RAYBOR MANAGEMENT, INC. WARRANT TO PURCHASE SHARES OF COMMON STOCK
THIS
WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS, AND MAY NOT BE MADE SUBJECT TO A SECURITY INTEREST,
PLEDGED, HYPOTHECATED, SOLD, ASSIGNED, OR OTHERWISE TRANSFERRED WITHOUT
COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE
FEDERAL AND STATE SECURITIES LAWS OR SUBMISSION TO RAYBOR MANAGEMENT, INC. OF
INFORMATION, AND AT ITS OPTION AN OPINION OF COUNSEL SATISFACTORY TO IT IN FORM
AND SUBSTANCE, INDICATING THAT REGISTRATION OR QUALIFICATION UNDER THOSE LAWS IS
NOT REQUIRED.
RAYBOR
MANAGEMENT, INC.
WARRANT
TO PURCHASE SHARES OF COMMON STOCK
| Date of Issuance: January 3 , 2005 |
Certificate
No. W-2 |
This
certifies that, for value received, BROADMARK CAPITAL,
LLC, with
its principal offices at 0000 Xxx Xxxxx Xxxxxx, 000 Xxxxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000, its successors and assigns (together with its successors and
assigns, the “Initial
Purchaser”), or
its assigns are entitled to subscribe for and purchase in accordance with the
provisions of this Warrant, from RAYBOR
MANAGEMENT, INC. (the
“Company”), a
Delaware corporation, with its principal offices at 000 Xxxx 00xx Xxxxxx,
Xxxxxxx, Xxxxxx 00000, 11,321 shares of .0001 par value Common Stock of the
Company (the “Subject
Common Stock”) for
the exercise price of $0.0001 per share (the “Warrant
Exercise Price”);
subject, however, to adjustment as provided in Section 4 hereof.
1. Certain
Definitions. In
addition to the terms defined in other provisions hereof, as used in this
Warrant the following terms (in their singular and plural forms) shall have the
specified meanings (all capitalized terms used herein but not defined herein
shall have the meanings ascribed to them in the Purchase
Agreement):
(1) “Act” shall
have the meaning assigned to that term in Section
9(1) of this
Warrant.
(2) “C3
Warrant” means
the Warrant to Purchase Shares of Common Stock issued to C3 Capital
Partners, LLC of event date herewith authorizing it to acquire shares of Common
Stock.
(3) “Common
Stock” means
the shares of Common Stock, $0.0001 par value, of the Company.
(4) “Common
Stock Deemed Outstanding” means,
at any given time, (i) the amount of Common Stock actually outstanding at
such time, plus (ii) the amount of Common Stock deemed to be outstanding
pursuant to Sections 4(2)
and 4(5),
regardless of whether or not the Options and Convertible Securities are actually
exercisable at such time.
(5) “Convertible
Securities” means
any evidence of debt, warrant, option or other security which is, directly or
indirectly, convertible into or exercisable or exchangeable for shares of Common
Stock, with or without the payment of additional consideration, either
immediately or upon arrival of a specified date or the happening of a specified
event.
(6) “Expiration
Date” shall
have the meaning assigned to that term in Section 2 of this
Warrant.
(7) “Holder” means
the Initial Purchaser or any Person or Persons to whom the Initial Purchaser or
any assignee has assigned this Warrant pursuant to the provisions of this
Warrant.
(8) “Liquidity
Event” means
(1) any acquisition of the Company by means of any transaction or series of
transactions (including, without limitation, any merger, consolidation or other
form of corporate reorganization) in which outstanding equity securities of the
Company are exchanged for securities or other consideration and pursuant to
which the holders of the outstanding voting securities of the Company
immediately prior to such consolidation, merger or other transaction fail to
hold equity securities representing a majority of the voting power of the
Company or surviving entity immediately following such consolidation, merger or
other transaction; (2) a sale of all or substantially all of the assets of
the Company; or (3) the sale of the Company’s equity securities in a public
offering registered under the Securities Act of 1933, as amended.
(9) “Market
Price” of any
security means the average of the closing prices of such security’s sales on all
securities exchanges on which such security may at the time be listed, or, if
there has been no sales on any such exchange on any day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on any day such security is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ system as of 4:00 p.m.,
New York time, or, if on any date such security is not quoted in the NASDAQ
system, the average of the highest bid and lowest asked prices on such day in
the domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization, in each such case
averaged over a period of 21 days consisting of the day as of which
“Market
Price” is
being determined and the 20 consecutive Business Days prior to such day. If at
any time such security is not listed on any securities exchange or quoted in the
NASDAQ system or the over-the-counter market, the “Market
Price” shall
be the fair value thereof determined by the Company. The determination of the
“Market
Price” of
securities of the Company pursuant to Section 3 shall be
made assuming such sale is made between a willing buyer and a willing seller and
taking into account all relevant factors determinative of value without regard
to any discount for any lack of liquidity attributable to a lack of a public
market for such security, any block discount or discount attributable to the
size of any Person’s holdings of such security or any minority interest or any
voting rights thereof or lack thereof. The determination of such appraiser shall
be final and binding upon the parties, and the fees and expenses of such
appraiser shall be borne by the Company.
(10) “Options” means
any rights to subscribe for or to purchase or any options to purchase Common
Stock or Convertible Securities from the Company.
2
(11) “Organic
Change” shall
have the meaning assigned to that term in Section 4(1) of this
Warrant.
(12) “Public
Offering” means
an offering of capital stock or other Equity Interests of the Company (or any
successor to the Company) that is registered with the Securities and Exchange
Commission under the Act.
(13) “Qualified
Public Offering” means a
public offering of Commons Stock or other equity security of the Company or its
successor, as applicable; in which the Company or its successor, as applicable,
is valued on a pre-offering basis as $25,000,000 or more and in which the
Company or its successor receives net proceeds of at least
$10,000,000.
(14) “Qualified
Sale” means
any merger, consolidation, change of control, liquidation or sale of all or
substantially all of the Company’s shares of capital stock or assets or the
assets of any of its subsidiaries (or shares of capital stock of any subsidiary
if subsequently held by the Company’s stockholders) whereby the cash proceeds or
the Market Price of the marketable securities issued in exchange for the sale of
the Company’s shares of capital stock (or any subsidiary, as the case may be)
(as determined on the effective date of such exchange) results in an aggregate
gross proceed in cash and /or stock to the holders of the Company’s capital
stock, in respect of their capital stock and exclusive of any amount received in
payment of a debt, of at least $25,000,000.
(15) “Warrants” means
this Warrant, all other warrants issued to Initial Purchaser pursuant to the
Financial Advisory/Investment Banking Agreement dated September 29, 2003
between the Company and Initial Purchaser, as amended, and all warrants issued
in exchange, substitution or replacement of any of the foregoing.
2. Term. This
Warrant shall be exercisable at the option of the Holder during the ten (10) day
period immediately preceding the consummation of a Liquidity Event and, to the
extent not so exercised, shall terminate and become no longer exercisable upon
the consummation of a Liquidity Event. The Warrants shall terminate, if not
earlier exercised or terminated as provided above, on the date that is three (3)
years from the date of closing of the purchase by C3 of that
certain initial 12% Secured Note of the Company and other issuers in the
principal amount of $1,500,000 as provided by Section 2.2 of that
certain Securities Purchase Agreement dated January 3, 2005 (the “Purchase
Agreement”) among the Company, C3 and the
other parties thereto (the “Expiration
Date”). At
5:00 p.m. Kansas City, Missouri time on the Expiration Date, this Warrant and
all rights and obligations hereunder shall automatically terminate and shall be
of no further force and effect.
3. Exercise
of Warrant. This
Warrant may be exercised, in whole but not in part, by presentation and
surrender of this Warrant, with the notice of exercise form attached hereto as
Exhibit
A duly
completed and executed, and payment of the applicable Warrant Exercise Price for
the Subject Common Stock (or the portion thereof for which this Warrant is being
exercised), in cash or by surrender to the Company of debt or equity securities
of the Company or any of its Subsidiaries having a Market Price (including any
interest due thereon) in the amount of the Warrant Exercise Price of the shares
for which this Warrant is being exercised, to the Company at its principal
office. If the Warrant is tendered in connection with a registered Public
Offering of the Company’s securities and the exercise is contingent upon the
closing of such offering, the form attached hereto as Exhibit A-1 shall be
delivered by the Holder in lieu of Exhibit A. The
Holder shall be deemed to become the holder of the Subject Common Stock (or the
portion thereof for which this Warrant is being exercised), and the Subject
Common Stock (or such portion thereof) shall be deemed to have been issued,
immediately before the close of business on the date on which this Warrant is
exercised. Notwithstanding any other provision hereof, if an exercise of any
portion of this Warrant is to be made in connection with a registered Public
Offering, the exercise of any portion of this Warrant may, at the election of
the Holder hereof, be conditioned upon the consummation of the Public Offering,
in which case such exercise shall not be deemed to be effective until the
consummation thereof. If this Warrant is exercised, a certificate representing
the number of shares of Common Stock as to which this Warrant has been exercised
shall be delivered to the Holder as soon as possible and in any event within ten
(10) days after the exercise. The Company shall assist and cooperate with the
Holder to make any required governmental filings or obtain any required
governmental approvals prior to or in connection with any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company). In the event of a partial exercise of this Warrant, the Company
shall promptly issue to the Holder a replacement Warrant containing the same
terms and conditions except for a reduction in the number of shares comprising
the Subject Common Stock to take into account the partial exercise.
3
4. Certain
Adjustments. The
Warrant Exercise Price and number and type of securities purchasable upon the
exercise of this Warrant shall be subject to adjustment from time to time upon
the occurrence of certain events, as follows:
(1) Adjustment
of Amount of Subject Common Stock Upon Certain Issuances and
Sales.
A. Issuances
and Sales Below Base Price. Except
for adjustments determined pursuant to Sections 4(3)
and (4) below,
if and whenever after the Date of Issuance the Company issues or sells, or in
accordance with this Section 4(1) is
deemed to have issued or sold, any shares of Common Stock for a consideration
per share less than the then current Base Price, as determined in Section 4(1)B, the
amount of Subject Common Stock acquirable upon exercise of this Warrant shall be
adjusted in the manner provided by Section 4(1)C.
B. Base
Price and Adjustments. If and
whenever on or after the Date of Issuance the Company issues or sells, or in
accordance with this Section is deemed to have issued or sold, any shares of
Common Stock for a consideration per share less than the current Base Price as
determined herein (as such amount is proportionately
adjusted for splits, combinations, distributions and recapitalizations
affecting
Common Stock after the original date of issuance of this Warrant), then
immediately upon such issue or sale the Base Price shall be reduced to the Base
Price determined by multiplying the Base Price in effect immediately prior to
such
issue or sale (or
deemed issue or sale) by a fraction, the numerator of which shall be the sum of
(1) the amount of Common Stock Deemed Outstanding immediately prior to such
issue or sale (or deemed issue or sale) multiplied by the Base Price as of the
date of such issue or sale (or deemed issue or sale), plus (2) the
consideration, if any, received by the Company
upon such issue and sale
(or deemed issue or sale), and the denominator of which shall be the product
derived by multiplying the Base Price by the amount of Common Stock Deemed
Outstanding immediately after such issue or sale (or deemed issue or sale). The
initial Base Price shall be $0.56.
4
C. Adjustments
in Subject Common Stock. Upon
each such adjustment of the Base Price hereunder, the amount of Subject Common
Stock acquirable upon exercise of this Warrant shall be adjusted to the amount
of Subject Common Stock determined by multiplying the Base Price in effect
immediately prior to such adjustment by the amount of Subject Common Stock
acquirable upon exercise of this Warrant immediately prior to such adjustment
and dividing the product thereof by the Base Price resulting from such
adjustment.
D. Exclusions. No
adjustment under this Section
4(1) shall be
made in connection with the issuance of (i) up to 1,707,809 shares of
Common Stock (subject to adjustment for stock splits, dividends, combinations
and the like) to officers, directors, consultants or employees of the Company
(except the Management Shareholders) pursuant to equity incentive plans, or
amendments to the same, consented to in accordance with the Purchase Agreement,
(ii) any Common Stock pursuant to this Warrant, and (iii) any Common
Stock pursuant to the C3
Warrant.
(2) Effect
on Base Price of Certain Events. For
purposes of determining the adjusted Base Price and amount of Subject Common
Stock acquirable upon exercise of this Warrant under Section 4(1)C, the
following shall be applicable:
A. Issuance
of Rights or Options. If the
Company in any manner grants or sells any Options and the price per share for
which Common Stock is issuable upon the exercise of such Options, or upon
conversion or exchange of any Convertible Securities issuable upon exercise of
such Options, is less than the Base Price determined immediately prior to such
granting or sale, then immediately upon such issue or sale in effect immediately
prior to the time of the granting or sale of such Options, then the total
maximum number of shares of Common Stock issuable upon the exercise of such
Options, or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable
upon the exercise of such Options,
shall be deemed to
be outstanding
and to have been
issued and sold by the Company at the time of the granting or sale of such
Option for such price per share. For purposes of this paragraph, the
"price
per
share for
which Common Stock is issuable upon exercise of such Options, or upon conversion
or exchange of such Convertible Securities" is
determined by dividing (A) the total amount, if any,
received or receivable
by the Company
as consideration
for the
granting or sale of such
Options, plus the minimum aggregate amount of additional consideration payable
to the Company upon the exercise of all such Options, plus in the case of such
Options which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the issuance or
sale of such Convertible Securities and the conversion or exchange thereof, by
(B) the total maximum amount of Common Stock issuable upon the exercise of
such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No adjustment under this
Section shall be made upon the actual issuance of such Common Stock or of such
Convertible Securities upon the exercise of such Options or upon the actual
issuance of such Common Stock upon conversion or exchange of such Convertible
Securities.
5
B. Issuance
of Convertible Securities. If the
Company in any manner issues or
sells any
Convertible Securities and the
price per
share for
which Common
Stock is
issuable upon conversion or exchange thereof is less than the Base Price
determined immediately prior to such issuance or sale, then the maximum amount
of Common Stock issuable upon conversion or exchange of all such Convertible
Securities shall be deemed to be outstanding and to have been issued and sold by
the Company at the time of the issuance or sale of such Convertible Securities
for such price per share. For the purposes of this paragraph, the “price
per share for which Common Stock is issuable upon conversion or exchange
thereof”' is
determined by dividing (A) the total amount received or receivable by the
Company as consideration for the issue or sale of such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the conversion or exchange thereof, by (B) the total
maximum amount of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities. No adjustment under this Section shall be made upon
the actual issuance of such Common Stock upon conversion or exchange of such
Convertible Securities, and if any such issuance or sale of such Convertible
Securities is made upon exercise of any Options for which adjustments of the
Base Price had been or are to be made pursuant to other provisions of this
Section, no further adjustment of the Base Price shall be made by reason of such
issue or sale.
C. Change
in Option Price or Rate. If the
purchase price provided for in any Option, the additional consideration (if any)
payable upon the issuance, conversion or exchange of any Convertible Security,
or the rate at which any Convertible Security is convertible into or
exchangeable for Common Stock changes at any time, the Base Price in effect at
the time of such change shall be adjusted immediately to the Base Price which
would have been in effect
at such
time had such Option or Convertible Security originally provided for such
changed purchase price, additional consideration or changed conversion rate, as
the case may be, at the time initially granted, issued or sold and the amount of
Subject Common Stock shall be correspondingly adjusted; provided, that if
such adjustment of the Base Price would result in an increase in the Base Price
then in effect, such adjustment shall not be effective until 30 days after
written notice thereof has been given to all Holders. For purposes of this
Section, if the terms of any Option or Convertible Security which was
outstanding as of the Date of Issuance are changed in the manner described in
the immediately
preceding
sentence, then such Option or Convertible Security and the Subject Common Stock
deemed issuable upon exercise, conversion or exchange thereof shall be deemed to
have been issued as of the date of such change; provided, that no
such change shall at any time cause the Base Price to be increased.
D. Treatment
of Expired Options and Unexercised Convertible Securities. Upon the
expiration (but not the extension) of any Option or the termination of any right
to convert or exchange any Convertible Securities without the exercise of such
Option or right, the Base Price then in effect and the amount of Common Stock
acquirable hereunder shall be adjusted immediately to the Base Price which would
have been in effect at the time of such expiration or termination had such
Option or Convertible Securities, to the extent outstanding immediately prior to
such expiration or termination, never been issued; provided, that if
such expiration or termination would result in an increase in the Base Price
then in effect, such increase shall not be effective until 30 days after written
notice thereof has been given to all Holders. For
purposes
of this Section, the expiration or termination of any Option or Convertible
Security which was outstanding as of the date of issuance of this Warrant shall
not cause the Base Price hereunder to be adjusted unless, and only to the extent
that, a change in the terms of such Option or Convertible Security caused it to
be deemed to have been issued after the date of issuance of this
Warrant.
6
E. Calculation
of Consideration Received. If any
Common Stock, Options or Convertible Securities are issued or sold or deemed to
have been issued or sold for cash, the consideration received therefor shall be
deemed to be the net amount received by the Company therefor. In case any Common
Stock, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of the consideration other than cash received by the
Company shall be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Company shall be the Market Price thereof as of the date of
receipt. In case any Common Stock, Options or Convertible Securities are issued
to the owners of the non-surviving entity in connection with any merger in which
the Company is the surviving entity, the amount of consideration therefor shall
be deemed to be the fair value of such portion of the net assets and business of
the non-surviving entity as is attributable to such Common Stock, Options or
Convertible Securities, as the case may be. The
fair
value of
any consideration other than cash and securities shall
be
determined
by the
Company.
F. Integrated
Transactions. In case
any Option or Convertible Security is issued in connection with the issue or
sale of other equity securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
Options or Convertible Securities by the parties thereto, the Options and
Convertible Securities shall
be deemed
to have been issued without consideration.
G. Treasury
Shares. The
amount of Common Stock outstanding at any given time does not include shares
owned or held by or for the account of the Company and the disposition of any of
the Company’s shares so owned or held shall be considered an issue or sale of
Common Stock.
H. Record
Date. If the
Company takes a record of the holders of Common Stock for the purpose of
entitling them (A) to receive a dividend payable in Common Stock, Options
or in Convertible Securities or (B) to subscribe for or purchase Common
Stock, Options
or Convertible Securities, then such record date
shall be deemed to
be the
date of the
issuance or sale
of the shares of Common
Stock deemed to have been
issued or sold upon the declaration of such Dividend or the
making thereof or the date of the
granting of such right of subscription or purchase, as the case may
be.
(3) Subdivision
or Combination of Common Stock. If the
Company at any time subdivides (by any share split, dividend or otherwise) its
Common Stock into a greater amount of shares, the Base Price in effect
immediately prior to such subdivision shall be proportionately reduced and the
amount of Subject Common Stock obtainable upon exercise of this Warrant shall be
proportionately increased. If the Company at any time combines (by reverse stock
split or otherwise) its Common Stock into a smaller amount of shares, the Base
Price in effect immediately prior to such combination shall be
proportionately
increased and the
amount of
Subject Common Stock obtainable upon exercise of this
Warrant shall be proportionately decreased.
7
(4) Stock
Dividends, Reclassifications, Mergers or Sales. Any
dividend, distribution, recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company’s assets
or other transaction, which in each case is declared or effected in such a way
that the holders of Common Stock are entitled to receive (either directly or
upon subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an “Organic
Change.” Prior
to the consummation of any Organic Change, the Company shall make appropriate
provision (in form and substance reasonably satisfactory to the Holder) to
ensure that the Holder shall thereafter have the right to acquire, upon exercise
of this Warrant, in lieu of or in addition to (as the case may be) the Subject
Common Stock as constituted immediately prior to such Organic Change, such
shares of stock, securities or assets as may be issued or payable in connection
with such Organic Change with respect to or in exchange for the number of shares
of Common Stock that is equal to the number of shares comprising the Subject
Common Stock immediately prior to such Organic Change. In any such case, the
Company shall make appropriate provision (in form and substance reasonably
satisfactory to the Holder) with respect to the Holder’s rights and interests
under this Warrant to ensure that all the provisions of this Warrant (or
substitute provisions conferring comparable rights and benefits on the Holder)
shall thereafter continue to be applicable. The Company shall not effect any
such consolidation, merger or sale except a Qualified Sale, unless, prior to the
consummation thereof, the successor entity (if other than the Company) resulting
from the consolidation or merger or the entity purchasing such assets assumes by
written instrument (in form and substance satisfactory to the Holder), the
obligation to deliver to the Holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the Holder may be entitled to
acquire upon exercise of this Warrant.
(5) Certain
Events. If any
event occurs of the type contemplated by the provisions of this Section 4 but not
expressly provided for by such provisions (including, without limitation, the
granting of equity appreciation rights, phantom equity rights or other rights
with equity features, except as permitted by Section 4(1)D of this
Warrant), then the Company's board of directors shall make an
appropriate adjustment in the
Warrant Exercise Price and/or the Base Price, as the case may be, and
the amount of
Subject Common Stock
obtainable upon exercise of this Warrant so as to protect the rights of
the
Holders; provided, that no
such adjustment shall increase the Warrant Exercise Price and/or the Base Price,
as the case may be, as otherwise determined pursuant to this Section 4 or
decrease the amount of Subject Common Stock issuable upon exercise of this
Warrant.
(6) No
Avoidance. In the
event the Company shall enter into any transaction for the purpose of avoiding
the provisions of this Section, the benefits provided by such provisions shall
nevertheless apply and be preserved.
(7) Notices.
Except
for those transactions described in Section 4(1)D of this
Warrant, the Company shall give written notice to the Holder at least twenty
(20) days prior to the date on which the Company closes its books, takes a
record or pays or distributes any cash or property (i) with respect to any
distribution or other payment upon or with respect to any Common Stock, (ii)
with respect to any subscription offer to any shareholder of the Company, or
(iii) for determining rights to vote with respect to any Organic Change,
dissolution or liquidation. The Company shall give written notice to the Holder
at least twenty (20) days prior to the date of closing of a Liquidity Event,
Qualified Public Offering or Qualified Sale. The Company shall also give written
notice to the Holder at least ten (10) days prior to the date on which any
Change in Control shall take place or, if later, within ten (10) days after the
Company learns that the Change in Control has occurred or is going to occur.
Moreover, except for those transactions described in Section 4(1)D of this
Warrant, the Company shall give at least ten (10) days prior written notice to
the Holder before entering into any agreement with respect to, or undertaking
any action in connection with, any issuance of Common Stock to any Person other
than in connection with the exercise of any Warrants.
8
Whenever
the Subject Common Stock purchasable hereunder is adjusted pursuant to this
Section
4, the
Company shall prepare a certificate signed by the Company’s chief financial
officer setting forth, in reasonable detail, the event requiring the adjustment
and the methodology used by the Company in determining the adjustment, and shall
cause a copy of the certificate to be delivered to the Holder in accordance with
Section
20 of this
Warrant.
(8) Purchase
Rights. If at
any time the Company grants or issues any Convertible Securities or rights to
purchase Common Stock, options, warrants, securities or other similar property
(the “Purchase
Rights”) in
respect of its Common Stock not otherwise deemed an Organic Change or otherwise
covered by any other adjustment provision of Section 4
hereunder, then the Holder of this Warrant shall be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which such Holder could have acquired if such Holder had held the Subject Common
Stock acquirable upon full exercise of this Warrant immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the shareholders
are to be determined for the grant, issue or sale of such Purchase Rights
(disregarding any limitations on the exercisability hereof on the date
thereof).
5. Adjustment
of Number of Outstanding Shares. Until
the day immediately preceding the Expiration Date, in connection with any
adjustment pursuant to Section
4 which
would have the effect of
increasing the amount of
Subject Common Stock which would be
issuable upon exercise of this
Warrant (assuming for this purpose that no portion of this Warrant had been
exercised), the
Company shall issue to
each
Holder who
retains shares of Common Stock previously obtained upon any
exercise of this
Warrant, that amount of
Common Stock which, when added to
the
amount of Common Stock held by such Holder, would equal the product of
(a) the amount of
Common Stock held by
such
Holder
(after exercise of this
Warrant) multiplied by
(b) a fraction, (i) the numerator of which is the maximum amount of
Common Stock which would have been obtainable upon exercise of this Warrant
after giving effect to such adjustment;
and (ii) the denominator
of which is the maximum amount of Common Stock which
would have been obtainable upon exercise of this Warrant prior to giving effect
to such adjustment (assuming for purposes of clauses (i)
and (ii) that no
portion of this Warrant
had been previously
exercised); provided, that
this Section
will not apply
to any such
increase effected pursuant to Section 4 to the
extent attributable to a subdivision, by split, dividend, recapitalization or
otherwise, of the classes of outstanding shares of Common Stock which has
otherwise resulted in issuance of the same amount of shares to any such Holder.
It is understood and agreed that this Section 5 shall
only apply to the Initial Purchaser and those Holders meeting the requirements
set forth in Section 9 and no
other transferee of the Subject Common Stock.
9
6. Reservation
of the Subject Common Stock. The
Subject Common Stock will, upon issuance, be fully paid and nonassessable and
free from any and all taxes and charges (other than income, gross receipts or
franchise taxes, charges and assessments) with respect to the issue thereof, and
the Holder shall have no obligation to make any capital contribution or other
payment to the Company other than payment of the Warrant Exercise Price.
7. Closing
of Books. Except
as otherwise provided in this Warrant and to the extent necessary to assure
compliance with federal, state, or other securities laws, the Company shall not
close its books against the issuance of any Common Stock in any manner that
interferes with the timely exercise of this Warrant.
8. Compliance
with Securities Laws.
(1) Investment
Intent. The
Holder, by accepting this Warrant, represents to the Company those
representations and warranties set forth in Section 8.4 of the
Purchase Agreement as if Holder had been a “Purchaser” thereunder, including but
limited to that Holder is an “accredited investor” as that term is defined by
the Securities and Exchange Commission and that Holder (an any authorized
transferee thereof) shall be an “accredited investor” upon any exercise
hereunder and that this Warrant is being acquired for (and if this Warrant is
exercised the Subject Common Stock will be acquired for) its own account for
investment purposes only and not with a view to a distribution thereof, and that
the Holder will not offer, sell or otherwise dispose of this Warrant (or the
Subject Common Stock) except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended (the “Act”). This
Warrant (and any substitute Warrant) and all certificates representing the
Subject Common Stock issued hereunder (unless registered under the Act and any
applicable state securities) shall be stamped or imprinted with a legend in
substantially the following form:
THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE MADE SUBJECT TO A
SECURITY INTEREST, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED, OR OTHERWISE
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS
OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR SUBMISSION TO RAYBOR
MANAGEMENT, INC. OF INFORMATION, AND AT ITS OPTION AN OPINION OF COUNSEL
SATISFACTORY TO IT IN FORM AND SUBSTANCE, INDICATING THAT REGISTRATION OR
QUALIFICATION UNDER THOSE LAWS IS NOT REQUIRED.
(2) Removal
of Legends. When the
restrictions on Transferability shall no longer be required by applicable
federal or state securities laws, as reflected in a written opinion, in form and
substance reasonably satisfactory to the Company, of counsel reasonably
satisfactory to the Company, the Company shall, or shall instruct its transfer
agent or warrant agent, as appropriate, to, issue new certificates evidencing
such securities, registered in the name of the Holder, not bearing the legends
required by this Section 8, with
respect to federal and state securities law requirements.
10
9. Transferability. Subject
to any transferee meeting the suitability standards set forth in Section 8 hereof
and the Holder transferring such portion of the Warrant equaling at least 10% of
the Subject Common Stock as of the Issuance Date, this Warrant and all rights
hereunder are transferable, in whole or in part, without charge to the Holder,
upon surrender of this Warrant with a properly executed Assignment (in the form
of Exhibit
B attached
hereto) at the principal office of the Company. Notwithstanding the foregoing,
this Warrant may only be transferred to up to four additional Holders which must
be, at the time of transfer, affiliates of the Initial Purchaser. Any person in
possession of this Warrant properly endorsed to him or it is authorized to
represent himself or itself as absolute owner hereof and is empowered to
transfer absolute title hereto by endorsement and delivery hereof to a bona fide
purchaser hereof for value; each prior taker or owner waives and renounces all
of his equities or rights in this Warrant in favor of each such bona fide
purchaser, and each such bona fide purchaser shall acquire absolute title hereto
and to all rights represented hereby. The Company shall be entitled to treat the
Person in whose name this Warrant is registered as the owner and holder for all
purposes.
10. Rights
as Holder; Information. The
Holder shall not be entitled to vote or receive any dividends or distributions
of the Company in connection with this Warrant or be deemed the owner of the
Subject Common Stock until exercise of this Warrant, nor shall anything
contained herein be construed to confer upon the Holder, solely as the Holder of
this Warrant, any of the rights of a shareholder of the Company or any right to
vote for the election of members of the Board of Directors or upon any matter
submitted to the shareholders of the Company at any meeting thereof or to
receive notice of meetings, until this Warrant has been exercised and the
Subject Common Stock has become deliverable, as provided herein. The Company
shall take no action or position (except as required as a result of a final
decision of a court or a Governmental Body having jurisdiction over the Company
for tax matters) which would reflect the Holder as an owner of the Subject
Common Stock until exercise of this Warrant. Notwithstanding the foregoing, the
Company may report the Holder’s beneficial ownership of the Subject Common Stock
as required by federal and state securities law.
11. Amendment
and Certain Waivers. Except
as otherwise provided herein, the provisions of this Warrant may be amended and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company has obtained the
prior written consent of the Holder.
12. Benefit
of Parties: Assignability. All of
the Company’s obligations relating to the Subject Common Stock shall survive the
exercise of this Warrant, and all of the Company’s covenants and agreements
shall inure to the benefit of the Holder’s successors and assigns. The Company
may not assign or transfer its obligations hereunder, except with the prior
written consent of the Holder. The Holder and any subsequent holder of the
Subject Common Stock shall be entitled to enforce all of the provisions of this
Warrant, and all holders of the Subject Common Stock shall be deemed to be
third-party beneficiaries of the provisions of this Warrant.
13. Captions. The
captions of the sections of this Warrant are solely for convenient reference and
shall not be deemed to affect the meaning or interpretation of any provision of
this Warrant.
11
14. Governing
Law; Consent to Forum. This
Warrant shall be governed by the laws of the State of Oregon without giving
effect to any choice of law rules thereof.
15. WAIVER
OF JURY TRIAL AND COUNTERCLAIMS. TO THE
FULLEST EXTENT PERMITTED BY LAW, AND AS SEPARATELY BARGAINED-FOR CONSIDERATION
TO HOLDER, THE COMPANY HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY (WHICH XXXXXX
ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING
OUT OF OR OTHERWISE RELATING TO THIS WARRANT OR THE HOLDER’S CONDUCT IN RESPECT
OF THE FOREGOING.
16. Lost
Warrants or Share Certificates. The
Company covenants to the Holder that, upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant or any certificate representing the Subject Common Stock and, in
the case of any such loss, theft, or destruction, upon receipt of an indemnity
bond or other agreement or security reasonably satisfactory to the Company or in
the case of any such mutilation upon surrender and cancellation of the Warrant
or certificate, the Company shall make and deliver a new Warrant or certificate,
of like tenor, in lieu of the lost, stolen, destroyed, or mutilated Warrant or
certificate.
17. Notices. All
notices, demands or other communications to be given or delivered under or by
reason of the provisions of this Warrant shall be in writing and shall be deemed
to have been given when delivered personally to the recipient, sent to the
recipient by reputable overnight courier service (charges prepaid), mailed to
the recipient by certified or registered mail, return receipt requested and
postage prepaid or sent via facsimile to the Holder at the address set forth in
the first paragraph of this Warrant or to any other address or number as the
Holder may specify in writing.
18. Remedies. The
rights and remedies provided by this Warrant shall be cumulative, and shall be
in addition to and not exclusive of other rights and remedies available at law
or in equity. The exercise or waiver by the Holder of any right or remedy
available under this Warrant shall not be deemed to be a waiver of any other
right or remedy available under this Warrant at law or in equity.
19. Survival
of Agreements. All
agreements of the Company and the Holder contained herein shall survive until,
by their respective terms, they are no longer operative; provided, however, this
Warrant shall terminate in all respects on the Expiration Date. Notwithstanding
the foregoing or any other provision of this Warrant, the Company shall remain
liable after the Expiration Date for any breach or default of the Company
occurring prior to the Expiration Date.
20. Lockup
Agreements. Holder
agrees not to effect any sale or distribution of the Company’s Equity Interests
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker, pursuant to the provisions of
Rule 144 adopted under the Act, during the 14 days prior to and the 180-day
period beginning on the effective date of (i) any underwritten offering of
the Company’s Equity Interests (except as part of such underwritten
registration) or (ii) the Public Offering in each case unless the
underwriters managing the registered Public Offering and the Company otherwise
agree “Public Offering” means an offering of Common Stock or other equity
securities by the Company, or by any successor to the Company, that is
registered under the Securities Act.
12
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly
authorized representative as of day and year first above written.
| RAYBOR
MANAGEMENT, INC.,
a
Delaware corporation
By: _________________________
Name: _______________________
Title: ________________________ |
13
EXHIBIT
A
NOTICE
OF EXERCISE
To: Raybor
Management, Inc.
1. The
undersigned hereby elects to purchase the Subject Common Stock of Raybor
Management, Inc. (the “Company”) or the Subsidiaries, pursuant to the terms of
the attached Warrant, and tenders herewith payment of [$_______], the applicable
Warrant Exercise Price under the provisions of such Warrant.
2. If Stock
in the Company or the Subsidiary is certificated, please issue a certificate or
certificates representing the Subject Common Stock of the Company in the name of
the undersigned or in such other name or names as are specified
below:
(Name)
(Address)
3. The
undersigned represents that the Subject Common Stock is being acquired for the
account of the undersigned for investment purposes only and not with a view to,
or for resale in correction with, the distribution thereof.
| By:
__________________________
By:
__________________________
(Signature) |
(Date)
EXHIBIT
A-1
NOTICE
OF EXERCISE
To: Raybor
Management, Inc.
1. Contingent
upon and effective immediately prior to the closing of the public offering
contemplated by the Registration Statement of Raybor Management, Inc. or a
Subsidiary on Form _____, filed on ____________, ____ (“Closing”), the
undersigned hereby elects to purchase the Subject Common Stock pursuant to the
terms of the attached Warrant, pursuant to the provisions of such
Warrant.
2. If Stock
in the Company or a Subsidiary is certificated, please deliver to the custodian
for the selling shareholders a certificate representing the Subject Common Stock
in the name of The undersigned or in such other name or names as are specified
below:
(Name)
(Address)
3. The
undersigned has instructed the custodian for the selling shareholders to deliver
to the Company [$_______] as the full Warrant Exercise Price from the proceeds
of the sale of the Subject Common Stock.
| By:
__________________________
By:
__________________________
(Signature) |
(Date)
EXHIBIT B
ASSIGNMENT
FORM
(To be
executed only upon the assignment of the Warrant)
FOR
VALUE RECEIVED, the
undersigned registered holder of the attached Warrant hereby sells, assigns and
transfers unto ______________________________, whose address is
______________________________, all or the rights of the undersigned under the
attached Warrant of Raybor Management, Inc., an Oregon corporation (the
“Company”), and
does hereby irrevocably constitute and appoint ______________________________
its attorney-in-fact to register such transfer on the books of the Company
maintained for the purpose, with full power of substitution in the
premises.
Dated:
_______________________
| By:
__________________________
By:
__________________________
(Signature) |
