FORM OF WARRANT
THESE SECURITIES (THE "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.
XXXXXXXX.XXX
COMMON STOCK PURCHASE WARRANT
1. Issuance; Certain Definitions. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by XXXXXXXX.XXX, a
California corporation (the "Company"), _________________ or registered assigns
(the "Holder") is hereby granted the right to purchase at any time until 5:00
P.M., New York City time, on _______________, 200__(1) (the "Expiration Date"),
______________ Thousand (__________)(2) fully paid and nonassessable
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(1) Insert date which is last day of month in which fifth anniversary of
the relevant Closing Date occurs.
(2) Insert (x) the aggregate stated value of the Preferred Stock issued to
the Holder on the relevant Closing Date divided by (y) the Fixed Conversion
Price (as defined in Certificate of Determination).
shares of the Company's Common Stock, no par value per share (the "Common
Stock") at an initial exercise price per share (the "Exercise Price") of
$________(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 June ____, 2000 (the "Securities Purchase
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 in the Securities Purchase Agreement.
2. Exercise of Warrants.
2.1 General. This Warrant is exercisable in whole or in part at any
time and from time to time. 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
this paragraph. The date such Notice of Exercise is faxed to the Company shall
be the "Exercise Date," provided that the Holder of this Warrant tenders this
Warrant Certificate to the Company within five (5) business days thereafter. The
Notice of Exercise shall be executed by the Holder of this Warrant and shall
indicate the number of shares then being purchased pursuant to such exercise.
Upon surrender of this Warrant Certificate, together with appropriate payment of
the Exercise Price for the shares of Common Stock purchased, the Holder shall be
entitled to receive a certificate or certificates for the shares of Common Stock
so purchased. If the Notice of Exercise form elects a "cash" exercise, the
Exercise Price per share of Common Stock for the shares then being exercised
shall be payable in cash or by certified or official bank check. 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 (x) 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 (y) the
Market Price of the Common Stock as of the trading day immediately prior to the
Exercise Date. For the purposes of this Warrant, the terms (Q) "Current Market
Value" shall be an amount equal to the Market Price of the Common Stock as of
the trading day immediately prior to the Exercise Date, multiplied by the number
of shares of Common Stock specified in such Notice of Exercise Form, and (R)
"Market Price of the Common Stock" shall be the closing price of the Common
Stock as reported by Bloomberg, LP or, if not so reported, as reported by the
securities exchange or automated quotation system on which the Common Stock is
listed or on the over-the-counter market
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(3) Insert 110% of (i) for the Warrants issued on the Initial Closing Date,
the average Closing Bid Price for the five (5) trading days ending on the
trading day immediately before (x) June 23, 2000 or (y) the Initial Closing
Date, whichever is lower, and (ii) for the Warrants issued on the Additional
Closing Date, the average Closing Bid Price for the five (5) trading days ending
on the trading day immediately before the Additional Closing Date.
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for the relevant date. 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 Securities Purchase 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) while there is outstanding a tender offer
for any or all of the shares of the Company's Common Stock, or (iii) on at least
seventy-five (75) days' advance written notice from the Holder of its election
to cancel this Section 2.2) 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 unconverted portion of
the Preferred Stock or unexercised portion of the Warrants), 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 9.99% 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, 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.
3. Reservation of Shares. The Company hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant such number of shares of its Common Stock as shall be
required for issuance upon exercise of this Warrant (the "Warrant Shares").
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 affidavit, 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.
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6. Protection Against Dilution.
6.1 Adjustment Mechanism. If an adjustment of the Exercise Price is
required pursuant to this Section 6, the Holder shall be entitled to purchase
such number of additional shares of Common Stock as will cause (i) the total
number of shares of Common Stock Holder is entitled to purchase pursuant to this
Warrant, multiplied by (ii) the adjusted Exercise Price per share, to equal
(iii) the dollar amount of the total number of shares of Common Stock which the
Holder is entitled to purchase before adjustment, multiplied by the total
Exercise Price before adjustment.
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, or like capital adjustment affecting the Common Stock
of the Company, 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.
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 of all or 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
(a) 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; and
(b) the Exercise Price on the Outstanding Warrants shall be
adjusted immediately after consummation of the Spin Off by multiplying the
Exercise Price by a fraction (if, but only if, such fraction is less than
1.0), the numerator of which is the Average Market Price
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of the Common Stock (as defined below) for the five (5) trading days
immediately following the fifth trading day after the Record Date, and the
denominator of which is the Average Market Price of the Common Stock on the
five (5) trading days immediately preceding the Record Date; and such
adjusted Exercise Price shall be deemed to be the Exercise Price with
respect to the Outstanding Warrants after the Record Date. As used herein,
the term "Average Market Price of the Common Stock" means the average
closing bid price of a share of Common Stock, as reported by Bloomberg, LP
or, if not so reported, as reported on the over-the-counter market for the
relevant period.
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 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), the Company
shall give written notice thereof to the Holder and the Holder shall have
the right, exercisable within ten (10) business 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
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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. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage pre-paid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission,
or, if mailed, two days after the date of deposit in the United States mails, as
follows:
(i) if to the Company, to:
Xxxxxxxx.xxx
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxx & Xxxxxxxxxxx LLP
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn:. Xxxxxxx X. Xxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(ii) if to the Holder, to:
ATTN:
Telephone No.: ( ) -
Telecopier No.: ( ) -
with a copy to:
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Xxxxxxx & Xxxxxx LLP
00 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
Any party may be notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
9. 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 hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.
10. 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 City of New York or the state courts
of the State of New York sitting in the City 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.
11. 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.
12. 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 parties hereto have executed this Warrant as of the
th day of , 2000.
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XXXXXXXX.XXX
By:
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Name: Xxxx Xxxxx
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Its: Chief Executive Officer
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Attest:
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Name:
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Title:
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NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of ______________, ________, to
purchase ________ shares of the Common Stock, no par value per share, of
XXXXXXXX.XXX and tenders herewith payment in accordance with Section 1 of said
Common Stock Purchase Warrant.
Please deliver the stock certificate to:
Dated:
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[Name of Holder]
By:
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[ ] CASH: $
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[ ] CASHLESS EXERCISE
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