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Exhibit 10.3
COMMON STOCK PURCHASE WARRANT
THIS WARRANT HAS BEEN, AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED
PURSUANT TO THE EXERCISE OF THIS WARRANT (THE "SHARES") WILL BE, ACQUIRED
SOLELY OR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH,
ANY DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR THE SHARES (TOGETHER, THE
"SECURITIES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
DISPOSITION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS.
No. W-
MOBINETIX SYSTEMS, INC.
WARRANT TO PURCHASE 125,000 SHARES OF COMMON STOCK
THIS CERTIFIES THAT, for value received, Federated Systems Group (the
"HOLDER") is entitled to subscribe for and purchase from MobiNetix Systems,
Inc., a Delaware corporation (the "COMPANY"), 125,000 shares (as adjusted
pursuant to Section 3 hereof) of the fully paid and nonassessable Common Stock
(the "SHARES"), of the Company at the price per share as determined in
accordance with Section 1(b) below (the "EXERCISE PRICE") (and as adjusted
pursuant to Section 3 hereof), subject to the provisions and upon the terms and
conditions hereinafter set forth. This Warrant has been executed and delivered
by the Company as an inducement to ▇▇▇▇▇▇'s willingness to cause it subsidiary,
Federated Systems Group, Inc. to agree to enter into the Amendment to Systems
Acquisition Agreement, dated even date herewith, between the Company and
Holder.
This Warrant is subject to the following terms and conditions:
1. Method of Exercise; Payment.
(a) Cash Exercise. The purchase rights represented by this Warrant
may be exercised by the Holder, in whole or in part, from time to time by the
surrender of this Warrant (with the notice of exercise form (the "NOTICE OF
EXERCISE") attached hereto as Exhibit A duly executed) at the principal office
of the Company, and by the payment to the Company of an amount equal to the
Exercise Price multiplied by the number of the Shares being purchased, which
amount may be paid, at the election of the Holder, by wire transfer or
certified check payable to the order of the Company.
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The person or persons whose name(s) any certificate(s) representing Shares
shall be issuable upon exercise of this Warrant shall be deemed to have become
the holder(s) of record of, and shall be treated for all purposes as the
record holder(s) of, the Shares represented thereby (and such shares shall be
deemed to have been issued) immediately prior to the close of business on the
date or dates upon which this Warrant is exercised.
(b) Initial Exercise Price. The initial Exercise Price shall be $3.75.
(c) Stock Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares of Common Stock so
purchased shall be delivered to the Holder within a reasonable time and, unless
this Warrant has been fully exercised or has expired, a new Warrant representing
the shares with respect to which this Warrant shall not have been exercised
shall also be issued to the Holder within such time.
2. Stock Fully Paid; Reservation of Shares. All of the Shares issuable
upon the exercise of the rights represented by this Warrant will, upon issuance
and receipt of the Exercise Price therefor, be fully paid and nonassessable,
and free from all preemptive rights, rights of first refusal or first offer,
taxes, liens and charges with respect to the issuance thereof. During the
period within which the rights represented by this Warrant may be exercised,
the company shall at all times have authorized and reserved for issuance
sufficient shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.
3. Mechanical Adjustments. The Exercise Price and the number and kind of
Shares purchasable upon exercise of this Warrant will be subject to adjustment
as follows:
(a) Subject to Section 3(f), if the Company (i) pays a dividend
or otherwise distributes to all of its holders of its Common Stock,
as such, shares of its capital stock (whether Common Stock or capital
stock of any other class), (ii) subdivides its outstanding shares of
Common stock into a greater number of shares of Common Stock, (iii)
combines its outstanding shares of Common Stock into a smaller number
of shares of Common Stock, or (iv) issues any shares of its capital
stock in a reclassification of its outstanding shares of Common Stock
(including any such reclassification in connection with a
consolidation, merger or other business combination transaction in
which the Company is the continuing or surviving corporation), then
the number and kind of Shares purchasable upon exercise of this
Warrant immediately prior thereto will be adjusted so that the Holder
will be entitled to receive (A) in the case of a dividend or
distribution, the sum of (1) the number of Shares that, if such
Warrant had been exercised immediately prior to such adjustment, the
Holder would have received upon such exercise and (2) the number and
kind of additional shares of capital stock that the Holder would have
been entitled to receive as a result of such dividend or distribution
by virtue of its ownership of such Shares, (B) in the case of a
subdivision or combination, the number of Shares that, if such
Warrant had been exercised immediately prior to such adjustment, the
Holder would have received upon such exercise, adjusted to give
effect to such subdivision or
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combination as if such Shares had been subject thereto, or (C) in the case of
an issuance in a reclassification, the sum of (1) the number of Shares that, if
this Warrant had been exercised immediately prior to such adjustment, the
Holder would have received upon such exercise and retained after giving effect
to such reclassification as if such Shares had been subject thereto and (2) the
number and kind of additional shares of capital stock that the Holder would
have been entitled to receive as a result of such reclassification as if such
Shares had been subject thereto. An Adjustment made pursuant to this paragraph
(a) will become effective immediately after the record date for the
determination of shareholders entitled to receive such dividend or
distribution in the case of a dividend or distribution and will become
effective immediately after the effective date of such subdivision, combination
or reclassification in the case of a subdivision, combination or
reclassification.
(b) Subject to Section 3(f), if the Company distributes to all of its
holders of its Common Stock, as such, (i) evidences of indebtedness or assets
(excluding regular cash dividends or cash distributions payable out of
consolidated retained earnings) of the Company or any corporation or other
legal entity a majority of the voting equity securities or equity interests of
which are owned, directly or indirectly, by the Company (a "Subsidiary"), (ii)
shares of capital stock of any Subsidiary, (iii) securities convertible into or
exchangeable for capital stock of the Company (including Common Stock or
capital stock of any other class) or any Subsidiary, or (iv) any rights,
options or warrants to purchase any of the foregoing (excluding those described
in Section 3(c)), then, the number of Shares thereafter purchasable upon
exercise of this Warrant will be adjusted to the number that results from
multiplying the number of Shares purchasable upon the exercise of this Warrant
immediately prior to such adjustment by a fraction (not to be less than one),
the numerator of which will be the Current Market Price per share (as defined
in Section 3(c)) of Common Stock on the record date for such distribution, and
the denominator of which will be such Current Market Price per share of Common
Stock less the fair value (as determined in good faith by the Board of
Directors of the Company, whose determination will be conclusive if based on
the financial advise of a nationally recognized investment banking firm) of the
portion of the evidences of indebtedness, assets, securities or rights, options
or warrants so distributed on account of one share of Common Stock. Such
adjustment will be made whenever any such distribution is made, and will become
effective immediately after the record date for the determination of
stockholders entitled to receive such distribution. Except as provided in
Section 3(i), no further adjustments of the number of Shares will be made upon
the actual issue of shares of Common Stock upon conversion or exchange of such
securities convertible or exchangeable for shares of Common Stock or upon
exercise of such rights, warrants or options for shares of Common Stock.
(c) Subject to Section 3(f), if the Company issues rights, options or
warrants to all of its holders of the outstanding shares of Common Stock, as
such, entitling the holders of such rights, options or warrants (for a period
expiring within 60 calendar days
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after the record date mentioned below) to subscribe for or purchase shares of
Common Stock at a price per share that is lower on the record date mentioned
below than the Current Market Price per share of Common Stock on such record
date, then the number of Shares thereafter purchasable upon the exercise of this
Warrant will be adjusted to the number that results from multiplying the number
of Shares purchasable upon exercise of this Warrant immediately prior to such
adjustment by a fraction (not to be less than none), the numerator of which will
be the number of shares of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock offered by such rights, options or
warrants for subscription or purchase and the denominator of which will be the
number of shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate subscription or purchase price of
the total number of shares of Common Stock so offered would purchase at the
Current Market Price per share of Common Stock on such record date. Such
adjustment will be made whenever such rights, options or warrants are issued,
and will become effective immediately after the record date for the
determination of stockholders-entitled to receive such rights, options or
warrants. In case such subscription or purchase price may be paid in a
consideration part or all of which is in a form other than cash, the fair value
of such consideration will be as determined by the Board of Directors of the
Company, whose determination will be conclusive if based on the financial advise
of a nationally recognized investment banking firm. Except as provided in
Section 3(i), no further adjustments of the number of Shares will be made upon
the actual issue of shares of Common Stock upon exercise of such rights, options
or warrants.
(d) Subject to Section 3(f), if the Company issues shares of Common Stock
or securities convertible into or exchangeable for shares of Common Stock
(excluding shares of Common Stock or convertible or exchangeable securities
issued in any of the transactions described in paragraph (a),(b) or (c) of this
Section 3) for a purchase price per share of such Common Stock, or for a
conversion or exchange price per share of Common Stock initially deliverable
upon conversion or exchange of such securities, that is less than the Series C
Conversion Price (as defined in the Company's Restated Certificate of
Incorporation) or, if there are no shares of Series C Preferred (as defined in
the Company's Restated Certificate of Incorporation) then outstanding, the
Current Market Price per share of the Common Stock, in either case, on the date
the purchase, conversion or exchange price of such additional shares of Common
Stock is first fixed (the "Adjustment Determination Price"), then the number of
Shares thereafter purchasable upon the exercise of this Warrant will be
adjusted to the number that results from multiplying the number of Shares
purchasable upon exercise of this Warrant immediately prior to such adjustment
by a fraction (not to be less than one), the numerator of which will be the
number of shares of Common Stock outstanding on such date plus the number of
additional shares of Common Stock so issued or issuable upon such conversion or
exchange, and the denominator of which will be the number of shares of Common
Stock outstanding on such date plus the number of shares of Common Stock which
the aggregate purchase, conversion or exchange price received by the Company
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for such additional shares of Common Stock would purchase at the Adjustment
Determination Price. Such adjustment will be made whenever such shares of
Common Stock or convertible or exchangeable securities are issued, and will
become effective immediately after the effective date of such event. In
case such purchase, conversion or exchange price may be paid in a
consideration part or all of which is in a form other than cash, the fair
value of such consideration will be as determined by the Board of Directors
of the Company, whose determination will be conclusive if based on the
financial advice of a nationally recognized investment banking firm. Except
as provided in 3(i), no further adjustment will be made upon the actual
issue of shares of Common Stock upon conversion or exchange of such
securities convertible into or exchangeable for shares of Common Stock.
(e) For purposes of this Warrant, the "Current Market Price" per
share of Common Stock on any date will be the average of the daily closing
prices for 20 consecutive Trading Days commencing 30 Trading Days before
the date of such computation. The closing price for each day (the "Closing
Price") will be the last reported sales price regular way or, in case no
such reported sale takes place on such day, the average of the closing bid
and asked prices regular way for such day, in each case on the principal
national securities exchange on which the shares of Common Stock are
listed or admitted to trading or, if not so listed or admitted to trading,
the average of the closing bid and asked prices of the shares of Common
Stock in the over-the-counter market as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System or any
comparable system, or if not so reported by any such organization on such
day, the average of the bid and asked prices furnished by a professional
market maker selected by the Board of Directors of the Company. In the
absence of one or more such quotations, the Board of Directors of the
Company will determine the Current Market Price in good faith on the basis
of such quotations or other relevant information as it considers
appropriate.
(f) No adjustment in the number of Warrant Shares purchasable upon
the exercise of this Warrant will be required unless such adjustment would
require an increase or decrease in the number of Shares purchasable upon
the hypothetical exercise of the Warrant of at least 1%; provided,
however, that any adjustments which by reason of this paragraph (f) are
not required to be made currently will be carried forward and made at the
time and together with the next subsequent adjustment which, together with
any adjustments so carried forward, would require an increase or decrease
in the number of Shares purchasable upon the hypothetical exercise of this
Warrant of 1% or more. All calculations with respect to the number of
Shares will be made to the nearest one-thousandth of a share and all
calculations with respect to the Exercise Price will be to the nearest
whole cent. No adjustment in the number of Shares purchasable upon the
exercise of a Warrant will be made under paragraph (b), (c) or (d) of this
Section 3 if the Company issues or distributes to the Holder the shares,
rights, options, warrants, convertible or exchangeable securities,
evidences of indebtedness, assets or other
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securities referred to in the applicable paragraph that the Holder would
have been entitled to receive had this Warrant been exercised prior to the
happening of such event on the record date with respect thereto (provided
that, in any case in which the Holder would have been so entitled to
receive a fractional interest in any such securities or assets, the
Company may distribute to the Holder in lieu of such fractional interest
cash in an amount equal to the fair value of such fractional interest as
determined in good faith by the Board of Directors of the Company). No
adjustment in the number of Shares purchasable upon the exercise of this
Warrant will be made on account of: (1) any issuance of shares of Common
Stock, or of options, rights or warrants to purchase, or securities
exchangeable for or convertible into, shares of Common Stock, in
accordance with any plan for the benefit of the employees or directors of
the Company that shall have been duly approved by the holders of Common
Stock, (2) any issuance of shares of Common Stock in connection with a
Company-sponsored plan for reinvestment of dividends or interest, or (3)
any issuance of shares of Common Stock or securities convertible into or
exchangeable for shares of Common Stock pursuant to an underwritten public
offering for a price per share of Common Stock in the case of an issuance
of shares of Common Stock, or for a price per share of Common Stock
initially deliverable upon conversion or exchange of such securities, that
is equal to or greater than 95% of the Closing Price per share of Common
Stock on the date the offering, conversion, or exchange price of such
additional share of Common Stock is first fixed. No adjustment in the
number of Shares will be made for a change in the par value of the shares
of Common Stock.
(g) Whenever the number of Shares purchasable upon the exercise of
each Warrant is adjusted as herein provided, the Exercise Price will be
adjusted by multiplying the Exercise Price in effect immediately prior to
such adjustment by a fraction, the numerator of which will be the number
of Shares purchasable upon the exercise of this Warrant immediately prior
to such adjustment, and the denominator of which will be the number of
Shares so purchasable immediately thereafter.
(h) For the purpose of this Section 3, the term "Common Stock" means
(i) the class of shares designated as the Common Stock of the Company as
of the date of this Warrant, (ii) all shares of any class or classes
(however designated) of the Company, now or hereafter authorized, the
holders of which have the right, without limitation as to amount, either
to all or to a part of the balance of current dividends and liquidating
dividends after the payment of dividends and distributions on any shares
entitled to preference, and the holders of which are ordinarily entitled
to vote generally in the election of directors of the Company, or (iii)
any other class of shares resulting from successive changes or
reclassifications of such shares consisting solely of changes in par
value, or from par value to no par value, or from no par value to par
value. In the event that at any time, as a result of an adjustment made
pursuant to Section 3(a), this Warrant becomes exercisable to purchase
Shares other than shares of Common Stock, thereafter the number of such
other shares so purchasable upon exercise of this Warrant and the
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Exercise Price payable in respect of such other shares upon the exercise of
this Warrant will be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Shares and the Exercise Price contained in this Section 3.
(i) Upon the expiration of any rights, options, warrants or conversion or
exchange privileges, if any thereof have not been exercised, the Exercise Price
and the number of Shares purchasable upon the exercise of this Warrant will,
upon such expiration, be readjusted and will thereafter be such as it would have
been had it been originally adjusted (or had the original adjustment not been
required, as the case may be) as if (i) the only shares of Common Stock so
issued were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants or conversion or exchange rights and
(ii) such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise, conversion or
exchange plus the aggregate consideration, if any, actually received by the
Company for the issuance, sale or grant of all such rights, options, warrants or
conversion or exchange rights whether or not exercised; provided, however, that
no such readjustment will have the effect of increasing the Exercise Price or
decreasing the number of Shares purchasable upon the exercise of this Warrant by
an amount in excess of the amount of the adjustment initially made in respect of
the issuance, sale or grant of such rights, options, warrants or conversion or
exchange privileges.
(j) In case of any consolidation of the Company with or merger of the
Company into another corporation or in case of any sale, transfer or lease to
another corporation of all or substantially all the property of the Company,
the Company or such successor or purchasing corporation, as the case may be,
will execute an agreement providing that the Holder will have the right
thereafter, upon payment of an amount equal to the amount payable upon the
exercise of this Warrant immediately prior thereto, to purchase upon exercise
of this Warrant the kind and amount of securities or property that it would
have owned or have been entitled to receive after giving effect to such
consolidation, merger, sale, transfer or lease on account of the Shares that
would have been purchasable upon the exercise of this Warrant had this Warrant
been exercised immediately prior thereto (provided that, to the extent that the
Holder would have been so entitled to receive cash on account of such Shares,
the Holder may elect in connection with the exercise of this Warrant in
accordance with Section 1 to reduce the amount of cash that it would be
entitled to receive upon such exercise in exchange for a corresponding reduction
in the amount payable upon such exercise). Such agreement will provide for
adjustments that will be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 3. The provisions of this Section 3(j)
will similarly apply to successive consolidations, mergers, sales, transfers or
leases.
4. Notices.
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(a) Upon any adjustments of the Exercise Price or the kind and number
of Shares purchasable upon the exercise of this Warrant in accordance with
Section 3 hereof, then, and in each such case, the Company, within thirty (30)
days thereafter, shall give written notice thereof to the Holder at the address
of such Holder as shown on the books of the Company which notice shall state the
Exercise Price as adjusted and, if applicable, the kind and number of Shares
purchasable upon the exercise of this Warrant, setting forth in reasonable
detail the method of calculation of each.
(b) Any written notice by the Company required or permitted hereunder
shall be given by hand delivery or first class mail, postage prepaid, addressed
to the Holder at the address shown on the books of the Company for the Holder.
5. Transfer of Warrant. Except in accordance with the conditions
contained in Section 6 hereof, this Warrant and all rights hereunder are not
transferable. In order to effect any transfer of all or a portion of this
warrant or the Shares, the transferor shall deliver a completed and duly
executed Notice of Transfer (attached hereto as Exhibit B).
6. Condition of Exercise or Transfer of Warrant.
(a) Unless exercised pursuant to an effective registration statement
under the Act which includes the Shares so exercised, it shall be a condition
to any exercise or transfer of this Warrant that the Company shall have
received, at the time of such exercise or transfer, a representation in writing
from the recipient or transferee in the form attached hereto as Exhibit A-1 or
Exhibit B-1, respectively, that the Shares being issued upon exercise, or this
Warrant (or portion hereof) transferred, as the case may be, are being acquired
for investment and not with a view to any sale or distribution thereof.
(b) It shall be a further condition to any transfer of this Warrant,
or of any or all of the Shares issued upon exercise of this Warrant, other than
a transfer registered under the Act, that the Holder shall have given written
notice to the Company which shall describe the manner and circumstances of the
proposed transfer and be accompanied by a written opinion of ▇▇▇▇▇▇'s legal
counsel or a "no-action" letter reasonably satisfactory to the Company stating
that such transfer is exempt from the registration requirements of the Act and
applicable state securities laws.
(c) Each certificate evidencing the Shares issued upon exercise of
this Warrant, or transfer of such shares (other than a transfer registered under
the Act or any subsequent transfer of shares so registered) shall be stamped or
imprinted with a legend substantially in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH
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REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT.
Subject to this Section 6, the Company may instruct its transfer agent not
to register the transfer of all or a part of this Warrant, or any of the
Shares, unless one of the conditions specified in the above legend is satisfied.
7. Removal of Legend. Upon request of a holder of a certificate with the
legend referred to in Section 6 hereof, the Company shall issue to such holder
a new certificate therefor free of any transfer legend, if, with such request,
the Company shall have received either an opinion of counsel or a "no-action"
letter referred to in section 6(b) of this Warrant to the effect that any
transfer by such holder of the shares evidenced by such certificate will not
violate the Act and applicable state securities laws.
8. Fractional Shares. No fractional shares of Common stock will be
issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company shall make a cash payment therefor upon the basis
of the Exercise Price then in effect.
9. Representations and Warranties of the Company. The Company
represents and warrants to the Holder as follows:
(a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms;
(b) The Shares have been duly authorized and reserved for issuance
by the Company and, when issued in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable;
(c) The rights, preferences, privileges and restrictions granted to
or imposed upon the Shares and the holders thereof are as set forth in the
Company's Certificate of Incorporation, a true and complete copy of which has
been delivered to the original Holder of this Warrant; and
(d) The execution and delivery of this Warrant are not, and the
issuance of the Shares upon exercise of this warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or Bylaws, as amended.
10. Representations and Warranties by the Holder. The Holder represents
and warrants to the Company as follows:
(a) This Warrant is being acquired for its own account, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Act. Upon
exercise of this Warrant, the Holder shall, if so requested by the
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Company, confirm in writing, in a form reasonably satisfactory to the Company,
that the Shares issuable upon exercise of this Warrant are being acquired for
investment and not with a view toward distribution or resale.
(b) The Holder understands that the Warrant and the Shares have not
been registered under the Act by reason of their issuance in a transaction
exempt from the registration and prospectus delivery requirements of the Act
pursuant to Section 4(2) thereof, and that they must be held by the Holder
indefinitely, and that the Holder must therefore bear the economic risk of such
investment indefinitely, unless a subsequent disposition thereof is registered
under the Act or is exempted from such registration. The Holder further
understands that the Shares have not been qualified under the California
Securities Law of 1968 (the "California Law") by reason of their issuance in a
transaction exempt from the qualification requirements of the California Law
pursuant to Section 25102(f) thereof, which exemption depends upon, among other
things, the bona fide nature of the Holder's investment intent expressed above.
(e) The Holder has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
purchase of this Warrant and the Shares purchasable pursuant to the terms of
this Warrant and of protecting its interests in connection therewith.
(d) The Holder is able to bear the economic risk of the purchase of
the Shares pursuant to the terms of this Warrant.
11. Rights of Stockholders. No holder of this Warrant shall be entitled,
as a Warrant holder, to vote or receive dividends or be deemed the holder of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the holder of this Warrant, 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, 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 and the Shares
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.
12. Expiration of Warrant. This Warrant shall expire and shall no longer
be exercisable as of the date of the earliest of the following to occur:
(a) March 20, 2003; and
(b) the closing of a firm commitment underwritten public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, covering the offer and sale of Common Stock for the account
of the Company to the public with gross proceeds to the
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Company (prior to underwriter commissions and offering expenses) per share of
not less than $8 (the "PUBLIC OFFERING").
13. Certain Registration Rights for Shares.
(a) If the Company proposes to file a registration
statement (other than in connection with an exchange offer, an offering made
solely to employees of the Company or a registration statement on Form S-4 or
S-8 or any successor form to such forms) under the Act with respect to an
offering of any securities issued or to be issued by the Company (whether or
not for its own account), the Company will give written notice of the proposed
registration at least 20 business days prior to the filing of a registration
statement under the Act with respect thereto to the Holder. The Holder will
have the right to request that all or any part of its Shares, whether issued or
issuable (such Shares being referred to herein as "Registrable Securities") be
included in such registration by giving written notice to the Company within 10
business days after the giving of such notice by the Company. Subject to the
next following sentence, the Company will include such Registrable Securities
in such registration in accordance with such request and on the terms and
subject to the conditions set forth herein. If the registration is an
underwritten offering and the managing underwriters of such offering deliver an
opinion to the Holder that the total amount of securities which the Holder, the
Company and any other person or entity having rights to participate in such
offering is such as to materially and adversely affect the success of such
offering, then the amount of securities to be offered for the account of the
Holder will be reduced (to zero, if necessary) on the same basis as any other
person or entity seeking to exercise so-called "piggyback" registration rights
in connection therewith or, if there are no such other persons or entities, to
the maximum number of Registrable Securities, if any, as can be included
therein without materially and adversely affecting the success of such offering.
(b) Registrable Securities proposed to be registered for
sale pursuant to an underwritten offering for the account of the Holder will be
sold to prospective underwriters selected or approved by the Company and on the
terms and subject to the conditions of one or more underwriting agreements
negotiated between the Company and such underwriters. The Company may withdraw
any registration statement which covers Registrable Securities (a "Registration
Statement") at any time before it becomes effective, or postpone the offering
of securities, without obligation or liability to the Holder. Notwithstanding
anything to the contrary herein contained, Registrable Securities need not be
included in any Registration Statement pursuant to Section 13(a) if (i)
registration under the Act is not required for public distribution of such
Registrable Securities in the manner that the Holder seeks to distribute such
Registrable Securities or (ii) such Registrable Securities may be sold pursuant
to Rule 144(k) under the Securities Act.
(c) The Holder will, if so requested by the managing
underwriters in an underwritten public offering, not effect any public sale or
distribution of securities of the Company of the same class as the securities
to be included in such registration, including a sale pursuant to Rules 144 or
144A under the Act (except as part of such offering), during the 20 calendar
day period prior to, and for a period of 180 days beginning on, the closing
date of such offering. ▇▇▇▇▇▇ further agrees to
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execute any agreement reflecting the foregoing as may be requested by the
underwriters in connection with the Public Offering.
(d) In connection with its obligations under Section 13(a), the Company
will as expeditiously as reasonably practicable:
(i) before filing with the Securities and Exchange Commission (the
"Commission") a Registration Statement or any amendments or supplements
thereto, furnish to the Holder, if its Registrable Securities are covered by
such Registration Statement (as such, the "Selling Shareholder"), copies of all
such documents proposed to be filed, which documents will be subject to the
reasonable review of the Holder;
(ii) prepare and file with the Commission a Registration Statement
and such amendments and supplements thereto as may be required by the
Commission's rules and regulations; and comply with the provisions of the Act
with respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the sellers thereof set forth in the related prospectus (the
"Prospectus");
(iii) notify the Selling Shareholder promptly:
(A) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose,
(B) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose, and
(C) of the existence of any fact which results in the Registration
Statement or the Prospectus containing an untrue statement of a material fact
required to be stated therein or necessary to make the statements therein not
misleading;
(iv) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the
earliest practicable time (unless such order has been issued as the result of
any action, omission or status of the Selling Shareholder);
(v) furnish to the Selling Shareholder, without charge, at least one
copy of the Registration Statement and any post-effective amendment thereto;
(vi) deliver to the Selling Shareholder, without charge, as many
copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as the Selling Shareholder may reasonably
request; and
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(vii) cooperate with the Selling Shareholder to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold.
(e) As a condition of the inclusion of Registrable Securities in a
registration, the Company may require the Selling Shareholder to furnish to the
Company such information regarding the proposed distribution of its securities
as the Company may from time to time reasonably request in writing.
(f) In connection with any Registration Statement prepared and
filed under Section 13(a), the Selling Shareholder will bear all costs and
expenses incurred by them directly and the underwriting discounts and
commissions relating to its Registrable Securities included in the related
offering. The Company will pay all other costs and expenses of registration.
(g) The Company will indemnify and hold harmless the Selling
Shareholder, its officers, directors, employees and agents and each person who
controls the Selling Shareholder within the meaning of Section 15 of the Act
from and against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and legal expenses) arising out of
or based upon any untrue statement or allegedly untrue statement of a material
fact contained in any Registration Statement (or any prospectus or prospectus
supplement relating thereto), arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or expenses arising out of or are
based upon any such untrue statement or omission or allegation thereof based
upon information furnished in writing to the Company by the Selling Shareholder
or on the Selling Shareholder's behalf expressly for use therein; provided,
however, that in connection with any non-underwritten offering the Company will
not be liable to the Selling Shareholder to the extent that any such losses,
claims, damages, liabilities or expenses arise out of or based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any preliminary prospectus if either (i)(A) the Selling Shareholder failed to
send or deliver a copy of the Prospectus with or prior to the deliver of
written confirmation of the sale by the Selling Shareholder of a Registrable
Security to the person asserting the claim from which such losses, claims,
damages, liabilities or expenses arise and (B) the Prospectus would have
completely corrected such untrue statement or alleged untrue statement of such
omission or alleged omission or (ii) such untrue statement or alleged untrue
statement, omission or alleged omission is completely corrected in an amendment
or supplement to the Prospectus and, having previously been furnished by or on
behalf of the Company with copies of the Prospectus as so amended or
supplemented, the Selling Shareholder thereafter fails to deliver such
Prospectus as so amended or supplemented prior to or concurrently with the sale
of a Registrable Security to the person asserting the claim from which such
losses, claims, damages, liabilities or expenses arise. The Selling Shareholder
will indemnify and hold harmless the Company, its directors and officer, any
agent of the Company, and each person, if any, who controls the Company within
the meaning of Section 15 of the Act to the same extent as the foregoing
indemnity from the Company to the Selling Shareholder, but only with respect
to information relating to the Selling Shareholder furnished in writing by the
Selling
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Shareholder or on the Selling Shareholder's behalf expressly for use in any
Registration Statement (or any prospectus supplement relating thereto).
(h) If the indemnification provided for in Section 13(g) is
unavailable to an indemnified party (other than by reason of exceptions provided
therein) in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, will contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as if appropriate to reflect the relative fault of
the indemnified party on the one hand and of the indemnifying party on the other
hand in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand and
of the Selling Shareholder on the other hand will be determined by reference to,
among other things, whether the untrue or allegedly untrue statement of a
material fact or the omission or alleged omission to state a material fact
related to information supplied by the Company or by the Selling Shareholder and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and the Selling
Shareholder acknowledge that it would not be just and equitable if contribution
pursuant to this Section 13(h) were determined by pro rata allocation or any
other method of allocation which does not take into account the equitable
considerations referred to above. No person guilty of fraudulent
misrepresentation (within the meaning of section 11(f) of the Act will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
14. Miscellaneous.
(a) The headings in this Warrant are for purposes of reference only,
and shall not limit or otherwise affect any of the terms hereof.
(b) The terms of this Warrant shall be binding upon and shall inure
to the benefit of any successors or assigns of the Company and of the holder or
holders hereof and of the Shares issued or issuable upon the exercise hereof.
(9) This Warrant and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof.
(d) The Company shall not, by amendment of its Certificate of
Incorporation, or through any other means, directly or indirectly, avoid or
seek to avoid the observance or performance of any of the terms of this
Warrant and shall at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant
against impairment.
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(e) Upon receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant and, in the case
of any such loss, theft or destruction, upon delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation, upon surrender and cancellation of such Warrant, the Company
at its expense will execute and deliver to the holder of record, in lieu
thereof, a new Warrant of like date and tenor.
(f) This Warrant and any provision hereof may be amended, waived or
terminated only by an instrument in writing signed by the Company and the
Holders.
(g) Receipt of this Warrant by the Holder hereof shall constitute
acceptance of and agreement to the foregoing terms and conditions.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
Issued this 19th day of March, 1998.
MOBINETIX SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Vice President
Acknowledged and Accepted:
FEDERATED DEPARTMENT STORES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
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EXHIBIT A
NOTICE OF EXERCISE
TO: MOBINETIX SYSTEMS, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
1. The undersigned hereby elects to purchase _______ shares of Common
Stock of MOBINETIX SYSTEMS, INC. pursuant to the terms of this Warrant, and
tenders herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
(Name)
(Address)
3. The undersigned hereby represents and warrants that the aforesaid
shares of Common Stock are being acquired for the account of the undersigned
for investment and not with a view to, or for resale, in connection with the
distribution thereof, and that the undersigned has no present intention of
distributing or reselling such shares and all representations and warranties of
the undersigned set forth in Section 10 of the attached Warrant are true and
correct as of the date hereof. In support thereof, the undersigned agrees to
execute an Investment Representation Statement in a form substantially similar
to the form attached to the Warrant as Exhibit A-1.
(Signature and Date)
Title:
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EXHIBIT A-1
INVESTMENT REPRESENTATION STATEMENT
PURCHASER
SELLER
COMPANY MOBINETIX SYSTEMS, INC.
SECURITY COMMON STOCK ISSUED UPON EXERCISE OF THE
COMMON STOCK PURCHASE WARRANT ISSUED ON March __, 1998
AMOUNT __________ SHARES
DATE ________________ , ___________
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Seller and to the Company the following:
(a) I am aware of the Company's business affairs and financial condition,
and have acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Securities. I am purchasing these
Securities for my own account for investment purposes only and not with a view
to, or for the resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933, as amended (the "Securities Act").
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein. In this connection, I understand that, in the view of the
Securities and Exchange Commission (the "SEC"), the statutory basis for such
exemption may be unavailable if my representation was predicated solely upon a
present intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future.
(c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. Moreover, I understand that the
Company is under no obligation to register the Securities. In addition, I
understand that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel for
the Company.
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(d) I am familiar with the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions.
The Securities may be resold in certain limited circumstances subject to
the provisions of Rule 144, which requires among other things: (1) the
availability of certain public information about the Company, (2) the resale
occurring not less than one year after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and, in
the case of an affiliate, or of a non-affiliate who has held the securities
less than two years, (3) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934) and the amount of
securities being sold during any three month period not exceeding the specified
limitations stated therein, if applicable.
(e) I hereby accept and agree to be bound by the provisions of the Warrant
as though I were a party thereto.
(f) I further understand that in the event all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive,
the Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers
or sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
(Signature)
By:
Title:
Date:
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EXHIBIT B
NOTICE OF TRANSFER
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _________________________________ the right represented by the attached
Warrant to purchase _____________________* shares of Common Stock of MOBINETIX
SYSTEMS, INC., to which the attached warrant relates, and appoints
___________________ Attorney to transfer such right on the books of MOBINETIX
SYSTEMS, INC., with full power of substitution in the premises.
Dated:
(Signature must conform in all respects to name
of ▇▇▇▇▇▇ as specified on the face of the
Warrant)
(Address)
Signed in the presence of:
* Insert here the number of shares without making any adjustment for
additional shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the Warrant,
may be deliverable upon exercise.
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EXHIBIT B-1
INVESTMENT REPRESENTATION STATEMENT
PURCHASER:
TRANSFEROR:
COMPANY : MOBINETIX SYSTEMS, INC.
SECURITY : COMMON STOCK PURCHASE WARRANT ORIGINALLY
ISSUED ON MARCH _____, 1998
AMOUNT : _______________ SHARES
DATE : ______________, ______
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Transferor and to the Company the following:
(a) I am aware of the Company's business affairs and financial condition,
and have acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Securities. I am purchasing these
Securities for my own account for investment purposes only and not with a view
to, or for the resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933, as amended (the "Securities Act").
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein. In this connection, I understand that, in the view of the
Securities and Exchange Commission (the "SEC"), the statutory basis for such
exemption may be unavailable if my representation was predicated solely upon a
present intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future.
(c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. Moreover, I understand that the
Company is under no obligation to register the Securities. In addition, I
understand that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel for
the Company.
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(d) I am familiar with the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions.
The Securities may be resold in certain limited circumstances subject to
the provisions of Rule 144, which requires among other things: (1) the
availability of certain public information about the Company, (2) the resale
occurring not less than one year after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and, in
the case of an affiliate, or of a non-affiliate who has held the securities
less than two years, (3) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934) and the amount of
securities being sold during any three month period not exceeding the specified
limitations stated therein, if applicable.
(e) I hereby accept and agree to be bound by the provisions of the Warrant
as though I were a party thereto.
(f) I further understand that in the event all of the applicable
requirements of Rule 144 is not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Fuel 144 is not exclusive,
the Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
(Signature)
By:
Title:
Date: , ______
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