SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
FIRST AMMENDMENT TO
CURRENT REPORT
DATED NOVEMBER 22, 2000
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 14, 2000
Salient Cybertech, Inc.
(Exact name of Registrant as specified in charter)
Delaware 0-28772 35-1990559
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1999 Lincoln Drive, Suite 202, Sarasota, Florida 34236
(Address of principal executive offices) (Zip Code)
(941) 953-6168
(Registrant's telephone number,
including area code)
<PAGE> 1
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
B. Exhibits
99.1 Convertible Debenture Purchase Agreement 4
99.2 Vesting Warrant #1 25
99.3 Closing Warrant # 1 39
99.4 Registration Rights Agreement 57
99.5 Securities Purchase Agreement 74
99.6 Vesting Warrant # 2 104
99.7 Closing Warrant # 2 119
<PAGE> 2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 27, 2000
Salient Cybertech, Inc.
By: /s/Paul Sloan
--------------------------------
Paul Sloan, President
and Director
<PAGE> 3
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
Among
SALIENT CYBERTECH, INC.
and
THE INVESTORS SIGNATORY HERETO
Dated as of November 14, 2000
<PAGE> 4
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT (this "Agreement"), dated
as of November 14, 2000, among Salient Cybertech, Inc., a Delaware
corporation (the "Company"), and the investors signatory hereto (each such
investor is a "Purchaser" and all such investors are, collectively, the
"Purchasers").
WHEREAS, subject to the terms and conditions set forth in this Agreement in
accordance with Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), the Company desires to issue and sell to the Purchasers
and the Purchasers, severally and not jointly, desire to purchase from the
Company (i) up to $2,000,000 of the Company's 8% Convertible Debentures,
due November 14, 2003, which shall be in the form of Exhibit A (the
"Debentures"), and which are convertible into shares of the Company's common
stock, $.001 par value per share (the "Common Stock"), and (ii) Warrants
(as defined below) as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers
agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 The Closing
(a) The Closing. Subject to the terms and conditions set forth in
this Agreement, the Company shall issue and sell to the Purchasers and the
Purchasers shall, severally, and not jointly, purchase from the Company the
Debentures for an aggregate purchase price of $2,000,000. The closing of
the purchase and sale of the Debentures and the Warrants (the "Closing")
shall take place at the offices of Robinson Silverman Pearce Aronsohn &
Berman LLP ("Robinson Silverman"), 1290 Avenue of the Americas, New York,
New York 10104, immediately following the execution hereof or such later
date as the parties shall agree. The date of the Closing is hereinafter
referred to as the "Closing Date."
(ii) On the Closing Date, the parties shall deliver or shall cause to be
delivered the following: (A) the Company shall deliver to each Purchaser:
(1) Debentures registered in the name of such Purchaser in the aggregate
principal equal to 50% of the total purchase price indicated below such
Purchaser's name on the signature page to this Agreement, (2) a Common Stock
purchase warrant, in the form of Exhibit C-1, registered in the name of such
Purchaser, pursuant to which such Purchaser shall have the right to acquire
shares of Common Stock, upon the terms and conditions set forth therein
(collectively, the "Closing Warrants"), (3) a Common Stock purchase warrant,
in the form of Exhibit C-2, registered in the name of such Purchaser,
pursuant to which, such Purchaser shall have the right to acquire shares of
Common Stock pursuant to the terms thereof (collectively, the "Vesting
Warrants", and together with the Closing Warrants, the "Warrants"), (4) the
legal opinion of the Law Offices of Bernabe B. Diaz, outside counsel to the
Company, in the form of Exhibit D, (5) an executed Registration Rights
Agreement, dated the date hereof, among the Company and the Purchasers, in
the form of Exhibit B (the "Registration Rights Agreement"), and (6) Transfer
Agent Instructions, in the form of Exhibit E, delivered to and acknowledged
<PAGE> 5
by the Company's transfer agent (the "Transfer Agent Instructions"), and (B)
each Purchaser will deliver to the Company: (1) 50% of the purchase price
indicated below such Purchaser's name on the signature page to this Agreement
in United States dollars in immediately available funds by wire transfer to
an account designated in writing by the Company for such purpose, and (2) an
executed Registration Rights Agreement.
(iii) Subject to the satisfaction or waiver by the Purchasers of the
conditions set forth in this Section 1.1(a)(iii), on the second Business Day
following the date on which an Underlying Shares Registration Statement (as
defined below) is first declared effective by the Securities and Exchange
Commission (the "Commission", and such date, the Effective Date"), (A) each
Purchaser shall deliver 50% of the purchase price indicated below such
Purchaser's name on the signature page to this Agreement in United States
dollars in immediately available funds by wire transfer to an account
designated in writing by the Company for such purpose, and (B) the Company
shall deliver debentures registered in the name of such Purchaser in the
aggregate principal equal to 50% of the total purchase price indicated below
such Purchaser's name on the signature page to this Agreement to the
Purchasers. The obligation of the Purchasers to acquire the Debentures
contemplated by this Second 1.1(iii), shall be subject the accuracy of the
following: (1) there shall not have occurred and be continuing any event or
series of events which individually or in the aggregate have had or could
reasonably be expected to result in a Material Adverse Effect (as defined in
Section 2.1(a)), (2) the Company shall have complied in all material respects
with its obligations under the Transaction Documents (as defined in Section
2.1(a)), and (3) the representations and warranties of the Company set forth
herein shall be true and correct in all material respects as of the date
first given and on the date of the acquisition of the additional Debentures
under this Section1.1(iii).
1.2 Certain Defined Terms. For purposes of this Agreement, "Conversion
Price," "Original Issue Date", "Business Day", "Person" and "Trading Day"
shall have the meanings set forth in the Debentures.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Purchasers:
(a) Organization and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware, with the requisite corporate power and authority to own
and use its properties and assets and to carry on its business as currently
conducted. The Company has no subsidiaries other than as set forth in
Schedule 2.1(a) (collectively, the "Subsidiaries"). Each of the Subsidiaries
is an entity, duly incorporated or otherwise organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite power and authority to own
and use its properties and assets and to carry on its business as currently
conducted. Each of the Company and the Subsidiaries is duly qualified to do
business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to
be so qualified or in good standing, as the case may be, could not,
individually or in the aggregate, (x) adversely affect the legality,
<PAGE> 6
validity or enforceability of the Securities (as defined below) or any of
this Agreement, the Registration Rights Agreement, the Transfer Agent
Instructions, the Debentures or the Warrants (collectively, the "Transaction
Documents"), (y) have or result in a material adverse effect on the results
of operations, assets, prospects, or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (z) adversely impair
the Company's ability to perform fully on a timely basis its obligations
under any of the Transaction Documents (any of (x), (y) or (z), a "Material
Adverse Effect").
(b) Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry
out its obligations thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company. Each of the Transaction Documents has been duly executed by the
Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms. Neither the Company nor
any Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, by-laws or other organizational or
charter documents.
(c) Capitalization. The number of authorized, issued and outstanding
capital stock of the Company is set forth in Schedule 2.1(c). Except as
disclosed in Schedule 2.1(c), the Company owns all of the capital stock of
each Subsidiary. No shares of Common Stock are entitled to preemptive or
similar rights, nor is any holder of the securities of the Company or any
Subsidiary entitled to preemptive or similar rights arising out of any
agreement or understanding with the Company or any Subsidiary by virtue of
any of the Transaction Documents. Except as a result of the purchase and
sale of the Debentures and the Warrants and except as disclosed in Schedule
2.1(c), there are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or securities, rights or obligations convertible into or exchangeable for,
or giving any Person any right to subscribe for or acquire, any shares of
Common Stock, or contracts, commitments, understandings, or arrangements by
which the Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. The issue and sale of the
Debentures, Warrants or Underlying Shares (as hereinafter defined) will not
obligate the Company to issue shares of Common Stock or other securities to
any Person other than the Purchasers and will not result in a right of any
holder of Company securities to adjust the exercise or conversion or reset
price under such securities.
(d) Issuance of the Debentures and the Warrants. The Company will
have (and will, at all times while the Debentures and the Warrants are
outstanding, maintain) an adequate reserve of duly authorized shares of
Common Stock, reserved for issuance to the holders of such Debentures and
Warrants, to enable it to perform its conversion, exercise and other
obligations under this Agreement, the Debentures and the Warrants. Such
number of reserved and available shares of Common Stock shall not be less
than the sum of 200% of the number of shares of Common Stock which would be
issuable upon: (i) conversion in full of the Debentures assuming such
conversion occurred on the Original Issue Date of the Debentures remain
outstanding for three years and all interest is paid in shares of Common
<PAGE> 7
Stock and (ii) exercise in full of the Warrants (collectively, the "Initial
Minimum"). All such authorized shares of Common Stock shall be duly reserved
for issuance to the holders of the Debentures and the Warrants. The shares
of Common Stock issuable upon conversion of the Debentures and upon exercise
of the Warrants are collectively referred to herein as the "Underlying
Shares." The Debentures, the Warrants and the Underlying Shares are
collectively referred to herein as, the "Securities." When issued in
accordance with the Debentures and the Warrants, the Underlying Shares will
be duly authorized, validly issued, fully paid and nonassessable, free and
clear of all liens, encumbrances and rights of first refusal of any kind
(collectively, "Liens").
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby do not and will not (i) conflict with
or violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other charter documents (each as amended
through the date hereof), or (ii) subject to obtaining the Required
Approvals (as defined below), conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the Company
or any Subsidiary is a party or by which any property or asset of the Company
or any Subsidiary is bound or affected, or (iii)result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company
or a Subsidiary is subject (including federal and state securities
laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), as could not, individually or in the aggregate,
have or result in a Material Adverse Effect. The business of the
Company is not being conducted in violation of any law, ordinance or
regulation of any governmental authority, except for violations which,
individually or in the aggregate, could not have or result in a Material
Adverse Effect.
(f) Filings, Consents and Approvals. Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court
or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than (i) the filings required
pursuant to Section 3.10, (ii) the filing with the Securities and Exchange
Commission (the "Commission") of a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale of the Shares and the Underlying Shares by the Purchasers (the
"Underlying Shares Registration Statement"), (iii) applicable Blue Sky
filings, and (iv) in all other cases where the failure to obtain such
consent, waiver, authorization or order, or to give such notice or make such
filing or registration could not have or result in, individually or inthe
aggregate, a Material Adverse Effect (the items described in clauses
(i)-(iv) are collectively, the "Required Approvals").
(g) Litigation; Proceedings. There is no action, suit, inquiry, notice
of violation, proceeding or investigation pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an "Action") which
(i) adversely affects or challenges the legality, validity or enforceability
<PAGE> 8
of any of the Transaction Documents or the Securities or (ii) could, if
there were an unfavorable decision, individually or in the aggregate, have
or result in a Material Adverse Effect. Neither the Company nor any
Subsidiary, nor any director or officer thereof, is or has been the subject
of any Action involving a claim of violation of or liability under federal
or state securities laws or a claim of breach of fiduciary duty. The Company
does not have pending before the Commission any request for confidential
treatment of information and the Company has no knowledge of any expected
such request that would be made prior to the Effectiveness Date (as defined
in the Registration Rights Agreement). There has not been, and to the best
of the Company's knowledge there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or
former director or officer of the Company.
(h) No Default or Violation. Neither the Company nor any Subsidiary (i)
is in default under or in violation of (and no event has occurred which has
not been waived which, with notice or lapse of time or both, would result in
a default by the Company or any Subsidiary under), nor has the Company or
any Subsidiary received notice of a claim that it is in default under or
that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any
of its properties is bound, (ii) is in violation of any judgment or order
of any court, arbitrator or governmental body, or (iii) is in violation of
any statute, rule or regulation of any governmental authority, in each case
of clauses (i), (ii) or (iii) above, except as could not individually or in
the aggregate, have or result in a Material Adverse Effect.
(i) Private Offering. Assuming the accuracy of the representations and
warranties of the Purchasers set forth in Sections 2.2(b)-(g), the offer,
issuance and sale of the Securities to the Purchasers as contemplated hereby
are exempt from the registration requirements of the Securities Act. Neither
the Company nor any Person acting on its behalf has taken or is contemplating
taking any action which could subject the offering, issuance or sale of the
Securities to the registration requirements of the Securities Act including
soliciting any offer to buy or sell the Securities by means of any form of
general solicitation or advertising.
(j) SEC Documents; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), including, without limitation, all
filings required pursuant to Sections 13(a) and 15(d) thereof, for the two
years preceding the date hereof (or such shorter period as the Company was
required by law to file such material) (the foregoing materials being
collectively referred to herein as the "SEC Documents" and, together with
the Schedules to this Agreement, the "Disclosure Materials") on a timely
basis or has received a valid extension of such time of filing and has filed
any such SEC Documents prior to the expiration of any such extension. As
of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act and the Exchange Act
and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Documents, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. All material
agreements to which the Company is a party or to which the property or
assets of the Company are subject have been filed as exhibits to the SEC
Documents as required under the Exchange Act. The financial statements of
the Company included in the SEC Documents comply in all material respects
with applicable accounting requirements and the rules and regulations of
the Commission with respect thereto as in effect at the time of filing.
<PAGE> 9
Such financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the
periods involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in all
material respects the financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results
of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit
adjustments. Since March 31, 2000, except as specifically disclosed in the
SEC Documents, (a) there has been no event, occurrence or development that
has or that could result in a Material Adverse Effect, (b) the Company has
not incurred any liabilities (contingent or otherwise) other than (x)
liabilities incurred in the ordinary course of business consistent with past
practice and (y) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (c) the Company has not altered its method of
accounting or the identity of its auditors and (d) the Company has not
declared or made any payment or distribution of cash or other property to
its stockholders or officers or directors (other than in compliance with
existing Company stock option plans) with respect to its capital
stock, or purchased, redeemed (or made any agreements to purchase or redeem)
any shares of its capital stock.
(k) Investment Company. The Company is not, and is not an Affiliate
(as defined in Rule 405 under the Securities Act) of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(l) Certain Fees. Other than fees payable to [_________] by the
Company, no fees or commissions will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated
by this Agreement. The Purchasers shall have no obligation with respect to
any fees or with respect to any claims made by or on behalf of other Persons
for fees of a type contemplated in this Section that may be due in connection
with the transactions contemplated by this Agreement. The Company shall
indemnify and hold harmless the Purchasers, their employees, officers,
directors, agents, and partners, and their respective Affiliates, from and
against all claims, losses, damages, costs (including the costs of preparation
and attorney's fees) and expenses suffered in respect of any such claimed or
existing fees, as such fees and expenses are incurred.
(m) Solicitation Materials. Neither the Company nor any Person acting
on the Company's behalf has solicited any offer to buy or sell the
Securities by means of any form of general solicitation or advertising.
(n) Exclusivity. The Company shall not issue and sell the Debentures to
any Person other than the Purchasers without the specific prior written
consent of the Purchasers.
(o) Seniority. No indebtedness of the Company is senior to the
Debentures in right of payment, whether with respect to interest or upon
liquidation or dissolution, or otherwise.
(p) Listing and Maintenance Requirements. The Company has not, in the
two years preceding the date hereof, received notice (written or oral)
from the OTC Bulletin Board ("OTC") or any stock exchange, market or trading
facility on which the Common Stock is or has been listed (or on which it has
been quoted) to the effect that the Company is not in compliance with the
<PAGE> 10
listing or maintenance requirements of such exchange, market or trading
facility. The Company is, and has no reason to believe that it will not
in the foreseeable future continue to be, in compliance with all such listing
and maintenance requirements.
(q) Patents and Trademarks. The Company and its Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and rights
which are necessary or material for use in connection with their respective
businesses as described in the SEC Documents and which the failure to so
have would have a Material Adverse Effect (collectively, the "Intellectual
Property Rights"). Neither the Company nor any Subsidiary has received a
written notice that the Intellectual Property Rights used by the Company or
its Subsidiaries violates or infringes upon the rights of any Person. To
the best knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any
of the Intellectual Property Rights.
(r) Registration Rights; Rights of Participation. Except as disclosed
in Section 6(c) of the Registration Rights Agreement, the Company has not
granted or agreed to grant to any Person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered with
the Commission or any other governmental authority which has not been
satisfied. Except as set forth on Schedule 6(b) to the Registration Rights
Agreement, no Person has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.
(s) Regulatory Permits. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses as described in the SEC Documents, except where the failure to
possess such permits could not, individually or in the aggregate, have or
result in a Material Adverse Effect ("Material Permits"), and neither the
Company nor any such Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
(t) Title. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them which is material to
the business of the Company and its Subsidiaries and good and marketable
title in all personal property owned by them which is material to the
business of the Company and its Subsidiaries, in each case free and clear
of all Liens, except for Liens as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of
such property by the Company and its Subsidiaries. Any real property and
facilities held under lease by the Company and its Subsidiaries are held by
them under valid, subsisting and enforceable leases of which the Company and
its Subsidiaries are in compliance and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and
its Subsidiaries.
(v) Labor Relations. No material labor problem exists or, to the
knowledge of the Company, is imminent with respect to any of the employees
of the Company.
(w) Disclosure. The Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Purchasers or its
agents or counsel with any information that constitutes or might constitute
<PAGE> 11
material non-public information. The Company understands and confirms that
the Purchasers shall be relying on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided
to the Purchasers regarding the Company, its business and the transactions
contemplated hereby, including the Schedules to this Agreement, furnished
by or on behalf of the Company are true and correct and do not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(x) Solvency. Based on the financial condition of the Company as of the
Closing Date, (i) the Company's fair saleable value of its assets exceeds
the amount that will be required to be paid on or in respect of the Company's
existing debts and other liabilities (including known contingent liabilities)
as they mature; (ii) the Company's assets do not constitute unreasonably
small capital to carry on its business for the current fiscal year as now
conducted and as proposed to be conducted including its capital needs taking
into account the particular capital requirements of the business conducted by
the Company, and project capital requirements and capital availability
thereof; and (iii) the current cash flow of the Company, together with the
proceeds the Company would receive, were it to liquidate all of its assets,
after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company does not intend to incur debts beyond
its ability to pay such debts as they mature (taking into account the timing
and amounts of cash to be payable on or in respect of its debt).
2.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby for itselfand for no other Purchaser represents and warrants to the
Company as follows:
(a) Organization; Authority. Such Purchaser is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its organization with the requisite corporate or partnership power and
authority to enter into and to consummate the transactions contemplated by
the Transaction Documents and otherwise to carry out its obligations
thereunder. The purchase by such Purchaser of the Securities hereunder has
been duly authorized by all necessary action on the part of such Purchaser.
Each of this Agreement and the Registration Rights Agreement has been duly
executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and legally
binding obligation of such Purchaser, enforceable against it in accordance
with its terms.
(b) Investment Intent. Such Purchaser is acquiring the Securities as
principal for its own account for investment purposes only and not with a
view to or for distributing or reselling such Securities or any part thereof,
without prejudice, however, to such Purchaser's right, subject to the
provisions of this Agreement, the Registration Rights Agreement, the
Debentures and the Warrants, at all times to sell or otherwise dispose of
all or any part of such Securities pursuant to an effective registration
statement under the Securities Act or under an exemption from such
registration and in compliance with applicable federal and state securities
laws. Nothing contained herein shall be deemed a representation or warranty
by such Purchaser to hold the Securities for any period of time. Such
Purchaser is acquiring the Securities hereunder in the ordinary course of
its business. Such Purchaser does not have any agreement or understanding,
directly or indirectly, with any Person to distribute the Securities.
<PAGE> 12
(c) Purchaser Status. At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is an "accredited investor"
as defined in Rule 501(a) under the Securities Act.
(d) Experience of such Purchaser. Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment.
(e) Ability of such Purchaser to Bear Risk of Investment. Such
Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of
such investment.
(f) Access to Information. Such Purchaser acknowledges that it has
reviewed the Disclosure Materials and has been afforded (i) the opportunity
to ask such questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning the terms and conditions of
the offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management
and prospects sufficient to enable it to evaluate its investment; and (iii)
the opportunity to obtain such additional information which the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment and to verify the accuracy and completeness of the information
contained in the Disclosure Materials. Neither such inquiries nor any other
investigation conducted by or on behalf of such Purchaser or its
representatives or counsel shall modify, amend or affect such Purchaser's
right to rely on the truth, accuracy and completeness of the Disclosure
Materials and the Company's representations and warranties contained in the
Transaction Documents.
(g) General Solicitation. Such Purchaser is not purchasing the Securities
as a result of or subsequent to any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine
or similar media or broadcast over television or radio or presented at any
seminar or any other general solicitation or general advertisement.
(h) Reliance. Such Purchaser understands and acknowledges that (i) the
Securities are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and
truthfulness of, the foregoing representations and such Purchaser hereby
consents to such reliance.
The Company acknowledges and agrees that no Purchaser makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
<PAGE> 13
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 Transfer Restrictions. (a) Securities may only be disposed of
pursuant to an effective registration statement under the Securities Act,
to the Company or pursuant to an available exemption from or in a transaction
not subject to the registration requirements of the Securities Act, and in
compliance with any applicable federal and state securities laws. In
connection with any transfer of Securities other than pursuant to an
effective registration statement or to the Company, except as otherwise set
forth herein, the Company may require the transferor thereof to provide to
the Company an opinion of counsel selected by the transferor, the form and
substance of which opinion shall be reasonably satisfactory to the Company,
to the effect that such transfer does not require registration of such
transferred securities under the Securities Act. Notwithstanding the
foregoing, the Company, without requiring a legal opinion as described in
the immediately preceding sentence, hereby consents to and agrees to register
on the books of the Company and with any transfer agent for the securities
of the Company any transfer of Securities by a Purchaser to an Affiliate of
such Purchaser or to one or more funds or managed accounts under common
management with such Purchaser, and any transfer among any such Affiliates
or one or more funds or managed accounts, provided that the transferee
certifies to the Company that it is an "accredited investor" as defined in
Rule 501(a) under the Securities Act and that it is acquiring the Securities
solely for investment purposes (subject to the qualifications hereof). Any
such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement and
the Registration Rights Agreement.
(b) The Purchasers agree to the imprinting, so long as is required by
this Section 3.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS,
AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
Underlying Shares shall not contain the legend set forth above nor any other
legend if the conversion of the Debentures and exercise of the Warrants or
other issuances of Underlying Shares as contemplated hereby, by the
Debentures or the Warrants occurs at any time while an Underlying Shares
Registration Statement is effective under the Securities Act or the holder
of any such security is relying on Rule 144 promulgated under the Securities
Act ("Rule 144") in connection with the resale of such Underlying Shares or
<PAGE> 14
in the event there is not an effective Underlying Shares Registration
Statement at such time and Rule 144 is not then available if, in the opinion
of counsel to the Company, such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission). The Company shall
cause its counsel to issue the legal opinion included in the Transfer Agent
Instructions to the Company's transfer agent on the day that the Underlying
Shares Registration Statement is declared effective by the Commission (the
"Effective Date"). The Company agrees that in the event any Underlying
Shares are issued with a legend in accordance with this Section 3.1(b), it
will, within three (3) Trading Days after request therefor by a Purchaser,
provide such Purchaser with a certificate or certificates representing such
Underlying Shares, free from such legend at such time as such legend would
not have been required under this Section 3.1(b) had such issuance occurred
on the date of such request. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company which
enlarge the restrictions of transfer set forth in this Section.
3.2 Acknowledgment of Dilution. The Company acknowledges that the
issuance of the Underlying Shares upon the (i) conversion of Debentures in
accordance with the terms of the Debentures, and (ii) exercise of the
Warrants in accordance with their terms, will result in dilution of the
outstanding shares of Common Stock, which dilution may be substantial under
certain market conditions. The Company further acknowledges that its
obligation to issue Underlying Shares upon the (x) conversion of the
Debentures in accordance with the terms of the Debentures, and (y) exercise
of the Warrants in accordance with their terms, is unconditional and
absolute, subject to the limitations set forth herein in the Debentures or
pursuant to the Warrants, regardless of the effect of any such dilution.
3.3 Furnishing of Information. As long as the Purchasers own Securities,
the Company covenants to timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to
be filed by the Company after the date hereof pursuant to Section 13(a) or
15(d) of the Exchange Act. As long as the Purchasers own Securities, if
the Company is not required to file reports pursuant to such sections, it
will prepare and furnish to the Purchasers and make publicly available in
accordance with Rule 144(c) promulgated under the Securities Act such
information as is required for the Purchasers to sell the Securities under
Rule 144 promulgated under the Securities Act. The Company further covenants
that it will take such further action as any holder of Securities may
reasonably request, all to the extent required from time to time to enable
such Person to sell Underlying Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including causing its attorneys to
render and deliver any legal opinion required in order to permit
a Purchaser to receive Underlying Shares free of all restrictive legends and
to subsequently sell Underlying Shares under Rule 144 upon receipt of a
notice of an intention to sell or other form of notice having a similar
effect. Upon the request of any such Person, the Company shall deliver to
such Person a written certification of a duly authorized officer as to
whether it has complied with such requirements.
3.4 Integration. The Company shall not, and shall use its best efforts
to ensure that, no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security
(as defined in Section 2 of the Securities Act) that would be integrated
<PAGE> 15
with the offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities to the
Purchasers.
3.5 Increase in Authorized Shares. If on any date the Company would be,
if a notice of conversion or exercise (as the case may be) were to be
delivered on such date, precluded from issuing (a) 200% of the number of
Underlying Shares as would then be issuable upon a conversion in full of the
Debentures and (b) the number of Underlying Shares issuable upon exercise in
full of the Warrants (the "Current Required Minimum"), in either case, due
to the unavailability of a sufficient number of authorized but unissued or
reserved shares of Common Stock, then the Board of Directors of the Company
shall promptly prepare and mail to the stockholders of the Company proxy
materials requesting authorization to amend the Company's certificate or
articles of incorporation to increase the number of shares of Common Stock
which the Company is authorized to issue to at least such number of shares
as reasonably requested by the Purchasers in order to provide for such
number of authorized and unissued shares of Common Stock to enable the
Company to comply with its issuance, conversion exercise and reservation of
shares obligations as set forth in this Agreement, the Debentures and the
Warrants (the sum of (x) the number of shares of Common Stock then
outstanding plus all shares of Common Stock issuable upon exercise of all
outstanding options, warrants and convertible instruments, and (y) the
Current Required Minimum, shall be a reasonable number). In connection
therewith, the Board of Directors shall (a) adopt proper resolutions
authorizing such increase, (b) recommend to and otherwise use its best
efforts to promptly and duly obtain stockholder approval to carry out such
resolutions (and hold a special meeting of the stockholders no later than
the earlier to occur of the sixtieth (60th) day after delivery of the proxy
materials relating to such meeting and the ninetieth (90th) day after
request by a holder of Securities to issue the number of Underlying Shares
in accordance with the terms hereof) and (c) within five (5) Business Days
of obtaining such stockholder authorization, file an appropriate amendment
to the Company's certificate or articles of incorporation to evidence such
increase.
3.6 Reservation and Listing of Underlying Shares. (a) The Company
shall (i) in the time and manner required by any national securities
exchange, market, trading or quotation facility on which the Common Stock
is then traded, prepare and file with such national securities exchange,
market, trading or quotation facility on which the Common Stock is then
traded an additional shares listing application covering a number of shares
of Common Stock which is not less than the Initial Minimum, (ii) take all
steps necessary to cause such shares of Common Stock to be approved for
listing on any such national securities exchange, market or trading or
quotation facility on which the Common Stock is then listed as soon as
possible thereafter, and (iii) provide to the Purchasers evidence of such
listing, and the Company shall maintain the listing of its Common Stock
thereon. If the number of Underlying Shares issuable upon (x) conversion in
full of the then outstanding Debentures and (y) exercise in full of the then
unexercised portion of the Warrants, exceeds eighty-five percent (85%) of
the number of Underlying Shares previously listed on account thereof with
any such required exchanges, then the Company shall take the necessary
actions to immediately list a number of Underlying Shares as equals no less
than the then Current Required Minimum.
(b) The Company shall maintain a reserve of shares of Common Stock for
issuance upon conversion of the Debentures in full and upon exercise in full
of the Warrants, respectively in accordance with this Agreement, in such
amount as may be required to fulfill its obligations in full under the
<PAGE> 16
Transaction Documents, which reserve shall equal no less than the then
Current Required Minimum.
3.7 Conversion and Exercise Procedures. The Transfer Agent Instructions,
the Conversion Notice (as defined in the Debentures) and the Form of
Election to Purchase (as defined in the Warrants) sets forth the totality
of the procedures with respect to the conversion of the Debentures and the
exercise of the Warrants, including the form of legal opinion, if necessary,
that shall be rendered to the Company's transfer agent and such other
information and instructions as may be reasonably necessary to enable the
Purchasers to convert their Debentures and exercise their Warrants, as the
case may be.
3.8 Conversion and Exercise Obligations of the Company. The Company
shall honor conversions of the Debentures and exercises of the Warrants and
shall deliver Underlying Shares in accordance with the respective terms,
conditions and time periods set forth in the Debentures.
3.9 Subsequent Financing; Limitation on Registrations.(a) From the date
of this Agreement through the 360th day following the Closing Date and the
180th day following the Effective Date, the Company will not offer, sell,
grant any option to purchase or any right to reprice securities, or
otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition) any Common Stock or equity or equity
equivalent securities (including the issuance of any debt or other instrument
that is at any time over the life thereof convertible into or exchangeable
for Common Stock), and the Company will cause its Subsidiaries not to offer,
sell or issue during such period any of such Subsidiary's securities which
provide the holder thereof the right to receive any Common Stock
(collectively, "Common Stock Equivalents").
(b) From the date of this Agreement through the 360th day following
the Effective Date, the Company will not offer, sell, grant any option to
purchase or any right to reprice securities, or otherwise dispose of (or
announce any offer, sale, grant or any option to purchase or other
disposition) any Common Stock or Common Stock Equivalents (collectively, a
"Subsequent Placement"), unless (A) the Company delivers to each Purchaser
a written notice (the "Subsequent Placement Notice") of its intention to
effect such Subsequent Placement, which Subsequent Placement Notice shall
describe in reasonable detail the proposed terms of such Subsequent Placement,
the amount of proceeds intended to be raised thereunder, the Person with
whom such Subsequent Placement shall be effected, and attached to which
shall be a term sheet or similar document relating thereto and (B) no
Purchaser notifies the Company by 6:30 p.m. (New York City time) on the
tenth Trading Day after its receipt of the Subsequent Placement Notice of
its willingness to provide (or to cause its sole designee to provide),
subject to completion of mutually acceptable documentation, financing to the
Company on the same terms set forth in the Subsequent Placement Notice. If
the Purchasers fail to notify the Company of its intention to enter into
such negotiations within such time period, then the Company may effect the
Subsequent Placement substantially upon the terms and to the Persons (or
Affiliates of such Persons) set forth in the Subsequent Placement Notice;
provided, that the Company shall provide the Purchaser with a second
Subsequent Placement Notice, and the Purchaser shall again have the right
of first refusal set forth above in this paragraph (b), if the Subsequent
Placement subject to the initial Subsequent Placement Notice shall not have
<PAGE> 17
been consummated for any reason on the terms set forth in such Subsequent
Placement Notice within 30 days after the date of the initial Subsequent
Placement Notice with the Person (or an Affiliate of such Person) identified
in the Subsequent Placement Notice.
(c) Except for (x) Registrable Securities, (y) securities of the Company
permitted pursuant to Section 6(c) of the Registration Rights Agreement to
be registered in the Registration Statement, and (z) Common Stock permitted
to be issued pursuant to Section 3.9(e), the Company may not until the 90th
day after the Effective Date file a registration statement to register any
of its securities.
(d) With respect to Section 3.9(a), (b) and (c), restrictive periods
shall be extended for the number of Trading Days during such period (A) in
which trading in the Common Stock is suspended by any securities exchange or
market or quotation system on which the Common Stock is then listed, or (B)
that the Registration Statement is not effective following the Effective
Date, or (C) that the prospectus included in the Registration Statement may
not be used by the holders thereof for the resale of Registrable Securities
following the Effective Date.
(e) The restrictions contained in Section 3.9(a) and (b) shall not apply
to the granting of options or warrants to employees, officers and directors
of the Company, and the issuance of Common Stock upon exercise of such
options or warrants granted under any stock option plan heretofore or
hereinafter duly adopted by the Company. The restrictions contained in
Sections 3.9(a) and (b) shall also not apply to shares of Common Stock
issuable upon exercise of any currently outstanding warrants and other
outstanding convertible securities of the Company, in each case as and to
the extent disclosed in Schedule 2.1(c) (but not as to any amendments or
modifications of the terms of such securities after the date of this
Agreement, including "back-dated" agreements).
3.10 Certain Securities Laws Disclosures; Publicity. The Company shall:
(i) on the Closing Date, issue a press release acceptable to the Purchasers
disclosing the transactions contemplated hereby, (ii) file with the
Commission a Report on Form 8-K disclosing the transactions contemplated
hereby within ten Business Days after the Closing Date, and (iii) timely
file with the Commission a Form D promulgated under the Securities Act.
The Company shall, no less than two Business Days prior to the filing of
any disclosure required by clauses (ii) and (iii) above, provide a copy
thereof to the Purchasers for their review. The Company and the Purchasers
shall consult with each other in issuing any other press releases or
otherwise making public statements or filings and other communications
with the Commission or any regulatory agency or stock market or trading
facility with respect to the transactions contemplated hereby and neither
party shall issue any such press release or otherwise make any such public
statement, filings or other communications without the prior written consent
of the other, except that if such disclosure is required by law or stock
market regulations, in which such case the disclosing party shall promptly
provide the other party with prior notice of such public statement, filing
or other communication. Notwithstanding the foregoing, the Company shall not
publicly disclose the names of the Purchasers, or include the names of the
Purchasers in any filing with the Commission, or any regulatory agency,
trading facility or stock market without the prior written consent of the
Purchasers, except to the extent such disclosure (but not any disclosure as
to the controlling Persons thereof) is required by law or stock market
regulations, in which case the Company shall provide the Purchasers with
prior notice of such disclosure.
<PAGE> 18
3.11 Non-Disclosure of Non-Public Information.(a) The Company shall not
disclose non-public information to the Purchasers or their advisors or
representatives unless prior to disclosure of such information the Company
identifies such information as being non-public information and the
Purchasers enter into a non-disclosure agreement in form mutually acceptable
to the Company and the Purchasers.
(b) The Company represents that it does not disseminate non-public
information to any investors who purchase stock in the Company in a public
offering, to money managers or to securities analysts. Notwithstanding the
foregoing or anything herein to the contrary, the Company will immediately
notify the Purchasers of any event or the existence of any circumstance
(without any obligation to disclose the specific event or circumstance) of
which it becomes aware, (whether or not requested of the Company specifically
or generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in the Registration
Statement would cause such prospectus to include a material misstatement or
to omit a material fact required to be stated therein in order to make the
statements, therein in light of the circumstances in which they were made,
not misleading.
3.12 Transfer of Intellectual Property Rights. Except in connection with
the sale of all or substantially all of the assets of the Company or
licensing arrangements in the ordinary course of the Company's business,
the Company shall not transfer, sell or otherwise dispose of any Intellectual
Property Rights, or allow any of the Intellectual Property Rights to become
subject to any Liens, or fail to renew such Intellectual Property Rights (if
renewable and it would otherwise lapse if not renewed), without the prior
written consent of the Purchasers.
3.13 Use of Proceeds. The Company shall use the net proceeds from the
sale of the Securities hereunder for working capital purposes and not for
the satisfaction of any portion of the Company's debt (other than payment
of trade payables in the ordinary course of the Company's business and prior
practices), to redeem any Company equity or equity-equivalent securities or
to settle any outstanding litigation.
3.14 Reimbursement. If any Purchaser becomes involved in any capacity in
any action, proceeding or investigation brought by or against any Person,
including stockholders of the Company, solely as a result of acquiring the
Securities under this Agreement, the Company will reimburse such Purchaser
for its reasonable legal and other expenses (including, but not limited to,
the cost of any investigation, preparation or travel) incurred in connection
therewith, as such expenses are incurred. The reimbursement obligations of
the Company under this paragraph shall be in addition to any liability which
the Company may otherwise have, shall extend upon the same terms and
conditions to any Affiliates of the Purchasers who are actually named in
such action, proceeding or investigation, and partners, directors, agents,
employees and controlling persons (if any), as the case may be, of the
Purchasers and any such Affiliate, and shall be binding upon and inure to
the benefit of any successors, assigns, heirs and personal representatives
of the Company, the Purchasers and any such Affiliate and any such Person.
The Company also agrees that neither the Purchasers nor any such Affiliates,
partners, directors, agents, employees or controlling persons shall have any
liability to the Company or any Person asserting claims on behalf of or in
<PAGE> 19
right of the Company solely as a result of acquiring the Securities under
this Agreement.
3.15 Shareholder Rights Plan. No claim will be made or enforced by the
Company or any other Person that any Purchaser is an "Acquiring Person"
under any shareholders rights plan or similar plan or arrangement in effect
or hereafter adopted by the Company, or that any Purchaser could be deemed
to trigger the provisions of any such plan or arrangement, by virtue of
receiving Securities or shares of Common Stock under the Transaction
Documents.
ARTICLE IV
MISCELLANEOUS
4.1 Fees and Expenses. At the Closing, the Company shall reimburse the
Purchasers for their legal fees and expenses incurred in connection with the
preparation and negotiation of the Transaction Documents by paying to
Robinson Silverman $50,000 for the preparation and negotiation of the
Transaction Documents. The amount contemplated by the immediately preceding
sentence shall be retained by the Purchasers and shall not be delivered to
the Company at the Closing. Other than the amount contemplated herein, and
except as otherwise set forth in the Registration Rights Agreement, each
party shall pay the fees and expenses of its advisers, counsel, accountants
and other experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and performance
of this Agreement. The Company shall pay all stamp and other taxes and
duties levied in connection with the issuance of the Securities.
4.2 Entire Agreement; Amendments. The Transaction Documents, together
with the Exhibits and Schedules thereto and Transfer Agent Instructions,
contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral
or written, with respect to such matters, which the parties acknowledge have
been merged into such documents, exhibits and schedules.
4.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of (i) the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (New York City
time) on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Agreement later than 6:30 p.m. (New York
City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the Business Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given. The
address for such notices and communications shall be as follows:
If to the Company: Salient Cybertech, Inc.
1999 Lincoln Drive, Suite 202
Sarasota, Florida 34236
Facsimile No.: (941) 953 4363
<PAGE> 20
Attn: Chief Financial Officer
With copies to: David J. Feingold, Esq.
3300 PGA Blvd.
Palm Beach Gardens, Florida 33410
Facsimile No.: (561) 630 8936
If to a Purchaser: To the address set forth under such
Purchaser's name on the signature pages
hereto.
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
4.4 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an
amendment, by the Company and each of the Purchasers or, in the case of
a waiver, by the party against whom enforcement of any such waiver is
sought. No waiver of any default with respect to any provision, condition
or requirement of this Agreement shall be deemed to be a continuing waiver
in the future or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of either party to exercise any
right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
4.5 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
4.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Purchasers.
Except as set forth in Section 3.1(a), the Purchasers may not assign this
Agreement or any of the rights or obligations hereunder without the consent
of the Company. This provision shall not limit any Purchaser's right to
transfer securities or transfer or assign rights under the Registration
Rights Agreement.
4.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other Person.
4.8 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof.
Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect
for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law. Each party irrevocably waives,
to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of a Transaction
<PAGE> 21
Document, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its' attorneys fees and other costs and
expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.
4.9 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery, exercise,
conversion and redemption of the Warrants or the Debentures, as the case
may be.
4.10 Execution. This Agreement may be executed in two or more counterparts
, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission, such signature shall create a valid
and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature page were an original thereof.
4.11 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall
not in any way be affecting or impaired thereby and the parties will attempt
to agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
4.12 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of
the Purchasers will be entitled to specific performance of the obligations
of the Company under the Transaction Documents. The parties hereto agree
that monetary damages may not be adequate compensation for any loss incurred
by reason of any breach of its obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance
of any such obligation the defense that a remedy at law would be adequate.
4.13 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document is several and
not joint with the obligations of any other Purchaser and no Purchaser shall
be responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in
any Transaction Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
<PAGE> 22
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by the
Transaction Document. Each Purchaser shall be entitled to independently
protect and enforce its rights, including without limitation the rights
arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOWS]
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have caused this Convertible
Debenture Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated above.
SALIENT CYBERTECH, INC.
By:_____________________________________
Name:
Title:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
HAINES AVENUE LLC
By:_____________________________________
Name:
Title:
Purchase Price: $2,000,000
Address for Notice: Haines Avenue LLC
c/o Citco Trustees (Cayman) Limited
Commercial Centre
P.O. Box 31106 SMB
Grand Cayman
Cayman Islands
British West Indies
Facsimile No.: (345) 945-7566
With copies to: Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, NY 10104
Facsimile No.: (212) 541-4630 and (212) 541-1432
Attn: Eric L. Cohen, Esq.
<PAGE> 24
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES
ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
THEREUNDER AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY
LAWS, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
SALIENT CYBERTECH, INC.
VESTING WARRANT
Warrant No.1 Dated: November 14, 2000
Salient Cybertech, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, Haines Avenue, LLC or its registered
assigns ("Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company the total number of shares of common stock, $.001
par value per share (the "Common Stock"), of the Company calculated
pursuant to Section 3 of this Warrant (each such share, a "Warrant Share"
and all such shares, the "Warrant Shares") at the exercise prices set forth
in Annex 1 hereto (as adjusted from time to time as provided in Section 8,
collectively, the "Exercise Price"). This Warrant may be exercised by the
Holder as to the Warrant Shares then vested at any time and from time to
time from and after the date such warrant shares have vested and through
and including November 14, 2005 (the "Expiration Date"), and subject to
the following terms and conditions:
1. Registration of Warrant. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, and the Company
shall not be affected by notice to the contrary.
<PAGE> 25
2. Registration of Transfers and Exchanges.
(a) The Company shall register the transfer of any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant, with the
Form of Assignment attached hereto duly completed and signed, to the
Transfer Agent or to the Company at its address for notice set forth in
Section 12. Upon any such registration or transfer, a new warrant to
purchase Common Stock, in substantially the form of this Warrant (any
such new warrant, a "New Warrant"), evidencing the portion of this Warrant
so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if
any, shall be issued to the transferring Holder. The acceptance of the
New Warrant by the transferee thereof shall be deemed the acceptance of
such transferee of all of the rights and obligations of a holder of a
Warrant.
(b) This Warrant is exchangeable, upon the surrender hereof by the
Holder to the office of the Company at its address for notice set forth
in Section 12 for one or more New Warrants, evidencing in the aggregate
the right to purchase the number of Warrant Shares which may then be
purchased hereunder. Any such New Warrant will be dated the date of such
exchange.
3. Duration and Exercise of Warrants.
(a) This Warrant shall be exercisable by the registered Holder on any
business day before 6:30 P.M., New York City time, at any time and from
time to time on or after the date hereof to and including the Expiration
Date. At 6:30 P.M., New York City time on the Expiration Date, the portion
of this Warrant not exercised prior thereto shall be and become void and of
no value. Prior to the Expiration Date, the Company may not call or
otherwise redeem this Warrant.
(b) Upon delivery of a duly completed and signed Form of Election to
Purchase attached hereto (and the grid attached hereto as Annex A) duly
completed and signed, to the Company at its address for notice set forth
in Section 12 and upon payment of the Exercise Price multiplied by the
number of Warrant Shares that the Holder intends to purchase hereunder,
in the manner provided hereunder, all as specified by the Holder in the
Form of Election to Purchase, the Company shall promptly (but in no event
later than 3 business days after the Date of Exercise (as defined herein)
issue or cause to be issued and cause to be delivered to or upon the written
order of the Holder and in such name or names as the Holder may designate,
a certificate for the Warrant Shares issuable upon such exercise, free of
restrictive legends except (i) either in the event that a registration
statement covering the resale of the Warrant Shares and naming the Holder
as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable without volume restrictions
pursuant to Rule 144(k) promulgated under the Securities Act of 1933,
as amended (the "Securities Act"), or (ii) if this Warrant shall have
been issued pursuant to a written agreement between the original Holder
and the Company, as required by such agreement. Any person so designated
by the Holder to receive Warrant Shares shall be deemed to have become
holder of record of such Warrant Shares as of the Date of Exercise of this
Warrant. The Company shall, upon request of the Holder, if available, use
its best efforts to deliver Warrant Shares hereunder electronically through
<PAGE> 26
the Depository Trust Corporation or another established clearing corporation
performing similar functions. To effect an exercise hereunder, the Holder
shall not be required to physically surrender this Warrant to the Company
unless all the Warrant Shares have been exercised. Exercises hereunder
shall have the effect of lowering the number of Warrant Shares in an
amount equal to the applicable exercise, which shall be evidenced by
entries set forth in the Exercise Schedule. The Holder and the Company
shall maintain records showing the number of Warrant Shares exercised and
the date of such exercises . In the event of any dispute or discrepancy,
the records of the Holder shall be controlling and determinative in the
absence of manifest error. The Holder and any assignee, by acceptance of
this Warrant, acknowledge and agree that, by reason of the provisions of
this paragraph, following exercise of a portion of this Warrant, the number
of shares issuable upon exercise of this Warrant may be less than the amount
stated on the face hereof.
A "Date of Exercise" means the date on which the Company shall have
received (i) the Form of Election to Purchase (and the Warrant Shares
Exercise Log attached hereto) completed and duly signed, and (ii) payment
of the Exercise Price for the number of Warrant Shares so indicated by the
Holder to be purchased.
(c) This Warrant shall be exercisable, either in its entirety or, from
time to time, for a portion of the number of Warrant Shares then vested.
The number of Warrant Shares that shall vest under this Warrant shall be
equal to the aggregate of (i) the amount of liquidated damages, if any,
calculated under Section 2(c) of the Registration Rights Agreement, dated
the date of issuance of this Warrant, between the Company and the original
Holder (the "Registration Rights Agreement") and (ii) any amounts payable
to the Holder of the Debenture under Section 3(b) of the Convertible
Debenture, due November 14, 2003 (the "Debenture"), issued pursuant to
the Convertible Debenture Purchase Agreement, dated the date of issuance of
this Warrant, between the Company and the original Holder. Such vesting
shall occur on the date on which the Holder shall indicate in writing that
such vesting has occurred in accordance with Section 2(c) of the Registration
Rights Agreement or Section 3(b) of the Debenture, as applicable, and such
indication shall be in the form of a writing from the Holder electing to
be paid the liquidated damages or the monies due under the Debenture, as
applicable, under such Section in shares of Common Stock. The Exercise
Price for a Warrant Share shall equal the closing sales price of the
Common Stock on the trading day immediately preceding the day on which
such Warrant Shares vested. The number of Warrant Shares vested hereunder
shall be measured cumulatively. Annex A shall set forth the number of
Warrant Shares then vested hereunder and the applicable Exercise Price.
4. Piggyback Registration Rights. This Warrant is subject to the
piggyback registration rights granted under the Registration Rights
Agreement and such piggyback registration rights shall continue until
all of the Holder's Warrant Shares have been sold in accordance with
an effective registration statement or upon the Expiration Date. The
Company will pay all registration expenses in connection therewith.
5. Payment of Taxes. The Company will pay all documentary stamp
taxes attributable to the issuance of Warrant Shares upon the exercise
of this Warrant; provided, however, that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in
the registration of any certificates for Warrant Shares or Warrants in a
name other than that of the Holder. The Holder shall be responsible for
all other tax liability that may arise as a result of holding or
transferring this Warrant or receiving Warrant Shares upon exercise
hereof.
6. Replacement of Warrant. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation hereof, or in lieu of and
substitution for this Warrant, a New Warrant, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction and indemnity, if requested, satisfactory to it. Applicants
for a New Warrant under such circumstances shall also comply with such
other reasonable regulations and procedures and pay such other reasonable
charges as the Company may prescribe.
7. Reservation of Warrant Shares. The Company covenants that it will
at all times reserve and keep available out of the aggregate of its
authorized but unissued Common Stock, solely for the purpose of enabling
it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and
deliverable upon the exercise of this entire Warrant, free from preemptive
rights or any other actual contingent purchase rights of persons other
than the Holder (taking into account the adjustments and restrictions of
Section 8). The Company covenants that all Warrant Shares that shall be
<PAGE> 27
so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly
and validly authorized, issued and fully paid and nonassessable.
8. Certain Adjustments. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment
from time to time as set forth in this Section 8.
(a) If the Company, at any time while this Warrant is outstanding, (i)
shall pay a stock dividend (except scheduled dividends paid on outstanding
preferred stock as of the date hereof which contain a stated dividend rate)
or otherwise make a distribution or distributions on shares of its Common
Stock or on any other class of capital stock payable in shares of Common
Stock, (ii) subdivide outstanding shares of Common Stock into a larger
number of shares, or (iii) combine outstanding shares of Common Stock into
a smaller number of shares, the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding before such event
and of which the denominator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding after such event. Any
adjustment made pursuant to this Section shall become effective immediately
after the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision or
combination, and shall apply to successive subdivisions and combinations.
(b) In case of any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is converted
into other securities, cash or property, then the Holder shall have the
right thereafter to exercise this Warrant only into the shares of stock
and other securities and property receivable upon or deemed to be held by
holders of Common Stock following such reclassification or share exchange,
and the Holder shall be entitled upon such event to receive such amount of
securities or property equal to the amount of Warrant Shares such Holder
would have been entitled to had such Holder exercised this Warrant
immediately prior to such reclassification or share exchange. The terms
of any such reclassification or share exchange shall include such terms
so as to continue to give to the Holder the right to receive the securities
or property set forth in this Section 8(b) upon any exercise following any
such reclassification or share exchange.
(c) If the Company, at any time while this Warrant is outstanding,
shall distribute to all holders of Common Stock (and not to holders of
this Warrant) evidences of its indebtedness or assets or rights or warrants
to subscribe for or purchase any security (excluding those referred to in
Sections 8(a), (b) and (d)), then in each such case the Exercise Price
shall be determined by multiplying the Exercise Price in effect immediately
prior to the record date fixed for determination of stockholders entitled
to receive such distribution by a fraction of which the denominator shall
be the Exercise Price determined as of the record date mentioned above,
and of which the numerator shall be such Exercise Price on such record date
less the then fair market value at such record date of the portion of such
assets or evidence of indebtedness so distributed applicable to one
outstanding share of Common Stock as determined by the Company's independent
certified public accountants that regularly examines the financial
statements of the Company (an "Appraiser").
<PAGE> 28
(d) In case of any (1) merger or consolidation of the Company with or
into another Person, or (2) sale by the Company of more than one-half of
the assets of the Company (on a book value basis) in one or a series of
related transactions, the Holder shall have the right thereafter to (A)
exercise this Warrant for the shares of stock and other securities, cash
and property receivable upon or deemed to be held by holders of Common
Stock following such merger, consolidation or sale, and the Holder shall
be entitled upon such event or series of related events to receive such
amount of securities, cash and property as the Common Stock for which this
Warrant could have been exercised immediately prior to such merger,
consolidation or sales would have been entitled or (B) in the case of a
merger or consolidation, (x) require the surviving entity to issue common
stock purchase warrants equal to the number Warrant Shares to which this
Warrant then permits, which newly warrant shall be identical to this
Warrant, and (y) simultaneously with the issuance of such warrant, the
Holder of such warrant shall have the right to exercise such warrant only
into shares of stock and other securities, cash and property receivable
upon or deemed to be held by holders of Common Stock following such merger
or consolidation or (C) require the surviving entity from such merger,
acquisition or business combination to pay to the Holder, in cash, the
Black Scholes value of this Warrant. In the case of clause (B), the
exercise price for such new warrant shall be based upon the amount of
securities, cash and property that each share of Common Stock would
receive in such transaction and the Exercise Price of this Warrant
immediately prior to the effectiveness or closing date for such transaction.
The terms of any such merger, sale or consolidation shall include such
terms so as continue to give the Holder the right to receive the securities,
cash and property set forth in this Section upon any conversion or
redemption following such event. This provision shall similarly apply to
successive such events.
(e) For the purposes of this Section 8, the following clauses shall
also be applicable:
(i) Record Date. In case the Company shall take a record of the holders
of its Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock or in securities
convertible or exchangeable into shares of Common Stock, or (B) to
subscribe for or purchase Common Stock or securities convertible or
exchangeable into shares of Common Stock, then such record date shall
be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.
(ii) Treasury Shares. The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or for the
account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.
(f) All calculations under this Section 8 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be.
<PAGE> 29
(g) Whenever the Exercise Price is adjusted pursuant to Section 8(c)
above, the Holder, after receipt of the determination by the Appraiser,
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case the adjustment shall
be equal to the average of the adjustments recommended by each of the
Appraiser and such appraiser. The Holder shall promptly mail or cause
to be mailed to the Company, a notice setting forth the Exercise Price
after such adjustment and setting forth a brief statement of the facts
requiring such adjustment. Such adjustment shall become effective
immediately after the record date mentioned above.
(h) If:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
(iii) the Company shall authorize the granting to all holders of
the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of
any rights; or
(iv) the approval of any stockholders of the Company shall be
required in connection with any reclassification of the
Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property; or
(v) the Company shall authorize the voluntary dissolution,
liquidation or winding up of the affairs of the Company,
then the Company shall cause to be mailed to each Holder at their last
addresses as they shall appear upon the Warrant Register, at least 20
calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined or (y)
the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and
the date as of which it is expected that holders of Common Stock of record
<PAGE> 30
shall be entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding up; provided, however, that the failure to mail
such notice or any defect therein or in the mailing thereof shall not
affect the validity of the corporate action required to be specified in
such notice.
9. Payment of Exercise Price. The Holder shall pay the Exercise
Price in one of the following manners:
(a) Cash Exercise. The Holder may deliver immediately available
funds; or
(b) Cashless Exercise. The Holder may surrender this Warrant to the
Company together with a notice of cashless exercise, in which event the
Company shall issue to the Holder the number of Warrant Shares determined
as follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be issued
to the Holder.
Y = the number of Warrant Shares with respect to which this Warrant is
being exercised.
A = the average of the closing sale prices of the Common Stock (as reported
by Bloomberg L.P. or any successor to its function of reporting share prices
at 4:15 p.m. (New York time for the closing bid price for regular session
trading on such day)) for the five (5) trading days immediately prior to
(but not including) the Date of Exercise.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to
have been commenced, on the issue date.
10. Certain Exercise Restrictions.
(a) A Holder may not exercise this Warrant to the extent such exercise
would result in the Holder, together with any affiliate thereof, beneficially
owning (as determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the rules
promulgated thereunder) in excess of 4.999% of the then issued and
outstanding shares of Common Stock, including shares issuable upon such
exercise and held by such Holder after application of this Section. Since
<PAGE> 31
the Holder will not be obligated to report to the Company the number of
shares of Common Stock it may hold at the time of an exercise hereunder,
unless the exercise at issue would result in the issuance of shares of
Common Stock in excess of 4.999% of the then outstanding shares of Common
Stock without regard to any other shares which may be beneficially owned by
the Holder or an affiliate thereof, the Holder shall have the authority and
obligation to determine whether the restriction contained in this Section
will limit any particular exercise hereunder and to the extent that the
Holder determines that the limitation contained in this Section applies,
the determination of which portion of this Warrant is exercisable shall be
the responsibility and obligation of the Holder. If the Holder has
delivered a Form of Election to Purchase for a number of Warrant Shares
that, without regard to any other shares that the Holder or its affiliates
may beneficially own, would result in the issuance in excess of the
permitted amount hereunder, the Company shall notify the Holder of this
fact and shall honor the exercise for the maximum portion of this Warrant
permitted to be exercised on such Date of Exercise in accordance with the
periods described herein and, at the option of the Holder, either keep the
portion of the Warrant tendered for exercise in excess of the permitted
amount hereunder for future exercises or return such excess portion of the
Warrant to the Holder. The provisions of this Section may be waived by a
Holder (but only as to itself and not to any other Holder) upon not less
than 61 days prior notice to the Company. Other Holders shall be unaffected
by any such waiver.
(b) A Holder may not exercise this Warrant to the extent such exercise
would result in the Holder, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of
the Exchange Act and the rules promulgated thereunder) in excess of 9.999%
of the then issued and outstanding shares of Common Stock, including shares
issuable upon such exercise and held by such Holder after application of
this Section. Since the Holder will not be obligated to report to the
Company the number of shares of Common Stock it may hold at the time of an
exercise hereunder, unless the exercise at issue would result in the
issuance of shares of Common Stock in excess of 9.999% of the then
outstanding shares of Common Stock without regard to any other shares
which may be beneficially owned by the Holder or an affiliate thereof, the
Holder shall have the authority and obligation to determine whether the
restriction contained in this Section will limit any particular exercise
hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of
this Warrant is exercisable shall be the responsibility and obligation of
the Holder. If the Holder has delivered a Form of Election to Purchase for
a number of Warrant Shares that, without regard to any other shares that the
Holder or its affiliates may beneficially own, would result in the issuance
in excess of the permitted amount hereunder, the Company shall notify the
Holder of this fact and shall honor the exercise for the maximum portion of
this Warrant permitted to be exercised on such Date of Exercise in
accordance with the periods described herein and, at the option of the
Holder, either keep the portion of the Warrant tendered for exercise in
excess of the permitted amount hereunder for future exercises or return
such excess portion of the Warrant to the Holder. The provisions of this
Section may be waived by a Holder (but only as to itself and not to any
other Holder) upon not less than 61 days prior notice to the Company. Other
Holders shall be unaffected by any such waiver.
11. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this
<PAGE> 32
Warrant. The number of full Warrant Shares which shall be issuable upon
the exercise of this Warrant shall be computed on the basis of the aggregate
number of Warrant Shares purchasable on exercise of this Warrant so
presented. If any fraction of a Warrant Share would, except for the
provisions of this Section, be issuable on the exercise of this Warrant,
the Company shall pay an amount in cash equal to the Exercise Price
multiplied by such fraction.
12. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on
the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section prior to 6:30 p.m. (New York City time) on a
business day, (ii) the business day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section later than 6:30 p.m. (New York
City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the business day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt
by the party to whom such notice is required to be given. The addresses
for such communications shall be: (i) if to the Company, to 1999 Lincoln
Drive, Suite 202, Sarasota, FL 34236, facsimile: (941) 953 4363, attention
Chief Financial Officer, or (ii) if to the Holder, to the Holder at the
address or facsimile number appearing on the Warrant Register or such other
address or facsimile number as the Holder may provide to the Company in
accordance with this Section.
13. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon thirty days' notice to the Holder, the Company may appoint
a new warrant agent. Any corporation into which the Company or any new
warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a
party or any corporation to which the Company or any new warrant agent
transfers substantially all of its corporate trust or shareholders services
business shall be a successor warrant agent under this Warrant without any
further act. Any such successor warrant agent shall promptly cause notice
of its succession as warrant agent to be mailed (by first class mail,
postage prepaid) to the Holder at the Holder's last address as shown on
the Warrant Register.
14. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns. This Warrant
may be amended only in writing signed by the Company and the Holder and
their successors and assigns.
(b) Subject to Section 14(a), above, nothing in this Warrant shall be
construed to give to any person or corporation other than the Company and
the Holder any legal or equitable right, remedy or cause under this Warrant.
This Warrant shall inure to the sole and exclusive benefit of the Company
and the Holder.
(c) The corporate laws of the State of Delaware shall govern all issues
concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity, enforcement and
<PAGE> 33
interpretation of this Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflicts of law thereof. The Company
and the Holder hereby irrevocably submit to the exclusive jurisdiction of
the state and federal courts sitting in the City of New York, borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives
personal service of process and consents to process being served in any
such suit, action or proceeding by receiving a copy thereof sent to the
Company at the address in effect for notices to it under this instrument
and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by
law. Each party irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions
contemplated hereby. If either party shall commence an action or proceeding
to enforce any provisions of this Warrant, then the prevailing party in
such action or proceeding shall be reimbursed by the other party for its'
attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
(d) The headings herein are for convenience only, do not constitute a
part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
(e) In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to
agree upon a valid and enforceable provision which shall be a commercially
reasonable substitute therefor, and upon so agreeing, shall incorporate
such substitute provision in this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
<PAGE> 34
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
SALIENT CYBERTECH, INC.
By:_____________________________________
Name:
Title:
<PAGE> 35
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of
Common Stock under the Warrant, issued on November 14, 2000 by Salient
Cybertech, Inc. )
To Salient Cybertech, Inc.:
The undersigned hereby irrevocably elects to purchase _____________ shares
of common stock, $.001 par value per share, of Salient Cybertech, Inc.
(the "Common Stock") and, if such Holder is not utilizing the cashless
exercise provisions set forth in this Warrant, encloses herewith $________
in cash, certified or official bank check or checks, which sum represents
the aggregate Exercise Price (as defined in the Warrant) for the number of
shares of Common Stock to which this Form of Election to Purchase relates,
together with any applicable taxes payable by the undersigned pursuant to
the Warrant.
Date of vesting of warrant: _______________.
Exercise Price: ________________.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
________________________________
_______________________________________________________________________
(Please print name and address)
Dated: _______,____ Name of Holder:
(Print)________________
(By:)__________________
(Name:)
(Title:)
(Signature must conform in
all respects to name of
holder as specified on
the face of the Warrant)
<PAGE> 36
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of Salient
Cybertech, Inc. to which the within Warrant relates and appoints
________________ attorney to transfer said right on the books of Salient
Cybertech, Inc. with full power of substitution in the premises.
Dated:
_______________, ____
_______________________________________
Signature must conform in all respects
to name of holder as specified on
the face of the Warrant)
_______________________________________
Address of Transferee
_______________________________________
_______________________________________
In the presence of:
__________________________
<PAGE> 37
ANNEX A
Vesting/Exercise Date
Number of Warrant Shares Vested on Such Vesting Date/Exercised on such
Exercise Date.
Applicable Exercise Price
Number of Warrant Shares Not Previously Exercised
Number of Warrant Shares Remaining to be Exercised at Such Exercise Price.
<PAGE> 38
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
SALIENT CYBERTECH, INC.
WARRANT
Warrant No.1 Dated: November 14, 2000
Salient Cybertech, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, Haines Avenue, LLC or its registered
assigns ("Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company up to a total of 423,729 shares of common stock,
$.001 par value per share (the "Common Stock"), of the Company (each such
share, a "Warrant Share" and all such shares, the "Warrant Shares") at an
exercise price equal to $0.90 per share (as adjusted from time to time as
provided in Section 8, the "Exercise Price"), at any time and from time to
time from and after the date hereof and through and including November 14,
2005 (the "Expiration Date"), and subject to the following terms and
conditions:
1. Registration of Warrant. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, and the Company
shall not be affected by notice to the contrary.
<PAGE> 39
2. Registration of Transfers and Exchanges.
(a) The Company shall register the transfer of any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant, with the
Form of Assignment attached hereto duly completed and signed, to the
Transfer Agent or to the Company at its address for notice set forth in
Section 12. Upon any such registration or transfer, a new warrant to
purchase Common Stock, in substantially the form of this Warrant (any such
new warrant, a "New Warrant"), evidencing the portion of this Warrant so
transferred shall be issued to the transferee and a New Warrant evidencing
the remaining portion of this Warrant not so transferred, if any, shall be
issued to the transferring Holder. The acceptance of the New Warrant by the
transferee thereof shall be deemed the acceptance of such transferee of all
of the rights and obligations of a holder of a Warrant.
(b) This Warrant is exchangeable, upon the surrender hereof by the
Holder to the office of the Company at its address for notice set forth in
Section 12 for one or more New Warrants, evidencing in the aggregate the
right to purchase the number of Warrant Shares which may then be purchased
hereunder. Any such New Warrant will be dated the date of such exchange.
3. Duration and Exercise of Warrants.
(a) This Warrant shall be exercisable by the registered Holder on any
business day before 6:30 P.M., New York City time, at any time and from time
to time on or after the date hereof to and including the Expiration Date.
At 6:30 P.M., New York City time on the Expiration Date, the portion of
this Warrant not exercised prior thereto shall be and become void and of
no value. Prior to the Expiration Date, the Company may not call or
otherwise redeem this Warrant.
(b) Upon delivery of a duly completed and signed Form of Election to
Purchase attached hereto (and the grid attached hereto as Annex A) duly
completed and signed, to the Company at its address for notice set forth in
Section 12 and upon payment of the Exercise Price multiplied by the number
of Warrant Shares that the Holder intends to purchase hereunder, in the
manner provided hereunder, all as specified by the Holder in the Form of
Election to Purchase, the Company shall promptly (but in no event later
than 3 business days after the Date of Exercise (as defined herein) issue
or cause to be issued and cause to be delivered to or upon the written
order of the Holder and in such name or names as the Holder may designate,
a certificate for the Warrant Shares issuable upon such exercise, free of
restrictive legends except (i) either in the event that a registration
statement covering the resale of the Warrant Shares and naming the Holder
as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable without volume restrictions
pursuant to Rule 144(k) promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), or (ii) if this Warrant shall have been
issued pursuant to a written agreement between the original Holder and the
Company, as required by such agreement. Any person so designated by the
Holder to receive Warrant Shares shall be deemed to have become holder of
record of such Warrant Shares as of the Date of Exercise of this Warrant.
The Company shall, upon request of the Holder, if available, use its best
efforts to deliver Warrant Shares hereunder electronically through the
Depository Trust Corporation or another established clearing corporation
<PAGE> 40
performing similar functions. To effect an exercise hereunder, the Holder
shall not be required to physically surrender this Warrant to the Company
unless all the Warrant Shares have been exercised. Exercises hereunder
shall have the effect of lowering the number of Warrant Shares in an amount
equal to the applicable exercise, which shall be evidenced by entries
set forth in the Exercise Schedule. The Holder and the Company shall
maintain records showing the number of Warrant Shares exercised and the date
of such exercises. In the event of any dispute or discrepancy, the records
of the Holder shall be controlling and determinative in the absence of
manifest error. The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph,
following exercise of a portion of this Warrant, the number of shares
issuable upon exercise of this Warrant may be less than the amount stated
on the face hereof.
A "Date of Exercise" means the date on which the Company shall have received
(i) the Form of Election to Purchase completed and duly signed, and (ii)
payment of the Exercise Price for the number of Warrant Shares so indicated
by the Holder to be purchased.
(c) This Warrant shall be exercisable, either in its entirety or, from
time to time, for a portion of the number of Warrant Shares.
4. Piggyback Registration Rights. This Warrant is subject to the
piggyback registration rights granted under the Registration Rights
Agreement and such piggyback registration rights shall continue until all
of the Holder's Warrant Shares have been sold in accordance with an
effective registration statement or upon the Expiration Date. The Company
will pay all registration expenses in connection therewith.
5. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay
any tax which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or Warrants in a name
other than that of the Holder. The Holder shall be responsible for all
other tax liability that may arise as a result of holding or transferring
this Warrant or receiving Warrant Shares upon exercise hereof.
6. Replacement of Warrant. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and
substitution for this Warrant, a New Warrant, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction and indemnity, if requested, satisfactory to it. Applicants for
a New Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable charges
as the Company may prescribe.
7. Reservation of Warrant Shares. The Company covenants that it will
at all times reserve and keep available out of the aggregate of its
authorized but unissued Common Stock, solely for the purpose of enabling
it to issue Warrant Shares upon exercise of this Warrant as herein provided,
the number of Warrant Shares which are then issuable and deliverable upon
the exercise of this entire Warrant, free from preemptive rights or any
other actual contingent purchase rights of persons other than the Holder
(taking into account the adjustments and restrictions of Section 8). The
Company covenants that all Warrant Shares that shall be so issuable and
deliverable shall, upon issuance and the payment of the applicable Exercise
Price in accordance with the terms hereof, be duly and validly authorized,
issued and fully paid and nonassessable.
8. Certain Adjustments. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 8.
(a) If the Company, at any time while this Warrant is outstanding, (i)
shall pay a stock dividend (except scheduled dividends paid on outstanding
preferred stock as of the date hereof which contain a stated dividend rate)
or otherwise make a distribution or distributions on shares of its Common
Stock or on any other class of capital stock payable in shares of Common
Stock, (ii) subdivide outstanding shares of Common Stock into a larger
number of shares, or (iii) combine outstanding shares of Common Stock into
a smaller number of shares, the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding before such event
and of which the denominator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding after such event. Any
adjustment made pursuant to this Section shall become effective immediately
after the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision or
combination, and shall apply to successive subdivisions and combinations.
(b) In case of any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is converted
into other securities, cash or property, then the Holder shall have the
right thereafter to exercise this Warrant only into the shares of stock
and other securities and property receivable upon or deemed to be held by
holders of Common Stock following such reclassification or share exchange,
and the Holder shall be entitled upon such event to receive such amount of
securities or property equal to the amount of Warrant Shares such Holder
would have been entitled to had such Holder exercised this Warrant
immediately prior to such reclassification or share exchange. The terms
of any such reclassification or share exchange shall include such terms
so as to continue to give to the Holder the right to receive the securities
or property set forth in this Section 8(b) upon any exercise following any
such reclassification or share exchange.
<PAGE> 41
(c) If the Company, at any time while this Warrant is outstanding,
shall distribute to all holders of Common Stock (and not to holders of this
Warrant) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security (excluding those referred to in
Sections 8(a), (b) and (d)), then in each such case the Exercise Price shall
be determined by multiplying the Exercise Price in effect immediately prior
to the record date fixed for determination of stockholders entitled to
receive such distribution by a fraction of which the denominator shall be
the Exercise Price determined as of the record date mentioned above, and of
which the numerator shall be such Exercise Price on such record date less
the then fair market value at such record date of the portion of such assets
or evidence of indebtedness so distributed applicable to one outstanding
share of Common Stock as determined by the Company's independent certified
public accountants that regularly examines the financial statements of the
Company (an "Appraiser").
(d) If the Company or any subsidiary thereof, as applicable with respect
to Common Stock Equivalents (as defined below), at any time while this
Warrant is outstanding, shall issue shares of Common Stock or rights,
warrants (including those issued under the Purchase Agreement), options or
other securities or debt that is convertible into or exchangeable for shares
of Common Stock ("Common Stock Equivalents") entitling any Person to acquire
shares of Common Stock, at a price per share less than the Exercise Price
(if the holder of the Common Stock or Common Stock Equivalent so issued
shall at any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or otherwise,
or due to warrants, options or rights issued in connection with such
issuance, be entitled to receive shares of Common Stock at a price less
than the Exercise Price, such issuance shall be deemed to have occurred for
less than the Exercise Price), then, at the option of the Holder for such
exercises as it shall indicate, the Exercise Price shall be adjusted to
mirror the conversion, exchange or purchase price for such Common Stock or
Common Stock Equivalents (including any reset provisions thereof) at issue.
Such adjustment shall be made whenever such Common Stock or Common Stock
Equivalents are issued. The Company shall notify the Holder in writing,
no later than the Trading Day following the issuance of any Common Stock or
Common Stock Equivalent subject to this section, indicating therein the
applicable issuance price, or of applicable reset price, exchange price,
conversion price and other pricing terms. No adjustment under this Section
shall be made as a result of (i) issuances of Common Stock or Common Stock
Equivalents to the extent disclosed in Schedule 2.1(c) to the Purchase
Agreement, (ii) issuances and exercises of options to purchase shares of
Common Stock issued for compensatory purposes pursuant to any of the
Company's stock option or stock purchase plans, or (iii) exercises under
the Warrants (as defined in the Purchase Agreement).
(e) In case of any (1) merger or consolidation of the Company with or
into another Person, or (2) sale by the Company of more than one-half of the
assets of the Company (on a book value basis) in one or a series of related
transactions, the Holder shall have the right thereafter to (A) exercise
this Warrant for the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following
such merger, consolidation or sale, and the Holder shall be entitled upon
such event or series of related events to receive such amount of securities,
cash and property as the Common Stock for which this Warrant could have been
exercised immediately prior to such merger, consolidation or sales would
have been entitled or (B) in the case of a merger or consolidation, (x)
require the surviving entity to issue common stock purchase warrants equal
<PAGE> 42
to the number Warrant Shares to which this Warrant then permits, which
newly warrant shall be identical to this Warrant and (y) simultaneously with
the issuance of such warrant, the Holder of such warrant shall have the
right to exercise such warrant only into shares of stock and other
securities, cash and property receivable upon or deemed to be held by holders
of Common Stock following such merger or consolidation
or (C) require the surviving entity from such merger, acquisition or
business combination to pay to the Holder, in cash, the Black Scholes value
of this Warrant. In the case of clause (B), the exercise price for such
new warrant shall be based upon the amount of securities, cash and property
that each share of Common Stock would receive in such transaction and the
Exercise Price of this Warrant immediately prior to the effectiveness or
closing date for such transaction. The terms of any such merger, sale or
consolidation shall include such terms so as continue to give the Holder
the right to receive the securities, cash and property set forth in this
Section upon any conversion or redemption following such event. This
provision shall similarly apply to successive such events.
(f) For the purposes of this Section 8, the following clauses shall also
be applicable:
(i) Record Date. In case the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them (A) to receive a dividend
or other distribution payable in Common Stock or in securities convertible
or exchangeable into shares of Common Stock, or (B) to subscribe for or
purchase Common Stock or securities convertible or exchangeable into shares
of Common Stock, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued
or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(ii) Treasury Shares. The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for the account
of the Company, and the disposition of any such shares shall be considered
an issue or sale of Common Stock.
(g) All calculations under this Section 8 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be.
(h) Whenever the Exercise Price is adjusted pursuant to Section 8(c)
above, the Holder, after receipt of the determination by the Appraiser,
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case the adjustment shall
be equal to the average of the adjustments recommended by each of the
Appraiser and such appraiser. The Holder shall promptly mail or cause to
be mailed to the Company, a notice setting forth the Exercise Price after
such adjustment and setting forth a brief statement of the facts requiring
such adjustment. Such adjustment shall become effective immediately after
the record date mentioned above.
(i) If:
<PAGE> 43
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
(iii) the Company shall authorize the granting to all holders of
the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights; or
(iv) the approval of any stockholders of the Company shall be
required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party,
any sale or transfer of all or substantially all of the assets of
the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property; or
(v) the Company shall authorize the voluntary dissolution,
liquidation or winding up of the affairs of the Company, then the
Company shall cause to be mailed to each Holder at their last
addresses as they shall appear upon the Warrant Register, at least
20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or
warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share
exchange is expected to become effective or close, and the date as
of which it is expected that holders of Common Stock of record shall
be entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding up; provided, however, that the failure to
mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to
be specified in such notice.
9. Payment of Exercise Price. The Holder shall pay the Exercise Price
in one of the following manners:
(a) Cash Exercise. The Holder may deliver immediately available funds;
or
<PAGE> 44
(b) Cashless Exercise. The Holder may surrender this Warrant to the
Company together with a notice of cashless exercise, in which event the
Company shall issue to the Holder the number of Warrant Shares determined
as follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be issued
to the Holder.
Y = the number of Warrant Shares with respect to which this Warrant
is being exercised.
A = the average of the closing sale prices of the Common Stock (as
reported by Bloomberg L.P. or any successor to its function of reporting
share prices at 4:15 p.m. (New York time for the closing bid price for
regular session trading on such day)) for the five (5) trading days
immediately prior to (but not including) the Date of Exercise.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to
have been commenced, on the issue date.
10. Certain Exercise Restrictions.
(a) A Holder may not exercise this Warrant to the extent such exercise
would result in the Holder, together with any affiliate thereof, beneficially
owning (as determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the rules
promulgated thereunder) in excess of 4.999% of the then issued and
outstanding shares of Common Stock, including shares issuable upon such
exercise and held by such Holder after application of this Section. Since
the Holder will not be obligated to report to the Company the number of
shares of Common Stock it may hold at the time of an exercise hereunder,
unless the exercise at issue would result in the issuance of shares of
Common Stock in excess of 4.999% of the then outstanding shares of Common
Stock without regard to any other shares which may be beneficially owned by
the Holder or an affiliate thereof, the Holder shall have the authority
and obligation to determine whether the restriction contained in this
Section will limit any particular exercise hereunder and to the extent that
the Holder determines that the limitation contained in this Section applies,
the determination of which portion of this Warrant is exercisable shall be
the responsibility and obligation of the Holder. If the Holder has delivered
a Form of Election to Purchase for a number of Warrant Shares that, without
regard to any other shares that the Holder or its affiliates may beneficially
own, would result in the issuance in excess of the permitted amount
hereunder, the Company shall notify the Holder of this fact and shall honor
the exercise for the maximum portion of this Warrant permitted to be
<PAGE> 45
exercised on such Date of Exercise in accordance with the periods described
herein and, at the option of the Holder, either keep the portion of the
Warrant tendered for exercise in excess of the permitted amount hereunder for
future exercises or return such excess portion of the Warrant to the Holder.
The provisions of this Section may be waived by a Holder (but only as to
itself and not to any other Holder) upon not less than 61 days prior notice
to the Company. Other Holders shall be unaffected by any such waiver.
(b) A Holder may not exercise this Warrant to the extent such exercise
would result in the Holder, together with any affiliate thereof, beneficially
owning (as determined in accordance with Section 13(d) of the Exchange Act
and the rules promulgated thereunder) in excess of 9.999% of the then issued
and outstanding shares of Common Stock, including shares issuable upon such
exercise and held by such Holder after application of this Section. Since
the Holder will not be obligated to report to the Company the number of
shares of Common Stock it may hold at the time of an exercise hereunder,
unless the exercise at issue would result in the issuance of shares of
Common Stock in excess of 9.999% of the then outstanding shares of Common
Stock without regard to any other shares which may be beneficially owned by
the Holder or an affiliate thereof, the Holder shall have the authority and
obligation to determine whether the restriction contained in this Section
will limit any particular exercise hereunder and to the extent that the
Holder determines that the limitation contained in this Section applies, the
determination of which portion of this Warrant is exercisable shall be the
responsibility and obligation of the Holder. If the Holder has delivered a
Form of Election to Purchase for a number of Warrant Shares that, without
regard to any other shares that the Holder or its affiliates may beneficially
own, would result in the issuance in excess of the permitted amount
hereunder, the Company shall notify the Holder of this fact and shall honor
the exercise for the maximum portion of this Warrant permitted to be
exercised on such Date of Exercise in accordance with the periods described
herein and, at the option of the Holder, either keep the portion of the
Warrant tendered for exercise in excess of the permitted amount hereunder
for future exercises or return such excess portion of the Warrant to the
Holder. The provisions of this Section may be waived by a Holder (but only
as to itself and not to any other Holder) upon not less than 61 days prior
notice to the Company. Other Holders shall be unaffected by any such waiver.
11. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this
Warrant. The number of full Warrant Shares which shall be issuable upon
the exercise of this Warrant shall be computed on the basis of the aggregate
number of Warrant Shares purchasable on exercise of this Warrant so
presented. If any fraction of a Warrant Share would, except for the
provisions of this Section, be issuable on the exercise of this Warrant,
the Company shall pay an amount in cash equal to the Exercise Price
multiplied by such fraction.
12. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on
the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in
this Section prior to 6:30 p.m. (New York City time) on a business day, (ii)
the business day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 6:30 p.m. (New York City time) on any
date and earlier than 11:59 p.m. (New York City time) on such date, (iii)
<PAGE> 46
the business day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the
party to whom such notice is required to be given. The addresses for such
communications shall be: (i) if to the Company, to 1999 Lincoln Drive,
Suite 202, Sarasota, FL 34236, facsimile: (941) 953 4363, attention Chief
Financial Officer, or (ii) if to the Holder, to the Holder at the address or
facsimile number appearing on the Warrant Register or such other address or
facsimile number as the Holder may provide to the Company in accordance with
this Section.
13. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon thirty (30) days' notice to the Holder, the Company may
appoint a new warrant agent. Any corporation into which the Company or any
new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party
or any corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business
shall be a successor warrant agent under this Warrant without any further
act. Any such successor warrant agent shall promptly cause notice of its
succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder's last address as shown on the Warrant
Register.
14. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns. This Warrant
may be amended only in writing signed by the Company and the Holder and
their successors and assigns.
(b) Subject to Section 14(a), above, nothing in this Warrant shall be
construed to give to any person or corporation other than the Company and
the Holder any legal or equitable right, remedy or cause under this
Warrant. This Warrant shall inure to the sole and exclusive benefit of the
Company and the Holder.
(c) The corporate laws of the State of Delaware shall govern all issues
concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflicts of law thereof. The Company
and the Holder hereby irrevocably submit to the exclusive jurisdiction of
the state and federal courts sitting in the City of New York, borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by receiving a copy thereof sent to the Company
at the address in effect for notices to it under this instrument and agrees
that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in
<PAGE> 47
any way any right to serve process in any manner permitted by law. Each
party irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. If
either party shall commence an action or proceeding to enforce any
provisions of this Warrant, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its' attorneys fees
and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.
(d) The headings herein are for convenience only, do not constitute a
part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
(e) In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to
agree upon a valid and enforceable provision which shall be a commercially
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Warrant.
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SIGNATURE PAGE FOLLOWS]
<PAGE> 48
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its authorized officer as of the date first indicated above.
SALIENT CYBERTECH, INC.
By:_____________________________________
Name:
Title:
<PAGE> 49
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of
Common Stock under the Warrant issued on November 14, 2000 by Salient
Cybertech, Inc.)
To Salient Cybertech, Inc.:
The undersigned hereby irrevocably elects to purchase _____________ shares
of common stock, $.001 par value per share, of Salient Cybertech, Inc. (the
"Common Stock") and , if such Holder is not utilizing the cashless exercise
provisions set forth in this Warrant, encloses herewith $________ in cash,
certified or official bank check or checks, which sum represents the
aggregate Exercise Price (as defined in the Warrant) for the number of
shares of Common Stock to which this Form of Election to Purchase relates,
together with any applicable taxes payable by the undersigned pursuant to
the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
________________________________________________________________________
(Please print name and address)
Dated: _________ , ________ Name of Holder:
(Print)_________________
(By:)___________________
(Name:)
(Title:)
(Signature must conform
in all respects to name
of holder as specified
on the face of the Warrant)
<PAGE> 50
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of Salient
Cybertech, Inc. to which the within Warrant relates and appoints
________________ attorney to transfer said right on the books of Salient
Cybertech, Inc. with full power of substitution in the premises.
Dated:
_______________, ____
_________________________
(Signature must conform
in all respects to name
of holder as specified
on the face of the Warrant)
__________________________
Address of Transferee
__________________________
__________________________
In the presence of:
__________________________
<PAGE> 51
<PAGE> 52
<PAGE> 53
<PAGE> 54
<PAGE> 55
Annex A
Date Number of Warrant Number of Warrant Number of Warrant
Shares Available Shares Exercised Shares Remaining
to be Exercised to be Exercised
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
<PAGE> 56
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of November 14, 2000, among Salient Cybertech, Inc., a Delaware
corporation (the "Company"), and the investors signatory hereto (each such
investor is a "Purchaser" and all such investors are, collectively, the
"Purchasers").
This Agreement is made pursuant to the Convertible Debenture Purchase
Agreement, dated as of the date hereof among the Company and the Purchasers
(the "Purchase Agreement"), and the Securities Purchase Agreement, dated the
date hereof, between the Company and the Investors signatory thereto (the
"Equity Line Agreement").
The Parties hereto, for good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, hereby agree as follows:
1. Definitions
Capitalized terms used and not otherwise defined herein that are defined in
the Purchase Agreement shall have the meanings given such terms in the
Purchase Agreement and the Equity Line Agreement. As used in this Agreement,
the following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control
with such Person. For the purposes of this definition, "control," when used
with respect to any Person, means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract
or otherwise; and the terms of "affiliated," "controlling" and "controlled"
have meanings correlative to the foregoing.
"Business Day" means any day except Saturday, Sunday and any day which shall
be a legal holiday or a day on which banking institutions in the State of
New York or State of Florida are authorized or required by law or other
government actions to close.
"Closing Date" shall have the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's common stock, $.001 par value, or such
securities in to which that such stock shall hereafter be reclassified.
"Debentures" means the Convertible Debentures issued to the Purchasers in
accordance with the Purchase Agreement.
<PAGE> 57
"Effectiveness Date" means with respect to the initial Registration
Statement required to be filed hereunder, the 105th day following the
Closing Date and, with respect to any additional Registration Statements
which may be required pursuant to Section 3(c), the 105th day following the
date that notice of the requirement to file such additional Registration
Statement is provided.
"Effectiveness Period" shall have the meaning set forth in Section 2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Filing Date" means the 30th day following the Closing Date and, with
respect to any additional Registration Statements which may be required
pursuant to Section 3(c), the 30th day following the date that notice of the
requirement to file such additional Registration Statement is provided.
"Holder" or "Holders" means the holder or holders, as the case may be, from
time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section 5(c).
"Indemnifying Party" shall have the meaning set forth in Section 5(c).
"Losses" shall have the meaning set forth in Section 5(a).
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such
as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments
and supplements to the Prospectus, including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by
reference in such Prospectus.
"Registrable Securities" means (i) the shares of Common Stock issuable upon
conversion in full of the Debentures, (ii) the shares of Common Stock
issuable upon conversion in full of the Warrants, and (iii) the Put Shares.
"Registration Statement" means the registration statement and any additional
<PAGE> 58
registration statements contemplated by Section 3(c), including (in each
case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 424" means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"Special Counsel" means one special counsel to the Holders, for which the
Holders will be reimbursed by the Company pursuant to Section 4.
"Warrants" shall mean (i) the Warrants (as defined in each of the Purchase
Agreement and the Equity Line Agreement), (ii) the Common Stock purchase
warrant issued or issuable to Alliance Financial as compensation in
connection with the issuance and sale of the Debentures to the Purchasers,
and (iii) the Common Stock purchase warrant issued to Alliance Financial
under the Equity Line Agreement.
2. Shelf Registration
(a) On or prior to each Filing Date, the Company shall prepare and file
with the Commission a "Shelf" Registration Statement covering the resale of
all Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415. The Registration Statement shall be on Form S-1
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-1, in which case such registration shall be
on another appropriate form and shall contain the "Plan of Distribution"
attached hereto as Annex A. The Company shall use its best efforts to
cause the Registration Statement to be declared effective under the
Securities Act as promptly as possible after the filing thereof, but in any
event prior to the Effectiveness Date, and shall use its best efforts to
keep such Registration Statement continuously effective under the Securities
Act until the date which is two years after the date that such Registration
Statement is declared effective by the Commission or such earlier date when
all Registrable Securities covered by such Registration Statement have been
sold or may be sold without volume restrictions pursuant to Rule 144(k) (the
"Effectiveness Period"). The Company agrees that it will make such pre-and
post-effective filings with the Commission as are necessary in order to
convert the Registration Statement to a Registration Statement under Form
S-3 promulgated under the Securities Act as soon as possible following the
<PAGE> 59
date, if any, on which the Company is eligible to utilize such form to
register the resale of its securities as contemplated by this Agreement.
(b) The initial Registration Statement to be filed hereunder shall
include (but not be limited to) a number of shares of Common Stock equal to
no less than the sum of (i) 200% of the number of shares of Common Stock
issuable upon conversion in full of the principal amount of all issuable
Debentures, assuming no interest is paid thereon in cash and that such
Debentures remain outstanding for three years and that such conversion
occurred at a price equal to the Conversion Price (as defined in the
Debentures) on the Closing Date, Filing Date or day prior to the filing
of a request with the Commission that the Registration Statement be
accelerated (whichever has a lower Conversion Price), and (ii) the number
of shares of Common Stock issuable upon exercise in full of the Warrants
issued as of the Closing Date (assuming that the Maximum number of shares of
Common Stock are issued and sold under the Equity Line Agreement) issued as
of the Closing Date, and (iii) 17,250,000 shares of Common Stock for the
Put Shares and the Warrant Shares for sale by the Holders under the Equity
Line Agreement.
(c) If (a) a Registration Statement is not filed on or prior to its
Filing Date (if the Company files such Registration Statement without
affording the Holder the opportunity to review and comment on the same as
required by Section 3(a) hereof, the Company shall not be deemed to have
satisfied this clause (a)), or (b) the Company fails to file with the
Commission a request for acceleration in accordance with Rule 461 promulgated
under the Securities Act, within five days of the date that the Company is
notified (orally or in writing, whichever is earlier) by the Commission that
a Registration Statement will not be "reviewed," or not subject to further
review, or (c) a Registration Statement filed hereunder is not declared
effective by the Commission on or prior to its Effectiveness Date, or (d)
after a Registration Statement is filed with and declared effective by the
Commission, such Registration Statement ceases to be effective as to all
Registrable Securities to which it is required to relate at any time prior
to the expiration of the Effectiveness Period without being succeeded within
ten Business Days by an amendment to such Registration Statement or by a
subsequent Registration Statement filed with and declared effective by the
Commission, or (e) the Common Stock shall not be quoted on the OTC Bulletin
Board ("OTC") or shall be delisted or suspended from trading on the New York
Stock Exchange, American Stock Exchange, the Nasdaq National Market or the
Nasdaq SmallCap Market (each, a "Subsequent Market") for more than three
Trading Days (which need not be consecutive Trading Days), or (f) the
conversion rights of the Holders pursuant to the Debentures are suspended
for any reason, or (g) an amendment to a Registration Statement is not filed
by the Company with the Commission within ten Business Days of the
Commission's notifying the Company that such amendment is required in order
for such Registration Statement to be declared effective (any such failure
or breach being referred to as an "Event," and for purposes of clauses
(a), (c) and (f) the date on which such Event occurs, or for purposes of
clause (b) the date on which such five day period is exceeded, or for
purposes of clauses (d) and (g) the date which such ten Business Day-period
is exceeded, or for purposes of clause (e) the date on which such three
Trading Day-period is exceeded, being referred to as "Event Date"), then, on
the first monthly anniversary of such Event Date, the Company shall pay to
each Holder an amount in cash, as liquidated damages and not as a penalty,
equal to 2.0% of the purchase price paid by such Holder pursuant to the
Purchase Agreement, and on each monthly anniversary thereafter of such
Event Date and every monthly anniversary thereof until the applicable Event
is cured, the Company shall pay to each Holder an amount in cash, as
liquidated damages and not as a penalty, equal to 3.0% of the purchase price
<PAGE> 60
paid by such Holder pursuant to the Purchase Agreement. If the Company
fails to pay any liquidated damages pursuant to this Section in full within
seven days after the date payable, the Company will pay interest thereon at
a rate of 15% per annum (or such lesser maximum amount that is permitted to
be paid by applicable law) to the Holder, accruing daily from the date such
liquidated damages are due until such amounts, plus all such interest
thereon, are paid in full and if not in cash by the tenth Business Day after
first accrued, at the option of the Holder, such liquidated damages be paid
in shares of Common Stock under the Vesting Warrant. The liquidated damages
pursuant to the terms hereof shall apply on a pro-rata basis for any portion
of a month prior to the cure of an Event.
3. Registration Procedures
In connection with the Company's registration obligations hereunder, the
Company shall:
(a) Not less than five Business Days prior to the filing of each
Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated or
deemed to be incorporated therein by reference), the Company shall, (i)
furnish to the Holders and their Special Counsel copies of all such
documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject to
the review of such Holders and their Special Counsel, and (ii) cause its
officers and directors, counsel and independent certified public accountants
to respond to such inquiries as shall be necessary, in the reasonable
opinion of respective counsel to conduct a reasonable investigation within
the meaning of the Securities Act. The Company shall not file the
Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities and their Special Counsel shall reasonably object, provided, the
Company is notified of such objection no later than 3 Business Days after
the Holders have been so furnished copies of such documents.
(b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep the Registration
Statement continuously effective as to the applicable Registrable Securities
for the Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule
424; (iii) respond as promptly as reasonably possible, and in any event
within ten Business Days, to any comments received from the Commission with
respect to the Registration Statement or any amendment thereto and as
promptly as reasonably possible provide the Holders true and complete copies
of all correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of
the Securities Act and the Exchange Act with respect to the disposition of
all Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by
the Holders thereof set forth in the Registration Statement as so amended or
in such Prospectus as so supplemented.
<PAGE> 61
(c) File additional Registration Statements if the number of Registrable
Securities at any time exceeds 85% of the number of shares of Common Stock
then registered in all their existing Registration Statements hereunder.
(d) Notify the Holders of Registrable Securities to be sold and their
Special Counsel as promptly as reasonably possible (and, in the case of (i)
(A) below, not less than five Business Days prior to such filing) and (if
requested by any such Person) confirm such notice in writing no later than
one Business Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is
proposed to be filed; (B) when the Commission notifies the Company whether
there will be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement (the Company
shall provide true and complete copies thereof and all written responses
thereto to each of the Holders); and (C) with respect to the Registration
Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the Commission or any other Federal or
state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information;
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that purpose;
(iv) if at any time any of the representations and warranties of the Company
contained in any agreement contemplated hereby ceases to be true and correct
in all material respects; (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (vi) of the occurrence of any event or passage of time that
makes the financial statements included in the Registration Statement
ineligible for inclusion therein or any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the
Prospectus, as the case may be, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(e) Promptly deliver to each Holder and their Special Counsel, without
charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Persons
may reasonably request. The Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement
thereto.
(f) Prior to any public offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the selling Holders and
their Special Counsel in connection with the registration or qualification
(or exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder requests in writing, to
keep each such registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts
or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, that the Company shall not be required to qualify
<PAGE> 62
generally to do business in any jurisdiction where it is not then so
qualified or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
(g) Cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be delivered
to a transferee pursuant to a Registration Statement, which certificates
shall be free, to the extent permitted by the Purchase Agreement, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holders may request.
(h) Upon the occurrence of any event contemplated by Section 3(d)(vi),
as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document
so that, as thereafter delivered, neither the Registration Statement nor
such Prospectus will contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(i) Comply with all applicable rules and regulations of the Commission.
4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be
borne by the Company whether or not any Registrable Securities are sold
pursuant to the Registration Statement. The fees and expenses referred to
in the foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and
expenses (A) with respect to filings required to be made with any Subsequent
Market on which the Common Stock is then listed for trading, and (B) in
compliance with applicable state securities or Blue Sky laws (including,
without limitation, fees and disbursements of counsel for the Company in
connection with Blue Sky qualifications or exemptions of the Registrable
Securities and determination of the eligibility of the Registrable Securities
for investment under the laws of such jurisdictions as requested by the
Holders)), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing
prospectuses requested by the Holders), (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Company
and Special Counsel for the Holders and (v) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement.
5. Indemnification
<PAGE> 63
(a) Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Holder,
the officers, directors, agents, brokers (including brokers who offer and
sell Registrable Securities as principal as a result of a pledge or any
failure to perform under a margin call of Common Stock), investment advisors
and employees of each of them, each Person who controls any such Holder
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, agents and employees of each such
controlling Person, to the fullest extent permitted by applicable law, from
and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and attorneys' fees)
and expenses (collectively, "Losses"), as incurred, arising out of or
relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (1) such
untrue statements or omissions are based solely upon information regarding
such Holder furnished in writing to the Company by such Holder expressly for
use therein, or to the extent that such information relates to such Holder
or such Holder's proposed method of distribution of Registrable Securities
and was reviewed and expressly approved in writing by such Holder expressly
for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto or (2) in the case of
an occurrence of an event of the type specified in Section 3(d)(ii)-(vi),
the use by such Holder of an outdated or defective Prospectus after the
Company has notified such Holder in writing that the Prospectus is outdated
or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(e). The Company shall notify the Holders promptly
of the institution, threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement.
(b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
Persons, to the fullest extent permitted by applicable law, from and against
all Losses (as determined by a court of competent jurisdiction in a final
judgment not subject to appeal or review) arising solely out of or based
solely upon any untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto, or arising solely out of or based solely
upon any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading to the extent, but
only to the extent, that such untrue statement or omission is contained in
any information so furnished in writing by such Holder to the Company
specifically for inclusion in such Registration Statement or such Prospectus
or to the extent that (1) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (2) in the case of an occurrence of an event of the
type specified in Section 3(d)(ii)-(vi), the use by such Holder of an
outdated or defective Prospectus after the Company has notified such Holder
<PAGE> 64
in writing that the Prospectus is outdated or defective and prior to the
receipt by such Holder of the Advice contemplated in Section 6(e). In no
event shall the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the net proceeds received by such Holder
upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party shall promptly notify the
Person from whom indemnity is sought (the "Indemnifying Party") in writing,
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such
notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent
that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that
such failure shall have proximately and materially adversely prejudiced
the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has
agreed in writing to pay such fees and expenses; or (2) the Indemnifying
Party shall have failed promptly to assume the defense of such Proceeding
and to employ counsel reasonably satisfactory to such Indemnified Party
in any such Proceeding; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and
the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying
Party in writing that it elects to employ separate counsel at the expense
of the Indemnifying Party, the Indemnifying Party shall not have the right
to assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending Proceeding in respect of which any Indemnified
Party is a party, unless such settlement includes an unconditional release
of such Indemnified Party from all liability on claims that are the subject
matter of such Proceeding.
All fees and expenses of the Indemnified Party (including reasonable fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten
Business Days of written notice thereof to the Indemnifying Party
(regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
(d) Contribution. If a claim for indemnification under Section 5(a)
<PAGE> 65
or 5(b) is unavailable to an Indemnified Party (by reason of public policy
or otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions
that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact, has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include, subject to the limitations
set forth in Section 5(c), any reasonable attorneys' or other reasonable
fees or expenses incurred by such party in connection with any Proceeding
to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available
to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 5(d),
no Holder shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the proceeds actually received by such Holder
from the sale of the Registrable Securities subject to the Proceeding
exceeds the amount of any damages that such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.
The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6. Miscellaneous
(a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified
or supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the same shall be in writing and signed by
the Company and the Holders of at least two-thirds of the then outstanding
Registrable Securities. Notwithstanding the foregoing, a waiver or consent
to depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders and that does not directly or
indirectly affect the rights of other Holders may be given by Holders
of at least a majority of the Registrable Securities to which such waiver
or consent relates; provided, however, that the provisions of this sentence
may not be amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence.
(b) No Inconsistent Agreements. Neither the Company nor any of its
subsidiaries has entered, as of the date hereof, nor shall the Company or
any of its subsidiaries, on or after the date of this Agreement, enter
into any agreement with respect to its securities that would have the
effect of impairing the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof. Except as and to the
<PAGE> 66
extent specified in Schedule 6(b) hereto, neither the Company nor any of
its subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person
that have not been satisfied in full.
(c) No Piggyback on Registrations. Except as and to the extent
specified in Schedule 6(b) hereto, neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto)
may include securities of the Company in the Registration Statement other
than the Registrable Securities, and the Company shall not after the date
hereof enter into any agreement providing any such right to any of its
security holders.
(d) Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities
pursuant to the Registration Statement.
(e) Discontinued Disposition. Each Holder agrees by its acquisition
of such Registrable Securities that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in Sections
3(d)(ii), 3(d)(iii), 3(d)(iv), 3(d)(v) or 3(d)(vi), such Holder will
forthwith discontinue disposition of such Registrable Securities under
the Registration Statement until such Holder's receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(h), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may
be resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company may
provide appropriate stop orders to enforce the provisions of this paragraph.
(f) Piggy-Back Registrations. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of
the Registrable Securities and the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering
for its own account or the account of others under the Securities Act of
any of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating
to equity securities to be issued solely in connection with any acquisition
of any entity or business or equity securities issuable in connection with
stock option or other employee benefit plans, then the Company shall send
to each Holder written notice of such determination and, if within fifteen
days after receipt of such notice, any such Holder shall so request in
writing, the Company shall include in such registration statement all or
any part of such Registrable Securities such holder requests to be registered.
g) Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile
at the facsimile telephone number specified in this Section prior to 6:30
p.m. (New York City time) on a Business Day, (ii) the Business Day after
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Agreement
later than 6:30 p.m. (New York City time) on any date and earlier than 11:59
p.m. (New York City time) on such date, (iii) the Business Day following
the date of mailing, if sent by nationally recognized overnight courier
service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications
shall be as follows:
<PAGE> 67
If to the Company: Salient Cybertech, Inc.
1999 Lincoln Drive, Suite 202
Sarasota, Florida 34236
Facsimile No.: (941) 953 4363
Attn: Chief Financial Officer
With copies to: David J. Feingold, Esq.
3300 PGA Blvd.
Palm Beach Gardens, Florida 33410
Facsimile No.: (561) 630 8936
If to a Purchaser: To the address set forth under such
Purchaser's name on the signature
pages hereto.
If to any other Person who is then the registered Holder:
To the address of such Holder as it
appears in the stock transfer books
of the Company
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
(h) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. The Company may
not assign its rights or obligations hereunder without the prior written
consent of each Holder. Each Holder may assign their respective rights
hereunder in the manner and to the Persons as permitted under the Purchase
Agreement.
(i) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the
original thereof.
(j) Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be
governed by and construed and enforced in accordance with the internal
laws of the State of New York, without regard to the principles of conflicts
of law thereof. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New
York, borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address
in effect for notices to it under this Agreement and agrees that such
<PAGE> 68
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. Each party
irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out
of or relating to this Agreement or the transactions contemplated hereby.
If either party shall commence an action or proceeding to enforce any
provisions of this Agreement, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its' attorneys fees
and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.
(k) Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
(l) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force
and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ
an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction.
It is hereby stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
(m) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(n) Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Holder, Purchaser and Investor hereunder are several
and not joint with the obligations of any other Holder, Purchaser and
Investor hereunder, and no such Person shall be responsible in any way
for the performance of the obligations of any other such Person hereunder.
Nothing contained herein or in any other agreement or document delivered
at any closing, and no action taken by any Holder, Purchaser or Investor
pursuant hereto or thereto, shall be deemed to constitute such Person as
a partnership, an association, a joint venture or any other kind of entity,
or create a presumption that such Person is in any way acting in concert
with respect to such obligations or the transactions contemplated by this
Agreement. Each Holder, Purchaser and Investor shall be entitled to
protect and enforce its rights, including without limitation the rights
arising out of this Agreement, and it shall not be necessary for any
other Holder, Purchaser or Investor to be joined as an additional party
in any proceeding for such purpose.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES TO FOLLOW]
<PAGE> 69
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
SALIENT CYBERTECH, INC.
By:_____________________________
Name:
Title:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES OF PURCHASER TO FOLLOW]
<PAGE> 70
HAINES AVENUE LLC
By:_____________________________
Name:
Title:
Address for Notice: Haines Avenue LLC
c/o Citco Trustees (Cayman)
Limited
Commercial Centre
P.O. Box 31106 SMB
Grand Cayman
Cayman Islands
British West Indies
Facsimile No.: (345) 945-7566
With copies to: Robinson Silverman Pearce
Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, NY 10104
Facsimile No.: (212) 541-4630
and (212) 541-1432
Attn: Eric L. Cohen, Esq.
<PAGE> 71
Annex A
Plan of Distribution
The Selling Stockholders and any of their pledgees, assignees and successors-
in-interest may, from time to time, sell any or all of their shares of
Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the broker-
dealer for its account;
- an exchange distribution in accordance with the rules of the
applicable exchange;
- privately negotiated transactions;
- short sales;
- broker-dealers may agree with the Selling Stockholders to sell
a specified number of such shares at a stipulated price per share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The Selling Stockholders may also engage in short sales against the box,
puts and calls and other transactions in securities of the Company or
derivatives of Company securities and may sell or deliver shares in
connection with these trades. The Selling Stockholders may pledge their
shares to their brokers under the margin provisions of customer agreements.
If a Selling Stockholder defaults on a margin loan, the broker may, from
time to time, offer and sell the pledged shares. The Selling Stockholders
have advised the Company that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers
regarding the sale of their shares other than ordinary course brokerage
arrangements, nor is there an underwriter or coordinating broker acting
<PAGE> 72
in connection with the proposed sale of shares by the Selling Stockholders.
Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-
dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. The Selling Stockholders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved.
The Investor and any broker-dealers or agents that are involved in
selling the shares are considered "underwriters" by the Securities and
Exchange Commission within the meaning of the Securities Act in connection
with sales under this Registration Statement. Accordingly, any commissions
received by such broker-dealers or agents and any profit on the resale of
the shares purchased by them will be deemed underwriting commissions or
discounts under the Securities Act.
The Company is required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel
to the Selling Stockholders. The Company has agreed to indemnify the
Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
<PAGE> 73
SECURITIES PURCHASE AGREEMENT
Between
SALIENT CYBERTECH, INC.
and
HAINES AVENUE LLC
SECURITIES PURCHASE AGREEMENT dated as of November 14, 2000 (this
"Agreement"), between the Investor signatory hereto (the "Investor"), and
Salient Cybertech, Inc., a Delaware corporation (the "Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall have the opportunity
to issue and sell to Investor from time to time as provided herein and
pursuant to Rule 506 promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), and Section 4(2) thereunder, up to
$10,000,000 of the Company's Common Stock (as defined below) and certain
Common Stock purchase warrants.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investor
agree as follows:
ARTICLE I
Certain Definitions
"Business Day" means any day except Saturday, Sunday and any day which
shall be a federal legal holiday in the United States or a day on which
banking institutions in the State of New York or State of Florida are
authorized or required by law or other government action to close.
"Capital Shares" means the Common Stock and any shares of any other class
of common stock whether now or hereafter authorized, having the right to
participate in the distribution of earnings and assets of the Company.
"Capital Shares Equivalents" means any securities, rights, or obligations
that are directly or indirectly convertible into or exchangeable for or
give any right to subscribe for or otherwise receive Capital Shares of the
Company or any warrants, options or other rights to subscribe for or
purchase Capital Shares.
<PAGE> 74
"Closing Warrant" means the Common Stock purchase warrant, in the form of
Exhibit C-1 hereto, to be delivered to the Investor concurrently with the
execution of this Agreement, entitling the Investor to purchase from time
to time in accordance with the terms thereof shares of Common Stock.
"Commission" means the Securities and Exchange Commission.
"Commitment Period" means the period commencing on the Effective Date and
expiring on the earliest to occur of (x) the date on which the Investor
shall have paid an aggregate of $10,000,000 in Purchase Price pursuant to
this Agreement, (y) the date this Agreement is terminated in accordance
with its terms, or (z) the date occurring 24 months from the Closing Date.
"Common Stock" means the Company's common stock, par value $.001 per share,
or such securities into which such stock shall hereafter be reclassified
or changed.
"Effective Date" means the date on which the Commission first declares
effective a Registration Statement meeting the requirements of the
Registration Statement and registering the sale by the Company and resale
by the Investor of the Registrable Securities.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Investment Amount" means the dollar amount to be invested by the Investor
to purchase Put Shares as specified in a Put Notice.
"Market Price" on any date means the average of the three lowest VWAPs
during the Valuation Period relating to such date, subject to equitable
adjustment in the event of a Valuation Event during such Valuation Period.
"Maximum Put Amount" means means the lesser of (x) $2,000,000 and (y)
150% of the weighted average daily price for the twenty Trading Day period
prior to the Put Date multiplied by the weighted average trading volume
for such twenty Trading Day period.
"Minimum Commitment Amount" means $2,500,000.
"Outstanding" when used with reference to shares of Common Stock or Capital
Shares, means, at any date as of which the number of such Shares is to be
determined, all issued and outstanding shares of Common Stock or Capital
Shares, and shall include all such shares issuable in respect of outstanding
scrip or any certificates representing fractional interests in such shares;
provided, that "Outstanding" shall not mean any shares of Common Stock or
Capital Shares directly or indirectly owned or held by or for the account
of the Company.
<PAGE> 75
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"Principal Market" means whichever of the Nasdaq National Market, Nasdaq
SmallCap Market, American Stock Exchange, New York Stock Exchange or OTC
Bulletin Board, that is then the principal trading exchange, market or
quotation system for the Common Stock.
"Purchase Price" means with respect to Put Shares, an amount equal to 90%
of the Market Price for the Valuation Period for a Put (subject to certain
adjustments as set forth in Section 5.7).
"Put" means the exercise by the Company of its right to require the
Investor to purchase Put Shares pursuant to the terms of this Agreement.
"Registrable Securities" has the meaning set forth in the Registration
Rights Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement
between the Company and the Investor, dated the date hereof, in the form
of Exhibit B hereto.
"Registration Statement" shall have the meaning set forth in the Registration
Rights Agreement.
"Securities" means, collectively, the Put Shares, Warrants and Warrant
Shares.
"Trading Day" means (a) a day on which the Common Stock is traded on the
Principal Market on which the Common Stock is then listed or quoted, or
(b) if the Common Stock is not listed or quoted for trading on a Principal
Market, a day on which the Common Stock is traded in the over-the-counter
market, as reported by the National Quotation Bureau Incorporated (or any
similar organization or agency succeeding its functions of reporting
prices); provided, that in the event that the Common Stock is not listed
or quoted as set forth in (a) or (b) hereof, then Trading Day shall mean
a Business Day.
"Undrawn Amount" means $2,500,000 less the aggregate Purchase Price paid
during the Commitment Period for Put Shares pursuant to this Agreement.
"Valuation Event" means an action by the Company during the Commitment
Period to:
(1) subdivide or combine the Common Stock;
(2) pay a dividend on its Capital Shares or make any other distribution
of its Capital Shares;
<PAGE> 76
(3) issue any additional Capital Shares ("Additional Capital Shares")
at a price per share less, or for other consideration lower, than the VWAP
in effect immediately prior to such issuance, or without consideration
(other than pursuant to this Agreement);
(4) issue any warrant, option, right or other security to subscribe for
or purchase Additional Capital Shares at a price per share at any time over
life of such security (whether by reset, adjustment or otherwise) that is
less than the VWAP in effect immediately prior to such issuance of such
warrant, option, right or other security;
(5) issue any securities convertible into or exchangeable for Capital
Shares at a price per Additional Capital Share that is at any time over
the life of such security (whether by reset, adjustment or otherwise) less
than the VWAP on the date of issuance of such convertible or exchangeable
security;
(6) make a distribution of its assets or evidences of indebtedness to
the holders of its Capital Shares as a dividend in liquidation or by way of
return of capital or other than as a dividend payable out of earnings or
surplus legally available for dividends under applicable law or any
distribution to such holders made in respect of the sale of all or
substantially all of the Company's assets (other than under the circumstances
provided for in the foregoing subsections (a) through (e)); or
(7) take any other action affecting the number of Outstanding Capital
Shares, which in the opinion of the Company's Board of Directors, determined
in good faith, would have a Material Adverse Effect upon the rights of the
Investor at the time of a Put.
"Valuation Period" means the period of ten Trading Days commencing on the
Put Date.
"Vesting Warrant" means the Common Stock purchase warrant, in the form of
Exhibit C-2 hereto, to be delivered to the Investor concurrently with the
execution of this Agreement, entitling the Investor to purchase from time
to time in accordance with the terms thereof shares of Common Stock.
"VWAP" means the daily volume weighted average price (as reported by
Bloomberg Financial using AQR function) of the Common Stock on the Principal
Market on the date in question, or if there is no such price on such date,
then the closing bid price on the date nearest preceding such date.
"Warrants" means, collectively, (a) the Closing Warrant, (b) the Vesting
Warrant and (c) the Common Stock purchase warrant, in the form of Exhibit
C-3 hereto, to be delivered to the Broker (as defined herein) concurrently
with the execution of this Agreement, entitling the Broker to purchase
from time to time in accordance with the terms thereof shares of Common
Stock.
"Warrant Shares" means the shares of Common Stock issuable upon exercise
of the Warrants.
<PAGE> 77
ARTICLE II
Purchase and Sale of Common Stock
Section II.1 Investments.
(1) Puts. Subject to the conditions and limitations set forth herein,
the Company may make a Put by the delivery of a duly completed written
notice to the Investor in the form attached hereto as Exhibit A (each, a
"Put Notice"), specifying therein the Investment Amount that the Company
intends to sell to the Investor. The number of shares of Common Stock that
the Investor shall receive pursuant to a Put ("Put Shares") shall be
determined by dividing the Investment Amount specified in the Put Notice
by the Purchase Price for the Valuation Period for such Put.
(2) Limitations on Puts and Common Stock Issuable.
(i) The Company may not deliver a Put Notice to the extent that,
following the purchase by the Investor of Put Shares thereunder, the
Investor and its affiliates would beneficially own (as determined in
accordance with Section 13(d) of the Exchange Act) in excess of 4.999%
of the then outstanding shares of Common Stock.
(ii) The maximum Purchase Price for all Puts is an aggregate of
$10,000,000.
(iii) The Investment Amount for each Put shall be neither less than
$50,000 nor more than the Maximum Put Amount.
(iv) The Company may not deliver a Put Notice during the continuation
of any of the events specified in Section 5.4.
Section II.2 Mechanics.
(1) Put Notice. Subject to the conditions and limitations herein,
at any time during the Commitment Period the Company may deliver a Put
Notice to the Investor.
(2) Date of Delivery of Put Notice or Notice to Acquire Investment
Shares. A Put Notice shall be deemed delivered on: (i) the Trading Day
it is received by facsimile or otherwise by the Investor if such notice
is received prior to 12:00 noon New York Time, or (ii) the immediately
succeeding Trading Day if it is received by facsimile or otherwise after
12:00 noon New York Time on a Trading Day or at any time on a day which
is not a Trading Day. The Trading Day that a Put Notice is deemed delivered
pursuant to this Section is the "Put Date."
Section II.3 Closings.
<PAGE> 78
(a) Subject to the satisfaction of the conditions set forth in this
Agreement, the closing of the purchase by the Investor of Put Shares
following a Put (a "Closing") shall occur on the second Business Day
following the end of the Valuation Period for such Closing (or such other
date as is mutually agreed to by the Company and the Investor) (a "Closing
Date") at the offices of Robinson Silverman Pearce Aronsohn & Berman LLP,
1290 Avenue of the Americas, New York, NY 10104 ("Robinson Silverman") or
such other place to which the parties may agree. At least one Business
Day prior to each Closing Date, the Company shall deliver (or cause to be
delivered) into escrow with Robinson Silverman (or such other escrow agent
to which the parties may agree): (1) the certificate contemplated by Section
6.1(c); (2) the legal opinion contemplated by Section 6.1(f); (3) a writing,
executed by the Investor and the Company concurring as to (x) the total
number of Put Shares that are to be issued and sold at such Closing, (y)
the Investment Amount for the Put Shares issuable at such Closing
and (z) the number of Warrant Shares that will vest on such Closing Date
under the Closing Warrant as a result of such Put (it being agreed that
750,000 shares of Common Stock shall vest under such Closing Warrant on the
first Closing Date and 150,000 shares of Common Stock shall vest for each
$1,000,000 of Purchase Price paid at additional Closings), and (4) all other
documents, instruments and writings required to be delivered by it pursuant
to the Transaction Documents (as defined herein) in order to effect a Closing
hereunder (the items contemplated by clauses (1) through (4) above are
collectively referred to as the "Company Required Items"). At least one
Business Day prior to each Closing Date, the Company shall deliver to the
Investor's account through the Depository Trust Company DWAC system, per
written account instructions delivered by the Investor to the Company (the
"DTC Account"), the Put Shares to be issued and sold to the Investor at such
Closing and meeting the requirements of Section 5.3 which Put Shares shall
be held in escrow pending delivery to the Company of the Investment Amount
for the Put Shares to be issued and sold at such Closing pursuant to the
terms hereof.
(b) Robinson Silverman (or such other escrow agent to which the parties
may agree) shall notify the Company, the Investor and Alliance Financial
(the "Broker") on the Business Day it receives all of the Company Required
Items relating to such Closing. If: (i) Robinson Silverman (or such other
escrow agent to which the parties may agree) shall have provided such notice
by the Closing, (ii) the DTC Account shall have been credited with the Put
Shares to be issued and sold to the Investor at such Closing and (iii) the
other conditions to the Investor's obligation to purchase Put Shares at such
Closing as provided hereunder shall have been satisfied or waived, the
Investor shall deliver (or cause to be delivered): (x) to the Company, the
Investment Amount for the Put Shares to be issued and sold at such Closing,
less the amounts contemplated by clause (y) following this clause (x), and
(y) (1) to Robinson Silverman (or such other escrow agent to which the
parties may agree), $2,000, (2) to the Investor, the amount of any Blackout
Payments (as defined below), together with all accrued interest thereon,
then owed and for which full payment shall not have previously been made,
(3) to the Broker, an amount equal to [ ] of the gross Investment Amount
to be paid at such Closing. In the event that: (i) any Company Required
Item shall not have been delivered, (ii) the DTC Account shall not have been
credited with the Put Shares to be issued and sold to the Investor at such
Closing or (iii) any condition set forth in Article VI shall not have been
fulfilled or waived by the Investor then, at the option of the Investor,
such Closing shall be canceled and any Company Required Items delivered to
Robinson Silverman (or such other escrow agent to which the parties may
agree) and any Put Shares credited to the DTC Account, in both cases, in
<PAGE> 79
connection with such Closing, shall be returned to or as directed by the
Company. The parties hereto understand and agree that Robinson Silverman
(or such other escrow agent to which the parties may agree) will not release
the Company Required Items to the Investor prior to its receipt of written
confirmation from the Company that the Company has received the net proceeds
from the sale of the Put Shares to have been sold at such Closing; provided,
if the Company does not confirm such receipt by 5:00 p.m. New York Time on
the Business Day following the Closing Date, the parties hereby direct
Robinson Silverman (or such other escrow agent to which the parties may
agree) to deliver the Company Required Items to the Investor at such time as
Robinson Silverman (or such other escrow agent to which the parties may
agree) receives written evidence from the institution from which the
Investment Amount was delivered on behalf of the Investor that funds equal
to the amount required hereunder to be delivered to the Company at such
Closing were delivered in accordance with the wire instructions provided
by the Company for such purpose (a federal wire number for the correct
amount and in accordance with the wire instructions provided by the Company
for such purpose shall be conclusive evidence of the Company's receipt).
(c) Each of the parties hereby agrees jointly and severally to indemnify
and hold harmless Robinson Silverman (or such other escrow agent to which
the parties may agree) and its members, employees, agents and representatives
from any and all claims, liabilities, costs or expenses in any way arising
from or relating to the performance of its duties hereunder and agrees that
Robinson Silverman (or such other escrow agent to which the parties may
agree) shall not have any liability hereunder other than as arising solely
from its willful misconduct in performing its duties hereunder. The
parties understand and agree that Robinson Silverman (or such other escrow
agent to which the parties may agree) may, at any time upon two Business
Days prior written notice to the parties, resign from its duties and
obligations hereunder without recourse to any party. The Company further
understands and agrees that Robinson Silverman acts as legal counsel to
the Investor in connection with the transactions contemplated hereby and may,
from time to time, represent the Investor in other matters,
including such matters as may directly or indirectly be adverse to the
interests of the Company. The Company consents to such representation and
waives any claim that such representation represents a conflict of interest
on the part of Robinson Silverman. The Investor understands that the
Company and Robinson Silverman are relying explicitly on the foregoing
provision in connection with the Investor entering into this Agreement.
Section II.4 Termination of Investment Obligation.
(1) The obligation of the Investor to purchase shares of Common Stock
shall, at the Investor's option, terminate permanently (including with
respect to a Closing Date that has not yet occurred) in the event that (i)
there shall occur any stop order or suspension of the effectiveness of the
Registration Statement (or the ability of the Investor to use the prospectus
thereunder to dispose of Registrable Securities) for an aggregate of thirty
days during the Commitment Period for any reason, (ii) the Company shall at
any time breach its obligations under the Transaction Documents or there
shall be an Event of Default under the Debentures issued in accordance with
the Convertible Debenture Purchase Agreement dated the date hereof among the
Company and the Purchasers signatory thereto, which breach shall not be
cured within 30 days after notice, (iii) the Registration Statement shall
not have become effective by the expiration of the 150th day following the
<PAGE> 80
date of this Agreement or (iv) if, after the Effective Date, the registration
statement ceases to be effective as to all Registrable Securities, or the
prospectus thereunder is not available for use by the Investor to sell
Registrable Securities, in either case, for an aggregate of 30 days.
(2) The obligation of the Company to sell Put Shares to the Investor
following delivery of a Put Notice shall terminate if the Investor fails to
honor such Put Notice within four Trading Days following the Closing Date
scheduled for such Put, and the Company notifies Investor of such
termination. Notwithstanding any such termination, the Company shall
maintain the Registration Statement in effect (and shall permit the Investor
to use the prospectus thereunder to sell Registrable Securities) for not
less than 45 Trading Days following the date of any such termination. Such
termination shall be the Company's sole remedy for the Investor's failure
to honor a Put.
Section II.5 Blackout Payments. If for any reason an Investor is not
permitted for more than an aggregate of ten Trading Days (which need not be
consecutive Trading Days) during the period commencing on the Effective
Date and ending on the 45th Trading Day following the expiration of the
Commitment Period to use the prospectus under the Registration Statement
to dispose of all Registrable Securities or if such Registration Statement
shall not be effective, then the Company shall pay to such Investor on the
following Business Day and on the Business Day following each additional
such ten Trading Day period in excess the initial ten Trading Day period,
as liquidated damages and not as a penalty, cash in an amount equal to 2%
of all Put Shares and Warrant Shares issued to and then held by such
Investor. The amounts that may become due and payable pursuant to this
Section are sometimes referred to herein as "Blackout Payments." Late
interest on any unpaid Blackout Payments shall accrue from and after the
date due at the rate of 15% per annum (or such lesser maximum amount as
shall be permitted under applicable law) until all Blackout Payments, plus
all accrued interest thereon, shall have been paid in full. At the option
of the Investors, any portion of Blackout Payments which are not paid in
full by the tenth Business Day following the date of incurrence of such
Blackout Payment shall be paid in shares of Common Stock through of the
Vesting Warrant.
Section II.6 Delisting; Suspension. If at any time prior to the 30th
Trading Day following the expiration of the Commitment Period the Common
Stock shall fail to be listed or quoted for trading on a Principal Market
or shall have been suspended from trading thereon (excluding suspensions of
not more than one Trading Day as a result of material announcements by the
Company) (a "Repurchase Event"), the Investor shall have the right,
exercisable within 30 days of a Repurchase Event, to put to the Company,
and the Company shall purchase, all or such portion of the Put Shares issued
to and then held by the Investor. The purchase price for such shares shall
equal the higher of (x) the Purchase Price paid for such shares and (y) the
product of (1) the number of such shares and (2) the higher of the closing
sales price of the Common Stock on the date of the demand by the Investor
of such put and the closing sales price of the Common Stock (as reported by
Bloomberg L.P. or any successor to its function of reporting share prices)
on the date of payment (if there shall no longer be a reported closing
sales price for the Common Stock, the amount under this clause (y) shall
equal the last reported closing sales price of the Common Stock on the
Principal Market). The purchase price under this Section shall be paid in
cash and shall be due in full by the 10th Business Day following the demand
<PAGE> 81
therefor. Late interest on any unpaid portion of the amounts that are due
from the Company under this Section shall accrue from and after the date due
at the rate of 15% per annum (or such lesser maximum amount as shall be
permitted under applicable law) until all such amounts, plus all accrued
interest thereon, shall have been paid in full. The Investor shall have
the right to rescind ab initio any demand for a put hereunder at any time
prior to the payment in full of the applicable purchase price by the Company.
Section II.7 Minimum Commitment Amount. If during the Commitment Period
the Company, for any reason (including a failure to cause a Registration
Statement to be declared effective under the Registration Rights Agreement),
fails to issue and deliver Put Shares equal to or exceeding the Minimum
Commitment Amount, then: (x) on the first Business Day following the
expiration of the Commitment Period, the Vesting Warrant shall vest in full
for such failure and (y) the Company shall, by the tenth Business Day
following the Commitment Period, pay to the Investors, in cash, an amount
equal to the product of (a) the Undrawn Amount and (b) the Market Price
less the Purchase Price, measured on the day of expiration of the Commitment
Period.
ARTICLE III
Representations and Warranties of Investor
The Investor represents and warrants to the Company as follows:
Section III.1 Intent. The Investor is entering into this Agreement for
its own account and the Investor has no present arrangement (whether or not
legally binding) at any time to sell the Common Stock to or through any
person or entity; provided, however, that by making the representations
herein, the Investor does not agree to hold Securities for any minimum or
other specific term and reserves the right to dispose of Securities at any
time in accordance with federal and state securities laws applicable to
such disposition and the terms and conditions, if any, relating thereto as
set forth in this Agreement.
Section III.2 Sophisticated Investor. The Investor is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an
accredited investor (as defined in Rule 501 of Regulation D), and Investor
has such experience in business and financial matters that it has the
capacity to protect its own interests in connection with this transaction
and is capable of evaluating the merits and risks of an investment in the
Securities. The Investor acknowledges that an investment in the Securities
is speculative and involves a high degree of risk.
Section III.3 Authority. This Agreement and the Registration Rights
Agreement have been duly authorized and validly executed and delivered
by the Investor and are valid and binding agreements of the Investor
enforceable against it in accordance with their respective terms.
Section III.4 Organization and Standing. Investor is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization.
<PAGE> 82
Section III.5 Disclosure; Access to Information. The Investor acknowledges
that it has reviewed the Disclosure Materials and has been afforded (i)
the opportunity to ask such questions as it has deemed necessary of, and
to receive answers from, representatives of the Company concerning the terms
and conditions of the offering of the Securities and the merits and risks of
investing in the Securities; (ii) access to information about the Company and
the Company's financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate
its investment; and (iii) the opportunity to obtain such additional
information which the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision
with respect to the investment and to verify the accuracy and completeness
of the information contained in the Disclosure Materials. Neither such
inquiries nor any other investigation conducted by or on behalf of the
Investor or its representatives or counsel shall modify, amend or affect
such Investor's right to rely on the truth, accuracy and completeness of
the Disclosure Materials and the Company's representations and warranties
contained in the Transaction Documents.
Section III.6 General Solicitation. Such Investor is not purchasing the
Securities as a result of or subsequent to any advertisement, article,
notice or other communication regarding the Securities published in any
newspaper, magazine or similar media or broadcast over television or radio
or presented at any seminar or any other general solicitation or general
advertisement.
Section III.7 Underwriter Liability. Investor understands that it is
the position of the Commission that with respect to any disposition of Put
Shares through a Registration Statement the Investor is an underwriter
within the meaning of Section 2(11) of the Securities Act. The Investor
agrees to be identified as an underwriter of the Put Shares sold by it in
the Registration Statement.
The Company acknowledges and agrees that the Investor has not made and
does not make any representations or warranties with respect to the
transactions contemplated hereby other than as specifically set forth
in this Article III.
ARTICLE IV
Representations and Warranties of the Company
The Company represents and warrants to the Investor as follows:
Section IV.1 Organization and Qualification. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, with the requisite corporate power and
authority to own and use its properties and assets and to carry on its
<PAGE> 83
business as currently conducted. The Company has no subsidiaries other
than as set forth in Schedule 4.1 (collectively the "Subsidiaries").
Each of the Subsidiaries is an entity, duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with
the requisite power and authority to own and use its properties and assets
and to carry on its business as currently conducted. Each of the Company
and the Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes
such qualification necessary, except where the failure to be so qualified or
in good standing, as the case may be, would not reasonably be expected to,
individually or in the aggregate, (x) adversely affect the legality,
validity or enforceability of the Securities (as defined below) or any
of this Agreement, the Registration Rights Agreement or the Warrants
(collectively, the "Transaction Documents"), (y) have or result in a
material adverse effect on the results of operations, assets, prospects,
or condition (financial or otherwise) of the Company and the Subsidiaries,
taken as a whole, or (z) adversely impair the Company's ability to perform
fully on a timely basis its obligations under any of the Transaction
Documents (any of (x), (y) or (z), a "Material Adverse Effect").
Section IV.2 Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and
otherwise to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been
duly authorized by all necessary corporate action on the part of the
Company. Each of the Transaction Documents has been duly executed by
the Company and, when delivered (or filed, as the case may be) in accordance
with the terms hereof, will constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms.
Neither the Company nor any Subsidiary is in violation of any of the
provisions of its respective certificate or articles of incorporation,
by-laws or other organizational or charter documents.
Section IV.3 Capitalization. The number of authorized, issued and
outstanding capital stock of the Company is set forth in Schedule 4.3.
Except as disclosed in the SEC Documents (as defined herein) the Company
owns all of the capital stock of each Subsidiary. No shares of Common
Stock are entitled to preemptive or similar rights, nor is any holder of
securities of the Company or any Subsidiary entitled to preemptive or
similar rights arising out of any agreement or understanding with the
Company or any Subsidiary by virtue of any of the Transaction Documents.
Except as a result of the purchase and sale of the Shares and except as
disclosed in the SEC Documents, there are no outstanding options, warrants,
script rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible
into or exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common Stock, or contracts, commitments,
understandings,or arrangements by which the Company or any Subsidiary is or
may become bound to issue additional shares of Common Stock, or securities
or rights convertible or exchangeable into shares of Common Stock. The issue
and sale of the Securities hereunder will not obligate the Company to issue
shares of Common Stock or other securities to any Person other than to the
Investors and the Broker and will not result in any right of any holder of
the Company's securities to adjust the exercise, conversion or reset price
under such securities.
Section IV.4 Issuance of the shares of Common Stock. When issued and
paid for in accordance with the terms hereof and the Warrants (as
applicable), the Put Shares and Warrant Shares will be duly and validly
issued, fully paid and nonassessable, free and clear of all liens,
<PAGE> 84
encumbrances and rights of first refusal of any kind (collectively,
"Liens"). The Company has on the date hereof and will, at all times
during the Commitment Period and while the Warrants are outstanding,
maintain an adequate reserve of duly authorized shares of Common Stock,
reserved for issuance to the Investor and the holders of the Warrants,
to enable it to perform its exercise and other obligations under this
Agreement and the Warrants.
Section IV.5 Filings, Consents and Approvals. Neither the Company nor
any Subsidiary is required to obtain any consent, waiver, authorization or
order of, give any notice to, or make any filing or registration with, any
court or other federal, state, local or other governmental authority or
other Person in connection with the execution, delivery and performance
by the Company of the Transaction Documents, other than (i) the filing of
the Registration Statement with the Commission), (ii) filings as may be
required under state securities laws, and (iii) in all other cases where
the failure to obtain such consent, waiver, authorization or order, or to
give such notice or make such filing or registration would not reasonably
be expected to have or result in, individually or in the aggregate, a
Material Adverse Effect (collectively, the "Required Approvals").
Section IV.6 No Default or Violation. Except as described in the SEC
Documents, neither the Company nor any Subsidiary (i) is in default under
or in violation of (and no event has occurred which has not been waived
which, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its properties
is bound, (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is in violation of any statute, rule or
regulation of any governmental authority, in each case of clauses (i),
(ii) or (iii) above, except as would not reasonably be expected to
individually or in the aggregate, have or result in a Material Adverse
Effect.
Section IV.7 SEC Documents; Financial Statements. The Company has filed
all reports required to be filed by it under the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years preceding
the date hereof (or such shorter period as the Company was required by law
to file such material) (the foregoing materials being collectively referred
to herein as the "SEC Documents" and, together with the Schedules to this
Agreement, the "Disclosure Materials") on a timely basis or has received a
valid extension of such time of filing and has filed any such SEC Documents
prior to the expiration of any such extension. As of their respective
dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Documents, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. All material agreements to which the
Company is a party or to which the property or assets of the Company are
subject have been filed as exhibits to the SEC Documents as required. The
financial statements of the Company included in the SEC Documents comply in
all material respects with applicable accounting requirements and the rules
and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
<PAGE> 85
during the periods involved ("GAAP"), except as may be otherwise specified
in such financial statements or the notes thereto, and fairly present in all
material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations
and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments. Since March
31, 2000, except as specifically disclosed in the SEC Documents, (a) there
has been no event, occurrence or development that has resulted or that
could result in a Material Adverse Effect, (b) the Company has not incurred
any liabilities (contingent or otherwise) other than (x) liabilities
incurred in the ordinary course of business consistent with past practice
and (y) liabilities not required to be reflected in the Company's financial
statements pursuant to GAAP or otherwise required to be disclosed in filings
made with the Commission, (c) the Company has not altered its method of
accounting or the identity of its auditors and (d) the Company has not
declared or made any payment or distribution of cash or other property
to its stockholders or officers or directors (other than in compliance
with existing compensation agreements or Company stock option plans) with
respect to its capital stock, or purchased, redeemed (or made any agreements
to purchase or redeem) any shares of its capital stock.
Section IV.8 Investment Company. The Company is not, and is not an
Affiliate (as defined in Rule 405 under the Securities Act) of, an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.
Section IV.9 Certain Fees. Other than fees payable to the Broker
pursuant to the terms hereof, no fees or commissions will be payable by
the Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other similar Person with
respect to the transactions contemplated by this Agreement. The Investor
shall have no obligation with respect to any fees or with respect to any
claims made by or on behalf of other Persons for fees of a type
contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement. The Company shall indemnify
and hold harmless the Investor, its employees, officers, directors, agents,
and partners, and its respective Affiliates, from and against all claims,
losses, damages, costs (including the costs of preparation and attorney's
fees) and expenses suffered in respect of any such claimed or existing
fees, as such fees and expenses are incurred.
Section IV.10 Solicitation Materials. Neither the Company nor any Person
acting on the Company's behalf has solicited any offer to buy or sell
the Securities by means of any form of general solicitation or advertising.
Section IV.11 Listing and Maintenance Requirements Compliance. The Company
has not, in the two years preceding the date hereof, received notice
(written or oral) from the OTC or any stock exchange, market or trading
facility on which the Common Stock is or has been listed (or on which it
has been quoted) to the effect that the Company is not in compliance with
the listing or maintenance requirements of such exchange, market or
trading facility. The Company is, and has no reason to believe that it
will not in the foreseeable future continue to be, in compliance with all
such listing and maintenance requirements.
<PAGE> 86
Section IV.12 Patents and Trademarks. The Company and its Subsidiaries
have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses
and rights which are necessary or material for use in connection with
their respective business as described in the SEC Documents and which the
failure to so have would have a Material Adverse Effect (collectively, the
"Intellectual Property Rights"). Neither the Company nor any Subsidiary
has received a written notice that the Intellectual Property Rights used
by the Company or its Subsidiaries violates or infringes upon the rights of
any Person, to the best knowledge of the Company. All such Intellectual
Property Rights are enforceable and there is no existing infringement by
another Person of any of the Intellectual Property Rights.
Section IV.13 Registration Rights. Except as disclosed under Section
6(c) of the Registration Rights Agreement, the Company has not granted
or agreed to grant to any Person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered
with the Commission or any other governmental authority which have not been
satisfied.
Section IV.14 Regulatory Permits. The Company and its Subsidiaries
possess all certificates, authorizations and permits issued by the
appropriate Federal, state or foreign regulatory authorities necessary
to conduct their respective businesses as described in the SEC Documents,
except where the failure to possess such permits would not reasonably be
expected to, individually or in the aggregate, have or result in a Material
Adverse Effect ("Material Permits"), and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.
Section IV.15 Title. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them which
is material to the business of the Company and its Subsidiaries and good
and marketable title in all personal property owned by them which is
material to the business of the Company and its Subsidiaries, in each
case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not interfere with the use made
and proposed to be made of such property by the Company and its Subsidiaries.
Any real property and facilities held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable leases
of which the Company and its Subsidiaries are in compliance and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.
Section IV.16 Absence of Certain Proceedings. There is no action,
suit, inquiry, notice of violation, proceeding or investigation pending or,
to the knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency
or regulatory authority (federal, state, county, local or foreign)
(collectively, an "Action") which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents
or the Securities or (ii) could, if there were an unfavorable decision,
individually or in the aggregate, have or result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor any director or
officer thereof, is or has been the subject of any Action involving a claim
of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty. The Company does not have pending before
<PAGE> 87
the Commission any request for confidential treatment of information and the
Company has no knowledge of any expected such request that would be made
prior to the Effectiveness Date (as defined in the Registration Rights
Agreement). There has not been, and to the best of the Company's knowledge
there is not pending or contemplated, any investigation by the Commission
involving the Company or any current or former director or officer of the
Company.
Section IV.17 No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated thereby do not and will not (i) conflict
with or violate any provision of the Company's or any Subsidiary's
certificate or articles of incorporation, bylaws or other charter documents
(each as amended through the date hereof), or (ii) subject to obtaining the
Required Approvals (as defined below), conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become
a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both)
of, any agreement, credit facility, debt or other instrument (evidencing a
Company or Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or asset of
the Company or any Subsidiary is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state securities
laws and regulations), or by which any property or asset of the Company or
a Subsidiary is bound or affected; except in the case of each of clauses
(ii) and (iii), as could not, individually or in the aggregate, have or
result in a Material Adverse Effect. The business of the Company is not
being conducted in violation of any law, ordinance or regulation of any
governmental authority, except for violations which, individually or in the
aggregate, could not have or result in a Material Adverse Effect.
Section IV.18 Solvency. Based on the financial condition of the Company
as of each Closing Date, (i) the Company's fair saleable value of its assets
exceeds the amount that will be required to be paid on or in respect of the
Company's existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company's assets do not constitute
unreasonably small capital to carry on its business for the current fiscal
year as now conducted and as proposed to be conducted including its capital
needs taking into account the particular capital requirements of the
business conducted by the Company, and project capital requirements and
capital availability thereof; and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate
all of its assets, after taking into account all anticipated uses of the
cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend to
incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be payable on or in respect
of its debt).
Section IV.19 Taxes. All Federal, state, local and foreign tax returns,
information returns, reports and estimated Tax returns have been timely
filed on behalf of the Company and all Taxes shown on any such return or
report have been paid on a timely basis. There is no action, suit,
proceeding, investigation, audit or claim now proposed or pending with
respect to any Tax of the Company and the Company is not aware of any
threatened claim for Tax deficiencies. There are no outstanding agreements
or waivers for the extension of time for assessment of any Tax payable by
<PAGE> 88
the Company, nor has any such waiver or agreement been requested by the
Internal Revenue Service or any other taxing authority. The Company has
not filed or been included in a consolidated, unitary or combined Tax return
with another person. The Company has collected or withheld all material
amounts required to be collected or withheld by it for any Taxes, and all
such material amounts have been paid to the appropriate governmental agencies
or set aside in appropriate accounts for future payment when due. The
Company is in material compliance with, and its records contain all material
information and documents necessary to comply with, all applicable
information reporting and Tax withholding requirements. As used herein,
the terms "Tax" and "Taxes" shall mean (i) any income, alternative or
add-on minimum tax, gross income, gross receipts, franchise, profits,
including estimated taxes relating to any of the foregoing, or other
similar tax or other like assessment or charge of similar kind whatsoever,
(ii) any sales, use, ad valorem, business license, withholding, payroll,
employment, excise, stamp, transfer, recording, occupation, premium,
property, value added, custom duty, severance, windfall profit tax,
license, or other tax, governmental fee or other similar assessment or
charge, and (iii) any interest and any penalty, addition to tax or
additional amount imposed by any federal, state, local or foreign
governmental authority responsible for the imposition of any such tax
(domestic or foreign).
Section IV.20 Labor Relations. No material labor problem exists or, to
the knowledge of the Company, is imminent with respect to any of the
employees of the Company.
Section IV.21 Disclosure. The Company confirms that neither it nor any
other Person acting on its behalf has provided the Investor or its agents
or counsel with any information that constitutes or might constitute
material non-public information. The Company understands and confirms
that the Investor shall be relying on the foregoing representations in
effecting transactions in securities of the Company. All disclosure
provided to the Investor regarding the Company, its business and the
transactions contemplated hereby, including the Schedules to this
Agreement, furnished by or on behalf of the Company are true and correct
in all material respects and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements made therein, in light of the circumstances under
which they were made, not misleading.
ARTICLE V
Other Agreements of the Parties
Section V.1 Listing of Common Stock. The Company shall maintain the
listing of the Common Stock on a Principal Market, and as soon as practicable
(but in any event prior to the commencement of the Commitment Period)
shall list the Put Shares and all potentially issuable Warrant Shares.
The Company further agrees, if the Company applies to have the Common
Stock traded on any other Principal Market, it will include in such
application the issued and issuable Put Shares and Warrant Shares. The
Company will take all action to continue the listing and trading of its
Common Stock on the Principal Market and will comply in all respects
with the Company's reporting, filing and other obligations under the bylaws
or rules of the Principal Market and shall provide Investor with copies of
any correspondence to or from such Principal Market which questions or
<PAGE> 89
threatens delisting of the Common Stock, within one Trading Day of the
Company's receipt thereof.
Section V.2 Exchange Act Registration; Rule 144 Compliance. The Company
will cause its Common Stock to continue to be registered under Section 12(g)
or 12(b) of the Exchange Act, will use its best efforts to timely comply in
all respects with its reporting and filing obligations under the Exchange
Act, and will not take any action or file any document (whether or not
permitted by Exchange Act or the rules thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations thereunder. During the Commitment Period, the Company will
notify the Investor immediately following each filing by the Company under
the Exchange Act. As long as the Investor owns Securities, if the Company
is not required to file reports pursuant to such sections, it will prepare
and furnish to the Investor and make publicly available in accordance with
Rule 144(c) promulgated under the Securities Act such information as is
required for the Investor to sell the Securities under Rule 144 promulgated
under the Securities Act. The Company further covenants that it will take
such further action as any holder of Securities may reasonably request, all
to the extent required from time to time to enable such Person to sell such
Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including causing its attorneys to render and deliver any
legal opinion required in order to permit such Person to sell its Securities
under Rule 144 upon notice of an intention to sell or other form of notice
having a similar effect. Upon the request of any such Person, the Company
shall deliver to such Person a written certification of a duly authorized
officer as to whether it has complied with such requirements.
Section V.3 Legends. The certificates evidencing the Common Stock to be
sold or otherwise issued to the Investor hereunder (including the Warrant
Shares under the Warrants) at any time while a Registration Statement is
then effective shall be issued free of restrictive legends of any kind and
no instructions or "stop transfer orders," so called, "stock transfer
restrictions," or other restrictions have been or shall be given to the
Company's transfer agent with respect thereto. Prior to the first Closing,
the Company will issue to the transfer agent for its Common Stock (and to
any substitute or replacement transfer agent for its Common Stock upon the
Company's appointment of any such substitute or replacement transfer agent)
instructions to deliver the Put Shares and Warrant Shares without restrictive
legends as required by this Section and shall cause its counsel to deliver
a to such transfer agent any legal opinion required in order for the
transfer agent to deliver shares in such manner. Unless such instructions
cover Securities issuable at future Closings, the Company must deliver new
such instructions prior to each Closing.
Section V.4 Notice of Certain Events Affecting Registration; Suspension
of Right to Make a Put. The Company will immediately notify the Investor
upon the occurrence of any of the following events in respect of a
Registration Statement or related prospectus in respect of an offering of
Registrable Securities; (i) receipt of any request for additional
information from the Commission or any other federal or state governmental
authority during the period of effectiveness of the Registration Statement
<PAGE> 90
the response to which would require any amendments or supplements to the
registration statement or related prospectus; (ii) the issuance by the
Commission or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose; (iv) the happening of any event that makes any statement
made in the Registration Statement or related prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in
any material respect or that requires the making of any changes in the
Registration Statement, related prospectus or documents so that, in the
case of the Registration Statement, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and that
in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
and (v) the Company's reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate; and the
Company will promptly make available to the Investor any such supplement or
amendment to the related prospectus.
Section V.5 Expectations Regarding Put Notices. Within ten days after
the commencement of each calendar quarter, the Company must notify the
Investor, in writing, as to its reasonable expectations as to the dollar
amount it intends to raise during such calendar quarter, if any, through
the issuance of Put Notices. Such notification shall constitute only the
Company's good faith estimate and shall in no way obligate the Company to
raise such amount, or any amount, or otherwise limit its ability to deliver
Put Notices. The failure by the Company to comply with this provision can
be cured by the Company's notifying the Investor, in writing, at any time
as to its reasonable expectations with respect to the current calendar
quarter.
Section V.6 Consolidation; Merger. During the Commitment Period and
for period of 30 days following the last Closing, the Company shall not
effect any merger or consolidation of the Company with or into, or a
transfer of all or substantially all of the assets of the Company to,
another entity unless the resulting successor or acquiring entity assumes
by written instrument or by operation of law the obligation to deliver to
the Investor such Securities as the Investor is entitled to receive pursuant
to this Agreement.
Section V.7 Purchase Price Adjustment. If at any time after the date
hereof and through the 360th day following the date hereof the Company or
any Subsidiary (with respect to Common Stock Equivalents) shall offer,
sell, grant any option to purchase, or otherwise dispose of (or announce
any offer, sale, grant or any option to purchase or other disposition) any
of shares of Common Stock or Common Stock Equivalents at a price that is,
at the issuance thereof, or at any later time due to adjustment, reset,
additional issuances or otherwise, less than the Purchase Price, then,
at the option of the Investor for such Closings as the Investor shall
indicate, the Purchase Price shall be adjusted to mirror the conversion,
exchange or purchase price for such Common Stock or Common Stock Equivalents
(including any reset provisions thereof) at issue. Such adjustment shall be
made whenever such Common Stock or Common Stock Equivalents are issued. If
the holder of the Common Stock or Common Stock Equivalent so issued shall at
any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or otherwise,
<PAGE> 91
or due to warrants, options or rights issued in connection with such
issuance, be entitled to receive shares of Common Stock at a price less
than the Purchase Price, such issuance shall be deemed to have occurred
for less than the Purchase Price. The Company shall notify the Investor
in writing, no later than the Trading Day following the issuance of any
Common Stock or Common Stock Equivalent subject to this section, indicating
therein the applicable issuance price, or of applicable reset price,
exchange price, conversion price and other pricing terms.
Section V.8 Integration. The Company shall not, and shall use its best
efforts to ensure that, no affiliate of the Company shall, sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the
Securities hereunder to the Investor.
Section V.9 Certain Securities Laws Disclosures; Publicity. The Company
shall: (i) on the Closing Date, issue a press release reasonably acceptable
to the Investors disclosing the transactions contemplated hereby, (ii) file
with the Commission a Report on Form 8-K disclosing the transactions
contemplated hereby within ten Business Days after the Closing Date, and
(iii) timely file with the Commission a Form D promulgated under the
Securities Act. The Company shall, no less than two Business Days prior
to the filing of any disclosure required by clauses (ii) and (iii) above,
provide a copy thereof to the Investors for their review. The Company
and the Investors shall consult with each other in issuing any other press
releases or otherwise making public statements or filings and other
communications with the Commission or any regulatory agency or stock
market or trading facility with respect to the transactions contemplated
hereby and neither party shall issue any such press release or otherwise
make any such public statement, filings or other communications without
the prior written consent of the other, except that if such disclosure is
required by law or stock market regulation, in which such case the
disclosing party shall promptly provide the other party with prior notice
of such public statement, filing or other communication. Notwithstanding
the foregoing, the Company shall not publicly disclose the names of the
Investors, or include the names of the Investors in any filing with the
Commission, or any regulatory agency, trading facility or stock market
without the prior written consent of the Investors, except to the extent
such disclosure (but not any disclosure as to the controlling Persons
thereof) is required by law or stock market regulations, in which case
the Company shall provide the Investors with prior notice of such disclosure.
Section V.10 Use of Proceeds. The Company shall use the net proceeds from
the sale of the Securities hereunder for working capital purposes and not
for the satisfaction of any portion of the Company's debt (other than
payment of trade payables in the ordinary course of the Company's business
and prior practices), to redeem any Company equity or equity-equivalent
securities or to settle any outstanding litigation.
Section V.11 Reimbursement. If the Investor, other than by reason of its
gross negligence or willful misconduct, becomes involved in any capacity in
any action, proceeding or investigation brought by or against any Person,
including stockholders of the Company, solely as a result of the consummation
of the transactions contemplated by Transaction Documents, the Company will
reimburse the Investor for its reasonable legal and other expenses
(including the cost of any investigation and preparation and travel in
<PAGE> 92
connection therewith) incurred in connection therewith, as such expenses
are incurred. The reimbursement obligations of the Company under this
paragraph shall be in addition to any liability which the Company may
otherwise have, shall extend upon the same terms and conditions to any
affiliates of the Investor actually named in such action, proceeding or
investigation, and partners, directors, agents, employees and controlling
persons (if any), as the case may be, of the Investor and any such affiliate,
and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the Investor
and any such affiliate and any such Person. The Company also agrees that
neither the Investor nor any such affiliates, partners, directors, agents,
employees or controlling persons shall have any liability to the Company or
any Person asserting claims on behalf of or in right of the Company in
connection with or as a result of the consummation of the Transaction
Documents except to the extent that any losses, claims, damages, liabilities
or expenses incurred by the Company result from the gross negligence or
willful misconduct of the applicable Investor or entity in connection with
the transactions contemplated by this Agreement.
ARTICLE VI
Conditions Precedent to the Right of the Company to Deliver a Put Notice and
the Obligation of the Investor to Close
Section VI.1 Conditions Precedent to the Right of the Company to Deliver
a Put Notice and the Obligation of the Investor to Close. In addition to
the specific conditions contained elsewhere in this Agreement, the right of
the Company to deliver a Put Notice and the obligation of Investor hereunder
to perform its obligations at any Closing hereunder is subject to the
satisfaction, on both (i) the date of delivery of such Put Notice and (ii)
the applicable Closing Date (each a "Condition Satisfaction Date"), of each
of the following conditions, or the waiver by the Investor of such
conditions:
(1) Representations and Warranties. The representations and warranties
of the Company in the Transaction Documents shall be true and correct as of
the date when made and as of the applicable Condition Satisfaction Date as
though first made at that time (except for representations and warranties
that speak of a specific date, which need only be true and correct as of
such date).
(2) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants and
agreements required by the Transaction Documents to be performed, satisfied
or complied with by the Company at or prior to each Condition Satisfaction
Date.
(3) Compliance Certificate. The Company shall have delivered to or as
directed by the Investor an Officer's Certificate signed by its Chief
Executive Officer, dated as of the applicable Closing Date, certifying
that the Company has satisfied the conditions set forth in paragraphs (a),
(b), (h)(ii) - (iv), and (l) of this Section.
<PAGE> 93
(4) Blue Sky. The Company shall have obtained all permits and
qualifications required by any state for the offer and sale of the
Securities to the Investor and by the Investor of the Registrable
Securities as contemplated by in the Registration Rights Agreement or
shall have the availability of exemptions therefrom.
(5) Delivery of Shares. The Company shall have transmitted the Put
Shares pursuant to Section 2.3 and the other conditions to such Closing
as set forth in such Section shall have been satisfied.
(6) Opinion of Counsel. The Investor shall have received (or receipt
shall have been confirmed by its agent on its behalf) an opinion of counsel
to the Company, in the form of Exhibit D hereto.
(7) Transfer Agent. The Investor shall have received satisfactory
evidence of the Company's delivery to its transfer agent for the Common
Stock of instructions and legal opinion meeting the requirements of this
Agreement and acceptable to such transfer agent.
(8) Registration Statement.
(i) The Registration Statement shall have been declared effective by
the Commission and shall at all times since the Put Date, and the prospectus
thereunder shall be available to the Investor to resell all of the
Registrable Securities thereunder (including the Put Shares, Warrant
Shares issuable at such Closing).
(ii) Neither the Company nor the Investor shall have received notice
that the Commission has issued or intends to issue a stop order with respect
to the Registration Statement or that the Commission otherwise has suspended
or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened to do so (unless
the Commission's concerns have been addressed and the Investor is reasonably
satisfied that the Commission no longer is considering or intends to take
such action).
(iii) The Registration Statement (including the information or documents
incorporated by reference therein) and any amendments or supplements thereto
shall not contain any untrue statement of material fact or omit to state any
material fact required to be state d therein or necessary to make the
statements therein not misleading.
(iv) The Company shall have no knowledge of any event which is reasonably
likely to occur within 30 Trading Days of the Put Date that would reasonably
be expected to cause the Registration Statement to be suspended or otherwise
ineffective or inaccurate.
(9) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent jurisdiction
or by the Principal Market that prohibits, materially impairs or renders
<PAGE> 94
impractical the transactions contemplated by this Agreement, and no
proceeding or rule making process shall have been commenced that may
reasonably be expected to have such result if enacted.
(10) Adverse Changes. Since the earlier to occur of (i) the date of
filing of the Company's most recent SEC Document and (ii) the last Closing
hereunder, no occurrence or event that could have or result in a Material
Adverse Effect shall have occurred.
(11) No Suspension of Trading In or Delisting of Common Stock. The
Common Stock shall be authorized for trading or quotation on the Principal
Market and trading in the Common Stock shall not have been suspended by
the Commission or the Principal Market at any time from the Put Date
through the Closing Date. The Company shall not have received any notice
threatening to delist the Common Stock from the Principal Market.
(12) Principal Market Requirements; Compliance. The Company shall have
received all authorizations from and made all filings required in order to
issue to the Investor the Securities at such Closing and shall have caused
the Put Shares and the Warrant Shares issuable upon the exercise of the
Warrants to be issued at such Closing to be listed for trading on the
Principal Market. The issuance of shares of Common Stock with respect
to the applicable Closing, if any, shall not violate the shareholder
approval requirements of the Principal Market.
(13) Timing. At least fifteen Trading Days shall have elapsed since the
immediately preceding Closing Date.
(14) Closing Threshold. For the ten Trading Days immediately preceding
the Put Date the weighted average daily trading volume of the Common Stock
on the Principal Exchange (volume multiplied by VWAP) shall not be less
than $50,000.
(15) Other. The Investor shall have received and been reasonably
satisfied with such other certificates and documents as shall have been
reasonably requested by the Investor in order for the Investor to confirm
the Company's satisfaction of the conditions set forth herein.
ARTICLE VII
Due Diligence Review; Non-Disclosure of Non-Public Information.
Section VII.1 Due Diligence Review. The Company shall make available for
inspection and review by the Investor, and its advisors and representatives
of the Investor, any underwriter participating in any disposition of the
Registrable Securities on behalf of the Investor all SEC Documents and other
filings with the Commission, and all other publicly available corporate
documents and properties of the Company as may be reasonably necessary
for the purpose of such review. In connection therewith, the Company
shall cause its officers, directors and employees to supply all such
publicly available information reasonably requested by the Investor or
any such Person (including, without limitation, in response to all questions
and other inquiries reasonably made or submitted by any of them), prior
to and from time to time after the filing and effectiveness of the
<PAGE> 95
Registration Statement. The review contemplated hereby is solely to
enable the Investor and such Persons to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of the Registration
Statement.
Section VII.2 Non-Disclosure of Non-Public Information.
(1) The Company shall not disclose non-public information to the
Investor or its advisors or representatives unless prior to disclosure
of such information the Company identifies such information as being non-
public information and the Investor enters into a non-disclosure agreement
in form mutually acceptable to the Company and the Investor.
(2) The Company represents that it does not disseminate non-public
information to any investors who purchase stock in the Company in a public
offering, to money managers or to securities analysts. Notwithstanding the
foregoing or anything herein to the contrary, the Company will immediately
notify the Investor of any event or the existence of any circumstance
(without any obligation to disclose the specific event or circumstance)
of which it becomes aware, (whether or not requested of the Company
specifically or generally during the course of due diligence by such persons
or entities), which, if not disclosed in the prospectus included in the
Registration Statement would cause such prospectus to include a material
misstatement or to omit a material fact required to be stated therein in
order to make the statements, therein in light of the circumstances in
which they were made, not misleading.
ARTICLE VIII
Miscellaneous
Section VIII.1 Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles
of conflicts of law thereof. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City
of New York, borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of
the any of the Transaction Documents), and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served
in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action
or proceeding to enforce any provisions of a Transaction Document, then the
<PAGE> 96
prevailing party in such action or proceeding shall be reimbursed by the
other party for its' attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
Section VIII.2 Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (i)
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section prior
to 6:30 p.m. (New York City time) on a Business Day, (ii) the Business Day
after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile telephone number specified in this Agreement
later than 6:30 p.m. (New York City time) on any date and earlier than 11:59
p.m. (New York City time) on such date, (iii) the Business Day following the
date of mailing, if sent by U.S. nationally recognized overnight courier
service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications
shall be as follows:
If to the Company: Salient Cybertech, Inc.
1999 Lincoln Drive, Suite 202
Sarasota, Florida 34236
Facsimile No.: (941) 953 4363
Attn: Chief Financial Officer
With copies to: David J. Feingold, Esq.
3300 PGA Blvd.
Palm Beach Gardens,
Florida 33410
Facsimile No.: (561) 630 8936
If to the Investor: To the address set forth under the Investor's
name on the signature page hereto.
A party may from time to time change its address or facsimile number for
notices under this Section by giving at least ten days' prior written
notice of such changed address or facsimile number to the other party
hereto.
Section VIII.3 Reporting Entity for the Common Stock. The reporting
entity relied upon for the determination of the trading price or trading
volume of the Common Stock on any given Trading Day for the purposes of
this Agreement shall be Bloomberg, L.P. or any successor to its function of
reporting share prices. The written mutual consent of the Investor and the
Company shall be required to employ any other reporting entity.
<PAGE> 97
Section VIII.4 Replacement of Certificates. Upon (i) receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of a certificate representing any Securities and (ii) in the
case of any such loss, theft or destruction of such certificate, upon
delivery of an indemnity agreement or security reasonably satisfactory in
form and amount to the Company (which shall not exceed that required by
the Company's transfer agent in the ordinary course) or (iii) in the case
of any such mutilation, on surrender and cancellation of such certificate,
the Company at its expense will execute and deliver, in lieu thereof, a new
certificate.
Section VIII.5 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and
the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature shall
create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) the same with the same force and effect
as if such facsimile signature page were an original thereof.
Section VIII.6 Entire Agreement. The Transaction Documents, together
with the Exhibits and Schedules thereto contain the entire understanding
of the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, oral or written, with respect to such
matters, which the parties acknowledge have been merged into such documents,
exhibits and schedules.
Section VIII.7 Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and each of the Investor or, in the case of a
waiver, by the party against whom enforcement of any such waiver is sought.
No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of either party to exercise any
right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
Section VIII.8 Survival. The representations, warranties and agreements
contained herein shall survive each Closing and the delivery and exercise
of all Securities issuable hereunder.
Section VIII.9 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and
permitted assigns. The Company may not assign this Agreement or any
rights or obligations hereunder without the prior written consent of the
Investor.
Section VIII.10 Remedies. In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages,
each of the Investor will be entitled to specific performance of the
obligations of the Company under the Transaction Documents. The Company
and each of the Investor agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of its
obligations described in the foregoing sentence and hereby agrees to
<PAGE> 98
waive in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.
Section VIII.11 Severability. In case any one or more of the provisions
of this Agreement shall be invalid or unenforceable in any respect, the
validity and enforceability of the remaining terms and provisions of this
Agreement shall not in any way be affecting or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision which
shall be a reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Agreement.
Section VIII.12 Headings. The headings herein are for convenience only,
do not constitute a part of this Agreement and shall not be deemed to limit
or affect any of the provisions hereof.
Section VIII.13 Fees and Expenses. Other than the amount contemplated in
Section 2.3(c) and Section 8.1, and except as otherwise set forth in the
Registration Rights Agreement, each party shall pay the fees and expenses
of its advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of the Transaction
Documents. The Company shall pay all stamp and other taxes and duties
levied in connection with the issuance of the securities issuable
hereunder.
Section VIII.14 No Third-Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective successors and
permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person.
[REMAINDER OF PAGE INTENTIONALLY BLANK
SIGNATURE PAGES FOLLOW]
<PAGE> 99
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be executed by the undersigned, thereunto
duly authorized, as of the date first set forth above.
SALIENT CYBERTECH, INC.
By: __________________________________
Name:
Title:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR INVESTOR FOLLOWS]
<PAGE> 100
HAINES AVENUE LLC
By:_____________________________________
Name:
Title:
Address for Notice: Haines Avenue LLC
c/o Citco Trustees (Cayman) Limited
Commercial Centre
P.O. Box 31106 SMB
Grand Cayman
Cayman Islands
British West Indies
Facsimile No.: (345) 945-7566
With copies to: Robinson Silverman Pearce Aronsohn &
Berman LLP
1290 Avenue of the Americas
New York, NY 10104
Facsimile No.: (212) 541-4630 and (212)
541-1432
Attn: Eric L. Cohen, Esq.
<PAGE> 101
EXHIBIT A
PUT NOTICE
Salient Cybertech, Inc., a Delaware corporation (the "Company"), hereby
elects to exercise its right pursuant to the Securities Purchase Agreement
dated as of November 14, 2000 (the "Agreement") to require __________ to
purchase Put Shares pursuant to terms of the Agreement.
The Company hereby certifies that:
1. The Investment Amount is: $_______________ ("IA")
2. The Valuation Period runs from _________ to __________.
3. 90% of the average of the three lowest VWAPs (subject to adjustment)
during the Valuation Period is: $________ ("PP")*
4. The number of Put Shares (IA/PP) issuable hereunder is:_______________
The undersigned has executed this Put Notice as of this _____ day of ______,
_______.
SALIENT CYBERTECH, INC.
By: __________________________________
Name:
Title:
- Subject to adjustments in accordance with Section 5.7 of the Agreement.
<PAGE> 102
Schedule 4.3
1. Authorized shares of Common Stock - [ ]
2. Issued and outstanding shares of Common Stock - [ ]
<PAGE> 103
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES
ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
THEREUNDER AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY
LAWS.
SALIENT CYBERTECH, INC.
WARRANT
Warrant No.1 Dated: November 14, 2000
Salient Cybertech, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, Haines Avenue, LLC or its registered
assigns ("Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company the total number of shares of common stock, $.001
par value per share (the "Common Stock"), of the Company vested pursuant to
the terms hereof (each such share, a "Warrant Share" and all such shares the
"Warrant Shares"), at the exercise prices set forth in Annex A hereto (as
adjusted from time to time as provided in Section 8, the "Exercise Price"),
at any time and from time to time from and after the date hereof and through
and including November 14, 2005 (the "Expiration Date"), and subject to the
following terms and conditions:
1. Registration of Warrant. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, and the Company
shall not be affected by notice to the contrary.
<PAGE> 104
2. Registration of Transfers and Exchanges.
(a) The Company shall register the transfer of any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant, with the
Form of Assignment attached hereto duly completed and signed, to the
Transfer Agent or to the Company at its address for notice set forth in
Section 12. Upon any such registration or transfer, a new warrant to
purchase Common Stock, in substantially the form of this Warrant (any such
new warrant, a "New Warrant"), evidencing the portion of this Warrant so
transferred shall be issued to the transferee and a New Warrant evidencing
the remaining portion of this Warrant not so transferred, if any, shall be
issued to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance of such transferee of
all of the rights and obligations of a holder of a Warrant.
(b) This Warrant is exchangeable, upon the surrender hereof by the Holder
to the office of the Company at its address for notice set forth in Section
12 for one or more New Warrants, evidencing in the aggregate the right to
purchase the number of Warrant Shares which may then be purchased hereunder.
Any such New Warrant will be dated the date of such exchange.
3. Duration and Exercise of Warrants.
(a) This Warrant shall be exercisable by the registered Holder on any
business day before 6:30 P.M., New York City time, at any time and from time
to time on or after the date hereof to and including the Expiration Date.
At 6:30 P.M., New York City time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value.
Prior to the Expiration Date, the Company may not call or otherwise redeem
this Warrant.
(b) Upon delivery of a duly completed and signed Form of Election to
Purchase attached hereto (and the Warrant Shares Exercise Log attached
hereto) duly completed and signed, to the Company at its address for notice
set forth in Section 12 and upon payment of the Exercise Price multiplied
by the number of Warrant Shares that the Holder intends to purchase hereunder,
in the manner provided hereunder, all as specified by the Holder in the Form
of Election to Purchase, the Company shall promptly (but in no event later
than 3 business days after the Date of Exercise (as defined herein)) issue
or cause to be issued and cause to be delivered to or upon the written order
of the Holder and in such name or names as the Holder may designate, a
certificate for the Warrant Shares issuable upon such exercise, free of
restrictive legends except (i) either in the event that a registration
statement covering the resale of the Warrant Shares and naming the Holder as
a selling stockholder thereunder is not then effective or the Warrant Shares
are not freely transferable without volume restrictionpursuant to Rule 144(k)
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), or (ii) if this Warrant shall have been issued pursuant to a written
agreement between the original Holder and the Company, as required by such
agreement. Any person so designated by the Holder to receive Warrant Shares
shall be deemed to have become holder of record of such Warrant Shares as of
the Date of Exercise of this Warrant. The Company shall, upon request of the
Holder, if available, use its best efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established
<PAGE> 105
clearing corporation performing similar functions. To effect an exercise
hereunder, the Holder shall not be required to physically surrender this
Warrant to the Company unless all the Warrant Shares have been exercised.
Exercises hereunder shall have the effect of lowering the number of Warrant
Shares in an amount equal to the applicable exercise, which shall be evidenced
by entries set forth in the Exercise Schedule. The Holder and the Company
shall maintain records showing the number of Warrant Shares exercised and the
date of such exercises . In the event of any dispute or discrepancy, the
records of the Holder shall be controlling and determinative in the absence
of manifest error. The Holder and any assignee, by acceptance of this
Warrant, acknowledge and agree that, by reason of the provisions of this
paragraph, following exercise of a portion of this Warrant, the number of
shares issuable upon exercise of this Warrant may be less than the amount
stated on the face hereof.
A "Date of Exercise" means the date on which the Company shall have received
(i) the Form of Election to Purchase completed and duly signed, and (ii)
payment of the Exercise Price for the number of Warrant Shares so indicated
by the Holder to be purchased.
(c) This Warrant shall be exercisable, either in its entirety or, from
time to time, for a portion of the number of Warrant Shares then vested. The
Warrant Shares shall vest as follows: 750,000 shares of Common Stock shall
vest under such Closing Warrant on the first Closing Date and 150,000 shares
of Common Stock shall vest for each $1,000,000 of Purchase Price paid at each
additional Closing. All vested Warrant Shares shall be cumulatively available
for purchase hereunder at an Exercise Price equal to 125% of the closing bid
price of the Common Stock on the trading day immediately prior to the
vesting date for such Warrant Shares. Each of the terms "Closing," "Closing
Date" and Investment Amount" shall have the meanings set forth in the
Purchase Agreement. The number of Warrant Shares vested hereunder shall be
measured cumulatively for all Closings. Annex A shall set forth the number
of Warrant Shares then vested hereunder for each Closing and the applicable
Exercise Price.
4. Piggyback Registration Rights. This Warrant is subject to the
piggyback registration rights granted under the Registration Rights Agreement
and such piggyback registration rights shall continue until all of the
Holder's Warrant Shares have been sold in accordance with an effective
registration statement or upon the Expiration Date. The Company will pay all
registration expenses in connection therewith.
5. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or Warrants in a name
other than that of the Holder. The Holder shall be responsible for all other
tax liability that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise hereof.
6. Replacement of Warrant. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
<PAGE> 106
satisfactory to the Company of such loss, theft or destruction and indemnity,
if requested, satisfactory to it. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.
7. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized
but unissued Common Stock, solely for the purpose of enabling it to issue
Warrant Shares upon exercise of this Warrant as herein provided, the number
of Warrant Shares which are then issuable and deliverable upon the exercise
of this entire Warrant, free from preemptive rights or any other actual
contingent purchase rights of persons other than the Holder (taking into
account the adjustments and restrictions of Section 8). The Company
covenants that all Warrant Shares that shall be so issuable and deliverable
shall, upon issuance and the payment of the applicable Exercise Price in
accordance with the terms hereof, be duly and validly authorized, issued and
fully paid and nonassessable.
8. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time
to time as set forth in this Section 8.
(a) If the Company, at any time while this Warrant is outstanding, (i)
shall pay a stock dividend (except scheduled dividends paid on outstanding
preferred stock as of the date hereof which contain a stated dividend rate)
or otherwise make a distribution or distributions on shares of its Common
Stock or on any other class of capital stock payable in shares of Common
Stock, (ii) subdivide outstanding shares of Common Stock into a larger number
of shares, or (iii) combine outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding after such event. Any adjustment made pursuant
to this Section shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date
in the case of a subdivision or combination, and shall apply to successive
subdivisions and combinations.
(b) In case of any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is converted into other
securities, cash or property, then the Holder shall have the right thereafter
to exercise this Warrant only into the shares of stock and other securities
and property receivable upon or deemed to be held by holders of Common Stock
following such reclassification or share exchange, and the Holder shall be
entitled upon such event to receive such amount of securities or property
equal to the amount of Warrant Shares such Holder would have been entitled to
had such Holder exercised this Warrant immediately prior to such reclassifi-
cation or share exchange. The terms of any such reclassification or share
exchange shall include such terms so as to continue to give to the Holder the
right to receive the securities or property set forth in this Section 8(b)
upon any exercise following any such reclassification or share exchange.
<PAGE> 107
(c) If the Company, at any time while this Warrant is outstanding, shall
distribute to all holders of Common Stock (and not to holders of this Warrant)
evidences of its indebtedness or assets or rights or warrants to subscribe
for or purchase any security (excluding those referred to in Sections 8(a),
(b) and (d)), then in each such case the Exercise Price shall be determined
by multiplying the Exercise Price in effect immediately prior to the record
date fixed for determination of stockholders entitled to receive such distri-
bution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the numerator
shall be such Exercise Price on such record date less the then fair market
value at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of Common
Stock as determined by the Company's independent certified public accountants
that regularly examines the financial statements of the Company (an
"Appraiser").
(d) If the Company or any subsidiary thereof, as applicable with respect
to Common Stock Equivalents (as defined below), at any time while this
Warrant is outstanding, shall issue shares of Common Stock or rights,
warrants (including those issued under the Purchase Agreement), options or
other securities or debt that is convertible into or exchangeable for shares
of Common Stock ("Common Stock Equivalents") entitling any Person to acquire
shares of Common Stock, at a price per share less than the Exercise Price
(if the holder of the Common Stock or Common Stock Equivalent so issued
shall at any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or otherwise,
or due to warrants, options or rights issued in connection with such issuance,
be entitled to receive shares of Common Stock at a price less than the
Exercise Price, such issuance shall be deemed to have occurred for less than
the Exercise Price), then, at the option of the Holder for such exercises as
it shall indicate, the Exercise Price shall be adjusted to mirror the
conversion, exchange or purchase price for such Common Stock or Common Stock
Equivalents (including any reset provisions thereof) at issue. Such
adjustment shall be made whenever such Common Stock or Common Stock
Equivalents are issued. The Company shall notify the Holder in writing, no
later than the Trading Day following the issuance of any Common Stock or
Common Stock Equivalent subject to this section, indicating therein the
applicable issuance price, or of applicable reset price, exchange price,
conversion price and other pricing terms. No adjustment under this Section
shall be made as a result of (i) issuances of Common Stock or Common Stock
Equivalents to the extent disclosed in Schedule 4.3 to the Purchase
Agreement, (ii) issuances and exercises of options to purchase shares of
Common Stock issued for compensatory purposes pursuant to any of the
Company's stock option or stock purchase plans, or (iii) exercises under the
Warrants (as defined in the Purchase Agreement).
(e) In case of any (1) merger or consolidation of the Company with or
into another Person, or (2) sale by the Company of more than one-half of the
assets of the Company (on a book value basis) in one or a series of related
transactions, the Holder shall have the right thereafter to (A) exercise
this Warrant for the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following
such merger, consolidation or sale, and the Holder shall be entitled upon
such event or series of related events to receive such amount of securities,
cash and property as the Common Stock for which this Warrant could have been
exercised immediately prior to such merger, consolidation or sales would have
been entitled or (B) in the case of a merger or consolidation, (x) require
<PAGE> 108
the surviving entity to issue common stock purchase warrants equal to the
number Warrant Shares to which this Warrant then permits, which newly warrant
shall be identical to this Warrant,and (y) simultaneously with the issuance
of such warrant, the Holder of such warrant shall have the right to
exercise such warrant only into shares of stock and other securities, cash
and property receivable upon or deemed to be held by holders of Common
Stock following such merger or consolidation or (C) require the surviving
entity from such merger, acquisition or business combination to pay to the
Holder, in cash, the Black Scholes value of this Warrant. In the case of
clause (B), the exercise price for such new warrant shall be based upon
the amount of securities, cash and property that each share of Common
Stock would receive in such transaction and the Exercise Price of
this Warrant immediately prior to the effectiveness or closing date
for such transaction. The terms of any such merger, sale or consolidation
shall include such terms so as continue to give the Holder the right to
receive the securities, cash and property set forth in this Section upon
any conversion or redemption following such event. This provision shall
similarly apply to successive such events.
(f) For the purposes of this Section 8, the following clauses shall also
be applicable:
(i) Record Date. In case the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them (A) to receive a dividend
or other distribution payable in Common Stock or in securities convertible
or exchangeable into shares of Common Stock, or (B) to subscribe for or
purchase Common Stock or securities convertible or exchangeable into shares
of Common Stock, then such record date shall be deemed to be the date of the
issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(ii) Treasury Shares. The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for the account
of the Company, and the disposition of any such shares shall be considered
an issue or sale of Common Stock.
(g) All calculations under this Section 8 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be.
(h) Whenever the Exercise Price is adjusted pursuant to Section 8(c)
above, the Holder, after receipt of the determination by the Appraiser,
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case the adjustment shall
be equal to the average of the adjustments recommended by each of the
Appraiser and such appraiser. The Holder shall promptly mail or cause to be
mailed to the Company, a notice setting forth the Exercise Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment. Such adjustment shall become effective immediately after the
record date mentioned above.
(i) If:
<PAGE> 109
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
(iii) the Company shall authorize the granting to all holders of
the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights; or
(iv) the approval of any stockholders of the Company shall be
required in connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any sale or transfer
of all or substantially all of the assets of the Company, or any compulsory
share exchange whereby the Common Stock is converted into other securities,
cash or property; or
(v) the Company shall authorize the voluntary dissolution,
liquidation or winding up of the affairs of the Company, then the Company
shall cause to be mailed to each Holder at their last addresses as they
shall appear upon the Warrant Register, at least 20 calendar days prior to
the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record
is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distributions, redemption, rights
or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up; provided,
however, that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
9. Payment of Exercise Price. The Holder shall pay the Exercise Price
in one of the following manners:
(a) Cash Exercise. The Holder may deliver immediately available funds;
or
<PAGE> 110
(b) Cashless Exercise. The Holder may surrender this Warrant to the
Company together with a notice of cashless exercise, in which event the
Company shall issue to the Holder the number of Warrant Shares determined as
follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be issued to the Holder.
Y = the number of Warrant Shares with respect to which this Warrant is being
exercised.
A = the average of the closing sale prices of the Common Stock (as reported
by Bloomberg L.P. or any successor to its function of reporting share prices
at 4:15 p.m. (New York time for the closing bid price for regular session
trading on such day)) for the five (5) trading days immediately prior to
(but not including) the Date of Exercise.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to
have been commenced, on the issue date.
10. Certain Exercise Restrictions.
(a) A Holder may not exercise this Warrant to the extent such exercise
would result in the Holder, together with any affiliate thereof, beneficially
owning (as determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the rules
promulgated thereunder) in excess of 4.999% of the then issued and
outstanding shares of Common Stock, including shares issuable upon such
exercise and held by such Holder after application of this Section. Since
the Holder will not be obligated to report to the Company the number of
shares of Common Stock it may hold at the time of an exercise hereunder,
unless the exercise at issue would result in the issuance of shares of
Common Stock in excess of 4.999% of the then outstanding shares of Common
Stock without regard to any other shares which may be beneficially owned by
the Holder or an affiliate thereof, the Holder shall have the authority and
obligation to determine whether the restriction contained in this Section
will limit any particular exercise hereunder and to the extent that the
Holder determines that the limitation contained in this Section applies, the
determination of which portion of this Warrant is exercisable shall be the
responsibility and obligation of the Holder. If the Holder has delivered a
Form of Election to Purchase for a number of Warrant Shares that, without
regard to any other shares that the Holder or its affiliates may beneficially
own, would result in the issuance in excess of the permitted amount hereunder
the Company shall notify the Holder of this fact and shall honor the exercise
<PAGE> 111
for the maximum portion of this Warrant permitted to be exercised on such
Date of Exercise in accordance with the periods described herein and, at the
option of the Holder, either keep the portion of the Warrant tendered for
exercise in excess of the permitted amount hereunder for future exercises or
return such excess portion of the Warrant to the Holder. The provisions of
this Section may be waived by a Holder (but only as to itself and not to any
other Holder) upon not less than 61 days prior notice to the Company. Other
Holders shall be unaffected by any such waiver.
(b) A Holder may not exercise this Warrant to the extent such exercise
would result in the Holder, together with any affiliate thereof, beneficially
owning (as determined in accordance with Section 13(d) of the Exchange Act
and the rules promulgated thereunder) in excess of 9.999% of the then issued
and outstanding shares of Common Stock, including shares issuable upon such
exercise and held by such Holder after application of this Section. Since
the Holder will not be obligated to report to the Company the number of
shares of Common Stock it may hold at the time of an exercise hereunder,
unless the exercise at issue would result in the issuance of shares of
Common Stock in excess of 9.999% of the then outstanding shares of Common
Stock without regard to any other shares which may be beneficially owned by
the Holder or an affiliate thereof, the Holder shall have the authority and
obligation to determine whether the restriction contained in this Section
will limit any particular exercise hereunder and to the extent that the
Holder determines that the limitation contained in this Section applies, the
determination of which portion of this Warrant is exercisable shall be the
responsibility and obligation of the Holder. If the Holder has delivered a
Form of Election to Purchase for a number of Warrant Shares that, without
regard to any other shares that the Holder or its affiliates may beneficially
own, would result in the issuance in excess of the permitted amount
hereunder, the Company shall notify the Holder of this fact and shall honor
the exercise for the maximum portion of this Warrant permitted to be
exercised on such Date of Exercise in accordance with the periods described
herein and, at the option of the Holder, either keep the portion of the
Warrant tendered for exercise in excess of the permitted amount hereunder
for future exercises or return such excess portion of the Warrant to the
Holder. The provisions of this Section may be waived by a Holder (but only
as to itself and not to any other Holder) upon not less than 61 days prior
notice to the Company. Other Holders shall be unaffected by any such waiver.
11. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise
of this Warrant shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of this Warrant so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section,
be issuable on the exercise of this Warrant, the Company shall pay an amount
in cash equal to the Exercise Price multiplied by such fraction.
12. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 6:30 p.m. (New York City time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in
this Section later than 6:30 p.m. (New York City time) on any date and
earlier than 11:59 p.m. (New York City time) on such date, (iii) the
<PAGE> 112
business day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom
such notice is required to be given. The addresses for such communications
shall be: (i) if to the Company, to 1999 Lincoln Drive, Suite 202,
Sarasota, Florida 34236 or facsimile number: (941) 953 4363, attention Chief
Financial Officer, or (ii) if to the Holder, to the Holder at the address or
facsimile number appearing on the Warrant Register or such other address or
facsimile number as the Holder may provide to the Company in accordance with
this Section.
13. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon thirty days' notice to the Holder, the Company may appoint a
new warrant agent. Any corporation into which the Company or any new
warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party
or any corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business
shall be a successor warrant agent under this Warrant without any further
act. Any such successor warrant agent shall promptly cause notice of its
succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder's last address as shown on the Warrant
Register.
14. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns. This Warrant
may be amended only in writing signed by the Company and the Holder and their
successors and assigns.
(b) Subject to Section 14(a), above, nothing in this Warrant shall be
construed to give to any person or corporation other than the Company and
the Holder any legal or equitable right, remedy or cause under this Warrant.
This Warrant shall inure to the sole and exclusive benefit of the Company
and the Holder.
(c) The corporate laws of the State of Delaware shall govern all issues
concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflicts of law thereof. The Company
and the Holder hereby irrevocably submit to the exclusive jurisdiction of
the state and federal courts sitting in the City of New York, borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by receiving a copy thereof sent to the Company
at the address in effect for notices to it under this instrument and agrees
that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in
<PAGE> 113
any way any right to serve process in any manner permitted by law. Each
party irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. If
either party shall commence an action or proceeding to enforce any provisions
of this Warrant, then the prevailing party in such action or proceeding s
hall be reimbursed by the other party for its' attorneys fees and other
costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
(d) The headings herein are for convenience only, do not constitute a
part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
(e) In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to
agree upon a valid and enforceable provision which shall be a commercially
reasonable substitute therefor, and upon so agreeing, shall incorporate
such substitute provision in this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
<PAGE> 114
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its authorized officer as of the date first indicated above.
SALIENT CYBERTECH, INC.
By:___________________________
Name:
Title:
<PAGE> 115
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of
Common Stock under the Warrant issued on November 14, 2000 by Salient
Cybertech, Inc.)
To Salient Cybertech, Inc.:
The undersigned hereby irrevocably elects to purchase _____________ shares
of common stock, $.001 par value per share, of Salient Cybertech, Inc. (the
"Common Stock") and, if such Holder is not utilizing the cashless exercise
provisions set forth in this Warrant, encloses herewith $________ in cash,
certified or official bank check or checks, which sum represents the
aggregate Exercise Price (as defined in the Warrant) for the number of
shares of Common Stock to which this Form of Election to Purchase relates,
together with any applicable taxes payable by the undersigned pursuant to
the Warrant.
Date of vesting of warrant: _______________.
Exercise Price: ________________.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
_____________________________________________________________________
(Please print name and address)
Dated: ________ ,______ Name of Holder:
(Print)___________________
(By:) ___________________
(Name:)
(Title:)
(Signature must conform in
all respects to name of
holder as specified on
the face of the Warrant)
<PAGE> 116
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of Salient
Cybertech, Inc. to which the within Warrant relates and appoints
________________ attorney to transfer said right on the books of Salient
Cybertech, Inc. with full power of substitution in the premises.
Dated:
_______________, ____
_______________________________________
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant)
_______________________________________
Address of Transferee
_______________________________________
_______________________________________
In the presence of:
__________________________
<PAGE> 117
ANNEX A
Exercise Date Number of Warrant Number of Warrant Number of Warrant
Shares Not Shares Exercised Shares Remaining
Previously on Date of to be Exercised
Exercised. Exercise
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
<PAGE> 118
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE
WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
SALIENT CYBERTECH, INC.
VESTING WARRANT
Warrant No.1 Dated: November 14, 2000
Salient Cybertech, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, Haines Avenue, LLC or its registered
assigns ("Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company, at any time and from time to time from and after
the business day following the expiration of the Commitment Period (as
defined in the Securities Purchase Agreement of even date herewith between
the Company and the original Holder (the "Purchase Agreement")), a number
of shares (each such share, as adjusted from time to time as provided in
Section 8, a "Warrant Share" and all such shares, the "Warrant Shares") of
common stock, $.001 par value per share, of the Company (the "Common Stock")
equal to the quotient obtained by dividing (x) the Undrawn Amount (as defined
in the Purchase Agreement) by (y) the lowest closing bid prices of the Common
Stock (as reported by Bloomberg L.P. or the successor to its function of
reporting stock prices) during the 90 days preceding the expiration of the
Commitment Period (subject to equitable adjustment upon the occurrence of
the events set forth in Section 8(a)), at an exercise price equal to $.001
(the "Exercise Price"), but only if, by the expiration of the Commitment
Period, the Company shall not have issued and sold Put Shares (as defined in
the Purchase Agreement) for an aggregate Investment Amount (as defined in
the Purchase Agreement) equal to $2,500,000. This Warrant is subject to the
following terms and conditions:
1. Registration of Warrant. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, and the Company
shall not be affected by notice to the contrary.
<PAGE> 119
2. Registration of Transfers and Exchanges.
(a) The Company shall register the transfer of any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant, with the
Form of Assignment attached hereto duly completed and signed, to the
Transfer Agent or to the Company at its address for notice set forth in
Section 12. Upon any such registration or transfer, a new warrant to
purchase Common Stock, in substantially the form of this Warrant (any such
new warrant, a "New Warrant"), evidencing the portion of this Warrant so
transferred shall be issued to the transferee and a New Warrant evidencing
the remaining portion of this Warrant not so transferred, if any, shall be
issued to the transferring Holder. The acceptance of the New Warrant by the
transferee thereof shall be deemed the acceptance of such transferee of all
of the rights and obligations of a holder of a Warrant.
(b) This Warrant is exchangeable, upon the surrender hereof by the
Holder to the office of the Company at its address for notice set forth in
Section 12 for one or more New Warrants, evidencing in the aggregate the
right to purchase the number of Warrant Shares which may then be purchased
hereunder. Any such New Warrant will be dated the date of such exchange.
3. Duration and Exercise of Warrants.
(a) This Warrant shall be exercisable by the registered Holder on any
business day before 6:30 P.M., New York City time, at any time and from
time to time on or after the date hereof to and including the fifth
anniversary of the expiration of the Commitment Period, (the "Expiration
Date"). At 6:30 P.M., New York City time on the Expiration Date, the
portion of this Warrant not exercised prior thereto shall be and become
void and of no value. Prior to the Expiration Date, the Company may not
call or otherwise redeem this Warrant.
(b) Upon delivery of a duly completed and signed Form of Election to
Purchase attached hereto (and the grid attached hereto as Annex A) duly
completed and signed, to the Company at its address for notice set forth
in Section 12 and upon payment of the Exercise Price multiplied by the
number of Warrant Shares that the Holder intends to purchase hereunder, in
the manner provided hereunder, all as specified by the Holder in the Form
of Election to Purchase, the Company shall promptly (but in no event later
than 3 business days after the Date of Exercise (as defined herein)) issue
or cause to be issued and cause to be delivered to or upon the written order
of the Holder and in such name or names as the Holder may designate, a
certificate for the Warrant Shares issuable upon such exercise, free of
restrictive legends except (i) either in the event that a registration
statement covering the resale of the Warrant Shares and naming the Holder
as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable without volume restrictions
pursuant to Rule 144(k) promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), or (ii) if this Warrant shall have been
issued pursuant to a written agreement between the original Holder and the
Company, as required by such agreement. Any person so designated by the
Holder to receive Warrant Shares shall be deemed to have become holder of
record of such Warrant Shares as of the Date of Exercise of this Warrant.
The Company shall, upon request of the Holder, if available, use its best
efforts to deliver Warrant Shares hereunder electronically through the
Depository Trust Corporation or another established clearing corporation
performing similar functions. To effect an exercise hereunder, the Holder
shall not be required to physically surrender this Warrant to the Company
unless all the Warrant Shares have been exercised. Exercises hereunder
shall have the effect of lowering the number of Warrant Shares in an amount
equal to the applicable exercise, which shall be evidenced by entries set
forth in the Exercise Schedule. The Holder and the Company shall maintain
records showing the number of Warrant Shares exercised and the date of such
exercises . In the event of any dispute or discrepancy, the records of the
Holder shall be controlling and determinative in the absence of manifest
error. The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph,
following exercise of a portion of this Warrant, the number of shares
issuable upon exercise of this Warrant may be less than the amount stated
on the face hereof.
A "Date of Exercise" means the date on which the Company shall have received
(i) the Form of Election to Purchase (and the Warrant Shares Exercise Log
attached hereto) completed and duly signed, and (ii) payment of the Exercise
Price for the number of Warrant Shares so indicated by the Holder to be
purchased.
4. Piggyback Registration Rights. This Warrant is subject to the
piggyback registration rights granted under the Registration Rights
Agreement and such piggyback registration rights shall continue until
all of the Holder's Warrant Shares have been sold in accordance with an
effective registration statement or upon the Expiration Date. The Company
will pay all registration expenses in connection therewith.
5. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay
any tax which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or Warrants in a name
other than that of the Holder. The Holder shall be responsible for all
other tax liability that may arise as a result of holding or transferring
this Warrant or receiving Warrant Shares upon exercise hereof.
6. Replacement of Warrant. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction
and indemnity, if requested, satisfactory to it. Applicants for a New
Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable charges
as the Company may prescribe.
7. Reservation of Warrant Shares. The Company covenants that it will
at all times reserve and keep available out of the aggregate of its
authorized but unissued Common Stock, solely for the purpose of enabling
it to issue Warrant Shares upon exercise of this Warrant as herein provided,
the number of Warrant Shares which are then issuable and deliverable upon
the exercise of this entire Warrant, free from preemptive rights or any
other actual contingent purchase rights of persons other than the Holder
(taking into account the adjustments and restrictions of Section 8). The
<PAGE> 120
Company covenants that all Warrant Shares that shall be so issuable and
deliverable shall, upon issuance and the payment of the applicable Exercise
Price in accordance with the terms hereof, be duly and validly authorized,
issued and fully paid and nonassessable.
8. Certain Adjustments. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment
from time to time as set forth in this Section 8.
(a) If the Company, at any time while this Warrant is outstanding, (i)
shall pay a stock dividend (except scheduled dividends paid on outstanding
preferred stock as of the date hereof which contain a stated dividend rate)
or otherwise make a distribution or distributions on shares of its Common
Stock or on any other class of capital stock payable in shares of Common
Stock, (ii) subdivide outstanding shares of Common Stock into a larger
number of shares, or (iii) combine outstanding shares of Common Stock into
a smaller number of shares, the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding before such event and
of which the denominator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding after such event. Any
adjustment made pursuant to this Section shall become effective immediately
after the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision or combination, and
shall apply to successive subdivisions and combinations.
(b) In case of any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is converted
into other securities, cash or property, then the Holder shall have the
right thereafter to exercise this Warrant only into the shares of stock and
other securities and property receivable upon or deemed to be held by
holders of Common Stock following such reclassification or share exchange,
and the Holder shall be entitled upon such event to receive such amount of
securities or property equal to the amount of Warrant Shares such Holder
would have been entitled to had such Holder exercised this Warrant
immediately prior to such reclassification or share exchange. The terms
of any such reclassification or share exchange shall include such terms
so as to continue to give to the Holder the right to receive the securities
or property set forth in this Section 8(b) upon any exercise following any
such reclassification or share exchange.
(c) If the Company, at any time while this Warrant is outstanding,
shall distribute to all holders of Common Stock (and not to holders of this
Warrant) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security (excluding those referred to in
Sections 8(a), (b) and (d)), then in each such case the Exercise Price shall
be determined by multiplying the Exercise Price in effect immediately prior
to the record date fixed for determination of stockholders entitled to
receive such distribution by a fraction of which the denominator shall be
the Exercise Price determined as of the record date mentioned above, and
of which the numerator shall be such Exercise Price on such record date less
the then fair market value at such record date of the portion of such assets
or evidence of indebtedness so distributed applicable to one outstanding
share of Common Stock as determined by the Company's independent certified
public accountants that regularly examines the financial statements of the
Company (an "Appraiser").
<PAGE> 121
(d) In case of any (1) merger or consolidation of the Company with or
into another Person, or (2) sale by the Company of more than one-half of
the assets of the Company (on a book value basis) in one or a series of
related transactions, the Holder shall have the right thereafter to (A)
exercise this Warrant for the shares of stock and other securities, cash
and property receivable upon or deemed to be held by holders of Common Stock
following such merger, consolidation or sale, and the Holder shall be
entitled upon such event or series of related events to receive such amount
of securities, cash and property as the Common Stock for which this Warrant
could have been exercised immediately prior to such merger, consolidation or
sales would have been entitled or (B) in the case of a merger or
consolidation, (x) require the surviving entity to issue common stock
purchase warrants equal to the number Warrant Shares to which this Warrant
then permits, which newly warrant shall be identical to this Warrant,and (y)
simultaneously with the issuance of such warrant, the Holder of
such warrant shall have the right to exercise such warrant only into shares
of stock and other securities, cash and property receivable upon or deemed
to be held by holders of Common Stock following such merger or
consolidation or (C) require the surviving entity from such merger,
acquisition or business combination to pay to the Holder, in cash, the
Black Scholes value of this Warrant. In the case of clause (B), the
exercise price for such new warrant shall be based upon the amount of
securities, cash and property that each share of Common Stock would receive
in such transaction and the Exercise Price of this Warrant immediately prior
to the effectiveness or closing date for such transaction. The terms of any
such merger, sale or consolidation shall include such terms so as continue
to give the Holder the right to receive the securities, cash and property
set forth in this Section upon any conversion or redemption following such
event. This provision shall similarly apply to successive such events.
(e) For the purposes of this Section 8, the following clauses shall also
be applicable:
(i) Record Date. In case the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them (A) to receive a dividend
or other distribution payable in Common Stock or in securities convertible
or exchangeable into shares of Common Stock, or (B) to subscribe for or
purchase Common Stock or securities convertible or exchangeable into shares
of Common Stock, then such record date shall be deemed to be the date of the
issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(ii) Treasury Shares. The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for the account
of the Company, and the disposition of any such shares shall be considered
an issue or sale of Common Stock.
(f) All calculations under this Section 8 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be.
<PAGE> 122
(g) Whenever the Exercise Price is adjusted pursuant to Section 8(c)
above, the Holder, after receipt of the determination by the Appraiser,
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case the adjustment shall
be equal to the average of the adjustments recommended by each of the
Appraiser and such appraiser. The Holder shall promptly mail or cause to
be mailed to the Company, a notice setting forth the Exercise Price after
such adjustment and setting forth a brief statement of the facts requiring
such adjustment. Such adjustment shall become effective immediately after
the record date mentioned above.
(h) If:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
(iii) the Company shall authorize the granting to all holders of
the Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights; or
(iv) the approval of any stockholders of the Company shall be
required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party,
any sale or transfer of all or substantially all of the assets of
the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property; or
(v) the Company shall authorize the voluntary dissolution,
liquidation or winding up of the affairs of the Company,
then the Company shall cause to be mailed to each Holder at their last
addresses as they shall appear upon the Warrant Register, at least 20
calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
<PAGE> 123
distributions, redemption, rights or warrants are to be determined or (y)
the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and
the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding
up; provided, however, that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
9. Payment of Exercise Price. The Holder shall pay the Exercise Price
in one of the following manners:
(a) Cash Exercise. The Holder may deliver immediately available funds;
or
(b) Cashless Exercise. The Holder may surrender this Warrant to the
Company together with a notice of cashless exercise, in which event the
Company shall issue to the Holder the number of Warrant Shares determined
as follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be issued to
the Holder.
Y = the number of Warrant Shares with respect to which this Warrant is
being exercised.
A = the average of the closing sale prices of the Common Stock (as reported
by Bloomberg L.P. or any successor to its function of reporting share prices
at 4:15 p.m. (New York time for the closing bid price for regular session
trading on such day)) for the five (5) trading days immediately prior to
(but not including) the Date of Exercise.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder,
and the holding period for the Warrant Shares shall be deemed to have been
commenced, on the issue date.
10. Certain Exercise Restrictions.
(a) A Holder may not exercise this Warrant to the extent such exercise
would result in the Holder, together with any affiliate thereof, beneficially
owning (as determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the rules
promulgated thereunder) in excess of 4.999% of the then issued and
outstanding shares of Common Stock, including shares issuable upon such
exercise and held by such Holder after application of this Section. Since
<PAGE> 124
the Holder will not be obligated to report to the Company the number of
shares of Common Stock it may hold at the time of an exercise hereunder,
unless the exercise at issue would result in the issuance of shares of
Common Stock in excess of 4.999% of the then outstanding shares of Common
Stock without regard to any other shares which may be beneficially owned by
the Holder or an affiliate thereof, the Holder shall have the authority and
obligation to determine whether the restriction contained in this Section
will limit any particular exercise hereunder and to the extent that the
Holder determines that the limitation contained in this Section applies,
the determination of which portion of this Warrant is exercisable shall be
the responsibility and obligation of the Holder. If the Holder has
delivered a Form of Election to Purchase for a number of Warrant Shares
that, without regard to any other shares that the Holder or its affiliates
may beneficially own, would result in the issuance in excess of the
permitted amount hereunder, the Company shall notify the Holder of this
fact and shall honor the exercise for the maximum portion of this Warrant
permitted to be exercised on such Date of Exercise in accordance with the
periods described herein and, at the option of the Holder, either keep the
portion of the Warrant tendered for exercise in excess of the permitted
amount hereunder for future exercises or return such excess portion of the
Warrant to the Holder. The provisions of this Section may be waived by a
Holder (but only as to itself and not to any other Holder) upon not less
than 61 days prior notice to the Company. Other Holders shall be unaffected
by any such waiver.
(b) A Holder may not exercise this Warrant to the extent such exercise
would result in the Holder, together with any affiliate thereof, beneficially
owning (as determined in accordance with Section 13(d) of the Exchange Act
and the rules promulgated thereunder) in excess of 9.999% of the then issued
and outstanding shares of Common Stock, including shares issuable upon such
exercise and held by such Holder after application of this Section. Since
the Holder will not be obligated to report to the Company the number of
shares of Common Stock it may hold at the time of an exercise hereunder,
unless the exercise at issue would result in the issuance of shares of
Common Stock in excess of 9.999% of the then outstanding shares of Common
Stock without regard to any other shares which may be beneficially owned
by the Holder or an affiliate thereof, the Holder shall have the authority
and obligation to determine whether the restriction contained in this
Section will limit any particular exercise hereunder and to the extent that
the Holder determines that the limitation contained in this Section applies,
the determination of which portion of this Warrant is exercisable shall be
the responsibility and obligation of the Holder. If the Holder has delivered
a Form of Election to Purchase for a number of Warrant Shares that, without
regard to any other shares that the Holder or its affiliates may beneficially
own, would result in the issuance in excess of the permitted amount
hereunder, the Company shall notify the Holder of this fact and shall honor
the exercise for the maximum portion of this Warrant permitted to be
exercised on such Date of Exercise in accordance with the periods described
herein and, at the option of the Holder, either keep the portion of the
Warrant tendered for exercise in excess of the permitted amount hereunder
for future exercises or return such excess portion of the Warrant to the
Holder. The provisions of this Section may be waived by a Holder (but only
as to itself and not to any other Holder) upon not less than 61 days prior
notice to the Company. Other Holders shall be unaffected by any such waiver.
11. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise
<PAGE> 125
of this Warrant shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of this Warrant so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section,
be issuable on the exercise of this Warrant, the Company shall pay an amount
in cash equal to the Exercise Price multiplied by such fraction.
12. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 6:30 p.m. (New York City time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in
this Section later than 6:30 p.m. (New York City time) on any date and
earlier than 11:59 p.m. (New York City time) on such date, (iii) the
business day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom
such notice is required to be given. The addresses for such communications
shall be: (i) if to the Company, to 1999 Lincoln Drive, Suite 202, Sarasota,
Florida 34236 or facsimile number: (941) 953 4363, Attention: Chief
Financial Officer, or (ii) if to the Holder, to the Holder at the address
or facsimile number appearing on the Warrant Register or such other address
or facsimile number as the Holder may provide to the Company in accordance
with this Section.
13. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon thirty days' notice to the Holder, the Company may appoint a
new warrant agent. Any corporation into which the Company or any new
warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a
party or any corporation to which the Company or any new warrant agent
transfers substantially all of its corporate trust or shareholders services
business shall be a successor warrant agent under this Warrant without any
further act. Any such successor warrant agent shall promptly cause notice
of its succession as warrant agent to be mailed (by first class mail,
postage prepaid) to the Holder at the Holder's last address as shown on the
Warrant Register.
14. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns. This Warrant
may be amended only in writing signed by the Company and the Holder and
their successors and assigns.
(b) Subject to Section 14(a), above, nothing in this Warrant shall be
construed to give to any person or corporation other than the Company and
the Holder any legal or equitable right, remedy or cause under this Warrant.
This Warrant shall inure to the sole and exclusive benefit of the Company
and the Holder.
(c) The corporate laws of the State of Delaware shall govern all issues
concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity, enforcement and
<PAGE> 126
interpretation of this Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflicts of law thereof. The Company
and the Holder hereby irrevocably submit to the exclusive jurisdiction of
the state and federal courts sitting in the City of New York, borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives
personal service of process and consents to process being served in any
such suit, action or proceeding by receiving a copy thereof sent to the
Company at the address in effect for notices to it under this instrument
and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by
law. Each party irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. If either party shall commence an action or proceeding to enforce
any provisions of this Warrant, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its' attorneys fees
and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.
(d) The headings herein are for convenience only, do not constitute a
part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
(e) In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to
agree upon a valid and enforceable provision which shall be a commercially
reasonable substitute therefor, and upon so agreeing, shall incorporate
such substitute provision in this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
<PAGE> 127
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its authorized officer as of the date first indicated above.
SALIENT CYBERTECH, INC.
By:_____________________________________
Name:
Title:
<PAGE> 128
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of
Common Stock under the Warrant, issued on November 14, 2000 by Salient
Cybertech, Inc.)
To Salient Cybertech, Inc.:
The undersigned hereby irrevocably elects to purchase _____________ shares
of common stock, $.001 par value per share, of Salient Cybertech, Inc. (the
"Common Stock") and, if such Holder is not utilizing the cashless exercise
provisions set forth in this Warrant, encloses herewith $________ in cash,
certified or official bank check or checks, which sum represents the
aggregate Exercise Price (as defined in the Warrant) for the number of
shares of Common Stock to which this Form of Election to Purchase relates,
together with any applicable taxes payable by the undersigned pursuant to
the Warrant.
Date of vesting of warrant: _______________.
Exercise Price: ________________.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
______________________________________________________________________
(Please print name and address)
Dated:________ ,______ Name of Holder:
(Print)____________________
(By:)______________________
(Name:)
(Title:)
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant)
<PAGE> 129
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of Salient
Cybertech, Inc. to which the within Warrant relates and appoints
________________ attorney to transfer said right on the books of Salient
Cybertech, Inc. with full power of substitution in the premises.
Dated:
_______________, ____
_______________________________________
(Signature must conform in all respects to
name of holder as specified on the face of the
Warrant)
_______________________________________
Address of Transferee
_______________________________________
_______________________________________
In the presence of:
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ANNEX A
Vesting/Exercise Date Number of Applicable Number of Number of
Warrant Exercise Price Warrant Warrant
Shares Vested Shares Not Shares
on Such Vesting Previously Remaining
Date/Exercised Exercised to be
on such Exercise Exercised
Date. at Such
Exercise
Price.
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