WARRANT
WARRANT NO. WARRANTS
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THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE SECURITIES OR BLUE SKY LAWS AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT (1) PURSUANT TO A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE
UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION
UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES AND (3) IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES AND BLUE SKY LAWS.
GANTOS, INC.
This warrant certificate (the "WARRANT CERTIFICATE") certifies that, for
value received, [NAME OF HOLDER] or registered assigns under Section 8 hereof
(the "HOLDER") is the owner of [NUMBER OF WARRANTS] specified above (the
"WARRANTS") each of which entitles the Holder thereof to purchase one (1)
fully paid and nonassessable share of common stock, $ .01 par value (the
"COMMON STOCK"), of Gantos, Inc., a corporation organized
under the laws of the State of Michigan (the "COMPANY"), or such other number
of shares as may be determined pursuant to an adjustment in accordance with
Section 4 hereof, at the price per share set forth in Section 4 hereof,
subject to adjustment from time to time pursuant to Section 4 hereof (the
"WARRANT PRICE") and subject to the provisions and upon the terms and
conditions set forth herein.
1. TERM OF WARRANT.
Each Warrant is exercisable in full for a period of five (5) years
beginning on the date hereof and ending on June 30, 2003.
2. METHOD OF EXERCISE AND PAYMENT; ISSUANCE OF NEW WARRANT
CERTIFICATE; CONTINGENT EXERCISE.
(a) In connection with any exercise pursuant to Section 1 hereof,
this Warrant Certificate shall be surrendered (with the notice of exercise
form attached hereto as EXHIBIT 1 (the "NOTICE OF EXERCISE") duly executed)
at the principal office of the Company together with the payment to the
Company of cash or a certified check or a wire transfer in an amount equal to
the then applicable Warrant Price multiplied by the number of shares of
Common Stock then being purchased.
(b) NET ISSUE ELECTION. The holder hereof may elect to receive,
without the payment by such holder of any consideration (other than the
surrender referred to in this Section 2(b)), shares equal to the value of this
Warrant or any portion hereof (as determined below) by the surrender of this
Warrant or such portion to the Company, with the Notice of Exercise duly
executed by such holder, at the office of any duly appointed transfer agent for
the Common Stock or at the office of the Company. Thereupon, the Company shall
issue to such holder such number of fully paid and nonassessable shares of
Common Stock as is computed using the following formula:
X = Y (A-B)
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A
where X = the number of shares of Common Stock to be issued to such holder
pursuant to this Section 2(b).
Y = the number of shares of Common Stock covered by this Warrant in
respect of which the net issue election is made pursuant to this Section
2(b).
A = the Fair Market Value (as defined below) of one share of Common
Stock.
B = the Warrant Price then in effect under this Warrant at the time
the net issue election is made pursuant to this Section 2(b).
As used herein, "FAIR MARKET VALUE" per share of Common Stock as of
any date shall mean the numerical average of the fair market value per share
of Common Stock over a period of 21 business days consisting of the business
day on which the Notice of Exercise is received by the Company and the 20
consecutive business days prior to such date. The fair market value per
share of Common Stock for any day shall mean the average of the closing
prices of the Company's Common Stock sold on all securities exchanges on
which the Common Stock may at the time be listed or as quoted on the Nasdaq
National Market, or, if there have been no sales on any such exchange or any
such quotation on any day, the average of the highest bid and lowest asked
prices on all such exchanges or such system at the end of such day, or, if
any day the Common Stock is not so listed, the average of the representative
bid and asked prices quoted in the Nasdaq system as of 4:00 p.m., Boston
time, or, if on any day that Common Stock is not quoted in the Nasdaq system,
the average of the highest bid and lowest asked price on such day in the
domestic over-the-counter market as reported by the
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National Quotation Bureau, Incorporated, or any similar successor
organization. If at any time the Common Stock is not listed on any
securities exchange or quoted in the Nasdaq system or the over-the-counter
market, the current fair market value of Common Stock shall be the highest
price per share which the Company could obtain from a willing buyer (not a
current employee or director) for shares of Common Stock sold by the Company,
from authorized but unissued shares, as determined in good faith by the Board
of Directors of the Company.
(c) The Company agrees that the shares of Common Stock so purchased
shall be deemed to be issued to the Holder hereof as the record owner of such
shares as of the close of business on the date on which this Warrant Certificate
shall have been surrendered and payment made for such shares as aforesaid. In
the event of any exercise of the rights represented by this Warrant Certificate,
certificates for the shares of Common Stock so purchased shall be delivered to
the Holder hereof within ten (10) days thereafter and, unless all of the
Warrants represented by this Warrant Certificate have been fully exercised or
have expired pursuant to Section 1 hereof, a new Warrant Certificate
representing the shares of Common Stock, if any, with respect to which the
Warrants represented by this Warrant Certificate shall not then have been
exercised, shall also be issued to the Holder hereof within such ten (10) day
period.
3. COMMON STOCK FULLY PAID; RESERVATION OF SHARES.
All Common Stock which may be issued upon the exercise of the Warrants
will, upon issuance, be fully paid and nonassessable, and free from all taxes,
liens and charges with respect to the issue thereof. During the period within
which the rights represented by this Warrant Certificate may be exercised, the
Company will at all times have authorized, and reserved for the purpose of the
issuance upon exercise of the purchase rights evidenced by this Warrant
Certificate, a sufficient number of shares of its Common Stock to provide for
the exercise of the Warrants.
4. WARRANT PRICE; ADJUSTMENT OF WARRANT PRICE AND NUMBER
OF SHARES.
The Warrant Price shall be $1.625 per share of Common Stock, and the
Warrant Price and the number of shares of Common Stock purchasable upon exercise
of the Warrants shall be subject to adjustment from time to time, as follows:
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(a) RECLASSIFICATION, CONSOLIDATION OR MERGER. In case of any
reclassification or change of outstanding securities of the class issuable
upon exercise of the Warrants, or in case of any consolidation or merger of
the Company with or into another corporation or entity, other than a
consolidation or merger with another corporation or entity in which the
Company is the continuing corporation and which does not result in any
reclassification, conversion or change of outstanding securities issuable
upon exercise of the Warrants, the Company, or such successor corporation, as
the case may be, shall execute a new warrant certificate (the "NEW WARRANT
CERTIFICATE"), providing that the Holder of this Warrant
Certificate shall have the right to exercise such new warrants and procure
upon such exercise, in lieu of each share of Common Stock theretofore
issuable upon exercise of the Warrants, the kind and amount of shares of
stock, other securities, money and property receivable upon such
reclassification, conversion, change, consolidation, or merger by a holder of
one share of Common Stock. Such New Warrant Certificate shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 4. The provisions of this Section
4(a) shall similarly apply to successive reclassifications, changes,
consolidations, mergers and transfers.
(b) SUBDIVISIONS, COMBINATIONS AND STOCK DIVIDENDS. If the Company
shall subdivide or combine its Common Stock, or shall pay a dividend with
respect to Common Stock payable in, or make any other distribution with respect
to its Common Stock consisting of, shares of Common Stock, then the Warrant
Price shall be adjusted, from and after the date of determination of
shareholders entitled to receive such dividend or distribution, to that price
(rounded to the nearest $.01) determined by multiplying the Warrant Price in
effect immediately prior to such date of determination by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution. Such adjustment
shall be made successively whenever such a dividend or distribution occurs.
Upon each adjustment in the Warrant Price pursuant to this Section 4(b)
hereof, the number of shares of Common Stock purchasable hereunder shall be
adjusted to the product obtained by multiplying the number of shares purchasable
immediately prior to such adjustment in the Warrant Price by a fraction (i) the
numerator of which shall be the Warrant Price immediately prior to such
adjustment and (ii) the denominator of which shall be the Warrant Price
immediately thereafter.
(c) MINIMUM ADJUSTMENT. No adjustment of the Warrant Price or the
number of shares of Common Stock purchasable hereunder shall be made if the
amount of any such Warrant Price adjustment would be an amount less than $.01,
but any such amount shall be carried forward and an adjustment in respect
thereof shall be made at the time of, and together with any subsequent
adjustment which, together with such amount and any other amount or amounts so
carried forward, shall aggregate an increase or decrease of $.01 or more.
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5. NOTICE OF ADJUSTMENTS.
Whenever any adjustment shall be made pursuant to Section 4 hereof, the
Company shall prepare a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
the Warrant Price after giving effect to such adjustment and the number of
shares of Common Stock then purchasable upon exercise of the Warrants, and shall
cause copies of such certificate to be mailed to the Holder hereof at the
address specified in Section 9(d) hereof, or at such other address as may be
provided to the Company in writing by the Holder hereof.
6. COMPLIANCE WITH SECURITIES ACT.
The Holder of this Warrant Certificate, by acceptance hereof, agrees that
the Warrants and the shares of Common Stock to be issued upon exercise thereof
are being acquired for investment and that it will not offer, sell or otherwise
dispose of the Warrants or any shares of Common Stock to be issued upon exercise
thereof except under circumstances which will not result in a violation of the
Act or applicable state securities or blue sky laws. Upon exercise of the
Warrants, the Holder hereof shall, if requested by the Company, confirm in
writing that the shares of Common Stock so purchased are being acquired for
investment and not with a view toward distribution or resale. This Warrant
Certificate and all shares of Common Stock issued upon exercise of the Warrants
(unless registered under the Act) shall be stamped or imprinted with a legend
substantially in the following form:
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE SECURITIES OR BLUE SKY LAWS AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT (1) PURSUANT TO A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE
UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION
UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES AND (3) IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES AND BLUE SKY LAWS.
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7. TRANSFER.
Subject to compliance with the terms of Section 6 above, the Warrants and
all rights under this Warrant Certificate are transferable, in whole or in part,
at the principal office of the Company by the Holder hereof, in person or by its
duly authorized attorney, upon surrender of this Warrant Certificate properly
endorsed (with the instrument of transfer form attached hereto as EXHIBIT 2 duly
executed), together with payment of all transfer taxes, if any, payable in
connection herewith. Each Holder of this Warrant Certificate, by taking or
holding the same, consents and agrees that this Warrant Certificate, when
endorsed in blank, shall be deemed negotiable; provided, however, that the last
Holder of this Warrant Certificate as registered on the books of the Company may
be treated by the Company and all other persons dealing with this Warrant
Certificate as the absolute owner of the Warrants for any purposes and as the
person entitled to exercise the rights represented by this Warrant Certificate
or to transfer the Warrants on the books of the Company, any notice to the
contrary notwithstanding, unless and until such Holder seeks to transfer
registered ownership of the Warrants on the books of the Company and such
transfer is effected.
8. MISCELLANEOUS.
(a) REPLACEMENT. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant
Certificate and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement or bond reasonably satisfactory in form and amount to the
Company or, in the case of mutilation, on surrender and cancellation of this
Warrant Certificate, the Company, at its expense, will execute and deliver, in
lieu of this Warrant Certificate, a new warrant certificate of like tenor.
(b) NOTICE OF CAPITAL CHANGES. In case:
(i) the Company shall declare any dividend or distribution
payable to the holders of shares of Common Stock;
(ii) there shall be any capital reorganization or
reclassification of the capital of the Company, or consolidation or merger
of the Company with, or sale of all or substantially all of its assets to,
another corporation or business organization; or
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company.
then, in any one or more of said cases, the Company shall give the Holder hereof
prior written notice of such event, in the manner set forth in Section 8(c)
below, at least 30 days prior to the date on which a record shall be taken for
such dividend or distribution or for determining shareholders entitled to vote
upon such reorganization, reclassification, consolidation, merger,
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sale, dissolution, liquidation, winding up or the date when any such
transaction shall take place, as the case may be.
(c) NOTICE. Any notice to be given to either party under this
Warrant Certificate shall be in writing and shall be deemed to have been given
to the Company or the Holder hereof, as the case may be, when delivered in hand
or when sent by first class mail, postage prepaid, addressed, if to the Company,
at its principal office and, if to the Holder hereof, at its address as set
forth in the Company's books and records or at such other address as the Holder
hereof may have provided to the Company in writing.
(d) NO IMPAIRMENT. The Company will not, by amendment of its
Articles of Incorporation, Bylaws or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all the provisions of
this Warrant Certificate.
(e) WARRANT HOLDER NOT STOCKHOLDER. This Warrant Certificate shall
not confer upon the Holder hereof any right to vote or to consent to or receive
notice as a stockholder of the Company, as such, in respect of any matters
whatsoever, or any other rights as a stockholder, prior to the exercise hereof.
(f) GOVERNING LAW; JURISDICTION. This Warrant Certificate shall be
deemed to be a contract made under, and shall be construed in accordance with,
the laws of the State of Delaware without giving effect to conflict of laws
principles except to the extent that the corporate laws of the State of Michigan
are mandatorily applicable thereof. The Company and the Holder of the Warrant
Certificate by acceptance hereof, each hereby agrees that the state and federal
court of New York shall have jurisdiction to hear and determine any claims or
disputes between the Holder and the Company pertaining directly or indirectly to
this Warrant Certificate and all documents, instruments and agreements executed
pursuant hereto, or to any matter arising therefrom (unless otherwise expressly
provided for therein). To the extent permitted by law, the Company and the
Holder of the Warrant Certificate by acceptance hereof, each hereby expressly
submits and consents in advance to such jurisdiction in any action or proceeding
commenced by the Company or any Holder in any of such courts, and agrees that
service of such summons and complaint or other process or papers may be made by
registered or certified mail addressed to such party at the address to which
notices are to be sent to such party pursuant to this Agreement. To the extent
permitted by law, should the Company or the Holder of this Warrant Certificate,
as the case may be, after being so served, fail to appear or answer to any
summons, complaint, or process or papers so served within 30 days after the
mailing thereof, such party shall be deemed in default and an order and/or
judgment may be entered against such party as demanded or prayed for in such
summons, complaint, process or papers. The exclusive choice of forum set forth
in this Section 8(f) shall not be deemed to preclude the enforcement of any
judgment
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obtained in such forum or the taking of any action to enforce the same
in any other appropriate jurisdiction.
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The Company has caused this Warrant Certificate to be executed as of this
[__] day of [_____], 1998.
GANTOS, INC.
By:
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Name:
---------------------------------
Title:
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Attest:
By:
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Name:
---------------------------
Title:
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EXHIBIT 1
NOTICE OF EXERCISE
TO: GANTOS, INC.
1. The undersigned hereby irrevocably elects to purchase ____________________
(_________) shares of the Common Stock, $.01 par value per share, of Gantos,
Inc. covered by Warrant No.___ according to the terms thereof and herewith makes
payment of the Warrant Price of such shares in full.
2. Specify method of exercise by check xxxx:
__ a. Such payment is hereby made in the amount of $_______ by (i)
cash, (ii) wire transfer or (iii) certified or bank check payable to
Gantos, Inc.
__ b. The holder elects to receive the number of shares of Common
Stock for the value (as determined pursuant to Section 2(b) of the
Warrant Certificate) of the Warrant or the portion thereof specified
in 1. above.
3. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
____________________________
(Name)
____________________________
(Address)
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Signature
Dated: _______________
EXHIBIT 2
FORM OF ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto the rights represented by the within Warrant Certificate to
purchase [___________] shares of Common Stock of Gantos, Inc. to which the
within Warrant Certificate relates and appoints _______________________ to
transfer such rights on the books of Gantos, Inc. with full power of
substitution in the premises.
Dated: Signature
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