EXHIBIT 4.11
WARRANT AGREEMENT
among
▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
and
AMERICAN EQUITIES, LLC
and
CORPORATE FINANCIAL ENTERPRISES, INC.
Dated as of January 24, 2000
THIS WARRANT AND THE WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THIS
WARRANT (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER APPLICABLE STATE OR FOREIGN
SECURITIES LAWS ("SECURITIES LAWS"). THE SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR
CONSIDERATION, IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT AND
QUALIFICATION OR REGISTRATION UNDER APPLICABLE SECURITIES LAWS OR (2) THE ISSUER
SHALL HAVE RECEIVED AN OPINION OF COUNSEL AS TO THE AVAILABILITY OF AN EXEMPTION
FROM SUCH QUALIFICATION AND REGISTRATION.
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "AGREEMENT") is dated as of January 24,
2000, and executed by and among ▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a California corporation
(the "Company"), American Equities, LLC, a California limited liability company
("American Equities"), and Corporate Financial Enterprises, Inc. ("CFE," and,
together with American Equities, the "Investor").
WHEREAS, the Company has agreed to grant to Investor or its assigns
common stock purchase warrants in substantially the form attached hereto as
EXHIBIT A hereto (the "WARRANTS") to acquire up to an aggregate of 37,000 shares
of the Company's Common Stock (the "Exercise Quantity"). This Agreement sets
forth certain rights and obligations of the Company and Investor with respect to
the Warrants.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, representations, warranties and agreements contained in this
Agreement, the parties hereto agree as follows:
I. DEFINITIONS
Section 1.01 DEFINED TERMS. As used in this agreement, the following
capitalized terms shall have the meanings respectively assigned to them below,
which meanings shall be applicable equally to the singular and plural forms of
the terms so defined.
"COMMON STOCK" shall mean the common stock, par value $0.01, of the
Company.
"COMMON STOCK EQUIVALENTS" shall mean all options, warrants (including,
without limitation, the Warrants), securities of any kind (including, without
limitation, securities convertible into or exchangeable or exercisable for
Common Stock) and other rights (in each case whether now existing or hereafter
issued or arising) to acquire from the Company shares of Common Stock (without
regard to whether such options, warrants, securities and other rights are then
exchangeable, exercisable or convertible in full, in part or at all).
"COMPANY" shall have the meaning set forth in the preamble.
"DIVIDEND" means, as to any Person, any declaration or payment of any
dividend or distribution (other than a dividend of Common Stock) on any shares
of capital stock of such Person.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, and any successor
provisions thereto.
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"EXERCISE PRICE" shall have the meaning given in each Warrant. The
Exercise Price and the number of shares of Common Stock purchasable pursuant to
the Warrants shall be subject to adjustment from time to time as hereinafter set
forth in Article V hereof.
"EXPIRATION PERIOD" means January 24, 2007.
"EXERCISE QUANTITY" shall mean the number of shares of Common Stock,
determined from time to time, taking into account all shares of Common Stock
theretofore issued upon exercise of the Warrants, required to be issued by the
Company to the holders of the Warrants. Exercise Quantity shall initially have
the meaning given in each Warrant, and may be adjusted from time to time,
pursuant to the provisions of the Warrants and this Agreement.
"FAIR VALUE" as of a particular date shall mean, with respect to the
Common Stock, the closing asked price of the Common Stock as reported on a
national securities exchange or on the NASDAQ SmallCap, National Market System
or OTC Bulletin Board Service (collectively, and as applicable, "NASDAQ") or, if
a last asked quotation is not available for the Common Stock, the last sale
price of the Common Stock as reported by NASDAQ, or if not so reported, as
listed in the National Quotation Bureau, Inc.'s "Pink Sheets." If the Company's
Common Stock is not then listed or traded on any securities exchange or
quotation system, or if such quotations are otherwise unavailable, or with
respect to other appropriate security, property, assets, business or entity,
"Fair Value" shall mean the fair value of any such item as determined by mutual
agreement reached by the Holder and the Company in good faith or, in the event
the parties are unable to agree, an opinion of an independent investment banking
firm or firms in accordance with the following procedure. In the case of any
event which gives rise to a requirement to determine "Fair Value" pursuant to
this Agreement, the Company shall notify the Holders of such event as promptly
as practicable, but in any event within ten (10) calendar days following such
event and if the procedures contemplated herein in connection with determining
Fair Value have not been complied with fully, then any such determination of
Fair Value for any purpose of this Agreement shall be deemed to be preliminary
and subject to adjustment pending full compliance with such procedures.
After the giving of such notice, the Company and the Holders shall engage
in direct good faith discussions to arrive at a mutually agreeable determination
of Fair Value. In the event the Company and the Holder(s) are unable to arrive
at a mutually agreeable determination within ten (10) days of the notice, the
Company and the Holder(s) of the Warrants (if more than one, the Holders of a
majority of the outstanding Warrants) shall retain an accounting firm of
national reputation mutually acceptable to the parties, or, if mutual agreement
is not reached within 15 days of the notice described above, KPMG, LLP or, if
KPMG, LLP is unavailable or unable to accept such engagement,
PricewaterhouseCoopers, LLP. Such firm shall determine the Fair Value of the
security, property, assets, business or entity, as the case may be, in question
and deliver its opinion in writing to the Company and to such Holder(s) within
thirty (30) days of its retention. Each of the Company and the Holders (as a
group) shall submit to such investment banking firm their proposed determination
of Fair Value, and any other supporting documentation reasonably requested by
the investment banking firm. The determination so
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made shall be conclusive and binding on the Company and such Holder(s), absent
clear and manifest error. The fees and expenses of such investment banking firm
retained pursuant to this provision shall be borne 50% by the Company and 50% by
the Holders in advance.
"HOLDER" or "HOLDERS" shall mean the Person(s) then registered as the
owners of the Warrants on the books and records of the Company.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, estate,
unincorporated organization, joint venture, court or governmental or political
subdivision or agency thereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder, and any successor provisions
thereto.
"SUBSIDIARY" of any Person means (i) a corporation, association or other
business entity of which more than 50% of the total voting power of all classes
of the outstanding voting stock or other indicia of ownership is owned, directly
or indirectly, by such Person or by one or more other Subsidiaries of such
Person or by such Person and one or more Subsidiaries thereof, (ii) any
partnership (a) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are such Person or one or more Subsidiaries of such Person (or
any combination thereof) and (iii) any other Person not described in clauses (i)
and (ii) above in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, owns 50% ownership and the power, whether by such ownership
interest, pursuant to a written contract or agreement or otherwise, to direct
the policies and management or the financial and other affairs thereof.
"WARRANT SECURITIES" shall mean the shares of Common Stock purchasable
or purchased from time to time under the Warrants, together with all additional
securities receivable or received in payment of Dividends or distributions on or
splits of those securities or receivable or received as a result of adjustments
provided for in ARTICLE V hereof.
II. WARRANTS
Section 2.01 GRANT OF WARRANTS. The Company hereby grants to Investor,
for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Warrants to purchase a number of shares of Common Stock
equal to the Exercise Quantity, as may be adjusted from time to time as set
forth herein, which Warrants shall be evidenced in substantially the form
attached as Exhibit A. Investor and any subsequent Holder of the Warrants and of
Warrant Securities shall have the rights and obligations provided for in the
Warrants and in this Agreement.
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Section 2.02 EXERCISE OF WARRANTS. Subject to the terms of this
Agreement, the Warrant holder shall have the right, at any time and from time to
time until 5:00 p.m., Pacific Time, on January 24, 2007, to purchase from the
Company up to the number of fully paid and nonassessable shares of Warrant
Securities to which the Warrant holder may at the time be entitled to purchase
pursuant to this Agreement and the Warrant, upon presentation and surrender of
the Warrant to the Company, together with the Exercise Form duly completed and
executed and payment in the aggregate amount equal to the Exercise Price
multiplied by the number of shares of Common Stock being purchased. Payment of
the Exercise Price shall be made by bank or certified check payable to the order
of the Company or wire transfer; PROVIDED, HOWEVER, that the Holder shall have
the right to pay the exercise price by surrender to the Company of a number of
shares of Common Stock with a Fair Value equal to the exercise price. Within
five business days of the Company's receipt of the Warrant, the completed and
signed Exercise Form and the requisite payment, the Company shall issue and
deliver (or cause to be delivered) to the exercising Holder stock certificates
aggregating the number of shares of Warrant Securities purchased. In the event
the Company fails to deliver or cause to be delivered to the Holder such
certificates (without legend or restriction if such Warrant Securities are then,
or are required to be, registered pursuant to the Warrant Agreement) within such
five business day period, the Company shall pay to the Holder an amount equal to
the greater of (i) $250 per calendar day, (ii) the product of (x) the last sale
price on the date the certificates are properly issued and delivered to the
Holder, less the last sale price on the date of the Exercise Form, multiplied by
(y) the number of shares of Warrant Securities purchased as set forth in the
Exercise Form, or (iii) the quotient of (x) the last reported sale price on the
day prior to the date of the Exercise Form, multiplied by the number of shares
of Warrant Securities issuable to such Holder upon such exercise, divided by (y)
200 (the "Delay Damages"), for each day after the fifth business day following
the delivery of the Warrant and such Exercise Form to the Company through and
including the day such certificates (without legend or restriction if such
Warrant Securities are then, or are required to be, registered pursuant to the
terms of the Warrant Agreement) are delivered to the Holder at the address set
forth in such Exercise Form; provided, however, notwithstanding the foregoing,
no Delay Damages shall accrue or shall be due and payable if the Warrant
Securities, upon issuance, would not then be freely transferrable without
registration. In the event the Company restricts or delays the transfer or
clearance of such certificates by the Holder (whether by stop transfer order,
unreasonable delay or otherwise), the Company shall pay to the Holder the Delay
Damages for each calendar day of such restriction or delay.
Section 2.03 PARTIAL EXERCISE. In the event of a partial exercise of the
Warrant, the Company shall issue and deliver to the Holder a new Warrant at the
same time such stock certificates are delivered, which new Warrant shall entitle
the Holder to purchase the balance of the Exercise Quantity not purchased in
that partial exercise and shall otherwise be upon the same terms and provisions
as the Warrant.
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III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company, hereby represents and warrants as follows:
(a) The Company is a corporation duly organized, validly existing, and
in good standing under the laws of California, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all its
obligations under the contracts to which it is a party. The Company is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each state or other jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification.
(b) The execution and delivery of this Agreement and the Warrants have
been duly and properly authorized by all requisite corporate action of the
Company and its board of directors, and no consent of any other Person is
required as a prerequisite to the validity, enforceability and performance of
this Agreement and the Warrants that has not been obtained. The Company has the
full legal right, power and authority to execute and deliver this Agreement and
the Warrants and to perform its obligations hereunder and thereunder. When
issued and delivered pursuant to this Agreement, the Warrants will have been
duly and validly executed, issued and delivered and will constitute valid and
legally binding obligations of the Company and the Holder thereof will be
entitled to the benefits provided herein and therein.
(c) The Warrant Securities, when issued, sold and delivered in
accordance with the terms hereof, for the consideration expressed herein, shall
be duly and validly issued and outstanding, fully paid and nonassessable, and
will be issued in compliance with all applicable federal and state securities or
blue sky laws.
(d) The Company is not a party to or otherwise subject to any contract
or agreement which restricts or otherwise affects its right or ability to
execute and deliver this Agreement or the Warrants or to perform any obligation
hereunder or thereunder (including, without limitation, issuance of the Warrant
Securities). Neither the execution or delivery of this Agreement or the
Warrants, nor compliance therewith (including, without limitation, issuance of
the Warrant Securities), will conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in any
violation of, or result in the creation of any material lien upon any assets or
properties of the Company under, or require any consent, approval, or other
action by, notice to or filing with any court or governmental agency or division
pursuant to the Articles of Incorporation or Bylaws of the Company, as currently
in effect, any award of any arbitrator, or any agreement, instrument or law to
which the Company is subject or by which it or its assets or properties is
bound.
(e) The Warrants are, and the Warrant Securities will be, issued by
the Company to Investor in a transaction exempt from registration and
qualification under the applicable federal and state securities and blue sky
laws.
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IV. COVENANTS
Section 4.01 COVENANTS OF THE COMPANY. The Company hereby covenants and
agrees that, during the term of this Agreement, unless Holders of outstanding
Warrants evidencing a majority of the Warrants agree otherwise in writing,
(a) Each of the Warrant Securities issued and delivered upon the
exercise of the Warrants and payment of the Exercise Price will be duly and
validly authorized and issued, will be fully paid and nonassessable, and will
not be subject to any unpaid tax of the Company or any lien imposed on or
created by the Company, whether respecting their issuance to and purchase by the
Holder of the Warrants or otherwise. The Company will take all such actions as
may be necessary to assure that all such Warrant Securities may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange or quotation system upon which
such Warrant Securities may be listed.
(b) The Company shall reserve and at all times keep available for
issuance an authorized number of shares of Common Stock or Warrant Securities
sufficient to permit the full and immediate exercise of the Warrants.
(c) The Company shall not permit the par value of its Common Stock to
exceed, at any time, the Exercise Price and shall take all such actions as may
be necessary or appropriate to ensure that it does not do so.
(d) As soon as available, and in no event later than three business
days after the dates filed with the Securities and Exchange Commission (the
"Commission") or any other governmental agency or division or other regulatory
authority, if such documents are so filed, the Company shall, upon request,
deliver to any Holder(s) copies of (i) all annual, quarterly and monthly
financial statements made available by the Company to its shareholders, (ii) all
reports, notices and proxy or information statements sent or made available
generally by the Company to its shareholders, and (iii) all regular and periodic
reports and all registration statements, prospectuses and other information
filed by the Company with the Commission, relevant state authorities or any
securities exchange, securities quotation system or other self-regulatory
organization other than publicly available materials.
(e) The Company agrees that to the extent reasonably necessary to
permit the Holders to sell shares of the Common Stock in accordance with and in
reliance on Rule 144, and for so long as such shares are owned by the Holders
and such shares are not registered for resale under the Securities Act, the
Company will make and keep public information available within the meaning of
Rule 144 at all times from and after the Closing Date, and, if so required to do
so by law, file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act.
(f) The Company shall cooperate with the Holder(s) in supplying such
information as may be reasonably necessary for the Holder(s) to complete and
file any information or other
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reporting forms from time to time required by the Commission, relevant state
authorities or any securities exchange, securities quotation system or other
self-regulatory organization, including, without limitation, information
pertaining to or required for the availability of any exemption from the
securities laws for the sale, transfer or other disposition of the Warrants or
any of the Warrant Securities.
Section 4.02 INDEMNIFICATION.
(a) The Company agrees to defend, indemnify and hold harmless, to the
full extent permitted by law, Investor and each other Holder of the Warrants,
this Agreement, or any Warrant Security purchased hereunder, any underwriter(s),
and their respective directors, officers, employees, attorneys and agents, as
well as each other Person (if any) controlling any of the foregoing Persons
within the meaning of Section 15 of the Securities Act, or Section 20 of the
Exchange Act, from and against any and all claims, liabilities, losses and
expenses (including, without limitation, the reasonable disbursements, expenses
and fees of their respective attorneys, accountants and experts) that may be
imposed upon, incurred by, or asserted against any of them, any of their
respective directors, officers, employees, attorneys and agents, or any such
control Person, under the Securities Act, the Exchange Act or any other statute
or at common law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof), arise out of or are related directly or indirectly
to the breach of any of the representations, warranties and/or covenants of the
Company contained herein and shall reimburse such Persons for any legal or any
other expenses reasonably incurred by such Persons in connection with
investigating or defending any such loss, claim, damage, liability or action.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any such indemnified Person, and shall
survive the transfer of such securities by such Person. Promptly after receipt
of notice of the commencement of any action in respect of which indemnity may be
sought against the Company, the Company shall assume the defense of such action
(including the employment of counsel, who shall be counsel of national
reputation and presence, and who shall be reasonably satisfactory to the party
seeking indemnity hereunder) and the payment of expenses insofar as such action
shall relate to any alleged liability in respect of which indemnity may be
sought against the Company. If the Company assumes the defense of such action,
(i) it will be conclusively established for purposes of this Agreement that the
claims made in that action are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be effected
by the Company without the indemnified party's consent (which shall not be
unreasonably withheld) unless (1) there is no finding or admission of any
violation of law, regulation, rule or order or any violation of the rights of
any other person or entity and no effect on any other claims that may be made
against the indemnified party, and (2) the sole relief provided is monetary
damages that are paid in full by Company; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to the Company of the
commencement of any action and the Company does not, within ten days after the
indemnified party's notice is given to the Company, give notice to the
indemnified party of its election to assume the defense of such action, the
Company will be bound by any determination made in such action or any compromise
or settlement effected by the indemnified party.
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(b) Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a claim or action may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, or if an
indemnified party determines that there are defenses available to it that are
either not available to the Company or not being raised by the Company, or if
the indemnified party determines that there is a conflict of interest between
the Company and the indemnified party in the claim or action, the indemnified
party may, by notice to the Company and an opinion of counsel concurring with
such indemnified party's determination, assume the exclusive right to defend,
compromise, or settle such claim or action, and the Company will be bound by any
determination of a claim or action so defended or any compromise or settlement
effected.
Section 4.03 LISTING ON THE SECURITIES EXCHANGE. Promptly after an
initial public offering of the Company's Common Stock, the Company shall, at its
expense, use its best efforts to list on NASDAQ or any securities exchange where
it lists its Common Stock, and maintain and increase when necessary such listing
of all outstanding Warrant Securities so long as any shares of Common Stock
shall be so listed. The Company shall also use its best efforts to list on each
such securities exchange or NASDAQ, and will maintain such listing of, any other
securities issued by the Company which the Holder(s) shall be entitled to
receive upon the exercise thereof if at the time any securities of the same
class shall be listed on such securities exchange or NASDAQ by the Company.
Nothing contained herein shall obligate the Company to file any registration
statement with respect to the Company's Common Stock.
V. ANTIDILUTION
Section 5.01 NO DILUTION OR IMPAIRMENT: ADJUSTMENTS.
(a) PROHIBITED ACTIONS. So long as any Warrants are outstanding, the
Company will not avoid or seek to avoid the observance or performance of any of
the terms of this Agreement or the Warrants or impair the ability of the
Holder(s) to realize the full intended economic value thereof, but will at all
times in good faith assist in the carrying out of all such terms, and of the
taking of all such action as may be necessary or appropriate, consistent with
the provisions of this Warrant Agreement, in order to protect the rights of the
Holder(s) of the Warrants against dilution or other impairment.
(b) ADJUSTMENT OF EXERCISE PRICE IN THE EVENT OF CERTAIN ISSUANCES OF
COMMON STOCK OR COMMON STOCK EQUIVALENTS. In case the Company shall at any time
issue or sell Common Stock or Common Stock Equivalents (by merger otherwise) for
less than Fair Value as of the date of such issuance or at a price per share
less than the then current Exercise Price of the Warrants (other than (i)
delivery of shares of Common Stock upon exercise of the Warrants), (ii) any
Common Stock Equivalents issued and outstanding on the date hereof and (iii) up
to 400,000 employee or other stock awards), or issue Common Stock or Common
Stock Equivalents by way of a Dividend or other distribution on any stock of the
Company (other than the Series A Preferred Stock) or effect a forward stock
split of the outstanding shares of Common
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Stock, the Exercise Price then in effect shall be proportionately decreased (on
the date of such issuance, sale or split), so that the new Exercise Price shall
be equal to the product of (x) the former Exercise Price and (y) the lesser of
(i) one or (ii) a fraction, the numerator of which shall be (1) the number of
shares of Common Stock outstanding immediately prior to such issuance or sale
(including shares of Common Stock issuable upon conversion of any outstanding
securities convertible or exchangeable into Common Stock), plus (2) the number
of shares of Common Stock which the aggregate consideration received by the
Company for the total number of shares of Common Stock or Common Stock
Equivalents so issued or sold would purchase at the Fair Value of such shares,
and (y) the denominator of which shall be (1) the number of shares of Common
Stock outstanding immediately prior to such issuance or sale (including shares
of Common Stock issuable upon conversion of any outstanding securities
convertible or exchangeable into Common Stock), plus (2) the number of such
shares of Common Stock so issued or sold. The Exercise Quantity purchasable upon
exercise of the Warrants immediately prior thereto shall be adjusted so that the
new Exercise Quantity shall be equal to the product of (x) the former Exercise
Quantity and (y) the following fraction:
THE EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH ADJUSTMENT
-----------------------------------------------------------------
The Exercise Price in effect immediately after such adjustment
(c) COMPANY TO PREVENT DILUTION. In any case at any time or from time
to time conditions arise by reason of action taken by the Company which are not
adequately covered by the provisions of this Article V, and which might
adversely affect the rights of the Holders under any provision of this
Agreement, the Board of Directors of the Company shall make such adjustment, if
any, on a basis consistent with the standards established in the other
provisions of this Article V, as is necessary with respect to the Exercise Price
and the Exercise Quantity, so as to preserve, without dilution, the rights of
the Holders. Except as expressly provided herein in connection with a
combination of outstanding Common Stock, no such adjustment shall be made which
shall increase the Exercise Price or decrease the Exercise Quantity.
(d) REORGANIZATION; ASSET SALES; ETC. In case of (i) any capital
reorganization or any reclassification of the capital stock of the Company, (ii)
any consolidation or merger of the Company with or into another Person, (iii)
the disposition or transfer of assets of the Company other than in the ordinary
course of the Company's business, (iv) any Dividend or other distribution to the
holders of capital stock of the Company in the form of any asset, including
without limitation securities of the Company, or (v) the dissolution,
liquidation or winding up of the Company, the Holders shall thereafter be
entitled to purchase (and it shall be a condition to the consummation of any
such transaction or event that appropriate provision shall be made so that such
Holders shall thereafter be entitled to purchase) the kind and amount of shares
of stock and other securities and property receivable in such transaction by a
holder of the number of shares of Common Stock of the Company into which this
Agreement entitled the Holders to purchase immediately prior to such capital
reorganization, reclassification of capital stock, non-surviving combination or
disposition; and in any such case appropriate adjustments shall be made in the
application of the provisions of this Article V with respect to rights and
interests thereafter purchasable upon the exercise of a Warrant. In the event
the Company effects a
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combination of outstanding shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to the record date for
such combination shall be proportionately increased, and the Exercise Quantity
proportionately decreased, effective immediately after the record date for such
combination.
(e) ADJUSTMENT STATEMENT. Whenever the Exercise Price or Exercise
Quantity is adjusted as herein provided, the Company shall, within ten days
following the consummation of the event triggering such adjustment, deliver to
the Holders a statement signed by the President of the Company and by its
Treasurer or Secretary stating the adjusted Exercise Price and Exercise Quantity
for which the Warrants are exercisable, determined as specified herein. The
statement shall show in detail the facts requiring such adjustment, including a
statement of the consideration received by the Company for any additional stock
issued. Irrespective of any adjustments in the Exercise Price or the Exercise
Quantity or the kind of shares purchasable upon the exercise of the Warrants,
the Warrants theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the Warrants initially
issuable pursuant to this Agreement.
(f) PRIOR NOTICE TO THE HOLDERS. If at any time:
(i) The Company shall pay any Dividend payable in Common Stock
or Common Stock Equivalents upon its capital stock or make any distribution to
the holders of its capital stock, in each case other than Series A Preferred
Stock; or
(ii) The Company shall offer for subscription pro rata to the
holders of its capital stock any additional shares of stock of any class or any
other rights; or
(iii) The Company shall effect any capital reorganization or any
reclassification of or change in the outstanding capital stock of the Company
(other than a change in par value, or a change from par value to no par value,
or a change from no par value to par value, or a change resulting solely from a
subdivision of outstanding shares), or any consolidation or merger, or any sale,
transfer or other disposition of all or substantially all of its property,
assets, business and goodwill as an entirety, or the liquidation, dissolution or
winding up of the Company; or
(iv) The Company shall declare a Dividend upon its capital
stock;
then, in any such event, the Company shall cause at least thirty (30) days'
prior written notice to be mailed to the Holders at the address of each such
Holder shown on the books of the Company. The notice shall also specify the date
on which the books of the Company shall close or a record be taken for such
stock dividend, distribution or subscription rights, or the date on which such
reclassification, reorganization, consolidation, merger, sale, transfer,
disposition, liquidation, dissolution, winding up, or Dividend, as the case may
be, shall take place, and the date of participation therein by the holders of
shares of capital stock if any such date is to be fixed, and
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shall also set forth such facts with respect thereto as shall be reasonably
necessary to indicate the effect of such action on the rights of the Holder.
(g) DISPUTES. If there is any dispute as to the computation of the
Exercise Price or the Exercise Quantity, the Company will retain the independent
certified public accountant, whose fees and expenses shall be shared equally by
the Company and the Holders raising such dispute, which provided the most recent
report on the Company's most recent audited financial statements to conduct an
audit of the computations pursuant to the terms hereof involved in such dispute,
including the financial statements or other information upon which such
computations were based. The determination of such accounting firm shall, in the
absence of manifest error, be conclusive and binding.
VI. TRANSFER OF WARRANTS AND WARRANT SECURITIES
Section 6.01 TRANSFER. Except as set forth in Section 7.02 below, the
Warrants and all rights thereunder are transferable, in whole or in part, on the
books of the Company to be maintained for such purpose, upon surrender of such
Warrant at the office of the Company maintained for such purpose, together with
a written assignment of such Warrant duly executed by the Holder thereof. Upon
such surrender and payment of all applicable transfer taxes, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees and in the denominations specified in such instrument of assignment,
and the surrendered Warrant shall promptly be canceled. The transferred Warrant,
if properly assigned in compliance herewith, may be exercised by an assignee for
the purchase of shares of Common Stock without having a new Warrant issued. The
Company will not close its stock transfer books against a transfer of the
Warrants or the Warrant Securities or any exercise of the Warrants. Any such
transfer or exercise tendered while such stock transfer books shall be closed
shall be deemed effective immediately prior to such closure.
Subject to Section 7.02 below, the Warrants may be divided or combined
with other Warrants upon presentation at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder thereof. Subject to
compliance with this Section 7.01, as to any transfer which may be involved in
such division or combination, the Company shall execute and deliver a new
Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.
The Company shall pay all expenses (other than transfer taxes and income
taxes, if any, of the transferee) and other charges incurred by the Company in
the performance of its obligations in connection with the preparation, issue and
delivery of Warrants under this Section. The Company agrees to maintain at its
aforesaid office books for the registration and transfer of the Warrants.
Notwithstanding any provision to the contrary contained herein, the Warrants and
the Warrant Securities shall be transferable only in compliance with the
provisions of the Securities Act and applicable state securities laws in respect
of the transfer of any Warrant or any Warrant Securities.
12
Section 6.02 TRANSFER RESTRICTIONS. Neither the Warrants nor the Warrant
Securities have been registered under the Securities Act or under the securities
laws of any state (the Securities Act and such other securities laws being
referred to collectively as the "Securities Laws"). Neither the Warrants nor the
Warrant Securities may be transferred: (a) if such transfer would constitute a
violation of any Securities Laws or a breach of the conditions to any exemption
from registration thereunder and (b) unless and until one of the following has
occurred: (i) registration of the Warrants or the Warrant Securities, as the
case may be, under the Securities Laws, have become effective, (ii) the Holder
has delivered an opinion of counsel that such registration is not required, or
(iii) such transfer would be permitted under Rule 144 of the Securities Act.
Each certificate for Warrants or Warrant Securities issued upon exercise
of a Warrant and each certificate issued to a subsequent transferee, unless at
the time of exercise such Warrants or Warrant Securities are registered under
the Securities Act, shall bear a legend substantially in the following form (and
any additional legends required by applicable law) on the face thereof:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
REGISTERED OR QUALIFIED UNDER APPLICABLE STATE OR FOREIGN SECURITIES LAWS
("SECURITIES LAWS"). THE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR CONSIDERATION,
IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT AND
QUALIFICATION OR REGISTRATION UNDER APPLICABLE SECURITIES LAWS OR (2) THE
ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL AS TO THE AVAILABILITY
OF AN EXEMPTION FROM SUCH QUALIFICATION AND REGISTRATION.
Section 6.03 REPLACEMENT OF INSTRUMENTS. Within five business days
following receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any
certificate or instrument evidencing any Warrants or Warrant Securities, and (a)
in the case of loss, theft or destruction, upon receipt by the Company of
indemnity reasonably satisfactory to it (provided that, the Holder's own
agreement of indemnification shall be deemed to be satisfactory), or (b) in the
case of mutilation, upon surrender and cancellation thereof, the Company, at its
expense, will execute, register and deliver, in lieu thereof, a new certificate
or instrument for an equal number of Warrants or Warrant Securities.
VII. MISCELLANEOUS
Section 7.01 TERM. Except as otherwise expressly provided in this
Agreement or the Warrants, this Agreement shall expire on January 24, 2007,
provided that the Company's obligations to honor an exercise of the Warrants
given prior to such expiration or to perform any
13
obligation arising hereunder continue and survive notwithstanding the expiration
of this Agreement.
Section 7.02 NO WAIVER UNDER OTHER AGREEMENTS. The terms and provisions
contained in this Agreement are not intended and shall not be construed to
waive, modify, repeal, stay, diminish or otherwise impair or affect in any
manner whatsoever any right or remedy of the Holder(s) under the Company's
Articles of Incorporation or Bylaws.
Section 7.03 RELIANCE. Each party to this Agreement shall be entitled to
rely upon any notice, consent, certificate, affidavit, statement, paper,
document, writing or other communication reasonably believed by that party to be
genuine and to have been signed, sent or made by the proper Person or Persons.
Section 7.04 NOTICE. All notices and other communications provided for or
permitted hereunder shall be made in writing and be by hand-delivery or
certified mail, return receipt requested, or by telecopy, (a) if to Investor, to
the address set forth on the signature page hereof or such other address given
by Investor to the Company in writing, (b), if to a subsequent Holder of
Warrants or Warrant Securities issued pursuant to the exercise of the Warrants,
at the most current address given by such Holder to the Company in writing; or
(c)if to the Company, as follows:
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
All such notices and communications shall be deemed to have been
duly given when delivered by hand, if personally delivered; four business days
after being deposited in the mail, postage prepaid, if mailed, when receipt is
acknowledged, if telecopied, or the next business day, if timely delivered to an
air courier guaranteeing overnight delivery.
Section 7.05 ENFORCEMENT. The Company acknowledges that the Holders may
proceed to exercise or enforce any right, power, privilege, remedy or interest
that they may have under this Agreement or applicable law without notice, except
as otherwise expressly provided herein, without pursuing, exhausting or
otherwise exercising or enforcing any other right, power, privilege, remedy or
interest that they may have against or in respect of any other party, or any
other Person or thing, and without regard to any act or omission of such party
or any other Person. The Company's obligations hereunder, including, without
limitation the obligation to issue the Warrant Securities upon exercise of the
Warrant, are absolute and unconditional and are not subject to any abatement,
reduction, setoff, defense, counterclaim or recoupment due or alleged to be due
to, or by reason of, any past, present or future claims which the Company may
have against any Holder, or any assignee, thereof, for any reason whatsoever.
All rights and remedies of the party hereto are cumulative of each other and of
every other right or remedy such
14
party may otherwise have at law or in equity, and the exercise of one or more
rights or remedies shall not prejudice or impair the concurrent or subsequent
exercise of other rights or remedies.
Section 7.06 EQUITABLE RELIEF. Each party acknowledges and agrees that it
would be impossible to measure in money the damage in the event of a breach of
any of the terms and provisions of this Agreement by any party hereto, and that,
in the event of any such breach, there may not be an adequate remedy at law,
although the foregoing shall not constitute a waiver of any of the party's
rights, powers, privileges and remedies against or in respect of a breaching
party, any other person or thing under this Agreement or applicable law. It is
therefore agreed that, in addition to all other such rights, powers, privileges
and remedies that it may have, each party shall be entitled, without the
obligation to post bond, to injunctive relief, specific performance or such
other equitable relief as such party may request to exercise or otherwise
enforce any of the terms and provisions of this Agreement and to enjoin or
otherwise restrain any act prohibited thereby, and no party will urge, and each
party hereby waives, any defense that there is an adequate remedy available at
law.
Section 7.07 MERGER OR CONSOLIDATION OF THE COMPANY. The Company shall
not reorganize, or consolidate with, or merge into a partnership, corporation,
or other entity (other than a reorganization, consolidation, or merger, in which
the Company is the surviving entity) or transfer all or substantially all of its
assets to another entity (any one of which shall constitute a "Reorganization"),
unless each Holder, upon the exercise of such Holder's Warrants at any time
after the consummation of such Reorganization, shall be entitled to receive, in
the same manner as specified in this Agreement, the stock or other securities or
property to which such Holder would have been entitled upon such consummation if
such Holder had exercised such Holder's Warrants on or before the record date
for such Reorganization. Any new entity formed upon or existing as a surviving
entity after any such Reorganization shall be deemed the "Company" for purposes
of this Agreement. The terms of this Agreement shall survive the consummation of
any such Reorganization, and the Warrants shall thereafter be applicable to the
shares of stock or other securities or property to which the Holders thereof
would have been entitled upon such consummation if such Holders had exercised
the Warrants on or before the record date for such Reorganization. The Company
shall not effect any Reorganization, unless prior to or simultaneously with the
consummation thereof, the successor or surviving entity after such
Reorganization shall assume, by written instrument, (i) the obligation to
deliver to the Holders such shares of stock, or other securities or property as,
in accordance with the foregoing provisions, the Holders may be entitled to
purchase and (ii) the other obligations of the Company under this Agreement.
Section 7.08 INTERPRETATION; HEADINGS, SEVERABILITY.
(a) The parties acknowledge and agree that since each party and its
counsel have had the opportunity to review and negotiate the terms and
provisions of this Agreement and have contributed to its revision, the normal
rule of construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement,
and its terms and provisions shall be construed fairly as to all parties hereto
and not in favor of or
15
against any party, regardless of which party was generally responsible for the
preparation of this Agreement.
(b) The Section and other headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(c) In the event that any term or provision of this Agreement shall be
finally determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by a governmental authority having jurisdiction and
venue, such determination shall not impair or otherwise affect the validity,
legality or enforceability: (i) by or before that authority of the remaining
terms and provisions of this Agreement, which shall be enforced as if the
superseded, invalid, illegal or otherwise unenforceable term or provision were
modified to the extent required to permit such provision to be not superseded,
invalid, illegal or unenforceable, or (ii) by or before any other authority of
any of the terms and provisions of this Agreement.
(d) If any period of time specified in this Agreement expires on a day
that is not a business day, that period shall be extended to and expire on the
next succeeding business day.
Section 7.09 SURVIVAL OF COVENANTS. Each of the covenants and other
agreements of the parties contained in this Agreement shall be absolute and,
except as otherwise expressly provided, unconditional, shall survive the
execution and delivery of this Agreement and shall continue in full force and
effect until the term of this Agreement has expired, and thereafter with respect
to events occurring prior thereto.
Section 7.10 NO REQUIRED EXERCISE. No term or provision of the Warrants
or this Agreement is intended to require, nor shall any such term or provision
be construed as requiring, any Holder of the Warrants to exercise or sell the
Warrants.
Section 7.11 BINDING EFFECT. This Agreement shall be binding upon and
enforceable against the parties hereto and their respective successors and
permitted assigns.
Section 7.12 NO WAIVER BY ACTION OR COURSE OF DEALING. No course of
dealing or any delay or failure to exercise any right hereunder on the part of
any party hereto shall operate as a waiver of such right or otherwise prejudice
the rights, powers or remedies of such party.
Section 7.13 WAIVER; MODIFICATION; AMENDMENT. Each and every modification
to and amendment of this Agreement shall be in writing and signed by the Company
and by the Holders of a majority in interest of the Warrants. Notwithstanding
the foregoing, no modification, amendment or waiver of any term or provision
hereof with respect to the Exercise Price, the Exercise Quantity any of the
terms of this Section 8.13 or which purports, or has the effect of, decreasing
the Exercise Quantity or increasing the Exercise Price, shortening the term of
any Warrant or limiting the right or ability of a Holder thereof to exercise a
Warrant shall be enforceable against a Holder unless such Holder specifically
approves, in writing, such modifications, amendment or modification; provided,
however, that the Company may reduce
16
the Exercise Price, increase the Exercise Quantity or extend the Expiration
Period of all outstanding Warrants without obtaining the consent of any Holder.
Section 7.14 ENTIRE AGREEMENT. This Agreement and the Warrants contain
the entire agreement of the parties with respect to the Warrants and supersede
all other representations, warranties, agreements and understandings, oral or
otherwise, among the parties hereto with respect to the Warrants, except as
otherwise provided herein.
Section 7.15 NO INCONSISTENT AGREEMENTS OR RIGHTS. The Company shall not
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement.
Section 7.16 TIME OF THE ESSENCE. With regard to all dates and time
periods set forth or referred to in this Agreement, time is of the essence.
Section 7.17 ATTORNEYS' FEES AND COSTS. Should any party institute any
action, suit or other proceeding arising out of or relating to this Agreement or
the Warrants, the prevailing party shall be entitled to receive from the losing
party reasonable attorneys' fees and costs incurred in connection therewith,
along with all costs of defense, investigation, preparation, experts and
collection.
Section 7.18 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS AGREEMENT, THE WARRANTS AND THE WARRANT SECURITIES AND ALL
AMENDMENTS, SUPPLEMENTS, WAIVERS, AND CONSENTS RELATING HERETO OR THERETO SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF CALIFORNIA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY
HEREBY IRREVOCABLY SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS SITTING IN THE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES,
AND AGREES AND CONSENTS THAT SERVICES OF PROCESS MAY BE MADE UPON IT IN ANY
LEGAL PROCEEDINGS RELATING HERETO BY ANY MEANS ALLOWED UNDER CALIFORNIA OR
FEDERAL LAW. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
THE COMPANY AND HOLDER EACH HEREBY AGREE TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE SECURITIES OR ANY OTHER AGREEMENTS RELATING TO THE SECURITIES OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY
17
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT, THE WARRANTS, THE WARRANT SECURITIES OR ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING THERETO.
18
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be executed as of the day and year first above written.
THE COMPANY:
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------
▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
American Equities, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
President
Corporate Financial Enterprises, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
President
19
Exhibit A
to
Warrant Agreement
INITIAL WARRANT
THIS WARRANT AND THE WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THIS
WARRANT (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER APPLICABLE STATE OR FOREIGN
SECURITIES LAWS ("SECURITIES LAWS"). THE SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR
CONSIDERATION, IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT AND
QUALIFICATION OR REGISTRATION UNDER APPLICABLE SECURITIES LAWS OR (2) THE ISSUER
SHALL HAVE RECEIVED AN OPINION OF COUNSEL AS TO THE AVAILABILITY OF AN EXEMPTION
FROM SUCH QUALIFICATION AND REGISTRATION.
Certificate No. 1
COMMON STOCK PURCHASE WARRANT
January 24, 2000
Capitalized terms used and not otherwise defined in this Warrant shall have the
meanings respectively assigned to them in the Warrant Agreement, dated as of the
date hereof, by and between the Company and Holder.
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a California corporation (the "Company") does hereby
certify and agree that, for good and valuable consideration (the existence,
sufficiency and receipt of which are hereby acknowledged by the Company),
AMERICAN EQUITIES, LLC, a California limited liability company, its successor,
and assigns ("Holder"), hereby is entitled to purchase from the Company, during
the term set forth in Section 1 hereof, up to an aggregate amount of 22,200
shares (the "Exercise Quantity") of duly authorized, validly issued, fully paid
and non-assessable shares of Common Stock of the Company (the "Common Stock"),
all upon the terms and provisions and subject to adjustment of such Exercise
Quantity provided in the Warrant Agreement and this Common Stock Purchase
Warrant (the "Warrant"). The exercise price per share of Common Stock for which
this Warrant is exercisable shall be the lesser of (i) $1.00, or (ii) seventy
percent (70%) of the lowest price per share of Common Stock or other capital
stock (as if converted into Common Stock) subsequent to the date hereof, as
adjusted from time to time pursuant to the terms of this Warrant and the Warrant
Agreement (the "Exercise Price").
1. TERM OF THE WARRANT. The term of this Warrant commences as of the
date hereof, and shall expire at 5:00 P.M., Pacific time, on January 24, 2007,
unless sooner exercised as herein provided.
2. EXERCISE OF WARRANT.
(a) This Warrant may be exercised by the Holder of this Warrant
at any time during the term hereof, in whole or in part, from time to time (but
not for fractional shares), by presentation and surrender of this Warrant (or a
copy hereof) to the Company, together with the annexed Exercise Form duly
completed and executed and payment in the aggregate amount equal to the Exercise
Price multiplied by the number of shares of Common Stock being purchased.
Payment of the Exercise Price shall be made by personal or business check
payable to the order of the Company; PROVIDED, HOWEVER, that the Holder shall
have the right to pay the exercise price by surrender to the Company of a number
of shares of Common Stock with a Fair Value equal to the exercise price. Within
five business days of the Company's receipt of this Warrant (or a copy thereof),
the completed and signed Exercise Form and the requisite payment (if any), the
Company shall issue and deliver (or cause to be delivered) to the exercising
Holder stock certificates aggregating the number of shares of Warrant Securities
purchased. In the event the Company fails to deliver or cause to be delivered to
the Holder such certificates (without legend or restriction if such Warrant
Securities are then, or are required to be, registered pursuant to the Warrant
Agreement) within such five business day period, the Company shall pay to the
Holder the Delay Damages, for each day after the fifth business day following
the delivery of this Warrant and such Exercise Form to the Company through and
including the day such certificates (without legend or restriction if such
Warrant Securities are then, or are required to be, registered pursuant to the
terms of the Warrant Agreement) are delivered to the Holder at the address set
forth in such Exercise Form. In the event the Company restricts or delays the
transfer or clearance of such certificates by the Holder (whether by stop
transfer order, unreasonable delay or otherwise), the Company shall pay to the
Holder the Delay Damages for each calendar day of such restriction or delay,
subject to the provisions of the Warrant Agreement.
(b) In the event the Holder of this Warrant desires that any or
all of the stock certificates to be issued upon the exercise hereof be
registered in a name or names other than that of the Holder of this Warrant, the
Holder must (i) so request in writing at the time of exercise if the transfer is
not a registered transfer, (ii) provide to the Company evidence reasonably
satisfactory to the Company to the effect that the proposed transfer may be
effected without registration under applicable Securities Laws, and (iii)
furnish the Company with such information regarding the transferee as the
Company may reasonably request.
(c) Upon the due exercise by the Holder of this Warrant,
whether in whole or in part, the Holder (or any other person to whom a stock
certificate is to be so issued) shall be deemed for all purposes to have become
the Holder of record of the shares of Common Stock for which this Warrant has
been so exercised, effective immediately prior to the close of business on the
date this Warrant, the completed and signed Exercise Form and the requisite
payment were duly delivered to the Company, irrespective of the date of actual
delivery of certificates representing such shares of Common Stock so issued.
Upon issuance and delivery of such certificates, this Warrant shall be deemed to
be of no further force and effect. Upon a partial exercise of this Warrant, the
Company shall issue and deliver to the Holder a new Warrant at the same time
such stock certificates are delivered, which new Warrant shall entitle the
Holder to
2
purchase the balance of the Exercise Quantity not purchased in that
partial exercise and shall otherwise be upon the same terms and provisions as
this Warrant.
3. SURRENDER OF WARRANT; EXPENSES.
(a) Whether in connection with the exercise, exchange or
registration of transfer or replacement of this Warrant, surrender of this
Warrant (or a copy hereof) shall be made to the Company during normal business
hours on a business day (unless the Company otherwise permits) at the executive
offices of the Company or to such other office or duly authorized representative
of the Company as from time to time may be designated by the Company by written
notice given to the Holder of this Warrant.
(b) The Company shall pay all costs and expenses incurred in
connection with the exercise, registering, exchange, transfer or replacement of
this Warrant, including the costs of preparation, execution and delivery of
warrants and stock certificates, and shall pay all taxes (other than any taxes
measured by the income of any Person other than the Company) and other charges
imposed by law payable in connection with the transfer or replacement of this
Warrant.
4. WARRANT REGISTER; EXCHANGE; TRANSFER; LOSS.
(a) The Company at all times shall maintain at its chief
executive offices an open register for all Warrants, in which the Company shall
record the name and address of each Person to whom a Warrant has been issued or
transferred, the number of shares of Common Stock or other securities
purchasable hereunder and the corresponding purchase prices.
(b) This Warrant may be exchanged for two or more warrants
entitling the identical Holder hereof to purchase the same aggregate Exercise
Quantity at the same Exercise Price per share and otherwise having the same
terms and provisions as this Warrant. The identical Holder may request such an
exchange by surrender of this Warrant to the Company, together with a written
exchange request specifying the desired number of warrants and allocation of the
Exercise Quantity purchasable under the existing Warrant.
(c) This Warrant may be transferred only in accordance with the
provisions of Article VII of the Warrant Agreement, in whole or in part, by the
Holder or any duly authorized representative of such Holder. A transfer may be
registered with the Company by submission to it of this Warrant, together with
the annexed Assignment Form duly completed and executed, and if the transfer is
not a registered transfer, evidence reasonably satisfactory to the Company that
such transfer is in compliance with all applicable Securities Laws. Within five
business days after the Company's receipt of this Warrant and the Assignment
Form so completed and executed, the Company will issue and deliver to the
transferee a new Warrant representing the portion of the Exercise Quantity
transferred at the same Exercise Price per share and otherwise having the same
terms and provisions as this Warrant, which the Company will register in the new
Holder's name.
3
(d) Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant, and (a) in the case of loss, theft or destruction,
upon receipt by the Company of indemnity reasonably satisfactory to it (provided
that, the Holder's own agreement of indemnity shall be deemed to be
satisfactory), or (b) in the case of mutilation, upon surrender and cancellation
thereof, the Company, at its expense, will execute, register and deliver, in
lieu thereof, a new certificate or instrument for (or covering the purchase of)
this Warrant.
(e) The Company will not close its books against the transfer
of this Warrant or any of the Warrant Securities in any manner which interferes
with the timely exercise of this Warrant. The Company will from time to time
take all such action as may be necessary to assure that the par value per share
of the unissued Common Stock acquirable upon exercise of this Warrant is at all
times equal or less than the Exercise Price then in effect.
5. RIGHTS AND OBLIGATIONS OF THE COMPANY AND THE HOLDER. The Company
and the Holder of this Warrant are entitled to the rights and bound by the
obligations set forth in the Warrant Agreement, all of which rights and
obligations are hereby incorporated by reference herein. This Warrant shall not
entitle its Holder to any rights of a stockholder in the Company (other than as
provided in SECTION 2(c) of this Warrant and the Warrant Agreement).
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized representative and its corporate seal, if any, to be
impressed hereupon and attested to by its Secretary or Assistant Secretary.
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
------------------------
▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
4
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
EXERCISE FORM
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. (the "Company")
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, __________ shares of common stock of the Company (the "Warrant
Securities"), and requests that certificates for the Warrant Securities be
issued in the name of:
---------------------------------------------------------------
(Please print or Type Name, Address and Social Security Number)
---------------------------------------------------------------
---------------------------------------------------------------
and, if said number of shares of Warrant Securities shall not be all the Warrant
Securities purchasable hereunder, that a new Warrant Certificate for the balance
of the Warrant Securities purchasable under the within Warrant Certificate be
registered in the name of the undersigned Holder or his Assignee as below
indicated and delivered to the address stated below.
Dated:_________________
Name of Holder
or Assignee: _________________________
(Please Print)
Address: _________________________
_________________________
Signature: _________________________
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, unless these Warrants have been assigned.
5
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
the right to purchase shares of common stock represented by the within Warrant
Certificate unto, and requests that a certificate for such Warrant be issued in
the name of:
---------------------------------------------------------------
(Name and Address of Assignee Must be Printed or Typewritten)
---------------------------------------------------------------
---------------------------------------------------------------
(Taxpayer Identification or Social security Number)
The undersigned hereby irrevocably constitutes and appoints _______________
Attorney to transfer said Warrants on the books of the Company, with full power
of substitution in the premises and, if said number of shares of common stock
shall not be all of the common stock purchasable under the within Warrant
Certificate, that a new Warrant Certificate for the balance of the common stock
purchasable under the within Warrant Certificate be registered in the name of
the undersigned Holder and delivered to such Holder's address as then set forth
on the Company's books.
Dated:_______________ ______________________________
Signature of Registered Holder
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
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THIS WARRANT AND THE WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THIS
WARRANT (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER APPLICABLE STATE OR FOREIGN
SECURITIES LAWS ("SECURITIES LAWS"). THE SECURITIES MAY NOT BE OFFERED, SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR
CONSIDERATION, IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT AND
QUALIFICATION OR REGISTRATION UNDER APPLICABLE SECURITIES LAWS OR (2) THE ISSUER
SHALL HAVE RECEIVED AN OPINION OF COUNSEL AS TO THE AVAILABILITY OF AN EXEMPTION
FROM SUCH QUALIFICATION AND REGISTRATION.
Certificate No. 2
COMMON STOCK PURCHASE WARRANT
January 24, 2000
Capitalized terms used and not otherwise defined in this Warrant shall have the
meanings respectively assigned to them in the Warrant Agreement, dated as of the
date hereof, by and between the Company and Holder.
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a California corporation (the "Company") does hereby
certify and agree that, for good and valuable consideration (the existence,
sufficiency and receipt of which are hereby acknowledged by the Company),
CORPORATE FINANCIAL ENTERPRISES, INC., a Delaware corporation, its successor,
and assigns ("Holder"), hereby is entitled to purchase from the Company, during
the term set forth in Section 1 hereof, up to an aggregate amount of 14,800
shares (the "Exercise Quantity") of duly authorized, validly issued, fully paid
and non-assessable shares of Common Stock of the Company (the "Common Stock"),
all upon the terms and provisions and subject to adjustment of such Exercise
Quantity provided in the Warrant Agreement and this Common Stock Purchase
Warrant (the "Warrant"). The exercise price per share of Common Stock for which
this Warrant is exercisable shall be the lesser of (i) $1.00, or (ii) seventy
percent (70%) of the lowest price per share of Common Stock or other capital
stock (as if converted into Common Stock) subsequent to the date hereof, as
adjusted from time to time pursuant to the terms of this Warrant and the Warrant
Agreement (the "Exercise Price").
1. TERM OF THE WARRANT. The term of this Warrant commences as of the
date hereof, and shall expire at 5:00 P.M., Pacific time, on January 24, 2007,
unless sooner exercised as herein provided.
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2. EXERCISE OF WARRANT.
(a) This Warrant may be exercised by the Holder of this Warrant
at any time during the term hereof, in whole or in part, from time to time (but
not for fractional shares), by presentation and surrender of this Warrant (or a
copy hereof) to the Company, together with the annexed Exercise Form duly
completed and executed and payment in the aggregate amount equal to the Exercise
Price multiplied by the number of shares of Common Stock being purchased.
Payment of the Exercise Price shall be made by personal or business check
payable to the order of the Company; PROVIDED, HOWEVER, the Holder shall have
the right to pay the exercise price by surrender to the Company of a number of
shares of Common Stock with a Fair Value equal to the exercise price. Within
five business days of the Company's receipt of this Warrant (or a copy thereof),
the completed and signed Exercise Form and the requisite payment (if any), the
Company shall issue and deliver (or cause to be delivered) to the exercising
Holder stock certificates aggregating the number of shares of Warrant Securities
purchased. In the event the Company fails to deliver or cause to be delivered to
the Holder such certificates (without legend or restriction if such Warrant
Securities are then, or are required to be, registered pursuant to the Warrant
Agreement) within such five business day period, the Company shall pay to the
Holder the Delay Damages, for each day after the fifth business day following
the delivery of this Warrant and such Exercise Form to the Company through and
including the day such certificates (without legend or restriction if such
Warrant Securities are then, or are required to be, registered pursuant to the
terms of the Warrant Agreement) are delivered to the Holder at the address set
forth in such Exercise Form. In the event the Company restricts or delays the
transfer or clearance of such certificates by the Holder (whether by stop
transfer order, unreasonable delay or otherwise), the Company shall pay to the
Holder the Delay Damages for each calendar day of such restriction or delay,
subject to the provisions of the Warrant Agreement. This Warrant may be subject
to mandatory exercise as provided in Section 2.4 of the Warrant Agreement.
(b) In the event the Holder of this Warrant desires that any or
all of the stock certificates to be issued upon the exercise hereof be
registered in a name or names other than that of the Holder of this Warrant, the
Holder must (i) so request in writing at the time of exercise if the transfer is
not a registered transfer, (ii) provide to the Company evidence reasonably
satisfactory to the Company to the effect that the proposed transfer may be
effected without registration under applicable Securities Laws, and (iii)
furnish the Company with such information regarding the transferee as the
Company may reasonably request.
(c) Upon the due exercise by the Holder of this Warrant,
whether in whole or in part, the Holder (or any other person to whom a stock
certificate is to be so issued) shall be deemed for all purposes to have become
the Holder of record of the shares of Common Stock for which this Warrant has
been so exercised, effective immediately prior to the close of business on the
date this Warrant, the completed and signed Exercise Form and the requisite
payment were duly delivered to the Company, irrespective of the date of actual
delivery of certificates representing such shares of Common Stock so issued.
Upon issuance and delivery of such certificates, this Warrant shall be deemed to
be of no further force and effect. Upon a partial exercise of this Warrant, the
Company shall issue and deliver to the Holder a new Warrant at the
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same time such stock certificates are delivered, which new Warrant shall entitle
the Holder to purchase the balance of the Exercise Quantity not purchased in
that partial exercise and shall otherwise be upon the same terms and provisions
as this Warrant.
3. SURRENDER OF WARRANT; EXPENSES.
(a) Whether in connection with the exercise, exchange or
registration of transfer or replacement of this Warrant, surrender of this
Warrant (or a copy hereof) shall be made to the Company during normal business
hours on a business day (unless the Company otherwise permits) at the executive
offices of the Company or to such other office or duly authorized representative
of the Company as from time to time may be designated by the Company by written
notice given to the Holder of this Warrant.
(b) The Company shall pay all costs and expenses incurred in
connection with the exercise, registering, exchange, transfer or replacement of
this Warrant, including the costs of preparation, execution and delivery of
warrants and stock certificates, and shall pay all taxes (other than any taxes
measured by the income of any Person other than the Company) and other charges
imposed by law payable in connection with the transfer or replacement of this
Warrant.
4. WARRANT REGISTER; EXCHANGE; TRANSFER; LOSS.
(a) The Company at all times shall maintain at its chief
executive offices an open register for all Warrants, in which the Company shall
record the name and address of each Person to whom a Warrant has been issued or
transferred, the number of shares of Common Stock or other securities
purchasable hereunder and the corresponding purchase prices.
(b) This Warrant may be exchanged for two or more warrants
entitling the identical Holder hereof to purchase the same aggregate Exercise
Quantity at the same Exercise Price per share and otherwise having the same
terms and provisions as this Warrant. The identical Holder may request such an
exchange by surrender of this Warrant to the Company, together with a written
exchange request specifying the desired number of warrants and allocation of the
Exercise Quantity purchasable under the existing Warrant.
(c) This Warrant may be transferred only in accordance with the
provisions of Article VII of the Warrant Agreement, in whole or in part, by the
Holder or any duly authorized representative of such Holder. A transfer may be
registered with the Company by submission to it of this Warrant, together with
the annexed Assignment Form duly completed and executed, and if the transfer is
not a registered transfer, evidence reasonably satisfactory to the Company that
such transfer is in compliance with all applicable Securities Laws. Within five
business days after the Company's receipt of this Warrant and the Assignment
Form so completed and executed, the Company will issue and deliver to the
transferee a new Warrant representing the portion of the Exercise Quantity
transferred at the same Exercise Price per share and otherwise having the same
terms and provisions as this Warrant, which the Company will register in the new
Holder's name.
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(d) Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant, and (a) in the case of loss, theft or destruction,
upon receipt by the Company of indemnity reasonably satisfactory to it (provided
that, the Holder's own agreement of indemnity shall be deemed to be
satisfactory), or (b) in the case of mutilation, upon surrender and cancellation
thereof, the Company, at its expense, will execute, register and deliver, in
lieu thereof, a new certificate or instrument for (or covering the purchase of)
this Warrant.
(e) The Company will not close its books against the transfer
of this Warrant or any of the Warrant Securities in any manner which interferes
with the timely exercise of this Warrant. The Company will from time to time
take all such action as may be necessary to assure that the par value per share
of the unissued Common Stock acquirable upon exercise of this Warrant is at all
times equal or less than the Exercise Price then in effect.
5. RIGHTS AND OBLIGATIONS OF THE COMPANY AND THE HOLDER. The Company
and the Holder of this Warrant are entitled to the rights and bound by the
obligations set forth in the Warrant Agreement, all of which rights and
obligations are hereby incorporated by reference herein. This Warrant shall not
entitle its Holder to any rights of a stockholder in the Company (other than as
provided in SECTION 2(c) of this Warrant and the Warrant Agreement).
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized representative and its corporate seal, if any, to be
impressed hereupon and attested to by its Secretary or Assistant Secretary.
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
------------------------
▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
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▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
EXERCISE FORM
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. (the "Company")
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, ____________ shares of common stock of the Company (the "Warrant
Securities"), and requests that certificates for the Warrant Securities be
issued in the name of:
---------------------------------------------------------------
(Please print or Type Name, Address and Social Security Number)
---------------------------------------------------------------
---------------------------------------------------------------
and, if said number of shares of Warrant Securities shall not be all the Warrant
Securities purchasable hereunder, that a new Warrant Certificate for the balance
of the Warrant Securities purchasable under the within Warrant Certificate be
registered in the name of the undersigned Holder or his Assignee as below
indicated and delivered to the address stated below.
Dated:_________________
Name of Holder
or Assignee: _________________________
(Please Print)
Address: _________________________
_________________________
Signature: _________________________
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, unless these Warrants have been assigned.
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ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
the right to purchase shares of common stock represented by the within Warrant
Certificate unto, and requests that a certificate for such Warrant be issued in
the name of:
---------------------------------------------------------------
(Name and Address of Assignee Must be Printed or Typewritten)
---------------------------------------------------------------
---------------------------------------------------------------
(Taxpayer Identification or Social security Number)
The undersigned hereby irrevocably constitutes and appoints _______________
Attorney to transfer said Warrants on the books of the Company, with full power
of substitution in the premises and, if said number of shares of common stock
shall not be all of the common stock purchasable under the within Warrant
Certificate, that a new Warrant Certificate for the balance of the common stock
purchasable under the within Warrant Certificate be registered in the name of
the undersigned Holder and delivered to such Holder's address as then set forth
on the Company's books.
Dated:_______________ ______________________________
Signature of Registered Holder
Note: The above signature must correspond with the name as it appears upon the
face of this Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.
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