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7. VESTING SCHEDULE/EXPIRATION DATE. The number of Warrant Shares
issuable upon exercise of this Warrant shall vest and become issuable on each
Vesting Date (as defined below) at a rate of one share for every $67 of Net
Revenues (as defined below), for the period of time (the "Period") beginning the
first day following the previous Vesting Date and ending on the current Vesting
Date; provided however, that with respect to the first Vesting Date to occur
such Period shall begin on the date hereof and end on the first Vesting Date.
For purposes of this Warrant, the Vesting Dates shall be June 30, September 30,
December 31 and March 31 of each calendar year beginning June 30, 1999 and
ending September 30, 2002 (each such date referred to herein as the "Vesting
Date"). On October 1, 2002, ("the Vesting Termination Date"), any vesting of the
Warrant Shares shall cease and Holder shall not be entitled to exercise this
Warrant for any remaining unvested Warrant. Notwithstanding the foregoing, in
the event that the amount of Net Revenues billed to the Holder does not equal or
exceed $10 million (the "Minimum") by the first Vesting Date, then no Warrant
Shares shall vest until the date that the Minimum is met, at which time the
number of Warrant Shares that would have vested, based on the vesting schedule
set forth in the preceding sentences (the "Vesting Schedule"), shall be
immediately vested. Within five (5) business days of the date that the Minimum
is met, the Company shall notify the Holder that the Minimum has been met and
accompany such notice with an accounting report evidencing the amount of Net
Revenues billed to the Holder, the date that the Minimum was met, and the number
of Warrant Shares that have vested. Once the Minimum has been met, the remaining
unvested Warrant Shares shall vest pursuant to the Vesting Schedule as if no
Minimum was required. In addition, within 30 calendar days of each Vesting Date,
the Company shall deliver to the Holder a report evidencing the Net Revenues
billed to the Holder for such Period and the number of Warrant Shares that
vested on such Vesting Date. This Warrant shall expire on the date five (5)
years from the date hereof (the "Expiration Date"). After the Expiration Date
the Holder shall not be entitled to exercise any portion of this Warrant that
had not been previously exercised. For purposes of this Section 7, Net Revenues
shall mean for each Period, the sum of all amounts billed to Holder by the
Company for the purchase or license of Products (as defined in the Agreement,
hereafter defined) pursuant to the Product Purchase Agreement between the Holder
and the Company dated the date hereof (the "Agreement") less any credits issued
to the Holder by the Company during such Period which have the effect of
reducing amounts due to the Company by the Holder.
8. NOTICE OF ADJUSTMENTS. Whenever any Exercise Price shall be adjusted
pursuant to Section 2 hereof, the Company shall make a certificate signed by its
chief financial officer setting forth, in reasonable detail, the event requiring
the adjustment, the amount of the adjustment the method by which such adjustment
was calculated, the
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Exercise Price or Prices and the number of Warrant Shares excisable hereunder
after giving effect to such adjustment, and shall cause copies of such
certificate to be mailed (by first class mail, postage prepaid) to the Holder of
this Warrant.
9. NOTICE OF CHANGE IN CONTROL. In the event that the Company shall
propose at any time to effect a Change in Control, then in connection with such
transaction the Company shall send to the Holder the same notice, proxy
materials or other information that it sends to its shareholders with respect to
such Change in Control at the same time and in the same manner that it sends
such notice and information to its shareholders.
10. LOCK-UP AGREEMENT. Holder agrees not to sell or otherwise transfer
any Warrant Shares purchased under this Warrant until the date ending six months
after the date the first Warrant Shares are purchased hereunder except (i)
Holder may transfer any Warrant Shares purchased hereunder to any affiliate of
the Holder and (ii) in the event of a Change in Control of the Company, this
Section 11 shall terminate and any Warrant Shares purchased hereunder shall be
transferable without restrictions except as provided by Section 3.
11. MISCELLANEOUS. |
