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Exhibit 4.2
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS
SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE
SECURITIES COMMISSION OF ANY STATE 1N 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 AND IN ACCORDANCE WITH
APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE
OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
To Purchase 10,000 Shares of Common Stock of
Knobias, Inc.
THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies
that, for
value received, TIMOTHY J. AYLOR (the "Holder"), is entitled,
upon the terms and
subject to the limitations on exercise and the conditions
hereinafter set forth,
at any time on or after the date hereof (the "Initial Exercise
Date") and on or
prior to the close of business on the five year anniversary of
the Initial
Exercise Date (the "Termination Date") but not thereafter, to
subscribe for and
purchase from Knobias, Inc., a Delaware corporation (the
"Company"), up to
10,000 shares (the "Warrant Shares") of Common Stock, $0.01 par
value, of the
Company (the "Common Stock"). The purchase price of one share of
Common Stock
under this Warrant shall be equal to the Exercise Price, as
defined in Section
1(b).
Section 1. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights
represented
by this Warrant may be made at any time or times on or after the
Initial
Exercise Date and on or before the Termination Date by delivery
to the
Company of a duly executed facsimile copy of the Notice of
Exercise Form
annexed hereto (or such other office or agency of the Company as
it may
designate by notice in writing to the registered Holder at the
address of
such Holder appearing on the books of the Company); provided,
however,
within 5 Trading Days of the date said Notice of Exercise is
delivered to
the Company, the Holder shall have surrendered this Warrant to
the Company
and the Company shall have received payment of the aggregate
Exercise
Price of the shares thereby purchased by wire transfer or
cashier's check
drawn on a United States bank.
<PAGE>
b) Exercise Price. The exercise price of the Common Stock under
this
Warrant shall be $0.75, subject to adjustment hereunder (the
"Exercise
Price").
c) Cashless Exercise. If at any time after one year from the
date of
issuance of this Warrant there is no effective Registration
Statement
registering the resale of the Warrant Shares by the Holder, then
this
Warrant may also be exercised at such time by means of a
"cashless
exercise" in which the Holder shall be entitled to receive a
certificate
for the number of Warrant Shares equal to the quotient obtained
by
dividing [(A-B) (X)] by (A), where:
(A) = the VWAP (volume weighted average price of the
Company's
Common Stock as quoted by Bloomberg, LP) on the Trading Day
immediately preceding the date of such election;
(B) = the Exercise Price of this Warrant, as adjusted; and
(X) = the number of Warrant Shares issuable upon exercise of
this
Warrant in accordance with the terms of this Warrant by
means
of a cash exercise rather than a cashless exercise.
d) Exercise Limitations; Holder's Restrictions. The Holder shall
not
have the right to exercise any portion of this Warrant, pursuant
to
Section 1(c) or otherwise, to the extent that after giving
effect to such
issuance after exercise, the Holder (together with the
Holder's
affiliates), as set forth on the applicable Notice of Exercise,
would
beneficially own in excess of 9.99% of the number of shares of
the Common
Stock outstanding immediately after giving effect to such
issuance. For
purposes of the foregoing sentence, the number of shares of
Common Stock
beneficially owned by the Holder and its affiliates shall
include the
number of shares of Common Stock issuable upon exercise of this
Warrant
with respect to which the determination of such sentence is
being made,
but shall exclude the number of shares of Common Stock which
would be
issuable upon (A) exercise of the remaining, nonexercised
portion of this
Warrant beneficially owned by the Holder or any of its
affiliates and (B)
exercise or conversion of the unexercised or nonconverted
portion of any
other securities of the Company (including, without limitation,
any other
Notes or Warrants) subject to a limitation on conversion or
exercise
analogous to the limitation contained herein beneficially owned
by the
Holder or any of its affiliates. Except as set forth in the
preceding
sentence, for purposes of this Section 1(d), beneficial
ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act,
it being
acknowledged by Holder that the Company is not representing to
Holder that
such calculation is in compliance with Section 13(d) of the
Exchange Act
and Holder is solely responsible for any schedules required to
be filed in
accordance therewith. To the extent that the limitation
contained in this
Section 1(d) applies, the determination of whether this Warrant
is
exercisable (in relation to other securities owned by the
Holder) and of
which a portion of this Warrant is exercisable shall be in the
sole
discretion of such Holder, and the submission of a Notice of
Exercise
shall be deemed to be such Holder's determination of whether
this Warrant
is exercisable (in relation to other securities owned by such
Holder) and
of which portion of this Warrant is exercisable, in each case
subject to
such aggregate percentage limitation, and the Company shall have
no
obligation to verify or confirm the accuracy of such
determination. For
purposes of this Section 1(d), in determining the number of
outstanding
shares of Common Stock, the Holder may rely on the number of
outstanding
shares of Common Stock as reflected in (x) the Company's most
recent Form
10-QSB or Form 10-KSB, as the case may be, (y) a more recent
public
announcement by the Company or (z) any other notice by the
Company or the
Company's Transfer Agent setting forth the number of shares of
Common
Stock outstanding. Upon the written or oral request of the
Holder, the
Company shall within two Trading Days confirm orally and in
writing to the
Holder the number of shares of Common Stock then outstanding. In
any case,
the number of outstanding shares of Common Stock shall be
determined after
giving effect to the conversion or exercise of securities of the
Company,
including this Warrant, by the Holder or its affiliates since
the date as
of which such number of outstanding shares of Common Stock was
reported.
The provisions of this Section 1(d) may be waived by the Holder
upon, at
the election of the Holder, not less than 61 days' prior notice
to the
Company, and the provisions of this Section 1(d) shall continue
to apply
until such 6lst day (or such later date, as determined by the
Holder, as
may be specified in such notice of waiver).
<PAGE>
e) Mechanics of Exercise.
i. Authorization of Warrant Shares. The Company covenants
that
all Warrant Shares which may be issued upon the exercise of
the
purchase rights represented by this Warrant will, upon exercise
of
the purchase rights represented by this Warrant, be duly
authorized,
validly issued, fully paid and nonassessable and free from
all
taxes, liens and charges in respect of the issue thereof (other
than
taxes in respect of any transfer occurring contemporaneously
with
such issue). The Company covenants that during the period
the
Warrant is outstanding, it will reserve from its authorized
and
unissued Common Stock a sufficient number of shares to provide
for
the issuance of the Warrant Shares upon the exercise of any
purchase
rights under this Warrant. The Company further covenants that
its
issuance of this Warrant shall constitute full authority to
its
officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for
the
Warrant Shares upon the exercise of the purchase rights under
this
Warrant. The Company will take all such reasonable action as may
be
necessary to assure that such Warrant Shares may be issued
as
provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon
which
the Common Stock may be listed.
ii. Delivery of Certificates Upon Exercise. Certificates for
shares purchased hereunder shall be transmitted by the
transfer
agent of the Company to the Holder by crediting the account of
the
Holder's prime broker with the Depository Trust Company through
its
Deposit Withdrawal Agent Commission ("DWAC") system if the
Company
is a participant in such system, and otherwise by physical
delivery
to the address specified by the Holder in the Notice of
Exercise
within 3 Trading Days from the delivery to the Company of the
Notice
of Exercise Form, surrender of this Warrant and payment of
the
aggregate Exercise Price as set forth above ("Warrant Share
Delivery
Date"). This Warrant shall be deemed to have been exercised on
the
date the Exercise Price is received by the Company. The
Warrant
Shares shall be deemed to have been issued, and Holder or any
other
person so designated to be named therein shall be deemed to
have
become a holder of record of such shares for all purposes, as of
the
date the Warrant has been exercised by payment to the Company of
the
Exercise Price and all taxes required to be paid by the Holder,
if
any, pursuant to Section 1(e)(vii) prior to the issuance of
such
shares, have been paid.
<PAGE>
iii. Delivery of New Warrants Upon Exercise. If this Warrant
shall have been exercised in part, the Company shall, at the
time of
delivery of the certificate or certificates representing
Warrant
Shares, deliver to Holder a new Warrant evidencing the rights
of
Holder to purchase the unpurchased Warrant Shares called for by
this
Warrant, which new Warrant shall in all other respects be
identical
with this Warrant.
iv. Rescission Rights. If the Company fails to cause its
transfer agent to transmit to the Holder a certificate or
certificates representing the Warrant Shares pursuant to
this
Section 1(e)(iv) by the Warrant Share Delivery Date, then the
Holder
will have the right to rescind such exercise.
v. Compensation for Buy-In on Failure to Timely Deliver
Certificates Upon Exercise. In addition to any other rights
available to the Holder, if the Company fails to cause its
transfer
agent to transmit to the Holder a certificate or
certificates
representing the Warrant Shares pursuant to an exercise on or
before
the Warrant Share Delivery Date, and if after such date the
Holder
is required by its broker to purchase (in an open market
transaction
or otherwise) shares of Common Stock to deliver in satisfaction
of a
sale by the Holder of the Warrant Shares which the Holder
anticipated receiving upon such exercise (a "Buy-In"), then
the
Company shall (1) pay in cash to the Holder the amount by which
(x)
the Holder's total purchase price (including brokerage
commissions,
if any) for the shares of Common Stock so purchased exceeds (y)
the
amount obtained by multiplying (A) the number of Warrant Shares
that
the Company was required to deliver to the Holder in connection
with
the exercise at issue times (B) the price at which the sell
order
giving rise to such purchase obligation was executed, and (2) at
the
option of the Holder, either reinstate the portion of the
Warrant
and equivalent number of Warrant Shares for which such exercise
was
not honored or deliver to the Holder the number of shares of
Common
Stock that would have been issued had the Company timely
complied
with its exercise and delivery obligations hereunder. For
example,
if the Holder purchases Common Stock having a total purchase
price
of $11,000 to cover a Buy-In with respect to an attempted
exercise
of shares of Common Stock with an aggregate sale price giving
rise
to such purchase obligation of $10,000, under clause (1) of
the
immediately preceding sentence the Company shall be required to
pay
the Holder $1,000. The Holder shall provide the Company
written
notice indicating the amounts payable to the Holder in respect
of
the Buy-In, together with applicable confirmations and other
evidence reasonably requested by the Company. Nothing herein
shall
limit a Holder's right to pursue any other remedies available to
it
hereunder, at law or in equity including, without limitation,
a
decree of specific performance and/or injunctive relief with
respect
to the Company's failure to timely deliver certificates
representing
shares of Common Stock upon exercise of the Warrant as
required
pursuant to the terms hereof.
<PAGE>
vi. No Fractional Shares or Scrip. No fractional shares or
scrip representing fractional shares shall be issued upon
the
exercise of this Warrant. As to any fraction of a share which
Holder
would otherwise be entitled to purchase upon such exercise,
the
Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by
the
Exercise Price.
vii. Charges, Taxes and Expenses. Issuance of certificates
for
Warrant Shares shall be made without charge to the Holder for
any
issue or transfer tax or other incidental expense in respect of
the
issuance of such certificate, all of which taxes and expenses
shall
be paid by the Company, and such certificates shall be issued in
the
name of the Holder or in such name or names as may be directed
by
the Holder; provided, however, that in the event certificates
for
Warrant Shares are to be issued in a name other than the name of
the
Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed
by
the Holder; and the Company may require, as a condition thereto,
the
payment of a sum sufficient to reimburse it for any transfer
tax
incidental thereto.
viii. Closing of Books. The Company will not close its
stockholder books or records in any manner which prevents the
timely
exercise of this Warrant, pursuant to the terms hereof.
Section 2. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time
while
this Warrant is outstanding: (A) pays a stock dividend or
otherwise make a
distribution or distributions on shares of its Common Stock or
any other
equity or equity equivalent securities payable in shares of
Common Stock
(which, for avoidance of doubt, shall not include any shares of
Common
Stock issued by the Company pursuant to this Warrant), (B)
subdivides
outstanding shares of Common Stock into a larger number of
shares, (C)
combines (including by way of reverse stock split) outstanding
shares of
Common Stock into a smaller number of shares, or (D) issues
by
reclassification of shares of the Common Stock any shares of
capital stock
of the Company, then in each case the Exercise Price shall be
multiplied
by a fraction of which the numerator shall be the number of
shares of
Common Stock (excluding treasury shares, if any) outstanding
before such
event and of which the denominator shall be the number of shares
of Common
Stock outstanding after such event and the number of shares
issuable upon
exercise of this Warrant shall be proportionately adjusted. Any
adjustment
made pursuant to this Section 2(a) shall become effective
immediately
after the record date for the determination of stockholders
entitled to
receive such dividend or distribution and shall become
effective
immediately after the effective date in the case of a
subdivision,
combination or re-classification.
<PAGE>
b) Subsequent Equity Sales. If the Company, at any time while
this
Warrant is outstanding, shall offer, sell, grant any option to
purchase or
offer, sell or grant any right to reprice its securities, or
otherwise
dispose of or issue (or announce any offer, sale, grant or any
option to
purchase or other disposition) any Common Stock or common
stock
equivalents entitling any Person to acquire shares of Common
Stock, at an
effective price per share less than the then Exercise Price
(such lower
price, the "Base Share Price" and such issuances collectively, a
"Dilutive
Issuance"), as adjusted hereunder (if the holder of the Common
Stock or
Common Stock Equivalents so issued shall at any time, whether by
operation
of purchase price adjustments, reset provisions, floating
conversion,
exercise or exchange prices or otherwise, or due to warrants,
options or
rights per share which is issued in connection with such
issuance, be
entitled to receive shares of Common Stock at an effective price
per share
which is less than the Exercise Price, such issuance shall be
deemed to
have occurred for less than the Exercise Price), then, the
Exercise Price
shall be reduced to equal the Base Share Price and the number of
Warrant
Shares issuable hereunder shall be increased such that the
aggregate
Exercise Price payable hereunder, after taking into account the
decrease
in the Exercis
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