NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, SUCH REGISTRATION AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE
TRANSFEROR TO SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH IS ACCEPTABLE TO THE
ISSUER.
XXXXXXXX CURHAN FORD GROUP, INC.
COMMON STOCK PURCHASE WARRANT
Warrant No. C-068 105,846 Shares
Original Issue Date: September 8, 2009
THIS CERTIFIES THAT, FOR VALUE RECEIVED, DGB Investments, Inc. or its permitted
assigns (the "HOLDER") is entitled to purchase, on the terms and conditions
hereinafter set forth, at any time and from time to time, in whole or in part,
beginning upon the date which is one (1) year from the Original Issue Date set
forth above (the "INITIAL EXERCISE DATE") until 5:00 p.m., Eastern Time, on the
fifth anniversary of the Original Issue Date, or if such date is not a day on
which the Company (as hereinafter defined) is open for business, then the next
succeeding day on which the Company is open for business (such date is the
"EXPIRATION DATE"), but not thereafter, One Hundred Five Thousand Eight Hundred
Forty Six (105,846) shares of the Common Stock, $0.0001 par value per share (the
"COMMON STOCK"), of XXXXXXXX XXXXXX FORD GROUP, INC., a Delaware corporation
(the "COMPANY"), at Sixty-Five Cents ($0.65) per share (the "EXERCISE PRICE"),
such number of shares and Exercise Price being subject to adjustment upon the
occurrence of the contingencies set forth in this Warrant. Each share of Common
Stock as to which this Warrant is exercisable is a "WARRANT SHARE" and all such
shares are collectively referred to as the "WARRANT SHARES."
Section 1. Definitions.
(a) "Effective Date" shall mean the date on which the Warrant
shall be deemed to have been exercised.
(b) "Initial Issue Date" shall mean ten (10) days from the date on
which the Convertible Preferred Stock is first purchased pursuant to the Stock
Purchase Agreement.
(c) "Settlement Agreement" shall mean the Settlement Agreement by
and among the Company and the parties thereto, dated September 8, 2009.
(d) "Stock Purchase Agreement" shall mean the Series D Preferred
Stock Purchase Agreement by and among the Company and the purchasers set forth
on Schedule A thereto, dated August 27,2009.
(e) "Convertible Preferred Stock" shall mean the Convertible
Preferred Stock convertible into shares of Common Stock issued pursuant to the
terms of the Stock Purchase Agreement.
Section 2. Exercise of Warrant; Conversion of Warrant.
(a) This Warrant may, at the option of the Holder, be exercised in
whole or in part from time to time, beginning on the Initial Exercise Date, on
or before 5:00 p.m., Eastern Time, on the Expiration Date, by delivery to the
Company at its principal office (i) a written notice of such Holder's election
to exercise this Warrant (the "EXERCISE NOTICE"), which notice may be in the
form of the Notice of Exercise attached hereto, properly executed and completed
by the Holder or an authorized officer thereof, (ii) a check or other funds (the
"FUNDS") payable to the order of the Company, in an amount equal to the product
of the Exercise Price multiplied by the number of Warrant Shares specified in
the Exercise Notice, and (iii) this Warrant (the items specified in (i), (ii),
and (iii) are collectively the "EXERCISE MATERIALS"); provided, however, that if
this Warrant is not exercised in whole immediately prior to the consummation by
the Company of a Change of Control Event (as defined in the Certificate of
Designation designating the rights of the holders of the Series D Convertible
Preferred Stock ("CERTIFICATE OF DESIGNATION")), then immediately following the
consummation by the Company of such Change in Control Event, this Warrant will
not be exercisable and shall be null and void for all purposes. Notwithstanding
anything in this Warrant to the contrary, if this Warrant shall not have been
exercised in full immediately prior to a Change in Control Event, then this
Warrant shall be automatically exercised pursuant to Section 3 below, without
further action on the part of the Holder (and the Holder hereof shall be deemed
to be a holder of the Common Stock issued upon such automatic exercise),
immediately prior to the Change in Control Event, unless at any time on or
before such time, the Holder shall notify the Company in writing that no such
automatic exercise is to occur. The Company shall provide the holder of this
Warrant any written materials which the Company is required to send to
stockholders in connection with a Change of Control Event at the same time such
materials are sent to the stockholders.
(b) As promptly as practicable, and in any event within five (5)
business days after the later of (i) its receipt of the Exercise Materials and
(ii) the clearing of the Funds, the Company shall execute or cause to be
executed and delivered to the Holder a certificate or certificates representing
the number of Warrant Shares specified in the Exercise Notice, together with
cash in lieu of any fraction of a share. The stock certificate or certificates
shall be registered in the name of the Holder or such other name or names as
shall be designated in the Exercise Notice. The Effective Date and the date the
person in whose name any certificate evidencing the Common Stock issued upon the
exercise hereof is issued shall be deemed to have become the holder of record of
such shares, shall be the date the Company receives the Exercise Materials,
irrespective of the date of delivery of a certificate or certificates evidencing
the Common Stock issued upon the exercise or conversion hereof provided,
however, that if the Exercise Materials are received by the Company on a date on
which the stock transfer books of the Company are
closed, the Effective Date shall be the next succeeding date on which the stock
transfer books are open. If this Warrant shall have been exercised only in part,
then, unless this Warrant has expired, the Company shall, at its expense, at the
time of delivery of such certificates, deliver to the Holder a new Warrant
representing the right to purchase the number of shares with respect to which
this Warrant shall not then have been exercised. In the event that this Warrant
is exercised in whole in connection with a Change of Control Event, the
Effective Date shall be the date of the consummation by the Company of such
Change of Control Event, at the time immediately prior to the consummation of
such Change of Control Event. All shares of Common Stock issued upon the
exercise or conversion of this Warrant will, upon issuance, be fully paid and
non-assessable and free from all taxes, liens, and charges with respect thereto.
Section 3. Cashless Exercise. (i) If there is not a registration
statement registering sales of the Warrant Shares under the Securities Act of
1933, as amended, in effect on the date which is 270 days from the Original
Issue Date (the "Registration Deadline"), then from and after the Registration
Deadline and continuing until there is such a registration statement in effect
or (ii) in connection with an automatic exercise of this Warrant in accordance
with the next-to-last Sentence of Section 2(a) of this Warrant, in lieu of
exercising this Warrant pursuant to Section 2, the Holder may elect (or shall be
deemed to have elected, as the case may be) to receive, without payment by the
Holder of any additional consideration, shares of Common Stock equal to the
value of this Warrant (or the portion thereof being cancelled) by surrender of
this Warrant at the principal office of the Company together with an Exercise
Notice, in which event the Company shall issue to the Holder a number of shares
of Common Stock computed using the following formula:
Y (A - B)
---------
X= A
Where:
X = The number of shares of Common Stock to be issued to the Holder
pursuant to this cashless exercise;
Y = The number of Warrant Shares in respect of which the cashless
exercise election is made or deemed made;
A = The fair market value of one (1) share of Common Stock at the time
the cashless exercise election is made; and
B = The Exercise Price (as adjusted to the date of the cashless
exercise)
For purposes of this Section 3, the fair market value of one (1) share
of Common Stock as of a particular date shall be detem1ined as follows: (i)
if listed or quoted for trading on a securities market or exchange, the value
shall be deemed to be the average closing price of the securities on such
exchange over the thirty (30) day period ending three (3) days prior to the
cashless exercise election; (ii) if traded over-the-counter, the value shall be
deemed to be the
average of the closing bid or sale prices (whichever is applicable) over the
thirty (30) day period ending three (3) days prior to the cashless exercise
election; and (iii) if there is no active public market, the value shall be the
fair market value thereof, as jointly determined in good faith by the Holder and
the Company's Board of Directors. If the Holder and the Company's Board of
Directors are unable to reach such a determination, the Holder and the Company's
Board of Directors shall jointly select an appraiser, who is experienced in such
matters. The decision of such appraiser shall be final and conclusive, and the
cost of such appraiser shall be borne equally by the Holder and the Company.
Section 4. Adjustments to Warrant Shares; Antidilution. The Exercise
Price and number of Warrant Shares issuable upon exercise of this Warrant are
subject to adjustment from time to time as set forth in this Section 4.
(a) Subdivisions, Combinations and Other Issuances. If the Company
shall at any time prior to the expiration of this Warrant subdivide its Common
Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Common Stock as a dividend, the number of Warrant
Shares issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination. Appropriate adjustments
shall also be made to the Exercise Price, but the aggregate Exercise Price
payable for the total number of Warrant Shares purchasable under this Warrant
(as adjusted) shall remain the same. Any adjustment under this Section 4(a)
shall become effective at the close of business on the date the subdivision or
combination becomes effective, or as of the record date of such dividend, or in
the event that no record date is fixed, upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case of
any reclassification, capital reorganization, or change in the Common Stock of
the Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 4(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the same number of
shares of Common Stock as were purchasable by the Holder immediately prior to
such reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the Exercise Price payable
hereunder, provided the aggregate Exercise Price shall remain the same.
(c) Full Ratchet. Upon the occurrence of an event which causes a
reduction of the Conversion Price (as defined in the Certificate of Designation)
of the Series D Convertible Preferred Stock pursuant to Section 5(d)(vii) of the
Certificate of Designation (or would cause such a reduction if the Series D
Convertible Preferred Stock were then outstanding),
(i) the Exercise Price of this Warrant shall be reduced to one and one-half-
times the revised Conversion Price; and (ii) the number of shares of Common
Stock for which this Warrant is exercisable shall equal the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
reduction of the Exercise Price times a fraction (x) the numerator of which is
the Exercise Price immediately prior to such reduction, and (y) the denominator
of which is the reduced Exercise Price (as set forth in clause (i) immediately
above).
(d) Calculations. All calculations under this Section 4 shall be
made to the nearest cent or the nearest 1/100th of a share, as applicable. The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition
of any such shares shall be considered an issue or sale of Common Stock.
(e) Warrant Shares. The Company covenants and agrees that all
Warrant Shares which may be issued will, upon issuance, be validly issued, fully
paid, and nonassessable. The Company further covenants and agrees that the
Company will at all times have authorized and reserved, free from preemptive
rights, a sufficient number of shares of its Common Stock to provide for the
exercise of this Warrant in full.
Section 5. Notice of Adjustments. Upon the occurrence of any adjustment
pursuant to Section 4, the Company at its expense will promptly compute such
adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment, including a statement of the adjusted
Exercise Price, describing the transactions giving rise to such adjustment and
showing in detail the facts upon which such adjustment is based. When any such
adjustment is required to be made, the Company will promptly, but in any event
no later than ten (l0) days after said adjustment, notify the Holder of the
event giving rise to such adjustment and deliver a copy of each such certificate
to the Holder.
Section 6. Registration Rights. The Holder shall be entitled to
registration rights with respect to the Warrant Shares as set forth in the
Investors Rights Agreement (the "Investors Rights Agreement") by and between the
Holder and the Company. dated August 27,2009.
Section 7. No Stockholder Rights. This Warrant shall not entitle the
Holder to any voting rights or other rights as a stockholder of the Company
until such time as the Holder has exercised this Warrant and received shares of
Common Stock pursuant to the provisions hereof.
Section 8. Transfer of Securities.
(a) This Warrant and the Warrant Shares and any shares of capital
stock received in respect thereof, whether by reason of a stock split or share
reclassification thereof, a stock dividend thereon, or otherwise, shall not be
transferable except in compliance with the provisions of the Securities Act of
1933, as amended (the "SECURITIES ACT"), and applicable state securities laws
with respect to the transfer of such securities. The Holder, by acceptance of
this Warrant, agrees to be bound by the provisions of this Section 8 hereof and
to indemnify and hold harmless the Company against any loss or liability arising
from the disposition of this Warrant or the Warrant Shares issuable upon
exercise hereof or any interest in either thereof in violation of the provisions
of this Warrant.
(b) Each certificate for the Warrant Shares and any shares of
capital stock received in respect thereof, whether by reason of a stock split or
share reclassification thereof, a stock dividend thereon, or otherwise, and each
certificate for any such securities issued to subsequent transferees of any such
certificate shall (unless otherwise permitted by the provisions hereof) be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, SUCH
REGISTRATION AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH IS ACCEPTABLE TO THE ISSUER."
Section 9. Replacement of Warrant. If this Warrant is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation hereto or in lieu of and
substitution for this Warrant, a new warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable bond or indemnity, if requested.
Section 10. Miscellaneous.
(a) The terms of this Warrant shall be binding upon and shall
inure to the benefit of any successors or permitted assigns of the Company and
the Holder.
(b) Except as otherwise provided herein, this Warrant and all
rights hereunder are transferable in whole or in part, at any time and from time
to time, by the registered holder hereof in person or by duly authorized
attorney on the books of the Company upon surrender of this Warrant, properly
endorsed, to the Company. The Company may deem
and treat the registered holder of this Warrant at any time as the absolute
owner hereof for all purposes and shall not be affected by any notice to the
contrary.
(c) Notwithstanding any provision herein to the contrary, the
Holder may not sell, transfer, or otherwise assign this Warrant unless the
Company is provided with an opinion of counsel reasonably satisfactory in form
and substance to the Company, to the effect that such sale, transfer, or
assignment would not violate the Securities Act or applicable state securities
laws.
(d) All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: (i) if to the Company, to: Xxxxxxxx Curhan Ford Group,
Inc., 000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
Attention: Chief Financial Officer, telecopier: 000-000-0000, (ii) if to the
Holder to: the address and telecopier number indicated on the signature pages to
the Settlement Agreement, as the case may be.
(e) This Warrant shall be governed by and construed in accordance
with the internal laws of the State of Delaware, without regard to principles of
conflicts of law. With respect to any disputes arising out of or related to this
Warrant, the parties consent to the exclusive jurisdiction of, and venue in, the
state courts in the city of Chicago, and county of Xxxx, Illinois (or in the
event of exclusive federal jurisdiction, the courts of the Northern District of
Illinois). EACH OF THE PARTIES KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WITH AND
UPON THE ADVICE OF COMPETENT COUNSEL IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY. The Company agrees and
acknowledges that any violation or breach of its covenants, agreements and
undertakings contained in this Warrant shall cause Holder irreversible injury
and, in addition to any other right or remedy available to a party at law or in
equity, a Holder shall be entitled to enforcement by court injunction for
specific performance of the obligations of the other party hereunder (without
the requirement of posting a bond). Notwithstanding the foregoing sentence,
nothing herein shall be construed as prohibiting a party from also pursuing any
other rights, remedies or defenses, for such breach or threatened breach,
including receiving damages and attorneys' fees. The election of any remedy
shall not be construed as a waiver on the part of any party of any rights such
party
might otherwise have at law or in equity. Said rights and remedies shall be
cumulative except as limited in the Investors Rights Agreement. The prevailing
party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Warrant or
any other agreement delivered in connection herewith is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.
(f) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(g) In case anyone or more of the provisions of this Warrant shall
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to agree
upon a valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
[The remainder of this page intentionally left blank]
SIGNATURE PAGE
TO
XXXXXXXX CURHAN FORD GROUP, INC.
COMMON STOCK PURCHASE WARRANT
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed in its
name by its duly authorized officers under seal, and to be dated as of the date
first above written.
XXXXXXXX CURHAN FORD GROUP, INC.
By /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
[Signature Page to Xxxxxxxx Curhan Ford Group. Inc.
Common Stock Purchase Warrant}
ASSIGNMENT
(To be Executed by the Holder to effect a transfer of the foregoing
Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, and assigns and transfers unto
__________ the foregoing Warrant and the rights represented thereto to purchase
shares of Common Stock, par value $0.0001 per share, of XXXXXXXX CURHAN FORD
GROUP, INC. in accordance with terms and conditions thereof, and does hereby
irrevocably constitute and appoint _______________ Attorney to transfer the said
Warrant on the books of the Company, with full power of substitution.
Holder:
-----------------------------------
-----------------------------------
Address
Dated: _______________ ,20___
In the presence of:
-----------------------------------
NOTICE OF EXERCISE
[To be signed only upon exercise of Warrant]
To: XXXXXXXX CURHAN FORD GROUP, INC.
The undersigned Holder of the attached Warrant hereby irrevocably
elects to exercise the Warrant for, and to purchase thereunder, shares of Common
Stock, par value $0.000] per share, of XXXXXXXX CURHAN FORD GROUP, INC.,
issuable upon exercise of said Warrant and hereby surrenders said Warrant.
The undersigned herewith requests that the certificates for such shares
be issued in the name of, and delivered to the undersigned, whose address is
-------------------------------.
If electronic book entry transfer, complete the following:
Account Number: _______________________
Transaction Code Number: ______________
Dated: ________________
Holder:
-------------------------------------
-------------------------------------
By:
--------------------------------
Name:
Title:
NOTICE
The signature above must correspond to the name as written upon the
face of the within Warrant in every pal1icular, without alteration or
enlargement or any change whatsoever.
