Common Stock Purchase Warrant - FreeMarkets Inc. and Visteon Corp.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON ITS EXERCISE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES STATUTES OR REGULATIONS. NEITHER THIS WARRANT NOR THE
SECURITIES ISSUABLE UPON ITS EXERCISE MAY BE TRANSFERRED EXCEPT IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES STATUTES AND REGULATIONS,
AND PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR IN A TRANSACTION WHICH QUALIFIES AS AN EXEMPT
TRANSACTION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER.
COMMON STOCK PURCHASE WARRANT
Warrant to Purchase 1,750,000 Shares Exercise Price: $.01 per share
of Common Stock
April 17, 2000
FREEMARKETS, INC., a Delaware corporation (the "Company"), hereby
certifies that, for value received, VISTEON CORPORATION (the "Holder") is
entitled, subject to the terms set forth below, to purchase from the Company, at
any time and from time to time during the Exercise Period (as defined below) or
earlier, if applicable, in whole or in part, the number of fully paid and
non-assessable shares of the Company's Common Stock, par value $.01 per share
("Common Stock"), first set forth above (or, if, upon exercise of an Early
Exercise Right, such lesser amount as set forth herein) at the per share
exercise price (the "Exercise Price") first set forth above (subject to
adjustment as set forth in Article II). This Common Stock Purchase Warrant (the
"Warrant") is nonforfeitable.
ARTICLE I -- EXERCISE OF WARRANT
1.1 Exercise Period and Procedure.
(a) Exercise Period. The Warrant shall be exercisable, in whole or in
part, by the Holder at any time and from time to time during the period (the
"Exercise Period") beginning on May 1, 2008 and ending at 5:00 p.m. (prevailing
local time at the principal executive office of the Company) on May 1, 2009, to
the extent not theretofore exercised pursuant to the Early Exercise Right set
forth in paragraph (b) below.
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(b) Early Exercise Right.
(i) Definitions. Certain capitalized terms used in this
Section 1.1(b) are defined below. Capitalized terms used in this Section 1.1(b)
and not otherwise defined below shall have the meanings set forth in the Long
Term Access and Service Agreement dated as of April 17, 2000 by and between
Holder and the Company (the "Service Agreement").
(A) "Contract Year Deficiency" shall mean with
respect to any Contract Year, the amount, if any, [*] for such Contract Year.
(B) The "Early Exercise Requirement" for each
Contract Year is set forth in the table in subparagraph (ii) below. The Early
Exercise Requirement for any Contract Year shall be deemed to have been met if
the Cumulative Bid Volume (as defined in the Service Agreement) for such
Contract Year equals or exceeds the Early Exercise Requirement for such Contract
Year.
(C) "Early Exercise Shares" shall mean, [*] shares of
Common Stock.
(D) "Excess Bid Volume" shall mean, with respect to
any Contract Year, the amount, if any [*].
(E) A "Material Default" shall mean a material
default by the Holder pursuant to [*].
(ii) If Holder (A) meets the applicable Early Exercise
Requirement for a Contract Year as set forth in the table below, (B) is not in
Material Default under the Service Agreement, and (C) has paid to the Company
all fees and expenses then due and owing under the Service Agreement, the Early
Exercise Right with respect to such Contract Year shall be deemed to have been
earned.
Contract Year Early Exercise Requirement
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May 1, 2000 - April 30, 2001 [*]
May 1, 2001 - April 30, 2002 [*]
May 1, 2002 - April 30, 2003 [*]
May 1, 2003 - April 30, 2004 [*]
May 1, 2004 - April 30, 2005 [*]
(iii) (A) If, in any Contract Year, there is Excess Bid
Volume, such Excess Bid Volume shall be [*] in which there is [*]. If the Excess
Bid Volume equals or exceeds the Contract Year Deficiency, then (x) the Early
Exercise Requirement [*] shall be deemed to have been satisfied, (y) the Early
Exercise Right [*] shall be deemed to have been earned, and (z) [*]
<PAGE> 3
For example, [*].
(iv) In the event that the Early Exercise Right with respect
to any Contract Year is deemed to have been earned in accordance with
subparagraph (ii) or (iii), the Holder shall be entitled to exercise this
Warrant with respect to the Early Exercise Shares for such Contract Year at any
time beginning on June 15 following such Contract Year and from time to time
thereafter until May 1, 2009; provided, however, in the event that [*].
(c) Change of Control. [*] upon a "Change of Control" as defined below.
The Company shall notify the Holder of such Change of Control no later than
twenty days prior to the consummation thereof; provided, however, in the event
that the Change of Control has not been publicly announced on such date, the
Company shall not be required to notify the Holder of such Change of Control
until the public announcement of such Change of Control.
For the purposes hereof, a "Change of Control" shall mean the
occurrence of any of the following events:
(i) the acquisition, other than from the Company, by any
individual, entity or group (within the meaning of Section 13(d)(3) or Section
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than the Company or an employee benefit plan of the Company, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than 50% of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the "Voting Securities"); or
(ii) the consummation of a reorganization, merger,
consolidation or recapitalization of the Company (a "Business Combination"),
other than a Business Combination in which more than 50% of the combined voting
power of the outstanding voting securities of the surviving or resulting entity
immediately following the Business Combination is held by the persons who,
immediately prior to the Business Combination, were the holders of the Voting
Securities; or
(iii) the consummation of a complete liquidation or
dissolution of the Company, or a sale of all or substantially all of the
Company's assets.
(d) The purchase rights represented by this Warrant are exercisable by
the Holder in whole or in part during the Exercise Period, or in part upon
exercise of an Early Exercise Right by the surrender of this Warrant, with the
form of Notice of Exercise attached hereto as Annex A duly completed and
executed by the Holder, to the Company at its principal executive office, upon
payment in cash, by certified or official bank check or by wire transfer, of an
amount equal
<PAGE> 4
to the Exercise Price multiplied by the number of shares of Common Stock being
purchased pursuant to such exercise of the Warrant.
1.2 Partial Exercise. This Warrant may be exercised for less than the full
number of shares of Common Stock then entitled to be purchased hereunder,
provided that this Warrant may not be exercised in part for less than a whole
number of shares of Common Stock. Upon any such partial exercise, the Company at
its expense will forthwith issue to the Holder a new Warrant or Warrants of like
tenor exercisable for the number of shares of Common Stock as to which rights
have not been exercised (subject to adjustment as herein provided).
1.3 Net Issue Exercise.
(a) In lieu of exercising this Warrant pursuant to Section 1.1 or
Section 1.2, Holder may elect to receive shares equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with notice of such election, in
which event the Company shall issue to Holder a number of shares of the
Company's Common Stock computed using the following formula:
X = Y(A-B)
------
A
Where:
X= the number of shares of Common Stock to be issued to Holder
Y= the number of shares of Common Stock purchasable under this
Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being canceled (at the
date of such calculation);
A= the fair market value of one share of the Company's Common
Stock (at the date of such calculation); and
B= Exercise Price (as adjusted to the date of such calculation).
(b) For the purposes of this Section 1.3, the "fair market value" of
one share of the Company's Common Stock shall mean the average closing sales
price of the Common Stock quoted on any exchange on which the Common Stock is
listed as published in The Wall Street Journal for the ten (10) trading days
prior to the date of determination of fair market value.
1.4 Delivery of Stock Certificates on Exercise. As soon as practicable
after the exercise of this Warrant and payment of the Exercise Price and in any
event within ten business days thereafter, the Company, at its expense, will
cause to be issued in the name of and delivered to the Holder a certificate or
certificates for the number of duly authorized, validly issued, fully paid and
non-assessable shares or other securities or property to which the Holder shall
be entitled upon such exercise, plus, in lieu of any fractional share to which
the Holder would otherwise be entitled, cash in an amount determined in
accordance with Section 2.5 hereof.
<PAGE> 5
ARTICLE II -- ADJUSTMENTS
2.1 Adjustments Generally. In order to prevent dilution of the rights
granted hereunder in the specific circumstances contemplated by this Article II,
the number of shares of Common Stock underlying this Common Stock Purchase
Warrant and the Exercise Price shall be subject to adjustment from time to time
in accordance with this Article II. Upon each adjustment of the Exercise Price
pursuant to this Article II, the Holder shall thereafter be entitled to acquire
upon exercise, at the Exercise Price resulting from such adjustment, the number
of shares of the Company's Common Stock determined by (a) multiplying (i) the
Exercise Price in effect immediately prior to such adjustment by (ii) the number
of shares of Common Stock issuable upon exercise hereof immediately prior to
such adjustment, and (b) dividing the product thereof by the Exercise Price
resulting from such adjustment.
2.2 Subdivisions and Combinations. In case the Company shall at any time
subdivide its outstanding shares of Common Stock into a greater number of shares
(including, without limitation, through any stock split effected by means of a
dividend on the Common Stock which is payable in Common Stock), the Exercise
Price in effect immediately prior to such subdivision shall be proportionately
reduced, and, conversely, in case the outstanding shares of Common Stock of the
Company shall be combined into a smaller number of shares, the Exercise Price in
effect immediately prior to such combination shall be proportionately increased.
2.3 Reorganization, Reclassification, Consolidation, Merger or Sale of
Assets. If any capital reorganization or reclassification of the capital stock
of the Company, or consolidation or merger of the Company with another
corporation, or the sale of a significant amount of assets to another
corporation shall be effected in such a way that (a) [*], and (b) holders of
Common Stock shall be entitled to receive stock, securities, cash or other
property with respect to or in exchange for Common Stock, then, as a condition
of such reorganization, reclassification, consolidation, merger or sale, lawful
and adequate provision shall be made whereby the Holder shall have the right to
acquire and receive upon exercise of this Warrant in accordance with the terms
of Article I hereof such shares of stock, securities, cash or other property of
the successor corporation that a holder of the shares deliverable upon exercise
of this Warrant would have been entitled to receive in such reorganization,
reclassification, consolidation, merger or sale if this Warrant had been
exercised immediately before such reorganization, reclassification,
consolidation, merger or sale. The foregoing provisions shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers or sales
and to the stock or securities of any other corporation that are at the time
receivable upon the exercise of this Warrant. In all events, appropriate
adjustments (as determined by the Board of Directors of the Company) shall be
made in the application of the provisions of this Warrant with respect to the
rights and interests of the Holder after the transaction, to the end that the
provisions of this Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant. The Company shall give the Holder not
less than [*] notice of any
<PAGE> 6
of the events described in this Section 2.3; provided, however, in the event
that such event has not been publicly announced on such date, the Company shall
not be required to notify the Holder of such event until the public announcement
of such event.
2.4 Adjustment by Board of Directors. If any event occurs as to which, in
the opinion of the Board of Directors of the Company, the provisions of this
Article II are not strictly applicable or if strictly applicable would not
fairly protect the rights of the Holder in accordance with the essential intent
and principles of such provisions, then the Board of Directors may make such
adjustment in the application of such provisions, in accordance with such
essential intent and principles, as it deems appropriate so as to protect such
rights as aforesaid, but in no event shall any adjustment have the effect of
increasing the Exercise Price as otherwise determined pursuant to any of the
provisions of this Article II except in the case of a combination of shares of a
type contemplated in Section 2.2 and then in no event to an amount larger than
the Exercise Price as adjusted pursuant to Section 2.2.
2.5 Fractional Shares. The Company shall not issue fractions of shares of
Common Stock upon exercise of this Warrant or scrip in lieu thereof. If any
fraction of a share of Common Stock would, except for the provisions of this
Section 2.5, be issuable upon exercise of this Warrant, then the Company shall
in lieu thereof pay to the person entitled thereto an amount in cash equal to
the fair market value of such fraction (as determined in good faith by the Board
of Directors of the Company), less the equivalent fraction of the then
applicable Exercise Price which would otherwise have been payable in respect of
such fractional share.
2.6 Certificate as to Adjustments. Whenever the Exercise Price shall be
adjusted as provided in Article II, the Company shall promptly compute such
adjustment and furnish to the Holder a certificate setting forth such adjustment
and showing in reasonable detail the facts requiring such adjustment, the
Exercise Price that will be effective after such adjustment and the number of
shares and the amount, if any, of other property that at the time would be
received upon the exercise of this Warrant.
ARTICLE III -- NO IMPAIRMENT
The Company will not, by amendment of its charter or through reorganization,
consolidation, merger, dissolution, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against impairment.
Without limiting the generality of the foregoing, the Company will not increase
the par value of any shares of stock receivable upon the exercise of this
Warrant above the amount payable therefor upon such exercise, and at all times
will take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and non-assessable stock upon
the exercise of this Warrant.
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ARTICLE IV -- RESERVATION OF STOCK
The Company shall at all times reserve and keep available out of its authorized
but unissued stock, solely for the issuance and delivery upon the exercise of
this Warrant, such number of its duly authorized shares of Common Stock as from
time to time shall be issuable upon the exercise of this Warrant. All of the
shares of Common Stock issuable upon exercise of this Warrant, when issued and
delivered in accordance with the terms hereof, will be duly authorized, validly
issued, fully paid and non-assessable. The Company represents that this Warrant
has been duly authorized and that the issuance of this Warrant and the shares of
Common Stock issuable hereunder do not and will not violate the Company's
Certificate of Incorporation or By-Laws, any applicable law, or any material
agreement by which the Company is bound.
ARTICLE V -- REPLACEMENT OF WARRANT
Upon receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant and (in the case of loss, theft
or destruction) upon delivery of an indemnity agreement reasonably satisfactory
to the Company, or (in the case of mutilation) upon surrender and cancellation
thereof, the Company will issue, in lieu thereof, a new Warrant of like tenor
and amount.
ARTICLE VI -- NEGOTIABILITY
This Warrant is issued upon the following terms, to all of which each taker or
owner hereof consents and agrees:
6.1 Transfer. Title to this Warrant may not be transferred other than to
an "Affiliated Entity", as defined below, and this Warrant may be exercised only
by the Holder or by any Affiliated Entity. For the purposes hereof, an
Affiliated Entity shall mean any entity of which more than fifty percent (50%)
of the outstanding voting securities is owned, directly or indirectly, by the
Holder or which owns, directly or indirectly, more than fifty percent (50%) of
the voting securities of the Holder. Upon such transfer, such Affiliated Entity
shall be entitled to the rights of the Holder of this Warrant. Absent an
effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), covering the disposition of the shares of Common Stock
issued or issuable upon exercise of this Warrant, the Holder will not sell or
transfer any or all of such shares without first providing the Company with an
opinion of counsel (which may be counsel for the Company) to the effect that
such sale or transfer will be exempt from the registration and prospectus
delivery requirements of the Securities Act. Each certificate representing
shares of Common Stock issued upon the exercise hereof shall bear a legend in
substantially the following form on the face thereof:
<PAGE> 8
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR APPLICABLE STATE SECURITIES LAWS AND MAY BE TRANSFERRED OR
RESOLD ONLY IN COMPLIANCE WITH SUCH SECURITIES LAWS.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a certificate issued upon completion of
a distribution under a registration statement covering the securities
represented hereby) shall also bear such legend unless, in the reasonable
opinion of counsel to the Company, the securities represented thereby may be
transferred as contemplated by the Holder without violation of the registration
requirements of the Securities Act.
6.2 Warrant Register. The Company will maintain a warrant register
containing the name and address of the Holder. The Holder may change its address
as shown on the warrant register by written notice to the Company requesting
such change.
6.3 No Rights as Stockholder. Prior to the exercise of this Warrant, the
Holder shall not be entitled to any rights of a stockholder of the Company with
respect to shares for which this Warrant shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company.
6.4 Transfer Taxes. The Company shall not be required to issue or deliver
any certificates for Common Stock upon the exercise of this Warrant until any
and all federal or state transfer taxes and charges shall have been paid by the
Holder or until it has been established to the Company's reasonable satisfaction
that no such tax or charge is due.
6.5 Compliance with Securities Laws. The Holder, by acceptance hereof,
acknowledges that the shares of Common Stock to be issued upon exercise hereof
are being acquired solely for the Holder's own account and not as a nominee for
any other party, and for investment, and that the Holder will not offer, sell or
otherwise dispose of any of the shares of Common Stock to be issued upon
exercise hereof except under circumstances that will not result in a violation
of applicable federal and state securities laws. Upon exercise of this Warrant,
the Holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the shares of Common Stock so purchased are
being acquired solely for the Holder's own account and not as a nominee for any
other party, for investment, and not with a view toward distribution or resale.
ARTICLE VII -- SUBDIVISION OF RIGHTS
This Warrant (as well as any new Warrants issued pursuant to the provisions of
this Article VII) is exchangeable, upon the surrender hereof by the Holder, at
the principal executive office of the Company for any number of new Warrants of
like tenor and date representing in the aggregate the right to subscribe for and
purchase the number of shares of Common Stock of the Company which may be
subscribed for and purchased hereunder.
<PAGE> 9
ARTICLE VIII -- MISCELLANEOUS
8.1 Headings. The headings in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect the meaning hereof.
8.2 Amendment; Waiver. This Warrant may be amended only by a writing
executed by both the Company and the Holder. Any term of this Warrant may be
waived by the party entitled to the benefit thereof by an instrument in writing
signed by such party. No waiver of any term, condition or provision of this
Warrant, in any one or more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such term, condition or provision.
8.3 Governing Law. This Warrant shall be construed and interpreted
according to the laws of the State of Delaware, without giving effect to any of
the conflicts of laws or choice of law provisions thereof that would compel the
application of the substantive laws of any other jurisdiction.
8.4 [*]. The Company shall [*].
<PAGE> 10
IN WITNESS WHEREOF, the Company has executed and issued this Warrant on
the date first written above.
FREEMARKETS, INC.
By: /s/ Glen T. Meakem
------------------------
Glen T. Meakem
President and Chief Executive Officer
<PAGE> 11
ANNEX A
NOTICE OF EXERCISE
[To be signed only upon exercise of Warrant]
To: FREEMARKETS, INC.
The undersigned, the Holder of the within Warrant, hereby elects to exercise the
purchase right represented by such Warrant for, and to purchase thereunder,
________ shares of Common Stock of FreeMarkets, Inc., and herewith makes payment
of $________ therefor.
In exercising this Warrant, the undersigned hereby confirms and acknowledges
that the shares of Common Stock to be issued upon exercise hereof are being
acquired solely for the Holder's own account and not as a nominee for any other
party, and for investment, and that the Holder will not offer, sell or otherwise
dispose of any such securities except under circumstances that will not result
in a violation of applicable federal and state securities laws.
Please issue a certificate or certificates representing said shares of Common
Stock in the name of the undersigned.
Dated:
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NAME
By:
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(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant)
Address:
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