Exhibit 10(iii)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
ACCENT COLOR SCIENCES, INC.
Warrant for the Purchase of Shares of Common Stock
No. 1999-1 46,535 Shares
FOR VALUE RECEIVED, ACCENT COLOR SCIENCES, INC., a Connecticut
corporation (the "Company"), with its principal office at 800 Connecticut
Boulevard, East Hartford, Connecticut 06108, hereby certifies that Pennsylvania
Merchant Group (the "Holder") is entitled, subject to the provisions of this
Warrant, to purchase from the Company, at any time after the date hereof and
continuing for a period of five (5) years (the "Expiration Date"), up to the
number of fully paid and nonassessable shares of Common Stock of the Company set
forth above, subject to adjustment as hereinafter provided.
The Holder may purchase such number of shares of Common Stock at
a purchase price per share (as appropriately adjusted pursuant to Section 6
hereof) of $.40 (the "Exercise Price"). The term "Common Stock" shall mean the
aforementioned Common Stock of the Company, together with any other equity
securities that may be issued by the Company in addition thereto or in
substitution therefor as provided herein.
The number of shares of Common Stock to be received upon the
exercise or exchange of this Warrant and the price to be paid for a share of
Common Stock are subject to adjustment from time to time as hereinafter set
forth. The shares of Common Stock deliverable upon such exercise or exchange, as
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Shares."
Section 1. Exercise of Warrant; Cashless Exercise.
(a) This Warrant may be exercised in whole or in part on any
business day on or before the Expiration Date by presentation and surrender
hereof
to the Company at its principal office at the address set forth in the initial
paragraph hereof (or at such other address as the Company may hereafter notify
the Holder in writing) with the Purchase Form annexed hereto duly executed and
accompanied by proper payment of the Exercise Price in lawful money of the
United States of America in the form of a check, subject to collection, for the
number of Warrant Shares specified in the Purchase Form. If this Warrant should
be exercised in part only, the Company shall, upon surrender of this Warrant,
execute and deliver a new Warrant evidencing the rights of the Holder thereof to
purchase the balance of the Warrant Shares purchasable hereunder. Upon receipt
by the Company of this Warrant and such Purchase Form, together with proper
payment of the Exercise Price, at such office, the Holder shall be deemed to be
the holder of record of the Warrant Shares, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such Warrant Shares shall not then be actually delivered to the
Holder. The Company shall pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of the Warrant
Shares.
(b) In addition to the rights of the Holder under paragraph (a)
above, the Holder shall have the right to exercise this Warrant, in whole or in
part, in lieu of paying the Exercise Price in cash, by instructing the Company
to issue that number of Warrant Shares determined by multiplying the number of
Warrant Shares in respect of which this Warrant is being exercised by a
fraction, the numerator of which shall be the difference between the Market
Price (as defined in Section 6(g) below) per share of Common Stock on the date
of exercise and the Exercise Price, and the denominator of which shall be such
Market Price per share of Common Stock.
Section 2. Reservation of Shares. The Company hereby agrees that
at all times there shall be reserved for issuance and delivery upon exercise or
exchange of this Warrant all shares of its Common Stock or other shares of
capital stock of the Company from time to time issuable upon exercise or
exchange of this Warrant. All such shares shall be duly authorized and, when
issued upon the exercise or exchange of the Warrant in accordance with the terms
hereof, shall be validly issued, fully paid and nonassessable, free and clear of
all liens, security interests, charges and other encumbrances or restrictions on
sale (other than any restrictions on sale pursuant to applicable federal and
state securities laws) and free and clear of all preemptive rights.
Section 3. Fractional Interest; Market Price.
(a) The Company will not issue a fractional share of Common Stock
upon exercise or exchange of this Warrant. Instead, the Company will deliver its
check for the current market value of the fractional share. The current market
value of a fraction of a share is determined as follows: multiply the Market
Price of a full share by the fraction of a share and round the result to the
nearest cent.
(b) For purposes of Section 3(a), the Market Price of a share of
Common Stock is, if the Common Stock is then publicly traded, the Quoted Price
(as defined in Section 6(g) below) of the Common Stock on the last trading day
prior to the date of exercise or exchange, and otherwise shall be equal to the
Exercise Price.
Section 4. Assignment or Loss of Warrant.
(a) Except as provided in Section 9, the Holder of this Warrant
shall be entitled, without obtaining the consent of the Company, to assign its
interest in this Warrant, or any of the Warrant Shares, in whole or in part to
any bona fide officer, director or partner of Holder, provided, however, that
the transferee, prior to any such transfer, agrees in writing, in form and
substance satisfactory to the Company, to be bound by the terms of this
Agreement as if originally a party hereto and provides the Company with an
opinion of counsel in such form reasonably acceptable to the Company and its
counsel, that such transfer would not be in violation of the Act or any
applicable state securities or blue sky laws. Subject to the provisions hereof
and of Section 9, upon surrender of this Warrant to the Company or at the office
of its stock transfer agent or warrant agent, with the Assignment Form annexed
hereto duly executed and funds sufficient to pay any transfer or other tax
payable in respect thereof, the Company shall, without charge, execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees named
in such instrument of assignment and, if the Holder's entire interest is not
being assigned, in the name of the Holder, and this Warrant shall promptly be
canceled.
(b) Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of indemnification satisfactory to the Company, and
upon surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
Section 5. Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a shareholder in the Company, either at law
or equity, and the rights of the Holder are limited to those set forth in this
Warrant. Nothing contained in this Warrant shall be construed as conferring upon
the Holder hereof the right to vote or to consent or to receive notice as a
shareholder of the Company on any matters or with respect to any rights
whatsoever as a shareholder of the Company. No dividends or interest shall be
payable or accrued in respect of this Warrant or the interest represented hereby
or the Warrant Shares purchasable hereunder until, and only to the extent that,
this Warrant shall have been exercised or exchanged in accordance with its
terms.
Section 6. Adjustment of Exercise Price and Number of Shares. The
number and kind of securities purchasable upon the exercise or exchange of this
Warrant and the Exercise Price shall be subject to adjustment from time to time
upon the occurrence of certain events, as follows:
(a) Adjustment for Change in Capital Stock. If at any time after
December 7, 1999, the Company:
(A) pays a dividend or makes a distribution on its Common
Stock, in either case in shares of its Common Stock;
(B) subdivides its outstanding shares of Common Stock into
a greater number of shares;
(C) combines its outstanding shares of Common Stock into a
smaller number of shares; or
(D) makes a distribution on its Common Stock in shares of
its capital stock other than Common Stock;
then the Exercise Price in effect immediately prior to such action shall be
adjusted so that the Holder may receive, upon exercise or exchange of this
Warrant and payment of the same aggregate consideration, the number of shares of
capital stock of the Company which the Holder would have owned immediately
following such action if the Holder had exercised or exchanged the Warrant
immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
(b) Adjustment for Other Distributions. If at any time after December
7, 1999, the Company distributes to all of its Common Stock any of its assets or
debt securities, the Exercise Price following the record date shall be adjusted
in accordance with the following formula:
E' = E x M-F
---
M
where: E' = the adjusted Exercise Price.
E = the Exercise Price immediately prior to the
adjustment.
M = the Market Price (as defined in (g) below)
per share of Common Stock on the record date
of the distribution.
F = the aggregate fair market value (as
conclusively determined by the Board of
Directors of the Company) on the record date
of the assets or debt securities to be
distributed divided by the number of
outstanding shares of Common Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of shareholders entitled to receive the distribution.
In the event
that such distribution is not actually made, the Exercise Price shall again be
adjusted to the Exercise Price as determined without giving effect to the
calculation provided hereby. In no event shall the Exercise Price be adjusted to
an amount less than zero.
This subsection does not apply to cash dividends or cash distributions
paid out of consolidated current or retained earnings as shown on the books of
the Company and paid in the ordinary course of business.
(c) Adjustment for Common Stock Issue. If at any time after December
7, 1999, the Company issues shares of Common Stock for consideration per share
less than the Exercise Price per share on the date the Company fixes the
offering price of such additional shares, the Exercise Price shall be adjusted
in accordance with the following formula:
O + P
--
E' = E x E
---------
A
where: E' = the adjusted Exercise Price.
E = the Exercise Price immediately prior to the
adjustment.
O = the number of shares outstanding immediately
prior to the issuance of such additional
shares.
P = the aggregate consideration received for
the issuance of such additional shares.
A = the number of shares outstanding
immediately after the issuance of such
additional shares.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
This subsection (c) does not apply to (i) any of the transactions
described in subsections (b) and (d), (ii) Common Stock issued pursuant to
options, warrants, convertible preferred stock and other rights to purchase
shares of Common Stock outstanding on December 7, 1999, (iii) Common Stock
issued to shareholders of any non-affiliated person which merges into or with
the Company, or any subsidiary of the Company, in proportion to their stock
holdings of such person immediately prior to such merger, upon such merger, or
(iv) Common Stock issued to directors or employees of, or consultants to, the
Company upon the exercise of warrants, rights or options which (A) are issued
pursuant to stock option plans, employee benefit plans, employment agreements or
consulting agreements, in each case approved by the Company's Board of Directors
or an appropriate committee of the Company's Board of Directors, and (B) have an
exercise price not less than 70% of the Market Price of the Company's Common
Stock at the time of issuance of such warrant, right or option.
(d) Adjustment for Convertible Securities Issue. If at any time after
December 7, 1999, the Company issues for consideration any securities
convertible into or exchangeable or exercisable for Common Stock (other than
securities issued in transactions described in subsection 6(a) above) for
consideration per share of Common Stock initially deliverable upon conversion,
exchange or exercise of such securities less than the Exercise Price per share
on the date of issuance of such securities, the Exercise Price shall be adjusted
in accordance with the following formula:
O + P
--
E' = E x E
--------
O + D
where: E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately
prior to the issuance of such securities.
P = the aggregate consideration received for
the issuance of such securities.
D = the maximum number of shares deliverable
upon conversion, exchange or exercise of
such securities at the initial conversion,
exchange or exercise rate.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance. If all of
the Common Stock deliverable upon conversion, exchange or exercise of such
securities has not been issued when such securities are no longer outstanding,
then the Exercise Price shall promptly be readjusted to the Exercise Price which
would then be in effect had the adjustment upon the issuance of such securities
been made on the basis of the actual number of shares of Common Stock issued
upon conversion, exchange or exercise of such securities.
This subsection (d) does not apply to (i) any of the transactions
described in subsections (b) and (c) above, (ii) securities convertible into or
exchangeable or exercisable for Common Stock issued to shareholders of any
non-affiliated person which merges into or with the Company, or any subsidiary
of the Company, in proportion to their stock holdings of such person immediately
prior to such merger, upon such merger, or (iii) warrants, rights or options
which (A) are issued pursuant to stock option plans, employee benefit plans,
employment agreements or consulting agreements, in each case approved by the
Company's Board of Directors or an appropriate committee of the Company's Board
of Directors, and (B) have an exercise price of not less than 70% of the Market
Price of the Company's Common Stock at the time of issuance of such warrants,
right, warrant or option.
(e) Deferral of Issuance or Payment. In any case in which an event
covered by this Section 6 shall require that an adjustment in the Exercise Price
be made effective as of a record date, the Company may elect to defer until the
actual occurrence of such event (i) issuing to the Holder, if this Warrant is
exercised after such record date, the shares of Common Stock and other capital
stock of the Company, if any, issuable upon such exercise over and above the
shares of Common Stock or other capital stock of the Company, if any, issuable
upon such exercise on the basis of the Exercise Price in effect prior to such
adjustment, and (ii) paying to the Holder by check any amount in lieu of the
issuance of fractional shares pursuant to Section 3.
(f) When No Adjustment Required. No adjustment need be made for a
change in the par value of the Common Stock.
(g) Market Price. The "Market Price" per share of Common Stock on any
date is the average of the Quoted Prices of the Common Stock for the 30
consecutive trading days commencing 45 trading days before the date in question.
The "Quoted Price" of the Common Stock is the last reported sales price of the
Common Stock as reported by Nasdaq, or the primary national securities exchange
on which the Common Stock is then quoted; provided, however, that if quotes for
the Common Stock are not reported by Nasdaq and the Common Stock is neither
traded on the Nasdaq National Market, on a national securities exchange, on the
Nasdaq Small Cap Market nor on the OTC Electronic Bulletin Board, the price
referred to above shall be the price reflected in the over-the-counter market as
reported by the National Quotation Bureau, Inc. or any organization performing a
similar function, and provided, further, that if the Common Stock is not then
publicly traded, the Market Price shall equal the Conversion Price.
(h) No Adjustment Upon Exercise of Warrants. No adjustments shall be
made under any Section herein in connection with the issuance of Warrant Shares
upon exercise or exchange of the Warrants.
(i) Common Stock Defined. Whenever reference is made in Section 6(a)
to the issue of shares of Common Stock, the term "Common Stock" shall include
any equity securities of any class of the Company hereinafter authorized which
shall not be limited to a fixed sum or percentage in respect of the right of the
holder thereof to participate in dividends or distributions of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the Company.
Subject to the provisions of Section 8 hereof, however, shares issuable upon
exercise or exchange hereof shall include only shares of the class designated as
Common Stock of the Company as of the date hereof or shares of any class or
classes resulting from any reclassification or reclassifications thereof or as a
result of any corporate reorganization as provided for in Section 8 hereof.
Section 7. Officers' Certificate. Whenever the Exercise Price shall be
adjusted as required by the provisions of Section 6, the Company shall forthwith
file in the custody of its secretary or an assistant secretary at its principal
office an officers' certificate showing the adjusted Exercise Price determined
as herein provided, setting forth in reasonable detail the facts requiring such
adjustment and the manner of computing such adjustment. Each such officers'
certificate shall be signed by the chairman, president or chief financial
officer of the Company and by the secretary or any assistant secretary of the
Company. Each such officers' certificate shall be made available at all
reasonable times for inspection by the
Holder or any holder of a Warrant executed and delivered pursuant to Section 4
hereof.
Section 8. Reclassification, Reorganization, Consolidation or Merger.
In the event of any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the Company (other than a subdivision or
combination of the outstanding Common Stock and other than a change in the par
value of the Common Stock) or in the event of any consolidation or merger of the
Company with or into another corporation (other than a merger in which merger
the Company is the continuing corporation and that does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise or exchange of this Warrant)
or in the event of any sale, lease, transfer or conveyance to another
corporation of the property and assets of the Company as an entirety or
substantially as an entirety, the Company shall use its best efforts to cause
effective provisions to be made so that the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and amount of
shares of stock and other securities and property (including cash) receivable
upon such reclassification, capital reorganization and other change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock that would have been received upon exercise or exchange of this
Warrant immediately prior to such reclassification, capital reorganization,
change, consolidation, merger, sale or conveyance. Any such provision shall
include provisions for adjustments in respect of such shares of stock and other
securities and property that shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Warrant. The foregoing provisions of
this Section 8 shall similarly apply to successive reclassifications, capital
reorganizations and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances.
Section 9. Transfer to Comply with the Securities Act of 1933;
Registration Rights.
9.1 No sale, transfer, assignment, hypothecation or other disposition
of this Warrant or of the Warrant Shares shall be made unless any such transfer,
assignment or other disposition will comply with the rules and statutes
administered by the Securities and Exchange Commission and (i) a Registration
Statement under the Act including such Shares is currently in effect, or (ii) in
the written opinion of counsel, which counsel and which opinion shall be
reasonably satisfactory to the Company, a current registration Statement is not
required for such disposition of the shares. Each stock certificate representing
Warrant Shares issued upon exercise or exchange of this Warrant shall bear a
legend in substantially the following form (unless, in the opinion of counsel,
which counsel and which opinion shall be reasonably satisfactory to the Company,
such legend is not required):
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF
THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS."
9.2 The Company agrees that during the term of this Warrant, the
Holder shall have the right, pursuant to the terms of the Registration Rights
Agreement among the Company and certain purchasers of the Company's Common
Stock, to require the Company to register the Warrant Shares under the
circumstances and in the manner set forth in the Registration Rights Agreement.
Section 10. Modification and Waiver. Except as otherwise provided
herein, any term of this Warrant may be amended, and the observance of any term
of this Warrant may be waived (either generally or in a particular instance,
either retroactively or prospectively, and either for a specified period of time
or indefinitely), with the written consent of the Company and the Holder of this
Warrant. Any amendment or waiver effected in accordance with this section shall
be binding upon each future Holder of this Warrant and the Company.
Section 11. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery, on the first business day following mailing by overnight
courier, or on the fifth day following mailing by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company at the
address indicated therefor in the first paragraph of this Warrant and the Holder
at its address as shown on the books of the Company; provided, however, that
presentation of a Purchase Form and payment of any Exercise Price shall be
effective only upon receipt by the Company.
Section 12. Descriptive Headings and Governing Law. The titles of the
paragraphs and subparagraphs of this Warrant are for convenience of reference
only and are not to be considered in construing this Warrant. This Warrant shall
be governed by and construed under the laws of the State of Connecticut without
regard to any otherwise applicable principles of conflicts of laws.
Section 13. Entire Agreement. This Warrant and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement among the parties with regard to the subjects hereof and no party
shall be liable or bound to any other party in any manner by any
representations, warranties, covenants or agreements except as specifically set
forth herein or therein. Nothing in this Warrant, express or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Warrant, except as expressly provided
herein.
Section 14. Severability. In the event that any provision of this
Warrant shall be invalid, illegal or unenforceable, it shall, to the extent
practicable, be modified so as to make it valid, legal and enforceable and to
retain as nearly as practicable the intent of the parties, and the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby. To the extent permitted by law, the parties hereto
waive the benefit of any provision of law that renders any provision of this
Warrant invalid or unenforceable in any respect.
Section 15. No Waiver. No waiver by any party to this Warrant of any
one or more defaults by any other party or parties in the performance of any of
the provisions hereof shall operate or be construed as a waiver of any future
default or defaults, whether of a like or different nature. Except as expressly
provided herein, no failure or delay on the part of any party in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy.
IN WITNESS WHEREOF, the Company has duly caused this Warrant to be
signed by its duly authorized officer and to be dated as of this ______ day of
________, 1999.
ACCENT COLOR SCIENCES, INC.
By: /s/
-------------------------------
Name:
Title:
PURCHASE FORM
Dated ,
------------------
The undersigned hereby irrevocably elects to exercise the within
Warrant to purchase ______ shares of Common Stock and hereby makes payment of
___________________ in payment of the exercise price thereof.
Signature
----------------------------
ASSIGNMENT FORM
Dated ,
--------------
FOR VALUE RECEIVED, __________________ hereby sells, assigns and
transfers unto _____________________________(the "Assignee"), (please type or
print in block letters)
_______________________________________________________________________________
(insert address)
its right to purchase up to _____ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint
_______________________________ Attorney, to transfer the same on the books of
the Company, with full power of substitution in the premises.
Signature
--------------------------