1
EXHIBIT 4.5
WARRANT AGREEMENT
THIS WARRANT AGREEMENT dated as of October 21, 1998, between Alpha-Beta
Technology, Inc., a Massachusetts corporation (the "Company"), and Reedland
Capital Partners (the "Holder").
W I T N E S S E T H:
WHEREAS, the Company has engaged the Holder to act as a consultant to
the Company regarding certain financing alternatives; and
WHEREAS, in consideration thereof, the Company has authorized the
issuance to the Holder of the warrant (the "Warrant") of the Company represented
by this Warrant Agreement, which Warrant entitles the Holder to purchase, upon
the terms and conditions hereinafter set forth, shares of Common Stock, par
value $.01 per share (the "Common Stock") of the Company;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
ARTICLE I
GRANT OF WARRANT
This Warrant Agreement entitles the Holder to purchase up to six
thousand two hundred fifty (6,250) shares of Common Stock at a price per share
equal to the Exercise Price per share (as defined in Section 2.1 hereof).
ARTICLE II
EXERCISE OF WARRANT; EXERCISE PRICE
Section 2.1 EXERCISE PRICE. This Warrant Agreement shall entitle the
Holder, subject to the provisions of Article II and Article III, to purchase
from the Company the number of shares of Common Stock provided for in Article I,
at a purchase price equal to the product of (x) 1.50 multiplied by (y) the
closing trade price on the date hereof for a share of Common Stock on the Nasdaq
National Market as reported by Bloomberg (such price, which shall be listed on
Schedule I and attached hereto upon determination, is hereinafter referred to as
the
2
"Exercise Price"), which shall be payable in full in cash at the time of
exercise of this Warrant Agreement.
Section 2.2 RIGHT TO EXERCISE THE WARRANT. This Warrant Agreement may be
exercised in full only, at any time during the period from the date hereof
through the date of the fifth anniversary of the date hereof (the "Exercise
Period").
Section 2.3 PROCEDURE FOR EXERCISING THE WARRANT. The Holder may
exercise this Warrant Agreement by executing the Form of Election attached
hereto as EXHIBIT A and delivering it to the Company and tendering the requisite
aggregate Exercise Price for the number of shares of Common Stock subject to
this Warrant Agreement to the Company on any business day during normal business
hours (the date of receipt of such Form of Election and aggregate Exercise Price
by the Company is hereinafter referred to as the "Exercise Date") provided, that
in lieu of tendering the requisite aggregate Exercise Price in cash, the Holder
may elect to exercise this Warrant Agreement on a net basis whereupon (a) the
number of shares of Common Stock issued upon such exercise shall be reduced by
that number of shares which have an aggregate fair market value, based upon the
average closing price for the Company's Common Stock for the last ten trading
days prior to the Exercise Date, equal to the requisite aggregate Exercise Price
and (b) the Exercise Price shall be deemed to have been paid and satisfied by
the tender of such shares to the Company.
Section 2.4 ISSUANCE OF SHARES OF COMMON STOCK. As soon as practicable
after the Exercise Date the Company shall (provided that it has received the
Form of Election duly executed, accompanied by payment of the Exercise Price
pursuant to Section 2.1 hereof for each of the shares of Common Stock to be
purchased) promptly cause certificates for the number of shares of Common Stock
to be issued in respect of this Warrant Agreement to be delivered to or upon the
order of the Holder, registered in such name as may be designated by such
holder; provided that if the Common Stock is to be registered in the name of any
entity or person other than the Holder, the Company may require evidence of
compliance by the Holder with all applicable securities laws.
ARTICLE III
RESERVATION AND AVAILABILITY OF COMMON STOCK; ADJUSTMENTS
Section 3.1 RESERVATION OF COMMON STOCK. The Company covenants and
agrees that it will cause to be kept available out of its authorized and
unissued Common Stock, or its authorized and issued Common Stock held in its
treasury, the number of shares of Common Stock that will be sufficient to permit
the exercise in full of this Warrant Agreement.
Section 3.2 COMMON STOCK TO BE DULY AUTHORIZED AND ISSUED, FULLY PAID
AND NONASSESSABLE. The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock delivered
upon exercise of the Warrant
2
3
shall, at the time of delivery of the certificates for such shares, be duly and
validly authorized and issued and fully paid and non-assessable shares.
Section 3.3 COMMON STOCK RECORD DATE. Each person or entity in whose
name any certificate for shares of Common Stock is issued upon the exercise of
this Warrant Agreement shall for all purposes be deemed to have become the
holder of record of the shares of Common Stock represented thereby on, and such
certificate shall be dated, the date upon which the Form of Election was duly
executed and payment of the aggregate Exercise Price was made pursuant to
Section 2.1 hereof. Prior to the exercise of this Warrant Agreement, the Holder
shall not be entitled to any rights of a stockholder of the Company with respect
to the shares of Common Stock for which this Warrant Agreement shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 3.4 ADJUSTMENT FOR COMMON STOCK DIVIDENDS, SUBDIVISIONS AND
COMBINATIONS. In case the Company shall, at any time or from time to time, (i)
pay a dividend in Common Stock, or make a distribution in Common Stock, (ii)
subdivide its outstanding Common Stock into a greater number of shares, or (iii)
combine its outstanding Common Stock into a smaller number of shares (including
a recapitalization in connection with a consolidation or merger in which the
Company is the continuing corporation), then (a) the Exercise Price in effect at
the time of the record date for such dividend or of the effective date of such
subdivision or combination shall be adjusted by multiplying such Exercise Price
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately before such event and the denominator of which is the
number of shares of Common Stock outstanding immediately after such event and
(b) the number of shares of Common Stock for which this Warrant Agreement may be
exercised immediately before such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the Exercise Price immediately
before such event and the denominator of which is the Exercise Price immediately
after such event.
Section 3.5 REORGANIZATIONS. All rights to exercise this Warrant
Agreement shall terminate in the event of any Reorganization (as defined below),
liquidation or dissolution of the Company, provided that the Company shall have
given at least thirty (30) days prior written notice to the Holder that such
transaction or event was to be consummated or effected and that the failure to
exercise this Warrant Agreement prior to such transaction or event shall result
in the lapse and termination of this Warrant Agreement and any rights hereunder.
In case of any consolidation or merger of the Company with or into another
corporation (other than a merger or consolidation in which the Company is the
continuing corporation and which does not result in any reclassification of the
outstanding shares of Common Stock or the conversion of such outstanding shares
of Common Stock into shares of other stock or other securities or property), or
the sale or transfer of the property of the Company as an entirety or
substantially as an entirety (collectively such actions being hereinafter
referred to as
3
4
"Reorganizations"), there shall be deliverable upon exercise of this Warrant
Agreement (in lieu of the number of shares of Common Stock theretofore
deliverable) the number of shares of stock or other securities or property to
which a holder of the number of shares of Common Stock which would otherwise
have been deliverable upon the exercise of this Warrant Agreement would have
been entitled upon such Reorganization if this Warrant Agreement had been
exercised immediately prior to such Reorganization.
ARTICLE IV
HOLDER REPRESENTATIONS, WARRANTIES AND COVENANTS
The Holder represents and warrants to and covenants with, the Company,
as follows:
Section 4.1 INVESTMENT REPRESENTATIONS. It understands the risks of
investing in developing high technology companies such as the Company and can
afford a loss of its entire investment. It is acquiring the Warrant for
investment for its own account and not with the view to, or for resale in
connection with any distribution thereof. It understands that the Warrant and
the shares of Common Stock issuable upon exercise thereof have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or any state blue sky laws, by reason of specified exemptions from the
registration provisions of the Securities Act and such laws. It acknowledges
that the Warrant and the shares of Common Stock issuable upon exercise thereof
must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. It has been
advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act, which permits the resale of shares purchased in a private
placement subject to the satisfaction of certain conditions and that such Rule
may not be available for resale of the shares. It has had an opportunity to
discuss the Company's business, management and financial affairs with its
management and has had the opportunity to review the Company's facilities.
Section 4.2 NO CONFLICT. The Holder hereby represents and warrants that
(i) its acquisition of the Restricted Securities does not violate any law,
ordinance or regulation of any governmental entity or regulatory authority
having authority or jurisdiction over the Holder, and (ii) no order or
authorization of, consent from or filing with any court or governmental entity
or regulatory authority that has not been made or received (as applicable) is
required in connection with the Holder's acquisition of the Restricted
Securities.
Section 4.3 RESTRICTIONS ON TRANSFERABILITY. Neither the Warrant, nor
the shares of Common Stock received upon exercise thereof, shall be
transferable, except upon the conditions specified in and in accordance with the
terms of this Article IV hereof.
Section 4.4 RESTRICTIVE LEGEND. Each certificate representing shares of
the Company's Common Stock issuable upon exercise of the Warrant, or any other
securities issued in respect
4
5
of the Common Stock issued upon exercise of the Warrant, upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event, shall
be stamped or otherwise imprinted with a legend in substantially the following
form (in addition to any legend required under applicable state securities
laws):
THE SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED BY THE HOLDER NAMED
HEREON FOR ITS OWN ACCOUNT FOR INVESTMENT WITH NO INTENTION OF MAKING OR
CAUSING TO BE MADE ANY PUBLIC DISTRIBUTION OF ALL OR ANY PORTION
THEREOF; AND SUCH SECURITIES MAY NOT BE PLEDGED, SOLD OR IN ANY OTHER
WAY TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS IN EFFECT AT
THAT TIME, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
Section 4.5 RESTRICTIONS ON, AND NOTICE OF, PROPOSED TRANSFERS. The
Holder agrees that prior to any proposed transfer of this Warrant or any of the
shares of Common Stock issuable upon exercise of this Warrant (collectively, the
"Restricted Securities"), the Holder shall give written notice to the Company of
its intention to effect such transfer. Each such notice shall describe the
manner and circumstances of the proposed transfer in sufficient detail, and
shall be accompanied by either (a) a written opinion of legal counsel who shall
be reasonably satisfactory to the Company, addressed to the Company and
reasonably satisfactory in form and substance to the Company's counsel, to the
effect that the proposed transfer of the Restricted Securities may be effected
without registration under the Securities Act or under any applicable state or
other securities laws (which opinion with respect to state or other securities
laws shall in any event be delivered if the "no-action" letter is delivered
pursuant to Section 4.4(b)) or (b) a "no-action" letter from the staff of the
Securities and Exchange Commission to the effect that the distribution of such
securities without registration will not result in a recommendation by the staff
of the Securities and Exchange Commission that action be taken with respect
thereto, whereupon the Holder shall be entitled to transfer such Restricted
Securities in accordance with the terms of the notice delivered to the Company.
Each certificate evidencing the Restricted Securities transferred as provided
above shall bear the appropriate restrictive legend set forth in Section 4.3
above, except that such certificate shall not bear such restrictive legend if
the opinion of counsel or "no-action" letter referred to above is to the further
effect that such legend is not required in order to comply with any provisions
of the Securities Act.
5
6
ARTICLE V
MISCELLANEOUS
Section 5.1 NOTICES. Notices or demands relating to this Warrant
Agreement shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed as follows, or telexed, telecopied, or delivered by
nationally-recognized overnight or other courier:
If to the Holder: Reedland Capital Partners
21 Tamal Vista Blvd., Suite 201
Corte Madera, CA 94925
Attention: Mr. Thomas Griesel
Fax: (415) 927-2178
If to the Company: Alpha-Beta Technology, Inc.
One Innovation Drive
Three Biotech Park
Worcester, MA 01605
Attention: Chief Financial Officer
Fax: (508) 799-7968
copy to: John J. Egan III, Esq.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Fax: (617) 523-1231
Section 5.2 SUCCESSORS. All the covenants and provisions of this Warrant
Agreement by or for the benefit of the Company or the Holder shall bind and
inure to the benefit of their respective successors and assigns hereunder;
provided that this Warrant Agreement may be assigned by the Holder only with the
prior written consent of the Company, and without such consent any attempted
transfer shall be null and void.
Section 5.3 MASSACHUSETTS CONTRACT. THIS AGREEMENT AND THE WARRANT, AND
ALL QUESTIONS RELATING TO THE INTERPRETATION, CONSTRUCTION AND ENFORCEABILITY OF
THIS AGREEMENT AND THE WARRANT, SHALL BE GOVERNED IN ALL RESPECTS BY THE
SUBSTANTIVE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
6
7
Section 5.4 AMENDMENTS AND WAIVERS. Except as otherwise provided herein,
the provisions of this Agreement may not be amended, modified or supplemented,
other than by a written instrument executed by the Company and the Holder.
Section 5.5 SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
Holder shall be enforceable to the fullest extent permitted by law.
[Remainder of Page Intentionally Left Blank]
7
8
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed and delivered, all as of the date and year first
above written.
ALPHA-BETA TECHNOLOGY, INC.
By: /s/ Joseph M. Grimm
------------------------------
Name: Joseph M. Grimm
Title: Chief Financial Officer
REEDLAND CAPITAL PARTNERS
By: /s/ Tom Griesel
------------------------------
Name: Tom Griesel
Title: Managing Director
8
9
SCHEDULE I
Closing trade price on October 21, 1998: $1.09375 per share
10
EXHIBIT A
FORM OF ELECTION TO PURCHASE
(To be executed if the Holder desires to
exercise the Warrant Agreement)
To ALPHA-BETA TECHNOLOGY, INC.:
The undersigned hereby irrevocably elects to exercise the Warrant
represented by the Warrant Agreement to purchase _______ shares of Common Stock
issuable upon the exercise of such Warrant and requests that certificates for
such shares be issued in the name of:
_______________________________________________________________________
(Please print name and address)
_______________________________________________________________________
Please insert social security or other identifying number _________________
Dated: ______________, 19__.
By: ___________________________
Name:
Title: