THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES AND AN OPINION OF COUNSEL OR
OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
0XXXXXXXXX.XXX
COMMON STOCK PURCHASE WARRANT
1. Issuance; Certain Definitions. In consideration of good and
valuable consideration, the receipt of which is hereby acknowledged by
0XXXXXXXXX.XXX, a California corporation (the "Company"), Hughson LLC or
registered assigns (the "Holder") is hereby granted the right to purchase at any
time commencing June 6, 2001 until 5:00 P.M., New York City time, on December
31, 2005 (the "Expiration Date"), One Hundred Fifty Thousand (150,000) fully
paid and nonassessable shares of the Company's Common Stock, no par value per
share (the "Common Stock") at an initial exercise price per share (the "Exercise
Price") of $1.925 per share, subject to further adjustment as set forth herein.
This Warrant is being issued pursuant to the terms of that certain Securities
Purchase Agreement, dated as of December 4, 2000 (the "Securities Purchase
Agreement"), to which the Company and Holder (or Holder's predecessor in
interest) are parties. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Securities Purchase Agreement.
2. Exercise of Warrants.
2.1 General. This Warrant is exercisable in whole or
in part at any time and from time to time. Such exercise shall be effectuated by
submitting to the Company (either by delivery to the Company or by facsimile
transmission as provided in Section 9 hereof) a completed and duly executed
Notice of Exercise (substantially in the form attached to this Warrant
Certificate) as provided in this paragraph. The date such Notice of Exercise is
faxed to the Company shall be the "Exercise Date," provided that the Holder of
this Warrant tenders this Warrant Certificate to the Company within five (5)
business days thereafter. The Notice of Exercise shall be executed by the Holder
of this Warrant and shall indicate the number of shares then being purchased
pursuant to such exercise. Upon surrender of this Warrant Certificate, together
with appropriate payment of the Exercise Price for the shares of Common Stock
purchased, the Holder shall be entitled to receive a certificate or certificates
for the shares of Common Stock so purchased. If the Notice of Exercise Form
elects a "cash" exercise, the Exercise Price per share of Common Stock for the
shares then being exercised shall be payable in cash or by certified or official
bank check accompanying the Notice. If the Notice of Exercise Form elects a
"cashless" exercise, the Holder shall thereby be entitled to receive a number of
shares of Common Stock equal to (x) the excess of the Current Market Value (as
defined below) over the total cash exercise price of the portion of the Warrant
then being exercised, divided by (y) the average Market Price of the Common
Stock for of the five trading days immediately prior to the Exercise Date. For
the purposes of this Section 2.1 "Current Market Value" shall be an amount equal
to the average Market Price of the Common Stock for the five trading days
immediately prior to the Exercise Date, multiplied by the number of shares of
Common Stock specified in such Notice of Exercise Form, and "Market Price of the
Common Stock" shall be the closing price of the Common Stock as reported by
Bloomberg, LP or, if not so reported, as reported by the securities exchange or
automated quotation system on which the Common Stock is listed or on the
over-the-counter market for the relevant date. The Holder shall be deemed to be
the holder of the shares issuable to it in accordance with the provisions of
this Section 2.1 on the Exercise Date.
2.2 Limitation on Exercise. Notwithstanding the
provisions of this Warrant, the Securities Purchase Agreement or of the other
Transaction Agreements, in no event (except (i) as specifically provided in this
Warrant as an exception to this provision, (ii) while there is outstanding a
tender offer for any or all of the shares of the Company's Common Stock or (iii)
on at least seventy-five (75) days' advance written notice from the Holder of
its election to cancel this Section 2.2) shall the Holder be entitled to
exercise this Warrant, or shall the Company have the obligation to issue shares
upon such exercise of all or any portion of this Warrant, to the extent that,
after such exercise the sum of (1) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Preferred Stock or unexercised portion of the
Warrants), and (2) the number of shares of Common Stock issuable upon the
exercise of the Warrants with respect to which the determination of this proviso
is being made, would result in beneficial ownership by the Holder and its
affiliates of more than 4.99% of the outstanding shares of Common Stock (after
taking into account the shares to be issued to the Holder upon such exercise).
For purposes of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, except as otherwise provided in clause (1) of
the prior sentence. The Holder, by its acceptance of this Warrant, further
agrees that if the Holder transfers or assigns any of the Warrants to a party
who or which would not be considered such an affiliate, such assignment shall be
made subject to the transferee's or assignee's specific agreement to be bound by
the provisions of this Section 2.2 as if such transferee or assignee were the
original Holder hereof.
3. Redemption of Warrant In the event that commencing nine (9)
months after the Effective Date, the Closing Bid Price of the Common Stock of
the Company is equal to two hundred seventy five percent (275%) of the Exercise
Price for a period of twenty (20) consecutive trading days, then the Company
shall have the right to redeem all or any of the then outstanding Warrants held
by the Holder, in cash for an amount equal to $0.10 per Warrant, by giving not
less than thirty (30) days written notice of such redemption to the Holders of
such Warrant.
4. Reservation of Shares. The Company hereby agrees that at
all times during the term of this Warrant there shall be reserved for issuance
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upon exercise of this Warrant such number of shares of its Common Stock as shall
be required for issuance upon exercise of this Warrant (the "Warrant Shares").
5. Mutilation or Loss of Warrant. Upon receipt by the Company
of evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification and affidavit, and (in the case of
mutilation) upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor and date and any such lost,
stolen, destroyed or mutilated Warrant shall thereupon become void.
6. Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.
7. Protection Against Dilution.
7.1 Adjustment Mechanism. If an adjustment of the
Exercise Price is required pursuant to this Section 7, the Holder shall be
entitled to purchase such number of additional shares of Common Stock as will
cause (i) the total number of shares of Common Stock Holder is entitled to
purchase pursuant to this Warrant, multiplied by (ii) the adjusted Exercise
Price per share, to equal (iii) the dollar amount of the total number of shares
of Common Stock which the Holder is entitled to purchase before adjustment,
multiplied by the total Exercise Price before adjustment.
7.2 Capital Adjustments. In case of any stock split
or reverse stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation, or like capital adjustment affecting
the Common Stock of the Company, the provisions of this Section 6 shall be
applied as if such capital adjustment event had occurred immediately prior to
the date of this Warrant and the original Exercise Price had been fairly
allocated to the stock resulting from such capital adjustment; and in other
respects the provisions of this Section shall be applied in a fair, equitable
and reasonable manner so as to give effect, as nearly as may be, to the purposes
hereof. A rights offering to stockholders shall be deemed a stock dividend to
the extent of the bargain purchase element of the rights.
7.3 Adjustment for Spin Off. If, for any reason,
prior to the exercise of this Warrant in full, the Company spins off or
otherwise divests itself of a part of its business or operations or disposes all
or of a part of its assets in a transaction (the "Spin Off") in which the
Company does not receive compensation for such business, operations or assets,
but causes securities of another entity (the "Spin Off Securities") to be issued
to security holders of the Company, then the Company shall cause (i) to be
reserved Spin Off Securities equal to the number thereof which would have been
issued to the Holder had all of the Holder's unexercised Warrants outstanding on
the record date (the "Record Date") for determining the amount and number of
Spin Off Securities to be issued to security holders of the Company (the
"Outstanding Warrants") been exercised as of the close of business on the
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trading day immediately before the Record Date (the "Reserved Spin Off Shares"),
and (ii) to be issued to the Holder on the exercise of all or any of the
Outstanding Warrants, such amount of the Reserved Spin Off Shares equal to (x)
the Reserved Spin Off Shares multiplied by (y) a fraction, of which (I) the
numerator is the amount of the Outstanding Warrants then being exercised, and
(II) the denominator is the amount of the Outstanding Warrants.
8. Transfer to Comply with the Securities Act; Registration
Rights.
8.1 Transfer. This Warrant has not been registered
under the Securities Act of 1933, as amended, (the "Act") and has been issued to
the Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or issuable upon exercise of this Warrant
may be sold, transferred, pledged or hypothecated in the absence of an effective
registration statement under the Act relating to such security or an opinion of
counsel satisfactory to the Company that registration is not required under the
Act. Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
8.2 Registration Rights. (a) Reference is made to
the Registration Rights Agreement. The Company's obligations under the
Registration Rights Agreement and the other terms and conditions thereof with
respect to the Warrant Shares, including, but not necessarily limited to, the
Company's commitment to file a registration statement including the Warrant
Shares, to have the registration of the Warrant Shares completed and effective,
and to maintain such registration, are incorporated herein by reference.
(b) In addition to the registration rights referred
to in the preceding provisions of Section 8.2(a), effective after the expiration
of the effectiveness of the Registration Statement as contemplated by the
Registration Rights Agreement, the Holder shall have piggy-back registration
rights with respect to the Warrant Shares then held by the Holder or then
subject to issuance upon exercise of this Warrant (collectively, the "Remaining
Warrant Shares"), subject to the conditions set forth below. If, at any time
after the Registration Statement has ceased to be effective, the Company
participates (whether voluntarily or by reason of an obligation to a third
party) in the registration of any shares of the Company's stock (other than a
registration on Form S-4 or Form S-8), the Company shall give written notice
thereof to the Holder and the Holder shall have the right, exercisable within
ten (10) business days after receipt of such notice, to demand inclusion of all
or a portion of the Holder's Remaining Warrant Shares in such registration
statement. If the Holder exercises such election, the Remaining Warrant Shares
so designated shall be included in the registration statement at no cost or
expense to the Holder (other than any costs or commissions which would be borne
by the Holder under the terms of the Registration Rights Agreement). The
Holder's rights under this Section 8 shall expire at such time as the Holder can
sell all of the Remaining Warrant Shares under Rule 144 without volume or other
restrictions or limit.
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9. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission confirmed by overnight
courier or sent by certified, registered or express mail, postage pre-paid. Any
such notice shall be deemed given when so delivered personally, telegraphed,
telexed or sent by facsimile transmission confirmed by overnight courier or, if
mailed, two days after the date of deposit in the United States mails, as
follows:
(i) if to the Company, to:
0XXxxxxxxx.Xxx
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxx xxx Xxx, XX 00000
Attn: Xxxx Xxxxxx, President
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
---------------
Graubard Xxxxxx & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxx Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(ii) if to the Holder, to:
Hughson LLC
c/o Citco Trustees (Cayman) Limited,
Commercial Centre
P.O. Box 31106 SMB
Grand Cayman Islands, British West Indies
Attn:
Telephone No.: ( ) -
Telecopier No.: ( ) -
with a copy to:
---------------
Xxxxxxx & Xxxxxx LLP
00 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
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Any party may be notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
10. Supplements and Amendments; Whole Agreement. This Warrant
may be amended or supplemented only by an instrument in writing signed by the
parties hereto. This Warrant of even date herewith contain the full
understanding of the parties hereto with respect to the subject matter hereof
and thereof and there are no representations, warranties, agreements or
understandings other than expressly contained herein and therein.
11. Governing Law. This Warrant shall be deemed to be a
contract made under the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the City of New York
or the state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Warrant and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Buyer in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
12. Counterparts. This Warrant may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
13. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the th day of , 2000.
0XXXXXXXXX.XXX
By: ______________________________
Name: ________________________
Its:__________________________
Attest:
_____________________________________
Name: _______________________________
Title:_______________________________
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NOTICE OF EXERCISE OF WARRANT
To Be Executed by the Registered Holder In Order to Exercise this Warrant
The undersigned registered Holder hereby irrevocably elects to exercise
the attached Warrant and to purchase ________ shares of Common Stock of
0xxxxxxxxx.xxx and hereby makes payment of $________ (at the rate of $____ per
share) in payment of the Exercise Price pursuant thereto. Please issue the
shares of Common Stock underlying the Warrants in accordance with the
instructions given below.
or
The undersigned Registered Holder hereby irrevocably elects to exercise
the attached Warrant and to purchase ________ shares of Common Stock of
0xxxxxxxxx.xxx by surrender of the unexercised portion of the attached Warrant
(with a "Value" of $______ based on a "Market Price" of $______). Please issue
the shares of Common Stock underlying the Warrants in accordance with the
instructions given below.
PLEASE ISSUE CERTIFICATES AS FOLLOWS:
PLEASE INSERT SOCIAL SECURITY OR
____________________________________ OTHER IDENTIFYING NUMBER
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(please print or type name and address)
-
and be delivered to
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(please print or type name and address)
and if such number of Warrants exercised shall not be all the Warrants evidenced
by the attached Warrant, that a new Warrant for the balance of such Warrant be
registered in the name of, and delivered to, the registered Holder at the
address stated below.
THE SIGNATURE ON THIS EXERCUSE FORM MUST CORRESPOND TO THE NAME AS WRITTEN UPON
THE FACE OF THIS WARRANT IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT
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OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A COMMERCIAL BANK OR TRUST
COMPANY OR A MEMBER FIRM OF THE AMERICAN STOCK EXCHANGE, NEW YORK STOCK
EXCHANGE, PACIFIC STOCK EXCHANGE OR MIDWEST STOCK EXCHANGE.
Dated:_____________ ________________________________________
(Signature of Registered Holder)
________________________________________
Signature Guaranteed
________________________________________
________________________________________
(Address of Registered Holder)
________________________________________
(Taxpayer Identification Number)
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