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.
AMEDIA NETWORKS, INC.
COMMON STOCK PURCHASE WARRANT
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 _____________, 2010(1) (the "Expiration Date"), _____________
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 per share,
subject to further adjustment as set forth herein. This Warrant is being issued
pursuant to the terms of that certain Bridge Loan Agreement, dated as of
December ___, 2005 (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 in the Agreement. This
Warrant was originally issued to the Holder of the Holder's predecessor in
interest on _____________, 2005(3) (the "Issue Date").
_________________
(1) Insert date which the last calendar of the month in which the fifth
anniversary of the Closing Date occurs.
(2) Insert amount equal to 50% of Purchase Price.
(3) Insert the Closing Date.
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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 resale of the Warrant Shares by the Holder. 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 as of the trading day immediately prior to the Exercise
Date. 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 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 (z)
"Market Price of the Common Stock" shall mean the Closing Price (as defined
below) of the Common Stock.
(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.
(d) 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.
(e) 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
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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.
(f) 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, the term
"Commencement Date" means the date which is six (6) months after the Issue Date.
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 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 were
exercisable in full at any time, without regard to any restrictions which might
limit the Holder's right to exercise any portion of this Warrant held by the
Holder.
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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 XXXXXXXX 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.(4)
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
_________________
(4) 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$0.70 =
US$15,000.
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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 Appendix A to this Warrant, the terms of which are
incorporated herein by reference. The Exercise Price shall be adjusted as
provided in the applicable provisions of said Appendix A.
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. Reference is made to the provisions
of Section 4(h) of the Agreement, the terms of which are incorporated herein by
reference.
8. BUY-IN AMOUNT.
(a) If, by the relevant Delivery Date, the Company fails for
any reason to deliver the relevant Warrant Share Certificates, and after such
Delivery Date, the Holder who has
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exercised this Warrant (an "Exercising Holder") purchases, in an arm's-length
open market transaction or otherwise, shares of Common Stock (the "Covering
Shares") in order to make delivery in satisfaction of a sale of Common Stock by
the Exercising Holder (the "Sold Shares"), which delivery such Exercising Holder
anticipated to make using the shares to be issued upon such exercise (a
"Buy-In"), the Exercising Holder shall have the right to require the Company to
pay to the Exercising Holder, in addition to and not in lieu of all other
amounts contemplated in other provisions of the Transaction Agreements, the
Warrant Share Buy-In Adjustment Amount (as defined below). The Company shall pay
the Warrant Share Buy-In Adjustment Amount to the Exercising Holder in
immediately available funds immediately upon demand by the Exercising Holder.
(b) The term "Warrant Share Buy-In Adjustment Amount" means
the amount equal to the excess, if any, of (i) the Exercising Holder's total
purchase price (including brokerage commissions, if any) for the Covering Shares
over (ii) the net proceeds (after brokerage commissions, if any) received by the
Exercising Holder from the sale of the Sold Shares. By way of illustration and
not in limitation of the foregoing, if the Exercising Holder purchases shares of
Common Stock having a total purchase price (including brokerage commissions) of
$11,000 to cover a Buy-In with respect to shares of Common Stock it sold for net
proceeds of $10,000, the Warrant Share Buy-In Adjustment Amount which the
Company will be required to pay to the Exercising Holder will be $1,000.
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 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.
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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 parties hereto have executed this Warrant as of
the th day of _____________________________, 200__.
AMEDIA NETWORKS, INC.
By: ________________________________
____________________________________
(Print Name)
____________________________________
(Title)
APPENDIX A
TO
COMMON STOCK PURCHASE WARRANT
OF
AMEDIA NETWORKS, INC.
1. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Agreement or in the Warrant.
2. (a) The term "Lower Price Transaction" means a New Transaction
offered or consummated during the New Transaction Period (as defined below),
where the lowest Exercise Price of any New Transaction Warrants (as defined
below) is, or by its terms or by an existing understanding of the Company and
the New Investor, could subsequently be adjusted or revised to be, lower than
the then effective Exercise Price of the Warrants (such Exercise Price, in each
case, subject to adjustment in the same manner as the initial Exercise Price of
the Warrant is adjusted, other than as a result of the application of this
Appendix A).
(b) The term "New Transaction Warrants" means any warrant, option or
other right (howsoever denominated) issued to the New Investor in the New
Transaction to purchase shares of Common Stock.
(c) The term "New Transaction Period" means the period commencing on
the Issue Date and continuing until the earlier of (i) the Expiration Date or
(ii) the date on which this Warrant has been fully exercised.
3. The Company covenants and agrees that, if there is a Lower Price
Transaction during the New Transaction Period, then the Exercise Price on the
unexercised portion of this Warrant shall be adjusted to equal the lowest
Exercise Price applicable to the Lower Price Transaction.
4. (a) Reference is made to that certain Stock Purchase Agreement,
dated as of April 22, 2005 and the amendment thereto, dated as of May 2, 2005
(collectively, the "Class B Agreement"), between the Company and the Buyers
named therein (the "Class B Buyers") and to the Transaction Agreements
contemplated by the Class B Agreement (the "Class B Transaction Agreements").
(b) Anything in the foregoing provisions of this Appendix A to the
contrary notwithstanding, if the exercise price of any Warrant issued to the
Class B Buyers (or any assignee or transferee thereof) in connection with the
transactions contemplated by the Class B Transaction Agreements is reduced for
any reason (the price to which it is reduced, the "Class B Reduced Exercise
Price"), and the Class B Reduced Exercise Price is lower than the then
effective exercise price of this Warrant, then the exercise price of this
Warrant shall be reduced to the Class B Reduced Exercise Price.
NOTICE OF EXERCISE OF WARRANT
TO: AMEDIA NETWORKS, INC.. VIA TELECOPIER TO:
000 Xxxxxxxxx Xxxxxx Xxxx (732) 949-0000
Xxxxxxx, XX 00000
Attn: President
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate, 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:
9 CASH: $ ______________________ = (Exercise Price x Exercise Shares)
Payment is being made by:
9 enclosed check
9 wire transfer
9 other
9 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 and the Bridge Loan Agreement, 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
9 via express courier, or
9 by electronic transfer
after receipt of this Notice of Exercise (by facsimile transmission or
otherwise) to:
_________________________________
_________________________________
_________________________________
Dated: __________________________
_________________________________
[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)(5) ____________
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(6) ____________
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%]
_________________
(5) 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
(6) Based on latest SEC filing by Company or information provided by executive
officer of Company, counsel to Company or transfer agent
