NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
THRUSTMASTER, INC.
WARRANT
Warrant No. A - 1 Dated: June 9, 1999
ThrustMaster, Inc., an Oregon corporation (the "Company"), hereby
certifies that, for value received, Strong River Investments, Inc., or its
registered and permitted assigns ("Holder"), is entitled, subject to the terms
set forth below, to purchase from the Company up to the total number of shares
of Common Stock, no par value (the "Common Stock"), of the Company (each such
share, a "Warrant Share" and all such shares, the "Warrant Shares") calculated
pursuant to Section 3 of this Warrant at an exercise price equal to $.01 per
share (as adjusted from time to time as provided in Section 9, the "Exercise
Price"), at the times set forth herein through and including ninety (90) days
following the Second Vesting Date (as defined in Section 3) (the "Expiration
Date"), and subject to the following terms and conditions:
1. Registration of Warrant. The Company shall register this
Warrant, upon records to be maintained by the Company for that purpose (the
"Warrant Register"), in the name of the record Holder hereof from time to time.
The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, and the Company shall not be affected
by notice to the contrary.
2. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) This Warrant is issued pursuant to
that Convertible Debenture Purchase Agreement between the Company and the
Holder dated as of June 9, 1999 (the "Purchase Agreement"). Neither this
Warrant nor any interest herein may be transferred except in compliance with
the provisions of section 3.1 of the Purchase Agreement and the provisions
hereof. The Company shall register the transfer of any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant, with the
Form of Assignment attached hereto duly completed and signed, to the Transfer
Agent or to the Company at the office specified in or pursuant to Section
3(i). Upon any such registration or transfer, a new warrant to purchase
Common Stock, in substantially the form of this Warrant (any such new
warrant, a "New Warrant"), evidencing the portion of this Warrant so
transferred shall be issued to the transferee and a New Warrant evidencing
the remaining portion of this Warrant not so transferred, if any, shall be
issued to the transferring Holder. The acceptance of the New Warrant by the
transferee thereof shall be deemed the acceptance of such transferee of all
of the rights and obligations of a holder of a Warrant.
(b) This Warrant is exchangeable, upon the
surrender hereof by the Holder to the office of the Company specified in or
pursuant to Section 3(g) for one or more New Warrants, evidencing in the
aggregate the right to purchase the number of Warrant Shares which may then
be purchased hereunder. Any such New Warrant will be dated the date of such
exchange.
3. DURATION AND EXERCISE OF WARRANTS.
(a) The vesting of the Warrant Shares
which the Holder is permitted to acquire pursuant to this Warrant shall
occur on the dates set forth below. On each such date, this Warrant shall
vest on a cumulative basis with respect to a number of Warrant Shares
calculated pursuant to Section 3(b) below. Only the Warrant Shares that have
vested may be acquired upon exercise of this Warrant.
(i) The first vesting date (the
"First Vesting Date") shall be the twenty-fifth (25th) day following
the earlier to occur of (A) the Effectiveness Date and (B) the Effectiveness
Required Date, provided that if such day is not a business day, the next
succeeding business day (the Warrant Shares with respect to which this
Warrant is exercisable on the First Vesting Date are called the "Tranche A
Warrant Shares"); and
(ii) The second vesting date (the "Second
Vesting Date", and together with the First Vesting Date, the "Vesting Dates")
shall be the twenty-fifth (25th) day following the First Vesting Date,
provided that if such day is not a business day, the next succeeding business
day (the Warrant Shares with respect to which this Warrant is exercisable on
the Second Vesting Date are called the "Tranche B Warrant Shares").
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(b) Except as otherwise set forth in this Warrant,
this Warrant shall vest and become exercisable on each Vesting Date with
respect to the number of Warrant Shares calculated in accordance with the
following formula:
(Applicable Share Number) x [18.00 - Reset Price]
--------------------------------------------------
Reset Price
If the number calculated in accordance with the foregoing formula is a negative
number, the Holder shall not be obligated to transfer any shares to the Company.
On each Vesting Date, the Company shall send a notice to the Holder setting
forth in reasonable detail its calculation of the number of Warrant Shares which
shall vest and be exercisable on such Vesting Date.
For purposes of this Warrant,
(i) "Applicable Share Number" means
with respect to the First Vesting Date and Second Vesting Date, 62,500
shares of Common Stock.
(ii) "Effectiveness Date" means the
effective date of the registration statement on Form S-3 (Registration No.
333-73333) meeting the requirements of the Registration Rights Agreement (the
ARegistration Rights Agreement@), dated as of January 28, 1999, among the
Company, the Holder and certain other parties.
(iii) "Effectiveness Required Date" means
the 90th day following the date hereof;
(iv) "Reset Price" means the average of
the lowest ten (10) Per Share Market Values (which need not occur on
consecutive Trading Days) during the twenty-five (25) Trading Days
immediately preceding the applicable Vesting Date.
(v) "Trading Day" means (a) a day on
which the Common Stock is traded on the Nasdaq National Market System or on
any other stock market or trading facility on which the shares of Common
Stock are listed or quoted (each, a "Subsequent Market"), as the case may be,
or (b) if the Common Stock is not listed on the Nasdaq National Market System
or on a Subsequent Market, a day on which the Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board, or (c) if the
Common Stock is not quoted on the OTC Bulletin Board, a day on which the
Common Stock is quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices); PROVIDED, HOWEVER, that in the
event that the Common Stock is not listed or quoted as set forth in (a), (b)
and (c) hereof, then Trading Day shall mean any day except Saturday, Sunday
and any day which shall be a legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or
other government action to close; and
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(vi) "Per Share Market Value" means on
any particular date (a) the closing bid price per share of the Common Stock
on such date on the Nasdaq National Market System ("Nasdaq") or on any
Subsequent Market, or if there is no such price on such date, then the
closing bid price on the Nasdaq or on such Subsequent Market on the date
nearest preceding such date, or (b) if the Common Stock is not then listed or
quoted on the Nasdaq or a Subsequent Market, the closing bid price for a
share of Common Stock in the over-the-counter market, as reported by the
National Quotation Bureau Incorporated or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or (c) if the Common Stock is not then reported by the National
Quotation Bureau Incorporated (or similar organization or agency succeeding
to its functions of reporting prices), then the average of the "Pink Sheet"
quotes for the relevant conversion period, as determined in good faith by the
Holder, or (d) if the Common Stock is not then publicly traded the fair
market value of a share of Common Stock as determined by an appraiser
selected in good faith by the Holders of a majority of the applicable
Registrable Securities.
(c) The vesting of the Warrant Shares in
accordance with this Section 3 shall not be affected by any failure by the
Company to maintain the effectiveness of the Registration Statement after it
has been declared effective by the Securities and Exchange Commission (the
"Commission").
(d) Notwithstanding the foregoing provisions
of this Section 3, at any time within ten (10) Trading Days following the
occurrence of any of the following events (each, an "Event"), the Holder
shall have the option to elect by notice ("Vesting Notice") to the Company to
have this Warrant vest with respect to those Warrant Shares that have not yet
already vested:
(i) upon the occurrence of any of (i) an
acquisition after the date hereof by an individual or legal entity or
"group" (as described in Rule 13d-5(b)(1) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of in excess of 50% of
the voting securities of the Company, (ii) a replacement of more than
one-half of the members of the Company's board of directors which is not
approved by those individuals who are members of the board of directors on
the date hereof (or by directors whose nomination was recommended by those
individuals who are directors as of the date hereof) in one or a series of
related transactions, (iii) the merger of the Company with or into another
entity, consolidation or sale of all or substantially all of the assets of
the Company in one or a series of related transactions, unless following such
transaction or series of transactions, the holders of the Company's
securities prior to the first such transaction continue to hold at least 50%
of the securities of the surviving entity or acquirer of such assets or (iv)
the execution by the Company of an agreement to which the Company is a party
or by which it is bound, providing for any of the events set forth above in
(i), (ii) or (iii);
(ii) immediately prior to an assignment
by the Company for the benefit of creditors or commencement of a voluntary
case under the Federal Bankruptcy Code, or an entering into of an order for
relief in an involuntary case under the Federal Bankruptcy Code, or adoption
by the Company of a plan of liquidation or dissolution; or
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(iii) five Business Days prior to the
proposed consummation with respect to the Company of a "Rule 13e-3
transaction" as defined in Rule 13e-3 under the Exchange Act (or, if
necessary, such earlier date as the Company shall determine in good faith to
be required in order for the Holder to be able to participate in such
transaction), it being agreed that the Holder will receive actual notice of
the 13e-3 Statement filed with the Commission on the date filed and actual
notice of the date of acceleration hereunder no later than such date, and
that if such transaction is not consummated, and this Warrant has been
exercised, then the Holder (and to the extent that this Warrant would not but
for this paragraph be exercisable, the Company) shall be entitled to declare
the exercise null and void and the Holder shall, upon return of the Warrant
Shares to the Company, be entitled to receive a refund of the Exercise Price
and warrants identical to this Warrant, and such acceleration shall become
void AB INITIO, and the Warrants shall (as to any remaining unexercised
portion thereof) remain in full force and effect in accordance with the terms
hereof.
In the event the Holder delivers a Vesting Notice, this Warrant shall vest
with respect to the number of Warrant Shares calculated in accordance with
the formula set forth on Section 3(b); PROVIDED, HOWEVER that for purposes of
such calculation, (i) the "Applicable Share Number" shall be deemed to mean
(A) 125,000 shares of Common Stock, if the Event occurred prior to the First
Vesting Date, and (B) 62,500 shares of Common Stock if the Event occurred on
or after the First Vesting Date but prior to the Second Vesting Date; and
(ii) the "Reset Price" shall be deemed to mean the average of the lowest ten
(10) Per Share Market Values (which need not occur on consecutive Trading
Days) during the twenty (25) Trading Days immediately preceding the date on
which the Event occurred.
(e) Subject to Sections 3 (a), 3(b) and 11, this
Warrant shall be exercisable by the registered Holder on any Business Day
before 5:30 P.M., New York City time, at any time and from time to time on or
after the date hereof to and including the Expiration Date. At 5:30 P.M., New
York City time on the Expiration Date, the portion of this Warrant not
exercised prior thereto shall be and become void and of no value. For
purposes of this Warrant, "Business Day" means any day except Saturday,
Sunday and any day which shall be a legal holiday or a day on which banking
institutions in the State of New York or Oregon are authorized or required by
law or other government action to close.
(f) Subject to Sections 2(b), 6, 10, 11 and 12
upon surrender of this Warrant, with the Form of Election to Purchase
attached hereto duly completed and signed, to the Company at its address for
notice set forth in Section 13 and upon payment of the Exercise Price
multiplied by the number of Warrant Shares that the Holder intends to
purchase hereunder, in the manner provided hereunder, all as specified by the
Holder in the Form of Election to Purchase, the Company shall promptly (but
in no event later than 5 Trading Days after the Date of Exercise (as defined
herein)) issue or cause to be issued and cause to be delivered to or upon the
written order of the Holder and in such name or names as the Holder may
designate, a certificate for the Warrant Shares issuable upon such exercise,
free of restrictive legends, except either in the event that (i) a
registration statement covering the resale of the Warrant Shares and naming
the Holder as a selling stockholder thereunder is not then effective or (ii)
the Warrant Shares are not freely transferable without volume restrictions
pursuant to Rule 144(k) promulgated under the Securities Act of 1933,
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as amended (the "Securities Act"). Any person so designated by the Holder to
receive Warrant Shares shall be deemed to have become holder of record of
such Warrant Shares as of the Date of Exercise of this Warrant.
A "Date of Exercise" means the date on which the
Company shall have received (i) this Warrant (or any New Warrant, as
applicable), with the Form of Election to Purchase attached hereto (or
attached to such New Warrant) appropriately completed and duly signed, and
(ii) payment of the Exercise Price for the number of Warrant Shares so
indicated by the holder hereof to be purchased.
(g) If the Company fails to deliver to the
Holder certificate or certificates representing the Warrant Shares
pursuant to Section 3(f) by the fifth (5) Trading Day after the Date of
Exercise, the Company shall pay to such Holder, in cash, as liquidated
damages and not as a penalty, $1,000 for each day after such fifth (5)
Trading Day until such certificates are delivered. Nothing herein shall limit
the Holder's right to pursue actual damages for the Company's failure to
deliver certificates representing shares of Common Stock upon exercise within
the period specified herein and the Holder shall have the right to pursue all
remedies available to it at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief. The exercise of any
such rights shall not prohibit the Holder from seeking to enforce damages
pursuant to any other Section hereof or under applicable law.
(h) In addition to any other rights available to
the Holder, if the Company fails to deliver to the Holder certificate or
certificates representing the Warrant Shares pursuant to Section 3(f) by the
fifth (5) Trading Day after the Date of Exercise, and if after such fifth (5)
Trading Day the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of
the Warrant Shares which the Holder anticipated receiving upon such exercise
(a "Buy-In"), then the Company shall pay in cash to the Holder (in addition
to any remedies available to or elected by the Holder) the amount by which
(x) the Holder's total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased exceeds (y) the amount
obtained by multiplying (A) the number of Warrant Shares that the Holder is
attempting to acquire by delivery of the Notice to Purchase by (B) the Per
Share Market Value on the Trading Day (or if such date is not a Trading Day,
on the immediately succeeding Trading Day) the certificate representing such
Warrant Shares are delivered to the Holder by or on behalf of the Company
(and if there is more than one certificate representing the Warrant Shares
and they are delivered on different Trading Days, clause (y)(B) of this
Section shall be the weighted average of the Per Share Market Values on the
Trading Days on which such certificates are delivered, based on the number of
Warrant Shares represented by each such certificate) . For example, if the
Holder purchases 10,000 shares of Common Stock having a total purchase price
of $90,000 to cover a Buy-In with respect to an attempted exercise of this
Warrant with respect to 10,000 Warrant Shares, and the Per Share Market Value
on the Trading Day the Holder receives the certificate representing such
Warrant Shares is $8.00 the Company shall be required to pay the Holder
$10,000. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In. Notwithstanding
anything contained herein to the
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contrary, if a Holder requires the Company to make payment in respect of a
Buy-In for the failure to timely deliver certificates hereunder and the
Company timely pays in full such payment, the Company shall not be required
to pay such Holder liquidated damages under Section 3(g) in respect of the
certificates resulting in such Buy-In.
(i) Subject to Sections 3(a), 3(b) and 11, this
Warrant shall be exercisable, either in its entirety or, from time to time,
for a portion of the number of Warrant Shares. If less than all of the
Warrant Shares which may be purchased under this Warrant are exercised at any
time, the Company shall issue or cause to be issued, at its expense, a New
Warrant evidencing the right to purchase the remaining number of Warrant
Shares for which no exercise has been evidenced by this Warrant.
4. PIGGYBACK REGISTRATION RIGHTS. During the term of this
Warrant, at any time when there is not an effective registration statement
covering the resale of the Warrant Shares and naming the Holder as a selling
stockholder thereunder, the Holder shall be entitled to the Piggyback
registration rights afforded to a holder pursuant to Section 6(d) of the
Registration Rights Agreement.
5. [INTENTIONALLY OMITTED]
6. PAYMENT OF TAXES. The Company will pay all documentary
stamp taxes attributable to the issuance of Warrant Shares upon the exercise of
this Warrant; provided, however, that the Company shall not be required to pay
any tax or other charge which may be payable in respect of any transfer of any
certificates for Warrant Shares or Warrants in a name other than that of the
Holder, and the Company shall not be required to issue or cause to be issued or
deliver or cause to be delivered the certificates for Warrant Shares unless or
until the person or persons requesting the issuance thereof shall have paid to
the Company the amount of such tax or other charge or shall have established to
the satisfaction of the Company that such tax or other charge has been paid. The
Holder shall be responsible for all other tax liability that may arise as a
result of holding or transferring this Warrant or receiving Warrant Shares upon
exercise hereof.
7. REPLACEMENT OF WARRANT. If this Warrant is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation hereof, or in lieu of and
substitution for this Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
indemnity, if requested., satisfactory to it. Applicants for a New Warrant under
such circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.
8. RESERVATION OF WARRANT SHARES. The Company covenants that
it will at all times reserve and keep available out of the aggregate of its
authorized but unissued Common Stock, solely for the purpose of enabling it to
issue Warrant Shares upon exercise of this Warrant as herein provided, the
number of Warrant Shares which are then issuable and deliverable upon the
exercise
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of this entire Warrant, free from preemptive rights or any other actual
contingent purchase rights of persons other than the Holder (taking into account
the adjustments and restrictions of Section 9) created by the Company. The
Company covenants that all Warrant Shares that shall be so issuable and
deliverable shall, upon issuance and the payment of the applicable Exercise
Price in accordance with the terms hereof, be duly and validly authorized,
issued and fully paid and nonassessable.
9. CERTAIN ADJUSTMENTS. The Exercise Price and number of
Warrant Shares issuable upon exercise of this Warrant are subject to adjustment
from time to time as set forth in this Section 9. Upon each such adjustment of
the Exercise Price pursuant to this Section 9, the Holder shall thereafter prior
to the Expiration Date be entitled to purchase, at the Exercise Price resulting
from such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(a) If the Company, at any time while this
Warrant is outstanding, (i) shall pay a stock dividend or otherwise make a
distribution or distributions on shares of its Common Stock or on any other
class of capital stock payable in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock into a larger number of shares, or (iii)
combine outstanding shares of Common Stock into a smaller number of shares,
the Exercise Price shall be multiplied by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding after such event. Any adjustment made pursuant to this Section
shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date
in the case of a subdivision or combination, and shall apply to successive
subdivisions and combinations.
(b) In case of any reclassification of the
Common Stock, any consolidation or merger of the Company with or into
another person, or any compulsory share exchange pursuant to which the Common
Stock is converted into other securities, cash or property, then the Holder
shall have the right thereafter to exercise this Warrant (at the aggregate
Exercise Price in effect for all shares of Common Stock issuable upon such
exercise immediately prior to such consummation as adjusted to the time of
such transaction) only into the shares of stock and other securities and
property receivable upon or deemed to be held by holders of Common Stock
following such reclassification, consolidation, merger or share exchange, and
the Holder shall be entitled upon such event to receive such amount of
securities or property equal to the amount of Warrant Shares such Holder
would have been entitled to had such Holder exercised this Warrant
immediately prior to such reclassification, consolidation, merger or share
exchange. The terms of any such consolidation, merger or share exchange shall
include such terms so as to continue to give to the Holder the right to
receive the securities or property set forth in this Section 9(b) upon any
exercise following any such reclassification, consolidation, merger or share
exchange.
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(c) If the Company, at any time while this
Warrant is outstanding, shall distribute (a "Distribution") to all holders
of Common Stock (and not to holders of this Warrant) evidences of its
indebtedness or assets or rights or warrants to subscribe for or purchase any
security (excluding those referred to in Sections 9(a), (b) and (d)
(collectively, "Rights"), then in each such case the Holder shall be entitled
to receive, for each Warrant Share with respect to which this Warrant is
exercised after the record date fixed for determination of stockholders
entitled to receive such Distribution, the Rights received by all holders of
Common Stock with respect to one share of Common Stock.
(d) [INTENTIONALLY OMITTED]
(e) For the purposes of this Section 9, in case
the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them (A) to receive a dividend or other distribution
payable in Common Stock or in securities convertible or exchangeable into
shares of Common Stock, or (B) to subscribe for or purchase Common Stock or
securities convertible or exchangeable into shares of Common Stock, then such
record date shall be deemed to be the date of the issue or sale of the shares
of Common Stock deemed to have been issued or sold upon the declaration of
such dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.
(f) All calculations under this Section 9 shall be
made to the nearest cent or nearest 1/100th of a share, as the case may be.
(g) Whenever the Exercise Price is adjusted
pursuant to Section 9(c) above, the Holder, after receipt of the
determination by the appraiser selected by the Company (the "Appraiser"),
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case the adjustment shall be
equal to the average of the adjustments recommended by each of the Appraiser
and such appraiser. The Holder shall promptly mail or cause to be mailed to
the Company, a notice setting forth the Exercise Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment.
Such adjustment shall become effective immediately after the record date
mentioned above. The Holder shall pay the expenses of such second appraiser.
(h) If:
(i) the Company shall declare a dividend (or
any other distribution) on its Common
Stock; or
(ii) the Company shall declare a special
nonrecurring cash dividend on or a
redemption of its Common Stock; or
(iii) the Company shall authorize the
granting to all holders of the Common
Stock rights or warrants to
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subscribe for or purchase any shares
of capital stock of any class or of any
rights; or
(iv) the approval of any stockholders of the
Company shall be required in connection
with any reclassification of the Common
Stock of the Company, any consolidation
or merger to which the Company is a
party or any compulsory share exchange
whereby the Common Stock is converted
into other securities, cash or property;
or
(v) the Company shall authorize the
voluntary dissolution, liquidation or
winding up of the affairs of the
Company,
then the Company shall cause to be mailed to the Holder at its last address as
it shall appear upon the Warrant Register, at least 20 calendar days prior to
the applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; PROVIDED, HOWEVER, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
10. PAYMENT OF EXERCISE PRICE. The Holder may pay the Exercise
Price in one of the following manners:
(a) CASH EXERCISE. The Holder shall deliver
immediately available funds; or
(b) CASHLESS EXERCISE. The Holder shall
surrender this Warrant to the Company together with a notice of cashless
exercise, in which event the Company shall issue to the Holder the number of
Warrant Shares determined as follows:
X = Y (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.
A = the average of the closing sale prices
of the Common Stock on the Nasdaq National
Market for the five (5) trading days
immediately prior to (but not including) the
Date of Exercise as reported by Bloomberg
Information Systems, Inc. (or any successor
to its function of reporting stock prices).
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood 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 shall be deemed to have been
commenced, on the issue date.
11. CERTAIN EXERCISE RESTRICTIONS.
(a) The Holder agrees not to exercise this Warrant
to the extent such exercise would result in the Holder beneficially owning
(as determined in accordance with Section 13(d) of the Exchange Act and the
rules thereunder) in excess of 4.999% of the then issued and outstanding
shares of Common Stock, including shares issuable upon exercise of this
Warrant after application of this Section. The Holder shall have the sole
authority and obligation to determine whether the restriction contained in
this Section applies. The provisions of this Section may be waived by the
Holder (but only as to itself and not to any other holders of the other
Warrant) upon not less than 75 days prior notice to the Company (in which
case, the Holder shall make such filings with the Commission, including under
Regulation 13D or 13G, as are required by applicable law). The holders of the
Other Warrant shall be unaffected by any such wavier.
(b) The Holder also agrees not to exercise this
Warrant to the extent such exercise would result in the Holder beneficially
owning (as determined in accordance with Section 13(d) of the Exchange Act
and the rules thereunder) in excess of 9.999% of the then issued and
outstanding Common Stock, including shares issuable upon exercise of this
Warrant after application of this Section. The Holder shall have the sole
authority and obligation to determine whether the restriction contained in
this Section applies. The provisions of this Section may be waived by the
Holder upon not less than 75 days prior notice to the Company.
12. FRACTIONAL SHARES. The Company shall not be required to
issue or cause to be issued fractional Warrant Shares on the exercise of this
Warrant. The number of full Warrant Shares which shall be issuable upon the
exercise of this Warrant shall be computed on the basis of the aggregate
number of Warrant Shares purchasable on exercise of this Warrant so
presented. If any fraction of a Warrant Share would, except for the
provisions of this Section 12, be issuable on the
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exercise of this Warrant, the Company shall pay an amount in cash equal to
the Exercise Price multiplied by such fraction.
13. NOTICES. Any and all notices or other communications or
deliveries hereunder shall be in writing and shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in this
Section prior to 6:00 p.m. (New York City time) on a Business Day, (ii) the
Business Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 6:00 p.m. (New York City time) on any date and earlier than
11:59 p.m. (New York City time) on such date, (iii) the Business Day following
the date of mailing, if sent by nationally recognized overnight courier service
with next day delivery specified thereon, or (iv) upon actual receipt by the
party to whom such notice is required to be given. The addresses for such
communications shall be: (i) if to the Company, to 0000 XX Xxxxxxxxx Xxxxxxx
#000, Xxxxxxxxx, Xxxxxx, facsimile number (000) 000-0000, attention Chief
Executive Officer, or (ii) if to the Holder, to the Holder at the address or
facsimile number appearing on the Warrant Register or such other address or
facsimile number as the Holder may provide to the Company in accordance with
this Section 13.
14. WARRANT AGENT.
(a) The Company shall serve as warrant agent under
this Warrant. Upon thirty (30) days' notice to the Holder, the Company may
appoint a new warrant agent.
(b) Any corporation into which the Company or any
new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party
or any corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business
shall be a successor warrant agent under this Warrant without any further
act. Any such successor warrant agent shall promptly cause notice of its
succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder's last address as shown on the Warrant
Register.
15. MISCELLANEOUS.
(a) This Warrant shall be binding on and inure to
the benefit of the parties hereto and their respective successors and
permitted assigns. This Warrant may be amended only in writing signed by the
Company and the Holder and their successors and assigns.
(b) Subject to Section 15(a), above, nothing in this
Warrant shall be construed to give to any person or corporation other than
the Company and the Holder any legal or equitable right, remedy or cause
under this Warrant. This Warrant shall inure to the sole and exclusive
benefit of the Company and the Holder.
-12-
(c) This Warrant shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof.
(d) The headings herein are for convenience only, do
not constitute a part of this Warrant and shall not be deemed to limit or
affect any of the provisions hereof.
(e) In case any one or more of the provisions of
this Warrant shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Warrant
shall not in any way be affected or impaired thereby and the parties will
attempt in good faith to agree upon a valid and enforceable provision which
shall be a commercially reasonable substitute therefor, and upon so agreeing,
shall incorporate such substitute provision in this Warrant.
(f) This Warrant shall terminate and be of no
further force and effect on the earlier of 5:00 p.m. (New York City time) on
the Expiration Date or the date on which the Warrant has been exercised in
full, except that the provisions of Sections 6 and 8 shall remain in full
force and effect after such termination date.
[REMAINDER OF XXXX INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by its authorized officer as of the date first indicated above.
THRUSTMASTER, INC.
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To ThrustMaster, Inc.:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase _____________
shares of Common Stock ("Common Stock"), no par value, of ThrustMaster, Inc.
and, if such Holder is not utilizing the cashless exercise provisions set forth
in this Warrant, encloses herewith $________ in cash, certified or official bank
check or checks, which sum represents the aggregate Exercise Price (as defined
in the Warrant) for the number of shares of Common Stock to which this Form of
Election to Purchase relates, together with any applicable taxes payable by the
undersigned pursuant to the Warrant.
[The undersigned elects that this Warrant be exercised in accordance
with Section 10(b) hereof.]
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
-------------------------------
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(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is entitled
to purchase in accordance with the enclosed Warrant, the undersigned requests
that a New Warrant (as defined in the Warrant) evidencing the right to purchase
the shares of Common Stock not issuable pursuant to the exercise evidenced
hereby be issued in the name of and delivered to:
-----------------------------------------------------------------------------
(Please print name and address)
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Dated: , Name of Holder:
---------------
(Print)
----------------------------
(By:)
----------------------------
(Name:)
(Title:)
(Signature must conform in all respects
to name of holder as specified on the face
of the Warrant)
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ________________________________ the right represented by the
within Warrant to purchase ____________ shares of Common Stock of
ThrustMaster, Inc. to which the within Warrant relates and appoints
________________ attorney to transfer said right on the books of
ThrustMaster, Inc. with full power of substitution in the premises. The
undersigned hereby certifies that it has fully complied with Section 2 of the
Warrant and Section 3.1 of the Purchase Agreement with respect to this
transfer and assignment.
Dated:
---------------, ----
-----------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant)
--------------------------------------
Address of Transferee
--------------------------------------
--------------------------------------
In the presence of:
--------------------------
