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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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CURRENT REPORT
ON
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): April 4, 2000
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XCEED, INC.
(Exact name of registrant as specified in its charter)
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Delaware 0-13049 13-3006788
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation) Identification No.)
488 Madison Avenue, 3rd Floor, New York, New York 10022
(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 419-1200
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Not Applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Not Applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not Applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not Applicable.
ITEM 5. OTHER EVENTS
On April 4, 2000, Xceed, Inc. (the "Company") entered into an Agreement
(the "Agreement") with Peconic Fund, Inc. ("Peconic"), Leonardo, L.P.
("Leonardo") and HFTP Investment, L.L.C. ("HFTP"), a copy of which is attached
hereto as Exhibit 4.1(a) and is incorporated by reference herein in its
entirety. Peconic, Leonardo and HFTP are collectively referred to herein as the
"Investors." Pursuant to the Agreement, the Company issued to the Investors
warrants to purchase 1,350,000 shares of common stock of the Company at an
exercise price of $15.75 per share (the "Warrants"), subject to adjustment, as
set forth therein. A copy of the form of Warrant is attached hereto as Exhibit
4.1(b) and is incorporated by reference herein in its entirety. In exchange for
the Warrants, the Investors agreed to release and waive certain provisions of:
(i) that certain Registration Rights Agreement, dated as of January 13, 2000,
between the Company and the Investors (the "Registration Rights Agreement");
(ii) the Certificate of Designation, Preferences and Rights of Series A
Cumulative Convertible Preferred Stock of the Company dated as of January 13,
2000 (the "Certificate of Designation"); and (iii) that certain Subscription
Agreement, dated as of January 13, 2000, between the Company and the Investors
(the "Subscription Agreement"). Copies of the Registration Rights Agreement, the
Certificate of Designation and the Subscription Agreement were previously filed
with the Securities and Exchange Commission on Form 8-K on January 20, 2000
(File No. 000-13049).
The Company is making this Current Report on Form 8-K solely as a source of
information for its stockholders. The transactions resulting from the Agreement
did not give rise to any change of control of the Company.
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS
Not Applicable.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) and (b) Financial Statements. Not Applicable.
(c) Exhibits:
4.1(a) Agreement, dated April 4, 2000, by and among Xceed, Inc. (the
"Company"), Peconic Fund, Inc., Leonardo, L.P. and HFTP
Investment, L.L.C.
4.1(b) Form of Common Stock Purchase Warrant issued by Xceed, Inc. to
each of Peconic Fund, Inc., Leonardo, L.P. and HFTP Investment,
L.L.C. on April 4, 2000.
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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 thereunto duly authorized.
XCEED, INC.
(Registrant)
Date: April 4, 2000 /s/ Werner Haase
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Werner Haase, Chief Executive Officer
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Exhibit 4.1(a)
AGREEMENT
This Agreement (this "Agreement") is entered into as of April 4, 2000, by
and among Xceed, Inc. ("Xceed"), Peconic Fund, Ltd. ("Peconic"), Leonardo, L.P.
("Leonardo") and HFTP Investment, L.L.C. ("HFTP"). Peconic, Leonardo and HFTP
are collectively referred to herein as the "Investors."
WHEREAS, pursuant to the terms of a certain Subscription Agreement, dated
as of January 13, 2000 (the "Subscription Agreement"), Xceed issued to the
Investors: (a) an aggregate of 30,000 shares of Series A Cumulative Convertible
Preferred Stock (the "Series A Stock") pursuant to the terms of a Certificate of
Designation, Preferences and Rights of Series A Cumulative Convertible Preferred
Stock (the "Certificate of Designation"); and (b) warrants (the "Warrants") to
purchase up to 183,273 shares of common stock, par value $0.01 per share, of
Xceed (the "Common Stock");
WHEREAS, in connection with the foregoing, Xceed and the Investors entered
into a certain Registration Rights Agreement, dated as of January 13, 2000 (the
"Rights Agreement") pursuant to which Xceed agreed to file and filed a
registration statement (the "Registration Statement") with the Securities and
Exchange Commission (the "SEC") relating to the shares of Common Stock issuable
upon conversion of the Series A Stock and exercise of the Warrants; and
WHEREAS, in exchange for the agreement by Xceed hereunder to issue to the
Investors additional warrants to purchase up to 1,350,000 shares of Common
Stock, substantially in the form attached hereto as Exhibit A (the "New
Warrants"), the Investors have agreed, notwithstanding the provisions of the
Subscription Agreement, the Certificate of Designation, the Warrants and the
Rights Agreement (collectively, the "Transaction Documents"), to enter into this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, mutually agree, notwithstanding any of the provisions of
the Transaction Documents to the contrary, as follows:
1. Warrants. Xceed hereby agrees to issue to each Investor a New Warrant,
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substantially in the form attached hereto as Exhibit A, to purchase the number
of shares of Common Stock set forth across from such Investor's name on Exhibit
B hereto at an exercise price of $15.75 per share, which Warrants shall be
exercisable for a period of five (5) years commencing on the date hereof.
2. Release and Waiver. Each Investor hereby irrevocably and unconditionally
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releases and waives any and all rights, claims, privileges, demands, agreements,
liabilities, objections, allegations, actions and causes of action of any
nature, type or description whatsoever, whether at law or in equity, in contract
or tort, or otherwise know or unknown, suspected or unsuspected, foreseen or
unforeseen that such Investor (or any of its investors, predecessors,
successors, assigns, agents, attorneys, representatives or any other person or
entity who has or potentially could derive rights through such Investor) has or
has had up to and including the date hereof pursuant to
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Sections 2(a), 2(b) and 2(c) of the Rights Agreement, Section 2 of the
Certificate of Designation with respect to the dividends due and payable through
the date hereof, which the Investors and Xceed hereby agree shall be deemed to
have increased the Aggregate Value (as defined in the Certificate of
Designation) as of the date such dividends became due and payable, and Section
5.11 of the Subscription Agreement.
3. Definition of Registrable Securities; Registration of Shares; Waiver of
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Voting Rights. Xceed and the Investors hereby agree that the term "Registrable
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Securities" as defined in Section 1 of the Rights Agreement shall be deemed
hereinafter to include the shares of Common Stock issuable upon exercise of the
New Warrants (the "Underlying New Warrants Shares"). Xceed further agrees to
promptly, but in no event later than five business days after the date of this
Agreement, amend its registration statement on Form S-3 (File No. 333-33866)
filed with the SEC to include the Underlying New Warrant Shares. Each Investor
severally agrees with Xceed, for so long as it owns any Underlying New Warrant
Shares, to waive any voting rights it may have as a holder of such Underlying
New Warrant Shares.
4. Form 8-K. On or before 8:30 a.m., Eastern Daylight time, on April 5, 2000
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(the "8-K Deadline"), Xceed shall file a Current Report on Form 8-K (the "Form
8-K") with the SEC describing the terms of the transactions contemplated by this
Agreement and including as exhibits to the Form 8-K this Agreement and all the
exhibits hereto, in each case, in the form required by the Securities Exchange
Act of 1934, as amended.
5. Entire Agreement; Amendment. This Agreement contains the entire agreement
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between Xceed and the Investors with respect to the subject matter hereof. This
Agreement may not be amended, changed, modified or discharged, nor may any
provision hereof be waived, except by an instrument in writing, executed by or
on behalf of the party against whom enforcement of any amendment, waiver,
change, modification or discharge is sought. No course of conduct or dealing
shall be construed to modify, amend or otherwise affect any of the provisions
hereof. Except as provided herein, the Transaction Documents shall remain in
full force and effect unmodified hereby.
6. Headings. Section headings are used for convenience only and shall in no
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way affect the construction of this Agreement.
7. Binding Effect; Assignment. All the terms of this Agreement shall be
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binding upon and inure to the benefit of and be enforceable by the successors
and assigns of the parties hereto. No party may assign this Agreement without
the consent of the other parties. Any such assignment shall only be effective
if the assignee acknowledges and agrees in writing to be bound by the terms of
this Agreement.
8. Rights and Powers. Any party may proceed, either in its own name or
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otherwise, to protect and enforce any or all of its respective rights under this
Agreement in equity, at law or by other
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appropriate proceedings, whether for the specific performance of any covenants
or agreements contained in this Agreement or otherwise, and shall be entitled to
require and enforce the performance of all acts and things required to be
performed hereunder by the other party.
9. Controlling Law. This Agreement shall be governed by, and construed and
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enforced in accordance with, the laws of the State of Delaware, applicable to
contracts made and to be performed in such state.
10. Notices. All notices, request, demands and other communications hereunder
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shall be in writing and shall be deemed to have been duly given if physically
delivered, delivered by express mail or other expedited service or upon receipt
if mailed, postage prepaid, via first class mail as follows:
(a) To Xceed: Xceed Inc.
488 Madison Avenue
3rd Floor
New York, New York 10022
Attention: Werner G. Haase,
Chief Executive Officer
With a copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1333 New Hampshire Ave., N.W.
Suite 400
Washington, D.C. 20036
Attention: Victoria A. Baylin, Esq.
(b) To the Investors: Peconic Fund, Ltd.
c/o Ramius Capital Group, LLC
666 Third Avenue, 26th Floor
New York, New York 10017
Attention: Jeffrey M. Solomon
Leonardo, L.P.
c/o Angelo, Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, New York 10167
Attention: Ari Storch or Gary Wolf
HFTP Investment L.L.C.
c/o Promethean Asset Management L.L.C.
750 Lexington Avenue, 22nd Floor
New York, New York 10022
Attention: James F O'Brien, Jr.
With a copy to: Stroock & Stroock & Lavan LLP
180 Maiden Lane
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New York, New York 10038-4982
Attention: Adam J. Chill, Esq.
and/or to such other persons and addresses as any party hereto shall have
specified in writing to the other.
11. Severability. The invalidity or unenforceability of any provision of
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this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
12. Counterparts. This Agreement may be executed in counterparts, each of
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which shall be deemed an original, but all of which together shall constitute
one and the same Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
all as of the date first above written.
XCEED, INC.
By: /s/ Werner G. Hasse
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Name: Werner G. Haase
Title: Chief Executive Officer
PECONIC FUND, LTD.
By: RAMIUS CAPITAL GROUP, LLC
Its: Investment Advisor
By: /s/ Jeffrey M. Solomon
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Name: Jeffrey M. Solomon
Title: Managing Officer
LEONARDO, L.P.
By: ANGELO, GORDON & CO., L.P.
Its: General Partner
By: /s/ Fred Berger
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Name: Fred Berger
Title: Chief Financial Officer
HFTP INVESTMENT L.L.C.
By: PROMETHEAN ASSET MANAGEMENT, L.L.C.
Its: Investment Advisor
By: /s/ John Flogel
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Name: John Floegel
Title: Authorized Signatory
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Exhibit A
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
XCEED, INC.
Expires April 4, 2005
No. W-__ New York, New York
April 4, 2000
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth, the
undersigned, XCEED, INC., a Delaware corporation (together with its successors
and assigns, the "Issuer"), hereby certifies that
________________________________________
or its registered assigns is entitled to subscribe for and purchase, during the
period specified in this Warrant, up to _______ shares (subject to adjustment as
hereinafter provided) of the duly authorized, validly issued, fully paid and
non-assessable common stock, par value $0.01 per share, of the Issuer (the
"Common Stock"), at an exercise price per share equal to the Warrant Price then
in effect, subject, however, to the provisions and upon the terms and conditions
hereinafter set forth provided, however, that in no event shall the holder be
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entitled to exercise this Warrant for a number of shares of Warrant Stock in
excess of that number of shares of Warrant Stock which, upon giving effect to
such exercise, would cause the aggregate number of shares of Common Stock
beneficially owned by the holder and its affiliates to exceed 4.99% of the
outstanding shares of the Common Stock following such exercise. For purposes of
the foregoing proviso, the aggregate number of shares of Common Stock
beneficially owned by the holder and its affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to
which the determination of such proviso is being made, but shall exclude shares
of Common Stock which would be issuable upon (i) exercise of the
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remaining, unexercised Warrants beneficially owned by the holder and its
affiliates and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Issuer beneficially owned by the holder
and its affiliates (including, without limitation, any warrants, convertible
notes or preferred stock) subject to a limitation on conversion or exercise
analogous to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. For purposes of this Warrant, in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (1) the Issuer's most recent
Form 10-Q, Form 10-K or other public filing with the Securities and Exchange
Commission, as the case may be, (2) a more recent public announcement by the
Issuer, or (3) any other notice by the Issuer or its transfer agent setting
forth the number of shares of Common Stock outstanding. Upon the written request
of any holder, the Issuer shall promptly, but in no event later than one (1)
business day following the receipt of such notice, confirm in writing to any
such holder the number of shares of Common Stock then outstanding. In any case,
the number of outstanding shares of Common Stock shall be determined after
giving effect to conversions or exercise of securities of the Issuer convertible
or exercisable for Common Stock and exercise of Warrants by such holder and its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported. Capitalized terms used in this Warrant and not
otherwise defined herein shall have the respective meanings specified in Section
7 hereof.
1. Term. The right to subscribe for and purchase shares of Warrant Stock
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represented hereby shall commence on the date of issuance of this Warrant and
shall expire at 5:00 p.m., New York City time, on April 4, 2005 (such period
being the "Term"). Prior to the end of the Term, the Issuer will not
intentionally or knowingly take any action which would terminate the Warrants.
2. Method of Exercise; Payment; Issuance of New Warrant; Registration;
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Transfer and Exchange.
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(a) Time of Exercise. The purchase rights represented by this Warrant may
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be exercised in whole or in part at any time and from time to time during the
Term.
(b) Method of Exercise. The Holder hereof may exercise this Warrant, in
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whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal executive office of the Issuer,
and by the payment to the Issuer of an amount of consideration therefor equal to
the Warrant Price in effect on the date of such exercise multiplied by the
number of shares of Warrant Stock with respect to which this Warrant is then
being exercised, payable at such Holder's election (i) by certified or official
bank check, (ii) if the Per Share Market Value is greater than the Warrant Price
(at the date of calculation as set forth below), in lieu of exercising this
Warrant for cash, by receiving shares equal to the value (as determined below)
of this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal executive office of the Company together with the
properly endorsed Subscription Form annexed hereto and notice of such election
in which event the Company shall issue to the Warrantholder a number of shares
of Common Stock computed using the following formula:
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X = Y(A-B)
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A
Where X = the number of shares of Common Stock to be issued to the Holder
Y = the number of shares of Common Stock purchasable under the
Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being canceled (at the
date of such calculation)
A = the Per Share Market Value of one share of the Common Stock
(at the date of such calculation)
B = Warrant Price (as adjusted to the date of such calculation),
or (iii) by a combination of the foregoing methods of payment selected by the
Holder of this Warrant. In any case where the consideration payable upon such
exercise is being paid in whole or in part pursuant to the provisions of clause
(ii) of this subsection (b), such exercise shall be accompanied by written
notice from the Holder of this Warrant specifying the manner of payment thereof
and containing a calculation showing the number of shares of Warrant Stock with
respect to which rights are being surrendered thereunder and the net number of
shares to be issued after giving effect to such surrender.
(c) Issuance of Stock Certificates. In the event of any exercise of this
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Warrant in accordance with and subject to the terms and conditions hereof, (i)
certificates for the shares of Warrant Stock so purchased shall be dated the
date of such exercise and the Issuer shall use its best efforts to deliver to
the Holder hereof within a reasonable time, not exceeding three Trading Days
after such exercise, and the Holder hereof shall be deemed for all purposes to
be the Holder of the shares of Warrant Stock so purchased as of the date of such
exercise, and (ii) unless this Warrant has expired, a new Warrant representing
the number of shares of Warrant Stock, if any, with respect to which this
Warrant shall not then have been exercised (less any amount thereof which shall
have been cancelled in payment or partial payment of the Warrant Price as
hereinabove provided) shall also be issued to the Holder hereof at the Issuer's
expense within such time.
(d) Registration. The Warrants shall be numbered and shall be registered
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in a Warrant register (the "Warrant Register"). The Issuer shall be entitled to
treat the registered holder of any Warrant on the Warrant Register (the
"Holder") as the owner in fact thereof for all purposes and shall not be bound
to recognize any equitable or other claim to or interest in such Warrant on the
part of any other person, and shall not be liable for any registration of
transfer of Warrants which are registered or are to be registered in the name of
a fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer, or with such knowledge of such facts that its
participation therein amounts to bad faith. The Warrants shall be registered
initially in
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the name of Holder as set forth in the first sentence of this Warrant in such
denominations as Holder may request in writing to the Issuer.
(e) Transfer of Warrant. Until such time as the shares of Warrant Stock
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issuable hereunder shall have been the subject of registration and are covered
by an effective registration statement under the Securities Act, or there is
available (in the opinion of counsel to the Issuer or counsel to the Holder,
acceptable to the Issuer) an exemption from the registration requirements of the
Securities Act, the Warrants shall not be sold, transferred, assigned or
hypothecated, in part or in whole (other than by will or pursuant to the laws of
descent and distribution), and then only to registered assigns of the Holder and
thereafter only upon delivery thereof duly endorsed by the Holder or by his duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer. In all cases of transfer by an
attorney, the original power of attorney, duly approved, or an official copy
thereof, duly certified, shall be deposited with the Issuer. In case of
transfer by executors, administrators, guardians or other legal representatives,
duly authenticated evidence of their authority shall be produced, and may be
required to be deposited with the Issuer in its discretion. Upon any
registration of transfer, the Issuer shall deliver a new Warrant or Warrants to
the persons entitled thereto. The Warrants may be exchanged at the option of
the Holder thereof for another Warrant, or other Warrants, of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of shares of Common Stock upon surrender to the Issuer or
its duly authorized agent. Notwithstanding the foregoing, the Issuer shall have
no obligation to cause Warrants to be transferred on its books to any person if
such transfer would violate the Securities Act.
(f) Compliance with Securities Laws.
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(i) The Holder of this Warrant, by acceptance hereof, acknowledges
that neither this Warrant nor the shares of Warrant Stock to be issued upon
exercise hereof have been registered under the Securities Act and have been
offered and sold by the Issuer in reliance upon exemption from the
registration provisions of the Securities Act and the Holder represents
that such securities are being acquired solely for the Holder's own account
and not as a nominee for any other party, and for investment, and that the
Holder will not offer, sell or otherwise dispose of this Warrant or any
shares of Warrant Stock to be issued upon exercise hereof except pursuant
to an effective registration statement, or an exemption from registration,
under the Securities Act and any applicable state securities laws.
(ii) Except as provided in paragraph (iii) below, this Warrant and all
certificates representing shares of Warrant Stock issued upon exercise
hereof shall be stamped or imprinted with a legend in substantially the
following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
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PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
(iii) The restrictions imposed by this subsection (f) upon the
transfer of this Warrant and the shares of Warrant Stock to be purchased
upon exercise hereof shall terminate (A) when such securities shall have
been effectively registered under the Securities Act, (B) upon the Issuer's
receipt of an opinion of counsel, in form and substance reasonably
satisfactory to the Issuer, addressed to the Issuer to the effect that such
restrictions are no longer required to ensure compliance with the
Securities Act or (C) upon the Issuer's receipt of other evidence
reasonably satisfactory to the Issuer that such registration is not
required. Whenever such restrictions shall cease and terminate as to any
such securities, the Holder thereof shall be entitled to receive from the
Issuer (or its transfer agent and registrar), without expense (other than
applicable transfer taxes, if any), new Warrants (or, in the case of shares
of Warrant Stock, new stock certificates) of like tenor not bearing the
applicable legends required by paragraph (ii) above relating to the
Securities Act and state securities laws.
(g) Continuing Rights of Holder. The Issuer will, at the time of or at any
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time after each exercise of this Warrant, upon the request of the Holder hereof
or of any shares of Warrant Stock issued upon such exercise, acknowledge in
writing the extent, if any, of its continuing obligation to afford to such
Holder all rights to which such Holder shall continue to be entitled after such
exercise in accordance with the terms of this Warrant, provided that if any such
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Holder shall fail to make any such request, the failure shall not affect the
continuing obligation of the Issuer to afford such rights to such Holder.
3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.
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(a) Stock Fully Paid. The Issuer represents, warrants, covenants and
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agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise hereunder will, upon issuance and payment in
accordance with the terms hereof, be duly authorized, validly issued, fully paid
and non-assessable and free from all taxes, liens and charges created by or
through Issuer. The Issuer further covenants and agrees that during the period
within which this Warrant may be exercised, the Issuer will at all times have
authorized and reserved for the purpose of the issue upon exercise of this
Warrant a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant.
(b) Payment of Taxes. The Issuer will pay all documentary stamp taxes, if any,
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attributable to the issuance of Warrant Stock; provided, however, that the
Issuer shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue or delivery of any certificates
for Warrant Stock in a name other than that of the Holder of Warrants in respect
of which such Warrant Stock is issued.
(c) Reservation. If any shares of Common Stock required to be reserved for
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issuance upon exercise of this Warrant or as otherwise provided hereunder
require registration or
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qualification with any governmental authority under any federal or state law
before such shares may be so issued, the Issuer will in good faith use its best
efforts as expeditiously as possible at its expense to cause such shares to be
duly registered or qualified. The transfer agent for the Common Stock (the
"Transfer Agent"), and every subsequent transfer agent, if any, for the Warrant
Stock will be irrevocably authorized and directed at all times until the end of
the Term to reserve such number of authorized and unissued shares of Common
Stock as shall be required for such purpose. The Issuer will keep a copy of this
Agreement on file with the Transfer Agent and with every subsequent transfer
agent for the Issuer's securities issuable upon the exercise of the Warrants.
The Issuer will supply the Transfer Agent or any subsequent transfer agent with
duly executed certificates for such purpose and will itself provide or otherwise
make available any cash which may be distributable as provided in Section 6 of
this Agreement. All Warrants surrendered in the exercise of the rights thereby
evidenced shall be canceled, and such canceled Warrants shall constitute
sufficient evidence of the number of Shares that have been issued upon the
exercise of such Warrants. No shares of Common Stock shall be subject to
reservation in respect of unexercised Warrants subsequent to the end of the
Term. If the Issuer shall list any shares of Common Stock on any securities
exchange or market it will, at its expense, list thereon, maintain and increase
when necessary such listing, of, all shares of Warrant Stock from time to time
issued upon exercise of this Warrant or as otherwise provided hereunder, and, to
the extent permissible under the applicable securities exchange rules, all
unissued shares of Warrant Stock which are at any time issuable hereunder, so
long as any shares of Common Stock shall be so listed. The Issuer will also so
list on each securities exchange or market, and will maintain such listing of,
any other securities which the Holder of this Warrant shall be entitled to
receive upon the exercise of this Warrant if at the time any securities of the
same class shall be listed on such securities exchange or market by the Issuer.
(d) Covenants. The Issuer shall not by any action including, without
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limitation, amending the certificate of incorporation or the by-laws of the
Issuer, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting the generality of
the foregoing, the Issuer will (i) not permit the par value, if any, of its
Common Stock to exceed the then effective Warrant Price, (ii) not amend or
modify any provision of the certificate of incorporation or by-laws of the
Issuer in any manner that would adversely affect in any way the powers,
preferences or relative participating, optional or other special rights of the
Common Stock or which would adversely affect the rights of the Holders of the
Warrants, (iii) take all such action as may be reasonably necessary in order
that the Issuer may validly and legally issue fully paid and nonassessable
shares of Common Stock, free and clear of any liens, claims, encumbrances and
restrictions (other than as provided herein) upon the exercise of this Warrant,
and (iv) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
reasonably necessary to enable the Issuer to perform its obligations under this
Warrant.
(e) Loss, Theft, Destruction of Warrants. Upon receipt of evidence
------------------------------------
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the
6
<PAGE>
case of any such loss, theft or destruction, upon receipt of indemnity or
security satisfactory to the Issuer or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Issuer will make and deliver, in
lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like
tenor and representing the right to purchase the same number of shares of Common
Stock.
(f) Rights and Obligations under the Registration Rights Agreement. This
--------------------------------------------------------------
Warrant and the Warrant Stock shall be deemed to be entitled to the benefits and
subject to the terms of the Registration Rights Agreement, dated as of January
13, 2000, between the Issuer and the Holders listed on the signature pages
thereof (as amended from time to time, the "Registration Rights Agreement").
The Issuer shall keep or cause to be kept a copy of the Registration Rights
Agreement, and any amendments thereto, at its principal executive office and
shall furnish, without charge, copies thereof to the Holder upon request.
4. Adjustment of Warrant Price and Warrant Share Number. The number and
----------------------------------------------------
kind of Securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the happening of
certain events as follows:
(a) Recapitalization, Reorganization, Reclassification, Consolidation,
------------------------------------------------------------------
Merger or Sale.
- --------------
(i) In case the Issuer after the Original Issue Date shall do any of
the following (each, a "Triggering Event"): (a) consolidate with or merge
into any other Person and the Issuer shall not be the continuing or
surviving corporation of such consolidation or merger, or (b) permit any
other Person to consolidate with or merge into the Issuer and the Issuer
shall be the continuing or surviving Person but, in connection with such
consolidation or merger, any Capital Stock of the Issuer shall be changed
into or exchanged for Securities of any other Person or cash or any other
property, or (c) transfer all or substantially all of its properties or
assets to any other Person, or (d) effect a capital reorganization or
reclassification of its Capital Stock, then, and in the case of each such
Triggering Event, proper provision shall be made so that, upon the basis
and the terms and in the manner provided in this Warrant, the Holder of
this Warrant shall be entitled, upon the exercise hereof at any time after
the consummation of such Triggering Event, to the extent this Warrant is
not exercised prior to such Triggering Event, or is redeemed in connection
with such Triggering Event, to receive at the Warrant Price in effect at
the time immediately prior to the consummation of such Triggering Event in
lieu of the Common Stock issuable upon such exercise of this Warrant prior
to such Triggering Event, the Securities, cash and property to which such
Holder would have been entitled upon the consummation of such Triggering
Event if such Holder had exercised the rights represented by this Warrant
immediately prior thereto, subject to adjustments and increases (subsequent
to such corporate action) as nearly equivalent as possible to the
adjustments provided for in Section 4 hereof.
(ii) Notwithstanding anything contained in this Warrant to the
contrary, the Issuer will not effect any Triggering Event unless, prior to
the consummation thereof, each Person (other than the Issuer) which may be
required to deliver any Securities, cash or property upon the exercise of
this Warrant as provided herein shall assume, by written
7
<PAGE>
instrument delivered to, and reasonably satisfactory to, the Holder of this
Warrant: (A) the obligations of the Issuer under this Warrant (and if the
Issuer shall survive the consummation of such Triggering Event, such
assumption shall be in addition to, and shall not release the Issuer from,
any continuing obligations of the Issuer under this Warrant); and (B) the
obligation to deliver to such Holder such shares of Securities, cash or
property as, in accordance with the foregoing provisions of this subsection
(a).
(b) Subdivision or Combination of Shares. If the Issuer, at any time while
------------------------------------
this Warrant is outstanding, shall subdivide or combine any shares of Common
Stock, (i) in case of subdivision of shares, the Warrant Price shall be
proportionately reduced (as at the effective date of such subdivision or, if the
Issuer shall take a record of Holders of its Common Stock for the purpose of so
subdividing, as at the applicable record date, whichever is earlier) to reflect
the increase in the total number of shares of Common Stock outstanding as a
result of such subdivision, or (ii) in the case of a combination of shares, the
Warrant Price shall be proportionately increased (as at the effective date of
such combination or, if the Issuer shall take a record of Holders of its Common
Stock for the purpose of so combining, as at the applicable record date,
whichever is earlier) to reflect the reduction in the total number of shares of
Common Stock outstanding as a result of such combination.
(c) Certain Dividends and Distributions. If the Issuer, at any time while
-----------------------------------
this Warrant is outstanding, shall:
(i) Stock Dividends. Pay a dividend in, or make any other
---------------
distribution to its stockholders (without consideration therefor) of,
shares of Common Stock, the Warrant Price shall be adjusted, as at the date
the Issuer shall take a record of the Holders of the Issuer's Capital Stock
for the purpose of receiving such dividend or other distribution (or if no
such record is taken, as at the date of such payment or other
distribution), to that price determined by multiplying the Warrant Price in
effect immediately prior to such record date (or if no such record is
taken, then immediately prior to such payment or other distribution), by a
fraction (1) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or
distribution, and (2) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend or
distribution (plus in the event that the Issuer paid cash for fractional
shares, the number of additional shares which would have been outstanding
had the Issuer issued fractional shares in connection with said dividends);
or
(ii) Other Dividends. Pay a dividend on, or make any distribution of
---------------
its assets upon or with respect to (including, but not limited to, a
distribution of its property as a dividend in liquidation or partial
liquidation or by way of return of capital), the Common Stock (other than
as described in clause (i) of this subsection (c)), or in the event that
the Issuer shall offer options or rights to subscribe for shares of Common
Stock, or issue any Common Stock Equivalents, to all of its holders of
Common Stock, then on the record date for such payment, distribution or
offer or, in the absence of a record date, on the date of such payment,
distribution or offer, the Holder shall receive what the Holder would have
received had it exercised this Warrant in full immediately prior to the
record date of
8
<PAGE>
such payment, distribution or offer or, in the absence of a record date,
immediately prior to the date of such payment, distribution or offer.
(d) Issuance of Additional Shares of Common Stock. If the Issuer, at any
---------------------------------------------
time while this Warrant is outstanding, shall issue any Additional Shares of
Common Stock (otherwise than as provided in the foregoing subsections (a)
through (c) of this Section 4), at a price per share less than the lower of (x)
the Warrant Price then in effect or (y) the Per Share Market Value then in
effect or without consideration, then the Warrant Price upon each such issuance
shall be adjusted to the price (rounded to the nearest cent) determined by
multiplying the Warrant Price then in effect by a fraction:
(i) the numerator of which shall be equal to the sum of (A) the number
of shares of Common Stock outstanding immediately prior to the issuance of
such Additional Shares of Common Stock plus (B) the number of shares of
Common Stock (rounded to the nearest whole share) which the aggregate
consideration for the total number of such Additional Shares of Common
Stock so issued would purchase at a price per share equal to the greater of
the Per Share Market Value then in effect and the Warrant Price then in
effect; and
(ii) the denominator of which shall be equal to the number of shares
of Common Stock outstanding immediately after the issuance of such
Additional Shares of Common Stock.
The provisions of this subsection (d) shall not apply under any of the
circumstances for which an adjustment is provided in subsections (a), (b) or (c)
of this Section 4. No adjustment of the Warrant Price shall be made under this
subsection (d) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to any Common Stock Equivalent if upon the issuance of such
Common Stock Equivalent (x) any adjustment shall have been made pursuant to
subsection (e) of this Section 4 or (y) no adjustment was required pursuant to
subsection (e) of this Section 4. No adjustment of the Warrant Price shall be
made under this subsection (d) in an amount less than $.01 per share, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment, if any, which together with
any adjustments so carried forward shall amount to $.01 per share or more,
provided that upon any adjustment of the Warrant Price as a result of any
dividend or distribution payable in Common Stock or Convertible Securities or
the reclassification, subdivision or combination of Common Stock into a greater
or smaller number of shares, the foregoing figure of $.01 per share (or such
figure as last adjusted) shall be adjusted (to the nearest one-half cent) in
proportion to the adjustment in the Warrant Price.
(e) Issuance of Common Stock Equivalents. If the Issuer, at any time while
------------------------------------
this Warrant is outstanding, shall issue any Common Stock Equivalent and the
price per share for which Additional Shares of Common Stock may be issuable
thereafter pursuant to such Common Stock Equivalent shall be less than the lower
of (w) the Warrant Price then in effect or (x) the Per Share Market Value then
in effect, or if, after any such issuance of Common Stock Equivalents, the price
per share for which Additional Shares of Common Stock may be issuable thereafter
is amended or adjusted, and such price as so amended shall be less than the
lower of (y) the
9
<PAGE>
Warrant Price or (z) the Per Share Market Value in effect at the time of such
amendment, then the Warrant Price upon each such issuance or amendment shall be
adjusted as provided in the first sentence of subsection (d) of this Section 4
on the basis that (1) the maximum number of Additional Shares of Common Stock
issuable pursuant to all such Common Stock Equivalents shall be deemed to have
been issued (whether or not such Common Stock Equivalents are actually then
exercisable, convertible or exchangeable in whole or in part) as of the earlier
of (A) the date on which the Issuer shall enter into a firm contract for the
issuance of such Common Stock Equivalent, or (B) the date of actual issuance of
such Common Stock Equivalent, and (2) the aggregate consideration for such
maximum number of Additional Shares of Common Stock shall be deemed to be the
minimum consideration received or receivable by the Issuer for the issuance of
such Additional Shares of Common Stock pursuant to such Common Stock Equivalent.
No adjustment of the Warrant Price shall be made under this subsection (e) upon
the issuance of any Convertible Security which is issued pursuant to the
exercise of any warrants or other subscription or purchase rights therefor, if
any adjustment shall previously have been made in the Warrant Price then in
effect upon the issuance of such warrants or other rights pursuant to this
subsection (e). If no adjustment is required under this subsection (e) upon
issuance of any Common Stock Equivalent or once an adjustment is made under this
subsection (e) based upon the Per Share Market Value in effect on the date of
such adjustment, no further adjustment shall be made under this subsection (e)
based solely upon a change in the Per Share Market Value after such date.
(f) Purchase of Common Stock by the Issuer. If the Issuer at any time
--------------------------------------
while this Warrant is outstanding shall, directly or indirectly through a
Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value then
in effect, then the Warrant Price upon each such purchase, redemption or
acquisition shall be adjusted to that price determined by multiplying such
Warrant Price by a fraction (i) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such purchase,
redemption or acquisition minus the number of shares of Common Stock which the
aggregate consideration for the total number of such shares of Common Stock so
purchased, redeemed or acquired would purchase at the Per Share Market Value;
and (ii) the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such purchase, redemption or acquisition. For the
purposes of this subsection (f), the date as of which the Per Share Market Value
shall be computed shall be the earlier of (x) the date on which the Issuer shall
enter into a firm contract for the purchase, redemption or acquisition of such
Common Stock, or (y) the date of actual purchase, redemption or acquisition of
such Common Stock. For the purposes of this subsection (f), a purchase,
redemption or acquisition of a Common Stock Equivalent shall be deemed to be a
purchase of the underlying Common Stock, and the computation herein required
shall be made on the basis of the full exercise, conversion or exchange of such
Common Stock Equivalent on the date as of which such computation is required
hereby to be made, whether or not such Common Stock Equivalent is actually
exercisable, convertible or exchangeable on such date.
(g) Other Provisions Applicable to Adjustments Under this Section 4. The
---------------------------------------------------------------
following provisions shall be applicable to the making of adjustments in the
Warrant Price hereinbefore provided in Section 4:
10
<PAGE>
(i) Computation of Consideration. The consideration received by the
----------------------------
Issuer shall be deemed to be the following: to the extent that any
Additional Shares of Common Stock or any Common Stock Equivalents shall be
issued for a cash consideration, the consideration received by the Issuer
therefor, or if such Additional Shares of Common Stock or Common Stock
Equivalents are offered by the Issuer for subscription, the subscription
price, or, if such Additional Shares of Common Stock or Common Stock
Equivalents are sold to underwriters or dealers for public offering without
a subscription offering, the public offering price, in any such case
excluding any amounts paid or receivable for accrued interest or accrued
dividends and without deduction of any compensation, discounts,
commissions, or expenses paid or incurred by the Issuer for or in
connection with the underwriting thereof or otherwise in connection with
the issue thereof; to the extent that such issuance shall be for a
consideration other than cash, then, except as herein otherwise expressly
provided, the fair market value of such consideration at the, time of such
issuance as determined in good faith by the Board. The consideration for
any Additional Shares of Common Stock issuable pursuant to any Common Stock
Equivalents shall be the consideration received by the Issuer for issuing
such Common Stock Equivalents, plus the additional consideration payable to
the Issuer upon the exercise, conversion or exchange of such Common Stock
Equivalents. In case of the issuance at any time of any Additional Shares
of Common Stock or Common Stock Equivalents in payment or satisfaction of
any dividend upon any class of Capital Stock of the Issuer other than
Common Stock, the Issuer shall be deemed to have received for such
Additional Shares of Common Stock or Common Stock Equivalents a
consideration equal to the amount of such dividend so paid or satisfied.
In any case in which the consideration to be received or paid shall be
other than cash, the Board shall notify the Holder of this Warrant of its
determination of the fair market value of such consideration prior to
payment or accepting receipt thereof. If, within thirty days after receipt
of said notice, the Majority Holders shall notify the Board in writing of
their objection to such determination, a determination of the fair market
value of such consideration shall be made by an Independent Appraiser
selected by the Majority Holders with the approval of the Board (which
approval shall not be unreasonably withheld), whose fees and expenses shall
be paid by the Issuer.
(ii) Readjustment of Warrant Price. Upon the expiration or
-----------------------------
termination of the right to convert, exchange or exercise any Common Stock
Equivalent the issuance of which effected an adjustment in the Warrant
Price, if such Common Stock Equivalent shall not have been converted,
exercised or exchanged in its entirety, the number of shares of Common
Stock deemed to be issued and outstanding by reason of the fact that they
were issuable upon conversion, exchange or exercise of any such Common
Stock Equivalent shall no longer be computed as set forth above, and the
Warrant Price shall forthwith be readjusted and thereafter be the price
which it would have been (but reflecting any other adjustments in the
Warrant Price made pursuant to the provisions of this Section 4 after the
issuance of such Common Stock Equivalent) had the adjustment of the Warrant
Price been made in accordance with the issuance or sale of the number of
Additional Shares of Common Stock actually issued upon conversion, exchange
or issuance of such Common Stock Equivalent and thereupon only the number
of Additional Shares of Common Stock actually so issued shall be deemed to
have been issued and only
11
<PAGE>
the consideration actually received by the Issuer (computed as in clause
(i) of this subsection (g)) shall be deemed to have been received by the
Issuer.
(iii) Outstanding Common Stock. The number of shares of Common
------------------------
Stock at any time outstanding shall (A) not include any shares thereof then
directly or indirectly owned or held by or for the account of the Issuer or
any of its Subsidiaries, and (B) be deemed to include all shares of Common
Stock then issuable upon conversion, exercise or exchange of any then
outstanding Common Stock Equivalents or any other evidences of
indebtedness, shares of Capital Stock (including, without limitation, the
Preferred Stock) or other Securities which are or may be at any time
convertible into or exchangeable for shares of Common Stock or Other Common
Stock.
(h) Adjustment of Warrant Share Number. Upon each adjustment in the
----------------------------------
Warrant Price pursuant to any of the foregoing provisions of this Section 4, the
Warrant Share Number shall be adjusted, to the nearest one hundredth of a whole
share, to the product obtained by multiplying the Warrant Share Number
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately before giving effect
to such adjustment and the denominator of which shall be the Warrant Price
immediately after giving effect to such adjustment. If the Issuer shall be in
default under any provision contained in Section 3 of this Warrant so that
shares issued at the Warrant Price adjusted in accordance with this Section 4
would not be validly issued, the adjustment of the Warrant Share Number provided
for in the foregoing sentence shall nonetheless be made and the Holder of this
Warrant shall be entitled to purchase such greater number of shares at the
lowest price at which such shares may then be validly issued under applicable
law. Such exercise shall not constitute a waiver of any claim arising against
the Issuer by reason of its default under Section 3 of this Warrant.
(i) Form of Warrant after Adjustments. The form of this Warrant need not be
---------------------------------
changed because of any adjustments in the Warrant Price or the number and kind
of Securities purchasable upon the exercise of this Warrant.
5. Notice of Adjustments. Whenever the Warrant Price or Warrant Share
---------------------
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "adjustment"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder
of this Warrant with respect to the matters set forth in such certificate may at
the option of the Holder of this Warrant be submitted to one of the national
accounting firms currently known as the "big five" selected by the Holder,
provided that the Issuer shall have ten days after receipt of notice from such
- --------
Holder of its selection of such firm to object thereto, in which case such
Holder shall select another such firm and the Issuer shall have no such right of
objection. The firm selected by the Holder of this Warrant as provided in the
preceding sentence shall be instructed to deliver a written opinion as to such
matters to the
12
<PAGE>
Issuer and such Holder within thirty days after submission to it of such
dispute. Such opinion shall be final and binding on the parties hereto. The fees
and expenses of such accounting firm shall be paid by the Issuer.
6. Fractional Shares. No fractional shares of Warrant Stock will be
-----------------
issued in connection with and exercise hereof, but in lieu of such fractional
shares, the Issuer shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Per Share Market Value then
in effect.
7. Definitions. For the purposes of this Warrant, the following terms
-----------
have the following meanings:
"Additional Shares of Common Stock" means all shares of Common Stock
issued by the Issuer after the Original Issue Date, and all shares of Other
Common, if any, issued by the Issuer after the Original Issue Date, except:
(i) Warrant Stock; (ii) any shares of Common Stock issuable upon conversion
of the Preferred Stock pursuant to the Preferred Stock Certificate of
Designation; (iii) any shares of Common Stock issuable pursuant to or in
connection with exercise of (A) any Convertible Security, (B) any other
Common Stock Equivalent, outstanding on the date hereof, or (C) the Common
Stock Purchase Warrants issued by the Issuer on January 13, 2000 pursuant
to the terms of a Subscription Agreement dated as of January 13, 2000
between the Issuer and the Subscribers listed therein; (iv) any shares of
Common Stock issuable pursuant to or in connection with any business
acquisitions, mergers, consolidations or other corporate combinations or
transactions heretofore or hereafter undertaken by the Issuer in which the
Issuer is the surviving entity (including, without limitation, shares
issuable under Common Stock Equivalents that may be issued pursuant to or
in connection with any of the foregoing transactions); (v) any shares of
Common Stock issuable pursuant to or in connection with any stock option or
other similar plan of the Issuer pursuant to which the Issuer issues Common
Stock to its officers, directors and employees; and (vi) any shares of
Common Stock issued in an underwritten public offering of securities by the
Issuer.
"Board" shall mean the Board of Directors of the Issuer.
"Capital Stock" means and includes (i) any and all shares, interests,
participations or other equivalents of or interests in (however designated)
corporate stock, including, without limitation, shares of preferred or
preference stock, (ii) all partnership interests (whether general or
limited) in any Person which is a partnership, (iii) all membership
interests or limited liability company interests in any limited liability
company, and (iv) all equity or ownership interests in any Person of any
other type.
"Common Stock" means the Common Stock, $0.01 par value, of the Issuer
and any other Capital Stock into which such stock may hereafter be changed.
"Common Stock Equivalent" means any Convertible Security or warrant,
option or other right to subscribe for or purchase any Additional Shares of
Common Stock or any Convertible Security.
13
<PAGE>
"Convertible Securities" means evidences of indebtedness, shares of
Capital Stock or other Securities which are or may be at any time
convertible into or exchangeable for Additional Shares of Common Stock.
The term "Convertible Security" means one of the Convertible Securities.
"Governmental Authority" means any governmental, regulatory or self-
regulatory entity, department, body, official, authority, commission,
board, agency or instrumentality, whether federal, state or local, and
whether domestic or foreign.
"Holders" mean the Persons who shall from time to time own any
Warrant. The term "Holder" means one of the Holders.
"Independent Appraiser" means a nationally recognized or major
regional investment banking firm or firm of independent certified public
accountants of recognized standing (which may be the firm that regularly
examines the financial statements of the Issuer) that is regularly engaged
in the business of appraising the Capital Stock or assets of corporations
or other entities as going concerns, and which is not affiliated with
either the Issuer or the Holder of any Warrant.
"Issuer" means Xceed, Inc., a Delaware corporation, and its
successors.
"Majority Holders" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable under
the Warrants at the time outstanding.
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
"Original Issue Date" means April 4, 2000.
"Other Common" means any other Capital Stock of the Issuer of any
class which shall be authorized at any time after the date of this Warrant
(other than Common Stock) and which shall have the right to participate in
the distribution of earnings and assets of the Issuer without limitation as
to amount.
"Person" means an individual, corporation, limited liability company,
partnership, joint stock company, trust, unincorporated organization, joint
venture, Governmental Authority or other entity of whatever nature.
"Per Share Market Value" means on any particular date (a) the closing
price per share of the Common Stock on such date on the Nasdaq National
Market, The Nasdaq SmallCap Market or other registered national stock
exchange on which the Common Stock is then listed or if there is no such
price on such date, then the closing price on such exchange or quotation
system on the date nearest preceding such date, or (b) if the Common Stock
is not listed then on the Nasdaq National Market, The Nasdaq SmallCap
14
<PAGE>
Market or any registered national stock exchange, the closing price for a
share of Common Stock in the over-the-counter market, as reported by NASDAQ
or in the National Quotation Bureau Incorporated or similar organization or
agency succeeding to its functions of reporting prices) at the close of
business on such date, or (c) if the Common Stock is not then reported by
the National Quotation Bureau Incorporated (or similar organization or
agency succeeding to its functions of reporting prices), then the average
of the "Pink Sheet" quotes for the relevant conversion period, as
determined in good faith by the holder, or (d) if the Common Stock is not
then publicly traded the fair market value of a share of Common Stock as
determined by an Independent Appraiser selected in good faith by the
Majority Holders; provided, however, that the Issuer, after receipt of the
-------- -------
determination by such Independent Appraiser, shall have the right to select
an additional Independent Appraiser, in which case, the fair market value
shall be equal to the average of the determinations by each such
Independent Appraiser; and provided, further that all determinations of the
-------- -------
Per Share Market Value shall be appropriately adjusted for any stock
dividends, stock splits or other similar transactions during such period.
The determination of fair market value by an Independent Appraiser shall be
based upon the fair market value of the Issuer determined on a going
concern basis as between a willing buyer and a willing seller and taking
into account all relevant factors determinative of value, and shall be
final and binding on all parties. In determining the fair market value of
any shares of Common Stock, no consideration shall be given to any
restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or any
limitations on, voting rights.
"Preferred Stock" means the Issuer's Series A Cumulative Convertible
Preferred Stock, $0.05 par value and stated value $1,000 per share.
"Preferred Stock Certificate of Designation" means the Certificate of
Designation, Powers, Preferences and Rights of the Preferred Stock adopted
by the Board on January 13, 2000.
"Registration Rights Agreement" has the meaning specified in Section
3(f) hereof.
"Securities" means any debt or equity securities of the Issuer,
whether now or hereafter authorized, any instrument convertible into or
exchangeable for Securities or a Security, and any option, warrant or other
right to purchase or acquire any Security. "Security" means one of the
Securities.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute then in effect.
"Subsidiary" means any corporation at least 50% of whose outstanding
Voting Stock shall at the time be owned directly or indirectly by the
Issuer or by one or more of its Subsidiaries, or by the Issuer and one or
more of its Subsidiaries.
"Trading Day" means (a) a day on which the Common Stock is traded on
the Nasdaq National Market, The Nasdaq SmallCap Market or other registered
national stock
15
<PAGE>
exchange on which the Common Stock has been listed, or (b) if the Common
Stock is not listed on the Nasdaq National Market, The Nasdaq SmallCap
Market or any registered national stock exchange, a day or which the Common
Stock is traded in the over-the-counter market, as reported by the OTC
Bulletin Board, or (c) if the Common Stock is not quoted on the OTC
Bulletin Board, a day on which the Common Stock is quoted in the over-the-
counter market as reported by the National Quotation Bureau Incorporated
(or any similar organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common
-------- -------
Stock is not listed or quoted as set forth in (a), (b) and (c) hereof, then
Trading Day shall mean any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government
action to close.
"Term" has the meaning specified in Section 1 hereof.
"Voting Stock", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) having
ordinary voting power for the election of a majority of the members of the
Board of Directors (or other governing body) of such corporation, other
than Capital Stock having such power only by reason of the happening of a
contingency.
"Warrants" means the Warrants issued simultaneously herewith and dated
as of the date hereof, including, without limitation, this Warrant, and any
other warrants of like tenor issued in substitution or exchange for any
thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or
of any of such other Warrants.
"Warrant Price" means $15.75, as such price may be adjusted from time
to time as shall result from the adjustments specified in Section 4 hereof.
"Warrant Share Number" means at any time the aggregate number of
shares of Warrant Stock which may at such time be purchased upon exercise
of this Warrant, after giving effect to all prior adjustments and increases
to such number made or required to be made under the terms hereof.
"Warrant Stock" means Common Stock issuable upon exercise of any
Warrant or Warrants or otherwise issuable pursuant to any Warrant or
Warrants.
8. Other Notices. In case at any time:
-------------
(A) the Issuer shall make any distributions to the
holders of Common Stock; or
(B) the Issuer shall authorize the granting to all
holders of its Common Stock of rights to subscribe
for or purchase any shares of Capital Stock of any
class or of any Common
16
<PAGE>
Stock Equivalents or Convertible Securities or other
rights; or
(C) there shall be any reclassification of the Capital
Stock of the Issuer; or
(D) there shall be any capital reorganization by the
Issuer; or
(E) there shall be any (i) consolidation or merger
involving the Issuer or (ii) sale, transfer or other
disposition of all or substantially all of the Issuer's
property, assets or business (except a merger or other
reorganization in which the Issuer shall be the
surviving corporation and its shares of Capital Stock
shall continue to be outstanding and except a
consolidation, merger, sale, transfer or other
disposition involving a wholly-owned Subsidiary); or
(F) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Issuer or any partial
liquidation of the Issuer or distribution to holders of
Common Stock;
then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
days prior to the action in question and not less than twenty days prior to the
record date or the date on which the Issuer's transfer books are closed in
respect thereto. The Issuer shall give to the Holder notice of all meetings and
actions by written consent of its stockholders, at the same time in the same
manner as notice of any meetings of stockholders is required to be given to
stockholders who do not waive such notice (or, if such requires no notice, then
two Trading Days written notice thereof describing the matters upon which action
is to be taken). The Holder shall have the right to send two representatives
selected by it to each meeting, who shall be permitted to attend, but not vote
at, such meeting and any adjournments thereof. This Warrant entitles the Holder
to receive copies of all financial and other information distributed or required
to be distributed to the holders of the Common Stock.
9. Amendment and Waiver. Any term, covenant, agreement or condition in
--------------------
this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such
-------- -------
17
<PAGE>
amendment or waiver shall reduce the Warrant Share number, increase the Warrant
Price, shorten the period during which this Warrant may be exercised or modify
any provision of this Section 9 without the consent of the Holder of this
Warrant.
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
11. Notices. Any and all notices or other communications or deliveries
-------
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earlier of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., New York City time, on
a Business Day, (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified for notice later than 5:00 p.m., New York City time, on any
date and earlier than 11:59 p.m., New York City time, on such date, (iii) the
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service or (iv) actual receipt by the party to whom such
notice is required to be given. The addresses for such communications shall be
with respect to the Holder of this Warrant or of Warrant Stock issued pursuant
hereto, addressed to such Holder at its last known address or facsimile number
appearing on the books of the Issuer maintained for such purposes, or with
respect to the Issuer, addressed to:
Xceed, Inc.
488 Madison Avenue
New York, New York 10022
Attention: Werner Haase
Facsimile No.: (212) 758-4385
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Holder shall be sent to Stroock &
Stroock & Lavan LLP, 180 Maiden Lane, New York New, York 10038-4982, Attention:
James R. Tanenbaum, facsimile no.: (212) 806-6006. Copies of notices to the
Issuer shall be sent to Akin, Gump, Strauss, Hauer & Feld, LLP, Attention:
Victoria A. Baylin, facsimile no.: (202) 887-4288.
12. Warrant Agent. The Issuer may, by written notice to each Holder of
-------------
this Warrant, appoint an agent having an office in New York, New York for the
purpose of issuing shares of Warrant Stock on the exercise of this Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.
13. Remedies. The Issuer stipulates that the remedies at law of the Holder
--------
of this Warrant in the event of any default or threatened default by the Issuer
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate and that, to the
18
<PAGE>
fullest extent permitted by law, such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
14. Successors and Assigns. This Warrant and the rights evidenced hereby
----------------------
shall inure to the benefit of and be binding upon the successors and assigns of
the Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any such
Holder or Holder of Warrant Stock.
15. Modification and Severability. If, in any action before any court or
-----------------------------
agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
16. Headings. The headings of the Sections of this Warrant are for
--------
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and
year first above written.
XCEED, INC.
By:
--------------------------
Name: Werner Haase
Title: Chief Executive Officer
19
<PAGE>
SUBSCRIPTION AGREEMENT
(To be signed only upon exercise of Warrant)
To XCEED, INC.:
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, 1 shares of Common Stock of XCEED, INC. and herewith
(a) makes payment of $ therefor, or (b) exercises Warrants with a Per
Share Market Value of $ . The undersigned requests that the certificates
for such shares be issued in the name of, and delivered to, , whose address
is .
Dated: ____________, 20__ __________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
__________________________________________
(Address)
- --------
1 Insert here the number of shares called for on the face of the Warrant (or, in
the case of a partial exercise, the portion thereof as to which the Warrant is
being exercised), in either case without making any adjustment for additional
Common Stock or any other stock or other securities or property or cash which,
pursuant to the adjustment provisions of the Warrant, may be deliverable upon
exercise.
20
<PAGE>
ASSIGNMENT
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers all
of the rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock of XCEED, INC. covered thereby set forth
hereinbelow unto:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
Dated: __________, 20__ __________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
__________________________________________
(Address)
Signed in the presence of:
_____________________________
21
<PAGE>
Exhibit B
Peconic Fund, Ltd. 300,000 shares of Common Stock
Leonardo, L.P. 450,000 shares of Common Stock
HFTP Investment, L.L.C. 600,000 shares of Common Stock
<PAGE>
Exhibit 4.1(b)
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
XCEED, INC.
Expires April 4, 2005
No. W-__ New York, New York
April 4, 2000
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth, the
undersigned, XCEED, INC., a Delaware corporation (together with its successors
and assigns, the "Issuer"), hereby certifies that
________________________________________
or its registered assigns is entitled to subscribe for and purchase, during the
period specified in this Warrant, up to _______ shares (subject to adjustment as
hereinafter provided) of the duly authorized, validly issued, fully paid and
non-assessable common stock, par value $0.01 per share, of the Issuer (the
"Common Stock"), at an exercise price per share equal to the Warrant Price then
in effect, subject, however, to the provisions and upon the terms and conditions
hereinafter set forth provided, however, that in no event shall the holder be
-------- -------
entitled to exercise this Warrant for a number of shares of Warrant Stock in
excess of that number of shares of Warrant Stock which, upon giving effect to
such exercise, would cause the aggregate number of shares of Common Stock
beneficially owned by the holder and its affiliates to exceed 4.99% of the
outstanding shares of the Common Stock following such exercise. For purposes of
the foregoing proviso, the aggregate number of shares of Common Stock
beneficially owned by the holder and its affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to
which the determination of such proviso is being made, but shall exclude shares
of Common Stock which would be issuable upon (i) exercise of the
1
<PAGE>
remaining, unexercised Warrants beneficially owned by the holder and its
affiliates and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Issuer beneficially owned by the holder
and its affiliates (including, without limitation, any warrants, convertible
notes or preferred stock) subject to a limitation on conversion or exercise
analogous to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. For purposes of this Warrant, in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (1) the Issuer's most recent
Form 10-Q, Form 10-K or other public filing with the Securities and Exchange
Commission, as the case may be, (2) a more recent public announcement by the
Issuer, or (3) any other notice by the Issuer or its transfer agent setting
forth the number of shares of Common Stock outstanding. Upon the written request
of any holder, the Issuer shall promptly, but in no event later than one (1)
business day following the receipt of such notice, confirm in writing to any
such holder the number of shares of Common Stock then outstanding. In any case,
the number of outstanding shares of Common Stock shall be determined after
giving effect to conversions or exercise of securities of the Issuer convertible
or exercisable for Common Stock and exercise of Warrants by such holder and its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported. Capitalized terms used in this Warrant and not
otherwise defined herein shall have the respective meanings specified in Section
7 hereof.
1. Term. The right to subscribe for and purchase shares of Warrant Stock
----
represented hereby shall commence on the date of issuance of this Warrant and
shall expire at 5:00 p.m., New York City time, on April 4, 2005 (such period
being the "Term"). Prior to the end of the Term, the Issuer will not
intentionally or knowingly take any action which would terminate the Warrants.
2. Method of Exercise; Payment; Issuance of New Warrant; Registration;
-------------------------------------------------------------------
Transfer and Exchange.
- ---------------------
(a) Time of Exercise. The purchase rights represented by this Warrant may
----------------
be exercised in whole or in part at any time and from time to time during the
Term.
(b) Method of Exercise. The Holder hereof may exercise this Warrant, in
------------------
whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal executive office of the Issuer,
and by the payment to the Issuer of an amount of consideration therefor equal to
the Warrant Price in effect on the date of such exercise multiplied by the
number of shares of Warrant Stock with respect to which this Warrant is then
being exercised, payable at such Holder's election (i) by certified or official
bank check, (ii) if the Per Share Market Value is greater than the Warrant Price
(at the date of calculation as set forth below), in lieu of exercising this
Warrant for cash, by receiving shares equal to the value (as determined below)
of this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal executive office of the Company together with the
properly endorsed Subscription Form annexed hereto and notice of such election
in which event the Company shall issue to the Warrantholder a number of shares
of Common Stock computed using the following formula:
2
<PAGE>
X = Y(A-B)
------
A
Where X = the number of shares of Common Stock to be issued to the Holder
Y = the number of shares of Common Stock purchasable under the
Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being canceled (at the
date of such calculation)
A = the Per Share Market Value of one share of the Common Stock
(at the date of such calculation)
B = Warrant Price (as adjusted to the date of such calculation),
or (iii) by a combination of the foregoing methods of payment selected by the
Holder of this Warrant. In any case where the consideration payable upon such
exercise is being paid in whole or in part pursuant to the provisions of clause
(ii) of this subsection (b), such exercise shall be accompanied by written
notice from the Holder of this Warrant specifying the manner of payment thereof
and containing a calculation showing the number of shares of Warrant Stock with
respect to which rights are being surrendered thereunder and the net number of
shares to be issued after giving effect to such surrender.
(c) Issuance of Stock Certificates. In the event of any exercise of this
------------------------------
Warrant in accordance with and subject to the terms and conditions hereof, (i)
certificates for the shares of Warrant Stock so purchased shall be dated the
date of such exercise and the Issuer shall use its best efforts to deliver to
the Holder hereof within a reasonable time, not exceeding three Trading Days
after such exercise, and the Holder hereof shall be deemed for all purposes to
be the Holder of the shares of Warrant Stock so purchased as of the date of such
exercise, and (ii) unless this Warrant has expired, a new Warrant representing
the number of shares of Warrant Stock, if any, with respect to which this
Warrant shall not then have been exercised (less any amount thereof which shall
have been cancelled in payment or partial payment of the Warrant Price as
hereinabove provided) shall also be issued to the Holder hereof at the Issuer's
expense within such time.
(d) Registration. The Warrants shall be numbered and shall be registered
------------
in a Warrant register (the "Warrant Register"). The Issuer shall be entitled to
treat the registered holder of any Warrant on the Warrant Register (the
"Holder") as the owner in fact thereof for all purposes and shall not be bound
to recognize any equitable or other claim to or interest in such Warrant on the
part of any other person, and shall not be liable for any registration of
transfer of Warrants which are registered or are to be registered in the name of
a fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer, or with such knowledge of such facts that its
participation therein amounts to bad faith. The Warrants shall be registered
initially in
3
<PAGE>
the name of Holder as set forth in the first sentence of this Warrant in such
denominations as Holder may request in writing to the Issuer.
(e) Transfer of Warrant. Until such time as the shares of Warrant Stock
-------------------
issuable hereunder shall have been the subject of registration and are covered
by an effective registration statement under the Securities Act, or there is
available (in the opinion of counsel to the Issuer or counsel to the Holder,
acceptable to the Issuer) an exemption from the registration requirements of the
Securities Act, the Warrants shall not be sold, transferred, assigned or
hypothecated, in part or in whole (other than by will or pursuant to the laws of
descent and distribution), and then only to registered assigns of the Holder and
thereafter only upon delivery thereof duly endorsed by the Holder or by his duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer. In all cases of transfer by an
attorney, the original power of attorney, duly approved, or an official copy
thereof, duly certified, shall be deposited with the Issuer. In case of
transfer by executors, administrators, guardians or other legal representatives,
duly authenticated evidence of their authority shall be produced, and may be
required to be deposited with the Issuer in its discretion. Upon any
registration of transfer, the Issuer shall deliver a new Warrant or Warrants to
the persons entitled thereto. The Warrants may be exchanged at the option of
the Holder thereof for another Warrant, or other Warrants, of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of shares of Common Stock upon surrender to the Issuer or
its duly authorized agent. Notwithstanding the foregoing, the Issuer shall have
no obligation to cause Warrants to be transferred on its books to any person if
such transfer would violate the Securities Act.
(f) Compliance with Securities Laws.
-------------------------------
(i) The Holder of this Warrant, by acceptance hereof, acknowledges
that neither this Warrant nor the shares of Warrant Stock to be issued upon
exercise hereof have been registered under the Securities Act and have been
offered and sold by the Issuer in reliance upon exemption from the
registration provisions of the Securities Act and the Holder represents
that such securities are being acquired solely for the Holder's own account
and not as a nominee for any other party, and for investment, and that the
Holder will not offer, sell or otherwise dispose of this Warrant or any
shares of Warrant Stock to be issued upon exercise hereof except pursuant
to an effective registration statement, or an exemption from registration,
under the Securities Act and any applicable state securities laws.
(ii) Except as provided in paragraph (iii) below, this Warrant and all
certificates representing shares of Warrant Stock issued upon exercise
hereof shall be stamped or imprinted with a legend in substantially the
following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
4
<PAGE>
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
(iii) The restrictions imposed by this subsection (f) upon the
transfer of this Warrant and the shares of Warrant Stock to be purchased
upon exercise hereof shall terminate (A) when such securities shall have
been effectively registered under the Securities Act, (B) upon the Issuer's
receipt of an opinion of counsel, in form and substance reasonably
satisfactory to the Issuer, addressed to the Issuer to the effect that such
restrictions are no longer required to ensure compliance with the
Securities Act or (C) upon the Issuer's receipt of other evidence
reasonably satisfactory to the Issuer that such registration is not
required. Whenever such restrictions shall cease and terminate as to any
such securities, the Holder thereof shall be entitled to receive from the
Issuer (or its transfer agent and registrar), without expense (other than
applicable transfer taxes, if any), new Warrants (or, in the case of shares
of Warrant Stock, new stock certificates) of like tenor not bearing the
applicable legends required by paragraph (ii) above relating to the
Securities Act and state securities laws.
(g) Continuing Rights of Holder. The Issuer will, at the time of or at any
---------------------------
time after each exercise of this Warrant, upon the request of the Holder hereof
or of any shares of Warrant Stock issued upon such exercise, acknowledge in
writing the extent, if any, of its continuing obligation to afford to such
Holder all rights to which such Holder shall continue to be entitled after such
exercise in accordance with the terms of this Warrant, provided that if any such
--------
Holder shall fail to make any such request, the failure shall not affect the
continuing obligation of the Issuer to afford such rights to such Holder.
3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.
--------------------------------------------------------------
(a) Stock Fully Paid. The Issuer represents, warrants, covenants and
----------------
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise hereunder will, upon issuance and payment in
accordance with the terms hereof, be duly authorized, validly issued, fully paid
and non-assessable and free from all taxes, liens and charges created by or
through Issuer. The Issuer further covenants and agrees that during the period
within which this Warrant may be exercised, the Issuer will at all times have
authorized and reserved for the purpose of the issue upon exercise of this
Warrant a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant.
(b) Payment of Taxes. The Issuer will pay all documentary stamp taxes, if any,
----------------
attributable to the issuance of Warrant Stock; provided, however, that the
Issuer shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue or delivery of any certificates
for Warrant Stock in a name other than that of the Holder of Warrants in respect
of which such Warrant Stock is issued.
(c) Reservation. If any shares of Common Stock required to be reserved for
-----------
issuance upon exercise of this Warrant or as otherwise provided hereunder
require registration or
5
<PAGE>
qualification with any governmental authority under any federal or state law
before such shares may be so issued, the Issuer will in good faith use its best
efforts as expeditiously as possible at its expense to cause such shares to be
duly registered or qualified. The transfer agent for the Common Stock (the
"Transfer Agent"), and every subsequent transfer agent, if any, for the Warrant
Stock will be irrevocably authorized and directed at all times until the end of
the Term to reserve such number of authorized and unissued shares of Common
Stock as shall be required for such purpose. The Issuer will keep a copy of this
Agreement on file with the Transfer Agent and with every subsequent transfer
agent for the Issuer's securities issuable upon the exercise of the Warrants.
The Issuer will supply the Transfer Agent or any subsequent transfer agent with
duly executed certificates for such purpose and will itself provide or otherwise
make available any cash which may be distributable as provided in Section 6 of
this Agreement. All Warrants surrendered in the exercise of the rights thereby
evidenced shall be canceled, and such canceled Warrants shall constitute
sufficient evidence of the number of Shares that have been issued upon the
exercise of such Warrants. No shares of Common Stock shall be subject to
reservation in respect of unexercised Warrants subsequent to the end of the
Term. If the Issuer shall list any shares of Common Stock on any securities
exchange or market it will, at its expense, list thereon, maintain and increase
when necessary such listing, of, all shares of Warrant Stock from time to time
issued upon exercise of this Warrant or as otherwise provided hereunder, and, to
the extent permissible under the applicable securities exchange rules, all
unissued shares of Warrant Stock which are at any time issuable hereunder, so
long as any shares of Common Stock shall be so listed. The Issuer will also so
list on each securities exchange or market, and will maintain such listing of,
any other securities which the Holder of this Warrant shall be entitled to
receive upon the exercise of this Warrant if at the time any securities of the
same class shall be listed on such securities exchange or market by the Issuer.
(d) Covenants. The Issuer shall not by any action including, without
---------
limitation, amending the certificate of incorporation or the by-laws of the
Issuer, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting the generality of
the foregoing, the Issuer will (i) not permit the par value, if any, of its
Common Stock to exceed the then effective Warrant Price, (ii) not amend or
modify any provision of the certificate of incorporation or by-laws of the
Issuer in any manner that would adversely affect in any way the powers,
preferences or relative participating, optional or other special rights of the
Common Stock or which would adversely affect the rights of the Holders of the
Warrants, (iii) take all such action as may be reasonably necessary in order
that the Issuer may validly and legally issue fully paid and nonassessable
shares of Common Stock, free and clear of any liens, claims, encumbrances and
restrictions (other than as provided herein) upon the exercise of this Warrant,
and (iv) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
reasonably necessary to enable the Issuer to perform its obligations under this
Warrant.
(e) Loss, Theft, Destruction of Warrants. Upon receipt of evidence
------------------------------------
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the
6
<PAGE>
case of any such loss, theft or destruction, upon receipt of indemnity or
security satisfactory to the Issuer or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Issuer will make and deliver, in
lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like
tenor and representing the right to purchase the same number of shares of Common
Stock.
(f) Rights and Obligations under the Registration Rights Agreement. This
--------------------------------------------------------------
Warrant and the Warrant Stock shall be deemed to be entitled to the benefits and
subject to the terms of the Registration Rights Agreement, dated as of January
13, 2000, between the Issuer and the Holders listed on the signature pages
thereof (as amended from time to time, the "Registration Rights Agreement").
The Issuer shall keep or cause to be kept a copy of the Registration Rights
Agreement, and any amendments thereto, at its principal executive office and
shall furnish, without charge, copies thereof to the Holder upon request.
4. Adjustment of Warrant Price and Warrant Share Number. The number and
----------------------------------------------------
kind of Securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the happening of
certain events as follows:
(a) Recapitalization, Reorganization, Reclassification, Consolidation,
------------------------------------------------------------------
Merger or Sale.
- --------------
(i) In case the Issuer after the Original Issue Date shall do any of
the following (each, a "Triggering Event"): (a) consolidate with or merge
into any other Person and the Issuer shall not be the continuing or
surviving corporation of such consolidation or merger, or (b) permit any
other Person to consolidate with or merge into the Issuer and the Issuer
shall be the continuing or surviving Person but, in connection with such
consolidation or merger, any Capital Stock of the Issuer shall be changed
into or exchanged for Securities of any other Person or cash or any other
property, or (c) transfer all or substantially all of its properties or
assets to any other Person, or (d) effect a capital reorganization or
reclassification of its Capital Stock, then, and in the case of each such
Triggering Event, proper provision shall be made so that, upon the basis
and the terms and in the manner provided in this Warrant, the Holder of
this Warrant shall be entitled, upon the exercise hereof at any time after
the consummation of such Triggering Event, to the extent this Warrant is
not exercised prior to such Triggering Event, or is redeemed in connection
with such Triggering Event, to receive at the Warrant Price in effect at
the time immediately prior to the consummation of such Triggering Event in
lieu of the Common Stock issuable upon such exercise of this Warrant prior
to such Triggering Event, the Securities, cash and property to which such
Holder would have been entitled upon the consummation of such Triggering
Event if such Holder had exercised the rights represented by this Warrant
immediately prior thereto, subject to adjustments and increases (subsequent
to such corporate action) as nearly equivalent as possible to the
adjustments provided for in Section 4 hereof.
(ii) Notwithstanding anything contained in this Warrant to the
contrary, the Issuer will not effect any Triggering Event unless, prior to
the consummation thereof, each Person (other than the Issuer) which may be
required to deliver any Securities, cash or property upon the exercise of
this Warrant as provided herein shall assume, by written
7
<PAGE>
instrument delivered to, and reasonably satisfactory to, the Holder of this
Warrant: (A) the obligations of the Issuer under this Warrant (and if the
Issuer shall survive the consummation of such Triggering Event, such
assumption shall be in addition to, and shall not release the Issuer from,
any continuing obligations of the Issuer under this Warrant); and (B) the
obligation to deliver to such Holder such shares of Securities, cash or
property as, in accordance with the foregoing provisions of this subsection
(a).
(b) Subdivision or Combination of Shares. If the Issuer, at any time while
------------------------------------
this Warrant is outstanding, shall subdivide or combine any shares of Common
Stock, (i) in case of subdivision of shares, the Warrant Price shall be
proportionately reduced (as at the effective date of such subdivision or, if the
Issuer shall take a record of Holders of its Common Stock for the purpose of so
subdividing, as at the applicable record date, whichever is earlier) to reflect
the increase in the total number of shares of Common Stock outstanding as a
result of such subdivision, or (ii) in the case of a combination of shares, the
Warrant Price shall be proportionately increased (as at the effective date of
such combination or, if the Issuer shall take a record of Holders of its Common
Stock for the purpose of so combining, as at the applicable record date,
whichever is earlier) to reflect the reduction in the total number of shares of
Common Stock outstanding as a result of such combination.
(c) Certain Dividends and Distributions. If the Issuer, at any time while
-----------------------------------
this Warrant is outstanding, shall:
(i) Stock Dividends. Pay a dividend in, or make any other
---------------
distribution to its stockholders (without consideration therefor) of,
shares of Common Stock, the Warrant Price shall be adjusted, as at the date
the Issuer shall take a record of the Holders of the Issuer's Capital Stock
for the purpose of receiving such dividend or other distribution (or if no
such record is taken, as at the date of such payment or other
distribution), to that price determined by multiplying the Warrant Price in
effect immediately prior to such record date (or if no such record is
taken, then immediately prior to such payment or other distribution), by a
fraction (1) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or
distribution, and (2) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend or
distribution (plus in the event that the Issuer paid cash for fractional
shares, the number of additional shares which would have been outstanding
had the Issuer issued fractional shares in connection with said dividends);
or
(ii) Other Dividends. Pay a dividend on, or make any distribution of
---------------
its assets upon or with respect to (including, but not limited to, a
distribution of its property as a dividend in liquidation or partial
liquidation or by way of return of capital), the Common Stock (other than
as described in clause (i) of this subsection (c)), or in the event that
the Issuer shall offer options or rights to subscribe for shares of Common
Stock, or issue any Common Stock Equivalents, to all of its holders of
Common Stock, then on the record date for such payment, distribution or
offer or, in the absence of a record date, on the date of such payment,
distribution or offer, the Holder shall receive what the Holder would have
received had it exercised this Warrant in full immediately prior to the
record date of
8
<PAGE>
such payment, distribution or offer or, in the absence of a record date,
immediately prior to the date of such payment, distribution or offer.
(d) Issuance of Additional Shares of Common Stock. If the Issuer, at any
---------------------------------------------
time while this Warrant is outstanding, shall issue any Additional Shares of
Common Stock (otherwise than as provided in the foregoing subsections (a)
through (c) of this Section 4), at a price per share less than the lower of (x)
the Warrant Price then in effect or (y) the Per Share Market Value then in
effect or without consideration, then the Warrant Price upon each such issuance
shall be adjusted to the price (rounded to the nearest cent) determined by
multiplying the Warrant Price then in effect by a fraction:
(i) the numerator of which shall be equal to the sum of (A) the number
of shares of Common Stock outstanding immediately prior to the issuance of
such Additional Shares of Common Stock plus (B) the number of shares of
Common Stock (rounded to the nearest whole share) which the aggregate
consideration for the total number of such Additional Shares of Common
Stock so issued would purchase at a price per share equal to the greater of
the Per Share Market Value then in effect and the Warrant Price then in
effect; and
(ii) the denominator of which shall be equal to the number of shares
of Common Stock outstanding immediately after the issuance of such
Additional Shares of Common Stock.
The provisions of this subsection (d) shall not apply under any of the
circumstances for which an adjustment is provided in subsections (a), (b) or (c)
of this Section 4. No adjustment of the Warrant Price shall be made under this
subsection (d) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to any Common Stock Equivalent if upon the issuance of such
Common Stock Equivalent (x) any adjustment shall have been made pursuant to
subsection (e) of this Section 4 or (y) no adjustment was required pursuant to
subsection (e) of this Section 4. No adjustment of the Warrant Price shall be
made under this subsection (d) in an amount less than $.01 per share, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment, if any, which together with
any adjustments so carried forward shall amount to $.01 per share or more,
provided that upon any adjustment of the Warrant Price as a result of any
dividend or distribution payable in Common Stock or Convertible Securities or
the reclassification, subdivision or combination of Common Stock into a greater
or smaller number of shares, the foregoing figure of $.01 per share (or such
figure as last adjusted) shall be adjusted (to the nearest one-half cent) in
proportion to the adjustment in the Warrant Price.
(e) Issuance of Common Stock Equivalents. If the Issuer, at any time while
------------------------------------
this Warrant is outstanding, shall issue any Common Stock Equivalent and the
price per share for which Additional Shares of Common Stock may be issuable
thereafter pursuant to such Common Stock Equivalent shall be less than the lower
of (w) the Warrant Price then in effect or (x) the Per Share Market Value then
in effect, or if, after any such issuance of Common Stock Equivalents, the price
per share for which Additional Shares of Common Stock may be issuable thereafter
is amended or adjusted, and such price as so amended shall be less than the
lower of (y) the
9
<PAGE>
Warrant Price or (z) the Per Share Market Value in effect at the time of such
amendment, then the Warrant Price upon each such issuance or amendment shall be
adjusted as provided in the first sentence of subsection (d) of this Section 4
on the basis that (1) the maximum number of Additional Shares of Common Stock
issuable pursuant to all such Common Stock Equivalents shall be deemed to have
been issued (whether or not such Common Stock Equivalents are actually then
exercisable, convertible or exchangeable in whole or in part) as of the earlier
of (A) the date on which the Issuer shall enter into a firm contract for the
issuance of such Common Stock Equivalent, or (B) the date of actual issuance of
such Common Stock Equivalent, and (2) the aggregate consideration for such
maximum number of Additional Shares of Common Stock shall be deemed to be the
minimum consideration received or receivable by the Issuer for the issuance of
such Additional Shares of Common Stock pursuant to such Common Stock Equivalent.
No adjustment of the Warrant Price shall be made under this subsection (e) upon
the issuance of any Convertible Security which is issued pursuant to the
exercise of any warrants or other subscription or purchase rights therefor, if
any adjustment shall previously have been made in the Warrant Price then in
effect upon the issuance of such warrants or other rights pursuant to this
subsection (e). If no adjustment is required under this subsection (e) upon
issuance of any Common Stock Equivalent or once an adjustment is made under this
subsection (e) based upon the Per Share Market Value in effect on the date of
such adjustment, no further adjustment shall be made under this subsection (e)
based solely upon a change in the Per Share Market Value after such date.
(f) Purchase of Common Stock by the Issuer. If the Issuer at any time
--------------------------------------
while this Warrant is outstanding shall, directly or indirectly through a
Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value then
in effect, then the Warrant Price upon each such purchase, redemption or
acquisition shall be adjusted to that price determined by multiplying such
Warrant Price by a fraction (i) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such purchase,
redemption or acquisition minus the number of shares of Common Stock which the
aggregate consideration for the total number of such shares of Common Stock so
purchased, redeemed or acquired would purchase at the Per Share Market Value;
and (ii) the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such purchase, redemption or acquisition. For the
purposes of this subsection (f), the date as of which the Per Share Market Value
shall be computed shall be the earlier of (x) the date on which the Issuer shall
enter into a firm contract for the purchase, redemption or acquisition of such
Common Stock, or (y) the date of actual purchase, redemption or acquisition of
such Common Stock. For the purposes of this subsection (f), a purchase,
redemption or acquisition of a Common Stock Equivalent shall be deemed to be a
purchase of the underlying Common Stock, and the computation herein required
shall be made on the basis of the full exercise, conversion or exchange of such
Common Stock Equivalent on the date as of which such computation is required
hereby to be made, whether or not such Common Stock Equivalent is actually
exercisable, convertible or exchangeable on such date.
(g) Other Provisions Applicable to Adjustments Under this Section 4. The
---------------------------------------------------------------
following provisions shall be applicable to the making of adjustments in the
Warrant Price hereinbefore provided in Section 4:
10
<PAGE>
(i) Computation of Consideration. The consideration received by the
----------------------------
Issuer shall be deemed to be the following: to the extent that any
Additional Shares of Common Stock or any Common Stock Equivalents shall be
issued for a cash consideration, the consideration received by the Issuer
therefor, or if such Additional Shares of Common Stock or Common Stock
Equivalents are offered by the Issuer for subscription, the subscription
price, or, if such Additional Shares of Common Stock or Common Stock
Equivalents are sold to underwriters or dealers for public offering without
a subscription offering, the public offering price, in any such case
excluding any amounts paid or receivable for accrued interest or accrued
dividends and without deduction of any compensation, discounts,
commissions, or expenses paid or incurred by the Issuer for or in
connection with the underwriting thereof or otherwise in connection with
the issue thereof; to the extent that such issuance shall be for a
consideration other than cash, then, except as herein otherwise expressly
provided, the fair market value of such consideration at the, time of such
issuance as determined in good faith by the Board. The consideration for
any Additional Shares of Common Stock issuable pursuant to any Common Stock
Equivalents shall be the consideration received by the Issuer for issuing
such Common Stock Equivalents, plus the additional consideration payable to
the Issuer upon the exercise, conversion or exchange of such Common Stock
Equivalents. In case of the issuance at any time of any Additional Shares
of Common Stock or Common Stock Equivalents in payment or satisfaction of
any dividend upon any class of Capital Stock of the Issuer other than
Common Stock, the Issuer shall be deemed to have received for such
Additional Shares of Common Stock or Common Stock Equivalents a
consideration equal to the amount of such dividend so paid or satisfied.
In any case in which the consideration to be received or paid shall be
other than cash, the Board shall notify the Holder of this Warrant of its
determination of the fair market value of such consideration prior to
payment or accepting receipt thereof. If, within thirty days after receipt
of said notice, the Majority Holders shall notify the Board in writing of
their objection to such determination, a determination of the fair market
value of such consideration shall be made by an Independent Appraiser
selected by the Majority Holders with the approval of the Board (which
approval shall not be unreasonably withheld), whose fees and expenses shall
be paid by the Issuer.
(ii) Readjustment of Warrant Price. Upon the expiration or
-----------------------------
termination of the right to convert, exchange or exercise any Common Stock
Equivalent the issuance of which effected an adjustment in the Warrant
Price, if such Common Stock Equivalent shall not have been converted,
exercised or exchanged in its entirety, the number of shares of Common
Stock deemed to be issued and outstanding by reason of the fact that they
were issuable upon conversion, exchange or exercise of any such Common
Stock Equivalent shall no longer be computed as set forth above, and the
Warrant Price shall forthwith be readjusted and thereafter be the price
which it would have been (but reflecting any other adjustments in the
Warrant Price made pursuant to the provisions of this Section 4 after the
issuance of such Common Stock Equivalent) had the adjustment of the Warrant
Price been made in accordance with the issuance or sale of the number of
Additional Shares of Common Stock actually issued upon conversion, exchange
or issuance of such Common Stock Equivalent and thereupon only the number
of Additional Shares of Common Stock actually so issued shall be deemed to
have been issued and only
11
<PAGE>
the consideration actually received by the Issuer (computed as in clause
(i) of this subsection (g)) shall be deemed to have been received by the
Issuer.
(iii) Outstanding Common Stock. The number of shares of Common
------------------------
Stock at any time outstanding shall (A) not include any shares thereof then
directly or indirectly owned or held by or for the account of the Issuer or
any of its Subsidiaries, and (B) be deemed to include all shares of Common
Stock then issuable upon conversion, exercise or exchange of any then
outstanding Common Stock Equivalents or any other evidences of
indebtedness, shares of Capital Stock (including, without limitation, the
Preferred Stock) or other Securities which are or may be at any time
convertible into or exchangeable for shares of Common Stock or Other Common
Stock.
(h) Adjustment of Warrant Share Number. Upon each adjustment in the
----------------------------------
Warrant Price pursuant to any of the foregoing provisions of this Section 4, the
Warrant Share Number shall be adjusted, to the nearest one hundredth of a whole
share, to the product obtained by multiplying the Warrant Share Number
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately before giving effect
to such adjustment and the denominator of which shall be the Warrant Price
immediately after giving effect to such adjustment. If the Issuer shall be in
default under any provision contained in Section 3 of this Warrant so that
shares issued at the Warrant Price adjusted in accordance with this Section 4
would not be validly issued, the adjustment of the Warrant Share Number provided
for in the foregoing sentence shall nonetheless be made and the Holder of this
Warrant shall be entitled to purchase such greater number of shares at the
lowest price at which such shares may then be validly issued under applicable
law. Such exercise shall not constitute a waiver of any claim arising against
the Issuer by reason of its default under Section 3 of this Warrant.
(i) Form of Warrant after Adjustments. The form of this Warrant need not be
---------------------------------
changed because of any adjustments in the Warrant Price or the number and kind
of Securities purchasable upon the exercise of this Warrant.
5. Notice of Adjustments. Whenever the Warrant Price or Warrant Share
---------------------
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "adjustment"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder
of this Warrant with respect to the matters set forth in such certificate may at
the option of the Holder of this Warrant be submitted to one of the national
accounting firms currently known as the "big five" selected by the Holder,
provided that the Issuer shall have ten days after receipt of notice from such
- --------
Holder of its selection of such firm to object thereto, in which case such
Holder shall select another such firm and the Issuer shall have no such right of
objection. The firm selected by the Holder of this Warrant as provided in the
preceding sentence shall be instructed to deliver a written opinion as to such
matters to the
12
<PAGE>
Issuer and such Holder within thirty days after submission to it of such
dispute. Such opinion shall be final and binding on the parties hereto. The fees
and expenses of such accounting firm shall be paid by the Issuer.
6. Fractional Shares. No fractional shares of Warrant Stock will be
-----------------
issued in connection with and exercise hereof, but in lieu of such fractional
shares, the Issuer shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Per Share Market Value then
in effect.
7. Definitions. For the purposes of this Warrant, the following terms
-----------
have the following meanings:
"Additional Shares of Common Stock" means all shares of Common Stock
issued by the Issuer after the Original Issue Date, and all shares of Other
Common, if any, issued by the Issuer after the Original Issue Date, except:
(i) Warrant Stock; (ii) any shares of Common Stock issuable upon conversion
of the Preferred Stock pursuant to the Preferred Stock Certificate of
Designation; (iii) any shares of Common Stock issuable pursuant to or in
connection with exercise of (A) any Convertible Security, (B) any other
Common Stock Equivalent, outstanding on the date hereof, or (C) the Common
Stock Purchase Warrants issued by the Issuer on January 13, 2000 pursuant
to the terms of a Subscription Agreement dated as of January 13, 2000
between the Issuer and the Subscribers listed therein; (iv) any shares of
Common Stock issuable pursuant to or in connection with any business
acquisitions, mergers, consolidations or other corporate combinations or
transactions heretofore or hereafter undertaken by the Issuer in which the
Issuer is the surviving entity (including, without limitation, shares
issuable under Common Stock Equivalents that may be issued pursuant to or
in connection with any of the foregoing transactions); (v) any shares of
Common Stock issuable pursuant to or in connection with any stock option or
other similar plan of the Issuer pursuant to which the Issuer issues Common
Stock to its officers, directors and employees; and (vi) any shares of
Common Stock issued in an underwritten public offering of securities by the
Issuer.
"Board" shall mean the Board of Directors of the Issuer.
"Capital Stock" means and includes (i) any and all shares, interests,
participations or other equivalents of or interests in (however designated)
corporate stock, including, without limitation, shares of preferred or
preference stock, (ii) all partnership interests (whether general or
limited) in any Person which is a partnership, (iii) all membership
interests or limited liability company interests in any limited liability
company, and (iv) all equity or ownership interests in any Person of any
other type.
"Common Stock" means the Common Stock, $0.01 par value, of the Issuer
and any other Capital Stock into which such stock may hereafter be changed.
"Common Stock Equivalent" means any Convertible Security or warrant,
option or other right to subscribe for or purchase any Additional Shares of
Common Stock or any Convertible Security.
13
<PAGE>
"Convertible Securities" means evidences of indebtedness, shares of
Capital Stock or other Securities which are or may be at any time
convertible into or exchangeable for Additional Shares of Common Stock.
The term "Convertible Security" means one of the Convertible Securities.
"Governmental Authority" means any governmental, regulatory or self-
regulatory entity, department, body, official, authority, commission,
board, agency or instrumentality, whether federal, state or local, and
whether domestic or foreign.
"Holders" mean the Persons who shall from time to time own any
Warrant. The term "Holder" means one of the Holders.
"Independent Appraiser" means a nationally recognized or major
regional investment banking firm or firm of independent certified public
accountants of recognized standing (which may be the firm that regularly
examines the financial statements of the Issuer) that is regularly engaged
in the business of appraising the Capital Stock or assets of corporations
or other entities as going concerns, and which is not affiliated with
either the Issuer or the Holder of any Warrant.
"Issuer" means Xceed, Inc., a Delaware corporation, and its
successors.
"Majority Holders" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable under
the Warrants at the time outstanding.
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
"Original Issue Date" means April 4, 2000.
"Other Common" means any other Capital Stock of the Issuer of any
class which shall be authorized at any time after the date of this Warrant
(other than Common Stock) and which shall have the right to participate in
the distribution of earnings and assets of the Issuer without limitation as
to amount.
"Person" means an individual, corporation, limited liability company,
partnership, joint stock company, trust, unincorporated organization, joint
venture, Governmental Authority or other entity of whatever nature.
"Per Share Market Value" means on any particular date (a) the closing
price per share of the Common Stock on such date on the Nasdaq National
Market, The Nasdaq SmallCap Market or other registered national stock
exchange on which the Common Stock is then listed or if there is no such
price on such date, then the closing price on such exchange or quotation
system on the date nearest preceding such date, or (b) if the Common Stock
is not listed then on the Nasdaq National Market, The Nasdaq SmallCap
14
<PAGE>
Market or any registered national stock exchange, the closing price for a
share of Common Stock in the over-the-counter market, as reported by NASDAQ
or in the National Quotation Bureau Incorporated or similar organization or
agency succeeding to its functions of reporting prices) at the close of
business on such date, or (c) if the Common Stock is not then reported by
the National Quotation Bureau Incorporated (or similar organization or
agency succeeding to its functions of reporting prices), then the average
of the "Pink Sheet" quotes for the relevant conversion period, as
determined in good faith by the holder, or (d) if the Common Stock is not
then publicly traded the fair market value of a share of Common Stock as
determined by an Independent Appraiser selected in good faith by the
Majority Holders; provided, however, that the Issuer, after receipt of the
-------- -------
determination by such Independent Appraiser, shall have the right to select
an additional Independent Appraiser, in which case, the fair market value
shall be equal to the average of the determinations by each such
Independent Appraiser; and provided, further that all determinations of the
-------- -------
Per Share Market Value shall be appropriately adjusted for any stock
dividends, stock splits or other similar transactions during such period.
The determination of fair market value by an Independent Appraiser shall be
based upon the fair market value of the Issuer determined on a going
concern basis as between a willing buyer and a willing seller and taking
into account all relevant factors determinative of value, and shall be
final and binding on all parties. In determining the fair market value of
any shares of Common Stock, no consideration shall be given to any
restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or any
limitations on, voting rights.
"Preferred Stock" means the Issuer's Series A Cumulative Convertible
Preferred Stock, $0.05 par value and stated value $1,000 per share.
"Preferred Stock Certificate of Designation" means the Certificate of
Designation, Powers, Preferences and Rights of the Preferred Stock adopted
by the Board on January 13, 2000.
"Registration Rights Agreement" has the meaning specified in Section
3(f) hereof.
"Securities" means any debt or equity securities of the Issuer,
whether now or hereafter authorized, any instrument convertible into or
exchangeable for Securities or a Security, and any option, warrant or other
right to purchase or acquire any Security. "Security" means one of the
Securities.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute then in effect.
"Subsidiary" means any corporation at least 50% of whose outstanding
Voting Stock shall at the time be owned directly or indirectly by the
Issuer or by one or more of its Subsidiaries, or by the Issuer and one or
more of its Subsidiaries.
"Trading Day" means (a) a day on which the Common Stock is traded on
the Nasdaq National Market, The Nasdaq SmallCap Market or other registered
national stock
15
<PAGE>
exchange on which the Common Stock has been listed, or (b) if the Common
Stock is not listed on the Nasdaq National Market, The Nasdaq SmallCap
Market or any registered national stock exchange, a day or which the Common
Stock is traded in the over-the-counter market, as reported by the OTC
Bulletin Board, or (c) if the Common Stock is not quoted on the OTC
Bulletin Board, a day on which the Common Stock is quoted in the over-the-
counter market as reported by the National Quotation Bureau Incorporated
(or any similar organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common
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Stock is not listed or quoted as set forth in (a), (b) and (c) hereof, then
Trading Day shall mean any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government
action to close.
"Term" has the meaning specified in Section 1 hereof.
"Voting Stock", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) having
ordinary voting power for the election of a majority of the members of the
Board of Directors (or other governing body) of such corporation, other
than Capital Stock having such power only by reason of the happening of a
contingency.
"Warrants" means the Warrants issued simultaneously herewith and dated
as of the date hereof, including, without limitation, this Warrant, and any
other warrants of like tenor issued in substitution or exchange for any
thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or
of any of such other Warrants.
"Warrant Price" means $15.75, as such price may be adjusted from time
to time as shall result from the adjustments specified in Section 4 hereof.
"Warrant Share Number" means at any time the aggregate number of
shares of Warrant Stock which may at such time be purchased upon exercise
of this Warrant, after giving effect to all prior adjustments and increases
to such number made or required to be made under the terms hereof.
"Warrant Stock" means Common Stock issuable upon exercise of any
Warrant or Warrants or otherwise issuable pursuant to any Warrant or
Warrants.
8. Other Notices. In case at any time:
-------------
(A) the Issuer shall make any distributions to the
holders of Common Stock; or
(B) the Issuer shall authorize the granting to all
holders of its Common Stock of rights to subscribe
for or purchase any shares of Capital Stock of any
class or of any Common
16
<PAGE>
Stock Equivalents or Convertible Securities or other
rights; or
(C) there shall be any reclassification of the Capital
Stock of the Issuer; or
(D) there shall be any capital reorganization by the
Issuer; or
(E) there shall be any (i) consolidation or merger
involving the Issuer or (ii) sale, transfer or other
disposition of all or substantially all of the Issuer's
property, assets or business (except a merger or other
reorganization in which the Issuer shall be the
surviving corporation and its shares of Capital Stock
shall continue to be outstanding and except a
consolidation, merger, sale, transfer or other
disposition involving a wholly-owned Subsidiary); or
(F) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Issuer or any partial
liquidation of the Issuer or distribution to holders of
Common Stock;
then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
days prior to the action in question and not less than twenty days prior to the
record date or the date on which the Issuer's transfer books are closed in
respect thereto. The Issuer shall give to the Holder notice of all meetings and
actions by written consent of its stockholders, at the same time in the same
manner as notice of any meetings of stockholders is required to be given to
stockholders who do not waive such notice (or, if such requires no notice, then
two Trading Days written notice thereof describing the matters upon which action
is to be taken). The Holder shall have the right to send two representatives
selected by it to each meeting, who shall be permitted to attend, but not vote
at, such meeting and any adjournments thereof. This Warrant entitles the Holder
to receive copies of all financial and other information distributed or required
to be distributed to the holders of the Common Stock.
9. Amendment and Waiver. Any term, covenant, agreement or condition in
--------------------
this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such
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17
<PAGE>
amendment or waiver shall reduce the Warrant Share number, increase the Warrant
Price, shorten the period during which this Warrant may be exercised or modify
any provision of this Section 9 without the consent of the Holder of this
Warrant.
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
11. Notices. Any and all notices or other communications or deliveries
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required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earlier of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., New York City time, on
a Business Day, (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified for notice later than 5:00 p.m., New York City time, on any
date and earlier than 11:59 p.m., New York City time, on such date, (iii) the
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service or (iv) actual receipt by the party to whom such
notice is required to be given. The addresses for such communications shall be
with respect to the Holder of this Warrant or of Warrant Stock issued pursuant
hereto, addressed to such Holder at its last known address or facsimile number
appearing on the books of the Issuer maintained for such purposes, or with
respect to the Issuer, addressed to:
Xceed, Inc.
488 Madison Avenue
New York, New York 10022
Attention: Werner Haase
Facsimile No.: (212) 758-4385
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Holder shall be sent to Stroock &
Stroock & Lavan LLP, 180 Maiden Lane, New York New, York 10038-4982, Attention:
James R. Tanenbaum, facsimile no.: (212) 806-6006. Copies of notices to the
Issuer shall be sent to Akin, Gump, Strauss, Hauer & Feld, LLP, Attention:
Victoria A. Baylin, facsimile no.: (202) 887-4288.
12. Warrant Agent. The Issuer may, by written notice to each Holder of
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this Warrant, appoint an agent having an office in New York, New York for the
purpose of issuing shares of Warrant Stock on the exercise of this Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.
13. Remedies. The Issuer stipulates that the remedies at law of the Holder
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of this Warrant in the event of any default or threatened default by the Issuer
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate and that, to the
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fullest extent permitted by law, such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
14. Successors and Assigns. This Warrant and the rights evidenced hereby
----------------------
shall inure to the benefit of and be binding upon the successors and assigns of
the Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any such
Holder or Holder of Warrant Stock.
15. Modification and Severability. If, in any action before any court or
-----------------------------
agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
16. Headings. The headings of the Sections of this Warrant are for
--------
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and
year first above written.
XCEED, INC.
By:
--------------------------
Name: Werner Haase
Title: Chief Executive Officer
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<PAGE>
SUBSCRIPTION AGREEMENT
(To be signed only upon exercise of Warrant)
To XCEED, INC.:
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, 1 shares of Common Stock of XCEED, INC. and herewith
(a) makes payment of $ therefor, or (b) exercises Warrants with a Per
Share Market Value of $ . The undersigned requests that the certificates
for such shares be issued in the name of, and delivered to, , whose address
is .
Dated: ____________, 20__ __________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
__________________________________________
(Address)
- --------
1 Insert here the number of shares called for on the face of the Warrant (or, in
the case of a partial exercise, the portion thereof as to which the Warrant is
being exercised), in either case without making any adjustment for additional
Common Stock or any other stock or other securities or property or cash which,
pursuant to the adjustment provisions of the Warrant, may be deliverable upon
exercise.
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ASSIGNMENT
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers all
of the rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock of XCEED, INC. covered thereby set forth
hereinbelow unto:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
Dated: __________, 20__ __________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
__________________________________________
(Address)
Signed in the presence of:
_____________________________
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