Exhibit 4.2
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
SBE, INC.
WARRANT TO PURCHASE COMMON STOCK
JUNE 27, 2003
VOID AFTER JUNE 27, 2008
THIS CERTIFIES THAT, for value received, ________, with ___ principal
residence or office at ______________, or permitted assigns (the "Holder"), is
entitled to subscribe for and purchase at the Exercise Price (defined below)
from SBE, Inc., a Delaware corporation (the "Company"), up to _______________
shares of the Common Stock of the Company (the "Common Stock"), as adjusted as
provided below.
1. DEFINITIONS. As used herein, the following terms shall have the
following respective meanings:
(A) "Exercise Period" shall mean the period commencing with the date
hereof and ending at 5:00 p.m. (California time) on the fifth anniversary of the
date hereof.
(B) "Exercise Price" shall mean $1.50 per share, subject to adjustment
pursuant to Section 5 below.
(C) "Exercise Shares" shall mean the shares of the Company's Common
Stock issuable upon exercise of this Warrant.
2. EXERCISE OF WARRANT. The rights represented by this Warrant may be
exercised in whole or in part at any time during the Exercise Period, by
delivery of the following to the Company at its address set forth above (or at
such other address as it may designate by notice in writing to the Holder):
(A) An executed Notice of Exercise in the form attached hereto;
(B) Payment of the Exercise Price either in cash or by check; and
(C) This Warrant.
Upon the exercise of the rights represented by this Warrant, a certificate
or certificates for the Exercise Shares so purchased, registered in the name of
the Holder or persons affiliated with the Holder, if the Holder so designates,
shall be issued and delivered to the Holder within a reasonable time after the
rights represented by this Warrant shall have been so exercised.
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The person in whose name any certificate or certificates for Exercise
Shares are to be issued upon exercise of this Warrant shall be deemed to have
become the holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate or certificates, except that, if the date of
such surrender and payment is a date when the stock transfer books of the
Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
Notwithstanding any provisions herein to the contrary, if the fair
market value of one share of the Company's Common Stock is greater than the
Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant by payment of cash, the Holder may elect to receive
shares equal to the value (as determined below) of this Warrant (or the portion
thereof being canceled) by surrender of this Warrant at the principal office of
the Company together with the properly endorsed Notice of Exercise in which
event the Company shall issue to the Holder a number of shares of Common Stock
computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to
the Holder
Y = the number of shares of Common Stock purchasable under
the Warrant or, if only a portion of the Warrant is
being exercised, the portion of the Warrant being
canceled (at the date of such calculation)
A = the fair market value of one share of the Company's
Common Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
For purposes of the above calculation, the "fair market value" of one
share of Common Stock shall mean (i) the average of the closing sales prices for
the shares of Common Stock on the Nasdaq SmallCap Market or other trading market
where such security is listed or traded as reported by Bloomberg Financial
Markets (or a comparable reporting service of national reputation selected by
the Company and reasonably acceptable to the holders if Bloomberg Financial
Markets is not then reporting sales prices of such security) (collectively,
"Bloomberg") for the 10 consecutive trading days immediately preceding such
date, or (ii) if the Nasdaq SmallCap Market is not the principal trading market
for the shares of Common Stock, the average of the reported sales prices
reported by Bloomberg on the principal trading market for the Common Stock
during the same period, or, if there is no sales price for such period, the last
sales price reported by Bloomberg for such period, or (iii) if neither of the
foregoing applies, the last sales price of such security in the over-the-counter
market on the pink sheets or bulletin board for such security as reported by
Bloomberg, or if no sales price is so reported for such security, the last bid
price of such security as reported by Bloomberg, or (iv) if fair market value
cannot be calculated as of such date on any of the foregoing bases, the fair
market value shall be as determined by the Board of Directors of the Company in
the exercise of its good faith judgment.
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3. COVENANTS OF THE COMPANY.
(A) COVENANTS AS TO EXERCISE SHARES. The Company covenants and agrees
that all Exercise Shares that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued and
outstanding, fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issuance thereof.
(B) NO IMPAIRMENT. Except as and to the extent waived or consented to
by the Holder, the Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in
the taking of all such action as may be necessary or appropriate in order to
protect the exercise rights of the Holder against impairment.
(C) NOTICES OF RECORD DATE. In the event of any taking by the Company
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, the Company shall mail to the Holder, at least 10 days prior
to the date specified herein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend or distribution.
4. REPRESENTATIONS AND COVENANTS OF HOLDER.
(A) ACQUISITION OF WARRANT FOR PERSONAL ACCOUNT. The Holder represents
and warrants that it is acquiring the Warrant solely for its account for
investment and not with a view to or for sale or distribution of said Warrant or
any part thereof. The Holder also represents that the entire legal and
beneficial interests of the Warrant and Exercise Shares the Holder is acquiring
is being acquired for, and will be held for, its account only.
(B) SECURITIES ARE NOT REGISTERED.
(1) The Holder understands that the Warrant and the Exercise Shares
have not been registered under the Securities Act of 1933, as amended (the
"Act"), on the basis that no distribution or public offering of the stock of the
Company is to be effected. The Holder realizes that the basis for the exemption
may not be present if, notwithstanding its representations, the Holder has a
present intention of acquiring the securities for a fixed or determinable period
in the future, selling (in connection with a distribution or otherwise),
granting any participation in, or otherwise distributing the securities. The
Holder has no such present intention except as set forth in Article 7 of the
Securities Purchase Agreement dated as of the date hereof by and among the
Company and the purchasers named therein (the "Securities Purchase Agreement").
(2) The Holder recognizes that the Warrant and the Exercise Shares must
be held indefinitely unless they are subsequently registered under the Act or an
exemption
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from such registration is available. The Holder recognizes that the Company will
register the Exercise Shares pursuant to the provisions of Section 7 of the
Securities Purchase Agreement.
(3) The Holder is aware that neither the Warrant nor the Exercise
Shares may be sold pursuant to Rule 144 adopted under the Act unless certain
conditions are met, including, among other things, the existence of a public
market for the shares, the availability of certain current public information
about the Company, the resale following the required holding period under Rule
144 and the number of shares being sold during any three month period not
exceeding specified limitations.
(C) DISPOSITION OF WARRANT AND EXERCISE SHARES.
(1) The Holder will not make any disposition of all or any part of the
Warrant or Exercise Shares in any event unless and until:
(A) The Company shall have received a letter secured by the Holder
from the Securities and Exchange Commission stating that no action will be
recommended to the Commission with respect to the proposed disposition;
(B) There is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in accordance
with said registration statement; or
(C) The Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and if reasonably
requested by the Company, the Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, for the Holder to
the effect that such disposition will not require registration of such Warrant
or Exercise Shares under the Act or any applicable state securities laws.
(2) The Holder understands and agrees that all certificates evidencing
the shares to be issued to the Holder may bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
5. ADJUSTMENT OF EXERCISE PRICE AND SHARES.
(A) In the event of changes in the outstanding Common Stock of the
Company by reason of stock dividends, split-ups, recapitalizations,
reclassifications, combinations or exchanges of shares, separations,
reorganizations, liquidations, consolidation, acquisition of the Company
(whether through merger or acquisition of substantially all the assets or stock
of
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the Company), or the like, the number and class of shares available under the
Warrant in the aggregate and the Exercise Price shall be correspondingly
adjusted to give the Holder of the Warrant, on exercise for the same aggregate
Exercise Price, the total number, class, and kind of shares or other property as
the Holder would have owned had the Warrant been exercised prior to the event
and had the Holder continued to hold such shares until the event requiring
adjustment. The form of this Warrant need not be changed because of any
adjustment in the number of Exercise Shares subject to this Warrant.
(B) If at any time or from time to time the holders of Common Stock of the
Company (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefor,
(1) Common Stock or any shares of stock or other securities which are
at any time directly or indirectly convertible into or exchangeable for Common
Stock, or any rights or options to subscribe for, purchase or otherwise acquire
any of the foregoing by way of dividend or other distribution (other than a
dividend or distribution covered in section 5(a) above),
(2) any cash paid or payable otherwise than as a cash dividend, or
(3) Common Stock or additional stock or other securities or property
(including cash) by way of spinoff, split-up, reclassification, combination of
shares or similar corporate rearrangement (other than shares of Common Stock
pursuant to Section 5(a) above),
then and in each such case, the Holder hereof will, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration
therefor, 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 had he been the holder of record of such
Common Stock as of the date on which holders of Common Stock received or became
entitled to receive such shares or all other additional stock and other
securities and property. The Exercise Price shall also be subject to downward
adjustment as provided in Section 7.4 of the Securities Purchase Agreement.
(C) SALE OF COMMON STOCK BELOW EXERCISE PRICE.
(I) If at any time or from time to time after the issuance hereof, the
Company issues or sells, or is deemed by the express provisions of this Section
5(c) to have issued or sold Additional Shares of Common Stock (as defined below)
for an Effective Price (as defined below) less than the then-existing Exercise
Price (a "Qualifying Dilutive Issuance"), then and in each such case, the
then-existing Exercise Price shall be reduced, as of 12:01 a.m. New York time on
the date immediately after such issue or sale, to a price equal to the Effective
Price of such Additional Shares of Common Stock issued or deemed to be issued in
the Qualifying Dilutive Issuance.
(II) No adjustment shall be made to the Exercise Price in an amount
less than one cent per share. Any adjustment otherwise required by this Section
5(c) that is not required to be made due to the preceding sentence shall be
included in any subsequent adjustment to the Exercise Price.
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(III) For the purpose of making any adjustment required under this
Section 5(c), the consideration received by the Company for any issue or sale of
securities (the "Aggregate Consideration") shall be computed at the net amount
of cash received by the Company after deduction of any underwriting or similar
commissions, compensation or concessions paid or allowed by the Company in
connection with such issue or sale but without deduction of any expenses payable
by the Company. If Additional Shares of Common Stock or Convertible Securities
(as defined below) are sold together with other stock or securities or other
assets of the Company for a consideration that covers both, Aggregate
Consideration will 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.
(IV) (1) For the purpose of the adjustment required under this Section
5(c), if the Company sells preferred stock, options, warrants, purchase rights
or other securities convertible into or exercisable for Additional Shares of
Common Stock ("Convertible Securities"), the Company shall be deemed to have
issued at the time of the issuance of such Convertible Securities the maximum
number of Additional Shares of Common Stock issuable upon exercise or conversion
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 Convertible Securities plus the minimum amounts
of consideration, if any, payable to the Company upon the conversion or exercise
thereof (other than by cancellation of liabilities or obligations evidenced by
such Convertible Securities); provided that if the minimum amounts of such
consideration cannot be ascertained, but are a function of antidilution or
similar protective clauses, the Company shall be deemed to have received the
minimum amounts of consideration without reference to such clauses.
(2) If the minimum amount of consideration payable to the Company
upon the exercise or conversion of Convertible Securities is reduced over time
or on the occurrence or non-occurrence of specified events other than by reason
of antidilution adjustments, the Effective Price on the then-unexercisable
portion of this Warrant shall be recalculated using the figure to which such
minimum amount of consideration is reduced; provided further, that if the
minimum amount of consideration payable to the Company upon the exercise or
conversion of such rights, options or Convertible Securities is subsequently
increased, the Effective Price shall be again recalculated using the increased
minimum amount of consideration payable to the Company upon the exercise or
conversion of such Convertible Securities.
(3) No further adjustment of the Exercise Price, as adjusted upon
the issuance of such Convertible Securities, shall be made as a result of the
actual issuance of Additional Shares of Common Stock the conversion or exercise
of any such Convertible Securities. If the conversion or exercise privilege
represented by any such Convertible Securities shall expire without having been
exercised, the Exercise Price as adjusted upon the issuance of such Convertible
Securities shall be readjusted to the Exercise Price that would have been in
effect had an adjustment been made on the basis that the only Additional Shares
of Common
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Stock so issued were the Additional Shares of Common Stock, if any, actually
issued or sold on the exercise or conversion 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 issuing or selling
the Convertible Securities actually converted, 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 of such
Convertible Securities.
(V) For the purpose of making any adjustment to the Exercise Price as
required under this Section 5(c), "Additional Shares of Common Stock" shall mean
all shares of Common Stock issued by the Company or deemed to be issued pursuant
to this Section 5(c) (including shares of Common Stock subsequently reacquired
or retired by the Company) for cash in a bona fide financing transaction or any
other assets or consideration in any transaction. Notwithstanding the foregoing,
Additional Shares of Common Stock shall not include:
(1) shares of Common Stock or Convertible Securities issued to
employees, officers or directors of, or consultants or advisors to the Company
or any subsidiary pursuant to stock purchase or stock option plans or other
arrangements;
(2) shares of Common Stock issued pursuant to the exercise of
Convertible Securities outstanding as of the date hereof;
(3) shares of Common Stock or Convertible Securities issued for
consideration other than cash pursuant to a merger, consolidation, acquisition,
strategic alliance or similar business combination;
(4) shares of Common Stock or Convertible Securities issued to
third-party service providers in exchange for or as partial consideration for
services rendered to the Company; and
(5) any Common Stock or Convertible Securities issued in
connection with strategic transactions involving the Company and other entities,
including (i) joint ventures, manufacturing, marketing or distribution
arrangements or (ii) technology transfer or development arrangements.
References to Common Stock in the subsections of this clause (v) above
shall mean all shares of Common Stock issued by the Company or deemed to be
issued pursuant to this Section 5(c). 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 5(c), into the Aggregate
Consideration received, or deemed to have been received by the Company for such
issue under this Section 5(c), for such Additional Shares of Common Stock.
(D) The Exercise Price shall also be subject to downward adjustment as
provided in Section 7.4 of the Securities Purchase Agreement.
6. FRACTIONAL SHARES. No fractional shares shall be issued upon the
exercise of this Warrant as a consequence of any adjustment pursuant hereto. All
Exercise Shares (including
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fractions) issuable upon exercise of this Warrant may be aggregated for purposes
of determining whether the exercise would result in the issuance of any
fractional share. If, after aggregation, the exercise would result in the
issuance of a fractional share, the Company shall, in lieu of issuance of any
fractional share, pay the Holder otherwise entitled to such fraction a sum in
cash equal to the product resulting from multiplying the then current fair
market value of an Exercise Share by such fraction.
7. NO STOCKHOLDER RIGHTS. This Warrant in and of itself shall not entitle
the Holder to any voting rights or other rights as a stockholder of the Company.
8. TRANSFER OF WARRANT. Subject to applicable laws and the restriction on
transfer set forth on the first page of this Warrant, this Warrant and all
rights hereunder are transferable, by the Holder in person or by duly authorized
attorney, upon delivery of this Warrant and the form of assignment attached
hereto to any transferee designated by Holder. The transferee shall sign an
investment letter in form and substance satisfactory to the Company.
9. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost,
stolen, mutilated or destroyed, the Company may, on such terms as to indemnity
or otherwise as it may reasonably impose (which shall, in the case of a
mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.
10. NOTICES, ETC. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company
at the address listed on the signature page and to Holder at the address listed
on the signature page or at such other address as the Company or Holder may
designate by 10 days' advance written notice to the other parties hereto.
11. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.
12. GOVERNING LAW. This Warrant and all rights, obligations and liabilities
hereunder shall be governed by the laws of the State of New York without regard
to conflicts of laws principles.
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The Company has caused this Warrant to be executed by its duly authorized
officer as of June 27, 2003.
SBE, INC.
By:
------------------------------------
Xxxxx Xxxxxxx
Chief Executive Officer
Address: 0000 Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Holder's address:
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NOTICE OF EXERCISE
TO: SBE, INC.
(1) |_| The undersigned hereby elects to purchase ________ shares of
the Common Stock of SBE, INC. (the "Company") pursuant to the terms of the
attached Warrant, and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
|_| The undersigned hereby elects to purchase ________ shares of Common
Stock of the Company pursuant to the terms of the net exercise provisions set
forth in Section 2 of the attached Warrant, and shall tender payment of all
applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares
of Common Stock of the Company in the name of the undersigned or in such other
name as is specified below:
------------------------
(Name)
------------------------
------------------------
(Address)
(3) The undersigned represents that (i) the aforesaid shares of Common
Stock 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, other than as contemplated by Article 7 of the Securities Purchase
Agreement dated as of June 27, 2003 by and among the Company and the purchasers
named therein (the "Securities Purchase Agreement"); (ii) the undersigned is
aware of the Company's business affairs and financial condition and has acquired
sufficient information about the Company to reach an informed and knowledgeable
decision regarding its investment in the Company; (iii) the undersigned is
experienced in making investments of this type and has such knowledge and
background in financial and business matters that the undersigned is capable of
evaluating the merits and risks of this investment and protecting the
undersigned's own interests; (iv) the undersigned understands that the shares of
Common Stock issuable upon exercise of this Warrant have not been registered
(except to the extent a registration statement pursuant to and as contemplated
by Article 7 of the Securities Purchase Agreement is effective) under the
Securities Act of 1933, as amended (the "Securities Act"), by reason of a
specific exemption from the registration provisions of the Securities Act, which
exemption depends upon, among other things, the bona fide nature of the
investment intent as expressed herein, and, because such securities have not
been registered under the Securities Act, they must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from such
registration is available; (v) the undersigned is aware that the aforesaid
shares of Common Stock may not be sold pursuant to Rule 144 adopted under the
Securities Act unless certain conditions are met and until the undersigned has
held the shares for the number of years prescribed by Rule 144, that among the
conditions for use of the Rule is the availability of current information to the
public about the Company; and (vi) the undersigned agrees not to make any
disposition of all or
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any part of the aforesaid shares of Common Stock unless and until there is then
in effect a registration statement under the Securities Act covering such
proposed disposition and such disposition is made in accordance with said
registration statement, or the undersigned has provided the Company with an
opinion of counsel satisfactory to the Company, stating that such registration
is not required.
--------------------------------- ----------------------------------
(Date) (Signature)
----------------------------------
(Print name)
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ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
Name:
-------------------------------------------------------------------------
(Please Print)
Address:
----------------------------------------------------------------------
(Please Print)
Dated: __________, 20__
Holder's
Signature:
-----------------------------------------------------------
Holder's
Address:
-------------------------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
