THIS WARRANT AND THE SHARES OF COMMON STOCK OF OPAL TECHNOLOGIES, INC. TO BE
ISSUED UPON ANY EXERCISE OF THE WARRANT HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
WARRANT
to Purchase Shares
of
Common Stock (.001 par value)
of
Opal Technologies, Inc.
May 12, 1998
This certifies that, for value received, Corinthian Capital Limited, ("CC")
and any subsequent transferee pursuant to the terms hereof (each, a "Holder"),
is entitled to purchase, subject to the provisions of this Warrant, from Opal
Technologies, Inc., a Nevada corporation (the "Issuer"), at any time or from
time to time on or after May 12, 1998 and on or before September 1, 2000 (the
"Expiration Date"), such number as is equal to the sum of the following:
(a) Twenty-five percent of the total of the issued and outstanding shares
of the Issuer as of May 12, 1998, plus
(b) Twenty-five percent of the total warrants issued and outstanding as of
May 12, 1998, including this warrant; plus
(c) Twenty-five percent of the total of any other shares reserved or
issuable by the Issuer used in computing the number of shares
outstanding on a fully diluted basis; less
(d) That number of shares of the Issuer owned by Bestalong Group, Inc.
multiplied by the percentage of share ownership of CC in Bestalong
Group, Inc.
fully paid and nonassessable shares of common stock, $.001 par value (the
"Common Stock"), of the Issuer at an exercise price equal to $1.00 per share,
subject to adjustment pursuant to the terms hereunder (the "Exercise Price")
(such shares of Common Stock and other securities issued and issuable upon
exercise of this Warrant, the "Warrant Shares"). This Warrant supercedes and
replaces the warrants granted pursuant to the Agreement dated April 22, 1997
between Bestalong Group, Inc. and Corinthian Capital Limited.
Section 1. Exercise of Warrant.
1
(a) Subject to the provisions hereof, this Warrant may be exercised,
in whole or in part, but not as to a fractional share, at any time or from
time to time on or after May 12, 1998 and on or before the Expiration Date,
by presentation and surrender hereof to the Issuer at the address which, in
accordance with the provisions of Section 9 hereof, is then effective for
notices to the Issuer, with the Election to Purchase Form annexed hereto as
Schedule One, duly executed and accompanied by payment to the Issuer as
further set forth below in this Section 1, for the account of the Issuer,
of the Exercise Price for the number of Warrant Shares specified in such
form. If this Warrant should be exercised in part only, the Issuer shall,
upon surrender of this Warrant, execute and deliver a new Warrant
evidencing the rights of the Holder hereof to purchase the balance of the
Warrant Shares purchasable hereunder. The Issuer shall maintain at its
principal place of business a register for the registration of this Warrant
and registration of transfer of the Warrant. The Exercise Price for the
number of Warrant Shares specified in the Election to Purchase Form shall
be payable in United States Dollars by certified or official bank check
payable to the order of the Issuer or by wire transfer of immediately
available funds to an account specified by the Issuer for that purpose.
(b) Certificates representing Warrant Shares shall bear the following
restrictive legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF EITHER AN EFFECTIVE REGISTRATION STATEMENT FOR THESE
SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF
COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
(c) Once the registration of the Common Stock underlying the Warrants
has been declared effective, the restriction legend denoted in Paragraph
(b) of this Section 1 shall be removed from any outstanding Common Share.
Section 2. Reservation of Shares; Preservation of Rights of Holder. The
Issuer hereby agrees that there shall be reserved for issuance and/or delivery
upon exercise of this Warrant, such number of Warrant Shares as shall be
required for issuance or delivery upon exercise of this Warrant. The Warrant
surrendered upon exercise shall be canceled by the Issuer. After the Expiration
Date no shares of Common Stock shall be subject to reservation in respect of
this Warrant. The Issuer further agrees (i) that it will not, by amendment of
its Articles of Incorporation or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observation or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by the Issuer, (ii) promptly to
take all action as may from time to time be required in order to permit the
Holder to exercise this Warrant and the Issuer duly and effectively to issue
shares of its Common Stock or other securities as provided herein upon the
exercise hereof, and (iii) promptly to take all action required or provided
herein to protect the rights of the Holder granted hereunder against dilution.
Without limiting the generality of the foregoing, should the Warrant Shares at
any time consist in whole or in part of shares of capital stock having a par
value, the Issuer agrees that before taking any action which would cause an
adjustment of the Exercise Price so that the same would be less than the then
par value of such Warrant Shares, the Issuer shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that the Issuer
may validly and legally issue fully paid and nonassessable shares of such Common
Stock at the Exercise Price as so adjusted. The Issuer further agrees that it
will not establish a par value for its Common Stock while this Warrant is
outstanding in an amount greater than the Exercise Price.
2
Section 3. Exchange, Transfer, Assignment or Loss of Warrant. This Warrant
is not transferable or assignable except as provided in this Section 3. Any
attempted transfer of this Warrant, the Warrant Shares or any new Warrant not in
accordance with this Section shall be null and void, and the Issuer shall not in
any way be required to give effect to such transfer. No transfer of this Warrant
shall be effective for any purpose hereunder until (i) written notice of such
transfer and of the name and address of the transferee has been received by the
Issuer, and (ii) the transferee shall first agree in a writing deposited with
the Secretary of the Issuer to be bound by all the provisions of this Warrant.
Upon surrender of this Warrant to the Issuer by any transferee authorized under
the provisions of this Section 3, the Issuer shall, without charge, execute and
deliver a new Warrant registered in the name of such transferee at the address
specified by such transferee, and this Warrant shall promptly be canceled. The
Issuer may deem and treat the registered holder of any Warrant as the absolute
owner thereof for all purposes, and the Issuer shall not be affected by any
notice to the contrary. Any Warrant if presented by an authorized transferee,
may be exercised by such transferee without prior delivery of a new Warrant
issued in the name of the transferee.
Upon receipt by the Issuer of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Issuer will
execute and deliver a new Warrant of like tenor and date. Any such new Warrant
executed and delivered shall constitute a separate contractual obligation on the
part of the Issuer, whether or not the Warrant so lost, stolen destroyed or
mutilated shall be at any time enforceable by anyone.
3
Section 4. Rights of Holder. Neither a Holder nor his transferee by devise
or otherwise shall be, or have any rights or privileges of, a shareholder of the
Issuer with respect to any Warrant Shares, unless and until certificates
representing such Warrant Shares shall have been issued and delivered thereto.
Section 5. Adjustments in Exercise Price and Warrant Shares. The Exercise
Price and Warrant Shares shall be subject to adjustment from time to time as
provided in this Section 5.
(a) If the Issuer is recapitalized through the subdivision or
combination of its outstanding shares of Common Stock into a larger or
smaller number of shares, the number of shares of Common Stock for which
this Warrant may be exercised shall be increased or reduced, as of the
record date for such recapitalization, in the same proportion as the
increase or decrease in the outstanding shares of Common Stock, and the
Exercise Price shall be adjusted so that the aggregate amount payable for
the purchase of all Warrant Shares issuable hereunder immediately after the
record date for such recapitalization shall equal the aggregate amount so
payable immediately before such record date.
(b) If the Issuer declares a dividend on Common Stock, or makes a
distribution to holders of Common Stock, and such dividend or distribution
is payable or made in Common Stock or securities convertible into or
exchangeable for Common Stock, or rights to purchase Common Stock or
securities convertible into or exchangeable for Common Stock, the number of
shares of Common Stock for which this Warrant may be exercised shall be
increased, as of the record date for determining which holders of Common
Stock shall be entitled to receive such dividend or distribution, in
proportion to the increase in the number of outstanding shares (and shares
of Common Stock issuable upon conversion of all such securities convertible
into common Stock) of Common Stock as a result of such dividend or
distribution, and the Exercise Price shall be adjusted so that the
aggregate amount payable for the purchase of all the Warrant Shares
issuable hereunder immediately after the record date for such dividend or
distribution shall equal the aggregate amount so payable immediately before
such record date.
(c) If the Issuer declares a dividend on Common Stock (other than a
dividend covered by subsection (b) above) or distributes to holders of its
Common Stock, other than as part of its dissolution or liquidation or the
winding up of its affairs, any shares of its capital stock, any evidence of
indebtedness or any cash or other of its assets (other than Common Stock or
securities convertible into or exchangeable for Common Stock), the Holder
shall receive notice of such event as set forth in Section 7 below.
(d) In case of any consolidation of the Issuer with, or merger of the
Issuer into, any other corporation (other than a consolidation or merger in
which the Issuer is the continuing corporation and in which no change
occurs in its outstanding Common Stock), or in case of any sale or transfer
of all or substantially all of the assets of the Issuer, or in the case of
any statutory exchange of securities with another corporation (including
any exchange effected in connection with a merger of a third corporation
into the Issuer, except where the Issuer is the surviving entity and no
change occurs in its outstanding Common Stock), the corporation formed by
such consolidation or the corporation resulting from such merger or the
corporation which shall have acquired such assets or securities of the
Issuer, as the case may be, shall execute and deliver to the Holder
simultaneously therewith a new Warrant, satisfactory in form and substance
to the Holder, together with such other documents as the Holder may
reasonably request, entitling the Holder thereof to receive upon exercise
of such Warrant the kind and amount of shares of stock and other securities
and property receivable upon such consolidation, merger, sale, transfer, or
exchange of securities, or upon the dissolution following such sale or
other transfer, by a holder of the number of shares of Common Stock
purchasable upon exercise of this Warrant immediately prior to such
consolidation, merger, sale, transfer, or exchange. Such new Warrant shall
contain the same basic other terms and conditions as this Warrant and shall
provide for adjustments which, for events subsequent to the effective date
of such written instrument, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 5. If any such
consolidation, merger, sale, transfer or exchange should occur prior to May
12, 1998, the date shall be adjusted to the date which is one business day
prior to the closing of any such consolidation, merger, sale, transfer or
exchange. The above provisions of this paragraph (d) shall similarly apply
to successive consolidations, mergers, exchanges, sales or other transfers
covered hereby.
4
(e) If the Issuer shall, at any time before the expiration of this
Warrant dissolve, liquidate or wind up its affairs, the Holder shall, upon
exercise of this Warrant have the right to receive, in lieu of the shares
of Common Stock of the Issuer that the Holder otherwise would have been
entitled to receive, the same kind and amount of assets as would have been
issued, distributed or paid to the Holder upon any such dissolution,
liquidation or winding up with respect to such shares of Common Stock of
the Issuer had the Holder been the holder of record of such shares of
Common Stock receivable upon exercise of this Warrant on the date for
determining those entitled to receive any such distribution. If any such
dissolution, liquidation or winding up results in any cash distribution in
excess of the Exercise Price provided by this Warrant for the shares of
Common Stock receivable upon exercise of this Warrant, the Holder may, at
the Holder's option, exercise this Warrant without making payment of the
Exercise Price and, in such case, the Issuer shall, upon distribution to
the Holder, consider the Exercise Price to have been paid in full and, in
making settlement to the Holder, shall obtain receipt of the Exercise Price
by deducting an amount equal to the Exercise Price for the shares of Common
Stock receivable upon exercise of this Warrant from the amount payable to
the Holder. For purposes of this paragraph, the sale of all or
substantially all of the assets of the Issuer and distribution of the
proceeds thereof to the Issuer's shareholders shall be deemed liquidation.
5
(f) If an event occurs which is similar in nature to the events
described in this Section 5, but is not expressly covered hereby, the Board
of Directors of the Issuer shall make or arrange for an equitable
adjustment to the number of Warrant Shares and the Exercise Price.
(g) If the loan dated May 5, 1998 to Bestalong Group, Inc. in the
amount of $2,200,000 for the benefit of the Issuer is not repaid in full
non or before September 6, 1998, the Exercise Price shall be reduced to the
following Exercise Price if the loan is repaid in full.
Date Exercise Price
-------------------------------- ---------------------------
1. On or after September 1, 1998,
but before September 7, 1998 $ 0.50
2. On or after September 7, 1998, but
before September 15, 1998 0.40
3. On or after September 15, 1998, but
before September 22, 1998 0.30
4. On or after September 22, 1998 but
before September 29, 1998 0.25
5. On or after September 29, 1998 but
before October 6, 1998 0.20
6. On or after October 6, 1998 but
before October 13, 1998 0.15
7. On or after October 13, 1998 but
before October 20, 1998 0.10
8. On or after October 20, 1998 0.05
(h) The term "Common Stock" shall mean the Common Stock, $.001 par
value, of the Issuer as the same exists at the date of issuance of this
Warrant or as such stock may be constituted from time to time, except that
for the purpose of this Section 5, the term "Common Stock" shall include
any stock of any class of the Issuer which has no preference in respect of
dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Issuer and which
is not subject to redemption by the Issuer.
6
(i) The Issuer shall retain a firm of independent public accountants
of recognized standing (who may be any such firm regularly employed by the
Issuer) to make any computation required under this Section 5, and a
certificate signed by such firm shall be conclusive evidence of the
correctness of any computation made under this Section 5.
(j) Whenever the number of Warrant Shares or the Exercise Price shall
be adjusted as required by the provisions of this Section 5, the Issuer
forthwith shall file in the custody of its secretary or an assistant
secretary, at its principal office, and furnish to each Holder hereof, a
certificate prepared in accordance with paragraph (h) above, showing the
adjusted number of Warrant Shares and the Exercise Price and setting forth
in reasonable detail the circumstances requiring the adjustments.
(k) Notwithstanding any other provision, this Warrant shall be binding
upon and inure to the benefit of any successors and assigns of the Issuer.
(l) No adjustment in the Exercise Price in accordance with the
provisions of this Section 5 need be made if such adjustment would amount
to a change in such Exercise Price of less than $.01 provided however, that
the amount by which any adjustment is not made by reason of the provisions
of this paragraph (k) shall be carried forward and taken into account at
the time of any subsequent adjustment in the Exercise Price.
(m) If an adjustment is made under this Section 5 and the event to
which the adjustment relates does not occur, then any adjustments in
accordance with this Section 5 shall be readjusted to the Exercise Price
and the number of Warrant Shares which would be in effect had the earlier
adjustment not been made.
Section 6. Taxes on Issue or Transfer of Common Stock and Warrant. The
Issuer shall pay any and all documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of shares of Common Stock or
other securities on the exercise of this Warrant. The Issuer shall not be
required to pay any tax which may be payable in respect of any transfer of this
Warrant or in respect of any transfers involved in the issue or delivery of
shares or the exercise of this Warrant in a name other than that of the Holder
and the person requesting such transfer, issue or delivery shall be responsible
for the payment of any such tax (and the Issuer shall not be required to issue
or deliver said shares until such tax has been paid or provided for).
7
Section 7. Notice of Adjustment. So long as this Warrant shall be
outstanding, (a) if the Issuer shall propose to pay any dividends or make any
distribution upon the Common Stock, or (b) if the Issuer shall offer generally
to the holder of Common Stock the right to subscribe to or purchase any shares
of any class of Common Stock or securities convertible into Common Stock or any
other similar rights, or (c) if there shall be any proposed capital
reorganization of the Issuer in which the Issuer is not the surviving entity,
recapitalization of the capital stock of the Issuer, consolidation or merger of
the Issuer with or into another corporation, sale, lease or other transfer of
all or substantially all of the property and assets of the Issuer, or voluntary
or involuntary dissolution, liquidation or winding up of the Issuer, or (d) if
the Issuer shall give to its stockholders any notices, report or other
communication respecting any significant or special action or event, then in
such event, the Issuer shall give to the Holder, at least ten days prior to the
relevant date described below (or such shorter period as is reasonably possible
if ten days is not reasonably possible), a notice containing a description of
the proposed action or event and stating the date or expected date on which a
record of the Issuer's stockholders is to be taken for any of the foregoing
purposes, and the date or expected date on which any such dividend,
distribution, subscription, reclassification, reorganization, consolidation,
combination, merger, conveyance, sale, lease or transfer, dissolution,
liquidation or winding up is to take place and the date or expected date, if any
is to be fixed, as of which the holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such event.
Section 8. Registration Rights.
a. Demand Registration Rights. The Issuer covenants and agrees with
the holders of Warrants(the "Registrable Securities") that the Issuer will
file as promptly as practicable and, in any event, not later than July 31,
1998, at CC's expense for all reasonable registration cost, no more than
once, a new registration statement under the Securities Act, registering or
qualifying the Registrable Securities for sale. The Issuer will use its
best efforts, through its officers, directors, auditors and counsel in all
matters necessary or advisable, to file and cause to become effective such
registration statement as promptly as practicable and for a period of two
years thereafter to reflect in the Amendment or registration statement
financial statements which are prepared in accordance with Section 10(a)(3)
of the Securities Act and any facts or events arising that, individually,
or in the aggregate, represent a fundamental and/or material change in the
information set forth in the Amendment or registration statement to enable
any Holders of the Warrants to exercise such Warrants and sell Warrant
Shares, or to enable any holders of Warrant Shares to sell such Warrant
Shares, during said two year period. The Holders may sell the Registrable
Securities pursuant to the Amendment or registration statement without
exercising the Warrants.
8
b. Action to be Taken by the Issuer. In connection with the
registration of Registrable Securities hereunder, the Issuer agrees to use
its best efforts to register or qualify the Registrable Securities for
offer or sale under state securities or Blue Sky laws of such jurisdictions
in which such holders shall reasonably request, provided, however, that no
qualification shall be required in any jurisdiction where, as a result
thereof, the Issuer would be subject to service of general process or to
taxation as a foreign corporation doing business in such jurisdiction to
which it is not then subject; and (iii) enter into a cross-indemnity
agreement, in customary form, with each underwriter, if any, and each
holder of securities included in such registration statement. CC agrees to
bear all reasonable registration costs for such a registration of the
Registrable Securities.
c. Action to be Taken by the Holders. The Issuer's obligations under
this Section 8 shall be conditioned upon a timely receipt by the Issuer in
writing of: (i) information as to the terms of such public offering
furnished by or on behalf of each holder of Registrable Securities
intending to make a public offering of his, her or its Registrable
Securities, and (ii) such other information as the Issuer may reasonably
require from such holders, or any underwriter for any of them, for
inclusion in such registration statement.
Section 9. Notices. All communications hereunder shall be in writing, and,
if sent to the Holder shall be sufficient in all respects if delivered, sent by
registered mail, or by facsimile and confirmed to the Holder at:
Corinthian Capital Limited
Av. Xxxxxxxx Xxxxxxx 0000, Xxxxxx Xxxx
Xxxxxx Xxxxx, Argentina
Attention: Xxxxx Xxxxxxxxx
Telephone: 00-0-000-0000
Fax: 00-0-000-0000
With copies to: Stairs Xxxxxxxxxx Xxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000-5090
Attention: Xxxxxxxx Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
or if to any other Holder, addressed to such Holder at such address as it shall
have specified to the Issuer in writing, or, if sent to
9
the Issuer, shall be delivered, sent by registered mail or by facsimile and
confirmed to the Issuer at:
Opal Technologies, Inc.
Suite 0000, 00 Xxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Attention: Xxxx Xxxx
Telephone: (000) 0000-0000
Facsimile: (000) 0000-0000
With copies to: Xxxxxxxxx & Xxxxxxx
000 Xxxxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Section 11. Governing Law. The Issuer agrees that any action or proceeding
based hereon, or arising out of this Warrant, shall be brought and maintained
exclusively in the United States District Court for the Southern District of New
York. The Issuer and the Holder each hereby irrevocably submit to the
jurisdiction of the United States District Court for the Southern District of
New York for the purpose of any such action or proceeding as set forth above and
irrevocably agree to be bound by any judgement rendered thereby in connection
with such action or proceeding. Each of the Issuer and the Holder hereby
irrevocably waive, to the fullest extent permitted by law, any objection which
it may have or hereafter may have to the laying of venue of any such action or
proceeding brought in any such court referred to above and any claim that any
such action or proceeding has been brought in an inconvenient forum.
Dated: May 12, 1998
Opal Technologies, Inc.
By: /s/ Xxxx Xxxx
--------------------------------
Name: Xxxx Xxxx
Title: President
ATTEST:
/s/ Xxxxxxx Xxxx
------------------------
Xxxxxxx Xxxx, Secretary
10
Schedule One
------------
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise this Warrant and to
purchase shares of Opal Technologies, Inc. Common Stock issuable upon the
--
exercise of this Warrant, and requests that certificates for such shares be
issued in the name of:
-----------------------------------------------------------------------------
(Name)
-----------------------------------------------------------------------------
(Address)
-----------------------------------------------------------------------------
(United States Social Security or other taxpayer
identifying number, if applicable)
and, if different from above, be delivered to:
-----------------------------------------------------------------------------
(Name)
-----------------------------------------------------------------------------
(Address)
and, if the number of Warrant Shares so purchased are not all of the Warrant
Shares issuable upon exercise of this Warrant, that a Warrant to purchase the
balance of such Warrant Shares be registered in the name of, and delivered to,
the undersigned at the address stated below.
Date: , 19
------------------------- ------------
Name of Registered Owner:
----------------------------------------------------
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Address:
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Signature:
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11
