Exhibit 10.5
VOID AFTER 5:00 P.M., CENTRAL TIME ON AUGUST 25, 2004
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 REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD
OR OTHERWISE TRANSFERRED 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.
Right to Purchase 136,519 Shares of
Common Stock, no par value
Date: August 25, 1999, amended December 18, 1999
WEBB INTERACTIVE SERVICES, INC.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, Castle Creek Technology Partners
LLC ("Castle Creek"), or its registered assigns, is entitled to purchase from
Webb Interactive Services, Inc., a Colorado corporation doing business as Webb
Interactive Services, Inc. (the "Company"), at any time or from time to time
during the period specified in Section 2 hereof, 136,519 fully paid and
nonassessable shares of the Company's Common Stock, no par value (the "Common
Stock"), at an exercise price of $11.44 per share (the "Exercise Price").
Subject to the completion by the Company prior to March 22, 2000 of an equity or
equity-like financing raising proceeds for the Company of not less than $10
million in which Castle Creek has the right to invest not less than $5 million,
the Exercise Price shall be adjusted and shall be effective September 30, 2000,
subject to adjustment as provided in Section 4 hereof, the lower of (i) the
Exercise Price in effect on September 29, 2000, or (ii) a price which is equal
to the average of the Closing Bid Prices for the Company's Common Stock for the
20 consecutive trading days ending on September 29, 2000. This Warrant is being
issued pursuant to that certain Securities Purchase Agreement dated August 25,
1999, as amended on December 18, 1999, by and between the Company and Castle
Creek (the "Securities Purchase Agreement"). The number of shares of Common
Stock purchasable hereunder (the "Warrant Shares") and the Exercise Price are
subject to adjustment as provided in Section 4 hereof.
The term "Closing Bid Price" means, for any security as of any date, the
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
Financial Markets or a comparable reporting service of national reputation
selected by the Company and
reasonably acceptable to the holder hereof (the "Holder") if Bloomberg Financial
Markets is not then reporting closing bid prices of such security (collectively,
"Bloomberg"), or if the foregoing does not apply, the last reported sale price
of such security in the over-the-counter market on the electronic bulletin board
of such security as reported by Bloomberg, or, if no sale 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 Closing Bid Price of such security
on such date shall be the fair market value as reasonably determined by an
investment banking firm selected by the Company and reasonably acceptable to the
Holder with the costs of such appraisal to be borne by the Company.
This Warrant is subject to the following terms, provisions, and conditions:
1. Mechanics of Exercise. Subject to the provisions hereof, including,
without limitation, the limitations contained in Section 8(f) hereof, this
Warrant may be exercised as follows:
(a) Manner of Exercise. This Warrant may be exercised by the Holder,
in whole or in part, by the surrender of this Warrant (or evidence of loss,
theft, destruction or mutilation thereof in accordance with Section 8(c)
hereof), together with a completed exercise agreement in the Form of
Exercise Agreement attached hereto as Exhibit 1 (the "Exercise Agreement"),
to the Company at the Company's principal executive offices (or such other
office or agency of the Company as it may designate by notice to the
Holder), and upon (i) payment to the Company in cash, by certified or
official bank check or by wire transfer for the account of the Company, of
the Exercise Price for the Warrant Shares specified in the Exercise
Agreement or (ii) if the Holder elects to effect a Cashless Exercise (as
defined in Section 12(c) below), delivery to the Company of a written
notice of an election to effect a Cashless Exercise for the Warrant Shares
specified in the Exercise Agreement. The Warrant Shares so purchased shall
be deemed to be issued to the Holder or Holder's designees, as the record
owner of such shares, as of the date on which this Warrant shall have been
surrendered, the completed Exercise Agreement shall have been delivered,
and payment (or notice of an election to effect a Cashless Exercise) shall
have been made for such shares as set forth above.
(b) Issuance of Certificates. Subject to Section 1(c), certificates
for the Warrant Shares so purchased, representing the aggregate number of
shares specified in the Exercise Agreement, shall be delivered to the
Holder within a reasonable time, not exceeding three (3) business days,
after this Warrant shall have been so exercised (the "Delivery Period").
The certificates so delivered shall be in such denominations as may be
requested by the Holder and shall be registered in the name of Holder or
such other name as shall be designated by such
Holder. If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Company shall, at its expense, at the
time of delivery of such certificates, deliver to the Holder a new Warrant
representing the number of shares with respect to which this Warrant shall
not then have been exercised.
(c) Exercise Disputes. In the case of any dispute with respect to an
exercise, the Company shall promptly issue such number of shares of Common
Stock as are not disputed in accordance with this Section. If such dispute
involves the calculation of the Exercise Price, the Company shall submit
the disputed calculations to a nationally recognized independent accounting
firm (selected by the Company and reasonably acceptable to Holder) via
facsimile within three (3) business days of receipt of the Exercise
Agreement. The accounting firm shall audit the calculations and notify the
Company and the converting Holder of the results no later than two (2)
business days from the date it receives the disputed calculations. The
accounting firm's calculation shall be deemed conclusive, absent manifest
error. The Company shall then issue the appropriate number of shares of
Common Stock in accordance with this Section.
(d) Fractional Shares. No fractional shares of Common Stock are to be
issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be
issuable in an amount equal to the same fraction of the Exercise Price of a
share of Common Stock (as determined for exercise of this Warrant into
whole shares of Common Stock); provided that in the event that sufficient
funds are not legally available for the payment of such cash adjustment any
fractional shares of Common Stock shall be rounded up to the next whole
number.
2. Period of Exercise. This Warrant is exercisable at any time and from
time to time on or after the date hereof and before 5:00 P.M., Central Standard
Time on the fifth (5th) anniversary of the date hereof (the "Exercise Period").
3. Certain Agreements of the Company. The Company hereby covenants and
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully paid,
and non-assessable and free from all taxes, liens, claims and encumbrances.
(b) Reservation of Shares. During the Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of
Common Stock to provide for the exercise of this Warrant.
(c) Listing. The Company shall promptly secure the listing of the
shares of Common Stock issuable upon exercise of this Warrant upon the
Nasdaq Small Cap Market ("Nasdaq") and use its best efforts to secure the
listing of its securities on the Nasdaq National Market System, or the New
York Stock Exchange, as required by Section 4.9 of the Securities Purchase
Agreement and upon each such national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
or become listed and shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all shares of Common Stock from
time to time issuable upon the exercise of this Warrant; and the Company
shall so list on each national securities exchange or automated quotation
system, as the case may be, and shall maintain such listing of any other
shares of capital stock of the Company issuable upon the exercise of this
Warrant so long as any shares of the same class shall be listed on such
national securities exchange or automated quotation system.
(d) Certain Actions Prohibited. The Company will not, by amendment of
its charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms 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 actions
as may reasonably be requested by the Holder of this Warrant in order to
protect the exercise privilege of the Holder of this Warrant, consistent
with the tenor and purpose of this Warrant. Without limiting the generality
of the foregoing, the Company (i) will not increase the par value of any
shares of Common Stock receivable upon the exercise of this Warrant above
the Exercise Price then in effect, and (ii) will take all such actions as
may be necessary or appropriate in order that the Company may at all times
validly and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant.
4. Antidilution Provisions. During the Exercise Period, the Exercise Price
and the number of Warrant Shares shall be subject to adjustment from time to
time as provided in this Section 4. In the event that any adjustment of the
Exercise Price as required herein results in a fraction of a cent, such Exercise
Price shall be rounded up or down to the nearest cent.
(a) Adjustment of Exercise Price and Number of Shares upon Issuance of
Common Stock. Except as otherwise provided in Section 4(c) and 4(e) hereof,
if and whenever after the initial issuance of this Warrant, the Company
issues or sells, or in accordance with Section 4(b) hereof is deemed to
have issued or sold, any shares of Common Stock for no consideration or for
a consideration per share less than the greater of the then current Market
Price (as herein defined) and the then current Exercise
Price on the date of issuance (a "Dilutive Issuance"), then effective
immediately upon the Dilutive Issuance, the Exercise Price will be adjusted
in accordance with the following formula:
E' = (E) (O + P/M) / (CSDO)
where:
E' = the adjusted Exercise Price
E = the then current Exercise Price;
M = the greater of the then current Market Price and the then current
Exercise Price;
O = the number of shares of Common Stock outstanding immediately
prior to the Dilutive Issuance;
P = the aggregate consideration, calculated as set forth in Section
4(b) hereof, received by the Company upon such Dilutive Issuance;
and
CSDO = the total number of shares of Common Stock Deemed Outstanding (as
herein defined) immediately after the Dilutive Issuance.
(b) Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Section 4(a) hereof, the
following will be applicable:
(i) Issuance of Rights or Options. If the Company in any manner
issues or grants any warrants, rights or options, whether or not
immediately exercisable, to subscribe for or to purchase Common Stock
or other securities exercisable, convertible into or exchangeable for
Common Stock ("Convertible Securities"), but not to include the grant
or exercise of any stock or options which may hereafter be granted or
exercised under any employee or Director benefit plan of the Company
now existing or to be implemented in the future, so long as the
issuance of such stock or options is approved by a majority of the
non-employee members of the Board of Directors of the Company or a
majority of the members of a committee of non-employee directors
established for such purpose (such warrants, rights and options to
purchase Common Stock or Convertible Securities are hereinafter
referred to as "Options"), and the price per share for which Common
Stock is issuable upon the exercise of such Options is less than the
greater of the Exercise Price or the Market Price on the date of
issuance ("Below Market Options"), then the maximum total number of
shares of Common Stock issuable upon the exercise of all such Below
Market
Options (assuming full exercise, conversion or exchange of Convertible
Securities, if applicable) will, as of the date of the issuance or
grant of such Below Market Options, be deemed to be outstanding and to
have been issued and sold by the Company for such price per share. For
purposes of the preceding sentence, the price per share for which
Common Stock is issuable upon the exercise of such Below Market
Options is determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the
issuance or granting of such Below Market Options, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of all such Below Market Options, plus, in
the case of Convertible Securities issuable upon the exercise of such
Below Market Options, the minimum aggregate amount of additional
consideration payable upon the exercise, conversion or exchange
thereof at the time such Convertible Securities first become
exercisable, convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the exercise of all
such Below Market Options (assuming full conversion of Convertible
Securities, if applicable). No further adjustment to the Exercise
Price will be made upon the actual issuance of such Common Stock upon
the exercise of such Below Market Options or upon the exercise,
conversion or exchange of Convertible Securities issuable upon
exercise of such Below Market Options.
(ii) Issuance of Convertible Securities.
(1) If the Company in any manner issues or sells any
Convertible Securities, whether or not immediately convertible
(other than where the same are issuable upon the exercise of
Options) and the price per share for which Common Stock is
issuable upon such exercise, conversion or exchange (as
determined pursuant to Section 4(b)(ii)(B) if applicable) is less
than the greater of the Market Price or the Exercise Price then
in effect on the date of issuance, then the maximum total number
of shares of Common Stock issuable upon the exercise, conversion
or exchange of all such Convertible Securities will, as of the
date of the issuance of such Convertible Securities, be deemed to
be outstanding and to have been issued and sold by the Company
for such price per share. For the purposes of the preceding
sentence, the price per
share for which Common Stock is issuable upon such exercise,
conversion or exchange is determined by dividing (i) the total
amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise,
conversion or exchange thereof at the time such Convertible
Securities first become exercisable, convertible or exchangeable,
by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such
Convertible Securities. No further adjustment to the Exercise
Price will be made upon the actual issuances of such Common Stock
upon exercise, conversion or exchange of such Convertible
Securities.
(2) If the Company in any manner issues or sells any
Convertible Securities with a fluctuating conversion or exercise
price or exchange ratio (a "Variable Rate Convertible Security"),
then the price per share for which Common Stock is issuable upon
such exercise, conversion or exchange for purposes of the
calculation contemplated by Section 4(b)(ii)(A) shall be deemed
to be the lowest price per share which would be applicable
assuming that (1) all holding period and other conditions to any
discounts contained in such Convertible Security have been
satisfied, and (2) the Market Price on the date of issuance of
such Convertible Security was 80% of the Market Price on such
date (the "Assumed Variable Market Price").
(iii) Change in Option Price or Conversion Rate. Except for the
grant or exercise of any stock or options which may hereafter be
granted or exercised under any employee or Director benefit plan of
the Company now existing or to be implemented in the future, so long
as the issuance of such stock or options is approved by a majority of
the non-employee members of the Board of Directors of the Company or a
majority of the members of a committee of non-employee directors
established for such purpose, if there is a change at any time in (i)
the amount of additional consideration payable to the Company upon the
exercise of
any Options; (ii) the amount of additional consideration, if any,
payable to the Company upon the exercise, conversion or exchange or
any Convertible Securities; or (iii) the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock
(other than under or by reason of provisions designed to protect
against dilution), the Exercise Price in effect at the time of such
change will be readjusted to the Exercise Price which would have been
in effect at such time had such Options or Convertible Securities
still outstanding provided for such changed additional consideration
or changed conversion rate, as the case may be, at the time initially
granted, issued or sold.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. If, in any case, the total number of shares of Common
Stock issuable upon exercise of any Options or upon exercise,
conversion or exchange of any Convertible Securities is not, in fact,
issued and the rights to exercise such option or to exercise, convert
or exchange such Convertible Securities shall have expired or
terminated, the Exercise Price then in effect will be readjusted to
the Exercise Price which would have been in effect at the time of such
expiration or termination had such Options or Convertible Securities,
to the extent outstanding immediately prior to such expiration or
termination (other than in respect of the actual number of shares of
Common Stock issued upon exercise or conversion thereof), never been
issued.
(v) Calculation of Consideration Received. If any Common Stock,
Options or Convertible Securities are issued, granted or sold for
cash, the consideration received therefor for purposes of this Warrant
will be the amount received by the Company therefor, before deduction
of reasonable commissions, underwriting discounts or allowances or
other reasonable expenses paid or incurred by the Company in
connection with such issuance, grant or sale. In case any Common
Stock, Options or Convertible Securities are issued or sold for a
consideration part or all of which shall be other than cash, the
amount of the consideration other than cash received by the Company
will be the fair market value of such consideration except where such
consideration consists of freely-tradeable securities, in which case
the amount of consideration received by the Company will be the Market
Price thereof as of the date of receipt. In case any Common Stock,
Options or Convertible Securities are issued in connection with any
merger or consolidation in which the Company is the surviving
corporation, the amount of consideration therefor will be deemed to be
the fair market value of such portion of the net assets and business
of the non-surviving corporation as is attributable to such Common
Stock, Options or Convertible Securities, as the case may be. The fair
market value of any consideration other than cash or securities will
be determined in the good faith reasonable business judgment of the
Board of Directors.
(vi) Exceptions to Adjustment of Exercise Price. No adjustment to
the Exercise Price will be made (i) upon the exercise of any warrants,
options or convertible securities issued and outstanding on the date
hereof in accordance with the terms of such securities as of such
date; (ii) upon the grant or exercise of any stock or options which
may hereafter be granted or exercised under any employee or Director
benefit plan of the Company now existing or to be implemented in the
future, so long as the issuance of such stock or options is approved
by a majority of the non-employee members of the Board of Directors of
the Company or a majority of the members of a committee of
non-employee directors established for such purpose; (iii) upon the
issuance of the Conversion Shares (as defined in the Securities
Purchase Agreement) or the Warrant in accordance with terms of the
Securities Purchase Agreement; or (iv) upon the exercise of the
Warrant.
(c) Subdivision or Combination of Common Stock. If the Company, at any
time after the initial issuance of this Warrant, subdivides (by any stock
split, stock dividend, recapitalization, reorganization, reclassification
or otherwise) its shares of Common Stock into a greater number of shares,
then, after the date of record for effecting such subdivision, the Exercise
Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company, at any time after the initial
issuance of this Warrant, combines (by reverse stock split,
recapitalization, reorganization, reclassification or otherwise) its shares
of Common Stock into a smaller number of shares, then, after the date of
record for effecting such combination, the Exercise Price in effect
immediately prior to such combination will be proportionately increased.
(d) Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 4, the number of
shares of Common Stock issuable upon exercise of this Warrant shall be
adjusted by multiplying a number equal to the Exercise Price in effect
immediately prior to such
adjustment by the number of shares of Common Stock issuable upon exercise
of this Warrant immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
(e) Major Transactions. If the Company shall consolidate or merge with
any other corporation or entity (other than a consolidation or merger in
which the Company is the surviving or continuing entity and its capital
stock is unchanged and unissued in such transaction (except for issuances
which do not exceed fifty percent (50%) of the Common Stock)) or there
shall occur any share exchange pursuant to which all of the outstanding
shares of Common Stock are converted into other securities or property or
any such other reclassification or change of the outstanding shares of
Common Stock or the Company shall sell all or substantially all of its
assets (each of the foregoing being a "Major Transaction"), then the holder
of this Warrant may, at its option, either (a) in the event that the Common
Stock remains outstanding or holders of Common Stock receive any common
stock or substantially similar equity interest, in each of the foregoing
cases which is publicly traded, retain this Warrant and this Warrant shall
continue to apply to such Common Stock or shall apply, as nearly as
practicable, to such other common stock or equity interest, as the case may
be, or (b) regardless of whether (a) applies, receive consideration, in
exchange for this Warrant (without payment of any exercise price
hereunder), equal to the greater of, as determined in the sole discretion
of such holder, (i) the number of shares of stock or securities or property
of the Company, or of the entity resulting from such Major Transaction (the
"Major Transaction Consideration"), to which a holder of the number of
shares of Common Stock delivered upon the exercise of this Warrant
(pursuant to the cashless exercise feature hereof) would have been entitled
upon such Major Transaction had such holder so exercised this Warrant
(without regard to any limitations on exercise herein or elsewhere
contained) on the trading date immediately preceding the public
announcement of the transaction resulting in such Major Transaction and had
such Common Stock been issued and outstanding and had such Holder been the
holder of record of such Common Stock at the time of the consummation of
such Major Transaction, and (ii) cash paid by the Company in immediately
available funds in an amount equal to the Black-Scholes Amount (as defined
herein) times the number of shares of Common Stock for which this Warrant
was exercisable (without regard to any limitations on exercise herein
contained and assuming payment of the exercise payment in cash hereunder)
but in no event shall such amount exceed the Black Scholes value of the
Warrant as of the Closing Date as determined by the Company's Auditors, and
the Company shall make lawful provision for the foregoing as a part of such
Major Transaction and shall cause the issuer of any security in such
transaction which constitutes Registrable Securities under that certain
Registration Rights Agreement dated August 25, 1999 by and between the
Company and Castle Creek (the "Registration Rights Agreement") to assume
all of the Company's obligations under the Registration Rights Agreement.
In the event that the
Company shall consolidate or merge with any other corporation in a
transaction in which common stock of the surviving corporation or the
parent thereof (the "Exchange Securities") is issued to the holders of
Common Stock in such transaction in exchange for all such Common Stock, and
(a) the Exchange Securities are publicly traded, (b) the average daily
dollar trading volume of the Exchange Securities during the one hundred
eighty (180) day period ending on the date on which such transaction is
publicly disclosed is greater than One Million Dollars ($1,000,000.00) per
day as reported by Bloomberg, (c) the historical one hundred (100) day
volatility of the Exchange Securities during the period ending on the date
on which such transaction is publicly disclosed is greater than fifty
percent (50%), and (d) the market capitalization of the issuer of the
Exchange Securities is not less than One hundred Million Dollars
($100,000,000.00) based on the last sale price of the Exchange Securities
on the date immediately before the date on which such transaction is
publicly disclosed (in each case, with respect to the foregoing clauses (a)
through (d), as reported by Bloomberg), then the provisions of clause (b)
of the preceding sentence shall not apply. In the event that the Company
shall, in a Major Transaction, consolidate or merge with any other
corporation in a transaction in which the Company is the survivor (a
"Company Transaction"), the provisions of clause (ii) of the second
preceding sentence shall not apply to the extent that each of the following
conditions remain true for the thirty (30) business days commencing as of
the date of the consummation of such transaction (the "Measurement
Period"): (a) the Common Stock remains publicly traded during the period,
(b) the average daily dollar trading volume of the Common Stock is greater
than One Million Dollars ($1,000,000.00), (c) the historical thirty (30)
day volatility of the Company's Common Stock is greater than fifty percent
(50%), and (d) the market capitalization of the Company is not less than
One Hundred Million Dollars ($100,000,000.00) on the last day of the period
(in each case, with respect to the foregoing clauses (a) through (d), as
reported by Bloomberg. No sooner than ten (10) business days nor later than
five (5) business days prior to the consummation of the Major Transaction,
but not prior to the public announcement of such Major Transaction, the
Company shall deliver written notice ("Notice of Major Transaction") to
each holder of a Warrant, which Notice of Major Transaction shall be deemed
to have been delivered one (1) business day after the Company's sending
such notice by telecopy (provided that the Company sends a confirming copy
of such notice on the same day by overnight courier) of such Notice of
Major Transaction. Such Notice of Major Transaction shall indicate the
amount and type of the Major Transaction consideration which such holder of
a Warrant would receive under this Section. If the Major Transaction
Consideration is cash and does not consist entirely of United States
currency, such holder may elect to receive United States currency in an
amount equal to the value of the Major Transaction Consideration in lieu
of the Major Transaction Consideration by delivering notice of such
election to the Company within five (5) business days of such holder's
receipt of the Notice of Major Transaction.
The "Black-Scholes Amount" shall be the amount determined by
calculating the "Black-Scholes" value of an option to purchase one share of
Common Stock on the applicable page on the Bloomberg online page, using the
following variable values: (i) the current market price of the Common Stock
equal to the closing trade price on the last trading day before the date of
the Notice of the Major Transaction; (ii) volatility of the Common Stock
equal to the volatility of the common Stock during the 100 trading day
period preceding the date of the Notice of the Major Transaction; (iii) a
risk free rate equal to the interest rate on the United States treasury
bill or treasury note with a maturity corresponding to the remaining term
of this Warrant on the date of the Notice of the Major Transaction; and
(iv) an exercise price equal to the Exercise Price on the date of the
Notice of the Major Transaction. In the event such calculation function is
no longer available utilizing the Bloomberg online page, the Holder shall
calculate such amount in its sole discretion using the closest available
alternative mechanism and variable values to those available utilizing the
Bloomberg online page for such calculation function.
(f) Distribution of Assets. In case the Company shall declare or make
any distribution of its assets (or rights to acquire its assets) to holders
of Common Stock as a partial liquidating dividend, by way of return of
capital or otherwise (including any dividend or distribution to the
Company's shareholders of cash or shares (or rights to acquire shares) of
capital stock of a subsidiary) (a "Distribution"), at any time after the
initial issuance of this Warrant, then the Holder shall be entitled upon
exercise of this Warrant for the purchase of any or all of the shares of
Common Stock subject hereto, to receive the amount of such assets (or
rights) which would have been payable to the Holder had such Holder been
the holder of such shares of Common Stock on the record date for the
determination of shareholders entitled to such Distribution.
(g) Special Adjustment and Notices of Adjustment. Upon the occurrence
of any event which requires any adjustment of the Exercise Price, then, and
in each such case, the Company shall give notice thereof to the Holder,
which notice shall state the Exercise Price resulting from such adjustment
and the increase or decrease in the number of Warrant Shares purchasable at
such price upon exercise, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. Such
calculation shall be certified by the chief financial officer of the
Company. If the Company takes any actions (including under or by virtue of
Section 4 of the Warrant) which would have a dilutive effect on the Holder
or which would materially and adversely affect the Holder with respect to
its investment in the Warrant, and if the provisions of Section 4
of the Warrant, are not strictly applicable to such actions or, if
applicable to such actions, would not operate to equitably protect the
Holder against such actions, then the Company shall promptly upon notice
from Holder appoint its independent certified public accountants to
determine as promptly as practicable an appropriate adjustment to the terms
hereof, including without limitation adjustments to the Exercise Price, or
another appropriate action to so equitably protect such Holder and prevent
any such dilution and any such material adverse effect, as the case may be.
Following such determination, the Company shall forthwith make the
adjustments or take the other actions described therein.
(h) Minimum Adjustment of Exercise Price. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise
Price in effect at the time such adjustment is otherwise required to be
made, but any such lesser adjustment shall be carried forward and shall be
made at the time and together with the next subsequent adjustment which,
together with any adjustments so carried forward, shall amount to not less
than 1% of such Exercise Price.
(i) [Intentionally Omitted]
(h) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon the Common Stock
payable in shares of stock of any class or make any other distribution
to the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any
class or other rights;
(iii) there shall be any capital reorganization of the Company,
or reclassification of the Common Stock, or consolidation or merger of
the Company with or into, or sale of all or substantially all of its
assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the Holder (a) notice of
the date on which the books of the Company shall close or a record shall be
taken for determining the holders of Common Stock entitled to receive any
such dividend, distribution, or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable
approximation thereof by the Company) when the same shall take place. Such
notice shall also specify the date on which the holders of Common Stock
shall be entitled to receive such dividend, distribution, or subscription
rights or to exchange their Common Stock for stock or other securities or
property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or winding-up, as
the case may be. Such notice shall be given at least thirty (30) days prior
to the record date or the date on which the Company's books are closed in
respect thereto, but in no event earlier than public announcement of such
proposed transaction or event. Failure to give any such notice or any
defect therein shall not affect the validity of the proceedings referred to
in clauses (i), (ii), (iii) and (iv) above.
(i) Certain Definitions.
(1) "Common Stock Deemed Outstanding" shall mean the number of
shares of Common Stock actually outstanding (not including shares of
Common Stock held in the treasury of the Company), plus (x) in case of
any adjustment required by Section 4(a) resulting from the issuance of
any Options, the maximum total number of shares of Common Stock
issuable upon the exercise of the Options for which the adjustment is
required (including any Common Stock issuable upon the conversion of
Convertible Securities issuable upon the exercise of such Options),
and (y) in the case of any adjustment required by Section 4(a)
resulting from the issuance of any Convertible Securities, the maximum
total number of shares of Common Stock issuable upon the exercise,
conversion or exchange of the Convertible Securities for which the
adjustment is required, as of the date of issuance of such Convertible
Securities, if any.
(2) "Market Price," as of any date, (i) means the average of the
Closing Bid Prices for the shares of Common Stock as reported to
Nasdaq for the ten (10) trading days immediately preceding such date,
or (ii) if Nasdaq is not the principal trading market for the Common
Stock, the average of the last reported bid prices on the principal
trading market for the Common Stock during the same period, or, if
there is no bid price for such period, the last reported sales price
for such period, or (iii) if market value cannot be calculated as of
such date on any of the foregoing bases, the Market Price shall be the
average fair market value as reasonably determined by an investment
banking firm selected by the Company and reasonably acceptable to the
Holders of a majority in interest of the Warrant, with the costs of
the appraisal to be borne by the Company. The manner of determining
the Market Price of the Common Stock set forth in the foregoing
definition shall apply with respect to any other security in respect
of which a determination as to market value must be made hereunder.
(3) "Common Stock," for purposes of this Section 4, includes the
Common Stock and any additional class of stock of the Company having
no preference as to dividends or distributions on liquidation,
provided that the shares purchasable pursuant to this Warrant shall
include only Common Stock in respect of which this Warrant is
exercisable, or shares resulting from any subdivision or combination
of such Common Stock, or in the case of any reorganization,
reclassification, consolidation, merger, or sale of the character
referred to in Section 4(e) hereof, the stock or other securities or
property provided for in such Section.
(j) Key Officer or Director Transfers. If any Key Officer (as defined
below) or director (in each case, or any member of his/her family or any
trust or other entity for the benefit of any member of his/her family),
during the period beginning on the Closing Date and ending on the date that
is six months after the registration statement required pursuant to Section
2.1 of the Registration Rights Agreement is declared effective, and while
such person is a Key Officer or director, directly or indirectly, offers,
sells, transfers, assigns, pledges, or otherwise disposes (except by gift
to family members or charitable organizations) of any shares of Common
Stock, or any securities directly or indirectly convertible into or
exercisable or exchangeable for, or warrants, options or rights to purchase
or acquire shares of Common Stock (all such securities, "Options") or enter
into any agreement, contract, arrangement or understanding with respect to
any such offer, sale, transfer, assignment, pledge or other disposition of
any Common Stock or Options or provides or files any public notice,
including pursuant to Rule 144 of the Securities Act, of a bona fide intent
to dispose of a specified amount of Common Stock or Options (an "Executive
Transfer"), then the Exercise Price shall be reduced by twenty (20) percent
of that Exercise Price calculated pursuant to this Agreement; provided,
however, that Key Officers or directors (and all such entities for the
benefit of any members of his/her family, collectively) may sell, assign,
pledge or otherwise dispose of up to 20,000 shares in the aggregate prior
to December 31, 1999 and during the six-month period following the
effective date of the registration statement, a Key Officer or director
(and all such entities for the benefit of any members of his/her family,
collectively) may sell, assign, pledge or otherwise dispose of up to the
greater of (i) ten percent (10%) of his or her total holdings as of the
Issue Date determined
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, or (ii) 25,000 shares of Common Stock without triggering the
adjustments of this Section. For purposes of this Section, Key Officer
shall mean R. Steven Adams, Lindley S. Branson, William R. Cullen, Perry
Evans, Andre Durand, Gwenael Hagan and Simon Greenman and any person who
assumes or performs the duties of any other Key Officer.
5. Intentionally omitted.
6. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the Holder or such
shares for any issuance tax or other costs in respect thereof, provided that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than the Holder.
7. No Rights or Liabilities as a Shareholder. This Warrant shall not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company. No provision of this Warrant, in the absence of affirmative action by
the Holder to purchase Warrant Shares, and no mere enumeration herein of the
rights or privileges of the Holder, shall give rise to any liability of the
Holder for the Exercise Price or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
8. Transfer, Exchange, Redemption and Replacement of Warrant.
a. Restriction on Transfer. This Warrant and the rights granted to the
Holder are transferable, in whole or in part, upon surrender of this
Warrant, together with a properly executed assignment in the Form of
Assignment attached hereto as Exhibit 2, at the office or agency of the
Company referred to in Section 8(e) below, provided, however, that any
transfer or assignment shall be subject to the provisions of Section 5.1
and 5.2 of the Securities Purchase Agreement. Until due presentment for
registration of transfer on the books of the Company, the Company may treat
the registered holder hereof as the owner and holder hereof for all
purposes, and the Company shall not be affected by any notice to the
contrary. Notwithstanding anything to the contrary contained herein, the
registration rights described in Section 9 hereof are assignable only in
accordance with the provisions of the Registration Rights Agreement.
b. Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the Holder at the office or
agency of the Company referred to in Section 8(e) below, for new Warrants,
in the form hereof, of different denominations representing in the
aggregate the right to purchase the number of shares of Common Stock which
may be purchased hereunder, each of such new Warrants to
represent the right to purchase such number of shares as shall be
designated by the Holder of at the time of such surrender.
c. Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation
of this Warrant or, in the case of any such loss, theft, or destruction,
upon delivery, of an indemnity agreement reasonably satisfactory in form
and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense,
will execute and deliver, in lieu thereof, a new Warrant, in the form
hereof, in such denominations as Holder may request.
d. Cancellation; Payment of Expenses. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as
provided in this Section 8, this Warrant shall be promptly canceled by the
Company. The Company shall pay all issuance taxes (other than securities
transfer taxes) and charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Section 8.
e. Warrant Register. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the Holder), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name
this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.
f. Additional Restriction on Exercise or Transfer. Notwithstanding
anything to the contrary contained herein, the Warrant shall not be
exercisable by the Holder to the extent (but only to the extent) that, if
exercisable by Holder, Holder would beneficially own in excess of 4.99%
(the "Applicable Percentage") of the shares of Common Stock. To the extent
the above limitation applies, the determination of whether the Warrant
shall be exercisable (vis-a-vis other securities owned by Holder which
contain similar limitations on conversion) and of which Warrants shall be
exercisable (as among Warrants) shall be made on the basis of the earliest
submission of the Warrants (vis-a-vis other securities owned by the Holder
which contain similar limitations on conversion and vis a vis other
Warrants), in each case subject to such aggregate percentage limitation. No
prior inability to exercise Warrants pursuant to this paragraph shall have
any effect on the applicability of the provisions of this paragraph with
respect to any subsequent determination of exercisability. For the purposes
of this paragraph, beneficial ownership and all determinations and
calculations, including without limitation, with respect to calculations of
percentage ownership, shall be determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended, and Regulation 13D and
G thereunder. The provisions of this paragraph may be implemented in a
manner otherwise than in strict
conformity with the terms of this Section 8(f) with the approval of the
Board of Directors of the Company and the Holder: (i) with respect to any
matter to cure any ambiguity herein, to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the intended
Applicable Percentage beneficial ownership limitation herein contained or
to make changes or supplements necessary or desirable to properly give
effect to such Applicable Percentage limitation; and (ii) with respect to
any other matter, with the further consent of the holders of a majority of
the then outstanding shares of Common Stock. For clarification, it is
expressly a term of this security that the limitations contained in this
Section shall apply to each successor Holder. The holders of Common Stock
of the Company shall be third-party beneficiaries of this Section 8(f) and
the Company may not waive this Section 8(f) without the consent of holders
of a majority of its Common Stock.
9. Registration Rights. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement.
10. Notices. Any notice herein required or permitted to be given shall be
in writing and may be personally served or delivered by courier or by confirmed
telecopy, and shall be deemed delivered at the time and date of receipt (which
shall include telephone line facsimile transmission). The addresses for such
communications shall be:
If to the Company:
Webb Interactive Services, Inc.
1800 Glenarm Place, Suite 700
Denver, Colorado 80202
Telecopy: (303) 292-5039
Attention: William Cullen
with a copy to:
Gray, Plant, Mooty, Mooty & Bennett, P.A.
3400 City Center
33 South Sixth Street
Minneapolis, MN 55402-3796
Telecopy: (612) 333-0066
Attention: Lindley S. Branson, Esq.
and if to the Holder, at such address as Holder shall have provided in writing
to the Company, or at such other address as each such party furnishes by notice
given in accordance with this Section 10.
11. Governing Law; Jurisdiction. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York. The Company
irrevocably consents
to the jurisdiction of the United States federal courts located in the State of
New York in any suit or proceeding based on or arising under this Warrant and
irrevocably agrees that all claims in respect of such suit or proceeding may be
determined in such courts. The Company irrevocably waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The Company
agrees that a final nonappealable judgment in any such suit or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
12. Miscellaneous.
12.1 Amendments. This Warrant and any provision hereof may only be
amended by an instrument in writing signed by the Company and the Holder.
12.2 Descriptive Headings. The descriptive headings of the several
Sections of this Warrant are inserted for purposes of reference only, and
shall not affect the meaning or construction of any of the provisions
hereof.
12.3 Cashless Exercise. Notwithstanding anything to the contrary
contained in this Warrant, this Warrant may be exercised by presentation
and surrender of this Warrant to the Company at its principal executive
offices with a written notice of the Holder's intention to effect a
cashless exercise, including a calculation of the number of shares of
Common Stock to be issued upon such exercise in accordance with the terms
hereof (a "Cashless Exercise"). In the event of a Cashless Exercise, in
lieu of paying the Exercise Price in cash, the Holder shall surrender this
Warrant for the number of shares of Common Stock determined by multiplying
the number of Warrant Shares to which it would otherwise be entitled by a
fraction, the numerator of which shall be the difference between the then
current Market Price per share of the Common Stock and the Exercise Price,
and the denominator of which shall be such then current Market Price per
share of Common Stock. Notwithstanding the provisions of this section
12(c), so long as a Registration Statement is effective and is available
for immediate use pursuant to the Registration Rights Agreement dated even
date herewith, the Holder shall not have the rights provided to it under
this provision.
12.4 Assignability. This Warrant shall be binding upon the Company and
its successors and assigns and shall inure to the benefit of Holder and its
successors and assigns. The Holder shall notify the Company upon the
assignment of this Warrant.
* * *
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer.
Webb Interactive Services, Inc.
By: /s/ William R. Cullen
-------------------------------
Name: William R. Cullen
-------------------------------
Title: EVP & CFO
-------------------------------
FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of common stock of Webb Interactive Services, Inc., a
Colorado corporation doing business as Webb Interactive Services, Inc. (the
"Company"), evidenced by the attached Warrant, and [herewith makes payment of
the Exercise Price with respect to such shares in full/ elects to effect a
Cashless Exercise pursuant to the terms of the Warrant], all in accordance with
the conditions and provisions of said Warrant.
(i) The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws.
(ii) The undersigned requests that stock certificates for such shares be
issued, and a Warrant representing any unexercised portion hereof be issued,
pursuant to the Warrant in the name of the Holder (or such other person or
persons indicated below) and delivered to the undersigned (or designee(s) at the
address (or addresses) set forth below:
Date:__________________ ________________________________________
Signature of Holder
Name of Holder (Print)
Address:
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
, and hereby irrevocably constitutes and appoints ______________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Date:____________, _____,
In the presence of
Name:
-------------------------------------
Signature:
--------------------------------
Title of Signing Officer or
Agent (if any):
Address:
-----------------------------
Note: The above signature should
correspond exactly with the
name on the face of the within
Warrant.