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NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND
NEITHER THIS WARRANT NOR SUCH SHARES MAY BE SOLD, TRANSFERRED, ASSIGNED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT AND, IF AN
EXEMPTION SHALL BE APPLICABLE, THE HOLDER SHALL HAVE DELIVERED AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT.
VOID AFTER 5:00 P.M., EASTERN STANDARD TIME, ON ____________________.
SUREBEAM CORPORATION
WARRANT AGREEMENT
THIS WARRANT AGREEMENT is made as of _____________________, between
SUREBEAM CORPORATION, a Delaware corporation (the "COMPANY"),
_________________________________________________________, or its successors or
permitted assigns (the "HOLDER"), and THE TITAN CORPORATION ("TITAN").
RECITALS
This Warrant to purchase shares of common stock of the Company ("COMMON
STOCK"), on the terms and conditions set forth below, is granted to the Holder
as a matter of separate inducement in connection with the _____________________
(the "WARRANT AGREEMENT").
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth herein and other good and valuable consideration, the
parties hereto agree as follows:
1. SHARES SUBJECT TO WARRANT; WARRANT PRICE. The Holder may, at its option,
and subject to all of the terms and conditions of this Warrant, purchase
__________________________ (_________) shares of Common Stock at a price per
share of $_________ or a total price of ______________________________
($__________) if this Warrant is exercised for all of the shares subject to this
Warrant (the "WARRANT PRICE"), on the terms and conditions set forth herein. The
Holder will be responsible for the payment of all relevant taxes in connection
with the receipt and exercise of this Warrant.
2. WARRANT TERMS; TIMES OF EXERCISE. The Warrant Term shall begin on
_________________ and shall terminate and be no longer exercisable on the
earliest of (a) _________________, (b) the closing of the Initial Public
Offering of Common Stock of the Company pursuant to a registration statement
filed under the Securities Act of 1933 (the "1933 ACT" or the "SECURITIES ACT"),
and (c) the closing of the sale of the Company or all or
1.
<PAGE>
substantially all of the Company's assets ("WARRANT TERM"). The Company will
provide the Holder with written notice of such Initial Public Offering or sale
at least sixty (60) days and not more than ninety (90) days prior to such
Initial Public Offering or sale. Within thirty (30) days of receipt of such
notice, the Holder shall notify the Company whether it intends to exercise this
Warrant, in whole or in part, prior to the end of the Warrant Term. Such notice
will not have any effect in the event such Initial Public Offering or sale does
not occur within the period contemplated by the Company's notice. This Warrant
may be exercised, in whole or in part, at any time during the Warrant Term
subject to the provisions in Section 3 of this Warrant; provided, however, if
this Warrant is exercised for less than the total number of shares subject to
this Warrant, this Warrant will expire with respect to any shares not included
in such exercise. Notwithstanding the foregoing, the Holder shall not in any
event be required under this Section 2 to exercise the Warrant prior to the
occurrence of an Initial Public Offering or sale.
3. EXERCISE. This Warrant may be exercised by the Holder by delivery to the
Company at its principal office of (i) an executed exercise notice substantially
in the form annexed hereto as SCHEDULE A and (ii) payment of the aggregate
Warrant Price for the number of shares purchased by certified check or bank
check.
The Company need not issue or deliver such shares unless and until in the
opinion of the Company's counsel all applicable requirements of law, including
qualification of such shares for sale under the California Corporate Securities
Law and registration of such shares under the Securities Act, and all applicable
listing requirements of any national securities exchange on which shares of the
same class are then listed, have been complied with. The Company will promptly
take all actions necessary to comply with all such applicable requirements of
law and all such applicable listing requirements and, notwithstanding anything
set forth herein to the contrary, the Warrant Term shall be extended until 30
days after all such requirements have been complied with.
4. STATUS OF AND RESERVATION OF STOCK. The Company represents and warrants
to the Holder that as of the date of this Warrant Agreement, there are
_____________ shares of Common Stock issued and outstanding, and that the
Company has issued and there are now unexercised purchase rights, including all
warrants and options to purchase Common Stock in respect of an additional
_____________ shares of Common Stock. The Company represents that there have
been reserved, and the Company agrees to keep reserved, out of its authorized
Common Stock, a number of shares of Common Stock sufficient to provide for the
exercise of the right of purchase provided for in this Warrant Agreement. The
Company shall not sell shares of Common Stock of other securities to any
officer, director or stockholder of the Company or any of their respective
Affiliates, except on terms no less favorable to the Company than it would
obtain in a comparable arms-length transaction with an unaffiliated person.
5. ADJUSTMENTS. The number and kind of securities purchasable upon the
exercise of this Warrant and the Warrant Price shall be subject to adjustment as
follows:
(a) STOCK DIVIDENDS, SPLITS, ETC. In case the Company shall at any time
after the date of this Agreement (i) declare a dividend in shares of Common
Stock or make a distribution to all holders of shares of Common Stock in shares
of Common Stock (or a series thereof) (ii) subdivide its outstanding shares of
Common Stock into a greater number of shares,
2.
<PAGE>
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock, or (iv) issue by reclassification of its share of Common
Stock other securities of the Company, the number of shares purchasable upon
exercise of this Warrant immediately prior thereto shall be adjusted so that the
Holder shall be entitled to receive solely the kind and number of shares or
other securities of the Company that it would have owned or have been entitled
to receive after the happening of any of the events described above had this
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. An adjustment made pursuant to this paragraph
(a) shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) DISTRIBUTION OF ASSETS IN LIQUIDATION. In case, upon liquidation, the
Company shall fix a record date for the distribution to all holders of its
shares of Common Stock of evidences or its indebtedness of securities (other
than Common Stock or right or warrants of the type described in paragraph 4
above) or assets (excluding cash dividends or distributions paid in the ordinary
course), then in each case the Warrant Price shall be adjusted to a price
determined by multiplying the Warrant Price in effect immediately prior to such
distribution by a fraction, of which the numerator shall be the then current
market price per share of Common Stock (as defined in paragraph (c) below) on
the date of such distribution, less the then fair value (as determined in good
faith by the Board of Directors the Company, whose determination shall be
conclusive) of the portion or the assets of the securities or the evidence of
indebtedness so distributed applicable to one share of Common Stock, and of
which the denominator shall be the then current market price per share of Common
Stock. Such adjustment shall be made whenever any such distribution is made, and
shall become effective on the date of distribution, retroactive to the record
date for the determination of stockholders entitled to receive such
distribution.
(c) DEFINITION OF MARKET PRICE. For the purpose of any computation under
paragraph (b) of this Section 5, the current market price per share of Common
Stock at any date shall be the book value per share as reflected in determinable
by reference to the most recent audited financial statements of the Company.
(d) DEFINITION OF SHARES OF COMMON STOCK. For the purpose of this section,
the term "SHARES OF COMMON STOCK" shall mean (i) the class of stock designated
as the Common Stock of the Company at the date of this Agreement, or (ii) any
other class of stock resulting from changes or reclassifications of such shares
consisting solely of changes in par value, or from par value to no value, or
from no par value to par value. In the event that any time, as a result of an
adjustment made pursuant to paragraph (a) above, the Holder of this Warrant
shall become entitled to purchase any shares of the Company other than shares of
Common Stock, thereafter the number of such other shares so purchasable upon
exercise of this Warrant and the Warrant Price of such shares shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
this Section 5 as they would have been applied to the Warrant Shares.
(e) MINIMUM ADJUSTMENT. No adjustment in the number of shares purchasable
hereunder shall be required unless such adjustment would require an increase or
decrease of a least ______ percent (___%) in the number of shares purchasable
upon the exercise of this Warrant, provided, however, that any adjustments which
be reason of this paragraph (e)
3.
<PAGE>
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment.
(f) WARRANT PRICE ADJUSTMENT. Whenever the number of shares purchasable
upon the exercise of this Warrant is adjusted, as herein provided, the Warrant
Price per shares payable upon exercise of this Warrant shall be adjusted to the
nearest cent by multiplying such Warrant Price immediately prior to such
adjustment by a fraction of which the numerator shall be the number of shares
purchasable upon the exercise of this Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of share so
purchasable immediately thereafter.
(g) NOTICE OF ADJUSTMENT. Whenever the number of shares purchasable upon
the exercise of this Warrant or Warrant Price of such shares is adjusted, as
herein provided, the Company shall promptly mail to the Holder, by first class
mail, postage prepaid, notice of such adjustment or adjustments.
(h) COMPANY MAY REDUCE WARRANT PRICE OR INCREASE NUMBER OF SHARES
PURCHASABLE. The Company may at its option, at any time during the term of this
Warrant, reduce the then current Warrant Price, or increase the number of shares
of Common Stock purchasable upon exercise of this Warrant, to any amount deemed
appropriate by the Board of Directors of the Company.
(i) REORGANIZATIONS. In case of any capital reorganization of the Company
or of any reclassification of the Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of subdivision or combination), or in the case of the consolidation
or merger of the Company into any other corporation, or any sale or transfer of
all or substantially all the assets of the Company, this Warrant shall after
such reorganization, reclassifications, consolidation, merger, sale or transfer
be exercisable, upon the terms and conditions or specified in this Agreement
solely for the number of shares of stock or other securities or property
(including cash) to which the Holder of the number of Warrant Shares purchasable
(at the time of such reorganization, reclassification, consolidation, merger,
sale or transfer) upon exercise of this Warrant would have been entitled upon
that reorganization, reclassification, consolidation, merger, sale or transfer;
and in any such case, if necessary, the provisions set forth in this Section 5
with respect to the rights and interests thereafter of the Holder of this
Warrant shall be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to any shares of stock or other securities or property thereafter
deliverable on the exercise of the Warrant.
6. TRANSFERABILITY OF WARRANT. This Warrant is not transferable, in whole
or in part, without the prior written consent of the Company, which consent will
not be unreasonably withheld, except to an Affiliate of the Holder or a
Permitted Transferee of the Holder, and shall not be otherwise transferred, or
assigned, pledged, hypothecated or otherwise disposed of in any way, whether by
operation of law or otherwise (other than by exercise), and shall not be subject
to execution, attachment or similar process. No transfer of this Warrant shall
be effective for any purpose hereunder until written notice of such transfer and
the name and address of the transferee has been received by the Company at its
address then in effect hereunder. No transfer of this Warrant shall be effective
or recognized by the Company unless
4.
<PAGE>
and until, in the opinion of the Company's counsel, all requirements of
applicable law, including any requirements to obtain a consent to such transfer
from the California Commissioner of Corporations and any requirement to register
such transfer under the Securities Act, have been complied with. The Company
will promptly take all actions necessary to comply with all such applicable
requirements of law and, notwithstanding anything set forth herein to the
contrary, the Warrant Term shall be extended until thirty (30) days after all
such requirements have been complied with. For purposes hereof, the following
terms have the following meanings:
"AFFILIATE" as applied to any Person, means any other Person, directly or
indirectly, controlling, controlled by or under common control with that Person.
The term "CONTROL" (including, with correlative meaning, the terms
"CONTROLLING," "CONTROLLED BY," and "UNDER COMMON CONTROL WITH"), as applied to
any Person, means the possession, directly or indirectly, of the power to vote
ten percent (10%) or more of the voting stock (or in the case of a Person which
is not a corporation, 10% or more of the ownership interest, beneficial or
otherwise) of such Person, or the ability to otherwise direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting stock, by contract or otherwise.
"PERMITTED TRANSFEREES" means the spouse or lineal descendants (including
adopted children) of the Holder, any trust for the benefit of the Holder or the
benefit of the spouse or lineal descendants (including adopted children) of the
Holder, any corporation, partnership or limited liability company in which the
Holder, the spouse and the lineal descendants (including adopted children) of
the Holder are the direct and beneficial owners of substantially all of the
equity interest, and the personal representative of the Holder upon the Holder's
death for purposes of administration of the Holder's estate or upon the Holder's
incompetency for purposes of the protection and management of the assets of the
Holder. "PERMITTED TRANSFEREES" also means the members of a limited liability
company, where the limited liability company is the Holder, the partners of a
partnership, where the partnership is the Holder, and the stockholders of a
corporation where the corporation is the Holder.
"PERSON" means an individual, partnership, corporation, limited liability
company, association, joint stock company, trust, joint venture, unincorporated
organization or other entity, or a governmental entity or any department, agency
or political subdivision thereof.
7. WARRANT HOLDER NOT SHAREHOLDER. Except as otherwise provided for herein,
this Warrant does not convey upon the Holder any right to vote, or to consent
to, or to receive notice as a shareholder of the Company, as such, in respect of
any matters whatsoever, or any other rights or liabilities as a shareholder.
Neither the Holder nor its transferee shall be, or have any rights or privileges
of, a shareholder of the Company with respect to any shares issuable upon
exercise of this Warrant, unless and until certificates representing such shares
shall have been issued and delivered. If, however, at any time prior to the
expiration of this Warrant and prior to its exercise, any of the following
events shall occur:
(a) the Company shall declare any dividend payable in any securities upon
its shares of Common Stock or make any distribution (other than a regular cash
dividend, as such dividend may be increased from time to time) to the holders of
its shares of Common Stock; or
5.
<PAGE>
(b) the Company shall offer to the holders of its shares of Common Stock
any cash, additional shares of Common Stock or other securities of the Company
or any right to subscribe for or purchase any thereof; or
(c) a dissolution, liquidation, or winding up of the Company (other than in
connection with a consolidation, merger, sale, transfer or lease of all or
substantially all of its property, assets and business as an entirety) shall be
proposed.
Then in any one or more of said events the Company shall give notice in
writing of such event to the Holder, such giving of notice to be completed at
least 30 days prior to the date fixed as a record date or the date of closing
the transfer books for the determination of the stockholders entitled to vote on
such proposed dissolution liquidation or winding up or the date of expiration of
such offer. Such notice shall specify such record date or the date of closing
the transfer books or the date of expiration, as the case may be.
8. RESTRICTION ON TRANSFER OF COMMON STOCK; INDEMNITY.
(a) RESTRICTION ON TRANSFER. Prior to any transfer of Common Stock issued
pursuant to this Warrant Agreement ("WARRANT SHARES"), and as a condition
thereto, if such transfer is not made pursuant to an effective registration
statement under the Securities Act, the Holder will, if requested by the
Company, deliver to the Company (i) an investment covenant similar to Section
11(a) signed by the proposed transferee, (ii) an agreement by such transferee to
the impression of the restrictive investment legend set forth herein on the
certificate, or certificates, representing the securities acquired by such
transferee, (iii) an agreement by such transferee that the Company may place a
"stop transfer order" with its transfer agent or registrar in order to ensure
compliance with Section 6 hereof, and (iv) an agreement by the transferee to
indemnify the Company to the same extent as set forth in the next succeeding
paragraph.
(b) INDEMNITY. The Holder acknowledges that the Holder understands the
meaning and legal consequences of this Section 8, and the Holder hereby agrees
to indemnify and hold harmless the Company, its representatives and each officer
and director thereof from and against any and all loss, damage or liability
(including all reasonable attorneys' fees and costs incurred in enforcing this
indemnity provision) due to or arising out of (i) the inaccuracy of any
representation or the breach of this Warrant, (ii) any transfer of the Warrant
or the Warrant Shares in violation of the Securities Act, the Securities
Exchange Act of 1934, as amended, or the rules and regulations promulgated under
either of such Acts, (iii) any transfer of the Warrant or any of the Warrant
Shares not in accordance with this Warrant, or (iv) any untrue statement or
omission to state any material fact in connection with the investment
representations or with respect to the facts and representations supplied by the
Holder to counsel to the Company upon which its opinion as to a proposed
transfer shall have been based.
9. NOTICES. Any notice to be given to the Company, Titan or the Holder
shall be addressed to the Company, Titan or the Holder at the address set forth
below or to the Company, Titan, the Holder or its transferee at such other
address as the Company, Titan, the Holder or such transferee may designate in
writing pursuant to the provisions of this Section 9:
6.
<PAGE>
If to the Company, to:
Surebeam Corporation
3033 Science Park Road
San Diego, CA 92121
Attn: President
If to Titan, to:
The Titan Corporation
3033 Science Park Road
San Diego, CA 92121
Attn: Secretary
If to the Holder, to:
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with a copy to:
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Any such notice shall have been deemed duly given when enclosed in a
properly sealed envelope addressed as aforesaid, registered or certified, and
deposited, postage and registry or certification fee prepaid, in a post office
or branch post office regularly maintained by the U.S. Postal Service.
10. INFORMATION. The Company will deliver to the Holder, as long as the
Holder owns any Piggy-Back Shares (as hereinafter defined), the following:
(a) As soon as practicable after the end of each fiscal year of the Company
the balance sheet of the Company and its subsidiaries as of the end of such
year, and the statement of operations and cash flow of the Company and its
subsidiaries for such fiscal year, prepared in accordance with GAAP and
certified by a national recognized independent public accountant;
(b) Promptly upon the occurrence thereof, notice of any event which has
had, or could reasonably be expected to have, a material adverse impact on the
business, assets, prospects, operations, or condition, financial or otherwise,
of the Company; and
(c) Copies of any other documents furnished to stockholders of the Company
regarding the Company or its affairs, simultaneously with the furnishing of such
documents to such stockholders.
7.
<PAGE>
11. RESTRICTIONS ON EXERCISE IMPOSED BY FEDERAL AND STATE SECURITIES LAWS.
The Holder hereby acknowledges that neither this Warrant nor any of the
securities that may be acquired upon exercise of this Warrant have been
registered under the 1933 Act or under the securities laws of any state. As a
condition to exercise, in the absence of an effective registration statement
under the 1933 Act, the Company may require the Holder to sign a representation
letter confirming compliance with this Agreement and applicable federal and
state securities laws and other applicable laws, by reaffirmation of the
following representations and warranties of the Holder if necessary to comply
with such securities and other applicable laws.
(a) This Warrant and the shares of Common Stock subject to this Warrant are
or will be acquired by the Holder solely for its own account, for investment
purposes only and with no present intention of distributing, selling or
otherwise disposing of them in connection with a distribution;
(b) The Holder is able to bear the economic risk of an investment in the
Common Stock issued upon exercise of this Warrant and can afford to sustain a
total loss of such investment;
(c) The Holder has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the proposed
investment and therefore has the capacity to protect its own interests in
connection with its acquisition of Common Stock pursuant to the terms of this
Warrant;
(d) The Holder is an "ACCREDITED INVESTOR," as that term is defined in
Regulation D under the 1933 Act, or if not an "accredited investor" then the
Holder, by reason of its business or financial experience or the business or
financial experience of its advisors, has the capacity to protect its own
interest in connection with the purchase of the Common Stock; and
(e) The Holder or its representatives have had an adequate opportunity to
ask questions and receive answers from the officers of the Company concerning,
among other matters, the Company, its management, its plans for the operation of
its business and potential additional acquisitions.
12. "MARKET STAND-OFF" AGREEMENT; AGREEMENT TO FURNISH INFORMATION. The
Holder hereby agrees that it shall not sell or otherwise transfer or dispose of
any Common Stock (or other securities) of the Company held by it (other than
those included in the registration) for a period of at least one hundred eighty
(180) days following the effective date of the Initial Public Offering of the
Company filed under the Securities Act, or as determined by the underwriter in
connection with such Initial Public Offering. The Holder further agrees to join
in or abide by any market stand-off agreement for a minimum of 180 days as
proposed by any underwriter in connection with a registration statement under
the Securities Act whereby Registrable Securities are offered for sale. The
Holder agrees to execute and deliver such other agreements as may be reasonably
requested by the Company or the underwriter which are consistent with the
foregoing and which are necessary to give further effect thereto. In addition,
if requested by the Company or the representative of the underwriters of Common
Stock (or other securities) of the Company, the Holder shall provide, within ten
(10) days of such request, such information as may be required by the Company or
such
8.
<PAGE>
representative in connection with the completion of any public offering of
the Company's securities pursuant to a registration statement filed under the
Securities Act. The obligations described in this Section 12 shall not apply to
a registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the Common Stock (or other
securities) subject to the foregoing restriction until the end of said period.
13. REGISTRATION.
(a) INCIDENTAL REGISTRATION AND QUALIFICATION. If the Company or any
security holder of the Company, other than the Holder, proposes to register any
securities of the Company under the Securities Act on any registration form
(otherwise than for the registration of securities to be offered and sold by the
Company pursuant to (i) an employee benefit plan, (ii) a dividend or interest
reinvestment plan, or (iii) mergers, consolidations and acquisitions of assets),
then not less than ninety (90) days prior to each such registration the Company
shall give to the Holder written notice of such proposal which shall describe in
detail the proposed registration and distribution and, upon the written request
of the Holder furnished within thirty (30) days after the date of any such
notice, proceed to include in such registration the shares subject to this
Warrant or issued upon exercise hereof ("PIGGY-BACK SHARES") as have been
requested by the Holder to be included in such registration. The Company will in
each instance use its best efforts to cause all such Piggy-Back Shares to be
registered under the Securities Act and qualified under the securities or blue
sky laws of any jurisdiction requested by a prospective seller, all to the
extent necessary to permit the sale or other disposition thereof (in the manner
stated in such request) by a prospective seller of the securities so registered.
If the managing underwriter advises the Company in writing that, in its
opinion, the inclusion of the Piggy-Back Shares with the securities being
registered by the Company and other prospective sellers would materially
adversely affect the distribution of all such securities, then the Company and
each prospective seller including the Holder may sell that proportion of the
shares of Common Stock to be sold in the proposed distribution which the number
of shares of Common Stock proposed to be sold by such prospective seller bears
to the aggregate number of shares of Common Stock proposed to be sold by all
prospective sellers (including the Company).
If the Holder has requested shares of Common Stock to be included in a
registration pursuant to this Section, the Holder agrees to (i) the selection by
the Company or such other security holder of the underwriter to manage such
registration and (ii) execute an underwriting agreement with such underwriter
that is in customary form. Nothing in this Section shall be deemed to require
the Company to proceed with any registration of its securities after giving the
notice as provided herein; provided, however, that the Company shall pay all
expenses incurred pursuant to such notice in accordance with Section 13(c).
(b) REGISTRATION AND QUALIFICATION PROCEDURES. Whenever the Company is
required by this Section to effect the registration of any Piggy-Back Shares
under the Securities Act, the Company will, as expeditiously as is possible,
take such steps as are necessary or
9.
<PAGE>
appropriate to prepare for a registration or qualification of its securities,
including, without limitation, preparing and filing with the Securities and
Exchange Commission (the "SEC") a registration statement, and amendments and
supplements thereto, furnishing to the Holder sufficient copies of prospectuses,
preparing and filing registrations under the blue sky laws of applicable
jurisdictions, entering into and performing underwriting agreements, keeping the
Holder advised as to the progress of the steps being taken and otherwise taking
such actions in cooperation with the Holder as are customarily taken or required
in connection with the public registration and sale of securities. The Company
and the Holder shall cooperate with each other in supplying such information as
may be necessary for any of such parties to complete and file any information
reporting forms presently or hereafter required by the SEC or any commissioner
or other authority administering the blue sky or securities laws of any
jurisdiction where shares of Common Stock are proposed to be sold pursuant to
this Section.
(c) ALLOCATION OF EXPENSES. If the Company is required by the provisions of
this Section to use its best efforts to effect the registration or qualification
under the Securities Act or any state securities or blue sky laws of any
Piggy-Back Shares, the Company shall pay all professional fees (including the
costs and expenses incurred by such professionals), all expenses and all
registration fees in connection therewith.
(d) INDEMNIFICATION. In connection with any registration or qualification
of securities under this Section, the Company agrees to indemnify the Holder and
each underwriter thereof, including each Person, if any, who controls the Holder
or underwriter within the meaning of Section 15 of the Securities Act, against
all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation and the costs, fees and expenses of legal counsel) caused
by any untrue, or alleged untrue, statement of a material fact contained in any
registration statement, preliminary prospectus, prospectus or notification or
offering circular (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or caused by any omission, or
alleged omission, to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or expenses are caused by any untrue
statement or alleged untrue statement or omission or alleged omission based upon
information furnished in writing to the Company by the Holder or underwriter
expressly for use therein. The Company and each officer, director and
controlling Person of the Company shall be indemnified respectively by the
Holder for all such losses, claims, damages, liabilities and expenses (including
the costs of reasonable investigation and the costs, fees and expenses of legal
counsel) caused by any such untrue, or alleged untrue, statement or any such
omission or alleged omission, based upon information furnished in writing to the
Company by the Holder expressly for use therein.
The indemnifying party shall be entitled to participate in and, to the
extent it may wish, jointly with any other indemnifying party, to assume the
defense of such action at its own expense, with counsel chosen by it and
satisfactory to such indemnified party. The indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party unless
(i) the indemnifying party agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel reasonably satisfactory
to the indemnified party or (iii) the named parties to any such action
10.
<PAGE>
(including any impleaded parties) have been advised by such counsel that
representation of such indemnified party and the indemnifying party by the same
counsel would be inappropriate under applicable standards of professional
conduct (in which case the indemnifying party shall not have the right to assume
the defense of such action on behalf of such indemnified party). No indemnifying
party shall be liable for any settlement entered into without its consent, which
consent shall not be withheld unreasonably.
If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages, liabilities, expenses or actions in respect thereof referred to
herein, then each indemnifying party shall in lieu of indemnifying such
indemnified party contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities, expenses or
actions in such proportion as is appropriate to reflect the relative fault of
the Company, on the one hand, and the Holder, on the other, in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities, expenses or actions as well as any other relevant equitable
considerations, including the failure to give the notice required hereunder. The
Company and the Holder hereof agree that it would not be just and equitable if
contribution pursuant to this Section were determined by any method of
allocation which did not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this Section, in no event shall the
amount contributed by the Holder exceed the net proceeds received by the Holder
from the sale of Common Stock to which such contribution claim relates. No
person guilty of fraudulent misrepresentations (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation.
(e) RULE 144 AND RULE 144A. After the Initial Public Offering of the
Company, the Company covenants that it will file all reports required to be
filed by it with the SEC, and that it will take such further action as the
Holder may reasonably request, all to the extent required from time to time to
enable the Holder to sell Piggy-Back Shares without registration under the
Securities Act pursuant to Rule 144 ("RULE 144") (or any similar rule then in
effect) promulgated by the SEC under the Securities Act. Upon the request of the
Holder, the Company will deliver to the Holder a notice stating whether it has
complied with such requirements. The Company covenants that it will provide to
the Holder or any prospective purchaser of Piggy-Back Shares the information
required to be delivered under paragraph (d)(4) of Rule 144A ("RULE 144A") (or
any similar rule then in effect) promulgated by the SEC under the Securities Act
in respect of a transaction qualifying for an exemption under Rule 144A and it
will take such further action as the Holder may reasonably request, all to the
extent required from time to time, to enable the Holder to sell this Warrant
without registration under the Securities Act pursuant to Rule 144A.
14. TAKE-ALONG RIGHTS. If Titan, the principal stockholder of the Company,
proposes any sale (other than in connection with a public offering of the
Company) of Common Stock or securities exchangeable or exercisable for or
convertible into Common Stock (a "SALE"), then it shall permit, and cause the
Proposed Purchaser (as hereinafter defined) to permit, the Holder to participate
as a seller in such Sale such that the Holder shall be entitled to sell a
percentage of the Piggy-Back Shares determined by multiplying the number of
shares of Common Stock (or other securities) that the proposed purchaser (a
"PROPOSED PURCHASER") is
11.
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willing to acquire in such Sale times the Holder's percentage ownership,
immediately prior to the Sale, of all outstanding Common Stock (assuming for
purposes hereof the full exercise of this Warrant). Titan shall give the Holder
written notice of any proposed Sale (the "SALE NOTICE") not less than forty-five
(45) days before such Sale is to take place. The Sale Notice shall set forth (i)
the name and address of the Proposed Purchaser, (ii) the number of shares of
Common Stock proposed to be transferred and the number of shares of Common Stock
issuable upon conversion, exercise or exchange of any other securities to be
transferred by Titan, and (iii) the proposed amount and form of consideration
and terms and conditions of payment offered by the Proposed Purchaser. If the
Holder desires to participate in the Sale, it shall notify Titan in writing
within thirty (30) days after receipt of the Sale Notice, which notice shall
state the number of Piggy-Back Shares that the Holder wishes to include in such
Sale. Titan shall cause the Proposed Purchaser to purchase from the Holder the
number of Piggy-Back Shares that the Holder elects to sell in such Sales at the
same price per share and otherwise on the same terms as the proposed Sale by
Titan.
15. PUT OPTION.
(a) COMPANY'S OBLIGATION TO PURCHASE SHARES. Upon written notice from the
Holder at any time after the fifth anniversary of the issuance of this Warrant,
the Company shall, within 90 days of the date of such notice, repurchase from
the Holder the Piggy-Back Shares held by the Holder for an amount equal to the
Repurchase Price as of the date of such notice (as hereinafter defined) times
the number of Piggy-Back Shares being repurchased. On the date of such
repurchase, the Holder shall surrender to the Company, certificates representing
the Piggy-Back Shares being repurchased, without being required to make any
representation or warranty (other than that the Holder has good and valid title
to the Piggy-Back Shares being repurchased free and clear of liens, claims,
encumbrances and restrictions of any kind), against payment therefor by wire
transfer to an account designated by the Holder.
The Holder may rescind such notice at any time prior to such repurchase
and, unless the Company by written notice to the Holder elects to proceed with
such repurchase on the terms set forth herein, the Holder shall not be obligated
to sell, and the Company shall not be obligated to purchase, the Piggy-Back
Shares pursuant to the provisions of this Section.
(b) DETERMINATION OF THE REPURCHASE PRICE. For purposes of this Section,
the Repurchase Price per share of Common Stock as of a date specified herein
(the "REPURCHASE PRICE") shall be equal to the quotient of the Fair Value (as
hereinafter defined) of the Company as of the date of such determination divided
by the number of shares of Common Stock outstanding on such date. "FAIR VALUE"
means the fair value of the appropriate security, property, assets, business or
entity (taking into account the value to such business or entity of any covenant
not to compete in favor thereof) as determined by an opinion of an independent
investment banking firm of national reputation selected by the Company and
reasonably acceptable to the Holder. In the case of any event which gives rise
to a requirement to determine Fair Value, the Company shall be responsible for
initiating the process by which Fair Value shall be determined as promptly as
practicable, but in any event within thirty (30) days following such event. Such
investment banking firm shall determine the Fair Value of the security,
property, assets, business or entity, as the case may be, in question and
deliver its opinion in writing to the Company and to the Holder. The fees and
expenses of any such determination made by such
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investment-banking firm shall be borne by the Company. In determining Fair
Value, no discount shall be imposed by reason of a minority ownership interest
or the illiquidity of the stock interest being valued.
16. SURVIVAL. The provisions of Sections 9, 10, 12, 13, 14 and 15 shall
survive the exercise of this Warrant and the surrender of this Warrant pursuant
to Section 3 hereof. The provisions of Section 10, 14 and 15 shall terminate
upon the closing of the Initial Public Offering of Common Stock pursuant to a
registration statement under the Securities Act.
17. NO PREEMPTIVE RIGHTS. The Holder agrees and acknowledges that it has no
preemptive rights or rights of first refusal to purchase from the Company any
shares of capital stock or other securities to be offered for sale or sold by
the Company.
18. LAWS APPLICABLE TO CONSTRUCTION. This Agreement has been executed on
the Company's behalf by its Chief Executive Officer or one of its officers, and
the Holder has hereunto set his/her hand as of the date and year first above
written. Construction of this Agreement shall be governed by the laws of the
State of California.
19. LEGENDS. Unless the shares of Common Stock underlying this Warrant have
been registered under the Securities Act, upon exercise of any part of the
Warrant, all certificates representing Warrant shares shall bear on the face
thereof substantially the following legend, insofar as is consistent with
California law:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT"). THE SHARES MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENT AND, IF AN EXEMPTION SHALL
BE APPLICABLE, THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED UNDER THE 1933 ACT.
SUREBEAM CORPORATION HOLDER:
By:
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Federal ID No.:
Address:
13.
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The Titan Corporation hereby executes this Warrant for the purpose of
agreeing to be bound by Section 13 of this Warrant.
THE TITAN CORPORATION
By:
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14.
<PAGE>
SCHEDULE A
FORM OF EXERCISE NOTICE
The undersigned registered Holder of the accompanying Warrant hereby elects to:
[ ] Exercise the rights thereunder to purchase _________ shares of
Common Stock of Surebeam Corporation (the "Company") and has
enclosed herewith in payment of the portion of the Purchase Price
therefore a bank or certified check in such amount.
A certificate representing the Common Stock subject to the Exercise Notice
should be delivered to the undersigned at the address set forth below.
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Authorized Signature of Warrant Holder
Federal ID No.:
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Address:
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