THIS WARRANT
AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT.
CONVERSION SERVICES
INTERNATIONAL, INC.
COMMON STOCK PURCHASE
WARRANT
March 26,
2008
THIS COMMON STOCK PURCHASE WARRANT (this “
Warrant ”) of Conversion Services
International, Inc., a corporation duly organized and validly
existing under the laws of the State of Delaware (the “
Company ”), is issued to the Holder (as
defined below).
FOR VALUE RECEIVED, the Company hereby certifies
that the registered holder hereof and its successors and assigns,
Hare & Co. (the “ Holder ”) is entitled to
purchase from the Company xxx,xxx duly authorized, validly
issued, fully paid and nonassessable shares of common stock of the
Company, par value $0.001 per share (the “ Common
Stock ”), at a purchase price per share equal to $0.143,
as may be adjusted to the anti-dilution provisions set forth herein
(the “ Warrant Price ”). The person or entity in
whose name this Warrant (or one or more predecessor Warrants) is
registered on the records of the Company regarding registration and
transfers of the Warrant (the “ Warrant Register
”) is the owner and holder thereof for all purposes, except
as described in Section 11 hereof.
1.
Vesting of Warrant
. This Warrant shall vest and
become exercisable as of the date hereof.
2.
Expiration of Warrant
. This Warrant shall expire on March
25, 2013 (the “ Expiration Date ”).
3.
Exercise of Warrant
. This Warrant shall be exercisable
pursuant to the terms of Section 1 and this Section 3
hereof.
3.1 Manner of
Exercise. This Warrant may only be exercised by the Holder hereof,
in accordance with the terms and conditions hereof, in whole or in
part with respect to any portion of the Warrant, into shares of
Common Stock, during normal business hours on any day other than a
Saturday or a Sunday or a day on which commercial banking
institutions in New York, New York are authorized by law to be
closed (a “ Business Day ”) on or prior to the
Expiration Date with respect to such portion of the Warrant, by
surrender of this Warrant to the Company at its office maintained
pursuant to Section 11.2(a) hereof, accompanied by an
exercise notice in substantially the form attached to this Warrant
as Exhibit A (or a reasonable facsimile thereof) duly
executed by the Holder, together with the payment of the Warrant
Price. Anything to the contrary not withstanding, at any time that
a Registration Statement under the Securities Act of 1933 (the
“ Act ”) covering the shares issuable upon
exercise of this Warrant is not effective, the Holder shall have
the right, at his election exercised in his sole discretion, to
exercise the Warrant, in whole or in part, and, in lieu of making
the cash payment otherwise contemplated to be made to the Company
upon such exercise in payment of the Exercise Price, elect instead
to receive upon such exercise the "Net Number" of shares of Common
Stock determined according to the following formula (a "
Cashless Exercise "):
Net Number = (A x B) - (A x C)
For purposes of
the foregoing formula:
A = the total
number of shares with respect to which this Warrant is then being
exercised.
B = the Closing
Sale Price of the Common Stock on the trading day immediately
preceding the date of the Exercise Notice.
C = the Warrant
Exercise Price then in effect for the applicable Warrant Shares at
the time of such exercise.
3.2
When Exercise Effective. Each
exercise of this Warrant shall be deemed to have been effected
immediately prior to the close of business on the Business Day on
which this Warrant shall have been surrendered to the Company as
provided in Section 3.1 hereof, and, at such time, the
corporation, association, partnership, organization, business,
individual, government or political subdivision thereof or a
governmental agency (a “ Person ” or the “
Persons ”) in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon
exercise as provided in Section 3.3 hereof shall be deemed
to have become the holder or holders of record thereof.
3.3
Delivery of Stock Certificates. As
soon as practicable after each exercise of this Warrant, in whole
or in part, and in any event within fifteen (15) Business Days
thereafter, the Company at its expense (including the payment by it
of any applicable issue taxes) will cause to be issued in the name
of and delivered to the Holder hereof or, subject to Section
10 hereof, as the Holder (upon payment by the Holder of any
applicable transfer taxes) may direct:
(a) a
certificate or certificates (with appropriate restrictive legends,
as applicable) for the number of duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock to which the
Holder shall be entitled upon exercise plus, in lieu of any
fractional share to which the Holder would otherwise be entitled,
all issuances of Common Stock shall be rounded up to the nearest
whole share.
(b) in case
exercise is in part only, a new Warrant of like tenor, dated the
date hereof and calling in the aggregate on the face thereof for
the number of shares of Common Stock equal to the number of shares
called for on the face of this Warrant minus the number of shares
designated by the Holder upon exercise as provided in Section
3.1 hereof (without giving effect to any adjustment
thereof).
3.4
Company to Reaffirm Obligations. The
Company will, at the time of each exercise of this Warrant, upon
the written request of the Holder hereof, acknowledge in writing
its continuing obligation to afford to the Holder all rights
(including without limitation any rights to registration of the
shares of Common Stock issued upon exercise) to which the Holder
shall continue to be entitled after exercise in accordance with the
terms of this Warrant; provided , however , that if
the Holder shall fail to make a request, the failure shall not
affect the continuing obligation of the Company to afford the
rights to such Holder.
4.
Adjustment of Common Stock
Issuable Upon Exercise .
The Warrant Price shall be subject to be adjusted and re-adjusted
from time to time as provided in this Section 4 and, as so
adjusted or re-adjusted, shall remain in effect until a further
adjustment or re-adjustment thereof is required by this Section
4 :
4.1
Stock Dividends; Stock Splits. In
case the Company at any time or from time to time after the date
hereof shall declare or pay any dividend on the Common Stock
payable in Common Stock, or shall effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares
of Common Stock (by reclassification or otherwise than by payment
of a dividend in Common Stock), then, and in each case, subject to
Section 4.3 hereof, the Warrant Price shall be reduced,
concurrently with the dividend or subdivision, to a price
determined by multiplying the Warrant Price by a
fraction:
(a) the
numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to the dividend or subdivision;
and
(b) the
denominator of which shall be the number of shares of Common Stock
outstanding immediately after the dividend or
subdivision.
Additional shares of Common Stock
shall be deemed to have been issued and to be outstanding (a) in
the case of any dividend, immediately after the close of business
on the record date for the determination of holders of any class of
securities entitled to receive the dividend, or (b) in the case of
any subdivision, at the close of business on the day immediately
prior to the day upon which the corporate action becomes effective.
Additional shares of Common Stock deemed to have been issued
pursuant to this Section 4.1 shall be deemed to have been
issued for no consideration.
4.2 Subscription Offerings. In case the Company
shall issue to stockholders or otherwise rights, options, or
warrants entitling the holders thereof to subscribe for or purchase
Common Stock (or securities convertible into or exchangeable for
Common Stock) at a price per share (or having a conversion price
per share, in the case of a security convertible into or
exchangeable for Common Stock) less than the lower of the then
Exercise Price or the Current Market Price per share (as defined in
Paragraph 4.4 below) on the record date for the
determination of stockholders entitled to receive such rights, or
otherwise on the granting date, as the case may be, then in each
such case the Exercise Price shall be adjusted by multiplying the
Exercise Price in effect immediately prior to such record or
granting date, as the case may be, by a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding
on such record or granting date plus the number of shares of Common
Stock which the aggregate offering price of the total number of
shares of Common Stock so to be offered (or the aggregate initial
conversion price of the convertible securities so to be offered)
would purchase at such Exercise Price or Current Market Price, as
the case may be, and of which the denominator shall be the number
of shares of Common Stock outstanding on such record or granting
date plus the number of additional shares of Common Stock to be
offered for subscription or purchase (or into which the convertible
or exchangeable securities so to be offered are initially
convertible or exchangeable). Such adjustment shall become
effective at the close of business on such record date or granting
date, as the case may be; provided , however , that,
to the extent the shares of Common Stock (or securities convertible
into or exchangeable for shares of Common Stock) are not delivered,
the Exercise Price shall be readjusted after the expiration of such
rights, options, or warrants (but only to the extent that the
Warrants are not exercised after such expiration), to the Exercise
Price which would then be in effect had the adjustments made upon
the issuance of such rights or warrants been made upon the basis of
delivery of only the number of shares of Common Stock (or
securities convertible into or exchangeable for shares of Common
Stock) actually issued. In case any subscription price may be paid
in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as determined
in good faith by the Company's Board of Directors. Shares of Common
Stock owned by or held for the account of the Company or any
majority-owned subsidiary shall not be deemed outstanding for the
purpose of any such computation.
4.3
Other Rights to Acquire Common
Stock. In case the Company shall distribute to all holders of its
Common Stock evidences of its indebtedness or assets (excluding
cash dividends or distributions paid from retained earnings of
Maker) or rights or warrants to subscribe or purchase Common stock
(excluding those referred to in Paragraph 4.2 above), then
in each such case the Exercise Price shall be adjusted so that the
same shall equal the price determined by multiplying the Exercise
Price in effect immediately prior to the date of such distribution
by a fraction of which the numerator shall be the Current Market
Price per share (as defined in Paragraph 4.4 below) of the
Common Stock on the Record Date mentioned below less the then fair
market value (as determined in good faith by the Board of Directors
of the Company) of the portion of the assets or evidences of
indebtedness so distributed or of such rights or warrants
applicable to one share of Common Stock, and the denominator shall
be the Current Market Price per share of the Common Stock. Such
adjustment shall become effective immediately after the Record Date
for the determination of shareholders entitled to receive such
distribution.
4.4
For the purpose of any computation
under Paragraph 4.2 and
3 of this Section 4 , the
Current Market Price per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices for the 30
consecutive trading days commencing 45 trading days before such
date. The closing price for each day shall be the last reported
sales price regular way or, in case no such reported sale takes
place on such day, the closing bid price regular way, in either
case on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or, if the Common
Stock is not listed or admitted to trading on any national
securities exchange, the highest reported bid price as furnished by
the NASDAQ Stock Market, Inc. or similar organization if the NASDAQ
Stock Market, Inc is no longer reporting such information, or by
the Pink Sheets, LLC or similar organization if the Common Stock is
not then quoted on an inter-dealer quotation system. If on any such
date the Common Stock is not quoted by any such organization, the
fair value of the Common Stock on such date, as determined in good
faith by the Company's Board of Directors, shall be
used.
4.5
Adjustments for Combinations. In
case the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser
number of shares of Common Stock, the Warrant Price in effect
immediately prior to the combination or consolidation shall,
concurrently with the effectiveness of such combination or
consolidation, be proportionately increased. Adjustment under this
Section 4.5 shall become effective at the close of business
on the day immediately prior to the day
