EXHIBIT F
NEITHER THIS WARRANT NOR THE WARRANT SHARES HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE
SECURITIES LAWS. NEITHER THIS WARRANT NOR THE WARRANT SHARES MAY BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT IN COMPLIANCE, AS EVIDENCED (UPON
THE COMPANY'S REASONABLE REQUEST) BY A LEGAL OPINION FROM SUCH TRANSFEROR'S
COUNSEL, WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE
SECURITIES LAWS.
WARRANT
TO PURCHASE COMMON STOCK
OF
VARIFLEX, INC.,
A DELAWARE CORPORATION
THIS IS TO CERTIFY THAT: Xxxxxxx X. Xxxx, XX or registered transferees
(collectively, the "HOLDER") is entitled to purchase from Variflex, Inc., a
Delaware corporation (the "COMPANY"), at any time and from time to time on and
after the date hereof an aggregate of One Hundred Thousand (100,000) shares of
Common Stock (defined below), exercisable in whole or in part, at a purchase
price of Five and 10/100 Dollars ($5.10) per share, all on the terms and
conditions and subject to the adjustments provided herein.
SECTION 1. CERTAIN DEFINITIONS. The following capitalized
terms as used in this Warrant shall have the following meanings:
"ADDITIONAL SHARES OF COMMON STOCK" means all shares of Common
Stock issued by the Company after the date hereof, other than shares of Common
Stock issued or issuable at any time pursuant to a stock consolidation,
subdivision, dividend, acquisition, employee stock option plan or employee stock
bonus plan.
"BUSINESS DAY" means any day on which commercial banks are not
authorized or required to close in Los Angeles, California.
"COMMON STOCK" means the Company's authorized Common Stock, par
value $0.001 per share, or any securities of any Person the Holder is entitled
to purchase as a result of adjustments under Section 3.3.
"EXERCISE PRICE" means a price per share of Common Stock equal to
Five and 10/100 Dollars ($5.10), as adjusted pursuant to Section 3 hereof.
"EXPIRATION DATE" means the date which is seven years from the
date hereof.
"MARKET PRICE" means, if the Warrant Shares are publicly traded,
the closing price per share for the date in question. The closing price will be
the last sales price regular way or, if no such sale takes place on such day,
the average of the closing bid and ask prices regular way on the principal
United States trading market on which the Warrant Shares are listed or admitted
to trading. If the Warrant Shares are not listed or admitted to trading on a
recognized United States trading market, the Market Price will be the price per
Warrant Share implied from the Company's most recent issuances of Common Stock
for securities convertible into or exchangeable for Common Stock, if any such
issuance has occurred in the six (6) months prior to the date in question. If no
such issuance has occurred, the Market Price will be the fair market value per
Warrant Share, on an enterprise theory of valuation, determined by the Company's
Board of Directors acting in good faith with advice from a recognized valuation
expert.
"PERSON" means a corporation, an association, a trust, a
partnership, a joint venture, a limited liability company, an organization, a
business, an individual, a government or political subdivision thereof or a
governmental body.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder, all as the same shall be in effect
at the time.
"WARRANT SHARES" means the number of shares of Common Stock that
may be acquired upon exercise of this Warrant.
SECTION 2. EXERCISE OF WARRANT.
2.1 EXERCISE OF WARRANT. The Holder may, at any time on and after
the date hereof, but not later than the Expiration Date, exercise this Warrant
in whole or in part.
2.2 METHOD OF EXERCISE.
2.2.1 CASH/EXCHANGE OF SHARES. The Holder may exercise this
Warrant for cash by delivering to the Company prior to the Expiration Date (a)
this Warrant, (b) a Subscription Form in the form of EXHIBIT A and (c) the
Exercise Price for the Warrant Shares so acquired, which may be paid in cash or
by the delivery of shares of Common Stock with a Market Price equal to the
aggregate Exercise Price for the Warrant Shares so acquired.
2.2.2 CASHLESS EXERCISE. This Warrant can also be exercised, in
whole or in part, in a "cashless" exercise, upon delivery to the Company of (a)
this Warrant and (b) a Cashless Exercise Form in the form of EXHIBIT B. In a
cashless exercise, the right to purchase each Warrant Share may be exchanged for
that number of Shares of Common Stock determined by multiplying the number one
(1) by a fraction, the numerator of which will be the excess of (y) the then
current Market Price over (z) the Exercise Price, and the denominator of which
will be the then current Market Price.
2.3 ISSUANCE OF WARRANT SHARES. Upon the Holder's exercise of the
Warrant, the Company shall, within five (5) Business Days, issue the Warrant
Shares so purchased to the Holder.
SECTION 3. ADJUSTMENT OF WARRANT SHARES; ANTI-DILUTION
PROVISIONS.
If any of the following events occurs at any time hereafter prior
to the full exercise of this Warrant, then the Exercise Price and/or the number
of remaining Warrant Shares to be purchased hereunder immediately prior to such
event shall be adjusted as described below:
3.1 STOCK SUBDIVISIONS OR STOCK CONSOLIDATIONS. If at any time
the outstanding shares of Common Stock are subdivided into a greater number of
shares, whether by stock split, stock dividend or otherwise, then the number of
Warrant Shares remaining to be purchased hereunder will be increased
proportionately and the Exercise Price will be reduced proportionately.
Conversely, if at any time the outstanding shares of Common Stock are
consolidated into a smaller number of shares, then the number of Warrant Shares
remaining to be purchased hereunder will be reduced proportionately and the
Exercise Price will be increased proportionately. Each adjustment to the
Exercise Price and the number of Warrant Shares shall be effective on the record
date, or if there is no record date, the effective date for such subdivision or
consolidation.
3.2 DIVIDENDS. Following the date hereof, if the Company proposes
to declare a dividend on or make a distribution of any kind (other than in
Common Stock) with respect to the Common Stock, the Company will deliver written
notice of such proposed event, in reasonable detail, to the Holder not less than
ten (10) Business Days prior to the record date, to enable the Holder to decide
whether to exercise this Warrant prior to the record date.
3.3 RECLASSIFICATION OR REORGANIZATION. If the Company engages in
a reorganization, a reclassification of its Common Stock, or in a merger or
other combination with another Person in which the other Person survives, upon
exercise of this Warrant, the Holder will be entitled to receive the number of
shares, securities or property the Holder would have been entitled to receive if
this Warrant had been exercised immediately prior to the record date for such
event. The aggregate exercise price applicable to such new shares, securities or
property will be the aggregate exercise price of all Warrant Shares remaining to
be purchased hereunder. If necessary, the rights and interests of the Holder
will be appropriately adjusted so as to be applicable, as nearly as reasonably
possible, to any such shares, securities or property thereafter deliverable upon
exercise of this Warrant.
3.4 ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In the event
that the Company shall issue Additional Shares of Common Stock without
consideration or for a consideration per share less than the Exercise Price in
effect on the date of and immediately prior to such issue, then and in each such
event, such Exercise Price shall be reduced concurrently with such issue of
shares to a price equal to the consideration per share for which the Additional
Shares of Common Stock are issued.
3.5 COMPUTATIONS AND ADJUSTMENTS. Upon each computation of an
adjustment under this Section 3, the Exercise Price shall be computed to the
nearest 1/1000 cent and the number of Warrant Shares shall be calculated to the
nearest whole share (i.e., fractions of less than one-half shall be disregarded
and fractions of one-half or greater shall be treated as being the next greater
integer). However, the fractional amount shall be used in calculating any future
adjustments.
3.6 NOTICES. When any adjustments are required to be made under
this Section 3, the Company shall as promptly as practicable (i) determine such
adjustments, (ii) prepare a statement describing in reasonable detail the method
used in arriving at the adjustment and setting forth the calculation thereof;
and (iii) cause a copy of such statement to be given to the Holder in accordance
with Section 8.10.
SECTION 4. SECURITIES LAWS. The Holder of this Warrant, by
acceptance hereof, acknowledges that this Warrant has not been and the Warrant
Shares that may be issued pursuant hereto have not been and may not be
registered under the Securities Act or applicable state securities laws. The
Holder of this Warrant, by acceptance hereof, represents that it is fully
informed as to the applicable limitations upon any distribution or resale of
this Warrant and any Warrant Shares under the Securities Act and any applicable
state securities laws and agrees not to distribute or sell this Warrant or any
Warrant Shares if such distribution or resale would constitute a violation of
the Securities Act or any applicable state securities laws or would cause the
issuance of this Warrant or the Warrant Shares, in the opinion of counsel, to be
in violation of the Securities Act or any applicable state securities laws. The
Holder of this Warrant agrees that it will not transfer or sell this Warrant or
the Warrant Shares unless and until the Holder provides the Company with an
opinion of its counsel that such transfer or sale can be made without violation
of the Securities Act or any applicable state securities laws. Any exercise
hereof by the Holder shall constitute a representation by the Holder that the
Warrant Shares are not being acquired with the view to, or for resale in
connection with, any distribution or public offering thereof in violation of the
Securities Act or applicable state securities laws.
SECTION 5. RESERVATION OF WARRANT SHARES. The Company will cause
to be kept available, out of the authorized and unissued shares of Common Stock,
the full number of shares sufficient to provide for the exercise of the rights
of purchase represented by this Warrant. Upon issuance and delivery against
payment pursuant to the terms of this Warrant, all Warrant Shares will be
validly issued, fully paid and nonassessable.
SECTION 6. LOSS, DESTRUCTION OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of the Warrant and, in the case of any such loss, theft or
destruction, upon receipt of an indemnity satisfactory to the Company or, in the
case of any such mutilation, upon surrender and cancellation of such Warrant,
the Company will make and deliver, in lieu of such lost, stolen, destroyed or
mutilated Warrant, a new Warrant of like tenor and representing the right to
purchase the same aggregate number of Warrant Shares.
SECTION 7. ASSIGNMENT. This Warrant and the rights hereunder are
not assignable by the Holder to any transferee until February 1, 1998.
Thereafter, any Holder may assign this Warrant and the rights hereunder to a
transferee, and upon such assignment, such transferee will become the "Holder"
under this Warrant.
SECTION 8. MISCELLANEOUS PROVISIONS.
8.1 AMENDMENTS; WAIVERS. Amendments, waivers, demands, consents
and approvals under this Warrant must be in writing and designated as such. No
failure or delay in exercising any right will be deemed a waiver of such right.
8.2 GOVERNING LAW. This Warrant shall be governed by, and
construed and enforced in accordance with, the laws of the State of California,
without regard to conflicts of laws principles.
8.3 JURISDICTION; VENUE; SERVICE OF PROCESS. Each of the parties
irrevocably submits to the jurisdiction of any California State or United States
Federal court sitting in Los Angeles County in any action or proceeding arising
out of or relating to this Warrant or the transactions contemplated hereby, and
irrevocably agrees that any such action or proceeding may be heard and
determined only in such California State or Federal court. Each of the parties
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of any such action or proceeding.
8.4 HEADINGS. Headings of Sections and subsections are for
convenience only and are not a part of this Warrant.
8.5 COUNTERPARTS. This Warrant may be executed in one or more
counterparts, all of which constitute one agreement.
8.6 SUCCESSORS AND ASSIGNS. This Warrant is binding upon and
inures to the benefit of each party and such party's respective heirs, personal
representatives, successors and assigns. Nothing in this Warrant, express or
implied, is intended to confer any rights or remedies upon any other person.
8.7 EXPENSES; LEGAL FEES. Each party will pay its own expenses in
the negotiation, preparation and performance of this Warrant. The prevailing
party in any action relating to this Warrant will be entitled to recover, in
addition to other appropriate relief, reasonable legal fees, costs and expenses
incurred in such action.
8.8 REPRESENTATION BY COUNSEL; INTERPRETATION. Each party
acknowledges that it has been represented by counsel in connection with this
Warrant. Any rule of law, including, but not limited to, Section 1654 of the
California Civil Code, or any legal decision that would require interpretation
of any claimed ambiguities in this Warrant against the party that drafted it,
has no application and is expressly waived.
8.9 SPECIFIC PERFORMANCE. In view of the uniqueness of the
matters contemplated by this Warrant, the parties hereto would not have an
adequate remedy at law for money damages if this Warrant is not being performed
in accordance with its terms. The parties therefore agree that each party will
be entitled to specific enforcement of the terms hereof in addition to any other
remedy to which such party may be entitled.
8.10 NOTICES. All notices, demands and requests required by this
Warrant shall be in writing and shall be deemed to have been given for all
purposes (i) upon personal delivery, (ii) one (1) business day after being sent,
when sent by professional overnight courier service for next business day
delivery from and to locations within the continental United States, (iii) five
(5) days after posting when sent by registered or certified mail, or (iv) on the
date of receipt by the sending party of confirmation of the successful
transmission of the facsimile, as printed by the facsimile machine, when sent by
facsimile. Any party hereto may from time to time by notice in writing served
upon the others as provided herein, designate a different mailing address or a
different party to which such notices or demands are thereafter to be addressed
or delivered.
(remainder of page intentionally left blank)
IN WITNESS WHEREOF, the Company and the Holder have caused this
Warrant to be signed in its name by an officer or authorized representative.
Dated: November 18, 1997
VARIFLEX, INC., a Delaware corporation
By:
--------------------------
Name:
---------------------
Title:
--------------------
Address: 0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
The foregoing is acknowledged
by and agreed to as of the
18th day of November, 1997
-------------------------------
XXXXXXX X. XXXX, XX
Address:
------------------------------
------------------------------
------------------------------
Facsimile:
--------------------
EXHIBIT A
SUBSCRIPTION FORM
TO BE EXECUTED
UPON EXERCISE OF WARRANT
The undersigned exercises the right to purchase ---------
Warrant Shares, evidenced by the enclosed Warrant, and makes payment of the
Purchase Price in cash ($----) or by the exchange of ---- shares of Common
Stock. Certificate(s) for such shares are to be issued and delivered as set
forth below.
Date:
--------------------- (XXXXXX)
By:
--------------------------
Its:
-------------------------
Name to appear on the stock certificate:
------------------------------
(Please Print)
Address:
------------------------------
------------------------------
------------------------------
Employer Identification Number, Social
Security Number or other identifying
number:
---------------------------------
If the foregoing exercise is not for all of the Warrant Shares
purchasable under this Warrant, please register and deliver a new Warrant for
the unexercised portion as follows:
Name:
-----------------------------------
(Please Print)
Address:
------------------------------
------------------------------
------------------------------
Employer Identification Number, Social
Security Number or other identifying
number:
---------------------------------
EXHIBIT B
CASHLESS EXERCISE FORM
The undersigned Holder exercises the right to purchase
--------- Warrant Shares, evidenced by the enclosed Warrant and requests that
the Company exchange the Warrant for Warrant Shares as provided in SECTION 2.2.2
of the Warrant. Certificate(s) for such shares are to be issued and delivered as
set forth below.
Date:
--------------------- (XXXXXX)
By:
--------------------------
Its:
-------------------------
Name to appear on the stock certificate:
------------------------------
(Please Print)
Address:
------------------------------ Employer Identification Number, Social
------------------------------ Security Number or other identifying
------------------------------ number:
If the foregoing exercise is not for all of the Warrant Shares
purchasable under the Warrant, please register and deliver a new Warrant for the
unexercised portion as follows:
Name:
-----------------------------------
(Please Print)
Address:
------------------------------ Employer Identification Number, Social
------------------------------ Security Number or other identifying
------------------------------ number:
Calculation of Cashless Exercise:
A = Current Market Price:
B = Exercise Price:
X = Number of Shares of Common Stock to be issued for each right to purchase one
Warrant Share exchanged:
A - B ( )
----------
1 x = X ( )
-------------------------- ----------------
A ( )
--------------------
Total number of Warrant Shares issuable:
----------------------------------------
Total number of Warrant Shares to be issued:
------------------------------------
