EYETEL IMAGING, INC. FORM OF WARRANT TO PURCHASE PREFERRED STOCK
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 COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
EYETEL
IMAGING, INC.
FORM
OF WARRANT TO PURCHASE PREFERRED STOCK
|
No.
|
____________________
|
VOID
AFTER DECEMBER 28, 2012
THIS
CERTIFIES THAT,
for
value received, ___________________________________,
with
its principal office at ____________________________________,
or
assigns (the “Holder”),
is
entitled to subscribe for and purchase from EYETEL
IMAGING, INC.,
a
Delaware corporation, with its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (the “Company”)
the Exercise
Shares at the Exercise Price (each subject to adjustment as provided herein).
This Warrant is being issued as one of a series of warrants (the “Warrants”)
pursuant to the terms of the Note and Warrant Purchase Agreement, dated
December 28, 2006 by and among the Company and the Purchasers therewith
(the “Purchase
Agreement”).
Unless indicated otherwise, the aggregate number of Exercise Shares that Holder
may purchase by exercising this warrant is equal to the quotient of (A) the
product of (i) thirty percent (30%) multiplied by (ii) such Holder’s Loan Amount
in the applicable Closing (as defined in the Purchase Agreement), divided by
(B) $1.394 per share, except in the event a Qualified Financing (as such
term is defined in the Purchase Agreement) occurs or is deemed to occur prior
to
December 28, 2007 (the “Note
Expiration Date”),
then
the per share price paid by investors for preferred stock purchased in such
financing, in each case, subject to adjustment pursuant to the terms hereof,
including but not limited to adjustments pursuant to Section 5
below.
1. DEFINITIONS.
Capitalized
terms used but not defined herein shall have the meanings set forth in the
Purchase Agreement. As used herein, the following terms shall have the following
respective meanings:
(a) “Exercise
Period”
shall
mean the period commencing upon the earlier to occur of (i) the occurrence
or
deemed occurrence of a Qualified Financing, (ii) a Liquidity Event (as defined
below), (iii) an Initial Offering (as defined below) or (iv) the Note Expiration
Date, and
ending five (5) years
later, unless sooner terminated as provided below.
(b) “Exercise
Price”
shall
mean (i) in the event a Qualified Financing occurs or is deemed to occur, the
per share price paid by investors for the Equity Securities purchased in such
financing, and (ii) in the event that either (A) the Note Expiration Date or
(B)
a Liquidity Event occurs (as defined below) prior to the occurrence or deemed
occurrence of a Qualified Financing, $1.394 per share, in each case, subject
to
adjustment pursuant to Section 5 below. Notwithstanding the foregoing, in the
event of an initial public offering of securities of the Company registered
under the Securities Act (an “Initial
Offering”)
prior
to a Qualified Financing or a Liquidity Event, the Exercise Price shall be
the
lesser of (i) $1.394 per share and (ii) the price paid by the public in the
Initial Offering for the number of shares of Common Stock into which each
Exercise Share is convertible immediately prior to the occurrence of such
Initial Offering, in each case, subject to adjustment pursuant to Section 5
below.
1.
(c) “Exercise
Shares”
shall
mean shares of the Company’s Series B Preferred Stock, except in the event a
Qualified Financing occurs or is deemed to occur prior to the Note Expiration
Date, then shares of the Company’s preferred stock purchased by investors in
such financing. For clarity, if a Liquidity Event occurs prior to (i) the
occurrence or deemed occurrence of a Qualified Financing and (ii) the Note
Expiration Date, then Exercise Shares shall mean shares of the Company’s Series
B Preferred Stock.
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 Company
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 (i) in cash or by check, or (ii) by cancellation
of
indebtedness; 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. In the event that
this
Warrant is being exercised for less than all of the then-current number of
Exercise Shares purchasable hereunder, the Company shall, concurrently with
the
issuance by the Company of the number of Exercise Shares for which this Warrant
is then being exercised, issue a new Warrant exercisable for the remaining
number of Exercise Shares purchasable hereunder.
The
person in whose name any certificate or certificates for Exercise Shares are
to
be issued upon exercise of this Warrant shall be deemed to have become the
holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the
date
of delivery of such certificate or certificates, except that, if the date of
such surrender and payment is a date when the stock transfer books of the
Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
2.1 Net
Exercise.
Notwithstanding any provisions herein to the contrary, if the fair market value
of one Exercise Share 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 Exercise Shares computed using the following
formula:
2.
X
=
Y
(A-B)
A
|
Where
|
X
=
|
the
number of Exercise Shares to be issued to the
Holder
|
|
Y
=
|
the
number of Exercise Shares purchasable under the Warrant or, if only
a
portion of the Warrant is being exercised, that portion of the Warrant
being canceled (at the date of such
calculation)
|
|
A
=
|
the
fair market value of one Exercise Share (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 Exercise Share
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 Exercise Share
is
convertible at the time of such exercise; provided further that if the Holder
disputes in good faith the fair market value of each Exercise Share as
determined by the Board (other than in connection with the Company’s initial
public offering), and the Holder and the Company are not able to resolve such
dispute within ten (10) days of the Company’s receipt from the Holder of its
written objection to such valuation, then the fair market value of each Exercise
Share shall be determined in accordance with the provisions set forth in the
definition of the term “Appraisal Procedure” of the Company’s then current
Certificate of Incorporation, as amended from time to time.
3. COVENANTS
OF THE COMPANY.
3.1 Covenants
as to Exercise Shares.
The
Company 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. The Company
further covenants and agrees that the Company will at all times during the
Exercise Period, have authorized and reserved, free from preemptive rights, a
sufficient number of shares of the series of equity securities comprising the
Exercise Shares to provide for the exercise of the rights represented by this
Warrant. If at any time during the Exercise Period the number of authorized
but
unissued shares of such series of the Company’s equity securities shall not be
sufficient to permit exercise of this Warrant, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of such series of the Company’s equity
securities to such number of shares as shall be sufficient for such
purposes.
3.
4. REPRESENTATIONS
OF HOLDER.
4.1 Representations
and Warranties.
Reference is made to the representations and warranties of the
Holder
set
forth in Section 4 of the Purchase Agreement.
4.2 Disposition
of Warrant and Exercise Shares.
(a) Reference
is made to the restrictions on transfer applicable to Holder set forth in
Section 5 of the Purchase Agreement.
(b) 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 AND NUMBER OF EXERCISE SHARES.
5.1 Changes
in Securities.
In the
event of changes in the series of equity securities of the Company comprising
the Exercise Shares by reason of stock dividends, splits, recapitalizations,
reclassifications, combinations or exchanges of shares, separations,
reorganizations, liquidations, or the like, the number and class of Exercise
Shares available under the Warrant in the aggregate and the Exercise Price
shall
be correspondingly adjusted to give the Holder of the Warrant, 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 been exercised prior to the
event
and had the Holder continued to hold such shares until after the event requiring
adjustment; provided, however, that such adjustment shall not be made with
respect to the events set forth in Section 7 below. For purposes of this
Section 5 and Section 7, the “Aggregate
Exercise Price”
shall
mean the aggregate Exercise Price payable in connection with the exercise in
full of this Warrant. The form of this Warrant need not be changed because
of
any adjustment in the number of Exercise Shares subject to this
Warrant.
5.2 Automatic
Conversion.
Upon the
automatic conversion of all outstanding shares of the series of equity
securities comprising the Exercise Shares, this Warrant shall become exercisable
for that number of shares of Common Stock of the Company into which the Exercise
Shares would then be convertible, so long as such shares, if this Warrant had
been exercised prior to such offering, would have been converted into shares
of
the Company’s Common Stock pursuant to the Company’s Certificate of
Incorporation. In such case, all references to “Exercise Shares” shall mean
shares of the Company’s Common Stock issuable upon exercise of this Warrant, as
appropriate.
4.
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) to be issued upon exercise of this Warrant shall 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 Company 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 one Exercise Share by such fraction.
7. EARLY
TERMINATION. In
the
event of, at any time during the Exercise Period, a Sale of the Corporation
(as
defined in the Company’s Certificate of Incorporation) (a “Liquidity
Event”),
the
Company shall provide to the Holder twenty (20) days advance written notice
of
such Liquidity Event, and this Warrant shall terminate unless exercised at
or
prior to the closing of such Liquidity Event. The Holder shall be permitted
to
make the exercise of this Warrant in connection with a Liquidity Event,
conditional upon the occurrence of such Liquidity Event.
8. 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 Company.
9. TRANSFER
OF WARRANT. Subject
to applicable laws and the restriction on transfer set forth on the first page
of this Warrant and Section 5 of the Purchase Agreement, 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 ▇▇▇▇▇▇.
10. LOST,
STOLEN, MUTILATED OR DESTROYED WARRANT. If
this
Warrant is lost, stolen, mutilated or destroyed, the Company 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 Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.
11. AMENDMENT.
Any term
of this Warrant may be amended or waived with the written consent of the Company
and Holders of at least a majority in interest of the outstanding Warrants
provided that all Warrants are similarly affected. Upon the effectuation of
such
amendment or waiver in conformance
with this Section 11, the Company
shall
promptly give written notice thereof to the record holders of the Warrants
who
have not previously consented thereto in writing.
12. NOTICES,
ETC. All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be notified,
(b) when sent by confirmed telex, electronic mail or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (d) one (1) day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be
sent
to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, attention: ▇▇▇▇▇
▇.
▇▇▇▇, with a copy to ▇▇▇▇▇▇ Godward Kronish LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, attention: Christian Plaza,
Esq., fax: (▇▇▇) ▇▇▇-▇▇▇▇, and to Holder at the address(es) set forth on the
Schedule of Purchasers attached to the Purchase Agreement or at such other
address(es) as the Company or Holder may designate by ten (10) days advance
written notice to the other parties hereto.
5.
13. ACCEPTANCE.
Receipt
of this Warrant by the Holder shall constitute acceptance of and agreement
to
all of the terms and conditions contained herein.
14. GOVERNING
LAW. This
Warrant shall be governed by and construed under the laws of the State of New
York as such laws are applied to agreements among New York residents entered
into and performed entirely within the State of New York, without reference
to
the conflict of laws provisions thereof.
6.
IN
WITNESS WHEREOF,
the
Company has caused this Warrant to be executed by its duly authorized officer
as
____________________.
EYETEL
IMAGING, INC.
By:
______________________________________
Name:
___________________________________
Title:
____________________________________
Address:
__________________________________
[SIGNATURE
PAGE]
NOTICE
OF EXERCISE
TO:
EYETEL IMAGING, INC.
(1)
¨ The
undersigned hereby elects to purchase ________ shares of ___________ (the
“Exercise
Shares”)
of
Eyetel Imaging, 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
“Exercise
Shares”)
of
Eyetel Imaging, 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 Exercise Shares in the
name of the undersigned or in such other name as is specified
below:
________________________
(Name)
________________________
________________________
(Address)
(3) In
the event the attached Warrant is exercised in whole or in part through the
payment of any cash consideration (and not, for the avoidance of doubt, entirely
pursuant to the terms of the net exercise provisions set forth in
Section 2.1 of the attached Warrant), the undersigned represents to the
Company as follows:
(a) Investment
Representations and Warranties.
The
undersigned understands that the issuance of the Exercise Shares has not been,
and will not be, registered under the Securities Act.
(b) Acquisition
for Own Account.
The
undersigned is acquiring the Exercise Shares for its own account for investment
and not with a view toward distribution in a manner which would violate the
Securities Act.
(c) Ability
to Protect Its Own Interests and Bear Economic Risks.
The
undersigned, by reason of the business and financial experience of its
management, has the capacity to protect its own interests in connection with
the
making investments of this type and is able to bear the economic risk of an
investment in the Exercise Shares and is able to sustain a loss of all of its
investment in the Exercise Shares without economic hardship if such a loss
should occur.
(d) Accredited
Investor.
The
undersigned is an “accredited investor” as that term is defined in
Regulation D promulgated under the Securities Act.
(e) Access
to Information.
The
undersigned has been given access to all Company documents, records, and other
information, and has had adequate opportunity to ask questions of, and receive
answers from, the Company’s officers, employees, agents, accountants, and
representatives concerning the Company’s business, operations, financial
condition, assets, liabilities, and all other matters relevant to its investment
in the Exercise Shares.
1.
(f) Restricted
Securities.
(i) The
undersigned understands that the Exercise Shares will be charac-terized as
“restricted securities” under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such Exercise Shares may
be
resold without registration under the Securities Act only in certain limited
circumstances.
(ii) The
undersigned acknowledges that the Exercise Shares must be held indefinitely
unless subsequently registered under the Securities Act and under applicable
state securities laws or an exemption from such registration is
available.
(iii) The
undersigned is aware of the provisions of Rule 144 under the Securities Act
which permit limited resale of securities purchased in a private
placement.
(g) No
Public Market.
The
undersigned understands that no public market now exists for any of the
securities issued by the Company, that the Company has made no assurances that
a
public market will ever exist for the Exercise Shares.
(4) TRANSFER
RESTRICTIONS.
The
undersigned understands that the Company may, as a condition to the transfer
of
any of the Exercise Shares, require that the request for transfer be accompanied
by an opinion of counsel reasonably satisfactory to the Company, to the effect
that the proposed transfer does not result in a violation of the Securities
Act,
unless such transfer is covered by an effective registration statement or by
Rule 144 or Rule 144A under the Securities Act; provided,
however,
that an
opinion of counsel shall not be required for a transfer by the undersigned
if
the undersigned is (A) a partnership transferring to its partners or former
partners in accordance with partnership interests, (B) a corporation
transferring to a wholly-owned subsidiary or a parent corporation that owns
all
of the capital stock of the undersigned, (C) a limited liability company
transferring to its members or former members in accordance with their interest
in the limited liability company, or (D) an individual transferring to the
undersigned’s family member or trust for the benefit of the undersigned;
provided,
further,
that
the transferee in each case agrees to be subject to the restrictions in this
paragraph (4).
|
____________________________________
(Date)
|
____________________________________
(Signature)
____________________________________
(Print
name)
|
2.
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:
__________, 20__
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.
3.