THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS. THE
WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THOSE LAWS OR UNLESS THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH DISPOSITION IS
IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
Right to Purchase __________ Shares
of Common Stock of VSource, Inc.
VSOURCE, INC.
Common Stock Purchase Warrant
VSOURCE, INC., a Nevada corporation (the "Company"), hereby certifies that,
for value received, _________________________________ (the "Holder"), located at
___________________________________________________________ is entitled, subject
to the terms set forth below, to purchase from the Company at any time or from
time to time on or before 5:00 p.m., Pacific Standard time, on September 17,
2005 (the "Expiration Date"), __________________ (________) fully paid and
nonassessable shares of common stock of the Company (the "Common Stock") at a
purchase price per share equal to the Purchase Price, as defined herein. The
number of such shares of Common Stock and the Purchase Price are subject to
adjustment as provided in this Warrant. The initial purchase price for shares
subject to this Warrant will be Six and 41/100 Dollars ($6.41) per share (the
"Initial Purchase Price"), and will be adjusted from time to time as provided
herein. The Initial Purchase Price or, if such price has been adjusted, the
price per share of Common Stock as last adjusted pursuant to the terms hereof is
referred to as the "Purchase Price" herein.
1. EXERCISE OF WARRANT. This Warrant may be exercised by the Holder
---------------------
hereof in full or in part at any time or from time to time until the Expiration
Date by surrender of this Warrant and the subscription form annexed hereto (duly
executed by the Holder), to the Company, and by making payment, in cash or by
certified or official bank check payable to the order of the Company, in the
amount obtained by multiplying (a) the number of shares of Common Stock
designated by the Holder in the subscription form by (b) the Purchase Price then
in effect.
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On any partial exercise the Company will forthwith issue and deliver to or upon
the order of the Holder hereof a new Warrant of like tenor, in the name of the
Holder hereof, providing in the aggregate on the face or faces thereof for the
purchase of the number of shares of Common Stock for which such Warrant may
still be exercised.
2. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon as
-------------------------------------------------------
practicable after the exercise of this Warrant, the Company will cause to be
issued in the name of and delivered to the Holder hereof a certificate for the
number of fully paid and nonassessable shares of Common Stock (or Other
Securities) to which the Holder shall be entitled on such exercise, plus, in
lieu of any fractional share to which the Holder would otherwise be entitled,
cash equal to such fraction multiplied by the then current fair market value (as
reasonably determined by the Company) of one full share, together with any other
stock or other securities or property (including cash, where applicable) to
which the Holder is entitled upon such exercise. "Other Securities" shall mean
any stock (other than Common Stock) and other securities of the Company or any
other person (corporate or otherwise) which the Holder at any time shall be
entitled to receive, or shall have received, on the exercise of this Warrant, in
lieu of or in addition to Common Stock, or which at any time shall be issuable
or shall have been issued in exchange for or in replacement of Common Stock or
Other Securities pursuant to Sections 3 or 4.
3. ADJUSTMENT.
----------
(a) Initial Purchase Price; Subsequent Adjustment of Price
--------------------------------------------------------
and Number of Purchasable Shares. The Initial Purchase Price will be
-----------------------------------
adjusted from time to time as provided below. The Initial Purchase Price
or, if such price has been adjusted, the price per share of Common Stock as
last adjusted pursuant to the terms hereof is referred to as the "Purchase
Price" herein. Upon each adjustment of the Purchase Price, the Holder will
thereafter be entitled to purchase, at the Purchase Price resulting from
such adjustment, the number of shares of Common Stock obtained by
multiplying the Purchase Price in effect immediately before such adjustment
by the number of shares of Common Stock purchasable pursuant to this
Warrant immediately before such adjustment and dividing the product by the
Purchase Price resulting from such adjustment.
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(b) Adjustment for Stock Splits and Combinations. If the
-----------------------------------------------
Company at any time or from time to time after the date of this Warrant
effects a subdivision of the outstanding Common Stock, by stock split or
otherwise, the Purchase Price then in effect immediately before that
subdivision shall be proportionately decreased; and, conversely, if the
Company at any time or from time to time after the date of this Warrant
combines the outstanding shares of Common Stock, by reverse stock split or
otherwise, the Purchase Price then in effect immediately before that
combination shall be proportionately increased. Any adjustment under this
Section 3(b) shall become effective at the close of business on the date
the subdivision or combination becomes effective.
(c) Adjustment for Certain Dividends and Distributions. In
---------------------------------------------------
the event the Company at any time or from time to time after the date of
this Warrant either makes, or fixes a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other
distribution payable in additional shares of Common Stock, then and in each
such event the Purchase Price then in effect shall be decreased as of the
time of such issuance or, in the event such a record date is fixed, as of
the close of business on such record date, by multiplying the Purchase
Price then in effect by a fraction (1) the numerator of which is the total
number of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance on the close of business on such record date,
and (2) the denominator of which shall be (i) the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus (ii) the number
of shares of Common Stock issuable in payment of such dividend or
distribution; provided, however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully made on the
date fixed therefor, the Purchase Price shall be recomputed accordingly as
of the close of business on such record date or date fixed therefor and
thereafter the Purchase Price shall be adjusted pursuant to this Section
3(c) as of the time of actual payment of such dividend or distribution. For
purposes of the foregoing formula, "the total number of shares of Common
Stock issued and outstanding" on a particular date shall include shares of
Common Stock issuable upon conversion of stock or securities convertible
into Common Stock and the exercise of warrants, options or rights for the
purchase of Common Stock which are outstanding on such date.
(d) Adjustments for Other Dividends and Distributions. In
--------------------------------------------------
the event the Company at any time or from time to time after the date of
this Warrant makes, or fixes a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Company other than shares of Common Stock,
then and in each such event, provision shall be made so that the Holder
shall receive upon exercise hereof, in addition to the number of shares of
Common Stock receivable thereupon, the amount of securities of the Company
which it would have received had this
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<PAGE>
Warrant been converted into Common Stock as of the date of such event and
had it thereafter, during the period from the date of such event to and
including the date of exercise, retained such securities receivable by it
as aforesaid during such period, subject to all other adjustments called
for during such period under this Section 3 with respect to the rights of
the Holder.
(e) Adjustment for Recapitalization, Reclassification, or
--------------------------------------------------------
Exchange. If the Common Stock issuable upon the exercise of this Warrant is
--------
changed into the same or a different number of shares of any class or
classes of stock of the Company, whether by recapitalization,
reclassification or other exchange (other than a subdivision or combination
of shares, or a stock dividend or a reorganization, merger, consolidation
or sale of assets, provided for elsewhere in this Section 3), then and in
any such event the Holder shall have the right thereafter to exercise this
Warrant to purchase the kind and amount of stock and other securities and
property receivable upon such recapitalization, reclassification or other
exchange by holders of the number of shares of Common Stock which might
have been purchased under this Warrant immediately prior to such
recapitalization, reclassification or other exchange, all subject to
further adjustment as provided herein.
(f) Reorganizations, Mergers, Consolidations or Sales of
-------------------------------------------------------
Assets. If at any time or from time to time there is a capital
------
reorganization of the Common Stock (other than a subdivision or combination
of shares or a stock dividend or a recapitalization, reclassification or
other exchange of shares, provided for elsewhere in this Section 3) 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 assets to any other
person, then, as a part of such capital reorganization, merger,
consolidation or sale, provision shall be made so that the Holder shall
thereafter be entitled to receive upon exercise of this Warrant the number
of shares of stock or other securities or property of the Company, or of
the successor corporation resulting from such capital reorganization,
merger, consolidation or sale, to which a holder of the number of shares of
Common Stock deliverable upon such conversion would have been entitled on
such capital reorganization, merger, consolidation or sale. In any such
case, appropriate adjustment shall be made in the application of the
provisions of this Section 3 with respect to the rights of the Holder after
the capital reorganization, merger, consolidation or sale to the end that
the provisions of this Section 3 (including the number of shares
deliverable upon exercise of this Warrant) shall continue to be applicable
after that event and shall be as nearly equivalent to the provisions hereof
as may be practicable.
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<PAGE>
(g) Sale of Shares Below Conversion Price.
---------------------------------------
(1) If at any time or from time to time after the date
hereof the Company issues or sells, or is deemed by the express
provisions of this Section 3(g) to have issued or sold, Additional
Shares of Common Stock (as hereinafter defined), other than as a
dividend or other distribution on any class of stock as provided in
Section 2 and other than upon a subdivision or combination of shares
of Common Stock as provided in Section 2, for an Effective Price (as
hereinafter defined) less than the then existing Conversion Price,
then and in each such case the then existing Conversion Price shall be
reduced, as of the opening of business on the date of such issue or
sale, to a price determined by multiplying that Conversion Price by a
fraction the numerator of which shall be (A) the number of shares of
Common Stock outstanding at the close of business on the day next
preceding the date of such issue or sale, plus (B) the number of
shares of Common Stock which the aggregate consideration received (or
by the express provisions hereof is deemed to have been received) by
the Company for the total number of Additional Shares of Common Stock
so issued would purchase at such Conversion Price, plus (C) the number
of shares of Common Stock underlying Other Securities (as hereinafter
defined) and the denominator of which shall be (X) the number of
shares of Common Stock outstanding at the close of business on the
date of such issue after giving effect to such issue of Additional
Shares of Common Stock, plus (Y) the number of shares of Common Stock
underlying the Other Securities at the close of business on the date
of such issue or sale.
(2) For the purpose of making any adjustment required
under this Section 3(g), the consideration received by the Company for
any issue or sale of securities shall (A) to the extent it consists of
cash be computed at the amount of cash received by the Company, (B) to
the extent it consists of property other than cash, be computed at the
fair value of that property as determined in accordance with the
procedure set forth in Section 2 above, and (C) if Additional Shares
of Common Stock, Convertible Securities (as hereinafter defined) or
rights or options to purchase either Additional Shares of Common Stock
or Convertible Securities are issued or sold together with other stock
or securities or other assets of the Company for a consideration which
covers both, be computed as the portion of the consideration so
received that may be reasonably determined in good faith by the Board
to be allocable to such Additional Shares of Common Stock, Convertible
Securities or rights or options under the procedure set forth in
Section 2 above.
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<PAGE>
(3) For the purpose of the adjustment required under
this Section 3(g), if the Company issues or sells any rights or
options for the purchase of, or stock or other securities convertible
into, Additional Shares of Common Stock (such convertible stock or
securities being hereinafter referred to as "Convertible Securities")
and if the Effective Price of such Additional Shares of Common Stock
is less than the Conversion Price then in effect, then in each case
the Company shall be deemed to have issued at the time of the issuance
of such rights or options or Convertible Securities the maximum number
of Additional Shares of Common Stock 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 rights or options or Convertible Securities, plus, in the case of
such rights or options, the minimum amounts of consideration, if any,
payable to the Company upon the exercise of such rights or options,
plus, in the case of Convertible Securities, the minimum amounts of
consideration, if any, payable to the Company (other than by
cancellation of liabilities or obligations evidenced by such
Convertible Securities) upon the conversion thereof. No further
adjustment of the Conversion Price, adjusted upon the issuance of such
rights, options or Convertible Securities, shall be made as a result
of the actual issuance of Additional Shares of Common Stock on the
exercise of any such rights or options or the conversion of any such
Convertible Securities. If any such rights or options or the
conversion privilege represented by any such Convertible Securities
shall expire without having been exercised, the Conversion Price
adjusted upon the issuance of such rights, options or Convertible
Securities shall be readjusted to the Conversion Price which would
have been in effect had an adjustment been made on the basis that the
only Additional Shares of Common Stock so issued were the Additional
Shares of Common Stock, if any, actually issued or sold on the
exercise of such rights or options or rights of conversion of such
Convertible Securities, and such Additional Shares of Common Stock, if
any, were issued or sold for the consideration actually received by
the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such rights
or options, whether or not exercised, plus the consideration received
for issuing or selling the Convertible Securities actually converted,
plus the consideration, if any, actually received by the Company
(other than by cancellation of liabilities or obligations evidenced by
such Convertible Securities) on the conversion of such Convertible
Securities.
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<PAGE>
(4) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Company after the date hereof,
whether or not subsequently reacquired or retired by the Company,
other than: (A) shares of Common Stock issued upon conversion of the
Series 2-A Preferred Stock or any other options or warrants or
convertible securities outstanding or issuable on the date hereof; (B)
shares of Common Stock issuable or issued to the directors, officers
and employees of or consultants to the Company; (C) shares of Common
Stock issuable or issued as part of an acquisition by the Company of
all of or certain assets (including technology rights) or shares of
another company or entity whether through a purchase, merger,
exchange, reorganization or the like; (D) shares of Common Stock
issuable or issued pursuant to equipment financing or leasing
arrangements; or (E) shares issued in a public offering of the
Company's securities. The "Effective Price" of Additional Shares of
Common Stock shall mean the quotient determined by dividing the total
number of Additional Shares of Common Stock issued or sold, or deemed
to have been issued or sold by the Company under this Section 3(g),
into the aggregate consideration received, or deemed to have been
received by the Company for such issue under this Section 3(g), for
such Additional Shares of Common Stock. "Other Securities" with
respect to an issue or sale of Additional Shares of Common Stock shall
mean (i) preferred stock, debentures and notes convertible into Common
Stock, and (ii) options or warrants to purchase Common Stock at a
price that is no greater than 95% of the Effective Price of such issue
or sale of Additional Shares of Common Stock. The "number of shares of
Common Stock underlying Other Securities" on a particular date shall
mean the number of shares of Common Stock issuable upon the exercise
or conversion, as the case may be, of such Other Securities at the
close of business on such date but only to the extent that the holders
thereof have the fully vested legal right to exercise or convert such
Other Securities on such date and to retain the Common Stock issued
upon such exercise or conversion.
(h) Certificate of Adjustment. Upon the occurrence of each
-------------------------
adjustment or readjustment of the Purchase Price and/or the number of
shares of Common Stock subject to this Warrant, the Company at its expense
shall promptly compute such adjustment or readjustment in accordance with
the terms hereof, and shall prepare and furnish to the Holder a certificate
setting forth such adjustment or readjustment and showing in detail the
facts upon which such adjustment or readjustment is based.
-7-
<PAGE>
4. EXERCISE UPON REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case
----------------------------------------------------------
at any time or from time to time, the Company intends to (a) effect a
reorganization, (b) consolidate with or merge into any other person, (c) sell or
transfer all or substantially all of its properties or assets to any other
person, (d) dissolve, (e) consummate an initial public offering of its
securities; or if the Company is sold through the sale of its capital stock,
then, notwithstanding any other provision of this Warrant, in each such case, as
a condition of such reorganization, consolidation, merger, sale dissolution,
conveyance, or offering the Company shall give at least fifteen (15) business
days notice to the Holder of such pending transaction whereby the Holder shall
have the right to exercise this Warrant prior to any such reorganization,
consolidation, merger, sale, dissolution, conveyance or offering. Any exercise
of this Warrant pursuant to notice under this Section shall be conditioned upon
the closing of such reorganization, consolidation, merger, sale, dissolution,
conveyance or offering which is the subject of the notice and the exercise of
this Warrant shall not be deemed to have occurred until immediately prior to the
closing of such transaction.
5. FURTHER ASSURANCES. The Company will take all action that may be
-------------------
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of stock, free from all taxes, liens and
charges with respect to the issue thereof, on the exercise of all or any portion
of this Warrant from time to time outstanding.
6. NOTICES OF RECORD DATE, ETC. In the event of:
------------------------------------
(a) 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 on, or any right to subscribe 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
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or
any transfer of all or substantially all of the assets of the Company to or
the sale, consolidation or merger of the Company with, to or into any other
person, or
-8-
<PAGE>
(c) 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, at least fifteen (15) business
days prior to such record date, 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, (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer,
consolidation, merger, 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 Common Stock (or Other Securities) shall be entitled to exchange
their shares of Common Stock (or Other Securities) for securities or other
property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation
or winding-up, and (iii) the amount and character of any stock or other
securities, or rights or options with respect thereto, proposed to be
issued or granted, the date of such proposed issue or grant and the persons
or class of persons to whom such proposed issue or grant is to be offered
or made. Such notice shall also state that the action in question or the
record date is subject to the effectiveness of a registration statement
under the Securities Act or a favorable vote of stockholders if either is
required. Such notice shall be mailed at least fifteen (15) business days
prior to the date specified in such notice on which any such action is to
be taken or the record date, whichever is earlier. The Holder shall use its
best efforts to decide whether to exercise this Warrant within ten (10)
days of its receipt of such notice.
7. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS. The
--------------------------------------------------------------
Company will at all times reserve and keep available out of its authorized
but unissued shares of capital stock, solely for issuance and delivery on
the exercise of this Warrant, a sufficient number of shares of Common Stock
(or Other Securities) to effect the full exercise of this Warrant and the
exercise, conversion or exchange of any other warrant or security of the
Company exercisable for, convertible into, exchangeable for or otherwise
entitling the Holder to acquire shares of Common Stock (or Other
Securities), and if at any time the number of authorized but unissued
shares of Common Stock (or Other Securities) shall not be sufficient to
effect such exercise, conversion or exchange, the Company shall take such
action as may be necessary to increase its authorized but unissued shares
of Common Stock (or Other Securities) to such number as shall be sufficient
for such purposes.
8. TRANSFER OF WARRANT. This Warrant cannot be transferred without the
--------------------
prior written consent of the Company, which consent shall not be
unreasonably withheld; provided, however, the Holder may transfer this
Warrant to any of its affiliates without such consent so long as such
transfer complies with all applicable securities laws.
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<PAGE>
9. NO RIGHTS AS A STOCKHOLDER. This Warrant shall not entitle the
----------------------------
Holder hereof to any voting rights or other rights as a stockholder of the
Company.
10. NOTICES, ETC. All notices which are required to be given pursuant
------------------
to this Warrant shall be in writing and shall be delivered by certified
mail, return receipt requested, first class postage prepaid, or sent by
overnight express or similarly recognized overnight delivery with receipt
acknowledged or by facsimile, with a copy thereof sent by one of the other
means. Notices shall be deemed to have been given at the time delivered and
shall be addressed as follows or to such other address as a party may
designate by proper notice hereunder.
If to Holder: To the address set forth on the first page
hereof.
If to the Company: VSource, Inc.
5740 Ralston Street, Suite 110
Ventura, California 93003
Attn.: CEO
11. SECURITIES LAWS. By acceptance of this Warrant, the Holder
----------------
represents to the Company that the Holder is an "accredited investor"
within the meaning of Regulation D adopted under the Securities Act, that
this Warrant is being acquired for the Holder's own account and for the
purpose of investment and not with a view to, or for sale in connection
with, the distribution thereof, nor with any present intention of
distributing or selling the Warrant or the Common Stock issuable upon
exercise of the Warrant, and that it is an investor in securities of
companies in the development stage and acknowledges that it can bear the
economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits
and risks of the investment in the shares subject to this Warrant. The
Holder acknowledges and agrees that this Warrant and the Common Stock
issuable upon exercise of this Warrant (if any) have not been (and at the
time of acquisition by the Holder, will not have been or will not be)
registered under the Securities Act or under the securities laws of any
state, in reliance upon certain exemptive provisions of such statutes. The
Holder further recognizes and acknowledges that because this Warrant and
the Common Stock issuable upon exercise of this Warrant are unregistered,
they may not be eligible for resale, and may only be resold in the future
pursuant to an effective registration statement under the Securities Act
and any applicable state securities laws, or pursuant to a valid exemption
from such registration requirements and that the Holder must, therefore,
bear the economic risk of such investment indefinitely.
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<PAGE>
12. LEGEND. Unless theretofore registered for resale under the
------
Securities Act, each certificate for shares issued upon exercise of this
Warrant shall bear the following or a similar legend:
The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any applicable state
securities laws. The securities have been acquired for investment and may
not be resold, transferred or assigned in the absence of an effective
registration statement for the securities under the Securities Act of 1933,
as amended, or an opinion of counsel acceptable to the Company that such
disposition is in compliance with the Securities Act and any applicable
state securities laws.
13. MISCELLANEOUS. This Warrant and any terms hereof may be changed,
--------------
waived, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the internal laws of the State of
California, without regard to conflict of laws principles. The headings in
this Warrant are for purposes of reference only, and shall not limit or
otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the
validity or enforceability of any other provision.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
on its behalf by one of its officers thereunto duly authorized as of
September 18, 2000.
VSOURCE, INC.
By: ______________________________________
Robert C. McShirley, President and CEO
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<PAGE>
FORM OF SUBSCRIPTION
VSOURCE, INC.
(To be signed only on exercise of Warrant)
TO: VSOURCE, INC.
1. The undersigned Holder of the attached original, executed Warrant
hereby elects to exercise its purchase right under such Warrant with respect to
shares of Common Stock, as defined in the Warrant, of VSource, Inc., a Nevada
corporation (the "Company").
2. The undersigned Holder is hereby paying the aggregate purchase
price for such shares of Common Stock (the "Exercise Shares") (i) by the
enclosed certified or official bank check payable in United States dollars to
the order of the Company in the amount of $___________, or (ii) by wire transfer
of United States funds to the account of the Company in the amount of
$______________, which transfer has been made before or simultaneously with the
delivery of this Form of Subscription pursuant to the instructions of the
Company.
3. Please issue a stock certificate or certificates representing the
appropriate number of shares of Common Stock in the name of the undersigned
Holder.
Dated:_______________________
__________________________________
Signature of Holder
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