Exhibit 10.5
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE STATE
SECURITIES LAWS, OR APPLICABLE LAWS OF ANY FOREIGN JURISDICTION. THIS WARRANT
AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND NEITHER THIS
WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT CAN BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND IN THE ABSENCE OF COMPLIANCE WITH ANY
APPLICABLE STATE SECURITIES LAWS AND APPLICABLE LAWS OF ANY FOREIGN
JURISDICTION, OR, IF THE CORPORATION SO REQUESTS, AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION, ACTING REASONABLY, THAT SUCH REGISTRATION IS
NOT REQUIRED AND SUCH FOREIGN JURISDICTION LAWS HAVE BEEN SATISFIED.
Dated: December 21, 2000
SOFTLOCK.COM, INC.
Common Stock Purchase Warrant
THIS IS TO CERTIFY THAT, for value received, [_____________] (the
"Initial Warrant Holder") and its successors and permitted assigns are entitled,
subject to the terms and conditions set forth below, to purchase from
SOFTLOCK.COM, INC., a Delaware corporation (the "Corporation"), at any time and
from time to time after 9:00 A.M., Boston, Massachusetts time on the Initial
Exercise Date (as defined in Section 1 below) and on or prior to 5:00 P.M.,
Boston, Massachusetts time on the Expiration Date (as defined in Section 1
below), all or any portion of the Warrant Shares (as defined in Section 1
below), at a purchase price per share equal to the Exercise Price (as defined in
Section 1 below). The number and character of the Warrant Shares and the
Exercise Price are subject to adjustment as provided herein.
This Common Stock Purchase Warrant (the "Warrant") evidences the right
of the Holder to purchase shares of Common Stock issued by the Corporation to
the Purchasers (as defined in and pursuant to that certain Series C Preferred
Stock and Warrant Purchase Agreement, dated as of the date hereof (the "Stock
Purchase Agreement"), by and among the Corporation and the persons listed
therein).
1. Definitions. As used in this Warrant, the following terms
shall have the respective meanings set forth below or
elsewhere in this Warrant as referred to below:
"Certificate of Incorporation" shall mean the Amended and Restated
Certificate of Incorporation of the Corporation, as amended from time to time
and including, without limitation, the Certificate of Designation of Powers,
Preferences and Rights of the Series C Preferred Stock.
"Commission" means the Securities and Exchange Commission or its
successor entity.
"Common Stock" shall mean shares of the Common Stock of the
Corporation, $0.01 par value per share of the Corporation.
"Corporation" shall mean SoftLock.com, Inc. and/or any Person that
shall succeed to, or assume the obligations hereunder of, SoftLock.com, Inc.
"Exercise Date" shall have the meaning set forth in Section 2.2 hereof.
"Exercise Price" shall mean, as of the Initial Exercise Date, the
Initial Exercise Price and after the Initial Exercise Date, the Initial Exercise
Price as adjusted from time to time pursuant to the terms of this Warrant.
"Expiration Date" shall mean December 21, 2005, unless terminated
earlier pursuant to Section 2.1(b) hereof.
"Fair Market Value" shall mean (i) the last sale price per share of
Stock reported by Nasdaq SmallCap Market or any national securities exchange on
which such Stock is quoted or listed, as the case may be, on the date
immediately preceding the Exercise Date or, if no such sale price is reported on
such date, such price on the next preceding business day in which such price was
reported, or (ii) if such Stock is not at the time quoted or listed by Nasdaq
SmallCap Market or on any national securities exchange, the average of the last
reported bid and asked prices as reported by The National Quotation Bureau
Incorporated or any similar reputable quotation and reporting service on the
date immediately preceding the Exercise Date or if no such bid and asked prices
are reported on such date, such price on the next preceding business day on
which such prices were reported, provided such date is not more than ten (10)
days prior to the Exercise Date or (iii) if such Stock is not quoted or listed
by Nasdaq SmallCap Market or on any national securities exchange or reported on
a reputable quotation and reporting service within the ten (10) day period prior
to the Exercise Date, the fair market value of a share of such Stock, as
determined in good faith by the Board of Directors of the Corporation and based
upon the fair market value of the Corporation as a whole, on a going concern
basis, using customary and appropriate valuation methods and the unaudited
financial statements for the most recently ended fiscal quarter of the
Corporation in addition to the most recent fiscal year end audited financial
statements of the Corporation, in each case, as filed with the Commission and
not taking into account any discount for minority ownership or restrictions on
transfer of the capital stock of the Corporation.
"Holder" shall mean, as applicable, (i) the Initial Warrant Holder,
(ii) any successor of the Initial Warrant Holder, or (iii) any other holder of
record of this Warrant or any portion thereof to whom this Warrant or any
portion thereof shall have been transferred in accordance with the provisions of
Section 9 hereof.
"Initial Exercise Date" shall mean the date on which this Warrant first
becomes exercisable in accordance with the provisions of Section 2.1(b) hereof.
"Initial Exercise Price" shall mean an amount equal to $1.91 per share.
"Initial Warrant Holder" shall have the meaning set forth in the first
paragraph of this Warrant.
"Initial Warrant Shares" shall mean [____] shares of Common Stock.
"Issue Date" shall mean the date hereof.
"Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"Preferred Stock" shall mean the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock and all other capital stock of the
Corporation having a preference on dissolution or liquidation of the
Corporation.
"Purchaser" shall have the meaning ascribed to it in the Stock Purchase
Agreement.
"Qualified Public Offering" shall have the meaning ascribed to it in
the Stock Purchase Agreement.
"Registrable Securities" shall mean all shares of Stock that may be
acquired by the Holder through any exchange or conversion of the Series C
Preferred Stock or upon exercise of this Warrant.
"Registration Statement" means any registration statement of the
Corporation which covers any of the Registrable Securities pursuant to the
provisions of the Stock Purchase Agreement, including the prospectus, amendments
and supplements to such registration statement, including post-effective
amendments, all exhibits and all material incorporated by reference in such
registration statement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series A Preferred Stock" shall mean the Series A Convertible
Preferred Stock of the Corporation, $0.01 par value per share.
"Series B Certificate" shall mean the Certificate of Designation of
Powers, Preferences and Rights of the Series B Preferred Stock.
"Series B Preferred Stock" shall mean the Series B Convertible
Preferred Stock of the Corporation, $0.01 par value per share.
"Series C Certificate" shall mean the Certificate of Designation of
Powers Preferences and Rights of the Series C Preferred Stock.
"Series C Preferred Stock" shall mean the Series C Convertible
Preferred Stock of the Corporation, $0.01 par value per share.
"Shareholders' and Rights Agreement" shall mean that certain Amended
and Restated Shareholders' and Rights Agreement, dated as of the date hereof, by
and among the Corporation and the persons listed therein.
"Stock" shall mean (i) Common Stock, (ii) capital stock of the
Corporation (other than Common Stock) or of any other Person or any other
securities of the Corporation or of any other Person that the Holder is entitled
to receive, or receives, upon exercise of this Warrant, in lieu of or in
addition to Common Stock, and/or (iii) capital stock of the Corporation (other
than Common Stock) or of any other Person or any other securities of the
Corporation or of any other Person that may be issued in replacement of,
substitution, exchange or redemption for, or upon reclassification or conversion
of, Common Stock or any other Stock, in each case whether as a result of a
reorganization, reclassification, merger, consolidation or sale of substantially
all of the assets of the Corporation.
"Stock Purchase Agreement" shall have the meaning set forth in the
second paragraph of this Warrant.
"Warrant" shall have the meaning set forth in the second paragraph of
this Warrant.
"Warrant Shares" shall mean at any time, the number and type of shares
of Stock purchasable hereunder, which shall be the Initial Warrant Shares after
giving effect to the number of shares of Stock previously purchased by the
Holder pursuant to any and all exercises of this Warrant prior to such time and
after giving effect to all adjustments with respect to the number and type of
Warrant Shares purchasable hereunder as provided for herein, including, without
limitation, those set forth in the definition of "Stock" and in Section 4
hereof, prior to such time.
2. Exercise of Warrant; Vesting.
2.1(a) Method of Exercise. Subject to and upon all of the
terms and conditions set forth in this Warrant (including the limitation set
forth in the next paragraph), the Holder may exercise this Warrant, in whole or
in part with respect to any Warrant Shares, at any time and from time to time
during the period commencing on the Initial Exercise Date and ending on the
Expiration Date, by giving prior written notice to the Corporation that the
Holder intends to exercise this Warrant (the "Exercise Notice"), which Exercise
Notice shall indicate the number of shares for which the Holder intends to
exercise this Warrant, and upon presentation and surrender of this Warrant to
the Corporation at its principal office, together with (a) a properly completed
and duly executed subscription form, in the form attached hereto, which
subscription form shall specify the number of Warrant Shares for which this
Warrant is then being exercised, and (b) payment of the aggregate Exercise Price
payable hereunder in respect of the number of Warrant Shares being purchased
upon exercise of this Warrant. Payment of such aggregate Exercise Price shall be
made (i) in cash or by money order, certified or bank cashier's check or wire
transfer (in each case in lawful currency of the United States of America), (ii)
cancellation of indebtedness owing from the Corporation to the Holder, (iii) by
the Holder surrendering a number of Warrant Shares having a Fair Market Value on
the Exercise Date equal to or greater than (but only if by a fractional share)
the required aggregate Exercise Price, in which case the Holder would receive
the number of Warrant Shares to which it would otherwise be entitled upon such
exercise, less the surrendered shares, or (iv) any combination of the methods
described in the foregoing clauses (i), (ii) and (iii).
2.1(b) Vesting Schedule. This Warrant will become exercisable
in full on and as of 9:00 A.M. (Boston time) on October 15, 2001 ("Initial
Exercise Date"); provided, however, that if there is a Liquidity Event (as
defined below) before the Initial Exercise Date, this Warrant shall terminate
automatically and without further action. The term "Liquidity Event" shall mean
the filing of a Registration Statement covering all of the Registrable
Securities with the Commission in compliance with the Securities Act and such
Registration Statement having been declared effective by the Commission.
2.2 Effectiveness of Exercise; Ownership. Each exercise of
this Warrant by the Holder shall be deemed to have been effected immediately
prior to the close of business on the date upon which all of the requirements of
Section 2.1 hereof with respect to such exercise shall have been complied with
in full (each such date, an "Exercise Date". On the applicable Exercise Date
with respect to any exercise of this Warrant by the Holder, the Corporation
shall be deemed to have issued to the Holder, and the Holder shall be deemed to
have become the holder of record and legal owner of, the number of Warrant
Shares being purchased upon such exercise of this Warrant, notwithstanding that
the stock transfer books of the Corporation shall then be closed or that
certificates representing such number of Warrant Shares being purchased shall
not then be actually delivered to the Holder.
2.3 Delivery of Stock Certificates on Exercise. As soon as
practicable after the exercise of this Warrant, and in any event within ten (10)
days thereafter, the Corporation, at its expense, and in accordance with
applicable securities laws, will cause to be issued in the name of and delivered
to the Holder, or as the Holder may direct (subject in all cases, to the
provisions of Section 9 hereof), a certificate or certificates for the number of
Warrant Shares purchased by the Holder on such exercise, plus, in lieu of any
fractional share to which the Holder would otherwise be entitled, cash equal to
such fraction multiplied by the Fair Market Value.
2.4 Shares to Be Fully Paid and Nonassessable. All Warrant
Shares issued upon the exercise of this Warrant shall be validly issued, fully
paid and nonassessable, free of all liens, taxes, charges and other encumbrances
or restrictions on sale (other than those set forth herein) and free and clear
of all preemptive rights.
2.5 Fractional Shares. No fractional shares of Stock or scrip
representing fractional shares of Stock shall be issued upon the exercise of
this Warrant. With respect to any fraction of a share of Stock called for upon
any exercise hereof, the Corporation shall make a cash payment to the Holder as
set forth in Section 2.3 hereof.
2.6 Issuance of New Warrants; Corporation Acknowledgement.
Upon any partial exercise of this Warrant, the Corporation, at its expense, will
forthwith and, in any event, within ten (10) days after partial exercise, issue
and deliver to the Holder a new warrant or warrants of like tenor, registered in
the name of the Holder, exercisable, in the aggregate, for the balance of the
Warrant Shares. Moreover, the Corporation shall, at the time of any exercise of
this Warrant, upon the request of the Holder, acknowledge in writing its
continuing obligation to afford to the Holder any rights to which the Holder
shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant; provided, however, that if the Holder shall fail to
make any such request, such failure shall not affect the continuing obligation
of the Corporation to afford to the Holder any such rights.
2.7 Payment of Taxes and Expenses. The Corporation shall pay
any recording, filing, stamp or similar tax which may be payable in respect of
any transfer involved in the issuance of, and the preparation and delivery of
certificates (if applicable) representing, (i) any Warrant Shares purchased upon
exercise of this Warrant and/or (ii) new or replacement warrants in the Holder's
name or the name of any transferee. The Holder shall pay any transfer tax due as
a result of the transfer of all or any portion of this Warrant to a transferee.
2.8 Expiration. This Warrant and the Holder's rights
hereunder, to the extent not previously exercised, shall expire as of 5:00
P.M., Boston, Massachusetts time, on the Expiration Date.
3. Registration and other Rights. The Holder of this Warrant shall have
the right to cause the Corporation to register any and all Warrant Shares under
the Securities Act and under any blue sky or securities laws of any
jurisdictions within the United States, at the time and in the manner specified
and as provided for in the Stock Purchase Agreement, and all Warrant Shares are
entitled to the registration rights set forth in Section 7.17 of the Stock
Purchase Agreement.
4. Adjustments.
4.1 Adjustments for Stock Dividends, Subdivisions and
Combinations.
(a) In the event that, at any time and from time
to time after the Issue Date, the Corporation shall
(i) issue any additional shares of Stock as a dividend or distribution on its
outstanding Stock or options, warrants or other rights to purchase, directly or
indirectly, Stock as a dividend or distribution on its outstanding Stock or
securities convertible, directly or indirectly, into Stock as a dividend or
distribution on its outstanding Stock (other than shares of Stock issued upon
exchange, exercise or conversion of the Preferred Stock or upon exercise of this
Warrant), (ii) subdivide its outstanding shares of Stock into a greater number
of shares of Stock or (iii) combine its outstanding shares of Stock into a
smaller number of shares of Stock, then and in each such event, (x) the Exercise
Price shall, simultaneously with the happening of such event, be adjusted by
multiplying the then current Exercise Price by a fraction, (A) the numerator of
which shall be the number of shares of Stock outstanding immediately prior to
such event, and (B) the denominator of which shall be the number of shares of
Stock outstanding immediately after such event, each in accordance with their
terms, and the product so obtained shall thereafter be the Exercise Price then
in effect, and (y) the number of Warrant Shares shall be adjusted by increasing
or decreasing, as the case may be, the number of shares of Stock included within
the Warrant Shares immediately prior to such event by the percentage increase or
decrease in the total number of shares of Stock outstanding immediately after
such event as compared to the total number of shares of Stock outstanding
immediately prior to such event and the result so obtained shall be the number
of Warrant Shares then in effect.
(b) The Exercise Price and the number of Warrant
Shares, as so adjusted, shall be readjusted in the
same manner upon the happening of any successive event or events described in
this Section 4.1.
4.2 Adjustment for Reorganization, Consolidation or Merger. In the event that,
at any time or from time to time after the Issue Date, the Corporation shall (a)
effect a reorganization, (b) consolidate with or merge into any other Person, or
(c) sell or transfer all or substantially all of its properties or assets or
more than fifty percent (50%) of the voting capital stock of the Corporation
(whether issued and outstanding, newly issued, from treasury, or any combination
thereof) to any other Person under any plan or arrangement contemplating the
reorganization, consolidation or merger, sale or transfer, or dissolution of the
Corporation, then, in each such case, the Holder, upon the exercise of this
Warrant as provided in Section 2 hereof at any time or from time to time after
the consummation of such reorganization, consolidation, merger or sale or the
effective date of such dissolution (subject to the limitation contained in
Section 4.6, if applicable), as the case may be, shall receive, in lieu of the
Warrant Shares issuable on such exercise immediately prior to such consummation
or such effective date, as the case may be, the Stock and property (including
cash) to which the Holder would have been entitled upon the consummation of such
reorganization, consolidation or merger, or sale or transfer, or in connection
with such dissolution, as the case may be, if the Holder had so exercised this
Warrant immediately prior thereto (assuming the payment by the Holder of the
Exercise Price therefor as required hereby in a form permitted hereby, which
payment shall be included in the assets of the Corporation for the purposes of
determining the amount available for distribution), all subject to successive
adjustments thereafter from time to time pursuant to, and in accordance with,
the provisions of this Section 4.
4.3 Adjustments for Reclassifications. If the Stock issuable upon the exercise
of this Warrant shall be changed into the same or a different number of shares
of any class(es) or series of stock, whether by reclassification or otherwise
(other than an adjustment under Section 4.1 or a merger, consolidation, or sale
of assets provided for under Section 4.2), then and in each such event, the
Holder hereof shall have the right thereafter to exercise this Warrant for the
kind and amount of shares of stock and other securities and property receivable
upon such reclassification, or other change by holders of the number of shares
of Stock for which this Warrant was exercisable immediately prior to such
reclassification, or change, all subject to further adjustment as provided
herein.
4.4 Distributions. In the event that, at any time or from time to time after
the Issue Date, the Corporation shall make or issue, or shall fix a record date
for the determination of eligible holders entitled to receive, a dividend or
other distribution with respect to Common Stock payable in (i) shares of its
capital stock (other than a stock dividend provided for in Section 4.1), (ii)
other securities of the Corporation or any other Person, (iii) evidences of
indebtedness issued by the Corporation or any other Person, (iv) options,
warrants or rights to subscribe for or purchase any of the foregoing, or (v)
assets (excluding cash dividends) then, in each such case, the Holder of this
Warrant shall receive, in addition to the shares of Stock issuable upon the
exercise of this Warrant prior to such date, and without the payment of
additional consideration therefor, the shares of capital stock, other
securities, evidence of indebtedness, options, warrants or other rights or
assets, as the case may be, to which such Holder would have been entitled upon
such date as if such Holder had exercised this Warrant on the date hereof and
had thereafter, during the period from the date hereof to and including the date
of the actual exercise of this Warrant, retained such shares and/or all other
additional stock available to it as aforesaid during such period, giving effect
to all adjustments pursuant to this Section 4. The Corporation shall reserve and
set aside, for the life of this Warrant or until exercised in full, all such
distributions to which the Holder is entitled to receive pursuant to this
Section 4.4.
4.5 Continuation of Terms. Upon any reorganization, reclassification, sale,
consolidation, merger or other transfer (and any liquidation, dissolution or
winding up of the Corporation following any such transfer) referred to in this
Section 4, this Warrant shall continue in full force and effect and the terms
hereof shall be applicable to the shares of Stock and property (including cash,
where applicable) receivable upon the exercise of this Warrant after the
consummation of such reorganization, reclassification, sale, consolidation,
merger or other transfer or the effective date of liquidation, dissolution or
winding up of the Corporation following any such transfer, as the case may be,
and shall be binding upon the issuer of any such Stock, including, in the case
of any such transfer, the Person acquiring all or substantially all of the
properties or assets or more than fifty percent (50%) of the voting capital
stock of the Corporation (whether issued and outstanding, newly issued or from
treasury or any combination thereof), whether or not such Person shall have
expressly assumed the terms of this Warrant.
4.6 Dissolution. Subject to Section 4.5 hereof, in the event of any dissolution
of the Corporation following the transfer of all or substantially all of its
properties or assets at any time after the Issue Date, the Corporation shall
retain for a period of at least ninety (90) days after the effective date of
such dissolution the Stock and property (including cash, where applicable)
receivable by the Holder pursuant to Section 4.2 hereof upon exercise of this
Warrant at any time after the effective date of such dissolution (assuming the
payment by the Holder of the Exercise Price therefor as required hereby in a
form permitted hereby). If the Holder fails to exercise this Warrant within the
sixty (60) day period following the effective date of such dissolution, then
such Stock and property (including cash, where applicable) shall be distributed
pro rata to those Persons who were stockholders of record of the Corporation on
the effective date of such dissolution or as otherwise required by law or the
Certificate of Incorporation of the Corporation.
5. Officer's Certificate as to Adjustments. In each case of any adjustment or
readjustment in the number and kind of Warrant Shares, or property, issuable
hereunder from time to time, or the Exercise Price, the Corporation, at its
expense, will promptly cause an officer of the Corporation to compute such
adjustment or readjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment or readjustment and showing
the facts upon which such adjustment or readjustment is based. The Corporation
will forthwith send a copy of each such certificate to the Holder in accordance
with Section 10.5 below.
6. Notices of Record Date, Etc. In the event of:
(a) any taking by the Corporation of a record of the holders of Stock
for the purpose of determining the holders thereof who are entitled to receive
any shares of Stock as a dividend or other distribution or pursuant to a stock
split; or
(b) any reorganization of the Corporation, or any sale or transfer, in
a single transaction or a series of related transactions, of all or
substantially all the assets of the Corporation to, or the consolidation or
merger of the Corporation with or into, any other Person; or
(c) any voluntary or involuntary dissolution, liquidation or winding-up
of the Corporation; or
(d) any sale, in a single transaction or a series of related
transactions, of more than fifty percent (50%) of the Corporation's voting
capital stock (whether issued and outstanding, newly issued, from treasury, or
any combination thereof);
then and in each such event the Corporation will mail or cause to be mailed to
the Holder a notice specifying (i) the date on which any such record is to be
taken for the purpose of such dividend, distribution or stock split, and stating
the amount and character of such dividend, distribution or stock split, or (ii)
the date on which any such reorganization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of any one or more classes of
Stock shall be entitled to exchange their shares of Stock for securities or
other property deliverable on such reorganization, transfer, consolidation,
merger, dissolution, liquidation or winding-up, or (iii) the date on which any
such sale of more than fifty percent (50%) of the Corporation's voting capital
stock is to take place and the material terms thereof, as the case may be. Such
notice shall be mailed at least ten (10) days prior to the date specified in
such notice on which any such action is to be taken.
7. Exchange of Warrant. Subject to the provisions of Section 9 hereof (if and
to the extent applicable), this Warrant shall be exchangeable, upon the
surrender hereof by the Holder at the principal office of the Corporation, for
new warrants of like tenor, each registered in the name of the Holder or in the
name of such other Persons as the Holder may direct. Each of such new warrants
shall be exercisable for such number of Warrant Shares as the Holder shall
direct, provided that all of such new warrants shall represent, in the
aggregate, the right to purchase the same number of Warrant Shares and cash,
securities or other property, if any, which may be purchased by the Holder upon
exercise of this Warrant at the time of its surrender.
8. Replacement of Warrant. On receipt of evidence reasonably satisfactory to
the Corporation of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any such loss, theft or destruction of this Warrant, on
delivery of a customary affidavit of the Holder and an indemnity agreement or,
in the case of any such mutilation, on surrender and cancellation of this
Warrant, the Corporation at its expense will execute and deliver, in lieu
thereof, a new warrant of like tenor.
9. Transfer Provisions, etc.
9.1 Legends.
(a) Each certificate representing any Warrant Shares issued
upon exercise of this Warrant shall bear the following legend:
"THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY BE TRANSFERRED ONLY PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED."
(b) Each certificate representing any shares of Stock issued
from time to time upon exercise of this Warrant shall also bear any legend
required under any applicable state securities or blue sky laws.
9.2 Mechanics of Transfer. Any transfer of all or any portion of this Warrant,
or of any interest therein, that is otherwise in compliance with applicable law
shall be effected by surrendering this Warrant to the Corporation at its
principal office, together with (i) a duly executed form of assignment, in the
form attached hereto, (ii) payment of any applicable transfer taxes and (iii)
unless there is in effect a registration statement under the Securities Act
covering the proposed transfer or the proposed transfer is to Affiliates or
Affiliated Groups (as such terms are defined in the Stock Purchase Agreement) of
the Holder, if the Corporation so requests (except in transactions in compliance
with Rule 144) a written opinion of legal counsel reasonably satisfactory to the
Corporation addressed to the Corporation and satisfactory in form and substance
to the Corporation's counsel, acting reasonably, to the effect that the proposed
transfer of the Warrant or the Warrant Shares may be effected without
registration under the Securities Act. In the event of any such transfer of this
Warrant, in whole, the Corporation shall issue a new warrant of like tenor to
the transferee, representing the right to purchase the same number of Warrant
Shares, and cash, securities or other property, if any, which were purchasable
by the Holder upon exercise of this Warrant at the time of its transfer. In the
event of any such transfer of a portion of this Warrant, (i) the Corporation
shall issue a new warrant of like tenor to the transferee, representing the
right to purchase the same number of Warrant Shares, and cash, securities or
other property, if any, which were purchasable by the Holder upon exercise of
the transferred portion of this Warrant at the time of such transfer, and (ii)
the Corporation shall issue a new warrant of like tenor to the Holder,
representing the right to purchase the number of Warrant Shares, and cash,
securities or other property, if any, purchasable by the Holder upon exercise of
the portion of this Warrant not transferred to such transferee. Until this
Warrant or any portion thereof is transferred on the books of the Corporation,
the Corporation may treat the Holder as the absolute holder of this Warrant and
all right, title and interest therein for all purposes, notwithstanding any
notice to the contrary.
9.3 Restrictions on Transfer. Subject to Section 9.2 hereof and compliance with
applicable securities laws, this Warrant, and any portion hereof, and the
Warrant Shares may be transferred by the Holder in its sole discretion at any
time and to any Person, including without limitation transfers to Affiliates or
Affiliated Groups (as such terms are defined in the Stock Purchase Agreement),
without the consent of the Corporation.
10. General.
10.1 Statement on Warrant. Irrespective of any adjustments in
the Exercise Price or the number or kind of Warrant Shares, this Warrant may
continue to express the same kind of Warrant Shares as are stated on the front
page hereof.
10.2 Authorized Shares; Reservation of Shares for Issuance. At
all times while this Warrant is outstanding the Corporation shall maintain its
corporate authority to issue, and shall have authorized and reserved for
issuance upon exercise of this Warrant, such number of shares of Stock as shall
be sufficient to perform its obligations under this Warrant (after giving effect
to any and all adjustments to the number and kind of Warrant Shares purchasable
upon exercise of this Warrant).
10.3 No Impairment. The Corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities, sale
or other transfer of any of its assets or properties, or any other voluntary
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 action as may be necessary or
appropriate in order to protect the rights of the Holder hereunder against
impairment. Without limiting the generality of the foregoing, the Corporation
(a) will not increase the par value of any shares of Stock receivable upon the
exercise of this Warrant above the amount payable therefor on such exercise, and
(b) will take all action that may be necessary or appropriate in order that the
Corporation may validly and legally issue fully paid and nonassessable shares of
Stock on the exercise of this Warrant.
10.4 No Rights as Stockholder. The Holder shall not be
entitled to vote or to receive dividends or to be deemed the holder of Stock
that may at any time be issuable upon exercise of this Warrant for any purpose
whatsoever, nor shall anything contained herein be construed to confer upon the
Holder any of the rights of a stockholder of the Corporation until the Holder
shall have exercised this Warrant and been issued Warrant Shares in accordance
with the provisions hereof.
10.5 Notices. All notices, demands, requests, certificates or
other communications under this Warrant shall be in writing and shall be either
mailed by certified mail, postage prepaid, in which case such notice, demand,
request, certificate or other communications shall be deemed to have been given
three (3) days after the date on which it is first deposited in the mails, or
hand delivered or sent by facsimile transmission, by tested or otherwise
authenticated telex or cable or by private expedited courier for overnight
delivery with signature required, in each such case, such notice, demand,
request, certificate or other communications being deemed to have been given
upon delivery or receipt, as the case may be:
(i) if to the Corporation, SoftLock.com, Inc., Five Clock Tower Place,
Suite 440, Maynard, Massachusetts 01754, Attention: President, or at such other
address as the Corporation may have furnished in writing to the Holder; and
(ii) if to the Holder, at the Holder's address appearing in the books
maintained by the Corporation.
10.6 Amendment and Waiver. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Corporation and the Holder.
10.7 Governing Law. This Warrant shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware.
10.8 Covenants to Bind Successor and Assigns. All covenants,
stipulations, promises and agreements in this Warrant shall be binding on and
inure to the benefit of the Corporation and the Holder and their respective
successors, assigns and transferees, whether so expressed or not.
10.9 Severability. In case any one or more of the provisions contained
in this Warrant shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
10.10 Construction. The definitions of this Warrant shall apply equally
to both the singular and the plural forms of the terms defined. Wherever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The section and paragraph headings used herein are
for convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
10.11 Remedies. The Holder, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Corporation agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Warrant and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate. In any action or proceeding brought to enforce any provision
of this Warrant or where any provision hereof is validly asserted as a defense,
the successful party to such action or proceeding shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
10.12 Counterparts; Delivery by Facsimile. This Warrant may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. Delivery of this
Warrant may be effected by facsimile.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Common Stock
Purchase Warrant to be executed as an instrument under seal in its corporate
name by one of its officers thereunto duly authorized, all as of the day and
year first above written.
SOFTLOCK.COM, INC.
By:______________________________
Name: Scott Griffith
Title: Chief Executive Officer
<PAGE>
FORM OF SUBSCRIPTION
(To be executed upon exercise of Warrant)
To: SOFTLOCK.COM, INC.
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the attached Warrant for, and to exercise thereunder,
______ shares of Common Stock, $0.01 par value per share ("Common Stock"), of
SoftLock.com, Inc., a Delaware corporation, and tenders herewith payment of
$____________, representing the aggregate purchase price for such shares based
on the price per share provided for in such Warrant. Such payment is being made
in accordance with [Section 2.1(a)(i)] [Section 2.1(a)(ii)] [Section
2.1(a)(iii)] of the attached Warrant.
Please issue a certificate or certificates for such shares of Common
Stock in the following name or names and denominations and deliver such
certificate or certificates to the person or persons listed below at their
respective addresses set forth below:
Dated: _____________, 2000 _________________________________
---------------------------------
(Address)
If said number of shares of Common Stock shall not be all the shares of
Common Stock issuable upon exercise of the attached Warrant, a new Warrant is to
be issued in the name of the undersigned for the balance remaining of such
shares of Common Stock less any fraction of a share of Common Stock paid in
cash.
Dated:_____________, 2000 _________________________________
NOTE: The above signature
should correspond exactly
with the name on the face
of the attached Warrant or
with the name of the
assignee appearing in the
assignment form below.
<PAGE>
FORM OF ASSIGNMENT
(To be executed upon assignment of Warrant)
For value received, ______________________________ hereby sells,
assigns and transfers unto ______________ the attached Warrant [____% of the
attached Warrant], together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint _______________________________
attorney to transfer said Warrant [said percentage of said Warrant] on the books
of SoftLock.com, Inc., a Delaware corporation, with full power of substitution
in the premises.
If not all of the attached Warrant is to be so transferred, a new
Warrant is to be issued in the name of the undersigned for the balance of said
Warrant.
Dated:_______________, 2000 _________________________________
NOTE: The above signature should
correspond exactly with the name on
the face of the attached Warrant.
