Exhibit 4.2
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES
NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS.
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THE 3DO COMPANY
COMMON STOCK PURCHASE WARRANT
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This certifies that, for good and valuable consideration, The 3DO
Company, a Delaware corporation (the "Company"), grants to ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Co., Inc., or registered assigns (the "Warrantholder"), the right to
subscribe for and purchase from the Company Three Hundred Six Thousand Eight
Hundred Forty-Two (306,842) validly issued, fully paid and nonassessable shares
(the "Warrant Shares") of the Company's Common Stock, par value $0.01 per share
(the "Common Stock"), at the purchase price per share of Two and 48/100 Dollars
($2.48) (the "Exercise Price"), from time to time, prior to 5:00 PM Eastern
Standard Time on December 10, 2006 (the "Expiration Date"), all subject to the
terms, conditions and adjustments herein set forth. Capitalized terms shall have
the meanings set forth in Section 18 of this Warrant.
Certificate No.: WA-16
Number of Warrant Shares: 306,842
Name of Warrantholder: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc.
1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of
Taxes.
1.1 Duration and Exercise of Warrant. Subject to the terms and
conditions set forth herein, the Warrant may be exercised, in whole or in part,
by the Warrantholder by:
(a) the surrender of this Warrant to the Company, with a duly
executed Exercise Form specifying the number of Warrant Shares to be purchased,
during normal business hours on any Business Day prior to the Expiration Date;
and
(b) the delivery of payment to the Company, for the account of
the Company, by cash, by wire transfer of immediately available funds or by
certified or bank cashier's check, of the Exercise Price for the number of
Warrant Shares specified in the Exercise Form in lawful money of the United
States of America. The Company agrees that such Warrant Shares shall be deemed
to be issued to the Warrantholder as the record holder of such Warrant Shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for the Warrant Shares as aforesaid (or as provided
in Section 1.2 below).
1.2 Conversion Right (Cashless Exercise).
(a) In lieu of the payment of the Exercise Price, the
Warrantholder shall have the right (but not the obligation), to require the
Company to convert this Warrant, in whole or in part, into shares of Common
Stock (the "Conversion Right") as provided for in this Section 1.2. Upon
exercise of the Conversion Right, the Company shall deliver to the Warrantholder
(without payment by the Warrantholder of any of the Exercise Price; provided,
however, that the Warrantholder shall be required to pay the par value for any
shares of Common Stock so delivered) that number of shares of Common Stock equal
to the quotient obtained by dividing (i) the value of the Warrant at the time
the Conversion Right is exercised (determined by subtracting the aggregate
Exercise Price in effect immediately prior to the exercise of the Conversion
Right from the aggregate Fair Market Value for the shares of Common Stock
issuable upon exercise of the Warrant immediately prior to the exercise of the
Conversion Right) by (ii) the Fair Market Value of one share of Common Stock
immediately prior to the exercise of the Conversion Right.
(b) The Conversion Right may be exercised by the Warrantholder
on any Business Day prior to the Expiration Date by delivering the Warrant
Certificate, together with a duly executed Exercise Form (with the conversion
section completed), to the Company, exercising the Conversion Right and
specifying the total number of shares of Common Stock the Warrantholder will be
issued pursuant to such conversion.
(c) Fair Market Value of a share of Common Stock as of a
particular date (the "Determination Date") shall mean:
(i) If the Common Stock is listed on a national securities
exchange, then the Fair Market Value shall be the average of the "daily sales
prices" of the Common Stock on the principal national securities exchange on
which the Common Stock is listed or admitted for trading on each of the last
five (5) Business Days prior to the Determination Date, or if not listed or
traded on any such exchange, then the Fair Market Value shall be the average of
the "daily sales
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prices" of the Common Stock on the National Market (the "National Market") of
the National Association of Securities Dealers Automated Quotations System
("Nasdaq") on each of the last five (5) Business Days prior to the Determination
Date. The "daily sales price" shall be the closing price of the Common Stock at
the end of each day.
(ii) If the Common Stock is not so listed or admitted to
unlisted trading privileges or if no such sale is made on at least four (4) of
such days, then the Fair Market Value shall be the fair value as reasonably
determined in good faith by the Company's Board of Directors or a duly appointed
committee of the Board (which determination shall be described in detail in the
written notice delivered to the Warrantholder together with the Common Stock
certificates). If the Warrantholder objects to the fair value determined by the
Company's Board of Directors, the Warrantholder shall have the right to appoint
an independent appraiser (mutually consented to by the Company, such consent not
to be unreasonably withheld) to determine the fair value. The independent
appraiser shall be a nationally recognized investment banking firm or nationally
recognized expert experienced in the valuation of companies engaged in the
business conducted by the Company. The determination of such independent
appraiser as to the fair value shall be controlling. The fees and expenses of
the independent appraiser shall be paid by the Company unless the fair value
determined by the Company's Board of Directors equals or exceeds the fair value
determined by the independent appraiser.
1.3 Limitations on Exercise. Notwithstanding anything to the
contrary herein, this Warrant may be exercised only upon the delivery to the
Company of any certificates or other documents reasonably requested by the
Company to satisfy the Company that the proposed exercise of this Warrant may be
effected without registration under the Securities Act.
1.4 Warrant Shares Certificate. A stock certificate or certificates
for the Warrant Shares specified in the Exercise Form shall be delivered to the
Warrantholder within ten (10) Business Days after receipt of the Exercise Form
and the Investment Representation Statement and, if such exercise is not
pursuant to Section 1.2, receipt of payment of the purchase price. If this
Warrant shall have been exercised only in part, the Company shall, at the time
of delivery of the stock certificate or certificates, deliver to the
Warrantholder a new Warrant evidencing the rights to purchase the remaining
Warrant Shares, which new Warrant shall in all other respects be identical to
this Warrant.
1.5 Payment of Taxes. The issuance of certificates for Warrant
Shares shall be made without charge to the Warrantholder for any stock transfer
or other issuance tax in respect thereto; provided, however, that the
Warrantholder shall be required to pay any and all taxes which may be payable in
respect of any transfer involved in the issuance and delivery of any certificate
in a name other than that of the then Warrantholder as reflected upon the books
of the Company.
1.6 Divisibility of Warrant; Transfer of Warrant.
(a) Subject to the provisions of this Section 1.6, this Warrant
may be divided into warrants of one thousand (1,000) shares or multiples
thereof, upon surrender at the principal office or the Company, without charge
to any Warrantholder. Upon such division, the Warrants may be transferred of
record as the then Warrantholder may specify without charge to such
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Warrantholder (other than any applicable transfer taxes). In addition, subject
to the provisions of this Section 1.6, the Warrantholder shall also have the
right to transfer this Warrant in its entirety to any person or entity.
(b) Upon surrender of this Warrant to the Company with a duly
executed Assignment Form and funds sufficient to pay any transfer tax, the
Company shall, without charge, execute and deliver a new Warrant or Warrants of
like tenor in the name of the assignee named in such Assignment Form, and this
Warrant shall promptly be canceled. Each Warrantholder agrees that prior to any
proposed transfer (whether as the result of a division or otherwise) of this
Warrant, such Warrantholder shall give written notice to the Company of such
Warrantholder's intention to effect such transfer. Each such notice shall
describe the manner and circumstances of the proposed transfer in sufficient
detail, and, if reasonably requested by the Company, shall be accompanied by a
written opinion of legal counsel, which opinion shall be addressed to the
Company and be reasonably satisfactory in form and substance to the Company's
counsel, to the effect that the proposed transfer of this Warrant may be
effected without registration under the Securities Act. In addition, the
Warrantholder and the transferee shall execute any documentation reasonably
required by the Company to ensure compliance with the Securities Act. The term
"Warrant" as used in this Agreement shall be deemed to include any Warrants
issued in substitution or exchange for this Warrant.
2. Restrictions on Transfer; Restrictive Legends. Except as otherwise
permitted by this Section 2, each Warrant shall (and each Warrant issued upon
direct or indirect transfer or in substitution for any Warrant pursuant to
Section 1.6 or Section 4 shall) be stamped or otherwise imprinted with a legend
in substantially the following form:
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR
ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT AND SUCH LAWS.
Except as otherwise permitted by this Section 2, each stock certificate
for Warrant Shares issued upon the exercise of any Warrant and each stock
certificate issued upon the direct or indirect transfer of any such Warrant
Shares shall be stamped or otherwise imprinted with a legend in substantially
the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION
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STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT AND SUCH LAWS.
Notwithstanding the foregoing, the Warrantholder may require the
Company to issue a Warrant or a stock certificate for Warrant Shares, in each
case without a legend, if: (i) such Warrant or such Warrant Shares, as the case
may be, have been registered for resale under the Securities Act, (ii) the
Warrantholder has delivered to the Company an opinion of legal counsel, which
opinion shall be addressed to the Company and be reasonably satisfactory in form
and substance to the Company's counsel, to the effect that such registration is
not required with respect to such Warrant or such Warrant Shares, as the case
may be, or (iii) such Warrant or Warrant Shares, as the case may be, may be sold
without restriction (including, without limitation, as to volume) pursuant to
Rule 144(k).
3. Company Representations, Warranties and Covenants. The Company
hereby represents, warrants, covenants and agrees as follows:
3.1 All Warrant Shares which are issued upon the exercise of this
Warrant will, upon issuance, be validly issued, fully paid, and nonassessable,
not subject to any preemptive rights, and free from all taxes, liens, security
interests, charges, and other encumbrances with respect to the issue thereof,
other than taxes with respect to any transfer occurring contemporaneously with
such issue.
3.2 During the period within which this Warrant may be exercised,
the Company will at all times have authorized and reserved, and keep available
free from preemptive rights, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.
3.3 This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, except to the extent that enforcement thereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity) and except to the extent that rights to
indemnification and contribution contained in this Warrant may be limited by
federal or state securities laws on public policy relating thereto.
3.4 The execution and delivery of this Warrant are not, and the
issuance of the Warrant Shares upon exercise of this Warrant in accordance with
the terms hereof (i) will not be in violation of the Company's certificate of
incorporation or bylaws, (ii) do not and will not contravene any law,
governmental rule or regulation, judgment or order applicable to the Company,
(iii) do not and will not conflict with or contravene any provision of, or
constitute a material default under, any material indenture, mortgage, contract
or other instrument of which the Company is a party or by which it is bound or
(iv) require the consent or approval of, the giving of notice to, the
registration or filing with or the taking of any action in respect of or by, any
federal, state or local government authority or agency (other than such
consents, approvals, notices, actions or filings as have already been obtained
or made); except in the case of each of clauses (ii), (iii) and (iv), as could
not,
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individually or in the aggregate, reasonably be expected to have or result in a
material adverse effect on the Company's ability to perform fully on a timely
basis all of its obligations under this Warrant.
3.5 The Company shall not, by amendment of its certificate of
incorporation or through any reorganization, transfer of assets, spinoff,
consolidation, merger, dissolution, issue or sale of securities or any other
action or inaction, seek to avoid the observance or performance of any of the
terms of this Warrant, and shall at all times in good faith assist in performing
and giving effect to the terms hereof and in the taking of all such actions as
may reasonably be requested by the Warrantholder in order to protect the rights
of the Warrantholder against dilution or other impairment.
4. Warrantholder Representations, Warranties and Covenants. The
Warrantholder represents and warrants to the Company that:
4.1 Authorization. The person signing this Warrant has full power
and authority to enter into this Warrant on behalf of the Warrantholder. When
executed and delivered, this Warrant will constitute the Warrantholder's valid
and legally binding obligation, except to the extent that enforcement thereof
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity) and except to the extent that
rights to indemnification and contribution contained in this Warrant may be
limited by federal or state securities laws on public policy relating thereto.
4.2 Investment Representations.
(a) The Warrantholder understands that the Warrant and the
Warrant Shares have not been registered under the Securities Act, and will be
issued pursuant to an exemption from registration contained in the Securities
Act based in part upon the representations of the Warrantholder contained
herein, and can be transferred in the absence of registration only pursuant to
an exemption from registration, Rule 144 under the Securities Act or if the
Company receives an opinion of counsel that such registration is not required.
(b) The Warrantholder is acquiring the Warrant and the Warrant
Shares solely for its own account and not as a nominee for any other party and
not with a view toward the resale or distribution thereof in violation of the
securities laws; provided, however, that by making the representations herein,
the Warrantholder does not agree to hold this Warrant or any of the Warrant
Shares for any minimum or other specific term and reserves the right to dispose
of this Warrant and the Warrant Shares at any time in accordance with or
pursuant to a registration statement or an exemption under the Securities Act.
(c) The Warrantholder is experienced in evaluating companies
such as the Company, is able to fend for the Warrantholder's self in
transactions such as the one contemplated by the Warrant, has such knowledge and
experience in financial and business matters that the Warrantholder is capable
of evaluating the merits and risks of the Warrantholder's prospective investment
in the Company, and has the ability to bear the economic risks of the
investment, including a complete loss of the Warrantholder's investment. The
Warrantholder has been afforded
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an opportunity to ask such questions of the Company's officers, employees,
agents, accountants and representatives concerning the Company's business,
operations, financial condition, assets, liabilities and other relevant matters
as it has deemed necessary or desirable. The Warrantholder has received all the
information it considers necessary or appropriate to decide whether to purchase
the Warrant and the Warrant Shares.
(d) The Warrantholder acknowledges that this Warrant satisfies
the Company's obligations to issue to the Warrantholder a warrant pursuant to
Section 4(b) of the letter agreement, dated July 5, 2001, between the Company
and ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc., as amended.
(e) Warrantholder is an "accredited investor" as defined in
Rule 501(a) under the Securities Act.
(f) Warrantholder is not purchasing the Warrant and the Warrant
Shares as a result of or subsequent to any advertisement, article, notice or
other communication regarding the Warrant and the Warrant Shares published in
any newspaper, magazine or similar media or broadcast over television or radio
or presented at any seminar or any other general solicitation or general
advertisement.
5. Loss or Destruction of Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or destruction, of
such bond or indemnification as the Company may reasonably require, and, in the
case of such mutilation, upon surrender and cancellation of this Warrant, the
Company will execute and deliver a new Warrant of like tenor.
6. Ownership of Warrant. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of
transfer.
7. Certain Adjustments.
7.1 The number of Warrant Shares purchasable upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) Stock Dividends. If at any time after the date of the
issuance of this Warrant (i) the Company shall fix a record date for the
issuance of any stock dividend payable in shares of Common Stock or (ii) the
number of shares of Common Stock shall have been increased by a subdivision or
split-up of shares of Common Stock, then, on the record date fixed for the
determination of holders of Common Stock entitled to receive such dividend or
immediately after the effective date of such subdivision or split up, as the
case may be, the number of shares to be delivered upon exercise of this Warrant
will be increased so that the Warrantholder will be entitled to receive the
number of shares of Common Stock that such Warrantholder would have owned
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immediately following such action had this Warrant been exercised in full
immediately prior thereto, and the Exercise Price will be adjusted as provided
below in paragraph (g).
(b) Combination of Stock. If the number of shares of Common
Stock outstanding at any time after the date of the issuance of this Warrant
shall have been decreased by a combination of the outstanding shares of Common
Stock, then, immediately after the effective date of such combination, the
number of shares of Common Stock to be delivered upon exercise of this Warrant
will be decreased so that the Warrantholder thereafter will be entitled to
receive the number of shares of Common Stock that such Warrantholder would have
owned immediately following such action had this Warrant been exercised in full
immediately prior thereto, and the Exercise Price will be adjusted as provided
below in paragraph (g).
(c) Reorganization, Merger, etc. If any capital reorganization
of the Company, any reclassification of the Common Stock, any consolidation of
the Company with or merger of the Company with or into any other person, or any
sale or lease or other transfer of all or substantially all of the assets of the
Company to any other person (each, a "Transaction"), shall be effected in such a
way that the holders of Common Stock shall be entitled to receive stock, other
securities or assets (whether such stock, other securities or assets are issued
or distributed by the Company or another person) with respect to or in exchange
for Common Stock, then, upon exercise of this Warrant, the Warrantholder shall
have the right to receive the kind and amount of stock, other securities or
assets receivable upon such Transaction by a holder of the number of shares of
Common Stock that such Warrantholder would have been entitled to receive upon
exercise of this Warrant had this Warrant been exercised in full immediately
before such Transaction. The Company shall execute and deliver to the
Warrantholder at least ten (10) Business Days prior to effecting such
Transaction a certificate setting forth the Warrantholder's rights as set forth
in the preceding sentence. No Transaction shall be consummated unless adequate
provision (in the reasonable opinion of the Warrantholder) has been made in the
definitive agreement for the adjustments set forth herein and for the successor
entity in any such Transaction to assume the Company's obligations hereunder.
The provisions of this Section 7.1(c) shall similarly apply to successive
Transactions.
(d) Stock and Rights Offering at Less than Fair Market Value or
Exercise Price.
(i) If at any time after the date of issuance of this
Warrant, the Company shall issue or sell Additional Securities at a price per
share (or having a conversion, exchange or exercise price per share) that is
less than (x) the Exercise Price or (y) the Fair Market Value (as defined in
Section 1.2(c) hereof), in either case on the date of such issuance or sale or
on such record date then, immediately after the date of such issuance or sale or
such record date, the Exercise Price shall be adjusted by reducing it to the
lower of the following prices:
(I) the price calculated by dividing (A) an amount
equal to the sum of (x) the number of shares of Common Stock
outstanding immediately prior to such issue or sale or fixing of record
date (on an as if converted basis, including the number of shares of
Common Stock issuable upon conversion or exchange of any obligations,
any shares of stock or other security of the Company or any other
security convertible into or
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exchangeable for any security convertible into or exchangeable for
Common Stock of the Company), multiplied by the then existing Exercise
Price, plus (y) the aggregate consideration, if any, received by the
Company upon such issue or sale, by (B) the total number of shares of
Common Stock outstanding immediately after such issue or sale or fixing
of record date (on an as if converted basis, including the number of
shares of Common Stock issuable upon conversion or exchange of any
obligations, any shares of stock or other security of the Company or
any other security convertible into or exchangeable for any security
convertible into or exchangeable for Common Stock of the Company); and
(II) the price calculated by multiplying the then
existing Exercise Price by a fraction, (A) the numerator of which is
the sum of (x) the number of shares of Common Stock outstanding
immediately prior to such issue or sale or fixing of record date (on an
as if converted basis, including the number of shares of Common Stock
issuable upon conversion or exchange of any obligations, any shares of
stock or other security of the Company or any other security
convertible into or exchangeable for any security convertible into or
exchangeable for Common Stock of the Company) multiplied by the Fair
Market Value per share of Common Stock immediately prior to such issue
or sale or fixing of record date plus (y) the cash consideration
received by the Company upon such issue or sale, and (B) the
denominator of which is the total number of shares of Common Stock
outstanding immediately after such issue or sale or fixing of record
date (on an as if converted basis, including the number of shares of
Common Stock issuable upon conversion or exchange of any obligations,
any shares of stock or other security of the Company or any other
security convertible into or exchangeable for any security convertible
into or exchangeable for Common Stock of the Company) times the Fair
Market Value per share of Common Stock immediately prior to such issue
or sale or fixing of record date.
(ii) If the Company shall, at any time after the date of
issuance of this Warrant, fix a record date to distribute to all holders of its
Common Stock any shares of capital stock of the Company (other than Common
Stock) or evidences of its indebtedness or assets (including all cash dividends
or other distributions, whether paid from retained earnings of the Company or
otherwise) or rights or warrants to subscribe for or purchase any of its
securities (excluding those referred to in paragraph (d)(i) above), then the
Warrantholder shall be entitled to receive, upon exercise of the Warrant, that
portion of such distribution to which it would have been entitled had the
Warrantholder exercised its Warrant immediately prior to the date of such
distribution. At the time it fixes the record date for such distribution, the
Company shall allocate sufficient reserves to ensure the timely and full
performance of the provisions of this Section 7.1(d)(ii). The Company shall
promptly (but in any case no later than five (5) Business Days prior to the
record date of such distribution) mail by first class, postage prepaid, to the
Warrantholder, notice that such distribution will take place.
(e) Fractional Shares. No fractional shares of Common Stock or
scrip shall be issued to any Warrantholder in connection with the exercise of
this Warrant. Instead of any fractional shares of Common Stock that would
otherwise be issuable to such Warrantholder, the Company will pay to such
Warrantholder a cash adjustment in respect of such fractional interest in an
amount equal to that fractional interest of the then current Fair Market Value
per share of Common Stock.
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(f) Carryover. Notwithstanding any other provision of this
Section 7, no adjustment shall be made to the number of shares of Common Stock
to be delivered to the Warrantholder (or to the Exercise Price) if such
adjustment represents less than 1% of the number of shares to be so delivered,
but any lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which together with any
adjustments so carried forward shall amount to 1% or more of the number of
shares to be so delivered.
(g) Exercise Price Adjustment. Whenever the number of Warrant
Shares purchasable upon the exercise of this Warrant is adjusted as provided in
this Section 7.1 (other than pursuant to Section 7.1(h)), the Exercise Price
payable upon the exercise of this Warrant shall be adjusted by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Warrant Shares purchasable upon the exercise of
the Warrant immediately prior to such adjustment, and of which the denominator
shall be the number of Warrant Shares purchasable immediately thereafter.
(h) Adjustment of Number of Warrant Shares Purchasable. Upon
any adjustment of the Exercise Price as provided in this Section 7.1 (other than
pursuant to Section 7.1(g)), the holder hereof shall thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
shares of Common Stock (calculated to the nearest .001 of a share) obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares of Common Stock purchasable hereunder immediately prior to
such adjustment and dividing the product thereof by the Exercise Price resulting
from such adjustment.
7.2 Notice of Adjustments. Whenever the number of Warrant Shares or
the Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail by first class, postage prepaid, to the
Warrantholder, notice of such adjustment or adjustments and a certificate of a
firm of independent public accountants of recognized national standing selected
by the Board of Directors of the Company (who shall be appointed at the
Company's expense and who may be the independent public accountants regularly
employed by the Company) setting forth in reasonable detail the number of
Warrant Shares and the Exercise Price of such Warrant Shares after such
adjustment, a brief statement of the facts requiring such adjustment, and the
computation by which such adjustment was made.
7.3 Notice of Extraordinary Corporate Events. In case the Company
after the date hereof shall propose to (a) distribute any dividend (whether
stock or cash or otherwise) to the holders of shares of Common Stock or to make
any other distribution to the holders of shares of Common Stock, (b) offer to
the holders of shares of Common Stock rights to subscribe for or purchase any
additional shares of any class of stock or any other rights or options, or (c)
effect any reclassification of the Common Stock (other than a reclassification
involving merely the subdivision or combination of outstanding shares of Common
Stock), any capital reorganization, any consolidation or merger (other than a
merger in which no distribution of securities or other property is to be made to
holders of shares of Common Stock), any sale, transfer or other disposition of
all or substantially all of its property, assets and business, or the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall mail to each Warrantholder notice of such proposed action,
which notice shall specify the date on which (i) the books of the Company shall
close, or (ii) a record
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shall be taken for determining the holders of Common Stock entitled to receive
such stock dividends or other distribution or such rights or options, or (iii)
such reclassification, reorganization, consolidation, merger, sale, transfer,
other disposition, liquidation, dissolution or winding up shall take place or
commence, as the case may be, and the date, if any, as of which it is expected
that holders of record of Common Stock shall be entitled to receive securities
or other property deliverable upon such action. Such notice shall be mailed at
least ten (10) days prior to the record date for determining holders of Common
Stock for purposes of receiving such payment or offer.
7.4 Effect of Failure to Notify. Failure to file any certificate or
notice or to mail any notice, or any defect in any certificate or notice,
pursuant to Sections 7.2 and 7.3 shall not affect the legality or validity of
the adjustment to the Exercise Price, the number of shares purchasable upon
exercise of this Warrant, or any transaction giving rise thereto.
7.5 Other Dilutive Events. If any event occurs of the type
contemplated by the provisions of Section 7.1 but not expressly provided for by
such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Exercise Price and the number of shares of Common Stock obtainable upon exercise
of this Warrant so as to protect the rights of the holders of this Warrant;
provided that no such adjustment will increase the Exercise Price or decrease
the number of shares of Common Stock obtainable as otherwise determined pursuant
to this Section 7.
8. Registration Rights.
8.1 Form S-3 Registration. Reference is hereby made to that certain
Registration Rights Agreement dated as of the date hereof (the "Registration
Rights Agreement"), by and among the Company and the Buyers (as defined
therein). The Warrantholder shall have the same Form S-3 registration rights
with respect to the Registrable Securities as the "Investors" (as defined under
the Registration Rights Agreement) under the Registration Rights Agreement, and
the terms and provisions of Sections 2(a)-(e), 3 and 4 of the Registration
Rights Agreement (captioned "Registration") shall apply to the Warrantholder and
its Registrable Securities with the Warrantholder holding the same rights as the
"Investors" under Sections 2(a)-(e), 3 and 4 of the Registration Rights
Agreement; provided, that, for purposes of such application, "Legal Counsel"
shall mean ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP or such other counsel as thereafter
designated by the holders of a majority of the Registrable Securities.
8.2 Incidental Registration.
(a) Notice of Registration. If at any time or from time to
time, the Company shall determine to register any of its securities, either for
its own account or the account of a security holder other than (i) a
registration relating solely to employee benefit plans, (ii) a registration
relating solely to a merger, acquisition or exchange, (iii) a registration
relating solely to a convertible debt transaction or (iv) a Form S-3
registration pursuant to Section 8.1, the Company will:
(i) promptly give to the Holders written notice thereof;
and
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(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests made within twenty (20) days after receipt of such written notice
from the Company by any Holder.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 8.2(a)(i). In such event, the right of any Holder to
registration pursuant to Section 8.2 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company (or by the
holders who have demanded such registration, as the case may be).
Notwithstanding any other provision of this Section 8.2, if the managing
underwriter determines in its sole discretion that marketing factors require a
limitation of the number of shares to be underwritten, the Company will include
in such registration and underwriting, to the extent of the number and type of
securities that the Company is so advised can be sold in (or during the time of)
such offering, first, all securities proposed by the Company to be sold for its
own account, second, such other securities requested to be registered on a pro
rata basis based on the total number of securities (including, without
limitation, Registrable Securities owned by each participating Holder) entitled
to be included in such registration, third, all Other Securities proposed to be
registered. To facilitate the allocation of shares in accordance with the above
provisions, the Company or the underwriters may round the number of shares
allocated to any Holder or other holder to the nearest 100 shares. If any Holder
or other holder disapproves of the terms of any such underwriting, he or she may
elect to withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration, and shall not be transferred in a public
distribution prior to ninety (90) days after the date of the final prospectus
included in the registration statement relating thereto.
(c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 8.2 prior to the effectiveness of such registration, whether or not any
Holder has elected to include securities in such registration.
9. Obligations of the Company.
In connection with the registration of the Registrable Securities as
contemplated by Section 8.2, the Company shall:
9.1 Prepare and file with the SEC a Registration Statement with
respect to the securities to be sold by the Company or on account of a security
holder together with the Registrable Securities to be sold by the requesting
Holders, promptly (and in any event within forty-five (45) days of delivery of a
written notice from a requesting Holder to register Registrable Securities) and
thereafter use its best efforts to cause the Registration Statement to become
effective, which Registration Statement (including any amendments or supplements
thereto and prospectuses
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contained therein), in each case, shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading;
9.2 Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement until such time as
all of such Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
the Registration Statement;
9.3 Furnish to each Holder whose Registrable Securities are included
in the Registration Statement (without charge to the Holders) such number of
copies of a prospectus, including a preliminary prospectus and all amendments
and supplements thereto and such other documents, as such Holder may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Holder; the Company consents to the use of the prospectus and any
amendment or supplement thereto by each Holder in connection with the offering
and the sale of the Registrable Securities covered by the prospectus or any
amendment or supplement thereto;
9.4 Use its best efforts to (a) register and qualify the Registrable
Securities covered by the Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as the Holders who hold a majority in
interest of the Registrable Securities reasonably request, (b) prepare and file
in those jurisdictions all required amendments (including post-effective
amendments) and supplements, (c) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times the
Registration Statement is in effect and (d) take all other actions necessary or
advisable to enable the disposition of such securities in all such
jurisdictions; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 9.4;
9.5 In the event of an underwritten offering, enter into and perform
its obligations under an underwriting agreement with the managing underwriter of
such offering, in usual and customary form, including, without limitation,
customary indemnification and contribution obligations, and in the case of any
non-underwritten offering, provide to broker-dealers participating in any
distribution of Registrable Securities reasonable indemnification substantially
similar to that provided by Section 12.1;
9.6 Promptly notify each Holder of the happening of any event of
which the Company has knowledge, as a result of which the prospectus included in
the 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, in light of the circumstances then
existing, not misleading, and use its best efforts to prepare promptly a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver a number of copies of such supplement or
amendment to each Holder as such Holder may reasonably request;
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9.7 Promptly notify each Holder who holds Registrable Securities
being sold (and, in the event of an underwritten offering, the managing
underwriters) of the issuance by the SEC of any stop order or other suspension
of effectiveness of the Registration Statement, and use its best efforts to
obtain the withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible time;
9.8 Permit a single firm of counsel designated as selling
stockholders' counsel by the Holders who hold a majority in interest of the
Registrable Securities being sold to review the Registration Statement and all
amendments and supplements thereto a reasonable period of time prior to their
filing with the SEC, and shall not file any document in a form to which such
counsel reasonably objects;
9.9 Make generally available to its security holders as soon as
practicable, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the Securities Act) covering a twelve-month period beginning not
later than the first day of the Company's fiscal quarter next following the
effective date of the Registration Statement;
9.10 At the reasonable request of the Holders who hold a majority in
interest of the Registrable Securities being sold, furnish on the date that
Registrable Securities are delivered to an underwriter for sale in connection
with the Registration Statement (a) a letter, dated such date, from the
Company's independent certified public accountants, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters; and (b) an
opinion, dated such date, from counsel representing the Company for purposes of
such Registration Statement, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters;
9.11 Make available for inspection by any Holder, any underwriter
participating in any disposition pursuant to the Registration Statement, and any
attorney, accountant, or other agent retained by any such Holder or underwriter
(collectively, the "Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of the Company, as shall be
reasonably necessary to enable each Inspector to exercise its due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Inspector in connection
with the Registration Statement;
9.12 Use its best efforts either to (a) cause all the Registrable
Securities covered by the Registration Statement to be listed on a national
securities exchange and on each additional national securities exchange on which
similar securities issued by the Company are then listed, if any, if the listing
of such Registrable Securities is then permitted under the rules of such
exchange or (b) secure designation of all the Registrable Securities covered by
the Registration Statement as a Nasdaq "National Market Security" within the
meaning of Rule 11Aa2-l of the SEC and the quotation of the Registrable
Securities on the Nasdaq National Market;
9.13 Provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
-14-
9.14 Cooperate with the Holders who hold Registrable Securities
being sold and the managing underwriter or underwriters, if any, to facilitate
the timely preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be sold pursuant to the
Registration Statement and enable such certificates to be in such denominations
or amounts, as the case may be, and registered in such names as the managing
underwriter or underwriters, if any, or the Holders may reasonably request;
9.15 Promptly notify each Holder when the prospectus or any
prospectus supplement or post-effective amendment has been filed, and with
respect to the Registration Statement or any post-effective amendment thereto,
when the same has become effective; and 9.16 Take all other reasonable actions
necessary to expedite and facilitate disposition by the Holders of the
Registrable Securities pursuant to the Registration Statement.
10. Obligations of the Holders.
In connection with the registration of Registrable Securities as
contemplated by Section 8.2, each Holder agrees as follows:
10.1 Each Holder, by its acceptance of the Registrable Securities,
agrees to reasonably cooperate with the Company in connection with the
preparation and filing of any registration statement under Section 8.2, unless
such Holder has decided not to participate.
10.2 No Holder may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting arrangements set forth in
Section 8.2(b), (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and (c) agrees to pay
such Holder's pro rata portion of all underwriting discounts and commissions.
10.3 Holder agrees that the Company may suspend offers and sales or
delay the effectiveness of any registration statement, an aggregate of up to
twenty (20) Business Days in any 12-month period (provided no suspension shall
exceed five consecutive Business Days), if the Company's Board of Directors
determines, in good faith, that such delay would be necessary to avoid premature
disclosure of any material acquisition, disposition, business combination, or
other material transaction or information or circumstances exist that make it
impractical or inadvisable to amend or supplement the registration statement.
11. Expenses of Registration. All Registration Expenses incurred in
connection with registrations pursuant to Section 8.1 or 8.2 shall be borne by
the Company. Unless otherwise stated, all Selling Expenses relating to
securities registered on behalf of the Holders shall be borne by the Holders of
the registered securities included in such registration pro rata on the basis of
the number of shares so registered.
-15-
12. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
12.1 To the extent permitted by law, the Company will indemnify and
hold harmless each Holder who holds such Registrable Securities, the directors,
if any, of such Holder, the officers, if any, of such Holder, who sign the
Registration Statement, and each person, if any, who controls such Holder (each,
an "Indemnified Holder"), against any losses, claims, damages, expenses,
liabilities (joint or several) (collectively, "Claims") to which any of them may
become subject under the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act") or otherwise, insofar as such Claims (or actions
or proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (a) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, (b) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used
prior to the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented if the Company files any amendment
thereof or supplement thereto with the SEC), or the omission or alleged omission
to state therein a material fact required to be stated therein, or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, or (c) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law, or
any rule or regulation promulgated under the Securities Act, the Exchange Act,
or any state securities law. Subject to the restrictions set forth in Section
12.3 with respect to the number of legal counsel, the Company shall reimburse
the Holders and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim, whether or not such claim, investigation or proceeding
is brought or initiated by the Company or a third party. If multiple claims are
brought against an Indemnified Holder in an arbitration proceeding, and
indemnification is permitted under applicable law and is provided for under this
Section 12 with respect to at least one such claim, the Company agrees that any
arbitration award shall be conclusively deemed to be based on claims as to which
indemnification is permitted and provided for, except to the extent the
arbitration award expressly states that the award, or any portion thereof, is
based solely on a claim as to which indemnification is not available.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 12.1 (w) shall not apply to a Claim arising
out of or based upon a Violation which occurs solely in reliance upon and in
conformity with information furnished in writing to the Company by any
Indemnified Holder expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto; (x)
with respect to any preliminary prospectus, shall not inure to the benefit of
any such person from whom the person asserting any such Claim purchased the
Registrable Securities that are the subject thereof (or to the benefit of any
person controlling such person) if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected in the prospectus, as
then amended or supplemented, if such prospectus was timely made available by
the Company pursuant to Section 3(d) of the Registration Rights Agreement or
Section 9.3, and the Indemnified Holder was promptly advised in writing not to
use the incorrect prospectus prior to the use giving rise to a violation and
such Indemnified Holder, notwithstanding such advice, used it;
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(y) shall not be available to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made available by
the Company, if such prospectus was timely made available by the Company
pursuant to Section 3(d) of the Registration Rights Agreement or Section 9.3;
and (z) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Indemnified Holder and shall survive the transfer of the Registrable Securities
by the Holders pursuant to Section 15.
12.2 In connection with any Registration Statement in which a Holder
is participating, each such Holder agrees to indemnify and hold harmless, to the
same extent and in the same manner set forth in Section 12.1, the Company, each
of its directors, each of its officers who sign the Registration Statement, each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act, any underwriter and any other stockholder selling
securities pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder or underwriter (each, a
"Company Indemnified Party" and collectively and together with an Indemnified
Holder, an "Indemnified Party"), against any Claim to which any of them may
become subject, under the Securities Act, the Exchange Act or otherwise, insofar
as such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs solely in reliance
upon and in conformity with written information furnished to the Company by such
Holder expressly for use in connection with such Registration Statement; and
such Holder will reimburse any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 12.2 shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Holder, which consent shall not be
unreasonably withheld; provided, further, that the Holder shall in no event be
liable under this Section 12.2 for any amount of a Claim that exceeds the net
proceeds to such Holder as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 12.2 with respect to any preliminary prospectus shall not inure to the
benefit of any Company Indemnified Party if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented.
12.3 Promptly after receipt by an Indemnified Party under this
Section 12 of notice of the commencement of any action (including any
governmental action), such Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 12,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
satisfactory to the Indemnified Parties; provided, however, that an Indemnified
Party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if, in the reasonable opinion of counsel
for the Indemnified Party, representation of such Indemnified Party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such Indemnified Party and any other
party represented by such counsel in such proceeding. The failure by an
Indemnified Party to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such
-17-
action shall not relieve such indemnifying party of any liability to the
Indemnified Party under this Section 12, except to the extent that such failure
to notify results in the forfeiture by the indemnifying party of substantive
rights or defenses. The indemnification required by this Section 12 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
13. Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 12 to the fullest extent permitted by law; provided,
however, that (a) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 12, (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation and (c)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
14. Reports. Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC that may at
any time permit the Holders to sell securities of the Company to the public
without registration ("Rule 144"), the Company agrees to:
(a) comply with the requirements of paragraph (c) of Rule 144
with respect to current public information about the Company;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to each Holder so long as such Holder owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the requirements of said Rule 144(c) and the
reporting requirements of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Holders to sell such securities without
registration.
15. Assignment of Registration Rights. The right to have the Company
register Registrable Securities pursuant to this Warrant shall be automatically
assigned by the Holders to transferees or assignees of this Warrant or such
Registrable Securities, provided that immediately following such transfer or
assignment, the further disposition of such securities by the transferee or
assignee would be subject to restrictions under the Securities Act. The term
"Holders" as used herein shall include permitted assignees and transferees.
16. Amendments. Any provision of this Warrant (including registration
rights) may be amended and the observance thereof may be waived (either
generally or in a particular instance and
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either retroactively or prospectively), only with the written consent of the
Company and the Holders who hold a majority in interest of the Registrable
Securities. Any amendment or waiver effected in accordance with this Section 16
shall be binding upon each Holder and the Company.
17. Expiration of the Warrant. The right to exercise this Warrant shall
terminate on the Expiration Date. All terms of this Warrant applicable to the
Warrant Shares, including, without limitation, Sections 8 through 16, inclusive,
shall survive exercise and/or expiration of this Warrant.
18. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
Additional Securities: all shares (including treasury shares) of
Common Stock, rights, options, warrants, or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of Common
Stock, issued or sold by the Company after the date hereof, excluding: (i) the
Warrant Shares; (ii) any options (or shares of Common Stock issued upon exercise
of such options) issued to any employee, officer, director or consultant of the
Company pursuant to a stock option plan which is approved by the Board of
Directors of the Company; (iii) securities issued pursuant to a
recapitalization, reorganization or merger, the sole purpose of which is to
effect a change in the Company's jurisdiction of incorporation; (iv) securities
issued pursuant to the bona fide acquisition of another business entity by the
Company by merger, purchase of substantially all of the assets or shares, or
other reorganization whereby the Company or its stockholders own not less than a
majority of the voting power of the surviving or successor corporation or the
entity that controls such surviving or successor corporation; (v) capital stock
issued in connection with any stock split, stock dividend or recapitalization by
the Company; (vi) securities issued in connection with the transactions
contemplated by the Securities Purchase Agreement, dated as of even date hereof,
between the Company and certain purchasers thereto, including shares of Common
Stock issuable upon conversion or exercise of securities issued pursuant to such
Securities Purchase Agreement; and (vii) securities issued in a firm commitment,
underwritten public offering with net proceeds to the Company of at least
$25,000,000.
Assignment Form: an Assignment Form in the form annexed hereto as
Exhibit C.
Business Day: any day other than a Saturday, Sunday or a day on
which national banks are authorized by law to close in The City of New York,
State of New York.
Claims: the meaning specified in Section 12.1.
Common Stock: the meaning specified on the cover of this Warrant.
Company: the meaning specified on the cover of this Warrant.
Company Indemnified Party: the meaning specified in Section 12.2.
Determination Date: the meaning specified in Section 1.2(c).
Exchange Act: the meaning specified in Section 12.1 or any similar
Federal statute, and the rules and regulations of the SEC thereunder, all as the
same shall be in effect at the time.
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Reference to a particular section of the Exchange Act shall include a reference
to a comparable section, if any, of any such similar Federal statute.
Exercise Form: an Exercise Form in the form annexed hereto as
Exhibit A.
Exercise Price: the meaning specified on the cover of this Warrant.
Expiration Date: the meaning specified on the cover of this Warrant.
Fair Market Value: the meaning specified in Section 1.2(c).
Holder(s): holder(s) of Registrable Securities.
Indemnified Holder: the meaning specified in Section 12.1.
Indemnified Party: the meaning specified in Section 12.2.
Inspectors: the meaning specified in Section 9.11.
Investment Representation Statement: means the investment
representation statement attached hereto as Exhibit B.
Nasdaq: the meaning specified in Section 1.2(c)(i).
National Market: the meaning specified in Section 1.2(c)(i).
Other Securities: any stock and other securities of the Company
(other than Common Stock) or of any other entity which shall become subject to
issue or sale upon the conversion or exchange of any stock or other securities
of the Company.
Registration Expenses: all reasonable expenses incurred by the
Company in complying with Sections 8.1 or 8.2 hereof, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses, the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company) and all reasonable fees
and disbursements of one special counsel for all of the Holders who elect to
include their Registrable Securities in any such registration up to a maximum of
$10,000 for such special counsel.
Registration Statement: a registration statement or registration
statements of the Company filed under the Securities Act covering the
Registrable Securities.
Registrable Securities: (i) the Warrant Shares and other securities
issued or issuable upon exercise of the Warrants and (ii) any securities issued
or issuable with respect to any Common Stock or other securities referred to in
subdivision (i) by way of stock dividend or stock split or in connection with a
combination or other reorganization or otherwise.
Rule 144: the meaning specified in Section 14.
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SEC: the Securities and Exchange Commission or any other Federal
agency at the time administering the Securities Act or the Exchange Act,
whichever is the relevant statute for the particular purpose.
Securities Act: the meaning specified on the cover of this Warrant,
or any similar Federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such similar Federal statute.
Selling Expenses shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and all fees and disbursements of special counsel for the Holders
(but only to the extent such fees and disbursements of such special counsel
exceed $10,000).
Transaction: the meaning specified in Section 7.1(c).
Violation: the meaning specified in Section 12.1.
Warrantholder: the meaning specified on the cover of this Warrant.
Warrant Shares: the meaning specified on the cover of this Warrant.
19. Miscellaneous.
19.1 Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to the Warrants.
19.2 Binding Effects; Benefits. This Warrant shall inure to the
benefit of and shall be binding upon the Company and the Warrantholder and their
respective heirs, legal representatives, successors and assigns. Nothing in this
Warrant, expressed or implied, is intended to or shall confer on any person
other than the Company and the Warrantholder, or their respective heirs, legal
representatives, successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Warrant.
19.3 Section and Other Headings. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
19.4 Pronouns. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
19.5 Further Assurances. Each of the Company and the Warrantholder
shall do and perform all such further acts and things and execute and deliver
all such other certificates, instruments and documents as the Company or the
Warrantholder may, at any time and from time to time, reasonably request in
connection with the performance of any of the provisions of this Agreement.
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19.6 Notices. All notices and other communications required or
permitted to be given under this Warrant shall be in writing and shall be deemed
to have been duly given if delivered personally or sent by United States mail,
postage prepaid, to the parties hereto at the following addresses or to such
other address as any party hereto shall hereafter specify by notice to the other
party hereto:
(a) if to the Company, addressed to:
The 3DO Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) if to the Warrantholder, addressed to:
the address of such Warrantholder
appearing on the signature page to this Warrant.
Except as otherwise provided herein, all such notices and
communications shall be deemed to have been received on the date of delivery
thereof, if delivered personally, or on the third Business Day after the mailing
thereof.
19.7 Separability. Any term or provision of this Warrant which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the terms and provisions of this Warrant or
affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
19.8 Governing Law. This Warrant shall be deemed to be a contract
made under the laws of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to such
agreements made and to be performed entirely within such State.
19.9 No Rights or Liabilities as Stockholder. Nothing contained in
this Warrant shall be determined as conferring upon the Warrantholder any rights
as a stockholder of the Company or as imposing any liabilities on the
Warrantholder to purchase any securities whether such liabilities are asserted
by the Company or by creditors or stockholders of the Company or otherwise.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
THE 3DO COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
Title: Executive Vice President and
Secretary
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Inc.
Name: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Senior Managing Director
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
----------------------------
Phone: ▇▇▇-▇▇▇-▇▇▇▇
--------------------------------
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Dated: December 10, 2001
-23-
EXHIBIT A
NOTICE OF EXERCISE
TO: THE 3DO COMPANY
1. The undersigned Warrantholder hereby elects to purchase ________
shares of Common Stock of The 3DO Company (the "Common Stock") pursuant to the
terms of the attached Warrant.
2. Method of Exercise (Please initial the applicable blank):
___ The undersigned elects to exercise the attached Warrant by means
of a cash payment, and tenders herewith payment in full for the
purchase price of the shares being purchased, together with all
applicable transfer taxes, if any. The undersigned represents
that the aforesaid shares of Common Stock are being acquired for
the account of the undersigned for investment and not with a
view to, or for resale in connection with, the distribution
thereof and that the undersigned has no present intention of
distributing or reselling such shares. In support thereof, the
undersigned has executed an Investment Representation Statement
attached hereto as Exhibit B.
___ The undersigned elects to exercise the attached Warrant by means
of the net exercise provisions of Section 1.2 of the Warrant.
3. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned Warrantholder:
----------------------------------------
----------------------------------------
(Address)
-------------------------------------
Name of Warrantholder
-------------------------------------
Signature of Authorized Signatory
-------------------------------------
Print Name and Title
-------------------------------------
Date
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
_______ Shares of Common Stock of
The 3DO Company
In connection with the acquisition of the above-listed securities
pursuant to the exercise of the Warrant, dated as of December 10, 2001, issued
by The 3DO Company (the "Company") to the undersigned (the "Warrant"), the
undersigned hereby represents to the Company as follows: (Unless otherwise
defined, capitalized terms referred to herein have the meanings set forth in the
Warrant.)
1. Investment Representations.
(A) The undersigned understands that the Warrant Shares have not
been registered under the Securities Act, and will be issued pursuant to an
exemption from registration contained in the Securities Act based in part upon
the representations of the undersigned contained herein, and can be transferred
in the absence of registration only pursuant to an exemption from registration,
Rule 144 or if the Company receives an opinion of counsel that such registration
is not required.
(B) The undersigned is acquiring the Warrant Shares solely for its
own account and not as a nominee for any other party and not with a view toward
the resale or distribution thereof in violation of the securities laws;
provided, however, that by making the representations herein, the undersigned
does not agree to hold any of the Warrant Shares for any minimum or other
specific term and reserves the right to dispose of the Warrant Shares at any
time in accordance with or pursuant to a registration statement or an exemption
under the Securities Act.
(C) The undersigned is experienced in evaluating companies such as
the Company, is able to fend for the undersigned's self in transactions such as
the one contemplated by the Warrant, has such knowledge and experience in
financial and business matters that the undersigned is capable of evaluating the
merits and risks of the undersigned's prospective investment in the Company, and
has the ability to bear the economic risks of the investment, including a
complete loss of such undersigned's investment. The undersigned has been
afforded an opportunity to ask such questions of the Company's officers,
employees, agents, accountants and representatives concerning the Company's
business, operations, financial condition, assets, liabilities and other
relevant matters as it has deemed necessary or desirable. The undersigned
believes that it has received all the information it considers necessary or
appropriate to decide whether to purchase the Warrant Shares.
(D) Warrantholder is an "accredited investor" as defined in Rule
501(a) under the Securities Act.
(E) Warrantholder is not purchasing the Warrant Shares as a result
of or subsequent to any advertisement, article, notice or other communication
regarding the Warrant Shares published in any newspaper, magazine or similar
media or broadcast over television or radio or presented at any seminar or any
other general solicitation or general advertisement.
--------------------------------------------
Name of Warrantholder
--------------------------------------------
Signature of Authorized Signatory
--------------------------------------------
Print Name and Title
--------------------------------------------
Date
EXHIBIT C
ASSIGNMENT FORM
(To be executed only upon transfer of this Warrant)
For value received, the undersigned registered holder of the within
Warrant hereby sells, assigns and transfers unto ______________________ the
right represented by such Warrant to purchase __________ shares of Common Stock
of The 3DO Company to which such Warrant relates and all other rights of the
Warrantholder under the within Warrant (including, without limitation, the
registration rights provided in Section 8 of the within Warrant), and appoints
______________________ Attorney to make such transfer on the books of The 3DO
Company maintained for such purpose, with full power of substitution in the
premises.
Dated: ___________________
Signature
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(Print Name)
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(Street Address)
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(City) (State) (Zip Code)
Signed in the presence of:
-------------------------------