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
Exercise Price,
shall
