Exhibit 10.2
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY STATE SECURITIES LAW. NEITHER THIS WARRANT
NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED, DIRECTLY OR INDIRECTLY, IN THE
ABSENCE OF (i) AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO, OR
(ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
Warrant No. CS-2
Date of Issuance: Xxxxx 0, 0000
XXXXXXX TO PURCHASE SHARES OF COMMON STOCK
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FOR VALUE RECEIVED, XXXXXXXXXXX.XXX INC., a Michigan corporation (the
"Company"), hereby certifies that ________________ or his registered assigns
(the "Holder"), is entitled to purchase from the Company, at any time during the
Exercise Period, 000,000 shares of the Company's Common Stock (the "Warrant
Shares") at the Exercise Price, subject to the terms and conditions set forth
herein.
ARTICLE I
DEFINITIONS
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Capitalized terms used but not otherwise defined herein shall have the
following meanings:
"Capital Event" means the Company's sale of all or substantially all of its
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assets or merger, consolidation or other business combination, as a result of
which stockholders of the Company immediately prior to such transaction possess
less than 65% of the voting power of the acquiring entity immediately following
such transaction.
"Common Stock" means the Company's common stock, without par value.
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"Exercise Period" means the period commencing on March 1, 2001 and ending
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on the fifth anniversary of the date hereof.
"Exercise Price" means One Dollar Twenty-five Cents ($1.25) per share;
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provided, however, in the event of completion of a Capital Event on or before
March 1, 2003, the Exercise Price shall be One Dollar ($1.00) per share (in
either event, the Exercise Price shall be further adjusted in accordance with
Article IV hereof).
"Principal Executive Office" means the Company's principal executive office
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as specified from time to time by the Company.
"Securities Act" means the Securities Act of 1933, as amended.
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ARTICLE II
EXERCISE
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2.1 Manner of Exercise. This Warrant may be exercised by the Holder, in
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whole or in part, at any time and from time to time during the Exercise Period
upon (i) surrender of this Warrant, together with an executed Notice of Exercise
(substantially in the form of Exhibit "A" attached hereto) and an executed
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Investment Representation Certificate (substantially in the form of Exhibit "B"
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attached hereto), at the Principal Executive Office, and (ii) payment to the
Company of the aggregate Exercise Price for the number of Warrant Shares
specified in the Notice of Exercise (such aggregate Exercise Price is herein
referred to as the "Total Exercise Price"). The Total Exercise Price shall be
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paid by: (a) cash, (b) certified or bank cashier's check payable to the order of
the Company, or (c) wire transfer of immediately available federal funds.
2.2 Exercise Procedures. The person or person(s) in whose name(s) any
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certificate(s) representing the Warrant Shares which are issuable upon exercise
of this Warrant shall be deemed to become the holder(s) of, and shall be treated
for all purposes as the record holder(s) of, such Warrant Shares, and such
Warrant Shares shall be deemed to have been issued, immediately prior to the
close of business on the date on which this Warrant and Notice of Exercise are
presented and payment made for such Warrant Shares, notwithstanding that the
stock transfer books of the Company shall then be closed or that certificates
representing such Warrant Shares shall not then be actually delivered to such
person or person(s). The Company shall, as promptly as practicable, and in any
event within fifteen (15) days after this Warrant is exercised, cause to be
issued and delivered to the Holder (or its nominee) a certificate or
certificates representing the number of Warrant Shares specified in the Notice
of Exercise. If this Warrant is exercised in part only, the Company shall, upon
surrender of this Warrant, note on the Warrant Share Purchase Schedule attached
hereto as Exhibit "C" the date of exercise and the number of Warrant Shares
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purchased and return this Warrant to the Holder promptly after recording such
exercise on the Company's records. The issuance of Warrant Shares upon exercise
of this Warrant shall be made without charge to the Holder for any issuance tax
with respect thereto or any other cost incurred by the Company in connection
with the exercise of this Warrant and the related issuance of Warrant Shares.
2.3 Fractional Shares. The Company shall not issue fractional shares of
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Common Stock or scrip representing fractional shares of Common Stock upon any
exercise or conversion
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of this Warrant. With respect to any fraction of a share called for upon the
exercise of this Warrant, an amount equal to such fraction multiplied by the
closing per share price of the Common Stock on the last trading day of the
Common Stock immediately preceding the exercise of the Warrant shall be paid in
cash or check to the Holder.
ARTICLE III
REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT
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3.1 Maintenance of Registration Books. The Company shall keep at its
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Principal Executive Office a register in which, subject to such reasonable
regulations as it may prescribe, it shall provide for the registration, transfer
and exchange of this Warrant. The Company and any Company agent may treat the
person in whose name this Warrant is registered as the owner of this Warrant for
all purposes whatsoever and neither the Company nor any Company agent shall be
affected by any notice to the contrary.
3.2 Restrictions on Transfers.
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(a) Compliance with Securities Act. The Holder, by acceptance hereof,
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agrees that this Warrant and the Warrant Shares to be issued upon the
exercise hereof are being acquired for investment, solely for the Holder's
own account and not as a nominee for any other person.
(b) Non-Transferable. This Warrant is not transferable, in whole or in
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part, without the prior written consent of the Company. This Warrant and
all Warrant Shares issued upon exercise of this Warrant may not be sold,
offered for sale, pledged or hypothecated, directly or indirectly, unless
the Warrant and/or the Warrant Shares are registered under the Securities
Act and applicable state securities laws or the Company has received an
opinion of counsel for the Holder, reasonably satisfactory to the Company,
or of counsel for the Company that such registration is not required.
(c) Certificate Legends. This Warrant and all Warrant Shares issued
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upon exercise of this Warrant shall be stamped or imprinted with a legend
in substantially the following form (in addition to any legends required by
applicable state securities laws):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
ANY STATE SECURITIES LAW AND ACCORDINGLY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED, DIRECTLY OR INDIRECTLY, IN THE ABSENCE
OF (i) AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO, OR (ii)
AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE
COMPANY, OR OF COUNSEL FOR
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THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
3.3 Replacement. Upon receipt of evidence reasonably satisfactory to the
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Company of the loss, theft, destruction or mutilation of this Warrant and (i) in
the case of any such loss theft or destruction, upon delivery of indemnity
reasonably satisfactory to the Company in form and amount, or (ii) in the case
of any such mutilation, upon surrender of such Warrant for cancellation at the
Principal Executive Office, the Company shall promptly execute and deliver, in
lieu thereof, a new Warrant.
ARTICLE IV
ADJUSTMENT PROVISIONS
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4.1 Adjustment for Stock Splits, Stock Dividends, Recapitalizations, etc.
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The Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this Section
4.1. Upon each such adjustment of the Exercise Price pursuant to this Section
4.1, the Holder shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of Warrant Shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.
(a) If the Company, at any time while this Warrant is outstanding, (i) shall
pay a stock dividend or otherwise make a distribution or distributions on shares
of its Common Stock or on any other class of capital stock payable in shares of
Common Stock (except scheduled dividends paid on preferred stock which contain a
stated dividend rate and except for the issunace of the Company's 8% Senior
Subordinated Convertible Promissory Notes (the "Notes")), (ii) subdivide
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outstanding shares of Common Stock into a larger number of shares, or (iii)
combine outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price shall be adjusted to an amount equal to the Exercise Price
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding before such event
and of which the denominator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding after such event. Any adjustment
made pursuant to this Section shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision or combination, and shall apply to
successive subdivisions and combinations.
(b) In case of any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is converted into other securities,
cash or property, then this Warrant shall be exercisable only for the shares of
stock and other securities and property receivable upon or deemed to be held by
holders of Common Stock following such reclassification or share exchange, and
the Holder shall be entitled upon such event to receive such amount of
securities or property equal to the amount of Warrant Shares such Holder would
have been entitled to had such Holder exercised this Warrant immediately prior
to such reclassification or share exchange. The terms of any such
reclassification or share exchange
4
shall include such terms so as to continue to give to the Holder the right to
receive the securities or property set forth in this Section 4.1(b) upon any
exercise following any such reclassification or share exchange. This provision
shall similarly apply to successive reclassifications and share exchanges.
(c) If the Company, at any time while this Warrant is outstanding, shall
distribute to all holders of Common Stock (and not to Holders of this Warrant)
evidences of its indebtedness or assets or rights or warrants to subscribe for
or purchase any security (excluding those referred to in Sections 4.1(a), (b)
and (d)), then in each such case the Exercise Price shall be determined by
multiplying the Exercise Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the Exercise Price as of the record
date mentioned above, and of which the numerator shall be such Exercise Price on
such record date less the then fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed applicable to
one outstanding share of Common Stock as determined by the Company's board of
directors in good faith. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date mentioned above.
(d) If the Company or any subsidiary thereof, as applicable with respect to
Common Stock Equivalents (as defined below), at any time while this Warrant is
outstanding, shall issue shares of Common Stock or rights, warrants, options or
other securities or debt that is convertible into or exchangeable for shares of
Common Stock (other than the Notes) ("Common Stock Equivalents"), entitling any
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person to acquire shares of Common Stock at a price per share less than the
Exercise Price (if the holder of the Common Stock or Common Stock Equivalent so
issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise,
or due to warrants, options or rights issued in connection with such issuance,
be entitled to receive shares of Common Stock at a price less than the Exercise
Price, such issuance shall be deemed to have occurred for less than the Exercise
Price), then the Exercise Price shall be multiplied by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding immediately
prior to the issuance of such Common Stock or such Common Stock Equivalents plus
the number of shares of Common Stock which the offering price for such shares of
Common Stock or Common Stock Equivalents would purchase at the Exercise Price,
and the denominator of which shall be the sum of the number of shares of Common
Stock outstanding immediately prior to such issuance plus the number of shares
of Common Stock so issued or issuable, provided, that for purposes hereof, all
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shares of Common Stock that are issuable upon conversion, exercise or exchange
of Common Stock Equivalents shall be deemed outstanding immediately after the
issuance of such Common Stock Equivalents. Such adjustment shall be made
whenever such Common Stock or Common Stock Equivalents are issued. However, upon
the expiration of any Common Stock Equivalents the issuance of which resulted in
an adjustment in the Exercise Price pursuant to this Section, if any such Common
Stock Equivalents shall expire and shall not have been exercised, the Exercise
Price shall immediately upon such expiration be recomputed and effective
immediately upon such expiration be increased to the price which it would have
been (but reflecting any other adjustments in the Exercise Price made pursuant
to the provisions of this Section after the issuance of such Common Stock
Equivalents) had the adjustment of the Exercise Price made upon the issuance of
such Common Stock Equivalents been made on the basis of offering for
subscription or purchase only that number of shares of the Common Stock actually
purchased
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upon the exercise of such Common Stock Equivalents actually exercised. The
foregoing shall not apply to any (i) issuances of securities as consideration in
a merger, consolidation or acquisition of assets, or in connection with any
strategic partnership or joint venture (the primary purpose of which is not to
raise equity capital), or as consideration for the acquisition of a business,
product or license by the Company, (ii) the issuance of securities upon the
exercise or conversion of the Company's options, warrants or other convertible
securities outstanding as of the date hereof, or (iii) the grant of options or
warrants, or the issuance of additional securities, under any duly authorized
Company stock option, restricted stock plan or stock purchase plan for the
benefit of the Company's employees.
(e) In case of any merger or consolidation of the Company with or into another
person, (A) the Holder shall have the right at all times from and after the date
of such merger or consolidation, to and including the Expiration Date, to
exercise this Warrant for the shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of Common Stock
immediately following such merger or consolidation, and the Holder shall be
entitled upon such event or series of related events to receive such amount of
securities, cash and property as the Common Stock for which this Warrant could
have been exercised immediately prior to such merger or consolidation would have
been entitled, or (B) the acquiring company or newly created company shall have
the right to pay the Holder the value of the Warrant determined on a Black-
Scholes basis taking into account the adjustment to the Exercise Price upon the
occurrence of a Capital Event. The terms of any such merger or consolidation
shall include such terms so as to continue to give the Holder the right to
receive the securities, cash and property set forth in this Section upon any
exercise following such event. This provision shall similarly apply to
successive such events.
(f) All calculations under this Section 4.1 shall be made to the nearest cent
or the nearest 1/100th of a share, as the case may be.
(g) Whenever the Exercise Price is adjusted pursuant hereto, the Company shall
promptly mail to each Holder a notice setting forth the Exercise Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment.
(h) If (A) the Company shall declare a dividend (or any other distribution) on
the Common Stock; (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock; (C) the Company shall authorize
the granting to all holders of the Common Stock rights or warrants to subscribe
for or purchase any shares of capital stock of any class or of any rights; (D)
the approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to
which the Company is a party, any sale or transfer of all or substantially all
of the assets of the Company, of any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or property; (E) the
Company shall authorize the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company; then, in each case, the Company shall
cause to be mailed to the Holders at their last addresses as they shall appear
upon the stock books of the Company, at least twenty calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
6
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided, that the
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failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. Holders are entitled to exercise the Warrant during the twenty-
day period commencing the date of such notice to the effective date of the event
triggering such notice.
ARTICLE V
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UNDERTAKINGS OF THE COMPANY
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5.1 Authorized Shares. The Company shall at all times have authorized,
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and reserved for the purpose of issue or transfer upon exercise of the rights
evidenced by this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant (for purposes
of determining compliance with this covenant, the shares of Common Stock
issuable upon exercise of all other options and warrants shall be deemed issued
and outstanding).
5.2 Fully Paid Shares. The Company shall take all actions necessary or
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appropriate to validly and legally issue fully paid and non-assessable shares of
Common Stock upon exercise of this Warrant. All such shares shall be free from
all taxes, liens and charges with respect to the issuance thereof, other than
any stock transfer taxes in respect to any transfer occurring contemporaneously
with such issuance.
5.3 No Impairment. The Company shall not, by amendment of its charter or
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through reorganization, consolidation, merger, dissolution, sale of assets or
any other 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 the carrying out of all such terms and the taking of all such action as may
be necessary or appropriate in order to protect the rights of the Holder against
impairment.
5.4 Notices of Certain Transactions. In case of:
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(a) any capital reorganization of the Company, any reclassification
of the capital stock of the Company, any consolidation or merger of the
Company with or into another corporation (other than a consolidation or
merger in which the Company is the surviving entity), or any transfer of
all or substantially all of the assets of the Company, or
(b) any voluntary or involuntary dissolution, liquidation or winding
up of the Company,
7
then, and in each such case, the Company shall provide Holder notice of such
event and the effective date on which such reorganization, reclassification,
consolidation, merger, transfer, dissolution, liquidation, or winding up is
anticipated to take place. To the extent practicable, such notice shall be
delivered to Holder at least fifteen (15) days prior to the effective date of
the event specified in such notice.
ARTICLE VI
MISCELLANEOUS
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6.1 Certain Expenses. The Company shall pay all expenses in connection
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with, and all taxes (other than stock transfer taxes or taxes applicable solely
to Holder) and other governmental charges that may be imposed in respect of, the
issuance, sale and delivery of the Warrant and the Warrant Shares.
6.2 Holder Not a Shareholder. Prior to the exercise of this Warrant as
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hereinbefore provided, the Holder shall not be entitled to any of the rights of
a shareholder of the Company including, without limitation, the right as a
shareholder (i) to vote on or consent to any proposed action of the Company or
(ii) to receive (a) dividends or any other distributions made to shareholders,
(b) notice of or attend any meetings of shareholders of the Company, or (c)
notice of any other proceedings of the Company.
6.3 Notices. Any notice, demand or delivery to be made pursuant to this
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Warrant shall be sufficiently given or made if sent by first class mail, postage
prepaid, addressed to (a) the Holder at Holder's last known address appearing on
the books of the Company maintained for such purpose or (b) the Company at its
Principal Executive Office. The Holder, and the Company may each designate a
different address by notice to the other pursuant to this Section 6.3. A notice
shall be deemed effective upon the earlier of (i) receipt or (ii) the third day
after mailing in accordance with the terms of this Section 6.3.
6.4 Amendment. This Warrant may not be modified or amended except by
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written agreement of the Company and the Holder.
6.5 Headings. The headings of the Articles and Sections of this Warrant
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are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
6.6 Meanings. Whenever used in this Warrant, any noun or pronoun shall be
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deemed to include both the singular and plural and to cover all genders; and the
words "herein," "hereof" and "hereunder" and words of similar import shall refer
to this instrument as a whole, including any amendments hereto.
6.7 Governing Law. This Warrant shall be governed by, and construed in
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accordance with, the laws of the State of Michigan.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of the date first above written.
XXXXXXXXXXX.XXX INC., a Michigan corporation
By:____________________________________________
Its:___________________________________________
9
EXHIBIT "A"
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NOTICE OF EXERCISE FORM
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(To be executed only upon partial or full
exercise of the Warrant)
The undersigned registered Holder of Warrant CS-1 hereby irrevocably
exercises the Warrant for and purchases ___________ shares of Common Stock of
xxxxxxxxxxx.xxx inc. (the "Company") and herewith makes payment therefor in the
amount of $______, on the terms and subject to the conditions specified in the
Warrant, and requests that a certificate for the shares of Common Stock of the
Company hereby purchased be issued in the name of and delivered to the
undersigned at the following address:
_______________________________________
_______________________________________
_______________________________________
Dated:______________________
____________________________________
By:_________________________________
(Signature of Registered Holder)
Title:______________________________
NOTICE: The signature to this Notice of Exercise must correspond with the name
as written upon the face of the Warrant in every particular, without
alteration or enlargement or any change whatever.
EXHIBIT "B"
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INVESTMENT REPRESENTATION CERTIFICATE
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Purchaser:
Company: xxxxxxxxxxx.xxx inc.
Securities: Shares of Common Stock
In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to the Company as
follows:
(a) The Purchaser is an "accredited investor" as defined in Rule 501 of
Regulation D promulgated under the Securities Act of 1933, as amended
("Securities Act").
(b) The Purchaser is aware of the Company's business affairs and financial
condition, and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. The Purchaser is
purchasing the Securities for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act.
(c) The Purchaser understands that the Securities have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the Purchaser's representations
contained herein.
(d) The Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. In addition, the
Purchaser understands that the certificate evidencing the Securities will be
imprinted with the legend referred to in the Warrant.
(e) The Purchaser is aware of the provisions of Rule 144, promulgated under
the Securities Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, which may include,
among other things: (i) the availability of certain public information about the
Company; (ii) the resale occurring not less than one year after the party has
purchased and paid for the securities to be sold; (iii) the sale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934) and (iv) the amount of securities being sold during any
three-month period not exceeding the specified limitations stated therein.
(f) The Purchaser further understands that at the time it wishes to sell
the Securities there may be no public market for such securities, and that, even
if such a public market exists the Company may not be satisfying the current
public information requirements of Rule 144, and
that, in such event, the Purchaser may be precluded from selling the Securities
under Rule 144 even if the minimum holding period had been otherwise satisfied.
Dated: ________________________
PURCHASER:
_________________________________
EXHIBIT "C"
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WARRANT SHARE PURCHASE SCHEDULE
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Number of Warrant
Date of Exercise/Conversion Shares Purchased/Converted
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