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EXHIBIT 4.2
WARRANT TO PURCHASE 175,000
SHARES OF COMMON STOCK
REPRESENTATIVE'S WARRANT
Dated: [Effective Date]
THIS CERTIFIES THAT ▇.▇. ▇▇▇▇▇▇ & CO., INC. (herein sometimes called the
"Holder") is entitled to purchase from DYNAMICWEB ENTERPRISES, INC., a New
Jersey corporation (the "Company"), at the respective prices and during the
period hereinafter specified, up to 175,000 shares of the Common Stock, $.0001
par value, of the Company (the "Common Stock"). This Representative's Warrant
(this "Warrant") is issued pursuant to an Underwriting Agreement dated
[Effective Date] between the Company and ▇.▇. ▇▇▇▇▇▇ & Co., Inc. (the
"Representative"), as representative of certain underwriters, including itself
(the "Underwriters"), in connection with a public offering, through the
Underwriters (the "Offering"), of 1,750,000 shares of Common Stock (and up to
262,500 additional shares of Common Stock covered by an over-allotment option
granted to the Underwriters), in consideration of $5.00 received by the Company
for this Warrant. Except as otherwise expressly provided herein, the shares of
Common Stock issued upon exercise of this Warrant shall bear the same terms and
conditions described under the caption "Description Of Securities" in the
registration statement (File No. 33-_____) on Form SB-2 relating to the Offering
(the "Registration Statement"), except that (i) the Holder shall have
registration rights under the Securities Act of 1933, as amended (the "Act"),
for this Warrant and the Common Stock as more fully described in Section 6. Each
certificate evidencing the Registrable Securities (as hereinafter defined) shall
bear the appropriate restrictive legend set forth below, except that any such
certificate shall not bear such restrictive legend if (a) it is transferred
pursuant to an effective registration statement under the Act or in compliance
with Rule 144 or Rule 144A promulgated under the Act, or (b) the Company is
provided with an opinion of counsel to the effect that such legend is not
required in order to establish compliance with the provisions of the Act:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF
THE REPRESENTATIVE'S WARRANT COVERING REGISTRATION RIGHTS PERTAINING TO
THESE SECURITIES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST
BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY AT THE OFFICE OF THE COMPANY AT FAIRFIELD, NEW
JERSEY."
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Unless the context otherwise requires, all references herein to a "Section"
shall mean the appropriate Section of this Warrant.
1. EXERCISE PRICE AND PERIOD. The rights represented by this Warrant shall
be exercised at the price and during the periods set forth below:
(a) During the period from [EFFECTIVE DATE] to [EFFECTIVE DATE+1
YEAR-1 DAY] (the "First Anniversary Date") inclusive, the Holder shall have no
right to purchase any Securities hereunder, except that in the event of any
merger or consolidation of the Company into another entity, or any sale of
substantially all of the assets of the Company as an entirety, prior to the
First Anniversary Date, the Holder shall have the right to exercise this Warrant
at such time and into such kinds and amounts of shares of stock and other
securities and property (including cash) as would be receivable by a holder of
the number of shares of Common Stock into which this Warrant might have been
exercisable immediately prior thereto.
(b) Between [EFFECTIVE DATE+1 YEAR] and [EFFECTIVE DATE+5 YEARS-1
DAY] (the "Expiration Date") inclusive, the Holder shall have the right to
purchase hereunder: (i) shares of Common Stock at a price of $_______ per share
(that being 120 percent of the public offering price of the shares of Common
Stock) (the "Share Exercise Price").
(c) Notwithstanding the provisions of Section 1(b) with respect to
the Exercise Price to the contrary, the Holder may elect to exercise this
Warrant, in whole or in part, by receiving Common Stock equal to the value (as
herein determined) of the portion of this Warrant then being exercised, in which
event the Company shall issue to the Holder the number of shares of Common Stock
determined by using the following formula:
X = Y(A-B)
______
A
where: X = the number of shares of Common Stock to be issued to the
Holder under the provisions of this Section 1(c)
Y = the number of shares of Common Stock that would
otherwise be issued upon such exercise
A = the Current Fair Market Value (as hereinafter
defined) of one share of Common Stock calculated as of
the last trading day immediately preceding such
exercise
B = the Exercise Price
As used herein, the "Current Fair Market Value" of the Common Stock as of a
specified date shall mean with respect to each share of Common Stock, (i) the
average of the closing prices of the Common Stock sold on all securities
exchanges on which the Common Stock may at
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the time be listed, or (ii) if there have been no sales on any such exchange on
such day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or (iii) if on such day the Common Stock is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 p.m., New York time, or (iv) if on such day the
Common Stock is not quoted in the NASDAQ System, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated or any similar successor
organization, in each such case either (i) calculated on the date which the form
of election specified in Section 2 herein is deemed to have been sent to the
Company or (ii) averaged over a period of 5 days consisting of the day as of
which the Current Fair Market Value is being determined and the 4 consecutive
business days prior to such day. The Holder hereof shall determine in its sole
discretion which method of calculation to use. If on the date for which Current
Fair Market Value is to be determined the Common Stock is not listed on any
securities exchange or quoted in the NASDAQ System or the over-the-counter
market, then Current Fair Market Value of the Common Stock shall be the highest
price per share which the Company could then obtain from a willing buyer (not a
current employee or director) for Common Stock sold by the Company from
authorized but unissued shares, as determined in good faith by the Board of
Directors of the Company, unless prior to such date the Company has become
subject to a merger, consolidation, reorganization, acquisition or other similar
transaction pursuant to which the Company is not the surviving entity, in which
case the Current Fair Market Value of the Common Stock shall be deemed to be the
per share value received or to be received in such transaction by the holders of
Common Stock.
(d) After the Expiration Date, the Holder shall have no right to
purchase any shares of Common Stock hereunder.
2. EXERCISE. The rights represented by this Warrant may be exercised, in
whole or in part (with respect to shares of Common Stock, by the Holder at any
time within the periods specified in Section 1 by: (a) surrender of this Warrant
for cancellation (with the purchase form at the end hereof properly executed) at
the principal executive office of the Company (or at such other office or agency
of the Company as it may designate by notice in writing to the Holder at the
address of the Holder appearing on the books of the Company); (b) to the extent
that the Holder does not use the election provided by Section 1(c), payment to
the Company of the Exercise Price for the number of shares of Common Stock
specified in the such purchase form, together with the amount of applicable
stock transfer taxes, if any; and (c) delivery to the Company of a duly executed
agreement signed by the person(s) designated in the purchase form to the effect
that such person(s) agree(s) to be bound by all of the terms and conditions of
this Warrant, including without limitation the provisions of Sections 6 and 7.
This Warrant shall be deemed to have been exercised, in whole or in part to the
extent specified, immediately prior to the close of business on the date on
which all of the provisions of this Section 2 are satisfied, and the person(s)
designated in the purchase form shall become the holder(s) of record of the
shares of Common Stock issuable upon such exercise at that time and date. The
certificates representing the shares of Common Stock so purchased shall be
delivered to the Holder within a reasonable time, not exceeding ten business
days, after this Warrant shall have been so exercised.
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3. TRANSFER OF WARRANT.
(a) During the period from [EFFECTIVE DATE] to the First Anniversary
Date inclusive, this Warrant shall not be transferred, sold, assigned or
hypothecated, except that during such period this Warrant may be transferred (i)
to successors in interest of the Holder, or (ii) in whole or in part to any one
or more shareholders, directors or officers of the Holder, in each case subject
to compliance with applicable Federal and state securities laws and
Interpretations of the Board of Governors of the National Association of
Securities Dealers, Inc.
(b) Between [EFFECTIVE DATE+1 YEAR] and the Expiration Date
inclusive, this Warrant shall be freely transferable, in whole or in part,
subject to the other terms and conditions hereof and to compliance with
applicable Federal and state securities laws; provided, however, that this
Warrant shall be immediately exercised upon any such transfer to any person or
entity that is not a shareholder, director or officer of the Holder and that if
this Warrant is not so exercised upon a transfer to any person or entity which
is not a shareholder, director or officer of the Holder, that this Warrant shall
immediately lapse.
(c) Any transfer of this Warrant permitted by this Section 3 shall
be effected by: (i) surrender of this Warrant for cancellation (with the
assignment form at the end hereof properly executed) at the office or agency of
the Company referred to in Section 2; (ii) delivery of a certificate (signed, if
the Holder is a corporation or partnership, by an authorized officer or partner
thereof), stating that each transferee designated in the assignment form is a
permitted transferee under this Section 3; and (iii) delivery of an opinion of
counsel stating that the proposed transfer may be made without registration or
qualification under applicable Federal or state securities laws. This Warrant
shall be deemed to have been transferred, in whole or in part to the extent
specified, immediately prior to the close of business on the date the provisions
of this Section 3(c) are satisfied, and the transferee(s) designated in the
assignment form shall become the holder(s) of record at that time and date. The
Company shall issue, in the name(s) of the designated transferee(s) (including
the Holder if this Warrant has been transferred in part) a new Warrant or
Warrants of like tenor and representing, in the aggregate, rights to purchase
the same number of shares of Common Stock as are then purchasable under this
Warrant. Such new Warrant or Warrants shall be delivered to the record holder(s)
thereof within a reasonable time, not exceeding ten business days, after the
rights represented by this Warrant shall have been so transferred. As used
herein (unless the context otherwise requires), the term "Holder" shall include
each such transferee, and the term "Warrant" shall include each such transferred
Warrant.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees that
all shares of Common Stock which may be issued upon exercise of this Warrant
shall, upon issuance in accordance with the terms hereof, be duly and validly
issued, fully paid and non-assessable, with no personal liability attaching to
the Holder thereof. The Company further covenants and agrees that during the
period within which this Warrant may be exercised, the Company shall at all
times have authorized and reserved a sufficient number of shares of Common Stock
for issuance upon exercise of this Warrant.
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5. SHAREHOLDERS' RIGHTS. This Warrant shall not entitle the Holder to any
voting rights or other rights as a shareholder of the Company.
6. REGISTRATION RIGHTS.
(a) CERTAIN DEFINITIONS. As used herein, the term:
(i) "Registrable Securities" shall mean this Warrant and/or the
shares of Common Stock issued or issuable upon exercise of this Warrant, as the
same shall be so designated by the Holder.
(ii) "50% Holder" shall mean the Holder(s) of at least 50 percent
of the total number of shares of Common Stock comprising the Registrable
Securities (whether or not this Warrant has been exercised), and shall include
any Holder or combination of Holders.
(b) "PIGGYBACK" REGISTRATION. From the date hereof until the
Expiration Date, the Company shall advise the Holder, whether the Holder holds
this Warrant or has exercised this Warrant and holds any of the Common Stock, by
written notice at least four weeks prior to the filing of any post-effective
amendment to the Registration Statement (unless the Company determines that to
comply with Federal securities law it must file such post-effective amendment in
less than four weeks' time, in which case the Company shall give the Holder the
most notice practicable under the circumstances), or of any new registration
statement or post-effective amendment thereto under the Act (other than a
registration statement on Form S-8 or its counterpart), or any Notification on
Form 1-A under the Act, covering any securities of the Company, whether for its
own account or for the account of others, and shall, upon the request of the
Holder, include in any such post-effective amendment or new registration
statement such information as may be required to permit a public offering of any
or all of the Registrable Securities of the Holder, all at no expense whatsoever
to the Holder (except in the case of any post-effective amendment to the extent
as permitted by the Act or the rules and regulations promulgated thereunder),
except that each Holder whose Registrable Securities are included in such
registration shall bear the fees of its own counsel and any underwriting
discounts or commissions applicable to the Securities sold by it.
(c) DEMAND REGISTRATION.
(i) If any 50% Holder shall give notice to the Company, at any
time after the First Anniversary Date and prior to the Expiration Date, to the
effect that such 50% Holder desires to register under the Act any Registrable
Securities under such circumstances that a public distribution (within the
meaning of the Act) of any such securities shall be involved, then the Company
shall promptly, but no later than 30 days after receipt of such notice, use its
reasonable best efforts to file a post-effective amendment to the Registration
Statement or a new registration statement under the Act, to the end that
Registrable Securities of such 50% Holder may be publicly sold under the Act as
promptly as practicable thereafter, and the Company shall use its best efforts
to cause such registration to become effective as soon as possible; provided,
however, that such 50% Holder shall furnish the Com-
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pany with appropriate information in connection therewith as the Company may
reasonably request in writing; and provided further that the Company shall then
have available current financial statements (unless the unavailability of
current financial statements results from the Company's fault or neglect). The
50% Holder may, at its option, cause Registrable Securities to be included in
such registration under this Section 6(c) on a maximum of two occasions during
the four-year period beginning on the First Anniversary Date and ending on the
Expiration Date.
(ii) Within ten days after receiving any such notice pursuant to
this Section 6(c), the Company shall give notice to each other Holder (whether
such Holder holds a Warrant or has exercised the Warrant and holds any of the
Securities), advising that the Company is proceeding with such post-effective
amendment or new registration statement and offering to include therein
Registrable Securities held by such other Holders, provided that they shall
furnish the Company with such appropriate information in connection therewith as
the Company shall reasonably request in writing.
(iii) All costs and expenses (including without limitation,
legal, accounting, printing, mailing and filing fees) of the first such
registration effected under this Section 6(c) shall be borne by the Company,
except that the Holder(s) whose Registrable Securities are included in such
registration shall bear the fees of their own counsel and any underwriting
discounts or commissions applicable to the securities sold by them. All costs
and expenses of the second such registration effected under this Section 6(c)
shall be borne by the Holder(s) whose Registrable Securities are included in
such registration.
(iv) The Company shall cause each registration statement or
post-effective amendment filed pursuant to this Section 6(c) to remain current
under the Act (including the taking of such steps as are necessary to obtain the
removal of any stop order) for a period of at least six months (and for up to an
additional three months if requested by the Holder(s)) from the effective date
thereof, or until all the Registrable Securities included in such registration
have been sold, whichever is earlier.
(d) FURTHER RIGHTS. The registration rights provided by this Section 6
may be exercised by the Holder either prior or subsequent to its exercise of
this Warrant. A 50% Holder may, at its option, request registration pursuant to
Section 6(b) and/or pursuant to Section 6(c), and its request for registration
under one such Section shall not affect its right to request registration under
the other. The registration rights provided by this Section 6 shall supersede
and be prior in right to any registration rights granted by the Company to other
holders of its outstanding securities.
(e) FURTHER OBLIGATIONS OF COMPANY. With respect to all registrations
under this Section 6, the Company shall: (i) supply prospectuses and such other
documents as the Holder may reasonably request in order to facilitate the public
sale or other disposition of the Registrable Securities; (ii) use its best
efforts to register and qualify the Registrable Securities for sale in such
states as the Holder designates (provided, however, that in no event shall the
Company be required to qualify as a foreign corporation or a dealer in
securities or to execute a general consent to service of process); and (iii) do
any and all other acts and things
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which may be necessary or desirable to enable the Holder to consummate the
public sale or other disposition of the Registrable Securities.
7. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. As used in this Section 7, the
term "Liabilities" shall mean any and all losses, claims, damages and
liabilities, and actions and proceedings in respect thereof, including without
limitation all reasonable costs of defense and investigation and all attorneys'
fees. Whenever pursuant to Section 6 a registration statement relating to any
Registrable Securities is filed under the Act, or amended or supplemented, the
Company shall indemnify and hold harmless each Holder of Registrable Securities
included in such registration statement, amendment or supplement (each, a
"Distributing Holder"), and each person (if any) who controls (within the
meaning of the Act) the Distributing Holder, and each underwriter (within the
meaning of the Act) of such Registrable Securities, and each person (if any) who
controls (within the meaning of the Act) any such underwriter, from and against
all Liabilities, joint or several, to which the Distributing Holder or any such
controlling person or underwriter may become subject, under the Act or
otherwise, insofar as such Liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any such
registration statement, or any preliminary prospectus or final prospectus
constituting a part thereof, or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company shall not be liable
in any such case to the extent that any such Liabilities arise out of or are
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary prospectus,
final prospectus, or amendment or supplement thereto, in reliance upon and in
conformity with written information furnished by such Distributing Holder or by
any other Distributing Holder for use in the preparation thereof. The foregoing
indemnity shall be in addition to any other liability which the Company may
otherwise have.
(b) INDEMNIFICATION BY HOLDER. The Distributing Holder(s) shall
indemnify and hold harmless the Company, and each of its directors, each nominee
(if any) named in any preliminary prospectus or final prospectus constituting a
part of such registration statement, each of its officers who have signed such
registration statement and such amendments or supplements thereto, and each
person (if any) who controls the Company (within the meaning of the Act) against
all Liabilities, joint or several, to which the Company or any such director,
nominee, officer or controlling person may become subject, under the Act or
otherwise, insofar as such Liabilities arise out of or are based upon any untrue
or alleged untrue statement of any material fact contained in such registration
statement, preliminary prospectus, final prospectus, or amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent that such Liabilities arise out of or are based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, preliminary prospectus, final prospectus or
amendment or supplement
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thereto in reliance upon and in conformity with written information furnished by
such Distributing Holder(s) for use in the preparation thereof. The foregoing
indemnity shall be in addition to any other liability which the Distributing
Holder(s) may otherwise have.
(c) PROCEDURE. Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party, give the indemnifying party notice of the commencement
thereof; but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Section 7. In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
(d) LIMITATION. Notwithstanding the foregoing, if the Registrable
Securities are to be distributed by means of an underwritten public offering, to
the extent that the provisions on indemnification and contribution contained in
the underwriting agreement entered into in connection with such underwriting are
in conflict with the provisions of this Section 7, the provisions of such
underwriting agreement shall be controlling, provided that the Holder is a party
to such underwriting agreement.
8. ANTI-DILUTION. In the event that the outstanding shares of Common Stock
are at any time increased or decreased in number, or changed into or exchanged
for a different number or kind of shares or other security of the Company or of
another corporation through reorganization, merger, consolidation, liquidation,
recapitalization or, in the case of Common Stock, stock split, reverse split,
combination of shares or stock dividends payable with respect to such Common
Stock, sold at below the exercise price of this Warrant, and for other unusual
events (other than employee benefit and stock option plans for employees and
advisors of the Company) appropriate adjustments shall be made in the number and
kind of such securities then subject to this Warrant and in the Exercise Price
of this Warrant effective as of the date of such occurrence, so that the
position of the Holder upon exercise of this Warrant shall be the same as it
would have been had it owned immediately prior to the occurrence of such event
the Common Stock subject to this Warrant; provided, however, that in no event
shall two adjustments be made for the same event. For example, if the Company
declares a 2-for-1 stock dividend or stock split, then the number of shares of
Common Stock then subject to this Warrant shall each be doubled and the Share
Exercise Price shall each be reduced by 50 percent. Such adjustments shall be
made successively whenever any event described by this Section 8 shall occur.
9. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be
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performed entirely within such State, without reference to such State's laws
regarding the conflict of laws. The Company submits to the jurisdiction of the
state and federal courts located in Monroe County, New York.
10. AMENDMENT OR WAIVER. Any provision of this Warrant may be amended,
waived or modified upon the written consent of the Company and any 50% Holder;
provided, however, that such amendment, waiver or modification applies by its
terms to each Holder; and provided further, that a Holder may waive any of its
rights or the Company's obligations to such Holder without obtaining the consent
of any other Holder.
IN WITNESS WHEREOF, DYNAMICWEB ENTERPRISES, INC. has caused this Warrant
to be signed by its duly authorized officers under its corporate seal and to be
dated as of the date set forth on the first page hereof.
DYNAMICWEB ENTERPRISES, INC.
By:
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Title: President and Chief Executive Officer
(Corporate Seal)
Attest:
--------------------------------
Secretary
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PURCHASE FORM
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
The undersigned, the Holder of the foregoing Warrant, hereby irrevocably
elects to exercise the purchase rights represented by such Warrant for, and to
purchase thereunder, -------- shares of Common Stock, $.0001 par value, of
DYNAMICWEB ENTERPRISES, INC. (the "Company") and (i) herewith makes payment of
an aggregate of $------------ therefor and/or (ii) pursuant to Section 1(c) of
such Warrant hereby tenders the right to exercise such Warrant to the extent of
-------- shares of Common Stock of the Company. The undersigned requests that
the certificates for the shares of such Common Stock be issued in the name(s)
of, and delivered to, the person(s) whose name(s) and address(es) are set forth
below:
Dated:
----------------------
--------------------------------
Name:
--------------------------------
Address:
Signatures guaranteed by:
-----------------------------
Taxpayer Identification Number:
-----------------------------
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TRANSFER FORM
(TO BE SIGNED ONLY UPON TRANSFER OF WARRANT)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto ------------------------------------------- the right to purchase shares of
the Common Stock, $.0001 par value per share, of DYNAMICWEB ENTERPRISES, INC.
(the "Company") represented by the foregoing Warrant to the extent of ----
shares of Common Stock and appoints ------------------------ attorney to
transfer such rights on the books of the Company, with full power of
substitution in the premises.
Dated:
------------------------
--------------------------------
Name:
--------------------------------
Address:
Signatures guaranteed by:
-----------------------------
Taxpayer Identification Number:
-----------------------------
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