Exhibit 2
COMMON STOCK PURCHASE WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME
OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND
APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO.
COMMON STOCK PURCHASE WARRANT
Number of Shares: __________
Shares of Common Stock
LANCER ORTHODONTICS, INC.
1. ISSUANCE. This Warrant is issued to the _______________________________
("Holder") by LANCER ORTHODONTICS, INC., a California corporation
(hereinafter, with its successors, called the "Company").
2. PURCHASE PRICE; NUMBER OF SHARES. The registered Holder of this Warrant
is entitled, upon surrender of this Warrant with the subscription form
annexed hereto duly executed and the exercise price thereof, at the principal
office of the Company, to purchase from the Company ______________ (___,____)
fully paid and nonassessable shares (the "Shares") of Common Stock, zero par
value, of the Company (the "Common Stock"), with an exercise price per share
of $0.85 (the "Purchase Price"). Until such time as this Warrant is exercised
in full or expires, the Purchase Price and the securities issuable upon
exercise of this Warrant are subject to adjustment as hereinafter provided.
The person or persons in whose name or names any certificate representing
Shares of Common Stock is issued hereunder shall be deemed to have become the
holder of record of the Shares represented thereby as at the close of
business on the date that this Warrant is exercised with respect to such
Shares, whether or not the transfer books of the Company shall be closed.
3. PAYMENT OF PURCHASE PRICE; ISSUANCE OF SHARES. The purchase price shall
be paid in cash or by check. Upon the exercise of the rights represented by
this Warrant, certificates for the Shares of Stock so purchased shall be
delivered to the Holder as soon as possible and in any event within thirty
(30) days after such exercise and, unless this Warrant has been fully
exercised or expired, a new Warrant representing the portion of Shares, if
any, with respect to which this Warrant shall not have been exercised shall
also be issued to the Holder as soon as possible and in any event within
thirty (30) days.
4. PARTIAL EXERCISE. This Warrant may be exercised in part, and the Holder
shall be entitled to receive a new warrant, which shall be dated as of the
date of this Warrant, covering the number of shares in respect of which this
Warrant shall not have been exercised.
5. FRACTIONAL SHARES. In no event shall any fractional share of Common
Stock or Common Stock be issued upon any exercise of this Warrant. If, upon
exercise of this Warrant in its entirety, the Holder would, except as
provided in this Section 5, be entitled to receive a fractional share of
Common Stock or Common Stock, then the Company shall pay the Holder
cash equal to the fraction of such share multiplied by the Purchase Price
per share.
6. EXPIRATION DATE; AUTOMATIC EXERCISE. This Warrant shall expire at 5:00
p.m., Pacific Standard Time, on ________, 2009, and shall be void thereafter.
7. RESERVED SHARES; VALID ISSUANCE. The Company covenants that it will at
all times from and after the date hereof reserve and keep available such
number of its authorized shares of Common Stock, no par value, of the
Company, free from all preemptive or similar rights therein, as will be
sufficient to permit the exercise of this Warrant in full. The Company
further covenants that such shares as may be issued pursuant to such
exercise and/or conversion will, upon issuance, be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof.
8. STOCK SPLITS AND DIVIDENDS. If after the date hereof the Company shall
subdivide the Common Stock, by stock split or otherwise or combine the
Common Stock, or issue additional shares of Common Stock in payment of a
stock dividend on the Common Stock, the number of shares of Common Stock
issuable on the exercise of this Warrant shall forthwith be proportionately
increased in the case of a stock split or stock dividend, or proportionately
decreased in the case of a combination, and the Purchase Price shall
forthwith be proportionately decreased in the case of stock split or stock
dividend, or proportionately increased in the case of a combination.
9. MERGERS AND RECLASSIFICATIONS. If after the date hereof the Company
shall enter into any Reorganization (as hereinafter defined), then, as a
condition of such Reorganization, lawful provisions shall be made, and duly
executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall thereafter have
the right to purchase, at a total price not to exceed that payable upon the
exercise of the then-unexercised portion of this Warrant, the kind and amount
of shares of stock and other securities and property receivable upon such
Reorganization by a holder of the number of shares of Common Stock which
might have been purchased by the Holder immediately prior to such
Reorganization upon the exercise of the unexercised portion of this Warrant,
and in any case appropriate provisions shall be made with respect to the
rights and interest of the Holder to the end that the provisions hereof
(including without limitation, provisions for the adjustment of the Purchase
Price and the number of shares issuable hereunder and the provisions relating
to the net issue election) shall thereafter be applicable in relation to any
shares of stock or other securities and property thereafter deliverable upon
exercise hereof. For the purposes of this Section 9, the term
"Reorganization" shall mean any reclassification or capital reorganization
(other than as a result of a subdivision, combination or stock dividend
provided for in Section 8 hereof), or any consolidation of the Company with,
or merger of the Company into, another corporation or other business
organization (other than a merger or consolidation in which the Company is
the surviving corporation or which does not result in any reclassification or
change of the outstanding Common Stock, or pursuant to which less than 50% of
the voting power of the Company is transferred to persons who were not
stockholders of the Company prior to the transaction), or any sale or
conveyance to another corporation or other business organization of all or
substantially all of the assets of the Company.
10. CERTIFICATE OF ADJUSTMENT. Whenever the Purchase Price or the number
of Shares purchasable hereunder is adjusted, as herein provided, the Company
shall promptly deliver to the Holder a certificate of the Company's chief
executive officer setting forth the purchase price and number of shares
after such adjustment and setting forth a brief statement of the facts
requiring such adjustment.
11. NOTICES OF RECORD DATE, ETC. In the event of:
(a) any reclassification of the capital stock of the Company, capital
reorganization of the Company, consolidation or merger involving the Company,
or sale or conveyance of all or substantially all of its assets; or
(b) any voluntary or involuntary dissolution, liquidation or winding-up of
the Company;
then, in each such event, the Company will provide or cause to be provided
to the Holder a written notice thereof at the time such notice is provided
to the holders of the Company's Common Stock.
12. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE COMPANY. This
Warrant is issued and delivered by the Company and accepted by Holder on the
basis of the following representations, warranties and covenants made by the
Company:
A. The Company has all necessary authority to issue, execute and deliver
this Warrant and to perform its obligations hereunder. This Warrant has been
duly authorized, issued, executed and delivered by the Company and is the
valid and binding obligation of the Company, enforceable in accordance with
its terms, subject to laws of general application related to bankruptcy,
insolvency and the relief of debtors and other laws of general application
affecting enforcement of creditors' rights generally, rules of law governing
specific performance, injunctive relief or other equitable remedies.
B. The shares of Common Stock issuable upon the exercise of this Warrant
have been duly authorized and reserved for issuance by the Company and, when
issued in accordance with the terms hereof, will be validly issued, fully
paid and nonassessable.
All representations and warranties of the Company and the Holder hereof
contained herein shall survive the exercise and conversion of this Warrant
(or any part hereof) or the termination or expiration of the rights hereunder.
13. AMENDMENT. The terms of this Warrant may be amended, modified or waived
only with the prior written consent of the Holder and the Company.
14. REPRESENTATIONS AND COVENANTS OF THE HOLDER. This Common Stock
Purchase Warrant has been entered into by the Company in reliance upon the
following representations and covenants of the Holder, which by its execution
hereof the Holder hereby confirms:
A. Investment Purpose. This Warrant and the right to acquire the Common
Stock issuable upon exercise of the Holder's rights contained herein will be
acquired for investment and not with a view to the sale or distribution of
any part thereof, and the Holder has no present intention of selling or
engaging in any public distribution of the same except pursuant to a
registration or exemption.
B. Accredited Investor. Holder is an "accredited investor" within the
meaning of the Securities and Exchange Commission Rule 501 of Regulation D,
as presently in effect.
C. Private Issue. The Holder understands (i) that the Common Stock
issuable upon exercise of the Holder's rights contained herein is not
registered under the 1933 Act or qualified under applicable state securities
laws on the ground that the issuance contemplated by this Warrant will be
exempt from the registration and qualifications requirements thereof, (ii)
that the Company's reliance on such exemption is predicated on the
representations set forth in this Section 14; and (iii) that the shares
issuable upon exercise of this Warrant shall bear a legend substantially
similar to the legend on the first page of this Warrant.
D. Financial Risk. The Holder has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits
and risks of its investment and has the ability to bear the economic risks
of its investment.
15. NOTICES, TRANSFERS, ETC..
A. Any notice or written communication required or permitted to be given to
the Holder may be given by first class mail or delivered to the Holder at the
address most recently provided by the Holder to the Company.
B. This Warrant may not be transferred by the Holder with respect to any or
all of the shares purchasable hereunder without compliance with applicable
federal and state securities laws. Upon surrender of this Warrant to the
Company, together with the assignment notice annexed hereto duly executed,
for transfer of this Warrant as an entirety by the Holder, the Company shall
issue a new warrant of the same denomination to the assignee. Upon surrender
of this Warrant to the Company, together with the assignment hereof properly
endorsed, by the Holder for transfer with respect to a portion of the shares
of Common Stock purchasable hereunder, the Company shall issue a new warrant
to the assignee, in such denomination as shall be requested by the Holder
hereof, and shall issue to such Holder a new warrant covering the number of
shares in respect of which this Warrant shall not have been transferred.
C. In case this Warrant shall be mutilated, lost, stolen or destroyed, the
Company shall issue a new warrant of like tenor and denomination, and deliver
the same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receive of an affidavit of the Holder or other
evidence reasonably satisfactory to the Company of the loss, theft or
destruction of such Warrant and the agreement of Holder to indemnify the
Company with respect to such matter.
16. NO IMPAIRMENT. The Company will not, by amendment of its Articles or
through any reclassification, capital reorganization, consolidation, merger,
sale or conveyance of assets, dissolution, liquidation, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance of 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 action as may be necessary or appropriate in order to
protect the rights of the Holder, provided however, that no issuance of
securities, whether convertible or otherwise, when made in accordance with
the Company's Articles shall be considered an impairment of the Holder's
rights hereunder.
17. GOVERNING LAW. The provisions and terms of this Warrant shall be
governed by and construed in accordance with the internal laws of the State
of California.
18. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the
Holder's successors, legal representatives and permitted assigns.
19. Market Stand-Off Agreement. The Holder of this Warrant, if requested
by the Company or the lead underwriter of any public offering of the Common
Stock or other securities of the Company (the "Lead Underwriter"), hereby
irrevocably agrees not to sell, contract to sell, grant any option to
purchase, transfer the economic risk of ownership in, make any short sale
of, pledge or otherwise transfer or dispose of any interest in any Common
Stock or any securities convertible into or exchangeable or exercisable for
or any other rights to purchase or acquire Common Stock (except Common Stock
included in such public offering or acquired on the public market after such
offering) during the one hundred and eighty (180) day period following the
effective date of a registration statement of the Company filed under the
Securities Act of 1933, as amended, or such shorter period of time as the
Lead Underwriter shall specify. The Grantee further agrees to sign such
documents as may be requested by the Lead Underwriter to further effect the
foregoing and agrees that the Company may impose stop-transfer instructions
with respect to such Common Stock subject until the end of such period. The
Company and the Grantee acknowledge that each Lead Underwriter of a public
offering of the Company's stock, during the period of such offering and for
the one hundred and eighty (180) day period thereafter, is an intended
beneficiary of this Section 19.
LANCER ORTHODONTICS, INC.
By ___________________________
Name Printed: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman
Dated: ________________, 2004
ANNEX A
EXERCISE NOTICE
To: LANCER ORTHODONTICS, INC.
Date: _________________
The undersigned hereby elects to exercise the attached Warrant as to shares
of Common Stock covered by this Warrant and hereby tenders the exercise price
for such shares, together with applicable transfer taxes, if any. The
certificate(s) for such shares shall be issued in the name of the undersigned.
The undersigned agrees not to sell or otherwise transfer or dispose of any
Common Stock, Preferred Stock, or other securities of the Company held by the
undersigned during a period of time determined by the Company and its
underwriters (not to exceed 180 days) following the effective date of the
registration statement of the Company filed under the 1933 Act with respect
to the Company's initial public offering. The undersigned further agrees to
execute any standard lock-up agreement that the underwriters require in
connection with such offering. The Company may impose stop-transfer
instructions with respect to the Common Stock, Preferred Stock, or other
securities subject to the foregoing restriction until the end of said period.
In exercising its rights hereby, the undersigned hereby confirms the
representations and statements made in Section 16 of the Warrant with respect
to the shares being acquired upon exercise hereof.
Name of Holder: _______________________________
Signature of Holder: __________________________
Name for Registration: ________________________
Mailing Address: ______________________________
______________________________
______________________________
ANNEX B
ASSIGNMENT
For value received, ______________________________ hereby sells, assigns and
transfers unto
[Please print or typewrite name and address of Assignee] the within Warrant,
and does hereby irrevocably constitute and appoint _________ its attorney to
transfer the within Warrant on the books of the within named Company with
full power of substitution on the premises.
Dated: __________________________________
Name of Holder: _________________________
By: ______________________________________
Name Printed: ____________________________
Title: ___________________________________
In the presence of:
__________________________________________