EXHIBIT 4.1
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANFER AS SET FORTH HEREIN. .
DECEMBER 31, 2002
846,154 shares Warrant No. 3
SEMOTUS SOLUTIONS, INC.
STOCK PURCHASE WARRANT
Registered Owner: BROWN SIMPSON PARTNERS I, LTD.
This certifies that, for value received, Semotus Solutions, Inc., a
Nevada corporation, the ("Company") grants the following rights to the
Registered Owner, or assigns, of this Warrant:
1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Purchase Agreement. As
used in this Warrant, the following terms have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under direct or indirect
common control with such Person. For the purposes of this definition, "control,"
when used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise; and the terms of "affiliated," "controlling" and
"controlled" have meanings correlative to the foregoing.
"Amex" means the American Stock Exchange.
"Appraiser" means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing.
"Approved Stock Plan" means any contract, plan or agreement which has
been approved by the Board of Directors of the Company or any committee thereof,
pursuant to which the Company's securities may be issued to any employee,
officer or director; provided, that such
issuance or issuances shall not exceed 10% of the Company's outstanding Common
Stock and preferred stock on the Closing Date.
"Average Price" on any date means (x) the sum of the Per Share Market
Value for the ten (10) Trading Days immediately preceding such date minus (y)
the highest and lowest Per Share Market Value during such 10 Trading Day period,
divided by (z) eight (8).
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the state of
New York generally are authorized or required by law or other government actions
to close.
"Change of Control Transaction" means the occurrence of any of (i) any
acquisition or series of related acquisitions by an individual or legal entity
or "group" (as described in Section 13(d)(3) of the Exchange Act) of in excess
of 50% of the voting power of the Company, (ii) a replacement of more than
one-half of the members of the Company's board of directors which is not
approved by a majority of those individuals who are members of the board of
directors on the date hereof, or their duly elected successors who are directors
immediately prior to such transaction(s), in one or a series of related
transactions, (iii) the merger or consolidation of the Company with or into
another entity, unless the holders of the Company's securities immediately prior
to such transaction or series of transactions continue to hold at least 50% of
such securities following such transaction or series of transactions, (iv) a
sale, conveyance, lease, transfer or disposition of all or substantially all of
the assets of the Company in one or a series of related transactions or (v) the
execution by the Company of an agreement to which the Company is a party or by
which it is bound, providing for any of the events set forth above in (i), (ii),
(iii) or (iv).
"Closing" means the closing of the transactions contemplated by the
Purchase Agreement.
"Closing Date" means December 31, 2002.
"Common Stock" means the shares of the Company's Common Stock, par
value $.01 per share.
"Company" means Semotus Solutions, Inc., a Nevada corporation.
"Excluded Securities" means (i) shares of Common Stock issued or
issuable pursuant to the Purchase Agreement, and this Warrant, (ii) shares of
Common Stock deemed to have been issued by the Company in connection with an
Approved Stock Plan, (iii) shares of Common Stock (including options and
warrants) issuable upon the exercise of any options or warrants outstanding on
the date hereof or (iv) shares of Common Stock issued or deemed to be issued by
the Company in connection with a strategic acquisition by the Company of the
assets or business, or division thereof, of another Person.
"Exercise Period" has the meaning assigned to it in Section 5 hereof.
"Exercise Price" has the meaning assigned to it in Section 4 hereof.
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"Per Share Market Value" means on any particular date (i) the closing
bid price per share of the Common Stock on such date on the Amex or other
Subsequent Market on which the Common Stock is then listed or if there is no
such price on such date, then the closing bid price on such exchange or
quotation system on the date nearest preceding such date, or (ii) if the Common
Stock is not listed then on the Amex or other Subsequent Market, the closing bid
price for a share of Common Stock in the over-the-counter market, as reported by
the National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or (iii) if the Common Stock is not then publicly traded the fair
market value of a share of Common Stock as determined by an Appraiser selected
in good faith by the Company; provided, however, that the registered owners of a
majority of the Underlying Shares and Warrants then outstanding, after receipt
of the determination by such Appraiser, shall have the right to select, in good
faith, an additional Appraiser, in which case the fair market value shall be
equal to the average of the determinations by each such Appraiser; and provided,
further that all determinations of the Per Share Market Value shall be
appropriately adjusted for any stock dividends, stock splits or other similar
transactions during such period.
"Person" means a corporation, association, partnership, organization,
business, individual, government or political subdivision thereof or
governmental agency.
"Purchase Agreement" means that certain Preferred Buy Back and Mutual
Release Agreement, dated as of December 31, 2002, by and among the Company and
Brown Simpson Partners I, Ltd..
"Registered Owner" means the person identified on the face of this
Warrant as the registered owner hereof or their assigns.
"Subsequent Market" means the New York Stock Exchange, the Nasdaq
National Market or the Nasdaq SmallCap Market.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of February 9, 2000, among the Company and Brown Simpson
Strategic Growth Fund, Ltd, and Brown Simpson Strategic Growth Fund, L.P., (the
"Brown Simpson Funds").
"Trading Day(s)" means any day on which the primary market on which
shares of Common Stock are listed is open for trading.
"Underlying Shares" means the shares of Common Stock which are issuable
upon exercise of this Warrant.
"Warrant(s)" means the warrants issuable at the Closing.
"Warrant Shares" has the meaning assigned to it in Section 3 hereof.
2. ISSUE. Upon tender to the Company pursuant to Section 6 hereof, the
Company, within three (3) Business Days of the date thereof, shall issue to the
Registered Owner, or assigns, up to the number of shares specified in Section 3
hereof of fully paid and nonassessable shares of Common Stock that the
Registered Owner, or assigns, is otherwise entitled to purchase.
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3. NUMBER OF SHARES. The total number of shares of Common Stock that
the Registered Owner, or assigns, of this Warrant is entitled to receive upon
exercise of this Warrant is 846,154 shares (the "Warrant Shares"), subject to
adjustment from time to time as provided herein. The Company shall at all times
reserve and hold available out of its authorized and unissued shares of Common
Stock or other securities, as the case may be, sufficient shares of Common Stock
to satisfy all conversion, exercise and purchase rights represented by
outstanding convertible securities, options and warrants, including this
Warrant. The Company covenants and agrees that all shares of Common Stock that
may be issued upon the exercise of this Warrant shall, upon issuance, be duly
and validly issued, fully paid and nonassessable, free from all taxes, liens and
charges with respect to the purchase and the issuance of the shares, shall not
have any legend or restrictions on resale, expect as required by Section 3.2(b)
of that certain Securities Purchase Agreement, dated as of February 9, 2000, by
and among the Company, on the one hand, and the Brown Simpson Funds, on the
other hand, the provisions of which are incorporated herein by reference,
MUTATIS MUTANDIS, and, subsequent to the effectiveness of a Registration
Statement (as defined in the Registration Rights Agreement), shall be freely
tradable.
4. EXERCISE PRICE. The initial per share exercise price of this
Warrant, representing the price per share at which each share of Common Stock
issuable upon exercise of this Warrant may be purchased, is $0.01, subject to
adjustment from time to time pursuant to the provisions of Section 7 hereof (the
"Exercise Price").
5. EXERCISE PERIOD. This Warrant may be exercised, in whole or in part,
from the Closing Date up to and including December 31, 2006 (4 years less 1 day)
(the "Exercise Period"). If not exercised during this period, this Warrant and
all rights granted under this Warrant shall expire and lapse.
6. TENDER; ISSUANCE OF CERTIFICATES.
a. This Warrant may be exercised, in whole or in part, by (a)
delivery of the applicable Exercise Price for the number of Warrant
Shares in respect of which this Warrant is exercisable, (b) delivery of
a duly executed Warrant Exercise Form, a copy of which is attached to
this Warrant as Exhibit A, properly executed by the Registered Owner,
or assigns, of this Warrant and (c) surrender of this Warrant. The
number of Warrant Shares so purchased shall be designated on the
Warrant Exercise Form and shall be deemed to be issued to the
Registered Owner as of the close of business on the date on which this
Warrant shall have been surrendered, the completed Warrant Exercise
Form shall have been delivered and payment shall have been made for
such shares as set forth above. The payment and Warrant Exercise Form
must be delivered to the registered office of the Company or of the
Company's transfer agent, either in person or as set for in Section 13
hereof.
b. If, and only if, at the time of exercise of this Warrant, the
Warrant Shares are not saleable pursuant to an effective registration
statement, then in addition to the exercise of all or a part of this
Warrant by payment of the Exercise Price in cash as provided above, and
in lieu of such payment, the Registered Owner shall have the right to
effect a cashless exercise (a "Cashless Exercise"). In the event of a
Cashless Exercise the Registered Owner may exercise this Warrant in
whole or in part by surrendering this
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Warrant in exchange for the number of shares of Common Stock equal to
the product of (i) the number of shares as to which this Warrant is
being exercised multiplied by (ii) a fraction, the numerator of which
is the Per Share Market Value on such date less the Exercise Price then
in effect and the denominator of which is the Per Share Market Value on
such date (in each case adjusted for fractional shares as herein
provided). The Registered Owner shall be responsible for any and all
taxes payable in respect of such Cashless Exercise.
c. In lieu of physical delivery of this Warrant, provided the
Company's transfer agent is participating in the Depositary Trust
Company ("DTC") Fast Automated Securities Transfer (FAST) program, upon
request of the Registered Owner and in compliance with the provisions
hereof, the Company shall use its best efforts to cause its transfer
agent to electronically transmit the Warrant Shares to the Registered
Owner by crediting the account of the Registered Owner's Prime Broker
with DTC through its Deposit Withdrawal Agent Commission system. The
time period for delivery described herein shall apply to any such
electronic transmittals.
d. Certificates for the Warrant Shares so purchased, representing
the aggregate number of shares specified in the Warrant Exercise Form,
and any cash payments due under Section 15 hereof shall be delivered to
the Registered Owner within three (3) Business Days after this Warrant
shall have been so exercised. The certificates so delivered shall be in
such denominations as may be requested by the Registered Owner and
shall be registered in the name of the Registered Owner or such other
name as shall be designated by such Registered Owner. If this Warrant
shall have been exercised only in part then, unless this Warrant has
expired, the Company shall, at its expense and at the time of delivery
of such certificates, deliver to the Registered Owner a new Warrant
representing the number of shares with respect to which this Warrant
shall not then have been exercised.
7. ADJUSTMENT OF EXERCISE PRICE.
a. Common Stock Dividends; Common Stock Splits; Reclassification.
If the Company, at any time while this Warrant is outstanding, (a)
shall pay a stock dividend on its Common Stock, (b) subdivide
outstanding shares of Common Stock into a larger number of shares or
(c) issue by reclassification of shares of Common Stock any shares of
capital stock of the Company, then (i) the Exercise Price shall be
multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding before such event and the
denominator of which shall be the number of shares of Common Stock
outstanding after such event and (ii) the number of Warrant Shares
shall be multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such event. Any
adjustment made pursuant to this paragraph 7(a) shall become effective
immediately after the record date for the determination of shareholders
entitled to receive such dividend or distribution or, in the case of a
subdivision or re-classification, shall become effective immediately
after the effective date thereof.
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b. Rights; Options; Warrants or Other Securities. If the Company,
at any time while this Warrant is outstanding, shall fix a record date
for the issuance of rights, options, warrants or other securities to
the holders of its Common Stock entitling them to subscribe for or
purchase, convert to, exchange for or otherwise acquire shares of
Common Stock for no consideration or at a price per share less than the
Exercise Price, the Exercise Price shall be multiplied by a fraction,
the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance or sale plus the number
of shares of Common Stock which the aggregate consideration received by
the Company would purchase at the Exercise Price, and the denominator
of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance date plus the number of additional
shares of Common Stock offered for subscription, purchase, conversion,
exchange or acquisition, as the case may be. Such adjustment shall be
made whenever such rights, options, warrants or other securities are
issued, and shall become effective immediately after the record date
for the determination of shareholders entitled to receive such rights,
options, warrants or other securities.
c. Subscription Rights. If the Company, at any time while this
Warrant is outstanding, shall fix a record date for the distribution to
holders of its Common Stock evidence of its indebtedness or assets or
rights, options, warrants or other security entitling them to subscribe
for or purchase, convert to, exchange for or otherwise acquire any
security (excluding those referred to in paragraphs 7(a) and (b)
above), then in each such case the Exercise Price at which this Warrant
shall thereafter be exercisable shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Per Share Market Value on
such record date less the then fair market value at such record date of
the portion of such assets or evidence of indebtedness so distributed
applicable to one outstanding share of Common Stock as determined by
the Board of Directors in good faith, and the denominator of which
shall be the Exercise Price as of such record date; provided, however,
that in the event of a distribution exceeding ten percent (10%) of the
net assets of the Company, such fair market value shall be determined
by an Appraiser selected in good faith by the registered owners of a
majority of the Warrants and Underlying Shares then outstanding; and
provided, further, that the Company, after receipt of the determination
by such Appraiser shall have the right to select in good faith an
additional Appraiser meeting the same qualifications, in which case the
fair market value shall be equal to the average of the determinations
by each such Appraiser. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the
record date mentioned above.
d. Rounding. All calculations under this Section 7 shall be made
to the nearest cent or the nearest l/l00th of a share, as the case may
be.
e. Notice of Adjustment. Whenever the Exercise Price is adjusted
pursuant to this Section 7 the Company shall promptly deliver to the
Registered Owner a notice setting forth the Exercise Price after such
adjustment and setting forth a brief statement of the facts requiring
such adjustment. Such notice shall be signed by the chairman, president
or chief financial officer of the Company.
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f. Treasury Shares. The number of shares of Common Stock
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 shall be considered an issue or sale of Common Stock by
the Company.
g. Change of Control; Compulsory Share Exchange. In case of (A)
any Change of Control Transaction or (B) any compulsory share exchange
pursuant to which the Common Stock is converted into other securities,
cash or property (each, an "Event"), lawful provision shall be made so
that the Registered Owner shall have the right thereafter to exercise
this Warrant for shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of Common
Stock following such Event, and the Registered Owner shall be entitled
upon such Event to receive such amount of shares of stock and other
securities, cash or property as the shares of the Common Stock of the
Company into which this Warrant could have been exercised immediately
prior to such Event (without taking into account any limitations or
restrictions on the exercisability of this Warrant) would have been
entitled. The provisions of this Section 7(g) shall similarly apply to
successive Events.
h. Issuance's Below Exercise Price. If the Company, at any time
while this Warrant is outstanding, takes any of the actions described
in this Section 7(h), the Registered Owner shall have the right to
amend this Warrant as set forth below:
(i) issues or sells, or is deemed to have issued or
sold, any Common Stock;
(ii) in any manner grants, issues or sells any
rights, options, warrants, options to subscribe for or to
purchase Common Stock or any stock or other securities
convertible into or exchangeable for Common Stock (other than
any Excluded Securities) (such rights, options or warrants
being herein called "Options" and such convertible or
exchangeable stock or securities being herein called
"Convertible Securities"); or
(iii) in any manner issues or sells any Convertible
Securities;
for (a) with respect to paragraph (h)(i), above, a price per share, or
(b) with respect to paragraphs h(ii) or h(iii), above, a price per
share for which Common Stock issuable upon the exercise of such Options
or upon conversion or exchange of such Convertible Securities is, less
than the Exercise Price in effect immediately prior to such issuance or
sale, then, immediately after such issuance, sale or grant, the
Registered Owner shall have the right to amend the issuance terms of
the Common Stock issuable upon exercise of this Warrant (including
adjustment of the Exercise Price) so that the issuance terms hereof are
equivalent to the issuance terms of such offering. No modification of
the issuance terms shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such Options or Convertible
Securities. If there is a change at any time in (i) the exercise price
provided for in any Options, (ii) the additional consideration, if any,
payable upon the issuance, conversion or exchange of any Convertible
Securities or (iii) the rate at which any Convertible Securities are
convertible
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into or exchangeable for Common Stock, then immediately after such
change the Registered Owner shall have the right to amend the issuance
terms of the Common Stock issuable upon exercise of this Warrant
accordingly, including, without limitation, by reducing the Exercise
Price in effect 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 exercise price, additional
consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold; provided that no adjustment
shall be made if such adjustment would result in an increase of the
Exercise Price then in effect.
i. Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Section 7(h), the
following shall be applicable:
(i) Calculation of Consideration Received. If any
Common Stock, Options or 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, without deducting any
expenses paid or incurred by the Company or any commissions or
compensations paid or concessions or discounts allowed to
underwriters, dealers or others performing similar services in
connection with such issue or sale. In case any Common Stock,
Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration
other than cash received by the Company will be the fair value
of such consideration, except where such consideration
consists of securities listed or quoted on a national
securities exchange or national quotation system, in which
case the amount of consideration received by the Company will
be the arithmetic average of the closing sale price of such
security for the five (5) consecutive Trading Days immediately
preceding the date of receipt thereof. In case any Common
Stock, Options or 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,
Options or 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 registered
owners of a majority of the Underlying Shares and Warrants
then outstanding. 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
forty-eight (48) hours of the tenth (10th) day following the
Valuation Event by an Appraiser selected in good faith by the
Company and agreed upon in good faith by the registered owners
of a majority of the Underlying Shares and Warrants then
outstanding. The determination of such Appraiser shall be
binding upon all parties absent manifest error.
(ii) Integrated Transactions. In case any Option is
issued in connection with the issue or sale of other
securities of the Company, together comprising one integrated
transaction in which no specific consideration is allocated to
such Options
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by the parties thereto, the Options will be deemed to have
been issued for an aggregate consideration of $.01.
(iii) Record Date. If the Company takes a record of
the holders of Common Stock for the purpose of entitling them
(a) to receive a dividend or other distribution payable in
Common Stock, Options or in Convertible Securities or (b) to
subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date will be deemed to be the
date of the issue 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.
(iv) Other Events. If any event occurs that would
adversely affect the rights of the Registered Owner of this
Warrant but is not expressly provided for by Section 7 hereof
(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 so as to
protect the rights of the Registered Owner; provided, however,
that no such adjustment will increase the Exercise Price.
j. Notice of Certain Events. If:
(i) the Company shall declare a dividend (or any
other distribution) on its Common Stock;
(ii) the Company shall declare a special nonrecurring
cash dividend on or a redemption of its Common Stock;
(iii) the Company shall authorize the granting to the
holders of its Common Stock rights or warrants to subscribe
for or purchase any shares of capital stock of any class or of
any rights;
(iv) the approval of any shareholders of the Company
shall be required in connection with any reclassification of
the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property; or
(v) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the
affairs of the Company;
then the Company shall cause to be filed at each office or agency
maintained for the purpose of exercise of this Warrant, and shall cause
to be delivered to the Registered Owner, at least 30 calendar days
prior to the applicable record or effective date hereinafter specified,
a notice (provided such notice shall not include any material
non-public information) stating (a) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be
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taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or
warrants are to be determined or (b) the date on which such
reclassification, consolidation, merger, sale, transfer or share
exchange is expected to become effective or close, and the date as of
which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash
or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided,
however, that the failure to mail such notice or any defect therein or
in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. Nothing herein shall
prohibit the Registered Owner from exercising this Warrant during the
30-day period commencing on the date of such notice.
k. Increase in Exercise Price. In no event shall any provision in
this Section 7 cause the Exercise Price to be greater than the Exercise
Price on the date of issuance of this Warrant.
8. CALL OPTION. If, at any time during the Exercise Period and
following the one-year anniversary of the date hereof, the Per Share Market
Value equals or exceeds $35.00 for any period of thirty (30) consecutive Trading
Days ending not more than ten (10) Trading Days after the Call Notice Date (as
defined below), then so long as (i) any Registration Statement required to be
filed and be effective pursuant to the Registration Rights Agreement is then in
effect and has been in effect and sales of all of the Registrable Securities can
be made thereunder for at least twenty (20) days prior to the Call Option Date
(as defined below), (ii) the Company has a sufficient number of authorized
shares of Common Stock reserved for issuance upon full exercise of the Warrants
and (iii) the Company is not then in breach of any of the provisions of this
Warrant, the Company shall have the right (the "Call Option"), to be exercised
on one (1) occasion only during the two (2) month period commencing on the Call
Notice Date (as defined below), to cause the Registered Owner to exercise this
Warrant in full in accordance with the provisions of Section 6 hereof (such date
that the Call Option is exercised, the "Call Option Date"). The Company shall
exercise its Call Option by delivering to the Registered Owner a call notice
(the "Call Notice" and, such date that the Call Notice is given, the "Call
Notice Date"), by facsimile and overnight courier, at least ten (10) Business
Days prior to the Call Option Date. The Call Notice shall indicate the Call
Option Date and shall include a brief statement of the facts evidencing the
Company's right to exercise the Call Option. Nothing herein shall prohibit the
Registered Owner from exercising this Warrant in accordance with the provisions
of Section 6 hereof at any time after receipt of the Call Notice and prior to
the Call Option Date, and the Company shall deliver certificates for Warrant
Shares in accordance with Section 6 hereof with respect to any Warrants so
exercised.
9. RESTRICTION ON EXERCISE BY EITHER THE REGISTERED OWNER OR THE
COMPANY. Notwithstanding anything herein to the contrary, in no event shall the
Registered Owner or the Company have the right or be required to exercise this
Warrant if as a result of such exercise the aggregate number of shares of Common
Stock beneficially owned by such Registered Owner and its Affiliates would
exceed 4.99% of the outstanding shares of the Common Stock following such
exercise. For purposes of this Section 9, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. The provisions of this Section 9 may be waived by a Registered
Owner as to itself (and solely as to
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itself) upon not less than 65 days prior written notice to the Company, and the
provisions of this Section 9 shall continue to apply until such 65th day (or
later, if stated in the notice of waiver).
10. REGISTRATION ON COMPANY BOOKS. This Warrant shall be numbered and
shall be registered as they are issued in a warrant register maintained the
Company. The Company may deem and treat the Registered Owner of this Warrant as
the absolute owner thereof, unless the Registered Owner shall have presented
this Warrant to the Company for transfer and the transferee shall have been
entered in the register as a subsequent holder. The ownership of this Warrant
shall be proven by such register, absent manifest error.
11. REGISTRATION RIGHTS. The Company will undertake the registration of
the Common Stock into which this Warrant is exercisable at such times and upon
such terms pursuant to the provisions of the Purchase Agreement.
12. RESERVATION OF UNDERLYING SHARES; LISTING. The Company covenants
that it will at all times reserve and keep available out of its authorized
shares of Common Stock, free from preemptive rights, solely for the purpose of
issue upon exercise of this Warrants as herein provided, such number of shares
of the Common Stock as shall then be issuable upon the exercise of all
outstanding Warrants into Common Stock. The Company shall promptly secure the
listing of the shares of Common Stock issuable upon exercise of this Warrant
upon each national securities exchange or automated quotation system upon which
shares of Common Stock are then listed (subject to official notice of issuance
upon exercise of this Warrant) and shall maintain, so long as any other shares
of Common Stock shall be so listed, such listing of all shares of Common Stock
form time to time issuable upon the exercise of this Warrant.
13. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by telex (with correct
answer back received), telecopy or facsimile (with transmission confirmation
report) at the address or number designated below (if received by 5:00 p.m.
eastern time where such notice is to be received), or the first Business Day
following such delivery (if received after 5:00 p.m. eastern time where such
notice is to be received) or (b) on the second Business Day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications are (i) if to the Company or the Company's
transfer agent to[Insert address], and (ii) if to the Registered Owner to Brown
Simpson Partners I, Ltd., 152 West 57th Street, 40th Floor, New York, NY 10029,
fax no. (212) 247-1329, with copies to Akin, Gump, Strauss, Hauer & Feld,
L.L.P., 590 Madison Avenue, New York, New York 10022, Attn: James Kaye, fax no.
(212) 872-1002 or such other address as may be designated in writing hereafter,
in the same manner, by such person.
14. COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. The Company covenants
that if any shares of Common Stock required to be reserved for purposes of
exercise of this Warrant requires registration with, or approval of, any
governmental authority under any Federal or state law, or any national
securities exchange, before such shares may be issued upon exercise, the Company
will use its best efforts to cause such shares to be duly registered or
approved, as the case may be.
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15. FRACTIONAL SHARES. Upon any exercise hereunder, the Company shall
not be required to issue stock certificates representing fractions of shares of
the Common Stock, but may if otherwise permitted make a cash payment in respect
of any final fraction of a share based on the Per Share Market Value at such
time. If the Company elects not, or is unable, to make such a cash payment, the
Registered Owner shall be entitled to receive, in lieu of the final fraction of
a share, one whole share of Common Stock.
16. PAYMENT OF TAX UPON ISSUE OF TRANSFER. The issuance of certificates
for shares of the Common Stock upon exercise of this Warrant shall be made
without charge to the Registered Owner hereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate upon exercise in a name other than that of the
Registered Owner of this Warrant and the Company shall not be required to issue
or deliver such certificates unless or until the person or persons requesting
the issuance thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has been
paid.
17. WARRANTS OWNED BY COMPANY DEEMED NOT OUTSTANDING. In determining
whether the holders of the outstanding Warrants have concurred in any direction,
consent or waiver under this Warrant, warrants which are owned by the Company or
any other obligor on the warrants shall be disregarded and deemed not to be
outstanding for the purpose of any such determination; provided, that any
Warrants owned by the Registered Owner shall be deemed outstanding for purposes
of making such a determination.
18. EFFECT OF HEADINGS. The section headings herein are for convenience
only and shall not affect the construction hereof.
19. NO RIGHTS AS STOCKHOLDER. This Warrant shall not entitle the
Registered Owner to any rights as a stockholder of the Company, including
without limitation, the right to vote, to receive dividends and other
distributions, or to receive notice of, or to attend, meetings of stockholders
or any other proceedings of the Company, unless and to the extent exercised into
shares of Common Stock in accordance with the terms hereof.
20. 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 action as may reasonably be requested by the Registered Owner
in order to protect the exercise privilege of the Registered Owner against
dilution or other impairment, 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 and (ii) will take all such actions as may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of Common Stock upon the exercise of this Warrant.
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21. SHAREHOLDER RIGHTS PLAN. In the event that the Company shall
distribute "poison pill" rights pursuant to a "poison pill" shareholder rights
plan (the "Rights"), the Company shall, in lieu of making any adjustment
pursuant to Section 7 hereof, make proper provision so that each Registered
Owner who exercises this Warrant after the record date for such distribution and
prior to the expiration or redemption of the Rights shall be entitled to receive
upon such exercise, in addition to the shares of Common Stock issuable upon such
exercise, a number of Rights to be determined as follows: (i) if such exercise
occurs on or prior to the date for the distribution to the holders of Rights of
separate certificates evidencing such Rights (the "Distribution Date"), the same
number of Rights to which a holder of a number of shares of Common Stock equal
to the number of shares of Common Stock issuable upon such exercise at the time
of such exercise would be entitled in accordance with the terms and provisions
of and applicable to the Rights; and (ii) if such exercise occurs after the
Distribution Date, the same number of Rights to which a holder of the number of
shares into which this Warrant was exercisable immediately prior to the
Distribution Date would have been entitled on the Distribution Date, in
accordance with the terms and provisions of such Rights, and in each case
subject to the terms and conditions of the Rights.
22. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon and
inure to the benefit of the Registered Owners and its assigns, and shall be
binding upon any entity succeeding to the Company by merger or acquisition of
all or substantially all the assets of the Company. The Company may not assign
this Warrant or any rights or obligations hereunder without the prior written
consent of the Registered Owner. The Registered Owner may assign this Warrant
without the prior written consent of the Company.
23. GOVERNING LAW. The corporate laws of the State of Nevada shall
govern all issues concerning the relative rights of the Company and the
Registered Owners as securities holders. All other issues shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the nonexclusive jurisdiction of the state
and federal courts sitting in the City of New York, Borough of Manhattan, for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by
law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
24. REMEDIES. In the event of a breach by the Company of any of their
obligations under this Warrant, the Registered Owner, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Warrant. The
Company agrees that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Warrant and hereby further agree that, in the event of any action for specific
13
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.
25. MUTILATED OR MISSING WARRANTS. In case this Warrant shall be
mutilated, lost, stolen or destroyed, the Company, upon request of the
Registered Owner, shall issue and deliver in exchange and substitution for and
upon cancellation of such mutilated Warrant, or in the event that this Warrant
is lost, stolen or destroyed, a new Warrant of like tenor and representing an
equivalent right or interest.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officer as of the date first set forth above.
SEMOTUS SOLUTIONS, INC.
By: /s/ Anthony N. LaPine
-----------------------------
Name: Anthony N. LaPine
Title: President and CEO
15
EXHIBIT A
WARRANT EXERCISE FORM
TO: SEMOTUS SOLUTIONS, INC.
The undersigned hereby: (1) irrevocably subscribes for and offers to
purchase _______ shares of Common Stock of Semotus Solutions, Inc., pursuant to
Warrant No. ___ heretofore issued to ___________________ on ____________, ____ ;
(2) encloses either (a) a cash payment of $__________ or (b) a Warrant
representing _____ shares of Common Stock valued at the Per Share Market Price
of $ _____ on ________, ____, for these shares at a price of $____ per share (as
adjusted pursuant to the provisions of the Warrant); and (3) requests that a
certificate for the shares be issued in the name of the undersigned, or the
undersigned's designee, and delivered to the undersigned, or the undersigned's
designee, at the address specified below.
Date:
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Investor Name:
----------------------------------
Taxpayer Identification Number:
----------------------------------
By:
----------------------------------
Printed Name:
----------------------------------
Title:
----------------------------------
Address:
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Cashless Exercise (Y or N): ------------
Note: The above signature should correspond exactly with the name on
the face of this Warrant Certificate or with the name of assignee
appearing in assignment form below.
AND, if said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant Certificate is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder less
any fraction of a share paid in cash and delivered to the address stated above.