NEITHER THIS WARRANT NOR THE COMMON STOCK WHICH MAY BE ACQUIRED UPON THE
EXERCISE HEREOF ("WARRANT SHARES"), AS OF THE DATE OF ISSUANCE HEREOF, HAS
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, PLEDGED,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
WITH RESPECT THERETO UNDER THE ACT AND COMPLIANCE WITH ANY APPLICABLE STATE
SECURITIES LAW, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED. THE
COMPANY'S SUBSCRIPTION AGREEMENT WITH THE HOLDER CONTAINS ADDITIONAL
PROVISIONS RESTRICTING THE TRANSFER OF THIS WARRANT AND THE WARRANT SHARES.
THIS WARRANT AND SUCH SUBSCRIPTION AGREEMENT SET FORTH THE COMPANY'S
OBLIGATIONS TO REGISTER THE ISSUANCE OF THE WARRANT SHARES. A COPY OF SUCH
SUBSCRIPTION AGREEMENT IS AVAILABLE FOR INSPECTION AT THE COMPANY'S OFFICE.
For the Purchase of
Number of shares shares of
No. -Warrant/#
WARRANT FOR THE PURCHASE OF
SHARES OF COMMON STOCK
OF
CROSS/Z INTERNATIONAL, INC.
Cross/Z International, Inc., a California corporation
("Company"), hereby certifies that for value received, Holder, or his, her or
its registered assigns ("Registered Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company, at any time or from time
to time during the period commencing on ____ __, 1998 and ending on ____ __,
2003, Number of shares ("Initial Number") shares of common stock, $.001 par
value, of the Company ("Common Stock"), at an exercise price equal to $4.28
per share. The number of shares of Common Stock purchasable upon exercise of
this Warrant, and the exercise price per share, each as adjusted from time to
time pursuant to the provisions of this Warrant, are hereinafter referred to
as the "Warrant Shares" and the "Exercise Price," respectively.
1. Exercise.
(a) This Warrant may be exercised by the Registered Holder,
in whole or in part, by the surrender of this Warrant (with the Notice of
Exercise Form attached hereto duly executed by such Registered Holder) at the
principal office of the Company, or at such other office or agency as the
Company may designate, accompanied by payment in full, in lawful money of the
United States, of an amount equal to the then applicable Exercise Price
multiplied by the number of Warrant Shares then being purchased upon such
exercise.
(b) Each exercise of this Warrant shall be deemed to have
been effected immediately prior to the close of business on the day on which
this Warrant shall have been surrendered to the Company as provided in
subsection 1(a) above. At such time, the person or persons in whose name or
names any certificates for Warrant Shares shall be issuable upon such exercise
as provided in subsection 1(c) below shall be deemed to have become the holder
or holders of record of the Warrant Shares represented by such certificates.
(c) Within five (5) business days after the exercise of the
purchase right represented by this Warrant, the Company at its expense will
use its best efforts to cause to be issued in the name of, and delivered to,
the Registered Holder, or, subject to the terms and conditions hereof, to such
other individual or entity as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of
full shares of Warrant Shares to which such Registered Holder shall be
entitled upon such exercise plus, in lieu of any fractional share to which
such Registered Holder would otherwise be entitled, cash in an amount
determined pursuant to Section 3 hereof, and
(ii) in case such exercise is in part only, a new
warrant or warrants (dated the date hereof) of like tenor, stating on the face
or faces thereof the number of shares currently stated on the face of this
Warrant minus the number of such shares purchased by the Registered Holder
upon such exercise as provided in subsection 1(a) above.
2. Adjustments.
(a) Split, Subdivision or Combination of Shares. If the
outstanding shares of the Company's Common Stock at any time while this
Warrant remains outstanding and unexpired shall be subdivided or split into a
greater number of shares or a dividend in Common Stock shall be paid in
respect of Common Stock, the Exercise Price in effect immediately prior to
such subdivision or at the record date of such dividend shall, simultaneously
with the effectiveness of such subdivision or split or immediately after the
record date of such dividend (as the case may be), shall be proportionately
decreased. If the outstanding shares of Common Stock shall be combined or
reverse-split into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination or reverse split shall, simultaneously
with the effectiveness of such combination or reverse split, be
proportionately increased. When any adjustment is required to be made in the
Exercise Price, the number of Warrant Shares purchasable upon the exercise of
this Warrant shall be changed to the number determined by dividing (i) an
amount equal to the number of shares issuable upon the
2
exercise of this Warrant immediately prior to such adjustment, multiplied by
the Exercise Price in effect immediately prior to such adjustment, by (ii) the
Exercise Price in effect immediately after such adjustment.
(b) Reclassification Reorganization, Consolidation or
Merger. In the case of any reclassification of the Common Stock (other than a
change in par value or a subdivision or combination as provided for in
subsection 2(a) above), or any reorganization, consolidation or merger of the
Company with or into another corporation (other than a merger or
reorganization with respect to which the Company is the continuing corporation
and which does not result in any reclassification of the Common Stock), or a
transfer of all or substantially all of the assets of the Company, or the
payment of a liquidating distribution then, as part of any such
reorganization, reclassification, consolidation, merger, sale or liquidating
distribution, lawful provision shall be made so that the Registered Holder of
this Warrant shall have the right thereafter to receive upon the exercise
hereof (to the extent, if any, still exercisable) the kind and amount of
shares of stock or other securities or property which such Registered Holder
would have been entitled to receive if, immediately prior to any such
reorganization, reclassification, consolidation, merger, sale or liquidating
distribution, as the case may be, such Registered Holder had held the number
of shares of Common Stock which were then purchasable upon the exercise of
this Warrant. In any such case, appropriate adjustment (as reasonably
determined by the Board of Directors of the Company) shall be made in the
application of the provisions set forth herein with respect to the rights and
interests thereafter of the Registered Holder of this Warrant such that the
provisions set forth in this Section 2 (including provisions with respect to
the Exercise Price) shall thereafter be applicable, as nearly as is reasonably
practicable, in relation to any shares of stock or other securities or
property thereafter deliverable upon the exercise of this Warrant.
(c) Price Adjustment. No adjustment in the per share
Exercise Price shall be required unless such adjustment would require an
increase or decrease in the Exercise Price of at least $0.01; provided,
however, that any adjustments which by reason of this subsection are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 2 shall be made to
the nearest cent or to the nearest 1/100th of a share, as the case may be.
(d) Price Reduction. Notwithstanding any other provision set
forth in this Warrant, at any time and from time to time during the period
that this Warrant is exercisable, the Company in it sole discretion may reduce
the Exercise Price or extend the period during which this Warrant is
exercisable.
(e) Additional Warrant Shares. In the event that the price
at which the Company's Common Stock is offered in the Company's initial public
offering is less than $8.00 ("Reduced Price"), then, in such event, the
aggregate number of Warrant Shares issuable upon exercise of this Warrant will
be increased to the lesser of (i) 1.5 times the Initial Number and (ii) the
quotient obtained by dividing (a) $3.72 times the Initial Number by (b) the
difference between the Reduced Price and $4.28.
3
(f) No Impairment. The Company will not, by amendment of its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Company but will at
all times in good faith assist in the carrying out of all the provisions of
this Section 2 and in the taking of all such actions as may be necessary or
appropriate in order to protect against impairment of the rights of the
Registered Holder of this Warrant to adjustments in the Exercise Price.
(g) Notice of Adjustment. Upon the happening of any event
requiring an adjustment of the Exercise Price hereunder, the Company shall
forthwith give written notice thereto to the Registered Holder of this Warrant
stating the adjusted Exercise Price and the adjusted number of Warrant Shares
resulting from such event and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
3. Fractional Shares. The Company shall not be required upon the
exercise of this Warrant to issue any fractional shares, but shall make an
adjustment thereof in cash on the basis of the last sale price of the
Company's Common Stock on the over-the-counter market as reported by the
National Association of Securities Dealers Automated Quotations System or on a
national securities exchange on the trading day immediately prior to the date
of exercise, whichever is applicable, or if neither is applicable, then on the
basis of the then fair market value of the Company's Common Stock as shall be
reasonably determined by the Board of Directors of the Company.
4. Limitation on Sales. Each holder of this Warrant acknowledges that
this Warrant and the Warrant Shares have not been registered under the
Securities Act of 1933 ("Act") as of the date of issuance hereof and agrees
not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose
of this Warrant, or any Warrant Shares issued upon its exercise, in the
absence of (i) an effective registration statement under the Act as to this
Warrant or such Warrant Shares and registration or qualification of this
Warrant or such Warrant Shares under any applicable Blue Sky or state
securities law then in effect or (ii) an opinion of counsel, satisfactory to
the Company, that such registration and qualification are not required.
Without limiting the generality of the foregoing, unless the
offering and sale of the Warrant Shares to be issued upon the particular
exercise of the Warrant shall have been effectively registered under the Act,
the Company shall be under no obligation to issue the shares covered by such
exercise unless and until the Registered Holder shall have executed an
investment letter in form and substance satisfactory to the Company, including
a warranty at the time of such exercise that it is acquiring such shares for
its own account, and will not transfer the Warrant Shares unless pursuant to
an effective and current registration statement under the Act or an exemption
from the registration requirements of the Act and any other applicable
restrictions, in which event the Registered Holder shall be bound by the
provisions of a legend or legends to such effect which shall be endorsed upon
the certificate(s) representing the Warrant Shares
4
issued pursuant to such exercise. In such event, the Warrant Shares issued
upon exercise hereof shall be imprinted with a legend in substantially the
following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SAID ACT OR APPLICABLE STATE SECURITIES LAWS, SUPPORTED
BY AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED."
5. Certain Dividends. If the Company pays a dividend or makes a
distribution on the Common Stock payable otherwise than in cash out of
earnings or earned surplus (determined in accordance with generally accepted
accounting principles) except for a stock dividend payable in shares of Common
Stock (a "Property Dividend"), then the Company will pay or distribute to the
Registered Holder of this Warrant, upon the exercise hereof, in addition to
the Warrant Shares purchased upon such exercise, the Property Dividend which
would have been paid to such Registered Holder if it had been the owner of
record of such shares of Warrant Shares immediately prior to the date on which
a record is taken for such Property Dividend or, if no record is taken, the
date as of which the record holders of Common Stock entitled to such dividends
or distribution are to be determined.
6. Registration Rights of Warrant Holder. The Company has agreed to
register the issuance of the Warrant Shares in accordance with Section 7.1 of
the Subscription Agreement entered into between the Company and the Registered
Holder.
7. Notices of Record Date. In case:
(a) the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time deliverable upon the
exercise of this Warrant) for the purpose of entitling or enabling them to
receive any dividend or other distribution, or to receive any right to
subscribe for or purchase any shares of any class or any other securities, 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 (other than a
consolidation or merger in which the Company is the surviving entity), or any
transfer of all or substantially all of the assets of the Company, or
(c) of the voluntary or involuntary dissolution, liquidation
or winding-up of the Company,
5
then, and in each such case, the Company will mail or cause to be mailed to
the Registered Holder of this Warrant 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 effective date on which such
reorganization, reclassification, consolidation, merger, transfer,
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 (or such
other stock or securities at the time deliverable upon the exercise of this
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
ten (10) days prior to the record date or effective date for the event
specified in such notice, provided that the failure to mail such notice shall
not affect the legality or validity of any such action.
8. Reservation of Stock. The Company will at all times reserve and
keep available, solely for issuance and delivery upon the exercise of this
Warrant, such shares of Warrant Shares and other stock, securities and
property, as from time to time shall be issuable upon the exercise of this
Warrant.
9. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of
an indemnity agreement (with surety if reasonably required) in an amount
reasonably satisfactory to the Company, or (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will issue, in lieu
thereof, a new Warrant of like tenor.
10. Transfers, etc.
(a) The Company will maintain a register containing the
names and addresses of the Registered Holders of this Warrant. Any Registered
Holder may change its, his or her address as shown on the warrant register by
written notice to the Company requesting such change.
(b) Until any transfer of this Warrant is made in the
warrant register, the Company may treat the Registered Holder of this Warrant
as the absolute owner hereof for all purposes; provided, however, that if and
when this Warrant is properly assigned in blank, the Company may (but shall
not be obligated to) treat the bearer hereof as the absolute owner hereof for
all purposes, notwithstanding any notice to the contrary.
11. No Rights as Shareholder. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a shareholder of the Company.
12. Successors. The rights and obligations of the parties to this
Warrant will inure to the benefit of and be binding upon the parties hereto
and their respective heirs, successors, assigns, pledgees, transferees and
purchasers. Without limiting the
6
foregoing, the registration rights set forth in this Warrant shall inure to
the benefit of the Registered Holder and all the Registered Holder's
successors, heirs, pledgees, assignees, transferees and purchasers of this
Warrant and the Warrant Shares.
13. Change or Waiver. Any term of this Warrant may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of the change or waiver is sought.
14. Headings. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.
15. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York as such laws are applied to
contracts made and to be fully performed entirely within that state between
residents of that state.
16. Jurisdiction and Venue. The Company (i) agrees that any legal
suit, action or proceeding arising out of or relating to this Warrant shall be
instituted exclusively in New York State Supreme Court, County of New York or
in the United States District Court for the Southern District of New York,
(ii) waives any objection to the venue of any such suit, action or proceeding
and the right to assert that such forum is not a convenient forum, and (iii)
irrevocably consents to the jurisdiction of the New York State Supreme Court,
County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding, and the Company
further agrees to accept and acknowledge service or any and all process which
may be served in any such suit, action or proceeding in New York State Supreme
Court, County of New York or in the United States District Court for the
Southern District of New York.
17. Mailing of Notices, etc. All notices and other communications
under this Warrant (except payment) shall be in writing and shall be
sufficiently given if delivered to the addressees in person, by Federal
Express or similar receipt delivery, or if mailed, postage prepaid, by
certified mail, return receipt requested, as follows:
Registered Holder: To his or her address on page 1 of this Warrant.
7
The Company: Cross/Z International, Inc.
00 Xxxxxxx Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxxxxxxx, President
Fax: (000) 000-000-0000
In either case, with a copy to: Xxxxxxxx Xxxxxx & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxx Xxxxxx, Esq.
Fax: (000) 000-0000
Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
or to such other address as any of them, by notice to the others may designate
from time to time. Time shall be counted to, or from, as the case may be, the
delivery in person or by mailing.
CROSS/Z INTERNATIONAL, INC.
By: ____________________________________
Xxxx Xxxxxxxxxxxxxx, President
8
NOTICE OF EXERCISE
TO: Cross/Z International, Inc.
00 Xxxxxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
18. The undersigned hereby elects to purchase _____ shares of
the Common Stock of Cross/Z International, Inc., pursuant to terms of the
attached Warrant, and tenders herewith payment of the exercise price of such
shares in full, together with all applicable transfer taxes, if any.
19. Please issue a certificate or certificates representing said
shares of the Common Stock in the name of the undersigned or in such other
name as is specified below:
____________________________________________
(Name)
____________________________________________
(Address)
____________________________________________
____________________________________________
____________________________________________
(Taxpayer Identification Number)
____________________________________________
[print name of Registered Holder]
By: ____________________________________________
Title:__________________________________________
Date: __________________________________________
9
