THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL)
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS.
WARRANT
TO PURCHASE UNITS OF
CONNECTIVCORP
DATED AS OF FEBRUARY ___, 2004 (THE "EFFECTIVE DATE")
WHEREAS, pursuant to that certain letter agreement, dated as of
February 12, 2004 (the "PLACEMENT AGREEMENT"), between _____________, a
_______________ (the "WARRANTHOLDER"), and ConnectivCorp, a Delaware corporation
(the "COMPANY"), the Company has engaged the Warrantholder as the Company's lead
placement agent to assist the Company with a proposed private placement of a
minimum of $10,000,000 and a maximum of $25,000,000 of Units (as defined below)
at a price per Unit equal to $10,000.00 (the "OFFERING"); and
WHEREAS, the Company desires to grant to the Warrantholder, in
consideration for its services as placement agent, the right to purchase
________ Units pursuant to the terms of the Placement Agreement.
NOW, THEREFORE, the Company, for value received, hereby certifies and
agrees as follows:
1. GRANT OF THE RIGHT TO PURCHASE UNITS.
The Company hereby grants to the Warrantholder, and the Warrantholder
is entitled, upon the terms and subject to the conditions hereinafter set forth,
to purchase, from the Company, up to __________ (_____) Units at a purchase
price of Ten Thousand Dollars ($10,000) per Unit (the "EXERCISE PRICE"), subject
to Section 9. A "Unit" shall consist of (i) one share of 7% Convertible
Preferred Stock of the Company (the "PREFERRED STOCK") and (ii) a Warrant (the
"WARRANT") to purchase, at an exercise price of $1.00 per share, ten thousand
(10,000) shares of Common Stock, $0.001 par value per share, of the Company (the
"COMMON STOCK"), the form of which is attached hereto as EXHIBIT A and
incorporated herein by reference. The number and Exercise Price of such Units
are subject to adjustment as provided in Section 6 hereof.
2. TERM OF THE WARRANT.
Except as otherwise provided for herein, the term of this Warrant and
the right to purchase Units as granted herein shall commence on the Effective
Date and shall be exercisable for a period ending on the fifth (5th) anniversary
of the Effective Date.
3. EXERCISE OF THE PURCHASE RIGHTS.
(a) EXERCISE GENERALLY. The purchase rights set forth in this Warrant
are exercisable by the Warrantholder, in whole or in part, at any time, or from
time to time, prior to the expiration of the term set forth in Section 2 above,
by tendering to the Company at its principal office a notice of exercise in the
form attached hereto as EXHIBIT B (the "NOTICE OF EXERCISE"), duly completed and
executed. Promptly upon receipt of the Notice of Exercise and the payment of the
purchase price in accordance with the terms set forth below, and in no event
later than thirty (30) days thereafter, the Company shall issue to the
Warrantholder the number of shares of Preferred Stock and Warrants as such
Warrantholder shall be entitled to receive upon exercise of this Warrant and
shall execute the acknowledgment of exercise in the form attached hereto as
EXHIBIT C (the "ACKNOWLEDGMENT OF EXERCISE") indicating the number of Units
which remain subject to future purchases, if any.
(b) EXERCISE PRICE. The Exercise Price for this Warrant may be paid at
the Warrantholder's election either (i) by cash or check, or (ii) by surrender
of Preferred Stock ("NET ISSUANCE") as determined below. If the Warrantholder
elects the Net Issuance method, the Company will issue Preferred Stock in
accordance with the following formula:
X = Y(A-B)
------
A
where: X = the number of shares of Preferred Stock that may be
issued to the Warrantholder.
Y = the number of shares of Preferred Stock requested to be
exercised under this Warrant.
A = the fair market value of one (1) share of Preferred Stock
at the time the Net Issuance election is made.
B = the Exercise Price.
For purposes of the above calculation, the current fair market value of
the Preferred Stock shall mean with respect to each share of Preferred Stock:
(i) if the Common Stock is traded on a securities exchange, the
fair market value shall be deemed to be the product of (x) the
average of the closing prices over a five (5) day period
ending three days before the day the current fair market value
of the securities is being determined and (y) the number of
shares of Common Stock into which each share of Preferred
Stock is convertible at the time of such exercise;
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(ii) if the Common Stock is traded over-the-counter, the fair
market value shall be deemed to be the product of (x) the
average of the closing bid prices quoted on the NASDAQ system
(or similar system) over the five (5) day period ending one
business day prior to the day the current fair market value of
the securities is being determined and (y) the number of
shares of Common Stock into which each share of Preferred
Stock is convertible at the time of such exercise; and
(iii) if there is no public market for the Common Stock, then fair
market value of the Preferred Stock shall be determined in
good faith by the Board of Directors of the Company.
Upon partial exercise by either cash or check or the Net Issuance
method, the Company shall promptly issue an amended Warrant representing the
remaining number of Units purchasable hereunder. All other terms and conditions
of such amended Warrant shall be identical to those contained herein, including,
but not limited to the Effective Date hereof.
(c) FRACTIONAL SHARES. The Company shall, upon the exercise of this
Warrant, issue fractional shares of Preferred Stock, as necessary and
applicable.
4. INCREASE OF AUTHORIZED COMMON STOCK.
The Company shall take all necessary actions to amend its Certificate
of Incorporation to increase the number of authorized shares of Common Stock in
accordance with the description contained in the Confidential Private Placement
Memorandum dated February 12, 2004.
5. NO RIGHTS AS STOCKHOLDER.
This Warrant does not entitle the Warrantholder to any voting rights or
other rights as a stockholder of the Company prior to the exercise of the
Warrant.
6. ADJUSTMENT RIGHTS.
The adjustment rights applicable to the Units underlying this Warrant
shall be as follows:
(a) The adjustment rights applicable to the Preferred Stock purchasable
hereunder are as set forth in the Certificate of Designations. The Company shall
promptly provide the Warrantholder with any restatement, amendment, modification
or waiver of the Certificate of Designations or the rights and privileges set
forth therein. The Preferred Stock purchasable hereunder shall have the benefit
of the same antidilution rights applicable to such Preferred Stock as designated
in the Certificate of Designations, and the Company shall provide Warrantholder
with all notices and information at the time and to the extent it is required to
do so to the holders of the Preferred Stock.
(b) The adjustment rights applicable to the Warrants shall be as
provided in the form of Warrant attached hereto as EXHIBIT A, the provisions of
which are incorporated herein by reference.
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7. TRANSFERS.
Without the prior written consent of the Company, neither this Warrant
nor any of the rights granted hereunder shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process. Any attempted transfer,
assignment, pledge, hypothecation or other disposition of this Warrant or of any
rights granted hereunder contrary to the provisions of this Section 7, or the
levy of any attachment or similar process upon the Warrant or such rights, shall
be null and void. Notwithstanding the foregoing, and upon written notice to the
Company, (i) this Warrant may be transferred to any member or affiliate of the
Warrantholder and (ii) a portion of this Warrant to purchase up to 92 Units may
be transferred to Atlantis Equities LLC or its members or affiliates; provided
that, any such transferee agrees to be bound by the terms and provisions of this
Warrant.
8. REGISTRATION RIGHTS.
The Company shall, as soon as practicable, but not later than ninety
(90) days after the Effective Date (the "FILING DATE"), (i) use its best efforts
to file with the SEC a registration statement on Form S-1 (or on such other form
on which the Company is eligible) (the "REGISTRATION STATEMENT") with respect to
the resale of the Registrable Securities and use its best efforts to have such
Registration Statement declared effective by the SEC as soon thereafter as is
practical and (ii) cause such Registration Statement to remain effective until
the Warrantholder has completed the distribution described in the registration
statement relating thereto. For purposes of this Warrant, the term "REGISTRABLE
SECURITIES" shall mean (i) the shares of Common Stock issuable upon conversion
of the Preferred Stock in accordance with the conversion provisions contained in
the Certificate of Designations, and (ii) the shares of Common Stock issuable
upon the exercise of the Warrants; provided, however, that securities shall only
be treated as Registrable Securities if and only for so long as they (A) have
not been disposed of pursuant to a registration statement declared effective by
the SEC, and (B) have not been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933,
as amended, so that all transfer restrictions and restrictive legends with
respect thereto are removed upon the consummation of such sale.
9. WARRANT ADJUSTMENT FOR UNDERLYING SECURITIES.
In the event that all or any portion of this Warrant has not been
exercised and (i) the Preferred Stock becomes subject to the automatic
conversion provisions of Section 6(b)(i) of the Certificate of Designations,
Preferences and Rights of the 7% Cumulative Convertible Preferred Stock and (ii)
the Warrant becomes subject to the call provisions of Section 6 of the Warrant,
then the Warrantholder hereby agrees that this Warrant shall become exercisable
into a number of shares of Common Stock equal to the sum of (a) the number of
shares of Common Stock into which the Preferred Stock converts and (b) the
number of shares of Common Stock into which the Warrant is exercisable. In
addition, the Exercise Price for this Warrant as defined in Section 1 shall be
adjusted such that the Warrantholder will have the right to purchase a share of
Common Stock at a purchase price per share as would have been in effect on such
date of conversion or exercise, as applicable, as if this Warrant had been
exercised in full; furthermore,
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for purposes of a "cashless" exercise under Section 3(b), the words "Preferred
Stock" shall be replaced with the words "Common Stock."
10. TERMINATION UPON CERTAIN EVENTS.
If there shall be a merger or consolidation of the Company with or into
another corporation (other than a merger or reorganization involving only a
change in the state of incorporation of the Company or the acquisition by the
Company of other businesses where the Company survives as a going concern), or
the sale of all or substantially all of the Company's capital stock or assets to
any other person, or the liquidation or dissolution of the Company, then as a
part of such transaction, at the Company's option, either:
(a) provision shall be made so that the Warrantholder shall thereafter
be entitled to receive the number of shares of stock or other securities or
property of the Company, or of the successor corporation resulting from the
merger, consolidation or sale, to which the Warrantholder would have been
entitled if the Holder had exercised its rights pursuant to the Warrant
immediately prior thereto (and, in such case, appropriate adjustment shall be
made in the application of the provisions of this Section 10 to the end that the
provisions of Section 6 hereof shall be applicable after that event in as nearly
equivalent a manner as may be practicable); or
(b) this Warrant shall terminate on the effective date of such merger,
consolidation or sale (the "TERMINATION DATE") and become null and void,
provided that if this Warrant shall not have otherwise terminated or expired,
(1) the Company shall have given the Warrantholder written notice of such
Termination Date at least ten (10) business days prior to the occurrence thereof
and (2) the Warrantholder shall have the right until 5:00 p.m., Eastern Standard
Time, on the day immediately prior to the Termination Date to exercise its
rights hereunder to the extent not previously exercised.
11. MISCELLANEOUS.
(a) GOVERNING LAW. This Warrant will be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to the
conflict of law principles thereof.
(b) COUNTERPARTS. This Warrant may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(c) NOTICES. All notices, requests and other communications hereunder
shall be in writing, shall be either (i) delivered by hand, (ii) made by telex,
telecopy or facsimile transmission, (iii) sent by overnight courier, or (iv)
sent by registered mail, postage prepaid, return receipt requested. All notices
from the Company to the Warrantholder shall be sent to One Embarcadero Xxxxxx,
Xxxxx 0000, Xxx Xxxxxxxxx, XX 00000. All notices from the Warrantholder to the
Company shall be delivered to the Company at its offices at 000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxx, Xxx Xxxxxx 00000 or such other address as the Company shall so
notify the Warrantholder. All notices, requests and other communications
hereunder shall be deemed to have been given (i) by hand, at the time of the
delivery thereof to the receiving party at the address of such party described
above, (ii) if made by telex, telecopy or facsimile transmission, at the time
that receipt thereof has been
-5-
acknowledged by electronic confirmation or otherwise, (iii) if sent by overnight
courier, on the next business day following the day such notices is delivered to
the courier service, or (iv) if sent by registered mail, on the fifth business
day following the day such mailing is made.
(d) SEVERABILITY. In the event any one or more of the provisions of
this Warrant shall for any reason be held invalid, illegal or unenforceable, the
remaining provisions of this Warrant shall be unimpaired, and the invalid,
illegal or unenforceable provision shall be replaced by a mutually acceptable
valid, legal and enforceable provision, which comes closest to the intention of
the parties underlying the invalid, illegal or unenforceable provision.
(e) AMENDMENTS. Any provision of this Warrant may be amended or waived
by a written instrument signed by the Company and the Warrantholder.
(f) HEADINGS. The headings in this Warrant are for convenience of
reference only and shall in no way modify or affect the meaning or construction
of any of the terms or provisions of this Warrant.
CONNECTIVCORP
By:
------------------------------
Name: Xxxxx Xxxxxx
Title: President
ACKNOWLEDGED
AND AGREED:
___________, hereby acknowledges and consents to the provisions of this Warrant.
______________
By:
---------------------------------
Name:
Title:
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EXHIBIT A
FORM OF WARRANT
EXHIBIT B
NOTICE OF EXERCISE
TO: ____________________________
(1) The undersigned Warrantholder hereby elects to purchase _______ Units
(representing ____ shares of Preferred Stock and a Warrant to purchase
_______ shares of Common Stock) of ConnectivCorp (the "Company"),
pursuant to the terms of the Warrant dated the ____ day of February,
2004 (the "WARRANT") between the Company and the Warrantholder, and
[TENDERS HEREWITH PAYMENT OF THE PURCHASE PRICE FOR SUCH SHARES IN
FULL, TOGETHER WITH ALL APPLICABLE TRANSFER TAXES, IF ANY] [ELECTS
PURSUANT TO SECTION ____ OF THE WARRANT TO EFFECT A NET ISSUANCE].
(2) Please issue a certificate or certificates representing said Preferred
Stock and Warrants in the name of the undersigned or in such other name
as is specified below.
---------------------------------
(Name)
---------------------------------
(Address)
WARRANTHOLDER:
---------------------------------
By:
------------------------------
Title:
---------------------------
Date:
----------------------------
EXHIBIT C
I. ACKNOWLEDGMENT OF EXERCISE
The undersigned ____________________________________, hereby acknowledge receipt
of the "NOTICE OF EXERCISE" from ________________________, to purchase ________
Units (representing _______ shares of Preferred Stock and a Warrant to purchase
_______ shares of Common Stock) of ConnectivCorp pursuant to the terms of the
Warrant, and further acknowledges that _________ Units remain subject to
purchase under the terms of the Warrant.
CONNECTIVCORP
By:
---------------------------
Title:
---------------------------
Date:
---------------------------
NYC281580v6
