EXHIBIT 4.1
FORM OF COMMON STOCK PURCHASE WARRANT
THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUED UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE AFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
STEAKHOUSE PARTNERS, INC.
WARRANT TO PURCHASE SHARES
(SUBJECT TO ADJUSTMENT)
OF COMMON STOCK
(Void after _______ _, 200__)
No: STHW __
This certifies that for value received,
_______________________________, or his/her/its registered assigns (the
"HOLDER"), is entitled, subject to the terms set forth below, at any time from
and after ______ _, 200__ (the "ORIGINAL ISSUANCE DATE") and before 5:00 p.m.,
Eastern Time, on _______ __, 200__ (the "EXPIRATION DATE"), to purchase from
Steakhouse Partners, Inc., a Delaware corporation (the "COMPANY"),
__________________________ (______) shares (subject to adjustment as described
herein), of common stock, par value $0.001 per share, of the Company (the
"COMMON STOCK"), upon surrender hereof, at the principal office of the Company
referred to below, with a duly executed subscription form in the form attached
hereto as EXHIBIT A (the "SUBSCRIPTION FORM") and simultaneous payment therefor
in lawful, immediately available money of the United States or otherwise as
hereinafter provided, at an initial exercise price per share of $2.00 (the
"EXERCISE Price"); provided, however, that notwithstanding anything to the
contrary provided herein or elsewhere, following the delivery of the audited
financial statements of the Company for the year ending December 28, 2005
("FISCAL 2005") the Exercise Price shall be: (i) increased by five (5%) percent
(but in no event shall the Exercise Price exceed $2.50 (except as a result of
anti-dilution provisions as provided elsewhere herein) for every $100,000) by
which the Company's earning before any non-recurring income and loss and before
interest, taxes, depreciation and amortization (the "EBITDA") exceeds $3,500,000
for Fiscal 2005 (the "EBITDA THRESHOLD"), and (ii) decreased by ten (10%)
percent (but in no event shall the Exercise Price be less than $1.00 (except as
a result of anti-dilution provisions as provided elsewhere herein) for every
$100,000 by which the Company's Fiscal 2005 EBITDA is below the EBITDA
Threshold. The EBITDA Threshold shall be determined from the Company's audited
financial statements included in the Company's Annual Report on Form 10-K (or
such other similar report) for Fiscal 2005. The Exercise Price is subject to
further adjustment as provided below, and the term "COMMON STOCK" shall include,
unless the context otherwise requires, the stock and other securities and
property at the time receivable upon the exercise of this Warrant. The term
"WARRANTS," as used herein, shall mean this Warrant and any other Warrants
delivered in substitution or exchange therefor as provided herein.
This Warrant was issued in connection with a $1,050,000 minimum amount
and a $3,000,000 maximum amount private placement (the "OFFERING") of Common
Stock and Warrants offered pursuant to that certain Confidential Private
Placement Memorandum, dated December 8, 2004 (the "MEMORANDUM"). Xxxxxxx &
Company (UK) Ltd. acted as placement agent for the Offering (the "PLACEMENT
AGENT"). In the Offering, the Company sold its securities to "accredited
investors" pursuant to Subscription Agreements (the "SUBSCRIPTION AGREEMENTS").
1. Exercise. This Warrant may be exercised by the Holder, in whole or
in part, at any time or from time to time from and after the Original Issuance
Date and before 5:00 p.m., Eastern Time, until the fifth year anniversary date
thereof on any business day, by surrender at the principal office of the
Company, at 00000 Xxxxxx Xxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, with the
Subscription Form duly executed, together with payment in an amount equal to (a)
the number of shares of Common Stock designated in the Subscription Form, as
adjusted in accordance with Section 4 of this Warrant (without giving effect to
any further adjustment herein), multiplied by (b) the Exercise Price (the
"PURCHASE PRICE"). Payment of the Purchase Price may be made at Holder's
choosing either: (1) by payment in immediately available funds; or (2) in lieu
of any cash payment, if this Warrant is exercised on a date following the date
one (1) year from the Original Issuance Date, and the Registration Statement (as
defined in the Registration Rights Agreement), covering the shares of Common
Stock issuable upon exercise of this Warrant has not been declared effective by
the Securities and Exchange Commission (the "COMMISSION"), or is no longer in
effect, in exchange for the number of shares of Common Stock equal to the
product of (x) the number of shares to which the Warrants are being exercised
multiplied by (y) a fraction, the numerator of which is the Purchase Price and
the denominator of which is the Fair Market Value (as defined below). This
Warrant may be exercised for less than the full number of shares of Common Stock
at the time called for hereby, except that the number of shares receivable upon
the exercise of this Warrant as a whole, and the sum payable upon the exercise
of this Warrant as a whole, shall be proportionately reduced. Upon a partial
exercise of this Warrant in accordance with the terms hereof, this Warrant shall
be surrendered, and a new Warrant of the same tenor and for the purchase of the
number of shares of Common Stock not purchased upon such exercise shall be
issued by the Company to the Holder without any charge therefor. A Warrant shall
be deemed to have been exercised immediately prior to the close of business on
the date of its surrender for exercise as provided above, and the person
entitled to receive the shares of Common Stock issuable upon such exercise shall
be treated for all purposes as the holder of such shares of record as of the
close of business on such date. Within five (5) business days after such date,
the Company shall issue and deliver to the person or persons entitled to receive
the same a certificate or certificates for the number of full shares of Common
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Stock issuable upon such exercise, together with cash, in lieu of any fraction
of a share, equal to such fraction of the then Fair Market Value on the date of
exercise of one full share of Common Stock.
"FAIR MARKET VALUE" shall mean, as of any date: (i) if shares of the
Common Stock are listed on a national securities exchange, the average of the
closing prices as reported for composite transactions during the five (5)
consecutive trading days preceding the trading day immediately prior to such
date or, if no sale occurred on a trading day, then the mean between the closing
bid and asked prices on such exchange on such trading day; (ii) if shares of the
Common Stock are not so listed but are traded on the Nasdaq SmallCap Market
("NSCM"), the average of the closing prices as reported on the NSCM during the
five (5) consecutive trading days preceding the trading day immediately prior to
such date or, if no sale occurred on a trading day, then the mean between the
highest bid and lowest asked prices as of the close of business on such trading
day, as reported on the NSCM; or if applicable, the Nasdaq National Market
("NNM"), or if not then included for quotation on the NNM or NSCM, the average
of the highest reported bid and lowest reported asked prices as reported by the
OTC Bulletin Board or the National Quotations Bureau, as the case may be; or
(iii) if the shares of the Common Stock are not then publicly traded, the fair
market price of the Common Stock as determined in good faith by the Board of
Directors of the Company.
2. Shares Fully Paid; Payment of Taxes. All shares of Common Stock
issued upon the exercise of this Warrant shall be validly issued, fully paid and
non-assessable, and the Company shall pay all taxes and other governmental
charges (other than income taxes to the holder) that may be imposed in respect
of the issue or delivery thereof.
3. Transfer and Exchange. This Warrant and all rights hereunder are
transferable, in whole or in part, on the books of the Company maintained for
such purpose at its principal office referred to above by Holder in person or by
duly authorized attorney, upon surrender of this Warrant together with a
completed and executed assignment form in the form attached hereto as EXHIBIT B,
payment of any necessary transfer tax or other governmental charge imposed upon
such transfer and an opinion of counsel reasonably acceptable the Company
stating that such transfer is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 ACT"). Upon any partial transfer,
the Company will issue and deliver to Holder a new Warrant with respect to the
shares of Common Stock not so transferred. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that this Warrant
when endorsed in blank shall be deemed negotiable and that when this Warrant
shall have been so endorsed, the holder hereof may be treated by the Company and
all other persons dealing with this Warrant as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented hereby, or
to the transfer hereof on the books of the Company, any notice to the contrary
notwithstanding; but until such transfer is reflected on such books, the Company
may treat the registered Holder hereof as the owner for all purposes.
This Warrant is exchangeable at the principal office of the
Company for a Warrant to purchase the same aggregate number of shares of Common
Stock, each new Warrant to represent the right to purchase such number of shares
as the Holder shall designate at the time of such exchange.
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4. Anti-Dilution Provisions.
A. Adjustment for Dividends in Other Stock or other Securities or
Properties; Property Reclassifications. In case at any time or from time to time
the holders of the Common Stock (or any shares of stock or other securities at
the time receivable upon the exercise of this Warrant) shall have received, or,
on or after the record date fixed for the determination of eligible
shareholders, shall have become entitled to receive, without payment therefor,
(1) other or additional stock or other securities or property
(other than cash) by way of dividend,
(2) any cash or other property paid or payable out of any source
other than retained earnings (determined in accordance with generally accepted
accounting principles), or
(3) other or additional stock or other securities or property
(including cash) by way of stock-split, spin-off, reclassification, combination
of shares or similar corporate rearrangement (other than (x) additional shares
of Common Stock or any other stock or securities into which such Common Stock
shall have been changed, (y) any other stock or securities convertible into or
exchangeable for such Common Stock or such other stock or securities or (z) any
stock purchase rights, issued as a stock dividend or stock-split, adjustments in
respect of which shall be covered by the terms of SECTION 4.C, 4.D OR 4.E), then
and in each such case, Holder, upon the exercise hereof as provided in SECTION
1, shall be entitled to receive the amount of stock and other securities and
property (including cash in the cases referred to in clauses (2) and (3) above)
which such Holder would hold on the date of such exercise if on the Original
Issuance Date Holder had been the holder of record of the number of shares of
Common Stock called for on the face of this Warrant, as adjusted in accordance
with the first paragraph of this Warrant, and had thereafter, during the period
from the Original Issuance Date to and including the date of such exercise,
retained such shares and/or all other or additional stock and other securities
and property (including cash in the cases referred to in clause (2) and (3)
above) receivable by it as aforesaid during such period, giving effect to all
adjustments called for during such period by SECTION 4.A and SECTION 4.B.
B. Adjustment for Reorganization, Consolidation and Merger. In case
of any reorganization of the Company (or any other corporation the stock or
other securities of which are at the time receivable on the exercise of this
Warrant) after the Original Issuance Date, or in case, after such date, the
Company (or any such other corporation) shall consolidate with or merge into
another corporation or entity or convey all or substantially all its assets to
another corporation or entity, then and in each such case Holder, upon the
exercise hereof as provided in SECTION 1 at any time after the consummation of
such reorganization, consolidation, merger or conveyance, shall be entitled to
receive, in lieu of the stock or other securities and property receivable upon
the exercise of this Warrant prior to such consummation, the stock or other
securities or property to which such Holder would have been entitled upon such
consummation if Holder had exercised this Warrant immediately prior thereto, all
subject to further adjustment as provided in SECTIONS 4.A, 4.B, 4.C, 4.D, AND
4.E; in each such case, the terms of this Warrant shall be applicable to the
shares of stock or other securities or property receivable upon the exercise of
this Warrant after such consummation.
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C. Sale of Shares Below Purchase Price.
(1) Subject to the exceptions set forth in SECTION 4.C(5), if the
Company issues or sells, or is deemed by the express provisions of this SECTION
4.C to have issued or sold, Additional Shares of Common Stock (as hereinafter
defined), other than as a dividend or other distribution on any class of stock
as provided in SECTION 4.D and other than upon a subdivision or combination of
shares of Common Stock as provided in SECTION 4.E, for an Effective Price (as
hereinafter defined) less than the then existing Exercise Price, then and in
each such case:
(A) the then existing Exercise Price shall be reduced, as of the
opening of business on the date of such issue or sale, to the Effective Price;
and
(2) For the purpose of making any adjustment required under this
SECTION 4.C, the consideration received by the Company for any issue or sale of
securities shall (i) to the extent it consists of cash be computed at the amount
of cash received by the Company, (ii) to the extent it consists of property
other than cash, be computed at the fair value of that property as determined in
good faith by the Board of Directors of the Company (the "BOARD"), (iii) if
Additional Shares of Common Stock, Convertible Securities (as hereinafter
defined) or rights or options to purchase either Additional Shares of Common
Stock or Convertible Securities are issued or sold together with other stock or
securities or other assets of the Company for a consideration which covers both,
be computed as the portion of the consideration so received that may be
reasonably determined in good faith by the Board to be allocable to such
Additional Shares of Common Stock, Convertible Securities or rights or options,
and (iv) be computed after reduction for all expenses payable by the Company in
connection with such issue or sale.
(3) For the purpose of the adjustment required under this SECTION
4.C, if the Company issues or sells any rights or options for the purchase of,
or stock or other securities convertible into or exchangeable for, Additional
Shares of Common Stock (such convertible or exchangeable stock or securities
being hereinafter referred to as "CONVERTIBLE SECURITIES") and if the Effective
Price of such Additional Shares of Common Stock is less than the Exercise Price
then in effect, then the Company shall be deemed to have issued at the time of
the issuance of such rights or options or Convertible Securities the maximum
number of Additional Shares of Common Stock issuable upon exercise, conversion
or exchange thereof and to have received as consideration for the issuance of
such shares an amount equal to the total amount of the consideration, if any,
received by the Company for the issuance of such rights or options or
Convertible Securities, plus, in the case of such rights or options, the minimum
amounts of consideration, if any, payable to the Company upon the exercise of
such rights or options, plus, in the case of Convertible Securities, the minimum
amounts of consideration, if any, payable to the Company (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion or exchange thereof. No further adjustment of
the Purchase Price, adjusted upon the issuance of such rights, options or
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Convertible Securities, shall be made as a result of the actual issuance of
Additional Shares of Common Stock on the exercise of any such rights or options
or the conversion or exchange of any such Convertible Securities. If any such
rights or options or the conversion or exchange privilege represented by any
such Convertible Securities shall expire without having been exercised, the
Exercise Price adjusted upon the issuance of such rights, options or Convertible
Securities shall be readjusted to the Purchase Price which would have been in
effect had an adjustment been made on the basis that the only Additional Shares
of Common Stock so issued were the Additional Shares of Common Stock, if any,
actually issued or sold on the exercise of such rights or options or rights of
conversion or exchange of such Convertible Securities, and such Additional
Shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Company upon such exercise, plus the consideration, if
any, actually received by the Company for the granting of all such rights or
options, whether or not exercised, plus the consideration received for issuing
or selling the Convertible Securities actually converted or exchanged, plus the
consideration, if any, actually received by the Company (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) on the conversion or exchange of such Convertible Securities.
(4) For the purpose of the adjustment required under this SECTION
4.C, if the Company issues or sells, or is deemed by the express provisions of
this subsection to have issued or sold, any rights or options for the purchase
of Convertible Securities and if the Effective Price of the Additional Shares of
Common Stock underlying such Convertible Securities is less than the Purchase
Price then in effect, then in each such case the Company shall be deemed to have
issued at the time of the issuance of such rights or options the maximum number
of Additional Shares of Common Stock issuable upon conversion or exchange of the
total amount of Convertible Securities covered by such rights or options and to
have received as consideration for the issuance of such Additional Shares of
Common Stock an amount equal to the amount of consideration, if any, received by
the Company for the issuance of such rights or options, plus the minimum amounts
of consideration, if any, payable to the Company upon the exercise of such
rights or options and plus the minimum amount of consideration, if any, payable
to the Company (other than by cancellation of liabilities or obligations
evidenced by such Convertible Securities) upon the conversion or exchange of
such Convertible Securities. No further adjustment of the Purchase Price,
adjusted upon the issuance of such rights or options, shall be made as a result
of the actual issuance of the Convertible Securities upon the exercise of such
rights or options or upon the actual issuance of Additional Shares of Common
Stock upon the conversion or exchange of such Convertible Securities. The
provisions of this Section 4.C(a)(A)(3) above for the readjustment of the
Purchase Price upon the expiration of rights or options or the rights of
conversion or exchange of Convertible Securities shall apply with the necessary
changes to the rights, options and Convertible Securities referred to in this
Section 4.C(1)(A)(4).
(5) "ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of
Common Stock issued by the Company on or after the Original Issuance Date,
whether or not subsequently reacquired or retired by the Company other than (i)
shares of Common Stock issuable upon exercise of the Warrants, (ii) shares of
Common Stock issuable upon exercise of warrants and options to purchase Common
Stock issued and outstanding as of the Original Issuance Date and employee stock
options granted by the Board after the Original Issuance Date, (iii) shares of
Common Stock issued to non-affiliated third parties in connection with any bona
fide mergers, acquisitions, business combinations and strategic ventures
approved by the Company's Board of Directors, (iv) shares of Common Stock issued
as dividends and/or interest payments in lieu of cash payments, (v) 500,000
shares of Common Stock to be issued to unsecured creditors, and (vi) shares of
Common Stock issued in connection with public offerings of the Company's
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securities. The "EFFECTIVE PRICE" of Additional Shares of Common Stock shall
mean the quotient determined by dividing the total number of Additional Shares
of Common Stock issued or sold, or deemed to have been issued or sold by the
Company under this SECTION 4.C, into the aggregate consideration received, or
deemed to have been received, by the Company for such issue under this SECTION
4.C, for such Additional Shares of Common Stock. "OTHER SECURITIES" with respect
to an issue or sale of Additional Shares of Common Stock shall mean Convertible
Securities; "THE NUMBER OF SHARES OF COMMON STOCK UNDERLYING OTHER SECURITIES"
on a particular date shall mean the number of shares of Common Stock issuable
upon the exercise, conversion or exchange, as the case may be, of such Other
Securities at the close of business on such date.
(6) Other than a reduction pursuant to its applicable anti-dilution
provisions, any reduction in the conversion price of any Convertible Security,
whether outstanding on the Original Issuance Date or thereafter, or the
subscription price of any option, warrant or right to purchase Common Stock or
any Convertible Security (whether such option, warrant or right is outstanding
on the Original Issuance Date or thereafter), to an Effective Price less than
the Fair Market Value or the then Purchase Price shall be deemed to be an
issuance of such Convertible Security and the issuance of all such options,
warrants or subscription rights, and the provisions of SECTIONS 4.C.(3), (4) AND
(5) shall apply thereto with any such changes as are necessary.
(7) In case any shares of stock or other securities, other than
Common Stock, shall at the time be receivable upon the exercise of this Warrant,
and in case any additional shares of such stock or any additional such
securities (or any stock or other securities convertible into or exchangeable
for any such stock or securities) shall be issued or sold for a consideration
per share such as to dilute the purchase rights evidenced by this Warrant, then
and in each such case the Purchase Price shall forthwith be adjusted,
substantially in the manner provided for above in this SECTION 4.C, so as to
protect the Holder of this Warrant against the effect of such dilution.
(8) In case the Company shall take a record of the holders of shares
of its stock of any class for the purpose of entitling them (a) to receive a
dividend or a distribution payable in Common Stock or in Convertible Securities,
or (b) to subscribe for, purchase or otherwise acquire Common Stock or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the Additional Shares of Common Stock issued or sold or
deemed to have been issued or sold upon the declaration of such dividend or the
making of such other distribution, or the date of the granting of such rights of
subscription, purchase or other acquisition, as the case may be.
(9) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least one cent
($0.01) in such price; provided, however, that any adjustments which by reason
of this SECTION 4 are not required to be made shall be carried forward and taken
into account in any subsequent adjustment required to be made hereunder. All
calculations under this SECTION 4 shall be rounded down to the nearest cent or
to the nearest one-hundredth of a share, as the case may be.
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D. Adjustment for Certain Dividends and Distributions. If the Company
at any time or from time to time makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock, then and in
each such event:
(1) the Purchase Price then in effect shall be decreased as of the
time of such issuance or, in the event such record date is fixed, as of the
close of business on such record date, by multiplying the Purchase Price then in
effect by a fraction (A) the numerator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and (B) the denominator
of which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date as the case may be, plus the number of shares of
Common Stock issuable in payment of such dividend or distribution; provided,
however, that if such record date is fixed and such dividend is not fully paid
or if such distribution is not fully made on the date fixed therefor, the
Purchase Price shall be recomputed accordingly as of the close of business on
such record date, and thereafter the Purchase Price shall be adjusted pursuant
to this SECTION 4.D as of the time of actual payment of such dividends or
distributions; and
(2) the number of shares of Common Stock theretofore receivable upon
the exercise of this Warrant shall be increased, as of the time of such issuance
or, in the event such record date is fixed, as of the close of business on such
record date, in inverse proportion to the decrease in the Purchase Price.
E. Stock Split and Reverse Stock Split. If the Company at any time or
from time to time effects a stock split or subdivision of the outstanding Common
Stock, the Purchase Price then in effect immediately before that stock split or
subdivision shall be proportionately decreased and the number of shares of
Common Stock theretofore receivable upon the exercise of this Warrant shall be
proportionately increased. If the Company at any time or from time to time
effects a reverse stock split or combines the outstanding shares of Common Stock
into a smaller number of shares, the Purchase Price then in effect immediately
before that reverse stock split or combination shall be proportionately
increased and the number of shares of Common Stock theretofore receivable upon
the exercise of this Warrant shall be proportionately decreased. Each adjustment
under this SECTION 4.E shall become effective at the close of business on the
date the stock split, subdivision, reverse stock split or combination becomes
effective.
F. Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this SECTION 4,
the Company at its expense, within thirty (30) days thereafter, shall give
written notice thereof to the Holder at the address of such Holder shown on the
books of the Company, which notice shall set forth such adjustment or
readjustment and show in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written request at any time
of any holder of a Warrant, furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustments and readjustments, (ii)
Purchase Price at the time in effect, and (iii) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the exercise of the Warrant.
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5. 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 receivable upon the exercise of the
Warrants) for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of stock 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, or any conveyance of all or substantially all
of the assets of the Company to another corporation, or
C. of any voluntary dissolution, liquidation or winding-up of the
Company, then, and in each such case, the Company will mail or cause to be
mailed to each holder of a Warrant as shown on the books of the Company at the
time outstanding a notice specifying, as the case may be, (a) 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
(b) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is expected to take
place, and the time, if any is to be fixed, as of which the holders of record of
Common Stock (or such stock or securities at the time receivable upon the
exercise of the Warrants) 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,
conveyance, dissolution, liquidation or winding-up, such notice shall be mailed
at least ten (10) days prior to the date therein specified.
6. Loss or Mutilation. Upon receipt by the Company of evidence
satisfactory to it (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it (in the
exercise of reasonable discretion), and (in the case of mutilation) upon
surrender and cancellation thereof, the Company will execute and deliver in lieu
thereof a new Warrant of like tenor.
7. Reservation of Common Stock. The Company shall at all times reserve and
keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. All of the shares of Commons
Stock issuable upon the exercise of the rights represented by this Warrant will,
upon issuance and receipt of the Purchase Price therefor, be fully paid and
nonassessable, and free from all preemptive rights, rights of first refusal or
first offer, taxes, liens and charges of whatever nature, with respect to the
issuance thereof.
8. Registration Rights Agreement. The Holder of this Warrant is entitled
to have the shares of Common Stock purchased in the Offering and the Warrant
Shares issuable upon exercise of this Warrant registered for resale under the
1933 Act, pursuant to and in accordance with the Registration Rights Agreement
dated as of the date hereof by and between the Holder and the Company.
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9. Notices. All notices and other communications from the Company to the
Holder of this Warrant shall be mailed by first class, registered or certified
mail, postage prepaid, to the address furnished to the Company in writing by the
Holder.
10. Change; Modifications; Waiver. This Warrant and any provisions hereof
may be amended, waived or terminated only by instrument in writing, signed by
the Company and the Holders of not less than 50.1% of the then outstanding
Warrants.
11. Headings. The headings in this Warrant are for purposes of convenience
in reference only, and shall not be deemed to constitute a part hereof.
12. Governing Law, Etc. This Warrant shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to the
conflicts of laws principles thereof. The parties hereto hereby irrevocably
agree that any suit or proceeding arising directly and/or indirectly pursuant to
or under this Warrant, shall be brought solely in a federal or state court
located in the City, County and State of New York. By its execution hereof, the
parties hereby covenant and irrevocably submit to the in personam jurisdiction
of the federal and state courts located in the City, County and State of New
York and agree that any process in any such action may be served upon any of
them personally, or by certified mail or registered mail upon them or their
agent, return receipt requested, with the same full force and effect as if
personally served upon them in New York City. The parties hereto waive any claim
that any such jurisdiction is not a convenient forum for any such suit or
proceeding and any defense or lack of in personam jurisdiction with respect
thereto. In the event of any such action or proceeding, the party prevailing
therein shall be entitled to payment from the other party hereto of all of its
reasonable legal fees and expenses.
13. Redemption of Warrants.
A. On not less than thirty (30) days, prior written notice (the
"REDEMPTION NOTICE") to the Holder, the Warrants may be redeemed, at the option
of the Company, at a redemption price of $0.01 per Warrant (the "REDEMPTION
PRICE"), provided that: (i) the Market Price (as defined below) for a share of
Common Stock equals or exceeds (a) two hundred (200%) percent of the then
current Purchase Price for any period of twenty (20) consecutive Trading Days
(as defined below) ending on the 2nd Trading Day prior to the date of the
Redemption Notice; and (ii) a registration statement covering the Warrant Shares
filed under the 1933 Act is declared effective by the Commission and remains
effective on and through the date fixed for redemption of the Warrants (the
"REDEMPTION DATE"). For purposes of this Warrant, (i) "MARKET PRICE" is defined
as the Closing Bid Price per share of Common Stock on the principal Trading
Market on which the Common Stock is included for trading; provided, that if
there is no trading in the Common Stock on a particular Trading Day on the
relevant principal Trading Market, the Market Price for that day shall be the
Market Price on the last preceding Trading Day on which there was trading in the
Common Stock on the principal Trading Market, (ii) "CLOSING BID PRICE" means on
any particular date (a) the last reported closing bid price per share of the
Common Stock on such date on the Trading Market (as reported by Bloomberg L.P.
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at 4:15 p.m. (New York time) as the last reported closing bid price for regular
session trading on such day), or (b) if there is no such price on such date,
then the closing bid price on the Trading Market on the date nearest preceding
such date (as reported by Bloomberg L.P. at 4:15 p.m. (New York time) as the
closing bid price for regular session trading on such day), or (c) if the Common
Stock is not then listed or quoted on the Trading Market and if prices for the
Common Stock are then reported in the "pink sheets" published by the National
Quotation Bureau Incorporated (or a similar organization or agency succeeding to
its functions of reporting prices), the most recent price per share of the
Common Stock so reported, or (d) if the shares of Common Stock are not then
publicly traded the fair market value of a share of Common Stock as determined
by an appraiser selected jointly by the holders of a majority of the Warrants
then outstanding and the Company; (iii) "TRADING DAY" means (a) a day on which
the Common Stock is traded on a Trading Market, or (b) if the Common Stock is
not quoted on a Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting price); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (a), and (b) hereof, then Trading Day shall
mean a Business Day; and (iv) "TRADING MARKET" means the following markets or
exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the OTC Bulletin Board, the American Stock Exchange, the New York
Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market.
B. The Redemption Notice shall specify (i) the Redemption Price, (ii)
the Redemption Date, (iii) the place where the Warrant certificate shall be
delivered and the redemption price paid, and (iv) that the right to exercise
this Warrant shall terminate at 5:00 p.m. (New York time) on the business day
immediately preceding the Redemption Date.
C. Any right to exercise this Warrant shall terminate at 5:00 p.m. (New
York time) on the business day immediately preceding the Redemption Date. On and
after the Redemption Date, the holder of this Warrant shall have no further
rights except to receive, upon surrender of this Warrant, the Redemption Price.
D. From and after the Redemption Date, the Company shall, at the place
specified in the Redemption Notice, upon presentation and surrender to the
Company by or on behalf of the holder thereof the warrant certificates
evidencing this Warrant being redeemed, deliver, or cause to be delivered to or
upon the written order of such holder, a sum in cash equal to the Redemption
Price of this Warrant. From and after the Redemption Date, this Warrant shall
expire and become void and all rights hereunder and under the warrant
certificates, except the right to receive payment of the Redemption Price, shall
cease.
14. Restriction on Exercise by the Holder. Notwithstanding anything herein
to the contrary, from and after such time as shares of Common Stock shall have
become registered under Section 12 of the Securities Exchange Act of 1934 (the
"1934 ACT"), in no event shall the Holder have the right or be required to
exercise this Warrant to the extent, and only to the extent, that as a result of
such exercise, the aggregate number of shares of Common Stock beneficially owned
by such Holder and its affiliates (as such term is defined under the 1934 Act)
and any other persons or entities which beneficial ownership of Common Stock
would be aggregated with the Holder for purposes of SECTION 13(D) of the 1934
Act (including shares held by any "group" of which the Holder is a member, but
excluding shares beneficially owned by virtue of the ownership of securities or
rights to acquire securities that have limitations on the right to convert,
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exercise or purchase similar to the limitation set forth herein) would exceed
9.9% of the outstanding shares of the Common Stock following such exercise. For
purposes of this SECTION 14, beneficial ownership shall be calculated in
accordance with SECTION 13(D) of the 1934 Act. The provisions of this SECTION 14
may be waived by a Holder as to itself (and solely as to itself) upon not less
than sixty-five (65) days, prior written notice to the Company, and the
provisions of this SECTION 14 shall continue to apply until such 65th day (or
later, if stated in the notice of waiver).
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WARRANT SIGNATURE PAGE
Dated:
-----------------------
STEAKHOUSE PARTNERS, INC.
By:
---------------------------------
Name:
Title:
EXHIBIT A
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant and purchases _______ of the number of shares of Common Stock of
Steakhouse Partners, Inc., purchasable with this Warrant, and herewith makes
payment therefor (either in cash or pursuant to the cashless exercise provisions
set forth in SECTION 1 of the Warrant), all at the price and on the terms and
conditions specified in this Warrant.
Please issue a certificate or certificates representing said securities
in the name of the undersigned or in such other name specified below:
-----------------------------------------
(Name)
-----------------------------------------
(Street Address)
-----------------------------------------
(City / State / Zip Code)
The undersigned hereby represents and warrants that the aforesaid
securities are being acquired for the account of the undersigned for investment
and not with a view to or for resale, in connection with the distribution
thereof, and that the undersigned has no present intention of distributing or
reselling such shares and all representatives and warranties of the undersigned
set forth in the Subscription Agreement are hereby correct as if the date
hereof.
Dated:
---------------------------
-----------------------------------------
(Signature)
EXHIBIT B
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within Warrant, with respect to the number
of shares of Common Stock set forth below:
Name of Assignee Address Number of Shares
---------------- ------- ----------------
and does hereby irrevocably constitute and appoint __________________________
Attorney to make such transfer on the books of Steakhouse Partners, Inc.,
maintained for the purpose, with full power of substitution in the premises.
Dated:
------------------------------
-----------------------------------------
(Signature)
-----------------------------------------
(Witness)
The undersigned Assignee of the Warrant hereby makes to Steakhouse
Partners, Inc., as of the date hereof, with respect to the Assignee, all of the
representations and warranties made by the Holder, and the undersigned Assignee
agrees to be bound by all the terms and conditions of the Warrant and the
Steakhouse Partners, Inc. Registration Rights Agreement, dated as of ______ __,
200_, by and between Steakhouse Partners, Inc. and the Holder.
Dated:
-----------------------------
-----------------------------------------
(Signature)
