Exhibit 10.3
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. THIS WARRANT IS SUBJECT TO
CANCELLATION UPON THE OCCURRENCE OF CERTAIN EVENTS STATED IN SECTION 3.9 OF THE
PURCHASE AGREEMENT, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS
ADDRESS STATED HEREIN.
ROWECOM INC.
CLASS A WARRANT
Warrant No.1 Dated:
September 12, 2000
RoweCom, Inc., a Delaware corporation (the "Company"), hereby certifies
that, for value received, Montrose Investments Ltd., or its registered assigns
(the "Holder"), is entitled, subject to the terms and conditions set forth
herein, to purchase from the Company up to a total of 1,500,000 shares of common
stock, $.01 par value per share (the "Common Stock"), of the Company (each such
share, a "Warrant Share" and all such shares, the "Warrant Shares"). This
Warrant and the right to acquire Warrant Shares hereunder shall expire at 5:00
p.m. (New York City time) on the second Trading Day following the one year
anniversary of the issuance of this Warrant (such date, the "Expiration Date").
Certain terms used herein are defined in EXHIBIT A attached hereto:
1. REGISTRATION OF WARRANT. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the "Warrant
Register") in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.
2. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) This Warrant may only be transferred pursuant to an effective
registration statement under the Securities Act, to the Company or pursuant to
an available exemption from or in a transaction not subject to the registration
requirements of the Securities Act. In connection with any transfer of this
Warrant other than pursuant to an effective registration statement or to the
Company, the Company may require the transferor thereof to provide to the
Company an
opinion of counsel selected by the transferor, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such Warrant under the Securities Act.
Holder agrees to the imprinting, so long as is required by this Section 2(a), of
a legend substantially similar to that first above written on any New Warrant
(as defined below). Any such transferee shall agree in writing to be bound by
the terms of this Warrant and shall have the rights of Holder under this
Warrant. The Company shall register the transfer of any portion of this Warrant
in the Warrant Register, upon surrender of this Warrant, with the Form of
Assignment attached hereto duly completed and signed, to the Transfer Agent or
to the Company at its address for notice set forth in Section 11. Upon any such
registration or transfer, a new warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new warrant, a "New Warrant"),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance of such transferee of all of the rights and obligations of a holder
of a Warrant.
(b) This Warrant is exchangeable, upon the surrender hereof by the
Holder to the Company at its address for notice set forth in Section 11 for one
or more New Warrants, evidencing in the aggregate the right to purchase the
number of Warrant Shares which may then be purchased hereunder. Any such New
Warrant will be dated the date of such exchange.
3. DURATION, EXERCISE AND REDEMPTION OF WARRANTS.
(a) EXERCISE BY HOLDER.
At any time between the Call Expiration Date (as defined
below) and 5:00 p.m.(New York City time) on the Expiration Date, the Holder
shall be entitled to exercise this Warrant to purchase all or a portion of the
Warrant Shares which have not been previously issued and with respect to which
this Warrant has not been previously redeemed or canceled in accordance with the
terms hereof.
(b) COMPANY CALL OPTION.
(i) Subject to the terms and conditions set forth herein,
prior to 2:30 p.m. (New York City time) on any Trading Day (as defined in
EXHIBIT A) during the period between the Closing Date (as defined in Purchase
Agreement) and the Trading Day immediately preceding the first year anniversary
of the Closing Date (the "Call Expiration Date"), the Company may deliver
written notices to the Holder (each, a "Call Notice" and the Trading Day a Call
Notice is delivered, a "Delivery Date"), of the Company's election to call, for
a price of $.0001 per Warrant Share, a portion of this Warrant as further
described herein. Notwithstanding anything to the contrary set forth in this
Warrant: (1) a Call Notice may not apply to a number of Warrant Shares in excess
of 15% of the average trading volume of the Common Stock for the two Trading
Days immediately preceding the Delivery Date, (2) no Call Notice may be
delivered until the expiration of the Call Expiration Time (as defined below)
for
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the immediately preceding Call Notice, (3) no Call Notice may be delivered
if the Exercise Price (as defined herein) applicable to an exercise of this
Warrant in response to such Call Notice is less than $4.01 per share and (4) no
Call Notice may be delivered unless the conditions set forth in Section
3(b)(iii) have been either satisfied by the Company or waived by the Holder.
(ii) The portion of this Warrant subject to a Call Notice will
be canceled and of no further effect from and after 5:00 p.m. (New York City
time) on the second Trading Day following Delivery Date (the "Call Expiration
Time"), unless between the Delivery Date and the Call Expiration Time the Holder
notifies the Company in writing that it will exercise this Warrant to acquire
the number of Warrant Shares subject to such Call Notice at the Exercise Price
per share set forth in Section 3(c). Such exercise shall be in accordance with
Section 3(c).
(iii) The right of the Company to deliver a Call Notice is
subject to the satisfaction or waiver by the Holder, at or before the applicable
Call Expiration Time, of each of the following conditions (and, if after
delivery thereof and on the applicable Exercise Date, any of the following
conditions shall cease to be met, such Call Notice, at the option of the Holder,
shall be null and void AB INITIO):
(A) The representations and warranties of the
Company contained in the Purchase Agreement other than as set forth in clause
(c) of Section 2.1(j) ("SEC Documents; Financial Statements") shall be true and
correct as of each of the applicable Delivery Date and Call Expiration Time, as
though first made on and as of such Delivery Date and Call Expiration Time
(other than representations and warranties which relate to a specific date
(which shall not include representations and warranties relating to the "date
hereof"), which representations and warranties shall be true as of such specific
date);
(B) The Company shall have performed, satisfied and
complied in all material respects with all covenants (including timely delivery
of Warrant Shares in accordance with Section 3(c)(ii)), and agreements in the
Transaction Documents (as defined in the Purchase Agreement) to be performed,
satisfied or complied with by the Company at or prior to the applicable Delivery
Date and Call Expiration Time;
(C) The Underlying Shares Registration Statement
(as defined in EXHIBIT A) shall be effective on the Delivery Date, not
subject to any stop order or suspension, and the Underlying Shares
Registration Statement shall cover all of the Warrant Shares subject to such
Call Notice;
(D) No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction and in
force on the Delivery Date which prohibits the consummation of any of the
transactions contemplated by the Transaction Documents;
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(E) Since the Closing Date, no event or series of
events which reasonably would be expected to have or result in a Material
Adverse Effect (as defined in the Purchase Agreement) and no Change of
Control Transaction (as defined in EXHIBIT A) shall have occurred;
(F) Since the Closing Date, trading in the Common
Stock shall not have been suspended by the Commission (as defined in Exhibit A)
for a period in excess of five consecutive Trading Days or ten Trading Days in
the aggregate (which need not be consecutive Trading Days), except for any
suspensions of trading of not more than one Trading Day solely to permit
dissemination of material information regarding the Company;
(G) On the Delivery Date, the Common Stock shall be
trading on the Nasdaq National Market ("NASDAQ"), or on the Nasdaq Smallcap
Market, New York Stock Exchange or American Stock Exchange (each, a
"Subsequent Market");
(H) No approval of the shareholders of the Company
shall be required under the rules of the Nasdaq Stock Market or any other
Subsequent Market on which the Common Stock is traded or listed for trading in
order to issue the number of Warrant Shares indicated in the applicable Call
Notice at the Exercise Price;
(I) Exercise of the Warrant with respect to all of
the Warrant Shares subject to such Call Notice would not result in a violation
of, or be limited by, any subsection of Section 3(d).
(c) EXERCISE MECHANICS
(i) When permitted in accordance with the terms of this
Warrant, the Holder may purchase Warrant Shares under this Section by delivering
to the Company, at its address for notice set forth in Section 11, a completed
Form of Election to Purchase in the form attached hereto (and the grid attached
hereto as ANNEX A), together with the payment of the Exercise Price multiplied
by the number of Warrant Shares indicated therein. A "Date of Exercise" means
the date of the delivery (which may be made via facsimile) of the Form of
Election to Purchase and applicable Exercise Price.
(ii) Within three Trading Days after receiving a Form of
Election to Purchase and the applicable Exercise Price, the Company shall issue
or cause to be issued and cause to be delivered to or upon the written order of
the Holder and in such name or names as the Holder may designate, a certificate
for the Warrant Shares issuable upon such exercise, free of restrictive legends
except as required by the Purchase Agreement.
(A) If the Company fails to deliver to the Holder
the certificate or certificates pursuant to this Section within the time
specified in above, the Holder shall be entitled by written notice to the
Company at any time on or before its receipt of such certificate or certificates
thereafter, to rescind such exercise.
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(B) In addition to the rights set forth in (A)
above, if the Company fails to deliver to the Holder such certificate or
certificates pursuant to this Section within the time specified in above, and if
after such time the Holder purchases (in an open market transaction or
otherwise) Common Stock to deliver in satisfaction of a sale by such Holder of
the Warrant Shares which the Holder anticipated receiving upon such exercise (a
"Buy-In"), then the Company shall (1) pay in cash to the Holder the amount by
which (x) the Holder's total purchase price (including brokerage commissions, if
any) for the Common Stock so purchased exceeds (y) the product of (i) the
aggregate number of Warrant Shares that such Holder anticipated receiving from
the exercise at issue multiplied by (ii) the Per Share Market Value on the Date
of Exercise and (2) at the option of the Holder, either rescind the exercise at
issue or deliver to the Holder the number of Warrant Shares that would have been
issued had the Company timely complied with its delivery requirements under this
Section. For example, if the Holder purchases Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise with respect to which the Per Share Market Value on the Date of
Exercise was a total of $10,000, the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In.
(iii) EXERCISE PRICE. The "EXERCISE PRICE" applicable to an exercise
following a Call Notice under Section 3(a) shall equal the lower of (i) $20.00
(subject to equitable adjustment for stock splits, reverse splits, combinations
and other similar events) and (ii) 92% of the average of the Per Share Market
Values of the Common Stock for the two Trading Days prior to the Date of
Exercise. The Exercise Price applicable to an exercise pursuant to Section
3(a)(i) that is not in response to a Call Notice shall equal $20.00 (subject to
equitable adjustment for stock splits, reverse splits, combinations and other
similar events). The Exercise Price shall be subject to adjustment in accordance
with Section 8.
(d) CERTAIN EXERCISE RESTRICTIONS.
(i) The Company may not issue Warrant Shares for a number of
shares of Common Stock in excess of 2,480,859 (which represents 19.999% of the
shares of Common Stock outstanding on the Closing Date), less the aggregate
number of shares of Common Stock issued and issuable upon conversion in full of
the Company's 7% Convertible Debentures and exercise of the Closing Warrants
{below such price)} AT A PRICE BELOW THE CLOSING SALES PRICE OF THE COMMON STOCK
ON THE DATE PRECEDING THE CLOSING DATE, unless the Company shall have obtained
the approval of the stockholders of the Company as required under the rules of
the Nasdaq Stock Market or such other exchange or trading facility on which the
Common Stock is traded or listed for trading for such issuance. In the event of
any subdivision, transfer or exchange of this Warrant, the limitation contained
in this Section 3(d)(i) shall be appropriately adjusted.
(ii) A Holder may not exercise this Warrant to the extent such
exercise would result in the Holder, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of the
Exchange Act and the rules promulgated
5
thereunder) in excess of 9.999% of the then issued and outstanding shares of
Common Stock, including shares issuable upon such exercise and held by such
Holder after application of this Section. Since the Holder will not be obligated
to report to the Company the number of shares of Common Stock it may hold at the
time of an exercise hereunder, unless the exercise at issue would result in the
issuance of shares of Common Stock in excess of 9.999% of the then outstanding
shares of Common Stock without regard to any other shares which may be
beneficially owned by the Holder or an affiliate thereof, the Holder shall have
the authority and obligation to determine whether the restriction contained in
this Section will limit any particular exercise hereunder and to the extent that
the Holder determines that the limitation contained in this Section applies, the
determination of which portion of this Warrant is exercisable shall be the
responsibility and obligation of the Holder. If the Holder has delivered a Form
of Election to Purchase for a number of Warrant Shares that, without regard to
any other shares that the Holder or its affiliates may beneficially own, would
result in the issuance in excess of the permitted amount hereunder, the Company
shall notify the Holder of this fact and shall honor the exercise for the
maximum portion of this Warrant permitted to be exercised on such Date of
Exercise in accordance with the periods described herein and, at the option of
the Holder, either keep the portion of the Warrant tendered for exercise in
excess of the permitted amount hereunder for future exercises or return such
excess portion of the Warrant to the Holder. The provisions of this Section may
be waived by a Holder (but only as to itself and not to any other Holder) upon
not less than 61 days prior notice to the Company. Other Holders shall be
unaffected by any such waiver.
4. PIGGYBACK REGISTRATION RIGHTS. This Warrant is subject to the piggyback
registration rights granted under the Registration Rights Agreement and such
piggyback registration rights shall continue until all of the Holder's Warrant
Shares have been sold in accordance with an effective registration statement or
upon the Expiration Date.
5. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
6. REPLACEMENT OF WARRANT. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and indemnity, if
requested, satisfactory to it. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.
6
7. RESERVATION OF WARRANT SHARES. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holder (taking into account the adjustments and
restrictions of Section 8). The Company covenants that all Warrant Shares that
shall be so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable.
8. CERTAIN ADJUSTMENTS.
(a) In case of any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification or share exchange, and the Holder
shall be entitled upon an exercise of this Warrant following such event to
receive such amount of securities or property equal to the amount of Warrant
Shares such Holder would have been entitled to had such Holder exercised this
Warrant immediately prior to such reclassification or share exchange. The terms
of any such reclassification or share exchange shall include such terms so as to
continue to give to the Holder the right to receive the securities or property
set forth in this Section 8(a) upon any exercise following any such
reclassification or share exchange.
(b) In case of any (1) merger or consolidation of the Company with
or into another Person, or (2) sale by the Company of more than one-half of the
assets of the Company (on a book value basis) in one or a series of related
transactions, the Holder shall have the right thereafter to (A) exercise this
Warrant for the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
merger, consolidation or sale, and the Holder shall be entitled upon such event
or series of related events to receive such amount of securities, cash and
property as the Common Stock for which this Warrant could have been exercised
immediately prior to such merger, consolidation or sales would have been
entitled or (B) in the case of a merger or consolidation, (x) require the
surviving entity to issue common stock purchase warrants equal to the number
Warrant Shares to which this Warrant then permits, which newly issued warrant
shall be identical to this Warrant, and (y) simultaneously with the issuance of
such warrant, the Holder of such warrant shall have the right, subject to the
identical limitations on exercise as are set forth in this Warrant, to exercise
such warrant only into shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
merger or consolidation or (C) require the surviving entity from such merger,
acquisition or business combination to pay to the Holder, in cash, the Black
Scholes value of this Warrant, but subject to the variables provided by the
Company at the time of such merger, acquisition or other business combination
7
for "volatility." In the case of clause (B), the exercise price for such new
warrant shall be based upon the amount of securities, cash and property that
each share of Common Stock would receive in such transaction and the Exercise
Price of this Warrant immediately prior to the effectiveness or closing date for
such transaction. The terms of any such merger, sale or consolidation shall
include such terms so as continue to give the Holder the right to receive the
securities, cash and property set forth in this Section upon any conversion or
redemption following such event. This provision shall similarly apply to
successive such events.
(c) All calculations under this Section 8 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(d) If (i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or (ii) the Company shall declare a special
nonrecurring cash dividend on or a redemption of its Common Stock; or (iii) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; or (iv) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; or (v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the affairs of the Company, then the
Company shall cause to be mailed to each Holder at their last addresses as they
shall appear upon the Warrant Register, at least 30 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up, PROVIDED, that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.
9. PAYMENT OF EXERCISE PRICE. For any purchases of Warrant Shares on or
prior to the Call Expiration Date, the Holder shall pay the Exercise Price for
Warrant Shares purchased hereunder by delivery of immediately available funds.
For exercises of this Warrant between the Call Expiration Date and 5:00 p.m.
(New York City time) on the Expiration Date, if there is not an Underlying
Shares Registration Statement then effective to permit the resale by the Holder
of the Warrant Shares and the prospectus thereunder available for the Holder to
resell Warrant Shares, then the Holder may pay the Exercise Price through a
cashless or net exercise and the Company shall deliver Warrant Shares in
accordance with the following:
8
The Holder shall pay the Exercise Price in one of the following
manners:
(a) CASH EXERCISE. The Holder may deliver immediately
available funds; or
(b) CASHLESS EXERCISE. The Holder may surrender this Warrant
to the Company together with a notice of cashless exercise, in which event the
Company shall issue to the Holder the number of Warrant Shares determined as
follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be issued
to the Holder.
Y = the number of Warrant Shares with respect to which
this Warrant is being exercised.
A = the average of the closing sale prices of the Common
Stock for the five (5) trading days immediately prior to
(but not including) the Date of Exercise.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that under current SEC rules and interpretations,
the Warrant Shares issued in a cashless exercise transaction shall be deemed to
have been acquired by the Holder, and the holding period for the Warrant Shares
shall be deemed to have been commenced, on the issue date.
10. FRACTIONAL SHARES. The Company shall not be required to issue or cause
to be issued fractional Warrant Shares on the exercise of this Warrant. The
number of full Warrant Shares which shall be issuable upon the exercise of this
Warrant shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of this Warrant so presented. If any fraction of a
Warrant Share would, except for the provisions of this Section, be issuable on
the exercise of this Warrant, the Company shall pay an amount in cash equal to
the Exercise Price multiplied by such fraction.
11. NOTICES. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 6:30 p.m. (New York City time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 6:30 p.m. (New York City time) on any date and earlier than
11:59 p.m. (New York City time) on
9
such date, (iii) the business day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given. The addresses for such
communications shall be: (i) if to the Company, to ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, attention Chief
Financial Officer, or (ii) if to the Holder, to the Holder at the address or
facsimile number appearing on the Warrant Register or such other address or
facsimile number as the Holder may provide to the Company in accordance with
this Section.
12. WARRANT AGENT. The Company shall serve as warrant agent under this
Warrant. Upon thirty days' notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.
13. MISCELLANEOUS.
(a) This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns. This Warrant may be
amended only in writing signed by the Company and the Holder and their
successors and assigns.
(b) Subject to Section 13(a), above, nothing in this Warrant shall
be construed to give to any person or corporation other than the Company and the
Holder any legal or equitable right, remedy or cause under this Warrant. This
Warrant shall inure to the sole and exclusive benefit of the Company and the
Holder.
(c) The corporate laws of the State of Delaware shall govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. The Company and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, borough of Manhattan, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, or that such suit,
action or proceeding is improper. Each of the Company and the Holder hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by receiving a copy thereof sent
to the Company at the address in effect for notices to it under this instrument
and agrees that such service shall constitute good and sufficient service
10
of process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law.
(d) The headings herein are for convenience only, do not constitute
a part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
(e) In case any one or more of the provisions of this Warrant shall
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to agree
upon a valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
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SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
ROWECOM INC.
By:
Name:
Title:
12
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To RoweCom Inc.:
The undersigned hereby irrevocably elects to purchase _____________ shares
of common stock, $.01 par value per share, of RoweCom Inc. (the "Common Stock")
and , if such Holder is not utilizing the cashless exercise provisions set forth
in this Warrant, encloses herewith $________ in cash, certified or official bank
check or checks or has sent a wire transfer with immediately available funds,
which sum represents the aggregate Exercise Price (as defined in the Warrant)
for the number of shares of Common Stock to which this Form of Election to
Purchase relates, together with any applicable taxes payable by the undersigned
pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
-------------------------------
(Please print name and address)
Dated: ___________, Name of Holder:
(Print)
(By:)
(Name:)
(Title:)
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
ANNEX A
-------------------------------------------------------------------------------
Date Number of Warrant Number of Warrant Number of
Shares Available Shares Exercised Warrant
to be Exercised Shares
Remaining to
be Exercised
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of RoweCom Inc. to which
the within Warrant relates and appoints ________________ attorney to transfer
said right on the books of RoweCom Inc. with full power of substitution in the
premises.
Dated:
---------------, ----
---------------------------------------
(Signature must conform in all respects to name
of holder as specified on the face of the
Warrant)
---------------------------------------
Address of Transferee
---------------------------------------
---------------------------------------
In the presence of:
--------------------------
EXHIBIT A
(i) "Business Day" means any day except Saturday, Sunday and any day which
shall be a federal legal holiday or a day on which banking institutions in the
State of New York and the Commonwealth of Massachusetts are authorized or
required by law or other governmental action to close.
(ii) "Change of Control Transaction" means the occurrence of any of (i) an
acquisition after the date hereof by an individual or legal entity or "group"
(as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 33% of the
voting securities of the Company, (ii) a replacement at one time or over time of
more than one-half of the members of the Company's board of directors which is
not approved by a majority of those individuals who are members of the board of
directors on the date hereof (or by those individuals who are serving as members
of the board of directors on any date whose nomination to the board of directors
was approved by a majority of the members of the board of directors who are
members on the date hereof), (iii) the merger or consolidation of the Company
with or into another entity that is not wholly-owned by the Company upon the
completion of which the stockholders of the Company immediately before such
merger or consolidation own or control less than 2/3 of the voting securities of
the surviving entity or sale of 50% or more of the assets of the Company in one
or a series of related transactions, or (i) the execution by the Company of an
agreement to which the Company is a party or by which it is bound, providing for
any of the events set forth above in (i), (ii) or (iii).
(iii) "Commission" means the Securities and Exchange Commission.
(iv) "Effective Date" means the date the Underlying Shares Registration
Statement is declared effective by the Commission.
(v) "Per Share Market Value" means on any particular date (a) the closing
bid price per share of Common Stock on such date on the NASDAQ or on such
Subsequent Market on which the shares of Common Stock are then listed or quoted,
or if there is no such price on such date, then the closing bid price on the
NASDAQ or on such Subsequent Market on the date nearest preceding such date, or
(b) if the shares of Common Stock are not then listed or quoted on the NASDAQ or
a Subsequent Market, the closing bid price for a share of Common Stock in the
over-the-counter market, as reported by the National Quotation Bureau
Incorporated or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (c) if the shares of
Common Stock are not then reported by the National Quotation Bureau Incorporated
(or similar organization or agency succeeding to its functions of reporting
prices), then the average of the "Pink Sheet" quotes for the relevant conversion
period, as determined in good faith by the Holder, or (d) if the shares of
Common Stock are not then publicly traded the fair market value of a share of
Common Stock as determined by an Appraiser selected in good faith by the Holders
of a majority in interest of the Warrants then outstanding.
(vi) "Purchase Agreement" means the Convertible Debenture Purchase
Agreement dated as of the date hereof, to which the Company and the original
Holder hereof are parties.
(vii) "Trading Day" means (a) a day on which the shares of Common Stock
are traded on the NASDAQ or on such Subsequent Market on which the shares of
Common Stock are then listed or quoted, or (b) if the shares of Common Stock are
not listed on the NASDAQ or a Subsequent Market, a day on which the shares of
Common Stock are traded in the over-the-counter market, as reported by the OTC
Bulletin Board, or (c) if the shares of Common Stock are not quoted on the OTC
Bulletin Board, a day on which the shares of Common Stock are quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); PROVIDED, HOWEVER, that in the event that the shares of
Common Stock are not listed or quoted as set forth in (a), (b) and (c) hereof,
then Trading Day shall mean a Business Day.
(viii) "Underlying Shares Registration Statement" shall have the meaning
set forth in the Purchase Agreement.
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