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EXHIBIT 4.1
Exhibit A to Securities Purchase Agreement
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION
WITH SUCH OFFER, SALE OR DISPOSITION. THIS WARRANT IS ISSUED SUBJECT TO THE
PROVISIONS OF A SECURITIES PURCHASE AGREEMENT, DATED JULY 24, 1997, BY AND
BETWEEN WAVEPHORE, INC. (THE "COMPANY") AND THE PURCHASERS NAMED THEREIN, AND A
REGISTRATION RIGHTS AGREEMENT, DATED JULY 24, 1997, BY AND BETWEEN THE COMPANY
AND SUCH PURCHASERS.
Warrant to Purchase
___________Shares
WARRANT TO PURCHASE COMMON STOCK
OF
WAVEPHORE, INC.
THIS CERTIFIES that ______________ or any subsequent holder hereof (the
"Holder"), has the right to purchase from WAVEPHORE, INC., an Indiana
corporation (the "Company"), up to fully paid and nonassessable shares of the
Company's Common Stock (the "Common Stock"), subject to adjustment as provided
herein, at a price equal to the Exercise Price (as defined below), at any time
beginning on July 24, 1997 (the "Issue Date") and ending at 5:00 p.m., eastern
time, on July 23, 2000 (the "Expiration Date").
This Warrant is issued, and all rights hereunder shall be, subject to
all of the conditions, limitations and provisions set forth herein.
1. Exercise.
(a) Right to Exercise; Exercise Price. The Holder shall have the right
to exercise this Warrant at any time and from time to time up to and including
the Expiration Date as to all or any part of the shares of Common Stock covered
hereby (the "Warrant Shares"). The "Exercise Price" payable by the Holder in
connection with the exercise of this Warrant shall be equal to 115% of the
average of the Closing Sale Prices (as defined below) for the Common Stock on
the five (5) Trading Days (as defined below) occurring immediately prior to (but
not including) the Issue Date.
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"Trading Day" shall mean any day on which the Common Stock is traded for any
period on the Nasdaq National Market or on the principal securities exchange or
market on which the Common Stock is then traded. "Closing Sale Price" means,
with respect to a security, the closing sale price of such security on the
Nasdaq National Market or on the principal securities exchange or market where
such security is listed or traded as reported by Bloomberg Financial Markets or,
if Bloomberg Financial Markets is not then reporting closing sale prices of such
security, a comparable reporting service of national reputation selected by the
Company and reasonably acceptable to the Holders (collectively, "Bloomberg"), or
if the foregoing does not apply, the last reported sale price of such security
in the over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg, or, if no sale price is reported for such
security by Bloomberg, the average of the sale prices of all market makers for
such security as reported in the "pink sheets" by the National Quotation Bureau,
Inc. If the Closing Sale Price cannot be calculated for such security on such
date on any of the foregoing bases, the Closing Sale Price of such security on
such date shall be the fair market value as reasonably determined by an
investment banking firm selected by the Holder (which may be the Holder or an
affiliate thereof) and reasonably acceptable to the Company, with the costs of
such appraisal to be borne by the Company.
(b) Exercise Notice. In order to exercise this Warrant, the Holder
shall send by facsimile transmission, at any time prior to 11:59 p.m., eastern
time, on the date on which the Holder wishes to effect such exercise (the
"Exercise Date"), to the Company and to its designated transfer agent for the
Common Stock (the "Transfer Agent") (i) a copy of the notice of exercise in the
form attached hereto as Exhibit A (the "Exercise Notice") stating the number of
Warrant Shares as to which such exercise applies and the calculation therefor
and (ii) a copy of this Warrant. The Holder shall promptly thereafter deliver to
the Transfer Agent the original Exercise Notice and the original Warrant and, to
the Company, the Exercise Price. Upon receipt of a facsimile of the Exercise
Notice, the Company shall send by facsimile to the Holder submitting such
Exercise Notice a confirmation of the receipt thereof ("a Confirmation Notice").
In the case of a dispute as to the calculation of the Exercise Price or the
number of Warrant Shares issuable hereunder, the Company shall promptly issue to
the Holder the number of Warrant Shares that are not disputed and shall submit
the disputed calculations to its independent accountants within three (3)
business days following the Exercise Date. The Company shall cause such
accountant to calculate the Exercise Price and/or the number of Warrant Shares
issuable hereunder and to notify the Company and the Holder of the results in
writing no later than three (3) business following the day on which it received
the disputed calculations. Such accountant's calculation shall be deemed
conclusive absent manifest error. The fees of any such accountant shall be borne
by the party whose calculations were most at variance with those of such
accountant.
(c) Cancellation of Warrant. This Warrant shall be canceled upon its
exercise and the Holder shall be entitled to receive, as soon as practicable
after the Exercise Date, a new Warrant or Warrants (containing terms identical
to this Warrant) representing any unexercised portion of this Warrant.
2. Delivery of Warrant Shares Upon Exercise. Upon receipt of an
Exercise Notice pursuant to paragraph 1 above, the Company shall, (A) in the
case of a Cashless Exercise (as
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defined below), no later than the close of business on the latest to occur of
(i) the third (3rd) business day following the Exercise Date set forth in such
Exercise Notice, (ii) the first business day following delivery of the original
Warrant to the Transfer Agent if such delivery is effected at or prior to 2:00
p.m., Arizona time, and (iii) the second Business Day following delivery of the
original Warrant if such delivery is effected after 2:00 p.m., Arizona time, and
(B) in the case of a Cash Exercise (as defined below) no later than the close of
business on the latest to occur of (i) the third (3rd) business day following
the Exercise Date set forth in such Exercise Notice and (ii) the first business
day following the day on which the Company shall have received payment of the
Exercise Price and delivery of the original Warrant if such payment and delivery
is effected at or prior to 2:00 p.m., Arizona time, and (iii) the second
Business Day following payment of the Exercise Price and delivery of the
original Warrant if such payment and delivery is effected after 2:00 p.m.,
Arizona time, (the "Delivery Date"), issue and deliver or caused to be delivered
to the Holder the number of Warrant Shares as shall be determined as provided
herein. The Company shall effect delivery of Warrant Shares by, as long as (A)
purchases and sales of shares of Common Stock are eligible for settlement at the
Depository Trust Company ("DTC")and (B) such Holder or its nominee (as
identified to the Company by such Holder) maintains on the applicable Delivery
Date an account at DTC for the receipt of securities, crediting the account of
such Holder or such nominee at DTC with the number of Warrant Shares required to
be delivered, no later than the close of business on the Delivery Date. In the
event that either or both of the conditions specified in clauses (A) or (B)
above are not satisfied as of the applicable Delivery Date, or if a Holder so
specifies in an Exercise Notice, the Company shall effect delivery of Warrant
Shares by delivering to the Holder or such nominee physical certificates
representing such Warrant Shares, no later than the close of business on such
Delivery Date.
3. Failure to Deliver Warrant Shares.
(a) Exercise Default. In the event that the Company fails for
any reason (other than by operation of paragraph 4 below) to deliver to a Holder
certificates representing the number of Warrant Shares specified in the
applicable Exercise Notice on or before the Delivery Date therefor (an "Exercise
Default"), such Holder shall notify the Company by facsimile of such Exercise
Default (a "Default Notice"). If, after the Holder has sent a Default Notice to
the Company, the Company has not delivered such certificates, and such failure
continues for three (3) business days following the Delivery Date, the Company
shall pay to such Holder payments ("Exercise Default Payments") in the amount of
(i) (N/365) times the number of Warrant Shares which are the subject of such
Exercise Default, multiplied by (ii) (x) the average Closing Sale Price for the
Warrant Shares on the five (5) Trading Days occurring immediately prior to (but
not including) the applicable Exercise Date minus (y) the aggregate Exercise
Price therefor multiplied by (iii) the lower of twenty-four percent (24%) and
the maximum rate permitted by applicable law, where "N" equals the number of
days elapsed between the original Delivery Date for such Warrant Shares and the
earlier to occur of (A) the date on which all of such Warrant Shares are issued
and delivered to such Holder and (B) the date on which a Withdrawal Notice (as
defined below) is delivered to the Company. Amounts payable under this
subparagraph 3(a) shall be paid to the Holder in immediately available funds on
or before the fifth (5th) business day of the calendar month immediately
following the calendar month in which such amount has accrued.
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(b) Buy-in. Nothing herein shall limit a Holder's right to
pursue actual damages for the Company's failure to issue and deliver Warrant
Shares in connection with an exercise on the applicable Delivery Date
(including, without limitation, damages relating to any purchase of shares of
Common Stock by such Holder to make delivery on a sale effected in anticipation
of receiving Warrant Shares upon exercise (a "buy-in"), such damages to be in an
amount equal to (A) the aggregate amount paid by such Holder for the shares of
Common Stock so purchased minus (B) the aggregate amount of net proceeds, if
any, received by such Holder from the sale of the Warrant Shares issued by the
Company pursuant to such exercise), and such Holder shall have the right to
pursue all remedies available to it at law or in equity (including, without
limitation, a decree of specific performance and/or injunctive relief).
(c) Reduction of Exercise Price. In the event that a Holder
has not received certificates representing the Warrant Shares by the tenth
(10th) business day following an Exercise Default, such Holder may, upon written
notice to the Company (a "Withdrawal Notice") delivered to the Company on such
business day or on any business day thereafter (unless, prior to the delivery of
such notice, such Warrant Shares are delivered to such Holder), withdraw its
Exercise Notice with respect to such Warrant Shares and regain on such business
day the rights of a Holder of this Warrant, or part thereof, with respect to the
Warrant Shares that are the subject of such Exercise Default. In such event, the
Exercise Price for such Warrant Shares shall be reduced by one percent (1%) for
each day occurring during the period immediately following such 10th Business
Day until the day on which the such Holder delivers a Withdrawal Notice to the
Company; provided, however, that the maximum percentage by which such Exercise
Price may be reduced shall be fifty percent (50%). (For example, if such
Exercise Default were to continue for five days following such 10th Business
Day, such Exercise Price would be reduced by 5%; if for ten days, by 10%; and
for fifty days or more, by 50%, so that the number of Warrant Shares deliverable
upon exercise of the Warrant would be increased proportionately) Upon delivery
by a Holder of a Withdrawal Notice, such Holder shall retain all of such
Holder's rights and remedies with respect to the Company's failure to deliver
such Warrant Shares (including without limitation the right to receive the cash
payments specified in subparagraph 3(a) above).
4. Exercise Limitations.
In no event shall a Holder be permitted to exercise this Warrant, or
part thereof, with respect to Warrant Shares in excess of the number of such
shares, upon the issuance of which, (x) the number of shares of Common Stock
beneficially owned by such Holder and its affiliates (other than shares of
Common Stock issuable upon exercise of the Warrant or which may be deemed
beneficially owned except for being subject to a limitation on conversion or
exercise analogous to the limitation contained in this Section 4) plus (y) the
number of shares of Common Stock issuable upon such exercise, would be equal to
or exceed (z) 4.99% of the number of shares of Common Stock then issued and
outstanding. As used herein, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and the rules thereunder. To the extent that the limitation contained
in this paragraph 4 applies, the determination of whether and the extent to
which this Warrant is exercisable shall be in the sole discretion of the Holder,
and the submission of an Exercise Notice shall be deemed to be the Holder's
determination
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of whether and the extent to which this Warrant is exercisable, subject to such
aggregate percentage limitation, and the Company shall have no obligation
whatsoever to verify or confirm the accuracy of such determination. This
paragraph may be amended (i) in order to clarify an ambiguity or otherwise to
give effect to such limitation, by the Board of Directors of the Company and the
Holder of this Warrant and (ii) for any other reason, with the further consent
of the holders of a majority of the shares of Common Stock then outstanding.
Nothing contained herein shall be deemed to restrict the right of the Holder to
exercise this Warrant at such time as such exercise will not violate the
provisions of this paragraph 4.
5. Payment of the Exercise Price. The Holder may pay the Exercise Price
in cash or, in the event that a Registration Statement (as defined in the
Registration Rights Agreement) is not available for the resale of the Warrant
Shares on the Exercise Date, pursuant to a cashless exercise, as follows:
(a) Cash Exercise: by delivery of immediately available funds.
(b) Cashless Exercise: by surrender of 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 x (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 Exercise
Date.
B = the Exercise Price.
For purposes of Rule 144 under the Securities Act of 1933, as amended, it is
intended, understood and acknowledged that 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.
6. Anti-Dilution Adjustments.
(a) Stock Split, Stock Dividend, Etc. If (A) the number of outstanding
shares of Common Stock is increased by a stock split, a stock dividend on the
Common Stock, a reclassification of the Common Stock, the distribution to
holders of Common Stock of rights or warrants entitling them to subscribe for or
purchase Common Stock at less than the then current market price thereof (based
upon the subscription or exercise price of such rights or warrants at the
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time of the issuance thereof) or other similar event, then upon the effective
date thereof, the number of shares of Common Stock which the Holder hereof shall
be entitled to purchase upon exercise of this Warrant shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such event, and the
Exercise Price shall be proportionately reduced, or (B) the number of
outstanding shares of Common Stock is decreased by a reverse stock split,
combination or reclassification of shares or other similar event, and the
Exercise Price shall be proportionately increased. In such event, the
Corporation shall notify the Transfer Agent of such change on or before the
effective date thereof. For purposes hereof, the market price per share of
Common Stock on any date shall be the average Closing Sale Price for the Common
Stock on the five (5) consecutive Trading Days occurring immediately prior to
but not including the earlier of such date and the Trading Day before the "ex"
date, if any, with respect to the issuance or distribution requiring such
computation. The term "'ex' date", when used with respect to any issuance or
distribution, means the first Trading Day on which the Common Stock trades
regular way in the market from which such average Closing Sale Price is then to
be determined without the right to receive such issuance or distribution.
(b) Distributions. If the Company shall declare or make any
distribution of cash, evidences of indebtedness or other securities or assets
(other than cash dividends or distributions payable out of earned surplus or net
profits for the current or the immediately preceding year), or any rights to
acquire any of the foregoing, to holders of Common Stock as a partial
liquidating dividend, by way of return of capital or otherwise, including any
dividend or distribution in shares of capital stock of a subsidiary of the
Company (collectively, a "Distribution"), then, upon the exercise of this
Warrant by a Holder occurring after the record date for determining shareholders
entitled to such Distribution, the Exercise Price shall be reduced to a price
determined by decreasing the Exercise Price in effect immediately prior to the
record date of the Distribution by an amount equal to the fair market value of
the assets so distributed with respect to each share of Common Stock, as
determined by mutual agreement of the Company and the Holder.
(c) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization or other
similar event, as a result of which shares of Common Stock of the Company shall
be changed into the same or a different number of shares of the same or another
class or classes of stock or securities or other assets of the Company or
another entity or there is a sale of all or substantially all the Company's
assets (a "Corporate Change"), then this Warrant shall be exercisable into such
class and type of securities or other assets as the Holder would have received
had the Holder exercised this Warrant immediately prior to such Corporate
Change. The Company shall not effect any transaction described in this
subsection 6(d) unless (i) it first gives to the Holder prior notice of such
merger, consolidation, exchange of shares, recapitalization, reorganization,
redemption or other similar event, and makes a public announcement of such event
at the same time that it gives such notice and (ii) the resulting successor or
acquiring entity (if not the Company) assumes by written instrument the
obligations of the Company under this Warrant, including the terms of this
subsection 6(d).
(d) Exercise Price as Adjusted. As used in this Warrant, the term
"Exercise Price" shall mean the purchase price per share specified in paragraph
1 of this Warrant, until the occurrence
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of an event stated in subsection (a), (b) or (c) of this paragraph 6, and
thereafter shall mean said price as adjusted from time to time in accordance
with the provisions of said subsection. No such adjustment under this paragraph
6 shall be made unless such adjustment would change the Exercise Price at the
time by $.01 or more; provided, however, that all adjustments not so made shall
be deferred and made when the aggregate thereof would change the Exercise Price
at the time by $.01 or more. No adjustment made pursuant to any provision of
this paragraph 6 shall have the effect of increasing the total consideration
payable upon exercise of this Warrant in respect of all the Common Stock as to
which this Warrant may be exercised.
(e) Adjustments: Additional Shares, Securities or Assets. In the event
that at any time, as a result of an adjustment made pursuant to this Section 6,
the Holder of this Warrant shall, upon exercise of this Warrant, become entitled
to receive shares and/or other securities or assets (other than Common Stock)
then, wherever appropriate, all references herein to shares of Common Stock
shall be deemed to refer to and include such shares and/or other securities or
assets; and thereafter the number of such shares and/or other securities or
assets shall be subject to adjustment from time to time in a manner and upon
terms as nearly equivalent as practicable to the provisions of this paragraph 6.
7. Fractional Interests.
No fractional shares or scrip representing fractional shares shall
be issuable upon the exercise of this Warrant, but on exercise of this Warrant,
the Holder hereof may purchase only a whole number of shares of Common Stock.
If, on exercise of this Warrant, the Holder hereof would be entitled to a
fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon exercise shall be the next higher number of
shares.
8. Transfer of this Warrant. Subject to the provisions contained in the
Securities Purchase Agreement, the Holder may sell, transfer, assign, pledge or
otherwise dispose of this Warrant, in whole or in part, as long as such sale or
other disposition is made pursuant to an effective registration statement or an
exemption to the registration requirements of the Securities Act of 1933, as
amended, and applicable state laws. Upon such transfer or other disposition, the
Holder shall deliver a written notice to Company, substantially in the form of
the Transfer Notice attached hereto as Exhibit B (the "Transfer Notice"),
indicating the person or persons to whom this Warrant shall be transferred and,
if less than all of this Warrant is transferred or this Warrant is transferred
in parts, the number of Warrant Shares to be covered by the part of this Warrant
to be transferred to each such person. Within five (5) business days of
receiving a Transfer Notice, the original of this Warrant and any applicable
transfer taxes, the Company shall deliver to each transferee designated by the
Holder a Warrant or Warrants of like tenor and terms for the appropriate number
of Warrant Shares.
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9. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer upon any
person other than the Holder of this Warrant any legal or equitable right,
remedy or claim under this Warrant and this Warrant shall be for the sole and
exclusive benefit of the Holder of this Warrant.
10. Loss, theft, destruction or mutilation of Warrant.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.
11. Notice or Demands.
Except as otherwise provided herein, any notice, demand or request
required or permitted to be given pursuant to the terms of this Warrant shall be
in writing and shall be deemed given (i) when delivered personally or by
verifiable facsimile transmission (with an original to follow) on or before 5:00
p.m., eastern time, on a business day or, if such day is not a business day, on
the next succeeding business day, (ii) on the next business day after timely
delivery to an overnight courier and (iii) on the third business day after
deposit in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed as follows:
If to the Company:
WavePhore Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇ (with a copy to the General Counsel)
Fax: ▇▇▇-▇▇▇-▇▇▇▇
and if to the Holder, to such address as shall be designated by the Holder in
writing to the Company.
12. Applicable Law.
This Warrant is issued under and shall for all purposes be governed
by and construed in accordance with the laws of the state of New York, without
giving effect to conflict of law provisions thereof.
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IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
24th day of July, 1997.
WAVEPHORE, INC.
By:__________________________
Name:
Title:
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EXHIBIT A to WARRANT
EXERCISE NOTICE
The undersigned Holder hereby irrevocably exercises the right to
purchase of the shares of Common Stock ("Warrant Shares") of
WAVEPHORE, INC., an Indiana corporation (the "Company"), evidenced by the
attached Warrant (the "Warrant"). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.
1. Form of Exercise Price. The Holder intends that payment of the
Exercise Price shall be made as:
______ a Cash Exercise with respect to _________________ Warrant Shares;
and/or
______ a Cashless Exercise with respect to _________________ Warrant
Shares (to the extent permitted by the terms of the Warrant).
2. Payment of Exercise Price. In the event that the Holder has elected
a Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the Holder shall pay the sum of $________________ to the
Company in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares. The Company shall deliver to the Holder
_____________ Warrant Shares in accordance with the terms of the Warrant.
Date: ______________________
_____________________________________
Name of Registered Holder
By: ________________________________
Name:
Title:
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EXHIBIT B to WARRANT
TRANSFER NOTICE
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons named below the right to
purchase shares of the Common Stock of WAVEPHORE, INC. evidenced
by the attached Warrant.
Date: ______________________
____________________________________
Name of Registered Holder
By: _______________________________
Name:
Title:
Transferee Name and Address:
___________________________________________
___________________________________________
___________________________________________
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