Exhibit 10.1
FORM OF WARRANT
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE
UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
To Purchase __________ Shares of Class A Common Stock of
ACCESS INTEGRATED TECHNOLOGIES, INC.
THIS COMMON STOCK PURCHASE WARRANT (this "WARRANT") certifies that, for
value received, _____________ (the "Holder"), is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date hereof (the "INITIAL EXERCISE DATE") and on or
prior to the close of business on August 29, 2010 (the "TERMINATION DATE") but
not thereafter, to subscribe for and purchase from Access Integrated
Technologies, Inc., a Delaware corporation (the "COMPANY"), up to ______ shares
(of which such number may be adjusted pursuant to Section 3 hereof, the "WARRANT
SHARES") of Class A Common Stock, par value $0.001 per share, of the Company
(the "COMMON STOCK"). The purchase price of one (1) share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
SECTION 1. DEFINITIONS. In addition to the terms defined elsewhere in this
Warrant (a) capitalized terms used and not otherwise defined herein shall have
the meanings set forth in that certain Letter Agreement (the "LETTER
AGREEMENT"), dated as of August 29, 2005, among the Company and the Investors
signatory thereto.
SECTION 2. Company and the Investors signatory thereto, and (b) the
following terms have the meanings indicated in this Section 1:
"AFFILIATE" means any Person that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 144 under the
Securities Act. With respect to an Investor, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Investor will be deemed to be an Affiliate of such Investor.
"CLOSING PRICE" means, for any date, the price determined by the first of
the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the last reported closing sale price of the Common
Stock for such date (or the nearest preceding date) on the Trading Market on
which the Common Stock is then listed or quoted as reported by Bloomberg
Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m.
Eastern Time); (b) if the Common Stock is not then listed or quoted on a Trading
Market and if prices for the Common Stock are then quoted on the OTC Bulletin
Board, the last reported closing sale price of the Common Stock for such date
(or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common
Stock is not then listed or quoted on the OTC Bulletin Board and if prices for
the Common Stock are then reported in the "Pink Sheets" published by the Pink
Sheets LLC (or a similar organization or agency succeeding to its functions of
reporting prices), the last reported closing sale price of the Common Stock so
reported; or (d) in all other cases, the fair market value of a share of Common
Stock as determined by an independent appraiser selected in good faith by the
Investors and reasonably acceptable to the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated as of the date hereof, among the Company and the Investors.
"REGISTRATION STATEMENT" means a Registration Statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale of the New Shares and/or the Warrant Shares by each Investor or the
issuance of the New Shares, the Warrant Shares or the Warrants by the Company
along with the resale of the New Shares and/or Warrant Shares, as provided for
in the Registration Rights Agreement.
"SECURITIES" means the Warrants and the Warrant Shares.
"TRADING DAY" means a day on which the Common Stock is traded on a Trading
Market.
"TRADING MARKET" means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the Nasdaq
Small Cap Market, the American Stock Exchange, the New York Stock Exchange or
the Nasdaq National Market.
SECTION 3. EXERCISE.
(a) EXERCISE OF WARRANT. Exercise of the purchase rights represented by
this Warrant may be made, in whole or in part, at any time or times on or after
the Initial Exercise Date and on or before the Termination Date by delivery to
the Company (or such other office or agency of the Company as it may designate
by notice in writing to the registered Holder at the address of such Holder
appearing on the books of the Company) of a duly executed facsimile copy of the
notice of exercise form annexed hereto (the "NOTICE OF EXERCISE"); PROVIDED,
HOWEVER, within five (5) Trading Days of the date said Notice of Exercise is
delivered to the Company, the Holder shall have surrendered this Warrant to the
Company and the Company shall have received payment of the aggregate Exercise
Price of the shares thereby purchased by wire transfer or cashier's check drawn
on a United States bank.
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(b) EXERCISE PRICE. The exercise price of the Common Stock under this
Warrant shall be $11.39, subject to adjustment hereunder (the "EXERCISE PRICE").
(c) CASHLESS EXERCISE. If at any time after one (1) year from the date of
issuance of this Warrant there is no effective Registration Statement
registering, or no current prospectus available for, the resale of the Warrant
Shares by the Holder, then this Warrant may also be exercised at such time by
means of a "cashless exercise" in which the Holder shall be entitled to receive
a certificate for the number of Warrant Shares equal to the quotient obtained by
dividing [(A-B) (X)] by (A), where:
(A) = the Closing Price on the Trading Day immediately
preceding the date of such election;
(B) = the Exercise Price of this Warrant, as adjusted;
and
(X) = the number of Warrant Shares issuable upon exercise
of this Warrant in accordance with the terms of this
Warrant by means of a cash exercise rather than a
cashless exercise.
Notwithstanding anything herein to the contrary, on the Termination Date,
this Warrant shall be automatically exercised via cashless exercise pursuant to
this Section 2(c).
(d) EXERCISE LIMITATIONS.
i. HOLDER'S RESTRICTIONS. The Holder shall not have the right to
exercise any portion of this Warrant, pursuant to Section 2(c) or
otherwise, to the extent that after giving effect to such issuance after
exercise, the Holder (together with the Holder's Affiliates), as set forth
on the applicable Notice of Exercise, would beneficially own in excess of
9.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to such issuance. For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned by the
Holder and its Affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which the
determination of such sentence is being made, but shall exclude the number
of shares of Common Stock which would be issuable upon (A) exercise of the
remaining, nonexercised portion of this Warrant beneficially owned by the
Holder or any of its Affiliates and (B) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any other Warrants) subject to a limitation
on conversion or exercise analogous to the limitation contained herein
beneficially owned by the Holder or any of its Affiliates. Except as set
forth in the preceding sentence, for purposes of this Section 2(d),
beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act, it being acknowledged by Holder that the Company is
not representing to Holder that such calculation is in compliance with
Section 13(d) of the Exchange Act and Holder is solely responsible for any
calculations and any schedules or other reports required to be filed with
the SEC in accordance therewith. To the extent that the limitation
contained in this Section 2(d) applies, the determination of whether this
Warrant is exercisable (in relation to other securities owned by the
Holder) and of which portion of this Warrant is exercisable shall be in the
sole discretion of such Holder, and the submission of a Notice of Exercise
shall be deemed to be such Holder's determination of whether this Warrant
is exercisable, in each case subject to such aggregate percentage
limitation, and the Company shall have no obligation to verify or confirm
the accuracy of such determination. For purposes of this Section 2(d), in
determining the number of outstanding shares of Common Stock, the Holder
may rely on the number of outstanding shares of Common Stock as reflected
in (x) the Company's most recent Form 10-Q or 10-QSB, or Form 10-K or
10-KSB, as the case may be, (y) a more recent public announcement by the
Company or (z) any other notice by the Company or the Company's transfer
agent setting forth the number of shares of Common Stock outstanding. Upon
the written request of the Holder, the Company shall within two (2) Trading
Days confirm orally (and in writing, if requested) to the Holder the number
of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect
to the conversion or exercise of securities of the Company, including this
Warrant, by the Holder or its Affiliates since the date as of which such
number of outstanding shares of Common Stock was reported. The provisions
of this Section 2(d) may be waived by the Holder upon, at the election of
the Holder, not less than 61 days' prior notice to the Company, and the
provisions of this Section 2(d) shall continue to apply until such 61st day
(or such later date, as determined by the Holder, as may be specified in
such notice of waiver).
(e) MECHANICS OF EXERCISE.
i. AUTHORIZATION OF WARRANT SHARES. The Company covenants that all
Warrant Shares which may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon exercise of the purchase rights
represented by this Warrant, be duly authorized, validly issued, fully paid
and nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
ii. DELIVERY OF CERTIFICATES UPON EXERCISE. The Company shall cause
certificates for Warrant Shares purchased hereunder to be transmitted by
the transfer agent of the Company to the Holder by crediting the account of
the Holder's prime broker with the Depository Trust Company through its
Deposit Withdrawal Agent Commission ("DWAC") system if the Company is a
participant in such system, and otherwise by physical delivery to the
address specified by the Holder in the Notice of Exercise, within three (3)
Trading Days from the receipt by the Company of the Notice of Exercise,
surrender of this Warrant and payment of the aggregate Exercise Price as
set forth above ("WARRANT SHARE DELIVERY DATE"). This Warrant shall be
deemed to have been exercised on the date the Exercise Price is received by
the Company, if such date is after the date on which the Notice of Exercise
and this Warrant are received by the Company. The Warrant Shares shall be
deemed to have been issued, and Holder or any other Person so designated to
be named therein shall be deemed to have become a holder of record of such
Warrant Shares for all purposes, as of the date the Warrant has been
exercised by payment to the Company of the Exercise Price and all taxes
required to be paid by the Holder, if any, pursuant to Section 2(e)(vii)
prior to the issuance of such shares, have been paid.
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iii. DELIVERY OF NEW WARRANTS UPON EXERCISE. If this Warrant shall
have been exercised in part, the Company shall, within five (5) Trading
Days after the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by
this Warrant, which new Warrant shall in all other respects be identical
with this Warrant.
iv. RESCISSION RIGHTS. If the Company fails to cause its transfer
agent to transmit to the Holder a certificate or certificates representing
the Warrant Shares pursuant to this Section 2(e)(iv) by the second (2nd)
Trading Day immediately following the Warrant Share Delivery Date, then the
Holder will have the right to rescind such exercise.
v. COMPENSATION FOR BUY-IN ON FAILURE TO TIMELY DELIVER CERTIFICATES
UPON EXERCISE. In addition to any other rights available to the Holder, if
the Company fails to cause its transfer agent to transmit to the Holder a
certificate or certificates representing the Warrant Shares pursuant to a
proper and conforming exercise on or before the 2nd Trading Day immediately
following the Warrant Share Delivery Date, and if after such date the
Holder is required by its broker to purchase in a bona fide arm's length
transaction for fair market value (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by
the Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a "BUY-IN"), then ------ the Company shall (1) pay in
cash to the Holder the amount by which (x) the Holder's total purchase
price (including brokerage commissions, if any) for the shares of Common
Stock so purchased exceeds (y) the amount equal to (A) the number of
Warrant Shares that the Company was otherwise required to deliver to the
Holder in connection with the exercise at issue, multiplied by (B) the
price per share at which the sell order giving rise to such purchase
obligation was executed, and (2) at the option of the Holder given within
three (3) Trading Days of the failure to deliver, either reinstate the
portion of the Warrant and equivalent number of Warrant Shares for which
such exercise was not honored or deliver to the Holder the number of shares
of Common Stock that would have been issued had the Company timely complied
with its exercise and delivery obligations hereunder. For example, if the
Holder purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of shares of Common
Stock with an aggregate sale price giving rise to such purchase obligation
of $10,000, under clause (1) of the immediately preceding sentence, the
Company shall be required to pay the Holder $1,000. The Holder shall
provide the Company a detailed written notice indicating the amounts
payable to the Holder in respect of the Buy-In, together with applicable
confirmations and other evidence reasonably requested by the Company.
Nothing herein shall limit a Holder's right to pursue any other remedies
available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company's failure to timely deliver certificates
representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.
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vi. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares of Common Stock shall be issued upon the
exercise of this Warrant. As to any fraction of a share of Common Stock
which Holder would otherwise be entitled to purchase upon such exercise,
the Company shall pay a cash adjustment in respect of such final fraction
in an amount equal to such fraction multiplied by the Exercise Price.
vii. CHARGES, TAXES AND EXPENSES. Issuance of certificates for Warrant
Shares shall be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company,
and such certificates shall be issued in the name of the Holder or in such
name or names as may be directed by the Holder; PROVIDED, HOWEVER, that in
the event that certificates representing Warrant Shares are to be issued in
a name other than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
completed and executed by the Holder; and the Company may require, as a
condition thereto, the payment of a sum sufficient to reimburse it for any
expenses incidental thereto. The Holder shall be responsible for all other
tax liability that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise thereof.
viii. CLOSING OF BOOKS. Subject to applicable law, the Company will
not close its stockholder books or records in any manner which prevents the
timely exercise of this Warrant, pursuant to the terms hereof.
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SECTION 4. CERTAIN ADJUSTMENTS.
(a) STOCK DIVIDENDS AND SPLITS. If the Company, at any time while this
Warrant is outstanding: (A) pays a stock dividend or otherwise makes a
distribution or distributions on shares of its Common Stock, the Company's Class
B Common Stock, par value $0.001 per share (the "CLASS B COMMON STOCK"), or any
other equity or equity equivalent securities, payable in shares of Common Stock
(which, for avoidance of doubt, shall not include any shares of Common Stock
issued by the Company pursuant to this Warrant), (B) subdivides outstanding
shares of Common Stock into a larger number of shares, (C) combines (including
by way of reverse stock split) outstanding shares of Common Stock into a smaller
number of shares, or (D) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Company, then in each case the Exercise
Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event.
Simultaneously with any adjustment to the Exercise Price pursuant to this
Section 3(a), the number of Warrant Shares which may be purchased upon exercise
of this Warrant shall be increased or decreased proportionately, so that after
such adjustment, the aggregate amount of the adjusted Exercise Price multiplied
by the aggregate adjusted amount of Warrant Shares shall equal the aggregate
amount of the unadjusted Exercise Price multiplied by the aggregate unadjusted
amount of Warrant Shares. Any adjustment made pursuant to this Section 3(a)
shall (x) with respect to clause (A) of the first sentence of this Section 3(a),
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and (y) with
respect to clauses (B) - (D) of the first sentence of this Section 3(a), become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
(b) PRO RATA DISTRIBUTIONS. If the Company, at any time prior to the
Termination Date, shall distribute to all holders of Common Stock, including all
holders of the Company's Class B Common Stock (and not to Holders of the
Warrants) evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any security other
than the Common Stock (which shall be subject to Section 3(b)), then in each
such case the Exercise Price shall be adjusted by multiplying the Exercise Price
in effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which the
denominator shall be the Closing Price determined as of the record date or
effective date, as the case may be, mentioned in Section 3(a), and of which the
numerator shall be such Closing Price on such date less the then per share fair
market value at such date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of the Common
Stock or Common Stock equivalent share of Class B Common Stock (determined by
dividing the amount distributed by the then issued and outstanding shares of
Common Stock) as determined by the Board of Directors in good faith. In either
case the adjustments shall be described in a statement provided to the Holders
of the portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock (or for Class B
Common Stock, equivalent measure). Such adjustment shall be made whenever any
such distribution is made and shall become effective immediately after the
record date mentioned above.
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(c) FUNDAMENTAL TRANSACTION. If, at any time while this Warrant is
outstanding, (A) the Company effects any merger or consolidation of the Company
with or into another Person, (B) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (C)
any tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (D) the Company
effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities (other than capital stock of the Company), cash
or property (in any such case, a "FUNDAMENTAL TRANSACTION"), then, upon any
subsequent conversion of this Warrant, the Holder shall have the right to
receive, for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, upon
exercise of this Warrant, the number of shares of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration ("ALTERNATE CONSIDERATION") receivable upon, or
as a result of, such Fundamental Transaction by a Holder holding the number of
Warrant Shares underlying this Warrant immediately prior to the occurence of
such event. For purposes of any such exercise, the determination of the Exercise
Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in connection with such Fundamental Transaction, and the Company
shall apportion the Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to such securities, cash or
property that it receives upon any exercise of this Warrant following such
Fundamental Transaction. To the extent necessary to effectuate the foregoing
provisions, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new warrant consistent with the
foregoing provisions and evidencing the Holder's right to exercise such warrant
into Alternate Consideration. The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this Section 3(c)
and insuring that this Warrant (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.
(d) CALCULATIONS. All calculations under this Section 3 shall be made to
the nearest cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Section 3, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the number of
shares of Common Stock (excluding treasury shares, if any) issued and
outstanding at the close of the Trading Day on or, if not applicable, most
recently preceding, such given date.
(e) VOLUNTARY ADJUSTMENT BY COMPANY. The Company may at any time during the
term of this Warrant reduce the then current Exercise Price to any amount and
for any period of time deemed appropriate by the Board of Directors of the
Company.
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(f) NOTICE TO HOLDERS.
i. ADJUSTMENT TO EXERCISE PRICE. Whenever the Exercise Price is
adjusted pursuant to this Section 3, the Company shall promptly mail to the
Holder a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.
ii. NOTICE TO ALLOW EXERCISE BY HOLDER. If (A) the Company shall
declare a dividend (or any other distribution) on the Common Stock; (B) the
Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock; (C) the Company shall authorize the
granting to all holders of the Common Stock rights or warrants to subscribe
for or purchase any shares of capital stock of any class or of any rights;
(D) the approval of any stockholders of the Company shall be required in
connection with any reclassification of the Common Stock, any consolidation
or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, of any compulsory share
exchange whereby the Common Stock is converted into other securities, cash
or property; (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company; then,
in each case, the Company shall cause to be mailed to the Holder at its
last address as it shall appear upon the Warrant Register (defined in
Section 4(c) below) of the Company, at least twenty (20) calendar days
prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the record date established for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is
not to be taken, the date as of which the holders of the Common Stock of
record to be entitled to such dividend, distributions, redemption, rights
or warrants are to be determined or (y) the record date established for
such reclassification, consolidation, merger, sale, transfer or share
exchange, or if a record is not to be taken, the date such
reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; PROVIDED, that the failure to mail such
notice or any defect therein or in the mailing thereof shall not --------
affect the validity of the corporate action required to be specified in
such notice. Subject to applicable law, the Holder is entitled to exercise
this Warrant during the twenty (20) day period commencing on the date of
such notice to the effective date of the event triggering such notice.
Notwithstanding the foregoing, the delivery of the notice described in this
Section 3(f) is not intended to and shall not bestow upon the Holder any
voting rights whatsoever with respect to outstanding unexercised Warrants.
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SECTION 5. TRANSFER OF WARRANT.
(a) TRANSFERABILITY. Subject to compliance with any applicable securities
laws and the conditions set forth in Sections 4(d) through 4(h) hereof and in
Section 5(a) hereof, this Warrant and all rights hereunder are transferable, in
whole or in part, upon surrender of this Warrant at the principal office of the
Company, together with a written assignment of this Warrant substantially in the
form attached hereto duly executed by the Holder or its agent or attorney and
funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new Warrant evidencing the
portion, if any, of this Warrant not so assigned, and this Warrant shall
promptly be cancelled. A Warrant, if properly assigned, may be exercised by a
new holder for the purchase of Warrant Shares without having a new Warrant
issued.
(b) NEW WARRANTS. This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with Section 4(a), as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice.
(c) WARRANT REGISTER. The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose (the "WARRANT REGISTER"), in
the name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.
(d) ADDITIONAL TRANSFER RESTRICTIONS. Each Holder acknowledges and
understands, severally and not jointly, that (i) the securities may only be
disposed of in compliance with state and federal securities laws and (ii) in
connection with any transfer of securities other than pursuant to an effective
registration statement or Rule 144, to the Company or to an affiliate of a
Holder or in connection with a pledge as contemplated in Section 4(e), the
Company may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor and reasonably acceptable to the Company,
the form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such
transferred Securities under the Securities Act. As a condition of transfer, any
such transferee shall be bound by the terms of this Warrant and shall have the
right of a Holder under this Warrant and the Registration Rights Agreement.
(e) LEGENDS. Each Holder agrees to the imprinting, so long as is required
by this Section 4(e), of a legend on any of the securities in the following
form:
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NEITHER THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE] HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES [AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES.
The Company acknowledges and agrees that a Holder may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the securities to a financial
institution that is an "accredited investor" as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Warrant and
the Registration Rights Agreement and, if required under the terms of such
arrangement, such Holder may transfer pledged or secured securities to the
pledgees or secured parties. Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate Holder's expense,
the Company will execute and deliver such reasonable documentation as a pledgee
or secured party of securities, may reasonably request in connection with a
pledge or transfer of the securities, including, if the securities are subject
to registration pursuant to the Registration Rights Agreement, the preparation
and filing of any required prospectus supplement under Rule 424(b)(3) under the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder.
(f) REMOVAL OF LEGENDS. Certificates evidencing the Warrant Shares shall
not contain any legend (including the legend set forth in Section 4(e) hereof:
(i) while a registration statement (including the Registration Statement)
covering the resale of such security is effective under the Securities Act, or
(ii) following the sale of such Warrant Shares pursuant to Rule 144, or (iii) if
such Warrant Shares are eligible for sale under Rule 144(k), or (iv) if such
legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the SEC). The Company shall cause its counsel to issue a legal opinion to the
Company's transfer agent promptly after the Effective Date if required by the
Company's transfer agent to effect the removal of the legend hereunder. If all
or any portion of a Warrant is exercised at a time where there is an effective
registration statement to cover the resale of the Warrant Shares, or if such
Warrant Shares may be sold under Rule 144(k) or if such legend is not otherwise
required under applicable requirements of the Securities Act (including judicial
interpretations thereof) then such Warrant Shares shall be issued free of all
legends. The Company agrees that following the Effective Date or at such time as
such legend is no longer required under this Section 4(f), it will, no later
than three (3) Trading Days following the delivery by a Holder to the Company or
the Company's transfer agent of a certificate representing Warrant Shares, as
applicable, issued with a restrictive legend (such third Trading Day, the
"LEGEND REMOVAL DATE"), deliver or cause to be delivered to such Holder a
certificate representing such shares that is free from all restrictive and other
legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section. Certificates for securities subject to
legend removal hereunder shall be transmitted by the transfer agent of the
Company to the Holders by crediting the account of the Holders prime broker with
the DWAC system.
10
(g) LIQUIDATED DAMAGES. In addition to such Holder's other available
remedies, the Company shall pay to a Holder, in cash, as partial liquidated
damages and not as a penalty, for each $1,000 of Warrant Shares (based on the
Closing Price of the Common Stock on the date such Securities are submitted to
the Company's transfer agent) delivered for removal of the restrictive legend
and subject to this Section 4, $10 per Trading Day (increasing to $20 per
Trading Day ten (10) Trading Days after such damages have begun to accrue) for
each Trading Day after second (2nd) Trading Day following the Legend Removal
Date until such certificate is delivered without a legend.
(h) RELIANCE ON HOLDER'S COMPLIANCE. Each Holder, severally and not jointly
with the other Holders, agrees that the removal of the restrictive legend from
certificates representing Securities as set forth in this Section 4 is
predicated upon the Company's reliance that the Holder will sell any Securities
pursuant to either the registration requirements of the Securities Act,
including any applicable prospectus delivery requirements, or an exemption
therefrom.
SECTION 6. MISCELLANEOUS.
(a) TITLE TO WARRANT. Prior to the Termination Date and subject to
compliance with applicable laws and Section 4 of this Warrant, this Warrant and
all rights hereunder are transferable, in whole or in part, at the office or
agency of the Company by the Holder in person or by duly authorized attorney,
upon surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed and the legal opinion required under Section 4(d). The
transferee shall sign an investment letter in form and substance reasonably
satisfactory to the Company.
(b) NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant does not entitle
the Holder to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof. Upon the surrender of this Warrant and the payment
of the aggregate Exercise Price (or by means of a cashless exercise), the
Warrant Shares so purchased shall be and be deemed to be issued to such Holder
as the record owner of such shares as of the close of business on the later of
the date of such surrender and payment.
(c) LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.
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(d) SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday, Sunday or a legal holiday, then such action may be taken or
such right may be exercised on the next succeeding day that is not a Saturday,
Sunday or legal holiday.
(e) AUTHORIZED SHARES.
The Company covenants that during the period the Warrant is outstanding, it
will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for the Warrant Shares upon the exercise of the purchase
rights under this Warrant. The Company will take all such reasonable action as
may be necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of the Trading Market upon which the Common Stock may be listed.
Except and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the Exercise
Price, the Company shall obtain all such authorizations or exemptions thereof,
or consents thereto, as may be necessary from any public regulatory body or
bodies having jurisdiction thereof.
(f) JURISDICTION. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in accordance
with the governing law provisions set forth in the Letter Agreement.
(g) RESTRICTIONS. The Holder acknowledges that the Warrant Shares acquired
upon the exercise of this Warrant, if not registered, will have restrictions
upon resale imposed by state and federal securities laws and will contain a
restrictive legend substantially in the form set forth in Section 4(e).
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(h) NONWAIVER AND EXPENSES. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date. If the Company willfully and knowingly fails to comply with any provision
of this Warrant, which results in any material damages to the Holder, the
Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
(i) NOTICES. Unless otherwise specifically set forth herein, any and
all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile number set
forth below prior to 5:30 p.m. (New York City time) on a Trading Day, (b)
the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth
below, or in the Warrant Register, and applicable on a day that is not a
Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second Trading Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service, or (d) upon actual
receipt by the party to whom such notice is required to be given. The
address for such notices and communications shall be as follows:
If to Company, to:
Access Integrated Technologies, Inc.
55 Madison Avenue, Suite 300
Morristown, New Jersey 07960
Attention: General Counsel
Facsimile: (973) 290-0081
E-mail address: gloffredo@accessitx.com
With a copy to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, New York 10178
Attention: Jonathan Cooperman, Esq.
Facsimile: (212) 808-7897
E-mail address: jcooperman@kelleydrye.com
If to the Holder:
To the address set forth under such Holder's name on the
Warrant Register; or such other address as may be designated
in writing hereafter, in the same manner, by such Person.
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(j) LIMITATION OF LIABILITY. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
(k) REMEDIES. Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
(l) SUCCESSORS AND ASSIGNS. Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder.
(m) AMENDMENT. This Warrant may only be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.
(n) SEVERABILITY. Wherever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.
(o) HEADINGS. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.
***************
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: _______ __, 2005
ACCESS INTEGRATED TECHNOLOGIES, INC.
By:
--------------------------------
Name:
Title:
15
NOTICE OF EXERCISE
TO: ACCESS INTEGRATED TECHNOLOGIES, INC.
(1)______The undersigned hereby elects to purchase ________ Warrant Shares
of the Company pursuant to the terms of the attached Warrant (only if exercised
in full), and tenders herewith payment of the exercise price in full, together
with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant Shares
as is necessary, in accordance with the formula set
forth in subsection 2(c), to exercise this Warrant
with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(3) Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is specified
below:
-------------------------------
The Warrant Shares shall be delivered to the following:
-------------------------------
-------------------------------
-------------------------------
(4) ACCREDITED INVESTOR. The undersigned is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.
(5) By delivery of this Notice of Exercise, the undersigned represents and
warrants to the Company that after giving effect to the exercise evidenced
hereby, the Holder will beneficially own no more than 9.99% of the shares of
Common Stock of the Company (as determined in accordance with Section 2(d)
hereof.
[SIGNATURE OF HOLDER]
Name of Investing Entity:
------------------------------------------------------
Signature of Authorized Signatory of Investing Entity:
--------------------------
Social Security or Tax ID#, if applicable:
-------------------------------------
Name of Authorized Signatory:
--------------------------------------------------
Title of Authorized Signatory:
-------------------------------------------------
Date:
-------------------------------------------------------------------------
16
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
- ----------------------------------------------- whose address is
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Dated:
----------------- -----------------
Holder's Signature:
---------------------------
Holder's Address:
---------------------------
Signature Guaranteed:
-----------------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
17