EXHIBIT 4.1
PACIFIC INTERNATIONAL ENTERPRISES, INC.
FORM OF WARRANT AGREEMENT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS AN EXEMPTION THEREFROM IS AVAILABLE.
This Warrant (the "Warrant") is entered into as of , 1996 by and
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between PACIFIC INTERNATIONAL ENTERPRISES, INC., a Nevada corporation (the
"Company"), and the holder identified below.
RECITALS
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WHEREAS, the Holder has purchased the number of Units set forth in
Exhibit A offered by the Company, each Unit consisting of (i) 25,000 shares of
Series A Convertible Preferred Stock which are convertible into shares of Common
Stock at the lesser of (A) $1.00 per share or (B) 70% of the average closing bid
price on the five trading days preceding conversion; and (ii) warrants to
purchase 25,000 shares of the Company's Common Stock, par value $0.001 per share
(the "Common Stock"), at an exercise price equal to the lesser of (A) $2.50 per
share or (B) 70% of the average closing bid price of the Common Stock for the
five days preceding the exercise date but in no event less than $1.00 per share
(the "Warrants").
WHEREAS, the Company desires to evidence such warrants (the "Warrant") by
executing and delivering this Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the adequacy and receipt of which are irrevocably
acknowledged, the parties hereto agree as follow.
1. DESCRIPTION; EXECUTION: REGISTRATION.
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(a) This certifies that, for value received, the Holder is hereby granted
warrants to purchase number of shares of Company Common Stock at the
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exercise price and on the terms set forth below. As used herein, "Shares"
refers to the shares of Common Stock issued upon exercise of the Warrant. The
Company shall cause to be issued to the Holder, a certificate in the form
attached hereto, as soon as practicable after the execution of the Agreement
(the "Warrant Certificate").
(b) This Agreement shall be executed on behalf of the Company by its Chief
Executive Officer and attested by any Secretary or Assistant Secretary. Upon
delivery of this Warrant to the Holder, this Agreement shall be binding upon the
Company, and the Holder shall be entitled to all the benefits set forth herein.
2. TERM OF WARRANTS; CALL BY COMPANY.
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(a) This Warrant shall remain exercisable as provided in Section 3 until
the close of business three years from the date first written above.
(b) If and only if (i) the shares of the Company's Common Stock are traded
on any national or regional stock exchange and the closing sales price of the
Common Stock equals or exceeds $4.00 per share for a period of thirty (30)
consecutive trading days and (ii) the shares of Common Stock issuable upon
exercise of the Warrant have been registered under the Securities Act of 1933,
then the Company may, at the option of the Board of Directors, establish a date
on or before which all of the Warrants must be exercised (the "Call Date").
Notwithstanding anything herein to the contrary, any Warrants which are not
exercised in the manner provided in
Section 3 on or before the Call Date shall automatically and without further
action by the Company expire and terminate. The Company shall give each holder
of Warrant written notice of the Call Date at least sixty (60) days in advance.
3. EXERCISE OF WARRANT.
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(a) The Warrant shall be immediately exercisable. At any time until the
Expiration Date, the Holder shall have the right to purchase from the Company
(and the Company shall promptly issue to the Holder) one fully-paid and
nonassessable share of Common Stock at the Exercise Price (as defined below) for
each Warrant by surrendering the appropriate Warrant Certificate and the
Subscription Form attached hereto to the Company at its executive offices and
paying the aggregate Exercise Price for the shares to be purchased, in cash or
by check.
(b) The Warrants may be exercised in whole and in part, but not in
increments of less than 100 shares. In case of a partial exercise, the Warrant
Certificate shall be surrendered and a new Warrant Certificate of the same tenor
and for the purchase of the number of shares not purchased upon such partial
exercise shall be issued by the Company to the Holder hereof. Warrants shall be
deemed to have been exercised immediately prior to the close of business on the
date of their surrender for exercise as provided above, and the person or entity
entitled to receive the shares of Common Stock issuable upon the exercise shall
be treated for all purposes as the holder of such shares of record as of the
close of business on such date. Prior to any such exercise, neither the Holder
nor any person entitled to receive shares issuable upon exercise shall be or
have any of the rights of a shareholder of the Company. No adjustment shall be
made for dividends or other stockholder rights for which the record date is
prior to the date of exercise. As soon as practicable on or after such date,
the Company shall issue in the name of, and deliver to the person or persons
entitled to receive, a certificate or certificates for the full number of shares
of Common Stock issuable upon such exercise.
4. EXERCISE PRICE; ADJUSTMENT.
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4.1 Exercise Price. The initial exercise price for each share of
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Common Stock issuable pursuant to the Warrants shall be at an exercise price
equal to the lesser of (A) $2.50 per share or (B) 70% of the average closing bid
price of the Common Stock for the five days preceding the exercise date, but in
no event less than $1.00 per share (the "Warrants").
5. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES OF COMMON STOCK. The
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number and kind of securities purchasable upon the exercise of the Warrants and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of certain events, as follows:
5.1 Adjustments. The number of shares of Common Stock purchasable upon
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the exercise of each Warrant and the Exercise Price thereof shall be subject to
adjustment as follows:
(a) In case the Company shall (i) pay a dividend in Common Stock
or make a distribution in Common Stock, (ii) subdivide its outstanding Common
Stock, (iii) combine its Stock, or (iv) issue, by reclassification of its Common
Stock, other securities of the Company, the number of shares of Common Stock
purchasable upon exercise of the Warrant immediately prior thereto shall be
adjusted so that the holder of the Warrant shall be entitled to receive the kind
and number of shares of Common Stock or other securities of the Company which
such holder would have owned or would have been entitled to receive immediately
after the happening of any of the events described above, had the Warrant been
exercised immediately prior to the happening of such event or any record date
with respect thereto. Any adjustment made pursuant to this Subsection 5.1(a)
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) In case the Company shall distribute to all or substantially all
holders of its Common Stock, evidences of its indebtedness or assets (excluding
cash dividends or distributions out of earnings) or rights, options, warrants or
convertible securities containing the right to subscribe for or purchase Common
Stock, then in each case the number of shares of Common Stock thereafter
purchasable upon the exercise of the Warrant shall
be determined by multiplying the number of shares of Common Stock theretofore
purchasable upon exercise of such Warrant by a fraction, of which the numerator
shall be the then Current Market Price on the date of such distribution, and of
which the denominator shall be such Current Market Price on such date minus the
then fair value (determined by the Company's Board of Directors) of the portion
of the assets or evidences of indebtedness so distributed or of such
subscription rights, options, warrants or convertible securities applicable to
one share. Such adjustment shall be made whenever any such distribution is made
and shall become effective on the date of distribution retroactive to the record
date for the determination of stockholders entitled to receive such
distribution.
(c) No adjustment in the number of shares of Common Stock
purchasable pursuant to the Warrants shall be required unless such adjustment
would require an increase or decrease of at least one percent in the number of
shares of Common Stock then purchasable upon the exercise of the Warrant or, if
the Warrant is not then exercisable, the number of shares of Common Stock
purchasable upon the exercise of the Warrants on the first date thereafter that
the Warrant become exercisable; provided, however, that any adjustments which by
reason of this Subsection 5.1(c) are not required to be made immediately shall
be carried forward and taken into account in any subsequent adjustment.
(d) Whenever the number of shares of Common Stock purchasable upon
the exercise of a Warrant is adjusted as herein provided, the Exercise Price
payable upon exercise of the Warrant shall be adjusted by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of shares of Common Stock purchasable upon the
exercise of such Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of shares of Common Stock so purchasable
immediately thereafter.
(e) Whenever the number of shares of Common Stock purchasable upon
the exercise of a Warrant or the Exercise Price is adjusted as herein provided,
the Company shall cause to be promptly mailed to the Holder by first class mail,
postage prepaid, notice of such adjustment or adjustments.
(f) For the purpose of this Section 5, the term "Common Stock"
shall mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Agreement, or (ii) any other class of stock resulting from
successive changes or reclassification of such Common Stock consisting solely of
changes in par value, or from par value to no par value, or from no par value to
par value.
5.2 No Adjustment for Dividends. Except as provided in Section 5.1
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hereof, no adjustment in respect of any dividends or distributions out of
earnings shall be made during the term of a Warrant or upon the exercise of a
Warrant.
5.3 No Adjustment in Certain Cases. No adjustments shall be made
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pursuant to Section 5 hereof in connection with the grant or exercise of
presently authorized or outstanding options to purchase Common Stock under the
Company's existing stock option plan or the exercise of presently outstanding
warrants to purchase Common Stock.
5.4 Preservation of Purchase Rights upon Reclassification,
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Consolidation, etc. In case of any consolidation of the company with or
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merger of the Company into another corporation or in case of any sale or
conveyance to another corporation of the property, assets or business of the
Company as an entirety or substantially as an entirety, the Company or such
successor or purchasing corporation, as the case may be, shall execute with the
Holder an agreement that the Holder shall have the right thereafter, upon
payment of the Exercise Price in effect immediately prior to such action, to
purchase, upon exercise of each Warrant, the kind and amount of shares and other
securities and property which it would have owned or have been entitled to
receive after the happening of such consolidation, merger, sale or conveyance
had each Warrant been exercised immediately prior to such action. In the event
of a merger described in Section 368(a)(2)(E) of the Internal Revenue Code of
1986, as amended, in which the Company is the surviving corporation, the right
to purchase shares of Common Stock under the Warrant shall terminate on the date
of such merger and thereupon the Warrant shall become null and void, but only if
the controlling corporation shall agree to substitute for the Warrant its
warrant which entitle the holders thereof to purchase upon their exercise the
kind and amount of shares and other securities and property which they would
have owned or been
entitled to receive had the Warrant been exercised immediately prior to such
merger. Any such agreements referred to in this Subsection 5.4 shall provide for
adjustments, which shall be as nearly equivalent as may be practicable to the
adjustments provided for in Section 5 hereof. The provisions of this Subsection
5.4 shall similarly apply to successive consolidations, mergers, sales or
conveyances.
6. FRACTIONAL SHARES; ISSUANCE OF SHARES; LEGENDS.
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6.1 Fractional Shares. The Company shall not be required to issue
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fractional shares of Common Stock on the exercise of the Warrant. If any
fraction of a share of Common Stock would, except for the provisions of this
Section 6.1, be issuable on the exercise of a Warrant (or specified portion
thereof), the Company shall in lieu thereof pay an amount in cash equal to the
then Current Market Price, multiplied by such fraction. For purposes of this
Agreement, the term "Current Market Price" shall mean (i) if the Common Stock is
traded in the over-the-counter market and not in the NASDAQ National Market
System nor on any national securities exchange, the average of the per share
closing bid price of the Common Stock on the 30 consecutive trading days
immediately preceding the date in question, as reported by NASDAQ or an
equivalent generally accepted reporting service, or (ii) if the Common Stock is
traded in the NASDAQ National Market System or on a national securities
exchange, the average for the 30 consecutive trading days immediately preceding
the date in question of the daily per share closing prices of the Common Stock
in the NASDAQ National Market System or on the principal stock exchange on which
it is listed, as the case may be. For purposes of clause (i) above, if trading
in the Common Stock is not reported by NASDAQ, the bid price referred to in said
clause shall be the lowest bid price as reported in the "pink sheets" published
by National Quotation Bureau, Incorporated. The closing price referred to in
clause (ii) above shall be the last reported sale price or, in the case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices, in either case in the NASDAQ National Market System or on the
national securities exchange on which the Common Stock is then listed.
6.2 Issuance of Shares. All shares of Common Stock issued upon exercise
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of the Warrant will be duly authorized, validly issued, fully paid and
nonassessable.
6.3 Legends. If the Common Stock to be issued upon exercise of this
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Warrant has not been registered under the Securities Act of 1933, as amended,
then the stock certificates representing such shares of Common Stock shall bear
a legend substantially in the following form:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE
SECURITIES LAWS AND ARE RESTRICTED SECURITIES. SUCH SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER THE ACT AND STATE SECURITIES LAWS.
7. TRANSFERABILITY.
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The Warrant may not be transferred, sold or otherwise disposed of, except
by will or devise and by the laws of descent. Any attempt to transfer, sell or
otherwise dispose of this Warrant (except as provided above) shall be void and
shall not convey any rights or privileges to the transferee.
8. MISCELLANEOUS.
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8.1 Notices.
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All notices, requests, demands and other communications required or
permitted to be given hereunder shall be deemed to have been duly given if in
writing and delivered personally, given by prepaid telegram, or mailed first
class, postage prepaid, registered or certified mail, return receipt requested,
to the following addresses:
If to the Company: Pacific International Enterprises, Inc.
0000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxxx, XX 00000
Attn: Binks Graval
With a copy to: Xxxxxxx, Xxxxxx & Xxxxx
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxx, Esq.
If to the Holder:
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Any party may change the address to which such communications are to be directed
to it by giving written notice to the other party. Except as otherwise provided
in this Warrant, all notices shall be deemed to be given when delivered in
person, or if placed in the mail as aforesaid, then two (2) days thereafter.
8.2 Modifications.
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The parties may, by mutual consent, amend, modify, supplement and waive any
right under this Warrant in any manner agreed by them in writing at any time.
8.3 Entire Agreement.
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This Agreement and any documents, instruments or agreements specifically
referred to herein, set forth the entire agreement and understanding of the
parties with respect to the transactions contemplated hereby and supersede all
prior agreements, arrangements and understandings relating to the subject matter
hereof.
8.4 Headings.
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The section and paragraph headings contained in this Warrant are for
convenient reference only, and shall not in any way affect the meaning or
interpretation hereof.
8.5 Governing Law.
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This Agreement shall be governed by and construed in accordance with the
laws of the State of California, without any regard to the choice of law
provisions thereof.
8.6 Severability.
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If any provision of this Agreement shall be held to be invalid, illegal or
unenforceable, it shall be deemed severable from the remaining provisions of
this Agreement which shall remain in full force and effect.
8.7 Waiver.
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No waiver of any provision of this Agreement or any breach thereof shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar) or any other breach hereunder nor shall such waiver constitute a
continuing waiver. Either party may waive performance of any provision of this
Agreement, the non-performance of which would otherwise constitute a breach of
this Agreement, including but not limited to the non-performance of any
condition precedent to such party's performance, without affecting the
enforceability of this Agreement or the provisions contained herein.
8.8 Successors and Assigns.
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The terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties hereto.
The Company may not assign this Agreement without the prior written consent of
the Holder. Holders may transfer and assign the Warrant only as provided in
Section 7. Any assignment by either party in violation of the foregoing shall
be void.
8.9 Attorneys' Fees.
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If any legal action is instituted to enforce or interpret the terms of this
Warrant, the prevailing party in such action shall be entitled to actual
attorneys' fees in addition to any other relief to which the party is entitled.
IN WITNESS WHEREOF, the parties have executed this instrument as of the
date first written above.
HOLDER PACIFIC INTERNATIONAL ENTERPRISES, INC.
By:
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Signature Binks Graval, Chief Executive Officer
WARRANT 1
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
The undersigned Holder of this Warrant hereby irrevocably exercises this
Warrant for the purchase of that number of shares of the Common Stock, no par
value, of PACIFIC INTERNATIONAL ENTERPRISES, INC. set forth below, up to a
maximum of shares (or such other number of shares as may be issuable upon the
exercise of this Warrant pursuant to the adjustment provisions hereof), and
hereby makes payment of the aggregate Exercise Price therefor which is also set
forth below, all on the terms and subject to the conditions specified in this
Warrant.
Number of Shares:
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x $
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Aggregate Purchase
Price paid: $
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Dated: , 1996
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HOLDER:
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(Signature)
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(Please print)
ACCEPTED:
PACIFIC INTERNATIONAL ENTERPRISES, INC.,
a Nevada corporation
By:
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Title:
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