Exhibit 4.7
WARRANT AGREEMENT (the "Agreement"), dated as of January 7, 2002, between
Mercator Software, Inc., a Delaware corporation (the "Company"), and MAST
Services LLC, a limited liability company formed and existing under the laws of
Delaware (the "Holder").
WHEREAS, the Holder has provided certain services to the Company; and in
consideration for such services, the Company has granted warrants (the "Initial
Warrants") to the Holder, each such Initial Warrant entitling the Holder to
purchase, upon the terms and subject to the conditions contained in this
Agreement and the certificates evidencing the Initial Warrants (the "Initial
Warrant Certificates"), one share of common stock of the Company; subject to
adjustment as provided herein;
WHEREAS, the parties hereto desire to acknowledge the grant of the Initial
Warrants, define and clarify certain rights of the Holder with respect to such
Initial Warrants and provide for the grant of additional warrants on the terms
and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto acknowledge and agree as follows:
Section 1. Issuance of Initial Warrants; Issuance of Initial Warrant
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Certificate.
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(a) The Company and the Holder hereby acknowledge that:
(i) On June 30, 2001, the Company granted to the Holder an Initial
Warrant to purchase 101,694 shares of common stock of the Company, $.01 par
value per share (the "Common Stock") at an initial exercise price of $4.00 per
share, which such initial exercise price is subject to adjustment as provided
herein.
(ii) On June 30, 2001, the Company granted to the Holder an Initial
Warrant to purchase 30,000 shares of Common Stock of the Company at the initial
exercise price of $3.66 per share, which such initial exercise price is subject
to adjustment as provided herein.
(iii) On July 2, 2001 the Company granted to the Holder an Initial Warrant
to purchase 100,000 shares of Common Stock of the Company at the initial
exercise price of $4.00 per share, which such initial exercise price is subject
to adjustment as provided herein.
(iv) On July 2, 2001 the Company granted to the Holder an Initial Warrant
to purchase 21,087 shares of Common Stock of the Company at the initial exercise
price of $4.00 per share, which such initial exercise price is subject to
adjustment as provided herein.
(v) On October 12, 2001 the Company granted to the Holder an Initial
Warrant to purchase 100,000 shares of Common Stock of the Company at the initial
exercise price of $4.00 per share, which such initial exercise price is subject
to adjustment as provided herein.
(vi) On October 12, 2001 the Company granted to the Holder an Initial
Warrant to purchase 100,000 shares of Common Stock of the Company at the initial
exercise price of $4.00 per share, which such initial exercise price is subject
to adjustment as provided herein.
(vii) On October 12, 2001 the Company granted to the Holder an Initial
Warrant to purchase 3,666 shares of Common Stock of the Company at the initial
exercise price of $4.00 per share, which such initial exercise price is subject
to adjustment as provided herein.
(b) The Company hereby issues to the Holder Initial Warrant Certificates,
substantially in the form set forth in Exhibit A attached hereto representing
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the Initial Warrants granted to the Holder as provided in Subsections (a)(i)
through (a)(vii) above.
Section 2. Issuance of Additional Warrants. From time to time, upon
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provision by the Holder of additional services to the Company, the Company shall
grant to the Holder that number of warrants ("Additional Warrants" and together
with the Initial Warrants, the "Warrants") as calculated pursuant to Exhibit B
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attached hereto and shall issue certificates representing such Additional
Warrants (the "Additional Warrant Certificates" and together with the Initial
Warrant Certificates, the "Warrant Certificates"), which such Additional Warrant
Certificates shall contain the same terms and conditions as the Initial Warrant
Certificates issued pursuant to subsections 1(a)(i) through 1(a)(vii) above,
except that such Additional Warrant Certificates shall contain an exercise
(strike) ▇▇▇▇▇, ▇▇▇▇▇ date and expiration date in accordance with Exhibit B
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attached hereto.
Section 3. Execution and Countersignature of Warrant Certificates. The
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Warrant Certificates shall be executed on behalf of the Company by its Chief
Executive Officer, President, Chief Financial Officer or Treasurer (each, a
"Company Officer") under its corporate seal reproduced thereon attested by its
Secretary or
Assistant Secretary. The signature of any of these Company Officers on any
Warrant Certificate may be manual or facsimile. Warrant Certificates bearing the
manual or facsimile signatures of individuals who were at any time Company
Officers shall bind the Company even if any such individual ceased to be a
Company Officer prior to the execution and delivery of such Warrant Certificate
or was not a Company Officer at the date of this Agreement.
Section 4. Transfers. Additional Warrants are not transferable or
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assignable, in whole or in part without compliance with applicable federal and
state securities laws by the transferor and the transferee (including, without
limitation, the delivery of investment representation letters and legal opinions
reasonably satisfactory to the Company). The Holder may transfer the Warrants to
MAST International Limited, an affiliate of the Holder, provided, however, that
(i) the Holder delivers an opinion of counsel satisfactory to counsel for the
Company that such transfer does not require registration under the Securities
Act of 1933, as amended; and (ii) the transferee delivers a letter agreement to
the Company stating that the transferee has agreed to be bound by the terms of
this Agreement. Warrant Certificates cancelled pursuant to any provisions of
this Agreement shall not be reissued, and shall be returned to the Company.
Section 5. Duration and Exercise of Warrants.
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(a) Each Warrant shall expire at 5:00 p.m. Connecticut time on the third
anniversary of such Warrant's effective date (a "Grant Date"), except as
otherwise described in the Warrant Certificate (such date of expiration being
herein referred to as the "Expiration Date"). In the event that the Expiration
Date falls on a day other than a Business Day, the Warrants shall expire at 5:00
p.m. Connecticut time on the next succeeding Business Day. A "Business Day"
shall mean a day other than a Saturday, Sunday or a public or national bank
holiday or the equivalent for banks generally under the laws of the State of
Connecticut.
(b) The Warrants are immediately exercisable upon grant. The Warrants
represented by each Warrant Certificate shall only be exercisable for shares of
Common Stock of the Company from such Warrant's Grant Date through and including
such Warrant's Expiration Date. Each Warrant may be exercised
on any Business Day on or prior to 5:00 p.m. Connecticut time on the Expiration
Date. After 5:00 p.m. Connecticut time on the Expiration Date, unexercised
Warrants will become wholly void and of no value.
(c) Subject to the provisions of this Agreement, the Holder shall have the
right to purchase from the Company (and the Company shall issue and sell to the
Holder) one fully paid and nonassessable share of Common Stock at the exercise
price (the "Exercise Price") at the time in effect hereunder, upon surrender to
the Company of the Warrant Certificate evidencing the Warrant exercised, with
the Form of Exercise attached therewith duly completed and signed, and upon
payment of the Exercise Price in lawful money of the United States of America by
certified or official bank check payable to the order of the Company or as
pursuant to Section 11(b) of this Agreement.
(d) Subject to Sections 6 and 13, upon surrender of a Warrant Certificate
and payment of the Exercise Price at the time in effect hereunder and an amount
equal to any applicable transfer tax in cash or by certified check or official
bank check payable to the order of the Company, the Company shall thereupon
promptly cause to be issued and shall deliver to the Holder within a reasonable
time, not exceeding five (5) days, after each Warrant represented by the Warrant
Certificate shall have been exercised, a certificate for the shares of Common
Stock issuable upon the exercise of each Warrant evidenced by such Warrant
Certificate. The Holder shall be deemed to have become the holder of record of
such shares of Common Stock (a "Shareholder") as of the date of the surrender of
such Warrant Certificate and payment of the Exercise Price or conversion of such
Warrant pursuant to Section 13 of this Agreement.
(e) The Warrants evidenced by a Warrant Certificate shall be exercisable
at the election of the Holder, either as an entirety or from time to time for
part only of the number of Warrants evidenced by the Warrant Certificate. In the
event that less than all of the Warrants evidenced by a Warrant Certificate
surrendered upon the exercise of Warrant is exercised, a new Warrant Certificate
or Certificates shall be issued for the remaining number of Warrants evidenced
by the Warrant Certificate so surrendered. All Warrant Certificates surrendered
upon exercise of Warrants shall be cancelled by the Company. Notwithstanding
anything herein to the contrary, the Company may elect to pay cash in lieu of
issuing Common Stock in accordance with Section 13(a) of this Agreement.
Section 6. Payment of Taxes. The Company shall pay all documentary stamp
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taxes, if any, attributable to the issuance of Warrants and the issuance of
Common Stock upon the exercise of any Warrant; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issuance of any certificates for shares
of Common Stock in a name other than that of the Holder of a Warrant Certificate
surrendered upon the exercise of a Warrant and the Company shall not be required
to issue or deliver such certificates unless or until the persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
Section 7. Mutilated or Missing Warrant Certificates. In case any of
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the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company shall issue, in exchange and substitution for and upon cancellation of
the mutilated Warrant Certificate, or in lieu of and in substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent number of Warrants, but only upon receipt
of evidence satisfactory to the Company of such loss, theft or destruction of
such Warrant Certificate and indemnity, if requested, also satisfactory to the
Company. Applicants for such substitute Warrant Certificates shall also comply
with such other reasonable requirements and pay such other reasonable charges as
the Company may prescribe.
Section 8. Representations and Warranties of the Company. The Company is a
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duly organized and validly existing corporation in good standing under the laws
of the State of Delaware and is in good standing as a foreign corporation where
the nature of the activities conducted by the Company makes such qualification
necessary. The Company has the requisite corporate power and authority to
execute and deliver this Agreement and the Warrant Certificates contemplated
hereby and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement by the Company, the execution and
delivery by Company of the Warrant Certificates
contemplated hereby, and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Company and no other or further corporate
proceedings will be necessary for the execution and delivery of such agreements
by the Company, the performance by the Company of its obligations hereunder and
thereunder and the consummation by the Company of the transactions contemplated
hereby and thereby. This Agreement has been duly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
Section 9. Reservation of Common Stock.
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(a) The Company will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued shares of
Common Stock and shares of Common Stock held in its Treasury, for the purpose of
enabling it to satisfy all obligations to issue shares of Common Stock upon the
exercise of Warrants the maximum number of shares of Common Stock which are
required to be delivered upon the exercise of all outstanding Warrants.
(b) The Company covenants that the shares issuable upon exercise of the
Warrants (the "Warrant Shares") will, upon issuance, be duly issued and
outstanding; fully paid and nonassessable and free from all taxes, liens,
charges and security interests with respect to the issuance thereof.
(c) The Company is authorized to requisition from time to time from a
transfer agent for the Common Stock (including the Company if then acting as a
transfer agent) stock certificates required to honor the exercise of outstanding
Warrants. The Company hereby authorizes its present and any future such transfer
agent to comply with all such requests. The Company will supply such transfer
agent with duly executed Common Stock certificates for such purposes and will
itself provide or otherwise make available any cash which may be payable as
provided in Section 11.
Section 10. Stock Exchange or Nasdaq Listings. The Company will use its
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best efforts to have the shares of Common Stock which are issuable upon exercise
of Warrants listed for trading on any securities exchange or the National
Association of Securities Dealers Automated Quotation System on which the then
outstanding Common Stock is then listed.
Section 11. Adjustment of Exercise Price and Number and Kind of Securities
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Purchasable upon Exercise of Warrants.
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(a) Adjustment of Exercise Price and Number of Warrants. The Exercise
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Price shall be subject to adjustment from time to time as provided in this
Section 11. No adjustment of the Exercise Price, however, shall be made in an
amount less than $.01 per share, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment, if any, which together with any subsequent adjustments so carried
forward shall amount to $.01 per share or more. Upon each adjustment of the
Exercise Price, the Holder shall thereafter, at or prior to the Expiration Date,
be entitled to purchase, at the Exercise Price resulting from such adjustment,
the number of shares issuable upon exercise of the Warrants (calculated to the
nearest whole share) obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the Exercise Price resulting from such adjustment.
(b) Subdivision or Combination of Stock. In case the Company shall at any
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time subdivide the outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced and the number of shares issuable upon exercise of
the Warrants immediately prior to such subdivision shall be proportionately
increased, and conversely, in case the outstanding shares of Common Stock shall
be combined at any time into a smaller number of shares, the Exercise Price in
effect immediately prior to such combination shall be proportionately increased
and the number of shares issuable upon exercise of the Warrants immediately
prior to such combination shall be proportionately reduced.
(c) Adjustments for Consolidation, Merger, Sale of Assets, Reorganization,
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etc. In case the Company (i) consolidates with or merges into any other
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corporation and is not the continuing or surviving corporation of such
consolidation or merger, or (ii) permits any other corporation to consolidate
with or merge into the Company and the Company is the continuing or surviving
corporation but, in connection with such consolidation or merger, the Common
Stock of the Company is changed into or exchanged for stock or other securities
of any other corporation or cash or any other assets, or (iii) transfers all or
substantially all of its properties and assets to any other corporation, or (iv)
effects a capital reorganization or reclassification of the capital stock of the
Company in such a way that holders of Common Stock shall be entitled to receive
stock, securities, cash or assets with respect to or in exchange for Common
Stock, then, and in each such case, proper provision shall be made so that, upon
the basis and upon the terms and in the manner provided in this subsection (c),
the Holder, upon the exercise of the Warrants at any time after the consummation
of such consolidation, merger, transfer, reorganization or reclassification,
shall be entitled to receive (at the aggregate Exercise Price in effect for
shares issuable upon such exercise of the Warrants prior to such consummation,
the stock and other securities, cash and assets to which such Holder would have
been entitled upon such consummation if such Holder had so exercised such
Warrants immediately prior thereto (subject to adjustments subsequent to such
corporate action as nearly equivalent as possible to the adjustments provided
for in this Section 11). Notwithstanding the foregoing, in the event that a
definitive agreement (a "Sale Agreement") is executed with respect to an all
cash transaction involving (i) either a merger or consolidation of the Company
with and into another corporation or (ii) the sale of all or substantially all
of the outstanding shares of Common Stock of the Company, the Company shall have
the right, on three (3) days prior written notice to the Holder, to pay or cause
to be paid to the Holder on or immediately prior to the closing date of the
transactions under the Sale Agreement in full and complete satisfaction and
cancellation of the Warrants, an amount in cash equal to (A) the product of (x)
the price per share of Common Stock payable to the holders of Common Stock under
the Sale Agreement and (y) the number of shares of Common Stock issuable upon
exercise of the Warrants on
such date minus (B) the product of (x) the Exercise Price in effect at such date
and (y) the number of shares of Common Stock issuable upon exercise of the
Warrants on such date.
(d) Notice of Adjustment. Whenever the number of shares issuable upon the
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exercise of the Warrants or the Exercise Price is adjusted, as provided in this
Section 11, the Company shall prepare and mail to the Holder a certificate
setting forth (i) the Exercise Price and the number of shares issuable upon the
exercise of the Warrants after such adjustment, (ii) a brief statement of the
facts requiring such adjustment and (iii) the computation by which such
adjustment was made.
(e) No Change of Warrant Necessary. Irrespective of any adjustment in the
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Exercise Price or in the number or kind of shares issuable upon exercise of the
Warrants, the Warrants may continue to express the same price and number and
kind of shares as are stated in the Warrants as initially issued.
(f) Successive Transactions. The provisions of this Section 11 shall
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similarly apply to successive transactions.
Section 12. Fractional Shares of Common Stock. The Company may, but will
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not be required to, issue fractions of shares of Common Stock or to distribute
shares of Common Stock certificates which evidence fractions of shares upon the
exercise of the Warrants; provided, however, that in lieu of fractional shares
of Common Stock the Company shall make a cash payment therefor equal in amount
to the product of the applicable fraction multiplied by the current Market Price
as defined in Section 13(c) below of shares of the Company's Common Stock.
Section 13. Exercise Options.
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(a) Cash In Lieu of Exercise. At any time prior to the Expiration Date,
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the Holder may notify the Company of its intent to exchange the Warrants
represented by the Warrant Certificates in whole or in part (a "Warrant
Exchange") into the number of fully paid and non-assessable shares of Common
Stock determined in accordance with this Section 13, by surrendering such
Warrant Certificate(s) at the principal office of the Company or at the office
of its Transfer Agent, accompanied by a notice stating such Holder's intent to
effect such exchange and the number of Warrants to be exchanged (the "Notice of
Exchange"). Upon receipt of a
Notice of Exchange, the Company shall have the option in its sole discretion to
pay to Holder cash in lieu of Common Stock issuable upon Holder's exercise of
Warrants, if, on a fully diluted basis, Holder's total ownership in the Company
on the date of a Notice of Exchange exceeds ten percent (10%) of the total
outstanding Common Stock on the date on which the Notice of Exchange is received
by the Company. For the purpose of this Section 13(a), "ownership" means
Holder's ownership of the Company's Common Stock and securities convertible into
shares of Common Stock. If the Company elects to exercise its cash payment
option under this Section 13(a), the Company shall notify Holder of such
election within five (5) days of the Company's receipt of the Notice of
Exchange. If the Company elects to exercise its cash payment option, the Company
shall pay to Holder in cash an amount per share equal to the difference between
the Exercise Price and Market Price (as defined in Section 13(c)). The Company
shall pay any cash due to Holder as follows: one third of such sum within ten
(10) days of the date of the Company's receipt of the Notice of Exchange and the
balance in cash paid one third thereof on each of the first and second
anniversaries of the day after the date of Notice of Exchange. Any unpaid sums
shall accrue interest at six percent (6%) per year.
(b) Cashless Exercise. At any time prior to the Expiration Date and
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subject to Section 13(a), the Holder may effect a Warrant Exchange for the
number of fully paid and non-assessable shares of Common Stock determined in
accordance with this Section 13(b), by surrendering such Warrant Certificate(s)
at the principal office of the Company or at the office of its Transfer Agent,
accompanied by a Notice of Exchange. Certificates for the shares issuable upon
such Warrant Exchange and, if applicable, a Warrant Certificate of like tenor
evidencing the balance of the shares remaining subject to the Holder's Warrant
Certificate(s), shall be issued as of the date of the Notice of Exchange and
delivered to the Holder within five (5) business days following the date that
the Notice of Exchange is received by the Company (the "Exchange Date"). In
connection with any Warrant Exchange, the Holder's Warrant Certificate(s) shall
represent the right to subscribe for and acquire the number of shares of Common
Stock (rounded to the next highest integer) equal to the product of (A) the
number of shares covered by the Warrant Certificate(s) that are being exchanged
as specified by the Holder in its Notice of Exchange (the "Total Share Number")
multiplied by (B) a fraction, the
numerator of which is the Market Price (defined below) of the Company's Common
Stock less the then existing Exercise Price per share and the denominator of
which is the Market Price.
(c) For the purpose of this Agreement, Market Price, which shall be
calculated on the date on which the Notice of Exchange is received by the
Company, shall be the last reported sale price, or in case no such reported sale
takes place on such day, the average of the last reported sale prices for the
last three trading days, in either case as officially reported by the principal
securities exchange on which the Common Stock is listed or admitted to trading
or as reported in the Nasdaq Market System (National or SmallCap system, as
applicable) or, if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on the Nasdaq Market System, the last
reported sale price as furnished by the National Association of Securities
Dealers, Inc. through Nasdaq or similar organization if Nasdaq is no longer
reporting such information, or if the Common Stock is not quoted on Nasdaq, as
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it for the two (2) days immediately
preceding such issuance or sale and the day of such issuance or sale.
Section 14. Restrictions on Transferability. The Warrant Certificates and
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the shares of Common Stock issuable upon exercise of the Warrants shall not be
transferable except upon the conditions specified in Section 4 and this Section
14, which conditions are intended to insure compliance with the provisions of
the Securities Act of 1933, as amended (the "Securities Act") in respect of the
transfer of any Warrant Certificate or any shares of Common Stock issuable upon
exercise of the Warrants.
(a) Restrictive Legend; Holder's Representation. Unless and until
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otherwise permitted by this Section 14, each certificate representing shares of
Common Stock issuable upon exercise of the Warrants, and any certificate issued
at any time upon transfer of, or in exchange for or replacement of, any
certificate bearing the legend set forth below shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND THE TRANSFER, RESALE OR OTHER DISPOSITION OF SUCH
SECURITIES MAY BE MADE ONLY PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR A VALID EXEMPTION THEREFROM AND IN
COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS, AND BY DELIVERY OF AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT THERE IS SUCH AN
EXEMPTION.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF THAT CERTAIN WARRANT AGREEMENT DATED AS OF JANUARY
4, 2002, BY AND BETWEEN THE HOLDER AND THE COMPANY. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
COMPANY."
(b) The Holder represents to the Company that it is acquiring the Warrants
and will acquire the shares of Common Stock issuable upon exercise of the
Warrants (if at all) for its own account and not with a view to any public
distribution thereof. The acquisition of any Warrants or shares of Common Stock
issuable upon exercise of the Warrants by the Holder on the date of this
Agreement or upon exercise of a Warrant shall constitute the Holder's
reaffirmation of such representation. The Holder further represents to the
Company that it is an "accredited investor" as defined in Regulation D under the
Securities Act. The Holder understands that the Warrants and the shares of
Common Stock issuable upon exercise of the Warrants have not been registered
under the Securities Act and may only be sold or otherwise disposed of in
compliance with the Securities Act. The Holder by its acceptance of such
security further understands that such security may bear a legend as
contemplated by this Section 14.
(c) All Warrant Certificates issued upon transfer, division or combination
of, or in substitution for, any Warrant Certificate or Warrant Certificates
entitled to bear such legend shall have a similar legend endorsed thereon.
Section 15. Registration Rights. (a) For a period of two (2) years from the
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later of (i) the Grant Date or (ii) the date hereof, the Company shall determine
to register any of its securities, for its own account or the account of any of
its shareholders, other than a registration on Form S-8 or on Form S-4 or on
Form S-3 relating solely to an SEC Rule 145 transaction or relating solely to a
merger, recapitalization, share exchange, consolidation, acquisition or similar
transaction, the Company will:
(i) promptly give to the Holder written notice thereof; and
(ii) include in such registration, and in any underwriting involved
therein, all the shares of Common Stock issued or issuable upon exercise of the
Warrants specified in a written request or requests, made within 30 days after
receipt of such written notice from the Company, by the Holder, except as set
forth in subsection 15(b) and (c) below.
(b) Underwriting. If the registration of which the Company gives notice
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is for a registered public offering involving a firm-commitment underwriting,
the Company shall so advise the Holder as a part of the written notice given
pursuant to subsection 15(a)(i). In such event the right of the Holder pursuant
to this subsection 15 shall be conditioned upon the Holder's participation in
such underwriting and the inclusion of the Holder's Common Stock in the
underwriting to the extent provided herein. The Holder proposing to distribute
its securities through such underwriting shall (together with the Company and
the other shareholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form (and not inconsistent
with the terms hereof) with the underwriter or underwriters selected for such
underwriting by the Company.
(c) In the case of any registration of Common Stock by the Company in a
firm-commitment underwriting, if the managing underwriters give written advice
to the Company that marketing factors require a limitation on all or any part of
the number of shares of Common Stock (or other securities convertible into or
exercisable or exchangeable for Common Stock) to be offered and sold by
stockholders of the Company in such offering, there shall be included in the
offering: (i) first, all securities proposed by the Company to be sold for its
account; and (ii) second, that number of shares of Common Stock, if any,
requested to be included in such registration statement by the Holder and by
other stockholders of the Company having contractual rights to include shares in
such registration, on a pro rata basis based upon the number of shares of Common
Stock each Holder and each such other stockholder beneficially owns, except that
where such a registration is solely for another shareholder, such shareholder
shall be considered before the Holder.
(d) The shares of Common Stock issuable upon exercise of the Warrants
covered by an effective registration statement may be transferred by the Holder
for as long as the registration statement is effective.
Not withstanding the foregoing, the Holder shall not offer or sell on the open
market more than 100,000 shares of such Common Stock issuable upon exercise of
the Warrants during a period of five (5) consecutive trading days at any time
for the term of this Agreement. If the Holder does not comply with this section
15(d), the Company has a right to amend the registration statement and to remove
from registration any of Common Stock issuable upon exercise of the Warrants
which remains unsold by the Holder.
(e) If at any time after giving notice pursuant to 15(a) hereof and prior
to the effective date of any such registration statement, the Company shall
determine for any reason not to register or to delay registration of its
securities, the Company may give written notice of such determination to Holder
who has requested inclusion of Common Stock issuable upon exercise of the
Warrants in such registration statement and, thereupon the Company (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Common Stock and (ii) in the case of a determination to delay
registration, shall be permitted to delay registering any Common Stock for the
same period as the delay in registering other securities included in such
registration statement.
(f) The Company will notify Holder at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing, and Holder shall thereupon forthwith discontinue use of such
prospectus until receipt of notice from the Company that use of such prospectus
may be resumed or receipt of prospectus supplement or amendment so that such
prospectus will not contain such untrue statement or omission.
(g) Holder included in any registration shall promptly furnish to the
Company such information regarding the Holder and the distribution proposed by
the Holder as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to
herein.
Section 16. Indemnification.
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(a) The Company will indemnify the Holder and each of its officers,
directors and partners, and each person controlling the Holder within the
meaning of Section 15 of the Securities Act ("controlling person"), with
respect to which registration, qualification or compliance of the Company's
Common Stock issuable upon exercise of the Warrants, against all claims,
losses, expenses, damages and liabilities (or actions in respect thereto)
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus (including any
related registration statement) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary
to make the statement therein not misleading, and will reimburse the Holder,
each of its officers, directors and partners, and each person controlling
such Holder, for any reasonable legal and any other expenses incurred in
connection with investigation, defending or settling any such claim, loss,
damage, liability or action; provided, however, that the indemnity agreement
contained in this subsection 16(a) shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability, or action if such
settlement is effected without the consent of the Company in its sole
discretion; and provided further, that the Company will not be liable in any
such case to the extent that any such claim, loss, damage or liability
arises out of or is based on any untrue statement or omission made in
reliance upon and conformity with written information furnished to the
Company by or on behalf of the Holder specifically for use therein, and
provided further that the indemnity agreement contained in this subsection
16(a) shall not apply to the extent that any such claim, loss, damage or
liability arises out of or is based on the Holder's use of a prospectus
after the Company has notified the Holder under Section 15(f).
(b) The Holder will, if the Company's Common Stock issuable upon
exercise of the Warrants held by or issuable to the Holder are included in
the securities as to which such registration, qualification or compliance is
being effected, indemnify the Company, each of its directors, officers and
controlling persons, each underwriter, if any, of the Company's securities
covered by such a registration statement, and each controlling person of
such underwriter, against all claims, losses, expenses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained
in any such registration statement or prospectus, or 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, and will
reimburse the Company, such directors, officers, partners, persons or
underwriters for any reasonable legal or any other expenses incurred in
connection with investigating, defending or settling any such claim, loss,
damage, liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission
(or alleged omission) is made in such registration statement, prospectus,
offering circular or other document in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Holder
specifically for use therein; provided, however, that the indemnity
agreement contained in this subsection 16(b) shall not apply to amounts paid
in settlement of any such claim, loss, damage, liability or action if such
settlement is effected without the consent of the Holder.
(c) The Holder will indemnify the Company against all claims, losses,
expenses, damages and liabilities (or actions in respect thereof) arising
out of or based on any transfers, assignments or sales to any entities by
the Holder of either the Warrants or the Company's Common Stock issuable
upon exercise of the Warrants as permitted in Sections 4 and 14 of this
Agreement, and will reimburse the Company for any reasonable legal or any
other expenses incurred in connection with investigating, defending or
settling any such claim, loss, damage, liability or action.
(d) Each party entitled to indemnification under this subsection 16
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense; and provided further, that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations hereunder, unless such failure resulted in prejudice to the
Indemnifying Party; and provided further, that an Indemnified Party (together
with all other Indemnified Parties which may be represented without conflict by
one counsel) shall have the right to retain one separate counsel, with the fees
and expenses to be paid by the Indemnifying Party, if representation of such
Indemnified Party by the counsel retained by the Indemnifying Party would in the
unqualified written opinion of counsel to the Holder, be inappropriate due to
actual or potential differing interests between such Indemnified Party and any
other party represented by such counsel in such proceeding.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 16
is due in accordance with its terms but for any reason is judicially
determined to be unenforceable against the Indemnifying Party or otherwise
unavailable to the Indemnified Party in respect to any losses, claims,
damages and liabilities referred to herein, then the Indemnifying Party
shall, in lieu of indemnifying such Indemnified Party, contribute to the
amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities to which such party may be subject in such
proportion as is appropriate to reflect the relative fault of the Company,
on the one hand, and the Holders, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company and the Holders shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement, or omission or alleged omission, of material fact related to the
information supplied by the Company or the Holders and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Holder agree that
it would not be just and equitable if contribution pursuant to this Section
16(e) were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 16(e), no
person adjudged guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not adjudged guilty of such fraudulent
misrepresentation. Any party entitled to contribution shall, promptly after
receipt of notice of commencement of any action, suit or proceeding against
such party in respect of which a claim for contribution may be made against
another party or parties under this Section 16(e), notify such party or
parties from whom contribution may be sought, but the omission so to notify
such party or parties from whom contribution may be sought shall not, in the
absence of actual prejudice to such party or parties, relieve it to them
from such contribution obligation. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent.
Section 17. Notices. All notices, demands or other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
delivered in person, via registered or certified mail, return receipt requested,
postage prepaid, or by nationally recognized overnight courier services:
(a) If to the Company, to:
Mercator Software, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(b) if to Holder, to:
MAST Services Incorporated LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ Mass
or at such other address as may have been furnished by such person in writing to
the other parties. Any such notice, demand or other communication shall be
deemed to have been given on the date actually delivered (or delivery is
refused) or as of the date deposited with the courier, as the case may be.
Section 18. Supplements and Amendments.
--------------------------
The Company may from time to time supplement or amend this Agreement
without the approval of the Holder in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any provisions herein, or to make any other provisions with regard to
matters or questions arising hereunder which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the Holder.
This Agreement may be changed, waived or terminated only with the written
consent of the Company and Holder.
Section 19. No Rights as Shareholders. Until such time as the Holder
-------------------------
exercises a Warrant, nothing contained in this Agreement or in any of the
Warrant Certificates shall be construed as conferring upon the Holder any rights
of a shareholder, including without limitation, the right to vote, to receive
dividends or to consent to, or receive notice as a shareholder in respect of,
any meeting of shareholders for the election of directors of the Company or for
any other matter.
Section 20. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Holder shall bind and
inure to the benefit of their respective successors and permitted assigns
hereunder.
Section 21. Binding Effect. This Agreement shall be in full force and
--------------
effect so long as any warrants is issued and remains outstanding pursuant to
this Agreement.
Section 22. Governing Law. This Agreement and each Warrant issued
-------------
hereunder shall be governed by and construed in accordance with the internal
laws of the State of Connecticut, without regard to its conflicts of laws
provisions.
Section 23. Jurisdiction: Service of Process. Any action or proceeding
---------------------------------
arising out of this Agreement may be brought against any of the parties in the
courts of the state of Connecticut, County of Fairfield, or, if it has or can
acquire jurisdiction, in the United States District Court for the District of
Connecticut, and each of the parties consents to the jurisdiction of the state
and federal courts of the State of Connecticut (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein.
Section 24. Benefits of this Agreement; Rights of Action. Nothing in
--------------------------------------------
this Agreement shall be construed to give to any person or corporation other
than the Company and the Holder any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the sole and exclusive
benefit of the Company and the Holder.
Section 25. Counterparts. This Agreement may be executed in one or more
------------
counterparts by facsimile signature, and with counterpart signature pages, each
of which shall be an original, and all of which together shall constitute one
and the same Agreement.
Section 26. Headings. The descriptive headings of the several
--------
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
Section 27. Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
MERCATOR SOFTWARE, INC.
By:_______________________________________
Name:
Title:
Attest:
_______________________________
MAST SERVICES, LLC
By:_______________________________________
Name:
Title:
Attest:
_______________________________
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND THE
TRANSFER, RESALE OR OTHER DISPOSITION OF SUCH SECURITIES MAY ONLY BE MADE
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR A
VALID EXEMPTION THEREFROM AND IN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES
LAWS, AND BY DELIVERY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
THERE IS SUCH AN EXEMPTION.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF THAT CERTAIN WARRANT AGREEMENT DATED AS OF JANUARY 7, 2002, BY
AND BETWEEN THE HOLDER AND THE COMPANY, COPIES OF SUCH AGREEMENT MAY BE OBTAINED
UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.
EXERCISABLE ONLY ON OR BEFORE 5:00 P.M. CONNECTICUT TIME
_______________, 200__
No. W- _________ Warrants
WARRANT CERTIFICATE
MERCATOR SOFTWARE, INC.
This Warrant Certificate certifies that MAST Service LLC, a Delaware
limited liability company, is the registered holder (the "Holder") of
_______ Warrants (the "Warrants") expiring ____________, 200_ to purchase
shares of common stock of Mercator Software, Inc., a Delaware corporation
(the "Company"). Each Warrant entitles the Holder to purchase from the
Company, on or after the issuance hereof, and on or before 5:00 p.m.
Connecticut time on ________ one fully paid and nonassessable share of
common stock of the Company, par value $.01 per share ("Common Stock"), at
the exercise price (the "Exercise Price") at the time in effect under the
Warrant Agreement (as defined on the reverse hereof), payable in lawful
money of the United States of America, upon surrender of
this Warrant Certificate and payment of such Exercise Price to the Company
in Wilton, Connecticut, subject to the conditions set forth herein and in
the Warrant Agreement, provided, however, that the number or kinds of
shares of Common Stock or other securities (or in certain events other
property) purchasable upon exercise of the Warrants and the Exercise Price
referred to on the reverse hereof may as of the date of this Warrant
Certificate have been, or may after such date be, adjusted as a result of
the occurrence of certain events, as more fully provided in the Warrant
Agreement. Payment of the Exercise Price shall be made by certified or
official bank check payable to the order of the Company or as provided in
Section 13 of the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m. Connecticut time on __________,
200_ (the "Expiration Date").
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by the
Holder by the manual signature of one of its authorized officers.
Void after ____________, 200_
MERCATOR SOFTWARE, INC.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to a Warrant Agreement, dated as of
January 4, 2002 (the "Warrant Agreement"), between the Company and Holder, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
Holder. Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Warrant Agreement. A copy of the Warrant
Agreement is available for inspection at the Company, located at ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, during regular business hours.
Warrants may be exercised to purchase shares of Common Stock from the
Company at any time, or from time to time on or after ________, 200_ and on or
before the Expiration Date, at the Exercise Price then in effect. The Holder
may exercise the Warrants represented by this Warrant Certificate by
surrendering the Warrant Certificate with the Form of Exercise attached herewith
properly completed and executed, together with payment of the Exercise Price at
the time in effect, to the Company. In the event that an exercise of Warrants
evidenced hereby shall be an exercise of less than the total number of Warrants
evidenced hereby, there shall be issued to the Holder a new Warrant Certificate
evidencing the number of Warrants not exercised. The Holder may exchange the
Warrants represented by this Warrant Certificate by surrendering the Warrant
Certificate with the Form of Exercise attached herewith properly completed and
executed, together with a Notice of Exchange, to the Company. In the event that
an exchange of Warrants evidenced hereby shall be an exchange of less than the
total number of Warrants evidenced hereby, there shall be issued to the Holder a
new Warrant Certificate evidencing the number of Warrants not exchanged. No
adjustment will be made for any dividends on any shares of Common Stock issuable
upon exercise or exchange of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price may, subject to certain conditions, be adjusted and under
certain circumstances the Warrant may become exercisable for securities or other
assets other than the shares of Common Stock referred to on the face hereof. If
the Exercise Price is adjusted, the Warrant Agreement provides that the number
of shares of Common Stock purchasable upon the exercise of each Warrant shall be
adjusted.
The Company may, but shall not be required to, issue fractions of shares of
Common Stock or any certificates that evidence fractional shares of Common
Stock. In lieu of fractional shares of Common Stock, the Company shall make a
cash payment therefor equal in amount to the product of the applicable fraction
multiplied by the current market price then in effect.
The Warrants represented by this Warrant Certificate are not transferable
or assignable, in whole or in part. The Company shall make no service or other
charge in connection with any such exchange of this Warrant Certificate, for the
purpose of any exercise hereof, any distribution to the Holder hereof, and for
all other purposes.
[FORM OF EXERCISE]
To Be Executed by the Holder in Order to Exercise Warrants
THE UNDERSIGNED HOLDER hereby irrevocably elects to exercise _____________
Warrants represented by this Warrant Certificate, and to purchase the securities
issuable upon the exercise of such Warrants, and requests that certificates for
such securities shall be issued in the name of
______________________________________________________
(please insert name and taxpayer identification number)
and be delivered to
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Holder at the
address stated below:
____________________________________________
____________________________________________
____________________________________________
(Address)
_________________________________
(Date)
_________________________________
(Signature of the Holder)
EXHIBIT B
Grant Date as used in this Agreement shall be the date on which the Company
signs an agreement with a strategic partner concerning which the Holder has
performed the following functions: introduction to Company, performance of due
diligence in regard to the partner and assisted the Company, upon Company's
reasonable request, in negotiating the agreement with the partner.
Exercise (Strike) Price means the greater of (i) 1.35 times the ▇▇▇▇▇ ▇▇▇▇▇ or
(ii) $8.98. ▇▇▇▇▇ ▇▇▇▇▇ means the Company's stock price at Grant Date, which
equals to the average final last reported sale price for the last ten (10)
trading days prior the Grant Date as officially reported by NASDAQ.
Term means expected life of Warrants which shall be 3 years.
Number of Warrants Issuable shall be determined by the following formula:
O = Fee / BS, where O is the number of Warrants to be granted, Fee is the
value of the Warrants to be granted and BS is the value of a single Warrant
to be granted, determined by calculating the "Black-Scholes" value of an
option to purchase one share of Common Stock on the applicable page on the
Bloomberg online page, using the following variable values: (i) ▇▇▇▇▇ ▇▇▇▇▇
as defined above; (ii) volatility of the Company's stock as determined by
the Company and approved by the Company's auditors for a calendar year in
which Warrants are granted; (Notwithstanding the foregoing, the rate to be
utilized for 2001 shall be 80%.) (iii) a risk free rate which means
annualized yield on 3-year US Treasury bonds at the Grant Date, as
published in the Wall Street Journal, minus the Company's annualized
dividend yield at the end of the quarter in which the Warrants are granted
(excluding one-time dividends); and (iv) Exercise Price as defined above.
In the event such calculation function is no longer available utilizing the
Bloomberg online page, the Company shall calculate such amount in its sole
discretion using the closest available alternative mechanism and variable
values to those available utilizing the Bloomberg online page for such
calculation function.