THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
OR EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS.
SUBJECT TO THE PROVISIONS OF SECTION 10 HEREOF, THIS WARRANT SHALL BE
VOID AFTER 5:00 P.M. EASTERN TIME ON [FIFTH ANNIVERSARY OF THE CLOSING DATE]
(the "EXPIRATION DATE").
No. ___________
STARBASE CORPORATION
WARRANT TO PURCHASE [_______] SHARES OF
COMMON STOCK, PAR VALUE $0.01 PER SHARE
For VALUE RECEIVED, [____________________] ("Warrantholder"), is
entitled to purchase, subject to the provisions of this Warrant, from Starbase
Corporation, a Delaware corporation ("Company"), at any time not later than 5:00
P.M., Eastern time, on the Expiration Date (as defined above), at an exercise
price per share equal to $2.50 (the exercise price in effect being herein called
the "Warrant Price"), [______] shares ("Warrant Shares") of the Company's Common
Stock, par value $0.01 per share ("Common Stock"). The number of Warrant Shares
purchasable upon exercise of this Warrant and the Warrant Price shall be subject
to adjustment from time to time as described herein.
Section 1. Registration. The Company shall maintain books for the
transfer and registration of the Warrant. Upon the initial issuance of this
Warrant, the Company shall issue and register the Warrant in the name of the
Warrantholder.
Section 2. Transfers. As provided herein, this Warrant may be
transferred only pursuant to a registration statement filed under the Securities
Act of 1933, as amended ("Securities Act"), or an exemption from such
registration. Subject to such restrictions, the Company shall transfer this
Warrant from time to time upon the books to be maintained by the Company for
that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer and such other documents as
may be reasonably required by the Company, including, if required by the
Company, an opinion of its counsel to the effect that such transfer is exempt
from the registration requirements of the Securities Act of 1933, to establish
that such transfer is being made in accordance with the terms hereof, and a new
Warrant shall be issued to the transferee and the surrendered Warrant shall be
canceled by the Company.
Section 3. Exercise of Warrant. Subject to the provisions hereof, the
Warrantholder may exercise this Warrant in whole or in part at any time upon
surrender of the Warrant, together
with delivery of the duly executed Warrant exercise form attached hereto as
Appendix A (the "Exercise Agreement") and payment by cash, certified check or
wire transfer of funds for the aggregate Warrant Price for that number of
Warrant Shares then being purchased, to the Company during normal business hours
on any business day at the Company's principal executive offices (or such other
office or agency of the Company as it may designate by notice to the holder
hereof). The Warrant Shares so purchased shall be deemed to be issued to the
holder hereof or such holder's designee, as the record owner of such shares, as
of the close of business on the date on which this Warrant shall have been
surrendered (or evidence of loss, theft or destruction thereof and security or
indemnity satisfactory to the Company), the Warrant Price shall have been paid
and the completed Exercise Agreement shall have been delivered. Certificates for
the Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time, not exceeding three (3) business days, after this
Warrant shall have been so exercised. The certificates so delivered shall be in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be designated
by such holder. 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 number of shares with respect to which this Warrant shall not
then have been exercised. As used herein, "business day" means a day, other than
a Saturday or Sunday, on which banks in New York City are open for the general
transaction of business. Each exercise hereof shall constitute the
re-affirmation by the Warrantholder that the representations and warranties
contained in Sections 5.3, 5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 of the Purchase
Agreement (as defined below) are true and correct in all respects with respect
to the Warrantholder as of the time of such exercise.
Section 4. Compliance with the Securities Act of 1933. The Company may
cause the legend set forth on the first page of this Warrant to be set forth on
each Warrant or similar legend on any security issued or issuable upon exercise
of this Warrant, unless counsel for the Company is of the opinion as to any such
security that such legend is unnecessary.
Section 5. Payment of Taxes. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the registered holder of this Warrant in respect of
which such shares are issued, and in such case, the Company shall not be
required to issue or deliver any certificate for Warrant Shares or any Warrant
until the person requesting the same has paid to the Company the amount of such
tax or has established to the Company's reasonable satisfaction that such tax
has been paid. The holder shall be responsible for income taxes due under
federal, state or other law, if any such tax is due.
Section 6. Mutilated or Missing Warrants. In case this Warrant shall be
mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and
substitution of and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares,
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but only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.
Section 7. Reservation of Common Stock. The Company hereby represents
and warrants that there have been reserved, and the Company shall at all
applicable times keep reserved until issued (if necessary) as contemplated by
this Section 7, out of the authorized and unissued shares of Common Stock,
sufficient shares to provide for the exercise of the rights of purchase
represented by this Warrant. The Company agrees that all Warrant Shares issued
upon due exercise of the Warrant shall be, at the time of delivery of the
certificates for such Warrant Shares, duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock of the Company.
Section 8. Adjustments. Subject and pursuant to the provisions of this
Section 8, the Warrant Price and number of Warrant Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.
(a) If the Company shall, at any time or from time to time while
this Warrant is outstanding, pay a dividend or make a distribution on its Common
Stock in shares of Common Stock, subdivide its outstanding shares of Common
Stock into a greater number of shares or combine its outstanding shares of
Common Stock into a smaller number of shares or issue by reclassification of its
outstanding shares of Common Stock any shares of its capital stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Company so that the Warrantholder thereafter exercising
the Warrant shall be entitled to receive the number of shares of Common Stock or
other capital stock which the Warrantholder would have received if the Warrant
had been exercised immediately prior to such event upon payment of a Warrant
Price that has been adjusted to reflect a fair allocation of the economics of
such event to the Warrantholder. Such adjustments shall be made successively
whenever any event listed above shall occur.
(b) If any capital reorganization, reclassification of the
capital stock of the Company, consolidation or merger of the Company with
another corporation in which the Company is not the survivor, or sale, transfer
or other disposition of all or substantially all of the Company's assets to
another corporation shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger, sale, transfer or other
disposition, lawful and adequate provision shall be made whereby each
Warrantholder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
such shares of stock, securities or assets as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder
-3-
to the end that the provisions hereof (including, without limitation, provision
for adjustment of the Warrant Price) shall thereafter be applicable, as nearly
equivalent as may be practicable in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise thereof. The Company shall
not effect any such consolidation, merger, sale, transfer or other disposition
unless prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such consolidation or
merger, or the corporation purchasing or otherwise acquiring such assets or
other appropriate corporation or entity shall assume the obligation to deliver
to the holder of the Warrant, at the last address of such holder appearing on
the books of the Company, such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase, and the other obligations under this Warrant. The provisions of this
paragraph (b) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers or other
dispositions.
(c) In case the Company shall fix a payment date for the making
of a distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness or assets
(other than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends or distributions referred to in Section
8(a)), or subscription rights or warrants, the Warrant Price to be in effect
after such payment date shall be determined by multiplying the Warrant Price in
effect immediately prior to such payment date by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding multiplied
by the Market Price (as defined below) per share of Common Stock immediately
prior to such payment date, less the fair market value (as determined by the
Company's Board of Directors in good faith) of said assets or evidences of
indebtedness so distributed, or of such subscription rights or warrants, and the
denominator of which shall be the total number of shares of Common Stock
outstanding multiplied by such Market Price per share of Common Stock
immediately prior to such payment date. "Market Price" as of a particular date
(the "Valuation Date") shall mean the following: (a) if the Common Stock is then
listed on a national stock exchange, the closing sale price of one share of
Common Stock on such exchange on the last trading day prior to the Valuation
Date; (b) if the Common Stock is then quoted on The Nasdaq Stock Market, Inc.
("Nasdaq"), the closing sale price of one share of Common Stock on Nasdaq on the
last trading day prior to the Valuation Date or, if no such closing sale price
is available, the average of the high bid and the low asked price quoted on
Nasdaq on the last trading day prior to the Valuation Date; or (c) if the Common
Stock is not then listed on a national stock exchange or quoted on Nasdaq, then
the current market price shall be the average of the high bid and low asked
price for the Common Stock as quoted on the OTC Bulletin Board, or, if such
prices are not quoted on the OTC Bulletin Board, the average of the high bid and
low asked price for the Common Stock as quoted in the Pink Sheets LLC (formerly
the National Quotation Bureau), or, if such prices are not quoted in the Pink
Sheets LLC, the Fair Market Value of one share of Common Stock as of the
Valuation Date, shall be determined in good faith by the Board of Directors of
the Company and the Warrantholder. The Board of Directors of the Company shall
respond promptly, in writing, to an inquiry by the Warrantholder prior to the
exercise hereunder as to the Market Value of a share of Common Stock as
determined by the Board of Directors of the Company. In the event that the Board
of Directors of the Company and
-4-
the Warrantholder are unable to agree upon the Market Value in respect of
subpart (c) hereof, the Company and the Warrantholder 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
evenly by the Company and the Warrantholder. Such adjustment shall be made
successively whenever such a payment date is fixed.
(d) For the term of this Warrant, in addition to the provisions
contained above, the Warrant Price shall be subject to adjustment as provided
below. An adjustment to the Warrant Price shall become effective immediately
after the payment date in the case of each dividend or distribution and
immediately after the effective date of each other event which requires an
adjustment.
(e) In the event that, as a result of an adjustment made pursuant
to this Section 8, the holder of this Warrant shall become entitled to receive
any shares of capital stock of the Company other than shares of Common Stock,
the number of such other shares so receivable upon exercise of this Warrant
shall be subject thereafter to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Warrant Shares contained in this Warrant.
(f) Except as provided in subsection (g) hereof, if and whenever
the Company shall issue or sell, or is, in accordance with any of subsections
(f)(l) through (f)(7) hereof, deemed to have issued or sold, any shares of
Common Stock for no consideration or for a consideration per share less than the
Warrant Price in effect immediately prior to the time of such issue or sale,
then and in each such case (a "Trigger Issuance") the then-existing Warrant
Price, shall be reduced, as of the close of business on the effective date of
the Trigger Issuance, to a price determined as follows:
Adjusted Warrant Price = (A x B) + D
-----------
A+C
where
"A" equals the number of shares of Common Stock
outstanding, including Additional Shares (as defined below) deemed to be issued
hereunder, immediately preceding such Trigger Issuance;
"B" equals the Warrant Price in effect immediately
preceding such Trigger Issuance;
"C" equals the number of Additional Shares of Common Stock
issued or deemed issued hereunder as a result of the Trigger Issuance; and
"D" equals the aggregate consideration, if any, received or
deemed to be received by the Company upon such Trigger Issuance.
-5-
provided, however, that in no event shall the Warrant Price after giving effect
to such Trigger Issuance be greater than the Warrant Price in effect prior to
such Trigger Issuance.
For purposes of this subsection (f), "Additional Shares of Common
Stock" shall mean all shares of Common Stock issued by the Company or deemed to
be issued pursuant to this subsection (f), other than Excluded Issuances (as
defined in subsection (g) hereof).
For purposes of this subsection (f), the following subsections
(f)(l) to (f)(7) shall also be applicable:
(f)(1) Issuance of Rights or Options. In case at any time
the Company shall in any manner grant (directly and not by
assumption in a merger or otherwise) any warrants or other rights
to subscribe for or to purchase, or any options for the purchase
of, Common Stock or any stock or security convertible into or
exchangeable for Common Stock (such warrants, rights or options
being called "Options" and such convertible or exchangeable stock
or securities being called "Convertible Securities") whether or
not such Options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price
per share for which Common Stock is issuable upon the exercise of
such Options or upon the conversion or exchange of such
Convertible Securities (determined by dividing (i) the sum (which
sum shall constitute the applicable consideration) of (x) the
total amount, if any, received or receivable by the Company as
consideration for the granting of such Options, plus (y) the
aggregate amount of additional consideration payable to the
Company upon the exercise of all such Options, plus (z), in the
case of such Options which relate to Convertible Securities, the
aggregate amount of additional consideration, if any, payable
upon the issue or sale of such Convertible Securities and upon
the conversion or exchange thereof, by (ii) the total maximum
number of shares of Common Stock issuable upon the exercise of
such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such
Options) shall be less than the Warrant Price in effect
immediately prior to the time of the granting of such Options,
then the total number of shares of Common Stock issuable upon the
exercise of such Options or upon conversion or exchange of the
total amount of such Convertible Securities issuable upon the
exercise of such Options shall be deemed to have been issued for
such price per share as of the date of granting of such Options
or the issuance of such Convertible Securities and thereafter
shall be deemed to be outstanding for purposes of adjusting the
Warrant Price. Except as otherwise provided in subsection
8(f)(3), no adjustment of the Warrant Price shall be made upon
the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such Options or upon the actual issue
of such Common Stock upon conversion or exchange of such
Convertible Securities.
(f)(2) Issuance of Convertible Securities. In case the
Company shall in any manner issue (directly and not by assumption
in a merger or otherwise) or sell
-6-
any Convertible Securities, whether or not the rights to exchange
or convert any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is
issuable upon such conversion or exchange (determined by dividing
(i) the sum (which sum shall constitute the applicable
consideration) of (x) the total amount received or receivable by
the Company as consideration for the issue or sale of such
Convertible Securities, plus (y) the aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total number of
shares of Common Stock issuable upon the conversion or exchange
of all such Convertible Securities) shall be less than the
Warrant Price in effect immediately prior to the time of such
issue or sale, then the total maximum number of shares of Common
Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued for
such price per share as of the date of the issue or sale of such
Convertible Securities and thereafter shall be deemed to be
outstanding for purposes of adjusting the Warrant Price, provided
that (a) except as otherwise provided in subsection 8(f)(3), no
adjustment of the Warrant Price shall be made upon the actual
issuance of such Common Stock upon conversion or exchange of such
Convertible Securities and (b) no further adjustment of the
Warrant Price shall be made by reason of the issue or sale of
Convertible Securities upon exercise of any Options to purchase
any such Convertible Securities for which adjustments of the
Warrant Price have been made pursuant to the other provisions of
subsection 8(f).
(f)(3) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase
price provided for in any Option referred to in subsection
8(f)(l) hereof, the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities
referred to in subsections 8(f)(l) or 8(f)(2), or the rate at
which Convertible Securities referred to in subsections 8(f)(l)
or 8(f)(2) are convertible into or exchangeable for Common Stock
shall change at any time (including, but not limited to, changes
under or by reason of provisions designed to protect against
dilution), the Warrant Price in effect at the time of such event
shall forthwith be readjusted to the Warrant Price which would
have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase
price, additional consideration or conversion rate, as the case
may be, at the time initially granted, issued or sold. On the
termination of any Option for which any adjustment was made
pursuant to this subsection 8(f) or any right to convert or
exchange Convertible Securities for which any adjustment was made
pursuant to this subsection 8(f) (including without limitation
upon the redemption or purchase for consideration of such
Convertible Securities by the Company), the Warrant Price then in
effect hereunder shall forthwith be changed to the Warrant Price
which would have been in effect at the time of such termination
had such Option or Convertible Securities, to the extent
outstanding immediately prior to such termination, never been
issued.
-7-
(f)(4) Stock Dividends. Subject to the provisions of this
Section 8(f), in case the Company shall declare a dividend or
make any other distribution upon any stock of the Company (other
than the Common Stock) payable in Common Stock, Options or
Convertible Securities, then any Common Stock, Options or
Convertible Securities, as the case may be, issuable in payment
of such dividend or distribution shall be deemed to have been
issued or sold without consideration.
(f)(5) Consideration for Stock. In case any shares of
Common Stock, Options or Convertible Securities shall be issued
or sold for cash, the consideration received therefor shall be
deemed to be the net amount received by the Company therefor,
after deduction therefrom of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the
Company in connection therewith. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold
for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be
deemed to be the fair value of such consideration as determined
in good faith by the Board of Directors of the Company, after
deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in
connection therewith. In case any Options shall be issued in
connection with the issue and sale of other securities of the
Company, together comprising one integral transaction in which no
specific consideration is allocated to such Options by the
parties thereto, such Options shall be deemed to have been issued
for such consideration as determined in good faith by the Board
of Directors of the Company. In situations other than those
covered by the immediately preceding sentence, if Common Stock,
Options or Convertible Securities shall be issued or sold by the
Company and, in connection therewith, other Options or
Convertible Securities (the "Additional Rights") are issued, then
the consideration received or deemed to be received by the
Company shall be reduced by the fair market value of the
Additional Rights (as determined using the Black-Scholes option
pricing model or another method mutually agreed to by the Company
and the Warrantholder). The Board of Directors of the Company
shall respond promptly, in writing, to an inquiry by the
Warrantholder as to the fair market value of the Additional
Rights. In the event that the Board of Directors of the Company
and the Warrantholder are unable to agree upon the fair market
value of the Additional Rights, the Company and the Warrantholder
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 evenly
by the Company and the Warrantholder.
(f)(6) Record Date. In case the Company shall take a
record of the holders of its Common Stock for the purpose of
entitling them (i) to receive a dividend or other distribution
payable in Common Stock, Options or Convertible Securities or
(ii) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to
be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the
-8-
declaration of such dividend or the making of such other
distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(f)(7) Treasury Shares. 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 or any of its
wholly-owned subsidiaries, and the disposition of any such shares
(other than the cancellation or retirement thereof) shall be
considered an issue or sale of Common Stock for the purpose of
this subsection (f).
(g) Anything herein to the contrary notwithstanding, the Company
shall not be required to make any adjustment of the Warrant Price in the case of
the issuance of (A) capital stock, Options or Convertible Securities issued to
directors, officers, employees or consultants of the Company in connection with
their service as directors of the Company, their employment by the Company or
their retention as consultants by the Company pursuant to an equity compensation
program approved by the Board of Directors of the Company or the compensation
committee of the Board of Directors of the Company, (B) shares of Common Stock
issued upon the conversion or exercise of Options or Convertible Securities
issued prior to the date hereof, (C) securities issued pursuant to that certain
Purchase Agreement dated May 22, 2002, among the Company and the Investors named
therein (the "Purchase Agreement") and securities issued upon the exercise or
conversion of those securities, (D) shares of Common Stock issued or issuable by
reason of a dividend, stock split or other distribution on shares of Common
Stock (but only to the extent that such a dividend, split or distribution
results in an adjustment in the Warrant Price pursuant to the other provisions
of this Warrant), (E) capital stock, Options or Convertible Securities issued to
the lender in any financing with no equity or equity-linked securities made to
the Company by a financial institution engaged in the business of lending money
such as a bank, trust company, insurance company or other institutional lender,
(F) capital stock, Options or Convertible Securities issued as consideration in
(i) a merger, consolidation or acquisition of assets, (ii) a strategic
partnership, collaboration or joint venture (the primary purpose of which is not
to raise capital), or (iii) an acquisition of a business or line of business,
(G) capital stock, Options or Convertible Securities issued pursuant to the
arrangements disclosed in Schedule 4.21 to the Purchase Agreement, and (H)
capital stock, Options or Convertible Securities issued or issuable as a
dividend or distribution on the outstanding Series J Preferred Stock
(collectively, "Excluded Issuances").
(h) Upon any adjustment to the Warrant Price pursuant to Section
8(f) above, the number of Warrant Shares purchasable hereunder shall be adjusted
by multiplying such number by a fraction, the numerator of which shall be the
Warrant Price in effect immediately prior to such adjustment and the denominator
of which shall be the Warrant Price in effect immediately thereafter.
Section 9. Fractional Interest. The Company shall not be required to
issue fractions of Warrant Shares upon the exercise of this Warrant. If any
fractional share of Common Stock would, except for the provisions of the first
sentence of this Section 9, be deliverable upon such exercise, the Company, in
lieu of delivering such fractional share, shall pay to the exercising
-9-
holder of this Warrant an amount in cash equal to the Fair Market Value of such
fractional share of Common Stock on the date of exercise. As used in this
Warrant, "Fair Market Value" of a share of Common Stock as of a particular date
(the "Valuation Date") shall mean the following: (a) if the Common Stock is then
listed on a national stock exchange, the closing sale price of one share of
Common Stock on such exchange on the last trading day prior to the Valuation
Date; (b) if the Common Stock is then quoted on Nasdaq, the closing sale price
of one share of Common Stock on Nasdaq on the last trading day prior to the
Valuation Date or, if no such closing sale price is available, the average of
the high bid and the low sales price quoted on Nasdaq on the last trading day
prior to the Valuation Date; or (c) if the Common Stock is not then listed on a
national stock exchange or quoted on Nasdaq, the Fair Market Value of one share
of Common Stock as of the Valuation Date, shall be determined in good faith by
the Board of Directors of the Company.
Section 10. Extension of Expiration Date. If the Company fails to cause
any Registration Statement covering Registrable Securities (unless otherwise
defined herein, capitalized terms are as defined in the Registration Rights
Agreement relating to the Warrant Shares (the "Registration Rights Agreement"))
to be declared effective prior to the applicable dates set forth therein, or if
any of the events specified in Section 2(c)(ii) of the Registration Rights
Agreement occurs, and the Blackout Period (whether alone, or in combination with
any other Blackout Period) continues for more than 60 days in any 12 month
period, or for more than a total of 90 days, then the Expiration Date of this
Warrant shall be extended one day for each day beyond the 60-day or 90-day
limits, as the case may be, that the Blackout Period continues.
Section 11. Benefits. Nothing in this Warrant shall be construed to give
any person, firm or corporation (other than the Company and the Warrantholder)
any legal or equitable right, remedy or claim, it being agreed that this Warrant
shall be for the sole and exclusive benefit of the Company and the
Warrantholder.
Section 12. Notices to Warrantholder. Upon the happening of any event
requiring an adjustment of the Warrant Price, the Company shall promptly give
written notice thereof to the Warrantholder at the address appearing in the
records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Failure to give such notice to the Warrantholder or any
defect therein shall not affect the legality or validity of the subject
adjustment.
Section 13. Identity of Transfer Agent. The Transfer Agent for the
Common Stock is ___________________. Upon the appointment of any subsequent
transfer agent for the Common Stock or other shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrant, the Company will mail to the Warrantholder a statement setting forth
the name and address of such transfer agent.
Section 14. Notices. Unless otherwise provided, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such
-10-
delivery, (ii) if given by telex or telecopier, then such notice shall be deemed
given upon receipt of confirmation of complete transmittal, (iii) if given by
mail, then such notice shall be deemed given upon the earlier of (A) receipt of
such notice by the recipient or (B) three days after such notice is deposited in
first class mail, postage prepaid, and (iv) if given by an internationally
recognized overnight air courier, then such notice shall be deemed given one day
after delivery to such carrier. All notices shall be addressed as follows: if to
the Warrantholder, at its address as set forth in the Company's books and
records and, if to the Company, at the address as follows, or at such other
address as the Warrantholder or the Company may designate by ten days' advance
written notice to the other:
If to the Company:
Starbase Corporation
0 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxxxxxxxx & Xxxxxxxx LLP
00000 Xxxxx Xxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
Section 15. Registration Rights. The initial holder of this Warrant is
entitled to the benefit of certain registration rights with respect to the
shares of Common Stock issuable upon the exercise of this Warrant as provided in
the Registration Rights Agreement, and any subsequent holder hereof may be
entitled to such rights.
Section 16. Successors. All the covenants and provisions hereof by or
for the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.
Section 17. Governing Law. This Warrant shall be governed by, and
construed in accordance with, the internal laws of the State of New York,
without reference to the choice of law provisions thereof. The Company and, by
accepting this Warrant, the Warrantholder, each irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Warrant and the transactions contemplated hereby. Service
of process in connection with any such suit, action or proceeding may be served
on each party hereto anywhere in the world by the same methods as are specified
for the giving of notices under this Warrant. The Company and, by
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accepting this Warrant, the Warrantholder, each irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to the
laying of venue in such court. The Company and, by accepting this Warrant, the
Warrantholder, each irrevocably waives any objection to the laying of venue of
any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
Section 18. No Rights as Stockholder. Prior to the exercise of this
Warrant, the Warrantholder shall not have or exercise any rights as a
stockholder of the Company by virtue of its ownership of this Warrant.
Section 19. Amendment; Waiver. This Warrant is one of a series of
Warrants of like tenor issued by the Company pursuant to the Purchase Agreement
and initially covering an aggregate of 2,400,000 shares of Common Stock
(collectively, the "Company Warrants"). Any term of this Warrant may be amended
or waived (including the adjustment provisions included in Section 8 of this
Warrant) upon the written consent of the Company and the holders of Company
Warrants representing at least 50% of the number of shares of Common Stock then
subject to all outstanding Company Warrants (the "Majority Holders"); provided,
that (x) any such amendment or waiver must apply to all Company Warrants; and
(y) the number of Warrant Shares subject to this Warrant, the Warrant Price and
the Expiration Date may not be amended, and the right to exercise this Warrant
may not be altered or waived, without the written consent of the Warrantholder.
Section 20. Section Headings. The section heading in this Warrant are
for the convenience of the Company and the Warrantholder and in no way alter,
modify, amend, limit or restrict the provisions hereof.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed, as of the ______ day of ___________, 2002.
STARBASE CORPORATION
By:___________________________
Name:
Title:
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APPENDIX A
STARBASE CORPORATION
WARRANT EXERCISE FORM
To: Starbase Corporation:
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant ("Warrant") for, and to purchase
thereunder by the payment of the Warrant Price and surrender of the Warrant,
_______________ shares of Common Stock ("Warrant Shares") provided for therein,
and requests that certificates for the Warrant Shares be issued as follows:
-------------------------------------
Name
-------------------------------------
Address
-------------------------------------
-------------------------------------
Federal Tax ID or Social Security No.
and delivered by (certified mail to the above address, or
(electronically (provide DWAC
Instructions:___________________), or
(other (specify):
__________________________________________).
and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares purchasable upon exercise of this Warrant be registered in
the name of the undersigned Warrantholder or the undersigned's Assignee as below
indicated and delivered to the address stated below.
Dated: ___________________, ____
Note: The signature must correspond with
the name of the registered holder as written Signature:____________________
on the first page of the Warrant in every
particular, without alteration or enlargement ______________________________
or any change whatever, unless the Warrant Name (please print)
has been assigned.
______________________________
Address
______________________________
Federal Identification or
Social Security No.
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Assignee:
_______________________________
_______________________________
_______________________________
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