EXHIBIT 4.2
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE WARRANT
MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
UNLESS IT HAS BEEN REGISTERED UNDER THOSE LAWS OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH DISPOSITION IS IN
COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
Right to Purchase 600 Shares
of Common Stock of Vsource, Inc.
VSOURCE, INC.
Common Stock Purchase Warrant
VSOURCE, INC., a Delaware corporation (the "Company"), hereby certifies
that, for value received, _______________ (the "Holder") is entitled, subject to
the terms set forth below, to purchase from the Company at any time on or before
5:00 p.m., Pacific Daylight Time, on July 18, 2007 (the "Expiration Date") Six
Hundred (600) fully paid and nonassessable shares of common stock of the
Company, par value $0.01 per share (the "Common Stock"), at a purchase price per
share equal to the Purchase Price, as defined herein. The number of such shares
of Common Stock and the Purchase Price are subject to adjustment as provided in
this Warrant. The initial purchase price for shares subject to this Warrant will
be 50/100 Dollars ($0.50) per share (the "Initial Purchase Price"), and will be
adjusted from time to time as provided herein. The Initial Purchase Price or, if
such price has been adjusted, the price per share of Common Stock as last
adjusted pursuant to the terms hereof is referred to as the "Purchase Price"
herein.
1. EXERCISE OF WARRANT. This Warrant may be exercised by the Holder hereof
in full at any time until the Expiration Date by surrender of this Warrant and
the subscription form annexed hereto (duly executed by the Holder), to the
Company, and by making payment in cash or by certified or official bank check
payable to the order of the Company, in the amount obtained by multiplying (i)
the number of shares of Common Stock subject to the Warrant by (ii) the Purchase
Price then in effect.
2. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon as
practicable after the exercise of this Warrant, the Company will cause to be
issued in the name of and delivered to the Holder hereof a certificate for the
number of fully paid and nonassessable shares of Common Stock (or Other
Securities) to which the Holder shall be entitled on such exercise, plus, in
lieu of any fractional share to which the Holder would otherwise be entitled,
cash equal to such fraction multiplied by the then current fair market value (as
reasonably determined by the Company) of one full share, together with any other
stock or other securities or property (including cash, where applicable) to
which the Holder is entitled upon such exercise. "Other Securities" shall mean
any stock (other than Common Stock) and other securities of the Company or any
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other person (corporate or otherwise) which the Holder at any time shall be
entitled to receive, or shall have received, on the exercise of this Warrant, in
lieu of or in addition to Common Stock, or which at any time shall be issuable
or shall have been issued in exchange for or in replacement of Common Stock or
Other Securities pursuant to Sections 3 or 4.
3. ADJUSTMENT.
(a) Initial Purchase Price; Subsequent Adjustment of Price and Number
of Purchasable Shares. The Initial Purchase Price will be adjusted from time to
time as provided below. Upon each adjustment of the Purchase Price, the Holder
will thereafter be entitled to purchase, at the Purchase Price resulting from
such adjustment, the number of shares of Common Stock obtained by multiplying
the Purchase Price in effect immediately before such adjustment by the number of
shares of Common Stock purchasable pursuant to this Warrant immediately before
such adjustment and dividing the product by the Purchase Price resulting from
such adjustment.
(b) Adjustment for Stock Splits and Combinations. If the Company at
any time or from time to time after the date of this Warrant effects a
subdivision of the outstanding shares of Common Stock, by stock split or
otherwise, the Purchase Price then in effect immediately before that subdivision
shall be proportionately decreased; and, conversely, if the Company at any time
or from time to time after the date of this Warrant combines the outstanding
shares of Common Stock, by reverse stock split or otherwise, the Purchase Price
then in effect immediately before that combination shall be proportionately
increased. Any adjustment under this Section 3(b) shall become effective at the
close of business on the date the subdivision or combination becomes effective.
(c) Adjustment for Certain Dividends and Distributions. In the event
the Company at any time or from time to time after the date of this Warrant
either makes, or fixes a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Purchase
Price then in effect shall be decreased as of the time of such issuance or, in
the event such a record date is fixed, as of the close of business on such
record date, by multiplying the Purchase Price then in effect by a fraction (1)
the numerator of which is the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance on the close of
business on such record date, and (2) the denominator of which shall be (i) the
total number of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record date plus
(ii) the number of shares of Common Stock issuable in payment of such dividend
or distribution; provided, however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Purchase Price shall be recomputed accordingly as of the
close of business on such record date or date fixed therefor and thereafter the
Purchase Price shall be adjusted pursuant to this Section 3(c) as of the time of
actual payment of such dividend or distribution. For purposes of the foregoing
formula, "the total number of shares of Common Stock issued and outstanding" on
a particular date shall include shares of Common Stock issuable upon conversion
of stock or securities convertible into Common Stock and the exercise of
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warrants, options or rights for the purchase of Common Stock which are
outstanding on such date.
(d) Adjustments for Other Dividends and Distributions. In the event the
Company at any time or from time to time after the date of this Warrant makes,
or fixes a record date for the determination of holders of Common Stock entitled
to receive, a dividend or other distribution payable in securities of the
Company other than shares of Common Stock, then and in each such event,
provision shall be made so that the Holder shall receive upon exercise hereof,
in addition to the number of shares of Common Stock receivable thereupon, the
amount and kind of securities of the Company which it would have received had
this Warrant been exercised for Common Stock as of the date of such event and
had it thereafter, during the period from the date of such event to and
including the date of exercise, retained such securities receivable by it as
aforesaid during such period, subject to all other adjustments called for during
such period under this Section 3 with respect to the rights of the Holder.
(e) Adjustment for Recapitalization, Reclassification, or Exchange. If the
Common Stock issuable upon the exercise of this Warrant is changed into the same
or a different number of shares of any class or classes of stock of the Company,
whether by recapitalization, reclassification or other exchange (other than a
subdivision or combination of shares, or a stock dividend or a reorganization,
merger, consolidation or sale of assets, provided for elsewhere in this Section
3), then and in any such event the Holder shall have the right thereafter to
exercise this Warrant to purchase the kind and amount of stock and other
securities and property receivable upon such recapitalization, reclassification
or other exchange by holders of the number of shares of Common Stock which might
have been purchased under this Warrant immediately prior to such
recapitalization, reclassification or other exchange, all subject to further
adjustment as provided herein.
(f) Reorganizations, Mergers, Consolidations or Sales of Assets. If at any
time or from time to time there is a capital reorganization of the Common Stock
(other than a subdivision or combination of shares or a stock dividend or a
recapitalization, reclassification or other exchange of shares, provided for
elsewhere in this Section 3 or a merger or consolidation of the Company with or
into another corporation, or the sale of all or substantially all of the
Company's assets to any other person), then, as a part of such capital
reorganization, provision shall be made so that the Holder shall thereafter be
entitled to receive upon exercise of this Warrant the number of shares of stock
or other securities or property of the Company, or of the successor corporation
resulting from such capital reorganization, to which a holder of the number of
shares of Common Stock deliverable upon such exercise would have been entitled
on such capital reorganization. In any such case, appropriate adjustment shall
be made in the application of the provisions of this Section 3 with respect to
the rights of the Holder after the capital reorganization to the end that the
provisions of this Section 3 (including the number of shares deliverable upon
exercise of this Warrant) shall continue to be applicable after that event and
shall be as nearly equivalent to the provisions hereof as may be practicable.
(g) Certificate of Adjustment. Upon the occurrence of each adjustment or
readjustment of the Purchase Price and/or the number of shares of Common Stock
subject to this Warrant, the Company at its expense shall promptly compute such
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adjustment or readjustment in accordance with the terms hereof, and shall
prepare and furnish to the Holder a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based.
4. EXERCISE UPON REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case at any
time or from time to time, the Company intends to (a) effect a reorganization,
(b) consolidate with or merge into any other person, (c) sell or transfer all or
substantially all of its properties or assets to any other person, (d) dissolve,
(e) consummate an initial public offering of its securities; or if the Company
is sold through the sale of its capital stock, then, notwithstanding any other
provision of this Warrant, in each such case, as a condition of such
reorganization, consolidation, merger, sale, dissolution, conveyance, or
offering the Company shall give at least ten (10) days' notice to the Holder of
such pending transaction whereby the Holder shall have the right to exercise
this Warrant prior to any such reorganization, consolidation, merger, sale,
dissolution, conveyance or offering. Any exercise of this Warrant pursuant to
notice under this Section shall be conditioned upon the closing of such
reorganization, consolidation, merger, sale, dissolution, conveyance or offering
which is the subject of the notice and the exercise of this Warrant shall not be
deemed to have occurred until immediately prior to the closing of such
transaction.
5. FURTHER ASSURANCES. The Company will take all action that may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock, free from all taxes, liens
and charges with respect to the issue thereof, on the exercise of all or any
portion of this Warrant from time to time outstanding.
6. NOTICES OF RECORD DATE, ETC. In the event of:
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend on, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all of the assets of the Company to or the sale, consolidation or
merger of the Company with, to or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or winding
up of the Company;
then and in each such event the Company will mail or cause to be mailed to the
Holder, at least ten (10) days prior to such record date, a notice specifying
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right, (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding up is to take place, and the time, if any is
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to be fixed, as of which the holders of record of Common Stock (or Other
Securities) shall be entitled to exchange their shares of Common Stock (or Other
Securities) for securities or other property deliverable on such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding up, and (iii) the amount and character of
any stock or other securities, or rights or options with respect thereto,
proposed to be issued or granted, the date of such proposed issue or grant and
the persons or class of persons to whom such proposed issue or grant is to be
offered or made.
7. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS. The
Company will at all times reserve and keep available out of its authorized but
unissued shares of capital stock, solely for issuance and delivery on the
exercise of this Warrant, a sufficient number of shares of Common Stock (or
Other Securities) to effect the full exercise of this Warrant and the exercise,
conversion or exchange of any other warrant or security of the Company
exercisable for, convertible into, exchangeable for or otherwise entitling the
Holder to acquire shares of Common Stock (or Other Securities), and if at any
time the number of authorized but unissued shares of Common Stock (or Other
Securities) shall not be sufficient to effect such exercise, conversion or
exchange, the Company shall take such action as may be necessary to increase its
authorized but unissued shares of Common Stock (or Other Securities) to such
number as shall be sufficient for such purposes.
8. TRANSFER OF WARRANT. This Warrant cannot be transferred without the
prior written consent of the Company, which consent shall not be unreasonably
withheld; provided, however, the Holder may transfer this Warrant to any of its
affiliates without such consent so long as such transfer complies with all
applicable securities laws.
9. NO RIGHTS AS A STOCKHOLDER. This Warrant shall not entitle the Holder
hereof to any voting rights or other rights as a stockholder of the Company.
10. NOTICES, ETC. All notices which are required to be given pursuant to
this Warrant shall be in writing and shall be delivered by certified mail,
return receipt requested, first class postage prepaid, or sent by overnight
express or similarly recognized overnight delivery with receipt acknowledged or
by facsimile, with a copy thereof sent by one of the other means. Notices shall
be deemed to have been given at the time delivered and shall be addressed as
follows or to such other address as a party may designate by proper notice
hereunder.
If to Holder: To the address set forth on the first page
hereof.
If to the Company: Vsource, Inc.
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Attn.: CEO
11. SECURITIES LAWS. By acceptance of this Warrant, the Holder hereby
represents to the Company that this Warrant is being acquired for investment for
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the Holder's own account, not as a nominee or agent, and not with a view to the
resale or distribution thereof, and that the Holder has no present intention of
selling, granting any participation in, or otherwise distributing this Warrant
or the Common Stock issuable upon exercise of this Warrant. By acceptance of
this Warrant, the Holder further represents that the Holder does not presently
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to this Warrant or the Common Stock issuable upon exercise of this
Warrant. The Holder is an "accredited investor" as the term is defined in Rule
501(a) of Regulation D promulgated under the Securities Act and has sufficient
knowledge and experience in finance and business that it is capable of
evaluating the risks and merits of its investment in the shares subject to this
Warrant and the Holder is able financially to bear the risks thereof. The Holder
understands that the sale and issuance of this Warrant and the Common Stock
issuable upon exercise of this Warrant have not been registered under the
Securities Act, by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of the Holder's
representations as expressed herein. The Holder further recognizes and
acknowledges that because the sale and issuance of this Warrant and the Common
Stock issuable upon exercise of this Warrant are unregistered, they may not be
eligible for resale, and may only be resold in the future pursuant to an
effective registration statement under the Securities Act and any applicable
state securities laws, or pursuant to a valid exemption from such registration
requirements and that the Holder must, therefore, bear the economic risk of such
investment indefinitely.
12. LEGEND. Unless theretofore registered for resale under the Securities
Act, each certificate for shares of Common Stock issued upon exercise of this
Warrant shall bear the following or a similar legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE RESOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH
DISPOSITION IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
13. MISCELLANEOUS. This Warrant and any terms hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the internal laws of the State of Delaware, without regard to
conflict of laws principles. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
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The invalidity or unenforceability of any provision hereof shall in no way
affect the validity or enforceability of any other provision.
* * *
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on
its behalf by one of its officers thereunto duly authorized as of July 7, 2005.
VSOURCE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
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FORM OF SUBSCRIPTION
VSOURCE, INC.
(To be signed only on exercise of Warrant)
TO: VSOURCE, INC.
1. The undersigned Holder of the attached original, executed Warrant of
Vsource, Inc., a Delaware corporation (the "Company"), hereby elects to exercise
its purchase right under such Warrant with respect to ______________
(__________) shares (the "Exercise Shares") of Common Stock (as defined in the
Warrant), constituting all the shares of Common Stock subject to the Warrant.
2. The undersigned Holder is hereby paying the aggregate purchase price for
such the Exercise Shares (i) by the enclosed certified or official bank check
payable in United States dollars to the order of the Company in the amount of
$___________, or (ii) by wire transfer of United States funds to the account of
the Company in the amount of $______________, which transfer has been made
before or simultaneously with the delivery of this Form of Subscription pursuant
to the instructions of the Company.
3. Please issue a stock certificate or certificates representing the
Exercise Shares in the name of the undersigned Holder.
Dated:_______________________
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Signature of Holder
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