EXHIBIT 10.3A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT
WITH RESPECT TO THESE SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT BUT ONLY UPON A HOLDER HEREOF
FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE COMPANY, OR OTHER
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, THAT THE PROPOSED DISPOSITION
IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS
ANY APPLICABLE "BLUE SKY" OR SIMILAR SECURITIES LAW.
BIG DOG HOLDINGS, INC.
10% PROMISSORY NOTE
DUE NOVEMBER 4, 2003
$____________ Dated: November 4, 1996
Santa Barbara, California
FOR VALUE RECEIVED, Big Dog Holdings, Inc., a Delaware corporation (the
"Company"), promises to pay to ______________________________ or assigns (the
"Holder"), the principal amount of ________________ Dollars ($_______) (the
"Principal Amount"), in such coin or currency of the United States of America
as at the time of payment shall be legal tender for the payment of public and
private debts, together with simple interest thereon at the rate of ten
percent (10%) per annum from the date hereof, at the principal office of the
Company, upon the earlier of (i) November 4, 2003 and (ii) the consummation
of a public offering of common stock of the Company in which the Company
receives net proceeds of at least $15,000,000. Interest shall be payable
quarterly in arrears on the fifteenth day after the end of each calendar
quarter, commencing January 15, 1997.
Notwithstanding anything to the contrary herein contained, the principal
amount of this Note or any interest hereon may be prepaid at any time or from
time to time, prior to the maturity of this Note, in whole or in part,
without prior notice and without penalty or premium. Prepayments shall be
applied first to interest due and then to principal.
1. THE NOTES: This Note is one of several promissory notes made and
issued by the Company in an aggregate principal amount of $2,000,000
(individually, a "Note," and together, the "Notes"), pursuant to the terms
and subject to the conditions of subscription agreements (the "Subscription
Agreements"), by and among the Company
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and certain investors. Reference is made to the Subscription Agreements for
agreements of the parties applicable to this Note.
2. COVENANTS: The Company covenants and agrees that, so long as any
of the Notes shall be outstanding and unpaid:
2.1 PAYMENT OF NOTES. The Company will punctually pay or cause to be
paid the principal amount and interest on this Note. Any sums required to
be withheld from any payment of principal amount, or interest on this Note
by operation of law or pursuant to any order, judgment, execution, treaty,
rule or regulation may be withheld by the Company and paid over in
accordance therewith.
Nothing in this Note or in any other agreement between the Holder and
the Company shall require the Company to pay, or the Holder to accept,
interest in amount which would subject the Holder to any penalty of
forfeiture under applicable law. In the event that the payment of any
charges, fees or other sums due under this Note, or in any other agreement
between the Company and the Holder are or could be held to be in the nature
of interest and would subject the Holder to any penalty or forfeiture under
applicable law, then IPSO FACTO the obligations of the Company to make such
payment to the Holder shall be reduced to the highest rate authorized under
the applicable law.
2.2 MAINTENANCE OF CORPORATE EXISTENCE; MERGER AND CONSOLIDATION.
The Company will at all times cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and all
of its rights and franchises and shall not be consolidated with or merge
into any other corporation or transfer all or substantially all of its
assets to any person unless (i) the corporation formed by such corporation
or into which the Company is merged or to which the assets of the Company
are transferred is a corporation which expressly assumes all of the
obligations of the Company under the Notes, and (ii) after giving effect to
such transaction, no Event of Default (as hereinafter defined) and no event
which, after notice or lapse of time, or both, would become an Event of
Default, shall have occurred and be continuing.
2.3 PAYMENT OF TAXES. The Company will comply or cause to be paid,
set aside for payment or discharged, before the same shall become
delinquent, all taxes, assessments and governmental charges levied or
imposed upon the Company or upon its income, profits or property; PROVIDED,
HOWEVER, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim
whose amount, applicability or validity is being contested in good faith by
appropriate proceedings.
2.4 COMPLIANCE WITH STATUTES. The Company will comply in all
material respects with all applicable statutes and regulations of the
United States
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of America and of any state or municipality, and of any agency of
any thereof, in respect of the conduct of business, and the
ownership of property by the Company; PROVIDED, HOWEVER, that
nothing contained in this SECTION 2.4 shall require the Company to
comply with any such statute or regulation so long as its legality
or applicability shall be contested in good faith; and provided
further that an unintentional violation of this covenant done in
good faith or inadvertently shall not be deemed an Event of Default
under SECTION 4 hereof.
3. SUBORDINATION: It is understood and agreed by the Company and
Holder (by acceptance of this Note) that all indebtedness and other
obligations of the Company to the Holder, now or hereafter existing, arising
under or in connection with this Note, including principal, interest thereon
and all other amounts payable in respect thereof or in connection therewith
(hereinafter referred to as the "Junior Debt"), shall be subordinated to the
payment of principal of and interest on (including interest accruing after
the date on which the Company becomes subject to the jurisdiction of any
federal or state debtor relief statute, whether or not recoverable against
the Company) any and all present and future debts and obligations of the
Company to Israel Discount Bank Limited ("IDB") under a certain Amended and
Restated Credit Agreement with the Company, dated as of February 15, 1996, as
the same has been and may in the future be amended from time to time (the
"Agreement"), and any loans, advances, payments, extensions of credit,
benefits or other financial accommodations heretofore or thereafter made,
granted or extended by IDB to or for the account of the Company under the
Agreement and the documents executed in connection therewith or under any
renewal, extension or amendment of the Agreement or by any other credit
agreement with another bank or financial institution replacing or
supplementing the line of credit provided under the Agreement (IDB and/or
such other institution is referred to as the "Bank"), whether or not for the
payment of money, whether or not evidenced by any note or instrument, whether
absolute or contingent, due or to become due, secured or unsecured
(hereinafter referred to as the "Senior Debt"). It is further understood and
agreed that:
(a) Upon the distribution of any of the Company's assets, whether by reason
of sale, reorganization, liquidation, dissolution, arrangement, bankruptcy,
receivership, assignment for the benefit of creditors, foreclosure or
otherwise, the Bank shall be entitled to receive payment in full of the
Senior Debt (including without limitation interest arising subsequent to the
date of the filing by or against the Company of any petition for relief under
the Federal Bankruptcy Code or the making of any assignment for the benefit
of creditors, whether or not such interest is recoverable from or provable
against the Company) prior to the payment of all or any part of the Junior
Debt.
(b) Holder will not, without the Bank's prior written consent, commence or
join with any other creditor in commencing any bankruptcy, reorganization or
insolvency proceeding against Debtor.
(c) The Bank may at any time, in its discretion, renew or extend the time of
payment of any portion of the Senior Debt, or waive or release any collateral
which may be held
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therefor, and the Bank may enter into such agreements with the Company as it
may deem desirable without notice to or further assent from Holder and
without in any way affecting the Bank's rights hereunder.
(d) In the event that (i) any event of default under the Agreement or other
credit agreement for Senior Debt shall have occurred and be continuing or
(ii) any judicial proceeding shall be pending with respect to any event of
default, then no payment shall be made by or on behalf of the Company for or
on account of any interest due pursuant to this Note, and Holder shall not
take or receive from the Company, directly or indirectly, in cash, cash
equivalent or other property or by set-off or in any other manner payment of
all or any of the Junior Debt.
(e) In the event that any Junior Debt is declared due and payable before its
stated maturity, the Bank shall be entitled to receive payment in full of all
amounts due or to become due on or in respect of all Senior Debt before any
Holder is entitled to receive any payment by the Company on account of the
Junior Debt.
(f) All payments or distributions upon or with respect to the Junior Debt
that are received by any Holder contrary to the provisions of this Note shall
be received in trust for the benefit of the Bank, shall be segregated from
other funds and property held by such Xxxxxx and shall be forthwith paid over
to the Bank to be applied (in the case of cash) to Senior Debt.
4. EVENTS OF DEFAULT AND REMEDIES: An "Event of Default" shall
occur if:
4.1 PAYMENT OF NOTES. The Company defaults in the payment of principal
amount or interest of this Note, when and as the same shall become due and
payable whether at maturity thereof, or by acceleration or otherwise, which
default shall continue uncured for a period of fifteen (15) days from the
date thereof; or
4.2 PERFORMANCE OF COVENANTS, CONDITIONS OR AGREEMENTS. The Company
fails to comply with any of the covenants, conditions or agreements set forth
in this Note and such default shall continue uncured for a period of thirty
(30) days after receipt of written notice to the Company from any Holder
stating the specific default or defaults; or
4.3 BANKRUPTCY, INSOLVENCY, ETC. The Company shall file or consent by
answer or otherwise to the entry of an order for relief or approving a
petition for relief, reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or shall make an assignment for the
benefit of its creditors, or shall consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers of itself or of any
substantial part of its property, or shall be adjudicated a bankrupt of
insolvent, or shall take corporate action for the purpose of any of the
foregoing, or if a court or governmental authority of competent jurisdiction
shall enter an order appointing a custodian, receiver, trustee or other
officer with similar powers with respect to the
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Company or any substantial part of its property, or constituting an order for
relief or approving a petition for relief or reorganization or any other
petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding up or liquidation of the Company, or if any such
petition shall be filed against the Company and such petition shall not be
dismissed within sixty (60) days.
In case an Event of Default (other than an Event of Default resulting
from the Company's failure to pay the principal amount of, or any interest
upon, this Note when the same shall be due and payable in accordance with the
terms hereof (after giving affect to applicable "cure" provisions herein) or
bankruptcy, insolvency or reorganization) shall occur and be continuing, the
Holders of the Notes representing at least fifty-one percent (51%) in the
aggregate of the principal amount of all Notes then outstanding, may declare
by notice in writing to the Company all unpaid principal amount and accrued
interest on all of the Notes then outstanding to be due and payable
immediately. In case an Event of Default resulting from the Company's
non-payment of principal amount of, or interest upon this Note shall occur,
the Holder may declare all unpaid principal amount and accrued interest on
this Note held by such Holder to be due and payable immediately. In case an
Event of Default resulting from certain events of bankruptcy, insolvency or
reorganization shall occur, all unpaid principal and accrued interest on the
Notes held by each such Holder shall be due and payable immediately without
any declaration or other act on the part of such Holders. Any such
acceleration may be annulled and past defaults (except, unless theretofore
cured, a default in payment of principal or interest on the Notes) may be
waived by the Holders of a majority in principal amount of the Notes then
outstanding.
5. COSTS OF COLLECTION: Should the indebtedness represented by the
Note or any part thereof be collected in any proceeding, or this Note be
placed in the hands of attorneys for collection after default, the Company
agrees to pay as an additional obligation under this Note, in addition to the
principal and interest due and payable hereon, all costs of collecting this
Note, including reasonable attorneys' fees.
6. WAIVER AND AMENDMENTS: This Note may be amended, modified,
superseded, canceled, renewed or extended, and the terms hereof may be waived
(except as above provided in paragraph 4.3) only by a written instrument
signed by the Company and Holders of at least 51% in principal amount of the
Notes at the time outstanding; PROVIDED, HOWEVER, that consent by a Holder
shall be required to modify the terms of this Note affecting the payment of
principal of, or interest on, such Holder's Note. No delay on the part of
any party in exercising any right, power or privilege hereunder shall operate
as a waiver hereof, nor shall any waiver on the part of any party of any
right, power or privilege or privilege hereunder preclude any other or
further exercise hereof or the exercise of any other right, power or
privilege hereunder. The rights and remedies provided herein are cumulative
and are not exclusive of any rights or remedies which any party may otherwise
have at law or in equity.
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7. LOSS, THEFT, DESTRUCTION OR MUTILATION OF NOTE: Upon receipt by
the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Note, and of indemnity or security
reasonably satisfactory to the Company, and upon reimbursement to the Company
of all reasonable expenses incidental thereto, and upon surrender and
cancellation of this Note, if mutilated, the Company will make and deliver a
new Note of like tenor, in lieu of this Note. Any Note made and delivered in
accordance with the provisions of this Section shall be dated as of the date
to which interest has been paid on this Note, or if no interest has therefore
been paid on this Note, then date the date hereof.
8. NOTICE: Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed or
sent by certified, registered, or express mail, postage prepaid, and shall be
deemed given when so delivered personally, telegraphed or, if mailed, five days
after the date of deposit in the United States mails, as follows:
(i) if to the Company, to:
Big Dog Holdings, Inc.
000 Xxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Attention: President
(ii) if to the Holder, to the address of such Holder as shown on
the books of the Company.
9. GOVERNING LAW: This Note shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
its conflicts of law principles. The Company and Holder (by acceptance of
this Note) agree that any dispute or controversy arising out of this Note
shall be adjudicated in a court located in the counties of Los Angeles or
Santa Barbara, California, and hereby submit to the exclusive jurisdiction of
the courts of the State of California located in the counties of Santa
Xxxxxxx or Los Angeles, California and of the federal courts in the Central
District of California in Santa Xxxxxxx or Los Angeles, California, and
irrevocably waive any objection they now or hereafter may have respecting the
venue of such action or proceeding brought in such a court or respecting the
fact that such court is an inconvenient forum, and consent to the service of
process in any such action or proceeding by means of registered or certified
mail, return receipt requested.
10. SUCCESSORS AND ASSIGNS: All the covenants, stipulations,
promises and agreements in this Note by or on behalf of the Company shall
bind its successors and assigns, whether or not so expressed.
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IN WITNESS WHEREOF, the Company has caused this Note to be signed in its
corporate name by a duly authorized officer and to be dated as of the date
first above written.
BIG DOG HOLDINGS, INC.
By: _______________________________
Xxxxxx Xxxxxxxx, President
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THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, OFFERED
FOR SALE, TRANSFERRED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED, AS PROVIDED IN THIS WARRANT.
BIG DOG HOLDINGS, INC.
B WARRANT
ISSUANCE DATE: NOVEMBER 4, 1996
Holder: XXXX XXXXX
Number of B Warrants: 120,000
THIS CERTIFIES THAT Xxxxxx is the owner of the number of B Warrants (the
"Warrants") set forth above of Big Dog Holdings, Inc., a Delaware corporation
(the "Company"). Each Warrant entitles the registered holder to purchase for
$5.00 one share of Common Stock of the Company, which price is reduced to $4.00
per share if the Company such not prepay in full the subordinated promissory
note in the principal amount of $2,000,000 issued by the Company together with
this Warrant by June 30, 1997 (the "Exercise Price"). The Warrants are subject
to the terms of a Subscription Agreement between the Company and Holder.
1. RIGHT TO EXERCISE WARRANTS. The Warrants represented by this
certificate may be exercised at any time commencing on the above Issuance
Date and terminating at 5:00 p.m., Pacific Standard Time, on the date five
(5) year thereafter.
2. EXERCISE OF WARRANTS. Subject to Paragraph 3 and the other
provisions of this certificate, the Warrants represented by this certificate
may be exercised, in whole or in part, at any time and from time to time, by
(i) surrender of this Warrant certificate (with the purchase form at the end
hereof properly executed) at the principal executive office of the Company
(or such other office or agency of the Company as it may designate by notice
in writing to Holder at the address of Holder appearing on the books of the
Company); (ii) payment to the Company of the Exercise Price in cash for the
number of shares specified in the above-mentioned purchase form together with
applicable stock transfer taxes, if any; and (iii) delivery to the Company of
a statement by Xxxxxx (in a form acceptable to the Company and its counsel)
that such shares are being acquired by Holder for investment and not with a
view to their distribution or resale. Any exercise of a Warrant shall be
deemed to have occurred immediately prior to the close of
business on the date the Warrant is surrendered and payment is made in
accordance with the foregoing provisions of this Paragraph 2, and the person
or persons in whose name or names the certificates for shares of Common Stock
shall be issuable upon such exercise shall become the holder or holders of
record of such Common Stock at that time and date. The certificates for the
Common Stock so purchased shall be delivered to Holder within a reasonable
time after the Warrant represented by this certificate shall have been so
exercised, and shall bear a restrictive legends including the following:
This security has not been registered under the Securities
Act of 1933 and may not be sold or offered for sale unless
registered under said Act and any applicable state
securities laws or unless an exemption from such
registration is available.
3. REDEMPTION. The Company may redeem some or all of the Warrants at
a price of $2.50 per Warrant in the event that (i) the Company has closed a
registered public offering of its Common Stock under the Securities Act of
1933 ("IPO") and (ii) the closing price at which the Common Stock of the
Company has traded on the NASDAQ or any exchange is greater than 150% of the
price to the public in the IPO for 20 out of 30 consecutive trading days.
The Company may exercise such redemption right by giving notice to Holder
within 30 days of the end of such 30-day trading period. Such notice shall
set forth the circumstances permitting such exercise and identify the number
of Warrants as to which the Company is exercising its redemption rights.
Upon receipt of such notice the Holder shall be obligated within 30 calendar
days of such notice to (i) deliver to the Company the certificate(s)
evidencing all Warrants held by Holder and (ii) execute and deliver any other
conveyance documents that the Company shall reasonably require. Upon
expiration of 30 days following such notice, and subject to receipt of such
documents, the Company shall mail payment for the redemption price to the
Holder and, if applicable, a new certificate representing any Warrants the
Company does not redeem. Notwithstanding the foregoing, within the 30 days
following such notice, the Holder may exercise any or all of his Warrants as
provided in Paragraph 2 above. In the event a Holder does not timely
exercise any Warrants and fails for any reason to surrender a certificate
evidencing a Warrant to the Company within 30 days after the Company has
given such notice of redemption, the Warrants shall be automatically canceled
as to the Warrants being redeemed, shall not be exercisable as to such
Warrants, and shall represent solely the right to receive the redemption
price as to the Warrants being redeemed.
The Warrant are also subject to redemption under the terms and conditions set
forth in the Section 4.2 of the Subscription Agreement entered into with the
Company upon the issuance of these Warrants.
4. ASSIGNMENT. The Warrants represented by this certificate may be
transferred, sold, assigned or hypothecated, only pursuant to a valid and
effective registration statement or if the Company has received from counsel
acceptable to the
Company a written opinion to the effect that registration of the Warrants or
the Common Stock underlying the Warrants is not necessary in connection with
such transfer, sale, assignment or hypothecation. Any such assignment shall
be effected by Holder by (i) executing the form of assignment at the end
hereof; (ii) surrendering this Warrant certificate for cancellation, in whole
or in part, at the office or agency of the Company referred to in Paragraph 2
hereof, accompanied by the opinion of counsel to the Company referred to
above; and (iii) delivery to the Company of a statement by the transferee
Holder (in a form acceptable to the Company and its counsel) that such
Warrants are being acquired by such Holder for investment and not with a view
to distribution or resale; whereupon the Company shall issue, in the name or
names specified by the transferring Holder, new Warrant certificate(s) in the
name of the transferee Holder(s) and, if not all Warrants are being
transferred, the transferor Holder. The term "Holder" shall be deemed to
include any person to whom a Warrant is transferred in accordance with the
terms herein. Any Warrants assigned shall be subject to the provisions of
this Warrant certificate and the Subscription Agreement.
5. COMMON STOCK. The Company covenants and agrees that all shares of
Common Stock which may be issued upon exercise hereof will, upon issuance, be
duly and validly issued, fully paid and non-assessable and no personal
liability will attach to the holder thereof. The Company further covenants
and agrees that, during the periods within which the Warrants may be
exercised, the Company will at all times have authorized and reserved a
sufficient number of shares of Common Stock for issuance upon exercise of
these Warrants and all other Warrants.
6. NO STOCKHOLDER RIGHTS. The Warrants shall not entitle Holder to any
voting rights or other rights as a stockholder of the Company.
7. ADJUSTMENT OF RIGHTS. In the event that the outstanding shares of
Common Stock of the Company are at any time increased or decreased or changed
into or exchanged for a different number or kind of share or other security
of the Company or of another corporation through reorganization, merger,
consolidation, liquidation, recapitalization, stock split, combination of
shares or stock dividends payable with respect to such Common Stock,
appropriate adjustments in the number and kind of such securities then
subject to this Warrant certificate shall be made effective as of the date of
such occurrence so that the position of Holder upon exercise will be the same
as it would have been had he owned immediately prior to the occurrence of
such events the Common Stock subject to these Warrants. Such adjustment
shall be made successively whenever any event listed above shall occur and
the Company will notify Holder of each such adjustment. In the event a
fraction of a share results from any adjustment, the Company may, at its
option, eliminate such fraction and adjust the price per share of the
remaining shares subject to this Warrant accordingly.
8. NOTICES. Notices and other communications provided for herein
shall be in writing and may be given by mail, courier, or facsimile
transmission and shall, unless otherwise expressly required, be deemed given
when received or when delivery thereof is
refused. In the case of Holder, such notices and communications shall be
addressed to its address as shown on the books maintained by the Company,
unless Xxxxxx shall notify the Company that notices and communications should
be sent to a different address (or facsimile number) in which case such
notices and communications shall be sent to the address (or facsimile number)
specified by Holder.
9. GOVERNING LAW. These Warrants shall be governed by and construed
in accordance with the internal laws of California.
IN WITNESS WHEREOF, the Company has caused these Warrants to be signed and
delivered by its duly authorized officer as of the date first set forth above.
BIG DOG HOLDINGS, INC.
By: ________________________________
Name: ______________________________
Title: ______________________________
PURCHASE FORM
(To be signed only upon exercise of Warrants)
The undersigned, the holder of the attached Warrant certificate, hereby
irrevocably elects to exercise the purchase rights represented by such
certificate to exercise __________ Warrants for, and to the purchase thereunder,
__________ shares of Common Stock and herewith makes payment of $ __________
thereof, and requests that the certificates for shares of Common Stock be issued
in the name(s) of, and delivered to _________________________________________
whose address(es) is (are) __________________________________________.
Dated: , 19
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-----------------------------------
Holder
-----------------------------------
Address
-----------------------------------
TRANSFER FORM
(To be signed only upon transfer of Warrants)
For value received, the undersigned hereby sells, assigns, and transfers
unto ___________________________ the right to purchase
_________________________shares of Common Stock of Big Dog Holdings, Inc.
represented by _________________________ Warrants, and appoints
_________________________ attorney to transfer such rights on the books of Big
Dog Holdings, Inc., with full power of substitution in the premises.
Dated: , 19
------------------ ---
-----------------------------------
Holder
-----------------------------------
Address
-----------------------------------
In the presence of:
------------------------------
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, OFFERED FOR
SALE, TRANSFERRED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO SUCH SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED, AS PROVIDED IN THIS WARRANT.
BIG DOG HOLDINGS, INC.
A WARRANT
ISSUANCE DATE: _______________, 1996
Holder: ____________________
____________________
____________________
Number of A Warrants: _________
THIS CERTIFIES THAT Holder is the owner of the number of A Warrants (the
"Warrants") set forth above of Big Dog Holdings, Inc., a Delaware corporation
(the "Company"). Each Warrant entitles the registered holder to purchase for
$4.00 one share of Common Stock of the Company, which price is reduced to
$3.00 per share if the Company such not prepay in full the subordinated
promissory note in the principal amount of $200,000 issued by the Company
together with this Warrant by June 30, 1997 (the "Exercise Price"). The
Warrants are subject to the terms of a Subscription Agreement between the
Company and Holder.
1. RIGHT TO EXERCISE WARRANTS. The Warrants represented by this
certificate may be exercised at any time commencing on the above Issuance
Date and terminating at 5:00 p.m., Pacific Standard Time, on the date five
(5) year thereafter.
2. EXERCISE OF WARRANTS. Subject to Paragraph 3 and the other
provisions of this certificate, the Warrants represented by this certificate
may be exercised, in whole or in part, at any time and from time to time, by
(i) surrender of this Warrant certificate (with the purchase form at the end
hereof properly executed) at the principal executive office of the Company
(or such other office or agency of the Company as it may designate by notice
in writing to Holder at the address of Holder appearing on the books of the
Company); (ii) payment to the Company of the Exercise Price in cash for the
number of shares specified in the above-mentioned purchase form together with
applicable stock transfer taxes, if any; and (iii) delivery to the Company of
a statement by Xxxxxx (in a form acceptable to the Company and its counsel)
that such shares are being
acquired by Xxxxxx for investment and not with a view to their distribution
or resale. Any exercise of a Warrant shall be deemed to have occurred
immediately prior to the close of business on the date the Warrant is
surrendered and payment is made in accordance with the foregoing provisions
of this Paragraph 2, and the person or persons in whose name or names the
certificates for shares of Common Stock shall be issuable upon such exercise
shall become the holder or holders of record of such Common Stock at that
time and date. The certificates for the Common Stock so purchased shall be
delivered to Holder within a reasonable time after the Warrant represented by
this certificate shall have been so exercised, and shall bear a restrictive
legends including the following:
This security has not been registered under the Securities
Act of 1933 and may not be sold or offered for sale unless
registered under said Act and any applicable state
securities laws or unless an exemption from such
registration is available.
3. REDEMPTION. The Company may redeem some or all of the Warrants at
a price of $2.50 per Warrant in the event that (i) the Company has closed a
registered public offering of its Common Stock under the Securities Act of
1933 ("IPO") and (ii) the closing price at which the Common Stock of the
Company has traded on the NASDAQ or any exchange is greater than 150% of the
price to the public in the IPO for 20 out of 30 consecutive trading days.
The Company may exercise such redemption right by giving notice to Holder
within 30 days of the end of such 30-day trading period. Such notice shall
set forth the circumstances permitting such exercise and identify the number
of Warrants as to which the Company is exercising its redemption rights.
Upon receipt of such notice the Holder shall be obligated within 30 calendar
days of such notice to (i) deliver to the Company the certificate(s)
evidencing all Warrants held by Holder and (ii) execute and deliver any other
conveyance documents that the Company shall reasonably require. Upon
expiration of 30 days following such notice, and subject to receipt of such
documents, the Company shall mail payment for the redemption price to the
Holder and, if applicable, a new certificate representing any Warrants the
Company does not redeem. Notwithstanding the foregoing, within the 30 days
following such notice, the Holder may exercise any or all of his Warrants as
provided in Paragraph 2 above. In the event a Holder does not timely
exercise any Warrants and fails for any reason to surrender a certificate
evidencing a Warrant to the Company within 30 days after the Company has
given such notice of redemption, the Warrants shall be automatically canceled
as to the Warrants being redeemed, shall not be exercisable as to such
Warrants, and shall represent solely the right to receive the redemption
price as to the Warrants being redeemed.
The Warrant are also subject to redemption under the terms and conditions set
forth in the Section 4.2 of the Subscription Agreement entered into with the
Company upon the issuance of these Warrants.
4. ASSIGNMENT. The Warrants represented by this certificate may be
transferred, sold, assigned or hypothecated, only pursuant to a valid and
effective registration statement or if the Company has received from counsel
acceptable to the Company a written opinion to the effect that registration
of the Warrants or the Common Stock underlying the Warrants is not necessary
in connection with such transfer, sale, assignment or hypothecation. Any
such assignment shall be effected by Holder by (i) executing the form of
assignment at the end hereof; (ii) surrendering this Warrant certificate for
cancellation, in whole or in part, at the office or agency of the Company
referred to in Paragraph 2 hereof, accompanied by the opinion of counsel to
the Company referred to above; and (iii) delivery to the Company of a
statement by the transferee Holder (in a form acceptable to the Company and
its counsel) that such Warrants are being acquired by such Holder for
investment and not with a view to distribution or resale; whereupon the
Company shall issue, in the name or names specified by the transferring
Holder, new Warrant certificate(s) in the name of the transferee Holder(s)
and, if not all Warrants are being transferred, the transferor Holder. The
term "Holder" shall be deemed to include any person to whom a Warrant is
transferred in accordance with the terms herein. Any Warrants assigned shall
be subject to the provisions of this Warrant certificate and the Subscription
Agreement.
5. COMMON STOCK. The Company covenants and agrees that all shares of
Common Stock which may be issued upon exercise hereof will, upon issuance, be
duly and validly issued, fully paid and non-assessable and no personal
liability will attach to the holder thereof. The Company further covenants
and agrees that, during the periods within which the Warrants may be
exercised, the Company will at all times have authorized and reserved a
sufficient number of shares of Common Stock for issuance upon exercise of
these Warrants and all other Warrants.
6. NO STOCKHOLDER RIGHTS. The Warrants shall not entitle Holder to
any voting rights or other rights as a stockholder of the Company.
7. ADJUSTMENT OF RIGHTS. In the event that the outstanding shares of
Common Stock of the Company are at any time increased or decreased or changed
into or exchanged for a different number or kind of share or other security
of the Company or of another corporation through reorganization, merger,
consolidation, liquidation, recapitalization, stock split, combination of
shares or stock dividends payable with respect to such Common Stock,
appropriate adjustments in the number and kind of such securities then
subject to this Warrant certificate shall be made effective as of the date of
such occurrence so that the position of Holder upon exercise will be the same
as it would have been had he owned immediately prior to the occurrence of
such events the Common Stock subject to these Warrants. Such adjustment
shall be made successively whenever any event listed above shall occur and
the Company will notify Holder of each such adjustment. In the event a
fraction of a share results from any adjustment, the Company may, at its
option, eliminate such fraction and adjust the price per share of the
remaining shares subject to this Warrant accordingly.
8. NOTICES. Notices and other communications provided for herein
shall be in writing and may be given by mail, courier, or facsimile
transmission and shall, unless otherwise expressly required, be deemed given
when received or when delivery thereof is refused. In the case of Holder,
such notices and communications shall be addressed to its address as shown on
the books maintained by the Company, unless Xxxxxx shall notify the Company
that notices and communications should be sent to a different address (or
facsimile number) in which case such notices and communications shall be sent
to the address (or facsimile number) specified by Holder.
9. GOVERNING LAW. These Warrants shall be governed by and construed
in accordance with the internal laws of California.
IN WITNESS WHEREOF, the Company has caused these Warrants to be signed
and delivered by its duly authorized officer as of the date first set forth
above.
BIG DOG HOLDINGS, INC.
By: ________________________________
Name: ______________________________
Title: ______________________________
PURCHASE FORM
(To be signed only upon exercise of Warrants)
The undersigned, the holder of the attached Warrant certificate, hereby
irrevocably elects to exercise the purchase rights represented by such
certificate to exercise __________ Warrants for, and to the purchase thereunder,
__________ shares of Common Stock and herewith makes payment of $ __________
thereof, and requests that the certificates for shares of Common Stock be issued
in the name(s) of, and delivered to _________________________________________
whose address(es) is (are) __________________________________________.
Dated: , 19
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Holder
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Address
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TRANSFER FORM
(To be signed only upon transfer of Warrants)
For value received, the undersigned hereby sells, assigns, and transfers
unto ___________________________ the right to purchase
_________________________shares of Common Stock of Big Dog Holdings, Inc.
represented by _________________________ Warrants, and appoints
_________________________ attorney to transfer such rights on the books of Big
Dog Holdings, Inc., with full power of substitution in the premises.
Dated: , 19
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Holder
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Address
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In the presence of:
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