EXHIBIT 4.6
THE `WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE II SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT", AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY OF THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
ONLINE SYSTEM SERVICES, INC.
WARRANT TO PURCHASE COMMON STOCK
THE TRANSFERABILITY OF THIS WARRANT IS
RESTRICTED AS PROVIDED IN SECTION 2.
Void after November 9, 2003 Right to Purchase 140,000 Shares of Common Stock
(subject to adjustment)
No. 1
PREAMBLE
Online System Services, Inc. ("OSSI" or the "Company"), a Colorado
corporation, hereby certifies that, for value received, Archer Investors LLC
whose address is One Word Trade Center, Suite 4563, New York, New York 10048, or
its registered assigns (hereinafter, the "Registered Holder"), is entitled,
subject to the terms set forth below, to purchase from the Company at any time
or .from time to time before 5: 00 P.M. New York time, on November 9, 2003 (such
time, the "Expiration Time"), 140,000 of the Company's fully paid and
nonassessable shares of common stock, no par value (the "Common Stock"), of the
Company, at the purchase price per share (the "Purchase Price") of $5.71. The
number and character of such Common Stock and the Purchase Price are subject to
adjustment as provided herein.
This Warrant is one of the Warrants to Purchase Common Stock (the
"Warrants"), evidencing the right to purchase Common Stock of the Company,
issued pursuant to a Securities Purchase Agreement (the "Securities Purchase
Agreement"), dated November 9, 1998, between the Company and the Purchasers
identified therein. The Securities Purchase Agreement contains certain
additional terms that are binding upon the Company and each Registered Holder of
the Warrants. A copy of the Securities Purchase Agreement may be obtained by any
Registered Holder of the Warrants from the Company upon written request.
Capitalized terms used but not -defined herein shall have the meanings set forth
in the Securities Purchase Agreement.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
(a) The term "Company" includes any corporation which shall succeed to
or assume the obligations of the Company hereunder.
(b) The term "Common Stock" includes all shares of any class or classes
(however designated) of the Company, authorized on or after the date hereof,
the holders of which shall have the right, without limitation as to amount,
either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and the holders of which
shall ordinarily be entitled to vote for the election of directors of the
Company (even though the right so to vote has been suspended by the
happening of a contingency).
(c) The term "Other Securities" refers to any class of shares (other
than Common Stock) and other securities of the Company or any other person
(corporate or otherwise) which the holders of the Warrants at any time shall
be entitled to receive, or shall have received, upon the exercise of the
Warrants, in lieu of or in addition to Common Stock, or which at any time
shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to Section 6 or
otherwise.
(d) The term "Shares" means the Common Stock issued or issuable upon
exercise of the Warrants.
1. REGISTRATION RIGHTS.
The rights of the holders of Warrants to register Warrants or Shares shall
be as stated in the Registration Rights Agreement of even date herewith.
2. RESTRICTED STOCK.
2.1. If, at the time of any transfer or exchange (other than a transfer or
exchange not involving a change in the beneficial ownership of such Warrant or
Shares) of a Warrant or Shares, such Warrant or Shares shall not be registered
under the Securities Act, the Company's obligation to transfer such Warrant or
Shares shall be subject to the provisions of Section 5 of the Securities
Purchase Agreement.
3. EXERCISE OF WARRANT.
3.1. EXERCISE IN FULL. The holder of this Warrant may exercise it in full
prior to the Expiration Time by surrendering this Warrant, with the form of
Election to Purchase at the end hereof duly executed by such holder, to the
Company in the manner set forth in Section 5 of the Securities Purchase
Agreement. The surrendered Warrant shall be accompanied by payment, in cash or
by certified or official bank check payable to the order of the Company, in the
amount obtained by multiplying the number of Shares of Common Stock called for
on the face of this Warrant (without giving effect to any adjustment therein) by
the Initial Purchase Price.
3.2. PARTIAL EXERCISE. This Warrant may be exercised in part by surrender of
this Warrant in the manner provided in Subsection 3.1, except that the exercise
price shall be calculated by multiplying (a) the number of shares of Common
Stock as shall be designated by he holder in the subscription at the end hereof
by (b).the Initial Purchase Price. On any such partial exercise, subject to the
provisions of Section 2 hereof, the Company, at its expense will forthwith issue
and deliver to or upon the order of the Registered Holder hereof a new Warrant
or Warrants of like tenor, in the name of the Registered Holder hereof or as
such Registered Holder may request, calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock (without giving effect to
any adjustment therein) equal to the number of such shares called for on the
face of this Warrant minus the number of such shares designated by the
Registered Holder in the applicable Election to Purchase.
3.3. COMPANY ACKNOWLEDGMENT. The Company will, at the time of the exercise,
exchange or transfer of this Warrant, upon the request of the Registered Holder
hereof, acknowledge in writing its continuing obligation to afford to such
Registered Holder or transferee any rights (including, without limitation, any
right to registration of the Company's shares of Common Stock) to which such
Registered Holder or transferee shall continue to be entitled after such
exercise, exchange or transfer in accordance with the provisions of this
Warrant, provided that if the Registered Holder of this Warrant shall fail to
make any such request, such failure shall not affect the continuing obligation
of the Company to afford to such Registered Holder or transferee any such
rights.
4. DELIVERY OF SHARE CERTIFICATES UPON EXERCISE. Following the exercise of this
Warrant in full or in part, within the time periods and in the manner provided
by Section 5(b) of the Securities Purchase Agreement, the Company, at its
expense (including the payment by it of any applicable issue taxes), will cause
to be issued in the name of and delivered to the Registered Holder hereof, or as
such Registered Holder (upon payment by such Registered Holder of any applicable
transfer taxes) may direct, a certificate or certificates for the number of
fully paid and nonassessable shares of Common Stock to which such Registered
Holder shall be entitled on such exercise, plus, in lieu of any fractional share
to which such Registered Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then current market value of one full share of Common
Stock (as computed in accordance with Subsection 5.1(d) hereof).
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES OF COMMON STOCK.
5.1. The Purchase Price hereof shall be subject to adjustment from time to
time as follows:
(a) In case the Company shall (i) pay a dividend on its shares of Common
Stock in Common Stock, (ii) subdivide its outstanding shares of Common Stock
or (iii) combine its-outstanding shares of Common Stock into a smaller
number of shares, then, in such an event, the Purchase Price in effect
immediately prior thereto shall be adjusted proportionately so that the
adjusted Purchase Price will bear the same relation to the Purchase Price in
effect immediately prior to any such event as the total number of shares of
Common Stock outstanding immediately prior any such event shall bear to the
total number of shares of Common Stock outstanding immediately after to such
event. An adjustment made pursuant to this Section 5.1(a) shall, (i) become
effective retroactively immediately after the record date in the case of a
dividend and shall (ii) become effective immediately-after the effective
date in the case of a subdivision or combination. The Purchase Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described herein.
(b) In case the Company shall distribute to all holders of its shares of
Common Stock, Other Securities, evidences of its indebtedness or assets
(excluding cash dividends or distributions) or purchase rights, options or
warrants to subscribe for or purchase Other Securities, then in each such
case, the Purchase Price in effect thereafter shall be determined by
multiplying the Purchase Price in effect immediately prior thereto by a
fraction, of which the numerator shall be the total number of outstanding
shares of Common Stock multiplied by the current market price per share of
Common Stock (as determined in accordance with the provisions of subdivision
(c) below) on the record date mentioned below, less the fair market value as
determined by the Board of Directors (whose determination shall be
conclusive) of the Other Securities, assets or evidences of indebtedness so
distributed or of such rights or warrants, and of which the denominator
shall be the total number 2f outstanding shares of Common Stock multiplied
by such current market price per share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become
effective retroactively immediately after the record date for the
determination of shareholders entitled to receive such distribution.
(c) For the purpose of any computation under subdivision (b) above, the
current market price per share of Common Stock shall be deemed to be the
closing price of the Company's shares of Common Stock on the date that the
computation is made.
(d) No adjustment of the Purchase Price shall be made if the amount of
such adjustment shall be less than $.02 per share, but in such case, any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next
subsequent adjustment, which, together with any adjustment so carried
forward, shall amount to not less than $.02 per share. In case the Company
shall at any time issue shares of Common Stock by way of dividend on any
class of stock of the Company or subdivide or combine the outstanding shares
of Common Stock, said amount of $.02 per share (as theretofore increased or
decreased, if the same amount shall have been adjusted in accordance with
the
provisions of this subparagraph) shall forthwith be proportionately
increased in the case of a combination or decreased in the case of such a
subdivision or stock dividend so as to appropriately reflect the same.
5.2. Upon each adjustment of the Purchase Price pursuant to subdivisions (a)
and (b) of Section 5.1, the number of shares of Common Stock purchasable upon
exercise of this Warrant-shall be adjusted to the number of shares of Common
Stock, calculated to the nearest one hundredth of a share, obtained by
multiplying the number of shares of Common Stock purchasable immediately prior
to such adjustment upon the exercise of this Warrant Certificate by the Purchase
Price in effect prior to such adjustment and dividing the product so obtained by
the new Purchase Price.
5.3. In the event of any capital reorganization of the Company, or of any
reclassification of the shares of Common Stock, this Warrant shall be
exercisable after such capital reorganization or reclassification upon the terms
and conditions specified in this Warrant, for the number of shares of stock or
other securities which the shares of Common Stock issuable (at the time of such
capital reorganization or reclassification) upon exercise of this Warrant would
have been entitled to receive upon such capital reorganization or
reclassification if such exercise had taken place immediately prior to such
action. The subdivision or combination of shares of Common Stock at any time
outstanding into a greater or lesser number of shares of Common Stock shall not
be deemed to be a reclassification of the shares of Common Stock of the Company
for the purposes of this Subsection 5.3.
5.4. Whenever the Purchase Price is adjusted as herein provided, the Company
shall compute the adjusted Purchase Price in accordance with Subsection 5.1 and
shall prepare a certificate signed by its Chief Financial Officer and any other
executive officer setting forth the adjusted Purchase Price, and showing in
reasonable detail the method of such adjustment and the fact requiring the
adjustment and upon which such calculation is based and such certificate shall
forthwith be forwarded to the Registered Holder.
5.5. The form of this Warrant need not be changed because of any change in
the Purchase Price pursuant to this Section 5 and any Warrant issued after such
change may state the same Purchase Price and the same number of shares of Common
Stock as are stated in this Warrant as initially issued.
6. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.
6.1. MERGER, ETC. In case at any time or from time to time after the date of
issuance of this Warrant, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company within three (3)
years from the date of such transfer (any such transaction being hereinafter
sometimes referred to as a "Reorganization"), then, in each such case, the
Registered Holder of this Warrant, upon the exercise hereof as provided in
Section 3 at any time after the consummation or effective date of such
Reorganization (the "Effective Date"), shall receive, in lieu of the shares of
Common Stock issuable on such exercise prior to such consummation or such
Effective Date, the stock and other securities and property (including cash) to
which such Registered Holder would have been entitled upon such consummation or
in connection with such dissolution, as the case may be, if such Registered
Holder had so exercised this Warrant, immediately prior thereto (all subject to
further adjustment thereafter as provided in Section 5). The Company shall not
effect a transaction of the type described in clause (b) or (c) above unless
upon or prior to the consummation thereof, the Company's successor corporation,
or if the Company shall be the "surviving company in any such Reorganization but
is not the issuer of the shares of stock, securities or other property to be
delivered to the holders of the Company's outstanding shares of Common Stock at
the effective time thereof, then such issuer, shall assume in writing the
obligation hereunder to deliver to the Registered Holder of this Warrant such
shares of stock, securities, cash or other property as such holder shall be
entitled to purchase in accordance with the provisions hereof
6.2. DISSOLUTION. Except as otherwise expressly provided in Subsection 6.1,
in the event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, prior to such
dissolution, shall at its expense deliver or cause to be delivered the stock and
other securities and property (including cash, where applicable) receivable by
the holders of the Warrants after the effective date of such
dissolution pursuant to this Section 6 to a bank or trust company having its
principal office in New York City, as trustee for the holder or holders of the
Warrants.
6.3. CONTINUATION OF TERMS. Except as otherwise expressly provided in
Subsection 6.1, upon any reorganization, consolidation, merger or transfer (and
any dissolution following any transfer) referred to in this Section 6, this
Warrant shall continue in full force and effect and the terms hereof shall be
applicable to the shares of stock and other securities and property receivable
on the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any such
stock or other securities, including, in the case of any such transfer, the
person acquiring all or substantially all of the properties or assets of the
Company, whether or not such person shall have expressly assumed the terms of
this Warrant.
7. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or By-laws, 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 of the Warrants, but will at all times in ..good faith
assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
holders of the Warrants, as specified herein and in the Securities Purchase
Agreement, against dilution (to the extent specifically provided herein) or
other impairment. Without limiting the generality of the foregoing, the Company
(a) will not increase the par value of any shares of stock receivable on the
exercise of the Warrants above the amount payable therefor on such exercise, and
(b) will not effect a subdivision or split up of shares or similar transaction
with respect to any class of the Common Stock without effecting an equivalent
transaction with respect to all other classes of Common Stock.
8. ACCOUNTANT'S CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment or
readjustment in the Common Stock issuable on the exercise of the Warrants, the
Company. At its expense, will promptly cause the independent certified public
accountants of the Company to compute such adjustment or readjustment in
accordance with the terms of the Warrants and prepared certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price in effect
and number and type of Shares for which the Warrants were exercisable
immediately prior to such issue or sale and as each is adjusted and readjusted
on account thereof The Company will forthwith .mail a copy of each such
certificate to each holder of a Warrant, and will, on the written request at any
time of any holder of a Warrant, furnish to such holder a like certificate
setting forth the Purchase Price and the number and type of Shares at the time
in effect and showing how it was calculated.
9. NOTICE OF RECORD DATE. In case of
(a) any taking by the Company of a record of the holders of any class of
its securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all
or substantially all the assets of the Company to or consolidation or merger
of the Company with or any voluntary or involuntary dissolution, liquidation
or winding up of the Company, or
(c) events shall have occurred resulting in the voluntary or involuntary
dissolution, liquidation or winding up of the Company
then and in each such event the Company will mail or cause to be mailed to each
holder of a Warrant a notice specifying (i) the date on which any record is to
be taken for the purpose of any such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or right, (ii)
the date on which any such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding up is to
take place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock (or Other Securities) shall be entitled to exchange their
Common Stock (or Other Securities) for securities or other property deliverable
on such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding up, and (iii) the
amount and character of any stock or other securities, or rights or options with
respect thereto, proposed to be issued or granted, the date of such proposed
issue or grant and the persons or class of persons to whom such proposed issue
or grant is to be offered or made. Such notice shall be mailed at least thirty
(30) days prior to the date specified in such notice on which any such action is
to be taken.
10. EXCHANGE OF WARRANTS. On surrender for exchange of any Warrant, properly
endorsed, to the Company, the Company, at its expense, will issue and deliver to
or (subject to Section 2) on the order of the holder thereof a new Warrant or
Warrants of like tenor, in the name of such holder or as such holder (on payment
by such holder or any applicable transfer taxes) may direct, calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
called for on the face or faces of the Warrant or Warrants so surrendered.
11. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of any Warrant and, in
the case of any such loss, theft or destruction of any Warrant, on delivery of
an indemnity agreement or security reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, on surrender and
cancellation of such Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
12. WARRANT AGENT. The Company may, by written notice to each holder of a
Warrant, appoint an agent having an office in New York, New York, for the
purpose of issuing shares of Common Stock on the exercise of the Warrants
pursuant to Section 3, exchanging Warrants pursuant to Section 10, and replacing
Warrants pursuant to Section 11, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.
13. REMEDIES. The Company stipulates that the remedies at law of the holder of
this Warrant in the event of any default or threatened default by the Company in
the performance of or compliance with any of the terms of this Warrant are not
and will not be adequate, and that such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
14. NEGOTIABILITY, ETC. This Warrant is issued upon the following terms, to all
of which each Registered Holder or owner hereof by the taking hereof consents
and agrees:
(a) subject to the terms of Section 4 of the Securities Purchase
Agreement, title to this Warrant may be transferred by endorsement (by the
Registered Holder hereof executing the form of assignment at the end hereof)
and delivery in the same manner as in the case of a negotiable instrument
transferable by endorsement and delivery;
(b) any person in possession of this Warrant properly endorsed is
authorized to represent himself as absolute owner hereof and is empowered to
transfer absolute title hereto by endorsement and delivery hereof to a bona
fide purchaser hereof for value; each prior taker or owner waives and
renounces all of his equities or rights in this Warrant in favor of each
such bona fide purchaser, and each such bona fide purchaser shall acquire
absolute title hereto and to all rights represented hereby; and
(c) until this Warrant is transferred on the books of the Company, the
Company may treat the Registered Holder hereof as the absolute owner hereof
for all purposes, notwithstanding any notice to the contrary.
15. NOTICES. All notices and other communications from the Company to the
Registered Holder of this Warrant shall be given in writing (unless otherwise
specified herein) and shall be effective upon personal delivery, via facsimile
(upon receipt of confirmation of error-free transmission) or two business days
following deposit of such notice with an internationally recognized courier
service, with postage prepaid and addressed, to such address as may have been
furnished to the Company in writing by such Registered Holder or, until any such
Registered Holder-furnishes to the Company an address, then to, and at the
address of, the last Registered Holder of this Warrant who has so furnished an
address to the Company.
16. MISCELLANEOUS. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant is being delivered in the State of New York and, except for
provisions with respect to internal corporate matters of the Company which shall
be governed by the corporate laws of the State of Colorado, shall be construed
and enforced in accordance with and governed by the laws of the State of New
York, without regard to principles of conflict of laws. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof All nouns and pronouns used herein shall be
deemed to refer to the masculine, feminine or neuter, as the identity of the
person or persons to whom reference is made herein may require.
17. EXPIRATION. The right to exercise this Warrant shall expire at 5:00 p.m.,
New York time, on November 9, 2003.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of November 9,
1998.
ONLINE SYSTEM SERVICES, INC.
By:
--------------------------------
Name:
Title:
Attest:
By:
-------------------------------
Name:
Title:
ANNEX A
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right, represented
by this Warrant, to purchase ____________ shares of Common Stock and herewith
tenders in payment for such securities a certified or official bank check
payable in New York Clearing House Funds to the order of ONLINE SYSTEM SERVICES,
INC., in the amount of $__________, all in accordance with the terms hereof The
undersigned requests that a certificate for such shares of Common Stock be
registered in the name of _____________, whose address is
_________________________________________ and that such Certificate be delivered
to whose address is_____________________________________.
Dated:
Name:
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Signature:
----------------------------------
(Signature must conform in all respects to the name of the
Registered Holder, as specified on the face of the Warrant.)
---------------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
ANNEX B
FORM OF ASSIGNMENT-
(TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH HOLDER DESIRES TO TRANSFER THE
WARRANT.)
FOR VALUE RECEIVED, ___________
hereby sells, assigns and transfers unto
- ---------------------------------------------
(Please print name and address of transferee)
this Warrant, together with all right, title and interest therein, and does so
hereby irrevocably constitute and appoint _______________________ Attorney, to
transfer the within Warrant on the books of the within-named Company, with full
power of substitution.
Dated:
Name:
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Signature:
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(Signature must conform in all respects to the name of the
Registered Holder, as specified on the face of the Warrant.)
---------------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)