EXHIBIT 10.6
CONFIDENTIAL
THIS WARRANT AND ALL SHARES OF WARRANT STOCK ISSUABLE HEREUNDER HAVE BEEN AND
WILL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (i) THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN
CONNECTION WITH SUCH DISPOSITION OR (ii) THE SALE OF SUCH SECURITIES IS MADE
PURSUANT TO RULE 144 PROMULGATED UNDER THE ACT.
WARRANT TO PURCHASE COMMON STOCK OF ▇▇▇▇▇ SYSTEMS, INC.
Warrant No. __________ Houston, Texas
Date of Issuance: June __, 2002 Number of Shares: 2,400,000
(subject to adjustment)
This Certifies That, for value received, ▇▇▇ ▇▇▇▇, an Arizona resident, or
its permitted registered assigns (the "Holder"), is entitled, subject to the
terms and conditions of this Warrant, at any time or from time to time after
June __, 2002 (the "Effective Date"), and before 5:00 p.m. Pacific Time on June
__, 2020 (the "Expiration Date"), to purchase from ▇▇▇▇▇ Systems, Inc., a Texas
corporation (the "Company"), Two Million Four Hundred Thousand (2,400,000)
shares of Warrant Stock of the Company at a price per share of $0.05 (the
"Exercise Price"). Both the number of shares of Warrant Stock purchasable upon
exercise of this Warrant and the Exercise Price are subject to adjustment as
provided herein. This Warrant is issued pursuant to that certain Amendment to
Loan Agreement and Modification of Note, dated as of the Effective Date (the
"Agreement"), between the Company and the Holder. Unless defined otherwise
herein, capitalized terms shall have the meaning set forth in the Agreement.
1. CERTAIN DEFINITIONS. As used in this Warrant the following terms shall have
the following respective meanings:
"Fair Market Value" of a share of Warrant Stock as of a particular date
shall mean:
(a) If traded on a national securities exchange or the Nasdaq National
Market, the Fair Market Value shall be deemed to be the average of the
closing prices of the shares of the Warrant Stock of the Company on such
exchange or market over the five (5) business days ending immediately prior
to the applicable date of valuation;
(b) If actively traded over-the-counter, the Fair Market Value shall
be deemed to be the average of the closing bid prices over the 30-day
period ending immediately prior to the applicable date of valuation; and
(c) If there is no active public market, the Fair Market Value shall
be the value thereof, as agreed upon by the Company and the Holder;
provided, however, that if the Company and the Holder cannot agree on such
value, such value shall be determined by an independent valuation firm
experienced in valuing businesses such as the Company and jointly selected
in good faith by the Company and the Holder. Fees and expenses of the
valuation firm shall be paid for by the Company.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Registered Holder" shall mean any Holder in whose name this Warrant is
registered upon the books and records maintained by the Company.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Warrant" shall include this Warrant and any warrant delivered in
substitution or exchange for this Warrant as provided herein.
"Warrant Stock" shall mean the Common Stock, $0.01 par value per share, of
the Company and any other securities at any time receivable or issuable upon
exercise of this Warrant.
2. EXERCISE OF WARRANT
2.1 Payment. Subject to compliance with the terms and conditions of this
Warrant and applicable securities laws, this Warrant may be exercised, in whole
or in part at any time or from time to time, on or before the Expiration Date by
the delivery (including, without limitation, delivery by facsimile) of the form
of Notice of Exercise attached hereto as Exhibit 1 (the "Notice of Exercise"),
duly executed by the Holder, at the principal office of the Company, and as soon
as practicable after such date, surrendering
(a) this Warrant at the principal office of the Company, and
(b) payment, (i) in cash (by check) or by wire transfer, (ii) by
cancellation by the Holder of indebtedness of the Company to the Holder; or
(iii) by a combination of (i) and (ii), of an amount equal to the product
obtained by multiplying the number of shares of Warrant Stock being
purchased upon such exercise by the then effective Exercise Price (the
"Exercise Amount"), except that if Holder is subject to HSR Act
Restrictions (as defined in Section 2.5 below), the Exercise Amount shall
be paid to the Company within five (5) business days of the termination of
all HSR Act Restrictions.
2.2 Net Issue Exercise. In lieu of the payment methods set forth in Section
2.1(b) above, if the Fair Market Value of one share of Warrant Stock is greater
than the Exercise Price (at the date of calculation set forth below), the Holder
may elect to exchange all or some of the Warrant for shares of Warrant Stock
equal to the value of the Warrant being exchanged on the date of exchange. If
the Holder elects to exchange this Warrant as provided in this Section 2.2, the
Holder shall tender to the Company, at the principal office of the Company, the
Warrant for the amount being exchanged, along with a properly endorsed Notice of
Exercise, and the Company shall issue to the Holder the number of shares of the
Warrant Stock computed using the following formula:
X = Y (A-B)
-------
A
Where: X = the number of shares of Warrant Stock to be issued to the Holder.
Y = the number of shares of Warrant Stock purchasable under
the amount of the Warrant being exchanged (as adjusted to the
date of such calculation).
A = the Fair Market Value of one share of the Warrant Stock.
B = Exercise Price (as adjusted to the date of such calculation).
All references herein to an "exercise" of the Warrant shall include an exchange
pursuant to this Section 2.2.
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2.3 "Easy Sale" Exercise. In lieu of the payment methods set forth in
Section 2.1(b) above, when permitted by law and applicable regulations
(including the rules of Nasdaq and the National Association of Securities
Dealers (the "NASD")), the Holder may pay the Exercise Amount through a "same
day sale" commitment from the Holder (and if applicable a broker-dealer that is
a member of the NASD (an "NASD Dealer")), whereby the Holder will irrevocably
elect to exercise this Warrant and to sell at least that number of shares of
Warrant Stock so purchased to pay the Exercise Amount (and up to all of the
shares of Warrant Stock so purchased) and the Holder (or, if applicable, the
NASD Dealer) commits upon sale (or, in the case of the NASD Dealer, upon
receipt) of such shares of Warrant Stock to forward the Exercise Amount directly
to the Company, with any sale proceeds in excess of the Exercise Amount being
for the benefit of the Holder.
2.4 Stock Certificates; Fractional Shares. As soon as practicable on or
after the date of exercise of this Warrant under Section 2.1, 2.2 or 2.3 above,
as applicable, the Company shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for the number of
whole shares of Warrant Stock issuable upon such exercise, together with cash in
lieu of any fraction of a share equal to such fraction of the current Fair
Market Value of one whole share of Warrant Stock as of the date of exercise of
this Warrant. No fractional shares or scrip representing fractional shares shall
be issued upon an exercise of this Warrant.
2.5 HSR Act. The Company hereby acknowledges that exercise of this Warrant
by the Holder may subject the Company and/or the Holder to the filing
requirements of the HSR Act and that the Holder may be prevented from exercising
this Warrant until the expiration or early termination of all waiting periods
imposed by the HSR Act ("HSR Act Restrictions"). If on or before the Expiration
Date, the Holder has sent the Notice of Exercise to Company and the Holder has
not been able to complete the exercise of this Warrant prior to the Expiration
Date because of HSR Act Restrictions, the Holder shall be entitled to complete
the process of exercising this Warrant in accordance with the procedures
contained herein notwithstanding the fact that completion of the exercise of
this Warrant would take place after the Expiration Date.
2.6 Partial Exercise; Effective Date of Exercise. In case of any partial
exercise of this Warrant, the Company shall cancel this Warrant upon surrender
hereof and shall execute and deliver a new Warrant of like tenor and date for
the balance of the shares of Warrant Stock purchasable hereunder. This Warrant
shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above. However,
if Holder is subject to HSR Act filing requirements this Warrant shall be deemed
to have been exercised on the date immediately following the date of the
expiration of all HSR Act Restrictions. The person entitled to receive the
shares of Warrant Stock issuable upon exercise of this Warrant shall be treated
for all purposes as the holder of record of such shares of Warrant Stock as of
the close of business on the date the Holder is deemed to have exercised this
Warrant.
2.7 Limitation Upon Exercise. Subject to the prior written consent of the
Company, which consent may not be unreasonably withheld or delayed, this Warrant
may be exercisable prior to the Effective Date if such exercise, when aggregated
with the exercise of Warrants issued at or about the same time this Warrant was
issued, would not result in a change in control of the Company and, therefore, a
loss of or impairment in the use of the Company's net operating loss and capital
loss carryforwards (the "NOLs"). As used in this Section 2.7, the term "change
in control" shall have the meaning set forth in the applicable code section of
the Internal Revenue Code of 1986, as amended, relating to NOLs. When making the
determination of whether to permit an early exercise of this Warrant, the
Company's determination shall be made with a view toward preserving the
Company's NOL and shall, at the time of such determination, take into account
whether or not the NOL still has value to the Company and similarly situated
holders of Warrants issued at or about the same time this
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Warrant was issued. The Company hereby agrees to use its best efforts to treat
all such similarly situated holders equitably for purposes of the determination
required by this Section 2.7.
3. VALID ISSUANCE; TAXES. All shares of Warrant Stock issued upon the exercise
of this Warrant shall be validly issued, fully paid and non-assessable, and the
Company shall pay all taxes and other governmental charges that may be imposed
in respect of the issue or delivery thereof.
4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The number of shares of
Warrant Stock issuable upon exercise of this Warrant (or any shares of stock or
other securities or property receivable or issuable upon exercise of this
Warrant) and the Exercise Price are subject to adjustment upon occurrence of the
following events:
4.1 Adjustment for Stock Splits, Stock Subdivisions or Combinations of
Shares. If the Company at any time while this Warrant, or any portion hereof,
remains outstanding and unexpired shall split, subdivide or combine the shares
of Warrant Stock, as to which purchase rights under this Warrant exist, into a
different number of securities of the same class, the number of shares of
Warrant Stock issuable upon exercise of this Warrant shall be proportionately
increased and the Exercise Price for such securities shall be proportionately
decreased in the case of a split or subdivision, and likewise, the number of
shares of Warrant Stock issuable upon exercise of this Warrant shall be
proportionately decreased and the Exercise Price proportionately increased in
the case of a combination.
4.2 Adjustment for Dividends or Distributions of Stock or Other Securities
or Property. In case the Company shall make or issue, or shall fix a record date
for the determination of eligible holders entitled to receive, a dividend or
other distribution with respect to the Warrant Stock payable in (a) securities
of the Company or (b) assets (excluding cash dividends paid or payable solely
out of retained earnings), then, in each such case, the Holder on exercise of
this Warrant at any time after the consummation, effective date or record date
of such dividend or other distribution, shall receive, in addition to the shares
of Warrant Stock issuable on such exercise prior to such date, and without the
payment of additional consideration therefor, the securities or such other
assets of the Company to which such Holder would have been entitled upon such
date if such Holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock available
by it as aforesaid during such period giving effect to all adjustments called
for by this Section 4.
4.3 Reclassification. If the Company, by reclassification of securities or
otherwise, shall change any of the securities as to which purchase rights under
this Warrant exist into the same or a different number of securities of any
other class or classes, this Warrant shall thereafter represent the right to
acquire such number and kind of securities as would have been issuable as the
result of such change with respect to the securities that were subject to the
purchase rights under this Warrant immediately prior to such reclassification or
other change and the Exercise Price therefore shall be appropriately adjusted,
all subject to further adjustment as provided in this Section 4. No adjustment
shall be made pursuant to this Section 4.3 upon any redemption of the Warrant
Stock which is the subject of Section 4.5.
4.4 Adjustment for Capital Reorganization, Merger or Consolidation. If at
any time while this Warrant, or any portion hereof, is outstanding and unexpired
there shall be (a) a reorganization (other than a combination, reclassification,
exchange or subdivision of shares as otherwise provided for herein), (b) a
merger or consolidation of the Company with or into another corporation in which
the Company is not the surviving entity, or a reverse triangular merger, or
similar transaction, in which the Company is the surviving entity but the shares
of the Company's capital stock outstanding immediately prior to the merger are
converted into other property, whether in the form of securities, cash, or
otherwise, and as a result of which the ownership of the Company shall change by
fifty percent (50%) or
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more, or (c) a sale or transfer of all or substantially all of the Company's
assets to any other person, then, as a part of such reorganization, merger,
consolidation, sale or transfer (collectively, a "Change of Control"), this
Warrant shall cease to represent the right to receive Warrant Shares and shall
automatically represent the right to receive upon the exercise of this Warrant,
during the period specified herein and upon payment of the Exercise Price then
in effect, the number of shares of stock or other securities or property offered
to the Company's holders of Warrant Stock in connection with such Change of
Control that a holder of shares of Warrant Stock, deliverable upon exercise of
this Warrant would have been entitled to receive in such Change of Control if
this Warrant had been exercised immediately before such Change in Control,
subject to further adjustment as provided in this Section 4. The foregoing
provisions of this Section 4.4 shall similarly apply to successive
reorganizations, consolidations, mergers, sales, and transfers to the extent
that this Warrant is assigned to or assumed by any successor corporation or
entity, whether by operation of law or otherwise, and to the stock or securities
of any other corporation that are at the time receivable upon the exercise of
this Warrant. If the per-share consideration payable to the holder hereof for
shares of Warrant Stock in connection with any such transaction is in a form
other than cash or marketable securities, then the value of such consideration
shall be determined in good faith by the Company's Board of Directors. In all
events, appropriate adjustment (as determined in good faith by the Company's
Board of Directors) shall be made in the application of the provisions of this
Warrant with respect to the rights and interests of the Holder after the
transaction, to the end that the provisions of this Warrant shall be applicable
after that event, as near as reasonably may be, in relation to any shares or
other property deliverable after that event upon exercise of this Warrant.
4.5 Redemption or Termination of Warrant Stock. In case all or any portion
of the authorized and outstanding shares of Warrant Stock of the Company are
redeemed pursuant to the Company's Certificate of Incorporation or otherwise, or
the Warrant Stock otherwise ceases to exist, then, in such case, the Holder of
this Warrant, upon exercise hereof at any time after the date on which the
Warrant Stock is so redeemed or ceases to exist (the "Warrant Stock Termination
Date"), shall receive, subject to the terms of this Warrant, in lieu of the
number of shares of Warrant Stock that would have been issuable upon such
exercise immediately prior to the Warrant Stock Termination Date, the securities
or property that would have been received if this Warrant had been exercised in
full and the Warrant Stock received thereupon had been simultaneously converted
immediately prior to the Warrant Stock Termination Date and the Exercise Price
shall be appropriately adjusted, all subject to further adjustment as provided
in this Warrant.
4.6 Adjustment for Issuance of Additional Shares of Common. Upon issuance
by the Company of Common Stock, or any right or option to acquire Common Stock
or other stock convertible into Common Stock, or any obligation or any share of
stock convertible into or exchangeable for Common Stock ("Additional Common
Stock") for a price per share that is less than the Exercise Price in effect
immediately prior to the time of such issuance or sale, then upon such issuance
or sale the Exercise Price in effect immediately prior to such issuance and the
number of shares of Warrant Stock for which the Warrant is exercisable will be
adjusted as follows:
(a) Adjustment to Exercise Price. The Exercise Price shall be adjusted
to equal (i) the Exercise Price for which this Warrant is exercisable prior
to the adjustment; (ii) multiplied by a fraction, (x) the numerator of
which is the sum of the number of shares of Common Stock outstanding
immediately prior to the issue or sale plus the number of shares of Common
Stock which the aggregate consideration, if any, received by the Company
upon the issue or sale of such Additional Common Stock would purchase at
the then-current Exercise Price, and (y) the denominator of which is the
number of shares of Common Stock outstanding immediately prior to the issue
or sale plus the number of shares of Additional Common Stock issued.
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(b) Adjustment to Number of Shares of Common Stock for Which Warrant
is Exercisable. The number of shares of Common Stock for which this Warrant
is exercisable shall be adjusted to equal the number of shares of Common
Stock for which this Warrant is exercisable immediately prior to such issue
or sale, multiplied by a fraction, (i) the numerator of which is the
Exercise Price in effect immediately prior to the issue or sale, and (ii)
the denominator of which is the Exercise Price after giving effect to the
adjustment set forth in Section 4.6(a) above.
5. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment in the Exercise
Price, or number or type of shares issuable upon exercise of this Warrant, the
Chief Financial Officer or Controller of the Company shall compute such
adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based, including a statement of the adjusted Exercise
Price. The Company shall promptly send (by facsimile and by either first class
mail, postage prepaid or overnight delivery) a copy of each such certificate to
the Holder.
6. LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory to the
Company of the ownership of and the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to it, and (in the case
of mutilation) upon surrender and cancellation of this Warrant, the Company will
execute and deliver in lieu thereof a new Warrant of like tenor as the lost,
stolen, destroyed or mutilated Warrant.
7. RESERVATION OF WARRANT STOCK. The Company hereby covenants that at all times
there shall be reserved for issuance and delivery upon exercise of this Warrant
such number of shares of Warrant Stock or other shares of capital stock of the
Company as are from time to time issuable upon exercise of this Warrant and,
from time to time, will take all steps necessary to amend its Certificate of
Incorporation to provide sufficient reserves of shares of Warrant Stock issuable
upon exercise of this Warrant. All such shares shall be duly authorized, and
when issued upon such exercise, shall be validly issued, fully paid and
non-assessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions on sale and free and clear of all preemptive
rights, except encumbrances or restrictions arising under federal or state
securities laws. Issuance of this Warrant shall constitute full authority to the
Company's officers who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for shares of Warrant Stock upon
the exercise of this Warrant.
8. TRANSFER AND EXCHANGE. Subject to the terms and conditions of this Warrant
and compliance with all applicable securities laws, this Warrant and all rights
hereunder may be transferred to any Registered Holder parent, subsidiary or
affiliate of the Holder, in whole or in part, on the books of the Company
maintained for such purpose at the principal office of the Company referred to
above, by the Registered Holder hereof in person, or by duly authorized
attorney, upon surrender of this Warrant properly endorsed and upon payment of
any necessary transfer tax or other governmental charge imposed upon such
transfer. Upon any permitted partial transfer, the Company will issue and
deliver to the Registered Holder a new Warrant or Warrants with respect to the
shares of Warrant Stock not so transferred. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that when this
Warrant shall have been so endorsed, the person in possession of this Warrant
may be treated by the Company, and all other persons dealing with this Warrant,
as the absolute owner hereof for any purpose and as the person entitled to
exercise the rights represented hereby, any notice to the contrary
notwithstanding; provided, however that until a transfer of this Warrant is duly
registered on the books of the Company, the Company may treat the Registered
Holder hereof as the owner for all purposes.
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9. RESTRICTIONS ON TRANSFER. The Company agrees that Holder may transfer some or
all of this Warrant or Warrant Stock, as the case may be, to the following
individuals: ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇. Further transfers of such Warrants or Warrant Stock shall
be subject to the following restrictions: absent an effective registration
statement filed with the SEC under the Securities Act, covering the disposition
or sale of this Warrant or the Warrant Stock issued or issuable upon exercise
hereof, and registration or qualification under applicable state securities
laws, such Holder will not sell, transfer, pledge, or hypothecate any or all
such Warrants or Warrant Stock, as the case may be, unless either (i) the
Company has received an opinion of counsel, in form and substance reasonably
satisfactory to the Company, to the effect that such registration is not
required in connection with such disposition or (ii) the sale of such securities
is made pursuant to Rule 144, promulgated under the Securities Act.
10. COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the Holder
hereby represents, warrants and covenants that any shares of stock purchased
upon exercise of this Warrant or acquired upon conversion thereof shall be
acquired for investment only and not with a view to, or for sale in connection
with, any distribution thereof; that the Holder has had such opportunity as the
Holder has deemed adequate to obtain from representatives of the Company such
information as is necessary to permit the Holder to evaluate the merits and
risks of its investment in the Company; that the Holder is able to bear the
economic risk of holding such shares of Warrant Stock for an indefinite period;
that the Holder understands that shares of Warrant Stock will not be registered
under the Securities Act (unless otherwise required pursuant to exercise by the
Holder of the registration rights, if any, previously granted to the Holder) and
will be "restricted securities" within the meaning of Rule 144 promulgated under
the Securities Act and that the exemption from registration under Rule 144 will
not be available for at least one year from the date of exercise of this
Warrant, subject to any special treatment by the SEC for exercise of this
Warrant pursuant to Section 2.2, and even then will not be available unless a
public market then exists for the stock, adequate information concerning the
Company is then available to the public, and other terms and conditions of Rule
144 are complied with; and that all stock certificates representing shares of
Warrant Stock may have affixed thereto a legend substantially in the following
form:
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT
REGISTRATION UNDER THE ACT UNLESS EITHER (i) THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH
SUCH DISPOSITION OR (ii) THE SALE OF SUCH SECURITIES IS MADE PURSUANT TO
RULE 144 PROMULGATED UNDER THE ACT.
11. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not entitle the
Holder to any voting rights or other rights as a stockholder of the Company.
12. REGISTRATION RIGHTS. All shares of Warrant Stock issuable upon exercise of
this Warrant shall be "Registrable Securities" or such other definition of
securities entitled to registration rights pursuant to that certain Registration
Rights Agreement, dated as of the Effective Date, and are entitled, subject to
the terms and conditions of that agreement, to all registration rights granted
to holders of Registrable Securities thereunder.
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13. NOTICES. All notices and other communications from the Company to the Holder
shall be given in accordance with the Agreement.
14. TITLES AND HEADINGS. The titles, captions and headings of this Warrant are
included for ease of reference only and will be disregarded in interpreting or
construing this Warrant. Unless otherwise specifically stated, all references
herein to "sections" and "exhibits" will mean "sections" and "exhibits" to this
Warrant.
15. LAW GOVERNING. This Warrant shall be governed in all respects by the laws of
the State of Texas, without regard to principles of conflict of laws.
16. NO IMPAIRMENT. The Company will not, by amendment of its Certificate of
Incorporation or bylaws, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Registered Holder of this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company (a) will not increase the par value of any shares of Warrant Stock
above the amount payable therefor upon such exercise, and (b) will take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non-assessable shares of Warrant Stock upon
exercise of this Warrant.
17. NOTICES OF RECORD DATE. In case: (a) the Company shall take a record of the
holders of its Common Stock (or other stock or securities at the time receivable
upon the exercise of this Warrant), for the purpose of entitling them to receive
any dividend or other distribution, or any right to subscribe for or purchase
any shares of stock of any class or any other securities or to receive any other
right; (b) of any consolidation or merger of the Company with or into another
corporation, any capital reorganization of the Company, any reclassification of
the capital stock of the Company, or any conveyance of all or substantially all
of the assets of the Company to another corporation in which holders of the
Company's stock are to receive stock, securities or property of another
corporation; (c) of any voluntary dissolution, liquidation or winding-up of the
Company; or (d) of any redemption or conversion of all outstanding Warrant
Stock; then, and in each such case, the Company will mail or cause to be mailed
to the Registered Holder of this Warrant a notice specifying, as the case may
be, (i) the date on which a record is to be taken for the purpose of such
dividend, distribution or right, or (ii) the date on which such event or
transaction is to take place, and the time, if any is to be fixed, as of which
the holders of record of Warrant Stock shall be entitled to exchange their
shares of Warrant Stock for securities or other property deliverable upon such
event or transaction. Such notice shall be delivered at least thirty (30) days
prior to the date therein specified.
18. SEVERABILITY. If any paragraph, provision or clause of this Warrant shall be
found or be held to be illegal, invalid or unenforceable, the remainder of this
Warrant shall be valid and enforceable and the parties shall use good faith to
negotiate a substitute, valid and enforceable provision that most nearly effects
the parties' intent in entering into this Warrant.
19. COUNTERPARTS. This Warrant may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.
20. NO INCONSISTENT AGREEMENTS. The Company will not on or after the date of
this Warrant enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the Holder of this Warrant or otherwise
conflicts with the provisions hereof. The rights granted to the Holder hereunder
do not in any way conflict with and are not inconsistent with the rights
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granted to holders of the Company's securities under any other agreements,
except rights that have been waived.
21. SATURDAYS, SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a Saturday,
Sunday or legal holiday, the Expiration Date shall automatically be extended
until 5:00 p.m. the next business day.
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IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of the
Effective Date.
▇▇▇▇▇ SYSTEMS, INC. ▇▇▇ ▇▇▇▇
By: By:
------------------------------- ----------------------------------
Name: Name:
Title: Title:
SIGNATURE PAGE TO WARRANT TO PURCHASE COMMON STOCK OF ▇▇▇▇▇ SYSTEMS, INC
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EXHIBIT 1
NOTICE OF EXERCISE
(To be executed upon exercise of Warrant)
▇▇▇▇▇ SYSTEMS, INC WARRANT NO. ___
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by this Warrant Certificate for, and to purchase thereunder, the
securities of ▇▇▇▇▇ Systems, Inc., as provided for therein, and (check the
applicable box):
|_| Tenders herewith payment of the exercise price in full in the form of cash
or a certified or official bank check in same-day funds in the amount of
$____________ for _________ such securities.
|_| Elects the Net Issue Exercise option pursuant to Section 2.2 of the Warrant,
and accordingly requests delivery of a net of ______________ of such securities,
according to the following calculation:
X = Y (A-B) ( ) = (____) [(_____) - (_____)]
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A (_____)
Where: X = the number of shares of Warrant Stock to be issued to Holder.
Y = the number of shares of Warrant Stock purchasable under
the amount of the Warrant being exchanged (as adjusted to the
date of such calculation).
A = the Fair Market Value of one share of the Warrant Stock.
B = Exercise Price (as adjusted to the date of such calculation).
|_| Elects the Easy Sale Exercise option pursuant to Section 2.3 of the Warrant,
and accordingly requests delivery of a net of ______________ of such securities.
Please issue a certificate or certificates for such securities in the name of,
and pay any cash for any fractional share to (please print name, address and
social security number):
Name:
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Address:
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Signature:
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Note: The above signature should correspond exactly with the name on the first
page of this Warrant Certificate or with the name of the assignee appearing in
the assignment form below.
If said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder rounded up to the next higher whole number of shares.
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EXHIBIT 2
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
▇▇▇▇▇ SYSTEMS, INC. WARRANT NO. ___________
For value received, the undersigned hereby sells, assigns and transfers unto
___________________ the within Warrant Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
____________________________ attorney, to transfer said Warrant Certificate on
the books of the within-named Company with respect to the number of Warrants set
forth below, with full power of substitution in the premises:
Name(s) of Assignee(s) Address # of Warrants
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And if said number of Warrants shall not be all the Warrants represented by the
Warrant Certificate, a new Warrant Certificate is to be issued in the name of
said undersigned for the balance remaining of the Warrants registered by said
Warrant Certificate.
Dated:
------------------------------
Signature:
--------------------------
Notice: The signature to the foregoing Assignment must correspond to the name as
written upon the face of this security in every particular, without alteration
or any change whatsoever; signature(s) must be guaranteed by an eligible
guarantor institution (banks, stock brokers, savings and loan associations and
credit unions with membership in an approved signature guarantee medallion
program) pursuant to Securities and Exchange Commission Rule 17Ad-15.
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