NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, SUCH REGISTRATION AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH IS ACCEPTABLE
TO THE ISSUER.
XXXXXXXX CURHAN FORD GROUP, INC.
COMMON STOCK PURCHASE WARRANT
Warrant No. C-009 1,162,791 Shares
Original Issue Date: July 31, 2009
THIS CERTIFIES THAT, FOR VALUE RECEIVED, First Bank & Trust as
Custodian of Xxxxxx X. Chez XXX, or its registered assigns (the "HOLDER") is
entitled to purchase, on the terms and conditions hereinafter set forth, at
any time in whole or in part from the Original Issue Date set forth above
until 5:00 p.m., Eastern Time, on the tenth anniversary of the Original Issue
Date, or if such date is not a day on which the Company (as hereinafter
defined) is open for business, then the next succeeding day on which the
Company is open for business (such date is the "EXPIRATION DATE"), but not
thereafter, One Million One Hundred Sixty Two Thousand Seven Hundred Ninety
One (1,162,791) shares of the Common Stock, $0.0001 par value per share (the
"COMMON STOCK"), of XXXXXXXX CURHAN FORD GROUP, INC., a Delaware corporation
(the "COMPANY"), at Sixty Five Cents ($0.65) per share (the "EXERCISE PRICE"),
such number of shares and Exercise Price being subject to adjustment upon the
occurrence of the contingencies set forth in this Warrant. Each share of
Common Stock as to which this Warrant is exercisable is a "WARRANT SHARE" and
all such shares are collectively referred to as the "WARRANT SHARES."
Section 1.
Definitions.
-----------
(a) "Effective Date" shall mean the date on which
--------------
the Warrant shall be deemed to have
been exercised.
(b) "Initial Issuance Date" shall mean the date
---------------------
first written above.
Section 2. Exercise of Warrant; Conversion of Warrant.
------------------------------------------
(a) This Warrant may, at the option of the Holder,
be exercised in whole or in part from time to time, on or before 5:00 p.m.,
Eastern Time, on the Expiration Date, by delivery to the Company at its
principal office (i) a written notice of such Holder's election to exercise
this Warrant (the "EXERCISE Notice"), which notice may be in the form of the
Notice of Exercise attached hereto, properly executed and completed by the
Holder or an authorized officer thereof, (ii) a check or other funds (the
"FUNDS") payable to the order of the Company, in an amount equal to the
product of the Exercise Price multiplied by the number of Warrant Shares
specified in the Exercise Notice, and (iii) this Warrant (the items specified
in (i), (ii), and (iii) are collectively the "EXERCISE MATERIALS"); provided,
however, that if this Warrant is not exercised in whole immediately prior to
the consummation by the Company of a Change in Control Event (as defined
below), then immediately following the consummation by the Company of such
Change in Control Event, this Warrant will not be exercisable and shall be
null and void for all purposes. Notwithstanding anything in this Warrant
Agreement to the contrary, if this Warrant shall not have been exercised in
full immediately prior to a Change in Control Event, then this Warrant shall
be automatically exercised pursuant to Section 3 below, without further action
on the part of the Holder (and the Holder hereof shall be deemed to be a
holder of the Common Stock issued upon such automatic exercise), immediately
prior to the Change in Control Event, unless at any time on or before such
time, the Holder shall notify the Company in writing that no such automatic
exercise is to occur. "Change in Control Event" shall mean (i) the acquisition
of the Issuer by another entity by means of any transaction or series of
related transactions to which the Issuer is party (including, without
limitation, any stock acquisition, reorganization, merger or consolidation but
excluding any sale of stock for capital raising purposes) other than a
transaction or series of transactions in which the holders of the voting
securities of the Issuer outstanding immediately prior to such transaction
continue to retain (either by such voting securities remaining outstanding or
by such voting securities being converted into voting securities of the
surviving entity), as a result of shares in the Issuer held by such holders
prior to such transaction, at least 50% of the total voting power represented
by the voting securities of the Issuer or such surviving entity outstanding
immediately after such transaction or series of transactions; (b) a sale,
lease or other conveyance of all or substantially all of the assets of the
Issuer; or (c) any liquidation, dissolution or winding up of the Issuer,
whether voluntary or involuntary.
(b) As promptly as practicable, and in any event
within five (5) business days after the later of (i) its receipt of the
Exercise Materials and (ii) the clearing of the Funds, the Company shall
execute or cause to be executed and delivered to the Holder a certificate or
certificates representing the number of Warrant Shares specified in the
Exercise Notice, together with cash in lieu of any fraction of a share. The
stock certificate or certificates shall be registered in the name of the
Holder or such other name or names as shall be designated in the Exercise
Notice. The Effective Date and the date the person in whose name any
certificate evidencing the Common Stock issued upon the exercise hereof is
issued shall be deemed to have become the holder of record of such shares,
shall be the date the Company receives the Exercise Materials, irrespective of
the
2
date of delivery of a certificate or certificates evidencing the Common Stock
issued upon the exercise or conversion hereof, provided, however, that if the
Exercise Materials are received by the Company on a date on which the stock
transfer books of the Company are closed, the Effective Date shall be the next
succeeding date on which the stock transfer books are open. If this Warrant
shall have been exercised only in part, then, unless this Warrant has expired,
the Company shall, at its expense, at the time of delivery of such
certificates, deliver to the Warrantholder a new Warrant representing the
right to purchase the number of shares with respect to which this Warrant
shall not then have been exercised. In the event that this Warrant is
exercised, in whole in connection with a Change in Control Event, the
Effective Date shall be the date of the consummation by the Company of such
Change in Control Event. All shares of Common Stock issued upon the exercise
or conversion of this Warrant will, upon issuance, be fully paid and
non-assessable and free from all taxes, liens, and charges with respect
thereto.
Section 3.
Cashless Exercise. In lieu of exercising
-----------------
this Warrant pursuant to Section 2(c), the Holder may elect to receive,
------------
without payment by the Holder of any additional consideration, shares of
Common Stock equal to the value of this Warrant (or the portion thereof being
cancelled) by surrender of this Warrant at the principal office of the Company
together with an Exercise Notice, in which event the Company shall issue to
the Holder a number of shares of Common Stock computed using the following
formula:
Y (A - B)
X= ---------
A
Where:
X =
The number of shares of Common Stock to be issued to the Holder pursuant
to this cashless exercise;
Y =
The number of Warrant Shares in respect of which the cashless exercise
election is made;
A =
The fair market value of one (1) share of Common Stock at the time the
cashless exercise election is made; and
B =
The Exercise Price (as adjusted to the date of the cashless exercise)
For purposes of this Section 3, the fair market value of one (1)
---------
share of Common Stock as of a particular date shall be determined as follows:
(i) if listed or quoted for
3
trading on a securities market or exchange, the value shall be deemed to be
the average closing price of the securities on such exchange over the thirty
(30) day period ending three (3) days prior to the cashless exercise election;
(ii) if traded over-the-counter, the value shall be deemed to be the average
of the closing bid or sale prices (whichever is applicable) over the thirty
(30) day period ending three (3) days prior to the cashless exercise election;
and (iii) if there is no active public market, the value shall be the fair
market value thereof, as jointly determined in good faith by the Holder and
the Company's Board of Directors. If the Holder and the Company's Board of
Directors are unable to reach such a determination, the Holder and the
Company's Board of Directors shall jointly select an appraiser, who is
experienced in such matters. The decision of such appraiser shall be final and
conclusive, and the cost of such appraiser shall be borne equally by the
Holder and the Company.
Section 4.
Adjustments to Warrant Shares;
------------------------------
Antidilution. 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.
---------
(a) Subdivisions, Combinations and Other Issuances.
----------------------------------------------
If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by split-up or otherwise, or combine its Common
Stock, or issue additional shares of its Common Stock as a dividend, the
number of Warrant Shares issuable on the exercise of this Warrant shall
forthwith be proportionately increased in the case of a subdivision or stock
dividend, or proportionately decreased in the case of a combination.
Appropriate adjustments shall also be made to the Exercise Price, but the
aggregate Exercise Price payable for the total number of Warrant Shares
purchasable under this Warrant (as adjusted) shall remain the same. Any
adjustment under this Section 4(a) shall become effective at the close of
------------
business on the date the subdivision or combination becomes effective, or as
of the record date of such dividend, or in the event that no record date is
fixed, upon the making of such dividend.
(b) Reclassification, Reorganization and
------------------------------------
Consolidation. In case of any reclassification, capital reorganization, or
-------------
change in the Common Stock of the Company (other than as a result of a
subdivision, combination, or stock dividend provided for in Section 4(a)
------------
above), then, as a condition of such reclassification, reorganization, or
change, lawful provision shall be made, and duly executed documents evidencing
the same from the Company or its successor shall be delivered to the Holder,
so that the Holder shall have the right at any time prior to the expiration of
this Warrant to purchase, at a total price equal to that payable upon the
exercise of this Warrant, the kind and amount of shares of stock and other
securities and property receivable in connection with such reclassification,
reorganization, or change by a holder of the same number of shares of Common
Stock as were purchasable by the Holder immediately prior to such
reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to
any shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate
4
adjustments shall be made to the Exercise Price payable hereunder, provided
the aggregate Exercise Price shall remain the same.
(c) Full Ratchet. If, after the date hereof, the
------------
Company issues "ADDITIONAL SHARES OF COMMON" as defined below, at a price less
than $0.43 per share: (i) the Exercise Price of this Warrant shall be reduced
to1.5 times the issue price of such Additional Shares of Common; and (ii) the
number of shares of Common Stock for which this Warrant is exercisable shall
equal the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such reduction of the Exercise Price times a
fraction (x) the numerator of which is the Exercise Price immediately prior to
such reduction, and (y) the denominator of which is the reduced Exercise Price
(as set forth in clause (i) immediately above). No adjustment in the Exercise
Price shall be made if such adjustment would result in an Exercise Price below
the higher of (A) the book value per share of Common Stock, and (B) the
closing consolidated bid price per share of Common Stock, on the date hereof,
or which would result in this Warrant being exercisable for shares
--
representing more than 19.9% of the Company's outstanding Common Stock, each
as calculated in accordance with Nasdaq Listing Rules, unless the provisions
------
of this Section 4(c) are first approved by the Company's stockholders in
accordance with Nasdaq Listing Rules. The Company agrees to include a proposal
for such approval in the proxy statement sent to stockholders in connection
with the Company's next meeting of stockholders unless such inclusion is
waived by Holder. No adjustment in the Exercise Price shall be made in respect
of the issuance of Additional Shares of Common unless the consideration
actually received per share for an Additional Share of Common issued or deemed
to be issued by the Company is less than the Exercise Price in effect on the
date of, and immediately prior to, such issuance. "ADDITIONAL SHARES OF
COMMON" shall mean all shares of Common Stock issued or deemed to be issued by
the Company after the date hereof, other than issuances or deemed issuances
of:
(i) shares of Common Stock issued or
issuable to officers, directors and employees of, or consultants to, the
Company pursuant to stock grants, option plans, purchase plans or other
employee stock incentive programs or arrangements approved by the Board of
Directors, including or upon exercise of options or warrants granted to such
parties pursuant to any such plan or arrangement;
(ii) shares of Common Stock issued upon
the exercise or conversion of options or convertible securities outstanding as
of the date hereof;
(iii) shares of Common Stock issued or
issuable pursuant to any event for which adjustment is made pursuant to
paragraph 4(a) or 4(b) hereof;
(iv) shares of Common Stock issued or
issuable pursuant to the acquisition of another entity by the Company by
merger, purchase of stock, purchase of substantially all of the assets or
other reorganization or to a joint venture agreement, provided that such
issuances are approved by the Board of Directors;
5
(v) shares of Common Stock issued or
issuable to banks, equipment lessors or other financial institutions pursuant
to a debt financing or commercial leasing transaction that is not effected
primarily for capital raising purposes and that is approved by the Board of
Directors;
(vi) shares of Common Stock issued or
issuable in connection with sponsored collaboration, marketing or other
similar strategic agreements or strategic partnerships approved by the Board
of Directors; and
(vii) shares of Common Stock issued or
issuable to suppliers or third party service providers in connection with the
provision of goods or services pursuant to transactions approved by the Board
of Directors.
(d) Calculations. All calculations under this
------------
Section 4 shall be made to the nearest cent or the nearest 1/100th of a share,
---------
as applicable. The number of shares of Common Stock outstanding at any given
time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issue
or sale of Common Stock.
(e) Warrant Shares. The Company covenants and
--------------
agrees that all Warrant Shares which may be issued will, upon issuance, be
validly issued, fully paid, and non-assessable. The Company further covenants
and agrees that the Company will at all times have authorized and reserved,
free from preemptive rights, a sufficient number of shares of its Common Stock
to provide for the exercise of this Warrant in full.
Section 5.
Notice of Adjustments. Upon the occurrence
---------------------
of each adjustment pursuant to Section 4, the Company at its expense will
---------
promptly compute such adjustment in accordance with the terms of this Warrant
and prepare a certificate setting forth such adjustment, including a statement
of the adjusted Exercise Price, describing the transactions giving rise to
such adjustments and showing in detail the facts upon which such adjustment is
based. When any such adjustment is required to be made, the Company will
promptly, but in any event no later than ten (10) days after said adjustment,
notify the Holder of the event giving rise to such adjustment and deliver a
copy of each such certificate to the Holder.
Section 6.
Registration Rights. The Holder shall be
-------------------
entitled to registration rights with respect to the Warrant Shares as set
forth in the Subscription Agreement by and among the Company and the
purchasers set forth on Schedule A thereto, dated June 1, 2009 (the
"Subscription Agreement"). If the Company enters into an Investors Rights
Agreement or other agreement granting registration rights which are superior
to, or additional to, the registration rights set forth in the Subscription
Agreement at any time while this Warrant is outstanding, Holder shall be
entitled to the registration rights provided for in that agreement. For
purposes of the second to last
6
sentence of Section 6(f) of the Subscription Agreement, the "aggregate
purchase price paid by such Subscriber pursuant to this Subscription Agreement
for any Registrable Securities", with respect to the Warrant Shares and the
Secured Promissory Note pursuant to which this Warrant was issued shall be
Five Hundred Thousand Dollars ($500,000).
Section 7.
No Stockholder Rights. This Warrant shall
---------------------
not entitle Holder to any voting rights or other rights as a stockholder of
the Company.
Section 8.
Transfer of Securities.
----------------------
(a) This Warrant and the Warrant Shares and any
shares of capital stock received in respect thereof, whether by reason of a
stock split or share reclassification thereof, a stock dividend thereon, or
otherwise, shall not be transferable except upon compliance with the
provisions of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
and applicable state securities laws with respect to the transfer of such
securities. The Holder, by acceptance of this Warrant, agrees to be bound by
the provisions this Section 8 hereof and to indemnify and hold harmless the
---------
Company against any loss or liability arising from the disposition of this
Warrant or the Warrant Shares issuable upon exercise hereof or any interest in
either thereof in violation of the provisions of this Warrant.
(b) Each certificate for the Warrant Shares and any
shares of capital stock received in respect thereof, whether by reason of a
stock split or share reclassification thereof, a stock dividend thereon, or
otherwise, and each certificate for any such securities issued to subsequent
transferees of any such certificate shall (unless otherwise permitted by the
provisions hereof) be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, SUCH
REGISTRATION AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH IS ACCEPTABLE TO THE ISSUER."
Section 9.
Replacement of Warrant. If this Warrant is
----------------------
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and
7
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a new warrant (the "NEW WARRANT"), but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction and customary and reasonable bond or indemnity, if requested.
Section 10.
Miscellaneous.
-------------
(a) The terms of this Warrant shall be binding upon
and shall inure to the benefit of any successors or permitted assigns of the
Company and the Holder.
(b) Except as otherwise provided herein, this
Warrant and all rights hereunder are transferable by the registered holder
hereof in person or by duly authorized attorney on the books of the Company
upon surrender of this Warrant, properly endorsed, to the Company. The Company
may deem and treat the registered holder of this Warrant at any time as the
absolute owner hereof for all purposes and shall not be affected by any notice
to the contrary.
(c) Notwithstanding any provision herein to the
contrary, the Holder may not exercise, sell, transfer, or otherwise assign
this Warrant unless the Company is provided with an opinion of counsel
satisfactory in form and substance to the Company, to the effect that such
exercise, sale, transfer, or assignment would not violate the Securities Act
or applicable state securities laws.
(d) All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be
in writing and, unless otherwise specified herein, shall be (i) personally
served, (ii) deposited in the mail, registered or certified, return receipt
requested, postage prepaid, (iii) delivered by reputable air courier service
with charges prepaid, or (iv) transmitted by hand delivery, telegram, or
facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other
communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address
or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during
normal business hours where such notice is to be received) or (b) on the
second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such communications
shall be: (i) if to the Company, to: Xxxxxxxx Curhan Ford Group, Inc., 000
Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention:
Chief Financial Officer, telecopier: (000) 000-000-0000, (ii) if to the Holder
to: the address and telecopier number indicated in the Company's records, as
may be updated in accordance with the provisions hereof.
8
(e) This Warrant shall be governed by and construed
in accordance with the laws of the State of California without regard to
principles of conflicts of laws. Any action brought by either party against
the other concerning the transactions contemplated by this Warrant shall be
brought only in the state courts of State of California located in the city
and county of San Francisco or in the federal courts located in the city and
county of San Francisco, California. THE PARTIES AND THE INDIVIDUALS EXECUTING
THIS WARRANT AND OTHER AGREEMENTS REFERRED TO HEREIN OR DELIVERED IN
CONNECTION HEREWITH ON BEHALF OF THE COMPANY AGREE TO SUBMIT TO THE
JURISDICTION OF SUCH COURTS AND WAIVE TRIAL BY JURY. The prevailing party
shall be entitled to recover from the other party its reasonable attorney's
fees and costs. In the event that any provision of this Warrant or any other
agreement delivered in connection herewith is invalid or unenforceable under
any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.
(f) The headings herein are for convenience only,
do not constitute a part of this Warrant and shall not be deemed to limit or
affect any of the provisions hereof.
(g) In case any one or more of the provisions of
this Warrant shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Warrant shall
not in any way be affected or impaired thereby and the parties will attempt in
good faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
[The remainder of this page intentionally left blank]
9
SIGNATURE PAGE
TO
XXXXXXXX CURHAN FORD GROUP, INC.
COMMON STOCK PURCHASE WARRANT
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed in its name by its duly authorized officers under seal, and to be
dated as of the date first above written.
XXXXXXXX CURHAN FORD GROUP, INC.
By: /s/ D. Xxxxxxxx Xxxxxxxx
--------------------------------
Name: D. Xxxxxxxx Xxxxxxxx
Title: Chief Executive Officer
[Signature Page to Xxxxxxxx Curhan Ford Group, Inc.
Common Stock Purchase Warrant]
10
ASSIGNMENT
(To be Executed by the Holder to effect a transfer of the foregoing
Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, and assigns and transfers
unto ______________________ the foregoing Warrant and the rights represented
thereto to purchase shares of Common Stock, par value $0.0001 per share, of
XXXXXXXX CURHAN FORD GROUP, INC. in accordance with terms and conditions
thereof, and does hereby irrevocably constitute and appoint ________________
Attorney to transfer the said Warrant on the books of the Company, with full
power of substitution.
Holder:
--------------------------------------------
--------------------------------------------
Address
Dated: __________________, 20__
In the presence of:
--------------------------------------------
11
NOTICE OF EXERCISE
[To be signed only upon exercise of Warrant]
To:
XXXXXXXX CURHAN FORD GROUP, INC.
The undersigned Holder of the attached Warrant hereby irrevocably
elects to exercise the Warrant for, and to purchase thereunder, _________
shares of Common Stock, par value $0.0001 per share, of XXXXXXXX CURHAN FORD
GROUP, INC., issuable upon exercise of said Warrant and hereby surrenders said
Warrant.
The undersigned herewith requests that the certificates for such
shares be issued in the name of, and delivered to the undersigned, whose
address is ________________________________.
If electronic book entry transfer, complete the following:
Account Number: ____________________________
Transaction Code Number: _____________________
Dated: ___________________
Holder:
------------------------------------------
------------------------------------------
By:
-------------------------------------
Name:
Title:
NOTICE
The signature above must correspond to the name as written upon the
face of the within Warrant in every particular, without alteration or
enlargement or any change whatsoever.
12
