Exhibit 4.9
______________________________________________________________________________
WARRANT AGREEMENT OF
WESTERN MICRO TECHNOLOGY, INC.
100,000 SHARES
Dated as of September 30, 1997
______________________________________________________________________________
COMMON STOCK PURCHASE WARRANT
WARRANT AGREEMENT dated as of September 30, 1997, between Western Micro
Technology, Inc., a Delaware corporation (the "Company"), the Company as Warrant
Agent, and IBM Credit Corporation (the "Warrant Holder" or "Holder").
WHEREAS, pursuant to that certain Inventory and Working Capital Agreement
Amendment #4 dated as of September 30, 1997, by and between the Company and the
Holder, the Holder has agreed to provide the Company with an acquisition loan
(the "Acquisition Loan"); and
WHEREAS, in partial consideration for making the Acquisition Loan, the
Holder is to receive warrants to acquire shares of Common Stock of the Company;
and
WHEREAS, the Company proposes to issue at closing (the "Closing") of the
Acquisition Loan the Common Stock Purchase Warrants as hereinafter described
(the "Warrants") exercisable to purchase one hundred thousand (100,000) shares
of its Common Stock, $0.01 par value ("Common Stock") (the shares of Common
Stock issuable on exercise of the Warrants being referred to herein as the
"Warrant Shares"), in favor of Warrant Holder.
In consideration of the benefits and services provided to the Company by
the grantor of the Warrant Holder, and for the purpose of defining the terms and
provisions of all of the Warrants and the respective rights and obligations
thereunder of the Company and the Holder, the Company and the Warrant Holder
hereby agree as follows:
SECTION 1. TRANSFERABILITY AND FORM OF THE WARRANTS.
1.1 REGISTRATION. The Warrants shall be numbered and shall be
registered on the books of the Company maintained at the principal office of the
Company at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Warrant
Register"). The Company shall be entitled to treat the Holders of the Warrants
as the owners in fact thereof for all purposes and shall not be bound to
recognize any equitable or other claim to or interest in such Warrants on the
part of any other person, and shall not be liable for any Company registration
or transfer of the Warrants which is registered or to be registered in the name
of a fiduciary or the nominee of a fiduciary unless made with the actual
knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration of transfer, or with such knowledge of such facts
that its participation therein amounts to bad faith.
1.2 TRANSFER RESTRICTIONS. The Warrants are freely transferable,
subject to applicable securities laws restrictions. The holder of any Warrants
so transferred shall continue to be bound by this Agreement. However, the
minimum denomination of any Warrant hereunder shall be a Warrant exchangeable
for 1,000 Warrant Shares.
1.3 TRANSFER-GENERAL. Subject to the terms hereof, the Warrants
shall be transferable only on the books of the Company maintained at its
principal office upon
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delivery thereof duly endorsed by the Holder or by its duly authorized attorney
or representative, or accompanied by proper evidence of succession, assignment
or authority to transfer. In all cases of transfer by an attorney, the original
power of attorney, duly approved, or a copy thereof, duly certified, shall be
deposited and remain with the Company. In case of transfer by executors,
administrators, guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced, and may be required to be
deposited and to remain with the Company in its discretion. Upon any
registration of transfer, the Company shall countersign and deliver new Warrants
to the Persons entitled thereto. The Company or the Warrant Agent may require
the payment of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any such transfer.
1.4 NOTICES OF CORPORATE ACTIONS. In the event of: (a) any taking
by the Company of a record of the holders of the Common Stock for the purpose of
determining the holders thereof who are entitled to receive any dividend or
distribution, or any right to subscribe for, purchase or otherwise acquire any
shares of capital stock of any class or any other securities, (b) any capital
reorganization of the Company, any reclassification or recapitalization of the
capital stock of the Company or any consolidation or merger involving the
Company and any other Person or any transfer or other disposition of all or
substantially all the assets of the Company to another Person; (c) any voluntary
or involuntary dissolution, liquidation or winding-up of the Company, or (d) any
amendment of the Certificate of Incorporation of the Company, the Company shall
mail to each Warrant Holder in accordance with the provisions of Section 12
hereof a notice specifying (i) the date or expected date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right and (ii)
the date or expected date on which any such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, disposition, dissolution,
liquidation or winding-up is to take place, the time, if any such time is to be
fixed, as of which the holders of record of Common Stock shall be entitled to
exchange their shares of Common Stock for the securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, disposition, dissolution, liquidation or
winding-up and a description in reasonable detail of the transaction. Such
notice shall be mailed to the extent practicable at least thirty (30), but not
more than ninety (90) days prior to the date therein specified. In the event
that the Company at any time sends any notice to the holders of its Common
Stock, it shall concurrently send a copy of such notice to each Warrant Holder.
1.5 FORM OF THE WARRANTS. The text of the Warrants and of the form
of election to purchase Warrant Shares (the "Purchase Form") shall be
substantially as set forth in Exhibit A attached hereto. The Exercise Price (as
defined in and determined in accordance with the provisions of Sections 2 and 6
hereof) and the number of Warrant Shares issuable upon exercise of the Warrant
is subject to adjustment upon the occurrence of certain events, all as
hereinafter provided. The Warrant shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, President, Chief
Financial Officer, or one of its Vice Presidents, and attested by its Secretary
or an Assistant Secretary.
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The Warrants shall be dated as of the date of countersignature thereof
by the Company either upon initial issuance or upon transfer.
SECTION 2. TERMS OF THE WARRANTS; EXERCISE OF THE WARRANTS; EXERCISE
PRICE, ETC.
2.1 TERM OF THE WARRANTS/VESTING. Subject to the terms of this
Agree ment, the Holder shall have the right, which may be exercised from time to
time until a date seven (7) years from the Closing, to purchase from the Company
the number of fully paid and nonassessable Warrant Shares which the Holder may
at the time be entitled to purchase on exercise of such Warrant. The Warrant
shall vest in full at Closing. If the last day for the exercise of the Warrant
shall not be a business day, then the Warrant may be exercised on the next
succeeding business day.
2.2 EXERCISE OF THE WARRANTS. The Warrants may be exercised upon
surrender to the Company, at its principal office, of the certificate evidencing
the particular Warrant to be exercised, together with the Purchase Form on the
reverse thereof duly completed and executed, and upon payment to the Company of
the Exercise Price, for the number of Warrant Shares in respect of which such
Warrant is then exercised. Upon partial exercise, a Warrant certificate for the
unexercised portion shall be delivered to the Holder. Payment of the aggregate
Exercise Price shall be made as provided in Section 2.3 below.
Subject to Section 3 hereof, upon such surrender of a Warrant, a
completed Purchase Form, and payment of the Exercise Price as aforesaid, the
Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the Holder and in such name or names as the Holder may
designate, a certificate or certificates for the number of full Warrant Shares
so purchased upon the exercise of the particular Warrant, together with an
additional whole share in respect of any fractional Warrant Share otherwise
issuable upon such surrender. Such certificate or certificates shall be deemed
to have been issued and any person so designated to be named therein shall be
deemed to have become a holder of record of such Warrant Shares as of the date
of the surrender of the particular Warrant, a completed Purchase Form, and
payment of the Exercise Price, as aforesaid; provided, however, that if, at the
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date of surrender of the particular Warrant, a completed Purchase Form, and
payment of such Exercise Price, the transfer books for the Warrant Shares or
other class of stock purchasable upon the exercise of the particular Warrant
shall be closed, the certificates for the Warrant Shares in respect of which the
particular Warrant is then exercised shall be issuable as of the date on which
such books shall next be opened (whether before or after the Expiration Date)
and until such date the Company shall be under no duty to deliver any
certificate for such Warrant Shares; provided, further, that the transfer books
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of record, unless otherwise required by law, shall not be closed at any one time
for a period longer than 20 calendar days.
2.3 PAYMENT OF THE EXERCISE PRICE. Payment of the Exercise Price
shall be made at the option of the Holder by one or more of the following
methods: (i) by delivery of
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cash, or a certified or official bank check in the amount of such Exercise
Price, (ii) by instructing the Company to withhold a number of Warrant Shares
then issuable upon exercise of the particular Warrant with an aggregate Fair
Value (as defined in Section 7 hereof) equal to such Exercise Price (the "Share
Withholding Option"), (iii) by surrender to the Company of Notes in principal
amount plus accrued interest equal to the applicable Exercise Price, or (iv) by
surrendering to the Company shares of Common Stock previously acquired by the
Holder with an aggregate Fair Value equal to such Exercise Price, or any
combination of foregoing. In the event of any withholding of Warrant Stock or
surrender of Common Stock pursuant to clause (ii) or (iv) above where the number
of shares whose Fair Value is equal to the Exercise Price is not a whole number,
the number of shares withheld by or surrendered to the Company shall be rounded
down to the nearest whole share.
2.4 COMPLIANCE WITH GOVERNMENT REGULATIONS. Holder acknowledges that
none of the Warrants or Warrant Shares has been registered under the Act, and
may be sold or disposed of in the absence of such registration only pursuant to
an exemption from such registration and in accordance with this Agreement. The
Warrants and Warrant Shares will bear a legend to the following effect:
"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). NO SALE OR OTHER
DISPOSITION OR PLEDGE OF THESE SECURITIES OR THE SECURITIES UNDERLYING
THESE SECURITIES CAN BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY OR A NO ACTION LETTER OR INTERPRETIVE OPINION OF THE STAFF OF THE
SECURITIES AND EXCHANGE COMMISSION THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACT."
2.5 EXERCISE PRICE. The price per share at which Warrant Shares
shall be purchasable upon exercise of the Warrant (the "Exercise Price") shall
be $7.50 per share, subject to adjustment pursuant to Section 6 hereof.
2.6 EXERCISE PRICE RESET. In the event that on any anniversary of
the date of this Agreement during the term of the Warrants, the average of the
closing bid price for the ten (10) Trading Days prior to such anniversary is
less than the Exercise Price of the Warrants then in effect, then the Exercise
Price of the Warrants shall be reset to 87.5% of the average of the closing bid
prices for such ten (10) Trading Day period. In the event that the Common Stock
of the Company is no longer publicly traded on any such anniversary date, then
in lieu of the ten (10) Trading Day average of the closing bid prices, the Fair
Value of the Common Stock shall be used.
SECTION 3. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of the Warrants and Warrant
Shares upon the
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exercise of any of the Warrants; provided, however, that the Company shall not
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be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue or delivery of the Warrants or certificates for
Warrant Shares in a name other than that of the Holder of the particular
Warrant.
SECTION 4. MUTILATED OR MISSING WARRANTS. In case the Warrant shall be
mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant certificate of like tenor and representing an equivalent right or
interest; but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of the particular Warrant certificate
and indemnity or bond, if requested, also reasonably satisfactory to them. An
applicant for such substitute Warrant certificate shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
SECTION 5. RESERVATION OF WARRANT SHARES.
5.1 RESERVATION OF WARRANT SHARES. There have been reserved, and
the Company shall at all times keep reserved, out of its authorized shares of
Common Stock, a number of shares of Common Stock sufficient to provide for the
exercise of the rights of purchase represented by the outstanding Warrants. The
transfer agent for the Common Stock ("Transfer Agent"), and every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of any of the rights of purchase aforesaid will be and are hereby
irrevocably authorized and directed at all times until the Expiration Date to
reserve such number of authorized shares as shall be requisite for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent
and with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrant. The Company covenants that all Warrant Shares which may be issued upon
exercise of the Warrant will, upon issue, be fully paid, nonassessable, free of
preemptive rights in any third party and free from all taxes, liens, charges and
security interests with respect to the issue thereof. The Company will supply
such Transfer Agent and any subsequent transfer agent with duly executed stock
certificates for such purpose and will itself provide or otherwise make
available any cash which may be payable as provided in Section 8 of this
Agreement. The Company will furnish to such Transfer Agent a copy of all notices
of adjustments, and certificates related thereto, transmitted to each Holder.
The particular Warrant surrendered in the exercise of the rights thereby
evidenced shall be canceled by the Company.
5.2 CANCELLATION OF THE WARRANTS. In the event the Company shall
purchase a Warrant, or otherwise acquire any of the Warrants, the particular
Warrant shall be canceled and retired.
SECTION 6. ADJUSTMENT OF THE EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
The number and kind of securities purchasable upon the exercise of the Warrant
and the
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Exercise Price shall be subject to adjustment from time to time upon the
happening of certain events, as hereinafter defined.
6.1 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
the Company shall:
(1) take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend payable in, or other distribution
of, additional shares of Common Stock,
(2) subdivide its shares of Common Stock outstanding into a larger
number of shares of such Common Stock, or
(3) combine its shares of Common Stock outstanding into a smaller
number of shares of such Common Stock,
then the number of Warrant Shares shall be adjusted so that the Warrant Holder
thereafter will be entitled to receive the number of shares of Common Stock that
such Warrant Holder would have owned immediately following such action had the
Warrant been exercised immediately prior thereto, and the Exercise Price of the
Warrant shall be adjusted to equal the product of the Exercise Price in effect
immediately prior to such event multiplied by a fraction the numerator of which
is equal to the number of Warrant Shares purchasable upon the exercise of the
Warrant immediately prior to such adjustment, and the denominator of which is
equal to the number of Warrant Shares purchasable immediately thereafter, and
thereafter the provisions of this Warrant Agreement shall apply with like effect
to such additional or reclassified shares.
6.2. RIGHTS OFFERINGS AND OFFERINGS OF COMMON STOCK.
(a) In the event that the Company issues rights, options or warrants
to all holders of its Common Stock in respect of its Common Stock entitling them
to subscribe for or purchase shares of Common Stock at a price per share less
than the Fair Value per share (determined as provided below) of the Common Stock
on the date fixed for the determination of stockholders entitled to receive such
rights, options or warrants, the Exercise Price in effect at the opening of
business on the day following the date fixed for such determination shall be
decreased by multiplying such Exercise Price by a fraction of which the
numerator shall be the number of shares of Common Stock Outstanding at the close
of business on the date fixed for such determination plus the number of shares
of Common Stock which the aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or purchase would purchase at
such Fair Value and the denominator shall be the number of shares of Common
Stock Outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such decrease to become effective immediately after
the opening of business on the day following the date fixed for such
determination. To the extent that shares of Common
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Stock are not delivered after the expiration of such rights, options or
warrants, the Exercise Price shall be readjusted (but only with regard to any
Warrant exercised after such expiration) to the Exercise Price that would be in
effect had the adjustment made upon the issuance of such rights, options or
warrants been made upon the basis of delivery of only the number of shares of
Common Stock actually issued. The Company will not issue any rights, options or
warrants in respect of shares of Common Stock held in the treasury of the
Company. The foregoing provisions of this Section 6.2 shall not apply to any
rights issued to holders of Common Stock that are not currently exercisable and
shall not apply until such time that such rights become exercisable.
(b) In case the Company shall issue shares of Common Stock, Stock
Purchase Rights or Convertible Securities, for a price per share of Common
Stock, in the case of the issuance of Common Stock, or for a price per share of
Common Stock initially deliverable upon conversion or exchange of such
securities less than Fair Value per share of Common Stock on the date the
Company fixed the offering, conversion or exchange price of such additional
shares, the Exercise Price in effect at the opening of business on the day
following the date fixed for such determination shall be decreased by
multiplying such Exercise Price by a fraction of which the numerator shall be
the number of shares of Common Stock Outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at such Fair
Value and the denominator shall be the number of shares of Common Stock
Outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock so offered for subscription or
purchase, such decrease to become effective immediately after the opening of
business on the day following the date fixed for such determination. Such
adjustment shall be made whenever such shares, Stock Purchase Rights or
Convertible Securities are issued, and shall become effective immediately after
the effective date of such event retroactive to the record date, if any, for
such event. To the extent that shares of Common Stock are not delivered after
the expiration of such Stock Purchase Rights or the Convertible Securities are
not converted, the Exercise Price shall be readjusted (but only with regard to
any Warrant exercised after such expiration) to the Exercise Price that would be
in effect had the adjustment made upon the issuance of such Stock Purchase
Rights or Convertible Securities been made upon the basis of delivery of only
the number of shares of Common Stock actually issued.
6.3 OTHER DISTRIBUTIONS. In case the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock cash, evidences of
indebtedness, shares of any class of capital stock or any other property or
rights (including securities, but excluding (i) any dividend or distribution
referred to in Section 6.1, and (ii) any merger or consolidation or other
transactions to which Section 6.4 applies), then, in such event, upon the
exercise of the Warrant, the Holder shall receive from the Company, in addition
to the shares of Common Stock to which the Holder is entitled, any cash,
evidences of indebtedness, shares of any class of capital stock or any other
property distributed by the Company with respect to the shares of Common Stock
as to which the exercised Warrant pertains, and until such
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exercise the Company shall retain the cash, evidences of indebtedness, shares of
any class of capital stock, or other property or rights so distributed in trust
for the benefit of the Holder. Upon the expiration of any such unexercised
Warrant, to the extent not exercised, the property held in trust shall be
released to the Company or its designee.
In the event of a distribution by the Company to holders of its shares
of Common Stock of stock of a subsidiary or securities convertible into or
exercisable for such stock, then in lieu of an adjustment in the number of
Shares purchasable upon the exercise of any of the Warrants, the Holder of any
of the Warrants, upon the exercise thereof at any time after such distribution,
shall be entitled to receive from the Company, such subsidiary or both, as the
Company shall determine, the stock or other securities to which such Holder
would have been entitled if such Holder had exercised the particular Warrant
immediately prior thereto, all subject to further adjustment as provided in this
Section 6.
6.4 REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS.
(a) In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another corporation (where the
Company is not the surviving corporation or where there is any change whatsoever
in, or distribution with respect to, the outstanding Common Stock of the
Company), or sell, transfer or otherwise dispose of all or substantially all of
its property, assets or business to another corporation and, pursuant to the
terms of such reorganization, reclassification, merger, consolidation or
disposition of assets, (i) shares of common stock of the successor or acquiring
corporation or of the Company (if it is the surviving corporation) or (ii) any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants, options, or other subscription or purchase rights) in
addition to or in lieu of common stock of the successor or acquiring corporation
are to be received by or distributed to the holders of Common Stock of the
Company who are holders immediately prior to such transaction, then the Holder
of the Warrants shall have the right thereafter to receive from the Company,
upon exercise of the applicable Warrant, the number of shares of common stock of
the successor or acquiring corporation or of the Company, if it is the surviving
corporation, and other property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a holder of the number of shares of Common Stock for which the Warrants are
exercisable immediately prior to such event and until such exercise the Company
shall retain the cash, evidences of indebtedness, shares of any class of capital
stock, or other property or rights so received in trust for the benefit of the
Holder. If the Warrant is exercised in such event, the aggregate Exercise Price
otherwise payable for the shares of Common Stock transferable upon exercise of
the Warrant shall be allocated among the shares of common stock and other
property receivable as a result of such reorganization, reclassification,
merger, consolidation or disposition of assets in proportion to the respective
fair market values of such shares of common stock and other property as
determined in good faith by the Holder and the Company, if necessary. Upon the
expiration of any such
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unexercised Warrant, to the extent not exercised, the property held in trust
shall be released to the Company or its designee.
(b) In case of any such reorganization, reclassification, merger,
consolidation or disposition of assets, the successor or acquiring corporation
(if other than the Company) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Agreement to be performed and observed by the Company and all the obligations
and liabilities hereunder. For purposes of this Section 6.4, "common stock of
the successor or acquiring corporation" shall include stock of such corporation
ration of any class that is not preferred as to dividends or assets over any
other class of stock of such corporation and that is not subject to redemption
and shall also include any evidences of indebtedness, shares of stock or other
securities that are convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event and any warrants or other rights to subscribe for or purchase
any such stock. The foregoing provisions of this Section 6.4 shall similarly
apply to successive reorganizations, reclassification, mergers, consolidations
or disposition of assets.
6.5 ADJUSTMENT OF NUMBER OF SHARES PURCHASABLE. Upon any adjustment
of the Exercise Price as provided in Section 6.2 hereof, the Holder shall
thereafter be entitled to purchase upon the exercise of the Warrant, at the
Exercise Price resulting from such adjustment, the number of shares of Common
Stock obtained by multiplying the Exercise Price in effect immediately prior to
such adjustment by the number of shares of Common Stock transferable on the
exercise hereof immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
6.6 DETERMINATION OF CONSIDERATION. For purposes of Section 6.2
hereof, the consideration received and/or receivable by the Company in
connection with the issuance, sale, grant or exercise of additional shares of
Common Stock, Stock Purchase Rights or Convertible Securities, irrespective of
the accounting treatment of such consideration, shall be valued as follows:
(1) SECURITIES OR OTHER PROPERTY. In the case of securities or other
property, the fair market value thereof as of the date immediately preceding
such issuance, sale, grant or exercise as determined in good faith by the Board
of Directors of the Company which determination shall be conclusive absent
manifest error.
(2) DIVIDENDS IN SECURITIES. In case the Company shall declare a
dividend or make any other distribution upon any stock of the Company payable in
either case in Common Stock or Convertible Securities, such Common Stock or
Convertible Securities, as the case may be, issuable in payment of such dividend
or distribution shall be deemed to have been issued or sold without
consideration.
(3) MERGER, CONSOLIDATION OR SALE OF ASSETS. In case any shares of
Common Stock, Stock Purchase Rights or Convertible Securities shall be issued in
connection
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with any merger or consolidation in which the Company is the surviving
corporation, the amount of consideration therefor shall be deemed to be the fair
value of such portion of the assets and business of the non-surviving
corporation attributable to such Common Stock, Stock Purchase Rights or
Convertible Securities, as is determined in good faith by the Board of Directors
of the Company which determination shall be conclusive absent manifest error.
6.7 OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION.
The following provisions shall be applicable to the adjustments provided for
pursuant to this Section 6:
(A) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by this
Section 6 shall be made whenever and as often as any specified event requiring
such an adjustment shall occur. For the purpose of any such adjustment, any
specified event shall be deemed to have occurred at the close of business in New
York on the date of its occurrence.
(B) FRACTIONAL INTERESTS. In computing adjustments under this Section
6, fractional interests in Common Stock shall be taken into account to the
nearest 1/100th of a share.
(C) WHEN ADJUSTMENT NOT REQUIRED.
(1) If the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or
distribution to which the provisions of Section 6 would apply, but
shall, thereafter and before the distribution to stockholders thereof,
legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment shall be required by
reason of the taking of such record and any such adjustment previously
made in respect thereof shall be rescinded and annulled.
(2) In case the Company shall sell or issue shares of Common Stock or
Stock Purchase Rights in the following situations:
(i) to, officers, directors, consultants or employees of
the Company pursuant to a plan approved by the Company's
shareholders or Board of Directors at a price not less than 85%
of the Fair Value of the Company's Common Stock in an amount
(taking into account all prior sales or issuances excluded
pursuant to this clause (i)) not greater than 5% of the total
number of shares of Common Stock Outstanding; or
(ii) pursuant to a provision in any existing agreement
between the Company and any third party in respect of an
acquisition by the Company in which all or a portion of the
consideration in
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connection with such acquisition is payable by the issuance of
shares of Common Stock or Stock Purchase Rights; or
(iii) to holders of the Company's Series A Preferred Stock,
$0.01 par value, issued on September 19, 1997, as dividends
thereon or upon conversion thereof; or
(iv) to any Person upon the exercise of any Stock Purchase
Right outstanding on the date hereof; or
(v) to Canpartners Investments IV, LLC and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Inc., a Delaware corporation, upon exercise of their warrant
dated September 30, 1997, for the purchase of 400,000 shares of
the Company's Common Stock,
there shall be no adjustment in the Exercise Price or the number of Warrant
Shares either upon the initial issuance of such securities or upon the
exercise or conversion thereof.
(d) MAXIMUM EXERCISE PRICE. Except with respect to mechanical
adjustments pursuant to Section 6.1 above, at no time shall the Exercise Price
per share of Common Stock exceed the amount set forth in Section 2.5 of this
Agreement, as adjusted pursuant to Section 2.6.
(e) CERTAIN LIMITATIONS. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction that, by reason
of any adjustment under Section 6 above, would cause the Exercise Price to be
less than the par value of the Common Stock, if any, unless the Company first
reduces the par value of the Common Stock to be less than the Exercise Price
that would result from such transaction.
(f) NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which the Warrants are exercisable or the Exercise Price shall be
adjusted pursuant to this Section 6, the Company forthwith shall prepare a
certificate to be executed by either the chief executive or chief financial
officer of the Company setting forth, in reasonable detail, the event requiring
the adjustment and the method by which such adjustment was calculated,
specifying the number of shares of Common Stock for which the Warrants are
exercisable and (if such adjustment was made pursuant to Section 6.3) describing
the number and kind of any other shares of stock or other property for which the
Warrants are exercisable, and any related change in the Exercise Price, after
giving effect to such adjustment or change. The Company shall promptly deliver
a signed copy of such certificate to the Holder in accordance with Section 12.
The Company shall keep at its principal office copies of all such certificates
and cause the same to be available for inspection at said office during normal
business hours by any Holder or any prospective transferee of any Warrants
designated by a Holder thereof.
-11-
(g) INDEPENDENT APPLICATION. Except as otherwise provided herein, all
subsections of this Section 6 are intended to operate independently of one
another (but without duplication). If an event occurs that requires the
application of more than one subsection, all applicable subsections shall be
given independent effect without duplication.
6.8 RIGHT OF FIRST REFUSAL. As used in this Section 6.8, the term
"Holder's Ratio" means the sum of the number of shares of Common Stock of the
Company, plus the number of shares of Common Stock of the Company underlying the
Warrants, plus the number of shares of Common Stock of the Company underlying
Stock Purchase Rights, held by a Holders or its assigns, divided by the number
of shares of Common Stock of the Company Outstanding from time to time. The
Company agrees that if at any time while a Holder holds shares of Common Stock
of the Company or Warrants, if the Company desires to sell or issue shares of
Common Stock or Stock Purchase Rights of the Company (excluding shares of Common
Stock issuable after the date hereof pursuant to Stock Purchase Rights of the
Company existing on the date hereof, or shares issuable in connection with the
matters listed in Section 6.7(c)(2)), then the Company shall first notify all
the Holders of the terms of such proposed sale and issuance and permit the
Holders to acquire on the same terms and conditions (which need only include
monetary terms and conditions and not need include any terms and conditions
which cannot be matched by the Holders) an amount equal to the number of shares
of Common Stock or Stock Purchase Rights proposed to be issued or sold times the
Holder's Ratio. The Holders shall have ten (10) Business Days after receipt of
such notice to elect by notice to the Company in writing whether to purchase
such shares of Common Stock or such Stock Purchase Rights, and may withdraw
their election by notice to the Company at any time up to two (2) Business Days
prior to the closing of the offer. After the ten (10) Business Day period has
expired, the Company shall have up to ninety (90) days (or such longer time as
may be reasonable necessary in the event the proposed issuance is pursuant to a
public offering of shares of Common Stock or Stock Purchase Rights) to complete
the sale of any such shares of Common Stock or Stock Purchase Rights, provided
that if the Company later desires to change the terms of such sale or issuance
in any material respect it shall first reoffer such shares of Common Stock or
Stock Purchase Rights to the Holders pursuant to the procedures set forth
herein.
The Right of First Refusal set forth in this Section may only be
transferred in connection with a transfer of the Warrants or Warrant Shares and
shall terminate with respect to any of the Holders' shares after such shares
have been sold pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission or pursuant to Rule 144
under the Act, and shall in no event continue beyond the term of the Warrants.
-12-
SECTION 7. DEFINITIONS.
As used in this Warrant Agreement, the following terms shall have the
following respective meanings:
ACT shall mean the Securities Act of 1933, as amended.
ACQUISITION LOAN means the loan between the Holder and the
Company made pursuant to that certain Inventory and Working Capital Agreement
Amendment #4 dated as of September 30, 1997.
BUSINESS DAY shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in New
York or California.
CLOSING means the closing of the Acquisition Loan.
COMMON STOCK means the Common Stock of the Company, $0.01 par
value per share, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
shares of any Common Stock upon any reclassification thereof which is also not
preferred as to dividends or liquidation over any other class of stock of the
Company and which is not subject to redemption and (ii) shares of common stock
of any successor or acquiring corporation (as defined in Section 6.4 hereof)
received by or distributed to the holders of Common Stock of the Company in the
circumstances contemplated by Section 6.4 hereof.
CONVERTIBLE SECURITIES shall mean evidences of indebtedness,
shares of stock or other securities that are convertible into or exchangeable
for, with or without payment of additional consideration in cash or property,
shares of Common Stock, either immediately or upon the occurrence of a specified
date or a specified event.
CURRENT MARKET PRICE shall mean as of any specified date the
average of the Daily Market Price of the Common Stock of the Company for the
twenty (20) consecutive Trading Days immediately preceding such date. The "Daily
Market Price" for each such Trading Day shall be the closing price of the Common
Stock on the principal stock exchange or market on which such stock is actually
traded.
FAIR VALUE means, per share of Common Stock as of any specified
date, (i) if the Common Stock is publicly traded on such date, the Current
Market Price per share or (ii) if the Common Stock is not publicly traded on
such date, the fair market value per share of Common Stock shall be agreed upon
in good faith between the Holders and the Company.
-13-
OUTSTANDING shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued and outstanding shares of Common Stock, except shares then owned or
held by or for the account of the Company or any Subsidiary there of.
PERSON shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, incorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).
PREEMPTIVE RIGHT means a right of a stockholder to preempt or
to purchase before others a new issue of shares in proportion to one's present
interest in the Company.
STOCK PURCHASE RIGHTS shall mean any options, warrants or other
securities or rights to subscribe to or exercisable for the purchase of shares
of Common Stock or Convertible Securities, whether or not immediately
exercisable.
TRADING DAY means any day that the principal stock exchange or
market on which the securities of the Company are traded is open for trading.
SECTION 8. FRACTIONAL INTERESTS. The Company shall not be required to
issue fractional Warrant Shares on the exercise of the Warrant. If any fraction
of a Warrant Shares would, except for the provisions of this Section 8, be
issuable on the exercise of the Warrant (or specified portion thereof), the
Company shall round up such share to an additional whole share of Common Stock.
SECTION 9. NO RIGHTS AS STOCKHOLDER; NOTICES TO HOLDER. Nothing contained
in either this Agreement or the Warrant shall be construed as conferring upon
the Holder or its permitted transferees the right to vote or to receive
dividends or to consent to or receive notice as a stockholder in respect of any
meeting of stockholders for the election of directors of the Company or any
other matter, or any rights whatsoever as a stockholder of the Company.
SECTION 10. INSPECTION OF WARRANT AGREEMENT. The Company shall keep copies
of this Agreement and any notices given or received hereunder available for
inspection by the Holder during normal business hours at its principal office.
SECTION 11. IDENTITY OF TRANSFER AND WARRANT AGENT. Forthwith upon the
appointment of any subsequent transfer agent for the Common Stock or Warrant
Agent, or any other shares of the Company's capital stock issuable upon the
exercise of the Warrant, the Company will notify the Holder of the name and
address of such subsequent transfer agent.
-14-
SECTION 12. NOTICES. Any notice pursuant to this Agreement by any Holder
to the Company, shall be in writing and shall be mailed first class, postage
prepaid, or delivered to the Company at its office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Each party hereto may from time to time change the address to which notices
to it are to be delivered or mailed hereunder by notice in writing to the other
party. Any notice mailed pursuant to this Agreement by the Company or the
Warrant Agent to the Holder shall be in writing and shall be mailed first class,
postage prepaid, or delivered to the Holder at its address on the books of the
Warrant Agent.
SECTION 13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to principles of conflict of laws. The parties hereto agree to submit to
the jurisdiction of the United States District Court for the Northern District
of California and the jurisdiction of any court of the State of California
located in Santa ▇▇▇▇▇ County in any action or proceeding arising out of or
relating to this Agreement.
SECTION 14. WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND THE HOLDER
HEREBY IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
(INCLUDING ANY COUNTERCLAIM) OF ANY TYPE IN WHICH THE COMPANY AND THE HOLDER ARE
PARTIES AS TO ALL MATTERS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT
OR ANY DOCUMENT, INSTRUMENT OR AGREEMENT EXECUTED IN CONNECTION HEREWITH.
SECTION 15. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 16. MERGER OR CONSOLIDATION OF THE COMPANY. So long as the Warrant
remains outstanding, the Company will not merge consolidate with or into, or
sell, transfer or lease all or substantially all of its property to, any other
corporation unless the successor or purchasing corporation, as the case may be
(if not the Company), shall expressly assume, by supplemental agreement, the due
and punctual performance and observance of each and every covenant and condition
of this Agreement to be performed and observed by the Company.
SECTION 17. AMENDMENTS AND WAIVERS. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the Company
and a majority of the Holders (by number of shares). Either the Company or any
Holder may, by an instrument in writing, waive compliance by the other party
with any term or provision of this Agreement on the part of such other party
hereto to be performed or complied with. The waiver by any such party of a
breach of any term or provision of this Agreement shall not be construed as a
waiver by any other party or of any subsequent breach.
-15-
SECTION 18. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation, other than the Company and the
Holder, any legal or equitable right, remedy or claim under this Agreement, but
this Agreement shall be for the sole and exclusive benefit of the Company and
the Holder.
SECTION 19. AGREEMENT IN CONFIDENCE. This Agreement and its terms and the
relationship between the Company and the Warrant Holder and its principals shall
be kept confidential by the Warrant Holder and its affiliates and by Company and
its affiliates and will not be disclosed by either of them except to the extent
that as a matter of law it must be disclosed by either party in any document
filed with any government agency or authority and available for public
inspection or as may be required to be disclosed in connection with the
Company's sale of its capital stock or assets or its merger, reorganization,
consolidation or similar event.
SECTION 20. CAPTIONS. The captions of the Sections of this Agreement have
been inserted for convenience only and shall have no substantive effect .
SECTION 21. COUNTERPARTS. This Agreement may be executed in any number of
counterparts each of which so executed shall be deemed to be an original; but
such counterparts together shall constitute but one and the same instrument.
* * *
-16-
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed as of the day, month and year first above written.
THE COMPANY, AND
AS THE WARRANT AGENT:
WESTERN MICRO TECHNOLOGY, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Financial Officer
THE WARRANT HOLDER:
IBM CREDIT CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Title: Remarketer Loan Manager
---------------------------------
SIGNATURE PAGE 1 OF 1
EXHIBIT A
No. ___ ________ Shares
COMMON STOCK PURCHASE WARRANT
Void After 5:00 P.M.
Pacific Daylight Time on September 30, 2004
THIS CERTIFIES THAT, for value received, IBM Credit Corporation, the
registered holder of this Common Stock Purchase Warrant (the "Warrant") or
permitted assigns (the "Holder"), is entitled to purchase from Western Micro
Technology, Inc., a Delaware corporation (the "Company"), at any time until
September 30, 2004 (the "Expiration Date"), at the purchase price per share of
$7.50 (the "Exercise Price"), the number of shares of Common Stock of the
Company (the "Common Stock") which is equal to the number of Shares set forth
above. The number of shares purchasable upon exercise of this Warrant and the
Exercise Price per share shall be subject to adjustment from time to time as set
forth in the Warrant Agreement referred to below.
This Warrant is issued under and in accordance with a Warrant Agreement
dated as of September 30, 1997, between the Company and the Warrant Holder and
is subject to the terms and provisions contained in the Warrant Agreement, to
all of which the Holder of this Warrant by acceptance hereof consents. A copy
of the Warrant Agreement may be obtained for inspection by the Holder hereof
upon written request to the Company.
This Warrant may be exercised in whole or in part by presentation of this
Warrant with the Purchase Form annexed hereto duly executed and simultaneous
payment of the Exercise Price (subject to adjustment) at the principal office of
the Company at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Payment of
such price shall be made at the option of the Holder hereof in cash or by
certified or official bank check or otherwise as set forth in the Warrant
Agreement, including in the form of a "net exercise." Terms relating to exercise
of this Warrant is set forth more fully in the Warrant Agreement.
This Warrant may be exercised in whole or in part. Upon partial exercise,
a Warrant certificate for the unexercised portion shall be delivered to the
Holder. No fractional shares will be issued upon the exercise of this Warrant
but the Company shall round up to a whole share any fractional share issuable
upon the exercise of this Warrant. This Warrant is transferable only in limited
circumstances as described in the Warrant Agreement at the office of the Company
in Campbell, California, in the manner and subject to the limitations set forth
in the Warrant Agreement.
EXHIBIT A-1
"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). NO SALE OR OTHER
DISPOSITION OR PLEDGE OF THESE SECURITIES OR THE SECURITIES UNDERLYING
THESE SECURITIES CAN BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY OR A NO ACTION LETTER OR INTERPRETIVE OPINION OF THE STAFF OF THE
SECURITIES AND EXCHANGE COMMISSION THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACT."
The Holder hereof may be treated by the Company and all other persons
dealing with this Warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented hereby, or to the
transfer hereof on the books of the Company. Any notice to the contrary
notwithstanding, and until such transfer on which books, the Company may treat
the Holder hereof as the owner for all purposes.
This Warrant does not entitle any Holder hereof to any of the rights of a
stockholder of the Company.
This Warrant shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Company.
WESTERN MICRO TECHNOLOGY, INC.,
a Delaware corporation
By ___________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Financial Officer
Attest __________
▇▇▇▇▇ ▇. ▇▇▇▇▇
Assistant Secretary
DATED: As of September 30, 1997
EXHIBIT A-2
PURCHASE FORM
Mailing Address
__________________________________ ______________________________________
__________________________________ ______________________________________
__________________________________ ______________________________________
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant for, and to purchase thereunder,
_______________ shares of the stock provided for therein, and tenders herewith
payment of the purchase price in full in the form of cash or by cashier's check
in the amount of $______________.
The undersigned requests that certificates for such shares be issued in the
name of:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please Print Name, Address and Social Security No.)
DATED: __________________
Name of Warrant holder or Permitted Assignee:
_____________________________________________________________________________
Address:
____________________________________________________________________________
____________________________________________________________________________
Signature:__________________________________________________________________
Signature Guaranteed:Note: The above signature must correspon with the name as
written upon the face of this Warrant in every
particular, without alteration or enlargement or any
change whatever, unless this Warrant has been
assigned.
PURCHASE FORM-1