EXHIBIT 4.2
FORM OF WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, THE COMPANY HAS NOT RESERVED
THE SHARES ISSUABLE ON EXERCISE OF THIS WARRANT AND WILL NOT MAKE SUCH
RESERVATION UNTIL THE FILING OF THE "CHARTER AMENDMENT" (AS DEFINED IN THE
AGREEMENT REFERRED TO BELOW).
AMEDIA NETWORKS, INC.
COMMON STOCK PURCHASE WARRANT
CLASS 2006-___(1)
1. Issuance. In consideration of good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by AMEDIA NETWORKS,
INC., a Delaware corporation (the "Company"), _____________________________ or
registered assigns (the "Holder") is hereby granted the right to purchase at any
time, on or after the Commencement Date (as defined below) until 5:00 P.M., New
York City time, on the Expiration Date (as defined below), _________________
Thousand __________ (____________)(2) fully paid and nonassessable shares of the
Company's Common Stock, $0.001 par value per share (the "Common Stock"), at an
initial exercise price per share (the "Exercise Price") of $1.50(3) per share,
subject to further adjustment as set forth herein. This Warrant is being issued
pursuant to the terms of that certain Securities Purchase Agreement, dated as of
April 26, 2006 (the "Agreement"), to which the Company and Holder (or Holder's
predecessor in interest) are parties. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them
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(1)Insert (x) "A" for Warrants originally issued on the Initial Closing Date and
(y) "B" for Warrants originally issued on the Additional Closing Date.
(2)Insert number equal to fifty percent (50%) of the Buyer's Issue Date
Conversion Shares for the relevant Closing Date.
(3)This amount applies also to Warrants issued on each Closing Date; provided,
however, if, prior to the Additional Closing Date, the Exercise Price for the
Initial Warrants was adjusted, insert such adjusted Exercise Price.
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in the Agreement. This Warrant was originally issued to the Holder of the
Holder's predecessor in interest on _____________, 2006(4) (the "Issue Date").
2. Exercise of Warrants.
2.1 General.
(a) This Warrant is exercisable in whole or in part at any time and
from time to time commencing on the Commencement Date (as defined below). Such
exercise shall be effectuated by submitting to the Company (either by delivery
to the Company or by facsimile transmission as provided in Section 8 hereof) a
completed and duly executed Notice of Exercise (substantially in the form
attached to this Warrant Certificate) as provided in the Notice of Exercise (or
revised by notice given by the Company as contemplated by the Section headed
"NOTICES" in the Agreement). The date such Notice of Exercise is faxed to the
Company shall be the "Exercise Date," provided that, if such exercise represents
the full exercise of the outstanding balance of the Warrant, the Holder of this
Warrant tenders this Warrant Certificate to the Company within five (5) Trading
Days thereafter. The Notice of Exercise shall be executed by the Holder of this
Warrant and shall indicate (i) the number of shares then being purchased
pursuant to such exercise and (ii) if applicable (as provided below), whether
the exercise is a cashless exercise.
(b) The provisions of this Section 2.1(b) shall only be applicable (i)
on or after the first anniversary of the Issue Date, and (ii) if, and only if,
on the Exercise Date there is no effective Registration Statement covering the
Warrant Shares (other than during a Permitted Suspension Period, as defined in
the Registration Rights Agreement). If the Notice of Exercise form elects a
"cashless" exercise, the Holder shall thereby be entitled to receive a number of
shares of Common Stock equal to (w) the excess of the Current Market Value (as
defined below) over the total cash exercise price of the portion of the Warrant
then being exercised, divided by (x) the Market Price of the Common Stock. For
the purposes of this Warrant, the terms (y) "Current Market Value" shall mean an
amount equal to the Market Price of the Common Stock, multiplied by the number
of shares of Common Stock specified in the applicable Notice of Exercise, and
(z) "Market Price of the Common Stock" shall mean the average Closing Price of
the Common Stock for the three (3) Trading Days ending on the Trading Day
immediately prior to the Exercise Date.
(c) If the Notice of Exercise form elects a "cash" exercise (or if the
cashless exercise referred to in the immediately preceding paragraph (b) is not
available in accordance with its terms), the Exercise Price per share of Common
Stock for the shares then being exercised shall be payable, at the election of
the Holder, in cash or by certified or official bank check or by wire transfer
in accordance with instructions provided by the Company at the request of the
Holder.
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(4)Insert the relevant Closing Date.
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(d) Upon the appropriate payment, if any, of the Exercise Price for
the shares of Common Stock purchased, together with the surrender of this
Warrant Certificate (if required), the Holder shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. The
Company shall deliver such certificates representing the Warrant Shares in
accordance with the instructions of the Holder as provided in the Notice of
Exercise (the certificates delivered in such manner, the "Warrant Share
Certificates") within three (3) Trading Days (such third Trading Day, a
"Delivery Date") of (i) with respect to a "cashless exercise," the Exercise Date
or, (ii) with respect to a "cash" exercise, the later of the Exercise Date or
the date the payment of the Exercise Price for the relevant Warrant Shares is
received by the Company.
(e) The Holder shall be deemed to be the holder of the shares issuable
to it in accordance with the provisions of this Section 2.1 on the Exercise
Date.
2.2 Limitation on Exercise. Notwithstanding the provisions of this
Warrant, the Agreement or of the other Transaction Agreements, in no event
(except (i) as specifically provided in this Warrant as an exception to this
provision, (ii) during the forty-five (45) day period prior to the Expiration
Date, or (iii) while there is outstanding a tender offer for any or all of the
shares of the Company's Common Stock) shall the Holder be entitled to exercise
this Warrant, or shall the Company have the obligation to issue shares upon such
exercise of all or any portion of this Warrant to the extent that, after such
exercise the sum of (1) the number of shares of Common Stock beneficially owned
by the Holder and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unexercised portion of
the Warrants or other rights to purchase Common Stock or through the ownership
of the unconverted portion of convertible securities), and (2) the number of
shares of Common Stock issuable upon the exercise of the Warrants with respect
to which the determination of this proviso is being made, would result in
beneficial ownership by the Holder and its affiliates of more than 4.99% of the
outstanding shares of Common Stock (after taking into account the shares to be
issued to the Holder upon such exercise). For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), except as otherwise provided in clause (1) of such sentence.
The Holder, by its acceptance of this Warrant, further agrees that if the Holder
transfers or assigns any of the Warrants to a party who or which would not be
considered such an affiliate, such assignment shall be made subject to the
transferee's or assignee's specific agreement to be bound by the provisions of
this Section 2.2 as if such transferee or assignee were the original Holder
hereof.
2.3 Certain Definitions. As used herein, each of the following terms
has the meaning set forth below, unless the context otherwise requires:
(a) "Commencement Date" means the date which is the earlier of (i) six
(6) months after the Effective Date, or (ii) the first anniversary of the Issue
Date.
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(b) "Expiration Date" means the date which the last calendar of the
month in which the fifth anniversary of the Effective Date occurs.
3. Reservation of Shares. The Company hereby agrees that, commencing
on the filing of the Charter Amendment and continuing thereafter at all times
during the term of this Warrant, there shall be reserved for issuance upon
exercise of this Warrant, one hundred percent (100%) of the number of shares of
its Common Stock as shall be required for issuance of the Warrant Shares for the
then unexercised portion of this Warrant. For the purposes of such calculations,
the Company should assume that the outstanding portion of this Warrants was
exercisable in full at any time, without regard to any restrictions which might
limit the Holder's right to exercise all or any portion of this Warrant held by
the Holder.
4. Mutilation or Loss of Warrant. 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) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue hereof, 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 this Warrant and
are not enforceable against the Company except to the extent set forth herein.
6. Protection Against Dilution and Other Adjustments.
6.1 Adjustment Mechanism. If an adjustment of the Exercise Price
is required pursuant to this Section 6 (other than pursuant to Section 6.4), the
Holder shall be entitled to purchase such number of shares of Common Stock as
will cause (i) (x) the total number of shares of Common Stock Holder is entitled
to purchase pursuant to this Warrant following such adjustment, multiplied by
(y) the adjusted Exercise Price per share, to equal the result of (ii) (x) the
dollar amount of the total number of shares of Common Stock Holder is entitled
to purchase before adjustment, multiplied by (y) the total Exercise Price before
adjustment.(5)
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(5)Example: Assume 10,000 shares remain under Warrant at original stated
Exercise Price of US$1.50. Total exercise price (clause (y) in text) is (i)
10,000 x (ii) US$1.50, or US$15,000. Company effects 2:1 stock split. Exercise
Price is adjusted to US$0.75. Number of shares covered by Warrant is adjusted to
20,000, because (applying clause (x) in text) (i) 20,000 x (ii) US$0.75 =
US$15,000.
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6.2 Capital Adjustments. In case of any stock split or reverse
stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation (where the Company is not the
surviving entity), the provisions of this Section 6 shall be applied as if such
capital adjustment event had occurred immediately prior to the date of this
Warrant and the original Exercise Price had been fairly allocated to the stock
resulting from such capital adjustment; and in other respects the provisions of
this Section shall be applied in a fair, equitable and reasonable manner so as
to give effect, as nearly as may be, to the purposes hereof. A rights offering
to stockholders shall be deemed a stock dividend to the extent of the bargain
purchase element of the rights. The Company will not effect any consolidation or
merger, unless prior to the consummation thereof, the successor or acquiring
entity (if other than the Company) and, if an entity different from the
successor or acquiring entity, the entity whose capital stock or assets the
holders of the Common Stock of the Company are entitled to receive as a result
of such consolidation or merger assumes by written instrument the obligations
under this Warrant (including under this Section 6) and the obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the holder may be entitled to
acquire.
6.3 Adjustment for Spin Off. If, for any reason, prior to the
exercise of this Warrant in full, the Company spins off or otherwise divests
itself of a part of its business or operations or disposes all or of a part of
its assets in a transaction (the "Spin Off") in which the Company does not
receive compensation for such business, operations or assets, but causes
securities of another entity (the "Spin Off Securities") to be issued to
security holders of the Company, then the Company shall cause (i) to be reserved
Spin Off Securities equal to the number thereof which would have been issued to
the Holder had all of the Holder's unexercised Warrants outstanding on the
record date (the "Record Date") for determining the amount and number of Spin
Off Securities to be issued to security holders of the Company (the "Outstanding
Warrants") been exercised as of the close of business on the Trading Day
immediately before the Record Date (the "Reserved Spin Off Shares"), and (ii) to
be issued to the Holder on the exercise of all or any of the Outstanding
Warrants, such amount of the Reserved Spin Off Shares equal to (x) the Reserved
Spin Off Shares, multiplied by (y) a fraction, of which (I) the numerator is the
amount of the Outstanding Warrants then being exercised, and (II) the
denominator is the amount of the Outstanding Warrants.
6.4 Adjustment for Certain Transactions. Reference is made to the
provisions of Section 4(g) of the Agreement, the terms of which are incorporated
herein by reference. The number of shares covered by this Warrant and the
Exercise Price shall be adjusted as provided in the applicable provisions of
said Section 4(g) of the Agreement.
7. Transfer to Comply with the Securities Act; Registration Rights.
7.1 Transfer. This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this
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Warrant nor any of the Warrant Shares or any other security issued or issuable
upon exercise of this Warrant may be sold, transferred, pledged or hypothecated
in the absence of an effective registration statement under the Act relating to
such security or an opinion of counsel satisfactory to the Company that
registration is not required under the Act. Each certificate for the Warrant,
the Warrant Shares and any other security issued or issuable upon exercise of
this Warrant shall contain a legend on the face thereof, in form and substance
satisfactory to counsel for the Company, setting forth the restrictions on
transfer contained in this Section.
7.2 Registration Rights. (a) Reference is made to the
Registration Rights Agreement. The Company's obligations under the Registration
Rights Agreement and the other terms and conditions thereof with respect to the
Warrant Shares, including, but not necessarily limited to, the Company's
commitment to file a registration statement including the Warrant Shares, to
have the registration of the Warrant Shares completed and effective, and to
maintain such registration, are incorporated herein by reference.
(b) In addition to the registration rights referred to in the
preceding provisions of Section 7.2(a), effective after the expiration of the
effectiveness of the Registration Statement as contemplated by the Registration
Rights Agreement, the Holder shall have piggy-back registration rights with
respect to the Warrant Shares then held by the Holder or then subject to
issuance upon exercise of this Warrant (collectively, the "Remaining Warrant
Shares"), subject to the conditions set forth below. If, at any time after the
Registration Statement has ceased to be effective, the Company participates
(whether voluntarily or by reason of an obligation to a third party) in the
registration of any shares of the Company's stock (other than a registration on
Form S-8 or on Form S-4), the Company shall give written notice thereof to the
Holder and the Holder shall have the right, exercisable within ten (10) Trading
Days after receipt of such notice, to demand inclusion of all or a portion of
the Holder's Remaining Warrant Shares in such registration statement. If the
Holder exercises such election, the Remaining Warrant Shares so designated shall
be included in the registration statement at no cost or expense to the Holder
(other than any costs or commissions which would be borne by the Holder under
the terms of the Registration Rights Agreement). The Holder's rights under this
Section 7 shall expire at such time as the Holder can sell all of the Remaining
Warrant Shares under Rule 144 without volume or other restrictions or limit.
8. Late Delivery of Warrant Shares. Reference is made to Section 5(b)
of the Agreement, the terms of which are incorporated herein by reference.
9. Notices. Any notice required or permitted hereunder shall be given
in manner provided in the Section headed "NOTICES" in the Agreement, the terms
of which are incorporated herein by reference.
10. Supplements and Amendments; Whole Agreement. This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
hereto. This Warrant contains the full understanding of the parties hereto with
respect to the subject matter
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hereof and thereof and there are no representations, warranties, agreements or
understandings other than expressly contained herein and therein.
11. Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of New York for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the County of New York or
the state courts of the State of New York sitting in the County of New York in
connection with any dispute arising under this Warrant and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Holder in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
12. JURY TRIAL WAIVER. The Company and the Holder hereby waive a trial
by jury in any action, proceeding or counterclaim brought by either of the
Parties hereto against the other in respect of any matter arising out or in
connection with this Warrant.
13. Remedies. The Company stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
[Balance of page intentionally left blank]
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15. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: _________________, 200__
AMEDIA NETWORKS, INC.
By: ________________________________
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(Print Name)
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(Title)
4/25/06
NOTICE OF EXERCISE OF WARRANT
TO: AMEDIA NETWORKS, INC. VIA FAX: (000) 000-0000
0 Xxxxxxx Xxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: President
The undersigned hereby irrevocably elects to exercise the right,
represented by the Common Stock Purchase Warrant Series 2006-__, dated as of
_____________________, 20___ , to purchase ___________ shares of the Common
Stock, $0.001 par value ("Common Stock"), of AMEDIA NETWORKS, INC. and tenders
herewith payment in accordance with Section 2 of said Common Stock Purchase
Warrant, as follows:
|_| CASH:$_______________________________ = (Exercise Price x Exercise Shares)
Payment is being made by:
|_| enclosed check
|_| wire transfer
|_| other
|_| CASHLESS EXERCISE [if available pursuant to Section 2.1(b)]:
Net number of Warrant Shares to be issued to Holder :_________*
* based on: Current Market Value - (Exercise Price x Exercise Shares)
Market Price of Common Stock
where:
Market Price of Common Stock ["MP"] = $_______________
Current Market Value [MP x Exercise Shares] = $_______________
It is the intention of the Holder to comply with the provisions of
Section 2.2 of the Warrant regarding certain limits on the Holder's right to
exercise thereunder. Based on the analysis on the attached Worksheet Schedule,
the Holder believes this exercise complies with the provisions of said Section
2.2. Nonetheless, to the extent that, pursuant to the exercise effected hereby,
the Holder would have more shares than permitted under said Section, this notice
should be amended and revised, ab initio, to refer to the exercise which would
result in the issuance of shares consistent with such provision. Any exercise
above such amount is hereby deemed void and revoked.
As contemplated by the Warrant, this Notice of Conversion is being sent
by facsimile to the telecopier number and officer indicated above.
If this Notice of Exercise represents the full exercise of the
outstanding balance of the Warrant, the Holder either (1) has previously
surrendered the Warrant to the Company or (2) will surrender (or cause to be
surrendered) the Warrant to the Company at the address indicated above by
express courier within five (5) Trading Days after delivery or facsimile
transmission of this Notice of Exercise.
The certificates representing the Warrant Shares should be transmitted
by the Company to the Holder
|_| via express courier, or
|_| by electronic transfer
after receipt of this Notice of Exercise (by facsimile transmission or
otherwise) to:
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Dated: ______________________
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[Name of Holder]
By: _________________________
NOTICE OF EXERCISE OF WARRANT
WORKSHEET SCHEDULE
1. Current Common Stock holdings of Holder and Affiliates _____________
2. Shares to be issued on current exercise _____________
3. Other shares to be issued on other current exercise(s) and
other current conversion(s)(6) _____________
4. Other shares eligible to be acquired within next 60 days
without restriction _____________
5. Total [sum of Lines 1 through 4] _____________
6. Outstanding shares of Common Stock(7) _____________
7. Adjustments to Outstanding
a. Shares known to Holder as previously issued
to Holder or others but not included in Line 6 _____________
b. Shares to be issued per Line(s) 2 and 3 _____________
c. Total Adjustments [Lines 7a and 7b] _____________
8. Total Adjusted Outstanding [Lines 6 plus 7c] _____________
9. Holder's Percentage [Line 5 divided by Line 8] _____________%
[Note: Line 9 not to be above 4.99%] _____________
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(6)Includes shares issuable on conversion of convertible securities (including
assumed payment, if relevant, of interest or dividends) or exercise of other
rights, including other warrants or options
(7)Based on latest SEC filing by Company or information provided by executive
officer of Company, counsel to Company or transfer agent
