pursuant
hereto shall be referred to as a "Closing".
Concurrently with the execution and delivery of this Agreement or promptly
thereafter, but not later than September 11, 1998, the Company is entering into
a similar agreement with each of the other Purchasers. Your obligations and
those of the other Purchasers shall be several and not joint and you shall not
be liable or responsible for the acts or defaults of any other Purchaser.
1.3. Warrants to Purchase Common Stock
In consideration of, and as an inducement to, your purchase of the Notes,
the Company also agrees to deliver to you on the Closing Date warrants (such
warrants together with the warrants delivered to the other Purchasers being
referred to collectively as the "Warrants") substantially in the form attached
hereto as Exhibit B to purchase 50,000 shares of the Common Stock, $.001 par
value per share, of the Company ("Common Stock") at a price per share equal to
$2.375 (the "Exercise Price") for each $100,000 principal value of Notes
purchased, appropriately apportioned for smaller principal amounts, and
indicated on Schedule 1 pursuant to this Agreement. The number of shares
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which may be purchased upon the exercise of the Warrants and the price per share
are subject to adjustment in the manner and on the terms and conditions set
forth herein.
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1.4. Purchase for Investment.
(a) You represent to the Company that you are purchasing the Notes and the
Warrants for your own account, for investment and with no present intention of
distributing or reselling the Notes, the Warrants, the shares of Common Stock
purchasable thereunder or any interest therein, but without prejudice, however,
to your right at all times to sell or otherwise dispose of all or any part of
the Notes, the Warrants or the shares of Common Stock purchasable thereunder
under a registration statement filed under the Securities Act of 1933, as
amended (the "Act"), or in a transaction exempt from the registration
requirements of such Act and, in the event the facts so warrant, evidenced by an
opinion of counsel reasonably satisfactory to the Company.
(b) You further represent to the Company that you are (i) an "accredited
investor," as that term is defined in Regulation D under the Act and (ii) you
have such knowledge, skill, sophistication and experience in business and
financial matters, based on actual participation, that you are capable of
evaluating the merits and risks of an investment in the Notes, Warrants and the
securities purchasable upon exercise of the Warrants and the suitability thereof
as an investment.
(c) It is understood and agreed that the Notes and Warrants will bear the
legends set forth thereon in Exhibits A and B.
1.5. Failure to Deliver.
If at the Closing of the sale of the Notes to you the Company fails to
tender to you the Notes and the Warrants to be purchased by you or if the
conditions specified in Section 3 have not been fulfilled, you may thereupon
elect to be relieved of all further obligations under this Agreement. Nothing in
this Section shall operate to relieve the Company from any of its obligations
hereunder or to waive any of your rights against the Company.
1.6. Expenses.
Whether or not the Notes and the Warrants are sold, the Company will pay
all expenses relating to this Agreement, including but not limited to:
(a) the cost of reproducing this Agreement, the Warrants, the
Warrant Agreement and the Notes;
(b) the fees and disbursements of your special counsel;
(c) your out-of-pocket expenses;
(d) the cost of delivering to your home office, insured to your
satisfaction, the Notes and the Warrants purchased by you at the closing;
(e) all expenses relating to any amendments, waivers or consents
pursuant to the provisions hereof, including, without limitation, any
amendment, waiver or consent resulting from any work-out, restructuring or
similar proceeding relating to the performance by the
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Company of its obligations under this Agreement, the Warrant Agreement,
the Warrants and the Notes.
The obligations of the Company under this Section 1.6 shall survive the
payment or prepayment of the Notes and the termination of this Agreement and the
exercise or expiration of the Warrants.
SECTION 2. WARRANTIES AND REPRESENTATIONS.
A. The Company warrants and represents to you as of the date of this
Agreement that:
2.1 Corporate Organization and Authority of the Company and Subsidiaries.
The Company
(a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority, has taken all necessary
corporate actions, and has all necessary licenses and permits, to execute,
deliver and perform this Agreement, the Notes and the Warrants and own and
operate its properties and to carry on its business as now conducted and
as presently proposed to be conducted, except as would not have a material
adverse effect on the Company, and, upon execution and delivery by the
Company, this Agreement, the Notes and the Warrants will constitute legal,
valid and binding agreements or instruments of the Company and the
obligations of the Company thereunder will be enforceable in accordance
with their respective terms.
(c) is duly licensed or qualified and is authorized to do business
and is in good standing as a foreign corporation in each jurisdiction
where the character of its properties or the nature of its activities
makes such licensing or qualification necessary, except as would not have
a material adverse effect on the Company and its subsidiaries taken as a
whole.
(d) The execution, delivery and performance of this Agreement, the
Notes and the Warrants, and the consummation of the transactions
contemplated thereby, do not and will not conflict with or result in a
breach of any material term or provision of, or constitute a default
under, or result in the maturing of any indebtedness pursuant to, any
indenture, mortgage, deed of trust, note or loan agreement, or other
material agreement or instrument to which the Company is a party and by
which the Company or any of its properties is bound. The execution,
delivery and performance by the Company of this Agreement, the Notes and
the Warrants and the consummation of the transactions contemplated thereby
do not and will not result in a violation of any judgment, order, decree,
determination or award of any court or governmental authority now in
effect and applicable to the Company or to any of its properties.
(e) Except for those which have been obtained by the Company, no
consent, approval, authorization or order of any court or governmental
agency is or was required (a)
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for the execution and delivery by it of this Agreement, the Notes and the
Warrants, (b) for the consummation by it of the transactions contemplated
hereby or (c) for the performance by it of its obligations hereunder.
2.2. SEC Reports and Filings; Financial Statements.
(a) The Forms 10-K and 10-Q for the periods ending June 30, 1997 and
September 30 and December 31, 1997 and March 31, 1998, together with the
Registration Statement on Form S-1 with respect to the Company's Common Stock
filed with the Securities and Exchange Commission on April 20, 1998 as amended
and declared effective on June 30, 1998 and as subsequently "stickered" are
accurate and complete as of the date of filing ("SEC Documents"). The
consolidated balance sheets of the Company and its subsidiaries as of June 30,
1997, and the related consolidated statements of operations, stockholders'
equity and cash flows of the Company and its subsidiaries for the fiscal years
ended on such date, such annual statement accompanied by a report thereon
containing an opinion without qualifications except as therein noted, by BDO
Xxxxxxx & Co., was prepared in accordance with generally accepted accounting
principles consistently applied, except for accounting changes noted in such
reports, and present fairly the financial position of the Company and its
subsidiaries as of such dates and the results of their operations for such
periods. The unaudited consolidated balance sheets of the Company and its
subsidiaries as of September 30, 1997 and December 31, 1997 and March 31, 1998
and statements of operations, stockholders' equity and cash flows of the Company
and its subsidiaries for the quarterly periods ended on said dates, copies of
which have been furnished to you, have been prepared in accordance with
generally accepted accounting principles consistently applied and present fairly
the financial position of the Company and its subsidiaries as of such dates and
the results of their operations for such periods.
(b) Since March 31, 1997, except as set forth in the aforesaid
quarterly financial statements and Exhibit C, there has been no change in the
properties, business, prospects, profits or condition (financial or otherwise)
of the Company and its subsidiaries except changes in the ordinary course of
business, none of which individually or in the aggregate have been materially
adverse to the properties, business, profits or financial condition of the
Company and its subsidiaries.
2.3. Full Disclosure.
Neither this Agreement, nor the SEC Documents, nor any written statement
furnished by the Company or its agents to you in connection with the negotiation
of the sale of the Notes and the Warrants, contains any untrue statement of a
material fact known to the Company or any of its subsidiaries or omits a
material fact known to the Company or any of its subsidiaries necessary to make
the statements contained therein or herein not misleading. There is no fact
known to the Company or any of its subsidiaries (or which, after due inquiry,
should have been known) which the Company has not disclosed to you in writing
(other than general economic conditions and conditions prevailing in the
industry in general) which materially affects adversely, nor, so far as the
Company can foresee, could materially affect adversely, the properties,
business, prospects, profits or condition (financial or otherwise) of the
Company and its subsidiaries taken as a whole or the ability of the Company to
perform its obligations contained in this Agreement, the Warrants, the Warrant
Agreement or the Notes.
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2.4. Pending Litigation.
Except as set forth in the SEC Documents and on Exhibit C, there are no
actions, suits, investigations, arbitrations or other proceedings pending or, to
the best knowledge of the Company or any of its subsidiaries, threatened against
or affecting the Company or any subsidiary in any court or before any
governmental authority or arbitration board or tribunal which, if adversely
determined, would materially and adversely affect the properties, business,
profits or condition (financial or otherwise) of the Company and its
subsidiaries or the ability of the Company to perform its obligations contained
in this Agreement, the Warrants, the Warrant Agreement or the Notes. Neither the
Company nor any subsidiary is in default with respect to any order of any court,
governmental authority or arbitration board or tribunal, which default could
have a material adverse effect on the condition (financial or otherwise) of the
Company and its subsidiaries taken as a whole.
2.5. Private Offering.
The Company has not offered nor will it offer the Notes or Warrants or any
similar security nor has it solicited nor will it solicit an offer to acquire
the Notes or Warrants or any similar security from or has otherwise approached
or negotiated or will approach or negotiate in respect of the Notes or the
Warrants or any similar security with any person other than the Purchasers and
not more than 50 other institutional investors, each of whom was offered a
portion of the Notes and the Warrants at private sale for investment. For
purposes of the preceding sentence, "similar security" shall mean any security,
the offer or sale of which would be "integrated" with the offer and sale of the
Notes and Warrants under applicable securities laws and regulations.
SECTION 3. CLOSING CONDITIONS.
Your obligation to purchase and pay for the Notes and the Warrants to be
delivered to you on the Closing Date on which you will purchase Notes and
Warrants pursuant to Section 1.2 shall be subject to the following conditions
precedent:
3.1. Warranties and Representations True as of the Closing.
The warranties and representations contained in Section 2 shall be true in
all material respects on the Closing Date with the same effect as though made on
and as of that date.
3.2. Compliance with this Agreement.
The Company shall have performed and complied with all agreements and
conditions contained herein which are required to be performed or complied with
by the Company on or before the Closing Date.
3.3. Officers' Certificate.
You shall have received a certificate dated the Closing Date and signed by
the President or any Vice President, certifying that the conditions specified in
Sections 3.1 and 3.2 have been fulfilled and setting forth the names, addresses
and amounts of Notes purchased by all Purchasers.
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SECTION 4. PREPAYMENTS.
4.1. Company's Option to Prepay.
The Company may at any time in accordance with the other terms of this
Agreement prepay the Notes in whole or in part (provided that any partial
prepayment shall be a prepayment of at least $1,000 principal amount) by paying
to the registered holders of the Notes in immediately available funds in
accordance with the terms of the Notes the principal amount to be prepaid plus
all interest owing on the principal amount so prepaid (accrued to the time of
actual payment)..
SECTION 5. COMPANY BUSINESS COVENANTS.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
5.1. Maintenance of Properties and Corporate Existence.
(a) The Company will, and will cause each of its subsidiaries to do or
cause to be done, all things necessary to preserve and keep in full force, and
effect the existence of the Company and each of its subsidiaries and the rights
and franchises of the Company and each of its subsidiaries which are material to
the proper conduct of the business of the Company and its subsidiaries.
(b) The Company shall (i) reserve at all times a sufficient number of
shares of Common Stock to permit the exercise of the Warrants and (ii) take no
action to limit or prevent the exercise of the Warrants.
5.2. Financial Reports.
The Company will provide the following reports to each registered holder
of Notes:
(a) as soon as practicable and in any event within 50 days after the
end of each quarterly period (other than the last quarterly period) in
each fiscal year, consolidated statements of operations, stockholders'
equity and cash flows of the Company and its subsidiaries for the period
from the beginning of the current fiscal year to the end of such quarterly
period, and a consolidated balance sheet of the Company and its
subsidiaries as at the end of such quarterly period, setting forth in each
case in comparative form figures for the corresponding period in the
preceding fiscal year, all in reasonable detail and certified by an
authorized financial officer of the Company, subject to changes resulting
from year end adjustments;
(b) as soon as practicable and in any event within 95 days after the
end of each fiscal year, consolidating and consolidated statements of
operations, stockholders' equity and cash flows of the Company and its
subsidiaries for such year, and the consolidating and consolidated balance
sheet of the Company and its subsidiaries as at the end of such year,
setting forth in each case in comparative form corresponding consolidated
figures from the preceding annual audit, all in reasonable and, as to the
consolidated statements, certified to
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the Company by its independent public accountants (and accompanied by a
certificate of such accountants stating (i) that they have reviewed this
Agreement, (ii) whether, in making their audit, such accountants have
become aware of any condition, circumstance or event which then
constitutes an Event of Default and (iii) if any such condition,
circumstance or event is known to them, specifying the nature and period
of existence thereof).
5.3. Payment of Notes, Registers and Maintenance of Office.
(a) The Company will punctually pay or cause to be paid the principal,
premium, if any, and interest to become due in respect of the Notes according to
the terms thereof. The Company will maintain an office which shall at all times
be in the State of New York where notices, presentations, demands and service of
process in respect of this Agreement, the Notes or the Warrants may be made upon
it. The register of the Notes and Warrants shall be maintained thereat by the
Company. Such office shall be maintained at 0 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, until such time as the Company shall notify the registered holders
of the Notes and the Warrants of any change of location of such office.
(b) The Company irrevocably and unconditionally submits to the
jurisdiction of the courts of the State of New York in respect to all matters
arising under this Agreement, the Notes and the Warrants and hereby waives any
objection to the laying of venue or convenience of the forum in any suit, action
or proceeding in such courts.
SECTION 6. ANTI-DILUTION PROVISIONS; REGISTRATION RIGHTS
6.1. Anti-Dilution Provisions.
The Exercise Price shall be subject to adjustment from time to time as
provided in Sections 6.1 through 6.12. Upon each adjustment of the Exercise
Price, each holder of a Warrant (a "Holder") shall thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the largest
number of Warrant Shares obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
hereunder immediately prior to such adjustment and dividing the product thereof
by the Exercise Price resulting from such adjustment. For purposes of this
Agreement, the term "Capital Stock", as used herein, means the Common Stock and
any additional class of stock of the Company having no preference as to
dividends or distributions on liquidation which may be authorized in the future
by an amendment to the Company's charter. In addition, as used hereinafter, the
following terms have the following meanings:
"Additional Shares of Capital Stock" shall mean all shares (including
treasury shares) of Capital Stock issued or sold (or, pursuant to Sections 6.4
or 6.5 hereof deemed to be issued) by the Company after the date hereof, whether
or not subsequently reacquired or retired by the Company, other than shares of
Common Stock issued upon the exercise of the Warrants.
"Convertible Securities" shall mean any evidences of indebtedness, shares
of stock, or securities directly or indirectly convertible into or exchangeable
for Additional Shares of Capital Stock.
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"Market Price" shall mean, on any date specified herein, (A) if any class
of Capital Stock is listed or admitted to trading on any national securities
exchange, the highest price obtained by taking the arithmetic mean over a period
of 20 consecutive Trading Days ending the second Trading Day prior to such date
of the average, on each such Trading Day, of the high and low sale prices of
shares of each such class of Capital Stock or if no such sale takes place on
such date, the average of the highest closing bid and lowest closing asked
prices thereof on such date, in each case as officially reported on all national
securities exchanges on which each such class of Capital Stock is then listed or
admitted to trading, or (B) if no shares of any class of Capital Stock are then
listed or admitted to trading on any national securities exchange or if such
exchange is not the principal trading market for such Capital Stock, the last
sale price of any class of Capital Stock on such date in the over-the-counter
market as reported by NASDAQ if such Capital Stock is quoted on the NASDAQ
National Market or NASDAQ SmallCap Market or the National Association of
Securities Dealers, Inc., if quoted on the OTC Bulletin Board, or, if no such
shares of any class of Capital Stock are then quoted in such markets, the
average of the highest bid and lowest asked prices as published by the National
Quotation Bureau, Inc. or any similar successor organization. If no shares of
any class of Capital Stock are then listed or admitted to trading on any
national securities exchange and if no last sale price or closing bid and asked
prices thereof are then so reported, quoted or published in the over-the-counter
market, "Market Price" shall mean the higher of (x) the book value per share of
Capital Stock (assuming for the purposes of this calculation the economic
equivalence of all shares of all classes of Capital Stock) as determined on a
fully diluted basis in accordance with generally accepted accounting principles
by a firm of independent certified public accountants of recognized standing
selected by the Board of Directors of the Company, as of the last day of any
month ending within 60 days preceding the date as of which the determination is
to be made or (y) the fair value per share of Capital Stock (assuming for the
purposes of this calculation the economic equivalence of all shares of all
classes of Capital Stock), as determined on a fully diluted basis in good faith
by an independent investment banking firm (as selected by the Board of Directors
of the Company), as of a date which is 15 days preceding the date as of which
the determination is to be made.
"Options" shall mean rights, options, or warrants to subscribe for,
purchase, or otherwise acquire either Additional Shares of Capital Stock or
Convertible Securities.
"Other Securities" shall mean any stock (other than Capital Stock) and any
other securities of the Company or any other person (corporate or otherwise)
which the Holders at any time shall be entitled to receive, or shall have
received, upon the exercise or partial exercise of the Warrants, in lieu of or
in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 6.10 hereof or otherwise.
"Warrant Shares" shall mean the shares of Capital Stock or Other
Securities issued or issuable upon exercise of a Warrant.
6.2. Issuance of Additional Shares of Capital Stock.
In case the Company at a time or from time to time after the date hereof,
shall issue or sell Additional Shares of Capital Stock without consideration or
for a consideration per share less than the greater of the Exercise Price or the
Market Price in effect, in each case, on the date of and
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immediately prior to such issue or sale, then, and in each such case, subject to
Section 6.9 hereof, the Exercise Price shall be reduced, concurrently with such
issue or sale, to a price (calculated to the nearest .1 of a cent) determined by
multiplying such Exercise Price by a fraction:
(a) the numerator of which shall be (i) the number of shares of
Capital Stock outstanding immediately prior to such issue or sale plus (ii) the
number of shares of Capital Stock which the aggregate consideration received by
the Company for the total number of such Additional Shares of Capital Stock so
issued or sold would purchase at the greater of such Market Price or such
Exercise Price, and
(b) the denominator of which shall be the number of shares of
Capital Stock outstanding immediately after such issue or sale;
provided that, for the purposes of this Section 6.2, (x) immediately after any
Additional Shares of Capital Stock are deemed to have been issued pursuant to
Section 6.4 or 6.5 hereof, such Additional Shares shall be deemed to be
outstanding, and (y) treasury Shares shall not be deemed to be outstanding.
6.3. Extraordinary Dividends and Distributions.
In case the Company, at any time or from time to time after the date
hereof shall declare, order, pay, or make a dividend or other distribution
(including, without limitation, any distribution of other or additional stock or
other securities or property or Options by way of dividend or spin-off,
reclassification, recapitalization, or similar corporate rearrangement) on the
Capital Stock, other than (a) a dividend payable in Additional Shares of Capital
Stock or Convertible Securities or in Options for Capital Stock or (b) a
dividend payable in cash or other property, declared out of retained earnings of
the Company, then, and in each such case, subject to Section 6.9 hereof, the
Exercise Price in effect immediately prior to the close of business on the
record date fixed for the determination of holders of any class of securities
entitled to receive such dividend or distribution shall be reduced, effective as
of the close of business on such record date, to a price (calculated to the
nearest .1 of a cent) determined by multiplying such Exercise Price by a
fraction
(a) the numerator of which shall be the Market Price in effect on
such record date or, if any class of Capital Stock trades with respect to said
dividend or other distribution on an ex-dividend basis, the date prior to the
commencement of ex-dividend trading, less the value of such dividend or
distribution (as determined in good faith by the Board of Directors of the
Company) applicable to one share of Capital Stock, and
(b) the denominator of which shall be such Market Price.
6.4. Treatment of Options and Convertible Securities.
In case the Company, at any time to time after the date hereof, shall
issue, sell, grant, or assume, or shall fix a record date for the determination
of holders of any class of securities entitled to receive any Options or
Convertible Securities, then, and in each such case, the maximum number of
Additional Shares of Capital Stock (as set forth in the instrument relating
thereto, without regard
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to any provisions contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Capital Stock issued as
of the time of such issue, sale, grant, or assumption or, in case such a record
date shall have been fixed, as of the close of business on such record date,
provided that such Additional Shares of Capital Stock shall not be deemed to
have been issued unless the consideration per share (determined pursuant to
Section 6.06 hereof) of such shares would be less than the greater of the
Exercise Price or the Market Price in effect, in each case, on the date of and
immediately prior to such issue, sale, grant, or assumption or immediately prior
to the close of business on such record date or, if the Capital Stock trades
with respect to said Options or Convertible Securities on an ex-dividend basis,
on the date prior to the commencement of ex-dividend trading, as the case may
be, and provided, further, that in any such case in which Additional Shares of
Capital Stock are deemed to be issued,
(a) no further adjustment of the Exercise Price shall be made upon
the subsequent issue or sale of Additional Shares of Capital Stock or
Convertible Securities upon the exercise of such Options or the conversion or
exchange of such Convertible Securities;
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any change in the
consideration payable to the Company, or change in the number of Additional
Shares of Capital Stock issuable, upon the exercise, conversion, or exchange
thereof (by change of rate or otherwise), the Exercise Price computed upon the
original issue, sale, grant, or assumption thereof (or upon the occurrence of
the record date with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such change becoming effective, be recomputed to
reflect such change insofar as it affects such Options, or the rights of
conversion or exchange under such Convertible Securities, which are outstanding
at such time;
(c) upon the expiration of any such Options or of the rights of
conversion or exchange under any such Convertible Securities which shall not
have been exercised (or upon purchase by the Company and cancellation or
retirement of any such Options which shall not have been exercised or of any
such Convertible Securities the rights of conversion or exchange under which
shall not have been exercised), the Exercise Price computed upon the original
issue, sale, grant, or assumption thereof (or upon the occurrence of the record
date with respect thereto), and any subsequent adjustments based thereon, shall,
upon such expiration (or such cancellation or retirement, as the case may be),
be recomputed as if:
(i) in the case of Options for Capital Stock or of Convertible
Securities, the only Additional Shares of Capital Stock issued or sold (or
deemed issued or sold) were the Additional Shares of Capital Stock, if any,
actually issued or sold upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the consideration received therefor
were (A) an amount equal to (1) the consideration actually received by the
Company for the issue, sale, grant, or assumption of all such Options, whether
or not exercised, plus (2) the consideration actually received by the Company
upon such exercise, minus (3) the consideration paid by the Company for any
purchase of such Options which were not exercised, or (B) an amount equal to (1)
the consideration actually received by the Company for the issue, sale, grant,
or assumption of all such Convertible Securities which were a converted or
exchanged, plus (2) the additional consideration, if any, actually received by
the Company upon such conversion or exchange, minus
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(3) the excess, if any, of the consideration paid by the Company for any
purchase of such Convertible Securities, the rights of conversion or exchange
under which were not exercised over an amount that would be equal to the fair
value (as determined in good faith by the Board of Directors of the Company) of
the Convertible Securities so Purchased if such Convertible Securities were not
convertible into or exchangeable for Additional Shares of Capital Stock, and
(ii) in the. case of Options for Convertible Securities, only
the Convertible Securities, if any, actually issued or sold upon the exercise of
such Options were issued at the time of the issue, sale, grant, or assumption of
such Options, and the consideration received by the Company for the Additional
Shares of Capital Stock deemed to have then been issued were an amount equal to
(A) the consideration actually received by the Company for the issue, sale,
grant, or assumption of all such Options, whether or not exercised, plus (B) the
consideration deemed to have been received by the Company (pursuant to Section
6.6 hereof) upon the issue or sale of the Convertible Securities with respect to
which such Options were actually exercised, minus (C) the consideration paid by
the Company for any purchase of such Options which were not exercised; and
(d) no readjustment pursuant to subdivision (b) or (c) above shall
have the effect of increasing the Exercise Price then in effect, unless such
adjustment is in respect of the expiration of Options consisting of rights
issued to shareholders of the Company to purchase Capital Stock or Convertible
Securities, which rights expire not more than 60 days after the issue thereof,
in which event such readjustment may have the effect of increasing the Exercise
Price by an amount not in excess of the amount of the adjustment thereof
originally made in respect of the issue of such rights.
6.5. Treatment of Stock Dividends, Stock Splits, Etc.
In case the Company, at any time or from time to time after the date
hereof, shall declare or pay any dividend or other distribution on the Capital
Stock payable in Capital Stock, or shall effect a subdivision of the outstanding
shares of Capital Stock into a greater number of shares of Capital Stock (by
reclassification or otherwise than by payment of a dividend in Capital Stock),
then, and in each such case, Additional Shares of Capital Stock shall be deemed
to have been issued (a) in the case of any such dividend, immediately after the
close of business on the record date for the determination of holders of any
class of securities entitled to receive such dividend, or (b) in the case of any
such subdivision, at the close of business on the day immediately prior to the
day upon which such corporate action becomes effective.
6.6. Computation of Consideration.
For the purposes of Sections 6.1 through 6.12:
(a) The consideration for the issue or sale of any Additional Shares
of Capital Stock or for the issue, sale, grant, or assumption of any Options or
Convertible Securities, irrespective of the accounting treatment of such
consideration,
(i) insofar as it consists of cash, shall be computed as the
amount of cash received by the Company, and insofar as it consists of securities
or other property, shall be computed as of the date immediately preceding such
issue, sale, grant, or assumption as the fair value (as
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determined in good faith by the Board of Directors of the Company) of such
consideration (or, if such consideration is received for the issue or sale of
Additional Shares of Capital Stock and the Market Price thereof is less than the
fair value, as so determined, of such consideration, then such consideration
shall be computed as the Market Price of such Additional Shares of Capital
Stock), in each case without deducting any expenses paid or incurred by the
Company, any commissions or compensation paid or concessions or discounts
allowed to underwriters, dealers, or others performing similar services, and any
accrued interest or dividends in connection with such issue or sale, and
(ii) in case Additional Shares of Capital Stock are issued or
sold or Options or Convertible Securities are issued, sold, granted, or assumed
together with other stock or securities or other assets of the Company for a
consideration which covers both, shall be the proportion of such consideration
so receive computed as provided in subdivision (i) above, allocable to such
Additional Shares of Capital Stock or Options or Convertible Securities as the
case may be, all as determined in good faith by the Board of Directors of the
Company.
(b) All Additional Shares of Capital Stock, Options, or Convertible
Securities issued in payment of any dividend or other distribution on any class
of stock of the Company and all Additional Shares of Capital Stock issued to
effect a subdivision of the outstanding shares of Capital Stock into a greater
number of shares of Capital Stock (by reclassification or otherwise than by
payment of a dividend in Capital Stock) shall be deemed to have been issued
without consideration.
(c) Additional Shares of Capital Stock deemed to have been issued
for consideration pursuant to Section 6.4 hereof, relating to Options and
Convertible Securities, shall be deemed to have been issued for a consideration
per share determined by dividing
(i) the total amount, if any, received and receivable by the
Company as consideration for the issue, sale, grant, or assumption of the
Options or Convertible Securities in question, plus the minimum aggregate amount
of additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Company upon the exercise in full of such
Options or the conversion or exchange of such Convertible Securities or, in the
case of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, in each case comprising such consideration as provided in the
foregoing subdivision (a),
by
(ii) the maximum number of shares of Capital Stock (as set
forth in the instruments relating thereto, without regard to any occasion
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
(d) In case the Company shall issue any Additional Shares of Capital
Stock, Options, or Convertible Securities in connection with the acquisition by
the Company of the stock or assets of any other Corporation or the merger of any
other corporation into the Company under circumstances where on the date of
issue of such Additional Shares of Capital Stock, Options, or
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Convertible Securities the consideration per share received for such Additional
Shares of Capital Stock or deemed to have been received for the Additional
Shares of Capital Stock deemed to be issued pursuant to Section 6.4 hereof is
less than the Market Price per share of the Capital Stock in effect immediately
prior to such issue, but on the date the number of Additional Shares of Capital
Stock or the amount and the exercise price or conversion price of such Options
or Convertible Securities to be so issued were set forth in a binding agreement
between the Company and the other party or parties to such transaction, the
consideration received for such Additional Shares of Capital Stock or deemed to
have been received for the Additional Shares of Capital Stock deemed to be
issued pursuant to Section 6.4 hereof would not have been less than the Market
Price of the Capital Stock then in effect, such Additional Shares of Capital
Stock shall not be deemed to have been issued for less than the Market Price of
the Capital Stock if such terms so set forth in such binding agreement are not
changed prior to the date of issue.
6.7. Adjustments for Combinations, Etc.
In case the outstanding shares of Capital Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Capital Stock, the Exercise Price in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
6.8. Dilution in Case of Other Securities.
In case any Other Securities shall be issued or sold or shall become
subject to issue or sale upon the conversion or exchange of any securities of
the Company or to subscription, purchase, or other acquisition pursuant to any
options issued or granted by the Company for a consideration such as to dilute,
on a basis to which the standards established in the other provisions of
Sections 6.1 through 6.12 are applicable, the exercise rights of the Holders,
then, and in each such case, the computations, adjustments, and readjustments
provided for in Sections 6.1 through 6.12 with respect to the Exercise Price
shall be made as nearly as possible in the manner so provided and applied to
determine the amount of Other Securities from time to time receivable upon the
exercise of the Warrants, so as to protect the Holders against the effect of
such dilution.
6.9. Minimum Adjustment of Exercise Price.
If the amount of any adjustment of the Exercise Price required Pursuant to
Sections 6.1 through 6.12 would be less than two percent (2%) of the Exercise
Price in effect at the time such adjustment is otherwise so required to be made,
such amount shall be carried forward and adjustment with respect thereto made at
the time of and together with any subsequent adjustment which, together with
such amount and any other amount or amounts so carried forward, shall aggregate
at least two percent (2%) of such Exercise Price; provided that, upon the
exercise of the Warrants, all adjustments carried forward and not theretofore
made up to and including the date of such exercise shall, with respect to the
portion of the Warrants then exercised, be made to the nearest .1 of a cent.
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6.10. Certain Issues Excepted.
Anything herein to the contrary notwithstanding, the Company shall not be
required to make any adjustment of the Exercise Price in the case of (a) the
issuance of the Warrants, (b) the issuance of shares of Common Stock issuable
upon exercise of the Warrants, (c) the granting, after the date hereof of stock
options, warrants, phantom stock, restricted shares, performance shares or stock
appreciation rights with respect to Capital Stock by the Company to employees of
the Company or any of its subsidiaries pursuant to any stock compensation plan
approved by the shareholders of the Company, (d) the issuance of shares of
Common Stock upon the exercise of the stock options referred to in clause (c)
above, and (e) the issuance of shares of Common Stock pursuant to those
outstanding securities of the Company as of the date of this Agreement.
6.11. Changes in Capital Stock.
In case at any time the Company shall be a party to any transaction
(including, without limitation, a merger, consolidation, sale of all or
substantially all the Company's assets, liquidation, or recapitalization of the
Capital Stock) in which the previously outstanding Capital Stock shall be
changed into or exchanged for different securities of the Company or common
stock or other securities of another corporation or interests in a noncorporate
entity or other property (including cash) or any combination of any of the
foregoing (each such transaction being herein called the "Transaction", the date
of consummation of the Transaction being herein called the "Consummation Date,"
the Company (in the case of a recapitalization of the Capital Stock or any other
such transaction in which the Company retains substantially all of its assets
and survives as a corporation) or such other corporation or entity (in each
other case) being herein called the "Acquiring Company", and the common stock
(or equivalent equity interests) of the Acquiring Company being herein called
the "Acquirer's Common Stock"), then, as a condition of the consummation of the
Transaction, lawful and adequate provisions shall be made so that the Holders,
upon the exercise thereof at any time on or after the Consummation Date, shall
be entitled to receive, and the Warrants shall thereafter represent the right to
receive, upon payment of the then effective Exercise Price, in lieu of the
Common Stock issuable upon such exercise prior to the Consummation Date, shares
of the Acquirer's Common Stock.
6.12. Notice of Adjustment.
Upon the occurrence of any event requiring an adjustment of the Exercise
Price, then and in each such case the Company shall promptly deliver to the
Holders an officer's certificate stating the Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares of
Common Stock issuable upon exercise of the Warrants, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based. Within 90 days after each fiscal year in which any such adjustment shall
have occurred, or within 30 days after any request therefor by a Holder stating
that such Holder contemplates exercise of the Warrants, the Company will obtain
and deliver to the Holders the opinion of its regular independent auditors or
another firm of independent certified public accountants of recognized national
standing selected by the Company's Board of Directors, which opinion shall
confirm adjustments to the Exercise Price.
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6.13. Registration Rights.
(a) If the Company at any time proposes to register any transfer of
its Capital Stock under the Securities Act for its own account or for the
account of a security holder (other than a registration relating to employee
benefit plans, the acquisition of another company or business, or an exchange
offer solely for already outstanding securities of the Company), the Company
will each such time give prompt written notice to all holders of outstanding
Warrant Shares (herein collectively called the "Prospective Sellers") of its
intention to do so. Upon the written notification by any Prospective Seller of
an intention to register a transfer of Warrant Shares under this Section 6.13
(stating the intended method of transfer of such Warrant Shares by such
Prospective Seller and the number of Warrant Shares to be transferred), given
within thirty (30) days after receipt of any such notice from the Company, the
Company will cause such intended transfer of all Warrant Shares of which any
such Prospective Sellers shall have given such notice to be registered under the
Securities Act. The Company shall have the right to reduce or eliminate Warrant
Shares of a Prospective Seller to be included pursuant to exercise of its
incidental rights under this Section 6.13 in an underwritten offering, by the
Company if, in the good faith opinion of the managing underwriter, supported by
written reasons therefor, the inclusion of such shares would raise a substantial
doubt as to whether the proposed offering could be successfully consummated, and
if all directors or officers of the Company who had sought to have any of their
shares included in such registration shall have withdrawn all such shares from
registration; provided, however, that any reduction of Warrant Shares of a
Prospective Seller to be included in an incidental registration pursuant to the
above shall be made on a basis no less favorable to such Prospective Seller than
a pro rata reduction of all securities requested to be registered on an
incidental basis by all sellers of securities in such registration. The Company
shall undertake to include in such a registration all of the Warrant Shares
requested by the Prospective Sellers to be included in such registration that
are not eliminated from such registration by the underwriters. In the case of an
underwritten public offering by the Company, each Prospective Seller
participating in such incidental registration shall, if requested by the
managing underwriter, agree not to transfer any securities of the Company held
by such Prospective Seller for a period of up to thirty (30) days following the
effective date of the registration statement relating to such offering or such
longer period as may be reasonably requested by such underwriter, but in no
event to exceed ninety (90) days, and the Company hereby covenants that it will
take whatever actions (including amendment of its registration statement) shall
be reasonably necessary to enable such Prospective Seller to register a transfer
of any such securities at such time.
(b) (i) Following the Company becoming eligible to register
securities with the Securities and Exchange Commission on Form S-3, the Company
shall effect a registration on Form S-3 (or similar short form) with respect to
all of the Warrant Shares whether or not registrations have been previously
requested; provided if the Company has not filed a registration on Form S-3 (or
similar short form) with respect to all of the Warrant Shares within six months
of the Closing of the sale of the last of the Notes, the Company shall file a
registration statement with respect to all of the Warrant Shares on Form S-1
prior to the expiration of such six month period and the Company shall use its
best efforts to have such registration statement declared effective promptly;
provided, further, if the Company determines in good faith that such filing
would interfere with a material financing or acquisition and so notifies the
holders of Warrant Shares, the Company shall have the right to delay for a
period not to exceed ninety days the registration of Warrant Shares contemplated
hereunder. (ii) With respect to any registration under Section 6.13, the Company
shall bear all expenses and pay all fees in connection with such registration,
including the preparation, filing and amendment of the registration statement
and the printing of a prospectus and any supplement thereto in such reasonable
-17-
quantities as requested by a Prospective Seller. The Company shall keep such
registration effective and the prospectus current until all of the Warrant
Shares registered thereunder have been sold.
(c) The Prospective Sellers shall not have the right to participate
in a registration under Section 6.13 if the Prospective Sellers receive a
written opinion of counsel for the Company, in substance and authorship
acceptable to the Prospective Sellers, together with a confirming opinion of
counsel selected by such Prospective Sellers, which opinion shall be paid for by
the Company, that such Prospective Sellers may make such transfer of all of
their Warrant Shares (if applicable) in a public sale which will be in
compliance with all applicable securities laws concerning transfer of
non-registered securities. If Prospective Sellers participate in a registration
under this Section 6.13, the Company and such Prospective Sellers shall provide
to the other the usual indemnifications.
SECTION 7. EVENTS OF DEFAULT.
7.1. Events of Default.
An "Event of Default" shall exist if any of the following occurs:
(a) The Company fails to make any payment of principal or premium on
any Note on or before the date such payment is due;
(b) The Company fails to make any payment of interest on any Note
when the same shall have become due and such default shall continue for a
period of three calendar days;
(c) The Company breaches any of its covenants hereunder;
(d) A custodian, receiver, liquidator or trustee of the Company, or
any of its subsidiaries which holds a substantial part of the properties
of the Company and its subsidiaries (taken as a whole), or of any
substantial part of the properties of the Company and its subsidiaries
(taken as a whole), is appointed by court order and such order remains in
effect for more than 60 days; or the Company, or any of its subsidiaries
which holds a substantial part of the properties of the Company and its
subsidiaries (taken as a whole), is adjudicated bankrupt or insolvent; or
any substantial part of the properties of the Company and its subsidiaries
(taken as a whole), is sequestered by court order and such order remains
in effect for more than 60 days; or petition is filed against the Company
or any of its subsidiaries which holds a substantial part of the
properties under any bankruptcy, reorganization, arrangement insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect, and is not dismissed or stayed within
60 days after such filing; or
(e) The Company, or any of its subsidiaries, files a petition in
voluntary bankruptcy or seeking relief under any provision of any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law or regulation, whether now or hereafter in
effect, or consents to the filing of any petition against it under such
law.
7.2 Default Remedies.
(a) When any Event of Default described in paragraph (a) or (b) of Section
7.1 has occurred and is continuing, any holder of any Note which has not
received the required payment, may, and when any Event of Default described in
paragraph (c) through (e), inclusive, has occurred and is continuing, the
holders of at least $350,000 in principal amount of the Notes may, exercise any
right, power or remedy permitted to holders of the Notes by law, and shall have,
in particular, without limiting the generality of the foregoing, the right to
declare the entire principal and all interest
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accrued on all the Notes then outstanding to be, and such Notes shall thereupon
become, forthwith due and payable, without any presentment demand, protest or
other notice of any kind, all of which are hereby expressly waived.
SECTION 8. INTERPRETATION OF THIS AGREEMENT.
8.1. Governing Law.
This Agreement, the Notes, the Warrants and the other documents
contemplated hereby shall be deemed to be contracts made under and shall be
construed in accordance with and governed by the laws of the State of New York
(without reference to the conflicts of laws principles thereof) and the laws of
the United States of America.
8.2. Notices; Payments.
(a) All notices and other communications under this Agreement or under the
Notes shall be given or made by telex or in writing and telecopied or mailed by
certified mail, return receipt requested, postage prepaid, air courier, or
delivered personally to the intended recipient,
(1) if to you, at your address and in the manner provided for
notices in Schedule I to this Agreement, marked for attention as there
indicated, or at such other address as you may have furnished the Company
in writing;
(2) if to the Company, at its address shown at the beginning of this
Agreement, marked for the attention of the President, or at such other
address as it may have furnished in writing to you and all other
registered holders of the Notes at the time outstanding; or
(3) if to any other holder of a Note, at its address set forth in
the Register maintained by the Company.
(b) All such notices and other communications shall be deemed to have been
duly given when transmitted by telex or telecopy, subject to telephone
confirmation of receipt, or when personally delivered or, in the case of a
mailed notice, three days after being duly deposited in the mails, in each case
given or addressed as aforesaid.
(c) All payments of principal, interest and premium due on any Note or any
other amount due under this Agreement shall be made in strict compliance with
the payment instructions contained in Schedule I with respect to the Purchaser
which is party to this Agreement, or such substitute written instructions as
such Purchaser or another registered holder of such Note may provide the Company
in accordance with this Section 8.2.
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8.3. Counterparts.
This Agreement may be executed in any number of counterparts, each
executed counterpart constituting an original but all together only one
Agreement.
8.4. Headings and Table of Contents.
The headings of the sections of this Agreement are inserted for purposes
of convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.
The execution by you shall constitute a contract between us for the uses
and purposes hereinabove set forth.
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Dated as of the day and year first above written.
IN WITNESS WHEREOF, the parties have executed and delivered this Note and
Warrant Purchase Agreement as of the date first above written.
DIGITEC 2000, INC.
By:
----------------------------------
Its
----------------------------
-----------------------------------
By:
----------------------------------
Its
----------------------------
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SCHEDULE I
Name and Addresses Principal Shares Initially
of Purchaser; Amount of Notes Purchasable
Payment Instructions to be Purchased Under Warrants
-------------------- --------------- --------------
EXHIBIT A
DIGITEC 2000, INC.
10% SIX MONTH NOTE
DUE MARCH __, 1998
No.__________ ______, 1998
DIGITEC 2000, INC., a Nevada corporation (the 'Company'), for value
received, hereby promises to pay to
------------------
Or Registered Holders
The Principal Amount of
-------------------
DOLLARS ($________)
and to pay, interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of Ten Percent (10%) per annum from the date hereof until maturity, payable
ninety days after issuance and at maturity. The entire then outstanding
principal amount and the unpaid interest shall be payable on March ___, 1999.
Payments of principal, premium, if any, and interest shall be made in such
coin or currency of the United States of America as at the time of payment is
legal tender for the payment of public and private debts by wire transfer in
immediately available funds over the Federal Wire Transfer System to the
registered holder hereof at the written instruction of the registered holder
hereof or, at the option of the registered holder hereof, in such manner and at
such other place in the United States of America as the registered holder hereof
shall have designated to the Company in writing. If any amount of principal,
premium, if any, or interest on or in respect of this Note becomes due and
payable on any date which is not a Business Day, such amount shall be payable on
the next Business Day. "Business Day' means any day other than a Saturday,
Sunday, statutory holiday or other day on which banks in New York, New York are
required by law to close or are customer closed.
The Company's obligations under this Note are unconditional and not
subject to deduction, diminution, abatement, counter-claim, defense or set-off
for any reason whatsoever. The Company's obligations hereunder shall not be
subordinate to any other indebtedness of the Company.
This Note is one of the 10% Six Month Notes of the Company in the
aggregate principal amount of up to $2,000,000.00 issued under and pursuant to
the terms and provisions of separate and several Note and Warrant Purchase
Agreements, each dated as of September 1, 1998 (the "Purchase
Agreements"), entered into by the Company with the purchasers named therein; and
this Note and the holder hereof are entitled equally and ratably with the
holders of all other Notes outstanding under the Purchase Agreements to all the
benefits provided for thereby or referred to therein, to which Purchase
Agreements reference is hereby made for the statement thereof. Said Purchase
Agreements also provide for the issuance of Warrants of the Company to purchase
its common stock.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the office of the Company in New York, New York,
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder of this Note or its attorney duly authorized in
writing. Payment of or on account of principal, premium, if any, and interest on
this Note shall be made only to or upon the order in writing of the registered
holder.
This Note and the other Notes under the Purchase Agreements are not
subject to prepayment or redemption at the option of the Company prior to its or
their expressed maturity date except on the terms and conditions and in the
amount and with premium, if any, provided for herein and in the Purchase
Agreements. The Company agree to make required prepayments on account of said
Notes in accordance with the provisions of this Note and the Purchase
Agreements.
THIS NOTE, THE NOTE AND WARRANT PURCHASE AGREEMENTS AND THE OTHER
DOCUMENTS CONTEMPLATED THEREBY, INCLUDING BUT NOT LIMITED TO, THE WARRANTS,
SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF) AND THE LAWS OF THE UNITED STATES OF
AMERICA.
DIGITEC 2000, INC.
By:
----------------------------------
Its
----------------------------
THIS NOTE IS SUBJECT TO THE TERMS AND PROVISIONS OF A NOTE AND WARRANT PURCHASE
AGREEMENT, DATED AS OF SEPTEMBER 1, 1998, BETWEEN DIGITEC 2000, INC. (THE
"COMPANY") AND THE PURCHASER NAMED THEREIN (AS SUCH AGREEMENT MAY BE
SUPPLEMENTED, MODIFIED, AMENDED, OR RESTATED FROM TIME TO TIME, THE
"AGREEMENT"). COPIES OF THE AGREEMENT ARE AVAILABLE AT THE OFFICES OF THE
COMPANY.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY
STATE SECURITIES OR BLUE SKY LAWS. THIS NOTE MAY NOT BE OFFERED, SOLD, ASSIGNED,
PLEDGED, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION
UNDER SAID ACT AND UNDER APPLICABLE STATE SECURITIES OR BLUE SKY LAWS OR
EXEMPTIONS FROM SUCH REGISTRATION, AS EVIDENCED BY AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY.
EXHIBIT B
THESE WARRANTS AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT TO
THE TERMS AND PROVISIONS OF NOTE AND WARRANT PURCHASE AGREEMENTS, DATED AS OF
SEPTEMBER 1, 1998, BETWEEN DIGITEC 2000, INC. (THE "COMPANY") AND THE PURCHASERS
NAMED THEREIN (AS SUCH AGREEMENT MAY BE SUPPLEMENTED, MODIFIED, AMENDED, OR
RESTATED FROM TIME TO TIME, THE "AGREEMENT"). COPIES OF THE AGREEMENT ARE
AVAILABLE AT THE OFFICES OF THE COMPANY.
THESE WARRANTS AND ANY SHARES ISSUABLE UPON THE EXERCISE OF THESE WARRANTS HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY STATE
SECURITIES OR BLUE SKY LAWS. NEITHER THE WARRANTS NOR ANY OF SUCH SHARES MAY BE
OFFERED, SOLD, ASSIGNED, PLEDGED, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF REGISTRATION UNDER SAID ACT AND UNDER APPLICABLE STATE SECURITIES OR
BLUE SKY LAWS OR EXEMPTIONS FROM SUCH REGISTRATION, AS EVIDENCED BY AN OPINION
OF COUNSEL AS PROVIDED FOR IN THE AGREEMENT.
WARRANT CERTIFICATE
Certificate Number Certificate for
W-
------------------ --------------------------
Warrants
This Certificate is Transferable
in New York, New York
DIGITEC 2000, INC.
Incorporated under the Laws of the State of Nevada
THIS CERTIFIES THAT, ______________________________________ for
value received, the registered holder hereof or registered assigns (the
"Holder"), is entitled to purchase from Digitec 2000, Inc., a Nevada corporation
(the "Company"), at any time after the date hereof and until 5:00 P.M., Eastern
Standard Time, September __, 2003 at the purchase price of $_____ per share (the
"Exercise Price"), as adjusted pursuant to Article 6 of the Note and Warrant
Purchase Agreements, dated as of September 1, 1998, among the Company and the
Purchasers named therein (the "Purchase Agreements"), the number of shares of
Common Stock, $.001 par value per share, of the Company (the "Common Stock")
which is equal to the number of Warrants set forth above. The number of shares
purchasable upon exercise of this Warrant and the Exercise Price per share shall
be subject to adjustment from time to time as set forth in the Purchase
Agreements. This Warrant shall not be redeemable by the Company and the Company
shall take no action prior to September __, 2003 to terminate this Warrant. This
Warrant is issued under and in accordance with the Purchase Agreement and is
subject to the terms of the Purchase Agreement, to all of which terms every
holder of this Warrant Certificate consents by acceptance hereof.
A copy of the Purchase Agreement may be obtained for inspection by
the Holder hereof upon written request to the Company.
This Warrant may be exercised in whole or in part by presentation of
this Warrant with the Election to Exercise at the end hereof duly executed and
simultaneous payment of the Exercise Price (subject to adjustment) at the office
of the Company in New York, New York. Payment of such price shall be made at the
option of the Holder hereof in cash, by check or by surrender of Notes.
Upon any partial exercise of this Warrant, there shall be issued to
the Holder hereof a new Warrant Certificate in respect of the shares of Common
Stock as to which this Warrant shall not have been exercised. No fractional
shares will be issued upon the exercise of this Warrant, but the Company shall
pay the cash value (as determined pursuant to the Purchase Agreements) of any
fraction of a share of Common Stock upon the exercise of one or more Warrants.
This Warrant Certificate may be exchanged either separately or in
combination with other Warrant Certificates for new Warrant Certificates
representing the same aggregate number of Warrants as are evidenced by the
Warrant Certificate or Warrant Certificates exchanged. This Warrant Certificate
is transferable at the office of the Company in New York, New York in the manner
and subject to the limitation set forth in the Purchase Agreements.
This Warrant does not entitle any Holder hereof to any of the rights
of a stockholder of the Company.
Dated: _____________________, 199_.
DIGITEC 2000, INC.
By: By:
-------------------------- ---------------------------
Secretary President
Notice of the call will be given as
provided in the Warrant Purchase Agreement
ELECTION TO EXERCISE
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for, and to purchase thereunder,
shares of Common Stock, as provided for therein.
Please issue a certificate or certificates for such shares of Common
Stock in the name of, and pay any cash for any fractional share to:
Name: __________________________________________
Signature: ____________________________________
Taxpayer Identification Number: ______________________________________
Address: ______________________________________
______________________________________
Note: The above signature should correspond
exactly with the name on the face of this
Warrant Certificate or with the name of
assignee appearing in assignment form
below.
Signature Guaranteed
AND, if said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant Certificate is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder less
any fraction of a share paid in cash and delivered to the address stated above.
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and
transfers unto ________________________________________________________
(Taxpayer Identification Number: ________________________________) the within
Warrant, together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint ___________________________________ attorney,
to transfer said Warrant on the books of the within-named Company with full
power of substitution in the premises.
Dated: ________________, 19__
------------------------------
Note: The above signature should correspond
exactly with the name on the face of
this Warrant Certificate.
Signature Guaranteed
--------------------------
EXHIBIT C
1. On August 6, 1998, the Company settled the litigation with Frontier
Communications, Inc. initiated on June 9, 1998, subject to payment of $150,000
by the Company on or before September 7, 1998 and $50,000 two weeks following
such initial payment by the Company.
2. The Company and Premiere Communications, Inc. ("Premiere") are
negotiating a release from the Independent Distribution Agreement, dated as of
September 26, 1997, pursuant to an agreement with Premiere which provides for
the Company to pay certain outstanding amounts currently payable to Premiere of
approximately $600,000 in conjunction with new carrier and network services
agreements. There are no assurances that these negotiations will be completed or
that agreements satisfactory to the Company will be signed.
3. The Company currently owes Vanity Fair Inc., the current sublessor of
the Company's offices in New York, approximately $175,000 which is in arrears.
Part of the proceeds of the current financing will be used to bring the Company
current.
