EXHIBIT 3.4
THIS WARRANT AND THE SHARES ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED
WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES ACT
OF 1933 ("ACT"), AND THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE
144 OF SUCH ACT.
STOCK PURCHASE WARRANT
RIGHT TO PURCHASE __________ SHARES OF COMMON STOCK
THIS CERTIFIES THAT _________________________ ("Holder") is entitled to
purchase, on or before April 30, 2002, _______________ (________) shares of the
common stock ("Common Stock") of VALUESTAR CORPORATION (the "Corporation") upon
exercise of this Warrant along with presentation of the full purchase price. The
purchase price of the common stock is equal to Seventy Five Cents ($0.75) per
share (the "Exercise Price"). This Warrant (which is one of five individual
warrants exercisable into an aggregate of 150,000 shares) is granted in
consideration of the payment by Xxxxxx Xxxxx Securities, Inc. pursuant to that
certain consulting agreement, dated April 30, 1997, between Xxxxxx Xxxxx
Securities, Inc. and the Corporation.
1. Net Issuance Option. At the option of Holder, in lieu of payment of the
Exercise Price for the Shares, the Holder may request in writing that the
Corporation issue to it the net Shares issuable determined in accordance with
the following formula:
NS = WS - [EP/CMP x WS]
NS = New Shares
WS = No. of Shares issuable upon exercises of the warrants
EP = Exercise Price
CMP = Current Market Price as of the date of the request
Upon such surrender of this Warrant and payment for the Shares a written request
that the Corporation issue the net Shares in accordance with the foregoing
formula, the Corporation shall issue and cause to be delivered within five (5)
business days to or upon the written order of the Holder and in such name or
names as the Holder may designate a certificate or certificates for the number
of full Shares issuable upon the exercise of the Warrants, together with cash in
respect of any fractional Share otherwise issuable upon such exercise.
2. Adjustment of Exercise Price and Number of Shares Deliverable Upon Exercise
of Warrant. The Exercise Price and the number of Shares purchasable upon the
exercise of this Warrant ("Warrant Shares") are subject to adjustment from time
to time upon the occurrence of the events enumerated in this paragraph.
(a) In case the Corporation shall at any time after the date of this Warrant:
(i) Pay a dividend of its shares of its Common Stock or make a
distribution in shares of its Common Stock with respect to its
outstanding Common Stock;
(ii) Subdivide its outstanding shares of Common Stock;
(iii) Combine its outstanding shares of Common Stock; or
(iv) Issue any other shares of capital stock by reclassification of
its shares of Common Stock;
the Exercise Price in effect at the time of the record date of such dividend,
subdivision, combination, or reclassification shall be proportionately adjusted
so that Holder shall be entitled to receive the aggregate number and kind of
shares which, if this Warrant had been exercised prior to such event, Holder
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination, or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
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(b) In case the Corporation shall fix a record date for the issuance of rights,
options, or warrants or make a distribution of shares of Common Stock to all
(but not less than all) holders of its outstanding Common Stock entitling them
to subscribe for or purchase shares of Common Stock (or securities convertible
into shares of Common Stock) at a price per share (or having a conversion price
per share, if a security convertible into Common Stock) less than the market
price of the shares (based on the closing price on the record date on NASDAQ or
a listed securities exchange of the Corporation's Common Stock, or if no such
quote is available, the shareholders equity on the date of the last financial
statement divided by the total number of shares outstanding) (the "Market
Price"), the Exercise Price to be in effect after such record date shall be
determined by multiplying the then current Exercise Price in effect immediately
prior to such record date by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate offering price of the total number
of shares of Common Stock so to be offered (or the aggregate initial conversion
price of the convertible securities so to be offered) would purchase at such
Market Price and of which the denominator shall be the number of shares of
Common Stock outstanding on such record date plus the number of additional
shares of Common Stock to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially convertible). Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such rights or warrants are not so issued, the Exercise Price
shall again be adjusted to be the Exercise Price which would then be in effect
if such record date had not been fixed.
(c) In case of any reorganization of the Corporation, or in case of any
reclassification or change of outstanding Common Stock issuable upon exercise of
this Warrant (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
split-up or combination of the Common Stock), or in case of any consolidation or
merger of the Company with or into another entity (other than a consolidation or
merger with a subsidiary or a continuing corporation), or in case of any sale or
conveyance to another entity of all or substantially all of the property of the
Corporation, then, as a condition of such reorganization, reclassification,
change, consolidation, merger, sale, or conveyance, the Corporation or such
successor or purchasing entity, as the case may be, shall forthwith provide to
Holder a supplemental warrant (the "Supplemental Warrant") which will make
lawful and adequate provision whereby Holder shall have the right thereafter to
receive, upon exercise of such Supplemental Warrant, the kind and amount of
shares and other securities and property which would have been received upon
such reorganization, reclassification, change, consolidation, merger, sale, or
conveyance by a holder of a number of shares of Common Stock equal to the number
of Shares issuable upon exercise of this Warrant immediately prior to such
reorganization, reclassification, change, consolidation, merger, sale, or
conveyance. Such Supplemental Warrant shall include provisions for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this paragraph. The above provisions of this paragraph shall
similarly apply to successive reorganizations, reclassifications, and changes of
Common Stock and to successive consolidations, mergers, sales, or conveyances.
3. Restrictions on Transfer.
Holder has been advised and understands that the Warrants and the Shares
purchasable thereby are characterized as "restricted securities" under the
federal securities laws because they are being acquired from Corporation in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act only in certain limited circumstances.Holder further understands that
the certificates evidencing the Shares will bear the following legend: "These
securities have not been registered under the Securities Act of 1933. They may
not be sold, offered for sale, pledged or hypothecated in the absence of a
registration statement in effect with respect to the securities under such Act
or an opinion of counsel satisfactory to the Company that such registration is
not required or unless sold pursuant to Rule 144 of such Act."
The Holder understands that the Company may place, and may instruct any transfer
agent or depository for the Shares to place, a stop transfer notation in the
securities records in respect of the Shares.
4. Registration Rights.
Holder shall have the right, at any time and from time to time until April 30,
2002, to include all of the shares purchased or purchasable upon the exercise of
this Warrant ( the "Registrable Shares") within any Registration Statement of
the Corporation filed by the Corporation covering shares of its Common Stock
other than a
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Registration Statement filed solely with respect to any employee benefit plan of
the Corporation or an offering solely related to an acquisition or for which
such Registrable Shares cannot be appropriately registered. The Corporation
shall promptly give written notice to Holder of any intended registration of its
Common Stock not less than forty-five (45) days prior to the anticipated
effective date of the Registration Statement, and Holder shall, within fifteen
(15) days of receipt thereof, notify the Corporation of the number of
Registrable Shares it desires to include in the Registration Statement. The
number of Registrable Shares which may be included by the Holder in any such
Registration Statement may be restricted by the Corporation if, in the opinion
of the Corporation's managing underwriter, the number of shares proposed to be
sold by the Holder and by the Corporation in such offering exceeds the number of
securities which can be sold in such offering. In such event, the Registrable
Shares of Holder to be included within such Registration Statement shall not
exceed the number approved for inclusion therein by the Corporation and its
managing underwriter. All costs or expenses, incident to the registration,
qualification or listing of such securities shall be paid by the Corporation,
and the Corporation shall comply with all reasonable requests of Holder made in
connection with the registration, qualification, listing or sale of Registrable
Shares.
Upon written request of Holders of Warrants for more than 50% of the Warrant
Shares the Company shall use its best efforts to file a registration statement
on Form S-8 at any time after one year from the date of this Warrant provided
that (i) counsel for the Corporation concurs that such shares qualify for
registration on Form S-8 at such time, (ii) the average closing bid price of the
Common Stock for the last thirty trading days has exceeded $1.50 per share, and
(iii) in the opinion of the Board of Directors such registration will not have
an adverse effect on any contemplated corporate actions. Should the Board of
Directors opine that the registration could have an adverse effect, then the
Corporation may delay registration one time for a period of 90 days.
5. Assignment or Loss of Warrant.
(a) The Holder of this Warrant shall be entitled, without obtaining the consent
of the Corporation, to assign its interest in this Warrant, or any of the
Warrant Shares, in whole or in part to any person, provided, however, that the
transferee, prior to any such transfer, provides the Corporation with a legal
opinion, in form and substance satisfactory to the Company, that such transfer
will not violate the Act or any applicable state securities or blue sky laws.
Otherwise without obtaining the prior written consent of the Company, Holder
shall not transfer or assign its interest in this Warrant, or any of the Warrant
Shares prior to exercise, in whole or in part to any transferee.
(b) Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnification satisfactory to the Company, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.
6. Reservation of Shares. The Company hereby agrees that at all times there
shall be reserved for issuance and delivery upon exercise or exchange of this
Warrant all shares of its Common Stock or other shares of capital stock of the
Company from time to time issuable upon exercise or exchange of this Warrant.
All such shares shall be duly authorized and, when issued upon the exercise or
exchange of the Warrant in accordance with the terms hereof, shall be validly
issued, fully paid and nonassessable, free and clear of all liens, security
interests, charges and other encumbrances or restrictions on sale (other than as
provided in the Company's articles of incorporation and any restrictions on sale
set forth herein or pursuant to applicable federal and state securities laws)
and free and clear of all preemptive rights.
7. Arbitration. In the event that a dispute arises between the Corporation and
the holder of this Warrant as to any matter relating to this Warrant, the matter
shall be settled by arbitration in Alameda County, California in accordance with
the Rules of the American Arbitration Association and the award rendered by such
arbitrator(s) shall not be subject to appeal and may be entered in any federal
or state court located in Alameda County having jurisdiction thereof, and
actions or proceedings shall be brought in no other forum or venue.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by
its duly authorized officers and the corporate seal hereunto affixed on this
30th day of April, 1997.
VALUESTAR CORPORATION
/s/ XXXXX XXXXX
Xxxxx Xxxxx, President and CEO
/s/ XXXXXXXX X. XXXXXXX
Xxxxxxxx X. Xxxxxxx, Secretary
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