EXHIBIT 4.2
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF 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.
WARRANT
WARRANT TO PURCHASE ____________________________________________
(_________) SHARES OF COMMON STOCK
OF
SONUS COMMUNICATION HOLDINGS, INC.
Date of Issuance: April ____, 2001
No.__________
THIS CERTIFIES that, for value received,
________________________, or its assigns (in either case, the
"Holder") is entitled to purchase, subject to the provisions of
this Warrant, from SONUS COMMUNICATION HOLDINGS, INC., a
Delaware corporation (the "Company"), at the price per share set
forth in Section 8 hereof, the number of shares of the Company's
common stock, $.0001 par value per share (the "Common Stock"),
set forth in Section 7 hereof. This Warrant is referred to
herein as the "Warrant" and the shares of Common Stock issuable
pursuant to the terms hereof are sometimes referred to herein as
"Warrant Shares".
Section 1. Exercise of Warrant. To exercise this Warrant in
whole or in part, the Holder shall deliver to the Company at its
principal office, (a) a written notice, in substantially the
form of the exercise notice attached hereto (the "Exercise
Notice"), of the Holder's election to exercise this Warrant,
which notice shall specify the number of shares of Common Stock
to be purchased, (b) a check in the amount of the aggregate
exercise price for the Warrant Shares being purchased, and (c)
this Warrant. The Company shall as promptly as practicable, and
in any event within twenty (20) days after delivery to the
Company of (i) the Exercise Notice, (ii) the check mentioned
above, and (iii) this Warrant, execute and deliver or cause to
be executed and delivered, in accordance with such notice, a
certificate or certificates representing the aggregate number of
shares of Common Stock specified in such notice. If the Holder
elects to purchase, at any time, less than the number of shares
of Common Stock then purchasable under the terms of this
Warrant, the Company shall issue to the Holder a new Warrant
exercisable into the number of remaining shares of Common Stock
purchasable under this Warrant. Each certificate representing
Warrant Shares shall bear the legend or legends required by
applicable securities laws as well as such other legend(s) the
Company requires to be included on certificates for its Common
Stock. The Company shall pay all expenses, taxes and other
charges payable in connection with the preparation, issuance and
delivery of such stock certificates except that, in case such
stock certificates shall be registered in a name or names other
than the name of the Holder, funds sufficient to pay all stock
transfer taxes that are payable upon the issuance of such stock
certificate or certificates shall be paid by the Holder at the
time of delivering the Exercise Notice. All shares of Common
Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid, and nonassessable. This Warrant may be
exercised on multiple occasions in amounts not less than 15% of
the original amount issued before the expiration of its term as
described in this Section 1. This Warrant will expire on the
third anniversary of the date of issuance (the "Expiration
Date").
Section 2. Reservation of Shares. The Company hereby
covenants that at all times during the term of this Warrant
there shall be reserved for issuance such number of shares of
its Common Stock as shall be required to be issued upon exercise
of this Warrant.
Section 3. Fractional Shares. This Warrant may be
exercised only for a whole number of shares of Common Stock, and
no fractional shares or scrip representing fractional shares
shall be issuable upon the exercise of this Warrant.
Transfer of Warrant and Warrant Shares. The Holder may sell,
pledge, hypothecate, or otherwise transfer this Warrant, in
whole or in part, only in accordance with and subject to the
terms and conditions set forth in the Subscription Agreement and
then only if such sale, pledge, hypothecation, or transfer is
made in compliance with the Act or pursuant to an available
exemption from registration under the Act relating to the
disposition of securities, and is made in accordance with
applicable State securities laws.
Loss of Warrant. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, or destruction of this
Warrant, and of indemnification satisfactory to it, or upon
surrender and cancellation of this Warrant, if mutilated, the
Company will execute and deliver a new Warrant of like tenor.
Rights of the Holder. No provision of this Warrant shall be
construed as conferring upon the Holder the right to vote,
consent, receive dividends or receive notice other than as
expressly provided herein. Prior to exercise, no provision
hereof, in the absence of affirmative action by the Holder to
exercise this Warrant, and no enumeration herein of the rights
or privileges of the Holder, shall give rise to any liability of
the Holder for the purchase price of any Warrant Shares or as a
stockholder of the Company, whether such liability is asserted
by the Company or by creditors of the Company.
Number of Warrant Shares. This Warrant shall be exercisable
for up to
__________________________________________________________
(_________) shares of the Company's Common Stock, as adjusted in
accordance with this Agreement.
Exercise Price; Redemption; Adjustment of Warrants.
Determination of Exercise Price. The per share purchase
price (the "Exercise Price") for each of the Warrant Shares
purchasable under this Warrant shall be equal to one cent
($0.01).
(b) Redemption of Warrants. In the event (i) a
registration statement has been filed under the Securities Act
covering the Warrant Shares and other securities which the
Company is contractually obligated to register, and such
registration statement is declared effective by the Securities
and Exchange Commission, and (ii) the bid price of the Common
Stock on the OTC Bulletin Board or other exchange is $1.00 or
higher for twenty consecutive trading days, the Company shall
have the option to deliver a redemption notice (the "Redemption
Notice") to the holder of this Warrant. Upon delivery of the
Redemption Notice, all Warrants which remain outstanding on the
30th day following delivery of the Redemption Notice shall be
automatically redeemed by the Company for $.0001 per Warrant
(the "Redemption Price"). All such unexercised Warrants shall
be deemed cancelled upon the Company's delivery of the
Redemption Price to the Holder. Upon receipt of the Redemption
Price, Holder agrees to return any documentation of the
unexercised Warrants to the Company.
(c) Adjustments for Stock Dividends, Distributions and
Subdivisions. If the Company at any time or from time to time
after the original issue date shall declare or pay any dividend
or distribution on the Common Stock payable in Common Stock, or
effect a subdivision of the outstanding shares of Common Stock
into a greater number of shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
Common Stock), then the number of shares of Common Stock into
which this Warrant is exercisable shall be increased to an
amount which is equal to the product of (i) the number of shares
of Common Stock for which this Warrant is exercisable
immediately prior to the stock dividend, distribution or
subdivision, as the case may be, and (ii) a fraction, the
numerator of which is equal to the number of shares of Common
Stock issued and outstanding after giving effect to such stock
dividend, distribution or subdivision, and the denominator of
which is the number of shares of Common Stock issued and
outstanding prior to such stock dividend, distribution or
subdivision. If the outstanding shares of Common Stock shall be
divided or increased because of a stock dividend or
distribution, by stock split or otherwise, into a greater number
of shares of Common Stock, the Exercise Price in effect
immediately prior to such dividend, distribution or division
shall, concurrently with the effectiveness of such division,
dividend or distribution, be proportionately decreased.
(d) Adjustments for Combinations or Consolidation of
Common Stock. If the outstanding shares of Common Stock shall
be combined or consolidated, by reclassification, reverse stock
split or otherwise, into a lesser number of shares of Common
Stock, then the number of shares of Common Stock into which this
Warrant is exercisable shall be decreased to an amount which is
equal to the product of (i) the number of shares of Common Stock
for which this Warrant is exercisable immediately prior to
combination or consolidation, as the case may be, and (ii) a
fraction, the numerator of which is equal to the number of
shares of Common Stock issued and outstanding after giving
effect to such combination or consolidation, and the denominator
of which is the number of shares of Common Stock issued and
outstanding prior to such combination or consolidation. If the
outstanding shares of Common Stock shall be combined or
consolidated, by reclassification, reverse stock split or
otherwise, into a lesser number of shares of Common Stock, the
Exercise Price in effect immediately prior to such combination
or consolidation shall, concurrently with the effectiveness of
such combination or consolidation, be proportionately increased.
(e) Adjustment for Mergers or Reorganization, etc. In
case of any consolidation or merger of the Company with or into
another corporation or the conveyance of all or substantially
all of the assets of the Company to another corporation, this
Warrant shall be exercisable into the number of shares of stock
or other securities or property to which a holder of the number
of shares of Common Stock of the Company deliverable upon
exercise of this Warrant would have been entitled upon such
consolidation, merger or conveyance; and, in any such case,
appropriate adjustment (as determined by the Board of Directors
of the Company) shall be made in the application of the
provisions herein set forth with respect to the rights and
interest thereafter of the holder of this Warrant, to the end
that the provisions set forth herein shall thereafter be
applicable, as nearly as reasonable may be, in relation to any
shares of stock or other property thereafter deliverable upon
the exercise of this Warrant.
(f) No Impairment. The Company will not, 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 Section 8 and in the
taking of all such action as may be necessary or appropriate in
order to protect the exercise rights of the holder of this
Warrant against impairment.
(g) Issue Taxes. The Company shall pay any and all issue
and other taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on exercise of this Warrant,
in whole or in part; provided, however, that the Company shall
not be obligated to pay any transfer taxes resulting from any
transfer requested by any holder in connection with any such
exercise.
(h) Reservation of Stock Issuable Upon Exercise. The
Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the
purpose of effecting the exercise of this Warrant, such number
of its shares of Common Stock as shall from time to time be
sufficient to effect the exercise of this Warrant; and 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 take all appropriate 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 purpose.
Section 9. Piggy-Back Registration Rights.
(a) Grant of Piggy-Back Rights. In the event that the
Company shall hereafter initiate a registration of any of its
common stock (a "Registered Offering"), either for its own
account or the account of any other holder or holders of equity
securities or securities convertible into equity securities of
the Company, other than (i) a registration relating solely to
employee benefit plans, (ii) a registration relating solely to a
Rule 145 transaction, (iii) a registration in which the only
equity security being registered is capital stock issuable upon
conversion of convertible (or exchange of exchangeable) debt
securities which are also being registered, or (iv) an initial
public offering of the Company, the Company will provide the
Holder with written notice thereof within 30 days of the filing
date of the first registration statement filed in connection
with the Registered Offering (the "Company Notice"), and,
subject to the other terms and conditions set forth in this
Section, include in such registration (and any related
qualification under blue sky laws or other compliance) and any
underwriting involved therein, if any, the Warrant Shares which
the Holder requests to be included therein within 10 days after
the date of the Company Notice (collectively, the "Registrable
Securities").
(b) Underwritten Registered Offering. If the Registered
Offering of which the Company gives notice is for a registered
public offering involving an underwriting, the Company shall so
advise the Holder as a part of the Company Notice. In such
event, the Holder's rights to registration pursuant to this
Section 9 shall be conditioned upon the Holder's participation
in such underwriting, and the inclusion of the Holder's
Registrable Securities in the underwriting shall be limited to
the extent provided herein. The Holder shall (together with the
Company and the other holders distributing their securities
through such underwriting, if any) enter into an underwriting
agreement in customary form with the managing underwriter
selected for such underwriting by the Company. Notwithstanding
any other provision of this Section 9, if the managing
underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, the
managing underwriter may limit the number of the Holder's
Registrable Securities to be included in such registration to
such number of the Holder's Registrable Securities which the
managing underwriter determines can be included in such
underwriting without reducing the number of shares to be sold by
the Company pursuant to such underwriting or by any persons or
entities exercising demand registration rights in connection
with such registration. In such event, the Company shall so
advise the Holder and the number of shares (other than shares
being registered by the Company) that may be included in the
registration and underwriting shall be allocated among all the
holders of the Company's shares wishing to participate in the
Registered Offering in proportion, as nearly as practicable, to
the respective amounts of shares held by such holders at the
time of filing the Registration Statement. To facilitate the
allocation of shares in accordance with the above provisions,
the Company may round the number of shares allocated to any
holder to the nearest 100 shares. If the Holder disapproves of
the terms of any such underwriting, the Holder may elect to
withdraw therefrom by written notice to the Company and the
managing underwriter. Any securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration, and
shall not be transferred in a public distribution prior to 180
days after the effective date of the registration statement
relating thereto, or such other shorter period of time as the
underwriters may require.
(c) Termination and Withdrawal of Registration. The
Company shall have the right to terminate or withdraw any
Registered Offering or other registration prior to the
effectiveness of such registration whether or not the Holder has
elected to include its Registrable Securities in such
registration.
(d) Expenses. All registration expenses incurred in
connection with registrations pursuant to this Section 9 shall
be borne by the Company. Unless otherwise stated, all selling
expenses relating to the Holder's Registrable Securities shall
be borne by the Holder.
(e) Notification Requirements. In the case of each
registration, qualification or compliance effected by the
Company pursuant to this Agreement, the Company will keep the
Holder advised in writing as to the initiation of each
registration, qualification and compliance and as to the
completion thereof. At its expense the Company will:
(i) prepare and file with the Commission a
registration statement with respect to such securities and use
reasonable best efforts to cause such registration statement to
become and remain effective for at least one hundred twenty
(120) days or until the distribution described in the
registration statement has been completed, whichever first
occurs; and
(ii) furnish to the Holder, should the Holder
participate in such registration, and to the underwriters of the
securities being registered such reasonable number of copies of
the registration statement, preliminary prospectus, final
prospectus and such other documents the Holder and/or the
underwriters may reasonably request in order to facilitate the
public offering of such securities.
(f) Underwriting Agreement Governs. In the event the
terms of this Section 9 conflicts with the terms of any
underwriting agreement in connection with any registration
hereunder, the terms of such underwriting agreement shall
control.
(g) Information. If the Holder's Registrable Securities
are to be included in any Registered Offering, the Holder shall
furnish to the Company such information as the Company may
request in writing and as shall be required in connection with
any registration, qualification or compliance referred to in
this Agreement.
(h) Termination. The rights granted pursuant to this
Section 9 shall terminate at such time as the Company has
registered the Holder's Registrable Securities in a Registered
Offering or other registration or when the Holder is permitted
to sell all of its Warrant Shares within any ninety day period
under Rule 144 promulgated under the Securities Act of 1933.
Section 10. Certain Distributions. In case the Company
shall, at any time, prior to the Expiration Date set forth in
Section 1 hereof, declare any distribution of its assets to
holders of its Common Stock as a partial liquidation,
distribution or by way of return of capital, other than as a
dividend payable out of earnings or any surplus legally
available for dividends, then the Holder shall be entitled, upon
the proper exercise of this Warrant in whole or in part prior to
the effecting of such declaration, to receive, in addition to
the shares of Common Stock issuable on such exercise, the amount
of such assets (or at the option of the Company a sum equal to
the value thereof at the time of such distribution to holders of
Common Stock as such value is determined by the Board of
Directors of the Company in good faith), which would have been
payable to the Holder had it been a holder of record of such
shares of Common Stock on the record date for the determination
of those holders of Common Stock entitled to such distribution.
Section 11. Dissolution or Liquidation. In case the
Company shall, at any time prior to the Expiration Date set
forth in Section 1 hereof, dissolve, liquidate or wind up its
affairs, the Holder shall be entitled, upon the proper exercise
of this Warrant in whole or in part and prior to any
distribution associated with such dissolution, liquidation, or
winding up, to receive on such exercise, in lieu of the shares
of Common Stock to which the Holder would have been entitled,
the same kind and amount of assets as would have been
distributed or paid to the Holder upon any such dissolution,
liquidation or winding up, with respect to such shares of Common
Stock had the Holder been a holder of record of such share of
Common Stock on the record date for the determination of those
holders of Common Stock entitled to receive any such
dissolution, liquidation, or winding up distribution.
Section 12. Reclassification or Reorganization. In case
of any reclassification, capital reorganization or other change
of outstanding shares of Common Stock of the Company (other than
a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of an issuance of
Common Stock by way of dividend or other distribution or of a
subdivision or combination), the Company shall cause effective
provision to be made so that the Holder shall have the right
thereafter by exercising this Warrant, to purchase the kind and
amount of shares of stock and other securities and property
receivable upon such reclassification, capital reorganization or
other change, by a holder of the number of shares of Common
Stock which might have been purchased upon exercise of this
Warrant immediately prior to such reclassification or change.
Any such provision shall include provision for adjustments which
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing
provisions of this Section 12 shall similarly apply to
successive reclassifications, capital reorganizations and
changes of shares of Common Stock. In the event that in any
such capital reorganization, reclassification, or other change,
additional shares of Common Stock shall be issued in exchange,
conversion, substitution or payment, in whole or in part, for or
of a security of the Company other than Common Stock, any amount
of the consideration received upon the issue thereof being
determined by the Board of Directors of the Company shall be
final and binding on the Holder.
Section 13. Indemnification.
(a) Indemnification. The Holders agree, if any of
Holders' Registrable Securities are included in the securities
as to which such registration, qualification or compliance is
being effected, to indemnify the Company, each of its directors
and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each Person
who controls the Company or such underwriter within the meaning
of Section 15 of the Securities Act, and each other such holder,
each of its officers and directors and each Person controlling
such holder within the meaning of Section 15 of the Securities
Act, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus,
offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, and will reimburse the Company, such holders, such
directors, officers, Persons, underwriters or control Persons
for any legal or any other expenses reasonably incurred, as such
expenses are incurred, in connection with investigating or
defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon
and in conformity with written information furnished to the
Company by the Holder. Notwithstanding the foregoing, the
Holder's liability under this subsection shall be limited in an
amount equal to the initial price of the Registrable Securities
sold by the Holder, unless such liability arises out of or is
based on willful misconduct by the Holder.
(b) Indemnification Procedure. Each party entitled to
indemnification under this Section (the "Indemnified Party")
shall give notice to the party required to provide
indemnification (the "Indemnifying Party") after such
Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party
to assume the defense of any such claim or any litigation
resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld), and the
Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this
Agreement, unless the failure to give such notice is materially
prejudicial to an Indemnifying Party's ability to defend such
action, and provided further that the Indemnifying Party shall
not assume the defense for matters as to which there is a
conflict of interest or separate and different defenses. No
Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to
such claim or litigation.
Section 14. Miscellaneous.
(a) Successors and Assigns. The terms and conditions of
this Agreement shall inure to the benefit of, and be binding
upon, the respective successors and assigns of the parties,
except to the extent otherwise provided herein. Nothing in this
Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto or their respective
successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(b) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Delaware, without regard to the principles of conflict of laws
thereof.
(c) Counterparts; Delivery by Facsimile. This Agreement
may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall
constitute one and the same instrument. Delivery of this
Agreement may be effected by facsimile.
(d) Titles and Subtitles. The titles and subtitles used
in this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement.
(e) Notices. Unless otherwise provided, any notice
required or permitted hereunder shall be given by personal
service upon the party to be notified, by nationwide overnight
delivery service or upon deposit with the United States Post
Office, by certified mail, return receipt requested and:
i. if to the Company, addressed to SONUS
COMMUNICATION HOLDINGS, INC., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxx Xxxxx, with a copy to Xxxxx X.
Xxxxxx, III, Esquire, McGuireWoods LLP, Seven Xxxxx Xxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxx, Xxxxxxxx 00000-0000, or at such other
address as the Company may designate by notice to the Holder in
accordance with the provisions of this Section; and
ii. if to the Warrant holder, at the address
indicated on the signature pages hereof, or at such other
addresses as such Holder may designate by notice to the Company
in accordance with the provisions of this Section.
(f) Amendments and Waivers. Any term of this Agreement
may be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance and
either prospectively or retroactively), only with the written
consent of the Company and a majority in interest of the Holders
receiving Warrants in the Offering.
(g) Entire Agreement. This Agreement and the Security
Agreement (including the exhibits and schedules hereto)
constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof and supersede
all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties hereto.
IN WITNESS WHEREOF, the undersigned hereby sets is hand and
seal this ____ day of April, 2001.
SONUS COMMUNICATION HOLDINGS, INC.
By:____________________________________
______
Name: Xxxxx Xxxx
Title: Chief Executive Officer
By:_________________________________
Title:________________________________
