Exhibit 2
Warrant to Purchase
** ___________ **
______________________
Shares of Common Stock
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER
THIS WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION SHALL BE
APPLICABLE, THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
Void after 5:00 P.M. New York City time on the last day of the Exercise Period,
as defined in the Warrant
COMMON STOCK PURCHASE WARRANT
OF
PPI CAPITAL GROUP, INC.
This is to certify that, FOR VALUE RECEIVED, ____________________ or
assigns ("Holder"), is entitled to purchase, subject to the provisions of this
Warrant, from PPI Capital Group, Inc., a Utah corporation (the "Company"), at an
exercise price per share of $.001, subject to adjustment as provided in this
Warrant, ___________ (_______) shares of common stock, par value $.001 per share
("Common Stock"), of the Company. The shares of Common Stock deliverable upon
such exercise, and as adjusted from time to time, are hereinafter sometimes
referred to as "Warrant Shares," and the exercise price for the purchase of a
share of Common Stock pursuant to this Warrant in effect at any time and as
adjusted from time to time is hereinafter sometimes referred to as the "Exercise
Price."
1. VESTING PERIOD. This Warrant shall become exercisable upon the
achievement by the Company of certain performance targets on a consolidated
basis. If the Company reports quarterly results in its quarterly or annual
filings (on Forms 10-QSB or 10-KSB or any similar form or forms) for net revenue
or net income which when combined with net revenue or net income (as the case
may be) reported in all previous quarterly financial statements contained in
such reports commencing on June 30, 2001 and such total for net revenue equals
or exceeds ten million dollars ($10,000,000), or for net income equals or
exceeds one million dollars ($1,000,000), then this Warrant shall become
exercisable for fifty percent (50%) of the Warrant Shares. If the Company
reports quarterly results in its quarterly or annual filings (on Forms 10-QSB or
10-KSB) for net revenue or net income which when combined with net revenue or
net income (as the case may be) reported in all previous quarterly financial
statements contained in such reports commencing on June 30, 2001 and such total
for net revenue equals or exceeds thirty million dollars ($30,000,000), or for
net income equals or exceeds three million dollars ($3,000,000), then this
Warrant shall become exercisable for the remaining Warrant Shares. The holder of
this Warrant may exercise its rights hereunder commencing on the date on which
the Company files the quarterly or annual report with the SEC which satisfies
the performance target set forth is this Section 1.
2. EXERCISE OF WARRANT.
(a) Subject to the provisions of Sections 1 and 10 hereof, this
Warrant may be exercised in whole or in part at any time or from time to time
from the date hereof until May 31, 2011 (the "Exercise Period") by presentation
and surrender hereof to the Company at its principal office, or at the office of
its stock transfer agent, if any, with the Purchase Form annexed hereto duly
executed and accompanied by payment of the Exercise Price for the number of
shares of Common Stock specified in such form. If this Warrant should be
exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the rights of the
Holder hereof to purchase the balance of the shares of Common Stock purchasable
hereunder. Upon receipt by the Company of this Warrant at its office, or by the
stock transfer agent of the Company at its office, in proper form for exercise,
the Holder shall be deemed to be the holder of record of the shares of Common
Stock issuable upon such exercise, notwithstanding that the stock transfer books
of the Company shall then be closed or that certificates representing such
shares of Common Stock shall not then be actually delivered to the Holder.
(b) At the option of Holder, this Warrant may be exercised, at any
time or from time to time, in the following "cashless exercise" transactions:
(i) The Holder shall have the right to convert, in whole or in part,
the Warrants (the "Conversion Right") at any time prior to the Expiration
Date, into shares of Common Stock in accordance with the provisions of this
paragraph by the Holder tendering to the Company written notice of exercise
together with advice of the delivery of an order to a broker to sell part
or all of the shares of Common Stock underlying the Warrants, subject to
such exercise notice and an irrevocable order to, and an irrevocable
commitment by, such broker to deliver to the Company (or its transfer
agent) sufficient proceeds from the sale of such shares to pay the
aggregate Purchase Price of such Warrants and any withholding taxes. All
documentation and procedures to be followed in connection with such
"cashless exercise" shall be approved in advance by the Company, which
approval shall be expeditiously provided and not unreasonably withheld; or
(ii) Upon written notice of exercise from the Holder to the Company
that the Holder is exercising this Warrant in whole or in part and as
consideration of such exercise is authorizing the Company to withhold from
issuance a number of shares of Common Stock issuable upon exercise of this
Warrant, the Company shall deliver to the Holder (without payment by the
Holder of the aggregate Purchase Price) that number of shares of Common
Stock equal to the quotient obtained by dividing (x) the Spread Value by
(y) the Fair Market Value of one share of Common Stock immediately prior to
the exercise of the Conversion Right. The shares withheld by the Company
shall no longer be issuable under this Warrant.
(c) Fair Market Value of a share of Warrant Shares as of a particular
date (the "Determination Date") shall mean:
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(i) If the Warrant Shares are traded on an exchange or are quoted on
the Nasdaq National Market or the Nasdaq SmallCap Market ("Nasdaq"), then
the average of the closing or last sale price, respectively, reported for
the five trading days immediately preceding the Determination Date.
(ii) If the Warrant Shares are not traded on an exchange or on Nasdaq
but are traded in the over-the-counter market or other similar organization
(including the OTC Bulletin Board), then the average of the closing bid and
ask prices reported for the five trading days immediately preceding the
Determination Date.
(iii) If the Warrant Shares are not traded as provided above, then the
price determined in good faith by the Board of Directors of the Company,
provided that (A) the basis or bases of each such determination shall be
set forth in the corporate records of the Company pertaining to meetings
and other actions of such board, and (B) such records are available to the
Holder for inspection during normal business hours of the Company upon the
giving of reasonable prior notice.
(iv) If the Determination Date is the date of a liquidation,
dissolution or winding up, or any event deemed to be a liquidation,
dissolution or winding up pursuant to the Company's certificate of
incorporation, then all amounts to be payable per share to Holders of the
securities then comprising Warrant Shares pursuant to the charter in the
event of such liquidation, dissolution or winding up, plus all other
amounts to be payable per share in respect of the Warrant Shares in
liquidation under the certificate of incorporation, assuming for the
purposes of this clause (iv) that all of the shares of Warrant Shares then
issuable upon exercise of all of the Warrants are outstanding at the
Determination Date.
(d) The term "Spread Value" shall mean (i) the number of shares
exercised at a given time multiplied by the Fair Market Value of one share of
Common Stock, less (ii) aggregate applicable Exercise Price.
3. RESERVATION OF SHARES. The Company hereby agrees that at all times
there shall be reserved for issuance and/or delivery upon exercise of this
Warrant such number of shares of Common Stock as shall be required for issuance
and delivery upon exercise of this Warrant.
4. FRACTIONAL SHARES. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant. Instead,
the Company will round to the nearest whole number.
5. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. Subject to the provisions of Section 11 of this
Warrant, upon surrender of this Warrant to the Company or at the office of its
stock transfer agent, if any, with the Assignment Form annexed hereto duly
executed and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant in the name of the assignee
named in such instrument of assignment and this Warrant shall promptly be
canceled. This Warrant may be divided or combined with other Warrants which
carry the same rights upon presentation hereof at the office of the Company or
at the office of its stock transfer agent, if any, together with a written
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notice specifying the names and denominations in which new Warrants are to be
issued and signed by the Holder hereof. The term "Warrant" as used herein
includes any Warrants into which this Warrant may be divided or exchanged. Upon
receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will execute and deliver
a new Warrant of like tenor. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.
6. RIGHTS OF THE HOLDER. The Holder shall not, by virtue of this Warrant,
be entitled to any rights of a stockholder in the Company, either at law or
equity, and the rights of the Holder are limited to those expressed in the
Warrant and are not enforceable against the Company except to the extent set
forth herein.
7. ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time and
the number and kind of securities purchasable upon exercise of each Warrant
shall be subject to adjustment as follows:
(a) In case the Company shall (1) pay a dividend or make a
distribution on its shares of Common Stock in shares of Common Stock (2)
subdivide or reclassify its outstanding Common Stock into a greater number of
shares, or (3) combine or reclassify its outstanding Common Stock into a smaller
number of shares or otherwise effect a reverse split, the Exercise Price in
effect at the time of the record date for such dividend or distribution or of
the effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the Holder of this Warrant exercised after such
date shall be entitled to receive the aggregate number and kind of shares which,
if this Warrant had been exercised immediately prior to such time, he would have
owned upon such exercise and been entitled to receive upon such dividend,
subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed in this Section 7(a) shall occur.
(b) In case the Company shall distribute to all holders of Common
Stock evidences of its indebtedness or assets (excluding cash dividends or
distributions paid out of current earnings and dividends or distributions
referred to in Section 7(a) of this Warrant or subscription rights or warrants,
then in each such case the Exercise Price in effect thereafter shall be
determined by multiplying the Exercise Price in effect immediately prior thereto
by a fraction, of which the numerator shall be the total number of shares of
Common Stock outstanding multiplied by the Fair Market Value per share of Common
Stock, less the fair market value (as determined by the Company's Board of
Directors) of said assets or evidences of indebtedness so distributed or of such
rights or warrants, and of which the denominator shall be the total number of
shares of Common Stock outstanding multiplied by such current market price per
share of Common Stock. Such adjustment shall be made successively whenever such
a record date is fixed. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
distribution.
(c) Whenever the Exercise Price payable upon exercise of each Warrant
is adjusted pursuant to Section 7(a) or (b) of this Warrant, the number of
shares of Common Stock purchasable upon exercise of each Warrant shall
simultaneously be adjusted by multiplying the number of shares of Common Stock
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issuable upon exercise of each Warrant in effect on the date thereof by the
Exercise Price in effect on the date thereof and dividing the product so
obtained by the Exercise Price, as adjusted. In no event shall the Exercise
Price per share be less than the par value per share, and, if any adjustment
made pursuant to Section 7(a) or (b) would result in an exercise price of less
than the par value per share, then, in such event, the Exercise Price per share
shall be the par value per share.
(d) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least ten cents ($0.001)
in such price; provided, however, that any adjustments which by reason of this
Section 7(d) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 7(d)
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be. Anything in this Section 7(d) to the contrary notwithstanding,
the Company shall be entitled, but shall not be required, to make such changes
in the Exercise Price, in addition to those required by this Section 7(d), as it
in its discretion shall determine to be advisable in order that any dividend or
distribution in shares of Common Stock, subdivision, reclassification or
combination of Common Stock, issuance of warrants to purchase Common Stock or
distribution of evidences of indebtedness or other assets (excluding cash
dividends) referred to hereinabove in this Section 7(d) hereafter made by the
Company to the holders of its Common Stock shall not result in any tax to the
holders of its Common Stock or securities convertible into Common Stock.
(e) The Company may retain a firm of independent public accountants
of recognized standing selected by the Board of Directors (who may be the
regular accountants employed by the Company) to make any computation required by
this Section 7(e), and a certificate signed by such firm shall be conclusive
evidence of the correctness of such adjustment.
(f) In the event that at any time, as a result of an adjustment made
pursuant to Section 7(a) of this Warrant, the Holder of any Warrant thereafter
shall become entitled to receive any shares of the Company, other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Sections 7(a) to (e), inclusive, of this Warrant.
(g) Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon exercise of Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in this and similar Warrants initially
issued by the Company.
8. OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted as
required by the provisions of Section 7 of this Warrant, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at its
principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price and the adjusted number of
shares of Common Stock issuable upon exercise of each Warrant, determined as
herein provided, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of additional shares of Common
Stock, if any, and such other facts as shall be necessary to show the reason for
and the manner of computing such adjustment. Each such officer's certificate
shall be made available at all reasonable times for inspection by the Holder or
any holder of a Warrant.
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9. NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (1) if the Company shall pay any dividend or make any distribution
upon Common Stock (other than a regular cash dividend payable out of retained
earnings) or (2) if the Company shall offer to the holders of Common Stock for
subscription or purchase by them any share of any class or any other rights or
(3) if any capital reorganization of the Company, reclassification of the
capital stock of the Company, consolidation or merger of the Company with or
into another corporation, sale, lease or transfer of all or substantially all of
the property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall be
effected, then in any such case, the Company shall cause to be mailed by
certified mail to the Holder, at least fifteen days prior to the date specified
in clauses (i) and (ii), as the case may be, of this Section 9 a notice
containing a brief description of the proposed action and stating the date on
which (i) a record is to be taken for the purpose of such dividend, distribution
or rights, or (ii) such reclassification, reorganization, consolidation, merger,
conveyance, lease, dissolution, liquidation or winding up is to take place and
the date, if any is to be fixed, as of which the holders of Common Stock or
other securities shall receive cash or other property deliverable upon such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.
10. RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
in which merger the Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon exercise of this
Warrant) or in case of any sale, lease or conveyance to another corporation of
the property of the Company as an entirety, this Warrant shall vest with respect
to all of the Warrant Shares immediately prior to such reclassification, capital
reorganization and other change, consolidation, merger, sale or conveyance. Each
holder of this Warrant shall be given a reasonable opportunity to exercise this
Warrant prior to the closing of such reclassification, capital reorganization
and other change, consolidation, merger, sale or conveyance
11. TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933. This Warrant or the
Warrant Shares or any other security issued or issuable upon exercise of this
Warrant may not be sold or otherwise disposed of except as follows:
(1) To a person who, in the opinion of counsel for the Company, is a
person to whom this Warrant or Warrant Shares may legally be transferred without
registration and without the delivery of a current prospectus under the Act with
respect thereto and then only against receipt of an agreement of such person to
comply with the provisions of this Section 11 with respect to any resale or
other disposition of such securities which agreement shall be satisfactory in
form and substance to the Company and its counsel; or
(2) to any person upon delivery of a prospectus then meeting the
requirements of the Act relating to such securities and the offering thereof for
such sale or disposition.
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12. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
principles of conflicts of law thereof. The parties hereto agree that venue in
any and all actions and proceedings related to the subject matter of this
Warrant shall be in the state and federal courts in and for San Diego,
California, which courts shall have exclusive jurisdiction for such purpose, and
the parties hereto irrevocably submit to the exclusive jurisdiction of such
courts and irrevocably waive the defense of an inconvenient forum to the
maintenance of any such action or proceeding. Service of process may be made in
any manner recognized by such courts.
Dated as of _________________, 2001
PPI CAPITAL GROUP, INC.
By:
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Name:
Title:
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PURCHASE FORM
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Dated: ____________, 20___
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing ______ shares of Common Stock and hereby makes payment
of $__________ in payment of the actual exercise price thereof.
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INSTRUCTIONS FOR REGISTRATION OF STOCK
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Name ____________________________________________
(Please typewrite or print in block letters)
Signature _______________________________________
Social Security or Employer Identification No. ______________________
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED, _________________________________
hereby sells, assigns and transfer unto
Name ____________________________________________
(Please typewrite or print in block letters)
Address _________________________________________
Social Security or Employer Identification No. ______________________
The right to purchase Common Stock represented by this Warrant to the extent of
__________ shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint _____ attorney to transfer the same on the
books of the Company with full power of substitution.
Dated: ____________, 20___
Signature _______________________________________
Signature Guaranteed:
_______________________________________________________
