EXHIBIT 4.4
NEITHER THIS SECURITY NOR THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. AS AMENDED (THE "ACT"), OR QUALIFIED UNDER ANY STATE
SECURITIES LAWS, AND NEITHER MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT AND QUALIFIED
UNDER SUCH LAWS OR EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND
THE QUALIFICATION REQUIREMENTS OF SUCH LAWS ARE AVAILABLE FOR SUCH OFFER, SALE,
OR TRANSFER, PLEDGE OR HYPOTHECATION.
"Warrants" Shares
WARRANT
TO PURCHASE SHARES OF COMMON STOCK OF
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
THIS CERTIFIES that, for value received, "First" "Last", or registered assigns
(a "Registered Holder") is entitled, upon the terms and subject to the
conditions set forth herein, to subscribe for and purchase from ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇,
Inc., a corporation with a principal office at ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), "Warrants" shares (the "Warrant
Shares") of the Company's Common Stock (the "Common Stock") at a price equal to
$8.00 per share (the "Exercise Price").
1. Title of Warrant. Prior to the expiration hereof and subject to compliance
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with applicable laws, this warrant (this "Warrant") and all rights
hereunder are transferable, in whole or in part, at the principal office
of the Company specified above, by the Registered Holder in person or by
duly authorized attorney, upon surrender of this Warrant, properly
endorsed, together with an Assignment Form substantially in the form of
Exhibit B attached hereto (the "Assignment Form").
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2. Method of Exercise; Payment.
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2.1 Cash Exercise. The purchase rights represented by this Warrant may be
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exercised by the Registered Holder, in whole or in part, at any time
during the period commencing on the date hereof and expiring on the date
that is two (2) year after the date hereof (the "Warrant Exercise Term")
by (i) surrender of this Warrant together with a duly executed notice of
exercise form (the "Notice of Exercise") substantially in the form
attached hereto as Exhibit A at the principal office of the Company (or
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such other office of the Company as it may designate by notice in writing
to the Registered Holder at the address of such holder appearing on the
books of the Company), and (ii) payment to the Company of an amount equal
to the Exercise Price multiplied by the number of Warrant Shares being
purchased, which amount may be paid, at the option of the Registered
Holder, by bank check payable to the order of the Company or by wire
transfer.
2.2 Net Issue Exercise.
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(a) In lieu of payment of the Exercise Price by bank check or wire
transfer in accordance with Section 2.1 hereof, the Registered Holder may elect
to pay the Exercise Price by surrendering this Warrant to the Company in
exchange for the number of shares of Common Stock determined in accordance with
the following formula:
X = Y (A-B)
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A
Where: X = the number of shares of Common Stock to be issued to
the Registered Holder;
Y = the number of Warrant Shares requested to be exercised
under this Warrant;
A = the fair market value of one share of Common Stock (as
of the date of calculation); and
B = the Exercise Price (as adjusted to the date of such
calculation).
(b) For purposes of the above calculation, current fair market value
of Common Stock shall mean with respect to each share of Common Stock:
(i) If this Warrant is exercised in connection with an initial
public offering of the Common Stock, and if the Company's Registration Statement
relating to such public offering has been declared effective by the Securities
and Exchange Commission (the "Commission"), then the fair market value per share
of Common Stock shall be the "Initial Price to Public" specified in the final
prospectus filed with the Commission with respect to such offering;
(ii) If this Warrant is exercised prior to, and not in
connection with, an initial public offering of Common Stock and if the Common
Stock is not then quoted in the Over-The-Counter Market Summary or on The Nasdaq
Stock Market or traded on an exchange, then the current fair market value of
Common Stock shall be as determined in good faith by the Company's Board of
Directors, unless (a) the Company shall become subject to a merger, acquisition
or other consolidation pursuant to which the Company is not the surviving party,
or (b) the Company shall become subject to a merger, acquisition or other
consolidation pursuant to which the Company shall be the surviving party and in
which all or substantially all of the outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other party or
cash or any other property, in which case the fair market value per share of
Common Stock shall be deemed to be the value received by the holders of Common
Stock pursuant to such merger, acquisition or consolidation; and
(iii) If this Warrant is exercised not in connection with an
initial public offering of Common Stock and the Common Stock quoted in the
Over-The-Counter Market Summary or on The Nasdaq Stock Market or traded on an
exchange, then the current fair market value of the Common Stock shall be the
weighted average of the closing bid and asked prices of the Common Stock quoted
in the Over-The-Counter Market Summary or on The Nasdaq Stock Market or the
closing price quoted on the exchange on which the Common Stock is traded, as the
case may be, as published in the Wall Street Journal for the ten (10) trading
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day period ending one day prior to the date of determination of such fair
market value.
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2.3 Record Date. If the Registered Holder shall be entitled to exercise
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this Warrant on the date that this Warrant is surrendered to the Company for
exercise in accordance with the terms hereof, the Warrant Shares so purchased
shall be deemed to have been issued to the Registered Holder and the Registered
Holder shall be deemed to have been the record owner of such shares as of the
close of business on the date of such surrender.
2.4 Stock Certificates. Within a reasonable time after the exercise of
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this Warrant in accordance with the terms hereof, certificates for the Warrant
Shares so purchased shall be delivered to the Registered Holder and, unless this
Warrant has been fully exercised or has expired, a new Warrant representing the
Warrant Shares with respect to which this Warrant shall not have been exercised
shall also be issued to the Registered Holder. The Company covenants that all
shares of stock which may be issued upon the exercise of this Warrant will be
duly authorized, validly issued, fully paid and nonassessable, and will be free
from all taxes, liens and charges with respect to the issue thereof (other than
taxes with respect to any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip. No fractional shares or scrip
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representing fractional shares shall be issued upon the exercise of this
Warrant.
4. Charges, Taxes and Expenses. The Company shall pay all charges, taxes
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and other expenses in connection with the issuance of certificates representing
the Warrant Shares purchased by the Registered Holder upon the exercise of this
Warrant, and such certificates shall be issued in the name of the Registered
Holder or in such name or names as may be directed by the Registered Holder;
provided, however, that in the event that certificates for Warrant Shares are
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directed by the Registered Holder to be issued in a name other than that of the
Registered Holder, this Warrant shall be accompanied by a duly executed
Assignment Form when surrendered for exercise.
5. No Rights as Shareholders. This Warrant does not entitle the
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Registered Holder hereof to any voting rights or other rights as a shareholder
of the Company prior to the exercise hereof.
6. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
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the surrender hereof by the Registered Holder at the principal office of the
Company specified above, for a new Warrant of like tenor to be dated as of the
date of such exchange. The Company shall maintain at its principal office a
registry showing the name and address of the Registered Holder. This Warrant may
be surrendered for exchange, transfer or exercise, in accordance with its terms,
at such office of the Company, and, the Company shall be entitled to rely in all
respects, prior to written notice to the contrary, upon such registry.
7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
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Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, the Company will make and deliver to
the Registered Holder a replacement warrant with terms that are substantially
the same as those contained herein provided that (i) in the event of loss, theft
or destruction of this Warrant, the Company receives indemnity or security
reasonably satisfactory to the Company, (ii) in the event of mutilation of this
Warrant, the Company receives this Warrant for cancellation, and (iii) in any
event the Company receives reimbursement of all reasonable expenses incurred in
connection with the issuance of a replacement warrant.
8. Saturdays, Sundays, Holidays. etc. If the last or appointed day for
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the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
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9. Adjustment. The number of shares for which this Warrant is exercisable,
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the Exercise Price and the time period for exercise are subject to adjustment
from time to time as follows:
9.1 Antidilution. Subject and pursuant to the provisions of this Section
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9.1, the Exercise Price and number of shares of Common Stock subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter:
(a) In the event that the Company shall sell or issue either any
shares of its Common Stock or any rights, options, warrants or obligations or
securities containing the right to subscribe for or purchase any shares of
Common Stock ("Options") or exchangeable for or convertible into shares of
Common Stock ("Convertible Securities"), at a price per share, as determined
pursuant to Section 9.1(b), less than the Exercise Price then in effect on the
date of such sale or issuance, then the number of shares of Common Stock
purchasable upon exercise of this Warrant shall be determined by multiplying the
number of shares of Common Stock theretofore purchasable upon exercise of this
Warrant by a fraction (A) the numerator of which shall be the number of shares
of Common Stock outstanding on the date of sale or issuance of such shares of
Common Stock, Options or Convertible Shares immediately following such sale or
issuance, and (B) the denominator of which shall be the number of shares of
Common Stock outstanding on the date prior to the date of sale or issuance of
such shares of Common Stock, Options or Convertible Shares, plus the number of
shares of Common Stock which the aggregate consideration received by the Company
upon such issuance would purchase on such date at the per share Exercise Price
then in effect.
(b) The following provisions, in addition to other provisions in this
Section 9.1, shall be applicable in determining any adjustment under
Section 9.1(a):
(i) In the event of the issuance or sale of shares of Common
Stock, part or all of the consideration for which shall be cash, the cash
consideration received by the Company therefor shall be deemed to be the amount
of gross cash proceeds of such sale of shares without deducting therefrom any
compensation paid or discount allowed in the sale, underwriting or purchase
thereof by underwriters or dealers or others performing similar services or any
expenses incurred in connection therewith.
(ii) In the event of the issuance or sale of shares of Common
Stock, wholly or partly for a consideration other than cash, the amount of the
consideration other than cash received by the Company for such shares shall be
deemed to be the value of such consideration as determined by a resolution
adopted by the Board of Directors of the Company acting in good faith,
irrespective of any accounting treatment thereof. Any such good faith
determination shall be final and binding upon the Registered Holder. In the
event of the issuance or sale of shares of Common Stock (other than upon
conversion or exchange) together with other stock or securities or other assets
of the Company for a consideration which is received for both such shares of
Common Stock and other securities or assets, the Board of Directors of the
Company acting in good faith shall determine what part of the consideration so
received is to be deemed to be the consideration for the issuance of such shares
of Common Stock, irrespective of any accounting treatment thereof. Any such good
faith determination shall be final and binding upon the Registered Holder.
(iii) In the event that at any time the Company shall declare a
dividend or make any other distribution upon any stock of the Company payable in
shares of Common Stock, then such shares of Common Stock issuable in payment of
such dividend or distribution shall be deemed to have been issued or sold
without consideration, and no adjustment shall be made in connection with such
distribution.
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(iv) The price per share of any shares of Common Stock sold or
issued by the Company (other than pursuant to Options or Convertible Securities)
shall be equal to a price calculated by dividing (A) the amount of the
consideration received by the Company, as determined pursuant to Sections
9.1(b)(i) and 9.1(b)(ii), upon such sale or issuance by (B) the number of shares
of Common Stock sold or issued.
(v) In the event that the Company shall at any time after the
date hereof issue any Options or Convertible Securities, the following
provisions shall apply in making any adjustment pursuant to this Section 9.1:
(1) The price per share for which shares of Common Stock
are issuable upon the exercise of the Options or upon conversion or exchange of
the Convertible Securities shall be determined by dividing (i) the total amount,
if any, received or receivable by the Company as consideration for the issuance
of such Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise of
such Options or the conversion or exchange of such Convertible Securities, by
(ii) the aggregate maximum number of shares of Common Stock issuable upon the
exercise of such Option or upon the conversion or exchange of such Convertible
Securities.
(2) In determining the price per share for which shares of
Common Stock are issuable upon exercise of the Option or conversion or exchange
of the Convertible Securities and in computing any adjustment pursuant to
Section 9.1(a) (i) the aggregate maximum number of shares of Common Stock
issuable upon the exercise of such Options or Convertible Securities shall be
considered to be outstanding at the time such Options or Convertible Securities
were issued and to have been issued for such price per share as determined
pursuant to Section 9.1(b)(v)(1), and (ii) the consideration for the issuance of
such Options or Convertible Securities and the amount of additional
consideration payable to the Company upon exercise of such Options or upon the
conversion or exchange of such Convertible Securities shall be determined in the
same manner as the consideration received upon the issuance of sale of shares of
Common Stock as provided in Sections 9.1(b)(i) and 9.1(b)(ii).
(3) On the expiration of such Options or the termination
of any right to convert or exchange any Convertible Securities, the number of
shares of Common Stock subject to this Warrant shall forthwith be readjusted to
such number of shares of Common Stock as would have been obtained had the
adjustments made upon the issuance of such Options or Convertible Securities
been made upon the basis of the delivery of only the number of shares of Common
Stock actually delivered upon the exercise of such Options or upon conversion or
exchange of such Convertible Securities.
(4) If the minimum purchase price per share of Common
Stock provided for in any Option or the rate at which any Convertible Securities
are convertible into or exchangeable for shares of Common Stock shall change or
a different purchase price or rate shall become effective at any time or from
time to time (other than pursuant to any antidilution provisions of such Options
or Convertible Securities) then upon such change becoming effective, the number
of shares of Common Stock subject to this Warrant shall forthwith be readjusted
to such number of shares as would have been obtained had the adjustments made
upon the granting or issuance of such Options or Convertible Securities been
made upon the basis of (i) the issuance of the number of shares of Common Stock
theretofore actually delivered upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities, and the total
consideration received therefor, and (ii) the granting or issuance at the time
of such change of any such Options or Convertible Securities then still
outstanding or the consideration, if any, received by the Company therefor and
to be received on the basis of such changed price or rate of exchange or
conversion.
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(5) Except as otherwise specifically provided herein, the
date of issuance or sale of shares of Common Stock, any Option or any
Convertible Security shall be deemed to be the date the Company is legally
obligated to issue such shares of Common Stock or such Option or Convertible
Security.
(6) Anything hereinabove to the contrary notwithstanding,
no adjustment shall be made pursuant to Section 9.1(a) to the Exercise Price, or
to the number of shares of Common Stock purchasable upon the exercise of the
Warrant upon:
a. The issuance or sale by the Company of (1) any
shares of Common Stock pursuant to this Warrant or any other warrant or warrants
to be issued to the Registered Holder, (2) any Options granted pursuant to the
Company's 1999 Stock Option Plan.
b. The issuance or sale of shares of Common Stock
pursuant to the exercise of Options or conversion or exchange of Convertible
Securities hereinafter issued for which an adjustment has been made (or was not
required to be made) pursuant to the provisions of this Section 9.1.
c. The increase in the number of shares of Common
Stock subject to any Option or Convertible Securities referred to in this
Section 9.1(b)(v)(6) pursuant to the provisions of such Options or Convertible
Securities designed to protect against dilution.
(c) No adjustment in the number of shares of Common Stock subject
to this Warrant shall be required under this Section 9.1 unless such adjustment
would require an increase or decrease in such number of shares of at least 2% of
the then adjusted number of shares of Common Stock issuable upon exercise of
this Warrant; provided, however, that any adjustments which by reason of the
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foregoing are not required at the time to be made shall be carried forward and
taken into account and included in determining the amount of any subsequent
adjustment.
(d) Whenever the number of shares of Common Stock purchasable upon
the exercise of this Warrant is adjusted as provided in this Section 9.1, the
Exercise Price shall be adjusted (to the nearest cent) by multiplying the
Exercise Price immediately prior to such adjustment by a fraction (x) the
numerator of which shall be the number of shares of Common Stock purchasable
upon the exercise of the Warrant immediately prior to such adjustment, and (y)
the denominator of which shall be the number of shares of Common Stock so
purchasable immediately thereafter.
(e) If the Company after the date hereof shall take any action
affecting the shares of its Common Stock, other than actions described in this
Section 9, which, in the opinion of the Board of Directors of the Company, would
materially affect the rights of the Registered Holder, the Exercise Price and
the number of shares of Common Stock obtainable upon exercise of such Warrant
shall be adjusted in such manner, if any, and at such time as the Board of
Directors of the Company, in good faith, may determine to be equitable under the
circumstances. The minutes or unanimous consent approving such action shall set
forth the Board's determination as to whether an adjustment is warranted and the
manner of such adjustment. In the absence of such determination, ▇▇▇▇▇▇ may
request in writing that the Board make such determination. Any such
determination made in good faith by the Board shall be final and binding upon
the Holder. If the Board fails, however, to make such determination within sixty
(60) days after such request, such failure shall be deemed a determination that
no such adjustment is required.
9.2 Merger, Sale of Assets, etc. If at any time there shall be a capital
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reorganization of the Common Stock (other than a subdivision, combination,
payment of dividend, reclassification or exchange of Common Stock provided for
below) or a merger or consolidation of the Company with or into another
6
corporation, or the sale of the Company's properties and assets as, or
substantially as, an entirety to any other person, then, as a part of such
reorganization, merger, consolidation or sale, lawful provision shall be made so
that the Registered Holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified in this
Warrant and upon payment of the Exercise Price then in effect, the number of
shares of Common Stock or other securities or property of the Company or of any
other entity to which a holder of the Common Stock issuable upon exercise of
this Warrant would have been entitled in such capital reorganization, merger, or
consolidation or sale if this Warrant had been exercised immediately before that
capital reorganization, merger, consolidation, or sale. In any such case,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interest of the Registered Holder of this Warrant
after the reorganization, merger, consolidation or sale such that the provisions
of this Warrant (including adjustment of the Exercise Price then in effect and
number and kind of securities purchasable upon exercise of this Warrant) shall
be applicable after that event in relation to any securities purchasable after
that event upon exercise of this Warrant.
9.3 Reclassification, etc. If the Company at any time shall, by
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subdivision, combination or reclassification of securities or otherwise, change
any of the securities to which purchase rights under this Warrant exist into the
same or a different number of securities of any class or classes, this Warrant
shall thereafter be deemed to represent the right to acquire such number and
kind of securities as would have been issuable as the result of such change with
respect to the securities which were subject to the purchase rights under this
Warrant immediately prior to such subdivision, combination, reclassification or
other change and the Exercise Price shall be proportionately adjusted.
9.4 Certificate as to Adjustment. In each case of any adjustment in either
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the Exercise Price or in the number of shares of Common Stock, or other stock,
securities or property receivable on the exercise of this Warrant, the Chief
Financial Officer of the Company shall compute such adjustment in accordance
with the terms of this Warrant and shall prepare a certificate setting forth
such adjustment and showing in detail the facts upon which such adjustment is
based, including a statement of the adjusted Exercise Price. The Company will
cause copies of such certificate to be mailed (by first class mail, postage
prepaid) to the Registered Holder.
10. Restrictions on Transfer. This Warrant and the securities issuable
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upon exercise of this Warrant have not been registered under the Act or under
the securities laws any states. These securities are subject to restrictions on
transferability and resale and may not be transferred or resold except as
permitted under the Act and the applicable state securities laws, pursuant to
registration or exemption therefrom, investors should be aware that they may be
required to bear the financial risks of this investment for an indefinite period
of time. As a condition to the issuance of this Warrant and to its exercise, the
Registered Holder hereby represents and warrants to the Company that:
10.1 The Warrant and, if applicable, the shares of Common Stock issuable
upon exercise hereof (collectively, the "Securities") have been acquired by
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the Registered Holder for investment and not with a view to the sale or other
distribution thereof or within the meaning of the Act, and the Registered
Holder has present intention of selling or otherwise disposing all or any
portion of the Securities.
10.2 The Registered Holder has acquired the Securities for the Registered
▇▇▇▇▇▇'s own account.
10.3 The Registered Holder is capable of evaluating the merits and risks
of any investment in the Securities, is financially capable of bearing a total
loss of this investment and has either: (i) a preexisting personal or business
relationship with the Company or its principals, or (ii) by reason of the
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Registered ▇▇▇▇▇▇'s business or financial experience, has the capacity to
protect his, her or its own interests in connection with this investment.
10.4 The Registered Holder has had access to all information regarding the
Company, its present and prospective business, assets, liabilities and financial
condition that the Registered Holder considers important to making the decision
to acquire the Securities and has had ample opportunity to ask questions of and
receive answers from the Company's representatives concerning an investment in
the Securities and to obtain any and all documents requested in order to
supplement or verify any of the information supplied.
10.5 The Registered Holder understands that the Securities shall be deemed
restricted securities under the Act and may not be resold unless they are
registered under the Act and qualified under any applicable state securities
laws unless an exemption from such registration and qualification is available.
10.6 The Registered Holder is familiar with the contents of Rule 144
promulgated under the Act ("Rule 144") which provides, in substance, that:
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(i) after the expiration of one year from the date restricted securities have
been purchased and fully paid for, a holder may transfer such restricted
securities provided certain public information, volume, manner of sale and
notice requirements are complied with; and (ii) after the expiration of two
years from the date restricted securities have been purchased and fully paid
for, holders who are not "affiliates" of the Company may sell such restricted
securities without satisfying such conditions.
10.7 The Registered Holder further understands that if the requirements of
Rule 144 are not met, registration under the Act, compliance with Regulation A
promulgated under the Act, or some other registration exemption will be required
for any disposition of the Securities; and that, although Rule 144 is not
exclusive, the Commission has expressed its opinion that persons proposing to
sell restricted securities other than in a registered offering or other than
pursuant to Rule 144 will have a substantial burden of proof in establishing
that an exemption from registration is available for such offers or sales and
such persons and the brokers who participate in the transactions do so at their
own risk.
11. Miscellaneous.
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11.1 Issue Date. The provisions of this Warrant shall be construed and
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shall be given effect in all respect as if it had been issued and delivered by
the Company on the date hereof.
11.2 Authorized Shares. The Company covenants that during the period the
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Warrant is exercisable, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of Common Stock
upon the exercise of any purchase rights under this Warrant, including taking
all actions necessary to increase the authorized number of shares of Common
Stock by a sufficient number of shares. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for shares of the Company's Common Stock upon the
exercise of the purchase rights under this Warrant.
11.3 No Impairment. The Company will not, by amendment of its
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Certificate of Incorporation 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 such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Registered Holder hereof against impairment.
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11.4 Notices of Record Date. In the event of:
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(a) the Company shall take a record of the holders of its Common
Stock for the purposes of entitling them to receive any dividend (other than a
cash dividend) or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares or stock of any class or any other securities or
property, or to receive any other right; or
(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder a notice specifying, as the case may be, (i) the date on which
a record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right, or
(ii) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to take place, and
the time, if any is to be fixed, as of which the holders of record of Common
Stock shall be entitled to exchange their shares of Common Stock for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up. Such
notice shall be mailed at least thirty (30) days prior to the date therein
specified.
12. Attorneys' Fees. In the event any party is required to engage the
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services of attorneys for the purpose of enforcing this Warrant, or any
provision thereof, the prevailing party shall be entitled to recover its
reasonable attorneys' fees and any other related costs and expenses.
13. Headings. The headings in this Warrant are for purposes of
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convenience only, and shall not be deemed to constitute a part hereof.
14. Governing Law. This Warrant shall constitute a contract under the
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laws of the State of Delaware and shall be construed and enforced in accordance
with, and governed by, the internal laws of the State of Delaware, excluding
that body of law applicable to conflicts of laws.
15. Terms Binding. This Warrant shall be binding upon any successors or
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assigns of the Company. By acceptance of this Warrant, the Registered Holder
(and each subsequent assignee, transferee or Registered Holder) accepts and
agrees to be bound by all the terms and conditions of this Warrant.
[SIGNATURE ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.
Dated: ___________ ___, 1999
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:_________________________
Name:_______________________
Its:________________________
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EXHIBIT A
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NOTICE OF EXERCISE
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TO: ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
1. The undersigned hereby elects to purchase _______________________
shares of Common Stock of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. pursuant to the terms of this
warrant, and tenders herewith payment of the purchase price of such shares in
full.
2. Payment of the purchase price shall be by (please mark the appropriate
method):
_________ Bank Check
_________ Wire Transfer
_________ Net Exercise
3. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
___________________________________
(Name)
___________________________________
(Address)
___________________________________
(Address)
4. The undersigned hereby represents and warrants that the aforesaid
shares of Common Stock are being acquired for the account of the undersigned for
investment and not with a view to the distribution thereof, and that the
undersigned has no present intention of distributing or reselling such shares
without registration under the Act or an exemption therefrom.
Date:
___________________________ ________________________________________
(Signature)
11
EXHIBIT B
---------
ASSIGNMENT FORM
---------------
(To assign the warrant to which this Assignment Form is attached,
complete and execute this form. Do not use this form to
purchase shares upon exercise of the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
________________________________________________________________________________
(Please Print)
whose address is
________________________________________________________________
(Please Print)
Dated: ______________________, _____.
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 to which this Assignment Form is attached,
without alteration or enlargement or any change whatsoever. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
12
NEITHER THIS SECURITY NOR THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACZachary RobertsFinancial Printing
GroupNEITHER THIS SECURITY NOR THE UNDERLYING SECURITIES HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR QUALIFIED UNDER ANY
STATE SECURITIES LAWS, AND NEITHER MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT
AND QUALIFIED UNDER SUCH LAWS OR EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS
OF THE ACT AND THE QUALIFICATION REQUIREMENTS OF SUCH LAWS ARE AVAILABLE FOR
SUCH OFFER, SALE, OR TRANSFER, PLEDGE OR HYPOTHECATION.
250,000 Shares
WARRANT
TO PURCHASE SHARES OF COMMON STOCK OF
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
THIS CERTIFIES that, for value received, @Onex LLC, or registered assigns (a
"Registered Holder") is entitled, upon the terms and subject to the conditions
set forth herein, to subscribe for and purchase from ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a
corporation with a principal office at ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), 250,000 shares (the "Warrant Shares") of the
Company's Common Stock (the "Common Stock") at a price equal to $7.00 per share
(the "Exercise Price").
1. Title of Warrant. Prior to the expiration hereof and subject to
----------------
compliance with applicable laws, this warrant (this "Warrant") and all rights
hereunder are transferable, in whole or in part, at the principal office of the
Company specified above, by the Registered Holder in person or by duly
authorized attorney, upon surrender of this Warrant, properly endorsed, together
with an Assignment Form substantially in the form of Exhibit B attached hereto
(the "Assignment Form").
2. Method of Exercise; Payment.
---------------------------
2.1 Cash Exercise. The purchase rights represented by this Warrant
-------------
compliance may be may be exercised by the Registered Holder, in whole or in
part, at any time during the period commencing on the date hereof and expiring
on the date that is five (5) years after the date hereof (the "Warrant Exercise
Term") by (i) surrender of this Warrant together with a duly executed notice of
exercise form (the "Notice of Exercise") substantially in the form attached
hereto as Exhibit A at the principal office of the Company (or such other office
---------
of the Company as it may designate by notice in writing to the Registered Holder
at the address of such holder appearing on the books of the Company), and (ii)
payment to the Company of an amount equal to the Exercise Price multiplied by
the number of Warrant Shares being purchased, which amount may be paid, at the
option of the Registered Holder, by bank check payable to the order of the
Company or by wire transfer.
2.2 Net Issue Exercise.
------------------
(1) In lieu of payment of the Exercise Price by bank check or wire
transfer in accordance with Section 2.1 hereof, the Registered Holder may elect
to pay the Exercise Price by surrendering this Warrant to the Company in
exchange for the number of shares of Common Stock determined in accordance with
the following formula:
X = Y (A-B)
-------
A
Where: X = the number of shares of Common Stock to be issued to the
Registered Holder;
Y = the number of Warrant Shares requested to be exercised under
this Warrant;
A = the fair market value of one share of Common Stock (as of the
date of calculation); and
B = the Exercise Price (as adjusted to the date of such
calculation).
(2) For purposes of the above calculation, current fair market value of
Common Stock shall mean with respect to each share of Common Stock:
(1) If this Warrant is exercised in connection with an initial public
offering of the Common Stock, and if the Company's Registration Statement
relating to such public offering has been declared effective by the Securities
and Exchange Commission (the "Commission"), then the fair market value per share
of Common Stock shall be the "Initial Price to Public" specified in the final
prospectus filed with the Commission with respect to such offering;
(2) If this Warrant is exercised prior to, and not in connection
with, an initial public offering of Common Stock and if the Common Stock is not
then quoted in the Over-The-Counter Market Summary or on The Nasdaq Stock Market
or traded on an exchange, then the current fair market value of Common Stock
shall be as determined in good faith by the Company's Board of Directors, unless
(a) the Company shall become subject to a merger, acquisition or other
consolidation pursuant to which the Company is not the surviving party, or (b)
the Company shall become subject to a merger, acquisition or other consolidation
pursuant to which the Company shall be the surviving party and in which all or
substantially all of the outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other party or cash or
any other property, in which case the fair market value per share of Common
Stock shall be deemed to be the value per share of Common Stock received by the
holders of Common Stock pursuant to such merger, acquisition or consolidation;
and
2
(3) If this Warrant is exercised not in connection with an initial
public offering of Common Stock and the Common Stock is quoted in the Over-The-
Counter Market Summary or on The Nasdaq Stock Market or traded on an exchange,
then the current fair market value of the Common Stock shall be the weighted
average of the closing bid and asked prices of the Common Stock quoted in the
Over-The-Counter Market Summary or on The Nasdaq Stock Market or the closing
price quoted on the exchange on which the Common Stock is traded, as the case
may be, as published in the Wall Street Journal for the ten (10) trading day
-------------------
period ending one day prior to the date of determination of such fair market
value.
2.3 Record Date. If the Registered Holder shall be entitled to exercise
-----------
this Warrant on the date that this Warrant is surrendered to the Company for
exercise in accordance with the terms hereof, the Warrant Shares so purchased
shall be deemed to have been issued to the Registered Holder and the Registered
Holder shall be deemed to have been the record owner of such shares as of the
close of business on the date of such surrender.
2.4 Stock Certificates. Within a reasonable time after the exercise of
------------------
this Warrant in accordance with the terms hereof, certificates for the Warrant
Shares so purchased shall be delivered to the Registered Holder and, unless this
Warrant has been fully exercised or has expired, a new Warrant representing the
Warrant Shares with respect to which this Warrant shall not have been exercised
shall also be issued to the Registered Holder. The Company covenants that all
shares of stock which may be issued upon the exercise of this Warrant will be
duly authorized, validly issued, fully paid and nonassessable, and will be free
from all taxes, liens and charges with respect to the issue thereof (other than
taxes with respect to any transfer occurring contemporaneously with such issue).
3. No Fractional Shares or Scrip. No fractional shares or scrip
-----------------------------
representing fractional shares shall be issued upon the exercise of this
Warrant. Fractional amounts resulting from a net issue exercise under Section
2.2 hereof shall be rounded to the nearest whole share.
4. Charges, Taxes and Expenses. The Company shall pay all charges, taxes
---------------------------
and other expenses in connection with the issuance of certificates representing
the Warrant Shares purchased by the Registered Holder upon the exercise of this
Warrant, and such certificates shall be issued in the name of the Registered
Holder or in such name or names as may be directed by the Registered Holder;
provided, however, that in the event that certificates for Warrant Shares are
-------- -------
directed by the Registered Holder to be issued in a name other than that of the
Registered Holder, this Warrant shall be accompanied by a duly executed
Assignment Form when surrendered for exercise.
5. No Rights as Shareholders; Limitation of Liability. This Warrant does
--------------------------------------------------
not entitle the Registered Holder hereof to any voting rights or other rights as
a shareholder of the Company prior to the exercise hereof. No provision hereof,
in the absence of affirmative action by the Registered Holder to purchase shares
of Common Stock, and no enumeration herein of the rights or privileges of the
Registered Holder hereof, shall give rise to any liability of the Registered
Holder for the purchase price of any Common Stock or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
3
6. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
--------------------------------
the surrender hereof by the Registered Holder at the principal office of the
Company specified above, for a new Warrant of like tenor to be dated as of the
date of such exchange. The Company shall maintain at its principal office a
registry showing the name and address of the Registered Holder. This Warrant may
be surrendered for exchange, transfer or exercise, in accordance with its terms,
at such office of the Company, and, the Company shall be entitled to rely in all
respects, prior to written notice to the contrary, upon such registry.
7. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
-------------------------------------------------
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, the Company will make and deliver to
the Registered Holder a replacement warrant with terms that are substantially
the same as those contained herein provided that (i) in the event of loss, theft
or destruction of this Warrant, the Company receives indemnity or security
reasonably satisfactory to the Company, (ii) in the event of mutilation of this
Warrant, the Company receives this Warrant for cancellation, and (iii) in any
event the Company receives reimbursement of all reasonable expenses incurred in
connection with the issuance of a replacement warrant.
8. Saturdays, Sundays, Holidays. etc. If the last or appointed day for
---------------------------------
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
9. Adjustment. The number of shares for which this Warrant is
----------
exercisable, the Exercise Price and the time period for exercise are subject to
adjustment from time to time as follows:
9.1 Antidilution. Subject and pursuant to the provisions of this
------------
Section 9.1, the Exercise Price and number of shares of Common Stock subject to
this Warrant shall be subject to adjustment from time to time as set forth
hereinafter:
(1) In the event that the Company shall sell or issue either any
shares of its Common Stock or any rights, options, warrants or obligations or
securities containing the right to subscribe for or purchase any shares of
Common Stock ("Options") or exchangeable for or convertible into shares of
Common Stock ("Convertible Securities"), at a price per share, as determined
pursuant to Section 9.1(b), less than the Exercise Price then in effect on the
date of such sale or issuance, then the number of shares of Common Stock
purchasable upon exercise of this Warrant shall be determined by multiplying the
number of shares of Common Stock theretofore purchasable upon exercise of this
Warrant by a fraction (A) the numerator of which shall be the number of shares
of Common Stock outstanding on the date of sale or issuance of such shares of
Common Stock, Options or Convertible Shares immediately following such sale or
issuance, and (B) the denominator of which shall be the number of shares of
Common Stock outstanding on the date prior to the date of sale or issuance of
such shares of Common Stock, Options or Convertible Shares, plus the number of
shares of Common Stock which the aggregate
4
consideration received by the Company upon such issuance would purchase on such
date at the per share Exercise Price then in effect.
(2) The following provisions, in addition to other provisions in this
Section 9.1, shall be applicable in determining any adjustment under Section
9.1(a):
(1) In the event of the issuance or sale of shares of Common
Stock, part or all of the consideration for which shall be cash, the cash
consideration received by the Company therefor shall be deemed to be the amount
of gross cash proceeds of such sale of shares without deducting therefrom any
compensation paid or discount allowed in the sale, underwriting or purchase
thereof by underwriters or dealers or others performing similar services or any
expenses incurred in connection therewith.
(2) In the event of the issuance or sale of shares of Common
Stock, wholly or partly for a consideration other than cash, the amount of the
consideration other than cash received by the Company for such shares shall be
deemed to be the value of such consideration as determined by the Board of
Directors of the Company acting in good faith, irrespective of any accounting
treatment thereof. In the event of the issuance or sale of shares of Common
Stock (other than upon conversion or exchange) together with other stock or
securities or other assets of the Company for a consideration which is received
for both such shares of Common Stock and other securities or assets, the Board
of Directors of the Company acting in good faith shall determine what part of
the consideration so received is to be deemed to be the consideration for the
issuance of such shares of Common Stock, irrespective of any accounting
treatment thereof. Any determination by the Board of Directors pursuant to this
Section 9.1(b)(ii) may be challenged in good faith by the Registered Holder, and
any dispute shall be resolved by an investment banking firm of nationally
recognized standing selected by the Company and acceptable to the Registered
Holder.
(3) The price per share of any shares of Common Stock sold or
issued by the Company (other than pursuant to Options or Convertible Securities)
shall be equal to a price calculated by dividing (A) the amount of the
consideration received by the Company, as determined pursuant to Sections
9.1(b)(i) and 9.1(b)(ii), upon such sale or issuance by (B) the number of shares
of Common Stock sold or issued.
(4) In the event that the Company shall at any time after the
date hereof issue any Options or Convertible Securities, the following
provisions shall apply in making any adjustment pursuant to this Section 9.1:
(1) The price per share for which shares of Common Stock
are issuable upon the exercise of the Options or upon conversion or exchange of
the Convertible Securities shall be determined by dividing (i) the total amount,
if any, received or receivable by the Company as consideration for the issuance
of such Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise of
such Options or the conversion or exchange of such Convertible Securities, by
5
(ii) the aggregate maximum number of shares of Common Stock issuable upon the
exercise of such Option or upon the conversion or exchange of such Convertible
Securities.
(2) In determining the price per share for which shares of Common
Stock are issuable upon exercise of the Option or conversion or exchange of the
Convertible Securities and in computing any adjustment pursuant to Section
9.1(a) (i) the aggregate maximum number of shares of Common Stock issuable upon
the exercise of such Options or Convertible Securities shall be considered to be
outstanding at the time such Options or Convertible Securities were issued and
to have been issued for such price per share as determined pursuant to Section
9.1(b)(iv)(1), and (ii) the consideration for the issuance of such Options or
Convertible Securities and the amount of additional consideration payable to the
Company upon exercise of such Options or upon the conversion or exchange of such
Convertible Securities shall be determined in the same manner as the
consideration received upon the issuance of sale of shares of Common Stock as
provided in Sections 9.1(b)(i) and 9.1(b)(ii).
(3) On the expiration of such Options or the termination of any right
to convert or exchange any Convertible Securities, the number of shares of
Common Stock subject to this Warrant shall forthwith be readjusted to such
number of shares of Common Stock as would have been obtained had the adjustments
made upon the issuance of such Options or Convertible Securities been made upon
the basis of the delivery of only the number of shares of Common Stock actually
delivered upon the exercise of such Options or upon conversion or exchange of
such Convertible Securities.
(4) If the minimum purchase price per share of Common Stock provided
for in any Option or the rate at which any Convertible Securities are
convertible into or exchangeable for shares of Common Stock shall change or a
different purchase price or rate shall become effective at any time or from time
to time then upon such change becoming effective, the number of shares of Common
Stock subject to this Warrant shall forthwith be readjusted to such number of
shares as would have been obtained had the adjustments made upon the granting or
issuance of such Options or Convertible Securities been made upon the basis of
(i) the issuance of the number of shares of Common Stock theretofore actually
delivered upon the exercise of such Options or upon the conversion or exchange
of such Convertible Securities, and the total consideration received therefor,
and (ii) the granting or issuance at the time of such change of any such Options
or Convertible Securities then still outstanding or the consideration, if any,
received by the Company therefor and to be received on the basis of such changed
price or rate of exchange or conversion.
(5) Except as otherwise specifically provided herein, the date of
issuance or sale of shares of Common Stock, any Option or any Convertible
Security shall be deemed to be the date the Company is legally obligated to
issue such shares of Common Stock or such Option or Convertible Security.
(6) Anything hereinabove to the contrary notwithstanding, no
adjustment shall be made pursuant to Section 9.1(a) to the Exercise Price, or to
the number of shares of Common Stock purchasable upon the exercise of the
Warrant upon:
6
1. The issuance or sale by the Company of (1) any shares of
Common Stock pursuant to this Warrant or any other warrant or warrants to be
issued to the Registered Holder, (2) any Options granted pursuant to the
Company's 1999 Stock Option Plan or shares in respect of exercises of such
Options, (3) up to 250,000 shares of Common Stock in connection with strategic
alliances, licensing arrangements and the like approved by the Company's Board
of Directors or Options not issued under the Company's 1999 Stock Option Plan
and (4) securities issuable on the exercise of Options or conversion of
securities outstanding as of the date of this Warrant.
2. The issuance or sale of shares of Common Stock pursuant
to the exercise of Options or conversion or exchange of Convertible Securities
hereinafter issued for which an adjustment has been made (or was not required to
be made) pursuant to the provisions of this Section 9.1.
(3) No adjustment in the number of shares of Common Stock subject to
this Warrant shall be required under this Section 9.1 unless such adjustment
would require an increase or decrease in such number of shares of at least 1% of
the then adjusted number of shares of Common Stock issuable upon exercise of
this Warrant; provided, however, that any adjustments which by reason of the
-------- -------
foregoing are not required at the time to be made shall be carried forward and
taken into account and included in determining the amount of any subsequent
adjustment.
(4) Whenever the number of shares of Common Stock purchasable upon
the exercise of this Warrant is adjusted as provided in this Section 9.1, the
Exercise Price shall be adjusted (to the nearest cent) by multiplying the
Exercise Price immediately prior to such adjustment by a fraction (x) the
numerator of which shall be the number of shares of Common Stock purchasable
upon the exercise of the Warrant immediately prior to such adjustment, and (y)
the denominator of which shall be the number of shares of Common Stock so
purchasable immediately thereafter.
(5) If the Company after the date hereof shall take any action
affecting the shares of its Common Stock, other than actions described in this
Section 9, which, in the opinion of the Board of Directors of the Company, would
materially affect the rights of the Registered Holder, the Exercise Price and
the number of shares of Common Stock obtainable upon exercise of such Warrant
shall be adjusted in such manner as may be equitable under the circumstances.
9.2 Merger, Sale of Assets. etc. If at any time there shall be a capital
---------------------------
reorganization of the Common Stock (other than a subdivision, combination,
payment of dividend, reclassification or exchange of Common Stock provided for
below) or a merger or consolidation of the Company with or into another
corporation, or the sale of all or substantially all of the Company's properties
or assets to any other person, or a liquidation of the Company's assets or a
dissolution of the Company then, as a part of such reorganization, merger,
consolidation, sale, liquidation or dissolution, lawful provision shall be made
so that the Registered Holder of this Warrant shall thereafter be entitled to
receive upon exercise of this
7
Warrant, during the period specified in this Warrant and upon payment of the
Exercise Price then in effect, or, in the case of a liquidation of assets or a
dissolution to receive, upon such liquidation or dissolution, without taking any
further action, the number of shares of Common Stock or other securities or
property of the Company or of any other entity to which a holder of the Common
Stock issuable upon exercise of this Warrant would have been entitled in such
capital reorganization, merger, or consolidation or sale if this Warrant had
been exercised immediately before that capital reorganization, merger,
consolidation, or sale. In any such case, appropriate adjustment (as determined
in good faith by the Company's Board of Directors) shall be made in the
application of the provisions of this Warrant with respect to the rights and
interest of the Registered Holder of this Warrant after the reorganization,
merger, consolidation or sale such that the provisions of this Warrant
(including adjustment of the Exercise Price then in effect and number and kind
of securities purchasable upon exercise of this Warrant) shall be applicable
after that event in relation to any securities purchasable after that event upon
exercise of this Warrant.
9.3 Reclassification, etc. If the Company at any time shall, by stock
---------------------
dividend, subdivision, combination or reclassification of securities or
otherwise, change any of the securities to which purchase rights under this
Warrant exist into the same or a different number of securities of any class or
classes, this Warrant shall thereafter be deemed to represent the right to
acquire such number and kind of securities as a record holder of the same number
and kind of securities for which this Warrant is exercisable immediately prior
to the occurrence of such event would own or be entitled to receive after the
happening of such event, and the Exercise Price shall be proportionately
adjusted.
9.4 Certain Other Distributions. If at any time the Company shall take a
---------------------------
record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of cash, evidences of indebtedness or
any other securities or property of any nature whatsoever (other than securities
for which an adjustment is made pursuant to Section 9.3), then the Company shall
cause to be mailed to the Registered Holder at least ten days prior to the date
hereinafter specified, a notice stating the date on which a record is to be
taken for the purpose of such dividend or distribution.
9.5 Certificate as to Adjustment. In each case of any adjustment in
----------------------------
either the Exercise Price or in the number of shares of Common Stock, or other
stock, securities or property receivable on the exercise of this Warrant, the
Chief Financial Officer of the Company shall compute such adjustment in
accordance with the terms of this Warrant and shall prepare a certificate
setting forth such adjustment and showing in detail the facts upon which such
adjustment is based, including a statement of the adjusted Exercise Price. The
Company will cause copies of such certificate to be mailed (by first class mail,
postage prepaid) to the Registered Holder.
10. Restrictions on Transfer. This Warrant and the securities issuable
------------------------
upon exercise of this Warrant have not been registered under the Act or under
the securities laws of any states. These securities are subject to restrictions
on transferability and resale and may not be transferred or resold except as
permitted under the Act and the applicable state securities laws, pursuant to
8
registration or exemption therefrom, and holders should be aware that they may
be required to bear the financial risks of this investment for an indefinite
period of time. As a condition to the issuance of this Warrant and to its
exercise, the Registered Holder hereby represents and warrants to the Company
that:
10.1 The Warrant and, if applicable, the shares of Common Stock issuable
upon exercise hereof (collectively, the "Securities") have been acquired by the
----------
Registered Holder for investment and not with a view to the sale or other
distribution thereof within the meaning of the Act, and the Registered Holder
has no present intention of selling or otherwise disposing all or any portion of
the Securities.
10.2 The Registered Holder has acquired the Securities for the Registered
▇▇▇▇▇▇'s own account.
10.3 The Registered Holder is capable of evaluating the merits and risks
of any investment in the Securities, is financially capable of bearing a total
loss of this investment and has either: (i) a preexisting personal or business
relationship with the Company or its principals, or (ii) by reason of the
Registered Holder's business or financial experience, has the capacity to
protect his, her or its own interests in connection with this investment.
10.4 The Registered Holder has had access to all information regarding the
Company, its present and prospective business, assets, liabilities and financial
condition that the Registered Holder considers important to making the decision
to acquire the Securities and has had ample opportunity to ask questions of and
receive answers from the Company's representatives concerning an investment in
the Securities and to obtain any and all documents requested in order to
supplement or verify any of the information supplied.
10.5 The Registered Holder understands that the Securities shall be deemed
restricted securities under the Act and may not be resold unless they are
registered under the Act and qualified under any applicable state securities
laws unless an exemption from such registration and qualification is available.
10.6 The Registered Holder is familiar with the contents of Rule 144
promulgated under the Act ("Rule 144") which provides, in substance, that: (i)
--------
after the expiration of one year from the date restricted securities have been
purchased and fully paid for, a holder may transfer such restricted securities
provided certain public information, volume, manner of sale and notice
requirements are complied with; and (ii) after the expiration of two years from
the date restricted securities have been purchased and fully paid for, holders
who are not "affiliates" of the Company may sell such restricted securities
without satisfying such conditions.
10.7 The Registered Holder further understands that if the requirements of
Rule 144 are not met, registration under the Act, compliance with Regulation A
promulgated under the Act, or some other registration exemption will be required
for any disposition of the Securities; and that, although Rule 144 is not
exclusive, the Commission has expressed its
9
opinion that persons proposing to sell restricted securities other than in a
registered offering or other than pursuant to Rule 144 will have a substantial
burden of proof in establishing that an exemption from registration is available
for such offers or sales and such persons and the brokers who participate in the
transactions do so at their own risk.
11. Representation and Warranties of the Company. The Company hereby
--------------------------------------------
represents and warrants to the Registered Holder that:
11.1 Organization and Standing. The Company is a corporation duly
-------------------------
organized and existing under the laws of the State of Nevada and is in good
standing under such laws. The Company has the requisite corporate power to own
and operate its properties and assets, and to carry on its business as presently
conducted.
11.2 Corporate Power. The Company has requisite legal and corporate power
---------------
and authority to issue this Warrant and the Warrant Shares as provided herein
and to carry out and perform its obligations hereunder.
11.3 Capitalization. The authorized capital stock of the Company consists
--------------
of 20,000,000 shares of Common Stock, par value $.001 per share ("Common
Stock"), of which 9,512,523 shares are issued and outstanding as of the date
hereof, and 2,000,000 shares of Preferred Stock, par value $.001 per share, of
which 1,750,000 shares have been designated as Series B Preferred Stock ("Series
B Preferred"). 1,093,073 shares of Series B Preferred are issued and outstanding
as of the date hereof. All of the outstanding shares of Common Stock and Series
B Preferred are duly authorized, validly issued, fully paid and nonassessable.
Except for such outstanding shares of Common Stock and Series B Preferred and
(i) options to purchase 1,868,000 shares of Common Stock granted under the
Company's 1999 Stock Option Plan (the "Option Plan"), (ii) warrants to purchase
an aggregate of 475,965 shares of Common Stock, (iii) 2,400,000 shares of Common
Stock reserved for issuance upon exercise of options outstanding or to be
granted under the Company's 1999 Stock Option Plan, (iv) 475,965 shares of
Common Stock reserved for issuance upon exercise of warrants and (v) 1,093,073
shares of Common Stock issuable on conversion of shares of Series B Preferred
(assuming no adjustment to the conversion price of the Series B Preferred),
there are no other outstanding shares of capital stock or outstanding rights of
first refusal, preemptive rights or other rights, options, warrants, conversion
rights, or other agreements either directly or indirectly for the purchase or
acquisition from the Company or any of its significant shareholders of any
shares of its capital stock.
11.4 Authorization. All corporate action on the part of the Company, its
-------------
officers, directors and shareholders necessary for the authorization, sale,
issuance and delivery of this Warrant and the Warrant Shares pursuant hereto and
the performance of all of the Company's obligations hereunder has been taken.
This Warrant constitutes a valid and binding obligation of the Company,
enforceable in accordance with its terms, except as enforcement may be limited
by applicable bankruptcy laws or other similar laws affecting creditors' rights
generally, and the availability of equitable remedies may be limited by
applicable law. This Warrant is validly issued, fully paid and non-assessable.
The Warrant Shares have been duly and validly reserved and, when issued in
accordance with the provisions of this Warrant, will be validly issued, fully
10
paid and non-assessable. This Warrant is, and when issued in accordance with
the terms of this Warrant, the Warrant Shares will be, free of any liens or
encumbrances created by Registered Holder; provided, however, that this Warrant
and the Warrant Shares may be subject to restrictions on transfer under state
and/or federal securities laws.
11.5 Compliance with Instruments. The Company is not in violation of or
---------------------------
default under (i) any term of its certificate of incorporation or bylaws, as
amended, (ii) to the knowledge of the Company, any term or provision of any
material mortgage, indebtedness, indenture, contract, agreement, instrument,
judgment, order or decree, or (iii) to the knowledge of the Company, any
statute, rule or regulation applicable to the Company in each case where such
violation would materially and adversely affect the Company. To the knowledge
of the Company, the execution, delivery, performance and issuance of this
Warrant and the issuance of the Warrant Shares have not resulted in, and will
not result in, any material violation of, or conflict with, or constitute with
or without the passage of time and the giving of notice a material violation or
default under, the Company's certificate of incorporation or bylaws, as amended,
or any such material agreements except where the violation, conflict, or default
would not (a) have a material adverse effect on the ability of the Company to
perform its obligations hereunder, (b) have a material adverse effect on the
Company's business operations, or (c) result in the creation of any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of the
Company.
11.6 Governmental Consent, etc. To the Company's knowledge, no consent,
--------------------------
approval or authorization of or designation, declaration or filing with any
governmental authority on the part of the Company is required in connection with
the valid execution, delivery and performance of this Warrant, or the offer,
sale or issuance of this Warrant or the Warrant Shares, or the consummation of
any other transaction contemplated hereby, except for the making of filings and
the payment of fees as may be necessary under California Corporate Securities
Law of 1968, as amended, and any other applicable Blue Sky laws, which filings
and payments of fees, if required, will be accomplished in a timely manner,
except where the failure to file or pay any such fee would not (i) have a
material adverse effect on the ability of the Company to perform its obligations
hereunder or (ii) have a material adverse effect on the Company's business
operations.
12. Miscellaneous.
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12.1 Issue Date. The provisions of this Warrant shall be construed
----------
and shall be given effect in all respects as if it had been issued and delivered
by the Company on the date hereof.
12.2 Authorized Shares. The Company covenants that during the period
-----------------
the Warrant is exercisable, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of Common
Stock upon the exercise of any purchase rights under this Warrant, including
taking all actions necessary to increase the authorized number of shares of
Common Stock by a sufficient number of shares. The Company further covenants
that its issuance of this Warrant shall constitute full authority to its
officers
11
who are charged with the duty of executing stock certificates to execute and
issue the necessary certificates for shares of the Company's Common Stock upon
the exercise of the purchase rights under this Warrant.
12.3 No Impairment. The Company will not, by amendment of its
-------------
Certificate of Incorporation 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 such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Registered Holder hereof against impairment.
12.4 Notices of Record Date. In the event:
----------------------
(1) the Company shall take a record of the holders of its Common
Stock for the purposes of entitling them to receive any dividend (other than a
cash dividend) or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares or stock of any class or any other securities or
property, or to receive any other right; or
(2) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation; or
(3) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder a notice specifying, as the case may be, (i) the date on which
a record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right, or
(ii) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to take place, and
the time, if any is to be fixed, as of which the holders of record of Common
Stock shall be entitled to exchange their shares of Common Stock for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up. Such
notice shall be mailed at least thirty (30) days prior to the date therein
specified.
13. Nonwaiver and Expenses. No course of dealing or any delay or failure
----------------------
to exercise any right hereunder on the part of the Registered Holder shall
operate as a waiver of such right or otherwise prejudice the Registered ▇▇▇▇▇▇'s
rights, powers or remedies. If the Company fails to make, when due, any payments
provided for hereunder, or fails to comply with any other provision of this
Warrant, the Company shall pay to the Registered Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys' fees, including those of appellate proceedings, incurred
by the Registered Holder in collecting any amounts due pursuant hereto or in
otherwise enforcing any of its rights, powers or remedies hereunder.
12
14. Headings. The headings in this Warrant are for purposes of
--------
convenience only, and shall not be deemed to constitute a part hereof.
15. Governing Law. This Warrant shall constitute a contract under the
-------------
laws of the State of Delaware and shall be construed and enforced in accordance
with, and governed by, the internal laws of the State of Delaware, excluding
that body of law applicable to conflicts of laws.
16. Terms Binding. This Warrant shall be binding upon any successors or
-------------
assigns of the Company. By acceptance of this Warrant, the Registered Holder
(and each subsequent assignee, transferee or Registered Holder) accepts and
agrees to be bound by all the terms and conditions of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.
Dated: ______________ __, 1999
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:________________________________
Name:______________________________
Its:_______________________________
13
EXHIBIT A
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NOTICE OF EXERCISE
------------------
TO: ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
17. The undersigned hereby elects to purchase _____________________ shares
of Common Stock of ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. pursuant to the terms of this warrant,
and tenders herewith payment of the purchase price of such shares in full.
18. Payment of the purchase price shall be by (please mark the appropriate
method):
___________ Bank Check
___________ Wire Transfer
___________ Net Exercise
19. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
_______________________________
(Name)
_______________________________
(Address)
_______________________________
(Address)
20. The undersigned hereby represents and warrants that the aforesaid
shares of Common Stock are being acquired for the account of the undersigned for
investment and not with a view to the distribution thereof, and that the
undersigned has no present intention of distributing or reselling such shares
without registration under the Act or an exemption therefrom.
Date:_____________________ ___________________________________
(Signature)
EXHIBIT B
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ASSIGNMENT FORM
---------------
(To assign the warrant to which this Assignment Form is attached,
complete and execute this form. Do not use this form to
purchase shares upon exercise of the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
________________________________________________________________________________
(Please Print)
whose address is _______________________________________________________________
(Please Print)
Dated:____________, ____.
Holder's Signature: ________________
▇▇▇▇▇▇'s Address: ________________
________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant to which this Assignment Form is attached,
without alteration or enlargement or any change whatsoever. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.