EXHIBIT 10.38
FORM OF WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED UPON THE
EXERCISE OF THIS WARRANT HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE, OFFER,
PLEDGE OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS UNLESS SOLD
PURSUANT TO RULE 144 OF THE ACT.
OLYMPIC CASCADE FINANCIAL CORPORATION
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, , is entitled, upon the
terms and subject to the conditions hereinafter set forth, at such times after
the date hereof as are set forth below, to acquire from Olympic Cascade
Financial Corporation, a Delaware corporation (the "Company"), in whole or, from
time to time, in part, up to fully paid and nonassessable shares of
Common Stock, $.02 par value, of the Company (the "Warrant Shares") at a
purchase price per share (the "Exercise Price") of $-----. Such number of
shares, type of security and Exercise Price are subject to adjustment as
provided herein, and all references to "Warrant Shares" and "Exercise Price"
herein shall be deemed to include any such adjustment or series of adjustments.
This Warrant is granted by the Company to the Holder pursuant to that certain
.
The Warrant Shares shall vest immediately upon the Closing (as defined in
the ).
1. Term.
(a) Commencement of Exercisability. Subject to the vesting
provisions described above and Section 4 below, the Warrant is exercisable, in
whole or in part, at any time and from time to time from the date hereof through
the Expiration Date (as defined in Section 1(b) below).
(b) Termination and Expiration. If not earlier exercised, the
Warrant shall expire on the third (3rd) anniversary of the date hereunder (the
"Expiration Date"), subject to Section 4 below.
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to
Section 1 hereof, exercise of this Warrant shall be made, in whole or in part,
by the surrender of this Warrant (with the notice of exercise form attached
hereto as Exhibit A duly executed) at the principal office of the Company and by
the payment to the Company of an amount equal to the Exercise Price multiplied
by the number of Warrant Shares being purchased, which amount may be paid in
cash or by check. In the event of any exercise of the rights represented by this
Warrant, certificates for the Warrant Shares so purchased shall be delivered to
the Holder hereof within a reasonable time and, unless this Warrant has been
fully exercised or expired, a new Warrant representing that portion of the
Warrant Shares, if any, with respect to which this Warrant shall not then have
been exercised, shall also be issued to the Holder within such reasonable time.
3. Stock Fully Paid; Reservation of Warrant Shares. All of the Warrant
Shares issuable upon the exercise of the rights represented by this Warrant
will, upon issuance and receipt of the Exercise Price therefor, be fully paid
and nonassessable, and free from all taxes, liens and charges with respect to
the issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company shall at all times have authorized and
reserved for issuance a sufficient number of shares of Common Stock to provide
for the exercise of the rights represented by this Warrant.
4. Adjustment of Exercise Price and Number of Shares of Warrant Shares.
Subject to the provisions of Section 2 hereof, the number and kind of securities
purchasable upon the exercise of this Warrant and the Exercise Price therefor
shall be subject to adjustment, from time to time, upon the occurrence of
certain events, as follows:
(a) In the event the Company shall at any time following the date
hereof subdivide the outstanding shares of Common Stock, or shall issue a stock
dividend on its outstanding Common Stock, the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such subdivision or
to the issuance of such stock dividend shall be proportionately increased, and
the Exercise Price shall be proportionately decreased; and in the event the
Company shall at any time following the date hereof combine the outstanding
shares of Common Stock, the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to such combination shall be
proportionately decreased, and the Exercise Price shall be proportionately
increased, effective at the close of business on the date of such subdivision,
stock dividend or combination, as the case may be.
(b) If the Company is, following the date hereof, recapitalized
through the subdivision or combination of its outstanding shares of Common Stock
into a larger or smaller number of shares, the number of shares of Common Stock
for which this Warrant may be exercised shall be increased or reduced in the
same proportion as the increase or decrease in the outstanding shares of Common
Stock and the then applicable Exercise Price shall be adjusted by multiplying by
a fraction with a numerator equal to the number of shares of Common Stock
purchasable upon exercise hereof immediately prior to such subdivision or
combination and the denominator of which shall be the number of shares of Common
Stock purchasable immediately following such subdivision or combination.
-2-
(c) Subject to Section 1 hereof, in the event of any consolidation
or merger of the Company with another entity in a bona fide transaction (i.e.,
not a mere recapitalization, reincorporation for the purpose of changing
corporate domicile, or similar transaction), at any time prior to the Expiration
Date, the Holder shall have the right upon exercise of this Warrant, to receive
the same kind and number of Warrant Shares and other securities, cash or other
property as would have been distributed to the Holder had the Holder exercised
this Warrant immediately prior to such consolidation or merger. Notwithstanding
the foregoing, in the event that the per share consideration price paid in the
bona fide transaction is lower than the then effective Exercise Price, this
Warrant shall expire without value upon consummation of the bona fide
transaction. 5. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder, but in lieu thereof, the
Company shall make a cash payment therefor upon the basis of the Exercise Price
then in effect.
6. Transfer, Assignment or Loss of Warrant and Warrant Shares.
(a) This Warrant and the Warrant Shares to be issued or issuable
upon exercise of this Warrant, may not be assigned or transferred except as
provided in this Section 6 and in accordance with and subject to the provisions
of the Securities Act of 1933, as amended, and the Rules and Regulations
promulgated thereunder (said Act and such Rules and Regulations being
hereinafter collectively referred to as the "Act"). Upon exercise of this
Warrant, the holder hereof shall confirm in writing, in the form of Exhibit B,
that the shares of Common Stock so purchased are being acquired for investment
and not with a view toward distribution or resale. Any purported transfer or
assignment made other than in accordance with this Section 6 shall be null and
void and of no force and effect.
(b) Any assignment permitted hereunder shall be made by surrender of
this Warrant to the Company at its principal office with the Assignment Form
attached hereto as Exhibit C duly executed. In such event the Company shall,
upon payment by the Holder of any issuance or transfer tax incurred or to be
incurred by the Company with respect to such transfer, execute and deliver a new
Warrant in the name of the assignee named in such instrument of assignment and
this Warrant shall promptly be canceled. This Warrant may be divided or combined
with other warrants which carry the same rights upon presentation thereof at the
principal office of the Company together with a written notice signed by the
Holder thereof, specifying the names and denominations in which new warrants are
to be issued. Upon any partial transfer, the Company will sign, issue and
deliver to the Holder a new Warrant with respect to any portion not so
transferred.
(c) Upon receipt by the Company of evidence satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant (provided that an
affidavit of the Holder shall be satisfactory for such purpose), and of
indemnity satisfactory to it (provided that if the Holder is the original Holder
of this Warrant, its own indemnification agreement shall under all circumstances
be satisfactory, and no bond shall be required), and upon surrender and
cancellation of this Warrant, if mutilated, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, or destroyed
Warrant shall thereupon become void.
-3-
(d) In order to ensure compliance with the restrictions referred to
herein, the Company may issue appropriate "stop transfer" instructions to its
transfer agent.
(e) The Company shall not be required (i) to transfer on its books
the Warrant or any Warrant Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Warrant or (ii) to treat as owner
of such Warrant Shares or to accord the right to vote or pay dividends to an
purchaser or other transferee to whom such Warrant Shares shall have been so
transferred.
7. Representations and Covenants of the Holder. The Holder represents that
this Warrant and any Warrant Shares issued or issuable upon exercise of this
Warrant, to be received will be acquired for investment for its own account, not
as a nominee or agent, and not with a view to the sale or distribution of any
part thereof, and that it has no present intention of selling, granting any
participation in or otherwise distributing the same. Such Holder understands and
acknowledges that the offering of this Warrant, and any issuance of Common Stock
on conversion thereof, will not be registered under the Securities Act on the
ground that the sale provided for in this Agreement and the issuance of
securities hereunder is exempt from registration pursuant to Section 4(2) of the
Act, and that the Company's reliance on such exemption is predicated on the
Holder's representations set forth herein. Such Holder represents that it is
experienced in evaluating companies such as the Company, is able to fend for
itself in investments such as this one, and has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of its prospective investment in the Company.
8. Rights of Stockholders. No holder of this Warrant shall be entitled, as
a Warrant holder, to vote or receive dividends or be deemed the holder of Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger, conveyance, or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until the Warrant shall have been exercised and
the Warrant Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein.
9. Registration Rights. The shares of Common Stock obtained upon exercise
of this Warrant shall have the registration rights set forth in the Registration
Rights Agreement dated and the term "Registrable Securities" as defined
in such Registration Rights Agreement shall include the Common Stock obtained
upon exercise of this Warrant.
10. Notices, Etc. All notices and other communications from the Company to
the Holder shall be mailed by first class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company in writing by
the Holder.
-4-
11. Governing Law, Headings. This Warrant shall be construed and enforced
in accordance with and governed by the laws of the State of New York. The
headings in this Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof.
"COMPANY"
OLYMPIC CASCADE FINANCIAL CORPORATION
By:________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
-5-
EXHIBIT A
NOTICE OF EXERCISE
TO: OLYMPIC CASCADE FINANCIAL CORPORATION
(i) The undersigned hereby elects to purchase ___________
shares of Common Stock pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such Common Stock in full.
(ii) Please issue a certificate or certificates representing
said Common Stock in the name of the undersigned or in such other name as is
specified below:
Name:
Address:
(iii) The undersigned hereby represents and warrants that 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.
By:_______________________________
Name:_____________________________
Title:____________________________
Date:_____________________________
-6-
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
PURCHASER:
COMPANY: OLYMPIC CASCADE FINANCIAL CORPORATION
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed securities (the
"Securities"), I, the Purchaser, represent to the Company the following:
(a) I am aware of the Company's business affairs and financial condition,
and have acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Securities. I am purchasing these
Securities for my own account for investment purposes only and not with a view
to, or for the resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933 (the "Securities Act").
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein. In this connection, I understand that, in the view of the
Securities and Exchange Commission (the "SEC"), the statutory basis for such
exemption may be unavailable if my representation was predicated solely upon a
present intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future.
(c) I further understand that the Securities must be held for at least one
(1) year under Rule 144 promulgated under the Securities Act, unless
subsequently registered under the Securities Act or unless an exemption from
registration is otherwise available. Moreover, I understand that the Company is
under no obligation to register the Securities except as set forth in the
Registration Rights Agreement. In addition, I understand that the certificate
evidencing the Securities will be imprinted with a legend which prohibits the
transfer of the Securities unless they are registered or such registration is
not required in the opinion of counsel for the Company.
(d) I am aware of the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions.
(e) I am aware that the Securities involve a high degree of risk and that
I may suffer a total loss of my investment. I have been provided with the
Company's periodic reports filed with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended (the "34 Act Filings"),
including the Company's most recently filed Annual Report on Form 10-K,
Quarterly Report on Form 10-Q and Proxy Statement on Schedule 14A . I have read
the information in such reports, including the information under the caption
"Risk Factors" contained in the Company's 34 Act Reports.
-7-
(f) I further understand that in the event all of the requirements of Rule
144 are not satisfied, registration under the Securities Act, compliance with
Regulation A, or some other registration exemption will be required; and that,
notwithstanding the fact that Rule 144 is not exclusive, the Staff of the SEC
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.
-----------------------------------
Name of Purchaser
-----------------------------------
Signature of Authorized Signatory
-----------------------------------
Print Name and Title
-----------------------------------
Date
-8-
EXHIBIT C
ASSIGNMENT FORM
FOR VALUE RECEIVED, _______________________________ hereby sells, assigns
and transfers unto ______________________________________________________ (Name
and Address) the right to purchase Warrant Shares represented by this Warrant to
the extent of ___________ shares and does hereby irrevocably constitute and
appoint ____________________________ __________________, attorney, to transfer
the same on the books of the Company with full power of substitution in the
premises.
Dated: _______________ , ____
By:__________________________
Name:________________________
Title:_______________________
-9-