THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE
TRANSFERRED UNLESS (1) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR SUCH APPLICABLE SECURITIES LAWS, OR (II) IN THE OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY REGISTRATION UNDER THE SECURITIES
ACT OR SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH
SUCH TRANSFER.
SMART CHOICE AUTOMOTIVE GROUP, INC.
Common Stock Purchase Warrant
------------
FOR VALUE RECEIVED, Smart Choice Automotive Group, Inc., a Florida corporation
(the "Company"), hereby certifies that ___________________, a ________
corporation or a permitted assign thereof, is entitled to purchase from the
Company, at any time or from time to time commencing August 29, 1997 and prior
to 5:00 P.M., New York City time, on August 29, 2002, up to __________ (_____)
fully paid and nonassessable shares of the common stock, of the Company for an
aggregate purchase price of _________ (computed on the basis of $7.00 per
share). (Hereinafter, (i) said common stock, together with any other equity
securities which may be issued by the Company with respect thereto or in
substitution therefor, is referred to as the "Common Stock," (ii) the shares of
the Common Stock purchasable hereunder or under any other Warrant (as
hereinafter defined) are referred to as the "Warrant Shares," the aggregate
purchase price payable hereunder for the Warrant Shares is referred to as the
"Aggregate Warrant Price," (iv) the price payable hereunder for each of the
Warrant Shares is referred to as the "Per Share Warrant Price," (v) this
Warrant, all identical warrants issued on the date hereof and all warrants
hereafter issued in exchange or substitution for this Warrant or such other
warrants are referred to as the "Warrants" and (vi) the holder of this Warrant
is referred to as the "Holder" and the holder of this Warrant and all other
Warrants are referred to as the "Holders"). The Aggregate Warrant Price is not
subject to adjustment. The Per Share Warrant Price is subject to adjustment as
hereinafter provided; in the event of any such adjustment, the number of Warrant
Shares shall be adjusted by dividing the Aggregate Warrant Price by the Per
Share Warrant Price in effect immediately after such adjustment.
1. Exercise of Warrant.
a) Exercise for Cash
This Warrant may be exercised, in whole at any time or in part from
time to time, commencing August 29, 1997 and prior to 5:00 P.M., New
York City time, on August 29, 2002 (the "Exercise Period"), by the
Holder by the surrender of this Warrant (with the subscription form at
the end hereof duly executed) at the address set forth in Subsection
9(a) hereof, together with proper payment of the Aggregate Warrant
Price, or the proportionate part thereof if this Warrant is exercised
in part (the "Warrant Exercise Price") and any applicable stock
transfer taxes, if any. After expiration of the Exercise Period, the
Holder shall have no right to purchase any shares of common stock
underlying this Warrant. Payment for Warrant Shares shall be made by
certified or official bank check payable to the order of the Company.
If this Warrant is exercised in part, this Warrant must be exercised
for a number of whole shares of the Common Stock, and the Holder is
entitled to receive a new Warrant Covering the Warrant Shares which
have not been exercised and setting forth the proportionate part of the
Aggregate Warrant Price applicable to such Warrant Shares. Upon such
surrender of this Warrant the Company will (a) issue a certificate or
certificates in the name of the Holder for the largest number of whole
shares of the Common Stock to which the Holder shall be entitled and,
if this Warrant is exercised in whole, in lieu of any fractional share
of the Common Stock to which the Holder shall be entitled, pay to the
Holder cash in an amount equal to the fair value of such fractional
share (determined in such reasonable manner as the Board of Directors
of the Company or a committee thereof shall determine), and (b) deliver
the other securities and properties receivable upon the exercise of
this Warrant, or the proportionate part thereof if this Warrant is
exercised in part, pursuant to the provisions of this Warrant. This
Warrant accordingly shall be deemed to have been exercised in whole or
in part to the extent specified, immediately prior to the close of
business on the date this Warrant is surrendered and payment is made in
accordance with the foregoing provisions of this paragraph, and the
Holder shall become the holder of record of such shares of Common Stock
at that time and date.
b) Cashless Exercise
In lieu of exercising this Warrant in the manner set forth in paragraph
l(a) above, the Warrant may be exercised by surrender of the Warrant
without payment of any other consideration, commission or remuneration,
by execution of the cashless exercise subscription form (at the end
hereof, duly executed). The number of shares to be issued in exchange
for the Warrant will be computed by subtracting the Warrant Exercise
Price from the average closing bid price of the common stock for the
five trading days immediately preceding on the date of receipt of the
cashless exercise subscription form, multiplying that amount by the
number of shares represented by the Warrant, and dividing by the
closing bid price as of the same date.
2. Reservation of Warrant Shares, Listing.
The Company agrees that, prior to the expiration of this Warrant, the
Company will at all times have authorized and in reserve, and will keep
available, solely for issuance or delivery upon the exercise of this
Warrant, the shares of the Common Stock and other securities and properties
as from time to time shall be receivable upon the exercise of this Warrant,
free and clear of all restrictions on sale or transfer (except for
applicable state or federal securities law restrictions) and free and clear
of all pre-emptive rights.
3. Protection Against Dilution.
a) If, at any time or from time to time after the date of this
Warrant, the Company shall issue or distribute (for no
consideration) to the holders of shares of Common Stock evidences
of its indebtedness, any other securities of the Company or any
cash, property or other assets (excluding a subdivision,
combination or reclassification, or dividend or distribution
payable in shares of Common Stock, referred to in Subsection
3(b), and also excluding cash dividends or cash distributions
paid out of net profits legally available therefor if the full
amount thereof, together with the value of other dividends and
distributions made substantially concurrently therewith or
pursuant to a plan which includes payment thereof, is equivalent
to not more than 5% of the Company's net worth) (any such
nonexcluded event being herein called a "Special Dividend"), the
Per Share Warrant Price shall be adjusted by multiplying the Per
Share Warrant Price then in effect by a fraction, the numerator
of which shall be the then current market price of the Common
Stock (defined as the average for the thirty consecutive business
days immediately prior to the record date of the daily closing
price of the Common Stock as reported by the NASDAQ system) less
the fair market value (as determined by the Company's Board of
Directors) of the evidences of indebtedness, securities or
property, or other assets issued or distributed in such Special
Dividend applicable to one share of Common Stock and the
denominator of which shall be such then current market price per
share of Common Stock. An adjustment made pursuant to this
Subsection 3(a) shall become effective immediately after the
record date of any such Special Dividend.
b) In case the Company shall hereafter (i) pay a dividend or make a
distribution on its capital stock in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a greater
number of shares, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares or (iv) issue by
reclassification of its Common Stock any shares of capital stock
of the Company, the Per Share Warrant Price shall be adjusted so
that the Holder of any Warrant upon the exercise hereof shall be
entitled to receive the number of shares of Common Stock or other
capital stock of the Company which he would have owned
immediately prior thereto. An adjustment made pursuant to this
Subsection 3(b) shall become effective immediately after the
record date in the case of a dividend or distribution and shall
become effective immediately after the effective date in the case
of a subdivision, combination or reclassification. If, as a
result of an adjustment made pursuant to this Subsection 3(b),
the Holder of any Warrant thereafter surrendered for exercise
shall become entitled to receive shares of two or more classes of
capital stock or shares of Common Stock and other capital stock
of the Company, the Board of Directors (whose determination shall
be conclusive and shall be described in a written notice to the
Holder of any Warrant promptly after such adjustment) shall
determine the allocation of the adjusted Per Share Warrant Price
between or among shares of such classes or capital stock or
shares of Common Stock and other capital stock.
c) Except as provided in Subsection 3(e), in case the Company shall
hereafter issue or sell any shares of Common Stock for a
consideration per share less than the Per Share Warrant Price on
the date of such issuance or sale, the Per Share Warrant Price
shall be adjusted as of the date of such issuance or sale so that
the same shall equal the consideration per share received by the
Company upon such issuance or sale; provided, however, that no
adjustment of the Per Share Warrant Price shall be required in
connection with the issuance of shares upon the exercise of: (i)
the conversion rights under the Convertible Notes in an aggregate
principal amount not to exceed $2,000,000 issued to HCF, ▇▇▇▇ ▇.
▇▇▇▇ and certain other purchasers pursuant to a term sheet dated
August 29, 1997 ("Term Sheet"); (ii) any warrants issued to HCF
or its designees or assigns pursuant to the Term Sheet; and (iii)
any other presently outstanding warrants or options.
d) In case of any capital reorganization or reclassification, or any
consolidation or merger to which the Company is a party other
than a merger or consolidation in which the Company is the
continuing corporation, or in case of any sale or conveyance to
another entity of the property of the Company as an entirety or
substantially as an entirety, or in the case of any statutory
exchange of securities with another corporation (including any
exchange effected in connection with a merger of a third
corporation into the Company), the Holder of this Warrant shall
have the right thereafter to convert such Warrant into the kind
and amount of securities, cash or other property which he would
have owned or have been entitled to receive immediately after
such reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance had this Warrant been
converted immediately prior to the effective date of such
reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance and in any such case, if
necessary, appropriate adjustment shall be made in the
application of the provisions set forth in this Section 3 with
respect to the rights and interests thereafter of the Holder of
this Warrant to the end that the provisions set forth in this
Section 3 shall thereafter correspondingly be made applicable, as
nearly as may reasonably be, in relation to any shares of stock
or other securities or be, in relation to any shares of stock or
other securities or property thereafter deliverable on the
conversion of this Warrant. The above provisions of this
Subsection 3(e) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers,
statutory exchanges, sales or conveyances. The issuer of any
shares of stock or other securities or property thereafter
deliverable on the conversion of this Warrant shall be
responsible for all of the agreements and obligations of the
Company hereunder. Notice of any such reorganization,
reclassification, consolidation, merger, statutory exchange, sale
or conveyance and of said provisions so proposed to be made,
shall be mailed to the Holders of the Warrants not less than 10
days prior to such event. A sale of all or substantially all of
the assets of the Company for a consideration consisting
primarily of securities shall be deemed a consolidation or merger
for the foregoing purposes.
e) No adjustment in the Per Share Warrant Price shall be required
unless such adjustment would require an increase or decrease of
at least $0.10 per share of Common Stock; provided, however, that
any adjustments which by reason of this Subsection 3(f) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment; provided further, however,
that adjustments shall be required and made in accordance with
the provisions of this Section 3 (other than this Subsection
3(f)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the Holder of
this Warrant or Common Stock issuable upon exercise hereof. All
calculations under this Section 3 shall be made to the nearest
cent. Anything in this Section 3 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Per
Share Warrant Price, in addition to those required by this
Section 3, as it in its discretion shall deem to be advisable in
order that any stock dividend, subdivision of shares or
distribution of rights to purchase stock or securities
convertible or exchangeable for stock hereafter made by the
Company to its shareholders shall not be taxable.
f) Whenever the Per Share Warrant Price is adjusted as provided in
this Section 3 and upon any modification of the rights of a
Holder of Warrants in accordance with this Section 3, the Company
shall promptly obtain, certificate of the Company's Chief
Financial Officer setting forth the Per Share Warrant Price and
the number of Warrant Shares after such adjustment or the effect
of such modification, a brief statement of the facts requiring
such adjustment or modification and the manner of computing the
same and cause copies of such certificate to be mailed to the
Holders of the Warrants.
g) If the Board of Directors of the Company shall declare any
dividend or other distribution with respect to the Common Stock,
other than a cash distribution out of earned surplus, the Company
shall mail notice thereof to the Holders of the Warrants not less
than 10 days prior to the record date fixed for determining
shareholders entitled to participate in such dividend or other
distribution.
4. Fully Paid Stock, Taxes.
The Company agrees that the shares of the Common Stock represented by each
and every certificate for Warrant Shares delivered on the exercise of this
Warrant shall, at the time of such delivery, be validly issued and
outstanding, fully paid and nonassessable, and not subject to pre-emptive
rights, and the Company will take all such actions as may be necessary to
assure that the par value or stated value, if any, per share of the Common
Stock is at all times equal to or less than the then Per Share Warrant
Price. The Company further covenants and agrees that it will pay, when due
and payable, any and all Federal and state stamp, original issue or similar
taxes which may be payable in respect of the issue of any Warrant Share or
certificate therefor, except transfer taxes, if any, which shall be payable
by Holder or its transferee.
5. Registration Under Securities Act of 1933.
a) The Company agrees to include the shares of Common Stock underlying the
Warrant in any registration statement required to be filed under that
certain Convertible Note issued to HCF by the Company on the date
hereof.
b) The Company agrees that if, at any time and from time to time during
the period commencing on September 1, 1997 and ending on January 31,
2002, the Board of Directors of the Company shall authorize the filing
of a registration statement or a post-effective amendment to a
registration statement (any such registration statement being
hereinafter called a "Subsequent Registration Statement") under the Act
other than a registration statement on Form ▇-▇, ▇▇▇▇ ▇-▇ or other form
which does not include substantially the same information as would be
required in a form for the general registration of securities) in
connection with the proposed offer of any of its securities by it or
any of its shareholders, subject to the holder providing such
information and customary indemnitees as reasonably requested by the
Company or its underwriters, the Company will (i) promptly notify the
Holder and each of the Holders, if any, of other Warrants and/or
Warrant Shares that such Subsequent Registration Statement will be
filed and that the Company will use its best efforts to cause the
Warrant Shares which are then held, and/or which may be acquired upon
the exercise of the Warrants, by the Holder and such Holders, at the
Holder's and such Holders' request, to be included in such Subsequent
Registration Statement, (ii) use its best efforts to cause to be
included in the securities covered by such Subsequent Registration
Statement all Warrant Shares which it has been so requested to include,
(iii) use its best efforts to cause such Subsequent Registration
Statement to become effective as soon as practicable and (iv) take all
other action necessary under any Federal or state law or regulation of
any governmental authority to permit all Warrant Shares which it has
been so requested to include in such Subsequent Registration Statement
or to be sold or otherwise disposed of, and will maintain such
compliance with each such Federal and state law and regulation of any
governmental authority for the period necessary for the Holder and such
Holders to effect the proposed sale or other disposition; provided
however, that (i) the Holders shall be entitled to only two
registrations under this section 5(b); and (ii) the Holder agrees to
sell Warrant Shares in the same manner and on the same terms and
conditions as the other Common Stock which the Company proposes to
register, including any "lock-up" agreements required of other selling
shareholders of the Company, and (iii) if the registration is to
include Common Stock to be sold for the account of the Company, the
proposed managing underwriter does not advise the Company that in its
opinion the inclusion of a portion or all of the Holder's Warrant
Shares is likely to affect adversely the success of the offering by the
Company or the price it would receive; if, however, such underwriter
does so opine then the distribution of all or a specified portion of
the Warrant Shares shall be excluded from such registration; in such
event, the Company shall give the Holder prompt notice of the number of
shares of Warrant Shares excluded from such registration at the request
of the managing underwriter and no such exclusion shall reduce the
securities being offered by the Company for its own account in such
registration statement.
c) Whenever the Company is required pursuant to the provisions of
this Section 5 to include Warrant Shares in a registration statement
or a post-effective amendment to a registration statement, the
Company shall (i) furnish each Holder of any such Warrant Shares
and each underwriter of such Warrant Shares with such copies of the
prospectus, including the preliminary prospectus, conforming to
the Act, (and such other documents as each such Holder or each such
underwriter may reasonably request) in order to facilitate the sale
or distribution of the Warrant Shares, (ii) use its best efforts to
register or qualify such Warrant Shares under the blue sky laws
(to the extent applicable)of such jurisdiction or jurisdictions as the
Holders of any such Warrant Shares and each underwriter of Warrant
Shares being sold by such Holders shall reasonably request and
(iii) take such other actions as may be reasonably necessary or
advisable to enable such Holders and such underwriters to
consummate the sale or distribution in such jurisdiction or
jurisdictions in which such Holders shall have reasonably requested
that the Warrant Shares be sold.
d) The Company shall pay all expenses incurred in connection with any
registration or other action pursuant to the provisions of this Section
5; provided that, the Company shall not be liable for underwriting
discounts or commissions, applicable transfer taxes relating to the
Warrant Shares, or the fees and expenses of counsel for any holder,
provided that the Company will pay costs of Company counsel when
Company counsel is representing any or all of the selling shareholders.
e) The Company will indemnify the Holders of Warrant Shares which are
included in each Subsequent Registration Statement substantially to the
same extent as the Company has indemnified the underwriters (the
"Underwriters") of its public offering of Common Stock pursuant to the
Underwriting Agreement and such Holders will indemnify the Company (and
the underwriters, if applicable) with respect to information furnished
by them in writing to the Company for inclusion therein substantially
to the same extent as the Underwriters have indemnified the Company.
6. Transferability.
The Company may treat the registered Holder of this Warrant as he or it
appears on the Company's books at any time as the Holder for all purposes.
The Company shall permit any Holder of a Warrant or his duly authorized
attorney, upon written request during ordinary business hours, to inspect
and copy or make extracts from its books showing the registered holders of
Warrants. All warrants issued upon the transfer or assignment of this
Warrant will be dated the same date as this Warrant, and all rights of the
Holder thereof shall be identical to those of the Holder.
The Warrant may be transferred or assigned by Purchaser, in whole in part,
subject to compliance with applicable federal and state securities laws;
provided that any transferee or assignee of the Warrant shall be an
"accredited investor" as defined in Regulation D and such transfer or
assignment is made expressly subject to the terms and provisions of this
Warrant.
7. Loss, etc., of Warrant.
Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and of indemnity reasonably
satisfactory to the Company, if lost, stolen or destroyed, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver to the Holder a new Warrant of like date, tenor and
denomination.
8. Warrant Holder Not Shareholders.
Except as otherwise provided herein, this Warrant does not confer upon the
Holder any right to vote or to consent to or receive notice as a
shareholder of the Company, as such, in respect of any matters whatsoever,
or any other rights or liabilities as a shareholder, prior to the exercise
hereof
9. Communication.
No notice or other communication under this Warrant shall be effective
unless, but any notice or other communication shall be effective and shall
be deemed to have been given if, the same is in writing and is mailed by
first-class mail, postage prepaid, addressed to:
If to the Company:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇,Executive Vice President & Chief Financial Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to HCF:
High Capital Funding, LLC
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
10. Accredited Investor Status.
The Holder represents and warrants to the Company that he is an
"accredited investor", as that term is defined in Rule 501 of the
Securities Act of 1933, as amended.
11. Headings.
The headings of this Warrant have been inserted as a matter of convenience
and shall not affect the construction hereof.
12. Applicable Law.
This Warrant shall be governed by and construed in accordance with the law
of the State of Florida without giving effect to the principles of
conflicts of law thereof.
IN WITNESS WHEREOF, Smart Choice Automotive Group, Inc. has caused this Warrant
to be signed this day of 29th day of August, 1997.
SMART CHOICE AUTOMOTIVE GROUP, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
By: ▇▇▇▇ ▇. ▇▇▇▇▇, President
Attest:
Secretary
SUBSCRIPTION
The undersigned, _____________________, pursuant to the provisions of the
foregoing Warrant, hereby agrees to subscribe for and purchase shares of the
Common Stock of Smart Choice Automotive Group, Inc. covered by said Warrant, and
makes payment therefor in full at the price per share provided by said Warrant.
Dated:______________________ Signature: ____________________________
Address: ___________________
ASSIGNMENT
FOR VALUE RECEIVED___________________ hereby sells, assigns and transfers unto
____________ the foregoing Warrant and all rights evidenced thereby, and does
irrevocably constitute and appoint _______________________, attorney, to
transfer said Warrant on the books of Smart Choice Automotive Group, Inc.
Dated:______________________ Signature: ____________________________
Address: ___________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED ____________________hereby assigns and transfers unto
____________________ the right to purchase ______________ shares of the Common
Stock of ________________ by the foregoing Warrant, and a proportionate part of
said Warrant and the rights evidenced hereby, and does irrevocably constitute
and appoint ____________________, attorney, to transfer that part of said
Warrant on the books of Smart Choice Automotive Group, Inc.
Dated:______________________ Signature: ____________________________
Address: ___________________
CASHLESS EXERCISE SUBSCRIPTION
The undersigned _______________________ pursuant to the provisions of the
foregoing Warrant, hereby agrees to subscribe to that number of shares of
stock of Smart Choice Automotive Group, Inc. as are issuable in accordance
with the formula set forth in paragraph l(b) of the Warrant, and makes
payment therefore in full by surrender and delivery of this Warrant.
Dated:______________________ Signature: ____________________________
Address: ___________________
