EXHIBIT 4.8
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("1933 ACT") OR ANY STATE SECURITIES
LAWS AND SHALL NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED, OR
OTHERWISE TRANSFERRED, WHETHER OR NOT FOR CONSIDERATION, BY THE HOLDER
EXCEPT UPON THE ISSUANCE TO THE COMPANY OF A FAVORABLE OPINION OF ITS
COUNSEL OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY
BE SATISFACTORY TO COUNSEL FOR THE COMPANY, IN EITHER CASE, TO THE
EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE 1933 ACT
AND APPLICABLE STATE SECURITIES LAWS.
EFFECTIVE MANAGEMENT SYSTEMS, INC.
Common Stock Purchase Warrant
to
Purchase _______ Shares
of
Common Stock
This Common Stock Purchase Warrant is issued to:
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c/o Taglich Brothers, D'Amadeo, Wagner & Company, Incorporated
100 Wall Street
10th Floor
New York, NY 10005
by EFFECTIVE MANAGEMENT SYSTEMS, INC., a Wisconsin corporation (hereinafter
called the "Company", which term shall include its successors and assigns).
FOR VALUE RECEIVED and subject to the terms and conditions hereinafter
set out, the registered holder of this Warrant as set forth on the books and
records of the Company (the "Holder") is entitled upon surrender of this Warrant
to purchase from the Company ________________________________________________
fully paid and nonassessable (except as otherwise provided in Section
180.0622(2)(b) of the Wisconsin Business Corporation Law) shares of Common
Stock, $ .01 par value (the "Common Stock"), at the Exercise Price (as defined
below) per share.
This Warrant shall expire at the close of business on October 31, 2003.
1. (a) The right to purchase shares of Common Stock represented by this
Warrant may be exercised by the Holder, in whole or in part, by the surrender of
this Warrant (properly endorsed if required) at the principal office of the
Company at 12000 West Park Place, Milwaukee, Wisconsin
53224 (or such other office or agency of the Company as it may designate by
notice in writing to the Holder at the address of the Holder appearing on the
books of the Company), and upon payment to
the Company, by cash or by certified check or bank draft, of the Exercise Price
for such shares. The Company agrees that the shares of Common Stock so purchased
shall be deemed to be issued to the Holder as the record owner of such shares of
Common Stock as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for such shares of Common Stock as
aforesaid. Certificates for the shares of Common Stock so purchased (together
with a cash adjustment in lieu of any fraction of a share) shall be delivered to
the Holder within a reasonable time, not exceeding five (5) business days, after
the rights represented by this Warrant shall have been so exercised, and, unless
this Warrant has expired, a new Warrant representing the number of shares of
Common Stock, if any, with respect to which this Warrant shall not then have
been exercised, in all other respects identical with this Warrant, shall also be
issued and delivered to the Holder within such time, or, at the request of the
Holder, appropriate notation may be made on this Warrant and the same returned
to the Holder.
(b) This Warrant may be exercised to acquire, from and after the
date hereof, the number of shares of Common Stock set forth on the first page
hereof; provided, however, the right hereunder to purchase such shares of Common
Stock shall expire at the close of business on October 31, 2003.
2. This Warrant is being issued by the Company to Taglich Brothers,
D'Amadeo, Wagner & Company, Incorporated ("Taglich Brothers"), or its designee
(provided that such designee is an "accredited investor" as defined in the rules
and regulations of the Securities and Exchange Commission promulgated under the
1933 Act), pursuant to a Series B Preferred Stock Placement Agreement between
the Company and Taglich Brothers dated as of October 27, 1998 (the "Placement
Agreement"), whereby the Company agreed to issue a five (5) year warrant
exercisable at the Exercise Price per share to Taglich Brothers, or its
designee, equal to ten (10%) percent of the total number of shares of Common
Stock issuable upon the conversion of the Company's Series B 8% convertible
redeemable preferred stock sold for cash by Taglich Brothers in a Private
Placement pursuant to the Company's Confidential Private Placement Memorandum
dated October 22, 1998 (the "Memorandum").
3. The Company covenants and agrees that all Common Stock upon issuance
against payment in full of the Exercise Price by the Holder pursuant to this
Warrant will be validly issued, fully paid and nonassessable (except as
otherwise provided by Section 180.0622(2)(b) of the Wisconsin Business
Corporation Law) and free from all taxes, liens and charges with respect to the
issue thereof (except to the extent resulting from the Holder's own
circumstances, actions or omissions); and, without limiting the generality of
the foregoing, the Company covenants and agrees that it will take from time to
time all such action as may be requisite to assure that the par value per share
of the Common Stock is at all times equal to or less than the then effective
Exercise Price. The Company further covenants and agrees that during the period
within which the rights represented by this Warrant may be exercised, the
Company will have at all times authorized, and reserved for the purpose of issue
or transfer upon exercise of the rights evidenced by this Warrant, a sufficient
number of shares of Common Stock to provide for the exercise of the rights
represented by this Warrant, and will procure at its sole expense upon each such
reservation of shares the listing thereof
(subject to issuance or notice of issuance) on all stock exchanges on which the
Common Stock is then listed or inter-dealer trading systems on which the Common
Stock is then traded. The Company will take all such action as may be necessary
to assure that such shares of Common Stock may be so issued without violation of
any applicable law or regulation, or of any requirements of any national
securities exchange upon which the Common Stock may be listed or inter-dealer
trading system on which the Common Stock is then traded. The Company will not
take any action which would result in any adjustment in the number of shares of
Common Stock purchasable hereunder if the total number of shares of Common Stock
issuable pursuant to the terms of this Warrant after such action upon full
exercise of this Warrant and, together with all shares of Common Stock then
outstanding and all shares of Common Stock then issuable upon exercise of all
options and other rights to purchase shares of Common Stock then outstanding,
would exceed the total number of shares of Common Stock then authorized by the
Company's Restated Articles of Incorporation, as then amended.
4. The Initial Exercise Price is $3.60 per share of Common Stock
("Initial Exercise Price"). The Initial Exercise Price shall be adjusted as
provided for below in this Section 4 (the Initial Exercise Price, and the
Initial Exercise Price, as thereafter then adjusted, shall be referred to as the
"Exercise Price") and the Exercise Price from time to time shall be further
adjusted as provided for below in this Section 4. Upon each adjustment of the
Exercise Price, the Holder shall thereafter be entitled to receive upon exercise
of this Warrant, at the Exercise Price resulting from such adjustment, the
number of shares of Common Stock obtained by (i) multiplying the Exercise Price
in effect immediately prior to such adjustment by the number of shares of Common
Stock purchasable hereunder immediately prior to such adjustment, and (ii)
dividing the product thereof by the Exercise Price resulting from such
adjustment. The Exercise Price shall be adjusted as follows:
(i) In the case of any amendment to the Company's
Restated Articles of Incorporation of the Company to change the
designation of the Common Stock or the rights, privileges,
restrictions or conditions in respect to the Common Stock or
division of the Common Stock, this Warrant shall be adjusted so
as to provide that upon exercise thereof, the Holder shall
receive, in lieu of each Common Stock theretofore issuable upon
such exercise, the kind and amount of shares, other securities,
money and property receivable upon such designation, change or
division by the Holder issuable upon such exercise had the
exercise occurred immediately prior to such designation, change
or division. This Warrant shall be deemed thereafter to provide
for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4.
The provisions of this Subsection 4(i) shall apply in the same
manner to successive reclassifications, changes, consolidations
and mergers.
(ii) If the Company shall at any time subdivide its
outstanding shares of Common Stock into a greater number of
shares of Common Stock, or declare a dividend or make any other
distribution upon the Common Stock payable in shares of Common
Stock, the Exercise Price in effect immediately prior to such
subdivision or
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dividend or other distribution shall be proportionately reduced,
and conversely, in case the outstanding shares of Common Stock
shall be combined into a smaller number of shares of Common
Stock, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased.
(iii) If case the Company shall, through either a
private placement or a public offering (but other than pursuant
to options granted under the Company's directors' and employee
stock option and stock purchase plans or shares or options
issued in an acquisition or shares issuable pursuant to the
exercise of warrants outstanding on October 22, 1998 and other
than warrants granted to Taglich Brothers and/or its designees)
issues shares of Common Stock, or options to purchase Common
Stock or rights to subscribe for Common Stock or securities
convertible into or exchangeable for Common Stock at a price
(such price, if other than cash, as determined by the Board of
the Board of Directors) less than 120% of the then Market Price
(as defined below) on the date of sale, the Exercise Price then
in effect shall automatically be reduced by multiplying the then
Exercise Price by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately
prior to such issuance, sale or distribution plus the number of
shares of Common Stock which the aggregate consideration
received or to be received by the Company for such issuance,
sale or distribution would purchase at 120% of the Market Price
per share, and the denominator of which shall be the number of
shares of Common Stock outstanding immediately after giving
effect to such issuance, sale or distribution. The term "Market
Price" shall mean the average closing bid price for the ten (10)
consecutive trading days immediately prior to the date of sale.
Notwithstanding the foregoing, in no event shall the Exercise
Price ever be increased as a result of this Subsection 4(iii).
There will be no adjustment in the event that the Company pays a
dividend in cash to its holders of Common Stock; provided,
however, the Company will give the holder of this Warrant
written notice at least thirty (30) days prior to the record
date for the cash dividend, that the Company intends to declare
a cash dividend.
(iv) If any capital reorganization or reclassification
of the capital stock of the Company, or any consolidation or
merger of the Company with another corporation or entity, or the
sale of all or substantially all of the Company's assets to
another corporation or other entity shall be effected in such a
way that holders of shares of Common Stock shall be entitled to
receive stock, securities, other evidence of equity ownership or
assets with respect to or in exchange for shares of Common
Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale (except as
otherwise provided below in this Section 4), lawful and adequate
provisions shall be made whereby the Holder shall thereafter
have the right to receive upon the basis and upon the terms and
conditions specified herein, such shares of stock, securities,
other evidence of equity ownership or assets as may be issued or
payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of
shares of Common Stock immediately
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theretofore purchasable and receivable upon the exercise of this
Warrant under this Section 4 had such reorganization,
reclassification, consolidation, merger or sale not taken place,
and in any such case appropriate provisions shall be made with
respect to the rights and interests of the Holder to the end
that the provisions hereof (including, without limitation,
provisions for adjustments of the Exercise Price and of the
number of shares of Common Stock receivable upon the exercise of
this Warrant) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities, other
evidence of equity ownership or assets thereafter deliverable
upon the exercise hereof (including an immediate adjustment, by
reason of such consolidation or merger, of the Exercise Price to
the value for the Common Stock reflected by the terms of such
consolidation or merger if the value so reflected is less than
the Exercise Price in effect immediately prior to such
consolidation or merger; provided, however, that the Exercise
Price shall not be reduced under this Section 4(iv) by more than
thirty (30%) percent). Subject to the terms of this Warrant, in
the event of a merger or consolidation of the Company with or
into another corporation or other entity as a result of which
the number of shares of common stock of the surviving
corporation or other entity issuable to holders of Common Stock,
is greater or lesser than the number of shares of Common Stock
outstanding immediately prior to such merger or consolidation,
then the Exercise Price in effect immediately prior to such
merger or consolidation shall be adjusted in the same manner as
though there were a subdivision or combination of the
outstanding shares of Common Stock. The Company shall not effect
any such consolidation, merger or sale, unless, prior to the
consummation thereof, the successor corporation (if other than
the Company) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written
instrument executed and mailed or delivered to the Holder, the
obligation to deliver to the Holder such shares of stock,
securities, other evidence of equity ownership or assets as, in
accordance with the foregoing provisions, the Holder may be
entitled to receive or otherwise acquire. If a purchase, tender
or exchange offer is made to and accepted by the holders of more
than fifty (50%) percent of the outstanding shares of Common
Stock, the Company shall not effect any consolidation, merger or
sale with the person having made such offer or with any
affiliate of such person, unless prior to the consummation of
such consolidation, merger or sale the Holder of this Warrant
shall have been given a reasonable opportunity to then elect to
receive upon the exercise of this Warrant the amount of stock,
securities, other evidence of equity ownership or assets then
issuable with respect to the number of shares of Common Stock in
accordance with such offer.
(v) In case the Company shall, at any time prior to
exercise of this Warrant, consolidate or merge with any other
corporation or other entity (where the Company is not the
surviving entity) or transfer all or substantially all of its
assets to any other corporation or other entity, then the
Company shall, as a condition precedent to such transaction,
cause effective provision to be made so that the Holder of this
Warrant upon the exercise of this Warrant after the effective
date of such transaction shall be entitled to receive the kind
and amount of shares, evidences of indebtedness
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and/or other securities or property receivable on such
transaction by a holder of the number of shares of Common Stock
as to which Warrant was exercisable immediately prior to such
transaction (without giving effect to any restriction upon such
exercise); and, in any such case, appropriate provision shall be
made with respect to the rights and interest of the Holder of
this Warrant to the end that the provisions of this Warrant
shall thereafter be applicable (as nearly as may be practicable)
with respect to any shares, evidences of indebtedness or other
securities or assets thereafter deliverable upon exercise of
this Warrant. Upon the occurrence of any event described in this
Section 4(v), the holder of this Warrant shall have the right to
(i) exercise this Warrant immediately prior to such event at a
Exercise Price equal to lesser of (1) the then Exercise Price or
(2) 120% of the price per share of Common Stock paid in such
event; provided, however, that the Exercise Price shall not be
reduced under this Section 4(v) (2) by more than thirty (30%)
percent, or (ii) retain ownership of this Warrant, in which
event, appropriate provisions shall be made so that the Warrant
shall be exercisable at the Holder's option into shares of
stock, securities or other equity ownership of the surviving or
acquiring entity.
Whenever the Exercise Price shall be adjusted pursuant to this
Section 4, the Company shall issue a certificate signed by its President or Vice
President and by its Treasurer, Assistant Treasurer, Secretary or Assistant
Secretary, setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Board of
Directors of the Company made any determination hereunder), and the Exercise
Price after giving effect to such adjustment, and shall cause copies of such
certificates to be mailed (by first-class mail, postage prepaid) to the Holder
of this Warrant. The Company shall make such certificate and mail it to the
Holder promptly after each adjustment.
No fractional Common Stock shall be issued in connection with
any exercise of this Warrant, but in lieu of such fractional shares, the Company
shall make a cash payment therefor equal in amount to the product of the
applicable fraction multiplied by the Exercise Price then in effect.
5. In the event the Company grants rights (other than rights granted
pursuant to a shareholder rights or poison pill plan) to all shareholders to
purchase Common Stock, the Holder shall have the same rights as if this Warrant
had been exercised immediately prior to such grant.
6. The Holder shall, with respect to the shares of Common Stock issuable
upon the exercise of this Warrant, have the registration rights and "piggy back"
registration rights set forth in the Placement Agreement. Such registration
rights and "piggy back" registration rights are incorporated herein by this
reference as if such provisions had been set forth herein in full.
7. This Warrant need not be changed because of any change in the
Exercise Price or in the number of shares of Common Stock purchased hereunder.
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8. The terms defined in this paragraph, whenever used in this Warrant,
shall, unless the context otherwise requires, have the respective meanings
hereinafter specified. The term "Common Stock shall mean and include the
Company's Common Stock, $.01 par value per share, authorized on the date of the
original issue of this Warrant and shall also include in case of any
reorganization, reclassification, consolidation, merger or sale of assets of the
character referred to in paragraph 4 hereof, the stock, securities or assets
provided for in such paragraph. The term "Company" shall also include any
successor corporation to EFFECTIVE MANAGEMENT SYSTEMS, INC. by merger,
consolidation or otherwise. The term "outstanding" when used with reference to
Common Stock shall mean at any date as of which the number of shares thereof is
to be determined, all issued shares of Common Stock, except shares then owned or
held by or for the account of the Company. The term "1933 Act" shall mean the
Securities Act of 1933, as amended, or any successor Federal statute, and the
rules and regulations of the Securities and Exchange Commission, or any other
Federal agency then administering the 1933 Act, thereunder, all as the same
shall be in effect at the time.
9. This Warrant is exchangeable, upon the surrender hereby by the Holder
at the office or agency of the Company, for 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 of Common Stock as shall be designated by the Holder at
the time of such surrender. Upon receipt of evidence satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant or any such new
Warrants and, in the case of any such loss, theft, or destruction, upon delivery
of a bond of indemnity, reasonably satisfactory to the Company, or, in the case
of any such mutilation, upon surrender or cancellation of this Warrant or such
new Warrants, the Company will issue to the Holder a new Warrant of like tenor,
in lieu of this Warrant or such new Warrants, representing the right to
subscribe for and purchase the number of shares of Common Stock which may be
subscribed for and purchased hereunder.
10. The Company agrees to use its best efforts to file timely all
reports required to be filed by it pursuant to Sections 13 or 15 of the
Securities Exchange Act of 1934, as amended, and to provide such information as
will permit the Holder to sell this Warrant or any shares of Common Stock
acquired upon exercise of this Warrant in accordance with Rule 144 under the
1933 Act.
11. The Company will at no time close its transfer books against the
transfer of this Warrant or of any shares of Common Stock issued or issuable
upon the exercise of this Warrant in any manner which interferes with the timely
exercise of this Warrant. This Warrant shall not entitle the Holder to any
voting rights or any rights as a shareholder of the Company. The rights and
obligations of the Company, of the Holder, and of any holder of shares of Common
Stock issuable hereunder, shall survive the exercise of this Warrant.
12. This Warrant sets forth the entire agreement of the Company and the
Holder of the Common Stock issuable upon the exercise of this Warrant with
respect to the rights of the Holder and the Common Stock issuable upon the
exercise of this Warrant, notwithstanding the knowledge of such Holder of any
other agreement or the provisions of any agreement, whether or not known
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to the Holder, and the Company represents that there are no agreements
inconsistent with the terms hereof or which purport in any way to bind the
Holder of this Warrant or the Common Stock.
13. The validity, interpretation and performance of this Warrant and
each of its terms and provisions shall be governed by the laws of the State of
New York.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer under its corporate seal and dated as of October __,
1998.
EFFECTIVE MANAGEMENT SYSTEMS, INC.
By:_______________________________________
Name: Jeffrey Fossum
Title: Chief Financial Officer
[CORPORATE SEAL]
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