EXHIBIT 10.22
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
BLYTH HOLDINGS, INC.
WARRANT TO PURCHASE COMMON STOCK
February 5, 1997
This Warrant (the "Warrant") entitles Xxxxxxx Xxxxx, or his transferees and
assigns (collectively, the "Holder"), for value received, to purchase from BLYTH
HOLDINGS, INC., a Delaware corporation, during the period commencing as of the
date hereof and ending on the Expiration Date (as defined herein) not more than
one hundred thousand (100,000) shares of Common Stock of the Company (subject to
adjustment as set forth herein) at a price of $1.094 per share (as adjusted, the
"Exercise Price").
The holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. EXERCISE OF WARRANT. Provided that the Settlement Agreement and
General Release dated February 5, 1997 between the Company and the Holder shall
become effective, the Holder may exercise this Warrant at any time or from time
to time on any business day prior to or on the Expiration Date, for the full or
any lesser number of shares of Common Stock purchasable hereunder, by
surrendering this Warrant to the Company at its principal office, together with
a duly executed Notice of Exercise (in substantially the form attached hereto as
Exhibit A), and payment in cash or by check of the aggregate Exercise Price then
in effect for the number of shares for which this Warrant is being exercised.
Promptly after such exercise, the Company shall issue and deliver to the Holder
a certificate or certificates representing the number of shares of Common Stock
issuable upon such exercise. Upon issuances by the Company in accordance with
the terms of this Warrant, all such shares of Common Stock shall be validly
issued, fully paid and non-assessable, and free from all taxes, liens and
encumbrances with respect to the issuance thereof (except as set forth in the
Company's Certificate of Incorporation (the "Certificate") or bylaws and any
restrictions on sale set forth therein or pursuant to federal or state
securities laws. To the extent permitted by law, this Warrant shall be deemed
to have been exercised immediately prior to the close of business on the date of
its surrender for exercise as provided herein, even if the Company's stock
transfer books are at that time closed, and the Holder shall be treated for all
purposes as the holder of record of the Common Stock to be issued upon such
exercise as of the close of business on such date. Upon any exercise of this
Warrant for fewer than all shares of Common Stock represented by this Warrant,
the Company shall cancel this Warrant and execute and deliver a new Warrant or
Warrants in substantially identical form for the remaining shares of Common
Stock.
1.1 NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, if the Quoted Price (as defined in Section 2.6 hereof) of one share
of the Company's Common Stock is greater than the Exercise Price (at the date
of calculation as set forth below), in lieu of exercising this Warrant by
payment with cash, certified or cashier's check, the Holder may elect to make
a cash-free exercise of this Warrant and thereby to receive Shares equal to
the value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Notice of Exercise and notice of such
election, in which event the Company shall issue to the Holder a number of
Shares of Common Stock computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of Shares of Common Stock to be issued to
the Holder
Y = the gross number of Shares of Common Stock purchasable
under this Warrant or, if only a portion of this Warrant is
being exercised, the gross number of Shares purchased under
this Warrant being canceled (at the date of such
calculation)
A = the Quoted Price (as defined under Section 2.6 hereof) of
one share of the Company's Common Stock (at the date of
such calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
Exercise Price and the number of shares of Common Stock subject to this
Warrant shall be subject to adjustment from time to time as follows:
2.1 SUBDIVISION OR COMBINATION OF STOCK.
(a) If at any time or from time to time after the date of this
Warrant (the "Issue Date") the Company shall subdivide its outstanding shares of
Common Stock, the Exercise Price in effect immediately prior to such subdivision
shall be reduced proportionately, and conversely, in the event the outstanding
shares of Common Stock shall be combined into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
increased proportionately.
(b) Upon each adjustment of the Exercise Price as provided in
Section 2.1(a), the Holder thereafter shall be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares of Common
Stock (calculated to the nearest whole share) obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
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2.2 ADJUSTMENT FOR STOCK DIVIDENDS. If at any time the Company
shall declare a dividend or make any other distribution upon any class or
series of stock of the Company payable in shares of Common Stock or
securities convertible into shares of Common Stock, the Exercise Price and
the number of shares to be obtained upon exercise of this Warrant shall be
adjusted proportionately to reflect the issuance of any shares of Common
Stock or convertible securities, as the case may be, issuable in payment of
such dividend or distribution.
2.3 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. In the event of any reorganization of the capital stock of the Company,
a consolidation or merger of the Company with another corporation (other than
a merger in which the Company is the surviving corporation), the sale of all
or substantially all of the Company's assets or any transaction involving the
transfer of a majority of the voting power over the capital stock of the
Company effected in a manner such that holders of Common Stock shall be
entitled to receive stock, securities, or other assets or property, then, as
a condition of such reorganization, reclassification, consolidation, merger,
sale or transaction, lawful and adequate provision shall be made whereby the
holder hereof shall have the right to purchase and receive (in lieu of the
shares of Common Stock of the Company immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby) such shares of
stock, securities or other assets or property as may be issued or payable
with respect to or in exchange for a number of outstanding shares of such
Common Stock equal to the number of shares of such stock immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby. In any such reorganization, consolidation, merger, sale
or transaction, including successive events of such nature, appropriate
provision shall be made with respect to the rights and interests of the
Holder such that the provisions hereof (including, without limitation,
provisions for adjustments of the Exercise Price and of the number of shares
purchasable and receivable upon the exercise of this Warrant) thereafter
shall be applicable, as nearly practicable, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise hereof.
2.4 MINIMAL ADJUSTMENTS. No adjustment in the Exercise Price
and/or the number of shares of Common Stock subject to this Warrant shall be
made if such adjustment would result in a change in (i) the Exercise Price of
less than one cent ($0.01) per share or (ii) the number of shares represented
by this Warrant of less than one share (the "Adjustment Threshold Amount").
Any adjustment not made because the Adjustment Threshold Amount is not
satisfied shall be carried forward and made, together with any subsequent
adjustments, at such time as (a) the aggregate amount of all such adjustments
is equal to at least the Adjustment Threshold Amount or (b) the Warrant is
exercised.
2.5 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Exercise Price pursuant to this Section 2,
the Company promptly shall compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to the Holder a
certificate setting forth such adjustment or readjustment, showing in detail
the facts upon which such adjustment or readjustment is based.
2.6 QUOTED PRICE. The "Quoted Price" of the Common Stock is the last
reported sales price of the Common Stock as reported by the Nasdaq National
Market ("NMS"), or the primary national securities exchange on which the Common
Stock is then quoted; PROVIDED, HOWEVER, that if the Common
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Stock is neither traded on the NMS nor on a national securities exchange, the
price referred to above shall be the price reflected on Nasdaq, or if the
Common Stock is not then traded on Nasdaq, the price reflected in the
over-the-counter market as reported by the National Quotation Bureau, Inc. or
any organization performing a similar function; and PROVIDED, FURTHER, that
if the Common Stock is not publicly traded, the Quoted Price of the Common
Stock shall be the fair market value as determined in good faith by the Board
of Directors of the Company.
3. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or
equity, and the rights of the Holder are limited to those expressed in this
Warrant. Nothing contained in this Warrant shall be construed as conferring
upon the Holder the right to vote or to consent or to receive notice as a
shareholder of the Company on any matters or with respect to any rights
whatsoever as a shareholder of the Company. No dividends or interest shall
be payable or accrued in respect of this Warrant or the interest represented
hereby or the shares of Common Stock purchasable hereunder until, and only to
the extent that, this Warrant shall have been exercised in accordance with
its terms.
4. NO IMPAIRMENT. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but shall at all times in good faith assist in effecting the terms
of this Warrant and in taking all actions necessary or appropriate in order
to protect the rights of the Holder against dilution or other impairment of
its rights hereunder.
5. NO FRACTIONAL SHARES. No fractional share shall be issued upon
exercise of this Warrant. In lieu of issuing any fractional share, the
Company shall pay the Holder entitled to such fraction a sum in cash equal to
the fair market value of such fraction on the date of exercise.
6. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company
covenants and agrees that during the period of time during which this Warrant
is exercisable, it will at all times have authorized and reserved solely for
issuance and delivery upon the exercise of this Warrant, all such shares of
Common Stock and other stock, securities and property as from time to time
are receivable upon the exercise of this Warrant. If at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the exercise of this Warrant, the Company will use its best efforts to
take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purposes. The Company
further covenants that all shares issuable upon exercise of the Warrant and
payment of the Exercise Price, all as set forth herein, will be free from all
taxes, liens and charges in respect of the issue of such shares (other than
taxes in respect of any transfer occurring contemporaneously with such
exercise and payment or otherwise specified herein). The Company agrees that
its issuance of the Warrant shall constitute full authority to its officers
who are charged with the duty of executing stock certificates to execute and
issue the necessary certificates for shares of Common Stock upon the exercise
of the Warrant and covenants that all such shares, when issued, sold and
delivered in accordance with the terms of the Warrant for the consideration
expressed herein, will be duly and validly issued, fully paid and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer set forth in this Warrant, and applicable state and
federal securities laws.
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7. NOTICES OF RECORD DATE. Upon (a) any establishment by the Company
of a record date of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, or right or option to acquire securities of the Company,
or any other right, (b) any capital reorganization, reclassification,
recapitalization, merger or consolidation of the Company with or into any
other corporation, any transfer of all or substantially all the assets of the
Company, or (c) any voluntary or involuntary dissolution, liquidation or
winding up of the Company, then, and in each such case, the Company shall
mail to the Holder a notice specifying, as the case may be, (i) the date
established as the record date for the purpose of such dividend,
distribution, option or right and a description of such dividend,
distribution, option or right, or (ii) the date on which any such
reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding up is expected to become
effective and the date, if any is to be fixed, as to when the holders of
record of Common Stock (of other securities at that time receivable upon
exercise of the Warrant) shall be entitled to exchange their shares of Common
Stock (or such other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation or winding up.
Such notice shall be mailed at least 10 days prior to the date therein
specified, or such longer period as may be required by law.
8. EXCHANGES OF WARRANT. Upon surrender for exchange of this Warrant
(in negotiable form, if not surrendered by the Holder named on the face
hereof) to the Company at its principal office, the Company will issue and
deliver a new Warrant or Warrants in substantially identical form
representing in the aggregate, the same number of shares of Common Stock, in
the denomination or denominations requested, to or on the order of such
Holder upon payment by such Holder of any applicable transfer taxes; provided
that any transfer of the Warrant shall be subject to the conditions on
transfer set forth herein; and provided further that all reasonable expenses
incurred in connection with such re-issuance and delivery shall be borne by
the Holder.
9. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) upon delivery
of an indemnity agreement in such reasonable amount as the Company may
determine, or (in the case of mutilation) upon surrender and cancellation
hereof, the Company, at its expense, shall issue a new Warrant in
substantially identical form in replacement hereof.
10. NOTICES. Except as provided in Section 9 above, all notices and
other communications from the Company to the Holder shall be mailed by
overnight courier or by first-class, registered or certified mail, postage
prepaid, to the address furnished to the Company in writing by the last
Holder who has furnished an address to the Company in writing. Notice shall
be deemed given one day after deposit with an overnight courier service,
three days after deposit in the mails in accordance with this Section 10 or
upon delivery if personally delivered.
11. MODIFICATION AND WAIVER. Neither this Warrant nor any term hereof
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
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12. HEADINGS. The descriptive headings in this Warrant are included for
convenience only, and do not constitute a part hereof.
13. GOVERNING LAW. This Warrant shall be construed in accordance with
and governed by the laws of the State of California.
14. EXPIRATION DATE. This Warrant will be wholly void and of no effect
after 5:00 p.m. (San Francisco time) February 5, 2002 (the "Expiration
Date"); provided that, if the last day on which this Warrant may be
exercised, or on which it may be exercised at a particular Exercise Price, is
a Sunday or a legal holiday or a day on which banking institutions doing
business in the City of San Francisco are authorized by law to close, this
Warrant may be exercised prior to 5:00 p.m. (San Francisco time) on the next
succeeding full business day with the same force and effect and at the same
Exercise Price as if exercised on such last day specified herein.
15. ISSUE TAX. The issuance of certificate for shares of Common Stock
upon the exercise of this Warrant shall be made without charge to the Holder
of the Warrant for any issue tax (other than applicable income taxes) in
respect thereof; provided, however, that the Company shall not be required to
pay any tax that may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the
then Holder of the Warrant being exercised.
16. TRANSFER RESTRICTIONS. The Company is relying upon an exemption
from registration, with respect to this Warrant and the shares of Common
Stock issuable upon exercise hereof, under the Act and applicable state
securities laws. The Holder, by acceptance hereof, represents that the
Holder understands that neither this Warrant nor the Common Stock issuable
upon exercise hereof has been registered with the Securities and Exchange
Commission nor under any state securities law, and that neither this Warrant
nor the Common Stock issuable upon exercise hereof may be sold or transferred
unless registered under the Act and any applicable state securities laws, or
unless an exemption from such registration is available. By acceptance
hereof, the Holder represents, warrants and acknowledges that (a) it is
acquiring the Warrant (and the shares of Common Stock or other securities
issuable upon exercise hereof) for its own account for investment purposes
and not with a view to distribution, (b) it has received all such information
as the Holder deems necessary and appropriate to enable the Holder to
evaluate the financial risk inherent in making an investment in the Company,
and satisfactory and complete information concerning the business and
financial condition of the Company in response to all inquiries in respect
thereof, (c) the Holder's acquisition of shares upon exercise hereof will be
a highly speculative investment, (d) the Holder is able, without impairing
its financial condition, to hold such shares for an indefinite period of time
and to suffer a complete loss of the Holder's investment, and (e) the Holder
has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of acquisition of this Warrant
and the shares issuable upon exercise hereof and of making an informed
investment decision with respect thereto. Each certificate representing
shares of Common Stock or other securities issued upon exercise of this
Warrant shall have conspicuously endorsed on its face, at the time of its
issuance, such legends as counsel to the Company deems necessary or
appropriate, including without limitation the legend set forth on the top of
the first page of this Warrant. The Company agrees to remove such legends
upon (i) receipt of an unqualified written opinion of legal counsel who shall
be reasonably satisfactory to the Company, addressed to the Company and
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reasonably satisfactory in form and substance to the Company's counsel, to
the effect that the proposed transfer of this Warrant, or the securities
issuable upon exercise hereof, may be effected without registration under the
Securities Act of 1933, as amended, or any applicable state securities laws
or (ii) such other showing as shall be reasonably satisfactory to the
Company's counsel.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and delivered on the date first set forth above.
BLYTH HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Xxxxxxx Xxxxxx, President and
Chief Executive Officer
[Warrant signature page]
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EXHIBIT A
NOTICE OF EXERCISE
(To be signed only upon exercise of Warrant)
To: BLYTH HOLDINGS, INC.
000 Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx Xxxx, XX 00000
The undersigned, Holder of the attached Warrant, hereby irrevocably elects
to exercise the purchase right represented by this Warrant as follows:
[ ] The undersigned elects to purchase for cash or check _________ full
shares of Common Stock of Blyth Holdings, Inc. and herewith makes
payment of $__________ for those shares;
[ ] The undersigned elects to effect a net exercise of this Warrant,
exercising this Warrant [ ] in full or [ ] as to the following GROSS
number of shares: ____________. The undersigned understands that the
actual number of shares issuable will be determined in accordance with
Sections 1.1 and 2 of this Warrant.
The undersigned requests that the certificates for the shares be issued
in the name of, and delivered to, _________________________________*, whose
address is____________________________________________.
Dated:____________, ____
(Signature must conform in all respects to name of
Holder as specified on the face of the attached
Warrant.)
________________________________________
Signature
________________________________________
Address
________________________________________
________________________
* If the stock is to be issued to anyone other than the registered Holder of
this Warrant, this Notice of Exercise must be accompanied by an opinion of
counsel to the effect that such transfer may be effected without compliance with
the registration and prospectus delivery requirements of the Securities Act of
1933, as amended.
