EXHIBIT C
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS, AND THIS WARRANT CANNOT BE
EXERCISED, SOLD OR TRANSFERRED, AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT CANNOT BE SOLD OR TRANSFERRED, UNLESS AND UNTIL THEY
ARE SO REGISTERED OR UNLESS AN EXEMPTION IS THEN AVAILABLE.
Warrant to Subscribe
for 1,000,000 Shares
DA CONSULTING GROUP, INC.
Warrant
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To Subscribe for and Purchase
Common Stock of
DA CONSULTING GROUP, INC.
THIS CERTIFIES that, for value received PURSE HOLDING LIMITED, a
British Virgin Islands limited company, or its registered assigns ("Holder"), is
entitled to subscribe for and purchase from DA CONSULTING GROUP, INC., a Texas
corporation ("Company"), at an exercise price per share of $3.00 (the "Exercise
Price"), 1,000,000 fully paid and nonassessable shares (the "Warrant Shares"),
of Company's common stock, par value $.01 per share (the "Common Stock"). This
Warrant may be exercised, in whole or in part, by Holder for a period commencing
on January 2, 2002 and ending on the 3rd anniversary of the Closing Date (as
such term is defined in the Securities Purchase Agreement, dated August 2, 2000,
by and between the Company and the Investor (the "Purchase Agreement")).
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to them in the Purchase Agreement.
This Warrant is subject to the following provisions, terms and
conditions:
1. Exercise; Payment. The rights represented by this Warrant may
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be exercised by Holder, in whole or in part, at any time after January 2, 2002
by the surrender of this Warrant at the principal office of Company properly
endorsed and accompanied by payment to Company of the Exercise Price for that
number of shares of Common Stock sought to be purchased (the "Exercised
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Shares"), in the manner provided below. Company agrees that (a) shares
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purchased upon exercise of this Warrant shall be and are deemed to be issued to
Holder as the record owner of such shares as of the close of business on the
date on which this Warrant shall have been surrendered and payment made for such
shares as provided herein, and (b) certificates for the shares of stock so
purchased shall be delivered to Holder as promptly as reasonably practicable
following any exercise of this Warrant, and unless this Warrant shall have been
exercised in full, or shall have expired, a new Warrant representing the number
of shares with respect to which this Warrant shall not yet have been exercised,
shall also be delivered to Holder.
Holder may pay the Exercise Price for any Exercised Shares by
delivering cash, check, money order or wire transfer of funds to the Company in
the amount of the Exercise Price of the Exercised Shares.
2. Covenants as to Common Stock.
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(a) Company covenants and agrees that all shares which may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance and payment therefor in accordance with Section 1 above, be validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issue thereof; and without limiting the generality of the
foregoing, Company covenants and agrees that it will from time to time take all
such action as may be required to assure that the par value per share of the
Common Stock is at all times equal to or less than the then effective Exercise
Price per share of Common Stock issuable pursuant to this Warrant. Company
further covenants and agrees that when the rights represented by this Warrant
may be exercised, Company will at all times thereafter have authorized, and
reserved for the purpose of issue or transfer upon exercise of the subscription
rights evidenced by this Warrant, a sufficient number of shares of its Common
Stock to provide for the exercise of the rights represented by this Warrant.
(b) The Company shall undertake all the requirements set
forth in Article VI of the Securities Purchase Agreement relating to
registration of the Warrant Shares.
(c) The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issuance or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the Holder in order
to protect the exercise privilege of the Holder against dilution or other
impairment, consistent with the tenor and purpose of this Warrant.
(d) This Warrant will be binding upon any entity succeeding
to the Company by merger, consolidation or acquisition of all or substantially
all of the Company's assets.
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3. Taxes. Company shall pay any and all taxes which may be
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payable with respect to the issuance and delivery of the Warrant Shares;
provided, however, that the Company shall not be required to pay any taxes that
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may be payable in respect of any transfer involved in the issue or delivery of
Common Stock or other securities or property in a name other than that of the
Holders to be converted and the Holder shall pay such amount, if any, to cover
any applicable transfer or similar tax.
4. Adjustments for Splits, etc.
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(a) In the event at any time or from time to time, all
holders of Common Stock (or any other shares of stock or other securities at
that time receivable upon exercise of this Warrant) shall have received, other
or additional or less stock or other securities whether through a dividend in
stock or any class of stock of Company or any other corporation, or through
stock split, spinoff, split-off, reclassification, combination of shares or
otherwise (a "Distribution"), then, and in each such case, Holder upon the
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exercise of this Warrant and payment of the Exercise Price provided above, shall
be entitled to receive, in lieu of the shares called for under this Warrant, the
shares or other securities or property to which Holder would have been entitled
in the Distribution if Holder had exercised this Warrant immediately prior
thereto. In case of the partial exercise of this Warrant under such
circumstances, the number of shares of stock or other securities which would
have been receivable upon the full exercise of this Warrant, and the Exercise
Price payable therefor computed as provided above, shall be proportionately
reduced.
(b) In case of any reorganization of Company, or any other
corporation the stock or securities of which are at the time deliverable on the
exercise of this Warrant, or in case Company or such other corporation shall (x)
be acquired through the consolidation or merger with or into another
corporation, whether or not Company or such other corporation survives such
merger, or (y) convey all or substantially all of its assets to another
corporation, or liquidate, Holder, upon the exercise hereof and upon the payment
of the Exercise Price provided above, shall be entitled to receive, in lieu of
the shares called for under this Warrant, the stock or other securities or
property to which Holder would have been entitled upon the consummation of such
reorganization, consolidation, merger, conveyance or liquidation if Holder had
purchased the shares called for hereby immediately prior thereto; and in such
case, the provisions of this Warrant shall be applicable to the shares of stock
or other securities or property thereafter deliverable upon the exercise of this
Warrant. In the case of the partial exercise of this Warrant under such
circumstances, the number of shares of stock or other securities or property
which would have been receivable upon the full exercise of this Warrant, and the
Exercise Price payable therefor, shall be proportionately reduced.
5. Adjustment for Dilutive Issuances. The Exercise Price and the
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number of shares of Common Stock issuable upon exercise of this Warrant shall be
adjusted from time to time as follows:
(a) Adjustment of Exercise Price and Number of Shares upon
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Issuance of Common Stock. If and whenever on or after the date of issuance of
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this Warrant, the Company issues or sells, or is deemed to have issued or sold,
any shares of Common Stock (other than shares of Common Stock issuable by the
Company (whether now or in the future) in connection with an approved stock plan
and other than Common Stock or securities exercisable for shares of Common Stock
issued to the Holder pursuant to the Purchase Agreement) for a consideration per
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share less than a price equal to the Exercise Price, then immediately after such
issuance or sale the Exercise Price shall be reduced to an amount determined by
dividing (1) the sum of (I) the product of the Exercise Price and the number of
shares of Common Stock actually outstanding (determined on a Fully Diluted
Basis, as defined below) immediately prior to such issuance or sale, and (II)
the consideration, if any, received by the Company upon such issuance or sale,
by (2) the number of shares of Common Stock outstanding (determined on a Fully
Diluted Basis) immediately after such issuance or sale. Upon each such
adjustment of the Exercise Price hereunder, the number of shares of Common Stock
acquirable upon exercise of this Warrant shall be adjusted to the number of
shares determined by multiplying the Exercise Price by the number of shares of
Common Stock acquirable upon exercise of this Warrant and dividing the product
thereof by the Exercise Price resulting from such adjustment. For purposes
hereof, "Fully Diluted Basis" shall mean that number of shares of Common Stock
outstanding assuming the conversion, exercise or exchange of all securities
convertible into or exchangeable for Common Stock (hereinafter "convertible
securities") regardless of whether any such securities are actually exercisable
or convertible at such time, but excluding any shares of Common Stock owned or
held by or for the account of the Company or issuable upon exercise of this
Warrant or any other warrant issued to the Holder pursuant to the Purchase
Agreement.
(b) Calculation of Consideration Received. In case any
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security is issued in connection with the issuance or sale of other convertible
securities of the Company, together comprising one integrated transaction in
which no specific consideration is allocated to such convertible securities by
the parties thereto, the convertible securities will be deemed to have been
issued for a consideration of $0.01. If any Common Stock or other convertible
securities are issued or sold or deemed to have been issued or sold for cash,
the consideration received therefor will be deemed to be the net amount received
by the Company therefor. If any Common Stock or other convertible securities are
issued or sold for a consideration other than cash, the amount of such
consideration received by the Company will be the fair value of such
consideration, except where such consideration consists of securities, in which
case the amount of consideration received by the Company will be the Market
Price (as defined below) of such securities for the twenty (20) consecutive
trading days immediately preceding the date of receipt. If any Common Stock or
other convertible securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving
entity, the amount of consideration therefor will be deemed to be the fair value
of such portion of the net assets and business of the non-surviving entity as is
attributable to such Common Stock or other convertible securities, as the case
may be. The fair value of any consideration other than cash or securities will
be determined jointly by the Company and the Holder. If such parties are unable
to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the "Valuation Event"), the fair value of such
consideration will be determined within five (5) Business Days after the tenth
(10th) day following the Valuation Event by an independent, reputable appraiser
jointly selected by the Company and the Holder. The determination of such
appraiser shall be final and binding upon all parties and the fees and expenses
of such appraiser shall be borne jointly by the Company and the Holder. As used
in this paragraph "Market Price" means, for any security as of any date, the
last closing bid price for such security on The Nasdaq National Market (the
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"Nasdaq") as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the
Nasdaq is not the principal trading market for such security, the last closing
bid price of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if
the foregoing do not apply, the last closing bid price of such security in the
over the counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no closing bid price is reported for such security
by Bloomberg, the last closing trade price for such security as reported by
Bloomberg, or, if no last closing trade price is reported for such security by
Bloomberg, the average of the bid prices of any market makers for such security
as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the
Closing Bid Price cannot be calculated for such security on such date on any of
the foregoing bases, the Market Price of such security on such date shall be the
fair market value as mutually determined by the Company and the Holder. All
such determinations to be appropriately adjusted for any stock dividend, stock
split or other similar transaction during such period
(c) Treasury Shares. The number of shares of Common Stock
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outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any shares so owned or held
will be considered an issuance or sale of Common Stock.
(d) Record Date. If the Company takes a record of the holders
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of Common Stock for the purpose of entitling them (1) to receive a dividend or
other distribution payable in Common Stock or in other convertible securities or
(2) to subscribe for or purchase Common Stock or other convertible securities,
then such record date will be deemed to be the date of the issuance or sale of
the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
(e) Certain Events. If any event occurs of the type
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contemplated by the provisions of this Section 4 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Exercise Price and the number of shares of Common Stock obtainable upon exercise
of this Warrant so as to protect the rights of the Holder; provided that no such
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adjustment will increase the Exercise Price or decrease the number of shares of
Common Stock obtainable as otherwise determined pursuant to this Section 4.
6. No Rights as Shareholder. Until the valid exercise of this
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Warrant, the holder hereof shall not be entitled to any voting right or other
rights as a shareholder of Company with respect to this Warrant.
7. Transfer of Warrants. Subject to Section 8 hereof, this
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Warrant and all rights hereunder are transferable, in whole or in part, without
charge to the Holder, at the office or agency of Company referred to in Section
1 by the Holder in person or by duly authorized attorney, upon surrender of this
Warrant properly endorsed. Each taker and holder of this Warrant, by taking or
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holding the same, consents and agrees that this Warrant, when endorsed in blank,
shall be deemed negotiable, and that the holder hereof, when this Warrant shall
have been so endorsed, may be treated by Company and all other persons dealing
with this Warrant as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented by this Warrant, or to the transfer
hereof on the books of Company, any notice to the contrary notwithstanding; but
until such transfer on such books, Company may treat the registered holder
hereof as the owner for all purposes. The Company is obligated to register the
shares of Common Stock for resale under the Securities Act of 1933, as amended,
(the "Securities Act") pursuant to the Securities Purchase Agreement and the
Holder (and certain assignees thereof) is entitled to the registration rights in
respect of the shares of Common Stock as set forth in the Securities Purchase
Agreement.
8. Fractional Interests. Company shall not be required to issue
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fractional shares of Common Stock upon the exercise of this Warrant. If any
fraction of a share of Common Stock would, except for the provisions of this
Section 7, be issuable upon the exercise of this Warrant (or specified portion
thereof), Company shall pay an amount in cash equal to the Fair Market Value (as
defined below) of such fraction of a Common Share on the business day prior to
the date of such exercise. As used in this Agreement, the "Fair Market Value"
of the Common Stock shall be the closing price of the Common Stock on the date
of determination on the principal stock market or quotation system on which the
Common Stock is then traded; provided, however, if the Common Stock is not, as
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of the date of determination of the Fair Market Value, traded on a recognized
public trading market or quoted on a recognized quotation system, then the Fair
Market Value shall be determined by the Board of Directors of the Company in
good faith on the basis of such valuation as it considers appropriate.
9. Compliance With Securities Laws. By acquiring this Warrant
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from Company on the date hereof, the Holder hereby represents and warrants as
follows:
(a) The Holder is acquiring this Warrant for its own account
and not with a present view toward the public sale or distribution thereof,
except pursuant to sales registered or exempted from registration under the
Securities Act; provided, however, that by making the representation herein, the
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Holder does not agree to hold the Warrant or Warrant Shares for any minimum or
other specific term and reserves the right to dispose of the Warrant and the
Exercised Shares at any time in accordance with or pursuant to a registration
statement or an exemption under the Securities Act.
(b) The Holder is an "accredited investor" as defined in Rule
501(a) of Regulation D.
(c) The Holder understands that the Warrant and the Warrant
Shares are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Holder's compliance with, the representations, warranties, agreements,
acknowledgements and understandings of the Holder set forth herein in order to
determine the availability of such exemptions and the eligibility of the Holder
to acquire the Warrant and the Warrant Shares.
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(d) The Holder and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company, and materials relating to the offer and sale of the Warrant and the
Warrant Shares, that have been requested by the Holder or its advisors, if any.
The Holder and its advisors, if any, have been afforded the opportunity to ask
questions of the Company. Neither such inquiries nor any other due diligence
investigation conducted by the Holder or any of its advisors or representatives
modifies, amends or affects the Holder's right to rely on the Company's
representations and warranties set forth in the Securities Purchase Agreement.
The Holder acknowledges and understands that its investment in the Warrant and
the Warrant Shares involves a significant degree of risk. The Holder
acknowledges that, except as set forth herein, it has not relied on any
materials other than the SEC documents in purchasing the Warrant and the Warrant
Shares.
(e) The Holder understands that no United States federal or
state agency or any other government or governmental agency has passed upon or
made any recommendation or endorsement of the Warrant or the Warrant Shares or
an investment therein.
(f) The Holder understands that:
(1) except as provided in Article VI of the Purchase
Agreement, the Warrant and the Warrant Shares have not been and are not required
to be registered under the Securities Act or any applicable state securities
laws and, consequently, the Holder may have to bear the risk of owning the
Securities for an indefinite period to time because the Warrant and the Warrant
Shares may not be transferred unless (i) the resale of the Warrant or the
Warrant Shares is registered pursuant to an effective registration statement
under the Securities Act; (ii) the Holder has delivered to the Company an
opinion of counsel (in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that the Warrant or the
Warrant Shares to be sold or transferred may be sold or transferred pursuant to
an exemption from such registration; (iii) the Warrant or the Warrant Shares are
sold or transferred pursuant to Rule 144; or (iv) the Warrant or the Warrant
Shares are sold or transferred to an affiliate (as defined in Rule 144) of the
Holder pursuant to an exemption from registration under the Securities Act;
(2) any sale of the Warrant or the Warrant Shares made
in reliance on Rule 144 may be made only in accordance with the terms of Rule
144 and, if Rule 144 is not applicable, any resale of the Warrant or the Warrant
Shares under circumstances in which the seller (or the person through whom the
sale is made) may be deemed to be an underwriter (as that term is defined in the
Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the SEC thereunder; and
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(3) except as set forth in Article VI of the Purchase
Agreement, neither the Company nor any other person is under any obligation to
register the Warrant or the Warrant Shares under the Securities Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder.
(g) The Holder understands that until such time as (a) the
Warrant or the Warrant Shares may be sold by the Holder under Rule 144(k) or (b)
the resale of the Warrant or the Warrant Shares has been registered under the
Securities Act as contemplated by Article VI of the Purchase Agreement, the
certificates representing the Warrant or the Warrant Shares shall bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Warrant or the
Warrant Shares):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY
NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES
LAWS, OR UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
The legend set forth above shall be removed and the Company shall
issue a certificate without the legend to the holder of any certificate upon
which it is stamped, in accordance with the terms of Article VI of the Purchase
Agreement.
(h) Holder is not a U.S. Person (as that term is defined in
Regulation S under the Securities Act ("Regulations S") and is not acquiring the
Warrant Shares for the account or benefit of any U.S. Person. The Holder agrees
to resell the Warrant Shares only (i) in accordance with the provisions of
Regulation S, (ii) pursuant to registration under the Securities Act, or (iii)
pursuant to an available exemption from such registration; and agrees not to
engage in hedging transactions with regard to the Securities unless in
compliance with the Securities Act. The Holder acknowledges and understands
that a legend will be placed on any certificates(s) representing the Warrant
Shares stating that transfer of the Warrant Shares in prohibited except (i) in
accordance with the provisions of Regulation S, (ii) pursuant to registration
under the Securities Act, or (iii) pursuant to an available exemption from
registration; and that hedging transactions involving those securities may not
be conducted unless in compliance with the Securities Act. The Holder
acknowledges and agrees that unless applicable foreign law prevents the Company
from refusing to register securities transfers, the Company will refuse to
register any transfer of the Warrant Shares not made (i) in accordance with the
provisions of Regulation S, (ii) pursuant to registration under the Securities
Act, or (iii) pursuant to an available exemption from such registration.
10. Notice. Company covenants and agrees to give notice in
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writing to Holder at least 10 days prior to (or, if later, then as soon as
reasonably practicable prior to) any action contemplated which would affect the
per share Exercise Price, or number of shares purchasable upon exercise of this
Warrant; provided, however, any failure of Company to provide such notice shall
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not affect the validity of any action by Company. Any notice, request or other
communication provided for under this Warrant shall be given in writing,
delivered by hand, by overnight United States mail, return receipt requested,
postage prepaid, or through a reputable courier service (such as Federal
Express) and shall be addressed to Company or to the Holder at the address shown
below, unless notice of a change in address is furnished in accordance with this
paragraph:
If to Company:
DA Consulting Group, Inc.
San Felipe Plaza
5847 San Felipe, Suite 37000
Houston, Texas 77057
Attention: John E. Mitchell, Chief Executive Officer; and
Dennis C. Fairchild, Chief Financial Officer
with a copy to:
Pepper Hamilton LLP
3000 Two Logan Square
Philadelphia, Pennsylvania 19103
Attention: Barry M. Abelson, Esquire
If to Holder:
Purse Holding Limited
Altstetterstrasse 126
P.O. Box 1705
CH - 8048
Zurich, Switzerland
Attention: Fredy Eckstein
with a copy to:
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, New York 10104
Attention: Joseph Bartlett, Esquire
11. Descriptive Headings and Governing Law. The descriptive
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headings of the several paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. The corporate laws of the
State of Texas shall govern all issues concerning the relative rights of the
Company and its stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall be governed by
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York,
or any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.
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12. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
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is lost, stolen, mutilated or destroyed, the Company shall, on receipt of an
indemnification undertaking (or, in the case of a mutilated Warrant, the
Warrant), issue a new Warrant of like denomination and tenor as this Warrant so
lost, stolen, mutilated or destroyed.
13. Amendment and Waiver. This Warrant and any provisions hereof
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may be changed, waived, discharged or terminated only an instrument in writing
signed by the party against which enforcement of the same is sought.
14. Date. The date of this Warrant is ______________, 2000. This
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Warrant, in all events, shall be wholly void and of no effect after 5:00 p.m.
New York time on the third anniversary of the Closing Date or if such day is not
a Business Day then on the Business Day next succeeding such date, except that
notwithstanding any other provisions hereof, the provisions of Section 6 shall
continue in full force and effect after such date as to any shares of Common
Stock or other securities issued upon the exercise of this Warrant.
[signature page follows]
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IN WITNESS WHEREOF, DA Consulting Group, Inc. has caused this Warrant
to be signed by its duly authorized officer under its corporate seal, this ____
day of ____________, 2000.
DA CONSULTING GROUP, INC.
By:________________________________
Name:
Title:
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