Form Of Warrant
Exhibit
4.5
Form
Of
Warrant
THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”),
OR
ANY OTHER SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION
STATEMENT COVERING SUCH SECURITIES UNDER THE SECURITIES ACT AND ANY OTHER
APPLICABLE SECURITIES LAWS OR (2) AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT
to
purchase shares of
Common
Stock
March
,
2007
This
WARRANT (this “Warrant”)
of
Passport Restaurants, Inc., a corporation duly organized and validly existing
under the laws of the State of Texas (the “Company”),
is
being issued inn connection with the amendment of Company’s Convertible
Promissory Note for $1,750,000 in favor of Absolute Return Fund.
FOR
VALUE
RECEIVED, the Company hereby grants to ABSOLUTE
RETURN FUND
and its
permitted successors and assigns (collectively, the “Holder”)
the
right to purchase from the Company up to ________________ shares of the
Company’s Common Stock (such shares underlying this Warrant, the “Warrant
Shares,”
with
such number of Warrant Shares not being affected by or otherwise adjusted to
reflect the Company’s planned reverse stock split or any other event effected
prior to the consummation of a Qualified Offering), at a per share purchase
price equal to the Applicable Exercise Price, subject to the terms, conditions
and adjustments set forth below in this Warrant. If the Company completes a
public offering of its equity securities resulting in gross proceeds to the
Company of at least $5.0 million (a “Qualified
Offering”)
prior
to December 31, 2007, then the Applicable Exercise Price will equal 50% of
the
public offering price in the Qualified Offering. If the Qualified Offering
is
not completed prior to December 31, 2007, then the Applicable Exercise Price
will equal the lower of $3.00 per share and the average closing price of the
Company’s Common Stock during the last 20 trading days immediately prior to
December 31, 2007 as officially reported by the principal securities exchange
on
which the Common Stock is then listed or admitted to trading, or, if the Common
Stock is not listed or admitted to trading on any securities exchange, as
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it. In the event that the Qualified
Offering consists of units (comprised of a share of common stock and a warrant)
5% of the price of such units shall be attributable to the warrants included
in
such units.
2
1 Expiration
of Warrant.
This
Warrant shall expire on December 31, 2009 (the “Expiration
Date”).
2 Exercise
of Warrant. This Warrant shall be exercisable pursuant to the terms of this
Section 2.
2.1 Manner
of Exercise.
(a) This
Warrant may only be exercised by the Holder hereof on or prior to the Expiration
Date, in accordance with the terms and conditions hereof, in whole or in part
(but not as to fractional shares) with respect to any portion of this Warrant,
during the Company’s normal business hours on any day other than a Saturday or a
Sunday or a day on which commercial banking institutions in New York, New York
are authorized by law to be closed (a “Business
Day”),
by
surrender of this Warrant to the Company at its office maintained pursuant
to
Section 9.2(a) hereof, accompanied by a written exercise notice in the form
attached as Exhibit
A
to this
Warrant (or a reasonable facsimile thereof) duly executed by the Holder,
together with the payment of the aggregate Applicable Exercise Price for the
number of Warrant Shares purchased upon exercise of this Warrant. Upon surrender
of this Warrant, the Company shall cancel this Warrant document and shall,
in
the event of partial exercise, replace it with a new Warrant document in
accordance with Section 2.3
(b) Each
exercise of this Warrant must be accompanied by payment in full of the aggregate
Applicable Exercise Price in cash by check or wire transfer in immediately
available fiends for the number of Warrant Shares being purchased by the Holder
upon such exercise.
(c) As
an
alternative to the method of payment set forth in Section 2(a) and in lieu
of
any cash payment required thereunder, the Warrant Holder shall have the right
at
any time and from time to time during the term of this Warrant to exercise
this
Warrant in whole or in part by surrendering its right to purchase a certain
number of Warrant Shares hereunder (the right to purchase a Warrant Share
hereunder being called herein a “Share
Purchase Right”)
as
payment of the Aggregate Exercise Price due upon such exercise (a “Cashless
Exercise”).
A
Cashless Exercise may be effected pursuant to this Section 2(c) by surrender
of
this Warrant with a duly executed notice of exercise in the form of Annex A
hereto. The number of Share Purchase Rights to be surrendered in payment of
the
Aggregate Exercise Price of any Cashless Exercise hereunder shall be determined
by dividing the Aggregate Exercise Price by an amount equal to the excess of
(i)
the Market Price per share of Common Stock on the date of such exercise (based
on the closing price on the day price to exercise) over (ii) the Exercise Price
per Share.
2.2 When
Exercise Effective.
Each
exercise of this Warrant shall be deemed to have been effected immediately
prior
to the close of business on the Business Day on which this Warrant shall have
been duly surrendered to the Company as provided in Sections 2.1 and 11 hereof,
and, at such time, the Holder in whose name any certificate or certificates
for
Warrant Shares shall be issuable upon exercise as provided in Section 2.3 hereof
shall be deemed to have become the holder or holders of record thereof of the
number of Warrant Shares purchased upon exercise of this Warrant.
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2.3 Delivery
of Common Stock Certificates and New Warrant. As soon as reasonably
practicable after each exercise of this Warrant, in whole or in part, and in
any
event within five (5) Business Days thereafter, the Company, at its expense
(including the payment by it of any applicable issue taxes), will cause to
be
issued in the name of and delivered to the Holder hereof or, subject to Sections
8 and 9 hereof; as the Holder (upon payment by the Holder of any applicable
transfer taxes) may direct:
(a) a
certificate or certificates (with appropriate restrictive legends, as
applicable) for the number of duly authorized, validly issued, fully paid and
nonassessable Warrant Shares to which the Holder shall be entitled upon
exercise; and
(b) in
case
exercise is in part only, a new Warrant document of like tenor, dated the date
hereof for the remaining number of Warrant Shares issuable upon exercise of
this
Warrant after giving effect to the partial exercise of this Warrant (including
the delivery of any Warrant Shares as payment of the Applicable Exercise Price
for such partial exercise of this Warrant).
3 Certain
Adjustments.
For so
long as this Warrant is outstanding:
3.1 Mergers
or Consolidations.
If at
any time after the Applicable Exercise Price is determined, there shall be
a
capital reorganization (other than a combination or subdivision of Common Stock
otherwise provided for herein) resulting in a reclassification to or change
in
the terms of securities issuable upon exercise of this Warrant (a “Reorganization”),
or a
merger or consolidation of the Company with another corporation, association,
partnership, organization, business, individual, government or political
subdivision thereof or a governmental agency (a “Person”
or
the
“Persons”)
(other
than a merger with another Person in which the Company is a continuing
corporation and which does not result in any reclassification or change in
the
terms of securities issuable upon exercise of this Warrant or a merger effected
exclusively for the purpose of changing the domicile of the Company) (a
“Merger”),
then,
as a part of such Reorganization or Merger, lawful provision and adjustment
shall be made so that the Holder shall thereafter be entitled to receive, upon
exercise of this Warrant, the number of shares of stock or any other equity
or
debt securities or property receivable upon such Reorganization or Merger by
a
holder of the number of shares of Common Stock which might have been purchased
upon exercise of this Warrant immediately prior to such Reorganization or
Merger. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Warrant with respect to the rights and
interests of the Holder after the Reorganization or Merger to the end that
the
provisions of this Warrant (including adjustment of the Applicable Exercise
Price then in effect and the number of Warrant Shares) shall be applicable
after
that event, as near as reasonably may be, in relation to any shares of stock,
securities, property or other assets thereafter deliverable upon exercise of
this Warrant. The provisions of this Section 3.1 shall similarly apply to
successive Reorganizations and/or Mergers.
3.2 Splits
and Subdivisions; Dividends. In the event after the Applicable Exercise
Price is determined, the Company should at any time or from time to time
effectuate a split or subdivision of the outstanding shares of Common Stock
or
pay a dividend in or make a distribution payable in additional shares of Common
Stock or Common Stock Equivalents without payment of any consideration by such
holder for the additional shares of Common Stock or Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of the applicable record date (or the date of such
distribution, split or subdivision if no record date is fixed), the per share
Applicable Exercise Price shall be appropriately decreased and the number of
Warrant Shares shall be appropriately increased in proportion to such increase
(or potential increase) of outstanding shares; provided,
however,
that no
adjustment shall be made in the event the split, subdivision, dividend or
distribution is not effectuated.
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3.3 Combination
of Shares. If after the Applicable Exercise Price is determined the number
of shares of Common Stock outstanding at any time after the date hereof is
decreased by a combination of the outstanding shares of Common Stock; the per
share Applicable Exercise Price shall be appropriately increased and the number
of shares of Warrant Shares shall be appropriately decreased in proportion
to
such decrease in outstanding shares.
3.4 Adjustments
for Other Distributions. In the event that after the Applicable Exercise
Price is determined, the Company shall declare a distribution payable in
securities of other Persons, evidences of indebtedness issued by the Company
or
other Persons, assets (excluding cash dividends or distributions to the holders
of Common Stock paid out of current or retained earnings and declared by the
Company’s board of directors) or options or rights not referred to in Sections
3.2, 3.3 or 3.4, then, in each such case for the purpose of this Section 3.5,
upon exercise of this Warrant, the Holder shall be entitled to a proportionate
share of any such distribution as though the Holder was the actual record holder
of the number of Warrant Shares as of the record date fixed for the
determination of the holders of Common Stock of the Company entitled to receive
such distribution.
4 No
Impairment.
The
Company will not, by amendment of its articles of incorporation or by-laws
or
through any consolidation, merger, reorganization, transfer of assets,
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 of the
terms and in the taking of all actions necessary or appropriate in order to
protect the rights of the Holder against impairment.
5 Chief
Financial Officer’s Report as to Adjustments. With respect to each
adjustment pursuant to Section 4 of this Warrant, the Company, at its expense,
will promptly compute the adjustment or re-adjustment in accordance with the
terms of this Warrant and cause its Chief Financial Officer to certify the
computation (other than any computation of the fair value of property of the
Company, as the case may be) and prepare a report setting forth, in reasonable
detail, the event requiring the adjustment or re-adjustment and the amount
of
such adjustment or re-adjustment, the method of calculation thereof and the
facts upon which the adjustment or re-adjustment is based, and the Applicable
Exercise Price and the number of Warrant Shares or other securities purchasable
hereunder after giving effect to such adjustment or re-adjustment, which report
shall be mailed by first class mail, postage prepaid to the Holder. The Company
will also keep copies of all reports at its office maintained pursuant to
Section 9.2(a) hereof and will cause them to be available for inspection at
the
office during normal business hours upon reasonable notice by the Holder or
any
prospective purchaser of the Warrant designated by the Holder
thereof.
5
6 Reservation
of Shares. The Company shall, solely for the purpose of effecting the
exercise of this Warrant, at all times during the term of this Warrant, reserve
and keep available out of its authorized shares of Common Stock, free from
all
taxes, liens and charges with respect to the issue thereof and not subject
to
preemptive rights or other similar rights of shareholders of the Company, such
number of its shares of Common Stock as shall from time to time be sufficient
to
effect in full the exercise of this Warrant. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
in full the exercise of this Warrant, in addition to such other remedies as
shall be available to Holder, the Company will promptly take such corporate
action as may, in the opinion of its counsel, be necessary to increase the
number of authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes, including without limitation,
using its commercially reasonable best efforts to obtain the requisite
shareholder approval necessary to increase the number of authorized shares
of
Common Stock. The Company hereby represents and warrants that all shares of
Common Stock issuable upon exercise of this Warrant shall be duly authorized
and, when issued and paid for upon exercise, shall be validly issued, fully
paid
and nonassessable.
7 Registration
and Listing.
7.1 Definition
of Registrable Securities, Majority.
As used
herein, the term “Registrable
Securities”
means
any shares of Common Stock issuable upon the exercise of this Warrant, until
the
date (if any) on which such shares (x) shall have been transferred or exchanged
and new certificates for them not bearing a legend restricting further transfer
shall have been delivered by the Company and subsequent disposition of them
shall not require registration or qualification of them under the Securities
Act
or any similar state law then in force or (y) shall be tradable pursuant to
Rule
144(k) under the Securities Act. For purposes of this Warrant, the term
“Majority”,
in
reference to the holders of Registrable Securities, shall mean in excess of
fifty percent (50%) of the then outstanding Warrant Shares (assuming the
exercise of the entire Warrant) that: (i) are not held by the Company, an
affiliate, officer, creditor, employee or agent thereof or any of their
respective affiliates, members of their family, Persons acting as nominees
or in
conjunction therewith and (ii) have not be resold to the public pursuant to
a
registration statement filed under the Securities Act.
7.2 Required
Registration.
(a) At
any
time on or after the earlier of (1) the filing of the registration statement
pertaining to the Qualified Offering and (2) January 1, 2008, but in no event
on
more than one (1) occasion, upon the written request of the holders of the
Registrable Securities representing a Majority of such Registrable Securities,
the Company will use its Best Efforts to effect the registration of the
respective shares of the holders of Registrable Securities under the Securities
Act to the extent requisite to permit the public disposition thereof as
expeditiously as reasonably possible. If required by holders of a Majority
of
the Registrable Securities this Registration right specifically permits
inclusion in the registration statement pertaining to the Qualified
Offering.
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(b) Registration
of Registrable Securities under this Section 8.2 shall be on such appropriate
registration form: (i) as shall be selected by the Company, and (ii) as shall
permit the public disposition of such Registrable Securities in accordance
with
this Section 7.2. The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities pursuant to this Section
7.2.
(c) A
registration requested pursuant to this Section 7.2 shall not be deemed to
have
been effected: (i) unless a registration statement with respect thereto has
become effective or (ii) it after it has become effective, such registration
is
interfered with by any stop order, injunction or other order or requirement
of
the Securities and Exchange Commission (the “SEC”)
or
other governmental agency or court of competent jurisdiction for any reason,
other than by reason of some act or omission by a holder of Registrable
Securities.
7.3 Incidental
Registration Rights.
(a) If
the
Company, at any time on or after the filing of the registration statement
pertaining to the Qualified Offering and on or before December 31, 2010 proposes
to register any of its securities under the Securities Act (other than in
connection with a registration on Form S-4 or S-8 or any successor forms)
whether for its own account or for the account of any holder or holders of
its
shares other than Registrable Securities (any shares of such holder or holders
(but not those of the Company and not Registrable Securities) with respect
to
any registration are referred to herein as, “Other
Shares”),
the
Company shall each such time give prompt (but not less than thirty (30) days
prior to the anticipated effectiveness thereof) written notice to the holders
of
Registrable Securities of its intention to do so. Upon the written request
of
any such holder of Registrable Securities made within twenty (20) days after
the
receipt of any such notice (which request shall specify the Registrable
Securities intended to be disposed of by such holder), except as set forth
in
Section 7.3(b), the Company will use its Best Efforts to effect the registration
under the Securities Act of all of the Registrable Securities which the Company
has been so requested to register by such holder, to the extent requisite to
permit the disposition of the Registrable Securities so to be registered, by
inclusion of such Registrable Securities in the registration statement which
covers the securities which the Company proposes to register, provided however,
that
if, at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
in its sole discretion either to not register, to delay or to withdraw
registration of such securities, the Company may, at its election, give written
notice of such determination to such holder and, thereupon: (i) in the case
of a
determination not to register, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration (but not from
its obligation to pay the Registration Expenses in connection therewith),
without prejudice, however, to the rights of the holders of Registrable
Securities entitled to request that such registration be effected as a
registration under Section 7.2, (ii) in the case of a determination to delay
registration, shall be permitted to delay registering any Registrable Securities
for the same period as the delay in registering such other securities (including
the Other Shares), without prejudice, however, to the rights of the holders
of
Registrable Securities entitled to request that such registration be effected
as
a registration under Section 7.2 and (iii) in the case of a determination to
withdraw registration, shall be permitted to withdraw registration, without
prejudice, however, to the rights of the holders of Registrable Securities
entitled to request that such registration be effected as a registration under
Section 7.2. No registration effected under this Section 7.3 shall relieve
the
Company of its obligation to effect any registration upon request under Section
7.2, nor shall any such registration hereunder be deemed to have been effected
pursuant to Section 7.2. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities pursuant to this
Section 7.3.
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(b) If
the
Company at any time proposes to register any of its securities under the
Securities Act as contemplated by this Section 7.3 and such securities are
to be
distributed by or through one or more underwriters, the Company will, if
requested by a holder of Registrable Securities, use its Best Efforts to arrange
for such underwriters to include all the Registrable Securities to be offered
and sold by such holder among the securities to be distributed by such
underwriters, provided
that if
the managing underwriter of such underwritten offering shall inform the Company
by letter of its belief that inclusion in such distribution of all or a
specified number of such securities proposed to be distributed by such
underwriters would interfere with the successful marketing of the securities
being distributed by such underwriters (such letter to state the basis of such
belief and the approximate number of such Registrable Securities, such Other
Shares and shares held by the Company proposed so to be registered which may
be
distributed without such effect), then the Company may, upon written notice
to
such holder, the other holders of Registrable Securities, and holders of such
Other Shares, reduce pro rata in accordance with the number of shares of Common
Stock desired to be included in such registration (if and to the extent stated
by such managing underwriter to be necessary to eliminate such effect) the
number of such Registrable Securities and Other Shares the registration of
which
shall have been requested by each holder thereof so that the resulting aggregate
number of such Registrable Securities and Other Shares so included in such
registration, together with the number of securities to be included in such
registration for the account of the Company, shall be equal to the number of
shares stated in such managing underwriter’s letter.
7.4 Registration
Procedures.
Whenever the holders of Registrable Securities have properly requested that
any
Registrable Securities be registered pursuant to the terms of this Warrant,
the
Company shall use its Best Efforts to effect the registration and the sale
of
such Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Company shall as expeditiously
as
possible:
(a) prepare
and file with the SEC a registration statement with respect to such Registrable
Securities and use its Best Efforts to cause such registration statement to
become effective;
(b) notify
such holders of the effectiveness of each registration statement filed hereunder
and prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be
necessary to (i) keep such registration statement effective and the prospectus
included therein usable for a period commencing on the date that such
registration statement is initially declared effective by the SEC and ending
on
the date when all Registrable Securities covered by such registration statement
have been sold pursuant to the registration statement or cease to be Registrable
Securities, and (ii) comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration
statement;
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(c) furnish
to such holders such number of copies of such registration statement, each
amendment and supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents
as
such seller may reasonably request in order to facilitate the disposition of
the
Registrable Securities owned by such holders;
(d) use
its
Best Efforts to register or qualify such Registrable Securities under such
other
securities or blue sky laws of such jurisdictions as such holders reasonably
request and do any and all other acts and things which may be reasonably
necessary or advisable to enable such holders to consummate the disposition
in
such jurisdictions of the Registrable Securities owned by such holders;
provided,
however,
that
the Company shall not be required to: (i) qualify generally to do business
in
any jurisdiction where it would not otherwise be required to qualify but for
this subparagraph; (ii) subject itself to taxation in any such jurisdiction;
or
(iii) consent to general service of process in any such
jurisdiction;
(e) notify
such holders, at any time when a prospectus relating thereto is required to
be
delivered under the Securities Act, of the happening of any event as a result
of
which the prospectus included in such registration statement contains an untrue
statement of a material fact or omits any material fact necessary to make the
statements therein, in light of the circumstances in which they are made, not
materially misleading, and, at the reasonable request of such holders, the
Company shall prepare a supplement or amendment to such prospectus so that,
as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not contain an untrue statement of a material fact or omit
to
state any material fact necessary to make the statements therein, in light
of
the circumstances in which they are made, not materially
misleading;
(f) provide
a
transfer agent and registrar for all such Registrable Securities not later
than
the effective date of such registration statement;
(g) make
available for inspection by any underwriter participating in any disposition
pursuant to such registration statement, and any attorney, accountant or other
agent retained by any such underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company’s officers, directors, managers, employees and independent accountants
to supply all information reasonably requested by any such underwriter,
attorney, accountant or agent in connection with such registration
statement;
(h) otherwise
use its Best Efforts to comply with all applicable rules and regulations of
the
SEC, and make available to its security holders, as soon as reasonably
practicable, an earnings statement of the Company, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and, at
the
option of the Company, Rule 158 thereunder;
(i) in
the
event of the issuance of any stop order suspending the effectiveness of a
registration statement, or of any order suspending or preventing the use of
any
related prospectus or suspending the qualification of any Registrable Securities
included in such registration statement for sale in any jurisdiction, the
Company shall use its Best Efforts promptly to obtain the withdrawal of such
order;
9
(j) use
its
Best Efforts to cause any Registrable Securities covered by such registration
statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the sellers thereof to consummate
the disposition of such Registrable Securities; and
(k) if
the
offering is underwritten, use its Best Efforts to furnish on the date that
Registrable Securities are delivered to the underwriters for sale pursuant
to
such registration, an opinion dated such date of counsel representing the
Company for the purposes of such registration, addressed to the underwriters
covering such issues as are reasonably required by such
underwriters.
7.5 Listing.
The
Company shall secure the listing of the Common Stock underlying this Warrant
upon each national securities exchange or automated quotation system upon which
shares of Common Stock are then listed or quoted (subject to official notice
of
issuance) and shall maintain such listing of shares of Common Stock. The Company
shall at all times comply in all material respects with the Company’s reporting,
filing and other obligations under the by-laws or rules of the national
securities exchange or market on which the Common Stock may then be listed,
as
applicable.
7.6 Expenses.
The Company shall pay all Registration Expenses relating to the registration
and
listing obligations set forth in this Section 7. For purposes of this Warrant,
the term “Registration
Expenses”
means:
(a) all registration, filing and NASD fees, (b) all reasonable fees and expenses
of the Company in complying with securities or blue sky laws, (c) all word
processing, duplicating and printing expenses, (d) the fees and disbursements
of
counsel for the Company and of its independent public accountants, including
the
expenses of any “cold comfort” letters required by or incident to such
performance and compliance, (e) premiums and other costs of policies of
insurance (if any) against liabilities arising out of the public offering of
the
Registrable Securities being registered if the Company desires such insurance,
if any, and (f) fees and disbursements of one counsel for the selling holders
of
Registrable Securities; provided however,
that,
in any case where Registration Expenses are not to be borne by the Company,
such
expenses shall not include (and such expenses shall be borne by the Company):
(i) salaries of Company personnel or general overhead expenses of the Company,
(ii) auditing fees, (iii) premiums or other expenses relating to liability
insurance of the Company, or (iv) other expenses for the preparation of
financial statements or other data, to the extent that any of the foregoing
either is normally prepared by the Company in the ordinary course of its
business or would have been incurred by the Company had no public offering
taken
place. Registration Expenses shall not include any underwriting discounts and
commissions which may be incurred in the sale of any Registrable Securities
and
transfer taxes of the selling holders of Registrable Securities.
7.7 Information
Provided by Holders. Any holder of Registrable Securities included in any
registration shall furnish to the Company such information as the Company may
reasonably request in writing to enable the Company to comply with the
provisions hereof in connection with any registration referred to in this
Warrant.
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8 Restrictions
on Transfer.
8.1 Restrictive
Legends.
This
Warrant and each Warrant issued upon transfer or in substitution for this
Warrant pursuant to Section 9 hereof; each certificate for Common Stock issued
upon the exercise of the Warrant and each certificate issued upon the transfer
of any such Common Stock shall be transferable only upon satisfaction of the
conditions specified in this Section 8. Each of the foregoing securities shall
be stamped or otherwise imprinted with a legend reflecting the restrictions
on
transfer set forth herein and any restrictions required under the Securities
Act
or other applicable securities laws.
8.2 Notice
of Proposed Transfer. Prior to any transfer of any securities which are not
registered under an effective registration statement under the Securities Act
(“Restricted
Securities”),
which
transfer may only occur if there is an exemption from the registration
provisions of the Securities Act and all other applicable securities laws,
the
Holder will give written notice to the Company of the Holder’s intention to
effect a transfer (and shall describe the manner and circumstances of the
proposed transfer). The following provisions shall apply to any proposed
transfer of Restricted Securities:
(i) If
in the
opinion of counsel for the Holder reasonably satisfactory to the Company the
proposed transfer may be effected without registration of the Restricted
Securities under the Securities Act (which opinion shall state in detail the
basis of the legal conclusions reached therein), the Holder shall thereupon
be
entitled to transfer the Restricted Securities in accordance with the terms
of
the notice delivered by the Holder to the Company. Each certificate representing
the Restricted Securities issued upon or in connection with any transfer shall
bear the restrictive legends required by Section 8.1 hereof,
(ii) If
the
opinion called for in (i) above is not delivered, the Holder shall not be
entitled to transfer the Restricted Securities until either: (x) receipt by
the
Company of a further notice from such Holder pursuant to the foregoing
provisions of this Section 8.2 and fulfillment of the provisions of clause
(i)
above, or (y) such Restricted Securities have been effectively registered under
the Securities Act.
8.3 Certain
Other Transfer Restrictions.
Notwithstanding any other provision of this Section 8, during the period
commencing with effectiveness of the registration statement relating to the
Qualified Offering and terminating 180 days following a Qualified Offering,
this
Warrant and the Restricted Securities thereunder may only be transferred or
assigned for estate planning purposes if the transferee agrees in writing to
be
subject to the terms hereof to the same extent as if the transferee were the
original purchaser hereof and such transfer is permitted under applicable
securities laws.
8.4 Termination
of Restrictions. Except as set forth in Section 8.3 hereof, the restrictions
imposed by this Section 8 upon the transferability of Restricted Securities
shall cease and terminate as to any particular Restricted Securities: (a) which
shall have been effectively registered under the Securities Act, or (b) when,
in
the opinions of both counsel for the holder thereof and counsel for the Company,
such restrictions are no longer required in order to insure compliance with
the
Securities Act or Section 8 hereof. Whenever such restrictions shall cease
and
terminate as to any Restricted Securities, the Holder thereof shall be entitled
to receive from the Company, without expense (other than applicable transfer
taxes, if any), new securities of like tenor not bearing the applicable legends
required by Section 8.1 hereof.
11
9 Ownership,
Transfer, Sale and Substitution of Warrant.
9.1 Ownership
of Warrant.
The
Company may treat any Person in whose name this Warrant is registered in the
Warrant Register maintained pursuant to Section 9.2(b) hereof as the owner
and
holder thereof for all purposes, notwithstanding any notice to the contrary,
except that, if and when any Warrant is properly assigned in blank, the Company
may (but shall not be obligated to) treat the bearer thereof as the owner of
such Warrant for all purposes, notwithstanding any notice to the contrary.
Subject to Sections 8 and 9 hereof, this Warrant, if properly assigned, may
be
exercised by a new holder without a new Warrant first having been
issued.
9.2 Office:
Exchange of Warrant.
(a) The
Company will maintain its principal office at the location identified in the
confidential offering memorandum or at such other offices as set forth in the
Company’s most current filing (as of the date notice is to be given) under the
Exchange Act or as the Company otherwise notifies the Holder.
(b) The
Company shall cause to be kept at its office maintained pursuant to Section
9.2(a) hereof a Warrant Register for the registration and transfer of the
Warrant. The name and address of the holder of the Warrant, the transfers
thereof and the name and address of the transferee of the Warrant shall be
registered in such Warrant Register. The Person in whose name the Warrant shall
be so registered shall be deemed and treated as the owner and holder thereof
for
all purposes of this Warrant, and the Company shall not be affected by any
notice or knowledge to the contrary.
(c) Upon
the
surrender of this Warrant, properly endorsed, for registration of transfer
or
for exchange at the office of the Company maintained pursuant to Section 9.2(a)
hereof, the Company at its expense will (subject to compliance with Section
8
hereof, if applicable) execute and deliver to or upon the order of the Holder
thereof a new Warrant of like tenor, in the name of such holder or as such
holder (upon payment by such holder of any applicable transfer taxes) may
direct, calling in the aggregate on the face thereof for the number of shares
of
Common Stock called for on the face of the Warrant so surrendered (after giving
effect to any previous adjustment(s) to the number of Warrant
Shares).
9.3 Replacement
of Warrant.
Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss,
theft or destruction of this Warrant, upon delivery of indemnity reasonably
satisfactory to the Company in form and amount or, in the case of any
mutilation, upon surrender of this Warrant for cancellation at the office of
the
Company maintained pursuant to Section 9.2(a) hereof, the Company, at its
expense, will execute and deliver, in lieu thereof, a new Warrant of like tenor
and dated the date hereof.
12
9.4 Opinions.
In connection with the sale of the Warrant Shares by Holder, the Company agrees
to cooperate with the Holder, and at the Company’s expense, have its counsel
provide any legal opinions required to remove the restrictive legends from
the
Warrant Shares in connection with a sale, transfer or legend removal request
of
Holder.
10 No
Rights or Liabilities as Stockholder.
No
Holder shall be entitled to vote or receive dividends or be deemed the holder
of
any shares 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, 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, 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 shares of Common Stock purchasable
upon the exercise hereof shall have become deliverable, as provided herein.
The
Holder will not be entitled to share in the assets of the Company in the event
of a liquidation, dissolution or the winding up of the Company.
11 Notices.
Any notice or other communication in connection with this Warrant shall be
given
in writing and directed to the parties hereto as follows: (a) if to the Holder,
to [INSERT ADDRESS], Attn: [ ], Fax No: [ ]; or (b) if to the Company, to the
attention of its Chief Executive Officer at its office maintained pursuant
to
Section 9.2(a) hereof; provided,
that
the exercise of the Warrant shall also be effected in the manner provided in
Section 2 hereof. Notices shall be deemed properly delivered and received when
delivered to the notice party (i) if personally delivered, upon receipt or
refusal to accept delivery, (ii) if sent via facsimile, upon mechanical
confirmation of successful transmission thereof generated by the sending
telecopy machine, (iii) if sent by a commercial overnight courier for delivery
on the next Business Day, on the rust Business Day after deposit with such
courier service, or (iv) if sent by registered or certified mail, five (5)
Business Days after deposit thereof in the U.S. mail.
12 Payment
of Taxes. The Company will pay all documentary stamp taxes attributable to
the issuance of shares of Common Stock underlying this Warrant upon exercise
of
this Warrant; provided,
however,
that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the transfer or registration of this Warrant or
any
certificate for shares of Common Stock underlying this Warrant in a name other
that of the Holder. The Holder is responsible for all other tax liability that
may arise as a result of holding or transferring this Warrant or receiving
shares of Common Stock underlying this Warrant upon exercise
hereof.
13 Miscellaneous.
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought. This
Warrant shall be construed and enforced in accordance with and governed by
the
laws of the State of New York. The section headings in this Warrant are for
purposes of convenience only and shall not constitute a part hereof. When used
herein, the term “Best Efforts” means, with respect to the applicable obligation
of the Company, the highest standard of diligence recognized under New York
law
for similarly situated, publicly-traded companies.
13
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
of
the date first above written.
| By: | ||
|
Name: ▇▇▇▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
Title: President
|
14
EXHIBIT
A
FORM
OF
EXERCISE NOTICE
[To
be
executed only upon exercise of Warrant]
The
undersigned registered holder of the within Warrant hereby irrevocably exercises
the Warrant pursuant to Section 2.1 of the Warrant with respect to Warrant
Shares, at an exercise price per share of $____________, and requests that
the
certificates for such Warrant Shares be issued, subject to Sections 8 and 9,
in
the name of, and delivered to:
The
undersigned hereby represents and warrants that it is, and has been since its
acquisition of the Warrant, the record and beneficial owner of the
Warrant.
Dated:
____________
|
Print
or Type Name
|
||
| (Signature must conform in all respects to name of holder as specified on the face of Warrant) | ||
| (Street Address) | ||
| (City) (State) (Zip Code) | ||
EXHIBIT
B
COMMON
STOCK WARRANT
Notice
of
Cashless Exercise
[date]
The
undersigned, pursuant to the provisions set forth in the Common Stock
Subscription Warrant dated as of ____________, 2007, hereby irrevocably elects
and agrees to purchase ____________ [or
the
maximum available number] of the Warrant Shares covered by such Warrant, by
Cashless Exercise, and hereby surrenders that number of Share Purchase Rights
as
necessary to constitute payment in full of the Aggregate Exercise Price
therefor.
The
undersigned hereby represents that the undersigned is exercising such Warrant
for its own account and will not sell or otherwise dispose of the underlying
Warrant Shares in violation of applicable securities laws. If said number of
shares is less than all of the shares purchasable hereunder the undersigned
requests that a new Warrant evidencing the rights to purchase the remaining
Warrant Shares (which new Warrant shall in all other respects be identical
to
the Warrant exercised hereby) be registered in the name of the
undersigned.
| Signature: | |||
| Printed Name: | |||
| Address: | |||
EXHIBIT
C
FORM
OF
ASSIGNMENT
[To
be
executed only upon transfer of Warrant]
For
value
received, the undersigned registered holder of the within Warrant hereby sells,
assigns and transfers unto ____________ [include name and addresses] the rights
represented by the Warrant to purchase ____________ shares of Common Stock
of
PASSPORT RESTAURANTS, INC. to which the Warrant relates, and appoints
____________ Attorney to make such transfer on the books of PASSPORT
RESTAURANTS, INC. maintained for the purpose, with full power of substitution
in
the premises.
Dated:
____________
|
(Signature
must conform in all respects to
name of holder as specified on theface
of Warrant)
|
| (Street Address) | ||
|
(City)
(State) (Zip Code)
|
|
Signed
in the presence of:
|
|
(Signature
of Transferee)
|
|
(Street
Address)
|
|
(City)
(State) (Zip Code)
|
|
Signed
in the presence of:
|