Exhibit 4.2
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD,
ASSIGNED OR TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SAID ACT IS NOT
REQUIRED.
Warrant No. W-__
SERIES B-1 COMMON STOCK PURCHASE WARRANT
To Purchase ____________ Shares of Common Stock
of
GLOBALOPTIONS GROUP, INC.
THIS IS TO CERTIFY THAT _______________, or registered assigns (the
"HOLDER"), is entitled, during the Exercise Period (as hereinafter defined), to
purchase from GlobalOptions Group, Inc., a Nevada corporation (the "Company"),
the Warrant Stock (as hereinafter defined and subject to adjustment as provided
herein), in whole or in part, at a purchase price of $___ per share, all on and
subject to the terms and conditions hereinafter set forth.
1. DEFINITIONS. As used in this Warrant, the following terms have
the respective meanings set forth below:
"ADDITIONAL SHARES OF COMMON STOCK" means any shares of Common Stock
issued by the Company after the Original Issuance Date other than: (i) shares of
Common Stock issued as dividends with respect to the Preferred Stock, (ii)
shares issued or issuable upon conversion of any convertible securities
outstanding as of the Original Issuance Date in accordance with the terms
thereof on the Original Issuance Date, (iii) shares of Common Stock or Common
Stock Equivalents issued in connection with any stock-based compensation plans
of the Company approved by the stockholders of the Company and the Board of
Directors of the Company including all (which shall be at least three)
independent directors, which shall not in the aggregate exceed 20% of the
Company's issued and outstanding Common Stock, (iv) shares of Preferred Stock
and warrants (the "CONVERSION WARRANTS") issuable upon conversion of the Notes
(as defined in the Purchase Agreement) and conversion of the Existing Notes (as
defined in the Purchase Agreement) or shares of Common Stock issuable upon
conversion of the Preferred Stock or upon exercise of the Conversion Warrants,
(v) securities or rights to acquire securities issued to financial institutions
in connection with commercial credit arrangements, equipment financings, service
agreements or similar transactions approved by the Board of Directors of the
Company and the primary purpose of which is not equity financing or (vi)
securities or rights to acquire securities issued in connection with strategic
collaborations, development agreements, joint ventures or licensing
transactions, the terms of which are approved by the Board of Directors of the
Company.
"AFFILIATE" means any person or entity that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with a person or entity, as such terms are used in and construed
under Rule 144 under the Securities Act. With respect to a Holder of Warrants,
any investment fund or managed account that is managed on a discretionary basis
by the same investment manager as such Holder will be deemed to be an Affiliate
of such Holder.
"BUSINESS DAY" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in New York
generally are authorized or required by law or other government actions to
close.
"CHANGE OF CONTROL" means the (i) acquisition by an individual or legal
entity or group (as set forth in Section 13(d) of the Exchange Act) of more than
one-half of the voting rights or equity interests in the Company; or (ii) sale,
conveyance, or other disposition of all or substantially all of the assets,
property or business of the Company or the merger into or consolidation with any
other corporation (other than a wholly owned subsidiary corporation) or
effectuation of any transaction or series of related transactions where holders
of the Company's voting securities prior to such transaction or series of
transactions fail to continue to hold at least 50% of the voting power of the
Company.
"COMMISSION" means the Securities and Exchange Commission or any other
federal agency then administering the Securities Act and other federal
securities laws.
"COMMON STOCK" means (except where the context otherwise indicates) the
Common Stock, $0.001 par value per share, of the Company as constituted on the
Original Issuance Date, and any capital stock into which such Common Stock may
thereafter be changed or converted, and shall also include (i) capital stock of
the Company of any other class (regardless of how denominated) issued to the
holders of shares of Common Stock upon any reclassification thereof which is
also not preferred as to dividends or assets on liquidation over any other class
of stock of the Company and which is not subject to redemption and (ii) shares
of common stock of any successor or acquiring corporation received by or
distributed to the holders of Common Stock of the Company in the circumstances
contemplated by Section 4.7.
"COMMON STOCK EQUIVALENTS" has the meaning set forth in Section 4.4.
"CURRENT MARKET PRICE" means, in respect of any share of Common Stock
on any date herein specified,
(1) if there shall not then be a public market for the Common
Stock, the higher of
(a) the book value per share of Common Stock at such date,
and
(b) the value per share of Common Stock at such date as
determined in good faith by the independent directors (of which there shall be
at least three) and, if North Sound Capital LLC or its Affiliates continue to
hold at least 25% of the Warrants originally issued to them upon conversion of
the Notes, upon consultation by such directors with North Sound Capital LLC,
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or
(2) if there shall then be a public market for the Common Stock,
(i) the closing price on such day on the principal stock exchange (including
Nasdaq) on which such Common Stock is then listed or admitted to trading, or
quoted, as applicable, (ii) if no sale takes place on such day on any such
exchange, the last reported closing price on such day as officially quoted on
any such exchange (including Nasdaq), (iii) if the Common Stock is not then
listed or admitted to trading on any stock exchange, the last reported closing
bid price on such day in the over-the-counter market, as furnished by the
National Association of Securities Dealers Automatic Quotation System or the
Pink Sheets LLC (formerly the National Quotation Bureau, Inc.), (iv) if neither
such corporation at the time is engaged in the business of reporting such
prices, as furnished by any similar firm then engaged in such business, or (v)
if there is no such firm, as furnished by any member of the National Association
of Securities Dealers, Inc. (the "NASD") selected mutually by the holder of this
Warrant and the Company or, if they cannot agree upon such selection, as
selected by two such members of the NASD, one of which shall be selected by
holder of this Warrant and one of which shall be selected by the Company.
"CURRENT WARRANT PRICE" means, in respect of a share of Common Stock at
any date herein specified, the price at which a share of Common Stock may be
purchased pursuant to this Warrant on such date. Until the Current Warrant Price
is adjusted pursuant to the terms herein, the initial Current Warrant Price
shall be _____ per share of Common Stock.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"EXERCISE PERIOD" means the period during which this Warrant is
exercisable pursuant to Section 2.1.
"EXPIRATION DATE" means ____, 2011.
"GAAP" means generally accepted accounting principles in the United
States of America as from time to time in effect.
"NASD" means the National Association of Securities Dealers, Inc., or
any successor corporation thereto.
"NOTES" means the convertible Promissory Notes of the Company issued
pursuant to the Purchase Agreement.
"ORIGINAL ISSUANCE DATE" means _______2006, the date on which this
Warrant was originally issued.
"OTHER PROPERTY" has the meaning set forth in Section 4.7.
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, incorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
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without limitation, any instrumentality, division, agency, body or department
thereof).
"PREFERRED STOCK" shall mean the Company's Series B Convertible
Preferred Stock, par value $0.001 per share.
"PURCHASE AGREEMENT" means the Convertible Note Purchase Agreement
dated as of June ____, 2006 among the Company and the other parties named
therein.
"RESTRICTED COMMON STOCK" means shares of Common Stock which are, or
which upon their issuance upon the exercise of any Warrant would be required to
be, evidenced by a certificate bearing the restrictive legend set forth in
Section 3.2.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"TRADING DAY" means any day on which the primary market on which shares
of Common Stock are listed is open for trading.
"TRANSFER" means any disposition of any Warrant or Warrant Stock or of
any interest in either thereof, which would constitute a sale thereof within the
meaning of the Securities Act.
"WARRANTS" means this Warrant and all warrants issued upon transfer,
division or combination of, or in substitution for, any thereof. All Warrants
shall at all times be identical as to terms and conditions and date, except as
to the number of shares of Common Stock for which they may be exercised.
"WARRANT PRICE" means an amount equal to (i) the number of shares of
Common Stock being purchased upon exercise of this Warrant pursuant to Section
2.1, multiplied by (ii) the Current Warrant Price.
"WARRANT STOCK" means the ____________ shares of Common Stock to be
purchased upon the exercise hereof, subject to adjustment as provided herein.
2. EXERCISE OF WARRANT.
2.1. MANNER OF EXERCISE. From and after the Original Issuance Date,
and until 5:00 P.M., New York time, on the Expiration Date (the "Exercise
Period"), the Holder may exercise this Warrant, on any Business Day, for all or
any part of the number of shares of Warrant Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, the Holder
shall deliver to the Company at its principal office or at the office or agency
designated by the Company pursuant to Section 12, (i) a written notice of
Holder's election to exercise this Warrant, which notice shall specify the
number of shares of Warrant Stock to be purchased, (ii) payment of the Warrant
Price as provided herein, and (iii) this Warrant. Such notice shall be
substantially in the form of the subscription form appearing at the end of this
Warrant as EXHIBIT A, duly executed by the Holder or its agent or attorney. Upon
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receipt thereof, the Company shall, as promptly as practicable, and in any event
within three Business Days thereafter, execute or cause to be executed and
deliver or cause to be delivered to the Holder a certificate or certificates
representing the aggregate number of full shares of Warrant Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or certificates so delivered shall
be, to the extent possible, in such denomination or denominations as the Holder
shall request in the notice and shall be registered in the name of the Holder or
such other name as shall be designated in the notice. This Warrant shall be
deemed to have been exercised and such certificate or certificates shall be
deemed to have been issued, and the Holder or any other Person so designated to
be named therein shall be deemed to have become a Holder of record of such
shares for all purposes, as of the date when the notice, together with the
payment of the Warrant Price and this Warrant, is received by the Company as
described above. If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
Warrant Stock, deliver to the Holder a new Warrant evidencing the rights of the
Holder to purchase the unpurchased shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or at the request of the Holder, appropriate notation may be made on
this Warrant and the same returned to the Holder.
If the Company intentionally and willfully fails to deliver to the
holder such certificate or certificates pursuant to this Section 2.1 (free of
any restrictions on transfer or legends, if such shares have been registered) in
accordance herewith, prior to the third trading day after the receipt by the
Company of (i) a written notice of Holder's election to exercise this Warrant,
which notice shall specify the number of shares of Warrant Stock to be
purchased, (ii) payment of the Warrant Price as provided herein, and (iii) this
Warrant (the "DATE OF RECEIPT"), the Company shall pay to such Holder, in cash,
on a per diem basis, an amount equal to 2% of the value of the undelivered
Warrant Stock (based on the Current Market Price of the Common Stock on the Date
of Receipt) per month until such delivery takes place.
Payment of the Warrant Price may be made at the option of the Holder
by: (i) certified or official bank check payable to the order of the Company,
(ii) wire transfer to the account of the Company or (iii) the surrender and
cancellation of a portion of shares of Common Stock then held by the Holder or
issuable upon such exercise of this Warrant, which shall be valued and credited
toward the total Warrant Price due the Company for the exercise of the Warrant
based upon the Current Market Price of the Common Stock on the date of exercise.
All shares of Common Stock issuable upon the exercise of this Warrant pursuant
to the terms hereof shall be validly issued and, upon payment of the Warrant
Price, shall be fully paid and nonassessable and not subject to any preemptive
rights.
2.2. FRACTIONAL SHARES. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which the Holder of one or more Warrants, the rights under
which are exercised in the same transaction, would otherwise be entitled to
purchase upon such exercise, the Company shall pay an amount in cash equal to
the Current Market Price per share of Common Stock on the date of exercise
multiplied by such fraction.
2.3. CONTINUED VALIDITY. A holder of shares of Common Stock issued
upon the exercise of this Warrant, in whole or in part (other than a holder who
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acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as the Holder under Sections 10 and
13 of this Warrant for as long as such holder holds such shares of Common Stock.
2.4. RESTRICTIONS ON EXERCISE AMOUNT.
(i) Unless a Holder delivers to the Company irrevocable written
notice (x) prior to the date of issuance hereof or sixty-one days prior to the
effective date of such notice that this Section 2.4(i) shall not apply to such
Holder or (y) prior to a Change of Control the terms of which require the
conversion of the Preferred Stock into Common Stock, the Holder may not acquire
a number of shares of Warrant Stock to the extent that, upon such exercise, the
number of shares of Common Stock then beneficially owned by such holder and its
Affiliates and any other persons or entities whose beneficial ownership of
Common Stock would be aggregated with the Holder's for purposes of Section 13(d)
of the Exchange Act (including shares held by any "group" of which the holder is
a member, but, for avoidance of doubt, excluding shares of common stock issuable
upon the exercise or conversion of securities or rights to acquire securities
that have limitations on the right to convert, exercise or purchase similar to
the limitation set forth herein) exceeds 4.99% of the total number of shares of
Common Stock of the Company then issued and outstanding. For purposes hereof,
"group" has the meaning set forth in Section 13(d) of the Exchange Act and
applicable regulations of the Securities and Exchange Commission, and the
percentage held by the holder shall be determined in a manner consistent with
the provisions of Section 13(d) of the Exchange Act. Each delivery of a notice
of exercise by a Holder will constitute a representation by such Holder that it
has evaluated the limitation set forth in this paragraph and determined, based
on the most recent public filings by the Company with the Commission, that the
issuance of the full number of shares of Warrant Stock requested in such notice
of exercise is permitted under this paragraph.
(ii) In the event the Company is prohibited from issuing shares of
Warrant Stock as a result of any restrictions or prohibitions under applicable
law or the rules or regulations of any stock exchange, interdealer quotation
system or other self-regulatory organization, the Company shall as soon as
possible seek the approval of its stockholders and take such other action to
authorize the issuance of the full number of shares of Common Stock issuable
upon exercise of this Warrant.
3. TRANSFER, DIVISION AND COMBINATION.
3.1. TRANSFER. The Warrants and the Warrant Stock shall be freely
transferable, subject to compliance with all applicable laws, including, but not
limited to the Securities Act. If, at the time of the surrender of this Warrant
in connection with any transfer of this Warrant or the resale of the Warrant
Stock, this Warrant or the Warrant Stock, as applicable, shall not be registered
under the Securities Act, the Company may require, as a condition of allowing
such transfer (i) that the Holder or transferee of this Warrant or the Warrant
Stock as the case may be, furnish to the Company a written opinion of counsel
that is reasonably acceptable to the Company to the effect that such transfer
may be made without registration under the Securities Act, (ii) that the Holder
or transferee execute and deliver to the Company an investment letter in form
and substance acceptable to the Company and substantially in the form attached
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as EXHIBIT C hereto and (iii) that the transferee be an "accredited investor" as
defined in Rule 501(a) promulgated under the Securities Act. Transfer of this
Warrant and all rights hereunder, in whole or in part, in accordance with the
foregoing provisions, shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of this Warrant at the principal
office of the Company referred to in Section 2.1 or the office or agency
designated by the Company pursuant to Section 12, together with a written
assignment of this Warrant substantially in the form of EXHIBIT B hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. Following a transfer that complies
with the requirements of this Section 3.1, the Warrant may be exercised by a new
Holder for the purchase of shares of Common Stock regardless of whether the
Company issued or registered a new Warrant on the books of the Company.
3.2. RESTRICTIVE LEGEND. Each certificate for Warrant Stock
initially issued upon the exercise of this Warrant, and each certificate for
Warrant Stock issued to any subsequent transferee of any such certificate, shall
be stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AS AMENDED, AND MAY NOT BE OFFERED, SOLD, ASSIGNED OR
TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID
ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SAID ACT IS NOT REQUIRED."
3.3. DIVISION AND COMBINATION; EXPENSES; BOOKS. This Warrant may be
divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency 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 or its agent or attorney. Subject to compliance with
Section 3.1 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 prepare, issue and deliver at its own
expense the new Warrant or Warrants under this Section 3. The Company agrees to
maintain, at its aforesaid office or agency, books for the registration and the
registration of transfer of the Warrants.
4. ADJUSTMENTS. The number of shares of Common Stock for which
this Warrant is exercisable, and the price at which such shares may be purchased
upon exercise of this Warrant, shall be subject to adjustment from time to time
as set forth in this Section 4. The Company shall give the Holder notice of any
event described below which requires an adjustment pursuant to this Section 4 in
accordance with Sections 5.1 and 5.2.
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4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
while this Warrant is outstanding the Company shall:
(i) declare a dividend or make a distribution on its
outstanding shares of Common Stock in shares of Common Stock,
(ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, then:
(1) the number of shares of Common Stock acquirable upon exercise
of this Warrant immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock which a record holder of
the same number of shares of Common Stock that would have been acquirable under
this Warrant immediately prior to the record date for such dividend or
distribution or the effective date of such subdivision or combination would own
or be entitled to receive after such record date or the effective date of such
subdivision or combination, as applicable, and
(2) the Current Warrant Price shall be adjusted to equal:
(A) the Current Warrant Price in effect at the time of the
record date for such dividend or distribution or of the effective date
of such subdivision or combination, multiplied by the number of shares
of Common Stock into which this Warrant is exercisable immediately
prior to the adjustment, divided by
(B) the number of shares of Common Stock into which this
Warrant is exercisable immediately after such adjustment.
Any adjustment made pursuant to clause (i) of this paragraph shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clauses (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination.
4.2. CERTAIN OTHER DISTRIBUTIONS. If at any time while this Warrant
is outstanding the Company shall cause the holders of its Common Stock to be
entitled to receive any dividend or other distribution of:
(i) cash,
(ii) any evidences of its indebtedness, any shares of stock
of any class or any other securities or property or assets of any nature
whatsoever (other than cash or additional shares of Common Stock as provided in
Section 4.1 hereof), or
(iii) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of stock of any class or
any other securities or property or assets of any nature whatsoever, then:
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the Current Warrant Price in effect immediately prior to the record
date fixed for determination of stockholders entitled to receive such
distribution shall be adjusted to equal (x) the Current Warrant Price
in effect immediately prior to the record date MINUS (y) the amount
allocable to one share of Common Stock of any such cash so
distributable and of the fair value (as determined in good faith by the
Board of Directors of the Company) of any and all such evidences of
indebtedness, shares of stock, other securities or property or warrants
or other subscription or purchase rights so distributable. A
reclassification of the Common Stock (other than a change in par value,
or from par value to no par value or from no par value to par value)
into shares of Common Stock and shares of any other class of stock
shall be deemed a distribution by the Company to the holders of its
Common Stock of such shares of such other class of stock within the
meaning of this Section 4.2 and, if the outstanding shares of Common
Stock shall be changed into a larger or smaller number of shares of
Common Stock as a part of such reclassification, such change shall be
deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of Section 4.1.
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK.
(i) If at any time while this Warrant is outstanding the
Company shall issue or sell any Additional Shares of Common Stock in exchange
for consideration in an amount per Additional Share of Common Stock less than
the Current Warrant Price at the time the additional shares of Common Stock are
issued or sold, then:
(A) the Current Warrant Price immediately prior to such
issue or sale shall be reduced to a price determined by dividing
(1) an amount equal to the sum of (a) the number of
shares of Common Stock outstanding immediately prior to such issue or
sale multiplied by the then existing Current Warrant Price, plus (b)
the consideration, if any, received by the Company upon such issue or
sale, by
(2) the total number of shares of Common Stock
outstanding immediately after such issue or sale; and
(B) the number of shares of Common Stock acquirable upon
exercise of this Warrant shall be adjusted to equal the amount obtained by
(1) multiplying the Current Warrant Price in effect
immediately prior to such issue or sale by the number of shares of
Common Stock acquirable upon exercise of this Warrant immediately prior
to such issue or sale and
(2) dividing the product thereof by the Current
Warrant Price resulting from the adjustment made pursuant to clause
(A).
(ii) The provisions of paragraph 4.3(i) shall not apply to
any issuance of additional shares of Common Stock for which an adjustment is
provided under Section 4.1 or 4.2. No adjustment of the number of shares of
Common Stock acquirable upon exercise of this Warrant shall be made under
paragraph 4.3(i) upon the issuance of any additional shares of Common Stock
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which are issued pursuant to the exercise of any warrants or other subscription
or purchase rights or pursuant to the exercise of any conversion or exchange
rights in any convertible securities, if any such adjustment shall previously
have been made upon the issuance of such warrants or other rights or upon the
issuance of such convertible securities (or upon the issuance of any warrant or
other rights therefor) pursuant to Section 4.4.
4.4. ISSUANCE OF COMMON STOCK EQUIVALENTS. If at any time while this
Warrant is outstanding the Company shall issue or sell any warrants or other
rights to subscribe for or purchase any additional shares of Common Stock or any
securities convertible into shares of Common Stock (other than the Additional
Shares of Common Stock) (collectively, "Common Stock Equivalents"), whether or
not the rights to exchange or convert thereunder are immediately exercisable,
and the effective price per share for which Common Stock is issuable upon the
exercise, exchange or conversion of such Common Stock Equivalents (the
"EFFECTIVE PRICE") shall be less than the Current Warrant Price in effect
immediately prior to the time of such issue or sale, then the number of shares
of Warrant Stock acquirable upon the exercise of this Warrant and the Current
Warrant Price shall be adjusted as provided in Section 4.3 on the basis that the
maximum number of additional shares of Common Stock issuable pursuant to all
such Common Stock Equivalents shall be deemed to have been issued and
outstanding and the Company shall have received all of the consideration payable
therefor, if any, as of the date of the actual issuance of such Common Stock
Equivalents. If the Effective Price is subsequently reduced to a lower price,
then the adjustment for the issuance of the applicable Common Stock Equivalents
pursuant to this Section 4.4 shall be re-calculated based upon such lower price
effective as of the date of such reduction. No further adjustments to the
current Warrant Price shall be made under this Section 4.4 upon the actual issue
of such Common Stock upon the exercise, conversion or exchange of such Common
Stock Equivalents.
4.5. SUPERSEDING ADJUSTMENT.
(i) If, at any time after any adjustment of the number of
shares of Common Stock into which this Warrant is exercisable and the Current
Warrant Price shall have been made pursuant to Section 4.4 as the result of any
issuance of Common Stock Equivalents, (x) the right to exercise, convert or
exchange all or a portion of such Common Stock Equivalents shall expire
unexercised, or (y) the conversion rate or consideration per share for which
shares of Common Stock are issuable pursuant to such Common Stock Equivalents
shall be increased solely by virtue of provisions therein contained for an
automatic increase in such conversion rate or consideration per share upon the
occurrence of a specified date or event, then any such previous adjustments to
the Current Warrant Price and the number of shares of Common Stock for which
this Warrant is exercisable shall be rescinded and annulled and the additional
shares of Common Stock which were deemed to have been issued by virtue of the
computation made in connection with the adjustment so rescinded and annulled
shall no longer be deemed to have been issued by virtue of such computation.
(ii) Upon the occurrence of an event set forth in Section
4.5(i) above there shall be a recomputation made of the effect of such Common
Stock Equivalents on the basis of: (i) treating the number of additional shares
of Common Stock or other property, if any, theretofore actually issued or
issuable pursuant to the previous exercise, conversion or exchange of such
Common Stock Equivalents, as having been issued on the date or dates of any such
exercise, conversion or exchange and for the consideration actually received and
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receivable therefor, and (ii) treating any such Common Stock Equivalents which
then remain outstanding as having been granted or issued immediately after the
time of such increase of the conversion rate or consideration per share for
which shares of Common Stock or other property are issuable under such Common
Stock Equivalents; whereupon a new adjustment to the number of shares of Common
Stock for which this Warrant is exercisable and the Current Warrant Price shall
be made, which new adjustment shall supersede the previous adjustment so
rescinded and annulled.
4.6. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS. The following
provisions shall be applicable to the making of adjustments of the number of
shares of Common Stock into which this Warrant is exercisable and the Current
Warrant Price provided for in Section 4:
(a) WHEN ADJUSTMENTS TO BE MADE. The adjustments required
by Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any that would otherwise be
required may be postponed (except in the case of a subdivision or combination of
shares of the Common Stock, as provided for in Section 4.1) up to, but not
beyond the date of exercise if such adjustment either by itself or with other
adjustments not previously made adds or subtracts less than 1% of the shares of
Common Stock into which this Warrant is exercisable immediately prior to the
making of such adjustment. Any adjustment representing a change of less than
such minimum amount (except as aforesaid) which is postponed shall be carried
forward and made as soon as such adjustment, together with other adjustments
required by this Section 4 and not previously made, would result in a minimum
adjustment or on the date of exercise. For the purpose of any adjustment, any
specified event shall be deemed to have occurred at the close of business on the
date of its occurrence.
(b) FRACTIONAL INTERESTS. In computing adjustments under
this Section 4, fractional interests in Common Stock shall be taken into account
to the nearest 1/100th of a share.
(c) WHEN ADJUSTMENT NOT REQUIRED. If the Company undertakes
a transaction contemplated under this Section 4 and as a result takes a record
of the holders of its Common Stock for the purpose of entitling them to receive
a dividend or distribution or subscription or purchase rights or other benefits
contemplated under this Section 4 and shall, thereafter and before the
distribution to stockholders thereof, legally abandon its plan to pay or deliver
such dividend, distribution, subscription or purchase rights or other benefits
contemplated under this Section 4, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
(d) ESCROW OF STOCK. If after any property becomes
distributable pursuant to Section 4 by reason of the taking of any record of the
holders of Common Stock, but prior to the occurrence of the event for which such
record is taken, a holder of this Warrant exercises the Warrant during such
time, then such holder shall continue to be entitled to receive any shares of
Common Stock issuable upon exercise hereunder by reason of such adjustment and
such shares or other property shall be held in escrow for the holder of this
Warrant by the Company to be issued to holder of this Warrant upon and to the
extent that the event actually takes place. Notwithstanding any other provision
to the contrary herein, if the event for which such record was taken fails to
occur or is rescinded, then such escrowed shares shall be canceled by the
Company and escrowed property returned to the Company.
11
4.7. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS.
(a) If there shall occur a Change of Control and if
pursuant to the terms of such Change of Control, shares of common stock of the
successor or acquiring corporation, or any cash, shares of stock or other
securities or property of any nature whatsoever (including warrants or other
subscription or purchase rights) in addition to or in lieu of common stock of
the successor or acquiring corporation ("Other Property"), are to be received by
or distributed to the holders of Common Stock of the Company, then the Holder of
this Warrant shall have the right thereafter to receive, upon the exercise of
the Warrant, the number of shares of common stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and the Other
Property receivable upon or as a result of such Change of Control by a holder of
the number of shares of Common Stock into which this Warrant is exercisable
immediately prior to such event.
(b) In case of any such Change of Control described above,
the successor or acquiring corporation (if other than the Company) and, if an
entity different from the successor or surviving entity, the entity whose
capital stock or assets the holders of Common Stock of the Company are entitled
to receive as a result of such transaction, shall expressly assume the due and
punctual observance and performance of each and every covenant and condition of
contained in this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined by resolution of the Board of Directors of
the Company) in order to provide for adjustments of shares of the Common Stock
into which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in Section 4. For purposes of
Section 4, common stock of the successor or acquiring corporation shall include
stock of such corporation of any class which is not preferred as to dividends or
assets on liquidation over any other class of stock of such corporation and
which is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of
this Section 4 shall similarly apply to successive Change of Control
transactions.
4.8. OTHER ACTION AFFECTING COMMON STOCK. In case at any time or
from time to time the Company shall take any action in respect of its Common
Stock, other than the payment of dividends permitted by Section 4 or any other
action described in Section 4, then, unless such action will not have a
materially adverse effect upon the rights of the holder of this Warrant, the
number of shares of Common Stock or other stock into which this Warrant is
exercisable and/or the purchase price thereof shall be adjusted in such manner
as may be equitable in the circumstances. No adjustment pursuant to this Section
4.8 shall be made if such adjustment would result in an increase of the Current
Warrant Price then in effect or a decrease in the number of Warrant Shares.
4.9. CERTAIN LIMITATIONS. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by reason
of any adjustment hereunder, would cause the Current Warrant Price to be less
than the par value per share of Common Stock.
12
4.10. STOCK TRANSFER TAXES. The issue of stock certificates upon
exercise of this Warrant shall be made without charge to the holder for any tax
in respect of such issue. The Company shall not, however, be required to pay any
tax which may be payable in respect of any transfer involved in the issue and
delivery of shares in any name other than that of the holder of this Warrant,
and the Company shall not be required to issue or deliver any such stock
certificate unless and until the person or persons requesting the issue thereof
shall have paid to the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been paid.
5. NOTICES TO WARRANT HOLDERS.
5.1. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Current Warrant Price, the Company, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to the Holder of this Warrant a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Company
shall, upon the written request at any time of the Holder of this Warrant,
furnish or cause to be furnished to such Holder a like certificate setting forth
(i) such adjustments and readjustments, (ii) the Current Warrant Price at the
time in effect and (iii) the number of shares of Common Stock and the amount, if
any, or other property which at the time would be received upon the exercise of
Warrants owned by such Holder.
5.2. NOTICE OF CORPORATE ACTION. If at any time:
(a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend (other than
a cash dividend payable out of earnings or earned surplus legally available for
the payment of dividends under the laws of the jurisdiction of incorporation of
the Company) or other distribution, or any right to subscribe for or purchase
any evidences of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) there shall be any capital reorganization of the
Company, any reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company with, or any sale,
transfer or other disposition of all or substantially all the property, assets
or business of the Company to, another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to the Holder (i)
at least 20 days' prior written notice of the date on which a record date shall
be selected for such dividend, distribution or right or for determining rights
to vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 20 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
13
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to the
Holder at the last address of the Holder appearing on the books of the Company
and delivered in accordance with Section 16.2.
5.3. NO RIGHTS AS STOCKHOLDER. This Warrant does not entitle the
Holder to any voting or other rights as a stockholder of the Company prior to
exercise and payment for the Warrant Price in accordance with the terms hereof.
6. NO IMPAIRMENT. The Company shall not by any action, including,
without limitation, amending 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 of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in par
value, (b) take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant, and (c) use its best efforts to
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable the
Company to perform its obligations under this Warrant. Upon the request of the
Holder, the Company will at any time during the period this Warrant is
outstanding acknowledge in writing, in form satisfactory to the Holder, the
continuing validity of this Warrant and the obligations of the Company
hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION
WITH APPROVAL OF ANY GOVERNMENTAL AUTHORITY. From and after the Original
Issuance Date, the Company shall at all times reserve and keep available for
issue upon the exercise of Warrants such number of its authorized but unissued
shares of Common Stock as will be sufficient to permit the exercise in full of
all outstanding Warrants (without regard to any ownership limitations provided
in Section 2.4(i)). All shares of Common Stock which shall be so issuable, when
issued upon exercise of any Warrant and payment therefor in accordance with the
terms of such Warrant, shall be duly and validly issued and fully paid and
nonassessable, and not subject to preemptive rights. Before taking any action
which would cause an adjustment reducing the Current Warrant Price below the
then par value, if any, of the shares of Common Stock issuable upon exercise of
the Warrants, the Company shall take any corporate action which may be necessary
in order that the Company may validly and legally issue fully paid and
non-assessable shares of such Common Stock at such adjusted Current Warrant
Price. Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in the
14
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof. If any shares of Common
Stock required to be reserved for issuance upon exercise of Warrants require
registration or qualification with any governmental authority under any federal
or state law before such shares may be so issued (other than as a result of a
prior or contemplated distribution by the Holder of this Warrant), the Company
will in good faith and as expeditiously as possible and at its expense endeavor
to cause such shares to be duly registered.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS. In the case
of all dividends or other distributions by the Company to the holders of its
Common Stock with respect to which any provision of Section 4 refers to the
taking of a record of such holders, the Company will in each such case take such
a record and will take such record as of the close of business on a Business
Day. The Company will not at any time, except upon dissolution, liquidation or
winding up of the Company, close its stock transfer books or Warrant transfer
books so as to result in preventing or delaying the exercise or transfer of any
Warrant.
9. REGISTRATION RIGHTS. The resale of the Warrant Stock shall be
registered in accordance with the terms and conditions contained in that certain
Investor Rights Agreement dated June ___, 2006, among the Holder, the Company
and the other parties named therein (the "Investor Rights Agreement"). The
Holder acknowledges that pursuant to the Investor Rights Agreement, the Company
has the right to request that the Holder furnish information regarding such
Holder and the distribution of the Warrant Stock as is required by law or the
Commission to be disclosed in the Registration Statement (as such term is
defined in the Investor Rights Agreement), and the Company may exclude from such
registration the shares of Warrant Stock acquirable hereunder if Holder fails to
furnish such information within a reasonable time prior to the filing of each
Registration Statement, supplemented prospectus included therein and/or amended
Registration Statement.
10. SUPPLYING INFORMATION. Upon any default by the Company of its
obligations hereunder or under the Investor Rights Agreement, the Company shall
cooperate with the Holder in supplying such information as may be reasonably
necessary for such Holder to complete and file any information reporting forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any Warrant
or Restricted Common Stock.
11. LOSS OR MUTILATION. Upon receipt by the Company from the Holder
of evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of this Warrant and indemnity or security
reasonably satisfactory to it and reimbursement to the Company of all reasonable
expenses incidental thereto and in case of mutilation upon surrender and
cancellation hereof, the Company will execute and deliver in lieu hereof a new
Warrant of like tenor to the Holder; provided, however, that in the case of
mutilation, no indemnity shall be required if this Warrant in identifiable form
is surrendered to the Company for cancellation.
12. OFFICE OF THE COMPANY. As long as any of the Warrants remain
outstanding, the Company shall maintain an office or agency (which may be the
principal executive offices of the Company) where the Warrants may be presented
for exercise, registration of transfer, division or combination as provided in
this Warrant.
15
13. FINANCIAL AND BUSINESS INFORMATION.
13.1. QUARTERLY INFORMATION. The Company will deliver to the Holder,
as soon as available and in any event within 45 days after the end of each of
the first three quarters of each fiscal year of the Company, one copy of an
unaudited consolidated balance sheet of the Company and its subsidiaries as at
the end of such quarter, and the related unaudited consolidated statements of
income, retained earnings and cash flow of the Company and its subsidiaries for
such quarter and, in the case of the second and third quarters, for the portion
of the fiscal year ending with such quarter, setting forth in each case in
comparative form the figures for the corresponding periods in the previous
fiscal year. Such financial statements shall be prepared by the Company in
accordance with GAAP and accompanied by the certification of the Company's chief
executive officer or chief financial officer that such financial statements
present fairly the consolidated financial position, results of operations and
cash flow of the Company and its subsidiaries as at the end of such quarter and
for such year-to-date period, as the case may be; provided, however, that the
Company shall have no obligation to deliver such quarterly information under
this Section 13.1 to the extent it is publicly available; and provided further,
that if such information contains material non-public information, the Company
shall so notify the Holder prior to delivery thereof and the Holder shall have
the right to refuse delivery of such information.
13.2. ANNUAL INFORMATION. The Company will deliver to the Holder as
soon as available and in any event within 90 days after the end of each fiscal
year of the Company, one copy of an audited consolidated balance sheet of the
Company and its subsidiaries as at the end of such year, and audited
consolidated statements of income, retained earnings and cash flow of the
Company and its subsidiaries for such year; setting forth in each case in
comparative form the figures for the corresponding periods in the previous
fiscal year; all prepared in accordance with GAAP, and which audited financial
statements shall be accompanied by an opinion thereon of the independent
certified public accountants regularly retained by the Company, or any other
firm of independent certified public accountants of recognized national standing
selected by the Company; provided, however, that the Company shall have no
obligation to deliver such annual information under this Section 13.2 to the
extent it is publicly available; and provided further, that if such information
contains material non-public information, the Company shall so notify the Holder
prior to delivery thereof and the Holder shall have the right to refuse delivery
of such information.
13.3. FILINGS. The Company will file on or before the required date
all regular or periodic reports (pursuant to the Exchange Act) with the
Commission and will deliver to Holder promptly upon their becoming available one
copy of each report, notice or proxy statement sent by the Company to its
stockholders generally.
14. LIMITATION OF LIABILITY. No provision hereof, in the absence of
affirmative action by the Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of the Holder hereof, shall give
rise to any liability of the Holder for the purchase price of any Common Stock,
whether such liability is asserted by the Company or by creditors of the
Company.
16
15. REDEMPTION AT COMPANY'S ELECTION.
15.1. The Company may at the option of the Board of Directors of the
Company redeem this Warrant, in whole or in part, at any time after June ___,
2007 provided that (i) the Current Market Price (as determined by paragraph (2)
of such definition) is greater than $_____ (as adjusted for stock splits,
reverse splits, stock dividends and the like) for twenty consecutive Trading
Days, (ii) the trading volume of the Common Stock on the applicable exchange or
market for at least fifteen of the twenty consecutive Trading Days provided in
clause (i) above is not less than 100,000 shares per such Trading Day (as
adjusted for stock splits, reverse splits, stock dividends and the like) and
(iii) all of the Warrant Stock underlying the Warrants to be redeemed (x) is
then registered under an effective registration statement in accordance with the
terms and conditions of the Investor Rights Agreement and the Company is in
compliance in all material respects with the Investor Rights Agreement or (y)
may be sold without restriction pursuant to Rule 144(k) promulgated by the
Commission under the Securities Act (any date on which the provisions of clauses
(i), (ii) and (iii) are satisfied, a "Qualifying Date"). The amount payable in
redemption of the rights to purchase the Warrant Stock pursuant to this Section
15.1 shall be cash equal to $0.001 multiplied by the number of Warrant Shares
that would be issuable upon exercise of the Warrants being redeemed (the
"Redemption Price").
15.2. The Company shall effect a redemption as follows:
(i) The number of warrants subject to redemption (including
the Warrants) shall be allocated pro rata among the holders of all of the
warrants to purchase Common Stock issued by the Company upon conversion of the
Notes and the Existing Notes (collectively, the "Redemption Warrants"), based
upon the number of Redemption Warrants then outstanding that are held by each
such holder.
(ii) The Company shall pay the Redemption Price in cash for
the Redemption Warrants to be redeemed.
(iii) At least 15 but no more than 60 days prior to the date
fixed for any redemption of any Redemption Warrants (the "Redemption Date"),
written notice shall be given (which notice shall be given not later than 10
days following the applicable Qualifying Date) to each holder of record of
Redemption Warrants to be redeemed, notifying such holder of the redemption to
be effected, specifying the Redemption Date, the Redemption Price, the place at
which payment may be obtained, calling upon such holder to surrender to the
Company, in the manner and at the place designated, its certificate or
certificates representing the Redemption Warrants to be redeemed and notifying
the holder that, if applicable, the holder may elect to opt out of the
restrictions on exercise set forth in Section 2.4 in order to exercise the
Warrant in full prior to the Redemption Date (the "Redemption Notice"). On or
after the Redemption Date, each holder of Redemption Warrants to be redeemed
shall surrender to the Company the certificate or certificates representing such
warrants, in the manner and at the place designated in the Redemption Notice,
and thereupon the Redemption Price therefor shall be paid to the person whose
name appears on such certificate or certificates as the owner thereof, and upon
such payment, each surrendered certificate shall be canceled. In the event less
than all the warrants represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed warrants. For avoidance
of doubt, the holder may exercise the Warrant at any time prior to the
17
redemption of the Warrant pursuant to this Section 15. If the holder would not
be permitted to exercise this Warrant in full on the date that the Redemption
Notice is delivered to the holder as a result of the restrictions set forth in
Section 2.4, then the Redemption Date shall be delayed to that date which is 70
days following the date that the Redemption Notice is delivered to the holder.
For purposes of determining whether a holder would be permitted to exercise this
Warrant in full as set forth in the previous sentence, the holder and its
Affiliates shall not be required to sell any securities of the Company then held
by them.
(iv) On the date that a Redemption Notice is given to the
holder, the Company shall issue a press release and file such press release on
Form 8-K. Such press release shall describe the terms of the redemption,
including the number of warrants to be redeemed, the price at which such
warrants will be redeemed, the redemption date and any other material terms or
information regarding the redemption reasonably necessary to ensure that the
holder shall not be in possession of material nonpublic information upon receipt
of the Redemption Notice.
16. MISCELLANEOUS.
16.1. NONWAIVER AND EXPENSES. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the Holder shall operate
as a waiver of such right or otherwise prejudice Holder's rights, powers or
remedies. If the Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Warrant, the
Company shall pay to the Holder such amounts as shall be sufficient to cover any
third party costs and expenses including, but not limited to, reasonable
attorneys' fees, including those of appellate proceedings, incurred by the
Holder in collecting any amounts due pursuant hereto or in otherwise enforcing
any of its rights, powers or remedies hereunder.
16.2. NOTICE GENERALLY. All notices, requests, demands or other
communications provided for herein shall be in writing and shall be given in the
manner and to the addresses set forth in the Purchase Agreement.
16.3. SUCCESSORS AND ASSIGNS. Subject to compliance with the
provisions of Section 3.1, this Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors of the Company and
the successors and assigns of the Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant,
and shall be enforceable by any such Holder.
16.4. AMENDMENT. This Warrant may be modified or amended or the
provisions of this Warrant waived with the written consent of both the Company
and the Holder.
16.5. SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be modified to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
16.6. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
18
16.7. GOVERNING LAW. This Warrant and the transactions contemplated
hereby shall be deemed to be consummated in the State of New York and shall be
governed by and interpreted in accordance with the local laws of the State of
New York without regard to the provisions thereof relating to conflicts of laws.
The Company hereby irrevocably consents to the exclusive jurisdiction of the
State and Federal courts located in New York City, New York in connection with
any action or proceeding arising out of or relating to this Warrant. In any such
litigation the Company agrees that the service thereof may be made by certified
or registered mail directed to the Company pursuant to Section 16.2.
[Signature Page Follows]
19
IN WITNESS WHEREOF, GlobalOptions Group, Inc. has caused this Warrant
to be executed by its duly authorized officer and attested by its Secretary.
Dated: June ___, 2006
GLOBALOPTIONS GROUP, INC.
By: /s/
----------------------------
Name:
Title:
Attest:
By: /s/
-----------------------------
Name:
Title: Secretary
20
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
1. The undersigned hereby elects to purchase ________ shares of
the Common Stock of GlobalOptions Group, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
2. The undersigned hereby elects to convert the attached Warrant
into Common Stock of GlobalOptions Group, Inc. through "cashless exercise" in
the manner specified in the Warrant. This conversion is exercised with respect
to _____________________ of the Shares covered by the Warrant.
3. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name as is specified
below:
--------------------------------
(Name)
--------------------------------
--------------------------------
--------------------------------
(Address)
[and, if such shares of Common Stock shall not include all of the
shares of Common Stock issuable as provided in this Warrant, that a new
Warrant of like tenor and date for the balance of the shares of Common
Stock issuable hereunder be delivered to the undersigned.]
---------------------------------
(Name of Registered Owner)
---------------------------------
(Signature of Registered Owner)
---------------------------------
(Street Address)
---------------------------------
(State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the Warrant in every particular, without alteration or
enlargement or any change whatsoever.
21
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant for the
purchase of shares of common stock of GlobalOptions Group, Inc. hereby sells,
assigns and transfers unto the Assignee named below all of the rights of the
undersigned under this Warrant, with respect to the number of shares of common
stock set forth below:
---------------------------------
---------------------------------
---------------------------------
(Name and Address of Assignee)
---------------------------------
(Number of Shares of Common Stock)
and does hereby irrevocably constitute and appoint ____________ attorney-in-fact
to register such transfer on the books of the Company, maintained for the
purpose, with full power of substitution in the premises.
Dated:
--------------------------
---------------------------------
(Print Name and Title)
---------------------------------
(Signature)
---------------------------------
(Witness)
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the Warrant in every particular, without alteration or
enlargement or any change whatsoever.
22
EXHIBIT C
FORM OF INVESTMENT REPRESENTATION LETTER
In connection with the acquisition of [warrants (the "Warrants") to purchase
____ shares of common stock of GlobalOptions Group, Inc. (the "Company"), par
value $0.001 per share (the "Common Stock")][___shares of common stock of
GlobalOptions Group, Inc. (the "Company"), par value $0.001 per share (the
"Common Stock") upon the exercise of warrants by ________], by _______________
(the "Holder") from _____________, the Holder hereby represents and warrants to
the Company as follows:
The Holder (i) is an "Accredited Investor" as that term is defined in Rule 501
of Regulation D promulgated under the Securities Act of 1933, as amended (the
"Act"); and (ii) has the ability to bear the economic risks of such Holder's
prospective investment, including a complete loss of Holder's investment in the
Warrants and the shares of Common Stock issuable upon the exercise thereof
(collectively, the "Securities").
The Holder, by acceptance of the Warrants, represents and warrants to the
Company that the Warrants and all securities acquired upon any and all exercises
of the Warrants are purchased for the Holder's own account, and not with view to
distribution of either the Warrants or any securities purchasable upon exercise
thereof in violation of applicable securities laws.
The Holder acknowledges that (i) the Securities have not been registered under
the Act, (ii) the Securities are "restricted securities" and the certificate(s)
representing the Securities shall bear the following legend, or a similar legend
to the same effect, until (i) in the case of the shares of Common Stock
underlying the Warrants, such shares shall have been registered for resale by
the Holder under the Act and effectively been disposed of in accordance with a
registration statement that has been declared effective; or (ii) in the opinion
of counsel for the Company such Securities may be sold without registration
under the Act:
"[NEITHER] THE SECURITIES REPRESENTED BY THIS CERTIFICATE [NOR THE SECURITIES
INTO WHICH THEY ARE EXERCISABLE] HAVE [NOT] BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND ALL SUCH SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE. [NEITHER] THE
SECURITIES REPRESENTED HEREBY [NOR THE SECURITIES INTO WHICH THEY ARE
EXERCISABLE] MAY [NOT] BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF
COUNSEL, REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT
THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT
REGISTRATION UNDER THE ACT."
23
IN WITNESS WHEREOF, the Holder has caused this Investment Representation Letter
to be executed in its corporate name by its duly authorized officer this __ day
of __________ 200_.
By:
-----------------------------
Name:
Title: