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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 10, 1997
NUKO INFORMATION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 2-31438 16-096287
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
2391 Qume Drive
San Jose, California 95131
(Address of principal executive offices, including Zip Code)
(408) 526-0288
(Registrant's telephone number, including area code)
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ITEM 5 OTHER EVENTS
On July 10, 1997, the Registrant completed a private financing which
resulted in the issuance of 1,318,027 shares of Common Stock for gross
proceeds of approximately $3,333,334. The shares were issued to two
institutional investors in separate transactions that were each conditioned
upon the concurrent closing of the other transaction.
Of the shares issued in this transaction, 297,619 shares were issued to
RGC International Investors, LDC ("RGC"), which purchased the shares at $2.80
per share. These shares were issued upon exercise of outstanding warrants,
immediately following repricing of the warrants from $18 to $2.80 (equal to
100% of the average closing prices of the Registrant's Common Stock for the
five trading days preceding the date of exercise). Such warrants were issued
in connection with prior conversions of shares of Series A Convertible
Preferred Stock (the "Convertible Preferred"). As of July 10, 1997, a total
of 7,000 shares of Convertible Preferred remained outstanding. In connection
with the July financing, the exercise price on all unexercised warrants,
whether issued in connection with prior conversions of the Convertible
Preferred, or issuable upon future conversions, was reduced from $18 to $15
per share. All of the shares underlying the Convertible Preferred and the
warrants issued and issuable upon conversion or exercise thereof, as the case
may be, including the 297,619 shares issued on July 10, 1997, are registered
for resale pursuant to a registration statement on Form S-3 that was declared
effective by the Securities and Exchange Commission on February 13, 1997
(File No. 333-19205). In addition to the 297,619 shares issued to RGC on July
10, 1997, RGC was issued a new three-year warrant to purchase 99,207 shares
at an exercise price of $2.80.
The remaining 1,020,408 shares of Common Stock were issued to six
institutional trust accounts for which Altamira Management, Ltd., Toronto,
Ontario ("Altamira") acts as agent, which purchased the shares at $2.45 per
share. Altamira was also issued a three-year warrant to purchase an
additional 204,082 shares of Common Stock at $2.45 per share. Altamira also
has the right to receive warrants equal to 10% of the aggregate number of
warrants issuable to RGC, when additional warrants are issued to RGC.
Pursuant to the terms of the agreements reached with RGC and Altamira,
the Registrant is obligated to promptly register the resale of the 1,020,408
shares issued to Altamira and the 303,280 shares issuable upon exercise of
the new warrants issued to these investors, as well as an additional 102,041
shares issuable upon exercise of five-year $2.45 warrants issued to the
placement agent who assisted in the sale of the securities to Altamira. The
Registrant intends to use its best efforts to file a registration statement
within approximately two weeks of the closing.
In addition to the agent's warrants, the placement agent also received
commissions and a nonaccountable expense allowance aggregating $225,000 in
connection with the sale of securities to Altamira.
The foregoing summary of the terms of the transactions described herein
does not purport to be complete and is qualified in its entirety by reference
to the exhibits referenced in Item 7 below.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following exhibits are filed as part of this Current Report on Form
8-K:
EXHIBIT
NUMBER EXHIBIT
- ------- -------
4.1 Form of Stock Purchase Warrants issued in connection with the
$2,500,000 investment by Altamira Management Ltd. in July 1997.
4.2 Form of Registration Rights Agreement between the Registrant and
Altamira Management Ltd. covering the shares issued and the shares
underlying the warrants issued in July 1997.
4.3 Letter Agreement dated July 9, 1997 between the Registrant and RGC
International Investors, LDC.
4.4 Form of Stock Purchase Warrant issued to RGC International Investors,
LCD issued in connection with the July 1997 transaction.
4.5 Form of Stock Purchase Warrant issued to Bailey & Company Inc. as
placement agent in connection with the sale of securities to Altamira
Management Ltd.
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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: July 25, 1997
NUKO INFORMATION SYSTEMS, INC.
(Registrant)
By: /s/ Thomas A. Spanier
----------------------------------
Thomas A. Spanier
INTERIM CHIEF FINANCIAL OFFICER
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Exhibit 4.1
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. EXCEPT AS OTHERWISE SET FORTH HEREIN OR IN THAT CERTAIN
SUBSCRIPTION AGREEMENT AND LETTER OF INVESTMENT INTENT DATED ON OR
ABOUT JULY 9, 1997, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY
BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER SUCH ACT OR AN
OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT
OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT. ANY SUCH SALE,
ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH APPLICABLE STATE
SECURITIES LAWS.
Right to
Purchase
________
Shares of
Common Stock, par
value $.001
per share
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, ______________________________,
or its registered assigns, is entitled to purchase from NUKO INFORMATION
SYSTEMS, INC., a Delaware corporation (the "Company"), at any time or from
time to time during the period specified in Paragraph 2 hereof,
___________________________________ (________) fully paid and nonassessable
shares of the Company's Common Stock, par value $0.001 per share (the "Common
Stock"), at an exercise price of $2.45 per share (the "Exercise Price"). The
term "Warrant Shares," as used herein, refers to the shares of Common Stock
purchasable hereunder. The Warrant Shares and the Exercise Price are subject
to adjustment as provided in Paragraph 4 hereof. The term Warrants means
this Warrant and the other warrants of the Company issued upon pursuant to
the provisions of this Warrant.
This Warrant is subject to the following terms, provisions, and
conditions:
1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
Subject to the provisions hereof, this Warrant may be exercised by the holder
hereof, in whole or in part, by the surrender of this Warrant, together with
a completed exercise agreement in the form attached hereto (the "Exercise
Agreement"), to the Company during normal business hours on any business day
at the Company's principal executive offices (or such other office or agency
of the Company as it may designate by notice to the holder hereof), and upon
(i) payment to the
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Company in cash, by certified or official bank check or by wire transfer for
the account of the Company of the Exercise Price for the Warrant Shares
specified in the Exercise Agreement or (ii) if the resale of the Warrant
Shares by the holder is not then registered pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), delivery to the Company of a written notice of an election
to effect a "Cashless Exercise" (as defined in Section 11(c) below) for the
Warrant Shares specified in the Exercise Agreement. The Warrant Shares so
purchased shall be deemed to be issued to the holder hereof or such holder's
designee, as the record owner of such shares, as of the close of business on
the date on which this Warrant shall have been surrendered, the completed
Exercise Agreement shall have been delivered, and payment shall have been
made for such shares as set forth above. Certificates for the Warrant Shares
so purchased, representing the aggregate number of shares specified in the
Exercise Agreement, shall be delivered to the holder hereof within a
reasonable time after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be requested
by the holder hereof and shall be registered in the name of such holder or
such other name as shall be designated by such holder. If this Warrant shall
have been exercised only in part, then, unless this Warrant has expired, the
Company shall, at its expense, at the time of delivery of such certificates,
deliver to the holder a new Warrant representing the number of shares with
respect to which this Warrant shall not then have been exercised.
2. PERIOD OF EXERCISE. This Warrant is exercisable at any time or from
time to time on or after the date on which this Warrant is issued and before
5:00 p.m., New York City time on July 9, 2000 (the "Exercise Period").
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly issued,
fully paid, and nonassessable and free from all taxes, liens, and charges
with respect to the issue thereof.
(b) RESERVATION OF SHARES. During the Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Common Stock
to provide for the exercise of this Warrant.
(c) LISTING. The Company shall promptly secure the listing of the
shares of Common Stock issuable upon exercise of the Warrant upon each
national securities exchange or automated quotation system, if any, upon
which shares of Common Stock are then listed (subject to official notice of
issuance upon exercise of this Warrant) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all shares
of Common Stock from time to time issuable upon the exercise of this Warrant;
and the Company shall so list on each national securities exchange or
automated quotation system, as the case may be, and shall maintain such
listing of, any other shares of capital stock of the Company issuable upon
the exercise of this Warrant if and so long as any shares of the same class
shall be listed on such national securities exchange or automated quotation
system.
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(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by amendment
of its charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed by it hereunder, but will at all
times in good faith assist in the carrying out of all the provisions of this
Warrant and in the taking of all such action as may reasonably be requested
by the holder of this Warrant in order to protect the exercise privilege of
the holder of this Warrant against dilution or other impairment, consistent
with the tenor and purpose of this Warrant. Without limiting the generality
of the foregoing, the Company (i) will not increase the par value of any
shares of Common Stock receivable upon the exercise of this Warrant above the
Exercise Price then in effect, and (ii) will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise
of this Warrant.
(e) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation, or acquisition of
all or substantially all the Company's assets.
4. ANTIDILUTION PROVISIONS. During the Exercise Period, the Exercise
Price and the number of Warrant Shares shall be subject to adjustment from
time to time as provided in this Paragraph 4.
In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be rounded
up to the nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE AND THE NUMBER OF SHARES UPON
ISSUANCE OF COMMON STOCK. Except as otherwise provided in Paragraphs 4(c)
and 4(e) hereof, if and whenever on or after July 9, 1997, the Company issues
or sells, or in accordance with Paragraph 4(b) hereof is deemed to have
issued or sold, any shares of Common Stock for no consideration or for a
consideration per share (before deduction of reasonable expenses or
commissions or underwriting discounts or allowances in connection therewith)
less than the Market Price (as hereinafter defined) on the date of issuance
(a "Dilutive Issuance"), then immediately upon the Dilutive Issuance, the
Exercise Price will be reduced to a price determined by multiplying the
Exercise Price in effect immediately prior to the Dilutive Issuance by a
fraction, (i) the numerator of which is an amount equal to the sum of (x) the
number of shares of Common Stock actually outstanding immediately prior to
the Dilutive Issuance, plus (y) the aggregate consideration, calculated as
set forth in Paragraph 4(b) hereof, received by the Company upon such
Dilutive Issuance, divided by the Market Price in effect immediately prior to
the Dilutive Issuance, and (ii) the denominator of which is the total number
of shares of Common Stock Deemed Outstanding immediately after the Dilutive
Issuance.
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Exercise Price under Paragraph 4(a) hereof, the
following will be applicable:
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(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in any
manner issues or grants any warrants, rights or options, whether or not
immediately exercisable, to subscribe for or to purchase Common Stock or
other securities convertible into or exchangeable for Common Stock
("Convertible Securities") (such warrants, rights and options to purchase
Common Stock or Convertible Securities are hereinafter referred to as
"Options") and the price per share for which Common Stock is issuable upon
the exercise of such Options is less than the Market Price on the date of
issuance, then the maximum total number of shares of Common Stock issuable
upon the exercise of all such Options will, as of the date of the issuance or
grant of such Options, be deemed to be outstanding and to have been issued
and sold by the Company for such price per share. For purposes of the
preceding sentence, the "price per share for which Common Stock is issuable
upon the exercise of such Options" is determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration for
the issuance or granting of all such Options, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
exercise of all such Options, plus, in the case of Convertible Securities
issuable upon the exercise of such Options, the minimum aggregate amount of
additional consideration payable upon the conversion or exchange thereof at
the time such Convertible Securities first become convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise of all such Options (assuming full conversion of
Convertible Securities, if applicable). No further adjustment to the
Exercise Price will be made upon the actual issuance of such Common Stock
upon the exercise of such Options or upon the conversion or exchange of
Convertible Securities issuable upon exercise of such Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Company in
any manner issues or sells any Convertible Securities, whether or not
immediately convertible (other than where the same are issuable upon the
exercise of Options) and the price per share for which Common Stock is
issuable upon such conversion or exchange is less than the Market Price on
the date of issuance, then the maximum total number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities
will, as of the date of the issuance of such Convertible Securities, be
deemed to be outstanding and to have been issued and sold by the Company for
such price per share. For the purposes of the preceding sentence, the "price
per share for which Common Stock is issuable upon such conversion or
exchange" is determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the issuance or sale of all
such Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
thereof at the time such Convertible Securities first become convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities.
No further adjustment to the Exercise Price will be made upon the actual
issuance of such Common Stock upon conversion or exchange of such Convertible
Securities.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If there is
a change at any time in (i) the amount of additional consideration payable to
the Company upon the exercise of any Options; (ii) the amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
of any Convertible Securities; or (iii) the rate at
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which any Convertible Securities are convertible into or exchangeable for
Common Stock (other than under or by reason of provisions designed to protect
against dilution), the Exercise Price in effect at the time of such change
will be readjusted to the Exercise Price which would have been in effect at
such time had such Options or Convertible Securities still outstanding
provided for such changed additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. If, in any case, the total number of shares of Common Stock
issuable upon exercise of any Option or upon conversion or exchange of any
Convertible Securities is not, in fact, issued and the rights to exercise
such Option or to convert or exchange such Convertible Securities shall have
expired or terminated, the Exercise Price then in effect will be readjusted
to the Exercise Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination (other
than in respect of the actual number of shares of Common Stock issued upon
exercise or conversion thereof), never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Options or Convertible Securities are issued, granted or sold for
cash, the consideration received therefor for purposes of this Warrant will
be the amount received by the Company therefor, before deduction of
reasonable commissions, underwriting discounts or allowances or other
reasonable expenses paid or incurred by the Company in connection with such
issuance, grant or sale. In case any Common Stock, Options or Convertible
Securities are issued or sold for a consideration part or all of which shall
be other than cash, the amount of the consideration other than cash received
by the Company will be the fair value of such consideration, except where
such consideration consists of securities, in which case the amount of
consideration received by the Company will be the Market Price thereof as of
the date of receipt. In case any Common Stock, Options or Convertible
Securities are issued in connection with any merger or consolidation in which
the Company is the surviving corporation, the amount of consideration
therefor will be deemed to be the fair value of such portion of the net
assets and business of the non-surviving corporation as is attributable to
such Common Stock, Options or Convertible Securities, as the case may be.
The fair value of any consideration other than cash or securities will be
determined in good faith by the Board of Directors of the Company.
(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No
adjustment to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities issued and outstanding on July 9,
1997; (ii) upon the grant or exercise of any stock or options which may
hereafter be granted or exercised under any employee benefit plan of the
Company now existing or to be implemented in the future, so long as the
issuance of such stock or options is approved by a majority of the
independent members of the Board of Directors of the Company or a majority of
the members of a committee of independent directors established for such
purpose; (iii) upon the exercise of the Warrants; (iv) upon the exercise of
any warrants issued to RGC International Investors, LDC ("RGC") either as of
or concurrently with the original issuance date of these Warrants or
hereafter issued upon conversion of outstanding Series A Preferred Stock; (v)
upon conversion of outstanding Series A Preferred Stock; (vi) that
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would result in an Exercise Price that is less than the last sale price of
the Common Stock on the closing date pursuant to the Subscription Agreement
and Letter of Investment Intent ("Subscription Agreement") (subject to the
appropriate adjustments for any stock split, stock dividend or similar event)
or (v) upon the issuance of Common Stock pursuant to a BONA FIDE firm
commitment underwritten public offering registered under the Securities Act.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at
any time subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced. If
the Company at any time combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a smaller number of shares, then, after the date of
record for effecting such combination, the Exercise Price in effect
immediately prior to such combination will be proportionately increased.
(d) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Paragraph 4, the number of
shares of Common Stock issuable upon exercise of this Warrant shall be
adjusted by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such adjustment
and dividing the product so obtained by the adjusted Exercise Price.
(e) CONSOLIDATION, MERGER OR SALE. In case of any consolidation of
the Company with, or merger of the Company into any other corporation, or in
case of any sale or conveyance of all or substantially all of the assets of
the Company other than in connection with a plan of complete liquidation of
the Company, then as a condition of such consolidation, merger or sale or
conveyance, adequate provision will be made whereby the holder of this
Warrant will have the right to acquire and receive upon exercise of this
Warrant in lieu of the shares of Common Stock immediately theretofore
acquirable upon the exercise of this Warrant, such shares of stock,
securities or assets as may be issued or payable with respect to or in
exchange for the number of shares of Common Stock immediately theretofore
acquirable and receivable upon exercise of this Warrant had such
consolidation, merger or sale or conveyance not taken place. In any such
case, the Company will make appropriate provision to insure that the
provisions of this Paragraph 4 hereof will thereafter be applicable as nearly
as may be in relation to any shares of stock or securities thereafter
deliverable upon the exercise of this Warrant. The Company will not effect
any consolidation, merger or sale or conveyance unless prior to the
consummation thereof, the successor corporation (if other than the Company)
assumes by written instrument the obligations under this Paragraph 4 and the
obligations to deliver to the holder of this Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the
holder may be entitled to acquire.
(f) DISTRIBUTION OF ASSETS. In case the Company shall declare or
make any distribution of its assets (including cash) to holders of Common
Stock as a partial liquidating dividend, by way of return of capital or
otherwise, then, after the date of record for determining
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stockholders entitled to such distribution, but prior to the date of
distribution, the holder of this Warrant shall be entitled upon exercise of
this Warrant for the purchase of any or all of the shares of Common Stock
subject hereto, to receive the amount of such assets which would have been
payable to the holder had such holder been the holder of such shares of
Common Stock on the record date for the determination of stockholders
entitled to such distribution.
(g) NOTICE OF ADJUSTMENT. Upon the occurrence of any event which
requires any adjustment of the Exercise Price, then, and in each such case,
the Company shall give notice thereof to the holder of this Warrant, which
notice shall state the Exercise Price resulting from such adjustment and the
increase or decrease in the number of Warrant Shares purchasable at such
price upon exercise, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. Such
calculation shall be certified by the chief financial officer of the Company.
(h) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise
Price in effect at the time such adjustment is otherwise required to be made,
but any such lesser adjustment shall be carried forward and shall be made at
the time and together with the next subsequent adjustment which, together
with any adjustments so carried forward, shall amount to not less than 1% of
such Exercise Price.
(i) NO FRACTIONAL SHARES. No fractional shares of Common Stock are
to be issued upon the exercise of this Warrant, but the Company shall pay a
cash adjustment in respect of any fractional share which would otherwise be
issuable in an amount equal to the same fraction of the Market Price of a
share of Common Stock on the date of such exercise.
(j) OTHER NOTICES. In case at any time:
(i) the Company shall declare any dividend upon the Common
Stock payable in shares of stock of any class or make any other distribution
(including dividends or distributions payable in cash out of retained
earnings) to the holders of the Common Stock;
(ii) the Company shall offer for subscription PRO RATA to the
holders of the Common Stock any additional shares of stock of any class or
other rights;
(iii) there shall be any capital reorganization of the
Company, or reclassification of the Common Stock, or consolidation or merger
of the Company with or into, or sale of al or substantially all its assets
to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a
record shall be taken for determining the holders of Common Stock entitled to
receive any such dividend, distribution, or subscription
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rights or for determining the holders of Common Stock entitled to vote in
respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, notice of the date (or, if not then known, a
reasonable approximation thereof by the Company) when the same shall take
place. Such notice shall also specify the date on which the holders of
Common Stock shall be entitled to receive such dividend, distribution, or
subscription rights or to exchange their Common Stock for stock or other
securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be. Such notice shall be given at least 30 days
prior to the record date or the date on which the Company's books are closed
in respect thereto. Failure to give any such notice or any defect therein
shall not affect the validity of the proceedings referred to in clauses (i),
(ii), (iii) and (iv) above.
(k) CERTAIN EVENTS. If any event occurs of the type contemplated
by the adjustment provisions of this Paragraph 4 but not expressly provided
for by such provisions, the Company will give notice of such event as
provided in Paragraph 4(g) hereof, and the Company's Board of Directors will
make an appropriate adjustment in the Exercise Price and the number of shares
of Common Stock acquirable upon exercise of this Warrant so that the rights
of the Holder shall be neither enhanced nor diminished by such event.
(l) ISSUANCE OF ADDITIONAL WARRANTS. If at any time or from time to
time during the term of this Warrant, the Company shall be required to issue
additional warrants to RGC or its nominees, designees, assignees or
successors pursuant to the provisions of the Securities Purchase Agreement
dated December 13, 1996 between the Company and RGC and its associated
documents or for any other purpose, the holder of this Warrant hereof shall
be entitled to receive warrants equal to 10% of the number of additional
warrants issued to RGC or its nominees, designees, assignees or successors,
on the identical terms and subject to the identical conditions as the
warrants issued at such future date to RGC or its nominees, designees,
assignees or successors. If this Warrant is assigned or otherwise distributed
among more than one holder, the new warrants issuable pursuant to this
paragraph 4(l) shall be distributed PRO RATA among all such holders (or in
such other distribution as shall be agreed upon by all such holders in
writing), with the total additional number of warrants so issued equaling 10%
of the number of additional warrants issued to RGC, its nominees, designees,
assignees or successors.
(m) CERTAIN DEFINITIONS.
(i) "COMMON STOCK DEEMED OUTSTANDING" shall mean the number of
shares of Common Stock actually outstanding (not including shares of Common
Stock held in the treasury of the Company), plus (x) pursuant to Paragraph
4(b)(i) hereof, the maximum total number of shares of Common Stock issuable
upon the exercise of Options, as of the date of such issuance or grant of
such Options, if any, and (y) pursuant to Paragraph 4(b)(ii) hereof, the
maximum total number of shares of Common Stock issuable upon conversion or
exchange of Convertible Securities, as of the date of issuance of such
Convertible Securities, if any.
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(ii) "MARKET PRICE" as of any date means (i) the average of
the last reported sale prices for the shares of Common Stock as reported by
the National Association of Securities Dealers Automated Quotation National
Market ("Nasdaq-NM") for the 10 trading days immediately preceding such date,
or (ii) if the Nasdaq-NM is not the principal trading market for the shares
of Common Stock, the average of the last reported sale prices on the
principal trading market for the Common Stock during the same period, or
(iii) if market value cannot be calculated as of such date on any of the
foregoing bases, the Market Price shall be the fair market value as
reasonably determined in good faith by (a) the Board of Directors of the
Corporation or, at the option of a majority-in-interest of the holders of the
outstanding Warrants by (b) an independent investment bank of nationally
recognized standing in the valuation of businesses similar to the business of
the corporation. The manner of determining the Market Price of the Common
Stock set forth in the foregoing definition shall apply with respect to any
other security in respect of which a determination as to market value must be
made hereunder.
(iii) "COMMON STOCK," for purposes of this Paragraph 4,
includes the Common Stock, par value $.001 per share, and any additional
class of stock of the Company having no preference as to dividends or
distributions on liquidation, provided that the shares purchasable pursuant
to this Warrant shall include only shares of Common Stock, par value $.001
per share, in respect of which this Warrant is exercisable, or shares
resulting from any subdivision or combination of such Common Stock, or in the
case of any reorganization, reclassification, consolidation, merger, or sale
of the character referred to in Paragraph 4(e) hereof, the stock or other
securities or property provided for in such Paragraph.
5. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect
thereof, provided that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than the holder of this Warrant.
6. NO RIGHTS OR LIABILITIES AS A STOCKHOLDER. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the holder hereto to purchase Warrant Shares, and no
mere enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such holder for the Exercise Price or as
a shareholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
7. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights granted
to the holder hereof are transferable, in whole or in part, upon surrender of
this Warrant, together with a properly executed assignment in the form
attached hereto, at the office or agency of the Company referred to in
Paragraph 7(e) below, provided, however, that any transfer or assignment
shall be subject to the conditions set forth in Paragraph 7(f) hereof and to
the applicable provisions of the Subscription Agreement. Until due
presentment for registration of transfer on the books of the Company, the
Company may treat the registered holder hereof as the
9
<PAGE>
owner and holder hereof for all purposes, and the Company shall not be
affected by any notice to the contrary. Notwithstanding anything to the
contrary contained herein, the registration rights described in Paragraph 8
are assignable only in accordance with the provisions of that certain
Registration Rights Agreement, dated as of July 9, 1997, by and among the
Company and the other signatories thereto (the "Registration Rights
Agreement").
(b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant
is exchangeable, upon the surrender hereof by the holder hereof at the office
or agency of the Company referred to in Paragraph 7(e) below, for new
Warrants of like tenor representing in the aggregate the right to purchase
the number of shares of Common Stock which may be purchased hereunder, each
of such new Warrants to represent the right to purchase such number of shares
as shall be designated by the holder hereof at the time of such surrender.
(c) REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount
to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
(d) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided
in this Paragraph 7, this Warrant shall be promptly canceled by the Company.
The Company shall pay all taxes (other than securities transfer taxes) and
all other expenses (other than legal expenses, if any, incurred by the Holder
or transferees) and charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Paragraph 7.
(e) REGISTER. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.
(f) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If , at the time of
the surrender of this Warrant in connection with any exercise, transfer, or
exchange of this Warrant, this Warrant (or, in the case of any exercise, the
Warrant Shares issuable hereunder), shall not be registered under the
Securities Act and under applicable state securities or blue sky laws, the
Company may require , as a condition of allowing such exercise, transfer, or
exchange, (i) that the holder for transferee of this Warrant , as the case
may be, furnish to the Company a written opinion of counsel, which opinion
and counsel are reasonably acceptable to the Company, to the effect that such
exercise, transfer, or exchange may be made without registration under said
Act and under applicable state securities or blue sky laws, (ii) that the
holder or transferee execute and deliver to the Company an investment letter
in form and substance reasonably acceptable to the Company, (iii) that the
transferee be an "accredited investor" as defined in Rule 501(a) promulgated
under the Securities Act and (iv) that, upon such transfer, the transferee
beneficially
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<PAGE>
owns Registrable Securities (as defined in the Registration Rights Agreement)
having an aggregate Market Price of at least $500,000; provided that no such
opinion, letter, status as an "accredited investor" or minimum Market Price
shall be required in connection with a transfer pursuant to Rule 144 under
the Securities Act. No "Subject Holder" (as defined below) may sell or
otherwise transfer Warrants, except (i) to the Company or to a stockholder
or a group of stockholders who immediately prior to the sale control a
majority of the Company's voting shares (a "Controlling Stockholder" or
"Controlling Group", as applicable); (ii) to an affiliate of such holder;
(iii) in connection with any merger, consolidation, reorganization or sale of
more than 50% of the outstanding Common Stock of the Company (a
"Reorganization"). (iv) in a registered public offering or a public sale
pursuant to Rule 144 or other applicable exemption from the registration
requirements of the Securities Act (or any successor rule or regulation); or
(v) in a private sale (otherwise than to the Company, to a Controlling
Stockholder or a Controlling Group, to an affiliate of such holder, or in a
Reorganization). Subject Holder means any holder who, but for the second
paragraph of Section 1 hereof, would beneficially own 5% or more of the
outstanding Common Stock of the Company. The first holder of this Warrant,
by taking and holding the same, represents to the Company that such holder is
acquiring this Warrant for investment and not with a view to the distribution
thereof.
8. REGISTRATION RIGHTS. The initial holder of this Warrant ( and
certain assignees thereof) is entitled to the benefit of such registration
rights in respect of the Warrant Shares as are set forth in Section 2 of the
Registration Rights Agreement.
9. NOTICES. All notices, requests, and other communications required
or permitted to be given or delivered hereunder to the holder of this Warrant
shall be in writing, and shall be personally delivered, or shall be sent by
certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed, to such holder at the address shown for such holder on
the books of the Company, or at such other address as shall have been
furnished to the Company by notice from such holder. All notices, requests,
and other communications required or permitted to be given or delivered
hereunder to the Company shall be in writing, and shall be personally
delivered, or shall be sent by certified or registered mail or by recognized
overnight mail courier, postage prepaid and addressed, to the office of the
Company at NUKO Information Systems, Inc., 2391 Qume Drive, San Jose, CA
95131, Attention: Chief Financial Officer, or at such other address as shall
have been furnished to the holder of this Warrant by notice from the Company.
Any such notice, request or other communication may be sent by facsimile,
but shall in such case be subsequently confirmed by a writing personally
delivered or sent by certified or registered mail or by recognized overnight
mail courier as provided above. All notices, requests, and other
communications shall be deemed to have been given either at the time of the
receipt thereof by the person entitled to receive such notice at the address
of such person for purposes of this Paragraph 9, or, if mailed by registered
or certified mail or with a recognized overnight mail courier upon deposit
with the United States Post Office or such overnight mail courier, if postage
is prepaid and the mailing is properly addressed, as the case may be.
10. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF
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THE STATE OF DELAWARE WITHOUT REGARD TO THE BODY OF LAW CONTROLLING CONFLICTS
OF LAW.
11. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof may only be
amended by an instrument in writing signed by the Company and the holder
hereof
(b) DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for purposes of reference only, and
shall not affect the meaning or construction of any of the provisions hereof.
(c) CASHLESS EXERCISE. Notwithstanding anything to the contrary
contained in this warrant, if the resale of the Warrant Shares by the holder
is not then registered pursuant to an effective registration statement under
the Securities Act, this Warrant may be exercised by presentation and
surrender of this Warrant to the Company at its principal executive offices
with a written notice of the holder's intention to effect a cashless
exercise, including a calculation of the number of shares of Common Stock to
be issued upon such exercise in accordance with the terms hereof (a "Cashless
Exercise"). In the event of a Cashless Exercise, in lieu of paying the
Exercise Price in cash, the holder shall surrender this Warrant for that
number of shares of Common Stock determined by multiplying the number of
Warrant Shares to which it would otherwise be entitled by a fraction, the
numerator of which shall be the difference between the then current Market
Price per share of the Common Stock and the Exercise Price, and the
denominator of which shall be the then current Market Price per share of
Common Stock.
12. REDEMPTION. On or after the 24 month anniversary of the date of
issuance of the Warrant, the Company may, at its option, upon may not less
than 30 days' prior written notice (the "Notice Period"), call for redemption
this Warrant, in whole or in part, at a redemption price of $0.001 per
Warrant Share (the "Redemption Price"), provided that the closing price for
the Common Stock on the Nasdaq-NM, or on the principal securities exchange or
the securities market on which the Common Stock is then being traded, is, on
the date written notice of redemption is dispatched (the "Notice Date") and
has been for at least the 10 consecutive Trading Days (as defined below)
ending immediately prior thereto at least 150% of the Exercise Price then in
effect (the "Redemption Threshold Price"). At any time after the Notice Date
until 5:00 p.m., New York time, on the final date of the Notice Period (or
the last Trading Day immediately prior thereto) (the Redemption Date"), the
holder of this Warrant may exercise this Warrant at an exercise price equal
to 100% of the Exercise Price in effect immediately prior to the start of the
Notice Period. This Warrant shall cease to be exercisable at 5:00 p.m., New
York time, on the Redemption Date. At any time following the Notice Date
until 10 days following the expiration of the Notice Period, the Company will
pay the Redemption Price to or as directed by the holder of this Warrant upon
presentation and surrender of this Warrant at the Company's offices.
"Trading Day" shall mean any day on which the Common Stock is traded for any
period on Nasdaq-NM, or on the principal securities exchange or other
securities market on which the Common Stock is the being traded.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer this 9th day of July, 1997.
NUKO Information Systems, Inc.
By:____________________________________
Name:__________________________________
Title:_________________________________
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<PAGE>
FORM OF EXERCISE AGREEMENT
Dated:________________
To:__________________________________
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase __________________ shares of Common Stock
covered by such Warrant, and makes payment herewith in full therefor at the
price per share provided by such Warrant in cash or by certified or official
bank check in the amount of, [or, if the resale of such Common Stock by the
undersigned is not currently registered pursuant to an effective registration
statement under the Securities Act of 1933, as amended, by surrender of
securities issued by the Company (including a portion of the Warrant) having a
market value (in the case of a portion of this Warrant, determined in
accordance with Section 11(c) of the Warrant) equal to $_______. Please issue
a certificate or certificates for such shares of Common Stock in the name of
and pay any cash for any fractional share to:
Name:_______________________________________
Signature:__________________________________
Address:____________________________________
______________________________________
______________________________________
Note: The above signature should correspond
exactly with the name on the face of
the within Warrant.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the
name of said undersigned covering the balance of the shares purchasable
thereunder less any fraction of a share paid in cash.
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell, assigns, and transfers
all the rights of the undersigned under the within Warrant, with respect to
the number of shares of Common Stock covered thereby set forth herein below,
to:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
, and hereby irrevocably constitutes and appoints _____________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Dated: ____________________, 19__
In the presence of
___________________________________________
Name: _______________________________________
Signature:___________________________________
Title of Signing Officer or Agent (if any):
_____________________________________________
Address: ____________________________________
_____________________________________________
Note: The above signature should correspond
exactly with the name on the face of the
within Warrant.
<PAGE>
Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of July 9,
1997 by and among NUKO Information Systems, Inc., a Delaware corporation,
with headquarters located at 2391 Qume Drive, San Jose, CA 95131 (the
"Company"), and Altamira Management, Ltd. (together with its affiliates and
any assignee or transferee of all of its rights hereunder, the "Initial
Investor").
WHEREAS:
A. Pursuant to that certain Subscription Agreements and Letters of
Investment Intent (the "Subscription Agreement"), the Company has agreed upon
the terms and subject to the conditions contained therein, to issue and sell
to the Initial Investor shares of its common stock, $0.001 par value (the
"Common Stock") aggregating up to Two Million Five Hundred Thousand United
States Dollars (US$2,500,000) (the "Shares") and Common Stock Purchase
Warrants entitling the holder thereof to purchase an additional number of
shares of Common Stock equal to Twenty Percent (20%) of the Shares so
subscribed for (the "Warrants") (collectively the Shares and Warrants are
referred to herein as the "Securities"); and
B. To induce the Initial Investor to execute and deliver the
Subscription Agreement and purchase the Securities and , the Company has
agreed to provide certain registration rights under the Securities Act of
1933, as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the "1933 Act"), and applicable state
securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investors" means the Initial Investor and any transferee
or assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.
(ii) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statement by the United States Securities
and Exchange Commission (the "SEC").
<PAGE>
(iii) "Registrable Securities" means (a) the Shares, (b) shares
of Common Stock issuable upon exercise of the Warrants ("Warrant Shares") and
(c) any shares of capital stock issued or issuable as a dividend on or in
exchange for or otherwise with respect to any of the foregoing. Without
limiting the foregoing, Registrable Securities includes Warrant Shares
issuable upon exercise of any additional Warrants issued by reason of the
anti-dilution provisions of the Warrants.
(iv) "Registration Statement" means a registration statement of
the Company under the 1933 Act.
b. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Subscription Agreement.
2. REGISTRATION.
a. MANDATORY REGISTRATION. The Company shall prepare, and, on or
prior to the date which is fifteen (15) days after the date of the Closing of
the sale of the Shares by the Company to the Investor (the "Closing Date"),
file with the SEC a Registration Statement on Form S-3 (or, if Form S-3 is
not then available, on such form of Registration Statement as is then
available to effect a registration of the Registrable Securities, subject to
the consent of the Initial Investor (to the extent such Initial Investor
still owns Registrable Securities), which consent will not be unreasonably
withheld) covering the resale of the Registrable Securities underlying the
securities issued at the Closing.
b. UNDERWRITTEN OFFERING. If any offering pursuant to a
Registration Statement pursuant to Section 2(a) hereof involves an
underwritten offering, the Investors who hold a majority in interest of the
Registrable Securities subject to such underwritten offering, with the
consent of the Initial Investor (to the extent such Initial Investor still
owns Registrable Securities), shall have the right to select one legal
counsel and an investment banker or bankers and manager or managers to
administer the offering, which investment banker or bankers or manager or
managers shall be reasonably satisfactory to the Company.
c. PAYMENTS BY THE COMPANY. The Company shall use its best efforts
to obtain effectiveness of the Registration Statement as soon as practicable.
If (i) the Registration Statement(s) covering the Registrable Securities
required to be filed by the Company pursuant to Section 2(a) hereof is not
declared effective by the SEC within one hundred (100) days after the Closing
Date (other than by reason of delay caused by (a) a change in a relevant
policy, procedure, interpretation, position, practice or rule of the SEC
announced after the Closing Date, or (b) any act or failure to act by the
Initial Investor) or if, after the Registration Statement has been declared
effective by the SEC, sales cannot be made pursuant to the Registration
Statement (by reason of stop order, or the Company's failure to update the
Registration Statement), or (ii) the Common Stock is not listed or included
for quotation on the Nasdaq National Market (the "National Market"), the
Nasdaq SmallCap Market (the "Nasdaq SmallCap"), the New York Stock Exchange
(the "NYSE") or the American Stock Exchange (the "AMEX") after being so
listed or included for quotation, then the Company will make
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<PAGE>
payments to the Investors in such amounts and at such times as shall be
determined pursuant to this Section 2(c) as and for liquidated damages to the
Investors by reason of any such delay in or reduction of their ability to
sell the Registrable Securities (which remedy shall not be exclusive of any
other remedies available at law or in equity). After the end of such 100-day
period and to the date the Registration Statement is declared effective by
the SEC, the Company shall pay monthly to the holder of Registrable
Securities an amount equal to two percent (2%) of the aggregate market value
of the Registrable Securities held by such holder, such aggregate market
value to be determined based on the per Share price of the Shares purchased
by the Initial Investor on the Closing Date, PROVIDED, HOWEVER, that there
shall be excluded from such period any delays which are solely attributable
to changes required by the Investors in the Registration Statement with
respect to information relating to the Investors, including, without
limitation, changes to the plan of distribution, or to the failure of the
Investors to conduct their review of the registration statement pursuant to
Section 3(h) below in a reasonably prompt manner. Payments of cash pursuant
hereto shall be made within ten (10) days after the end of each period that
gives rise to such obligation.
d. PIGGY-BACK REGISTRATIONS. If at any time prior to the
expiration of the Registration Period (as hereinafter defined) the Company
shall file with the SEC a Registration Statement relating to an offering for
its own account or the account of others under the 1933 Act of any of its
equity securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or entity securities issuable
in connection with stock option or other employee benefit plans), the Company
shall send to each Investor who is entitled to registration rights under this
Section 2(d) written notice of such determination and, if within fifteen (15)
days after the effective date of such notice, such Investor shall so request
in writing, the Company shall include in such Registration Statement all or
any part of the Registrable Securities such Investor requests to be
registered, except that (i) so long as the Registration Statement filed
pursuant to Section 2(a) has become and continues to be effective, the rights
referred to herein shall not apply to any Registration Statement filed in
respect of an underwritten public offering of securities within the 12-month
period following the date hereof and (ii) if, in connection with any
underwritten public offering for the account of the Company the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because, in
such underwriter(s)' judgment, marketing or other factors dictate such
limitation is necessary to facilitate public distribution, then the Company
shall be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which such
Investor has requested inclusion hereunder as the underwriter shall permit.
Any exclusion of Registrable Securities shall be made PRO RATA among the
Investors seeking to include Registrable Securities in proportion to the
number of Registrable Securities sought to be included by such Investors;
PROVIDED, HOWEVER, that the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding securities,
the holders of which are not entitled to inclusion of such securities in such
Registration Statement or not entitled to PRO RATA inclusion with the
Registrable Securities; and PROVIDED, FURTHER, HOWEVER, that, after giving
effect to the immediately preceding proviso, any exclusion of Registrable
Securities shall be made PRO RATA with holders of other securities having the
right to include such securities in the Registration Statement other than
holders of securities who are entitled to inclusion of their securities in
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<PAGE>
such Registration Statement by reason of demand registration rights. No right
to registration of Registrable Securities under this Section 2(d) shall be
construed to limit any registration required under Section 2(a) hereof. If an
offering in connection with which an Investor is entitled to registration
under this Section 2(d) is an underwritten offering, then each Investor whose
Registrable Securities are included in such Registration Statement shall,
unless otherwise agreed by the Company, offer and sell such Registrable
Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same
terms and conditions as other shares of Common Stock included in such
underwritten offering.
e. ELIGIBILITY FOR FORM S-3. The Company represents and warrants
that it meets the registrant eligibility and transaction requirements for the
use of Form S-3 for registration of the sale by the Initial Investor and any
other Investor of the Registrable Securities and the Company shall file all
reports required to be filed by the Company with the SEC in a timely manner
so as to maintain such eligibility for use of Form S-3.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities,
the Company shall have the following obligations:
a. The Company shall prepare promptly, and file with the SEC not
later than fifteen (15) days after the Closing Date, a Registration Statement
with respect to the number of Registrable Securities provided in Section
2(a), and thereafter use its best efforts to cause such Registration
Statement relating to Registrable Securities to become effective as soon as
possible after such filing, and keep the Registration Statement effective
pursuant to Rule 415 at all times until such date as is the earlier of (i)
the date on which all of the Registrable Securities have been sold and (ii)
the date on which the Registrable Securities (in the opinion of counsel to
the Initial Investors) may be immediately sold without registration (the
"Registration Period"), which Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall
not contain any 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 not misleading.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration
Statement as may be necessary to keep the Registration Statement effective at
all times during the Registration Period, and, during such period, comply
with the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of
in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in the Registration Statement. The Company shall
use its best efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable following the filing
thereof.
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<PAGE>
c. The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement (i) promptly after the
same is prepared and publicly distributed, filed with the SEC, or received by
the Company, one copy of the Registration Statement and any amendment
thereto, each preliminary prospectus and prospectus and each amendment or
supplement thereto, and (ii) such number of copies of a prospectus, including
a preliminary prospectus, and all amendments and supplements thereto and such
other documents as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Investor.
d. The Company shall use reasonable efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement
under such other securities or "blue sky" laws of such jurisdictions in the
United States as the Investors who hold a majority in interest of the
Registrable Securities being offered reasonably request, (ii) prepare and
file in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; PROVIDED, HOWEVER, that the
Company shall not be required in connection therewith or as a condition
thereto to (a) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (b) subject
itself to general taxation in any such jurisdiction, (c) file a general
consent to service of process in any such jurisdiction, (d) provide any
undertakings that cause the Company undue expense or burden, or (e) make any
change in its charter or bylaws, which in each case the Board of Directors of
the Company determines to be contrary to the best interests of the Company
and its stockholders.
e. In the event Investors who hold a majority in interest of the
Registrable Securities being offered in the offering (with the approval of
the Initial Investor) select underwriters for the offering, the Company shall
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriters of such
offering.
f. As promptly as practicable after becoming aware of such event,
the Company shall notify each Investor of the happening of any event, of
which the Company has knowledge, as a result of which the prospectus included
in the Registration Statement, as then in effect, includes an untrue
statement of a material fact or omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and use its best efforts promptly to prepare a supplement or amendment to the
Registration Statement to correct such untrue statement or omission, and
deliver such number of copies of such supplement or amendment to each
Investor as such Investor may reasonably request.
g. The Company shall use its best efforts to prevent the issuance
of any stop order or other suspension of effectiveness of a Registration
Statement, and, if such an order is issued, to obtain the withdrawal of such
order at the earliest possible moment and to notify each Investor who holds
Registrable Securities being sold (or, in the event of an underwritten
offering, the managing underwriters) of the issuance of such order and the
resolution thereof.
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h. At the request of any Investor, the Company shall furnish, on
the date that Registrable Securities are delivered to an underwriter, if any,
for sale in connection with the Registrable Securities or, if such securities
are not being sold by an underwriter, on the date of effectiveness thereof
(i) an opinion, dated as of such date, from counsel representing the Company
for purposes of such Registration Statement, in form, scope and substance as
is customarily given in an underwritten public offering, addressed to the
underwriters, if any, and the Investors and (ii) a letter, dated such date,
from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and the Investors.
i. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition pursuant to
the Registration Statement, (iii) one firm of attorneys and one firm of
accountants or other agents retained by the Initial Investor, (iv) one firm
of attorneys and one firm of accountants or other agents retained by all
other Investors, if any, and (v) one firm of attorneys retained by all such
underwriters (collectively, the "Inspectors") all pertinent financial and
other records, and pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may reasonably
request for purposes of such due diligence; PROVIDED, HOWEVER, that in no
event shall the Company be obligated to provide any information to an
Inspector that it reasonably concludes is, or is acting on behalf of, a
competitor of the Company, and each Inspector shall hold in confidence and
shall not make any disclosure (except to an Investor) of any Record or other
information which the Company determines in good faith to be confidential,
and of which determination the Inspectors are so notified, unless (a) the
disclosure of such Records is necessary to avoid or correct a misstatement or
omission in any Registration Statement, (b) the release of such Records is
ordered pursuant to a subpoena or other order from a court or government body
of competent jurisdiction, or (c) the information in such Records has been
made generally available to the public other than by disclosure in violation
of this or any other agreement. The Company shall not be required to disclose
any confidential information in such Records to any Inspector until and
unless such Inspector shall have entered into confidentiality agreements (in
form and substance satisfactory to the Company) with the Company with respect
thereto, substantially in the form of this Section 3(i). Each Inspector
agrees that it shall, upon learning that disclosure of such Records is sought
in or by a court or governmental body of competent jurisdiction or through
other means, give prompt notice to the Company and allow the Company, at its
expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, the Records deemed confidential. Nothing
herein shall be deemed to limit the Investor's ability to sell Registrable
Securities in a manner which is otherwise consistent with applicable laws and
regulations. The cost of any inspection hereunder shall be borne by the
Investors.; PROVIDED, HOWEVER, in connection with the filing of the
Registration Statement pursuant to Section 2(a) (or an amendment thereto
pursuant to Section 3(b)), the cost of one firm of attorneys and one firm of
accountants selected by the Initial Investor with respect to the review of
such
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<PAGE>
Registration Statement and the disclosure and financial information contained
therein shall be borne by the Company in accordance with Section 5 below.
j. The Company shall hold in confidence and not make any disclosure
of information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to
avoid or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or
other order from a court or governmental body of competent jurisdiction, or
(iv) such information has been made generally available to the public other
than by disclosure in violation of this or any other agreement. The Company
agrees that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to such
Investor prior to making such disclosure, and allow the Investor, at its
expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information.
k. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable
such certificates to be in such denominations or amounts, as the case may be,
as the managing underwriter or underwriters, if any, or the Investors may
reasonably request and registered in such names as the managing underwriter
or underwriters, if any, or the Investors may request, and, within three (3)
business days after the Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall cause legal counsel selected by the Company to deliver, to the transfer
agent for the Registrable Securities (with copies to the Investors whose
Registrable Securities are included in such Registration Statement) an
appropriate set of instructions to the transfer agent and an opinion of such
counsel necessary to complete the resale transactions contemplated by the
Registration Statement.
l. The Company shall take all reasonable actions necessary to
expedite and facilitate disposition by the Investors of Registrable
Securities pursuant to the Registration Statement.
4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities,
the Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations of the
Company to complete its registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor
shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of
the Registrable Securities held by it as shall be reasonably required to
effect the registration of
7
<PAGE>
such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least three
(3) business days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Investor of the
information the Company requires from such Investor.
b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by
the Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing
of such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
c. In the event Investors holding a majority in interest of the
Registrable Securities being registered (with the approval of the Initial
Investor to the extent the Initial Investor still owns Registrable
Securities) determine to engage the services of an underwriter, each Investor
agrees to enter into and perform such Investor's obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities, unless such Investor has notified the Company in
writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement.
d. Each Investor agrees that, upon receipt of any notice from the
Company or the happening of any event of the kind described in Section 3(f)
or 3(g), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or 3(g) and,
if so directed by the Company, such Investor shall deliver to the Company (at
the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in such Investor's possession, of the
prospectus covering such Registrable Securities current at the time of
receipt of such notice.
e. No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements in usual
and customary form entered into by the Company, (ii) completes and executes
all questionnaire, powers of attorney, indemnities, underwriting agreements,
and other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its PRO RATA shares of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5 below.
5. EXPENSE OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation,
all registration, listing and qualifications fees, printers and
8
<PAGE>
accounting fees, the fees and disbursements of counsel for the Company, and
the reasonable fees and disbursements of one counsel selected by the Initial
Investor pursuant to Section 2(b) hereof shall be borne by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in the
Registration Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) each Investor who holds such Registrable Securities,
(ii) the directors, officers, partners, employees, agents and each person who
controls any Investor within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), if any, and (iii) any
underwriter (as defined in the 1933 Act) for the Investors; and the
directors, officers, partners, employees and each person who controls any
such underwriter within the meaning of the 1933 Act or the 1934 Act, if any
(each, an "Indemnified Person"), against any joint or several losses, claims,
damages, liabilities or expenses (collectively, together with actions,
proceedings or inquiries by any regulatory or self-regulatory organization,
whether commenced or threatened, in respect thereof, "Claims") to which any
of them may become subject insofar as such Claims arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a material fact
in a Registration Statement or the omission or alleged omission to state
therein a material fact required to be stated or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus
if used prior to the effective date of such Registration Statement, or
contained in the final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the
omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which
the statements therein were made, not misleading, or (iii) any violation or
alleged violation by the Company of the 1933 Act, the 1934 Act, any other
law, including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Subject to the restrictions set forth in Section
6(c) with respect to the number of legal counsel, the Company shall reimburse
the Investors and each such underwriter or controlling person, promptly as
such expenses incurred by them in connection with investigating or defending
any such Claim. Notwithstanding anything to the contrary contained therein,
the indemnification agreement contained in this Section 6(a): (i) shall not
apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information based in writing to the
Company by any Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof; (ii) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld; and (iii) with respect to
any preliminary prospectus, shall not inure to the benefit of any Indemnified
Person if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely
9
<PAGE>
basis in the prospectus, as then amended or supplemented, such corrected
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof, and the Indemnified Person was promptly advised in writing not to use
the incorrect prospectus prior to the use giving rise to a Violation and such
Indemnified Person, notwithstanding such advise, used it. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees severally and not
jointly to indemnify, hold harmless and defend, to the same extent and in the
same manner set forth in Section 6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement, each person, if
any, who controls the Company within the meaning of the 1933 Act or the 1934
Act, any underwriter and any other stockholder selling securities pursuant to
the Registration Statement or any of its directors or officers or any person
who controls such stockholder or underwriter within the meaning of the 1933
Act or the 1934 Act (collectively and together with an Indemnified Person, an
"Indemnified Party"), against any Claim to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
arises out of or is based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and subject
to Section 6(c) such Investor will reimburse any legal or other expenses
(promptly as such expenses are incurred and are due and payable) reasonably
incurred by them in connection with investigating or defending any such
Claim; PROVIDED, HOWEVER, that the indemnity agreement contained in this
Section 6(b) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of such
Investor, which consent shall not be unreasonably withheld; PROVIDED,
FURTHER, HOWEVER, that the Investor shall be liable under this Agreement
(including this Section 6(b) and Section 7) for only that amount as does not
exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant
to Section 9. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified
Party if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party
so desires, jointly with any other indemnifying party similarly noticed, to
assume control of the defense thereof with counsel mutually satisfactory to
the indemnifying party and the Indemnified Person or the Indemnified
10
<PAGE>
Party, as the case may be; PROVIDED, HOWEVER, that an Indemnified Person or
Indemnified Party shall have the right to retain its own counsel with the
fees and expenses to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the representation by
such counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and
any other party represented by such counsel in such proceeding. The
indemnifying party shall pay for only one separate legal counsel for the
Indemnified Persons or the Indemnified Parties, as applicable, and such legal
counsel shall be selected by Investors holding a majority in interest of the
Registrable Securities included in the Registration Statement to which the
Claim relates (with the approval of a majority in interest of the Initial
Investors), if the Investors are entitled to indemnification hereunder, or
the Company, if the Company is entitled to indemnification hereunder, as
applicable. The failure to deliver such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party
is actually prejudiced in its ability to defend such action. The
indemnification required by this Section 6 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as
such expense, loss, damage or liability is incurred and is due and payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; PROVIDED,
HOWEVER, that (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault
standards set forth in Section 6, (ii) no seller of Registrable Securities
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the 1933 Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent
misrepresentation, and (iii) contribution (together with any indemnification
or other obligations under this Agreement) by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received
by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of
Rule 144 promulgated under the 1933 Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration ("Rule 144"),
the Company agrees to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long
as the Company remains
11
<PAGE>
subject to such requirements and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assignable by the Investors
to any transferee of all or any portion of the Registrable Securities if:
(i) the Investor agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within
a reasonable time after such assignment, (ii) the Company is, within a
reasonable time after such transfer or assignment, furnished with written
notice of (a) the name and address of such transfer or assignee, and (b) the
securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment, the
further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act and applicable state securities laws (iv) at or
before the time the Company receives the written notice contemplated by
clause (ii) of this sentence, the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein, (v)
such transfer shall have been made in accordance with the applicable
requirements of the Subscription Agreement, and (vi) such transferee shall be
an "accredited investor" as that term is defined in Rule 501 of Regulation D
promulgated under the 1933 Act.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and
either retroactively or prospectively), only with written consent of the
Company, the Initial Investor (to the extent such Initial Investor still owns
Registrable Securities) and Investors who hold a majority interest in
Registrable Securities. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
12
<PAGE>
b. Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally
delivered (by hand, by courier, by telephone line facsimile transmission or
other means) or which receipt is refused if delivered by hand or by courier
or sent by certified mail, return receipt requested, properly addressed and
with proper postage prepaid:
If to the Company:
NUKO Information Systems, Inc.
2391 Qume Drive
San Jose, CA 95131
Attention: Chief Executive Officer
Telecopy: (408) 526-9541
and if to any Investor, at such address as such Investor shall have provided
in writing to the Company, or at such other address as each such party
furnishes by notice given in accordance with this Section 11(b), and shall be
effective, when personally delivered, upon receipt and, when so sent by
certified or registered mail (return receipt requested), five days after
deposit with the United States Postal Service.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d. This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements
made and to be performed entirely within such State. In the event that any
provision of this Agreement is invalid or unenforceable under any applicable
statute or law, then such provision shall be deemed inoperative to the extent
that it may conflict therewith and shall be deemed modified to conform with
such statute or rule of law. Any provision hereof which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability
of any other provision hereof. The parties hereto hereby submit to the
exclusive jurisdiction of the United States Federal Courts located in
Wilmington, Delaware with respect to any dispute arising under this Agreement
or the transactions contemplated hereby.
e. This Agreement and the Subscription Agreement constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein.
This Agreement and the Subscription Agreement supersede all prior agreements
and understandings among the parties hereto with respect to the subject
matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns
of each of the parties hereto.
13
<PAGE>
g. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the
other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
j. All consents and other determinations to be made by the
Investors pursuant to this Agreement shall be made by Investors holding a
majority of the Registrable Securities, then outstanding.
IN WITNESS WHEREOF, the Company and the undersigned Initial Investor
have caused this Agreement to be duly executed as of the date first above
written.
NUKO INFORMATION SYSTEMS, INC.
By: _____________________________________
Name: ___________________________________
Its: ____________________________________
ALTAMIRA MANAGEMENT, LTD.
By: _____________________________________
Name: ___________________________________
Its: ____________________________________
14
<PAGE>
Exhibit 4.3
Pratap Kesav Kondamoori July 9, 1997
President/CEO
Nuko Information Systems, Inc.
2235 Qume Drive
San Jose, California 95131
Dear Bob:
Following are the terms upon which RGC International Investors, LDC
("RGC") is willing to make an additional investment in the Common Stock of
Nuko:
1. Contingent upon, and simultaneous with, a $2.5 million investment by the
"Altamira Funds" in Nuko Common Stock at a price per share equal to 85%
of the "Closing Date Market Price" (as hereinafter defined) (plus 20%
coverage in three year-warrants exercisable at 85% of the Closing Date
Market Price), Nuko will reset the exercise price on 297,619 currently
outstanding warrants previously issued to RGC upon conversion of Series
A Preferred Stock to $2.80, 100% of the average closing bid prices
during the five trading day period prior to exercise (the "Closing Date
Market Price"), and RGC will exercise those warrants immediately
thereafter for an aggregate $833,334 in cash. Upon exercise, RGC will
receive 297,619 shares of common stock and a new three year-warrant (in
a form substantially the same as the 625,000 warrants previously issued
to RGC) to purchase 99,207 shares of common stock (33% coverage). The
exercise price of the new warrants shall be the Closing Date Market
Price. The shares underlying the new warrant will be registered with
the Altamira shares and with the warrants underlying the 625,000
warrants previously issued to RGC. The Registration Statement shall be
filed within 15 days. The terms of the Registration Rights Agreement
executed in connection with the 625,000 warrants shall apply to and
cover the filing of such Registration Statement and the registration of
the shares underlying the new warrants issued to RGC. The closing of
the transactions contemplated hereby will take place not later than
5:00 pm eastern time on July 9, 1997.
2. The exercise price of all $18 warrants issued or issuable upon conversion
of Series A Preferred Stock (other than the warrants exercised pursuant
to paragraph 1) shall be reset at $15.
3. RGC will waive its right of first refusal for "Future Offerings," other
than Future Offerings involving floating rate or reset convertible
instruments or warrants.
4. Subject to the last sentence of this paragraph 4, so long as no Event of
Default shall have occurred and be continuing, upon a merger of Nuko or
a sale of all of Nuko's assets in a transaction where the consideration
for the sale will be liquidated to Nuko shareholders (a "Merger"), Nuko
shall have the right, exercisable on not less than 30 Trading Days
notice, to redeem the Series A Preferred Stock. The redemption price
shall be the greater of (i) 118% multiplied by the aggregate Stated
Value, plus accrued and (ii) the aggregate Stated Value, plus accrued,
divided by the Conversion Price (determined in accordance with the
Certificate of Designation and assuming, for such purpose, the date of
the public announcement of the Merger is the Conversion Date)
multiplied by the Merger consideration per share. The provisions of
this paragraph will only apply beginning on the one year anniversary
hereof, or at anytime, if the Merger consideration is at least 130% of
the average of the five day closing bid prices ending on the day prior
to the public announcement
5. Unless Altamira shall otherwise agree, until 90 days following the
effective date of the Registration Statement, but no later than January
31, 1998 (and so long as Altamira holds at least 10% of the shares
acquired by it), RGC shall not cause there to be a 19.99% Redemption
Event if (i) such event, at the time it initially occurs, would cause a
default under the $6 million net asset covenant of Nuko's line of
credit agreement with Silicon Valley Bank, as the same currently exist,
and (ii) at the time Nuko is otherwise in compliance with such covenant
and the other material covenants under such credit agreement (or if it
is not so in compliance, Silicon Valley Bank has otherwise agreed to
forebear from termination of the credit agreement). Nuko will use its
best efforts to promptly negotiate an agreement
<PAGE>
with Silicon Valley Bank whereby the issuance of a subordinated note
upon a 19.99% Redemption Event will not result in a default of such
covenant.
6. If on or at any time after December 31, 1997 the ten day average closing
bid price of the Common Stock is not at least $5.50 (and full
conversion of the Series A Preferred Stock would otherwise violate Rule
4460(i) of the NASDAQ Rules) Nuko agrees to promptly call a special
meeting of shareholders (which meeting shall occur not sooner than
January 31, 1998 nor later than sixty-five (65) days after any such
ten day average closing bid price is not at least $5.50) to approve the
issuance of more than 20% upon conversion of the Series A Preferred
Stock and to use its best efforts to cause it to be approved. In that
regard, Nuko confirms that Bob Kondamoori and Altamira have agreed to
vote in favor of such proposal.
7. RGC's commitment pursuant to paragraph 1 is conditioned on there being no
material adverse change in Nuko's business, financial condition or
prospects between the date hereof and the exercise date of the warrants
described therein. The agreements set forth in paragraphs 2, 3, 4, 5
and 6 are contingent upon the consummation of the events described in
paragraph 1 hereof.
8. Nuko hereby represents that as of the date hereof and as of the date of
the exercise of the warrants pursuant to paragraph 1, the Registration
Statement of Form S-3 (Reg. No. 333-19205), together with the filings
incorporated therein by reference through the date hereof, are true and
correct in all material respects and Nuko has not omitted to state any
material fact in order to make the statements made therein not
misleading. Nuko acknowledges that RGC is relying on such securities
filings and Nuko's representation contained herein in making its
decision to exercise the warrants pursuant to paragraph 1.
9. Capitalized terms used herein and not otherwise defined will have the
meanings ascribed thereto in the Securities Purchase Agreement, dated
December 13, 1996, between Nuko and RGC and the agreements and
instruments attached as Exhibits thereto.
If the foregoing reflects our understanding, please execute the enclosed
copy of this letter to signify your agreement with the terms hereof.
Sincerely,
Rose Glen Capital Management, L.P.,
As Agent for RGC International Investors, LDC
By: RGC General Partner Corp.
By: /s/ Wayne D. Bloch
-----------------------------------
Wayne D. Bloch
In my capacity as President and Chief Executive
Officer of Nuko Information Systems, Inc., on
behalf of Nuko, I hereby agree to, and certify that
the Board of Directors has approved, the foregoing.
Nuko Information Systems, Inc.
/s/ Pratap Kesav Kondamoori
- -----------------------------
Pratap Kesav Kondamoori
President/CEO
cc:Tom Spanier
<PAGE>
Exhibit 4.4
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE
SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER SUCH ACT OR AN
OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT
OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT. ANY SUCH SALE,
ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH APPLICABLE STATE
SECURITIES LAWS.
Right to
Purchase
99,207
Shares of
Common Stock, par
value $.001
per share
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, RGC INTERNATIONAL INVESTORS,
LDC or its registered assigns, is entitled to purchase from NUKO INFORMATION
SYSTEMS, INC., a Delaware corporation (the "Company"), at any time or from
time to time during the period specified in Paragraph 2 hereof, Ninety-nine
Thousand Two Hundred Seven (99,207) fully paid and nonassessable shares of
the Company's Common Stock, par value $0.001 per share (the "Common Stock"),
at an exercise price of $2.80 per share (the "Exercise Price"). The term
"Warrant Shares," as used herein, refers to the shares of Common Stock
purchasable hereunder. The Warrant Shares and the Exercise Price are subject
to adjustment as provided in Paragraph 4 hereof. The term Warrants means
this Warrant and the other warrants of the Company issued upon pursuant to
the provisions of this Warrant.
This Warrant is subject to the following terms, provisions, and
conditions:
1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
Subject to the provisions hereof, this Warrant may be exercised by the holder
hereof, in whole or in part, by the surrender of this Warrant, together with
a completed exercise agreement in the form attached hereto (the "Exercise
Agreement"), to the Company during normal business hours on any business day
at the Company's principal executive offices (or such other office or agency
of the Company as it may designate by notice to the holder hereof), and upon
(i) payment to the Company in cash, by certified or official bank check or by
wire transfer for the account of the Company of the Exercise Price for the
Warrant Shares specified in the Exercise Agreement or (ii) if the resale of
the Warrant Shares by the holder is not then registered pursuant to an
effective
<PAGE>
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") (as a result of the Company's failure to comply with its
obligations under the Warrant Share Registration Rights Agreement (as
hereinafter defined) or as a result of any failure to keep a registration
statement filed pursuant to such agreement effective in accordance with the
terms thereof), delivery to the Company of a written notice of an election to
effect a "Cashless Exercise" (as defined in Section 11(c) below) for the
Warrant Shares specified in the Exercise Agreement. The Warrant Shares so
purchased shall be deemed to be issued to the holder hereof or such holder's
designee, as the record owner of such shares, as of the close of business on
the date on which this Warrant shall have been surrendered, the completed
Exercise Agreement shall have been delivered, and payment shall have been
made for such shares as set forth above. Certificates for the Warrant Shares
so purchased, representing the aggregate number of shares specified in the
Exercise Agreement, shall be delivered to the holder hereof within a
reasonable time after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be requested
by the holder hereof and shall be registered in the name of such holder or
such other name as shall be designated by such holder. If this Warrant shall
have been exercised only in part, then, unless this Warrant has expired, the
Company shall, at its expense, at the time of delivery of such certificates,
deliver to the holder a new Warrant representing the number of shares with
respect to which this Warrant shall not then have been exercised.
Notwithstanding anything in this Warrant to the contrary, in no event
shall the Holder of this Warrant be entitled to exercise a number of Warrants
(or portions thereof) in excess of the number of Warrants (or portions
thereof) upon exercise of which the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates (other than shares
of Common Stock which may be deemed beneficially owned through the ownership
of any unexercised warrants and unconverted securities containing provisions
substantially similar to this provision) and (ii) the number of shares of
Common Stock issuable upon exercise of the Warrants (or portions thereof)
with respect to which the determination described herein is being made, would
result in beneficial ownership by the Holder and its affiliates of more than
4.9% of the outstanding shares of Common Stock. For purposes of the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13D-G thereunder, except as otherwise provided in
clause (i) hereof.
2. PERIOD OF EXERCISE. This Warrant is exercisable at any time or from
time to time on or after the date on which this Warrant is issued and before
5:00 p.m., New York City time on July 9, 2000 (the "Exercise Period").
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly issued,
fully paid, and nonassessable and free from all taxes, liens, and charges
with respect to the issue thereof.
2
<PAGE>
(b) RESERVATION OF SHARES. As of the date of issuance of this
Warrant, the Company has 97,896 shares reserved for issuance upon exercise of
this Warrant. During the Exercise Period, the Company shall at all times have
authorized, and reserved for the purpose of issuance upon exercise of this
Warrant, a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant.
(c) LISTING. The Company shall promptly secure the listing of the
shares of Common Stock issuable upon exercise of the Warrant upon each
national securities exchange or automated quotation system, if any, upon
which shares of Common Stock are then listed (subject to official notice of
issuance upon exercise of this Warrant) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all shares
of Common Stock from time to time issuable upon the exercise of this Warrant;
and the Company shall so list on each national securities exchange or
automated quotation system, as the case may be, and shall maintain such
listing of, any other shares of capital stock of the Company issuable upon
the exercise of this Warrant if and so long as any shares of the same class
shall be listed on such national securities exchange or automated quotation
system.
(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by amendment
of its charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed by it hereunder, but will at all
times in good faith assist in the carrying out of all the provisions of this
Warrant and in the taking of all such action as may reasonably be requested
by the holder of this Warrant in order to protect the exercise privilege of
the holder of this Warrant against dilution or other impairment, consistent
with the tenor and purpose of this Warrant. Without limiting the generality
of the foregoing, the Company (i) will not increase the par value of any
shares of Common Stock receivable upon the exercise of this Warrant above the
Exercise Price then in effect, and (ii) will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise
of this Warrant.
(e) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation, or acquisition of
all or substantially all the Company's assets.
4. ANTIDILUTION PROVISIONS. During the Exercise Period, the Exercise
Price and the number of Warrant Shares shall be subject to adjustment from
time to time as provided in this Paragraph 4.
In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be rounded
up to the nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE AND THE NUMBER OF SHARES UPON
ISSUANCE OF COMMON STOCK. Except as otherwise provided in Paragraphs 4(c)
and 4(e) hereof, if and whenever on or after July 9, 1997, the Company issues
or sells, or in accordance with Paragraph 4(b) hereof is deemed to have
issued or sold, any shares of Common Stock for no
3
<PAGE>
consideration or for a consideration per share (before deduction of
reasonable expenses or commissions or underwriting discounts or allowances in
connection therewith) less than the Market Price (as hereinafter defined) on
the date of issuance (a "Dilutive Issuance"), then immediately upon the
Dilutive Issuance, the Exercise Price will be reduced to a price determined
by multiplying the Exercise Price in effect immediately prior to the Dilutive
Issuance by a fraction, (i) the numerator of which is an amount equal to the
sum of (x) the number of shares of Common Stock actually outstanding
immediately prior to the Dilutive Issuance, plus (y) the aggregate
consideration, calculated as set forth in Paragraph 4(b) hereof, received by
the Company upon such Dilutive Issuance, divided by the Market Price in
effect immediately prior to the Dilutive Issuance, and (ii) the denominator
of which is the total number of shares of Common Stock Deemed Outstanding
immediately after the Dilutive Issuance.
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Exercise Price under Paragraph 4(a) hereof, the
following will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in any
manner issues or grants any warrants, rights or options, whether or not
immediately exercisable, to subscribe for or to purchase Common Stock or
other securities convertible into or exchangeable for Common Stock
("Convertible Securities") (such warrants, rights and options to purchase
Common Stock or Convertible Securities are hereinafter referred to as
"Options") and the price per share for which Common Stock is issuable upon
the exercise of such Options is less than the Market Price on the date of
issuance, then the maximum total number of shares of Common Stock issuable
upon the exercise of all such Options will, as of the date of the issuance or
grant of such Options, be deemed to be outstanding and to have been issued
and sold by the Company for such price per share. For purposes of the
preceding sentence, the "price per share for which Common Stock is issuable
upon the exercise of such Options" is determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration for
the issuance or granting of all such Options, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
exercise of all such Options, plus, in the case of Convertible Securities
issuable upon the exercise of such Options, the minimum aggregate amount of
additional consideration payable upon the conversion or exchange thereof at
the time such Convertible Securities first become convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise of all such Options (assuming full conversion of
Convertible Securities, if applicable). No further adjustment to the
Exercise Price will be made upon the actual issuance of such Common Stock
upon the exercise of such Options or upon the conversion or exchange of
Convertible Securities issuable upon exercise of such Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Company in
any manner issues or sells any Convertible Securities, whether or not
immediately convertible (other than where the same are issuable upon the
exercise of Options) and the price per share for which Common Stock is
issuable upon such conversion or exchange is less than the Market Price on
the date of issuance, then the maximum total number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities
will, as of the date of the issuance of
4
<PAGE>
such Convertible Securities, be deemed to be outstanding and to have been
issued and sold by the Company for such price per share. For the purposes of
the preceding sentence, the "price per share for which Common Stock is
issuable upon such conversion or exchange" is determined by dividing (i) the
total amount, if any, received or receivable by the Company as consideration
for the issuance or sale of all such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the conversion or exchange thereof at the time such Convertible
Securities first become convertible or exchangeable, by (ii) the maximum
total number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities. No further adjustment to the
Exercise Price will be made upon the actual issuance of such Common Stock
upon conversion or exchange of such Convertible Securities.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If there is
a change at any time in (i) the amount of additional consideration payable to
the Company upon the exercise of any Options; (ii) the amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
of any Convertible Securities; or (iii) the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock (other than
under or by reason of provisions designed to protect against dilution), the
Exercise Price in effect at the time of such change will be readjusted to the
Exercise Price which would have been in effect at such time had such Options
or Convertible Securities still outstanding provided for such changed
additional consideration or changed conversion rate, as the case may be, at
the time initially granted, issued or sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. If, in any case, the total number of shares of Common Stock
issuable upon exercise of any Option or upon conversion or exchange of any
Convertible Securities is not, in fact, issued and the rights to exercise
such Option or to convert or exchange such Convertible Securities shall have
expired or terminated, the Exercise Price then in effect will be readjusted
to the Exercise Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination (other
than in respect of the actual number of shares of Common Stock issued upon
exercise or conversion thereof), never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Options or Convertible Securities are issued, granted or sold for
cash, the consideration received therefor for purposes of this Warrant will
be the amount received by the Company therefor, before deduction of
reasonable commissions, underwriting discounts or allowances or other
reasonable expenses paid or incurred by the Company in connection with such
issuance, grant or sale. In case any Common Stock, Options or Convertible
Securities are issued or sold for a consideration part or all of which shall
be other than cash, the amount of the consideration other than cash received
by the Company will be the fair value of such consideration, except where
such consideration consists of securities, in which case the amount of
consideration received by the Company will be the Market Price thereof as of
the date of receipt. In case any Common Stock, Options or Convertible
Securities are issued in connection with any merger or consolidation
5
<PAGE>
in which the Company is the surviving corporation, the amount of
consideration therefor will be deemed to be the fair value of such portion of
the net assets and business of the non-surviving corporation as is
attributable to such Common Stock, Options or Convertible Securities, as the
case may be. The fair value of any consideration other than cash or
securities will be determined in good faith by the Board of Directors of the
Company.
(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No
adjustment to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities issued and outstanding on July 9,
1997; (ii) upon the grant or exercise of any stock or options which may
hereafter be granted or exercised under any employee benefit plan of the
Company now existing or to be implemented in the future, so long as the
issuance of such stock or options is approved by a majority of the
independent members of the Board of Directors of the Company or a majority of
the members of a committee of independent directors established for such
purpose; (iii) upon the exercise of the Warrants; (iv) upon the exercise of
warrants issued or issuable upon conversion of the Company's Series A
Convertible Preferred Stock or upon conversion of such Series A Convertible
Preferred Stock; (v) upon closing of the transaction for the purchase of an
aggregate of $2,500,000 of Common Stock by the "Altamira Funds," Toronto,
Ontario (or such other dollar amount as shall be invested collectively by the
Altamira Funds between $2,500,000 and $3,000,000), on or about the date of
the original issuance of these Warrants; (vi) upon the issuance of Common
Stock pursuant to a BONA FIDE firm commitment underwritten public offering
registered under the Securities Act.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at
any time subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced. If
the Company at any time combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a smaller number of shares, then, after the date of
record for effecting such combination, the Exercise Price in effect
immediately prior to such combination will be proportionately increased.
(d) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Paragraph 4, the number of
shares of Common Stock issuable upon exercise of this Warrant shall be
adjusted by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such adjustment
and dividing the product so obtained by the adjusted Exercise Price.
(e) CONSOLIDATION, MERGER OR SALE. In case of any consolidation of
the Company with, or merger of the Company into any other corporation, or in
case of any sale or conveyance of all or substantially all of the assets of
the Company other than in connection with a plan of complete liquidation of
the Company, then as a condition of such consolidation, merger or sale or
conveyance, adequate provision will be made whereby the holder of this
Warrant will have the right to acquire and receive upon exercise of this
Warrant in lieu of the shares of Common Stock immediately theretofore
acquirable upon the exercise of this Warrant, such
6
<PAGE>
shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of Common Stock
immediately theretofore acquirable and receivable upon exercise of this
Warrant had such consolidation, merger or sale or conveyance not taken place.
In any such case, the Company will make appropriate provision to insure that
the provisions of this Paragraph 4 hereof will thereafter be applicable as
nearly as may be in relation to any shares of stock or securities thereafter
deliverable upon the exercise of this Warrant. The Company will not effect
any consolidation, merger or sale or conveyance unless prior to the
consummation thereof, the successor corporation (if other than the Company)
assumes by written instrument the obligations under this Paragraph 4 and the
obligations to deliver to the holder of this Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the
holder may be entitled to acquire.
(f) DISTRIBUTION OF ASSETS. In case the Company shall declare or
make any distribution of its assets (including cash) to holders of Common
Stock as a partial liquidating dividend, by way of return of capital or
otherwise, then, after the date of record for determining stockholders
entitled to such distribution, but prior to the date of distribution, the
holder of this Warrant shall be entitled upon exercise of this Warrant for
the purchase of any or all of the shares of Common Stock subject hereto, to
receive the amount of such assets which would have been payable to the holder
had such holder been the holder of such shares of Common Stock on the record
date for the determination of stockholders entitled to such distribution.
(g) NOTICE OF ADJUSTMENT. Upon the occurrence of any event which
requires any adjustment of the Exercise Price, then, and in each such case,
the Company shall give notice thereof to the holder of this Warrant, which
notice shall state the Exercise Price resulting from such adjustment and the
increase or decrease in the number of Warrant Shares purchasable at such
price upon exercise, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. Such
calculation shall be certified by the chief financial officer of the Company.
(h) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise
Price in effect at the time such adjustment is otherwise required to be made,
but any such lesser adjustment shall be carried forward and shall be made at
the time and together with the next subsequent adjustment which, together
with any adjustments so carried forward, shall amount to no less than 1% of
such Exercise Price.
(i) NO FRACTIONAL SHARES. No fractional shares of Common Stock are
to be issued upon the exercise of this Warrant, but the Company shall pay a
cash adjustment in respect of any fractional share which would otherwise be
issuable in an amount equal to the same fraction of the Market Price of a
share of Common Stock on the date of such exercise.
(j) OTHER NOTICES. In case at any time:
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<PAGE>
(i) the Company shall declare any dividend upon the Common
Stock payable in shares of stock of any class or make any other distribution
(including dividends or distributions payable in cash out of retained
earnings) to the holders of the Common Stock;
(ii) the Company shall offer for subscription PRO RATA to the
holders of the Common Stock any additional shares of stock of any class or
other rights;
(iii) there shall be any capital reorganization of the
Company, or reclassification of the Common Stock, or consolidation or merger
of the Company with or into, or sale of al or substantially all its assets
to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a
record shall be taken for determining the holders of Common Stock entitled to
receive any such dividend, distribution, or subscription rights or for
determining the holders of Common Stock entitled to vote in respect of any
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, notice of the date (or, if not then known, a
reasonable approximation thereof by the Company) when the same shall take
place. Such notice shall also specify the date on which the holders of
Common Stock shall be entitled to receive such dividend, distribution, or
subscription rights or to exchange their Common Stock for stock or other
securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be. Such notice shall be given at least 30 days
prior to the record date or the date on which the Company's books are closed
in respect thereto. Failure to give any such notice or any defect therein
shall not affect the validity of the proceedings referred to in clauses (i),
(ii), (iii) and (iv) above.
(k) CERTAIN EVENTS. If any event occurs of the type contemplated
by the adjustment provisions of this Paragraph 4 but not expressly provided
for by such provisions, the Company will give notice of such event as
provided in Paragraph 4(g) hereof, and the Company's Board of Directors will
make an appropriate adjustment in the Exercise Price and the number of shares
of Common Stock acquirable upon exercise of this Warrant so that the rights
of the Holder shall be neither enhanced nor diminished by such event.
(l) CERTAIN DEFINITIONS.
(i) "COMMON STOCK DEEMED OUTSTANDING" shall mean the number of
shares of Common Stock actually outstanding (not including shares of Common
Stock held in the treasury of the Company), plus (x) pursuant to Paragraph
4(b)(i) hereof, the maximum total number of shares of Common Stock issuable
upon the exercise of Options, as of the date of such issuance or grant of
such Options, if any, and (y) pursuant to Paragraph 4(b)(ii) hereof, the
8
<PAGE>
maximum total number of shares of Common Stock issuable upon conversion or
exchange of Convertible Securities, as of the date of issuance of such
Convertible Securities, if any.
(ii) "MARKET PRICE" as of any date means (i) the average of
the last reported sale prices for the shares of Common Stock as reported by
the National Association of Securities Dealers Automated Quotation National
Market ("Nasdaq-NM") for the 10 trading days immediately preceding such date,
or (ii) if the Nasdaq-NM is not the principal trading market for the shares
of Common Stock, the average of the last reported sale prices on the
principal trading market for the Common Stock during the same period, or
(iii) if market value cannot be calculated as of such date on any of the
foregoing bases, the Market Price shall be the fair market value as
reasonably determined in good faith by (a) the Board of Directors of the
Corporation or, at the option of a majority-in-interest of the holders of the
outstanding Warrants by (b) an independent investment bank of nationally
recognized standing in the valuation of businesses similar to the business of
the corporation. The manner of determining the Market Price of the Common
Stock set forth in the foregoing definition shall apply with respect to any
other security in respect of which a determination as to market value must be
made hereunder.
(iii) "COMMON STOCK," for purposes of this Paragraph 4,
includes the Common Stock, par value $.001 per share, and any additional
class of stock of the Company having no preference as to dividends or
distributions on liquidation, provided that the shares purchasable pursuant
to this Warrant shall include only shares of Common Stock, par value $.001
per share, in respect of which this Warrant is exercisable, or shares
resulting from any subdivision or combination of such Common Stock, or in the
case of any reorganization, reclassification, consolidation, merger, or sale
of the character referred to in Paragraph 4(e) hereof, the stock or other
securities or property provided for in such Paragraph.
5. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect
thereof, provided that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than the holder of this Warrant.
6. NO RIGHTS OR LIABILITIES AS A STOCKHOLDER. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the holder hereto to purchase Warrant Shares, and no
mere enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such holder for the Exercise Price or as
a shareholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
7. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights granted
to the holder hereof are transferable, in whole or in part, upon surrender of
this Warrant, together with a properly executed assignment in the form
attached hereto, at the office or agency of the Company referred to in
Paragraph 7(e) below, provided, however, that any transfer or
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<PAGE>
assignment shall be subject to the conditions set forth in Paragraph 7(f)
hereof and to the applicable provisions of the Securities Purchase
Agreement. Until due presentment for registration of transfer on the books
of the Company, the Company may treat the registered holder hereof as the
owner and holder hereof for all purposes, and the Company shall not be
affected by any notice to the contrary. Notwithstanding anything to the
contrary contained herein, the registration rights described in Paragraph 8
are assignable only in accordance with the provisions of that certain Warrant
Share Registration Rights Agreement, dated as of February 28, 1997 by and
among the Company and the other signatories thereto (the "Warrant Share
Registration Rights Agreement").
(b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant
is exchangeable, upon the surrender hereof by the holder hereof at the office
or agency of the Company referred to in Paragraph 7(e) below, for new
Warrants of like tenor representing in the aggregate the right to purchase
the number of shares of Common Stock which may be purchased hereunder, each
of such new Warrants to represent the right to purchase such number of shares
as shall be designated by the holder hereof at the time of such surrender.
(c) REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount
to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
(d) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided
in this Paragraph 7, this Warrant shall be promptly canceled by the Company.
The Company shall pay all taxes (other than securities transfer taxes) and
all other expenses (other than legal expenses, if any, incurred by the Holder
or transferees) and charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Paragraph 7.
(e) REGISTER. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.
(f) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If , at the time of
the surrender of this Warrant in connection with any exercise, transfer, or
exchange of this Warrant, this Warrant (or, in the case of any exercise, the
Warrant Shares issuable hereunder), shall not be registered under the
Securities Act and under applicable state securities or blue sky laws, the
Company may require , as a condition of allowing such exercise, transfer, or
exchange, (i) that the holder or transferee of this Warrant , as the case may
be, furnish to the Company a written opinion of counsel, which opinion and
counsel are reasonably acceptable to the Company, to the effect that such
exercise, transfer, or exchange may be made without registration under said
Act
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<PAGE>
and under applicable state securities or blue sky laws, (ii) that the holder
or transferee execute and deliver to the Company an investment letter in form
and substance reasonably acceptable to the Company, (iii) that the transferee
be an "accredited investor" as defined in Rule 501(a) promulgated under the
Securities Act and (iv) that, upon such transfer, the transferee beneficially
owns Registrable Securities (as defined in the Warrant Share Registration
Rights Agreement) having an aggregate Market Price of at least $250,000;
provided that no such opinion, letter, status as an "accredited investor" or
minimum market price shall be required in connection with a transfer pursuant
to Rule 144 under the Securities Act. No "Subject Holder" (as defined below)
may sell or otherwise transfer Warrants, except (i) to the Company or to a
stockholder or a group of stockholders who immediately prior to the sale
control a majority of the Company's voting shares (a "Controlling
Stockholder" or "Controlling Group", as applicable); (ii) to an affiliate of
such holder; (iii) in connection with any merger, consolidation,
reorganization or sale of more than 50% of the outstanding Common Stock of
the Company (a "Reorganization"). (iv) in a registered public offering or a
public sale pursuant to Rule 144 or other applicable exemption from the
registration requirements of the Securities Act (or any successor rule or
regulation); or (v) in a private sale (otherwise than to the Company, to a
Controlling Stockholder or a Controlling Group, to an affiliate of such
holder, or in a Reorganization), provided that pursuant to such private
sale(s) the holder shall not sell or otherwise transfer during any ninety
(90) day period a portion(s) of the Warrants which, if converted into Common
Stock at the time of transfer, would represent, in the aggregate (together
with any other shares of Common Stock so transferred), beneficial ownership
by the transferees of more than 4.9% of the Common Stock then outstanding
(after giving full effect to the second paragraph of Section 1 hereof).
Subject Holder means any holder who, but for the second paragraph of Section
1 hereof, would beneficially own 5% or more of the outstanding Common Stock
of the Company. The first holder of this Warrant, by taking and holding the
same, represents to the Company that such holder is acquiring this Warrant
for investment and not with a view to the distribution thereof.
8. REGISTRATION RIGHTS. The initial holder of this Warrant ( and
certain assignees thereof) is entitled to the benefit of such registration
rights in respect of the Warrant Shares as are set forth in Section 2 of the
Warrant Share Registration Rights Agreement.
9. NOTICES. All notices, requests, and other communications required
or permitted to be given or delivered hereunder to the holder of this Warrant
shall be in writing, and shall be personally delivered, or shall be sent by
certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed, to such holder at the address shown for such holder on
the books of the Company, or at such other address as shall have been
furnished to the Company by notice from such holder. All notices, requests,
and other communications required or permitted to be given or delivered
hereunder to the Company shall be in writing, and shall be personally
delivered, or shall be sent by certified or registered mail or by recognized
overnight mail courier, postage prepaid and addressed, to the office of the
Company at NUKO Information Systems, Inc., 2391 Qume Drive, San Jose, CA
95131, Attention: Chief Financial Officer, or at such other address as shall
have been furnished to the holder of this Warrant by notice from the Company.
Any such notice, request or other communication may be sent by facsimile,
but shall in such case be subsequently confirmed by a writing personally
delivered or sent by certified or registered mail or by recognized overnight
mail courier as provided above. All notices, requests,
11
<PAGE>
and other communications shall be deemed to have been given either at the
time of the receipt thereof by the person entitled to receive such notice at
the address of such person for purposes of this Paragraph 9, or, if mailed by
registered or certified mail or with a recognized overnight mail courier upon
deposit with the United States Post Office or such overnight mail courier, if
postage is prepaid and the mailing is properly addressed, as the case may be.
10. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE
WITHOUT REGARD TO THE BODY OF LAW CONTROLLING CONFLICTS OF LAW.
11. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof may only be
amended by an instrument in writing signed by the Company and the holder
hereof.
(b) DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for purposes of reference only, and
shall not affect the meaning or construction of any of the provisions hereof.
(c) CASHLESS EXERCISE. Notwithstanding anything to the contrary
contained in this warrant, if the resale of the Warrant Shares by the holder
is not then registered pursuant to an effective registration statement under
the Securities Act, this Warrant may be exercised by presentation and
surrender of this Warrant to the Company at its principal executive offices
with a written notice of the holder's intention to effect a cashless
exercise, including a calculation of the number of shares of Common Stock to
be issued upon such exercise in accordance with the terms hereof (a "Cashless
Exercise"). In the event of a Cashless Exercise, in lieu of paying the
Exercise Price in cash, the holder shall surrender this Warrant for that
number of shares of Common Stock determined by multiplying the number of
Warrant Shares to which it would otherwise be entitled by a fraction, the
numerator of which shall be the difference between the then current Market
Price per share of the Common Stock and the Exercise Price, and the
denominator of which shall be the then current Market Price per share of
Common Stock.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
12
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer this 9th day of July, 1997.
NUKO Information Systems, Inc.
By: /s/ Thomas A. Spanier
-------------------------------------
Name: Thomas A. Spanier
-----------------------------------
Title: Chief Financial Officer
----------------------------------
13
<PAGE>
FORM OF EXERCISE AGREEMENT
Dated:_______________
To:_________________________________
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase __________________ shares of Common Stock
covered by such Warrant, and makes payment herewith in full therefor at the
price per share provided by such Warrant in cash or by certified or official
bank check in the amount of, [or, if the resale of such Common Stock by the
undersigned is not currently registered pursuant to an effective registration
statement under the Securities Act of 1933, as amended, by surrender of
securities issued by the Company (including a portion of the Warrant) having
a market value (in the case of a portion of this Warrant, determined in
accordance with Section 11(c) of the Warrant) equal to $_______. Please issue
a certificate or certificates for such shares of Common Stock in the name of
and pay any cash for any fractional share to:
Name:____________________________________
Signature:_______________________________
Address:_________________________________
___________________________________
___________________________________
Note: The above signature should correspond
exactly with the name on the face of the
within Warrant.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the
name of said undersigned covering the balance of the shares purchasable
thereunder less any fraction of a share paid in cash.
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell, assigns, and transfers
all the rights of the undersigned under the within Warrant, with respect to
the number of shares of Common Stock covered thereby set forth herein below,
to:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
, and hereby irrevocably constitutes and appoints ____________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Dated: __________________, 19__
In the presence of
______________________________________
Name: _____________________________________
Signature: ________________________________
Title of Signing Officer or Agent (if any):
___________________________________________
Address: __________________________________
___________________________________________
Note: The above signature should correspond
exactly with the name on the face of the
within Warrant.
<PAGE>
Exhibit 4.5
THE SECURITIES DESCRIBED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE SECURITIES LAWS OF ANY
STATE OR JURISDICTION OF THE UNITED STATES OR ANY FOREIGN JURISDICTION. NO
REGULATORY BODY HAS ENDORSED THESE SECURITIES. NO SALE OR DISTRIBUTION OF
THE SECURITIES MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT AND
APPLICABLE STATE BLUE SKY LAWS.
STOCK PURCHASE WARRANT
TO PURCHASE SHARES OF COMMON STOCK OF
NUKO INFORMATION SYSTEMS, INC.
THIS CERTIFIES that, subject to the terms and conditions set forth
herein BAILEY & COMPANY INC. is entitled to purchase from NUKO Information
Systems, Inc., a Delaware corporation (the "Company") One Hundred Two
Thousand Forty-one (102,041) shares of fully paid and non-assessable Common
Stock of the Company, as adjusted pursuant to Paragraph 4 below (the
"Shares"), at the price of Two Dollars Forty-five Cents ($2.45) per share
(such price or an adjusted price as provided below being referred to herein
as the "Warrant Price"). As used herein, (i) "Common Stock" shall mean the
Company's presently authorized Common Stock, and any stock into or for which
such Common Stock may hereafter be converted or exchanged.
1. TERM. The purchase right represented by this Warrant is
exercisable on or after the earlier of (i) one year from the date hereof or
(ii) the effective date of a registration statement covering the resale of
the shares issuable upon exercise hereof, and shall terminate on July 9, 2002.
2. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT.
a. Subject to Paragraph 1 above, the purchase right represented by
this Warrant may be exercised by the holder hereof, in whole or in part (but
not for less than 1,000 shares of Common Stock, as adjusted pursuant to
Paragraph 4 below) and from time to time, by the surrender of this Warrant
(with the notice of exercise form attached hereto as Exhibit "A", duly
executed) at the principal office of the Company and the payment to the
Company, in cash, by check or other consideration agreed to by the Company,
of an amount equal to the then applicable Warrant Price multiplied by the
number of Shares then being purchased ("Total Purchase Price").
<PAGE>
b. A Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise as
provided above, and the person entitled to receive the shares of Common Stock
issuable upon such exercise shall be treated for all purposes as the holder
of such shares of record as of the close of business on such date. As
promptly as practicable on or after such date, the Company shall issue and
deliver to the person or persons entitled to receive the same a certificate
or certificates for the number of full shares of Common Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share as
provided in Paragraph 6 below.
c. Upon partial exercise hereof, a new warrant or warrants
containing the same date and provisions as this Warrant shall be issued by
the Company to the registered holder for the number of shares of Common Stock
with respect to which this Warrant shall not have been exercised.
3. SHARES FULLY PAID; RESERVATION OF SHARES. All shares of Common
Stock that may be issued upon the exercise of the rights represented by this
Warrant shall, upon issuance, be fully paid and non-assessable, and free from
all taxes (other than taxes based on the income of the holder of this
Warrant), with respect to the issue thereof. During the period within which
the rights represented by this Warrant may be exercised, the Company shall at
all times have authorized and reserved for issuance upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of
its Common Stock to provide for the exercise of the rights represented by
this Warrant. The Company agrees that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates
for shares of Common Stock issuable upon exercise of this Warrant.
4. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The Warrant Price
and number and kind of securities purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence
of certain events as follows:
a. In case the Company shall (i) pay a dividend in shares of its
capital stock, (ii) subdivide its outstanding shares of Common Stock, (iii)
reduce, consolidate, or combine its outstanding shares of Common Stock into a
smaller number of shares, or (iv) issue by reclassification of its shares of
Common Stock any shares of the Company, the Warrant Price in effect
immediately prior thereto shall be adjusted to that amount determined by
multiplying the Warrant Price in effect immediately prior to such date by a
fraction, of which the numerator shall be the number of shares of Common
Stock outstanding on such date before giving effect to such division,
subdivision, reduction, combination or consolidation or stock dividend and of
which the denominator shall be the number of shares of Common Stock
outstanding after giving effect thereto. Such adjustment shall be made
successively whenever any such effective date or record date shall occur. An
adjustment made pursuant to this Paragraph 4a shall become effective
retroactively, immediately after the record date in the case of a dividend,
and immediately after the effective date in the case of a subdivision,
reduction, consolidation, combination or reclassification.
2
<PAGE>
b. In case the Company shall issue rights or warrants to all or
substantially all holders of its Common Stock entitling them (for a period
expiring within 45 days after the record date mentioned below) to subscribe
for or purchase shares of Common Stock at a price per share (the "Offering
Price") less than the fair market value per share of Common Stock (as defined
below), at the record date mentioned below, the Warrant Price in effect
immediately prior thereto shall be adjusted to that amount determined by
dividing the Warrant Price in effect immediately prior to such date by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants plus the
number of additional shares of Common Stock offered for subscription or
purchase, and of which the denominator shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights or warrants,
plus the number of shares which the aggregate of the Offering Price of the
total number of shares so offered would purchase at such fair market value.
Such adjustment shall be made whenever such rights or warrants are issued,
and shall become effective retroactively, immediately after the record date
for the determination of shareholders entitled to receive such rights or
warrants.
c. In case the Company shall distribute to all or substantially all
holders of its Common Stock evidences of its indebtedness, shares of any
class of the Company's stock other than Common Stock, or assets (excluding
cash dividends) or rights or warrants to subscribe (excluding those referred
to in Paragraph 4b above), then in each such case the Warrant Price in effect
immediately prior thereto shall be adjusted to that amount determined by
dividing the Warrant Price in effect immediately prior to such date by a
fraction, of which the numerator shall be the fair market value per share of
Common Stock (as defined below) on the date of such distribution and of which
the denominator shall be such fair market value per share of Common Stock,
less the then fair market value (as determined by the board of directors of
the Company, whose determination shall be conclusive, and described in a
statement, which will have applicable resolutions of the board of directors
attached thereto, filed with the Company) of the portion of the assets or
evidences of indebtedness or shares so distributed or of such subscription
rights or warrants applicable to one share of the Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall
become effective retroactively immediately after the record date for the
determination of stockholders entitled to receive such distribution.
d. If the Common Stock issuable upon exercise of this Warrant shall
be changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares or stock
dividend, or a reorganization, merger, consolidation or sale of assets
provided for in this Paragraph 4), then, and in each such event, the holder
of this Warrant shall have the right thereafter to receive, without payment
of any additional consideration therefor, the kind and amount of shares of
Common Stock and other securities and property receivable upon such
reorganization, reclassification, or other change, by holders of the number
of shares of Common Stock into which this Warrant might have been exercised,
as reasonably determined by the Company's board of directors, immediately
prior to such reorganization, reclassification, or change, all subject to
further adjustment as provided in this Paragraph 4.
3
<PAGE>
e. If at any time or from time to time there shall be a capital
reorganization of the Common Stock (other than a subdivision, combination,
reclassification or exchange of shares provided for in this Paragraph 4) or a
merger or consolidation of the Company with or into another corporation, or
the sale of all or substantially all of the Company's properties and assets
to any other person, then, as a part of such reorganization, merger,
consolidation or sale, provisions shall be made as reasonably determined by
the Company's board of directors so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, without
payment of any additional consideration therefor, the number of shares of
stock or other securities or property of the Company or of the successor
corporation resulting from such merger or consolidation or sale, to which a
holder of Common Stock deliverable upon exercise of this Warrant would have
been entitled on such capital reorganization, merger, consolidation or sale.
f. Upon each adjustment in the Warrant Price, the number of shares
of Common Stock purchasable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Shares
purchasable immediately prior to such adjustment in the Warrant Price by a
fraction, the numerator of which shall be the Warrant Price immediately prior
to such adjustment and the denominator of which shall be the Warrant Price
immediately thereafter.
g. The adjustments provided for in this Paragraph 4 are cumulative
and shall apply to successive divisions, subdivisions, reductions,
combinations, consolidations, issues, distributions or other events
contemplated herein resulting in any adjustment under the provisions of this
Paragraph 4 provided that, notwithstanding any other provision of this
Paragraph 4, no adjustment of the Warrant Price shall be required (i) unless
such adjustment would require an increase or decrease of at least five
percent (5%) in the Warrant Price then in effect; provided, however, that any
adjustments which by reason of this Paragraph 4g are not required to be made
shall be carried forward and taken into account in any subsequent adjustment,
or (ii) if the issue of Common Stock is being made pursuant to any stock
option or stock purchase plan in force from time to time for officers and/or
employees of the Company or any other options or warrants outstanding at the
date of issuance of this Warrant.
h. Except as provided in this Paragraph 4, no adjustment on account
of dividends or interest on Common Stock or other securities purchasable
hereunder will be made upon the exercise hereof.
i. For the purposes hereof, the fair market value per share of
Common Stock at any date shall be determined in good faith by the Company's
board of directors in its sole discretion, exercised in good faith; provided,
however, that where there is a public market for the Common Stock, the fair
market value per share shall be the average of the closing bid and ask prices
for the Common Stock on the relevant date, as reported in on the
over-the-counter electronic bulletin board, if the Common Stock is so traded.
In the event the Common Stock is quoted on the Nasdaq SmallCap MarketSM, the
fair market value shall mean the average of the closing bid and asked prices
on the Nasdaq SmallCap Market, as reported in THE WALL STREET JOURNAL or
otherwise reported, on the relevant date. In the event the Common Stock is
listed on a stock exchange or on the Nasdaq National Market-TM- (or other
national market system), the fair
4
<PAGE>
market value per share shall be the closing price on the exchange or on the
Nasdaq National Market (or other national market system), as the case may be,
as of the relevant date, as reported in THE WALL STREET JOURNAL or otherwise.
5. CERTIFICATE OF ADJUSTMENT. Whenever the Warrant Price is adjusted,
as provided in Paragraph 4 above, the Company shall promptly deliver to the
record holder of this Warrant a certificate of an officer of the Company
setting forth the Warrant Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment.
6. NO FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would otherwise be issuable, the Company shall pay
cash equal to the product of such fraction multiplied by the Warrant Price in
effect on the date of exercise.
7. RIGHTS AS STOCKHOLDERS. No holder of this Warrant, as such, shall
be entitled to vote or receive dividends or be deemed the holder of Common
Stock or any other securities of the Company which may at any time be
issuable on the exercise thereof for any purpose, nor shall anything
contained herein be construed to confer upon the holder of this Warrant, as
such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until this Warrant shall have
been exercised and the Shares purchasable upon the exercise hereof shall have
become deliverable, as provided herein.
8. NOTICE OF CERTAIN EVENTS. If at any time prior to the expiration
or full exercise of this Warrant, the Company shall:
a. Take a record of the holders of any class of securities of the
Company for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a cash dividend at the same rate as the
rate of the last cash dividend theretofore paid) or other distribution, or
any rights to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property, or to receive any
other right; or
b. Offer for subscription pro rata to holders of Common Stock of
the Company any additional shares of stock or any class or other rights;
c. Propose any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or
any consolidation or merger of the Company with, or sale of all or
substantially all of its assets to, another corporation or business
organization; or
d. Be the subject of any voluntary or involuntary dissolution,
liquidation or winding-up;
5
<PAGE>
then in each such event the Company shall mail to the registered holder a
notice specifying (i) the date or expected date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and (ii)
the date or expected date on which any such reorganization, reclassification,
recapitalization, dissolution, liquidation or winding-up is to take place and
the time, if any, to be fixed, as of which the holders of record of Common
Stock shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, recapitalization, dissolution, liquidation or winding-up.
Such notice shall be mailed at least forty-five (45) days prior to the
earlier of the dates specified in clauses (i) and (ii) above.
9. COMPLIANCE WITH SECURITIES LAWS. The holder of this Warrant, by
acceptance hereof, agrees that this Warrant (and the shares issuable upon
exercise hereof ) are being acquired for investment and that such holder will
not offer, sell or otherwise dispose of this Warrant or shares except under
circumstances which will not result in a violation of the Securities Act of
1933, as amended (the "Act"), any applicable state Blue Sky law, or any
applicable foreign statute. Absent an effective registration statement
covering the resale of the shares issuable upon exercise of this Warrant or
an available exemption, the shares will be required to be held indefinitely.
Rule 144 under the Act will not be available for the possible future public
sale of the shares of Common Stock for at least one (1) year from the date of
full payment for the shares, following exercise of this Warrant, and is
subject to the fulfillment of certain conditions set forth in the Rule.
Accordingly, there is no assurance that the provisions of Rule 144 will be
available at the time the holder of the shares desires to sell such shares.
This Warrant and the shares issuable upon exercise thereof shall bear a
legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THIS SECURITY MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THESE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
10. DISPOSITION OF WARRANT. With respect to any offer, sale or other
disposition of this Warrant, the holder hereof and each subsequent holder of
this Warrant agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of
such holder's counsel, if requested by the Company, to the effect that such
offer, sale or other disposition may be effected without registration or
qualification of this Warrant under the Act or any applicable state Blue Sky
law then in effect, and indicating whether or not under any of said laws
certificates for this Warrant to be sold or otherwise disposed of require any
restrictive legend as to applicable restrictions on transferability in order
to ensure compliance therewith. Upon receiving such written notice and
reasonably satisfactory opinion, if so requested, the Company shall notify
such holder that such holder may sell or otherwise dispose of this Warrant,
all in accordance with the terms of the notice delivered to the
6
<PAGE>
Company. If a determination has been made pursuant to this Paragraph 10 that
the opinion of counsel for the holder is not reasonably satisfactory to the
Company, the Company shall so notify the holder promptly after such
determination has been made.
11. MISCELLANEOUS.
a. BINDING ON SUCCESSORS. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a
contract under the laws of the State of California and for all purposes shall
be construed in accordance with and governed by the laws of the State of
California.
b. HEADINGS. The headings in this Warrant are for purposes of
convenience and reference only and shall not be deemed to constitute a part
hereof.
c. AMENDMENTS. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the Company and the registered holder hereof.
d. NOTICES. All notices and other communications from the Company
to the holder of this Warrant shall be mailed by first-class registered or
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last holder of this Warrant who shall have furnished an
address to the Company in writing.
Date: July 9, 1997.
NUKO INFORMATION SYSTEMS, INC.
By:_________________________________
Pratap Kesav Kondamoori
PRESIDENT AND CHIEF EXECUTIVE OFFICER
7
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
TO: NUKO INFORMATION SYSTEMS, INC.
The undersigned Holder of this Warrant hereby irrevocably elects to
exercise this Warrant, or portion hereof (which is at least 1,000 shares,
unless the undersigned holds Warrants aggregating fewer than 1,000 shares, in
which event, the amount exercised shall be the entire Warrant) below
designated, for shares of Common Stock of NUKO Information Systems, Inc. in
accordance with the terms of this Warrant, and directs that the shares
issuable and deliverable upon such exercise, together with any check in
payment for fractional shares and any Warrants representing any unexercised
amount hereof, be issued and delivered to the undersigned unless a different
name has been indicated below. If shares are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer
taxes, if any, payable with respect thereto.
Dated_____________________
____________________________________
Signature of Holder
Amount to be Exercised
____________________________________
THIS WARRANT IS TRANSFERABLE ONLY AS PROVIDED HEREIN
Provide the following information if shares of Common Stock and/or
Warrants are to be issued otherwise than to the Holder. Please print name
and address (including zip code) of other person.
____________________________________
____________________________________
Social Security or Other Taxpayer
Identifying Number, If Applicable
A-1
