THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
ZENASCENT, INC.
WARRANT TO PURCHASE COMMON STOCK
NO. W-__ DECEMBER ___, 2001
VOID AFTER DECEMBER ___, 2006
THIS CERTIFIES THAT, for value received, __________________[PURCHASER],
with its principal office at _____________________[ADDRESS OF PURCHASER], or its
assigns (the "HOLDER"), is entitled to subscribe for and purchase at the
Exercise Price (defined below) from ZENASCENT, INC., a Delaware corporation,
with its principal office at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ (the "CORPORATION") up to __________________ (______) shares of common
stock, par value $.01 per share, of the Corporation (the "COMMON STOCK").
1. DEFINITIONS. As used herein, the following terms shall have the
following respective meanings:
(A) "Exercise Period" shall mean the period commencing 120 days
from the date hereof and ending five years from the date hereof, unless sooner
terminated or otherwise altered as provided below.
(B) "Exercise Price" shall mean $.50 per share, subject to
adjustment pursuant to Section 5 below.
(C) "Exercise Shares" shall mean the shares of Common Stock
issuable upon exercise of this Warrant.
2. EXERCISE OF WARRANT. The rights represented by this Warrant may be
exercised in whole or in part at any time during the Exercise Period, by
delivery of the following to the Corporation at its address set forth above (or
at such other address as it may designate by notice in writing to the Holder):
(A) An executed Notice of Exercise in the form attached hereto;
(B) Payment of the Exercise Price either in cash or by check; and
(C) This Warrant.
Upon the exercise of the rights represented by this Warrant, a
certificate or certificates for the Exercise Shares so purchased, registered in
the name of the Holder or persons affiliated with the Holder, if the Holder so
designates, shall be issued and delivered to the Holder within a reasonable time
after the rights represented by this Warrant shall have been so exercised.
Notwithstanding the foregoing, on the date hereof, there are not sufficient
shares of common stock of the Company reserved to issue the Exercise Shares if
the Warrant were exercised on the date hereof. If the Exercise Shares are for
any reason whatsoever still not available to be issued by the Corporation at the
time of the exercise of this Warrant, the Corporation shall so issue the
Exercise Shares as soon as practicable.
2.1. NET EXERCISE. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Common Stock is greater
than the Exercise Price (at the date of calculation as set forth below), in lieu
of exercising this Warrant by payment of cash, the Holder may elect to receive
shares equal to the value (as determined below) of this Warrant (or the portion
thereof being canceled) by surrender of this Warrant at the principal office of
the Company together with the properly endorsed Notice of Exercise in which
event the Company shall issue to the Holder a number of shares of Common Stock
computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to the
Holder
Y = the number of shares of Common Stock purchasable
under the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the
Warrant being canceled (at the date of such
calculation)
A = the fair market value of one share of the Common Stock (at
the date of such calculation)
B = Exercise Price (as adjusted to the date of such calculation)
For purposes of the above calculation, the fair market value of one
share of Common Stock shall be determined by the Company's Board of Directors in
good faith; provided, however, that in the event that this Warrant is exercised
pursuant to this Section 2.1 in connection with the Company's initial public
offering of its Common Stock, the fair market value per share shall be the
product of (i) the per share offering price to the public of the Company's
initial public offering, and (ii) the number of shares of Common Stock into
which each share of Common Stock is convertible at the time of such exercise.
3. COVENANTS OF THE CORPORATION.
3.1. COVENANTS AS TO EXERCISE SHARES. The Corporation covenants and
agrees that all Exercise Shares that may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued and
outstanding, fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issuance thereof.
3.2. NO IMPAIRMENT. Except and to the extent as waived or consented to
by the Holder, the Corporation will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant and
in the taking of all such action as may be necessary or appropriate in order to
protect the exercise rights of the Holder against impairment.
3.3. NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Corporation shall mail to the
Holder, at least ten (10) days prior to the date specified herein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend or distribution.
4. REPRESENTATIONS OF HOLDER.
4.1. ACQUISITION OF WARRANT FOR PERSONAL ACCOUNT. The Holder represents
and warrants that it is acquiring the Warrant solely for its account for
investment and not with a view to or for sale or distribution of said Warrant or
any part thereof. The Holder also represents that the entire legal and
beneficial interests of the Warrant and Exercise Shares the Holder is acquiring
is being acquired for, and will be held for, its account only.
4.2. SECURITIES ARE NOT REGISTERED.
(A) The Holder understands that the Warrant and the Exercise Shares
have not been registered under the Securities Act of 1933, as amended (the
"ACT") on the basis that no distribution or public offering of the stock of the
Corporation is to be effected. The Holder realizes that the basis for the
exemption may not be present if, notwithstanding its representations, the Holder
has a present intention of acquiring the securities for a fixed or determinable
period in the future, selling (in connection with a distribution or otherwise),
granting any participation in, or otherwise distributing the securities. The
Holder has no such present intention.
(B) The Holder recognizes that the Warrant and the Exercise Shares must
be held indefinitely unless they are subsequently registered under the Act or an
exemption from such registration is available. The Holder recognizes that the
Corporation has no obligation to register the Warrant or the Exercise Shares of
the Corporation, or to comply with any exemption from such registration.
(C) The Holder is aware that neither the Warrant nor the Exercise
Shares may be sold pursuant to Rule 144 adopted under the Act unless certain
conditions are met, including, among other things, the existence of a public
market for the shares, the availability of certain current public information
about the Company, the resale following the required holding period under Rule
144 and the number of shares being sold during any three month period not
exceeding specified limitations. ▇▇▇▇▇▇ is aware that the conditions for resale
set forth in Rule 144 have not been satisfied and that the Corporation presently
has no plans to satisfy these conditions in the foreseeable future.
4.3. DISPOSITION OF WARRANT AND EXERCISE SHARES. The Holder understands
and agrees that all certificates evidencing the shares to be issued to the
Holder may bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
5. ADJUSTMENT OF EXERCISE PRICE. In the event of changes in the
outstanding Common Stock of the Corporation by reason of stock dividends,
split-ups, recapitalizations, reclassifications,
combinations or exchanges of shares, separations, reorganizations, liquidations,
or the like prior to the exercise of this Warrant (or portion thereof), the
number and class of shares available under the Warrant (or portion thereof) in
the aggregate and the Exercise Price shall be correspondingly adjusted to give
the Holder of the Warrant (or portion thereof), on exercise for the same
aggregate Exercise Price, the total number, class, and kind of shares as the
Holder would have owned had the Warrant (or portion thereof) been exercised
prior to the event and had the Holder continued to hold such shares until after
the event requiring adjustment. The form of this Warrant need not be changed
because of any adjustment in the number of Exercise Shares subject to this
Warrant.
6. FRACTIONAL SHARES. No fractional shares shall be issued upon the
exercise of this Warrant as a consequence of any adjustment pursuant hereto. All
Exercise Shares (including fractions) issuable upon exercise of this Warrant may
be aggregated for purposes of determining whether the exercise would result in
the issuance of any fractional share. If, after aggregation, the exercise would
result in the issuance of a fractional share, the Corporation shall, in lieu of
issuance of any fractional share, pay the Holder otherwise entitled to such
fraction a sum in cash equal to the product resulting from multiplying the then
current fair market value of an Exercise Share by such fraction.
7. NO STOCKHOLDER RIGHTS. This Warrant in and of itself shall not
entitle the Holder to any voting rights or other rights as a stockholder of the
Corporation.
8. TRANSFER OF WARRANT. Subject to applicable laws and the provisions
of the Note and Warrant Purchase Agreement dated the date hereof between the
Holder and the Corporation, the restriction on transfer set forth on the first
page of this Warrant, this Warrant and all rights hereunder are transferable, by
the Holder in person or by duly authorized attorney, upon delivery of this
Warrant and the form of assignment attached hereto to any transferee designated
by ▇▇▇▇▇▇. The transferee shall sign an investment letter in form and substance
satisfactory to the Corporation.
9. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is
lost, stolen, mutilated or destroyed, the Corporation may, on such terms as to
indemnity or otherwise as it may reasonably impose (which shall, in the case of
a mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the
Corporation, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.
10. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by telex, telegram,
express mail or other form of rapid communications, if possible, and if not then
such notice or communication shall be mailed by first-class mail, postage
prepaid, addressed in each case to the party entitled thereto at the following
addresses: (a) if to the Corporation, to Zenascent, Inc., ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and (b) if to the Holder,
___________________[ADDRESS OF HOLDER], or at such other address as one party
may furnish to the other in writing. Notice shall be deemed effective on the
date dispatched if by personal delivery, telecopy, telex or telegram, one
business day after mailing if by express mail, or three days after mailing if by
first-class mail.
11. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.
12. GOVERNING LAW. This Warrant and all rights, obligations and
liabilities hereunder shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
executed by its duly authorized officer as of December ____, 2001.
ZENASCENT, INC.
By:
-------------------------------------
Name:
Title:
ATTEST:
-------------------------------------
Secretary
NOTICE OF EXERCISE
TO: ZENASCENT, INC.
(1) |_| The undersigned hereby elects to purchase ______________ shares
of the Common Stock of ZENASCENT, INC. (the "COMPANY") pursuant to the terms of
the attached Warrant, and tenders herewith payment of the exercise price in
full, together with all applicable transfer taxes, if any.
|_| The undersigned hereby elects to purchase ______________ shares
of the Common Stock of ZENASCENT, INC. (the "COMPANY") pursuant to the terms of
the net exercise provisions set forth in Section 2.1 of the attached Warrant,
and shall tender payment of all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
------------------------
(Name)
------------------------
------------------------
(Address)
(3) The undersigned represents that (i) the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment and
not with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares; (ii) the undersigned is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision regarding its investment in the
Company; (iii) the undersigned is experienced in making investments of this type
and has such knowledge and background in financial and business matters that the
undersigned is capable of evaluating the merits and risks of this investment and
protecting the undersigned's own interests; (iv) the undersigned understands
that the shares of Common Stock issuable upon exercise of this Warrant have not
been registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), by reason of a specific exemption from the registration provisions of the
Securities Act, which exemption depends upon, among other things, the bona fide
nature of the investment intent as expressed herein, and, because such
securities have not been registered under the Securities Act, they must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available; (v) the undersigned is aware that
the aforesaid shares of Common Stock may not be sold pursuant to Rule 144
adopted under the Securities Act unless certain conditions are met and until the
undersigned has held the shares for the number of years prescribed by Rule 144,
that among the conditions for use of the Rule is the availability of current
information to the public about the Company and the Company has not made such
information available and has no present plans to do so; and (vi) the
undersigned agrees not to make any disposition of all or any part of the
aforesaid shares of Common Stock unless and until there is then in effect a
registration statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with said registration
statement, or the undersigned has provided the Company with an opinion of
counsel satisfactory to the Company, stating that such registration is not
required.
----------------------- ----------------------------
(Date) (Signature)
----------------------------
(Print name)
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form
and supply required information. Do not use this
form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
Name:
---------------------------------------------------------------------------
(Please Print)
Address:
------------------------------------------------------------------------
(Please Print)
Dated:
------------------------------
Holder's
Signature:
---------------------------------------------------
Holder's
Address:
-----------------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.