NEITHER THIS WARRANT NOR ANY SHARES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER APPLICABLE
FEDERAL OR STATE SECURITIES LAW, AND NEITHER THIS WARRANT NOR ANY SHARES
ISSUABLE UPON CONVERSION HEREOF MAY BE TRANSFERRED IN THE ABSENCE OF
REGISTRATION THEREUNDER OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL)
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS.
WARRANT
To Purchase Common Stock of
SOUTHWALL TECHNOLOGIES INC.
1. ISSUANCE. This Warrant, dated as of February 20, 2004, is issued to
________________ by Southwall Technologies Inc., a Delaware corporation
(hereinafter with its successors called the "COMPANY"). This Warrant is issued
pursuant to Section 2.4 of that certain Amended and Restated Investment
Agreement dated as of February 20, 2004, by and among Xxxxxxx & Company, Inc.
("XXXXXXX"), Xxxxxxx Capital Partners II, L.P., Xxxxxxx Capital Partners II
(Bermuda), L.P., Xxxxxxx Capital Partners III, L.P., Xxxxxxx Capital Partners
IIIA, L.P., Xxxxxxx Capital Partners III (Bermuda), L.P., Dolphin Direct Equity
Partners, LP and the Company (the "INVESTMENT AGREEMENT").
2. PURCHASE PRICE; NUMBER OF SHARES. Subject to the terms and
conditions hereinafter set forth, the registered holder of this Warrant (the
"HOLDER"), is entitled upon surrender of this Warrant with the subscription form
annexed hereto duly executed, at the office of the Company, 0000 Xxxx Xxxxxxxx
Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, or such other office in the United States as
the Company shall notify the Holder of in writing on or before the Termination
Date (as defined below), to purchase from the Company [ ] shares (as
adjusted or increased, the "WARRANT SHARES") of the Company's Common Stock,
$.001 par value per share ("COMMON STOCK"), at an exercise price equal to $0.01
per share. The "TERMINATION DATE" shall mean February 20, 2009.
3. PAYMENT OF PURCHASE PRICE. The aggregate purchase price payable upon
any exercise of this Warrant may be paid in cash or by check or as set forth in
Section 4 below.
4. NET ISSUANCE ELECTION. The Holder may elect to receive, without the
payment by the Holder of any additional consideration, Warrant Shares equal to
the value of this Warrant or any portion hereof by the surrender of this Warrant
or such portion to the Company, with the net issuance election notice annexed
hereto duly executed, at the office of the Company. Thereupon, the Company shall
issue to the Holder such number of fully paid and nonassessable Warrant Shares
as is computed using the following formula:
X = Y (A-B)
-------
A
where X = the number of Warrant Shares to be issued to the Holder
pursuant to this Section 4.
Y = the number of Warrant Shares covered by this Warrant in respect
of which the net issuance election is made pursuant to this
Section 4.
A = Fair Market Value (as defined below) of one Warrant Share at the
time the net issuance election is made pursuant to this Section 4.
B = the purchase price per share in effect under this Warrant at the
time the net issuance election is made pursuant to this Section 4.
For purposes of this Section 4, "FAIR MARKET VALUE" on any day shall mean (a)
the average of the closing bid and asked prices of a share of Common Stock on
the trading day immediately preceding the day in question in the
over-the-counter market as shown by the National Association of Securities
Dealers, Inc. Automated Quotation System, or any similar system of automated
dissemination of quotations and securities prices then in common use, if so
quoted, as reported by any member firm of the New York Stock Exchange selected
by the Company and the Holder, (b) if not quoted as describe in clause (a), the
average closing bid and asked prices for a share Common Stock on the trading day
immediately preceding the day in question as reported by the National Quotation
Bureau Incorporated or any similar successor organization, as reported by any
member firm of the New York Stock Exchange selected by the Company and the
Holder, or (c) if not quoted as described in clause (a) or (b) above, the fair
market value of a share of Common Stock on such date as determined by the board
of directors of the Company and the Holder in good faith.
5. PARTIAL EXERCISE. This Warrant may be exercised in part, and the
Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of Warrant Shares in respect of
which this Warrant shall not have been exercised.
6. ISSUANCE DATE. The person or persons in whose name or names any
certificate representing Warrant Shares is issued hereunder shall be deemed to
have become the holders of record of such shares represented thereby as at the
close of business on the date this Warrant is exercised with respect to such
shares, whether or not the transfer books of the Company shall be closed.
7. EXPIRATION DATE. This Warrant shall expire at the close of business
on the Termination Date, and shall be void thereafter.
8. RESERVED SHARES; VALID ISSUANCE. The Company covenants that it will
reserve and keep available at all times from and after the date hereof such
number of its authorized shares of Common Stock, free from all preemptive or
similar rights therein, as will be sufficient to permit the exercise of this
Warrant in full. The Company further covenants that such shares as may be issued
pursuant to the exercise of this Warrant will, upon issuance, be duly and
validly issued,
2
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof.
9. SUBDIVISIONS, SPLIT-UPS, COMBINATIONS AND STOCK DIVIDENDS;
RECLASSIFICATIONS.
(a) If after the date hereof the Company shall subdivide the Common
Stock, by split up or otherwise, or combine such shares, or issue additional
shares in payment of a stock dividend on such shares, the number of shares
issuable on the exercise of this Warrant shall forthwith be proportionately
increased in the case of a subdivision or stock dividend, or proportionately
decreased in the case of a combination, and the purchase price shall forthwith
be proportionately decreased in the case of a subdivision or stock dividend, or
proportionately increased in the case of a combination.
(b) If after the date hereof there shall be any reclassification,
capital reorganization or change of the Common Stock (other than as a result of
a subdivision, combination or stock dividend provided for in Section 9(a)
hereof), then, as a condition of such reclassification, reorganization or
change, lawful provisions shall be made, and duly executed documents evidencing
the same from the Company shall be delivered to the Holder, so that the Holder
shall thereafter have the right to purchase, at a total price not to exceed that
payable upon the exercise of this Warrant in full, the kind and amount of shares
of stock and other securities and property receivable upon such
reclassification, reorganization or change, by holders of the number of shares
of Common Stock which might have been purchased by the Holder immediately prior
to such reclassification, reorganization or change, and in such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
to the end that the provisions hereof (including, without limitation, provisions
for the adjustment of the purchase price and the number of shares issuable
hereunder) shall thereafter be applicable in relation to any shares of stock or
other securities and property thereafter deliverable upon exercise hereof.
10. MERGER OR SALE. If this Warrant has not been exercised prior to the
closing of a "Merger or Sale", this Warrant will terminate automatically upon
such closing. "Merger or Sale" shall mean one or a series of related
transactions involving a sale of all or substantially all of the Company's
assets, a merger of the Company with or into another entity (if after such
merger or asset sale the holders of a majority of the Company's voting
securities before the transaction do not constitute a majority of the voting
securities of the successor entity), or a transfer of all or substantially all
of the Company's voting equity securities to another person or entity.
11. FRACTIONAL SHARES. In no event shall any fractional share of Common
Stock be issued upon any exercise of this Warrant. If, upon exercise of this
Warrant as an entirety, the Holder would, except as provided in this Section 11,
be entitled to receive such a fractional share, then the Company shall issue the
next higher number of full shares of Common Stock, issuing a full share with
respect to such fractional share.
12. REGISTRATION RIGHTS. Reference is hereby made to the Amended and
Restated Registration Rights Agreement dated February 20, 2004 by and among the
Company, Xxxxxxx and certain other investors named therein for certain
provisions relating to the rights of the Holder of this Warrant and the Warrant
Shares to require the Company to register the Warrant Shares under the
Securities Act of 1933, as amended.
3
13. CERTIFICATE OF ADJUSTMENT. Whenever the purchase price is adjusted,
as herein provided, the Company shall promptly deliver to the Holder a
certificate of the Company's Chief Financial Officer setting forth the purchase
price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment.
14. NOTICES OF RECORD DATE, ETC. In the event of:
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right,
(b) any reclassification of the capital stock of the Company, capital
reorganization of the Company, Merger or Sale, or
(c) any voluntary or involuntary dissolution, liquidation or winding-up
of the Company,
then and in each such event the Company will mail or cause to be mailed to the
Holder a notice specifying (x) the date on which any such 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 (y) the date on which
any such reclassification, reorganization, Merger or Sale or 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 in respect of such event are to
be determined. Such notice shall be mailed at least 20 days prior to the date
specified in such notice on which any such action is to be taken.
15. AMENDMENT. The terms of this Warrant may be amended, modified or
waived only with the written consent of the Company and the Holder.
16. WARRANT REGISTER; TRANSFERS, ETC.
(a) The Company will maintain a register containing the names and
addresses of the registered holders of the Warrants. The Holder may change his
or its address as shown on the warrant register by written notice to the Company
requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be given by certified mail or delivered
to the Holder at his or its address as shown on the warrant register.
(b) Subject to compliance with applicable federal and state securities
laws, this Warrant may be transferred by the Holder with respect to any or all
of the Warrant Shares purchasable hereunder. Upon surrender of this Warrant to
the Company, together with the assignment hereof properly endorsed for transfer
of this Warrant as an entirety by the Holder, the Company shall issue a new
warrant of the same denomination to the assignee. Upon surrender of this Warrant
to the Company, together with the assignment hereof properly endorsed by the
Holder for transfer with respect to a portion of the Warrant Shares purchasable
hereunder, the Company shall issue a new warrant to the assignee, in such
denomination as shall be requested by the Holder hereof, and shall issue to such
Holder a new warrant covering the number of shares in respect of which this
Warrant shall not have been transferred.
4
(c) In case this Warrant shall be mutilated, lost, stolen or destroyed,
the Company shall issue a new warrant of like tenor and denomination and deliver
the same (I) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (II) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft or destruction of such Warrant (including a
reasonably detailed affidavit with respect to the circumstances of any loss,
theft or destruction) and of indemnity reasonably satisfactory to the Company.
17. NO IMPAIRMENT. The Company will not, by amendment of its charter or
by-laws or through any reclassification, capital reorganization, consolidation,
merger, sale or conveyance of assets, dissolution, liquidation, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Holder.
18. GOVERNING LAW. The provisions and terms of this Warrant shall be
governed by and construed in accordance with the internal laws of The State of
New York.
19. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of each of the
Holder's successors, legal representatives and permitted assigns.
[SIGNATURE PAGE FOLLOWS.]
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
as an instrument under seal by its duly authorized officer as of the date first
above written.
Southwall Technologies, Inc.
By: /s/
----------------------------
Name:
Title:
Agreed to and accepted by:
[---------------]
By: ----------------------------
Name:
Title:
SUBSCRIPTION
Date: [ ]
The undersigned hereby subscribes for:
[ ] shares of Common Stock covered by this Warrant.
The certificate(s) for such shares shall be issued in the name of the
undersigned or as otherwise indicated below:
---------------------------------
Signature
--------------------------------
Name for Registration
---------------------------------
Mailing Address
NET ISSUANCE ELECTION NOTICE
Date: [ ]
The undersigned hereby elects under Section 4 to surrender the right to
purchase:
[ ] shares of Common Stock covered by this Warrant.
The certificate(s) for such shares issuable upon such net issuance election
shall be issued in the name of the undersigned or as otherwise indicated below:
---------------------------------
Signature
---------------------------------
Name for Registration
---------------------------------
Mailing Address
ASSIGNMENT
For value received [ ] hereby sells, assigns and transfers
unto (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE ABOVE)
--------------------------------------------------------------------------------
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the within Warrant, and does hereby irrevocably constitute and appoint
[ ] its attorney to transfer the within Warrant on the books of the
within named Company with full power of substitution in the premises.
Dated: [ ]
------------------------------------
In the Presence of:
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