THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE RESOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
ACT, OR AN OPINION OF COUNSEL SATISFACTION TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER THE ACT.
CAVION TECHNOLOGIES, INC.
COMMON STOCK PURCHASE WARRANT
CAVION TECHNOLOGIES, INC., a Colorado corporation, and doing
business as cavion.com (the "Company"), hereby certifies that,
for value received, Neidiger, Tucker, Bruner, Inc. or its
registered assigns (the "Holder"), is entitled, on the terms and
subject to the conditions set forth herein, to purchase from the
Company at any time commencing -------, 2000 and before 5:00
p.m., Denver, Colorado time, on ------, 2004, ------ fully paid
and nonassessable shares of Common Stock (as hereinafter defined)
at a purchase price of $---- per share. The number of such
shares of Common Stock and the Purchase Price are subject to
adjustment as provided in this Warrant.
As used herein the following terms, unless the context
otherwise requires, have the indicated meanings:
"Company" means Cavion Technologies, Inc. and any person
(corporate or otherwise) that shall succeed to or assume the
obligations of Cavion Technologies, Inc. hereunder in accordance
with the terms hereof.
"Common Stock" means the Company's Class A Common Stock,
$.0001 par value per share, as authorized on the date hereof, and
any other securities into which or for which the Common Stock may
be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expiration Date" means --------, 2004.
"Holder" or "Holders" means the holder or holders of the
Registerable Securities, including the holder or holders of
Warrants to purchase Registerable Securities not then issued.
"Issue Date" means the -------, 2000 date of the original
issuance of this Warrant.
"Majority Holders" means the holder or holders of Warrants
and Registerable Securities theretofore issued upon exercise or
conversion of Warrants, who own or have the right to acquire upon
exercise or conversion of Warrants a majority of the Registerable
Securities that would be outstanding if all of the outstanding
Warrants were exercised in full on the date as of which the
determination is being made.
"Nasdaq" means the NASDAQ SmallCap Market.
"Other Securities" means any stock (other than Common Stock)
and other securities of the Company or any other person
(corporate or otherwise) which the Holder at any time shall be
entitled to receive, or shall have received, on the exercise of
this Warrant, in lieu of or in addition to Common Stock, or which
at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other
Securities as a result of the provisions of Section 4.
"Prospectus" means the prospectus included in the
Registration Statement as of the date it becomes effective under
the Securities Act ("SEC Effective Date"), including financial
statements and all documents incorporated by reference therein.
In the case of references to the Prospectus as of a date
subsequent to the SEC Effective Date, Prospectus means as
supplemented as of such subsequent date.
"Purchase Price" means $----- per share.
"Register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration
statement or statements in compliance with the Securities Act and
the declaration or ordering of effectiveness of such registration
statement by the United States Securities and Exchange Commission
(the "SEC").
"Registerable Securities" means the shares of Common Stock
issued or issuable upon exercise or conversion of the Warrant and
Other Securities issued or issuable as a result of the
provisions of Sections 4 or 5 hereof. References herein to
amounts or percentages of Registerable Securities as of or on any
particular date shall be deemed to refer to amounts or
percentages after giving effect to any applicable events
contemplated by the preceding sentence. As to any particular
Registerable Securities, such securities shall cease to be
Registerable Securities when they have been sold pursuant to an
effective registration statement or in compliance with Rule 144
or are eligible to be sold pursuant to subsection (k) of Rule
144.
"Registration Period" means the period from the Issue Date
to the earliest of (i) the date which is three years after the
SEC Effective Date, (ii) the date on which the Holder may sell
all of Holder's Registerable Securities without registration
under the Securities Act pursuant to subsection (k) of Rule 144,
without restriction on the manner of sale or the volume of
securities which may be sold in any period and without the
requirement for the giving of any notice to, or the mailing of
any filing with the SEC and (iii) the date on which the Holder no
longer owns any Registerable Securities.
"Registration Statement" means a registration statement of
the Company under the Securities Act on such form for which the
Company then qualifies and which permits the secondary resale
thereunder of Registerable Securities required by, the provisions
hereof to be included therein. The term "Registration Statement"
shall also include any amendment thereto and all exhibits and
financial statements and schedules and documents incorporated by
reference in such Registration Statement as of the SEC Effective
Date. In the case of references to the Registration Statement as
of a date subsequent to the SEC Effective Date, Registration
Statement means as amended or supplemented as of such subsequent
date.
"Rule 144" means Rule 144 promulgated under the Securities
Act or any other similar rule or regulation of the SEC that may
at any time permit a holder of securities of the Company to sell
such Company securities to the public without registration under
the Securities Act.
"Securities Act" means the Securities Act of 1933, as
amended.
"SEC" means the United States Securities and Exchange
Commission.
"SEC Effective Date" means the date the Registration
Statement is declared effective by the SEC.
"SEC Filing Date" means the date the Registration Statement
is first filed with the SEC pursuant to Section 20 hereof.
"Trading Day" means a day on which the principal securities
market for the Common Stock is open for general trading of
securities.
"Warrants" means this Warrant and any other warrants derived
from this Warrant originally issued by the Company to Neidiger,
Tucker, Bruner, Inc. on the Issue Date.
1. EXERCISE OF WARRANT.
1.1 EXERCISE. This Warrant may be exercised by the
Holder, in full or in part, at any time, or from time to time,
commencing on the Issue Date to and including the Expiration Date
by surrender of this Warrant and the subscription form annexed
hereto (completed and signed by the Holder) to the principal
office of the Company or the Company's transfer agent and
registrar for the Common Stock, and by making payment by
certified or official bank check payable to the order of the
Company, in the amount obtained by multiplying (a) the number of
shares of Common Stock designated by the Holder in the
subscription form by (b) the Purchase Price then in effect. The
Holder shall provide a copy of the subscription form to the
Company at the time of exercise and the Company will confirm the
exercise instructions given therein by notice to the Company's
transfer agent within one Trading Day after receiving such
subscription form. On any partial exercise the Company will
promptly issue and deliver to or upon the order of the Holder
hereof a new Warrant or Warrants of like tenor, in the name of
the Holder hereof or as the Holder (upon payment by the Holder of
any applicable transfer taxes) may request, providing in the
aggregate on the face or faces thereof for the purchase of the
number of shares of Common Stock for which such Warrant or
Warrants may still be exercised.
1.2 CASHLESS EXERCISE. Notwithstanding anything to the
contrary contained in Section 1.1, the Holder may elect to
exercise this Warrant in whole or in part by receiving shares of
Common Stock equal to the net issuance value (as determined
below) of this Warrant, or any part hereof upon surrender of this
Warrant to the principal office of the Company or the Company's
transfer agent and registrar for the Common Stock together with
the subscription form annexed hereto (completed and signed by the
Holder), in which event the Company shall issue to the Holder a
number of shares of Common Stock equal to X in the following
formula:
X = Y (A-B)
-------
A
Where:
Y = the number of shares of Common
Stock as to which this Warrant is to be
exercised.
A = the current fair market value
of one share of Common Stock calculated as of
the last Trading Day immediately preceding
the exercise of this Warrant.
B = the Purchase Price.
As used herein, current fair market value of Common
Stock as of a specified date shall mean with respect to each
share of Common Stock the closing sale price of the Common Stock
on the principal securities market on which the Common Stock may
at the time be listed or, if there have been no sales on any such
exchange on such day, the average of the reported closing bid and
asked prices on the principal securities market at the end of
such day, or, if on such day the Common Stock is not so listed,
the average of the representative bid and asked prices quoted in
the Nasdaq System as of 2:00 p.m., Denver, Colorado time, or, if
on such day the Common Stock is not quoted in the Nasdaq System,
the average of the highest bid and lowest asked price on such day
in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor
organization, in each such case averaged over a period of five
consecutive Trading Days consisting of the day as of which the
current fair market value of a share of Common Stock is being
determined (or if such day is not a Trading Day, the Trading Day
next preceding such day) and the four consecutive Trading Days
prior to such day. If on the date for which current fair market
value is to be determined the Common Stock is not listed on any
securities exchange or quoted in the Nasdaq System or the over-
the-counter market, the current fair market value of Common Stock
shall be the highest price per share which the Company could then
obtain from a willing buyer (not a current employee or director)
for shares of Common Stock sold by the Company from authorized
but unissued shares, as determined in good faith by the Board of
Directors of the Company, unless prior to such date the Company
has become subject to a merger, acquisition or other
consolidation transaction pursuant to which the Company is not
the surviving party, in which case the current fair market value
of the Common Stock shall be deemed to be the value received or
agreed to be paid by the holders of the Company's Common Stock
for each share thereof pursuant to such transaction.
2. DELIVERY UPON EXERCISE. As soon as practicable after
the exercise of this Warrant, and in any event within three (3)
Trading Days thereafter, the Company at its expense (including
the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder, or as the
Holder (upon payment by the Holder of any applicable transfer
taxes) may direct, a certificate or certificates for the number
of fully paid and nonassessable shares of Common Stock (or Other
Securities) to which the Holder shall be entitled on such
exercise, in such denominations as may be requested by the Holder
plus, in lieu of any fractional share to which the Holder would
otherwise be entitled, cash equal to such fraction multiplied by
the then current fair market value (as determined in accordance
with subsection 1.2) of one full share, together with any other
stock or other securities and property (including cash where
applicable) to which the Holder is entitled upon such exercise
pursuant to Section 1 or otherwise. Upon exercise of this
Warrant as provided herein, the Company's obligation to issue and
deliver the certificates for Common Stock shall be absolute and
unconditional, irrespective of the absence of any action by the
Holder to enforce the same, any waiver or consent with respect to
any provision thereof the recovery of any judgment against any
person or any action to enforce the same, any failure or delay in
the enforcement of any other obligation of the Company to the
Holder, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder or any
other person of any obligation to the Company, and irrespective
of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with such
exercise. If the Company fails to issue and deliver the
certificates for the Common Stock to the Holder pursuant to the
first sentence of this paragraph as and when required to do so,
in addition to any other liabilities the Company may have
hereunder and under applicable law, the Company shall pay or
reimburse the Holder on demand for all out-of-pocket expenses
including, without limitation, reasonable fees and expenses of
legal counsel incurred by the Holder as a result of such failure.
3. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK, PROPERTY ETC.;
RECLASSIFICATION ETC. In case at any time, or from time to
time, after the Issue Date, all the holders of Common Stock (or
Other Securities) shall have received, or (on or after the record
date fixed for the determination of stockholders eligible to
receive) shall have become entitled to receive, without payment
therefor:
3.1 other or additional stock or other securities or
property (other than cash) by way of dividend, or
3.2 any cash (excluding cash dividends payable solely
out of earnings or earned surplus of the Company), or
3.3 other or additional stock or other securities or
property (including cash) by way of spin-off, split-up,
reclassification, recapitalization, combination of shares or
similar corporate rearrangement,
other than additional shares of Common Stock (or Other
Securities) issued as a stock dividend or in a stock-split
(adjustments in respect of which are provided for in Section 5),
then and in each such case the Holder, on the exercise hereof as
provided in Section 1, shall be entitled to receive the amount of
stock and other securities and property (including cash in the
cases referred to in subsections 3.2 and 3.3 of this Section 3)
which the Holder would hold on the date of such exercise if on
the date thereof the Holder had been the holder of record of the
number of shares of Common Stock called for on the face of this
Warrant and had thereafter, during the period from the date
hereof to and including the date of such exercise, retained such
shares and all such other or additional stock and other
securities and property (including cash in the case referred to
in subsections 3.2 and 3.3 of this Section 3) receivable by the
Holder as aforesaid during such period, giving effect to all
adjustments called for during such period by Section 4.
Notwithstanding anything in this Section 3 to the contrary, no
adjustments pursuant to this Section 3 shall actually be made
until the cumulative effect of the adjustments called for by this
Section 3 since the date of the last adjustment actually made
would change the amount of stock or other securities and property
which the Holder would hold by more than 1%.
4. EXERCISE UPON REORGANIZATION, CONSOLIDATION, MERGER ETC.
In case at any time or from time to time after the Issue Date,
the Company shall (a) effect a reorganization, (b) consolidate
with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person
under any plan or arrangement contemplating the dissolution of
the Company, then, in each such case, as a condition of such
reorganization, consolidation, merger, sale or conveyance the
Company shall cause lawful and adequate provisions to be made
whereby the Holder hereof shall thereafter have the right to
receive upon exercise of this Warrant, in addition to or in lieu
of (as the case may be) the shares of Common Stock of the Company
immediately issuable upon such exercise, such securities or other
property receivable upon such reorganization, consolidation,
merger, sale or conveyance as though the Holder had exercised the
Warrant and was the owner of the shares of Common Stock issuable
hereunder immediately prior to any such events at a price equal
to the product of (x) the number of shares issuable upon exercise
of the Warrant and (y) the Purchase Price applicable immediately
prior to the record date for such reorganization, consolidation,
merger, sale or conveyance as though Holder had exercised the
Warrant. The provisions of this Section shall apply to
successive reorganizations, consolidations, mergers, sales or
conveyances.
5. ADJUSTMENT FOR EXTRAORDINARY EVENTS. In the event
that after the Issue Date the Company shall (i) issue additional
shares of Common Stock as a dividend or other distribution on
outstanding Common Stock, (ii) subdivide or reclassify its
outstanding shares of Common Stock, or (iii) combine its
outstanding shares of Common Stock into a smaller number of
shares of Common Stock, then, in each event, the Purchase Price
shall, simultaneously with the happening of such event, be
adjusted by multiplying the Purchase Price in effect immediately
prior to such event by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately
prior to such event, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after
such event. and the product so obtained shall thereafter be the
Purchase Price then in effect. The Purchase Price, as so
adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described in this
Section 5. The Holder shall thereafter, on the exercise hereof
as provided in Section 1, be entitled to receive that number of
shares of Common Stock determined by multiplying the number of
shares of Common Stock which would be issuable on such exercise
immediately prior to such issuance by a fraction of which (i) the
numerator is the Purchase Price in effect immediately prior to
such issuance and (ii) the denominator is the Purchase Price in
effect on the date of such exercise.
6. ADJUSTMENT FOR CERTAIN STOCK ISSUANCES.
6.1 In case at any time the Company shall issue shares
of its Common Stock or debt or equity securities convertible into
or exercisable or exchangeable for shares of Common Stock
(collectively, the "Newly Issued Shares"), other than (i)
issuances in the private placement which is the subject of the
Placement Agent Agreement, dated March 10, 1999 between the
Company and Neidiger, Tucker, Bruner, Inc.; (ii) an issuance pro
rata to all holders of its outstanding Common Stock, (iii)
issuances pursuant to options, warrants and convertible
securities outstanding on the Issue Date and (iv) issuances
pursuant to employee stock option plans (other than in connection
with any corporate financing or acquisition transaction), at a
price below the Purchase Price in effect at the time of such
issuance, then, following such issuance of Newly Issued Shares,
the number of shares of Common Stock which the Holder shall be
entitled to receive upon exercise of this Warrant shall be
increased and the Purchase Price shall be decreased to the
respective amounts determined pursuant to this Section 6. The
number of shares of Common Stock purchasable upon the exercise of
this Warrant following any such adjustment shall be determined by
multiplying the number of shares purchasable upon exercise of
this Warrant immediately prior to such adjustment by a fraction,
the numerator of which shall be the sum of (a) the number of
shares of Common Stock outstanding or authorized to be
outstanding immediately prior to the issuance of the Newly Issued
Shares (calculated on a fully-diluted basis assuming the exercise
or conversion of all options, warrants, purchase rights or
convertible securities which are exercisable at the time of the
issuance of the Newly Issued Shares), plus (b) the number of
Newly Issued Shares, and the denominator of which shall be the
sum of (a) the number of shares of Common Stock outstanding
immediately prior to the issuance of the Newly Issued Shares
(calculated on a fully-diluted basis assuming the conversion of
all options, warrants, purchase rights or convertible securities
which are exercisable at the time of the issuance of the Newly
Issued Shares), plus (b) the number of shares of Common Stock
which the aggregate consideration, if any, received by the
Company for the number of Newly Issued Shares would purchase at a
price equal to the Purchase Price in effect at the time of such
issuance. Upon any adjustment under this Section 6, the number
of shares of Common Stock purchasable upon exercise of this
Warrant in full immediately after such adjustment shall be
rounded to the nearest one-one-hundredth of a share of Common
Stock subject, however, to Section 2 of this Warrant relating to
fractional shares of Common Stock. Such adjustment of the number
of shares purchasable provided for in this Section 6 may be
expressed in the following formula:
X = W x [O+N]
------
[O+(C/P)]
Where:
C = aggregate consideration
received by the Company for the Newly Issued
Shares.
N = number of Newly Issued Shares.
O = number of shares of Common
Stock outstanding or authorized to be
outstanding (on a fully diluted basis, as
described above) immediately prior to the
issuance of the Newly Issued Shares.
P = Purchase Price in effect
immediately prior to the time of the issuance
of the Newly Issued Shares.
W = number of shares of Common
Stock issuable upon exercise of this Warrant
prior to the issuance of the Newly Issued
Shares.
X = number of shares of Common
Stock issuable upon exercise of this Warrant
after the issuance of the Newly Issued
Shares.
Upon the issuance of such Newly Issued Shares, the Purchase Price
shall, simultaneously with the happening of such event, be
adjusted by multiplying the Purchase Price in effect immediately
prior to such event by a fraction, the numerator of which shall
be the number of shares of Common Stock issuable upon exercise of
this Warrant prior to the issuance of the Newly Issued Shares and
the denominator of which shall be the number of shares of Common
Stock issuable upon the exercise of this Warrant after the
issuance of the Newly Issued Shares as provided in this Section
6, and the product so obtained shall thereafter be the Purchase
Price then in effect. The number of shares of Common Stock
issuable upon exercise of this Warrant and the Purchase Price, as
each is so adjusted, shall be readjusted in the same manner upon
the happening of any successive issuances of Newly Issued Shares
described in this Section 6.
6.2 The foregoing provisions of subsection 6.1 shall
be in addition to, and not in lieu of, the adjustment or
adjustments provided by the provisions of Section 5, captioned
"CONVERSION," of the Articles of Amendment to the Amended and
Restated Articles of Incorporation of Cavion Technologies, Inc.
Setting Forth the Statement of Designation of Series and
Determination of Rights and Preferences of Convertible Common
Stock, Series A, as dated February 26, 1999 and filed with the
Colorado Secretary of State.
7. FURTHER ASSURANCES. The Company will take all action
that may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable shares
of stock, free from all taxes, liens and charges with respect to
the issue thereof, on the exercise of all or any portion of this
Warrant from time to time outstanding.
8. NOTICES OF RECORD DATE, ETC. In the event of:
8.1 any taking by the Company of a record of the
holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend on,
or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property,
or to receive any other right, or
8.2 any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all of the assets
of the Company to or consolidation or merger of the Company with
or into any other person (other than a wholly-owned subsidiary of
the Company), or
8.3 any voluntary or involuntary dissolution,
liquidation or winding-up of the Company, then and in each such
event the Company will mail or cause to be mailed to the Holder,
at least ten days prior to such record date, a notice specifying
(i) the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and stating the
amount and character of such dividend, distribution or right,
(ii) the date on which any such reorganization, reclassification,
recapitalization, 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 Common Stock
(or Other Securities) shall be entitled to exchange their shares
of Common Stock (or Other Securities) for securities or other
property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up, and (iii) the amount and character of
any stock or other securities or rights or options with respect
thereto, proposed to be issued or granted, the date of such
proposed issue or grant and the persons or class of persons to
whom such proposed issue or grant is to be offered or made. Such
notice shall also state that the action in question or the record
date is subject to the effectiveness of a registration statement
under the Securities Act, or a favorable vote of stockholders if
either is required. Such notice shall be mailed at least ten
days prior to the date specified in such notice on which any such
action is to be taken or the record date, whichever is earlier.
9. RESERVATION OF STOCK ISSUABLE ON EXERCISE. The Company
will at all times reserve and keep available out of its
authorized but unissued shares of capital stock solely for
issuance and delivery on the exercise of this Warrant, a
sufficient number of shares of Common Stock (or Other Securities)
to effect the full exercise of this Warrant and the exercise,
conversion or exchange of any other warrant or security of the
Company exercisable for, convertible into, exchangeable for or
otherwise entitling the holder to acquire shares of Common Stock
(or Other Securities), and if at any time the number of
authorized but unissued shares of Common Stock (or Other
Securities) shall not be sufficient to effect such exercise,
conversion or exchange, the Company shall take such action as may
be necessary to increase its authorized but unissued shares of
Common Stock (or Other Securities) to such number as shall be
sufficient for such purposes.
10. TRANSFER OF WARRANT. This Warrant shall inure to the
benefit of the successors to and assigns of the Holder. This
Warrant and all rights hereunder, in whole or in part, are
Registerable at the principal office of the Company or the office
of the Company's transfer agent and registrar by the Holder
hereof in person or by his duly authorized attorney, upon
surrender of this Warrant properly endorsed.
11. REGISTER OF WARRANTS. The Company shall maintain, at
the principal office of the Company (or such other office or
agency as it may designate by notice to the Holder hereof), a
register in which the Company shall record the name and address
of the person in whose name this Warrant has been issued, as well
as the name and address of each successor and prior owner of such
Warrant. The Company shall be entitled to treat the person in
whose name this Warrant is so registered as the sole and absolute
owner of this Warrant for all purposes.
12. EXCHANGE OF WARRANT. This Warrant is exchangeable,
upon the surrender hereof by the Holder hereof at the principal
office of the Company or the office of the Company's transfer
agent and registrar, for one or more new Warrants of like tenor
representing in the aggregate the right to subscribe for and
purchase the number of shares of Common Stock which may be
subscribed for and purchased hereunder, each of such new Warrants
to represent the right to subscribe for and purchase such number
of shares as shall be designated by said Holder hereof at the
time of such surrender.
13. REPLACEMENT OF WARRANT. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any
such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security reasonably satisfactory in
form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the
Company at its expense will execute and deliver, in lieu thereof,
a new Warrant of like tenor.
14. WARRANT AGENT. American Securities Transfer & Trust.
Inc., 1825 Lawrence Street, Suite 444, Denver, Colorado 80202,
has been appointed the Company's Transfer Agent and Registrar and
the Company's exercise agent for purposes of issuing shares of
Common Stock (or Other Securities) on the exercise of this
Warrant pursuant to Section 1. The Company may, by notice to the
Holder, appoint an agent having an office in the United States of
America for the purpose of exchanging this Warrant pursuant to
Section 12 and replacing this Warrant pursuant to Section 13, or
either of the foregoing, and thereafter any such exchange or
replacement, as the case may be, shall be made at such office by
such agent.
15. REMEDIES. The Company stipulates that the remedies at
law of the Holder in the event of any default or threatened
default by the Company in the performance of or compliance with
any of the terms of this Warrant are not and will not be
adequate, and that 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.
16. RIGHTS OR LIABILITIES AS A STOCKHOLDER. This Warrant
shall not entitle the Holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision of this
Warrant, in the absence of affirmative action by the Holder
hereof to purchase Common Stock, and no mere enumeration herein
of the rights or privileges of the Holder hereof, shall give rise
to any liability of the Holder for the Purchase Price or as a
stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
17. NOTICES. ETC. All notices and other communications
required or permitted hereunder shall be in writing and shall be
deemed to be sufficiently given when delivered personally (by
hand, by courier or by facsimile, with answer back confirmation)
and shall be effective upon receipt, addressed: (i) if to the
Company, at 7475 Dakin Street, Suite 607, Denver, Colorado 80221,
Attn: President, facsimile number (303) 657-8212 and (ii) if to
the Holder, at 300 Plaza Level, 1675 Larimer Street, Denver,
Colorado 80202, Attn: President, facsimile number (303) 623-9310,
or at such other address or facsimile number as a party shall
have provided to the other party by written notice given in
accordance with these provisions.
18. SECURITIES LAW RESTRICTIONS. By acceptance of this
Warrant, the Holder represents to the Company that this Warrant
is being acquired for the Holder's own account and for the
purpose of investment and not with a view to, or for sale in
connection with, the distribution thereof, nor with any present
intention of distributing or selling this Warrant or the Common
Stock issuable upon exercise of this Warrant. Neither this
Warrant nor the shares of Common Stock issuable upon the exercise
or conversion of this Warrant have been registered under the
Securities Act or under the securities laws of any state.
Neither this Warrant, nor the shares of Common Stock issuable
upon the exercise or conversion of this Warrant, may be sold,
transferred, hypothecated, assigned, offered for sale or
otherwise disposed of unless registered pursuant to the
Securities Act and applicable state securities laws or unless in
the opinion of counsel who is reasonably satisfactory to the
Company an exemption from such registration is available.
Certificates representing securities issued upon exercise or
conversion of this Warrant shall bear a legend as provided in
Section 19 hereof.
19. LEGEND. Unless theretofore registered for resale
under the Securities Act, each certificate for shares issued upon
exercise of this Warrant shall bear the following legend:
The securities represented by this
certificate have not been registered under
the Securities Act of 1933, as amended (the
"Act"). The securities have been acquired
for investment and may not be resold,
transferred or assigned in the absence of an
effective registration statement for the
securities under the Act, or an opinion of
counsel satisfactory to the issuer that
registration is not required under the Act.
20. REGISTRATION RIGHTS. Nothing contained herein shall
be construed as requiring the exercise of this Warrant prior to
the initial filing of any registration statement provided herein
or the effectiveness thereof.
20.1 MANDATORY REGISTRATION. The Company shall
prepare and file with the SEC a Registration Statement which
covers a public offering of the Company's securities for its own
account, the resale of the Registerable Securities by the Holder
and the resale of shares of Common Stock issued or issuable upon
conversion of up to 700,000 shares of Common Stock in accordance
with the registration rights agreements entered into under
subscription agreements between the Company and the certain
investors. The registration rights provided in this subsection
20.1 shall be in addition to the registration rights provided in
subsections 20.2 and 20.3 below and such additional registration
rights shall not be diminished in any way by the decision of the
Holder not to include the Registerable Securities of the Holder
in the Registration Statement provided by this subsection 20.1.
No right to registration of Registerable Securities under this
subsection 20.1 shall be construed to limit any registration
required under subsections 20.2 and 20.3.
20.2 DEMAND REGISTRATION. At any time on or before -
- -------, 2004, a Majority of the Holders shall have the right to
request registration under the Securities Act for all or any
portion of the Registerable Securities upon the terms and
conditions set forth in this subsection 20.2. Promptly after
receipt of a request for registration pursuant to this subsection
20.2 the Company shall notify all other Holders in writing of
such request for registration. Upon receipt of such notice from
the Company (the "Company Notice"), each such holder may give the
Company a written request to register all or some of such
holder's Registerable Securities in the Registration Statement
described in the Company Notice, provided that such written
request is given within 10 days after the date on which the
Company Notice is given (with such request stating (i) the amount
of Registerable Securities to be included and (ii) any other
information reasonably requested by the Company to properly
effect the registration of such Registerable Securities). The
Company shall as soon as practicable after the date on which the
Company Notice is given, file with the SEC and use its best
efforts to cause to become effective a Registration Statement
which shall cover the Registerable Securities specified in the
Demand Notice and in any written request from any other holder
received by the Company within 10 days of the date on which the
Company Notice is given. No right to registration of
Registerable Securities under this subsection 20.2 shall be
construed to limit any registration required under subsections
20.1 and 20.3 hereof. The obligations of the Company under this
subsection 20.2 shall expire after the Company has afforded the
Holder the opportunity to exercise registration rights under this
subsection 20.2 for two registrations. Notwithstanding any other
provision of this Agreement, if the Registration Statement
required to be filed pursuant to Section 20.1 of this Agreement
shall have been ordered effective by the SEC and the Company
shall have maintained the effectiveness of such registration as
required hereunder and if the Company shall otherwise have
complied in all material respects with its obligations hereunder,
then the Company shall not be obligated to registered any
Registerable Securities on such Registration Statement referred
to in this subsection 20.2.
20.3 PIGGY-BACK REGISTRATION. If at any time the
Company shall determine to prepare and file with the SEC a
Registration Statement relating to an offering for its own
account or the account of others under the Securities Act of any
securities of the Company, other than on Form S-4 or Form S-8 or
their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or
business or equity securities issuable in connection with stock
option or other employee benefit plans, the Company shall send to
the Holder and each other holder who is entitled to registration
rights under this subsection 20.3 written notice of such
determination and if, within 10 days after receipt of such
notice, Holder shall so request in writing, the Company shall
include in such Registration Statement all or any part of the
Registerable Securities the Holder requests to be registered,
except that if, in connection with any underwritten public
offering for the account of the Company, the managing
underwriter(s) thereof shall impose a limitation on the number of
shares of Common Stock (or Other Securities) which may be
included in the Registration Statement because, in such
underwriter(s)' judgement, such limitation is necessary to effect
an orderly public distribution, then the Company shall be
obligated to include in such Registration Statement only such
limited portion of the Registerable Securities with respect to
which Holder has requested inclusion. Any exclusion of
Registerable Securities shall be made pro rata among all holders
who have requested that Registerable Securities be included, in
proportion to the number of Registerable Securities specified in
their respective requests; provided, however, that the Company
shall not exclude any Registerable Securities unless the Company
has first excluded all outstanding securities the holders of
which are not entitled by right to inclusion of securities in
such Registration Statement; and provided further, however, that,
after giving effect to the immediately preceding proviso, any
exclusion of Registerable Securities shall be made pro rata with
holders of other securities having the right to include such
securities in the Registration Statement, based on the number of
securities for which registration is requested except to the
extent such pro rata exclusion of such other securities is
prohibited under any written agreement entered into by the
Company with the holder of such other securities prior to the
Issue Date of this Certificate, in which case such other
securities shall be excluded, if at all, in accordance with the
terms of such agreement. No right to registration of
Registerable Securities under this subsection 20.3 shall be
construed to limit any registration required under subsections
20.1 or 20.2 hereof. The obligations of the Company under this
subsection 20.3 may be waived by a Majority of the Holders and
such obligations of the Company shall expire after the Company
has afforded the opportunity to the holders to exercise
registration rights under this subsection 20.3 for two
registrations; provided, however, that any Holder who shall have
had any Registerable Securities excluded from any Registration
Statement in accordance with this subsection 20.3 shall be
entitled to include in an additional Registration Statement filed
by the Company the Registerable Securities so excluded.
Notwithstanding any other provision of this Agreement, if the
Registration Statement required to be filed pursuant to
subsection 20.1 of this Agreement shall have been ordered
effective by the SEC and the Company shall have maintained the
effectiveness of such Registration Statement as required
hereunder and if the Company shall otherwise have complied in all
material respects with the obligations hereunder, then the
Company shall not be obligated to register any Registerable
Securities on such Registration Statement referred to subsection
20.3.
20.4 OBLIGATIONS OF THE COMPANY. In connection with
the registration of the Registerable Securities, the Company
shall:
20.4.1 prepare promptly and file with the SEC the
Registration Statement provided in Section 20.1 with respect to
the Registerable Securities and thereafter to use its best
efforts to cause such Registration Statement relating to the
Registerable Securities to become effective as soon as possible
after such filing, and keep the Registration Statement effective
at all times during the Registration Period; submit to the SEC,
within three Business Days after the Company learns that no
review of the Registration Statement will be made by the staff of
the SEC or the staff of the SEC has no further comments on the
Registration Statement, as the case may be, a request for
acceleration of the effectiveness of the Registration Statement
to a time and date not later then 48 hours after the submission
of such request; notify the Holder of the effectiveness of the
Registration Statement on the date the Registration Statement is
declared effective; and, the Company represents and warrants to,
and covenants and agrees with the Holder that the Registration
Statement (including any amendments or supplements thereto and
prospectuses contained therein, at the time it is first filed
with the SEC, at the time it is ordered effective by the SEC and
al all time during which it is required to be effective
hereunder) and each such amendment and supplement at the time it
is filed with the SEC and all times during which it is available
for use in connection with the offer and sale of Registerable
Securities shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading;
20.4.2 prepare and file with the SEC such
amendments (including post-effective amendments) and supplements
to the Registration Statement and the prospectus used in
connection with the Registration Statement as may be necessary to
keep the Registration Statement effective at all times during the
Registration Period, and during the Registration Period, comply
with the provisions of the Securities Act with respect to the
disposition of all Registerable Securities of the Company covered
by the Registration Statement until such time as all of such
Registerable Securities have been disposed of in accordance with
the intended methods of disposition by the Holder or Holders
thereof as set forth in the Registration Statement;
20.4.3 furnish to each Holder whose Registerable
Securities are included in the Registration Statement and its
legal counsel, (i) promptly after the same is prepared and
publicly distributed, filed with the SEC or received by the
Company, one copy of the Registration Statement and any amendment
thereto, each preliminary prospectus and prospectus and each
amendment or supplement thereto, each letter written by or on
behalf of the Company to the SEC or the staff of the SEC and each
item of correspondence from the SEC or the staff of the SEC
relating to such Registration Statement (other than any portion
of any thereof which contains information for which the Company
has sought confidential treatment) and (ii) such number of copies
of a prospectus, including a preliminary prospectus and all
amendments and supplements thereto and such other documents, as
such Holder reasonably may request in order to facilitate the
disposition of the Registerable Securities owned by such Holder;
20.4.4 use reasonable efforts to (i) register and
qualify the Registerable Securities covered by the Registration
Statement under such securities or blue sky laws of such
jurisdictions as the Holders who hold a majority of the
Registerable Securities being offered reasonably request, (ii)
prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain
the effectiveness thereof at all times until the end of the
Registration Period, (iii) take such other actions as may be
necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period and (iv) take
all other actions reasonably necessary or advisable to qualify
the Registerable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in
connection therewith or as a condition thereto (I) to qualify to
do business in any jurisdiction where it would not otherwise be
required to qualify but for this subsection 20.4.4, (II) to
subject itself to general taxation in any such jurisdiction,
(III) to file a general consent to service of process in any such
jurisdiction, or (IV) to make any change in its Articles of
Incorporation or Bylaws which the Board of Directors of the
Company determines to be contrary to the best interests of the
Company and its stockholders;
20.4.5 in the event that the Registerable
Securities are being offered in an underwritten offering, enter
into and perform its obligations under an underwriting agreement
in usual and customary form, including, without limitation,
customary indemnification and contribution obligations, with the
underwriters of such offering;
20.4.6 as promptly as practicable after becoming
aware of such event or circumstance, notify each Holder of any
event or circumstance of which the Company has knowledge, as a
result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading, and use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct
such untrue statement or omission, file such supplement or
amendment with the SEC at such time as shall permit the Holder to
sell Registerable Securities pursuant to the Registration
Statement as promptly as practicable, and deliver a number of
copies of such supplement or amendment to each Holder as such
Holder may reasonably request;
20.4.6 as promptly as practicable after becoming
aware of such event, notify each Holder who holds Registerable
Securities being sold (or, in the event of an underwritten
offering the managing underwriters) of the issuance by the SEC of
any stop order or other suspension of effectiveness of the
Registration Statement at the earliest possible time;
20.4.7 permit one legal counsel designated as
selling stockholders' counsel by the Holder(s) holding a majority
of the Registerable Securities being sold to review and comment
on the Registration Statement and all amendments and supplements
thereto a reasonable period of time prior to their filing with
the SEC;
20.4.8 make generally available to its security
holders as soon as practical, but not later than ninety (90) days
after the close of the period covered thereby, an earnings
statement (in form complying with the provisions of Rule 158
under the Securities Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal
quarter next following the effective date of the Registration
Statement;
20.4.9 at the request of the Holder(s) who hold a
majority of the Registerable Securities being sold, furnish on
the date that Registerable Securities are delivered to an
underwriter, if any, for sale in connection with the Registration
Statement (i) a letter, dated such date, from the Company's
independent certified public accountants in form and substance as
is customarily given by independent certified public accountants
to underwriters in an underwritten public offering, addressed to
the underwriters; and (ii) an opinion, dated such date, from
counsel representing the Company for purposes of such
Registration Statement, in form and substance as is customarily
given in an underwritten public offering, addressed to the
underwriters and the Investors;
20.4.10 make available for inspection by Holder,
any underwriter participating in any distribution or disposition
pursuant to the Registration Statement, and any attorney,
accountant or other agent retained by Holder or underwriter
(collectively, the "Inspectors"), all pertinent financial and
other records, pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably
necessary to enable Holder to exercise Holder's due diligence
responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may
reasonably request for purposes of such due diligence; provided,
however, that each Inspector shall hold in confidence and shall
not make any disclosure (except to a Holder) of any Record or
other information which the Company determines in good faith to
be confidential, and of which determination the Inspectors are so
notified, unless (i) the disclosure of such Records is necessary
to avoid or correct a misstatement or omission in any
Registration Statement, (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction or (iii) the
information in such Records has been made generally available to
the public other than by disclosure in violation of this or any
other agreement. The Company shall not be required to disclose
any confidential information in such Records to any Inspector
until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to
the Company) with the Company with respect thereto;
20.4.11 use its best efforts (i) to cause all the
Registerable Securities covered by the Registration Statement to
be listed on the NASDAQ or such other principal securities market
on which securities of the same class or series issued by the
Company are then listed or traded or (ii) if securities of the
same class or series as the Registerable Securities are not then
listed on the NASDAQ or any such other securities market, to
cause all of the Registerable Securities covered by the
Registration Statement to be listed on the NASDAQ, New York Stock
Exchange or the American Stock Exchange;
20.4.12 provide a transfer agent and registrar,
which may be a single entity, for the Registerable Securities not
later than the effective date of the Registration Statement;
20.4.13 cooperate with the Holder and the
managing underwriter or underwriters, if any, to facilitate the
timely preparation and delivery of certificates (not bearing any
restrictive legends) representing Registerable Securities to be
offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case
may be, as the managing underwriter or underwriters, if any, or
the Holder may reasonably request and registered in such names as
the managing underwriter or underwriters, if any, or the Holder
may request;
20.4.14 during the period the Company is required
to maintain effectiveness of the Registration Statement pursuant
to subsection 20.4.1, the Company shall not bid for or purchase
any Common Stock or Other Securities or any right to purchase
Common Stock or Other Securities or attempt to induce any person
to purchase any such security or right if such bid, purchase or
attempt would in any way limit the right of the Holder to sell
Registerable Securities by reason of the limitations set forth in
Regulation M under the Exchange Act; and
20.4.15 take all other reasonable actions
necessary to expedite and facilitate disposition by the Holder of
the Registerable Securities pursuant to the Registration
Statement.
20.4.16 With a view to making available to the
Holders the benefits of Rule 144, the Company agrees to: (i) make
and keep public information available, as those terms are
understood and defined in Rule 144; (ii) file with the SEC in a
timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act; and (iii)
furnish to each Holder so long as such Holder owns Registerable
Securities, promptly upon request, (I) a written statement by the
Company that it has complied with the reporting requirements of
Rule 144 and the Exchange Act, (II) a copy of the most recent
annual or quarterly report of the Company and such other reports
and documents so filed by the Company and (III) such other
information as may be reasonably requested to permit the Holders
to sell such securities pursuant to Rule 144 without
registration.
20.5 OBLIGATIONS OF THE HOLDER. In connection with
the registration of the Registerable Securities, the Holder shall
have the following obligations:
20.5.1 it shall be a condition precedent to the
obligations of the Company to complete the registration pursuant
hereto with respect to the Holder's Registerable Securities that
the Holder shall furnish to the Company such information
regarding Holder, the Registerable Securities held by Holder and
the intended method of disposition of the Registerable Securities
held by Holder as shall be reasonably required to effect the
registration of such Registerable Securities and shall execute
such documents in connection with such registration as the
Company may reasonably request. At least five days prior to the
first anticipated filing date of the Registration Statement, the
Company shall notify the Holder of the information the Company
requires from the Holder (the "Requested Information") if any of
Holder's Registerable Securities are eligible for inclusion in
the Registration Statement. If at least two Business Days prior
to the filing date the Company has not received the Requested
Information from the Holder (at such time Holder becoming a "Non-
Responsive Holder"), then the Company may file the Registration
Statement without including Registerable Securities of Non-
Responsive Holder but shall not be relieved of its obligation to
file a Registration Statement with the SEC relating to the
Registerable Securities of Non-Responsive Holder promptly after
Non-Responsive Holder provides the Requested Information;
20.5.2 by Holder's acceptance of the Registerable
Securities, Holder agrees to cooperate with the Company as
reasonably requested by the Company in connection with the
preparation and filing of the Registration Statement hereunder,
unless Holder has notified the Company in writing of such
Holder's election to exclude all of Holder's Registerable
Securities from the Registration Statement;
20.5.3 in the event Holder(s) holding a majority
of the Registerable Securities being registered determine to
engage the services of an underwriter, each Holder agrees to
enter into and perform such Holder's obligations under an
underwriting agreement, in usual and customary form, including,
without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and
take such other actions as are reasonably required in order to
expedite or facilitate the disposition of the Registerable
Securities, unless such Holder has notified the Company in
writing of such Investor's election to exclude all of such
Investor's Registerable Securities from the Registration
Statement;
20.5.4 Holder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in subsections 20.4.6 or 20.4.7, Holder will
immediately discontinue disposition of Registerable Securities
pursuant to the Registration Statement covering such Registerable
Securities until Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subsections
20.4.6 or 20.4.7 and, if so directed by the Company, Holder shall
deliver to the Company (at the expense of the Company) or destroy
(and deliver to the Company a certificate of destruction) all
copies in such Investor's possession of the prospectus covering
such Registerable Securities current at the time of receipt of
such notice;
20.5.5 Holder may not participate in any
underwritten registration hereunder unless Holder (i) agrees to
sell Holder's Registerable Securities on the basis provided in
any underwriting arrangements approved by the Holders entitled
hereunder to approve such arrangements, (ii) completes and
executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements and (iii)
agrees to pay its pro rata share of all underwriting discounts
and commissions and other fees and expenses of investment bankers
and any manager or managers of such underwriting and legal
expenses to the underwriters applicable with respect to its
Registerable Securities, in each case to the extent not payable
by the Company pursuant to the terms of this Agreement; and
20.5.6 Holder agrees to take all reasonable
actions necessary to comply with the prospectus delivery
requirements of the Securities Act applicable to its sales of
Registerable Securities.
20.6 EXPENSES OF REGISTRATION. All costs and expenses,
other than underwriting or brokerage discounts, commissions and
other fees related to the distribution of the Registerable
Securities, incurred in connection with registrations, filings or
qualifications pursuant to subsections 20.1, 20.2 and 20.3,
including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees and the fees
and disbursements of counsel for the Company shall be borne by
the Company, provided, however, that the Holder(s) shall bear the
fees and out-of-pocket expenses of the one legal counsel selected
by the Holder(s) pursuant to subsection 20.4.8 hereof and all
reasonable costs and expenses incurred in connection with the
second demand registration permitted by subsection 20.2,
including all registration, listing and qualification fees,
printers and accounting fees and the fees and disbursements of
the Company counsel, shall be borne by the Holder(s) of the
Registerable Securities covered by such registration.
20.7 INDEMNIFICATION. In the event any Registerable
Securities are included in a Registration Statement under this
Agreement:
20.7.1 To the extent permitted by law, the Company
will indemnify and hold harmless each Holder who holds such
Registerable Securities, the directors, if any, of such Holder,
the officers, if any, of such Holder, each person, if any, who
controls any Holder within the meaning of the Securities Act or
the Exchange Act, any underwriter (as defined in the Securities
Act) for the Holders, the directors, if any, of such underwriter
and the officers, if any, of such underwriter, and each person,
if any, who controls any such underwriter within the meaning of
the Securities Act or the Exchange Act (each, an "Indemnified
Person"), against any losses, claims, damages, liabilities or
expenses (joint or several) incurred (collectively, "Claims") to
which any of them may become subject under the Securities Act,
the Exchange Act or otherwise, insofar as such Claims (or actions
or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any of the following
statements, omissions or violations in the Registration
Statement, or any post-effective amendment thereof, or any
prospectus included therein: (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereof or the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading (ii) any untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus if
used prior to the effective date of such Registration Statement,
or contained in the final prospectus (as amended or supplemented,
if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state
therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements
therein were made, not misleading or (iii) any violation or
alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation
under the Securities Act, the Exchange Act or any state
securities law (the matters in the foregoing clauses (i) through
(iii) being, collectively, "Violations"). Subject to the
restrictions set forth in subsection 20.7.4 with respect to the
number of legal counsel, the Company shall reimburse the Holders
and the other Indemnified Persons, promptly as such expenses are
incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification
agreement contained in this subsection 20.7.1: (I) shall not
apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information
furnished in writing to the Company by any Indemnified Person or
underwriter for such Indemnified Person expressly for use in
connection with the preparation of the Registration Statement,
the prospectus or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the
Company pursuant to subsection 20.4.3 hereof; (II) with respect
to any preliminary prospectus shall not inure to the benefit of
any Indemnified Person if the untrue statement or omission of
material fact contained in the preliminary prospectus was
corrected in the prospectus, as then amended or supplemented, if
such prospectus was timely made available by the Company pursuant
to subsection 20.4.3 hereof; and (III) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent
shall not be unreasonably withheld. Such indemnity shall remain
in full force and effect regardless of any investigation made by
or on behalf of the Indemnified Person and shall survive the
transfer of the Registerable Securities by the Holders pursuant
to Section 24.
20.7.2 In connection with any Registration Statement
in which a Holder is participating, each such Holder agrees to
indemnify and hold harmless, to the same extent and in the same
manner set forth in subsection 20.7.1, the Company, each of its
directors, each of its officers who signs the Registration
Statement, each person on, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act, any
underwriter and any other stockholder selling securities pursuant
to the Registration Statement or any of its directors or officers
or any person who controls such stockholder or underwriter within
the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an
"Indemnified Party"), against any Claim to which any of them may
become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon
any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by
such Holder expressly for use in connection with such
Registration Statement; and such Holder will reimburse any legal
or other expenses reasonably incurred by any Indemnified Party,
promptly as such expenses are incurred and are due and payable,
in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this
subsection 20.7.2 shall not apply to amounts paid in settlement
of any Claim if such settlement is effected without the prior
written consent of such Holder, which consent shall not be
unreasonably withheld; provided, further, however, that the
Holder shall be liable under this subsection 20.7.2 for only that
amount of a Claim as does not exceed the amount by which the net
proceeds to such Holder from the sale of Registerable Securities
pursuant to such Registration Statement exceeds the cost of such
Registerable Securities to such Holder. Such indemnity shall
remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive
the transfer of the Registerable Securities by the Holders
pursuant to Section 10. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this
subsection 20.7.2 with respect to any preliminary prospectus
shall not inure to the benefit of any Indemnified Party if the
untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented.
20.7.3 The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers
and similar securities industry professionals participating in
any distribution, to the same extent as provided above, with
respect to information so furnished in writing by such persons
expressly for inclusion in the Registration Statement.
20.7.4 Promptly after receipt by an Indemnified Person
or Indemnified Party under this Section 20.7 of notice of the
commencement of any action (including any governmental action),
such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party
under Section 20.7, deliver to the indemnifying party a written
notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the
defense thereof with counsel selected by the indemnifying party
but reasonably acceptable to the Indemnified Person or the
Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such
counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel
in such proceeding. In such event, the Company shall pay for
only one separate legal counsel for the Investors; such legal
counsel shall be selected by the Holders holding a majority in
interest of the Registerable Securities included in the
Registration Statement to which the Claim relates. The failure
to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 20.7,
except to the extent that the indemnifying party is prejudiced in
its ability to defend such action. The indemnification required
by Section 20.7 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as
such expense, loss, damage or liability is incurred and is due
and payable.
20.8 The agreements, representations and warranties of
the Company and the Holder set forth or provided in this Section
20 shall survive any exercise of this Warrant and the delivery of
and payment for the Registerable Securities hereunder and shall
remain in full force and effect, regardless of any investigation
made by or on behalf of the Company and the Holder.
21. MISCELLANEOUS. This Warrant and any term hereof may
be changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is
sought. This Warrant shall be construed and enforced in
accordance with and governed by the internal laws of the State of
Colorado. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of
the terms hereof. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or
enforceability of any other provision.
IN WITNESS WHEREOF, the Company has caused this Warrant to
be executed on its behalf by one of its officers thereunto duly
authorized.
Dated: ---------, 1999 CAVION TECHNOLOGIES, INC.
--------------------------
David J. Selina, President
FORM OF SUBSCRIPTION
CAVION TECHNOLOGIES, INC.
(To be signed only on exercise of Warrant)
TO: Cavion Technologies, Inc.
7475 Dakin Street, Suite 607
Denver, Colorado 80221
Attn: President
1. The undersigned Holder of the attached original, executed
Warrant hereby elects to exercise its purchase right under such
Warrant with respect to -------- shares of Common Stock, as
defined in the Warrant, of Cavion Technologies, Inc., a Colorado
corporation (the "Company").
2. The undersigned Holder (check one):
(a) elects to pay the aggregate
purchase price for such shares of Common Stock
(the "Exercise Shares") (i) by lawful money of the
United States or the enclosed certified or
official bank check payable in United States
dollars to the order of the Company in the amount
of $-------, or (ii) by wire transfer of United
States funds to the account of the Company in the
amount of $--------, which transfer has been made
before or simultaneously with the delivery of this
Form of Subscription pursuant to the instructions
of the Company;
or
(b) elects to receive shares of Common
Stock having a value equal to the value of the
Warrant calculated in accordance with Section 1.2
of the Warrant.
3. Please issue a stock certificate or certificates
representing the appropriate number of shares of Common Stock in
the name of the undersigned or in such other name as is specified
below:
Name:----------------------------------------
Address:-------------------------------------
----------------------------------------
Dated:----------------- --------------------------
(Signature must conform to
name of Holder as
specified on the face of
the Warrant)
--------------------------
--------------------------
(Address)