EXHIBIT 10.3
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO
IS EFFECTIVE UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES
LAWS, OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933
ACT.
IN ADDITION, A COMMON STOCK PURCHASE AGREEMENT DATED AS OF JANUARY
11th, 2008 (THE "PURCHASE AGREEMENT"), A COPY OF WHICH MAY BE OBTAINED
FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN
ADDITIONAL AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THIS
WARRANT.
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MB SOFTWARE CORPORATION
COMMON STOCK PURCHASE WARRANT "A"
Number of Shares: 500,000 Holder: T Squared Investments LLC
Original Issue Date: January 11th, 2008 Managing Member Attn:
Thomas M. Sauve
Expiration Date: January 11th, 2013 1325 Sixth Avenue, Floor 28
New York NY 10024
Exercise Price per Share: $1.00 tel (212) 763-8616
MB Software Corporation, a company organized and existing under the laws of the
State of Texas (the "Company"), hereby certifies that, for value received, T
Squared Investments LLC, or its registered assigns (the "Warrant Holder"), is
entitled, subject to the terms set forth below, to purchase from the Company up
to Five Hundred Thousand (500,000) shares (as adjusted from time to time as
provided in Section 8, the "Warrant Shares") of common stock, $.001 par value
(the "Common Stock"), of the Company at a price of One Dollar ($1.00) per
Warrant Share (as adjusted from time to time as provided in Section 8, the
"Exercise Price"), at any time and from time to time from and after the date
thereof and through and including 5:00 p.m. New York City time on January 1 1
th, 2013 (or eighteen months of effectiveness of a Registration Statement
MB Software Corporation Warrant / T Squared Investments LLC
subsequent to the issuance hereof (such eighteen months to be extended by one
month for each month or portion of a month during which a Registration
Statement's effectiveness has lapsed or been suspended), whichever is longer)
(the "Expiration Date"), and subject to the following terms and conditions:
1. Registration of Warrant. The Company shall register this Warrant upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Warrant Holder hereof from time to time.
The Company may deem and treat the registered Warrant Holder of this Warrant as
the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Warrant Holder, and for all other purposes, and the Company
shall not be affected by notice to the contrary.
2. Investment Representation. The Warrant Holder by accepting this Warrant
represents that the Warrant Holder is acquiring this Warrant for its own account
or the account of an affiliate for investment purposes and not with the view to
any offering or distribution and that the Warrant Holder will not sell or
otherwise dispose of this Warrant or the underlying Warrant Shares in violation
of applicable securities laws. The Warrant Holder acknowledges that the
certificates representing any Warrant Shares will bear a legend indicating that
they have not been registered under the United States Securities Act of 1933, as
amended (the "1933 Act") and may not be sold by the Warrant Holder except
pursuant to an effective registration statement or pursuant to an exemption from
registration requirements of the 1933 Act and in accordance with federal and
state securities laws. If this Warrant was acquired by the Warrant Holder
pursuant to the exemption from the registration requirements of the 1933 Act
afforded by Regulation S thereunder, the Warrant Holder acknowledges and
covenants that this Warrant may not be exercised by or on behalf of a Person
during the one year distribution compliance period (as defined in Regulation S)
following the date hereof. "Person" means an individual, partnership, firm,
limited liability company, trust, joint venture, association, corporation, or
any other legal entity.
3. Validity of Warrant and Issue of Shares. The Company represents and
warrants that this Warrant has been duly authorized and validly issued and
warrants and agrees that all of Common Stock that may be issued upon the
exercise of the rights represented by this Wan-ant will, when issued upon such
exercise, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof. The
Company further warrants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of Common Stock to
provide for the exercise of the rights represented by this Warrant.
4. Registration of Transfers and Exchange of Warrants.
a. Subject to compliance with the legend set forth on the face of
this Warrant, the Company shall register the transfer of any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant with the Form of
Assignment attached hereto duly completed and signed, to the Company at the
office specified in or pursuant
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to Section 13. Upon any such registration or transfer, a new warrant to purchase
Common Stock, in substantially the form of this Warrant (any such new warrant, a
"New Warrant"), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued to the transferring
Warrant Holder. The acceptance of the New Warrant by the transferee thereof
shall be deemed the acceptance of such transferee of all of the rights and
obligations of a Warrant Holder of a Warrant.
b. This Warrant is exchangeable, upon the surrender hereof by the
Warrant Holder to the office of the Company specified in or pursuant to Section
13 for one or more New Warrants, evidencing in the aggregate the right to
purchase the number of Warrant Shares which may then be purchased hereunder. Any
such New Warrant will be dated the date of such exchange.
5. Exercise of Warrants.
a. Upon surrender of this Warrant with the Form of Election to
Purchase attached hereto duly completed and signed to the Company, at its
address set forth in Section 13, and upon payment and delivery of the Exercise
Price per Warrant Share multiplied by the number of Warrant Shares that the
Warrant Holder intends to purchase hereunder, in lawful money of the United
States of America, in cash or by certified or official bank check or checks, to
the Company, all as specified by the Warrant Holder in the Form of Election to
Purchase, the Company shall promptly (but in no event later than 7 business days
after the Date of Exercise (as defined herein)) issue or cause to be issued and
cause to be delivered to or upon the written order of the Warrant Holder and in
such name or names as the Warrant Holder may designate (subject to the
restrictions on transfer described in the legend set forth on the face of this
Warrant), a certificate for the Warrant Shares issuable upon such exercise, with
such restrictive legend as required by the 1933 Act. Any person so designated by
the Warrant Holder to receive Warrant Shares shall be deemed to have become
holder of record of such Warrant Shares as of the Date of Exercise of this
Warrant.
b. A "Date of Exercise" means the date on which the Company shall
have received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the Warrant Holder to be
purchased.
c. This Warrant shall be exercisable at any time and from time to
time for such number of Warrant Shares as is indicated in the attached Form of
Election To Purchase. If less than all of the Warrant Shares which may be
purchased under this Warrant are exercised at any time, the Company shall issue
or cause to be issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares for which no exercise has been
evidenced by this Warrant.
d. (i) Notwithstanding anything contained herein to the contrary
but subject to Section 6, the holder of this Warrant may, at its election
exercised in its sole
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discretion, exercise this Warrant in whole or in part and, in lieu of making
the cash payment otherwise contemplated to be made to the Company upon such
exercise in payment of the Aggregate Exercise Price, elect instead to receive
upon such exercise the "Net Number" of shares of Common Stock determined
according to the following formula (a "Cashless Exercise"):
Net Number = (A x (B - C))/B
(ii) For purposes of the foregoing formula:
A= the total number shares with respect to which this
Warrant is then being exercised.
B= the last reported sale price (as reported by Bloomberg)
of the Common Stock on the trading day immediately preceding
the date of the Exercise Notice.
C= the Warrant Exercise Price then in effect at the time of
such exercise.
e. The holder of this Warrant agrees not to elect a Cashless
Exercise for a period of six (6) months. The holder of this Warrant also agrees
not to elect a Cashless Exercise so long as there is an effective registration
statement for the Warrant Shares.
6. Maximum Exercise. The Warrant Holder shall not be entitled to exercise
this Warrant on a Date of Exercise in connection with that number of shares of
Common Stock which would be in excess of the sum of (i) the number of shares of
Common Stock beneficially owned by the Warrant Holder and its affiliates on an
exercise date, and (ii) the number of shares of Common Stock issuable upon the
exercise of this Warrant with respect to which the determination of this
limitation is being made on an exercise date, which would result in beneficial
ownership by the Warrant Holder and its affiliates of more than 4.9% of the
outstanding shares of Common Stock on such date. This Section 6 may be waived or
amended only with the consent of the Holder and the consent of holders of a
majority of the shares of outstanding Common Stock of the Company who are not
Affiliates. For the purposes of the immediately preceding sentence, the term
"Affiliate" shall mean any person: (a) that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the Company; or (b) who beneficially owns (i) the Company's Common
Stock Purchase Warrant "B" dated January 11th, 2008, or (ii) this Warrant. For
the purposes of the immediately preceding sentence, beneficial ownership shall
be determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulation 13d-3 thereunder.
7. Adjustment of Exercise Price and Number of Shares. The character of the
shares of stock or other securities at the time issuable upon exercise of this
Warrant and the Exercise Price therefore, are subject to adjustment upon the
occurrence of the following events, and all such adjustments shall be
cumulative:
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a. Adjustment for Stock Splits, Stock Dividends,
Recapitalizations, Etc. The Exercise Price of this Warrant and the number of
shares of Common Stock or other securities at the time issuable upon exercise of
this Warrant shall be appropriately adjusted to reflect any stock dividend,
stock split, combination of shares, reclassification, recapitalization or other
similar event affecting the number of outstanding shares of stock or securities.
b. Adjustment for Reorganization, Consolidation, Merger, Etc. In
case of any consolidation or merger of the Company with or into any other
corporation, entity or person, or any other corporate reorganization, in which
the Company shall not be the continuing or surviving entity of such
consolidation, merger or reorganization (any such transaction being hereinafter
referred to as a "Reorganization"), then, in each case, the holder of this
Warrant, on exercise hereof at any time after the consummation or effective date
of such Reorganization (the "Effective Date"), shall receive, in lieu of the
shares of stock or other securities at any time issuable upon the exercise of
the Warrant issuable on such exercise prior to the Effective Date, the stock and
other securities and property (including cash) to which such holder would have
been entitled upon the Effective Date if such holder had exercised this Warrant
immediately prior thereto (all subject to further adjustment as provided in this
Warrant).
c. Certificate as to Adjustments. In case of any adjustment or
readjustment in the price or kind of securities issuable on the exercise of this
Warrant, the Company will promptly give written notice thereof to the holder of
this Warrant in the form of a certificate, certified and confirmed by the Board
of Directors of the Company, setting forth such adjustment or readjustment and
showing in reasonable detail the facts upon which such adjustment or
readjustment is based.
d.
i. The Company fails to meet certain earnings per share
projections. In the event the Company earns between $0.093 and $0.046 per share
(where such earnings in this paragraph shall always be defined as earnings on a
pre taxed fully diluted basis (including dilution from any options, warrants and
convertible securities) as reported for the first six months ended June 30th,
2008 from continuing operations before any non-cash items the then current
warrant exercise price shall be reduced proportionately by 0% if the earnings
are $0.093 per share and by 50% if the earnings are $0.046 per share. For
example, if the Company earns $0.074 per share, or 20% below $0.093 per share,
then the current warrant exercise price shall be reduced by 20%. Such reduction
shall automatically be in effect at the time the June 30th, 2008 financial
results are reported or at any other time that the Investor and the Company have
a written and executed agreement stating otherwise, and shall be made from the
starting exercise price of the warrants being the exercise price of the warrants
at that time, and shall be cumulative upon any other changes to the exercise
price of the warrant that may already have been made.
ii. The Company fails to meet certain earnings per share
projections. In the event the Company earns between $0.204 and $0.102 per share
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(where such earnings in this paragraph shall always be defined as earnings on a
pre taxed fully diluted basis (including dilution from any options, warrants and
convertible securities) as reported for the fiscal year ended December 31st,
2008 from continuing operations before any non-cash items the then current
warrant exercise price shall be reduced proportionately by 0% if the earnings
are $0.204 per share and by 50% if the earnings are $0.102 per share. For
example, if the Company earns $0.163 per share, or 20% below $0.204 per share,
then the then current warrant exercise price shall be reduced by 20%. Such
reduction shall automatically be in effect at the time the December 31st, 2008
financial results are reported or at any other time that the Investor and the
Company have a written and executed agreement stating otherwise, and shall be
made from the starting exercise price of the warrants being the exercise price
of the warrants at that time, and shall be cumulative upon any other changes to
the exercise price of the warrant that may already have been made.
iii. Notwithstanding the foregoing, no adjustment shall be
made to the Conversion Price if the price (as quoted on the OTCBB or national
exchange on which the Common Stock trades, has not, during the three month
periods prior to the measurement date referenced in 7.d.i. or 7.d.ii., been
below $3.00 for any twenty (20) consecutive day period.
e. The Company sells, grants or issues any shares, options,
warrants, or any instrument convertible into shares or equity in any form below
the exercise price per share of the warrant. In the event the Company sells,
grants or issues any shares, options, warrants, or any instrument convertible
into shares or equity in any form below the current exercise price per share of
the warrant, then the current exercise price per share for the warrant shall be
reduced to such lower price per share. Such reduction shall be made at the time
such transaction is executed.
8. Fractional Shares. The Company shall not be required to issue or cause
to be issued fractional Warrant Shares on the exercise of this Warrant. The
number of full Warrant Shares that shall be issuable upon the exercise of this
Warrant shall be computed on the basis of the aggregate number of Warrants
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 9, be issuable
on the exercise of this Warrant, the Company shall, at its option, (i) pay an
amount in cash equal to the Exercise Price multiplied by such fraction or (ii)
round the number of Warrant Shares issuable, up to the next whole number.
9. Sale or Merger of the Company. Upon a Change in Control, the restriction
contained in Section 7 shall immediately be released and the Warrant Holder will
have the right to exercise this Warrant concurrently with such Change in Control
event or the Investor will be paid the difference between the Sale or Merger
price and the exercise price of the Warrant at the closing of the Sale or
Merger. For purposes of this Warrant, the term "Change in Control" shall mean a
consolidation or merger of the Company with or into another company or entity in
which the Company is not the surviving entity or the sale of all or
substantially all of the assets of the Company to
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another company or entity not controlled by the then existing stockholders of
the Company in a transaction or series of transactions.
10. Notice of Intent to Sell or Merge the Company. The Company will give
Warrant Holder fifteen (15) days notice before the event of a sale of all or
substantially all of the assets of the Company or the merger or consolidation of
the Company in a transaction in which the Company is not the surviving entity.
11. Call by the Company. This Warrant contains a callable feature requiring
the automatic exercise at any time prior to the Expiration Date if the volume
weighted average public market price of the Company's common stock is equal to
or in excess of the callable price of $3.00 per share for a period of twenty
(20) consecutive days and if there is an effective registration in place for the
shares underlying the Warrant. Upon occurrence of the Automatic Exercise, the
Company shall provide the Holder with notice of such Automatic Conversion
("Automatic Exercise Notice"). Upon receipt of the Automatic Exercise Notice,
the Holder must exercise, in whole or in part, this Warrant within ten (10)
days. In the event that this Warrant is exercised, the Holder must deliver to
the Company at its office pursuant to Section 13, on or before 5:00 p.m.,
Eastern Time, on the required date, (i) Form of Election to Purchase properly
executed and completed by Holder or an authorized officer thereof, (ii) a check
payable to the order of the Company, in an amount equal to the product of the
Exercise Price multiplied by the number of Warrant Shares specified in the
Exercise Notice, and (iii) this Warrant. In no event may the Company require the
Investor to exercise any such warrant that would force the Investor to violate
the 4.9% provision in the Stock Purchase Agreement or this Warrant Agreement.
12. Issuance of Substitute Warrant. In the event of a merger,
consolidation, recapitalization or reorganization of the Company or a
reclassification of Company shares of stock, which results in an adjustment to
the number of shares subject to this Warrant and/or the Exercise Price
hereunder, the Company agrees to issue to the Warrant Holder a substitute
Warrant reflecting the adjusted number of shares and/or Exercise Price upon the
surrender of this Warrant to the Company.
13. Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given (i) on the date they are
delivered if delivered in person; (ii) on the date initially received if
delivered by facsimile transmission followed by registered or certified mail
confirmation; (iii) on the date delivered by an overnight courier service; or
(iv) on the third business day after it is mailed by registered or certified
mail, return receipt requested with postage and other fees prepaid as follows:
If to the Company:
------------------
MB Software Corporation 777 Main Street,
Suite 3100 Fort Worth, Texas 76102
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If to the Warrant Holder:
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T Squared Investments LLC C/O T Squared
Capital LLC Attn: Thomas M. Sauve Managing
Member
302 West 79th Street, Suite 6D New York, NY
10024
14. Miscellaneous.
a. This Warrant shall be binding on and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. This
Warrant may be amended only by a writing signed by the Company and the Warrant
Holder.
b. Nothing in this Warrant shall be construed to give to any
person or corporation other than the Company and the Warrant Holder any legal or
equitable right, remedy or cause of action under this Warrant; this Warrant
shall be for the sole and exclusive benefit of the Company and the Warrant
Holder.
c. This Warrant shall be governed by, construed and enforced in
accordance with the internal laws of the State of New York without regard to the
principles of conflicts of law thereof.
d. The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
e. In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceablilty of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonably substitute therefore, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
f. The Warrant Holder shall not, by virtue hereof, be entitled to
any voting or other rights of a shareholder of the Company, either at law or
equity, and the rights of the Warrant Holder are limited to those expressed in
this Warrant.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by the authorized officer as of the date first above stated.
MB Software Corporation, a Texas corporation
By:
Name: Scott A. Haire
Title: Chief Executive Officer
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FORM OF ELECTION TO PURCHASE
(To be executed by the Warrant Holder to exercise the right to purchase shares
of Common Stock under the foregoing Warrant)
To: MB Software Corporation:
In accordance with the Warrant enclosed with this Form of Election to Purchase,
the undersigned hereby irrevocably elects to
purchase______________________shares of Common Stock ("Common Stock"), $.001 par
value, of MB Software Corporation, and encloses the warrant and $1.00 for each
Warrant Share being purchased or an aggregate of $_________________ in cash or
certified or official bank check or checks, which sum represents the aggregate
Exercise Price (as defined in the Warrant) together with any applicable taxes
payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of:
__________________________________________
__________________________________________
__________________________________________
(Please print name and address)
__________________________________________
(Please insert Social Security or Tax Identification Number)
If the number of shares of Common Stock issuable upon this exercise shall not be
all of the shares of Common Stock which the undersigned is entitled to purchase
in accordance with the enclosed Warrant, the undersigned requests that a New
Warrant (as defined in the Warrant) evidencing the right to purchase the shares
of Common Stock not issuable pursuant to the exercise evidenced hereby be issued
in the name of and delivered to:
__________________________________________
__________________________________________
__________________________________________
(Please print name and address)
Dated: ________________ Name of Warrant Holder: T Squared Investments LLC
Print:____________________________________________
By:_______________________________________________
Name: Thomas M. Sauve
Title: Managing Member
Signature must conform in all respects to name of
Warrant Holder as specified on the face of the Warrant
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