THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS COMMON STOCK PURCHASE WARRANT, AGREES FOR THE BENEFIT OF THE COMPANY THAT
SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
COMPANY, (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT, OR (C) IF REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. IN ADDITION, A SECURITIES PURCHASE AGREEMENT, DATED THE DATE
HEREOF, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTIES,
INCLUDING, WITHOUT LIMITATION, PROVISIONS WHICH LIMIT THE EXERCISE RIGHTS OF THE
HOLDER.
STARUNI CORP.
COMMON STOCK PURCHASE WARRANT
No. B-001 Warrant to Purchase 1,000,000 Shares
STARUNI CORP., a California corporation (the "Company"), hereby
certifies that, for value received, Boat Basin Investors LLC or assigns, is
entitled, subject to the terms set forth below, to purchase from the Company at
any time or from time to time during the period commencing (i) September 28,
2000 and ending September 28, 2003, at the Purchase Price (as hereinafter
defined), eight hundred thousand (800,000) shares of the fully paid and
nonassessable shares of Common Stock of the Company and (ii) on the earlier of
(x) February 16, 2001 or (y) the date the Registration Statement (as hereinafter
defined) becomes effective two hundred thousand (200,000) shares of the fully
paid and nonassessable shares of Common Stock of the Company. The time periods
for the exercise of Warrants set forth in (i) and (ii) above shall be the
"Exercise Period".The number and character of such shares of Common Stock and
the Purchase Price are subject to adjustment as provided herein.
This Warrant (this "Warrant"; such term to include any warrants issued
in substitution therefor) is one of a series of warrants issued in connection
with that certain Private Equity Line of Credit dated of even date herewith
among the initial Holder hereof, the Company and certain other parties thereto.
Capitalized terms used herein not otherwise defined shall have the
meanings ascribed thereto in the Agreement. As used herein the following terms,
unless the context otherwise requires, have the following respective meanings:
(a) The term "Agreement" refers to that certain Private
Equity Line of Credit Agreement dated the date herewith among the
initial Holder hereof, the Company and certain other parties hereto.
(b) The term "Company" shall include Staruni Corp. and
any corporation that shall succeed or assume the obligations of such
corporation hereunder.
10.7 - 1
(c) The term "Common Stock" includes (a) the Company's
common stock, no par per share, (b) any other capital stock of any
class or classes (however designated) of the Company, authorized on or
after such date, the Holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference, and
the Holders of which shall ordinarily, in the absence of contingencies,
be entitled to vote for the election of a majority of directors of the
Company (even though the right so to vote has been suspended by the
happening of such a contingency) and (c) any other securities into
which or for which any of the securities described in (a) or (b) may be
converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(d) The term "Other Securities" refers to any stock
(other than Common Stock) and other securities of the Company or any
other person (corporate or otherwise) that the Holder of this Warrant
at any time shall be entitled to receive, or shall have received, on
the exercise of this Warrant, in lieu of or in addition to Common
Stock, or that at any time shall be issuable or shall have been issued
in exchange for or in replacement of Common Stock or Other Securities
pursuant to Section 3 or otherwise.
(e) The term "Purchase Price" means 75% of the Market
Price; and the term "Market Price" shall mean the lowest closing bid
price of a share of Common Stock as reported on the Principal Market as
reported by the National Association of Securities Dealers Electronic
Bulletin Board ("OTC Bulletin Board") for the 30 days immediately
preceding the date of receipt by the Company of Notice of Exercise (as
hereinafter defined). If on any date that a Notice of Exercise is given
the Common Stock is not listed or traded on the OTC Bulletin Board, the
Market Price shall be determined by reference to the Nasdaq Stock
Market or the principal securities exchange or trading market where
such security is listed or traded as reported by Bloomberg, L.P., or
the average of the bid prices of any market makers for such security as
reported in the "pink sheets" by the National Quotations Bureau, Inc.
If the closing bid price cannot be calculated for such security on such
date on any of the foregoing bases, the closing bid price of such
security on such date shall be the fair market value as mutually
determined by the Company and the Holder of this Warrant.
(f) The term "Registration Statement" means that
Registration Statement defined in a certain Registration Rights
Agreement ("Registration Rights Agreement") between the Company and the
Holder of even date.
1. Exercise of Warrant.
1.1. Method of Exercise.
(a) This Warrant may be exercised in whole or in part
(but not as to a fractional share of Common Stock), at any time and
from time to time during the Exercise Period by the Holder hereof by
10.7 - 2
delivery of a notice of exercise (a "Notice of Exercise") in the form
attached hereto as Exhibit A via facsimile to the Company specifying
the Purchase Price (the "Exercise Price"). This Warrant is a "cashless"
Warrant, and upon exercise of the Warrant the Holder shall not be
required to make cash payment to the Company for the shares of Common
Stock issuable upon such exercise. Rather, upon exercise, the Holder
shall be entitled to receive, one or more certificates, issued in the
Holder's name or in such name or names as the Holder may direct,
subject to the limitations on transfer contained herein, for the number
of shares of Common Stock so purchased, less the number of shares
equivalent in value to the Purchase Price of the Warrants determined by
applying the Market Price. The number of shares of Common Stock
constituting the Purchase Price shall be set forth in the Notice of
Exercise along with the net number of shares to be delivered to the
Holder. The shares of Common Stock so purchased shall be deemed to be
issued as of the close of business on the date on which the Company
shall have received from the Holder payment of the Exercise Price (the
"Exercise Date").
(b) Notwithstanding anything to the contrary set forth
herein, upon exercise of all or a portion of this Warrant in accordance
with the terms hereof, the Holder shall not be required to physically
surrender this Warrant to the Company. Rather, records showing the
amount so exercised and the date of exercise shall be maintained on a
ledger in the form of Annex B attached hereto (a copy of which shall be
delivered to the Company or transfer agent with each Notice of
Exercise). It is specifically contemplated that the Company hereof
shall act as the calculation agent for all exercises of this Warrant.
In the event of any dispute or discrepancies, such records maintained
by the Company shall be controlling and determinative in the absence of
manifest error. The Holder and any assignee, by acceptance of this
Warrant, acknowledge and agree that, by reason of the provisions of
this paragraph, following an exercise of a portion of this Warrant, the
number of shares of Common Stock represented by this Warrant will be
the amount indicated on Annex B attached hereto (which may be less than
the amount stated on the face hereof).
1.2. Regulation D Restrictions. The Holder hereof
represents and warrants to the Company that it has acquired this
Warrant and anticipates acquiring the shares of Common Stock issuable
upon exercise of the Warrant solely for its own account for investment
purposes and not with a view to or for resale of such securities unless
such resale has been registered with the Commission or an applicable
exemption is available therefor. At the time this Warrant is exercised,
the Company may require the Holder to state in the Notice of Exercise
such representations concerning the Holder as are necessary or
appropriate to assure compliance by the Holder with the Securities Act.
2. Delivery of Stock Certificates on Exercise. As soon as
practicable after the exercise of this Warrant, the Company at its expense
(including the payment by it of any applicable issue, stamp or transfer taxes)
will cause to be issued in the name of and delivered to the Holder thereof, or,
to the extent permissible hereunder, to such other person as such Holder may
direct, a certificate or certificates for the number of fully paid and
10.7 - 3
nonassessable shares of Common Stock (or Other Securities) to which such Holder
shall be entitled on such exercise, plus, in lieu of any fractional share to
which such Holder would otherwise be entitled, cash equal to such fraction
multiplied by the then applicable Purchase Price, together with any other stock
or other securities and property (including cash, where applicable) to which
such Holder is entitled upon such exercise pursuant to Section 1 or otherwise.
3. Adjustment of Purchase Price In Certain Events. The Purchase
Price to be paid by the Holder upon exercise of this Warrant, and the
consideration to be received upon exercise of this Warrant, shall be adjusted in
case at any time or from time to time for Capital Reorganizations as provided in
the Agreement as if such provisions were specifically set forth herein.
4. No Impairment. The Company will not, by amendment of its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder of this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company (a) will not increase the par value of any shares of stock
receivable on the exercise of this Warrant above the amount payable therefor on
such exercise, (b) will take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable shares of stock on the exercise of this Warrant, and (c) will not
transfer all or substantially all of its properties and assets to any other
person (corporate or otherwise), or consolidate with or merge into any other
person or permit any such person to consolidate with or merge into the Company
(if the Company is not the surviving person), unless such other person shall
expressly assume in writing and will be bound by all the terms of this Warrant.
5. Notices of Record Date. In the event of
(a) any taking by the Company of a record of the
Holders of any class or securities for the purpose of
determining the Holders thereof who are entitled to receive
any dividend or other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any
other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of
the Company or any transfer of all or substantially all the
assets of the Company to or consolidation or merger of the
Company with or into any other person, or
(c) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company, then and in each
such event the Company will mail or cause to be mailed to the
Holder of this Warrant a notice specifying (i) the date on
which any such record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and
10.7 - 4
character of such dividend, distribution or right, and (ii)
the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and
the time, if any, as of which the Holders of record of Common
Stock (or Other Securities) shall be entitled to exchange
their shares of Common Stock (or Other Securities) for
securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up.
Such notice shall be mailed at least 20 days prior to the date
specified in such notice on which any action is to be taken.
6. Reservation of Stock Issuable on Exercise of Warrant. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of this Warrant, all shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of this Warrant.
7. Exchange of Warrant. On surrender for exchange of this
Warrant, properly endorsed and in compliance with the restrictions on transfer
set forth in the legend on the face of this Warrant, to the Company, the Company
at its expense will issue and deliver to or on the order of the Holder thereof a
new Warrant of like tenor, in the name of such Holder or as such Holder (on
payment by such Holder of any applicable transfer taxes) may direct, calling in
the aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face of the Warrant so surrendered.
8. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.
9. Remedies. The Company stipulates that the remedies at law of
the Holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
10. Negotiability, etc. This Warrant is issued upon the following
terms, to all of which each Holder or owner hereof by the taking hereof consents
and agrees:
(a) title to this Warrant may be transferred by
endorsement and delivery in the same manner as in the case of
a negotiable instrument transferable by endorsement and
delivery.
(b) any person in possession of this Warrant properly
endorsed is authorized to represent himself as absolute owner
hereof and is empowered to transfer absolute title hereto by
endorsement and delivery hereof to a bona fide purchaser
10.7 - 5
hereof for value; each prior taker or owner waives and
renounces all of his equities or rights in this Warrant in
favor of each such bona fide purchaser, and each such bona
fide purchaser shall acquire absolute title hereto and to all
rights represented hereby;
(c) until this Warrant is transferred on the books of
the Company, the Company may treat the registered Holder
hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary; and
(d) notwithstanding the foregoing, this Warrant may
not be sold, transferred or assigned except pursuant to an
effective registration statement under the Securities Act or
pursuant to an applicable exemption therefrom.
11. Registration Rights. The Company is obligated to register the
shares of Common Stock issuable upon exercise of this Warrant in accordance with
the terms of the Registration Rights Agreement.
12. Notices. All notices and other communications from the Company
to the Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company in writing by such Holder or, until any such Holder furnishes to the
Company an address, then to, and at the address of, the last Holder of this
Warrant who has so furnished an address to the Company.
13. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the internal laws of the State of New York. The
headings in this Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or enforceability of
any other provision.
[Signature Page Follows]
10.7 - 6
DATED as of September 28, 2000.
STARUNI CORP.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
[Corporate Seal]
Attest:
By:
-----------------------
Secretary
10.7 - 7
EXHIBIT A
FORM OF NOTICE OF EXERCISE - WARRANT
------------------------------------
(To be executed only upon exercise of the Warrant in whole or in part)
To: STARUNI CORP.
The undersigned registered Holder of the accompanying Warrant hereby
exercises such Warrant or portion thereof for, and purchases thereunder,
____________(1) shares of Common Stock (as defined in such Warrant) and herewith
makes payment therefor in the amount and manner set forth below, as of the date
written below. The undersigned requests that the certificates for such shares of
Common Stock be issued in the name of, and delivered to,
_________________________ whose address is ____________________________________.
The Exercise Price for the shares of Common Stock issued on account of
this exercise of Warrant shall be in the amount of $________.
The number of shares to be issued hereunder less shares equivalent to
the Exercise Price, as determined in this Warrant, is_______________ .
Dated: ____________________
(Name must conform to name of Holder as
specified on the face of the Warrant)
By:
-----------------------------------------
Name:
--------------------------------
Title:
--------------------------------
Address of Holder:
-------------------------
-------------------------
-------------------------
Date of exercise:
C:\Edgarizing\New\staruniwarrantf\staruniwarrantf.final.wpd
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(1) Insert the number of shares of Common Stock as to which the
accompanying Warrant is being exercised. In the case of a partial exercise, a
new Warrant or Warrants will be issued and delivered, representing the
unexercised portion of the accompanying Warrant, to the holder surrendering the
same.
10.7 - 8
