THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE EXERCISED BY OR ON
BEHALF OF ANY U.S. PERSON, OR SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS IN ACCORDANCE WITH REGULATION S OF
THE SECURITIES ACT, REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR XXXX.XXX, INC. (THE "COMPANY") SHALL HAVE RECEIVED AN
OPINION, IN FORM, SCOPE AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, OF
COUNSEL WHO IS REASONABLY ACCEPTABLE TO THE COMPANY THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE
FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
XXXX.XXX, INC.
Expires __________, 2002
No.: W-__ Number of Shares: __________
Date of Issuance: __________, 2000
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth,
the undersigned, XXXX.xxx, Inc., a Delaware corporation (together with its
successors and assigns, the "Issuer"), hereby certifies that Dominion Fixed
Income Plus Fund Limited or its permitted assigns is entitled to subscribe for
and purchase, during the period specified in this Warrant, up to __________
shares (subject to adjustment as hereinafter provided) of the duly authorized,
validly issued, fully paid and non-assessable Common Stock of the Issuer, at an
exercise price per share equal to the lower of 35% below the following: (a) the
average quoted closing price of the Common Stock of the twenty trading days
immediately prior to the exercise, or (b) the last quoted bid price of the
Common Stock as of the time of exercise, provided, however, that the exercise
price shall in neither case be higher than 110% of, nor lower than 50% of, the
price of the Common Stock at the close of business on July 7, 2000, subject,
however, to the provisions and upon the terms and conditions hereinafter set
forth. Capitalized terms used in this Warrant and not otherwise defined herein
shall have the respective meanings specified in Section 7 hereof.
I. TERM
The right to subscribe for and purchase shares of Warrant Stock
represented hereby shall commence on the date of issuance of this
Warrant and shall expire at 5:00 p.m., eastern time, on June __, 2002
(such period being the "Term").
II. METHOD OF EXERCISE PAYMENT; ISSUANCE OF NEW WARRANT; TRANSFER AND
EXCHANGE .
A. TIME OF EXERCISE
The purchase rights represented by this Warrant may be
exercised in whole or in part at any time and from time to
time during the Term.
B. METHOD OF EXERCISE
The Holder hereof may exercise this Warrant, in whole or in
part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the
Issuer, and by the payment to the Issuer of an amount of
consideration therefor equal to the Warrant Price in effect on
the date of such exercise multiplied by the number of shares
of Warrant Stock with respect to which this Warrant is then
being exercised, payable at such Holder's election (i) by
certified or official bank check or (ii) or at anytime after
one year from the Original Issue Date by surrender to the
Issuer for cancellation of a portion of this Warrant
representing that number of unissued shares of Warrant Stock
which is equal to the quotient obtained by dividing (A) the
product obtained by multiplying the Warrant Price by the
number of shares of Warrant Stock being purchased upon such
exercise by (B) the difference obtained by subtracting the
Warrant Price from the Per Share Market Value as of the date
of such exercise, or (iii) by a combination of the foregoing
methods of payment selected by the Holder of this Warrant. In
any case where the consideration payable upon such exercise is
being paid in whole or in part pursuant to the provisions of
clause (ii) of this subsection (b), such exercise shall be
accompanied by written notice from the Holder of this Warrant
specifying the manner of payment thereof and containing a
calculation showing the number of shares of Warrant Stock with
respect to which rights are being surrendered thereunder and
the net number of shares of Common Stock to be issued after
giving effect to such surrender.
C. ISSUANCE OF STOCK CERTIFICATES
In the event of any exercise of the rights represented by this
Warrant in accordance with and subject to the terms and
conditions hereof, (i) certificates for the shares of Warrant
Stock so purchased shall be dated the date of such exercise
and delivered to the Holder hereof within a reasonable time,
not exceeding three (3) Trading Days after such exercise, and
the Holder hereof shall be deemed for all purposes to be the
Holder of the shares of Warrant Stock so purchased as of the
date of such exercise, and (ii) unless this Warrant has
expired, a new Warrant representing the number of shares of
-2-
Warrant Stock, if any, with respect to which this Warrant
shall not then have been exercised (less any amount thereof
which shall have been canceled in payment or partial payment
of the Warrant Price as hereinabove provided) shall also be
issued to the Holder hereof at the Issuer's expense within
such time.
D. TRANSFERABILITY OF WARRANT
Subject to Section 2(e), this Warrant may be transferred by a
Holder without the consent of the Issuer. If transferred
pursuant to this subsection and subject to the provisions of
subsection (e) of this Section 2, this Warrant may be
transferred on the books of the Issuer by the Holder hereof in
person or by duly authorized attorney, upon surrender of this
Warrant at the principal office of the Issuer, properly
endorsed (by the Holder executing an assignment in the form
attached hereto) and upon payment of any necessary transfer
tax imposed upon such transfer. This Warrant is exchangeable
at the principal office of the Issuer for Warrants for the
purchase of the same aggregate number of shares of Warrant
Stock, each new Warrant to represent the right to purchase
such number of shares of Warrant Stock as the Holder hereof
shall designate at the time of such exchange. All Warrants
issued on transfers or exchanges shall be dated the Original
Issue Date and shall be identical with this Warrant except as
to the number of shares of Warrant Stock issuable pursuant
hereto.
E. COMPLIANCE WITH SECURITIES LAWS
1. The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant or the shares of
Warrant Stock to be issued upon exercise hereof are
being acquired solely for the Holder's own account
and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell
or otherwise dispose of this Warrant or any shares of
Warrant Stock to be issued upon exercise hereof
except pursuant to an effective registration
statement, or an exemption from registration, under
the Securities Act and any applicable state
securities laws.
2. Except as provided in paragraph (iii) below, this
Warrant and all certificates representing shares of
Warrant Stock issued upon exercise hereof shall be
stamped or imprinted with a legend in substantially
the following form:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND
MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S.
PERSON, OR SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS IN
ACCORDANCE WITH REGULATION S OF THE SECURITIES ACT,
REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR XXXX.XXX, INC.
(THE "COMPANY") SHALL HAVE RECEIVED AN OPINION, IN
FORM, SCOPE AND SUBSTANCE REASONABLY ACCEPTABLE TO
THE COMPANY, OF COUNSEL WHO IS REASONABLY ACCEPTABLE
TO THE COMPANY THAT REGISTRATION OF SUCH SECURITIES
UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF
APPLICABLE FEDERAL AND STATE SECURITIES LAWS IS NOT
REQUIRED.
-3-
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF MAY NOT BE SOLD, TRANSFERRED,
ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN
COMPLIANCE WITH THE TERMS OF THE UNIT PURCHASE
AGREEMENT DATED JULY 21, 2000, BETWEEN THE COMPANY
AND THE INITIAL HOLDER HEREOF.
3. The restrictions imposed by this subsection (e) upon
the transfer of this Warrant or the shares of Warrant
Stock to be purchased upon exercise hereof shall
terminate (A) when such securities shall have been
resold pursuant to being effectively registered under
the Securities Act, (B) upon the Issuer's receipt of
an opinion of counsel, in form and substance
reasonably satisfactory to the Issuer, addressed to
the Issuer to the effect that such restrictions are
no longer required to ensure compliance with the
Securities Act and state securities laws or (C) upon
the Issuer's receipt of other evidence reasonably
satisfactory to the Issuer that such registration and
qualification under state securities laws is not
required. Whenever such restrictions shall cease and
terminate as to any such securities, the Holder
thereof shall be entitled to receive from the Issuer
(or its transfer agent and registrar), without
expense (other than applicable transfer taxes, if
any), new Warrants (or, in the case of shares of
Warrant Stock, new stock certificates) of like tenor
not bearing the applicable legend required by
paragraph (ii) above relating to the Securities Act
and applicable state securities laws.
F. CONTINUING RIGHTS OF HOLDER
The Issuer will, at the time of or at any time after each
exercise of this Warrant, upon the request of the Holder
hereof, acknowledge in writing the extent, if any, of its
continuing obligation to afford to such Holder all rights to
which such Holder shall continue to be entitled after such
exercise in accordance with the terms of this Warrant;
provided that if any such Holder shall fail to make any such
request, the failure shall not affect the continuing
obligation of the Issuer to afford such rights to such Holder.
-4-
III. STOCK FULLY PAID: RESERVATION AND LISTING OF SHARES: COVENANTS
A. STOCK FULLY PAID
The Issuer represents, warrants, covenants and agrees that all
shares of Warrant Stock which may be issued upon the exercise
of this Warrant or otherwise hereunder will, upon issuance, be
duly authorized, validly issued, fully paid and non-assessable
and free from all taxes and liens, security interest, charges
and encumbrances of any nature whatsoever created by or
through the Issuer. The Issuer further represents, warrants,
covenants and agrees that during the period within which this
Warrant may be exercised, the Issuer will at all times have
authorized and reserved for the purpose of the issue upon
exercise of this Warrant a sufficient number of shares of
Common Stock to provide for the exercise of this Warrant.
RESERVATION. If any shares of Common Stock required to be
reserved for issuance upon exercise of this Warrant or as
otherwise provided hereunder require registration or
qualification with any governmental authority under any
federal or state law before such shares may be so issued, the
Issuer will in good faith use its best efforts as
expeditiously as possible at its expense to cause such shares
to be duly registered or qualified. If the Issuer shall list
any shares of Common Stock on any securities exchange or
market it will, at its expense, list thereon, maintain and
increase when necessary such listing, of, all shares of
Warrant Stock from time to time issued upon exercise of this
Warrant or as otherwise provided hereunder, and, to the extent
permissible under the applicable securities exchange rules,
all unissued shares of Warrant Stock which are at any time
issuable hereunder, so long as any shares of Common Stock
shall be so listed. The Issuer will also so list on each
securities exchange or market, and will maintain such listing
of, any other Msecurities which the Holder of this Warrant
shall be entitled to receive upon the exercise of this Warrant
if at the time any securities of the same class shall be
listed on such securities exchange or market by the Issuer.
COVENANTS. The Issuer shall not by any action including,
without limitation, amending the Certificate of Incorporation
or the by-laws of the Issuer, or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other action, avoid or seek to
avoid the observance or performance of any of the terms or
provisions of this Warrant, but will at all times in good
faith carry out all such terms or provisions and take all such
actions as may be necessary or appropriate to protect the
rights of the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting
the generality of the foregoing, the Issuer will (i) not
permit the par value, if any, of its Common Stock to exceed
the then effective Warrant Price, (ii) not amend or modify any
provision of the Certificate of Incorporation or by-laws of
the Issuer in any manner that would adversely affect in any
way the powers, preferences or relative participating,
-5-
optional or other special rights of the Common Stock or which
would adversely affect the rights of the Holders of the
Warrants, (iii) take all such action as may be reasonably
necessary in order that the Issuer may validly and legally
issue fully paid and nonassessable shares of Common Stock,
free and clear of any liens, security interests, charges,
claims, encumbrances and restrictions (other than as provided
herein) upon the exercise of this Warrant, and (iv) obtain all
such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be
necessary to enable the Issuer to perform its obligations
under this Warrant.
LOSS, THEFT, DESTRUCTION OF WARRANTS. Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss,
theft, destruction or mutilation of any Warrant and, in the
case of any such loss, theft or destruction, upon receipt of
indemnity or security satisfactory to the Issuer or, in the
case of any such mutilation, upon surrender and cancellation
of such Warrant, the Issuer will make and deliver, in lieu of
such lost, stolen, destroyed or mutilated Warrant, a new
Warrant of like tenor and representing the right to purchase
the same number of shares of Common Stock.
REGISTRATION RIGHTS. The shares of Warrant Stock are entitled
to the benefits and subject to the terms of the Registration
Rights as set forth in the Unit Purchase Agreement dated as of
even date herewith between the Issuer and the Holder listed on
the signature page thereof.
IV. ADJUSTMENT OF WARRANT PRICE AND WARRANT SHARE NUMBER
The number and kind of Securities purchasable upon the exercise of this
Warrant and the Warrant Price shall be subject to adjustment from time
to time upon the happening of certain events as follows:
RECAPITALIZATION, REORGANIZATION, RECLASSIFICATION, CONSOLIDATION,
MERGER OR SALE.
1. In case the Issuer after the Original Issue Date
shall do any of the following (each, a "Triggering
Event"): (a) consolidate with or merge into any other
Person and the Issuer shall not be the continuing or
surviving Person of such consolidation or merger, or
(b) permit any other Person to consolidate with or
merge into the Issuer and the Issuer shall be the
continuing or surviving Person but, in connection
with such consolidation or merger, any Capital Stock
of the Issuer shall be changed into or exchanged for
Securities of any other Person or cash or any other
property, or (c) transfer all or substantially all of
its properties or assets to any other Person, or (d)
effect a capital reorganization or reclassification
of its Capital Stock, then, and in the case of each
such Triggering Event, proper provision shall be made
so that, upon the basis and the terms and in the
manner provided in this Warrant, the Holder of this
Warrant shall be entitled, at the sole option of such
-6-
Holder, (x) upon the exercise hereof at any time
after the consummation of such Triggering Event, to
the extent this Warrant is not exercised prior to
such Triggering Event, to receive at the Warrant
Price in effect at the time immediately prior to the
consummation of such Triggering Event in lieu of the
Common Stock issuable upon such exercise of this
Warrant prior to such Triggering Event, the
Securities, cash and property to which such Holder
would have been entitled upon the consummation of
such Triggering Event if such Holder had exercised
the rights represented by this Warrant immediately
prior thereto, subject to adjustments (subsequent to
such corporate action) as nearly equivalent as
possible to the adjustments provided for in Section 4
hereof or (y) to sell this Warrant (or, at such
Holder's election, a portion hereof) concurrently
with the Triggering Event to the Person continuing
after or surviving such Triggering Event, or to the
Issuer (if Issuer is the continuing or surviving
Person) at a sales price equal to the amount of cash,
property and/or Securities to which a holder of the
number of shares of Common Stock which would
otherwise have been delivered upon the exercise of
this Warrant would have been entitled upon the
effective date or closing of any such Triggering
Event (the "Event Consideration"), less the amount or
portion of such Event Consideration having a fair
value equal to the aggregate Warrant Price applicable
to this Warrant or the portion hereof so sold.
2. Notwithstanding anything contained in this Warrant to
the contrary, the Issuer will not effect any
Triggering Event unless, prior to the consummation
thereof, each Person (other than the Issuer) which
may be required to deliver any Securities, cash or
property upon the exercise of this Warrant as
provided herein shall assume, by written instrument
delivered to, and reasonably satisfactory to, the
Holder of this Warrant, (A) the obligations of the
Issuer under this Warrant (and if the Issuer shall
survive the consummation of such Triggering Event,
such assumption shall be in addition to, and shall
not release the Issuer from, any continuing
obligations of the Issuer under this Warrant) and (B)
the obligation to deliver to such Holder such shares
of Securities, cash or property as, in accordance
with the foregoing provisions of this subsection (a),
such Holder shall be entitled to receive, and such
Person shall have similarly delivered to such Holder
an opinion of counsel for such Person, which counsel
shall be reasonably satisfactory to such Holder,
stating that this Warrant shall thereafter continue
in full force and effect and the terms hereof
(including, without limitation, all of the provisions
of this subsection (a)) shall be applicable to the
Securities, cash or property which such Person may be
required to deliver upon any exercise of this Warrant
or the exercise of any rights pursuant hereto.
3. If with respect to any Triggering Event, the Holder
of this Warrant has exercised its right as provided
in clause (y) of subparagraph (i) of this subsection
(a) to sell this Warrant or a portion thereof, the
Issuer agrees that as a condition to the consummation
of any such Triggering Event the Issuer shall secure
such right of Holder to sell this Warrant to the
Person continuing after or surviving such Triggering
-7-
Event and the Issuer shall not effect any such
Triggering Event unless upon or prior to the
consummation thereof the amounts of cash, property
and/or Securities required under such clause (y) are
delivered to the Holder of this Warrant. The
obligation of the Issuer to secure such right of the
Holder to sell this Warrant shall be subject to such
Holder's cooperation with the Issuer, including,
without limitation, the giving of reasonable and
customary representations and warranties to the
purchaser in connection with any such sale. Prior
notice of any Triggering Event shall be given to the
Holder of this Warrant in accordance with Section 11
hereof.
SUBDIVISION OR COMBINATION OF SHARES. If the Issuer,
at any time while this Warrant is outstanding, shall
subdivide or combine any shares of Common Stock, (i)
in case of subdivision of shares, the Warrant Price
shall be proportionately reduced (as at the effective
date of such subdivision or, if the Issuer shall take
a record of holders of its Common Stock for the
purpose of so subdividing, as at the applicable
record date, whichever is earlier) to reflect the
increase in the total number of shares of Common
Stock outstanding as a result of such subdivision, or
(ii) in the case of a combination of shares, the
Warrant Price shall be proportionately increased (as
at the effective date of such combination or, if the
Issuer shall take a record of holders of its Common
Stock for the purpose of so combining, as at the
applicable record date, whichever is earlier) to
reflect the reduction in the total number of shares
of Common Stock outstanding as a result of such
combination.
CERTAIN DIVIDENDS AND DISTRIBUTIONS. If the Issuer,
at any time while this Warrant is outstanding, shall:
4. STOCK DIVIDENDS. Pay a dividend in, or make any other
distribution to its stockholders (without
consideration therefor) of, shares of Common Stock,
the Warrant Price shall be adjusted, as at the date
the Issuer shall take a record of the holders of the
Issuer's Capital Stock for the purpose of receiving
such dividend or other distribution (or if no such
record is taken, as at the date of such payment or
other distribution), to that price determined by
multiplying the Warrant Price in effect immediately
prior to such record date (or if no such record is
taken, then immediately prior to such payment or
other distribution), by a fraction (1) the numerator
of which shall be the total number of shares of
Common Stock outstanding immediately prior to such
dividend or distribution, and (2) the denominator of
which shall be the total number of shares of Common
Stock outstanding immediately after such dividend or
distribution (plus in the event that the Issuer paid
cash for fractional shares, the number of additional
shares which would have been outstanding had the
Issuer issued fractional shares in connection with
said dividends); or
-8-
5. OTHER DIVIDENDS. Pay a dividend on, or make any
distribution of its assets upon or with respect to
(including, but not limited to, a distribution of its
property as a dividend in liquidation or partial
liquidation or by way of return of capital), the
Common Stock (other than as described in clause (i)
of this subsection (c)), or in the event that the
Company shall offer options or rights to subscribe
for shares of Common Stock, or issue any Common Stock
Equivalents, to all of its holders of Common Stock,
then on the record date for such payment,
distribution or offer or, in the absence of a record
date, on the date of such payment, distribution or
offer, the Holder shall receive what the Holder would
have received had it exercised this Warrant in full
immediately prior to the record date of such payment,
distribution or offer or, in the absence of a record
date, immediately prior to the date of such payment,
distribution or offer
OTHER ACTION AFFECTING COMMON STOCK. In case after the
Original Issue Date the Issuer shall take any action affecting
its Common Stock, other than an action described in any of the
foregoing subsections (a) through (c) of this Section 4,
inclusive, and the failure to make any adjustment would not
fairly protect the purchase rights represented by this Warrant
in accordance with the essential intent and principle of this
Section 4, then the Warrant Price shall be adjusted in such
manner and at such time as the Board may in good faith
determine to be equitable in the circumstances.
ADJUSTMENT OF WARRANT SHARE NUMBER. Upon each adjustment in
the Warrant Price pursuant to any of the foregoing provisions
of this Section 4, the Warrant Share Number shall be adjusted,
to the nearest one hundredth of a whole share, to the product
obtained by multiplying the Warrant Share Number immediately
prior to such adjustment in the Warrant Price by a fraction,
the numerator of which shall be the Warrant Price immediately
before giving effect to such adjustment and the denominator of
which shall be the Warrant Price immediately after giving
effect to such adjustment. If the Issuer shall be in default
under any provision contained in Section 3 of this Warrant so
that shares issued at the Warrant Price adjusted in accordance
with this Section 4 would not be validly issued, the
adjustment of the Warrant Share Number provided for in the
foregoing sentence shall nonetheless be made and the Holder of
this Warrant shall be entitled to purchase such greater number
of shares at the lowest price at which such shares may then be
validly issued under applicable law. Such exercise shall not
constitute a waiver of any claim arising against the Issuer by
reason of its default under Section 3 of this Warrant.
FORM OF WARRANT AFTER ADJUSTMENTS. The form of this Warrant
need not be changed because of any adjustments in the Warrant
Price or the number and kind of Securities purchasable upon
the exercise of this Warrant.
V. NOTICE OF ADJUSTMENTS
Whenever the Warrant Price or Warrant Share Number shall be adjusted
pursuant to Section 4 hereof (for purposes of this Section 5, each an
"adjustment"), the Issuer shall cause its Chief Financial Officer to
prepare and execute a certificate setting forth, in reasonable detail,
the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description
-9-
of the basis on which the Board made any determination hereunder), and
the Warrant Price and Warrant Share Number after giving effect to such
adjustment, and shall cause copies of such certificate to be delivered
to the Holder of this Warrant promptly after each adjustment. Any
dispute between the Issuer and the Holder of this Warrant with respect
to the matters set forth in such certificate may at the option of the
Holder of this Warrant be submitted to the accounting firm selected by
the Holder, provided that the Issuer shall have ten (10) days after
receipt of notice from such Holder of its selection of such firm to
object thereto, in which case such Holder shall select another such
firm and the Issuer shall have no such right of objection. The firm
selected by the Holder of this Warrant as provided in the preceding
sentence shall be instructed to deliver a written opinion as to such
matters to the Issuer and such Holder within thirty (30) days after
submission to it of such dispute. Such opinion shall be final and
binding on the parties hereto. The fees and expenses of such accounting
firm shall be paid by the Issuer.
VI. FRACTIONAL SHARES
No fractional shares of Warrant Stock will be issued in connection with
and exercise hereof, but in lieu of such fractional shares, the Issuer
shall make a cash payment therefor equal in amount to the product of
the applicable fraction multiplied by the Per Share Market Value then
in effect.
VII. DEFINITIONS
For the purposes of this Warrant, the following terms have the
following meanings:
"Additional Shares of Common Stock" means all shares of Common
Stock issued by the Issuer after the Original Issue Date, and all
shares of Other Common, if any, issued by the Issuer after the Original
Issue Date, except the Warrant Stock.
"Board" shall mean the Board of Directors of the Issuer.
"Capital Stock" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in
(however designated) corporate stock, including, without limitation,
shares of preferred or preference stock, (ii) all partnership interests
(whether general or limited) in any Person which is a partnership,
(iii) all membership interests or limited liability company interests
in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.
"Certificate of Incorporation" means the Certificate of
Incorporation, as amended, of the Issuer as in effect on the Original
Issue Date, and as hereafter from time to time amended, modified,
supplemented or restated in accordance with the terms hereof and
thereof and pursuant to applicable law.
"Common Stock" means the Common Stock, $.001 par value, of the
Issuer and any other Capital Stock into which such stock may hereafter
be changed.
-10-
"Common Stock Equivalent" means any Convertible Security or
warrant, option or other right to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Security.
"Convertible Securities" means evidences of Indebtedness,
shares of Capital Stock or other Securities which are or may be at any
time convertible into or exchangeable for Additional Shares of Common
Stock. The term "Convertible Security" means one of the Convertible
Securities.
"Governmental Authority" means any governmental, regulatory or
self-regulatory entity, department, body, official, authority,
commission, board, agency or instrumentality, whether federal, state or
local, and whether domestic or foreign.
"Holders" mean the Persons who shall from time to time own any
Warrant. The term "Holder" means one of the Holders.
"Independent Appraiser" means a nationally recognized or major
regional investment banking firm or firm of independent certified
public accountants of recognized standing (which may be the firm that
regularly examines the financial statements of the Issuer) that is
regularly engaged in the business of appraising the Capital Stock or
assets of corporations or other entities as going concerns, and which
is not affiliated with either the Issuer or the Holder of any Warrant.
"Issuer" means XXXX.xxx, Inc., a Delaware corporation, and its
successors.
"Majority Holders" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable
under the Warrants at the time outstanding.
"Original Issue Date" means __________, 2000.
"Other Common" means any other Capital Stock of the Issuer of
any class which shall be authorized at any time after the date of this
Warrant (other than Common Stock) and which shall have the right to
participate in the distribution of earnings and assets of the Issuer
without limitation as to amount.
"OTC Bulletin Board" means the over-the-counter electronic
bulletin board.
"Person" means an individual, corporation, limited liability
company, partnership, joint stock company, trust, unincorporated
organization, joint venture, Governmental Authority or other entity of
whatever nature.
"Per Share Market Value" means on any particular date (a) the
closing bid price per share of the Common Stock on such date on the
Nasdaq SmallCap Market, Nasdaq National Market or other registered
national stock exchange on which the Common Stock is then listed or if
there is no such price on such date, then the closing bid price on such
exchange or quotation system on the date nearest preceding such date,
or (b) if the Common Stock is not listed then on the Nasdaq SmallCap
Market, Nasdaq National Market or any registered national stock
exchange, the closing bid price for a share of Common Stock in the
-11-
over-the-counter market, as reported by NASDAQ or in the National
Quotation Bureau Incorporated or similar organization or agency
succeeding to its functions of reporting prices) at the close of
business on such date, or (c) if the Common Stock is not then reported
by NASDAQ the National Quotation Bureau Incorporated (or similar
organization or agency succeeding to its functions of reporting
prices), then the average of the "Pink Sheet" quotes for the relevant
conversion period, as determined in good faith by the holder, or (d) if
the Common Stock is not then publicly traded the fair market value of a
share of Common Stock as determined by an Independent Appraiser
selected in good faith by the Majority Holders; PROVIDED, HOWEVER, that
the Issuer, after receipt of the determination by such Independent
Appraiser, shall have the right to select an additional Independent
Appraiser, in which case, the fair market value shall be equal to the
average of the determinations by each such Independent Appraiser; and
PROVIDED, FURTHER that all determinations of the Per Share Market Value
shall be appropriately adjusted for any stock dividends, stock splits
or other similar transactions during such period. The determination of
fair market value by an Independent Appraiser shall be based upon the
fair market value of the Issuer determined on a going concern basis as
between a willing buyer and a willing seller and taking into account
all relevant factors determinative of value, and shall be final and
binding on all parties. In determining the fair market value of any
shares of Common Stock, no consideration shall be given to any
restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or
any limitations on, voting rights.
"Unit Purchase Agreement" means the Unit Purchase Agreement
dated as of even date hereof between the Issuer and the Holder a party
thereto.
"Registration Rights" has the meaning specified in Section
3(e) hereof.
"Securities" means any debt or equity securities of the
Issuer, whether now or hereafter authorized, any instrument convertible
into or exchangeable for Securities or a Security, and any option,
warrant or other right to purchase or acquire any Security. "Security"
means one of the Securities.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute then in effect.
"Subsidiary" means any corporation at least 50% of whose
outstanding Voting Stock shall at the time be owned directly or
indirectly by the Issuer or by one or more of its Subsidiaries, or by
the Issuer and one or more of its Subsidiaries.
"Term" has the meaning specified in Section 1 hereof.
"Trading Day" means (a) a day on which the Common Stock is
traded on the Nasdaq SmallCap Market, Nasdaq National Market or other
registered national stock exchange on which the Common Stock has been
listed, or (b) if the Common Stock is not listed on the Nasdaq SmallCap
Market, Nasdaq National Market or other registered national stock
exchange on which the Common Stock has been listed, a day on which the
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Common Stock is quoted in the over-the-counter market, as reported by
the OTC Bulletin Board, or (c) if the Common Stock is not quoted on the
OTC Bulletin Board, 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 its
functions of reporting prices); PROVIDED, HOWEVER, that in the event
that the Common Stock is not listed or quoted as set forth in (a), (b)
and (c) hereof, then Trading Day shall mean any day except Saturday,
Sunday and any day which shall be a legal holiday or a day on which
banking institutions in the State of New York are authorized or
required by law or other government action to close.
"Voting Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however
designated) having ordinary voting power for the election of a majority
of the members of the Board of Directors (or other governing body) of
such corporation, other than Capital Stock having such power only by
reason of the happening of a contingency.
"Warrants" means the Warrants issued in connection with the
sale and issuance of Series B Convertible Preferred Stock pursuant to
the Unit Purchase Agreement, including, without limitation, this
Warrant, and any other warrants of like tenor issued in substitution or
exchange for any thereof pursuant to the provisions of Section 2(c),
2(d) or 2(e) hereof or of any of such other Warrants.
"Warrant Price" means the lower of 35% below the following:
(a) the average quoted closing price of the Common Stock of the twenty
trading days immediately prior to the exercise, or (b) the last quoted
bid price of the Common Stock as of the time of exercise, provided,
however, that the exercise price shall in neither case be higher than
110% of, nor lower than 50% of, the price of the Common Stock at the
close of business on July 7, 2000, as such price may be adjusted from
time to time as shall result from the adjustments specified in Section
4 hereof.
"Warrant Share Number" means at any time the aggregate number
of shares of Warrant Stock which may at such time be purchased upon
exercise of this Warrant, after giving effect to all prior adjustments
and increases to such number made or required to be made under the
terms hereof.
"Warrant Stock" means Common Stock issuable upon exercise of
the Warrant or Warrants.
VIII. OTHER NOTICES
In case at any time:
a. the Issuer shall make any distributions to the holders of
Common Stock; or
b. the Issuer shall authorize the granting to all holders of
its Common Stock of rights to subscribe for or purchase any shares of
Capital Stock of any class or of any Common Stock Equivalents or
Convertible Securities or other rights; or
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c. there shall be any reclassification of the Capital Stock of
the Issuer; or
d. there shall be any capital reorganization by the Issuer; or
e. there shall be any (i) consolidation or merger involving
the Issuer or (ii) sale, transfer or other disposition of all or
substantially all of the Issuer's property, assets or business (except
a merger or other reorganization in which the Issuer shall be the
surviving corporation and its shares of Capital Stock shall continue to
be outstanding and unchanged and except a consolidation, merger, sale,
transfer or other disposition involving a wholly-owned Subsidiary); or
f. there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Issuer or any partial liquidation of
the Issuer or distribution to holders of Common Stock;
then, in each of such cases, the Issuer shall give written notice to
the Holder of the date on which (i) the books of the Issuer shall close
or a record shall be taken for such dividend, distribution or
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, disposition, dissolution, liquidation or
winding-up, as the case may be, shall take place. Such notice also
shall specify the date as of which the holders of Common Stock of
record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common
Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be. Such notice
shall be given at least twenty (20) days prior to the action in
question and not less than twenty (20) days prior to the record date or
the date on which the Issuer's transfer books are closed in respect
thereto. The Issuer shall give to the Holder notice of all meetings and
actions by written consent of its stockholders, at the same time in the
same manner as notice of any meetings of stockholders is required to be
given to stockholders who do not waive such notice (or, if such actions
require no notice, then two (2) Trading Days written notice thereof
describing the matters upon which action is to be taken). The Holder
shall have the right to send two representatives selected by it to each
meeting, who shall be permitted to attend, but not vote at, such
meeting and any adjournments thereof. This Warrant entitles the Holder
to receive copies of all financial and other information distributed or
required to be distributed to the holders of the Common Stock.
IX. AMENDMENT AND WAIVER
Any term, covenant, agreement or condition in this Warrant may be
amended, or compliance therewith may be waived (either generally or in
a particular instance and either retroactively or prospectively), by a
written instrument or written instruments executed by the Issuer and
the Majority Holders; provided, however, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant
Price, shorten the period during which this Warrant may be exercised or
modify any provision of this Section 9 without the consent of the
Holder of this Warrant.
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X. GOVERNING LAW
THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW. THIS WARRANT SHALL NOT BE INTERPRETED OR CONSTRUED
WITH ANY PRESUMPTION AGAINST THE PARTY CAUSING THIS WARRANT TO BE
DRAFTED.
XI. NOTICES
To exercise the Warrants hereunder (or a portion thereof) the Holder
must deliver this Warrant (with the exercise form attached hereto duly
executed) to the Company as herein provided. The time and date on which
notice of exercise is given shall be the time and date of receipt by
the Company via facsimile of this Warrant (with the exercise form
attached hereto duly executed), provided that the transmitting
facsimile machine provides for confirmation of such facsimile to the
Holder. Any and all other notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective if delivered personally, or sent by
facsimile transmission with telephone confirmation or sent by
certified, registered, or express mail, postage prepaid and shall be
deemed given when so delivered, or sent by facsimile transmission, or
if mailed, three days after the date of mailing. The addresses for such
communications shall be with respect to the Holder of this Warrant or
of Warrant Stock issued pursuant hereto, addressed to such Holder at
its last known address or facsimile number appearing on the books of
the Issuer maintained for such purposes, or with respect to the Issuer,
addressed to:
XXXX.xxx, Inc.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
or to such other address or addresses or facsimile number or numbers as
any such party may most recently have designated in writing to the
other parties hereto by such notice. Copies of notices to the Issuer
shall be sent to _________________________________. Copies of notices
to the Holder shall be sent to (a) Wuersch & Xxxxxx LLP, 00 Xxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X.
Xxxxxx, Esq., Facsimile No.: (000) 000-0000.
XII. WARRANT AGENT
The Issuer may, by written notice to each Holder of this Warrant,
appoint an agent having an office in New York, New York for the purpose
of issuing shares of Warrant Stock on the exercise of this Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant
pursuant to subsection (d) of Section 2 hereof or replacing this
Warrant pursuant to subsection (d) of Section 3 hereof, or any of the
foregoing, and thereafter any such issuance, exchange or replacement,
as the case may be, shall be made at such office by such agent.
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XIII. REMEDIES
The Issuer stipulates that the remedies at law of the Holder of this
Warrant in the event of any default or threatened default by the Issuer
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.
XIV. SUCCESSORS AND ASSIGNS
This Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors and assigns of the Issuer, the
Holder hereof and (to the extent provided herein) the Holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any
such party.
XV. MODIFICATION AND SEVERABILITY
If, in any action before any court or agency legally empowered to
enforce any provision contained herein, any provision hereof is found
to be unenforceable, then such provision shall be deemed modified to
the extent necessary to make it enforceable by such court or agency. If
any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the
other provisions of this Warrant, but this Warrant shall be construed
as if such unenforceable provision had never been contained herein.
XVI. HEADINGS
The headings of the Sections of this Warrant are for convenience of
reference only and shall not, for any purpose, be deemed a part of this
Warrant.
[Signature page follows]
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IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day
and year first above written.
XXXX.XXX, INC.
By: _________________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President and Secretary
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EXERCISE FORM
XXXX.XXX, INC.
The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of
___________________ covered by the within Warrant.
Dated: _________________ Signature _____________________
Address _____________________
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated: _________________ Signature _____________________
Address _____________________
_____________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.
Dated: _________________ Signature _____________________
Address _____________________
_____________________
FOR USE BY THE ISSUER ONLY:
This Warrant No. W-A- cancelled (or transferred or exchanged) this _____ day of
___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-A- issued for ____ shares of Common Stock in the
name of _______________.
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