EXHIBIT 10.4
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE, SOLD
OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR IN ACCORDANCE WITH AN
EXEMPTION FROM REGISTRATION UNDER THAT ACT.
WARRANT TO PURCHASE
1,750,000 SHARES OF COMMON STOCK OF
FRONT PORCH DIGITAL, INC.
This certifies that MANAGEDSTORAGE INTERNATIONAL, INC. (or any party to whom
this Warrant is assigned in accordance with its terms) is entitled to subscribe
for and purchase 1,750,000 shares of the Common Stock of Front Porch Digital
Inc., a Nevada corporation, on the terms and conditions of this Warrant.
1. DEFINITIONS. As used in this Warrant, the term:
1.1 "BUSINESS DAY" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated to be closed by law or by executive order.
1.2 "COMMISSION" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
1.3 "COMMON STOCK" shall mean the Common Stock, par value
$.001 per share, of the Corporation, or, in the case of a conversion,
reclassification or exchange of such shares of such Common Stock, shares of the
stock into or for which such shares of Common Stock shall be converted,
reclassified or exchanged, and all provisions of Section 4 shall be applied
appropriately thereto and to any stock resulting from any subsequent conversion,
reclassification or exchange therefor.
1.4 "CORPORATION" shall mean Front Porch Digital Inc., a
Nevada corporation, or its successor.
1.5 "EXPIRATION DATE" shall mean July 31, 2012.
1.6 "HOLDER" shall mean ManagedStorage International, Inc. or
any party to whom this Warrant is assigned in accordance with its terms.
1.7 "PERSON" shall mean any individual, firm, corporation,
partnership, limited liability company, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
1.8 "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute enacted hereafter, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.
1.9 "WARRANT" shall mean this Warrant and any warrants
delivered in substitution or exchange for this Warrant in accordance with the
provisions of this Warrant.
1.10 "WARRANT PRICE" shall mean $2.00 per share of Common
Stock, as such amount may be adjusted pursuant to Section 4 hereof.
2. EXERCISE OF WARRANT. At any time before the Expiration Date, the
Holder may exercise the purchase rights represented by this Warrant, in whole or
in part, by surrendering this Warrant (with a duly executed subscription in the
form attached) at the Corporation's principal corporate office (located on the
date hereof in Mt. Laurel, New Jersey) and by paying the Corporation, by
certified or cashier's check, the aggregate Warrant Price for the shares of
Common Stock being purchased.
2.1 DELIVERY OF CERTIFICATES. Within ten (10) days after each
exercise of the purchase rights represented by this Warrant, the Corporation
shall deliver a certificate for the shares of Common Stock so purchased to the
Holder and, unless this Warrant has been fully exercised or expired, a new
Warrant representing the balance of the shares of Common Stock subject to this
Warrant.
2.2 EFFECT OF EXERCISE. The Person entitled to receive the
shares of Common Stock issuable upon any exercise of the purchase rights
represented by this Warrant shall be treated for all purposes as the holder of
such shares of record as of the close of business on the date of exercise.
2.3 ISSUE TAXES. The Corporation shall pay all issue and other
taxes that may be payable in respect of any issue or delivery to the Holder of
shares of Common Stock upon exercise of this Warrant.
3. STOCK FULLY PAID; RESERVATION OF SHARES. The Corporation covenants
and agrees that all securities that it may issue upon the exercise of the rights
represented by this Warrant will, upon issuance, be fully paid and nonassessable
and free from all taxes, liens and charges. The Corporation further covenants
and agrees that, during the period within which the Holder may exercise the
rights represented by this Warrant, the Corporation shall at all times have
authorized and reserved for issuance enough shares of its Common Stock or other
securities for the full exercise of the rights represented by this Warrant. The
Corporation shall not, by an amendment to its Articles of Incorporation or
through reorganization, consolidation, merger, dissolution, issue or sale of
securities, sale of assets or any other voluntary action, avoid or seek
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to avoid the observance or performance of any of the terms of this Warrant.
4. ADJUSTMENTS. The Warrant Price and the number of shares of Common
Stock that the Corporation must issue upon exercise of this Warrant shall be
subject to adjustment in accordance with Sections 4.1 through 4.3.
4.1 ADJUSTMENT TO WARRANT PRICE FOR COMBINATIONS OR
SUBDIVISIONS OF COMMON STOCK. If the Corporation at any time or from time to
time after the date hereof (1) declares or pays, without consideration, any
dividend on the Common Stock payable in Common Stock; (2) creates any right to
acquire Common Stock for no consideration; (3) subdivides the outstanding shares
of Common Stock (by stock split, reclassification or otherwise); or (4) combines
or consolidates the outstanding shares of Common Stock, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Corporation shall
proportionately increase or decrease the Warrant Price, as appropriate.
4.2 ADJUSTMENTS FOR RECLASSIFICATION AND REORGANIZATION. If
the Common Stock issuable upon exercise of this Warrant changes into shares of
any other class or classes of security or into any other property for any reason
other than a subdivision or combination of shares provided for in Section 4.1,
including without limitation any reorganization, reclassification, merger or
consolidation, the Corporation shall take all steps necessary to give the Holder
the right, by exercising this Warrant, to purchase the kind and amount of
securities or other property receivable upon any such change by the owner of the
number of shares of Common Stock subject to this Warrant immediately before the
change.
4.3 SPIN OFFS. If the Corporation spins off any subsidiary by
distributing to the Corporation's shareholders as a dividend or otherwise any
stock or other securities of the subsidiary, the Corporation shall reserve until
the Expiration Date enough of such shares or other securities for delivery to
the Holders upon any exercise of the rights represented by this Warrant to the
same extent as if the Holders owned of record all Common Stock or other
securities subject to this Warrant on the record date for the distribution of
the subsidiary's shares or other securities.
4.4 CERTIFICATES AS TO ADJUSTMENTS. Upon each adjustment or
readjustment required by this Section 4, the Corporation at its expense shall
promptly compute such adjustment or readjustment in accordance with this
Section, cause independent public accountants selected by the Corporation to
verify such computation and prepare and furnish to the Holder a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based.
5. FRACTIONAL SHARES. The Corporation shall not issue any fractional
shares in connection with any exercise of this Warrant.
6. DISSOLUTION OR LIQUIDATION. If the Corporation dissolves, liquidates
or winds up its business before the exercise or expiration of this Warrant, the
Holder shall be entitled, upon exercising this Warrant, to receive in lieu of
the shares of Common Stock or any other securities
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receivable upon such exercise, the same kind and amount of assets as would have
been issued, distributed or paid to it upon any such dissolution, liquidation or
winding up with respect to such shares of Common Stock or other securities, had
the Holder been the holder of record on the record date for the determination of
those entitled to receive any such liquidating distribution or, if no record is
taken, upon the date of such liquidating distribution. If any such dissolution,
liquidation or winding up results in a cash distribution or distribution of
property which the Corporation's Board of Directors determines in good faith to
have a cash value in excess of the Warrant Price provided by this Warrant, then
the Holder may, at its option, exercise this Warrant without paying the
aggregate Warrant Price and, in such case, the Corporation shall, in making
settlement to Holder, deduct from the amount payable to Holder an amount equal
to such aggregate Warrant Price.
7. TRANSFER AND EXCHANGE.
7.1 TRANSFER. Subject to Section 7.3, the Holder may transfer
all or part of this Warrant at any time on the books of the Corporation at its
principal office upon surrender of this Warrant, properly endorsed. Upon such
surrender, the Corporation shall issue and deliver to the transferee a new
Warrant or Warrants representing the Warrants so transferred. Upon any partial
transfer, the Corporation shall issue and deliver to the Holder a new Warrant or
Warrants with respect to the Warrants not so transferred.
7.2 EXCHANGE. The Holder may exchange this Warrant at any time
at the principal office of the Corporation for Warrants in such denominations as
the Holder may designate in writing. No such exchanges will increase the total
number of shares of Common Stock or other securities that are subject to this
Warrant.
7.3 SECURITIES ACT OF 1933. By accepting this Warrant, the
Holder agrees that this Warrant and the shares of the Common Stock issuable upon
exercise of this Warrant may not be offered or sold except in compliance with
the Securities Act, and then only with the recipient's agreement to comply with
this Section 7 with respect to any resale or other disposition of such
securities. The Corporation may make a notation on its records in order to
implement such restriction on transferability.
8. LOSS OR MUTILATION. Upon the Corporation's receipt of reasonably
satisfactory evidence of the ownership and the loss, theft, destruction or
mutilation of this Warrant and (in the case of loss, theft or destruction) of a
reasonably satisfactory indemnity or (in the case of mutilation) upon surrender
and cancellation of this Warrant, the Corporation shall execute and deliver a
new Warrant to the Holder.
9. SUCCESSORS. All the covenants and provisions of this Warrant shall
bind and inure to the benefit of the Holder and the Corporation and their
respective successors and assigns.
10. NOTICES. All notices and other communications given pursuant to
this Warrant shall be in writing and shall be deemed to have been given when
personally delivered or when
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mailed by prepaid registered, certified or express mail, return receipt
requested. Notices should be addressed as follows:
(a) If to Holder, then to:
ManagedStorage International, Inc.
12303 Airport Way
Suite 250
Broomfield, Colorado 80021
Attention: Reed Guest, Esq.
With a copy (which shall not constitute notice) to:
Patrick Perrin, Esq.
Hogan & Hartson L.L.P.
1470 Walnut, Suite 200
Boulder, Colorado 80302-5341
(b) If to the Corporation, then to:
Front Porch Digital Inc.
20000 Horizon Way
Suite 120
Mt. Laurel, New Jersey 08054
With a copy (which shall not constitute notice) to:
Eric M. Hellige, Esq.
Pryor Cashman Sherman & Flynn LLP
410 Park Avenue
New York, New York 10022
Such addresses for notices may be changed by any party by notice to the other
party pursuant to this Section 10.
11. AMENDMENT. This Warrant may be amended only by an instrument in
writing signed by the Corporation and the Holder.
12. CONSTRUCTION OF WARRANT. This Warrant shall be construed as a whole
and in accordance with its fair meaning. A reference in this Warrant to any
section shall be deemed to include a reference to every section the number of
which begins with the number of the section to which reference is made. This
Warrant has been negotiated by both parties and its language shall not be
construed for or against any party.
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13. LAW GOVERNING. This Warrant shall be construed and enforced in
accordance with and governed by the New York law without regard to any conflicts
of law or choice of forum provisions.
Dated as of July 31, 2002
FRONT PORCH DIGITAL INC.
By: /s/ Don Maggi
---------------------------------
Name: Don Maggi
Title: Chief Executive Officer
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SUBSCRIPTION FORM
(TO BE EXECUTED ONLY UPON EXERCISE OF WARRANT)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant and agrees to purchase __________ shares of Common Stock of Front
Porch Digital Inc., all at the price and on the terms and conditions specified
in this Warrant.
Dated:
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(Signature of Registered Holder)
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(Street Address)
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(City) (State) (Zip)
ISSUE OF A NEW WARRANT
(TO BE EXECUTED ONLY UPON PARTIAL EXERCISE,
EXCHANGE, OR PARTIAL TRANSFER OF WARRANT)
Please issue __________ Warrants, each representing the right to
purchase __________ shares of Common Stock of Front Porch Digital Inc. to the
registered holder.
Dated:
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(Signature of Registered Holder)
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered Holder of this Warrant
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the Warrant, with respect to the number of shares of
Common Stock set forth below (the "Transfer"):
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
The undersigned irrevocably constitutes and appoints _________________ as the
undersigned's attorney-in-fact, with full power of substitution, to make the
transfer on the books of Front Porch Digital Inc.
Dated:
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(Signature)