Exhibit 10.4
WARRANT AGREEMENT
WARRANT AGREEMENT (this "Agreement"), dated as of February 9, 2001, by
---------
and between MICROSTRATEGY INCORPORATED, a Delaware corporation (the "Company"),
-------
and FOOTHILL CAPITAL CORPORATION, a California corporation ("Lender").
------
W I T N E S S E T H:
--------------------
WHEREAS, the Company and Lender are parties to that certain Loan and
Security Agreement, dated as of February 9, 2001 (as the same may from time to
time be amended, restated, supplemented or otherwise modified, the "Loan
----
Agreement") pursuant to which Lender has agreed to make certain financial
- ---------
accommodations to the Company;
WHEREAS, pursuant to the Loan Agreement and as a condition to the
effectiveness thereof, it is a requirement that the Company execute and deliver
this Agreement and issue to the Warrant Holder, in accordance with the terms and
conditions hereof, a warrant (the "Warrant") to purchase up to an aggregate of
-------
50,000 shares of the Company's class A common stock, par value $0.001 per share
("Common Stock"), at the exercise price per share provided for herein, which
------------
warrant shall be evidenced in substantially the same form as the Form of Warrant
Certificate (the "Warrant Certificate") attached hereto as Exhibit A; and
------------------- ---------
WHEREAS, Lender desires to acquire from the Company, and the Company
desires to issue to Lender, the Warrant.
NOW, THEREFORE, in consideration of these premises, and the respective
promises and covenants contained herein, the parties hereto hereby agree as
follows:
SECTION 1. Definitions. The following terms as used in this
-------------------------------------------------
Agreement shall have the meanings set forth below:
- --------------------------------------------------
"Business Day" means a day other than a Saturday, Sunday or other day
on which banks in the State of California are authorized by law to remain
closed;
"Common Stock" shall mean the meaning set forth in the Recitals to
this Agreement;
"Company" shall have the meaning set forth in the introductory
paragraph hereof, or any successor thereof;
"Convertible Securities" shall have the meaning set forth in
Section 4(c);
- ------------
"Exempt Securities" shall have the meaning set forth in Section 4(o);
------------
"Exercise Date" shall mean any date on which the Company shall have
received both (i) a Warrant Certificate representing a Warrant, with the
exercise form thereon duly executed by the Warrant Holder, or his attorney-in-
fact duly authorized in writing, and (ii) payment of the
Underlying Share Purchase Price pursuant to Section 2(b) or Section 2(c), as
determined by the Warrant Holder in its sole discretion;
"Lender" shall have the meaning set forth in the preamble hereto;
"Nasdaq" means the Nasdaq National Market;
"Notice Event" shall mean (i) any authorization by the Company of the
issuance to all holders of shares of Common Stock of rights, options or warrants
to subscribe for or purchase shares of Common Stock or of any other subscription
rights or warrants, (ii) any authorization by the Company of the distribution to
all holders of shares of Common Stock of evidences of its indebtedness or assets
(other than cash dividends or distributions payable out of consolidated earnings
or earned surplus or dividends payable in shares of Common Stock), (iii) any
consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company is required, or of the conveyance or transfer
of the properties and assets of the Company substantially as an entirety, or of
any reclassification or change of Common Stock issuable upon exercise of the
Warrants (other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common Stock,
(iv) any voluntary or involuntary dissolution, liquidation or winding up of the
Company, or (v) any proposal by the Company to take any other action that would
require an adjustment of the Underlying Share Purchase Price or the number of
Underlying Shares pursuant to Section 4;
"Option Issuance" shall have the meaning set forth in Section 4 (c);
-------------
"Options" shall have the meaning set forth in Section 4(c);
------------
"Registrable Securities" shall have the meaning set forth in the
Registration Rights Agreement;
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of the date hereof, by and between the Company and Lender;
"SEC" means the Securities and Exchange Commission;
"SEC Reports" shall have the meaning set forth in Section 3(d);
------------
"Stock Option Plan" shall have the meaning set forth in Section 4(o);
------------
"Transfer Agent" means American Stock Transfer & Trust Company, or
such other firm as may then be acting as the transfer agent of the Company;
"Underlying Share Expiration Date" means the last date on which the
Warrants to purchase the Underlying Shares may be exercised, which shall be 5:00
p.m., California time, on the day before the date which is 5 years from the date
hereof (or as may be extended pursuant to Section 3(c)), or if such expiration
date is not a Business Day, at or before 5:00 p.m. California time on the next
following Business Day;
-2-
"Underlying Share Purchase Price" shall mean the average of the high
and low sales prices of the Company's Common Stock as reported by Nasdaq for the
five consecutive business days prior to the closing date of the Loan Agreement
subject to adjustment from time to time pursuant to the provisions of Section 4;
---------
"Underlying Shares" means the 50,000 shares of Common Stock that are
the subject of the Warrants, subject to adjustment from time to time as provided
herein;
"Warrants" shall mean the right to purchase the Underlying Shares
pursuant to this Agreement, together with any divisions thereof;
"Warrant Certificate" shall have the meaning set forth in the recitals
hereto;
"Warrant Holder" means a person or entity in whose name the Warrants
shall be either initially or subsequently registered upon the books to be
maintained by the Company for such purpose.
SECTION 2. Duration and Exercise
---------------------
(a) Duration. Subject to the provisions of Section 4 hereof,
--------
the Warrants may be exercised from time to time, upon the terms and subject to
the conditions set forth herein, at any time before the Underlying Share
Expiration Date. If the Warrants are not exercised before the Underlying Share
Expiration Date, the Warrant Holder shall no longer be entitled to purchase the
Underlying Shares and all rights hereunder to purchase such Underlying Shares
shall thereupon cease.
(b) Exercise.
--------
(i) A Warrant Holder may exercise the Warrants, in whole
or in part, to purchase the Underlying Shares in such amounts as may be elected
upon surrender of the Warrant Certificates therefor with the subscription form
thereon duly executed, to the Company at its corporate office at 8000 Towers
Crescent Drive, Suite 1400, Vienna, Virginia 22182, together with the full
Underlying Share Purchase Price for each Underlying Share to be purchased,
(i) in lawful money of the United States, or by certified check or bank
draft payable in United States dollars to the order of the Company or
(ii) cancellation of all or any part of the unpaid principal amount of
indebtedness outstanding under the Loan Agreement in an amount equal to the
Underlying Share Purchase Price and upon compliance with and subject to the
conditions set forth herein and in the Warrant Certificate.
(ii) Upon receipt of such Warrant Certificates together
with the Subscription Form attached hereto as Exhibit D (or a reasonable
---------
facsimile thereof) thereon duly executed and accompanied by payment of the
Underlying Share Purchase Price for the number of Underlying Shares for which
such Warrants are then being exercised, the Company shall, subject to Section
-------
5(b) hereof, cause to be issued and delivered promptly, but in all events within
- ----
three (3) Business Days of receipt by the Company of the Underlying Share
Purchase Price, to the Warrant Holder certificates for such shares of Common
Stock in such denominations as are requested by the Warrant Holder.
-3-
(iii) In case a Warrant Holder shall exercise Warrants with
respect to less than all of the Underlying Shares, the Company will execute a
new Warrant Certificate, as represented by a warrant certificate substantially
in the form attached hereto as Exhibit A, exercisable for the balance of the
Underlying Shares that may be purchased upon exercise of such Warrants and
deliver such new Warrant Certificate to the Warrant Holder. Warrant Certificates
shall be executed on behalf of the Company by the Company's Chairman of the
Board, President or any Vice President and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary.
(iv) Warrants shall be deemed to have been exercised
immediately prior to the close of business on the Exercise Date, and the person
entitled to receive the Underlying Shares and any Warrant Certificate
representing the unexercised portion of the Warrants deliverable upon such
exercise shall be treated for all purposes as the holder of such Underlying
Shares and unexercised Warrants, respectively, upon such exercise as of the
close of business on the Exercise Date.
(v) The Company covenants and agrees that it will pay
when due and payable any and all taxes that may be payable in respect of the
issue of the Warrants or the issue of any Underlying Shares. The Company shall
not, however, be required to pay any tax that may be payable in respect of any
transfer by the Warrant Holder of the Warrants or any Underlying Shares to any
person or entity at the time of surrender. Until the payment of the tax referred
to in the previous sentence and the presentation to the Company by the Warrant
Holder of reasonable proof of such payment, the Company shall not be required to
issue such Underlying Shares or new Warrant Certificates representing
unexercised Warrants to any transferee.
(c) Cashless Exercise. In lieu of a cash payment of the
-----------------
Underlying Share Purchase Price, a Warrant Holder may exercise the Warrants, in
whole or in part, by presentation and surrender of the Warrants to the Company,
together with a Cashless Exercise Form attached hereto as Exhibit B (or a
---------
reasonable facsimile thereof) duly executed (a "Cashless Exercise"). Acceptance
-----------------
by the Company of such presentation and surrender shall be deemed a waiver of
the Warrant Holder's obligation to pay all or any portion of the Underlying
Share Purchase Price, as the case may be. In the event of a Cashless Exercise,
the Warrant Holder shall exchange the Warrants for that number of shares of
Common Stock determined by multiplying the number of shares of Common Stock for
which the Warrants are being exercised by a fraction, the numerator of which
shall be the difference between the then current market price per share of the
Common Stock and the Underlying Share Purchase Price, and the denominator of
which shall be the then current market price per share of Common Stock. For
purposes of any computation under this Section 2(c), the then current market
------------
price per share of Common Stock at any date shall be deemed to be the average
for the ten (10) consecutive business days immediately prior to the Cashless
Exercise of the daily closing prices of the Common Stock on the principal
national securities exchange on which the Common Stock is admitted to trading or
listed, or if not listed or admitted to trading on any such exchange, the last
reported sales prices as included for quotation on Nasdaq, or if not included
for quotation on Nasdaq, the average of the highest reported bid and lowest
reported asked prices as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System, or if not then publicly traded, the
fair market price of the Common Stock as determined by the Board of Directors of
the Company.
-4-
SECTION 3. Covenants
---------
(a) Issuance and Sale of Underlying Shares. The Company
--------------------------------------
covenants that it will at all times reserve and keep available, free from
preemptive rights, out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of the Warrants, such number of shares of Common Stock as
shall equal the aggregate number of the Underlying Shares. The Company covenants
that all shares of Common Stock that shall be issuable upon exercise of the
Warrants shall, at the time of delivery and, subject to Section 2(c) hereof,
upon receipt by the Company of the Underlying Share Purchase Price, be duly and
validly issued, fully paid, nonassessable and free from all taxes, liens and
charges with respect to the issue thereof (other than those which the Company
shall promptly pay or discharge).
The Company hereby authorizes and directs the Transfer Agent for the
Common Stock at all times to reserve such number of authorized shares of Common
Stock as shall be required for such purpose. The Company will keep a copy of
this Agreement on file with the Transfer Agent. The Company will supply such
Transfer Agent with duly executed certificates for such purposes and will
provide or otherwise make available any cash which may be payable as provided in
Section 5(b) hereof. The Company will furnish such Transfer Agent with a copy
of all notices of adjustments and certificates related thereto transmitted to
the Warrant Holder pursuant to Section 4(p) hereof.
(b) Registration Rights Agreement. Lender, any transferee of
-----------------------------
Lender's interests hereunder and any subsequent transferee thereof shall be
entitled to the benefits of that certain Registration Rights Agreement between
Lender and the Company of even date herewith, to the extent provided for in the
Registration Rights Agreement.
(c) SEC Reports. So long as the Warrants remain outstanding,
-----------
the Company shall cause copies of all financial reports, documents, and other
reports (or copies of such portions of any of the foregoing) which the Company
provides to its stockholders (whether pursuant to Section 13 or 15(d) of the
Exchange Act or otherwise) to be mailed to the Warrant Holder at his, her or its
address appearing in the register of warrant holders maintained by the Company,
in each case, within 15 days of filing with the SEC. If the Company is not
subject to the requirements of Section 13 or 15(d) of the Exchange Act, the
Company shall nevertheless continue to cause quarterly and annual reports
comparable to those which it would be required to file on Form 10-Q and Form 10-
K, respectively, pursuant to Section 13 or 15(d) of the Exchange Act as if it
were subject to the requirements of either such section, to be so filed with the
SEC (but only if the SEC permits such filings) and mailed to the Warrant Holder,
in each case, within the same time periods as would have applied (including
under the preceding sentence) had the Company been subject to the requirements
of Section 13 or 15(d) of the Exchange Act.
(d) Restrictive Legend. Each Warrant Certificate and
------------------
certificate evidencing shares of Common Stock issued to the Warrant Holder
following the exercise of Warrants shall bear the following restrictive legend
until such time as the transfer of such security is not restricted under the
federal securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES
-5-
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT, OR (II) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE
ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
IS AVAILABLE..
SECTION 4. Adjustment of Underlying Share Purchase Price and Number
--------------------------------------------------------
of Underlying Shares. The number of Underlying Shares purchasable upon the
- --------------------
exercise of the Warrants and the payment of the Underlying Share Purchase Price
shall be subject to adjustment from time to time as follows:
(a) Stock Splits, Combinations, etc. In case the Company shall
-------------------------------
hereafter, but prior to 5:00 p.m. (California time) on the Underlying Share
Expiration Date: (i) pay a dividend or make a distribution on its Common Stock
in shares of its capital stock (whether such distribution consists of shares of
Common Stock or of capital stock of any other class); (ii) subdivide its
outstanding shares of Common Stock; (iii) combine its outstanding shares of
Common Stock into a smaller number of shares; or (iv) issue by reclassification
of its shares of Common Stock any shares of capital stock of the Company, the
Underlying Share Purchase Price in effect and the number of Underlying Shares
issuable upon exercise of the Warrants immediately prior to such action shall be
adjusted so that the Warrant Holder shall be entitled to receive that number of
shares of Common Stock of the Company at the same aggregate Underlying Share
Purchase Price that the Warrant Holder would have owned immediately following
such action had the Warrants been exercised immediately prior thereto. An
adjustment made pursuant to this paragraph shall become effective on the day
which is immediately after the record date in the case of a dividend and shall
become effective on the day which is immediately after the effective date in the
case of a subdivision, combination or reclassification. If, as a result of an
adjustment made pursuant to this paragraph, the Warrant Holder shall become
entitled to receive shares of two or more classes of capital stock of the
Company, the Board of Directors of the Company (whose determination shall be
conclusive) shall determine the allocation of the adjusted Underlying Share
Purchase Price between or among shares of such classes of capital stock.
(b) Reclassification, Combination, Mergers, etc. In case of any
--------------------------------------------
reclassification or change of outstanding shares of Common Stock issuable upon
exercise of the Warrants (other than as set forth in paragraph (a) above and
other than a change in par value, or from par value to no par value, or from no
par value to par value or as a result of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into another
corporation or entity (other than a merger in which the Company is the
continuing corporation and which does not result in any reclassification or
change of the then outstanding shares of Common Stock or other capital stock
issuable upon exercise of the Warrants), or in the case of any sale or
conveyance of all or substantially all of the assets of the Company followed by
a related distribution to holders of shares of Common Stock or cash, securities
or other property, then as a condition of such reclassification, change,
consolidation, merger, or sale of assets, the Company or such successor
corporation or entity, as the case may be, shall forthwith make lawful and
adequate
-6-
provision whereby the Warrant Holder shall have the right thereafter to receive
on exercise of the Warrants (provided such exercise occurs prior to 5:00 p.m.
(California time) on the Underlying Share Expiration Date) the kind and amount
of shares of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, or sale of assets, by a holder
of shares of Common Stock immediately prior to such reclassification, change,
consolidation, merger, or sale of assets, and the Company or such successor
corporation or entity shall enter into a supplemental warrant agreement with the
Warrant Holder so providing. Such provisions shall include provision for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 4. If the issuer of securities
---------
deliverable upon exercise of the Warrants under the supplemental warrant
agreement is an affiliate of the formed or surviving corporation or other
entity, that issuer shall join in the supplemental warrant agreement. The above
provisions of this paragraph (b) shall similarly apply to successive
reclassification and changes of shares of Common Stock and to successive
consolidations or mergers.
(c) Issuance of Options or Convertible Securities. In the event
---------------------------------------------
the Company shall, at any time or from time to time after the date hereof, but
prior to 5:00 p.m. (California time) on the Underlying Share Expiration Date,
issue, sell, distribute or otherwise grant in any manner (including by
assumption) any rights to subscribe for or to purchase, or any warrants or
options for the purchase of, Common Stock or any stock or securities convertible
into or exchangeable for Common Stock (any such rights, warrants or options
being herein called "Options" and any such convertible or exchangeable stock or
-------
securities being herein called "Convertible Securities"), whether or not such
----------------------
Options or rights to convert or exchange such Convertible Securities are
immediately exercisable, and the price per share at which Common Stock is
issuable upon the exercise of such Options or upon the conversion or exchange of
such Convertible Securities (determined by dividing (1) the aggregate amount, if
any, received or receivable by the Company as consideration for the issuance,
sale, distribution or granting of such Options or such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the exercise of all such Options or upon conversion or
exchange of all such Convertible Securities, plus, in the case of Options to
acquire Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange of all such
Convertible Securities, by (2) the total maximum number of shares of Common
Stock issuable upon the exercise of all such Options or upon the conversion or
exchange of all such Convertible Securities or upon the conversion or exchange
of all Convertible Securities issuable upon the exercise of all such Options)
shall be less than the current market price per share of the Common Stock on the
record date that the Company becomes obligated to make such issuance, sale,
distribution or granting of such Options or Convertible Securities except in
connection with the issuance or sale of any Exempt Securities (as defined in
paragraph (n) below) (any such event being herein called an "Option Issuance"),
---------------
then, effective upon such Option Issuance:
(i) the Underlying Share Purchase Price shall be reduced
to the price (calculated to the nearest one tenth of one cent ($0.001))
determined by multiplying the Underlying Share Purchase Price in effect
immediately prior to such Option Issuance by a fraction, the numerator of which
shall be the sum of (X) the number of shares of Common Stock outstanding
(exclusive of any treasury shares) immediately prior to such Option Issuance
multiplied by the current market price per share of Common Stock on the date of
such Option Issuance, plus (Y) the consideration, if any, received by the
Company upon such Option Issuance, and the denominator of which shall be the
product of (A) the total number of shares of Common Stock outstanding
-7-
(exclusive of any treasury shares) immediately after such Option Issuance,
multiplied by (B) the current market price per share of Common Stock on the
record date for such Option Issuance; and
(ii) (2) the number of Underlying Shares purchasable upon
the exercise of the Warrants shall be increased to a number determined by
multiplying the number of Underlying Shares so purchasable immediately prior to
the record date for such Option Issuance by a fraction, the numerator of which
shall be the Underlying Share Purchase Price in effect immediately prior to the
adjustment required by clause (1) of this Section 4(c) and the denominator of
which shall be the Underlying Share Purchase Price in effect immediately after
such adjustment.
For purposes of the foregoing, the total maximum number of shares of
Common Stock issuable upon exercise of all such Options or upon conversion or
exchange of all such Convertible Securities or upon the conversion or exchange
of the total maximum amount of the Convertible Securities issuable upon the
exercise of all such Options shall be deemed to have been issued as of the date
of such Option Issuance and thereafter shall be deemed to be outstanding and the
Company shall be deemed to have received as consideration therefor such price
per share, determined as provided above. Except as provided in paragraphs (j)
and (k) below, no additional adjustment of the Underlying Share Purchase Price
shall be made upon the actual exercise of such Options or upon conversion or
exchange of the Convertible Securities or upon the conversion or exchange of the
Convertible Securities issuable upon the exercise of such Options.
(d) Dividends and Distributions. In the event the Company
---------------------------
shall, at any time or from time to time after the date hereof, but prior to
5:00 p.m. (California time) on the Underlying Share Expiration Date, distribute
to all the holders of Common Stock any dividend or other distribution of cash,
evidences of its indebtedness, other securities or other properties or assets
(in each case other than (1) dividends payable in Common Stock, Options or
Convertible Securities and (2) any cash dividend that, when added to all other
cash dividends paid in the one year prior to the declaration date of such
dividend, does not exceed 5% of the current market price per share of Common
Stock on such declaration date), or any options, warrants or other rights to
subscribe for or purchase any of the foregoing, then:
(i) the Underlying Share Purchase Price shall be
decreased to a price determined by multiplying the Underlying Share Purchase
Price then in effect by a fraction, the numerator of which shall be the current
market price per share of Common Stock on the record date for such distribution
less the sum of (X) the cash portion per share, if any, of such distribution of
Common Stock outstanding (exclusive of any treasury shares) on the record date
for such distribution plus (Y) the then fair market value per share of Common
Stock outstanding (exclusive of any treasury shares) on the record date for such
distribution of that portion, if any, of such distribution consisting of
evidences of indebtedness, other securities, properties assets, options,
warrants or subscription of purchase rights, and the denominator of which shall
be such current market price per share of the Common Stock on the record date
for such distribution; and
(ii) the number of Underlying Shares purchasable upon the
exercise of the Warrants shall be increased to a number determined by
multiplying the number of Underlying Shares so purchasable immediately prior to
the record date for such distribution by a fraction, the numerator of which
shall be the Underlying Share Purchase Price in effect immediately
-8-
prior to the adjustment required by clause (1) of this Section 4(d) and the
------------
denominator of which shall be the Underlying Share Purchase Price in effect
immediately after such adjustment.
The adjustments required by this paragraph (d) shall be made whenever
-------------
any such distribution occurs retroactive to the record date for the
determination of stockholders entitled to receive such distribution.
(e) Sale of Common Stock Below its Current Market Price. Except
---------------------------------------------------
in connection with the issuance or sale of any Exempt Securities (as defined in
paragraph (n) below), if the Company shall at any time or from time to time
after the date hereof, issue or sell any shares of Common Stock and the price
per share at which such shares were issued or sold shall be less than the
current market price per share of the Common Stock on the date the Company
becomes obligated to make such issuance or sale, then, effective upon such
issuance or sale:
(i) the Underlying Share Purchase Price shall be reduced
to the price (calculated to the nearest one tenth of one cent ($0.001))
determined by multiplying the Underlying Share Purchase Price in effect
immediately prior to such issuance or sale by a fraction, the numerator of which
shall be the sum of (A) the number of shares of Common Stock outstanding
(exclusive of any treasury shares) immediately prior to such issuance or sale
multiplied by the current market price per share of Common Stock on the date of
such issuance or sale, plus (B) the consideration received by the Company upon
such issuance or sale, and the denominator of which shall be the product of
(X) the total number of shares of Common Stock outstanding (exclusive of any
treasury shares) immediately after such issuance or sale, multiplied by (Y) the
current market price per share of Common Stock on the date of such issuance or
sale; and
(ii) the number of Underlying Shares purchasable upon the
exercise of the Warrants shall be increased to a number determined by
multiplying the number of Underlying Shares so purchasable immediately prior to
the date of such issuance or sale by a fraction, the numerator of which shall be
the Underlying Share Purchase Price in effect immediately prior to the
adjustment required by clause (i) of this sentence and the denominator of which
shall be the Underlying Share Purchase Price in effect immediately after such
adjustment.
(f) Current Market Price. For the purpose of any computation of
--------------------
current market price under this Section 4 and Section 5(b) hereof, the current
--------- ------------
market price per share of the Common Stock at any date shall be (x) for purposes
of Section 5(b), the closing price on the Business Day immediately prior to the
exercise of the Warrants and (y) in all other cases, the average of the daily
closing prices for the 5 consecutive trading days immediately preceding the date
in question. The closing price for any day shall be the last reported sale price
or, in case no such reported sale takes place on such day, the average of the
closing bid and asked prices for such day, in each case (1) on the principal
national securities exchange on which the shares of Common Stock are listed or
to which such shares are admitted to trading or (2) if the Common Stock is not
listed or admitted to trading on a national securities exchange, in the over-
the-counter market as included for quotation on Nasdaq or any comparable system
or (3) if the Common Stock is not included for quotation on Nasdaq or a
comparable system, as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time in good faith by the Board
of Directors of the Company for that purpose. In the absence of all of the
foregoing, or if for any reason the current market price per share cannot be
determined pursuant to the foregoing provisions
-9-
of this paragraph (f), the current market price per share shall be the fair
market value thereof as determined in good faith by the Board of Directors of
the Company.
(g) Consideration Received. If any shares of Common Stock,
----------------------
Options or Convertible Securities shall be issued, sold or distributed for
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then fair
market value of such consideration (as determined in good faith by the Board of
Directors of the Company). If any Options shall be issued in connection with the
issuance and sale of other securities of the Company, together comprising one
transaction in which no specific consideration is allocated to such Options by
the parties thereto, such Options shall be deemed to have been issued without
consideration. If the Company shall pay a dividend or make any other
distribution payable in Options or Convertible Securities, then such Options or
Convertible Securities shall be deemed to have been issued or sold without
consideration. In the case of an underwritten public offering, the amount of any
underwriting discount shall be deemed to be additional consideration received by
the Company as part of the issuance of the applicable securities.
(h) Deferral of Certain Adjustments. No adjustment to the
-------------------------------
Underlying Share Purchase Price (including the related adjustment to the number
of Underlying Shares) shall be required hereunder unless such adjustment,
together with other adjustments carried forward as provided below, would result
in an increase or decrease of at least one percent (1%) of the Underlying Share
Purchase Price; provided that any adjustments which by reason of this paragraph
(i) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. No adjustment need be made for a change in the par
value of the Common Stock. All calculations under this Section 4 shall be made
to the nearest one tenth of one cent ($0.001) or to the nearest whole share, as
the case may be.
(i) Changes in Options and Convertible Securities. If the
---------------------------------------------
exercise price provided for in any Options referred to in paragraph (c) above,
-------------
the additional consideration, if any, payable upon the conversion or exchange of
any Convertible Securities referred to in paragraph (c) above, or the rate at
which any Convertible Securities referred to in paragraph (c) above are
-------------
convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution upon an event which results in a related adjustment pursuant to this
Section 4), the Underlying Share Purchase Price then in effect and the number of
- ---------
Underlying Shares purchasable upon the exercise of the Warrants shall forthwith
be readjusted (effective only with respect to any exercise of the Warrants after
such readjustment) to the Underlying Share Purchase Price and number of
Underlying Shares so purchasable that would then be in effect had the adjustment
made upon the issuance, sale, distribution or granting of such Options or
Convertible Securities been made based upon such changed purchase price,
additional consideration or conversion rate, as the case may be, but only with
respect to such Options and Convertible Securities as then remain outstanding.
(j) Expiration of Options and Convertible Securities. If, at
------------------------------------------------
any time after any adjustment to the number of Underlying Shares purchasable
upon the exercise of the Warrants shall have been made pursuant to paragraph (c)
-------------
or (j) above or this paragraph (k), any Options or Convertible Securities shall
--- -------------
have expired unexercised, the number of Underlying Shares so purchasable with
respect to any then outstanding Warrants shall, upon such expiration, be
readjusted and shall thereafter be such as they would have been had the Warrants
outstanding at the time of the
-10-
original adjustment been adjusted (or had the original adjustment not been
required, as the case may be) as if (i) the only shares of Common Stock deemed
to have been issued in connection with such Options or Convertible Securities
were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such Options or Convertible Securities and (ii) such shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate consideration, if
any, actually received by the Company for the issuance, sale, distribution or
granting of all such Options or Convertible Securities, whether or not
exercised; provided that no such readjustment shall have the effect of
decreasing the number of such Underlying Shares so purchasable by an amount
(calculated by adjusting such decrease to account for all other adjustments made
pursuant to this Section 4 following the date of the original adjustment
referred to above) in excess of the amount of the adjustment initially made in
respect of the issuance, sale, distribution or granting of such Options or
Convertible Securities.
(k) Other Adjustments. In the event that at any time, as a
-----------------
result of an adjustment made pursuant to this Section 4, the Warrant Holder
---------
shall become entitled to receive any securities of the Company other than
Underlying Shares, thereafter the number of such other securities so receivable
upon exercise of the Warrants and the Underlying Share Purchase Price applicable
to such exercise shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with respect
to the shares of Common Stock contained in this Section 4.
(l) Common Stock. As used in this Section 4, the term "Common
------------ --------- ------
Stock" shall mean and include the Common Stock issued and outstanding on the
- -----
date hereof and shall also include any capital stock of any class of the Company
thereafter authorized for issuance that is not limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary liquidation,
dissolution or winding up of the Company; provided, however, that the Underlying
-------- -------
Shares shall include only shares of such class designated in the Company's
Certificate of Incorporation as Class A common stock or (i) in the case of any
reclassification, change, consolidation, merger, or sale of assets of the
character referred to in Section 4(b) hereof, the stock, securities or property
------------
provided for in such section or (ii) in the case of any reclassification or
change in the number of Underlying Shares as a result of a subdivision or
combination or consisting of a change in par value, or from par value to no par
value, or from no par value to par value, such Underlying Shares as so
reclassified or changed.
(m) Determination of Net Sales Price. In case of the sale for
--------------------------------
cash of any shares of Common Stock, Options, or Convertible Securities, the
consideration received by the Company therefor shall be deemed to be the net
sales price therefor (after deducting therefrom any expense paid or incurred by
the Company or any underwriting discounts or commissions or concessions paid or
allowed by the Company in connection therewith).
(n) Events Resulting in no Adjustments. No adjustment to the
----------------------------------
Underlying Share Purchase Price or to the number of Underlying Shares, however,
will be made upon (i) the issuance or exercise of any stock options under any
stock option plan or employee stock purchase plan of the Company that has been
approved by the Board of Directors of the Company; (ii) the issuance of shares
of Common Stock upon conversion of any shares of the Company's Series A
Preferred Stock outstanding on the date hereof; (iii) the issuance of any
securities in connection with the settlement or other resolution of the class
action lawsuit filed in the United States District
-11-
Court for the Eastern District of Virginia, captioned In re MicroStrategy Inc.
Securities Litigation, Civ. No. 00-473-A and the issuance of any shares of
Common Stock upon the exercise or conversion of any such securities; (iv) the
issuance of securities as consideration for mergers or consolidations or the
acquisition of businesses or their assets and the issuance of any shares of
Common Stock upon the exercise or conversion of any such securities; (v) the
issuance of Common Stock upon conversion of shares of the Company's Class B
Common Stock, provided such shares of Class B Common Stock were issued and
outstanding on the date hereof; (vi) the issuance of Common Stock upon the
exercise of warrants which are outstanding on the date hereof; (vii) the
issuance of Common Stock or warrants to purchase Common Stock in connection with
any strategic investor, vendor, lease or similar arrangement (the primary
purpose of which is not to raise equity capital), provided that the aggregate
number of shares of Common Stock subject to warrants and shares of Common Stock
which the Company may issue pursuant to this subclause (vii) shall not exceed
250,000 (subject to adjustment for stock splits, stock dividends, stock
combinations and other similar transactions); and (viii) the issuance of Common
Stock in a private placement to institutional investors at a price not less than
95% of the current market price per share of Common Stock on the date the
Company becomes obligated to make such issuance or sale (collectively, the
"Exempt Securities"). In the event the Company issues or sells Common Stock in a
-----------------
private placement at a price less than 95% of the current market price per share
of Common Stock on the date the Company becomes obligated to make such issuance
or sale, Warrant Holder shall be entitled to an adjustment in the Underlying
Share Purchase Price and the Underlying Shares as provided in Section 4 herein.
(o) Notice of Change in Underlying, Share Purchase Price. Upon
----------------------------------------------------
any adjustment pursuant to this Section 4, the Company shall promptly thereafter
(i) cause to be prepared a certificate of the Chief Financial Officer of the
Company setting forth the Underlying Share Purchase Price after such adjustment
and setting forth in reasonable detail the method of calculation and the facts
upon which such calculations are based and setting forth the number of
Underlying Shares (or portion thereof) issuable after such adjustment in the
Underlying Share Purchase Price, upon exercise of the Warrants and payment of
the adjusted Underlying Share Purchase Price, which certificate shall be
conclusive evidence of the correctness of the matters set forth therein absent
manifest error, and (ii) send to the Warrant Holder at the address appearing on
the registry books maintained by the Company written notice of such adjustments
by first-class mail, postage prepaid.
(p) Notice of Certain Events. With respect to any Notice Event,
------------------------
the Company shall cause to be given to the Warrant Holder at such Warrant
Holder's address on the registry books maintained by the Company, at least 20
days prior to the applicable record date hereinafter specified, or in the case
of events for which there is no record date, at least fifteen (15) days prior to
the taking of such proposed action, by certified mail, return receipt requested,
postage prepaid, a written notice stating (i) the date as of which the holders
of record of shares of Common Stock entitled to receive any such rights,
options, warrants or distribution is to be determined, (iii) the initial
expiration date set forth in any tender offer or exchange offer for shares of
Common Stock, or (iii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective or consummated and the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled to exchange such
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up. The failure to give the notice required by this
Section 4(q) or any defect therein shall not affect the legality or validity of
- ------------
any distribution, right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, or
-12-
liquidation or winding up, or the vote upon any action, provided that the
Warrant Holder shall retain any right to damages from the Company with respect
to such failure.
SECTION 5. Other Provisions Relating to Rights of the Warrant Holder
---------------------------------------------------------
(a) Warrant Holder not a Stockholder. The Warrant Holder, as
--------------------------------
such, shall not be entitled to vote or receive dividends or be deemed holders of
Common Stock for any purpose whatsoever, nor shall anything contained in this
Agreement be construed to confer upon the Warrant Holder, as such, any of the
rights of a stockholder of the Company including, but not limited to, the right
to vote for the election of directors or on any other matter, give or withhold
consent to any action by the Company (whether upon any recapitalization, issue
of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings or other action affecting stockholders
(except for notices provided for in this Agreement), receive dividends or
subscription rights, or otherwise until Warrants shall have been exercised to
purchase Underlying Shares, at which time the person or persons in whose name or
names the certificate or certificates for the shares of Common Stock are
registered shall be deemed the holder or holders of record of such shares of
Common Stock for all purposes.
(b) Fractional Shares. Anything contained herein to the
-----------------
contrary notwithstanding, the Company shall not be required to issue any
fractional shares of Common Stock in connection with the exercise of the
Warrants. In any case where the Warrant Holder would, except for the provisions
of this Section 5(b), be entitled under the terms of this Agreement to receive a
------------
fraction of a share of Common Stock upon the exercise of the Warrants, the
Company shall, upon the exercise of the Warrants and receipt of the Underlying
Share Purchase Price, issue the largest number of whole shares of Common Stock
purchasable upon exercise of the Warrants. The Warrant Holder expressly waives
his or her right to receive a certificate of any fraction of a share of Common
Stock upon the exercise hereof. However, with respect to any fraction of a share
of Common Stock called for upon any exercise hereof, the Company shall pay to
the Warrant Holder an amount in cash equal to such fraction multiplied by the
current market price per share of Common Stock determined pursuant to
Section 4(f) hereof.
(c) Absolute Owner. Prior to due presentment for registration
--------------
of transfer of the Warrant Certificates, the Company may deem and treat the
Warrant Holder as the absolute owner of the Warrants for the purpose of any
exercise thereof and for all other purposes and the Company shall not be
affected by any notice to the contrary.
SECTION 6. Division, Split-Up, Combination, Exchange and Transfer of
---------------------------------------------------------
Warrants
- --------
(a) Request. The Warrants may be divided, split up, combined or
-------
exchanged for other Warrants of like tenor to purchase a like aggregate number
of Underlying Shares. If the Warrant Holder desires to divide, split up, combine
or exchange the Warrants, he or she shall make such request in writing delivered
to the Company at its office in 8000 Towers Crescent Drive, Vienna, Virginia
22182, or as otherwise directed by the Company in writing, and shall surrender
such Warrant Certificates to be so divided, split up, combined or exchanged at
said office. Upon any such surrender for a division, split-up, combination or
exchange, the Company shall execute and deliver to the person entitled thereto a
new Warrant Certificate(s) as so requested
-13-
to the extent permitted by law. The Company may require the Warrant Holder to
pay a sum sufficient to cover any tax, governmental or other charge that may be
imposed in connection with any division, split-up, combination or exchange of
the Warrants.
(b) Initial Issuance to Lender. The Company shall issue the
right to purchase 50,000 Underlying Shares to Lender, subject to adjustment as
provided herein, as represented by a Warrant Certificate issued to Lender in the
form attached hereto as Exhibit A or to Lender's designee or such officers of
Lender as Lender may direct.
(c) Assignment; Replacement of Warrant Certificates. The
-----------------------------------------------
Warrants may be sold, transferred, assigned or hypothecated by Lender at any
time, in whole or in part, subject to compliance with federal and state
securities laws. Any division or assignment permitted of the Warrants shall be
made by surrender of the Warrant Certificates to the Company at its principal
office with the Form of Assignment attached as Exhibit C hereto duly executed.
---------
In such event, the Company shall, without charge, execute and deliver a new
Warrant Certificate in the name of the assignee named in such instrument of
assignment and the surrendered Warrant Certificates shall promptly be canceled.
Upon receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of the Warrant Certificates and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and (in the
case of mutilation) upon surrender and cancellation of such Warrant
Certificates, the Company will execute and deliver a new Warrant Certificate of
like tenor and date and any such lost, stolen or destroyed Warrant Certificates
shall thereupon become void.
SECTION 7. Other Matters
-------------
(a) Taxes and Charges. The Company will from time to time
-----------------
promptly pay, subject to the provisions of paragraph (5) of Section 2(b), all
------------- ------------
taxes and charges that may be imposed upon the Company in respect of the
issuance or delivery of the Warrants or the Underlying Shares.
(b) Notices. Notice or demand pursuant to this Agreement to be
-------
given or made by the Warrant Holder to or on the Company shall be sufficiently
given or made if delivered or sent by registered or certified mail, postage
prepaid, return receipt requested, and addressed, until another address is
designated in writing by the Company, or by facsimile transmission, as follows:
MICROSTRATEGY INCORPORATED
8000 Towers Crescent Drive
Suite 1400
Vienna, Virginia 22182
Attention: Mr. Mark Lynch
Facsimile No.: 703.847.4837
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: Mitchel Appelbaum, Esq.
Facsimile No.: 617.526.5000
-14-
Notices to the Warrant Holder provided for in this Agreement shall be
deemed given or made by the Company if delivered or sent by mail, certified or
registered, return receipt requested, postage prepaid, or overnight courier or
facsimile transmission addressed to the Warrant Holder at his or her last known
address or facsimile number as shall appear on the registry books of the Company
and at the following address for Lender:
FOOTHILL CAPITAL CORPORATION
2450 Colorado Boulevard
Suite 3000 West
Santa Monica, California 90404
Attention: Business Finance Division, Manager
Facsimile No.: (310) 453-7413
With a copy to:
Brobeck, Phleger & Harrison, LLP
550 South Hope Street
Los Angeles, California 90071-2604
Attention: John F. Hilson, Esq.
Facsimile No.: (213) 745-3345
(c) Governing Law. The validity, interpretation and performance
-------------
of this Agreement shall be governed by the laws of the State of Delaware without
giving effect to the conflicts of laws and principles thereof.
(d) WAIVER OF JURY TRIAL. THE COMPANY WAIVES (A) THE RIGHT TO
--------------------
TRIAL BY JURY (WHICH THE WARRANT HOLDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT,
PROCEEDING, OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE WARRANT, THE WARRANT CERTIFICATE OR THE REGISTRATION RIGHTS
AGREEMENT. THE COMPANY WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE
FOREGOING WAIVER WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
(e) Exclusive Benefit. Nothing in this Agreement expressed or
-----------------
nothing that may be implied from any of the provisions hereof is intended, or
shall be construed, to confer upon, or give to, any person or corporation other
than the Company, Lender and the Warrant Holder any right, remedy or claim
hereunder, and all covenants, conditions, stipulations, promises and agreements
contained in this Agreement shall be for the sole and exclusive benefit of such
persons
-15-
and their successors, survivors and permitted assigns hereunder. This Agreement
is for the benefit of and is enforceable by any subsequent Warrant Holder.
(f) Headings. The article headings herein are for convenience
---------
only and are not part of this Agreement and shall not affect the interpretation
hereof.
[Remainder of page left intentionally blank.]
-16-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
MICROSTRATEGY INCORPORATED
By: /s/ Eric F. Brown
---------------------------------------
Name: Eric F. Brown
Title: President and Chief Financial Officer
FOOTHILL CAPITAL CORPORATION
By: /s/ Brian Duffy
---------------------------------------
Name: Brian Duffy
Title: Senior Vice President
S-1
EXHIBIT A
---------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, OR (II) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE.
No. FCC - 1
Warrant Certificate
MICROSTRATEGY INCORPORATED
This warrant certificate certifies that FOOTHILL CAPITAL CORPORATION,
or its registered assigns, is the registered holder of Warrants representing the
right to purchase 50,000 shares (the "Underlying Shares") of the Class A common
stock, par value $0.001 per share (the "Common Stock") of MICROSTRATEGY
INCORPORATED (the "Company") in accordance with the terms of that certain
Warrant Agreement dated February 9, 2001 between the Company and Foothill
Capital Corporation (the "Warrant Agreement"). The Warrants with respect to the
Underlying Shares expire on February 8, 2006 (the "Underlying Share Expiration
Date"), or on such expiration dates as may be extended pursuant to the terms of
the Warrant Agreement. Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to such terms in the Warrant Agreement.
The Warrants entitle the registered holder, upon exercise from time to
time from 9:00 a.m. California City time on or after February 9, 2001 until 5:00
p.m. California time on the Underlying Share Expiration Date to purchase the
Underlying Shares at an exercise price per Underlying Share equal to $14.825
(the "Underlying Share Purchase Price") in lawful money of the United States of
America upon surrender of this certificate and payment of the Underlying Share
Purchase Price in accordance with the terms of the Warrant Agreement. The
Underlying Share Purchase Price, the number of Underlying Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events set of in the Warrant Agreement.
The Warrants with respect to the Underlying Shares may not be
exercised after 5:00 p.m. (California time) on the Underlying Share Expiration
Date, and to the extent not exercised by such time such Warrants shall become
void.
A-1
This warrant certificate shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to conflicts of
laws and principles thereof.
IN WITNESS WHEREOF, MicroStrategy Incorporated has caused this warrant
certificate to be signed by its duly authorized officers.
Dated: February 9, 2001
----------------
MICROSTRATEGY INCORPORATED
By:
--------------------------------------
Name:
Title:
A-2
EXHIBIT B
---------
CASHLESS EXERCISE FORM
To be executed upon exercise of Warrants pursuant to Section 2(c) of the Warrant
Agreement.
The undersigned hereby irrevocably elects to surrender ___________
shares purchasable under the Warrants for such shares of Common Stock issuable
in exchange therefor pursuant to the Cashless Exercise provisions of the within
Warrants, as provided for in Section 2(c) of such Warrant Agreement.
Please issue a certificate or certificates for such Common Stock in
the name of, and pay cash for fractional shares in the name of:
______________________________________________________________________________
(Please print name, address, and social security number/
tax identification number:)
______________________________________________________________________________
and, if said number of shares of Common Stock shall not be all the shares of
Common Stock purchasable thereunder, then a new Warrant Certificate for the
balance remaining of the shares of Common Stock purchasable under the within
Warrants shall be registered in the name of the undersigned Warrant Holder or
its transferee as below indicated and delivered to the address stated below.
Dated: _________________
Name of Warrant Holder
or transferee:_________________________________________________________________
(Please print)
Address: ______________________________________________________________________
Signature: ____________________________________________________________________
NOTE: Signature must conform to the name of Warrant Holder as
specified on the face of the Warrants or with the name of the
transferee appearing in the form of assignment attached as
Exhibit C to the Warrant Agreement.
B-1
EXHIBIT C
---------
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and
transfers unto ________________, whose address is _____________________________
_____________________________________________ and whose social security or other
identifying number is ________________, the right to purchase ________________
Underlying Shares evidenced by the within Warrants, and hereby irrevocably
constitutes and appoints the Secretary of MicroStrategy Incorporated (the
"Company") as his, her or its attorney-in-fact to transfer the same on the books
of the Company with full power of substitution and re-substitution. If said
number of Underlying Shares is less than all of the Underlying Shares
purchasable hereunder, the undersigned requests that a new warrant certificate
representing the right to purchase the balance of such Underlying Shares be
registered in the name of _________________, whose address is __________________
_________________________________________, whose social security or other
identifying number is ______________, and that such warrant certificate be
delivered to ________________, whose address is ________________________________
____________________________________________.
Date: _____________ [Transferor Name]
By: __________________________________
Name: ________________________________
Title: _______________________________
C-1
EXHIBIT D
---------
SUBSCRIPTION FORM
The undersigned hereby irrevocably elects to exercise the right,
represented by this warrant certificate, to purchase _________________
Underlying Shares and [tenders payment herewith in the amount $_____________]
[or] [makes payment therefor by application pursuant to Section 2(b)(ii) of the
Warrant of $_________ aggregate principal amount of the outstanding indebtedness
under the Loan and Security Agreement] [or] [makes payment therefor by delivery
of the following Common Stock Certificates of the Company (properly endorsed for
transfer in blank) for cancellation by the Company pursuant to Section 2(b)(iii)
of the Warrant, certificates of which are attached hereto for cancellation
[list certificates by number and amount]. The undersigned requests that a
certificate for such Underlying Shares be registered in the name of
_______________, whose address is ______________________________________________
_______________________________________________, and whose social security or
other identifying number is ____________, and that such Underlying Shares be
delivered to ___________________, whose address is _____________________________
__________________________________________. If said number of Underlying Shares
is less than all of the Underlying Shares purchasable hereunder, the undersigned
requests that a new warrant certificate representing the right to purchase the
balance of such Underlying Shares be registered in the name of _______________,
whose address is ______________________________________________ and whose social
security or other identifying number is ________________, and that such warrant
certificate be delivered to ______________, whose address is ___________________
_____________________________________________.
Date: [Warrant Holder]
By: ___________________________________
Name: _________________________________
Title: ________________________________
D-1