NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, SUCH REGISTRATION AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH IS ACCEPTABLE
TO THE ISSUER.
▇▇▇▇▇▇▇▇ CURHAN FORD GROUP, INC.
COMMON STOCK PURCHASE WARRANT
Warrant No.[___]
[______] Shares
Original Issue Date: [__________], 2009
THIS CERTIFIES THAT, FOR VALUE RECEIVED, [________________] or its
registered assigns (the "HOLDER") is entitled to purchase, on the terms and
conditions hereinafter set forth, at any time in whole or in part from the
Original Issue Date set forth above until 5:00 p.m., Eastern Time, on the
fifth anniversary of the Original Issue Date, or if such date is not a day on
which the Company (as hereinafter defined) is open for business, then the next
succeeding day on which the Company is open for business (such date is the
"EXPIRATION DATE"), but not thereafter, [_____________] thousand (______,000)
shares of the Common Stock, $0.0001 par value per share (the "COMMON STOCK"),
of ▇▇▇▇▇▇▇▇ CURHAN FORD GROUP, INC., a Delaware corporation (the "COMPANY"),
at Sixty-Five Cents ($0.65) per share (the "EXERCISE PRICE"), such number of
shares and Exercise Price being subject to adjustment upon the occurrence of
the contingencies set forth in this Warrant. Each share of Common Stock as to
which this Warrant is exercisable is a "WARRANT SHARE" and all such shares are
collectively referred to as the "WARRANT SHARES."
Section 1.
Definitions.
-----------
(a) "Effective Date" shall mean the date on which
--------------
the Warrant shall be deemed to have been exercised.
(b) "Initial Issuance Date" shall mean the date on
---------------------
which Convertible Preferred Stock is first purchased pursuant to the Stock
Purchase Agreement.
(c) "Stock Purchase Agreement" shall mean the
------------------------
Convertible Preferred Stock Purchase Agreement by and among the Company and
the purchasers set forth on Schedule A thereto, dated [________], 2009.
(d) "Convertible Preferred Stock" shall mean the
---------------------------
Convertible Preferred Stock convertible into shares of Common Stock issued
pursuant to the terms of the Stock Purchase Agreement.
Section 2. Exercise of Warrant; Conversion of Warrant.
------------------------------------------
(a) Subject to the limitations described in Section
2(a) above, this Warrant may, at the option of the Holder, be exercised in
whole or in part from time to time, on or before 5:00 p.m., Eastern Time, on
the Expiration Date, by delivery to the Company at its principal office (i) a
written notice of such Holder's election to exercise this Warrant (the
"EXERCISE NOTICE"), which notice may be in the form of the Notice of Exercise
attached hereto, properly executed and completed by the Holder or an
authorized officer thereof, (ii) a check or other funds (the "FUNDS") payable
to the order of the Company, in an amount equal to the product of the Exercise
Price multiplied by the number of Warrant Shares specified in the Exercise
Notice, and (iii) this Warrant (the items specified in (i), (ii), and (iii)
are collectively the "EXERCISE MATERIALS"); provided, however, that if this
Warrant is not exercised in whole immediately prior to the consummation by the
Company of a Change in Control Event (as defined in the Certificate of
Designation designating the rights of the holders of the Series D Convertible
Preferred Stock ("CERTIFICATE OF DESIGNATION")), then immediately following
the consummation by the Company of such Change in Control Event, this Warrant
will not be exercisable and shall be null and void for all purposes.
Notwithstanding anything in this Warrant Agreement to the contrary, if this
Warrant shall not have been exercised in full immediately prior to a Change in
Control Event, then this Warrant shall be automatically exercised pursuant to
Section 3 below, without further action on the part of the Holder (and the
Holder hereof shall be deemed to be a holder of the Common Stock issued upon
such automatic exercise), immediately prior to the Change in Control Event,
unless at any time on or before such time, the Holder shall notify the Company
in writing that no such automatic exercise is to occur. The Company shall
provide the holder of this Warrant any written materials which the Company is
required to send to stockholders in connection with a Change of Control Event
at the same time such materials are sent to the stockholders.
(b) As promptly as practicable, and in any event
within five (5) business days after the later of (i) its receipt of the
Exercise Materials and (ii) the clearing of the Funds, the Company shall
execute or cause to be executed and delivered to the Holder a certificate or
certificates representing the number of Warrant Shares specified in the
Exercise Notice, together with cash in lieu of any fraction of a share. The
stock certificate or certificates shall be registered in the name of the
Holder or such other name or names as shall be designated in the Exercise
Notice. The Effective Date and the date the person in whose name any
certificate evidencing the Common Stock issued upon the
2
exercise hereof is issued shall be deemed to have become the holder of record
of such shares, shall be the date the Company receives the Exercise Materials,
irrespective of the date of delivery of a certificate or certificates
evidencing the Common Stock issued upon the exercise or conversion hereof,
provided, however, that if the Exercise Materials are received by the Company
on a date on which the stock transfer books of the Company are closed, the
Effective Date shall be the next succeeding date on which the stock transfer
books are open. If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Company shall, at its expense, at the
time of delivery of such certificates, deliver to the Warrantholder a new
Warrant representing the right to purchase the number of shares with respect
to which this Warrant shall not then have been exercised. In the event that
this Warrant is exercised, in whole in connection with a Change in Control
Event, the Effective Date shall be the date of the consummation by the Company
of such Change in Control Event. All shares of Common Stock issued upon the
exercise or conversion of this Warrant will, upon issuance, be fully paid and
non-assessable and free from all taxes, liens, and charges with respect
thereto.
Section 3.
Cashless Exercise. If (i) there is not a
-----------------
registration statement registering sales of the Warrant Shares under the
Securities Act of 1933, as amended, in effect on the date which is 270 days
from the Original Issue Date (the "Registration Deadline"), then from and
after the Registration Deadline and continuing until there is such a
registration statement in effect or (ii) in connection with an automatic
exercise of this Warrant in accordance with the last Sentence of Section 2(a)
of this Agreement, in lieu of exercising this Warrant pursuant to Section
-------
2(c), the Holder may elect to receive, without payment by the Holder of any
----
additional consideration, shares of Common Stock equal to the value of this
Warrant (or the portion thereof being cancelled) by surrender of this Warrant
at the principal office of the Company together with an Exercise Notice, in
which event the Company shall issue to the Holder a number of shares of Common
Stock computed using the following formula:
Y (A - B)
X= ---------
A
Where:
X = The number of shares of Common Stock to be issued to the
Holder pursuant to this cashless exercise;
Y = The number of Warrant Shares in respect of which the
cashless exercise election is made;
A = The fair market value of one (1) share of Common Stock
at the time the cashless exercise election is made; and
B = The Exercise Price (as adjusted to the date of the
cashless exercise)
3
For purposes of this Section 3, the fair market value of one (1)
---------
share of Common Stock as of a particular date shall be determined as follows:
(i) if listed or quoted for trading on a securities market or exchange, the
value shall be deemed to be the average closing price of the securities on
such exchange over the thirty (30) day period ending three (3) days prior to
the cashless exercise election; (ii) if traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the thirty (30) day period ending three (3) days prior to
the cashless exercise election; and (iii) if there is no active public market,
the value shall be the fair market value thereof, as jointly determined in
good faith by the Holder and the Company's Board of Directors. If the Holder
and the Company's Board of Directors are unable to reach such a determination,
the Holder and the Company's Board of Directors shall jointly select an
appraiser, who is experienced in such matters. The decision of such appraiser
shall be final and conclusive, and the cost of such appraiser shall be borne
equally by the Holder and the Company.
Section 4.
Adjustments to Warrant Shares;
------------------------------
Antidilution. The Exercise Price and number of Warrant Shares issuable upon
------------
exercise of this Warrant are subject to adjustment from time to time as set
forth in this Section 4.
---------
(a) Subdivisions, Combinations and Other Issuances.
----------------------------------------------
If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by split-up or otherwise, or combine its Common
Stock, or issue additional shares of its Common Stock as a dividend, the
number of Warrant Shares issuable on the exercise of this Warrant shall
forthwith be proportionately increased in the case of a subdivision or stock
dividend, or proportionately decreased in the case of a combination.
Appropriate adjustments shall also be made to the Exercise Price, but the
aggregate Exercise Price payable for the total number of Warrant Shares
purchasable under this Warrant (as adjusted) shall remain the same. Any
adjustment under this Section 4(a) shall become effective at the close of
------------
business on the date the subdivision or combination becomes effective, or as
of the record date of such dividend, or in the event that no record date is
fixed, upon the making of such dividend.
(b) Reclassification, Reorganization and
------------------------------------
Consolidation. In case of any reclassification, capital reorganization, or
change in the Common Stock of the Company (other than as a result of a
subdivision, combination, or stock dividend provided for in Section 4(a)
------------
above), then, as a condition of such reclassification, reorganization, or
change, lawful provision shall be made, and duly executed documents evidencing
the same from the Company or its successor shall be delivered to the Holder,
so that the Holder shall have the right at any time prior to the expiration of
this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant, the kind and amount of shares of stock and other
securities and property receivable in connection with such reclassification,
reorganization, or change by a holder of the same number of shares of Common
Stock as were purchasable by the Holder immediately prior to such
reclassification, reorganization, or change. In any such case appropriate
4
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to
any shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the Exercise Price
payable hereunder, provided the aggregate Exercise Price shall remain the
same.
(c) Full Ratchet. Upon the occurrence of an event
------------
which causes a reduction of the Conversion Price (as defined in the
Certificate of Designation) of the Series D Convertible Preferred Stock
pursuant to Section 5(d)(vii) of the Certificate of Designation (or would
cause such a reduction if the Series D Convertible Preferred Stock were then
outstanding), (i) the Exercise Price of this Warrant shall be reduced to one
and one-half times the revised Conversion Price; and (ii) the number of shares
of Common Stock for which this Warrant is exercisable shall equal the number
of shares of Common Stock for which this Warrant is exercisable immediately
prior to such reduction of the Exercise Price times a fraction (x) the
numerator of which is the Exercise Price immediately prior to such reduction,
and (y) the denominator of which is the reduced Exercise Price (as set forth
in clause (i) immediately above).
(d) Calculations. All calculations under this
------------
Section 4 shall be made to the nearest cent or the nearest 1/100th of a share,
---------
as applicable. The number of shares of Common Stock outstanding at any given
time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issue
or sale of Common Stock.
(e) Warrant Shares. The Company covenants and
--------------
agrees that all Warrant Shares which may be issued will, upon issuance, be
validly issued, fully paid, and non-assessable. The Company further covenants
and agrees that the Company will at all times have authorized and reserved,
free from preemptive rights, a sufficient number of shares of its Common Stock
to provide for the exercise of this Warrant in full.
Section 5.
Notice of Adjustments. Upon the occurrence
---------------------
of each adjustment pursuant to Section 4, the Company at its expense will
---------
promptly compute such adjustment in accordance with the terms of this Warrant
and prepare a certificate setting forth such adjustment, including a statement
of the adjusted Exercise Price, describing the transactions giving rise to
such adjustments and showing in detail the facts upon which such adjustment is
based. When any such adjustment is required to be made, the Company will
promptly, but in any event no later than ten (10) days after said adjustment,
notify the Holder of the event giving rise to such adjustment and deliver a
copy of each such certificate to the Holder.
5
Section 6.
Registration Rights. The Holder shall be
-------------------
entitled to registration rights with respect to the Warrant Shares as set
forth in the Investors Rights Agreement referred to in the Stock Purchase
Agreement.
Section 7.
No Stockholder Rights. This Warrant shall
---------------------
not entitle Holder to any voting rights or other rights as a stockholder of
the Company.
Section 8.
Transfer of Securities.
----------------------
(a) This Warrant and the Warrant Shares and any
shares of capital stock received in respect thereof, whether by reason of a
stock split or share reclassification thereof, a stock dividend thereon, or
otherwise, shall not be transferable except upon compliance with the
provisions of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
and applicable state securities laws with respect to the transfer of such
securities. The Holder, by acceptance of this Warrant, agrees to be bound by
the provisions this Section 8 hereof and to indemnify and hold harmless the
---------
Company against any loss or liability arising from the disposition of this
Warrant or the Warrant Shares issuable upon exercise hereof or any interest in
either thereof in violation of the provisions of this Warrant.
(b) Each certificate for the Warrant Shares and any
shares of capital stock received in respect thereof, whether by reason of a
stock split or share reclassification thereof, a stock dividend thereon, or
otherwise, and each certificate for any such securities issued to subsequent
transferees of any such certificate shall (unless otherwise permitted by the
provisions hereof) be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, SUCH
REGISTRATION AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH IS ACCEPTABLE TO THE ISSUER."
Section 9.
Replacement of Warrant. If this Warrant is
----------------------
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation hereof, or in
lieu of and substitution for this
6
Warrant, a new warrant (the "NEW WARRANT"), but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable bond or indemnity, if requested.
Section 10.
Miscellaneous.
-------------
(a) The terms of this Warrant shall be binding upon
and shall inure to the benefit of any successors or permitted assigns of the
Company and the Holder.
(b) Except as otherwise provided herein, this
Warrant and all rights hereunder are transferable by the registered holder
hereof in person or by duly authorized attorney on the books of the Company
upon surrender of this Warrant, properly endorsed, to the Company. The Company
may deem and treat the registered holder of this Warrant at any time as the
absolute owner hereof for all purposes and shall not be affected by any notice
to the contrary.
(c) Notwithstanding any provision herein to the
contrary, the Holder may not exercise, sell, transfer, or otherwise assign
this Warrant unless the Company is provided with an opinion of counsel
satisfactory in form and substance to the Company, to the effect that such
exercise, sale, transfer, or assignment would not violate the Securities Act
or applicable state securities laws.
(d) All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be
in writing and, unless otherwise specified herein, shall be (i) personally
served, (ii) deposited in the mail, registered or certified, return receipt
requested, postage prepaid, (iii) delivered by reputable air courier service
with charges prepaid, or (iv) transmitted by hand delivery, telegram, or
facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other
communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address
or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during
normal business hours where such notice is to be received) or (b) on the
second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such communications
shall be: (i) if to the Company, to: ▇▇▇▇▇▇▇▇ Curhan Ford Group, Inc., ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Chief Financial Officer, telecopier: (▇▇▇) ▇▇▇-▇▇▇-▇▇▇▇, (ii) if to the Holder
to: the address and telecopier number indicated on the signature pages to the
Stock Purchase Agreement.
(e) This Warrant shall be governed by and construed
in accordance with the internal laws of the State of Delaware, without regard
to principles of conflicts of law. With respect to any disputes arising out of
or related to this Warrant, the parties consent to the exclusive
7
jurisdiction of, and venue in, the state courts in the city of Chicago, and
county of ▇▇▇▇, Illinois (or in the event of exclusive federal jurisdiction,
the courts of the Northern District of Illinois). EACH OF THE PARTIES
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY. The Company agrees and acknowledges that any violation
or breach of its covenants, agreements and undertakings contained in this
Warrant shall cause Holder irreversible injury and, in addition to any other
right or remedy available to a party at law or in equity, a Holder shall be
entitled to enforcement by court injunction for specific performance of the
obligations of the other party hereunder (without the requirement of posting a
bond). Notwithstanding the foregoing sentence, nothing herein shall be
construed as prohibiting a party from also pursuing any other rights, remedies
or defenses, for such breach or threatened breach, including receiving damages
and attorneys' fees. The election of any remedy shall not be construed as a
waiver on the part of any party of any rights such party might otherwise have
at law or in equity. Said rights and remedies shall be cumulative except as
limited in the Investors Rights Agreement. The prevailing party shall be
entitled to recover from the other party its reasonable attorney's fees and
costs. In the event that any provision of this Warrant or any other agreement
delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.
(f) The headings herein are for convenience only,
do not constitute a part of this Warrant and shall not be deemed to limit or
affect any of the provisions hereof.
(g) In case any one or more of the provisions of
this Warrant shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Warrant shall
not in any way be affected or impaired thereby and the parties will attempt in
good faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
[The remainder of this page intentionally left blank]
8
SIGNATURE PAGE
TO
▇▇▇▇▇▇▇▇ CURHAN FORD GROUP, INC.
COMMON STOCK PURCHASE WARRANT
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed in its name by its duly authorized officers under seal, and to be
dated as of the date first above written.
▇▇▇▇▇▇▇▇ CURHAN FORD GROUP, INC.
By:
----------------------------------
Name:
Title:
[Signature Page to ▇▇▇▇▇▇▇▇ Curhan Ford Group, Inc.
Common Stock Purchase Warrant]
9
ASSIGNMENT
(To be Executed by the Holder to effect a transfer of the foregoing
Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, and assigns and transfers
unto ______________________ the foregoing Warrant and the rights represented
thereto to purchase shares of Common Stock, par value $0.0001 per share, of
▇▇▇▇▇▇▇▇ CURHAN FORD GROUP, INC. in accordance with terms and conditions
thereof, and does hereby irrevocably constitute and appoint ________________
Attorney to transfer the said Warrant on the books of the Company, with full
power of substitution.
Holder:
--------------------------------------------
--------------------------------------------
Address
Dated: __________________, 20__
In the presence of:
--------------------------------------------
10
NOTICE OF EXERCISE
[To be signed only upon exercise of Warrant]
To:
▇▇▇▇▇▇▇▇ CURHAN FORD GROUP, INC.
The undersigned Holder of the attached Warrant hereby irrevocably
elects to exercise the Warrant for, and to purchase thereunder, _________
shares of Common Stock, par value $0.0001 per share, of ▇▇▇▇▇▇▇▇ CURHAN FORD
GROUP, INC., issuable upon exercise of said Warrant and hereby surrenders said
Warrant.
The undersigned herewith requests that the certificates for such
shares be issued in the name of, and delivered to the undersigned, whose
address is ________________________________.
If electronic book entry transfer, complete the following:
Account Number: ____________________________
Transaction Code Number: _____________________
Dated: ___________________
Holder:
----------------------------------------
----------------------------------------
By:
------------------------------------
Name:
Title:
NOTICE
The signature above must correspond to the name as written upon the
face of the within Warrant in every particular, without alteration or
enlargement or any change whatsoever.
11