WARRANT TO PURCHASE COMMON STOCK OF ZAP
Exhibit
99.3
THIS
WARRANT (THIS “WARRANT”) AND
THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE OR SOLD
UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE
IN
CONNECTION WITH SUCH OFFER OR SALE. THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE
HEREOF
(I) MAY BE PLEDGED OR HYPOTHECATED IN CONNECTION WITH A BONA FIDE MARGIN LOAN
OR
OTHER FINANCING SECURED BY SUCH SECURITIES OR (II) MAY BE TRANSFERRED OR
ASSIGNED TO AN AFFILIATE OF THE HOLDER HEREOF WITHOUT THE NECESSITY OF AN
OPINION OF COUNSEL OR THE CONSENT OF THE ISSUER HEREOF.
WARRANT
TO
PURCHASE COMMON STOCK
OF
Issue
Date: December 5,
2006
Warrant
No. [__]
THIS
CERTIFIES that [GEMINI
MASTER FUND, LTD.] or
any permitted subsequent holder hereof (the “Holder”),
has the right to purchase from ZAP,
a California corporation (the
“Company”),
up to [____] fully paid and nonassessable shares of the Company’s common stock,
no par value (the “Common
Stock”),
subject to adjustment as provided herein, at a price per share equal to the
Exercise Price (as defined below), at any time and from time to time beginning
on the date on which this Warrant is issued (the “Issue
Date”)
and ending at 5:00 p.m., New York City time, on the fifth (5th)
anniversary of the Issue Date or, if such day is not a Business Day, on the
next
succeeding Business Day (the “Expiration
Date”).
This Warrant is issued pursuant to a Securities Purchase Agreement, dated as
of
December 5, 2006 (the “Securities
Purchase Agreement”).
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Securities Purchase Agreement.
1. EXERCISE.
(a)
Right
to Exercise; Exercise Price.
The Holder shall have the right to exercise this Warrant at any time and from
time to time during the period beginning on the Issue Date and
ending
at 5 p.m., New York City time, on the Expiration Date as to all or any part
of
the shares of Common Stock covered hereby (the “Warrant
Shares”).
The “Exercise
Price”
for each Warrant Share purchased by the Holder upon the exercise of this Warrant
shall be $1.10, subject to adjustment for the events specified in Section
6
of this Warrant.
(b)
Exercise
Notice.
In order to exercise this Warrant, the Holder shall (i) send by facsimile
transmission (followed by a telephonic or email confirmation that such facsimile
was sent), at any time prior to 5:00 p.m., New York City time, on the Business
Day on which the Holder wishes to effect such exercise (the “Exercise
Date”),
to the Company an executed copy of the notice of exercise in the form attached
hereto as Exhibit
A
(the “Exercise
Notice”)
and (ii) in the case of a Cash Exercise (as defined below), deliver the Exercise
Price to the Company by wire transfer of immediately available funds. The Holder
shall promptly thereafter deliver the original Warrant to the Company for
cancellation (and replacement with a new Warrant if exercised in part) pursuant
to Section
1(d)
of this Warrant. Subject to Section
8(d),
the
Exercise Notice shall also state the name or names in which the Warrant Shares
issuable on such exercise shall be issued if other than the Holder. In
the case of a dispute as to the calculation of the Exercise Price or the number
of Warrant Shares issuable hereunder (including, without limitation, the
calculation of any adjustment pursuant to Section
6 below),
the Company shall promptly issue to the Holder the number of Warrant Shares
that
are not disputed, the Company and the Holder shall provide each other with
their
respective calculations, and the Company shall submit the disputed calculations
to a certified public accounting firm of national recognition (other than the
Company’s independent accountants) within two (2) Business Days following the
later of the date on which the Holder delivers its calculations to the Company
and the date on which the Exercise Notice is delivered to the Company. The
Company shall use its best efforts to cause such accountant to calculate the
Exercise Price and/or the number of Warrant Shares issuable hereunder and to
notify the Company and the Holder of the results in writing no later than two
(2) Business Days following the day on which such accountant received the
disputed calculations (the “Dispute
Procedure”).
Such accountant’s calculation shall be deemed conclusive absent manifest error.
The fees of any such accountant shall be borne by the party whose calculations
were most at variance with those of such accountant.
(c)
Holder
of Record.
The Holder shall, for all purposes, be deemed to have become the holder of
record of the Warrant Shares specified in an Exercise Notice on the Exercise
Date specified therein, irrespective of the date of delivery of such Warrant
Shares. Except as specifically provided herein, nothing in this Warrant shall
be
construed as conferring upon the Holder hereof any rights as a stockholder
of
the Company prior to the Exercise Date.
(d)
Cancellation
of Warrant.
This Warrant shall be canceled upon its exercise and, if this Warrant is
exercised in part, the Company shall, at the time that it delivers Warrant
Shares to the Holder pursuant to such exercise as provided herein, issue a
new
warrant, and deliver to the Holder a certificate representing such new warrant,
with terms identical in all respects to this Warrant (except that such new
warrant shall be exercisable into the number of shares of Common Stock with
respect to which this Warrant shall remain unexercised); provided,
however,
that the Holder shall be entitled to exercise all or any portion of such new
warrant at any time following the time at which this Warrant is exercised,
regardless of whether the Company has actually issued such new warrant or
delivered to the Holder a certificate therefor.
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2. DELIVERY
OF WARRANT SHARES UPON EXERCISE.
Upon
receipt of an Exercise Notice pursuant to Section
1
of this Warrant, the Company shall, (A) in the case of a Cash Exercise (as
defined below) no later than the close of business on the later to occur of
(i)
the sixth (6th) Business Day following the Exercise Date set forth in such
Exercise Notice and (ii) the date on which the Company has received payment
of
the Exercise Price, (B) in the case of a Cashless Exercise (as defined below),
no later than the close of business on the sixth (6th) Business Day following
the Exercise Date set forth in such Exercise Notice, and (C) with respect to
Warrant Shares that are the subject of a Dispute Procedure, the close of
business on the sixth (6th) Business Day following the determination made
pursuant to Section
1(b)
of this Warrant (each of the dates specified in the foregoing clauses
(A),
(B)
or (C)
being referred to as a “Delivery
Date”),
issue and deliver or cause to be delivered to the Holder the number of Warrant
Shares as shall be determined as provided herein. The Company shall effect
delivery of Warrant Shares to the Holder, as long as the Company’s designated
transfer agent or co-transfer agent in the United States for the Common Stock
(the “Transfer
Agent”)
participates in the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer program (“FAST”),
by crediting the account of the Holder or its nominee at DTC (as specified
in
the applicable Exercise Notice) with the number of Warrant Shares required
to be
delivered, no later than the close of business on such Delivery Date. In the
event that the Transfer Agent is not a participant in FAST, or if the Holder
so
specifies in an Exercise Notice or otherwise in writing on or before the
Exercise Date, the Company shall effect delivery of Warrant Shares by delivering
to the Holder or its nominee physical certificates representing such Warrant
Shares, no later than the close of business on such Delivery Date. If any
exercise would create a fractional Warrant Share, such fractional Warrant Share
shall be disregarded and the number of Warrant Shares issuable upon such
exercise, in the aggregate, shall be the nearest whole number of Warrant Shares.
Warrant Shares delivered to the Holder shall not contain any restrictive legend
unless such legend is required pursuant to the terms of the Securities Purchase
Agreement.
3. FAILURE
TO DELIVER WARRANT SHARES.
(a) In
the event that the Company fails for any reason (other than as a result of
the
Holder’s failure, in the case of a Cash Exercise (as defined below), to pay the
aggregate Exercise Price for the Warrant Shares being purchased) to deliver
to
the Holder the number of Warrant Shares specified in the applicable Exercise
Notice (without any restrictive legend to the extent permitted by applicable
law
and the terms of the Securities Purchase Agreement) on or before the Delivery
Date therefor, or fails to remove any restrictive legend from outstanding
Warrant Shares at the request of the Holder in accordance with Section
2.5
of the Securities Purchase Agreement on or before the tenth (10th) Business
Day
following such request (an “Exercise
Default”),
the Holder shall have the right to receive from the Company an amount equal
to
(i) (N/365) multiplied
by
(ii) the aggregate Exercise Price of the Warrant Shares which are the subject
of
such Exercise Default multiplied
by
(iii) the lower of twelve percent (12%) and the maximum rate permitted by
applicable law or by the applicable rules or regulations of any Governmental
Agency (the “Default
Interest Rate”),
where “N” equals the number of days elapsed between the original Delivery Date
of such Warrant Shares (or from such tenth Business Day in the event of a
failure to remove a legend from outstanding Warrant Shares) and the
date
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on
which such Exercise Default has been cured. In the event that shares of Common
Stock are purchased by or on behalf of the Holder in order to
make
delivery on a sale effected in anticipation of receiving Warrant Shares upon
an
exercise, and there is an Exercise Default with respect to such exercise, the
Holder shall have the right to receive from the Company, in addition to the
foregoing amounts, (i) the aggregate amount paid by or on behalf of the Holder
for such shares of Common Stock minus
(ii) the aggregate amount of net proceeds, if any, received by the Holder from
the sale of the Warrant Shares issued by the Company pursuant to such exercise.
Amounts
payable under this Section
3(a) shall
be paid to the Holder in immediately available funds on or before the second
(2nd) Business Day following written notice from the Holder to the Company
specifying the amount owed to it by the Company pursuant to this Section
3(a)
and, if an Exercise Default continues to exist thereafter, at the end of each
period of thirty (30) days following such second Business Day.
(b) In
addition to its rights under Section
3(a)
of this Warrant, the Holder shall have the right to pursue all other remedies
available to it at law or in equity (including, without limitation, a decree
of
specific performance and/or injunctive relief).
4. EXERCISE
LIMITATION.
In
no event shall the Holder be permitted to exercise this Warrant, or part
thereof, if, upon such exercise, the number of shares of Common Stock
beneficially owned by the Holder (other than shares which may be deemed
beneficially owned except for being subject to a limitation on exercise or
exercise analogous to the limitation contained in this Section
4,
would exceed 4.99% of the number of shares of Common Stock then issued and
outstanding, it being the intent of the Company and the Holder that the Holder
not be deemed at any time to have the power to vote or dispose of greater than
4.99% of the number of shares of Common Stock issued and outstanding at any
time. Nothing contained herein shall be deemed to restrict the right of the
Holder to exercise this Warrant at such time as such exercise will not violate
the provisions of this Section
4.
As
used herein, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act. To the extent that the limitation contained in this
Section
4
applies (and without limiting any rights the Company may otherwise have), the
submission of an Exercise Notice by the Holder shall be deemed to be the
Holder’s representation that this Warrant is exercisable
pursuant to the terms hereof,
the Company may rely on the Holder’s representation that this
Warrant
is exercisable pursuant to the terms hereof,
and the Company shall have no obligation whatsoever to verify or confirm the
accuracy of such representation. The Company shall have no liability to any
person if the Holder’s determination of whether this Warrant is exercisable
pursuant to the terms hereof is incorrect. The holders of Common Stock are
to be
deemed third-party beneficiaries of the limitation imposed hereby and,
accordingly, this Section
4
may not be amended without the consent of the holders of a majority of the
shares of Common Stock then outstanding; provided,
however,
that the Holder shall have the right, upon sixty (60) days’ prior written notice
to the Company, to waive the provisions of this Section
4,
without obtaining such consent.
5.
PAYMENT
OF THE EXERCISE PRICE; CASHLESS
EXERCISE.
The
Holder may pay the Exercise Price in either of the following forms or, at the
election of Holder, a combination thereof:
4
(a) through
a cash exercise (a “Cash
Exercise”)
by delivering immediately available funds, or
(b) through
a cashless exercise (a “Cashless
Exercise”)
if an effective Registration Statement is not available for the resale of all
of
the Warrant Shares issuable hereunder at the time an Exercise Notice is
delivered to the Company, or if the Company otherwise consents in writing.
The
Holder shall effect a Cashless Exercise by surrendering this Warrant to the
Company and noting on the Exercise Notice that the Holder wishes to effect
a
Cashless Exercise, upon which the Company shall issue to the Holder a number
of
Warrant Shares determined as follows:
X
= Y x (A-B)/A
where:
X
= the number of Warrant Shares to be issued to the Holder;
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Y
= the number of Warrant Shares with respect to which this Warrant
is being
exercised;
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A
= the Market Price as of the Exercise Date;
and
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B
= the Exercise Price.
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It
is intended and acknowledged that the Warrant Shares issued in a Cashless
Exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares required by Rule 144 shall be deemed,
subject to applicable law, to have been commenced, on the Issue Date.
6. ANTI-DILUTION
ADJUSTMENTS; DISTRIBUTIONS; OTHER EVENTS.
The
Exercise Price and the number of Warrant Shares issuable hereunder shall be
subject to adjustment from time to time as provided in this Section
6.
(a) Stock
Splits, Stock Interests, Etc.
If, at any time on or after the Issue Date, the number of outstanding shares
of
Common Stock is increased by a stock split, stock dividend, reclassification
or
other similar event, the Exercise Price shall be proportionately reduced, or
if
the number of outstanding shares of Common Stock is decreased by a reverse
stock
split, combination, reclassification or other similar event, the Exercise Price
shall be proportionately increased. In such event, the Company shall notify
the
Company’s transfer agent of such change on or before the effective date
thereof.
(b) Major
Transactions.
If, at any time after the Issue Date, any Major Transaction shall occur, then
the Holder shall thereafter have the right to receive upon exercise, in lieu
of
the shares of Common Stock otherwise issuable upon exercise of this Warrant,
such shares of stock, securities and/or other property as would have been issued
or payable upon such Major Transaction with respect to or in exchange for the
number of shares of Common Stock which would have been issuable upon exercise
of
this Warrant had such Major Transaction not taken place (without giving effect
to any limitations on such exercise contained in this Warrant or
the
5
Securities
Purchase Agreement). The Company shall not effect any Major Transaction unless
(i) the Holder has received written notice of such transaction at least thirty
(30) days prior thereto (which period shall be increased to sixty one (61)
days
if, at such time, without giving effect to the limitation on exercise contained
in Section
4
hereof, the Holder would beneficially own more than 4.99% of the Common Stock
then outstanding, and the Holder has notified the Company in writing of such
circumstance) but in no event later than fifteen (15) days prior to the record
date for the determination of stockholders entitled to vote with respect
thereto; provided,
however,
that the Company shall publicly disclose the material terms of any such Major
Transaction on or before the date on which it delivers notice of a Major
Transaction to the Holder, and (ii) the resulting successor or acquiring entity
(if not the Company) assumes by written instrument (in form and substance
reasonable satisfactory to the Holder) the obligations of the Company under
this
Warrant. The above provisions shall apply regardless of whether or not there
would have been a sufficient number of shares of Common Stock authorized and
available for issuance upon exercise of this Warrant as of the date of such
transaction, and shall similarly apply to successive Major
Transactions.
(c) Distributions.
If, at any time after the Issue Date, the Company declares or makes any
distribution of cash or any other assets (or rights to acquire such assets)
to
holders of Common Stock, including without limitation any dividend or
distribution to the Company’s stockholders in shares (or rights to acquire
shares) of capital stock of a subsidiary) (a “Distribution”),
the Company shall deliver written notice of such Distribution (a “Distribution
Notice”)
to the Holder at least fifteen (15) days prior to the earlier to occur of (i)
the record date for determining stockholders entitled to such Distribution
(the
“Record
Date”)
and (ii) the date on which such Distribution is made (the “Distribution
Date”)
(the earlier of such dates being referred to as the “Determination
Date”).
Upon receipt of the Distribution Notice, the Holder shall promptly (but in
no
event later than three (3) Business Days) notify the Company whether it has
elected (A) to receive the same amount and type of assets (including, without
limitation, cash) being distributed as though the Holder were, on the
Determination Date, a holder of a number of shares of Common Stock into which
this Warrant is exercisable as of such Determination Date (such number of shares
to be determined without giving effect to any limitations on such exercise)
or
(B) upon any exercise of this Warrant on or after the Distribution Date, to
reduce the Exercise Price in effect on the Business Day immediately preceding
the Record Date by an amount equal to the fair market value of the assets to
be
distributed divided
by
the number of shares of Common Stock as to which such Distribution is to be
made, such fair market value to be reasonably determined in good faith by the
independent members of the Company’s Board of Directors. Upon receipt of such
election notice from the Holder, the Company shall timely effectuate the
transaction or adjustment contemplated in the foregoing clause
(A) or (B),
as applicable.
If the Holder does not notify the Company of its election pursuant to the
preceding sentence on or prior to the Determination Date, the Holder shall
be
deemed to have elected clause
(A)
of the preceding sentence.
(d) Convertible
Securities; Options.
If, at any time after the Issue Date, the Company issues Convertible Securities
or Options to the record holders of the Common Stock, whether or not such
Convertible Securities or Options are immediately convertible, exercisable
or
exchangeable, then the Holders shall be entitled, upon any exercise of this
Warrant after the date of record for determining stockholders entitled to
receive such Convertible Securities or Options (or if no such record is taken,
the date on which such Convertible Securities or Options are
6
issued),
to receive the aggregate number of Convertible Securities or Options which
the
Holder would have received with respect to the shares of Common Stock issuable
upon such exercise (without giving effect to any limitations on such exercise
contained in this Warrant or the Securities Purchase Agreement) had the Holder
been the holder of such shares of Common Stock on the record date for the
determination of stockholders entitled to receive such Convertible Securities
or
Options (or if no such record is taken, the date on which such Convertible
Securities or Options were issued).
(e) Dilutive
Issuances.
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(i)
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Adjustment
Upon Dilutive Issuance.
If, at any time after the Issue Date, and on or prior to the date
that is
the later of (1) the earlier of (x) the Effective Date and (y) two
years
from the Issue Date, and (2) the six month anniversary of the Issue
Date,
the Company issues or sells, or in accordance with Section
6(e)(ii) is
deemed to have issued or sold, any shares of Common Stock for no
consideration or for a consideration per share less than the Exercise
Price on the date of such issuance or sale (or deemed issuance or
sale) (a
“Dilutive
Issuance”),
then the Exercise Price shall be adjusted so as to equal 110% of
the
consideration received or receivable by the Company (on a per share
basis)
for the additional shares of Common Stock so issued, sold or deemed
issued
or sold in such Dilutive Issuance (which, in the case of a deemed
issuance
or sale, shall be calculated in accordance with Section
6(e)(ii)
of this Warrant).
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Notwithstanding
the foregoing, no adjustment shall be made pursuant to this Section
6(e)(i)
if such adjustment would result in an increase in the Exercise
Price.
(ii) Effect
On Exercise Price Of Certain Events.
For purposes of determining the adjusted Exercise Price under Section
6(e)(i)
of this Warrant, the following will be applicable:
(A) Issuance
Of Options.
If the Company issues or sells any Options, whether or not immediately
exercisable, and the price per share for which Common Stock is issuable upon
the
exercise of such Options (and the price of any conversion of Convertible
Securities, if applicable) is less than the Exercise Price in effect on the
date
of issuance or sale of such Options, then the maximum total number of shares
of
Common Stock issuable upon the exercise of all such Options (assuming full
conversion, exercise or exchange of Convertible Securities, if applicable)
shall, as of the date of the issuance or sale of such Options, be deemed to
be
outstanding and to have been issued and sold by the Company for such price
per
share. For purposes of the preceding sentence, the “price per share for which
Common Stock is issuable upon the exercise of such Options” shall be determined
by dividing (x) the total amount, if any, received or receivable by the Company
as consideration for the issuance or sale of all such Options, plus
the minimum aggregate amount of additional consideration, if any, payable to
the
Company upon the exercise of all such Options, plus,
in the case of Convertible
7
Securities
issuable upon the exercise of such Options, the minimum aggregate amount of
additional consideration payable upon the conversion, exercise or exchange
thereof (determined in accordance with the calculation method set forth in
Section
6(e)(ii)(B)
below) at the time such Convertible Securities first become convertible,
exercisable or exchangeable, by (y) the maximum total number of shares of Common
Stock issuable upon the exercise of all such Options (assuming full conversion,
exercise or exchange of Convertible Securities, if applicable). No further
adjustment to the Exercise Price shall be made upon the actual issuance of
such
Common Stock upon the exercise of such Options or upon the conversion, exercise
or exchange of Convertible Securities issuable upon exercise of such
Options.
To the extent that shares of Common Stock or Convertible Securities are not
delivered pursuant to such Options, upon the expiration or termination of such
Options, the Exercise Price shall be readjusted to the Exercise Price that
would
then be in effect had the adjustments made upon the issuance of such Options
been made on the basis of delivery of only the number of shares of Common Stock
actually delivered.
(B) Issuance
Of Convertible Securities.
If the Company issues or sells any Convertible Securities, whether or not
immediately convertible, exercisable or exchangeable, and the price per share
for which Common Stock is issuable upon such conversion, exercise or exchange
is
less than the Exercise Price in effect on the date of issuance or sale of such
Convertible Securities, then the maximum total number of shares of Common Stock
issuable upon the conversion, exercise or exchange of all such Convertible
Securities shall, as of the date of the issuance or sale of such Convertible
Securities, be deemed to be outstanding and to have been issued and sold by
the
Company for such price per share. If the Convertible Securities so issued or
sold do not have a fluctuating conversion or exercise price or exchange ratio,
then for the purposes of the immediately preceding sentence, the “price per
share for which Common Stock is issuable upon such conversion, exercise or
exchange” shall be determined by dividing (A) the total amount, if any, received
or receivable by the Company as consideration for the issuance or sale of all
such Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion, exercise
or
exchange thereof (determined in accordance with the calculation method set
forth
in this Section
6(e)(ii)(B))
at the time such Convertible Securities first become convertible, exercisable
or
exchangeable, by (B) the maximum total number of shares of Common Stock issuable
upon the exercise, conversion or exchange of all such Convertible Securities.
If
the Convertible Securities so issued or sold have a fluctuating conversion
or
exercise price or exchange ratio (a “Variable
Rate Convertible Security”),
then for purposes of the first sentence of this Section
6(e)(ii)(B),
the “price per share for which Common Stock is issuable upon such conversion,
exercise or exchange” shall be deemed to be the lowest price per share which
would be applicable (assuming all holding period and other conditions to any
discounts contained in such Variable Rate Convertible Security have been
satisfied) if the conversion price of such Variable Rate Convertible Security
on
the date of issuance or sale thereof were equal to the actual conversion price
on such date (or such higher minimum conversion price if such Variable Rate
Convertible Security is subject to a minimum conversion price) (the
“Assumed
Variable Market Price”),
and, further, if the conversion price of such Variable Rate Convertible Security
at any time or times thereafter is less than or equal to the Assumed
Variable
8
Market
Price last used for making any adjustment under this Section
6(e)
with respect to any Variable Rate Convertible Security, the Exercise Price
in
effect at such time shall be readjusted to equal the Exercise Price which would
have resulted if the Assumed Variable Market Price at the time of issuance
of
the Variable Rate Convertible Security had been equal to the actual conversion
price of such Variable Rate Convertible Security existing at the time of the
adjustment required by this sentence; provided,
however,
that if the conversion or exercise price or exchange ratio of a Convertible
Security may fluctuate solely as a result of provisions designed to protect
against dilution, such Convertible Security shall not be deemed to be a Variable
Rate Convertible Security. No further adjustment to the Exercise Price shall
be
made upon the actual issuance of such Common Stock upon conversion, exercise
or
exchange of such Convertible Securities.
(C) Change
In Option Price Or Conversion Rate.
If there is a change at any time (including, without limitation, a change with
respect to any Options or Convertible Securities outstanding as of the Issue
Date) in (x) the amount of additional consideration payable to the Company
upon
the exercise of any Options; (y) the amount of additional consideration, if
any,
payable to the Company upon the conversion, exercise or exchange of any
Convertible Securities; or (z) the rate at which any Convertible Securities
are
convertible into or exercisable or exchangeable for Common Stock (in each such
case, other than under or by reason of provisions designed to protect against
dilution), the Exercise Price in effect at the time of such change shall be
readjusted to the Exercise Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed additional consideration or changed conversion, exercise or exchange
rate, as the case may be, at the time initially issued or sold.
(D) Calculation
Of Consideration Received.
If any Common Stock, Options or Convertible Securities are issued or sold for
cash, the consideration received therefor will be the amount received by the
Company therefor. In case any Common Stock, Options or Convertible Securities
are issued or sold for a consideration part or all of which shall be other
than
cash, the amount of the consideration other than cash received by the Company
(including the net present value of the consideration expected by the Company
for the provided or purchased services) shall be the fair market value of such
consideration. In case any Common Stock, Options or Convertible Securities
are
issued in connection with any merger or consolidation in which the Company
is
the surviving corporation, the amount of consideration therefor will be deemed
to be the fair market value of such portion of the net assets and business
of
the non-surviving corporation as is attributable to such Common Stock, Options
or Convertible Securities, as the case may be. The independent members of the
Company’s Board of Directors shall calculate reasonably and in good faith, using
standard commercial valuation methods appropriate for valuing such assets,
the
fair market value of any consideration.
(iii) Exceptions
To Adjustment Of Exercise Price.
Notwithstanding the foregoing, no adjustment to the Exercise Price shall be
made
pursuant to this Section
6(e)
upon the issuance of any Excluded Securities.
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(iv) Notice
Of Adjustments.
Upon the occurrence of each adjustment or readjustment of the Exercise Price
pursuant to this Section
6(e)
resulting in a change in the Exercise Price by more than one percent (1%),
or
any change in the number or type of stock, securities and/or other property
issuable upon exercise of this Warrant, the Company, at its expense, shall
promptly compute such adjustment, readjustment or change and prepare and furnish
to the Holder a certificate setting forth such adjustment, readjustment or
change and showing in detail the facts upon which such adjustment, readjustment
or change is based. The Company shall, upon the written request at any time
of
the Holder, furnish to the Holder a like certificate setting forth (i) such
adjustment, readjustment or change, (ii) the Exercise Price at the time in
effect and (iii) the number of shares of Common Stock and the amount, if any,
of
other securities or property which at the time would be received upon exercise
of this Warrant.
(f) Adjustments;
Additional Shares, Securities or Assets.
In the event that at any time, as a result of an adjustment made pursuant to
this Section
6,
the Holder of this Warrant shall, upon exercise of this Warrant, become entitled
to receive securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock shall be deemed
to
refer to and include such shares and/or other securities or assets; and
thereafter the number of such shares and/or other securities or assets shall
be
subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section
6.
Any adjustment made herein that results in a decrease in the Exercise Price
shall also effect a proportional increase in the number of shares of Common
Stock into which this Warrant is exercisable.
7. FORCED
EXERCISE.
(a) Forced
Exercise.
Subject to the terms and conditions of this Section
7(a),
the Company shall have the right, exercisable at any time after December 31,
2007, to require exercise of this Warrant in whole or in part (a “Forced
Exercise”).
In order to effect a Forced Exercise, (i) the daily VWAP must, on each of twenty
(20) Trading Days occurring during any period of thirty (30) consecutive Trading
Days (such period of thirty Trading Days, a “Forced
Exercise Period”),
be equal to or greater than the Forced Exercise Price (as defined below) and
(ii) each of the Equity Conditions must be satisfied on each Trading Day
occurring during the Forced Exercise Period and through and including the Forced
Exercise Date. For purposes hereof, “Forced
Exercise Price”
means, as of any date, the lesser of (i) $2.20 and (ii) two hundred percent
(200%) of the Exercise Price in effect as of such date (provided
that the Forced Exercise Price shall be appropriately adjusted for any stock
dividend, stock split, reverse stock split or other similar transaction).
Notwithstanding the foregoing, in no event shall the Company be permitted to
effect a Forced Exercise to the extent that, upon receipt of the shares of
Common Stock deliverable thereby, the Holder would beneficially own more than
4.99% of the number of shares of Common Stock then outstanding.
(b) Forced
Exercise Notice; Number of Warrant Shares.
In order to effect a Forced Exercise hereunder, the Company must deliver to
the
Holder written notice thereof (a “Forced
Exercise Notice”)
at any time after the fifth (5th)
Business Day immediately following the last Trading Day of the Forced Exercise
Period but not later than the tenth (10th)
Business Day following such last Trading Day. A Forced Exercise Notice shall
specify the number of Warrant Shares that the Company elects to submit to a
Forced Exercise. Within three (3) Business Days after its receipt of a Forced
Exercise Notice, the Holder shall deliver to the Company, in
accordance
10
with
Section
1
of this Warrant, an Exercise Notice and, if applicable, the Exercise Price
for
the number of Warrant Shares specified in the Forced Exercise Notice. On the
date that is the third (3rd)
Trading Day immediately following delivery of such Exercise Notice by the Holder
(the “Forced
Exercise Date”),
the Company must deliver the specified shares of Common Stock to the Holder
in
accordance with the provisions of Section
2
of this Warrant, with
the Forced Exercise Date being deemed the Delivery Date for purposes hereof.
If
any fractional share would be issuable upon a Forced Exercise, such fractional
shares shall be disregarded and the number of shares issuable shall, in the
aggregate, be equal to the nearest whole number of shares.
(c) Notwithstanding
the delivery by the Company of a Forced Exercise Notice, nothing contained
herein shall be deemed to limit in any way (x) the right of the Holder to
exercise this Warrant prior to the Forced Exercise Date or (y) the availability
of any and all remedies that are provided to the Holder hereunder, including
without limitation in the event that the Company fails to deliver Warrant Shares
upon a Forced Exercise as required by the terms of Section
3
of this Warrant, provided,
that,
in the event of such failure, the Forced Exercise shall be terminated with
respect to the Holder upon the delivery of written notice thereof by the Holder
to the Company, and the Company shall forfeit its right to require a Forced
Exercise of the Warrants thereafter. In
the event of multiple Forced Exercises, at least sixty (60) days must elapse
between Forced Exercise Dates.
8. MISCELLANEOUS.
(a) Failure
to Exercise Rights not Waiver.
No failure or delay on the part of the Holder in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof. All rights and remedies of the Holder
hereunder are cumulative and not exclusive of any rights or remedies otherwise
available. In the event that the Company breaches any of its obligations
hereunder to issue Warrant Shares or pay any amounts as and when due, the
Company shall bear all costs incurred by the Holder in collecting such amount,
including without limitation reasonable legal fees and expenses.
(b) Notices.
Any notice, demand or request required or permitted to be given by the Company
or the Holder pursuant to the terms of this Warrant shall be in writing and
shall be deemed delivered (i) when delivered personally or by verifiable
facsimile transmission, unless such delivery is made on a day that is not a
Business Day, in which case such delivery will be deemed to be made on the
next
succeeding Business Day, (ii) on the next Business Day after timely delivery
to
an overnight courier and (iii) on the Business Day actually received if
deposited in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed as follows:
If
to the Company:
000
Xxxxxx Xxxxxx
Xxxxx
Xxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxx
Xxx
Telephone:
(000) 000-0000
Facsimile:
(000)
000-0000
11
with
a copy (for informational purposes only) to:
Xxxxxxx
Xxxxxxxxx Xxxxx LLP
Suite
1900
000
Xxxxxxxx Xxxxx
Xxxxxxx,
XX 00000
Attn: Xxxxxxx
X. Xxxxxx
Tel: (000)
000-0000
Fax: (000)
000-0000
and
if to the Holder, to such address for such party as shall appear on the
signature page of the Securities Purchase Agreement executed by such party,
or
as shall be designated by such party in writing to the other parties hereto
in
accordance this Section
8(b).
(c)
Amendments
and Waivers.
No amendment, modification or other change to, or waiver of any provision of,
this Warrant or any other Warrant may be made unless such amendment,
modification or change, or request for waiver, is (A) set forth in writing
and
is signed by the Company, (B) consented to in writing by the holders of at
least
sixty-six percent (66%) of the Warrant Shares underlying the Warrants then
outstanding, and (C) applied to all of the Warrants. Upon the satisfaction
of
the conditions described in (A), (B) and (C) above, this Warrant shall be deemed
to incorporate the amendment, modification, change or waiver effected thereby
as
of the effective date thereof, even if the Holder did not consent to such
amendment, modification, change or waiver.
Notwithstanding the foregoing, the limitation on beneficial ownership set forth
in Section
4
may not be amended without the consent of the holders of a majority of the
shares of Common Stock then outstanding; provided,
however,
that such limitation may be waived by the Holder upon sixty (60) days’ prior
written notice to the Company, and such waiver shall be valid and shall not
require the consent of the Company or any other holder of Common Stock or
Warrants.
(d)
Transfer
of Warrant.
The Holder may sell, transfer or otherwise dispose of all or any part of this
Warrant (including without limitation pursuant to a pledge) to any person or
entity as long as such sale, transfer or disposition is the subject of an
effective registration statement under the Securities Act of 1933, as amended,
and applicable state securities laws, or is exempt from registration thereunder,
and is otherwise made in accordance with the applicable law and applicable
provisions of the Securities Purchase Agreement. From and after the date of
any
such sale, transfer or disposition, the transferee hereof shall be deemed to
be
the holder of the portion of this Warrant acquired by such transferee, and
the
Company shall, as promptly as practicable, issue and deliver to such transferee
a new Warrant identical in all respects to this Warrant, in the name of such
transferee. The Company shall be entitled to treat the original Holder as the
holder of this entire Warrant unless and until it receives written notice of
the
sale, transfer or disposition hereof.
(e)
Lost
or Stolen Warrant.
Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction)
of
indemnity or security reasonably satisfactory to the Company, and upon surrender
and
12
cancellation
of this Warrant, if mutilated, the Company shall execute and deliver to the
Holder a new Warrant identical in all respects to this Warrant.
(f)
Governing
Law.
This Warrant shall be governed by and construed in accordance with the laws
of
the State of California applicable
to contracts made and to be performed entirely within the State of
California.
(g) Successors
and Assigns.
The terms and conditions of this Warrant shall inure to the benefit of and
be
binding upon the respective successors (whether by merger or otherwise) and
permitted assigns of the Company and the Holder. The Company may not assign
its
rights or obligations under this Warrant except as specifically required or
permitted pursuant to the terms hereof.
[Signature
Page to Follow]
13
IN
WITNESS WHEREOF, the Company has duly executed and delivered this Warrant as
of
the Issue Date.
By:
__________________________
Name:
Title:
EXHIBIT
A to WARRANT
EXERCISE
NOTICE
The
undersigned Holder hereby irrevocably exercises the right to purchase
_____
of the shares of Common Stock (“Warrant
Shares”)
of ZAP evidenced
by the attached Warrant (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.
1.
Form
of Exercise Price. The Holder intends that payment of the Exercise Price shall
be made as:
______
a Cash
Exercise
with respect to _________________ Warrant Shares; and/or
______
a Cashless
Exercise
with respect to _________________ Warrant Shares, as permitted by Section 5(b)
of the attached Warrant.
2.
Payment
of Exercise Price. In the event that the Holder has elected a Cash Exercise
with
respect to some or all of the Warrant Shares to be issued pursuant hereto,
the
Holder shall pay the sum of $________________ to the Company in accordance
with
the terms of the Warrant.
Date:
______________________
___________________________________
Name
of Registered Holder
By:
_______________________________
Name:
Title:
Holder
Requests Delivery to be made:
(check one)
|
o
|
By
Delivery of Physical Certificates to the Above
Address
|
|
o
|
Through
Depository Trust Corporation
(Account
_________________________)
|
