1
EXHIBIT 10.6
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED
OF EXCEPT AS PROVIDED HEREIN. THE HOLDER OF THIS WARRANT AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO THE RESTRICTIONS HEREIN
SET FORTH.
WARRANT
TO
PURCHASE SHARES OF COMMON STOCK
OF
VIASOURCE COMMUNICATIONS, INC.
This Warrant, dated as of June 29, 2001, certifies that, for good and valuable
consideration, Viasource Communications, Inc., a New Jersey corporation (the
"Company"), hereby grants to Gateway Companies, Inc. ("Gateway"), together with
any permitted transferee (the "Holder" or "Holders") of this Warrant or Warrant
Shares (as defined below), subject to the terms and conditions set forth herein,
the right to subscribe for and purchase from the Company up to 475,000 shares of
common stock of the Company, no par value ("Common Stock"), in the amounts set
forth in Section 1.3 below (the "Warrant Shares"), at the purchase prices per
share set forth in Section 1.3 below (the "Exercise Prices"). The Exercise
Prices and the number of Warrant Shares are subject to adjustment from time to
time as provided in Section 6. This Warrant is issued in consideration and as a
part of that certain Amendment to Amended and Restated Service Agreement, dated
of even date herewith, between the Company and Gateway (the Amended and Restated
Service Agreement, as amended, being referred to herein as the "Service
Agreement").
1. DURATION AND EXERCISE OF WARRANT; LIMITATION ON EXERCISE; PAYMENT OF TAXES.
1.1. EXERCISE PERIOD. This Warrant may be exercised by the Holder
in whole or in part from time to time during the period from
the date of this Warrant to and including the date that is the
earlier of (a) five (5) years after the date of this Warrant
or (b) in the event that the Service Agreement is terminated
prior to the end of its term, ninety (90) days after the date
of termination of the Service Agreement, or the next
succeeding business day if either such date falls on a
Saturday, Sunday or other day on which the Company is not open
for business (the "Expiration Date"), subject to the vesting
provisions of Section 1.3.
1.2. MANNER OF EXERCISE.
(a) The rights represented by this Warrant may be
exercised by the Holder, in whole or in part from
time to time, by delivery to the Company of (i) this
Warrant, (ii) a completed Exercise Form in the form
attached hereto (the "Exercise Form"), duly executed
by the Holder and specifying the number of Warrant
Shares to be purchased, and (iii) payment of the
Exercise Price for the number of Warrant Shares
specified in the Exercise Form in the form of
certified funds, wire transfer or the exchange of
shares of Common Stock, including shares issuable
upon exercise of this Warrant, having a Fair Market
Value (as defined in Section 1.2(b)) on the business
day immediately preceding the exercise date equal to
such Exercise Price, or any combination of these
forms of payment. The foregoing shall be delivered to
the Company at the notice address set forth in
Section 8.7 during normal business hours on any
business day on or before the Expiration Date.
1
2
(b) In the event the Holder elects to pay all or part of
the Exercise Price through the exchange of shares of
Common Stock, then the shares of Common Stock so
exchanged shall have an aggregate Fair Market Value
equal to the aggregate Exercise Price due upon
exercise. When used in this Warrant, the "Fair Market
Value" of a share of Common Stock shall mean the
closing sale price or last reported bid price, as
applicable, of the Common Stock on the specified
date, as reported on the primary securities exchange
or quotation system on which the Common Stock is
listed or, if the Common Stock is not listed, then
the value as reasonably determined in good faith by
the Company's Board of Directors. In the event the
Holder elects to pay all or part of the Exercise
Price through the exchange of shares of Common Stock
issuable upon exercise of this Warrant, then the
Holder shall specify the number of such shares in the
Exercise Form and the Company shall issue to the
Holder the number of shares of Common Stock computed
using the following formula:
X=Y (A-B)
-------
A
Where X equals the number of shares of Common Stock
to be issued to the Holder, Y equals the number of
shares exercised by the Holder, including the shares
to be used to pay the Exercise Price, A equals the
Fair Market Value of a share of Common Stock, and B
equals the Exercise Price per share.
(c) If then unexercised in whole or in part, this Warrant
shall be deemed to have been exercised immediately
prior to the close of business on the Expiration Date
pursuant to Section 1.2(b), and the Holder shall be
treated for all purposes as the holder of record of
such shares as of the close of business on such date.
As promptly as practicable on or after such date and
in any event within five business days thereafter,
the Company at its expense shall issue and deliver to
the Holder a certificate or certificates for the
number of shares issuable upon such exercise.
(d) The Warrant Shares shall be deemed to be issued to
the Holder as of the close of business on the date on
which this Warrant has been properly exercised,
regardless of whether the Company's stock transfer
books may then be closed or certificates representing
the Warrant Shares shall have been issued.
Certificates for the Warrant Shares specified in the
Exercise Form shall be delivered to the Holder as
promptly as practicable, and in any event within five
business days thereafter. The certificates so
delivered shall be in denominations specified by the
Holder, and shall be issued in the name of the Holder
or, if permitted by Section 1.5, in such other name
as shall be designated in the Exercise Form. If this
Warrant shall have been exercised only in part, the
Company shall, at the time of delivery of the
certificates representing the Warrant Shares, deliver
to the Holder a new Warrant evidencing the right to
purchase the remaining Warrant Shares, which new
Warrant shall in all other respects be identical to
this Warrant. No adjustments or payments shall be
made on or in respect of Warrant Shares issuable on
the exercise of this Warrant for any cash dividends
paid or payable to holders of record of Common Stock
as of any date prior to the date as of which the
Holder shall be deemed to be the record holder of
Warrant Shares.
1.3 VESTING AND EXERCISE PRICE. The right to exercise the Warrant
shall vest in the Holder under the following terms and
conditions and at the following exercise prices:
(a) The Holder shall have the right to exercise 125,000
Warrant Shares as of the date of issuance of this
Warrant, at an exercise price equal to $1.00 per
share; provided, however, that the exercise price
shall be reduced to the closing price of Viasource's
common stock on June 28, 2001 in the event that the
average of the closing prices of the Common Stock on
the primary securities exchange or quotation system
on which
2
3
the Common Stock is then listed (presently, the
Nasdaq Stock Market) for the ten (10) consecutive
calendar days ending on December 29, 2001 equals an
amount less than $1.00 per share (as adjusted for
stock splits, recapitalizations and the like).
(b) The Holder shall have the right to exercise up to an
additional 150,000 Warrant Shares upon the issuance
of a press release announcing a national installation
program for Gateway personal computers as follows:
1. 150,000 Warrant Shares shall vest and become
exerciseable if a press release is issued by
July 6, 2001 during the term of the Service
Agreement;
2. 125,000 Warrant Shares shall vest and become
exerciseable if a press release is issued
after July 6, 2001 but by July 29, 2001
during the term of the Service Agreement;
3. 100,000 Warrant Shares shall vest and become
exerciseable if a press release is issued
after July 29, 2001 but by August 13, 2001
during the term of the Service Agreement;
and
4. 75,000 Warrant Shares shall vest and become
exerciseable if a press release is issued
after August 13, 2001 during the term of the
Service Agreement.
Any Warrant Shares that fail to vest pursuant to this
Section 1.3(b) in the time periods set forth in (1) -
(4) above shall expire (and remain unvested) despite
any later press release that may be issued relating
to a national installation program. Any Warrant
Shares vesting pursuant to this Section 1.3(b) shall
have an exercise price equal to the lesser of $1.00
per share or the Discounted Market Price (as defined
in Section 1.3(h) below).
(c) The Holder shall have the right to exercise an
additional 50,000 Warrant Shares on each of June 29,
2002 and June 29, 2003 during the term of the Service
Agreement, at an exercise price equal to the lesser
of $1.00 per share or the Discounted Market Price.
The maximum number of shares that may vest pursuant
to this Section 1.3(c) is 100,000 Warrant Shares.
(d) The Holder shall have the right to exercise an
additional 25,000 Warrant Shares upon the initiation
by the Company of a pilot project for a high
speed/broadband Internet services for consumers
provided by Gateway, at an exercise price equal to
the lesser of $1.00 per share or the Discounted
Market Price.
(e) The Holder shall have the right to exercise an
additional 25,000 Warrant Shares upon the initiation
by the Company of a pilot project for home networking
services provided by Gateway, at an exercise price
equal to the lesser of $1.00 per share or the
Discounted Market Price.
(f) The Holder shall have the right to exercise an
additional 25,000 Warrant Shares upon the launch by
Gateway of a national marketing campaign offering
installation and orientation services for purchasers
of personal computers, at an exercise price equal to
the lesser of $1.00 per share or the Discounted
Market Price.
(g) The Holder shall have the right to exercise an
additional 25,000 Warrant Shares upon the roll-out of
Gates III and IV pursuant to the Service Agreement
(and as defined in the Service Agreement), at an
exercise price equal to the lesser of $1.00 per share
or the Discounted Market Price.
(h) For purposes of this Section 1.3, the Discounted
Market Price shall mean a ten percent (10%) discount
to the average of the closing prices of the Common
Stock on
3
4
the primary securities exchange or quotation system
on which the Common Stock is listed (presently, the
Nasdaq Stock Market) for the ten (10) consecutive
calendar days ending on the date preceding the
applicable vesting date (as adjusted to reflect stock
splits, recapitalizations and the like). If the
Common Stock is not then listed on any securities
exchange or quotation system, then the Discounted
Market Price shall be a ten percent (10%) discount to
the value of the Common Stock as reasonably
determined in good faith by the Company's Board of
Directors.
(i) In the event that the Company conducts at least
100,000 installation events under the Service
Agreement during either (1) July 1, 2001 to December
31, 2002 or (2) July 1, 2002 to December 31, 2003,
then the Holder shall have the right to exercise all
Warrant Shares set forth in this Warrant (regardless
of the number of Warrant Shares otherwise then
vested) commencing immediately upon such occurrence,
at an exercise price equal to the lesser of $1.00 per
share or the Discounted Market Price.
(j) In the event of any liquidation, dissolution or
winding up of the Company or in the event of any
Fundamental Change or Change in Control of the
Company, the Holder shall have the right to exercise
all Warrant Shares set forth in this Warrant
(regardless of the number of Warrant Shares otherwise
then vested) commencing immediately prior to the
consummation of such occurrence or event, at an
exercise price equal to the lesser of $1.00 per share
or the Discounted Market Price. The term "Fundamental
Change" shall mean a reorganization, consolidation or
merger in which the Company is a party (except any
reorganization, consolidation or merger where the
Company is the surviving corporation and, after
giving effect thereto, the holders of the Company's
outstanding capital stock (on a fully diluted basis)
immediately prior to such reorganization,
consolidation or merger will own immediately
following such reorganization, consolidation or
merger outstanding capital stock of the Company (on a
fully diluted basis) possessing the voting power
under ordinary circumstances to elect a majority of
the Company's Board of Directors), or a sale or other
transfer of all or substantially all of the assets of
the Company on a consolidated basis in any
transaction or series of related transactions (other
than sales in the ordinary course of business)). The
term "Change of Control" shall mean any sale,
transfer, issuance or redemption or series of sales,
transfers, issuances or redemptions (or any
combination thereof) of shares of the Company's
capital stock by the holders thereof or the Company
which results in any person or entity or group of
affiliated persons or entities (other than the owners
of the Company's capital stock (on a fully diluted
basis) immediately prior to any such transaction or
series of transactions) owning capital stock of the
Company possessing the voting power under ordinary
circumstances to elect at least fifty percent (50%)
of the Company's Board of Directors.
(k) Notwithstanding anything to the contrary set forth in
Section 1.3 above, the vesting of the Warrant Shares
shall only occur if (1) the Service Agreement is then
in full force and effect (except if failure to be in
full force and effect is due to action by the Company
other than for cause of Gateway), and (2) Gateway is
then in compliance with the Service Agreement in all
material respects (subject to any applicable cure
periods). Similarly, in the event that any of the
Warrant Shares fail to vest as a result of any
material non-compliance by the Company with any of
the terms of the Service Agreement as of the date of
the applicable vesting (subject to any applicable
cure periods), then any such Warrant Shares that
failed to vest as a result of the Company's material
non-compliance shall immediately vest and become
exerciseable, at an exercise price equal to the
lesser of $1.00 per share or the Discounted Market
Price.
4
5
(l) For the avoidance of doubt, the press releases and
national marketing campaign for installation and
orientation services program(s) for Gateway personal
computers, high speed/broadband Internet services and
home networking services described in Sections
1.3(b), (d), (e) and (f) above all refer to Gateway
programs with installation and orientation services
being provided by the Company.
1.4 PAYMENT OF TAXES. The issuance of certificates for Warrant
Shares shall be made without charge to the Holder for any
stock transfer or other issuance tax in respect thereto;
provided, however, that the Holder shall be responsible for
the payment of any and all taxes which may be payable in
respect of any transfer involved in the issuance and delivery
of any certificates for Warrant Shares in a name other than
that of the then Holder as reflected upon the books of the
Company.
1.5 TRANSFER, RESTRICTION ON TRANSFER.
(a) Subject to the provisions of Section 1.5(b), this
Warrant may be transferred, in whole or in part, at
any time after the date of this Warrant, without the
consent of the Company, to any other person. Upon
notice of transfer duly executed by the Holder, the
transferee shall become the Holder of record of the
Warrant or part thereof. The Company shall keep at
its principal office a register in which the Company
shall provide for the registration, transfer and
exchange of this Warrant. The Company will not at any
time, except upon the dissolution, liquidation or
winding up of the Company, close such register so as
to prevent or delay the exercise or transfer of this
Warrant.
(b) Neither this Warrant nor any of the Warrant Shares,
nor any interest or participation in either, may be
in any manner transferred or disposed of, in whole or
in part, except in compliance with the Securities Act
of 1933, as amended (the "Securities Act"), and
applicable state securities laws.
(c) Each certificate for Warrant Shares and any Warrant
issued at any time in exchange or substitution for
any Warrant bearing such a legend shall bear a legend
similar in effect to the foregoing paragraph unless,
in the reasonable opinion of counsel for the Company,
the Warrant need no longer be subject to the
restriction contained herein. The provisions of this
Section 1.5 shall be binding upon all subsequent
holders of this Warrant.
1.6 DIVISIBILITY OF WARRANT. This Warrant may be divided into
warrants representing one Warrant Share or multiples thereof,
upon surrender at the principal office of the Company on any
business day, without charge to any Holder, except as provided
below. Upon any such division, and if permitted by Section
1.5, the Warrants may be transferred of record to a name other
than that of the Holder of record; provided, however, that the
Holder shall be responsible for payment of any and all
transfer taxes with respect thereto.
1.7 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company hereby represents, warrants and covenants as follows:
(a) EXISTENCE. The Company is a corporation duly
organized and validly existing under the laws of the
state of its incorporation and is authorized to do
business and is in good standing as a foreign
corporation in every jurisdiction in which it owns or
leases real property or in which the nature of its
business requires it to be so qualified, except where
the failure to so qualify, individually or in the
aggregate, could not reasonably be expected to have a
material adverse effect on the Company.
5
6
(b) ORGANIZATIONAL DOCUMENTS. True and complete copies of
the Company's charter and bylaws, each as amended to
date, have been delivered to the Holder prior to the
date of this warrant.
(c) POWER AND AUTHORITY. The Company has all requisite
corporate power and authority, and has taken all
corporate action necessary (i) to grant, issue and
deliver this Warrant and (ii) to authorize and
reserve for issuance and, upon payment from time to
time of the Exercise Price, to issue and deliver the
shares of Common Stock initially issuable upon
exercise of the Warrant. This Warrant has been duly
executed and delivered by the Company.
(d) RESERVATION, ISSUANCE AND DELIVERY OF COMMON STOCK.
There have been reserved for issuance out of the
authorized and unissued shares of Common Stock a
number of shares sufficient to provide for the
exercise of the rights represented by this Warrant as
of the date of this Warrant.
(e) NO VIOLATION; CONSENTS AND APPROVALS. The execution
or delivery of this Warrant and the consummation of
the transactions contemplated herein does not and
will not (i) result in a breach or violation of any
of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or
instrument to which the Company is a party or by
which the Company is bound or to which any of its
properties or assets are subject, (ii) result in any
violation of any provision of the charter or bylaws
of the Company or any statute or any order, rule or
regulation of any court or governmental agency or
body having jurisdiction over the Company or any of
its properties, or (iii) require any filing with, or
any consent or approval of, any governmental
authority.
(f) ENFORCEABILITY. This Warrant, when duly executed and
delivered, will constitute the legal, valid and
binding obligation of the Company, enforceable
against the Company in accordance with its terms,
subject to any applicable bankruptcy, insolvency or
other laws of general application affecting
creditors' rights and judicial decisions interpreting
any of the foregoing.
(g) NO OUTSTANDING RIGHTS. Except as disclosed to the
Holder, the Company has not issued any warrants,
options or other securities convertible into or
exchangeable for shares of Common Stock and there are
no registration rights outstanding with respect to
any securities of the Company.
(h) COMPLIANCE WITH SERVICE AGREEMENT. The Company shall
at all times be in compliance with all terms of the
Service Agreement.
2. RESERVATION AND LISTING OF SHARES. All Warrant Shares which are
issued upon the exercise of the rights represented by this Warrant shall, upon
issuance and payment of the Exercise Price, be validly issued, fully paid and
nonassessable and free from all taxes, liens, security interests, charges and
other encumbrances with respect to the issue thereof other than taxes in respect
of any transfer occurring contemporaneously with such issuance. During the
period within which this Warrant may be exercised, the Company shall at all
times have authorized and reserved, and keep available free from preemptive
rights, a sufficient number of shares of Warrant Shares to provide for the
exercise of this Warrant, and shall at its expense procure such listing thereof
(subject to official notice of issuance) as then may be required on all stock
exchanges on which the Common Stock is then listed, if any. The Company from
time to time shall take all such action as may be required to assure that the
par value per share of the Warrant Shares is equal to or less than the Exercise
Price.
3. RULE 144 AND REPORTS. The Company covenants that, as long as any
class of its equity securities is registered pursuant to Section 12(b) or 12(g)
under the Securities Exchange Act
6
7
of 1934, as amended (the "Exchange Act"), it will file the reports required to
be filed by it under the Securities Act and the Exchange Act, and the rules and
regulations adopted by the Commission thereunder (or, if the Company is not
required to file such reports, it will, upon the request of the Holder, make
publicly available other information so long as necessary to permit sales under
Rule 144 under the Securities Act), and it will take such other action as the
Holder may reasonably request, all to the extent required from time to time to
enable the Holder to sell Warrant Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act, as amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission. Upon the request of the Holder,
the Company will deliver to the Holder a written statement confirming its
compliance with such requirements.
4. EXCHANGE, LOSS OR DESTRUCTION OF WARRANT. Upon any transfer
permitted by Section 1.5 or 1.6, the Company, without charge to the Holder,
shall execute and deliver a new Warrant of like tenor in the name of the
assignee named in such instrument of assignment and this Warrant shall promptly
be canceled. 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 mutilation, upon surrender and cancellation of this Warrant, the Company
will execute and deliver a new Warrant of like tenor. The term "Warrant" as used
herein includes any Warrants issued in substitution or exchange of this Warrant.
5. OWNERSHIP OF WARRANT. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof for all
purposes (notwithstanding any notations of ownership or writing hereon made by
anyone other than the Company) and shall not be affected by any notice to the
contrary, until presentation of this Warrant for registration of transfer.
6. CERTAIN ADJUSTMENTS. The Exercise Price at which Warrant Shares may
be purchased and the number of Warrant Shares to be purchased upon exercise of
this Warrant are subject to change or adjustment as follows:
6.1. GENERAL. If the Company (i) pays a dividend in shares of
Common Stock or makes a distribution in shares of Common
Stock, (ii) subdivides its outstanding shares of Common Stock
into a greater number of shares of Common Stock, (iii)
combines its outstanding shares of Common Stock into a smaller
number of shares of Common Stock or (iv) issues by
reclassification of its shares of Common Stock other
securities of the Company (including any such reclassification
in connection with a consolidation or merger in which the
Company is the surviving corporation), the number of Warrant
Shares purchasable upon exercise of this Warrant shall be
adjusted so that the Holder shall be entitled to receive the
kind and number of Warrant Shares or other securities of the
Company that the Holder would have owned or have been entitled
to receive after the happening of any of the events described
above, had this Warrant been exercised immediately prior to
the happening of such event or any record date with respect
thereto. An adjustment made pursuant to this Section 6.1 shall
become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.
6.2 ADJUSTMENT FOR CAPITAL REORGANIZATION. If at any time there
shall be a capital reorganization of the Company or a merger
or consolidation of the Company with or into another
corporation, or the sale of all or substantially all of the
Company's properties and assets, then, as part of such
reorganization, merger, consolidation, or sale, lawful
provision shall be made so that the Holder of this Warrant
shall thereafter be entitled to receive on exercise of this
Warrant during the period specified in this Warrant and on
payment of the Exercise Price then in effect, the number of
shares of stock or other securities or property of the
Company, or of the successor corporation resulting from such
merger or consolidation, to which a holder of the Common Stock
deliverable
7
8
on exercise of this Warrant would have been entitled on such
capital reorganization, merger, consolidation, or sale if this
Warrant had been exercised immediately before that capital
reorganization, merger, consolidation, or sale. In any such
case, appropriate adjustment shall be made in the application
of the provisions of this Warrant with respect to the rights
and interests of the Holder of this Warrant after the
reorganization, merger, consolidation, or sale to the end that
the provisions of this Warrant (including adjustment of the
number of shares purchasable on exercise of this Warrant)
shall be applicable after that event, as near as reasonably
may be, in relation to any shares or other securities or
property deliverable after that event on exercise of this
Warrant. Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred
to in this Section 6.2, this Warrant shall continue in full
force and effect and the terms hereof shall be applicable to
the shares of stock and other securities property receivable
on the exercise of this Warrant after the consummation of such
reorganization, consolidation or merger or the effective date
of dissolution following any such transfer, as the case may
be, and shall be binding upon the issuer of any such stock or
other securities, including, in the case of any such transfer,
the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such
person shall have expressly assumed the terms of this Warrant
as provided in Section 7.
6.3 ADJUSTMENTS FOR ISSUANCES OF COMMON STOCK BELOW EXERCISE PRICE
(a) For the purposes of adjustment of the Exercise Price
pursuant to this Section 6.3, the following
definitions shall apply:
"Additional Shares of Common Stock" shall mean all
shares of Common Stock other than Excluded Stock (as
such term is defined below).
"Convertible Securities" shall mean any evidences of
indebtedness, shares or securities, in each case
convertible into or exchangeable for Additional
Shares of Common Stock.
"Excluded Stock" shall mean shares of Common Stock
issued (a) on conversion or exercise of securities of
the Company outstanding as of the date hereof; (b)
upon the issuance or exercise of Options to acquire
shares of Common Stock issued after the date hereof
to (I) officers, directors, or employees of the
Company pursuant to an employee stock option plan
approved by a majority of the entire Board of
Directors of the Company and (II) non-employees,
including, without limitation, members of the Board
of Directors, consultants, suppliers and contractors,
pursuant to a non-employee stock option plan approved
by a majority of the entire Board of Directors of the
Company, PROVIDED that in either case the price per
share at which such Options are exercisable is not
less than the fair market value of Common Stock as of
the date such options are issued unless such stock
option plan shall have been approved by the entire
Board of Directors unanimously; (c) upon a
subdivision of the Common Stock to the extent an
adjustment to the Exercise Price is made pursuant to
Section 6.1 or 6.2, (d) pursuant to capital-raising
transactions with financial institutions and
investors (as opposed to with strategic partners)
which have a primary purpose of raising capital for
the Company, and (e) pursuant to any equipment
leasing or debt financing from a commercial bank or
similar financial institution.
"Options" shall mean rights, options or warrants to
subscribe for purchase or otherwise acquire Common
Stock or Convertible Securities.
(b) If the Company shall issue any Additional Shares of
Common Stock for a consideration per share less than
the Exercise Price in effect immediately prior to the
issuance of such Additional Shares of Common Stock,
then the Exercise Price concurrently with each such
issuance shall be reduced to an amount equal to the
8
9
consideration per share received by the Company upon
issuance of the Additional Shares of Common Stock. In
the event of any adjustment of the Exercise Price
pursuant to this Section 6.3, the number of Warrant
Shares issuable upon exercise of this Warrant shall
be simultaneously adjusted to that number equal to
the quotient of (i) the aggregate Exercise Price
which would have been payable had this Warrant been
exercised in full, for cash, immediately prior to
such issuance, divided by (ii) the Exercise Price as
so adjusted.
For the purposes of making any adjustment required
under this Section 6.3, the consideration received by
the Company for any issue or sale of securities shall
(i) to the extent it consists of cash be computed at
the net amount of cash received by the Company after
deduction of any underwriting or similar commissions,
compensation or concessions paid or allowed by the
Company in connection with such issue or sale, (ii)
to the extent it consists of property other than
cash, be computed at the fair value of that property
as agreed to by the parties hereto and (iii) if
Additional Shares of Common Stock, Convertible
Securities or Options are issued or sold together
with other stock or securities or other assets of the
Company for a consideration which covers both, such
consideration shall be reasonably allocated between
such Additional Shares of Common Stock, Convertible
Securities or Options and such other assets.
(c) For the purposes of the adjustment required under
this Section 6.3, if the Company issues or sells any
Options or Convertible Securities, then in each case
the Company shall be deemed to have issued at the
time of the issuance of such Options or Convertible
Securities the maximum number of Additional Shares of
Common Stock (as set forth in the instruments
relating thereto, giving effect to any provision
contained therein for a subsequent upward adjustment
of such number) issuable upon exercise or conversion
thereof and to have received as consideration for the
issuance of such shares an amount equal to the total
amount of the consideration, if any, received by the
Company for the issuance of such Options or
Convertible Securities plus the minimum amounts of
consideration, if any (as set forth in the
instruments relating thereto, giving effect to any
provision contained therein for a subsequent downward
adjustment of such consideration), payable to the
Company upon the exercise or conversion of such
Options and Convertible Securities. No further
adjustment of the Exercise Price shall be made as a
result of the actual issuance of Additional Shares of
Common Stock on the exercise of any such Options or
the conversion of any such Convertible Securities. To
the extent any such Options or Convertible Securities
shall expire without having been exercised, the
Exercise Price shall be readjusted to the Exercise
Price which would have been in effect had the
unexercised Options or Convertible Securities not
been issued.
6.4 CERTIFICATE OF ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 6, the
Company at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and
furnish to each Holder a certificate setting forth such
adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The
Company shall, upon the written request, at any time, of any
Holder, furnish or cause to be furnished to such Holder, a
like certificate setting forth: (i) such adjustments and
readjustments; (ii) the Exercise Price at the time in effect;
and (iii) the number of shares of Common Stock and the amount,
if any, of other property that at the time would be received
upon the exercise of the Warrant.
6.5 NOTICES OF RECORD DATE. In the event of any taking by the
Company of a record of the holders of any class of securities
for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend
that is the same as cash dividends paid in previous quarters)
or other distribution, or any right to subscribe
9
10
for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any
other right, or any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of
the Company or any Fundamental Change or Change in Control, or
any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, then and in each such event the
Company will mail or cause to be mailed to the holder of this
Warrant a notice specifying (i) the date on which any such
record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of
such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, and
(ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation,
Fundamental Change, Change in Control, dissolution,
liquidation or winding-up is to take place, and the time, if
any is to be fixed, as of which the holders of record of any
class of securities shall be entitled to exchange their shares
of securities for securities or other property deliverable on
such reorganization, reclassification, recapitalization,
transfer, consolidation, Fundamental Change, Change in
Control, dissolution, liquidation or winding-up. Such notice
shall be mailed to the Holder at the same time it is sent to
stockholders, but in any event at least 20 business days prior
to the record date specified in such notice.
7. NO IMPAIRMENT. The Company will not, by amendment of its Certificate
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder of this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company (a) will not increase the par value of any shares of stock
receivable on the exercise of this Warrant above the amount payable therefor on
such exercise, (b) will take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable shares of stock on the exercise of this Warrant, and (c) will not
transfer all or substantially all of its properties and assets or Common Stock
to any other person (corporate or otherwise), or consolidate with or merger into
any other person or permit any such person to consolidate with or merge into the
Company (if the Company is not the surviving person), unless such other person
shall expressly assume in writing and will be bound by all the terms of this
Warrant. Upon the request of a Holder at any time during the period that this
Warrant is outstanding, the Company will acknowledge in writing, in form
reasonably satisfactory to such Holder, the continued validity of this Warrant
and the Company's obligations hereunder.
8. MISCELLANEOUS.
8.1. ENTIRE AGREEMENT. This Warrant constitutes the entire
agreement between the Company and the Holder with respect to
this Warrant and the Warrant Shares.
8.2. BINDING EFFECTS. This Warrant shall inure to the benefit of
and shall be binding upon the Company, the Holder and holders
of Warrant Shares 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, the Holder and holders
of Warrant Shares, or their respective heirs, legal
representatives, successors or assigns, any rights, remedies,
obligations or liabilities under or by reason of this Warrant
or the Warrant Shares.
8.3. AMENDMENTS AND WAIVERS. This Warrant may not be modified or
amended except by an instrument in writing signed by the
Company and the Holder. The Company, the Holder or holders of
Warrant Shares may, by an instrument in writing, waive
compliance by the other party with any term or provision of
this Warrant on the part of such other party hereto to be
performed or complied with. The waiver by any such party of a
10
11
breach of any term or provision of this Warrant shall not be
construed as a waiver of any subsequent breach.
8.4. FIDUCIARY DUTIES. The Company and its directors shall owe the
Holder the same fiduciary duties that the Company and its
directors would owe to holders of Warrant Shares and the other
stockholders of the Company.
8.5. 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.
8.6. FURTHER ASSURANCES. Each of the Company, the Holder and
holders of Warrant Shares shall do and perform all such
further acts and things and execute and deliver all such other
certificates, instruments and/or powers of attorney as may be
necessary or appropriate as any party hereto may, at any time
and from time to time, reasonably request in connection with
the performance of any of the provisions of this Warrant.
8.7. NOTICES. All demands, requests, 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
certified or registered first class mail, postage prepaid, to
the parties hereto at the following addresses or at such other
address as any party hereto shall hereafter specify by notice
to the other party hereto:
(a) if to the Company, addressed to:
Viasource Communications, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇, Exec. VP, Business Development
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Tele: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Holder, addressed to the following address
or to the address of the record Holder appearing on
the books of the Company.
Gateway Companies, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Tele: (▇▇▇) ▇▇▇-▇▇▇▇
8.8. SEVERABILITY. Any term or provision of this Warrant that 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
any other term or provision of this Warrant or affecting the
validity or enforceability of any of the terms or provisions
of this Warrant in any other jurisdiction.
8.9. FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for
upon any exercise hereof, the Company shall pay to the Holder
an amount in cash equal to such fraction multiplied by the
then-current market price.
11
12
8.10. RIGHTS OF THE HOLDER. No Holder shall, solely by virtue of
this Warrant, be entitled to any rights of a stockholder of
the Company, either at law or in equity.
8.11. GOVERNING LAW. This Warrant shall be deemed to be a contract
made under the laws of the State of New York and for all
purposes shall be governed by and construed in accordance with
the laws of such State applicable to contracts made and
performed in New York.
8.12. REGISTRATION RIGHTS AND SELLING RESTRICTIONS.
(a) The Company agrees to cause the Warrant Shares
issuable to the Holders to be registered with the
Securities and Exchange Commission ("SEC") under the
Securities Act, on an effective and current Form S-3
registration statement, or any successor form if Form
S-3 shall not be available, as follows: (1) the
Company will file such registration statement no
later than the earlier to occur of (A) if the Company
is then eligible to file a registration statement
with the SEC on Form S-3, thirty (30) days after the
date that the Company issues stock with net proceeds
to the Company of at least $8,000,000, and (B)
fifteen (15) days after the date that the Company
becomes eligible to file a registration statement
with the SEC on Form S-3; and (2) the Company will
use its commercially reasonable best efforts to have
such registration statement declared effective as
soon as reasonably practicable thereafter. The
Company also agrees to comply with all requirements
of the Nasdaq Stock Market in connection with the
transactions contemplated by Warrant, and to use its
best efforts to cause the Warrant Shares to be
approved for listing on the Nasdaq Stock Market as
soon as reasonably practicable, but in any event
within sixty (60) days after the date of issuance of
this Warrant.
(b) The Company shall keep such registration statement
effective and current until the date after the
Expiration Date, during which period the Warrant
Shares shall be freely saleable in accordance with
the plan of distribution set forth in the
registration statement and listed and tradeable on
the principal securities exchange or quotation system
on which the Common Stock then traded, without any
resale restrictions or limitations, except for the
prospectus delivery requirements, if any, relating to
such Form S-3 or other registration form or any other
similar requirements under any applicable SEC rule
and regulation as to which the selling shareholder
(as compared to the Company) is solely responsible
for compliance with respect to such selling
shareholder's effectuation of a resale of the Warrant
Shares.
(c) All expenses incurred in connection with a
registration pursuant to this Section 8.12 (excluding
underwriters' and brokers' discounts and commissions
relating to shares sold by the Holders, which shall
be borne by the respective Holders), including,
without limitation, all federal, state and "blue sky"
registration, filing and qualification fees,
printers' and accounting fees, and fees and
disbursements of counsel for the Company, shall be
borne by the Company. Fees and disbursements of any
counsel for the Holders shall be borne by the
Holders.
(d) Until the date that is six (6) months after the date
of issuance of this Warrant, the Holders collectively
may not sell or transfer more than an aggregate of
10,000 Warrant Shares on any calendar day.
12
13
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer as of the date first written above.
VIASOURCE COMMUNICATIONS, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Title: Executive Vice President,
Business Development
------------------------------
13
14
EXERCISE FORM
The undersigned, the record holder of this Warrant, hereby irrevocably elects to
exercise the right, represented by this Warrant, to purchase __________ of the
Warrant Shares and herewith tenders payment for such Warrant Shares in the
amount of $___________ in the form of (__) certified funds, (__) wire transfer,
(__) the exchange of _________ shares of Common Stock, and/or (__) the exchange
of _____________ Warrant Shares included in this exercise. The undersigned
requests that a certificate for such Warrant Shares be registered in the
following name and for delivery to the following address:
Name Address
---- -------
[NAME OF HOLDER]
Date:
By:
Name:
Title:
14