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NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. NO SALE, TRANSFER OR OTHER DISPOSITION OF THIS WARRANT OR SAID
SHARES MAY BE EFFECTED WITHOUT (I) AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO, (II) AN OPINION OF COUNSEL FOR THE HOLDER THAT SUCH
REGISTRATION IS NOT REQUIRED OR (III) RECEIPT OF A NO-ACTION LETTER
FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT
REGISTRATION UNDER THE ACT IS NOT REQUIRED.
Void after 5:00 p.m., Utah Time
on January ___, 2003
SENTO CORPORATION
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
--------------------------
This certifies that, for value received, ____________________ (the
"PURCHASER") or registered assigns (the Purchaser or such assignee, as
applicable, being referred to herein as the "HOLDER"), is entitled, subject to
the provisions of that certain Subscription Agreement, dated as of February 1,
2000 between the Company and Purchaser (the "SUBSCRIPTION AGREEMENT"), to
_______________ (___) warrants, each such warrant entitling the Holder to
purchase one (1) share of the common stock, par value $0.25 per share (the
"COMMON STOCK"), of Sento Corporation, a Utah corporation (the "COMPANY"), at a
price of Six and 25/100 Dollars ($6.25) per share (the "EXERCISE PRICE") (such
warrants and this certificate evidencing such warrants being referred to herein,
collectively, as this "WARRANT"). The number of shares of Common Stock to be
received upon the exercise of this Warrant (the "WARRANT SHARES") and the
Exercise Price may be adjusted from time to time as hereinafter set forth. This
Warrant is issued in connection with a 7% Convertible Subordinated Debenture,
dated as of January ____, 2000, issued by the Company to Purchaser in the
original principal amount of $__________________ (the "DEBENTURE").
1. EXERCISE OF WARRANT. Subject to the provisions of Section 2
below, this Warrant may be exercised in whole (but not in part) at any time
or from time to time on or after the date hereof, but in any event no later
than 5:00 p.m., Utah time, on January _____, 2003, or if such date is a day
on which federal or state-chartered banking institutions in Utah are
authorized by law to close, then on the next succeeding day which shall not
be such a day. Such exercise shall be effective upon presentation and
surrender to the Company at its principal office or at the office of its
stock transfer agent, if any, of this Warrant with the duly executed Notice
of Exercise form set forth on Exhibit A (attached hereto and made
<PAGE>
a part hereof by this reference) (the "NOTICE OF EXERCISE") indicating
whether such exercise is being made in accordance with Section 1(a) or 1(b)
below and the form of payment necessary to comply with the provisions of such
Section. The number of Warrant Shares which may be purchased upon exercise of
this Warrant shall initially be equal to the number of warrants granted by
this Warrant as identified above, which number may be adjusted, if at all, in
accordance with Section 7 below. The Company may require the purchaser to
execute such further documents and make certain representations and
warranties as the Company deems necessary to ensure compliance with
exemptions from applicable federal and state securities laws as required by
Section 2 below.
(a) CASH PAYMENT UPON EXERCISE. If the Notice of Exercise
specifies that the exercise of this Warrant is made pursuant to this Section
1(a), then the Notice of Exercise shall be accompanied by payment, in cash or
by certified or official bank check, payable to the order of the Company, in
the amount of the Exercise Price for the number of the Warrant Shares,
together with all taxes applicable upon such exercise.
(b) CASHLESS EXERCISE. If the Notice of Exercise specifies
that the exercise of this Warrant is made pursuant to this Section 1(b), then
the Company shall deliver to Holder, without payment by Holder of any
Exercise Price or any cash or other consideration, that number of Warrant
Shares computed using the following formula:
Y(A-B)
X = ------
A
WHERE: X = the number of Warrant Shares to be issued
to the Holder pursuant to the exercise of
this Warrant pursuant to this Section 1(b);
Y = the number of Warrant Shares that may be
purchased upon the exercise of this Warrant;
A = the Market Price (as defined in the
Debenture) of one share of Common Stock; and
B = the Exercise Price per Warrant Share and
the amount of taxes per Warrant Share
payable upon the exercise of this Warrant or
the issuance of the Warrant Shares pursuant
to this Section 1(b) (assuming the full
issuance of the Warrant Shares that may be
purchased upon the exercise of this
Warrant).
2. COMPLIANCE WITH SECURITIES LAWS. This Warrant may not be
exercised by the Holder unless at the time of exercise (i) a registration
statement registering the Warrant Shares upon such exercise is effective
under the Securities Act of 1933, as amended (and together with the rules and
regulations promulgated thereunder, collectively, the "SECURITIES ACT"), or
the transaction in which such Warrant Shares are to be issued is exempted
from the application of the registration requirements of the Securities Act,
and (ii) the Warrant Shares have been registered or qualified under any
applicable state securities laws or an exemption from registration or
qualification is available under such laws. The Holder may have
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certain registration rights with respect to the Warrant Shares under the
Registration Rights Agreement dated as of _______________, 2000, between the
Purchaser and the Company (the "REGISTRATION RIGHTS AGREEMENT"), pursuant to
which the holder of Warrant Shares may, in certain limited circumstances,
obligate the Company to register or qualify such Warrant Shares under federal
or state securities laws. This Warrant may not be exercised so long as
Purchaser is in default under the representations, warranties or covenants of
this Warrant, the Debenture or the Subscription Agreement.
3. STOCK FULLY PAID; RESERVATION OF SHARES. All Warrant Shares
that may be issued upon the exercise of this Warrant shall, upon issuance, be
duly authorized, validly issued, fully paid and nonassessable, and free from
all taxes, liens and charges with respect to the issue thereof. The Company
hereby covenants and agrees that at all times during the period this Warrant
is exercisable it shall reserve from its authorized and unissued Common Stock
for issuance and delivery upon exercise of this Warrant such number of shares
of its Common Stock as shall be required for issuance and delivery upon
exercise of 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 upon the exercise of this Warrant.
4. FRACTIONAL SHARES. No fractional shares or stock representing
fractional shares shall be issued upon the exercise of this Warrant. In lieu
of any fractional shares which would otherwise be issuable, the Company
shall, in its sole discretion, either (i) pay cash equal to the product of
such fraction multiplied by the fair market value of one share of Common
Stock on the date of exercise, as determined in good faith by the Company's
Board of Directors or (ii) issue the next largest whole number of Warrant
Shares.
5. TRANSFER, EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT OR
CERTIFICATES.
(a) This Warrant may not be assigned or transferred except as
provided herein and in accordance with and subject to the provisions of the
Securities Act and any applicable state securities laws. Any purported
transfer or assignment made other than in accordance with this Section 5 and
Section 9 hereof shall be null and void and of no force and effect.
(b) This Warrant shall be transferable only upon the receipt
of an opinion of counsel satisfactory to the Company to the effect that (i)
the transferee is a person to whom the Warrant may be legally transferred
without registration under the Securities Act or any state securities laws;
and (ii) such transfer will not violate any applicable law or governmental
rule or regulation including, without limitation, any applicable federal or
state securities law. Prior to any transfer or assignment of this Warrant,
the assignor or transferor shall reimburse the Company for its reasonable
expenses, including attorneys' fees, incurred in connection with the transfer
or assignment.
(c) Any assignment permitted hereunder shall be made by
surrender of this Warrant to the Company at its principal office with the
duly executed Assignment Form set forth on Exhibit B attached hereto and made
a part hereof by this reference and funds sufficient to pay any transfer tax.
In such event, the Company shall, without charge, execute and deliver a new
Warrant in the name of the assignee named in such Assignment Form, and this
Warrant shall promptly be cancelled. This Warrant may be divided or combined
with other Warrants which carry the same rights upon presentation thereof at
the principal office of the Company together with a written notice signed by
the Holder thereof,
3
<PAGE>
specifying the names and denominations in which new Warrants are to be
issued. The terms "Warrant" and "Warrants" as used herein include any Warrants
in substitution for or replacement of this Warrant, or into which this Warrant
may be divided or exchanged.
(d) Upon receipt by the Company of evidence satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate representing Warrant Shares issued upon the exercise hereof and,
in the case of any such loss, theft or destruction, upon receipt of an
indemnity reasonably satisfactory to the Company, and, in the case of any
such mutilation, upon surrender and cancellation of this Warrant or such
stock certificate, the Company will execute and deliver a new Warrant or
stock certificate of like tenor and date, and any such lost, stolen,
destroyed or mutilated Warrant or stock certificate shall thereupon become
void.
Each Holder of this Warrant, the Warrant Shares or any other
security issued or issuable upon exercise of this Warrant shall indemnify and
hold harmless the Company, its directors and officers, and each person, if
any, who controls the Company, against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such director,
officer or any such person may become subject under the Securities Act or any
statute or common law, insofar as such losses, claims, damages or
liabilities, or actions in respect thereof, arise out of or are based upon
the disposition by such Holder of the Warrant, the Warrant Shares or other
such securities in violation of the terms of this Warrant.
6. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof,
be entitled to any rights of a shareholder in the Company, either at law or
equity, and the rights of the Holder by virtue hereof are limited to those
expressed in this Warrant and are not enforceable against the Company except
to the extent set forth herein.
7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The number
and kind of securities issuable upon the exercise of this Warrant and the
Exercise Price of such securities shall be subject to adjustment from time to
time upon the happening of certain events as follows:
(a) SUBDIVISION OR COMBINATION OF COMMON Stock. If the Company
at any time subdivides (by any stock split, stock dividend or otherwise) one
or more classes of its outstanding shares of Common Stock into a greater
number of shares, or combines by reverse stock split or otherwise) one or
more classes of its outstanding shares of Common Stock into a smaller number
of shares, the number of Warrant Shares purchasable upon exercise of this
Warrant immediately prior thereto shall be adjusted so that the Holder of
this Warrant shall be entitled to receive the kind and number of Warrant
Shares or other securities of the Company which 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. If the Holder is entitled
to receive shares of two or more classes of capital stock of the Company
pursuant to the foregoing upon exercise of the Warrant, the Company shall
determine the allocation of the adjusted Exercise Price between the classes
of capital stock. After such allocation, the exercise privilege and the
Exercise Price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Section. 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. Such adjustment shall be made
successively whenever such a payment, subdivision, combination or
reclassification is made.
4
<PAGE>
(b) ADJUSTMENT IN EXERCISE PRICE. Except as set forth in
Section 7(c) below, whenever the number of Warrant Shares purchasable upon
the exercise of each Warrant is adjusted as provided in this Section, the
Exercise Price payable upon exercise of each Warrant shall be adjusted by
multiplying such Exercise Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of Warrant Shares
purchasable upon the exercise of each Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of Warrant
Shares purchasable immediately thereafter.
(c) RESET OF EXERCISE PRICE. If the Market Price (as defined
in the Debenture) of the Common Stock does not equal or exceed $6.00 per
share for any period of 20 consecutive trading days occurring during the
period between the date set forth on the signature page hereof and December
31, 2000, then the Exercise Price shall be equal to $5.00 from and after
December 31, 2000.
8. OFFICER'S CERTIFICATE. Whenever the Exercise Price or the
number of Warrant Shares issuable on exercise of this Warrant shall be
adjusted as required by the provisions of Section 7 hereof, the Company shall
forthwith file with its Secretary or an Assistant Secretary at its principal
office, and with its stock transfer agent, if any, an officer's certificate
showing the adjusted Exercise Price and number of Warrant Shares determined
as herein provided and setting forth in reasonable detail the facts requiring
such adjustment. Each such officer's certificate shall be made available at
all reasonable times for inspection by the Holder, and the Company shall,
forthwith after each such adjustment, deliver a copy of such certificate to
the Holder.
9. TRANSFER TO COMPLY WITH THE SECURITIES ACT.
(a) This Warrant and the Warrant Shares or any other security
issued or issuable upon exercise of this Warrant may not be sold, transferred
or otherwise disposed of except (i) as contemplated by the Registration
Rights Agreement or (ii) to a person who, in the opinion of counsel
reasonably satisfactory to the Company, is a person to whom this Warrant or
such Warrant Shares may legally be transferred pursuant to Section 5 hereof
without registration and without the delivery of a current prospectus under
the Securities Act with respect thereto and then only against receipt of an
agreement of such person to comply with the provisions of this Section 9 with
respect to any resale or other disposition of such securities unless, in the
opinion of such counsel, such agreement is not required.
(b) The Holder, by acceptance of this Warrant, agrees that the
Warrant Shares to be issued upon exercise hereof are being acquired for the
account of the Holder for investment and not with a view to, or for resale in
connection with, the distribution thereof and that the Holder will not offer,
sell or otherwise dispose of such Warrant Shares except under circumstances
which will not result in a violation of the Securities Act and all applicable
state securities laws. The Holder represents that the Holder has no present
intention of distributing or reselling the Warrant Shares.
(c) The Company may cause the following legend, or one of
similar substance, to be set forth on each certificate representing Warrant
Shares or any other security issued or issuable upon exercise of this
Warrant, unless counsel for the Company is of the opinion as to any such
certificate that such legend is unnecessary:
5
<PAGE>
THE SECURITIES OF THE COMPANY EVIDENCED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT OF 1933, AS AMENDED, AND VARIOUS APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR ASSIGNED OR A SECURITY INTEREST
CREATED THEREIN, UNLESS THE PURCHASE, TRANSFER, ASSIGNMENT,
PLEDGE OR GRANT OF SUCH SECURITY INTEREST COMPLIES WITH ALL
STATE AND FEDERAL SECURITIES LAWS (I.E., SUCH SHARES OF COMMON
STOCK ARE REGISTERED UNDER SUCH LAWS OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE THEREUNDER) AND UNLESS THE SELLER,
TRANSFEROR, ASSIGNOR, PLEDGOR OR GRANTOR OF SUCH SECURITY
INTEREST PROVIDES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT THE TRANSACTION CONTEMPLATED
WOULD NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
TRANSFERABILITY OF THE SECURITIES IS THEREFORE LIMITED AND
INVESTORS MUST BEAR THE ECONOMIC RISK OF THEIR INVESTMENT FOR
AN INDEFINITE PERIOD OF TIME.
10. GOVERNING LAW. This Warrant shall be governed by, and construed
in accordance with, the laws of the State of Utah applicable to contracts
entered into and to be performed wholly within such State.
11. MODIFICATION AND WAIVER. This Warrant and any provision hereof
may be modified, amended, waived or discharged only by an instrument in
writing signed by the party against which enforcement of the same is sought.
12. NOTICE. Notices and other communications to be given to the
Holder shall be delivered by hand or mailed, postage prepaid, to such address
as the Holder shall have designated by written notice to the Company as
provided in this Section. Notices or other communications to the Company
shall be deemed to have been sufficiently given if delivered by hand or
mailed postage prepaid to the Company at 808 East Utah Valley Drive, American
Fork, Utah 84003, or such other address as the Company shall have designated
by written notice to the Holder as provided in this Section. Notice by mail
shall be deemed given when deposited in the United States mail, postage
prepaid, as herein provided.
13. CONSTRUCTION. The descriptive headings of the several
paragraphs and sections of this Warrant are inserted for convenience only and
do not constitute a part of this Warrant. Unless otherwise indicated,
references to sections shall be construed as references to the corresponding
Sections of this Warrant.
6
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IN WITNESS WHEREOF, the Company has executed this Warrant effective as
of the _____ day of _____________, 2000.
SENTO CORPORATION, a Utah corporation
By:
-----------------------------------
Its:
----------------------------------
7
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EXHIBIT A
NOTICE OF EXERCISE
TO: SENTO CORPORATION (the "COMPANY"):
1. The undersigned holder of the attached warrant (the "WARRANT")
hereby elects to purchase the Warrant Shares (as defined in the Warrant)
pursuant to (Select (a) or (b) below):
_______ (a) Section 1(a) of the Warrant and the terms and conditions of
Initial the Warrant and tenders here with payment of the purchase price
Here of such shares in full; or
_______ (b) Section 1(b) of the Warrant and the terms and conditions of
Initial the Warrant.
Here
2. Please issue a certificate or certificates representing the
Warrant Shares in the name of the undersigned.
---------------
(DATE)
-------------------------------------
(SIGNATURE)
-------------------------------------
(PRINT OR TYPE NAME)
8
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EXHIBIT B
ASSIGNMENT FORM
Dated: ____________________
FOR VALUE RECEIVED, _____________________ hereby sells, assigns, and
transfers unto ______________________ (please type or print)
______________________________ (address) the right to purchase Common Stock
represented by the warrant attached hereto to the extent of _____________ shares
as to which such right is exercisable and does hereby irrevocably constitute and
appoint the Sento Corporation (the "COMPANY") and/or its transfer agent as
attorney to transfer the same on the books of the Company with full power of
substitution in the premises.
---------------------------------------
(SIGNATURE)
9
