EXHIBIT 4.5
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE
AN OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO
THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
KS-1A 60,000 Shares
NEOWARE SYSTEMS, INC.
---------------------
Date of Issuance: January 31, 1998
Expiration Date: January 31, 2001
Warrant for the Purchase of Common Stock
----------------------------------------
FOR VALUE RECEIVED, Neoware Systems, Inc., a Delaware corporation (the
Company"), hereby certifies that Kirlin Holding Corp. or assigns (the "Holder"),
is entitled, subject to the provisions of this Warrant, to purchase from the
Company, at any time before 5:00 p.m. (Eastern Standard Time) on January 31,
2001 (the "Expiration Date"), up to Sixty Thousand (60,000) shares of common
stock, $.001 par value per share ("Common Stock"), of the Company. The Company
in its sole discretion may extend the duration of the Warrant by delaying the
Expiration Date.
The Common Stock purchasable upon exercise of this Warrant may be
purchased at an exercise price, subject to adjustment pursuant to Section 2
below, of $3.00 per share (as adjusted pursuant to Section 2 hereof, the
"Warrant Price").
The number of shares of Common Stock to be received upon the exercise
of this Warrant and the price to be paid for a share of Common Stock are subject
to adjustment from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, as adjusted from time to time, are
hereinafter sometimes referred to as the "Warrant Shares."
1. Exercise of Warrant.
1.1 Payment. This Warrant may be exercised by the registered
holder thereof by surrendering it to the Company at its principal office in King
of Prussia, Pennsylvania (or at such other address as the Company may hereafter
notify the Holder in writing), with the subscription form, as annexed hereto,
duly executed, and by paying in full, either (i) in lawful money of the United
States, in cash, good certified check or good bank draft payable to the order of
the Company or (ii) by net issuance (as provided below), the Warrant Price for
each full share of Common Stock as to which this Warrant is exercised and any
and all applicable taxes due in connection with the exercise of this Warrant,
the exchange of this Warrant for the Common Stock, and the issuance of the
Common Stock.
In lieu of the payment of the Warrant Price in the manner
provided by this Section 1.1, the registered holder shall have the right (but
not the obligation) to convert this Warrant, in whole or in part, into Common
Stock ("Conversion Right"), as follows: upon exercise of the Conversion Right,
the Company shall deliver to the registered Holder (without payment of any of
the Warrant Price) that number of shares of Common Stock equal to the quotient
obtained by dividing (x) the "Value" (as defined below) of the portion of the
Warrant being converted at the time the Conversion Right is exercised by (y) the
"Current Value" (as defined in Section 2.5). The "Value" of the portion of the
Warrant being converted shall equal the remainder derived from subtracting (a)
the Warrant Price multiplied by the number of shares of Common Stock underlying
the portion of the Warrant being converted from (b) the Current Value of the
Common Stock multiplied by the number of shares of Common Stock underlying the
portion of the Warrant being converted.
1.2 Issuance of Certificates. As soon as practicable after the
exercise of this Warrant, the Company shall cause to be issued to the registered
Holder of this Warrant a certificate or certificates for the number of full
shares of Common Stock to which he is entitled, registered in such name or names
as may be directed by him, and if the Warrant shall not have been exercised in
full, a new Warrant for the number of shares as to which this Warrant shall not
have been exercised, reduced by the number of shares of Common Stock deemed to
have been surrendered in connection with a net issuance. Notwithstanding the
foregoing, the Company shall not be obligated to deliver any securities pursuant
to the exercise of this Warrant unless an exemption from registration under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities is available. This Warrant may not be exercised by, or securities
issued to, the registered Holder in any state in which such exercise would be
unlawful. The Company agrees to take all reasonable action necessary to permit
the exercise of this Warrant by the Registered Holder in compliance with the
Securities Act and applicable state securities laws.
1.3 Valid Issuance. All shares of Common Stock issued upon the
proper exercise of this Warrant in conformity with the terms contained herein
shall be validly issued.
1.4 Date of Issuance. Each person in whose name any such
certificate for shares of Common Stock is issued shall for all purposes be
deemed to have become the holder of record of such shares on the date on which
this Warrant was surrendered and payment of the Warrant Price was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
2. Adjustments.
2.1 Stock Dividends - Split-Ups. If after the date hereof, and
subject to the provisions of Section 2.5 below, the number of outstanding shares
of Common Stock is increased by a stock dividend payable in shares of Common
Stock or by a split-up of shares of Common Stock or other similar event, then,
on the day following the date fixed for the determination of holders of Common
Stock entitled to receive such stock dividend or split-up, the number of shares
issuable on exercise of this Warrant shall be increased in proportion to such
increase in outstanding shares and the then applicable Warrant Price shall be
correspondingly decreased.
2.2 Aggregation of Shares. If after the date hereof, and
subject to the provisions of Section 2.5, the number of outstanding shares of
Common Stock is decreased by a consolidation, combination or reclassification of
shares of Common Stock or other similar event, then, after the effective date of
such consolidation, combination or reclassification, the number of shares
issuable on exercise of this Warrant shall be decreased in proportion to such
decrease in outstanding shares and the then applicable Warrant Price shall be
correspondingly increased.
2.3 Reorganization. etc. If after the date hereof any capital
reorganization or reclassification of the Common Stock of the Company, or
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation or other similar
event shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger, or sale, lawful and fair provision
shall be made whereby the Warrant Holder shall thereafter have the right to
purchase and receive, upon the basis and upon the terms and conditions specified
in this Warrant and in lieu of the shares of Common Stock of the Company
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, such shares of stock, securities, or assets as may be
issued or payable with respect to or in exchange for the number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented by this Warrant, had such reorganization, reclassification,
consolidation, merger, or sale not taken place and in such event appropriate
provision shall be made with respect to the rights and interests of the Holder
to the end that the provisions hereof (including, without limitation, provisions
for adjustments of the Warrant Price and of the number of shares purchasable
upon the
exercise of the Warrant) shall thereafter be applicable, as nearly as may be in
relation to any share of stock, securities, or assets thereafter deliverable
upon the exercise hereof. The Company shall not effect any such consolidation,
merger, or sale unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting from such consolidation or
merger, or the corporation purchasing such assets, shall assume by written
instrument executed and delivered to the Company the obligation to deliver to
the Holder such shares of stock, securities, or assets as, in accordance with
the foregoing provisions the Holder may be entitled to purchase.
2.4 Notices of Changes in Warrant. Upon every adjustment of
the Warrant Price or the number of shares issuable on exercise of this Warrant,
the Company shall give written notice thereof to the registered Holder, which
notice shall state the Warrant Price resulting from such adjustment and the
increase or decrease, if any, in the number of shares purchasable at such price
upon the exercise of this Warrant, setting forth in reasonable detail the method
of calculation and the facts upon which such calculation is based. Upon the
occurrence of any event specified in Sections 2.1, 2.2, or 2.3, then, in any
such event, the Company shall give written notice in the manner set forth above
of the record date for such dividend, distribution, or subscription rights, or
the effective date of such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, winding up or issuance. Such notice
shall also specify the date as of which the holders of Common Stock of record
shall participate in such dividend, distribution, or subscription rights, or
shall be entitled to exchange their Common Stock for stock, securities, or other
assets deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, winding up of issuance. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
such event.
2.5 No Fractional Shares. Notwithstanding any provision
contained in this Warrant to the contrary, the Company shall not issue
fractional shares upon exercise of this Warrant. If, by reason of any adjustment
made pursuant to this Section 2, the Holder would be entitled, upon the exercise
of this Warrant, to receive a fractional interest in a share, the Company shall,
upon such exercise, purchase such fractional interest, determined as follows:
(i) If the Common Stock is listed on a National Securities
Exchange or admitted to unlisted trading privileges on such exchange or listed
for trading on the Nasdaq Stock Market or the NASD OTC Bulletin Board, the
current value ("Current Value") shall be the last reported sale price of the
Common Stock on the principal trading market for the Common Stock on the last
business day prior to the date of exercise or conversion of the Warrant or if no
such sale is made on such day, the average of the closing bid and asked prices
for such day on such exchange; or
(ii) If the Common Stock is not listed or admitted to
unlisted trading privileges, the Current Value shall be the mean of the last
reported bid and asked
prices reported by the National Quotation Bureau, Inc. on the last business day
prior to the date of the exercise or conversion of the Warrant; or
(iii) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so reported, the
Current Value shall be an amount determined in good faith and in such reasonable
manner as may be prescribed by resolution of the Board of Directors of the
Company.
3. Transfer and Exchange of Warrant.
3.1 Procedure for Surrender of Warrant. This Warrant may be
surrendered to the Company, together with a written request for exchange, and
thereupon the Company shall cause to be issued in exchange therefor one or more
new Warrants as requested by the registered Holder of this Warrant so
surrendered, representing an equal aggregate number of Warrants; provided,
however, that in the event that this Warrant bears a restrictive legend, the
Company shall not cancel this Warrant and issue new Warrants in exchange
therefor until the Company has received an opinion of counsel stating that such
transfer may be made and indicating whether the new Warrants must also bear a
restrictive legend.
3.2 Fractional Warrants. The Company shall not be required to
effect any registration of transfer or exchange which will result in the
issuance of a fraction of a Warrant.
3.3 Service Charges. No service charge shall be made for any
exchange or registration of transfer of this Warrant.
4. Other Provisions Relating to Rights of the Holder of this
Warrant.
4.1 No Rights as Stockholder. This Warrant does not entitle
the Holder thereof to any of the rights of a stockholder of the Company,
including, without limitation, the right to receive dividends, or other
distributions, exercise any preemptive rights to vote or to consent or to
receive notice as stockholders in respect of the meetings of stockholders or the
election of directors of the Company or any other matter.
4.2 Lost. Stolen. Mutilated. or Destroyed Warrant. If this
Warrant is lost, stolen, mutilated, or destroyed, the Company may on such terms
as to indemnify or otherwise as it may in its discretion impose (which shall, in
the case of a mutilated Warrant, include the surrender thereof), issue a new
Warrant of like denomination, tenor, and date as this Warrant so lost, stolen,
mutilated, or destroyed. Any such new Warrant shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated, or destroyed Warrant shall be at any time enforceable by
anyone.
4.3 Reservation of Common Stock. The Company shall at all
times reserve and keep available a number of its authorized but unissued shares
of Common Stock that will be sufficient to permit the exercise in full of this
Warrant.
5. Payment of Taxes. The Company will from time to time promptly
pay all taxes and charges that may be imposed upon the Company in respect of the
issuance or delivery of shares of Common Stock upon the exercise of this
Warrant, but the Company shall not be obligated to pay any transfer taxes in
respect of the Warrant or such shares.
6. Restrictions on Transferability of Warrant and Shares;
Registration Rights.
6.1 In General. This Warrant and the Common Stock issued upon
the exercise hereof shall not be transferable except upon the conditions
hereinafter specified, which conditions are intended to insure compliance with
the provisions of the Securities Act and any applicable state securities laws in
respect of the transfer of this Warrant or any such Common Stock.
6.2 Restrictive Legends. This Warrant (including each Warrant
issued upon the transfer of any Warrant) shall bear on the face thereof a legend
substantially in the form of the notice endorsed on the first page of this
Warrant.
Each certificate for shares of Common Stock initially issued
upon the exercise of this Warrant and each certificate for shares of Common
Stock issued to a subsequent transferee of such certificate shall, unless
otherwise permitted by the provisions of this Section 6.2, bear on the face
thereof a legend reading substantially as follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION
THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF
LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
In the event that a registration statement covering the shares
of Common Stock issued upon exercise of this Warrant shall become effective
under the Securities Act or in the event that the Company shall receive an
opinion of its counsel that, in the
opinion of such counsel, such legend is not, or is no longer, necessary or
required (including, without limitation, because of the availability of the
exemption afforded by Rule 144 of the Regulations of the Securities and Exchange
Commission), the Company shall, or shall instruct its transfer agents and
registrars to, remove such legend from the certificates evidencing such shares
of Common Stock or issue new certificates without such legend in lieu thereof.
6.3 Notice of Proposed Transfer. Prior to any proposed
transfer of this Warrant or the shares of Common Stock issued upon exercise of
this Warrant, the Holder thereof shall give written notice to the Company of its
intention to effect such transfer. Each such notice shall describe the manner of
the proposed transfer and, if requested by the Company, shall be accompanied by
an opinion of counsel satisfactory to the Company to the effect that the
proposed transfer may be effected without registration under the Securities Act,
whereupon the holder of such securities shall be entitled to transfer such stock
in accordance with the terms of this notice. Each certificate for Warrants or
Common stock transferred as above provided shall bear the legend set forth in
Section 6.2, except that such certificate shall not bear such legend if the
opinion of counsel referred to above is to the further effect that the
transferee and any subsequent transferee (other than an affiliate of the
Company) would be entitled to transfer such securities in a public sale without
registration under the Securities Act. The restrictions provided for in this
Section 8.2 shall not apply to securities which are not required to bear the
legend prescribed by Section 6.2 in accordance with the provisions of that
Section.
6.4 Required Registration and Notice. Subject to the
conditions set forth in Section 6.4 hereof, upon the written request of the
Holder of this Warrant or shares of Common Stock issued or issuable upon the
exercise of the Warrant and evidenced by a certificate required to bear the
legend specified in Section 6.2 (the "Restricted Shares") setting forth the
Holder's demand that the Company effect the registration pursuant to a
registration statement permitted under the Securities Act of such Restricted
Shares, the Company shall promptly give written notice to all holders of
Warrants and Restricted Shares of a proposed registration, and shall, subject to
the conditions of Section 6.4, use its best efforts to effect promptly any such
registration pursuant to a registration statement under the Securities Act of
(a) such Restricted Shares, and (b) all Restricted Shares of the Holder of this
Warrant or Restricted Shares which shall have advised the Company in writing
within 30 days after the giving of such written notice by the Company of their
desire to have their Restricted Shares registered under the Securities Act, for
public sale in accordance with the method of disposition described by the
holders, and the Company will keep effective such registration and a prospectus
related thereto current until the earlier of such time that the Restricted
Shares (i) have been sold or (ii) are eligible for sale without restriction
pursuant to Rule 144(k) of the Regulations of the Securities and Exchange
Commission.
6.5 Conditions to Required Registration.
(a) The Company shall not be required to register or to
use its best efforts to effect any registration of the Restricted Shares under
the Securities Act:
(i) more than one time in the aggregate for all
holders thereof; or
(ii) more than two years after the date on which the
last remaining rights under this Warrant are exercised; or
(iii) unless a demand therefor is made to the Company
by the holders of at least 50% of the aggregate number of the Restricted Shares
issued or issuable under this Warrant; or
(iv) if any holder which has advised the Company in
writing of its desire to have its Restricted Shares (or portion thereof)
registered is, in the opinion of counsel for such holder, legally permitted to
sell all such shares pursuant to any exemption from the registration
requirements of the Securities Act; or
(v) any securities other than Restricted Shares.
(b) The Company may delay any registration of Restricted
Shares required pursuant to Section 6.3 for a period not exceeding 60 days
provided the Company shall in good faith determine, as evidenced by resolution
of its Board of Directors, that any such registration would adversely affect
active negotiations or planning for a proposed or pending merger, stock or asset
acquisition or sale of all or substantially all of the Company's assets.
(c) The Company may include in the registration statement
pursuant to which the Restricted Shares are registered additional securities of
the Company to be sold for the account of the Company or other security holders,
as long as such inclusion does not adversely affect the registration of the
Restricted Shares.
7. Miscellaneous Provisions.
7.1 Successors. All the covenants and provisions of this
Warrant by or for the benefit of the Company shall bind and inure to the benefit
of its successors and assigns.
7.2 Notices. Any notice, statement or demand authorized by
this Warrant to be given or made by the Holder of this Warrant to or on the
Company shall be sufficiently given or made if sent by certified mail, or
private courier service, postage prepaid, addressed (until another address is
provides in writing by the Company to the Holder), as follows:
Neoware Systems, Inc.
400 Feheley Drive
King of Prussia, Pennsylvania 19406
Attn: Edward C. Callahan, President and Chief Executive Officer
With a copy to:
McCausland, Keen & Buckman
Radnor Court
259 Radnor-Chester Road, Suite 160
Radnor, Pennsylvania 19087-5240
Attn: Nancy D. Weisberg, Esquire
Any notice, statement or demand authorized by this Warrant to be given or made
by the Holder of this Warrant to the Company shall be sufficiently given or made
if sent by certified mail or private courier service, postage prepaid, addressed
(until another address is provided in writing by the Holder to the Company), as
follows:
Kirlin Holding Corp.
6901 Jericho Turnpike
Syosset, New York 11791
7.3 Applicable Law. The validity, interpretation, and
performance of this Warrant shall be governed in all respects by the laws of the
State of New York, without giving effect to conflict of laws.
7.4 Effect of Headings. The Section headings herein are for
convenience only and are not part of this Warrant and shall not affect the
interpretation thereof.
IN WITNESS WHEREOF, this Warrant has been duly executed by the
Company as of the day and year first above written.
Attest: NEOWARE SYSTEMS, INC.
/s/ Margaret M. Huebsch By: /s/Edward C. Callahan, Jr.
- ----------------------- --------------------------
Edward C. Callahan, Jr., President and
Chief Executive Officer
SUBSCRIPTION FORM
-----------------
Dated __________________, 19___
The undersigned hereby irrevocably elects to exercise the within
Warrant dated as of ________________ to purchase _________shares of Common
Stock, $.001 par value per share, of Neoware Systems, Inc., a Delaware
corporation, and hereby makes payment pursuant to Section 1.1 of the Warrant of
$ in payment of the Warrant Price thereof.
or
--
The undersigned hereby irrevocably elects to convert its right to
purchase __________ shares of Common Stock, $.001 par value per share, of
Neoware Systems, Inc., a Delaware corporation, purchasable under the within
Warrant dated as of _______________, into __________ shares of Common Stock
(based on a "Current Value" of $__________).
Holder:
______________________________
By:___________________________
Print Name:___________________
Title:________________________
Date:_________________________
ASSIGNMENT FORM
Date __________________, 19__
FOR VALUE RECEIVED, ____________________________ hereby sells, assigns
and transfers
unto___________________________________________________________________________
(please type or print in block letters)
_______________________________________________________________________________
(insert address)
its right to purchase ____________shares of Common Stock, $.001 par value per
share, of Neoware Systems, Inc., a Delaware corporation (the "Company"),
represented by this Warrant and does hereby irrevocably constitute and appoint ,
Attorney, to transfer the same on the books of the Company, with full power of
substitution in the premises.
______________________________
By:___________________________
Print Name:___________________
Title:________________________
Date:_________________________
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE
AN OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO
THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
KS-2A 60,000 Shares
NEOWARE SYSTEMS, INC.
--------------------
Date of Issuance: January 31, 1998
Expiration Date: January 31, 2001
Warrant for the Purchase of Common Stock
----------------------------------------
FOR VALUE RECEIVED, Neoware Systems, Inc., a Delaware corporation (the
Company"), hereby certifies that Kirlin Holding Corp. or assigns (the "Holder"),
is entitled, subject to the provisions of this Warrant, to purchase from the
Company, at any time during the Exercise Period (as defined below), up to Sixty
Thousand (60,000) shares of Common Stock of the Company. The term "Exercise
Period" shall mean the period commencing on the third business day after the ten
(10) consecutive trading day period during which the last sale price of the
Common Stock has been at least $7.00 on each day in such period, which period
must be completed prior to July 31, 1999, and terminating prior to 5:00 p.m.
(Eastern Standard Time) on January 31, 2001 (the "Expiration Date"). The Company
in its sole discretion may extend the duration of the Warrant by delaying the
Expiration Date.
The Common Stock purchasable upon exercise of this Warrant may be
purchased at an exercise price, subject to adjustment pursuant to Section 2
below, of $5.00 per share (as adjusted pursuant to Section 2 hereof, the
"Warrant Price").
The number of shares of Common Stock to be received upon the exercise
of this Warrant and the price to be paid for a share of Common Stock are subject
to adjustment from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, as adjusted from time to time, are
hereinafter sometimes referred to as the "Warrant Shares."
1. Exercise of Warrant.
1.1 Payment. This Warrant may be exercised by the registered
holder thereof by surrendering it to the Company at its principal office in King
of Prussia, Pennsylvania (or at such other address as the Company may hereafter
notify the Holder in writing), with the subscription form, as annexed hereto,
duly executed, and by paying in full, either (i) in lawful money of the United
States, in cash, good certified check or good bank draft payable to the order of
the Company or (ii) by net issuance (as provided below), the Warrant Price for
each full share of Common Stock as to which this Warrant is exercised and any
and all applicable taxes due in connection with the exercise of this Warrant,
the exchange of this Warrant for the Common Stock, and the issuance of the
Common Stock.
In lieu of the payment of the Warrant Price in the manner
provided by this Section 1.1, the registered holder shall have the right (but
not the obligation) to convert this Warrant, in whole or in part, into Common
Stock ("Conversion Right"), as follows: upon exercise of the Conversion Right,
the Company shall deliver to the registered Holder (without payment of any of
the Warrant Price) that number of shares of Common Stock equal to the quotient
obtained by dividing (x) the "Value" (as defined below) of the portion of the
Warrant being converted at the time the Conversion Right is exercised by (y) the
"Current Value" (as defined in Section 2.5). The "Value" of the portion of the
Warrant being converted shall equal the remainder derived from subtracting (a)
the Warrant Price multiplied by the number of shares of Common Stock underlying
the portion of the Warrant being converted from (b) the Current Value of the
Common Stock multiplied by the number of shares of Common Stock underlying the
portion of the Warrant being converted.
1.2 Issuance of Certificates. As soon as practicable after the
exercise of this Warrant, the Company shall cause to be issued to the registered
Holder of this Warrant a certificate or certificates for the number of full
shares of Common Stock to which he is entitled, registered in such name or names
as may be directed by him, and if the Warrant shall not have been exercised in
full, a new Warrant for the number of shares as to which this Warrant shall not
have been exercised, reduced by the number of shares of Common Stock deemed to
have been surrendered in connection with a net issuance. Notwithstanding the
foregoing, the Company shall not be obligated to deliver any securities pursuant
to the exercise of this Warrant unless an exemption from registration under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities is available. This Warrant may not be exercised by, or securities
issued to, the registered Holder in any state in which such exercise would be
unlawful. The Company
agrees to take all reasonable action necessary to permit the exercise of this
Warrant by the Registered Holder in compliance with the Securities Act and
applicable state securities laws.
1.3 Valid Issuance. All shares of Common Stock issued upon the
proper exercise of this Warrant in conformity with the terms contained herein
shall be validly issued.
1.4 Date of Issuance. Each person in whose name any such
certificate for shares of Common Stock is issued shall for all purposes be
deemed to have become the holder of record of such shares on the date on which
this Warrant was surrendered and payment of the Warrant Price was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
2. Adjustments.
2.1 Stock Dividends - Split-Ups. If after the date hereof, and
subject to the provisions of Section 2.5 below, the number of outstanding shares
of Common Stock is increased by a stock dividend payable in shares of Common
Stock or by a split-up of shares of Common Stock or other similar event, then,
on the day following the date fixed for the determination of holders of Common
Stock entitled to receive such stock dividend or split-up, the number of shares
issuable on exercise of this Warrant shall be increased in proportion to such
increase in outstanding shares and the then applicable Warrant Price shall be
correspondingly decreased.
2.2 Aggregation of Shares. If after the date hereof, and
subject to the provisions of Section 2.5, the number of outstanding shares of
Common Stock is decreased by a consolidation, combination or reclassification of
shares of Common Stock or other similar event, then, after the effective date of
such consolidation, combination or reclassification, the number of shares
issuable on exercise of this Warrant shall be decreased in proportion to such
decrease in outstanding shares and the then applicable Warrant Price shall be
correspondingly increased.
2.3 Reorganization. etc. If after the date hereof any capital
reorganization or reclassification of the Common Stock of the Company, or
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation or other similar
event shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger, or sale, lawful and fair provision
shall be made whereby the Warrant Holder shall thereafter have the right to
purchase and receive, upon the basis and upon the terms and conditions specified
in this Warrant and in lieu of the shares of Common Stock of the Company
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby,
such shares of stock, securities, or assets as may be issued or payable with
respect to or in exchange for the number of outstanding shares of such Common
Stock equal to the number of shares of such stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented by this
Warrant, had such reorganization, reclassification, consolidation, merger, or
sale not taken place and in such event appropriate provision shall be made with
respect to the rights and interests of the Holder to the end that the provisions
hereof (including, without limitation, provisions for adjustments of the Warrant
Price and of the number of shares purchasable upon the exercise of the Warrant)
shall thereafter be applicable, as nearly as may be in relation to any share of
stock, securities, or assets thereafter deliverable upon the exercise hereof.
The Company shall not effect any such consolidation, merger, or sale unless
prior to the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger, or the corporation
purchasing such assets, shall assume by written instrument executed and
delivered to the Company the obligation to deliver to the Holder such shares of
stock, securities, or assets as, in accordance with the foregoing provisions the
Holder may be entitled to purchase.
2.4 Notices of Changes in Warrant. Upon every adjustment of
the Warrant Price or the number of shares issuable on exercise of this Warrant,
the Company shall give written notice thereof to the registered Holder, which
notice shall state the Warrant Price resulting from such adjustment and the
increase or decrease, if any, in the number of shares purchasable at such price
upon the exercise of this Warrant, setting forth in reasonable detail the method
of calculation and the facts upon which such calculation is based. Upon the
occurrence of any event specified in Sections 2.1, 2.2, or 2.3, then, in any
such event, the Company shall give written notice in the manner set forth above
of the record date for such dividend, distribution, or subscription rights, or
the effective date of such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, winding up or issuance. Such notice
shall also specify the date as of which the holders of Common Stock of record
shall participate in such dividend, distribution, or subscription rights, or
shall be entitled to exchange their Common Stock for stock, securities, or other
assets deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, winding up of issuance. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
such event.
2.5 No Fractional Shares. Notwithstanding any provision
contained in this Warrant to the contrary, the Company shall not issue
fractional shares upon exercise of this Warrant. If, by reason of any adjustment
made pursuant to this Section 2, the Holder would be entitled, upon the exercise
of this Warrant, to receive a fractional interest in a share, the Company shall,
upon such exercise, purchase such fractional interest, determined as follows:
(i) If the Common Stock is listed on a National Securities
Exchange or admitted to unlisted trading privileges on such exchange or listed
for trading on the Nasdaq Stock Market or the NASD OTC Bulletin Board, the
current value ("Current Value") shall be the last reported sale price of the
Common Stock on the principal trading market for the Common Stock on the last
business day prior to the date of exercise or conversion of the Warrant or if no
such sale is made on such day, the average of the closing bid and asked prices
for such day on such exchange; or
(ii) If the Common Stock is not listed or admitted to
unlisted trading privileges, the Current Value shall be the mean of the last
reported bid and asked prices reported by the National Quotation Bureau, Inc. on
the last business day prior to the date of the exercise or conversion of the
Warrant; or
(iii) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so reported, the
Current Value shall be an amount determined in good faith and in such reasonable
manner as may be prescribed by resolution of the Board of Directors of the
Company.
3. Transfer and Exchange of Warrant.
3.1 Procedure for Surrender of Warrant. This Warrant may be
surrendered to the Company, together with a written request for exchange, and
thereupon the Company shall cause to be issued in exchange therefor one or more
new Warrants as requested by the registered Holder of this Warrant so
surrendered, representing an equal aggregate number of Warrants; provided,
however, that in the event that this Warrant bears a restrictive legend, the
Company shall not cancel this Warrant and issue new Warrants in exchange
therefor until the Company has received an opinion of counsel stating that such
transfer may be made and indicating whether the new Warrants must also bear a
restrictive legend.
3.2 Fractional Warrants. The Company shall not be required to
effect any registration of transfer or exchange which will result in the
issuance of a fraction of a Warrant.
3.3 Service Charges. No service charge shall be made for any
exchange or registration of transfer of this Warrant.
4. Other Provisions Relating to Rights of the Holder of this Warrant.
4.1 No Rights as Stockholder. This Warrant does not entitle
the Holder thereof to any of the rights of a stockholder of the Company,
including, without limitation, the right to receive dividends, or other
distributions, exercise any preemptive rights to vote or to consent or to
receive notice as stockholders in respect of the meetings of stockholders or the
election of directors of the Company or any other matter.
4.2 Lost. Stolen. Mutilated. or Destroyed Warrant. If this
Warrant is lost, stolen, mutilated, or destroyed, the Company may on such terms
as to indemnify or otherwise as it may in its discretion impose (which shall, in
the case of a mutilated
Warrant, include the surrender thereof), issue a new Warrant of like
denomination, tenor, and date as this Warrant so lost, stolen, mutilated, or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated,
or destroyed Warrant shall be at any time enforceable by anyone.
4.3 Reservation of Common Stock. The Company shall at all
times reserve and keep available a number of its authorized but unissued shares
of Common Stock that will be sufficient to permit the exercise in full of this
Warrant.
5. Payment of Taxes. The Company will from time to time promptly pay
all taxes and charges that may be imposed upon the Company in respect of the
issuance or delivery of shares of Common Stock upon the exercise of this
Warrant, but the Company shall not be obligated to pay any transfer taxes in
respect of the Warrant or such shares.
6. Restrictions on Transferability of Warrant and Shares; Registration
Rights.
6.1 In General. This Warrant and the Common Stock issued upon
the exercise hereof shall not be transferable except upon the conditions
hereinafter specified, which conditions are intended to insure compliance with
the provisions of the Securities Act and any applicable state securities laws in
respect of the transfer of this Warrant or any such Common Stock.
6.2 Restrictive Legends. This Warrant (including each Warrant
issued upon the transfer of any Warrant) shall bear on the face thereof a legend
substantially in the form of the notice endorsed on the first page of this
Warrant.
Each certificate for shares of Common Stock initially issued
upon the exercise of this Warrant and each certificate for shares of Common
Stock issued to a subsequent transferee of such certificate shall, unless
otherwise permitted by the provisions of this Section 6.2, bear on the face
thereof a legend reading substantially as follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION
THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF
LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
In the event that a registration statement covering the shares
of Common Stock issued upon exercise of this Warrant shall become effective
under the Securities Act or in the event that the Company shall receive an
opinion of its counsel that, in the opinion of such counsel, such legend is not,
or is no longer, necessary or required (including, without limitation, because
of the availability of the exemption afforded by Rule 144 of the Regulations of
the Securities and Exchange Commission), the Company shall, or shall instruct
its transfer agents and registrars to, remove such legend from the certificates
evidencing such shares of Common Stock or issue new certificates without such
legend in lieu thereof.
6.3 Notice of Proposed Transfer. Prior to any proposed
transfer of this Warrant or the shares of Common Stock issued upon exercise of
this Warrant, the Holder thereof shall give written notice to the Company of its
intention to effect such transfer. Each such notice shall describe the manner of
the proposed transfer and, if requested by the Company, shall be accompanied by
an opinion of counsel satisfactory to the Company to the effect that the
proposed transfer may be effected without registration under the Securities Act,
whereupon the holder of such securities shall be entitled to transfer such stock
in accordance with the terms of this notice. Each certificate for Warrants or
Common stock transferred as above provided shall bear the legend set forth in
Section 6.2, except that such certificate shall not bear such legend if the
opinion of counsel referred to above is to the further effect that the
transferee and any subsequent transferee (other than an affiliate of the
Company) would be entitled to transfer such securities in a public sale without
registration under the Securities Act. The restrictions provided for in this
Section 8.2 shall not apply to securities which are not required to bear the
legend prescribed by Section 6.2 in accordance with the provisions of that
Section.
6.4 Required Registration and Notice. Subject to the
conditions set forth in Section 6.4 hereof, upon the written request of the
Holder of this Warrant or shares of Common Stock issued or issuable upon the
exercise of the Warrant and evidenced by a certificate required to bear the
legend specified in Section 6.2 (the "Restricted Shares") setting forth the
Holder's demand that the Company effect the registration pursuant to a
registration statement permitted under the Securities Act of such Restricted
Shares, the Company shall promptly give written notice to all holders of
Warrants and Restricted Shares of a proposed registration, and shall, subject to
the conditions of Section 6.4, use its best efforts to effect promptly any such
registration pursuant to a registration statement under the Securities Act of
(a) such Restricted Shares, and (b) all Restricted Shares of the Holder of this
Warrant or Restricted Shares which shall have advised the Company in writing
within 30 days after the giving of such written notice by the Company of their
desire to have their Restricted Shares registered under the Securities Act, for
public sale in accordance with the method of disposition described by the
holders, and the Company will keep effective such registration and a prospectus
related thereto current until the earlier of such time that the Restricted
Shares (i) have
been sold or (ii) are eligible for sale without restriction pursuant to Rule
144(k) of the Regulations of the Securities and Exchange Commission.
6.5 Conditions to Required Registration.
(a) The Company shall not be required to register or to
use its best efforts to effect any registration of the Restricted Shares under
the Securities Act:
(i) more than one time in the aggregate for all
holders thereof; or
(ii) more than two years after the date on which the
last remaining rights under this Warrant are exercised; or
(iii) unless a demand therefor is made to the Company
by the holders of at least 50% of the aggregate number of the Restricted Shares
issued or issuable under this Warrant; or
(iv) if any holder which has advised the Company in
writing of its desire to have its Restricted Shares (or portion thereof)
registered is, in the opinion of counsel for such holder, legally permitted to
sell all such shares pursuant to any exemption from the registration
requirements of the Securities Act; or
(v) any securities other than Restricted Shares.
(b) The Company may delay any registration of Restricted
Shares required pursuant to Section 6.3 for a period not exceeding 60 days
provided the Company shall in good faith determine, as evidenced by resolution
of its Board of Directors, that any such registration would adversely affect
active negotiations or planning for a proposed or pending merger, stock or asset
acquisition or sale of all or substantially all of the Company's assets.
(c) The Company may include in the registration statement
pursuant to which the Restricted Shares are registered additional securities of
the Company to be sold for the account of the Company or other security holders,
as long as such inclusion does not adversely affect the registration of the
Restricted Shares.
7. Miscellaneous Provisions.
7.1 Successors. All the covenants and provisions of this
Warrant by or for the benefit of the Company shall bind and inure to the
benefit of its successors and assigns.
7.2 Notices. Any notice, statement or demand authorized by
this Warrant to be given or made by the Holder of this Warrant to or on the
Company shall be
sufficiently given or made if sent by certified mail, or private courier
service, postage prepaid, addressed (until another address is provides in
writing by the Company to the Holder), as follows:
Neoware Systems, Inc.
400 Feheley Drive
King of Prussia, Pennsylvania 19406
Attn: Edward C. Callahan, President and Chief Executive Officer
With a copy to:
McCausland, Keen & Buckman
Radnor Court
259 Radnor-Chester Road, Suite 160
Radnor, Pennsylvania 19087-5240
Attn: Nancy D. Weisberg, Esquire
Any notice, statement or demand authorized by this Warrant to be given or made
by the Holder of this Warrant to the Company shall be sufficiently given or made
if sent by certified mail or private courier service, postage prepaid, addressed
(until another address is provided in writing by the Holder to the Company), as
follows:
Kirlin Holding Corp.
6901 Jericho Turnpike
Syosset, New York 11791
7.3 Applicable Law. The validity, interpretation, and
performance of this Warrant shall be governed in all respects by the laws of the
State of New York, without giving effect to conflict of laws.
7.4 Effect of Headings. The Section headings herein are for
convenience only and are not part of this Warrant and shall not affect the
interpretation thereof.
IN WITNESS WHEREOF, this Warrant has been duly executed by the
Company as of the day and year first above written.
Attest: NEOWARE SYSTEMS, INC.
/s/ Margaret M. Huebsch By:/s/Edward C. Callahan, Jr.
- ----------------------- --------------------------
Edward C. Callahan, President and
Chief Executive Officer
SUBSCRIPTION FORM
-----------------
Dated __________________, 19__
The undersigned hereby irrevocably elects to exercise the within
Warrant dated as of ________________ to purchase ___________ shares of Common
Stock, $.001 par value per share, of Neoware Systems, Inc., a Delaware
corporation, and hereby makes payment pursuant to Section 1.1 of the Warrant of
$________ in payment of the Warrant Price thereof.
or
--
The undersigned hereby irrevocably elects to convert its right to
purchase __________ shares of Common Stock, $.001 par value per share, of
Neoware Systems, Inc., a Delaware corporation, purchasable under the within
Warrant dated as of _______________, into __________ shares of Common Stock
(based on a "Current Value" of $__________).
Holder:
______________________________
By:___________________________
Print Name:___________________
Title:________________________
Date:_________________________
ASSIGNMENT FORM
Date __________________, 19__
FOR VALUE RECEIVED,____________________________ hereby sells, assigns
and transfers
unto____________________________________________________________________________
(please type or print in block letters)
_______________________________________________________________________________
(insert address)
its right to purchase ___________ shares of Common Stock, $.001 par value per
share, of Neoware Systems, Inc., a Delaware corporation (the "Company"),
represented by this Warrant and does hereby irrevocably constitute and appoint
_________________, Attorney, to transfer the same on the books of the Company,
with full power of substitution in the premises.
_____________________________
By:__________________________
Print Name:__________________
Title:_______________________
Date:________________________
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE
AN OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO
THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
KS-3A 60,000 Shares
NEOWARE SYSTEMS, INC.
---------------------
Date of Issuance: January 31, 1998
Expiration Date: January 31, 2001
Warrant for the Purchase of Common Stock
----------------------------------------
FOR VALUE RECEIVED, Neoware Systems, Inc., a Delaware corporation (the
Company"), hereby certifies that Kirlin Holding Corp. or assigns (the "Holder"),
is entitled, subject to the provisions of this Warrant, to purchase from the
Company, at any time during the Exercise Period (as defined below), up to Sixty
Thousand (60,000) shares of Common Stock of the Company. The term "Exercise
Period" shall mean the period commencing on the third business day after the ten
(10) consecutive trading day period during which the last sale price of the
Common Stock has been at least $7.00 on each day in such period, which period
must be completed prior to July 31, 1999, and terminating prior to 5:00 p.m.
(Eastern Standard Time) on January 31, 2001 (the "Expiration Date"). The Company
in its sole discretion may extend the duration of the Warrant by delaying the
Expiration Date.
The Common Stock purchasable upon exercise of this Warrant may be
purchased at an exercise price, subject to adjustment pursuant to Section 2
below, of $7.00 per share (as adjusted pursuant to Section 2 hereof, the
"Warrant Price").
The number of shares of Common Stock to be received upon the exercise
of this Warrant and the price to be paid for a share of Common Stock are subject
to adjustment from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, as adjusted from time to time, are
hereinafter sometimes referred to as the "Warrant Shares."
1. Exercise of Warrant.
1.1 Payment. This Warrant may be exercised by the registered
holder thereof by surrendering it to the Company at its principal office in King
of Prussia, Pennsylvania (or at such other address as the Company may hereafter
notify the Holder in writing), with the subscription form, as annexed hereto,
duly executed, and by paying in full, either (i) in lawful money of the United
States, in cash, good certified check or good bank draft payable to the order of
the Company or (ii) by net issuance (as provided below), the Warrant Price for
each full share of Common Stock as to which this Warrant is exercised and any
and all applicable taxes due in connection with the exercise of this Warrant,
the exchange of this Warrant for the Common Stock, and the issuance of the
Common Stock.
In lieu of the payment of the Warrant Price in the manner
provided by this Section 1.1, the registered holder shall have the right (but
not the obligation) to convert this Warrant, in whole or in part, into Common
Stock ("Conversion Right"), as follows: upon exercise of the Conversion Right,
the Company shall deliver to the registered Holder (without payment of any of
the Warrant Price) that number of shares of Common Stock equal to the quotient
obtained by dividing (x) the "Value" (as defined below) of the portion of the
Warrant being converted at the time the Conversion Right is exercised by (y) the
"Current Value" (as defined in Section 2.5). The "Value" of the portion of the
Warrant being converted shall equal the remainder derived from subtracting (a)
the Warrant Price multiplied by the number of shares of Common Stock underlying
the portion of the Warrant being converted from (b) the Current Value of the
Common Stock multiplied by the number of shares of Common Stock underlying the
portion of the Warrant being converted.
1.2 Issuance of Certificates. As soon as practicable after the
exercise of this Warrant, the Company shall cause to be issued to the registered
Holder of this Warrant a certificate or certificates for the number of full
shares of Common Stock to which he is entitled, registered in such name or names
as may be directed by him, and if the Warrant shall not have been exercised in
full, a new Warrant for the number of shares as to which this Warrant shall not
have been exercised, reduced by the number of shares of Common Stock deemed to
have been surrendered in connection with a net issuance. Notwithstanding the
foregoing, the Company shall not be obligated to deliver any securities pursuant
to the exercise of this Warrant unless an exemption from registration under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities is available. This Warrant may not be exercised by, or securities
issued to, the registered Holder in any state in which such exercise would be
unlawful. The Company
agrees to take all reasonable action necessary to permit the exercise of this
Warrant by the Registered Holder in compliance with the Securities Act and
applicable state securities laws.
1.3 Valid Issuance. All shares of Common Stock issued upon the
proper exercise of this Warrant in conformity with the terms contained herein
shall be validly issued.
1.4 Date of Issuance. Each person in whose name any such
certificate for shares of Common Stock is issued shall for all purposes be
deemed to have become the holder of record of such shares on the date on which
this Warrant was surrendered and payment of the Warrant Price was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
2. Adjustments.
2.1 Stock Dividends - Split-Ups. If after the date hereof, and
subject to the provisions of Section 2.5 below, the number of outstanding shares
of Common Stock is increased by a stock dividend payable in shares of Common
Stock or by a split-up of shares of Common Stock or other similar event, then,
on the day following the date fixed for the determination of holders of Common
Stock entitled to receive such stock dividend or split-up, the number of shares
issuable on exercise of this Warrant shall be increased in proportion to such
increase in outstanding shares and the then applicable Warrant Price shall be
correspondingly decreased.
2.2 Aggregation of Shares. If after the date hereof, and
subject to the provisions of Section 2.5, the number of outstanding shares of
Common Stock is decreased by a consolidation, combination or reclassification of
shares of Common Stock or other similar event, then, after the effective date of
such consolidation, combination or reclassification, the number of shares
issuable on exercise of this Warrant shall be decreased in proportion to such
decrease in outstanding shares and the then applicable Warrant Price shall be
correspondingly increased.
2.3 Reorganization. etc. If after the date hereof any capital
reorganization or reclassification of the Common Stock of the Company, or
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation or other similar
event shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger, or sale, lawful and fair provision
shall be made whereby the Warrant Holder shall thereafter have the right to
purchase and receive, upon the basis and upon the terms and conditions specified
in this Warrant and in lieu of the shares of Common Stock of the Company
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby,
such shares of stock, securities, or assets as may be issued or payable with
respect to or in exchange for the number of outstanding shares of such Common
Stock equal to the number of shares of such stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented by this
Warrant, had such reorganization, reclassification, consolidation, merger, or
sale not taken place and in such event appropriate provision shall be made with
respect to the rights and interests of the Holder to the end that the provisions
hereof (including, without limitation, provisions for adjustments of the Warrant
Price and of the number of shares purchasable upon the exercise of the Warrant)
shall thereafter be applicable, as nearly as may be in relation to any share of
stock, securities, or assets thereafter deliverable upon the exercise hereof.
The Company shall not effect any such consolidation, merger, or sale unless
prior to the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger, or the corporation
purchasing such assets, shall assume by written instrument executed and
delivered to the Company the obligation to deliver to the Holder such shares of
stock, securities, or assets as, in accordance with the foregoing provisions the
Holder may be entitled to purchase.
2.4 Notices of Changes in Warrant. Upon every adjustment of
the Warrant Price or the number of shares issuable on exercise of this Warrant,
the Company shall give written notice thereof to the registered Holder, which
notice shall state the Warrant Price resulting from such adjustment and the
increase or decrease, if any, in the number of shares purchasable at such price
upon the exercise of this Warrant, setting forth in reasonable detail the method
of calculation and the facts upon which such calculation is based. Upon the
occurrence of any event specified in Sections 2.1, 2.2, or 2.3, then, in any
such event, the Company shall give written notice in the manner set forth above
of the record date for such dividend, distribution, or subscription rights, or
the effective date of such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, winding up or issuance. Such notice
shall also specify the date as of which the holders of Common Stock of record
shall participate in such dividend, distribution, or subscription rights, or
shall be entitled to exchange their Common Stock for stock, securities, or other
assets deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, winding up of issuance. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
such event.
2.5 No Fractional Shares. Notwithstanding any provision
contained in this Warrant to the contrary, the Company shall not issue
fractional shares upon exercise of this Warrant. If, by reason of any adjustment
made pursuant to this Section 2, the Holder would be entitled, upon the exercise
of this Warrant, to receive a fractional interest in a share, the Company shall,
upon such exercise, purchase such fractional interest, determined as follows:
(i) If the Common Stock is listed on a National Securities
Exchange or admitted to unlisted trading privileges on such exchange or listed
for trading on the Nasdaq Stock Market or the NASD OTC Bulletin Board, the
current value
("Current Value") shall be the last reported sale price of the Common Stock on
the principal trading market for the Common Stock on the last business day prior
to the date of exercise or conversion of the Warrant or if no such sale is made
on such day, the average of the closing bid and asked prices for such day on
such exchange; or
(ii) If the Common Stock is not listed or admitted to
unlisted trading privileges, the Current Value shall be the mean of the last
reported bid and asked prices reported by the National Quotation Bureau, Inc. on
the last business day prior to the date of the exercise or conversion of the
Warrant; or
(iii) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so reported, the
Current Value shall be an amount determined in good faith and in such reasonable
manner as may be prescribed by resolution of the Board of Directors of the
Company.
3. Transfer and Exchange of Warrant.
3.1 Procedure for Surrender of Warrant. This Warrant may be
surrendered to the Company, together with a written request for exchange, and
thereupon the Company shall cause to be issued in exchange therefor one or more
new Warrants as requested by the registered Holder of this Warrant so
surrendered, representing an equal aggregate number of Warrants; provided,
however, that in the event that this Warrant bears a restrictive legend, the
Company shall not cancel this Warrant and issue new Warrants in exchange
therefor until the Company has received an opinion of counsel stating that such
transfer may be made and indicating whether the new Warrants must also bear a
restrictive legend.
3.2 Fractional Warrants. The Company shall not be required to
effect any registration of transfer or exchange which will result in the
issuance of a fraction of a Warrant.
3.3 Service Charges. No service charge shall be made for any
exchange or registration of transfer of this Warrant.
4. Other Provisions Relating to Rights of the Holder of this Warrant.
4.1 No Rights as Stockholder. This Warrant does not entitle
the Holder thereof to any of the rights of a stockholder of the Company,
including, without limitation, the right to receive dividends, or other
distributions, exercise any preemptive rights to vote or to consent or to
receive notice as stockholders in respect of the meetings of stockholders or the
election of directors of the Company or any other matter.
4.2 Lost. Stolen. Mutilated. or Destroyed Warrant. If this
Warrant is lost, stolen, mutilated, or destroyed, the Company may on such terms
as to indemnify or otherwise as it may in its discretion impose (which shall, in
the case of a mutilated
Warrant, include the surrender thereof), issue a new Warrant of like
denomination, tenor, and date as this Warrant so lost, stolen, mutilated, or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated,
or destroyed Warrant shall be at any time enforceable by anyone.
4.3 Reservation of Common Stock. The Company shall at all
times reserve and keep available a number of its authorized but unissued shares
of Common Stock that will be sufficient to permit the exercise in full of this
Warrant.
5. Payment of Taxes. The Company will from time to time promptly pay
all taxes and charges that may be imposed upon the Company in respect of the
issuance or delivery of shares of Common Stock upon the exercise of this
Warrant, but the Company shall not be obligated to pay any transfer taxes in
respect of the Warrant or such shares.
6. Restrictions on Transferability of Warrant and Shares; Registration
Rights.
6.1 In General. This Warrant and the Common Stock issued upon
the exercise hereof shall not be transferable except upon the conditions
hereinafter specified, which conditions are intended to insure compliance with
the provisions of the Securities Act and any applicable state securities laws in
respect of the transfer of this Warrant or any such Common Stock.
6.2 Restrictive Legends. This Warrant (including each Warrant
issued upon the transfer of any Warrant) shall bear on the face thereof a legend
substantially in the form of the notice endorsed on the first page of this
Warrant.
Each certificate for shares of Common Stock initially issued
upon the exercise of this Warrant and each certificate for shares of Common
Stock issued to a subsequent transferee of such certificate shall, unless
otherwise permitted by the provisions of this Section 6.2, bear on the face
thereof a legend reading substantially as follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION
THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF
LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
In the event that a registration statement covering the shares
of Common Stock issued upon exercise of this Warrant shall become effective
under the Securities Act or in the event that the Company shall receive an
opinion of its counsel that, in the opinion of such counsel, such legend is not,
or is no longer, necessary or required (including, without limitation, because
of the availability of the exemption afforded by Rule 144 of the Regulations of
the Securities and Exchange Commission), the Company shall, or shall instruct
its transfer agents and registrars to, remove such legend from the certificates
evidencing such shares of Common Stock or issue new certificates without such
legend in lieu thereof.
6.3 Notice of Proposed Transfer. Prior to any proposed
transfer of this Warrant or the shares of Common Stock issued upon exercise of
this Warrant, the Holder thereof shall give written notice to the Company of its
intention to effect such transfer. Each such notice shall describe the manner of
the proposed transfer and, if requested by the Company, shall be accompanied by
an opinion of counsel satisfactory to the Company to the effect that the
proposed transfer may be effected without registration under the Securities Act,
whereupon the holder of such securities shall be entitled to transfer such stock
in accordance with the terms of this notice. Each certificate for Warrants or
Common stock transferred as above provided shall bear the legend set forth in
Section 6.2, except that such certificate shall not bear such legend if the
opinion of counsel referred to above is to the further effect that the
transferee and any subsequent transferee (other than an affiliate of the
Company) would be entitled to transfer such securities in a public sale without
registration under the Securities Act. The restrictions provided for in this
Section 8.2 shall not apply to securities which are not required to bear the
legend prescribed by Section 6.2 in accordance with the provisions of that
Section.
6.4 Required Registration and Notice. Subject to the
conditions set forth in Section 6.4 hereof, upon the written request of the
Holder of this Warrant or shares of Common Stock issued or issuable upon the
exercise of the Warrant and evidenced by a certificate required to bear the
legend specified in Section 6.2 (the "Restricted Shares") setting forth the
Holder's demand that the Company effect the registration pursuant to a
registration statement permitted under the Securities Act of such Restricted
Shares, the Company shall promptly give written notice to all holders of
Warrants and Restricted Shares of a proposed registration, and shall, subject to
the conditions of Section 6.4, use its best efforts to effect promptly any such
registration pursuant to a registration statement under the Securities Act of
(a) such Restricted Shares, and (b) all Restricted Shares of the Holder of this
Warrant or Restricted Shares which shall have advised the Company in writing
within 30 days after the giving of such written notice by the Company of their
desire to have their Restricted Shares registered under the Securities Act, for
public sale in accordance with the method of disposition described by the
holders, and the Company will keep effective such registration and a prospectus
related thereto current until the earlier of such time that the Restricted
Shares (i) have
been sold or (ii) are eligible for sale without restriction pursuant to Rule
144(k) of the Regulations of the Securities and Exchange Commission.
6.5 Conditions to Required Registration.
(a) The Company shall not be required to register or to
use its best efforts to effect any registration of the Restricted Shares under
the Securities Act:
(i) more than one time in the aggregate for all
holders thereof; or
(ii) more than two years after the date on which the
last remaining rights under this Warrant are exercised; or
(iii) unless a demand therefor is made to the Company
by the holders of at least 50% of the aggregate number of the Restricted Shares
issued or issuable under this Warrant; or
(iv) if any holder which has advised the Company in
writing of its desire to have its Restricted Shares (or portion thereof)
registered is, in the opinion of counsel for such holder, legally permitted to
sell all such shares pursuant to any exemption from the registration
requirements of the Securities Act; or
(v) any securities other than Restricted Shares.
(b) The Company may delay any registration of Restricted
Shares required pursuant to Section 6.3 for a period not exceeding 60 days
provided the Company shall in good faith determine, as evidenced by resolution
of its Board of Directors, that any such registration would adversely affect
active negotiations or planning for a proposed or pending merger, stock or asset
acquisition or sale of all or substantially all of the Company's assets.
(c) The Company may include in the registration statement
pursuant to which the Restricted Shares are registered additional securities of
the Company to be sold for the account of the Company or other security holders,
as long as such inclusion does not adversely affect the registration of the
Restricted Shares.
7. Miscellaneous Provisions.
7.1 Successors. All the covenants and provisions of this
Warrant by or for the benefit of the Company shall bind and inure to the benefit
of its successors and assigns.
7.2 Notices. Any notice, statement or demand authorized by
this Warrant to be given or made by the Holder of this Warrant to or on the
Company shall be
sufficiently given or made if sent by certified mail, or private courier
service, postage prepaid, addressed (until another address is provides in
writing by the Company to the Holder), as follows:
Neoware Systems, Inc.
400 Feheley Drive
King of Prussia, Pennsylvania 19406
Attn: Edward C. Callahan, President and Chief Executive Officer
With a copy to:
McCausland, Keen & Buckman
Radnor Court
259 Radnor-Chester Road, Suite 160
Radnor, Pennsylvania 19087-5240
Attn: Nancy D. Weisberg, Esquire
Any notice, statement or demand authorized by this Warrant to be given or made
by the Holder of this Warrant to the Company shall be sufficiently given or made
if sent by certified mail or private courier service, postage prepaid, addressed
(until another address is provided in writing by the Holder to the Company), as
follows:
Kirlin Holding Corp.
6901 Jericho Turnpike
Syosset, New York 11791
7.3 Applicable Law. The validity, interpretation, and
performance of this Warrant shall be governed in all respects by the laws of the
State of New York, without giving effect to conflict of laws.
7.4 Effect of Headings. The Section headings herein are for
convenience only and are not part of this Warrant and shall not affect the
interpretation thereof.
IN WITNESS WHEREOF, this Warrant has been duly executed by the
Company as of the day and year first above written.
Attest: NEOWARE SYSTEMS, INC.
/s/ Margaret M. Huebsch By: /s/ Edward C. Callahan, Jr.
---------------------------------
Edward C. Callahan, President and
Chief Executive Officer
SUBSCRIPTION FORM
-----------------
Dated __________________, 19__
The undersigned hereby irrevocably elects to exercise the within
Warrant dated as of ________________ to purchase _________________shares of
Common Stock, $.001 par value per share, of Neoware Systems, Inc., a Delaware
corporation, and hereby makes payment pursuant to Section 1.1 of the Warrant of
$_____________ in payment of the Warrant Price thereof.
or
--
The undersigned hereby irrevocably elects to convert its right to
purchase __________ shares of Common Stock, $.001 par value per share, of
Neoware Systems, Inc., a Delaware corporation, purchasable under the within
Warrant dated as of _______________, into __________ shares of Common Stock
(based on a "Current Value" of $__________).
Holder:
________________________________
By:_____________________________
Print Name:_____________________
Title:__________________________
Date:___________________________
ASSIGNMENT FORM
Date __________________, 19__
FOR VALUE RECEIVED, ______________________________ hereby sells,
assigns and transfers
unto____________________________________________________________________________
(please type or print in block letters)
_______________________________________________________________________________
(insert address)
its right to purchase ________________shares of Common Stock, $.001 par value
per share, of Neoware Systems, Inc., a Delaware corporation (the "Company"),
represented by this Warrant and does hereby irrevocably constitute and appoint
_________________, Attorney, to transfer the same on the books of the Company,
with full power of substitution in the premises.
______________________________
By:___________________________
Print Name:___________________
Title:________________________
Date:_________________________