EXHIBIT B
to Securities
Purchase
Agreement
VOID AFTER 5:00 P.M., NEW YORK CITY
TIME, ON MARCH 31, 2003
(UNLESS EXTENDED PURSUANT TO SECTION 2 HEREOF)
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER JURISDICTION. THE SECURITIES REPRESENTED
HEREBY MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE
SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
Right to Purchase 56,000 Shares of Class A
Common Stock, par value $.001 per share
Date: March 31, 1998
CAM DESIGNS INC.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, JNC STRATEGIC FUND LTD., or
its registered assigns, is entitled to purchase from CAM DESIGNS INC., a
corporation organized under the laws of the State of Delaware (the "Company"),
at any time or from time to time during the period specified in Section 2
hereof, Fifty-Six Thousand (56,000) fully paid and nonassessable shares of the
Company's Class A Common Stock, par value $.001 per share (the "Common
Stock"), at an exercise price per share (the "Exercise Price") equal to $3.93
(110% of the Market Price (as defined in Section 4(l) hereof) in effect on the
Issue Date (as defined in Section 2 hereof)). The number of shares of Common
Stock purchasable hereunder (the "Warrant Shares") and the Exercise Price are
subject to adjustment as provided in Section 4 hereof. The term "Warrants"
means this Warrant and the other warrants of the Company, if any, issued
pursuant to that certain Securities Purchase Agreement, dated as of March 27,
1998, by and between the Company and the initial holder hereof (the
"Securities Purchase Agreement").
This Warrant is subject to the following terms, provisions and
conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for
Shares. Subject to the provisions hereof, including, without limitation, the
limitations contained in Section 7 hereof, this Warrant may be exercised by
the holder hereof, in whole or in part, by the surrender of this Warrant,
together with a completed exercise agreement in the form attached hereto (the
"Exercise Agreement"), to the Company during normal business hours on any
business day at the Company's principal executive offices (or such other
office or agency of the Company as it may designate by notice to the holder
hereof), and upon (i) payment to the Company in cash, by certified or official
bank check or by wire transfer for the account of the Company, of the Exercise
Price for the Warrant Shares specified in the Exercise Agreement or (ii) if
the holder is effectuating a Cashless Exercise (as defined in Section 11(c)
hereof) pursuant to Section 11(c) hereof, delivery to the Company of a written
notice of an election to effect a Cashless Exercise for the Warrant Shares
specified in the Exercise Agreement. The Warrant Shares so purchased shall be
deemed to be issued to the holder hereof or such holder's designee, as the
record owner of such shares, as of the close of business on the date on which
this Warrant shall have been surrendered, the completed Exercise Agreement
shall have been delivered, and payment shall have been made for such shares as
set forth above or, if such date is not a business date, on the next
succeeding business date. The Warrant Shares so purchased, representing the
aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the holder hereof within a reasonable time, not exceeding two (2)
business days, after this Warrant shall have been so exercised in accordance
with the foregoing (the "Delivery Period"). If the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer program, and so long as the certificates therefor do not
bear a legend and the holder is not obligated to return such certificate for
the placement of a legend thereon, the Company shall cause its transfer agent
to electronically transmit the Warrant Shares so purchased to the holder by
crediting the account of the holder or its nominee with DTC through its
Deposit Withdrawal Agent Commission system ("DTC Transfer"). If the
aforementioned conditions to a DTC Transfer are not satisfied, the Company
shall deliver to the holder physical certificates representing the Warrant
Shares so purchased. Further, the holder may instruct the Company to deliver
to the holder physical certificates representing the Warrant Shares so
purchased in lieu of delivering such shares by way of DTC Transfer. Any
certificates so delivered shall be in such denominations as may be reasonably
requested by the holder hereof, shall be registered in the name of such holder
or such other name as shall be designated by such holder and, following the
date on which the Warrant Shares have been registered under the Securities Act
pursuant to that certain Registration Rights Agreement, dated as of March 27,
1998, by and between the Company and the other signatories thereto (the
"Registration Rights Agreement") or otherwise may be sold by the holder
pursuant to Rule 144 promulgated under the Securities Act (or a successor
rule), shall not bear any restrictive legend. If this Warrant shall have been
exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates, deliver
to the holder a new Warrant representing the number of shares with respect to
which this Warrant shall not then have been exercised.
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If, at any time, a holder of this Warrant submits this Warrant, an
Exercise Agreement and payment to the Company of the Exercise Price for each
of the Warrant Shares specified in the Exercise Agreement (including pursuant
to a Cashless Exercise), and the Company fails for any reason to deliver, on
or prior to the fourth business day following the expiration of the Delivery
Period for such exercise, the number of shares of Common Stock to which the
holder is entitled upon such exercise (an "Exercise Default"), then the
Company shall pay to the holder payments ("Exercise Default Payments") for an
Exercise Default in the amount of (a) (N/365), multiplied by (b) the amount by
which the Market Price on the date the Exercise Agreement giving rise to the
Exercise Default is transmitted in accordance with this Section 1 (the
"Exercise Default Date") exceeds the Exercise Price, multiplied by (c) the
number of shares of Common Stock the Company failed to so deliver in such
Exercise Default, multiplied by (d) .24, where N = the number of days from the
Exercise Default Date to the date that the Company effects the full exercise
of this Warrant which gave rise to the Exercise Default. The accrued Exercise
Default Payment for each calendar month shall be paid in cash or shall be
convertible into Common Stock, at the holder's option, as follows:
(a) In the event holder elects to take such payment in
cash, cash payment shall be made to holder by the fifth (5th) day of the month
following the month in which it has accrued; and
(b) In the event holder elects to take such payment in
Common Stock, the holder may convert such payment amount into Common Stock (in
accordance with the terms contained in Article IV of the Certificate of
Designations, Preferences and Rights (the "Certificate of Designation")
governing the Company's Series A Convertible Preferred Stock (the "Series A
Preferred Stock")) at the lower of the Exercise Price or the Market Price (as
in effect at the time of conversion) at any time after the fifth (5th) day of
the month following the month in which it has accrued.
Nothing herein shall limit the holder's right to pursue actual
damages for the Company's failure to maintain a sufficient number of
authorized shares of Common Stock as required pursuant to the terms of Section
3(b) hereof or to otherwise issue shares of Common Stock upon exercise of this
Warrant in accordance with the terms hereof, and the holder shall have the
right to pursue all remedies available at law or in equity (including a decree
of specific performance and/or injunctive relief).
2. Period of Exercise.
(a) This Warrant is immediately exercisable, at any time
or from time to time on or after the date of initial issuance of this Warrant
(the "Issue Date") and before 5:00 p.m., New York City time, on the fifth
(5th) anniversary of the Issue Date (the "Exercise Period"). The Exercise
Period shall automatically be extended by one (1) day for each day (i) on
which the Company
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does not have a number of shares of Common Stock reserved for issuance upon
exercise hereof at least equal to the number of shares of Common Stock
issuable upon exercise hereof and (ii) after the seventy-fifth (75th) day
following the Issue Date on which the registration statement required to be
filed by the Company pursuant to Section 2(a) of the Registration Rights
Agreement has not been declared effective by the United States Securities and
Exchange Commission.
3. Certain Agreements of the Company. The Company hereby covenants
and agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly issued,
fully paid, and nonassessable and free from all taxes, liens, claims and
encumbrances.
(b) Reservation of Shares. During the Exercise Period, the
Company shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of
Common Stock to provide for the exercise in full of this Warrant (without
giving effect to the limitations on exercise set forth in Section 7(g)
hereof).
(c) Listing. The Company shall promptly secure the listing
of the shares of Common Stock issuable upon exercise of this Warrant upon each
national securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed or become listed (subject to official
notice of issuance upon exercise of this Warrant) and shall maintain, so long
as any other shares of Common Stock shall be so listed, such listing of all
shares of Common Stock from time to time issuable upon the exercise of this
Warrant; and the Company shall so list on each national securities exchange or
automated quotation system, as the case may be, and shall maintain such
listing of, any other shares of capital stock of the Company issuable upon the
exercise of this Warrant if and so long as any shares of the same class shall
be listed on such national securities exchange or automated quotation system.
(d) Certain Actions Prohibited. The Company will not, by
amendment of its charter 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 to be observed or performed by it hereunder, but will at all
times in good faith assist in the carrying out of all the provisions of this
Warrant and in the taking of all such action as may reasonably be requested by
the holder of this Warrant in order to protect the economic benefit inuring to
the holder hereof and the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant. Without limiting the generality of the foregoing, the Company
(i) will not increase the par value of any shares of Common Stock receivable
upon the exercise of this Warrant above the Exercise Price then in effect, and
(ii) will take all such actions as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant.
(e) Successors and Assigns. This Warrant will be binding
upon any entity succeeding to the Company by merger, consolidation, or
acquisition of all or substantially all of the Company's assets.
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(f) Blue Sky Laws. The Company shall, on or before the
date of issuance of any Warrant Shares, take such actions as the Company shall
reasonably determine are necessary to qualify the Warrant Shares for, or
obtain exemption for the Warrant Shares for, sale to the holder of this
Warrant upon the exercise hereof under applicable securities or "blue sky"
laws of the states of the United States, and shall provide evidence of any
such action so taken to the holder of this Warrant prior to such date;
provided, however, that the Company shall not be required to qualify as a
foreign corporation or file a general consent to service of process in any
such jurisdiction.
4. Antidilution Provisions. During the Exercise Period, the
Exercise Price and the number of Warrant Shares issuable hereunder and for
which this Warrant is then exercisable pursuant to Section 2 hereof shall be
subject to adjustment from time to time as provided in this Section 4.
In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be rounded
up or down to the nearest cent.
(a) Adjustment of Exercise Price. Except as otherwise
provided in Sections 4(c) and 4(e) hereof, if and whenever during the Exercise
Period the Company issues or sells, or in accordance with Section 4(b) hereof
is deemed to have issued or sold, any shares of Common Stock for no
consideration or for a consideration per share less than the Market Price on
the date of issuance (a "Dilutive Issuance"), then effective immediately upon
the Dilutive Issuance, the Exercise Price will be adjusted in accordance with
the following formula:
E' = E x O + P/M
-------------------
CSDO
where:
E' = the adjusted Exercise Price;
E = the then current Exercise Price;
M = the then current Market Price;
O = the number of shares of Common Stock
outstanding immediately prior to the
Dilutive Issuance;
P = the aggregate consideration, calculated
as set forth in Section 4(b) hereof,
received by the Company upon such Dilutive
Issuance; and
CSDO = the total number of shares of Common
Stock Deemed Outstanding (as defined in
Section 4(l)(i)) immediately after the
Dilutive Issuance.
(b) Effect on Exercise Price of Certain Events. For purposes
of determining the adjusted Exercise Price under Section 4(a) hereof, the
following will be applicable:
(i) Issuance of Rights or Options. If the Company
in any manner issues or grants any warrants, rights or options, whether or not
immediately exercisable, to subscribe for
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or to purchase Common Stock or other securities exercisable, convertible into
or exchangeable for Common Stock ("Convertible Securities") (such warrants,
rights and options to purchase Common Stock or Convertible Securities are
hereinafter referred to as "Options") and the price per share for which Common
Stock is issuable upon the exercise of such Options is less than the Market
Price on the date of issuance ("Below Market Options"), then the maximum total
number of shares of Common Stock issuable upon the exercise of all such Below
Market Options (assuming full exercise, conversion or exchange of Convertible
Securities, if applicable) will, as of the date of the issuance or grant of
such Below Market Options, be deemed to be outstanding and to have been issued
and sold by the Company for such price per share. For purposes of the
preceding sentence, the "price per share for which Common Stock is issuable
upon the exercise of such Below Market Options" is determined by dividing (i)
the total amount, if any, received or receivable by the Company as
consideration for the issuance or granting of all such Below Market Options,
plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the exercise of all such Below Market Options, plus, in
the case of Convertible Securities issuable upon the exercise of such Below
Market Options, the minimum aggregate amount of additional consideration
payable upon the exercise, conversion or exchange thereof at the time such
Convertible Securities first become exercisable, convertible or exchangeable,
by (ii) the maximum total number of shares of Common Stock issuable upon the
exercise of all such Below Market Options (assuming full conversion of
Convertible Securities, if applicable). No further adjustment to the Exercise
Price will be made upon the actual issuance of such Common Stock upon the
exercise of such Below Market Options or upon the exercise, conversion or
exchange of Convertible Securities issuable upon exercise of such Below Market
Options.
(ii) Issuance of Convertible Securities.
(A) If the Company in any manner issues
or sells any Convertible Securities, whether or not immediately convertible
(other than where the same are issuable upon the exercise of Options) and the
price per share for which Common Stock is issuable upon such exercise,
conversion or exchange (as determined pursuant to Section 4(b)(ii)(B) if
applicable) is less than the Market Price on the date of issuance, then the
maximum total number of shares of Common Stock issuable upon the exercise,
conversion or exchange of all such Convertible Securities will, as of the date
of the issuance of such Convertible Securities, be deemed to be outstanding
and to have been issued and sold by the Company for such price per share. For
the purposes of the preceding sentence, the "price per share for which Common
Stock is issuable upon such exercise, conversion or exchange" is determined by
dividing (i) the total amount, if any, received or receivable by the Company
as consideration for the issuance or sale of all such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the exercise, conversion or exchange thereof at the time
such Convertible Securities first become exercisable, convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities. No further adjustment to the Exercise Price will be made upon the
actual issuance of such Common Stock upon exercise, conversion or exchange of
such Convertible Securities.
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(B) If the Company in any manner issues or
sells any Convertible Securities with a fluctuating conversion or exercise
price or exchange ratio (a "Variable Rate Convertible Security"), then the
"price per share for which Common Stock is issuable upon such exercise,
conversion or exchange" for purposes of the calculation contemplated by
Section 4(b)(ii)(A) shall be deemed to be the lowest price per share which
would be applicable (assuming all holding period and other conditions to any
discounts contained in such Convertible Security have been satisfied) if the
Market Price on the date of issuance of such Convertible Security was 75% of
the Market Price on such date (the "Assumed Variable Market Price"). Further,
if the Market Price at any time or times thereafter is less than or equal to
the Assumed Variable Market Price last used for making any adjustment under
this Section 4 with respect to any Variable Rate Convertible Security, the
Exercise Price in effect at such time shall be readjusted to equal the
Exercise Price which would have resulted if the Assumed Variable Market Price
at the time of issuance of the Variable Rate Convertible Security had been 75%
of the Market Price existing at the time of the adjustment required by this
sentence.
(iii) Change in Option Price or Conversion Rate.
If there is a change at any time in (i) the amount of additional consideration
payable to the Company upon the exercise of any Options; (ii) the amount of
additional consideration, if any, payable to the Company upon the exercise,
conversion or exchange of any Convertible Securities; or (iii) the rate at
which any Convertible Securities are convertible into or exchangeable for
Common Stock (in each such case, other than under or by reason of provisions
designed to protect against dilution), the Exercise Price in effect at the
time of such change will be readjusted to the Exercise Price which would have
been in effect at such time had such Options or Convertible Securities still
outstanding provided for such changed additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold.
(iv) Treatment of Expired Options and Unexercised
Convertible Securities. If, in any case, the total number of shares of Common
Stock issuable upon exercise of any Option or upon exercise, conversion or
exchange of any Convertible Securities is not, in fact, issued and the rights
to exercise such Option or to exercise, convert or exchange such Convertible
Securities shall have expired or terminated, the Exercise Price then in effect
will be readjusted to the Exercise Price which would have been in effect at
the time of such expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such expiration or
termination (other than in respect of the actual number of shares of Common
Stock issued upon exercise or conversion thereof), never been issued.
(v) Calculation of Consideration Received. If any
Common Stock, Options or Convertible Securities are issued, granted or sold
for cash, the consideration received therefor for purposes of this Warrant
will be the amount received by the Company therefor, before deduction of
reasonable commissions, underwriting discounts or allowances or other
reasonable expenses paid or incurred by the Company in connection with such
issuance, grant or sale. In case any Common Stock, Options or Convertible
Securities are issued or sold for a consideration part or all of which shall
be other than cash, the amount of the consideration other than cash received
by the
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Company will be the fair market value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Company will be the Market Price thereof as of
the date of receipt. In case any Common Stock, Options or Convertible
Securities are issued in connection with any merger or consolidation in which
the Company is the surviving corporation, the amount of consideration therefor
will be deemed to be the fair market value of such portion of the net assets
and business of the non-surviving corporation as is attributable to such
Common Stock, Options or Convertible Securities, as the case may be. The fair
market value of any consideration other than cash or securities will be
determined in good faith by an investment banker or other appropriate expert
of national reputation selected by the Company and reasonably acceptable to
the holder hereof, with the costs of such appraisal to be borne by the
Company.
(vi) Exceptions to Adjustment of Exercise Price.
No adjustment to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities issued and outstanding on the
Issue Date and set forth on Schedule 3(c) of the Securities Purchase Agreement
in accordance with the terms of such securities as of such date; (ii) upon the
grant or exercise of any stock or options which may hereafter be granted or
exercised under any employee benefit plan of the Company now existing or to be
implemented in the future, so long as the issuance of such stock or options is
approved by a majority of the non-employee members of the Board of Directors
of the Company or a majority of the members of a committee of non-employee
directors established for such purpose; (iii) upon the issuance of any shares
of Series A Preferred Stock or Warrants issued or issuable in accordance with
the terms of the Securities Purchase Agreement; or (iv) upon conversion of any
shares of Series A Preferred Stock or upon exercise of any Warrants.
(c) Subdivision or Combination of Common Stock. If the
Company, at any time during the Exercise Period, subdivides (by any stock
split, stock dividend, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a greater number of shares, then,
after the date of record for effecting such subdivision, the Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced.
If the Company, at any time during the Exercise Period, combines (by reverse
stock split, recapitalization, reorganization, reclassification or otherwise)
its shares of Common Stock into a smaller number of shares, then, after the
date of record for effecting such combination, the Exercise Price in effect
immediately prior to such combination will be proportionately increased.
(d) Adjustment in Number of Shares. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Section 4, the number
of shares of Common Stock issuable upon exercise of this Warrant and for which
this Warrant is or may become exercisable shall be adjusted by multiplying a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Common Stock issuable or for which this
Warrant is or may become exercisable (as applicable) upon exercise of this
Warrant immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
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(e) Consolidation, Merger or Sale. In case of any
consolidation of the Company with, or merger of the Company into, any other
corporation in which the consideration payable to the holders of the Company's
Common Stock consists, in whole or in part, of shares of stock or other
securities, then as a condition of such consolidation or merger, adequate
provision will be made whereby the holder of this Warrant will have the right
to acquire and receive upon exercise of this Warrant in lieu of the shares of
Common Stock immediately theretofore acquirable upon the exercise of this
Warrant, such shares of stock or other securities as may be issued or payable
with respect to or in exchange for the number of shares of Common Stock
immediately theretofore acquirable and receivable upon exercise of this
Warrant had such consolidation or merger not taken place. In any such case,
the Company will make appropriate provision to insure that the provisions of
this Section 4 will thereafter be applicable as nearly as may be in relation
to any shares of stock or securities thereafter deliverable upon the exercise
of this Warrant. The Company will not effect any such consolidation or merger
unless (i) prior to the consummation thereof, the successor corporation (if
other than the Company) assumes by written instrument the obligations under
this Warrant and the obligations to deliver to the holder of this Warrant such
shares of stock or other securities as, in accordance with the foregoing
provisions, the holder may be entitled to acquire and (ii) the successor
corporation is a publicly traded corporation whose common stock is listed for
trading on the New York Stock Exchange, the American Stock Exchange, the
Nasdaq National Market or the Nasdaq SmallCap Market. In the case of any sale
or conveyance of all or substantially all of the Company's assets (other than
in connection with a plan of complete liquidation of the Company) or in the
case of any consolidation of the Company with, or merger of the Company into,
any other corporation which involves the receipt of cash consideration by the
holders of the Company's capital stock or in which the surviving or continuing
entity is not a publicly traded corporation whose common stock is listed for
trading on the New York Stock Exchange, the American Stock Exchange, the
Nasdaq National Market or the Nasdaq SmallCap Market, the holder of this
Warrant shall be entitled to receive, in connection with such transaction,
cash consideration equal to the fair market value (as determined by the holder
of this Warrant) of this Warrant.
(f) Distribution of Assets. In case the Company shall
declare or make any distribution of its assets (or rights to acquire its
assets) to holders of Common Stock as a partial liquidating dividend, stock
repurchase by way of return of capital or otherwise (including any dividend or
distribution to the Company's stockholders of cash or shares (or rights to
acquire shares) of capital stock of a subsidiary) (a "Distribution"), at any
time during the Exercise Period, then the holder of this Warrant shall be
entitled upon exercise of this Warrant for the purchase of any or all of the
shares of Common Stock subject hereto, to receive the amount of such assets
(or rights) which would have been payable to the holder had such holder been
the holder of such shares of Common Stock on the record date for the
determination of stockholders entitled to such Distribution.
(g) Notice of Adjustment. Upon the occurrence of any event
which requires any adjustment of the Exercise Price, then, and in each such
case, the Company shall give notice thereof to the holder of this Warrant,
which notice shall state the Exercise Price resulting from such adjustment and
the increase or decrease in the number of Warrant Shares purchasable at such
price upon exercise, setting forth in reasonable detail the method of
calculation and the facts upon which
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such calculation is based. Such calculation shall be certified by the chief
financial officer of the Company.
(h) Minimum Adjustment of Exercise Price. No adjustment of
the Exercise Price shall be made in an amount of less than 1% of the Exercise
Price in effect at the time such adjustment is otherwise required to be made,
but any such lesser adjustment shall be carried forward and shall be made at
the time and together with the next subsequent adjustment which, together with
any adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
(i) No Fractional Shares. No fractional shares of Common
Stock are to be issued upon the exercise of this Warrant, but the Company
shall pay a cash adjustment in respect of any fractional share which would
otherwise be issuable in an amount equal to the same fraction of the Market
Price of a share of Common Stock on the date of such exercise.
(j) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon the
Common Stock payable in shares of stock of any class or make any other
distribution (other than dividends or distributions payable in cash out of
retained earnings consistent with the Company's past practices with respect to
declaring dividends and making distributions) to the holders of the Common
Stock;
(ii) the Company shall offer for subscription pro
rata to the holders of the Common Stock any additional shares of stock of any
class or other rights;
(iii) there shall be any capital reorganization of
the Company, or reclassification of the Common Stock, or consolidation or
merger of the Company with or into, or sale of all or substantially all of its
assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a
record shall be taken for determining the holders of Common Stock entitled to
receive any such dividend, distribution, or subscription rights or for
determining the holders of Common Stock entitled to vote in respect of any
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, notice of the date (or, if not then known, a
reasonable estimate thereof by the Company) when the same shall take place.
Such notice shall also specify the date on which the holders of Common Stock
shall be entitled to receive such dividend, distribution, or subscription
rights or to exchange their Common Stock for stock or other securities or
property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or winding-up, as the
case may be. Such notice shall be given at least seventy-five (75) days prior
to
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the record date or the date on which the Company's books are closed in
respect thereto. Failure to give any such notice or any defect therein shall
not affect the validity of the proceedings referred to in clauses (i), (ii),
(iii) and (iv) above.
(k) Certain Events. If, at any time during the Exercise
Period, any event occurs of the type contemplated by the adjustment provisions
of this Section 4 but not expressly provided for by such provisions, the
Company will give notice of such event as provided in Section 4(g) hereof, and
the Company's Board of Directors will make an appropriate adjustment in the
Exercise Price and the number of shares of Common Stock acquirable upon
exercise of this Warrant so that the rights of the holder shall be neither
enhanced nor diminished by such event.
(l) Certain Definitions.
(i) "Common Stock Deemed Outstanding" shall mean the
number of shares of Common Stock actually outstanding (not including shares of
Common Stock held in the treasury of the Company), plus (x) in the case of any
adjustment required by Section 4(a) resulting from the issuance of any
Options, the maximum total number of shares of Common Stock issuable upon the
exercise of the Options for which the adjustment is required (including any
Common Stock issuable upon the conversion of Convertible Securities issuable
upon the exercise of such Options), and (y) in the case of any adjustment
required by Section 4(a) resulting from the issuance of any Convertible
Securities, the maximum total number of shares of Common Stock issuable upon
the exercise, conversion or exchange of the Convertible Securities for which
the adjustment is required, as of the date of issuance of such Convertible
Securities, if any.
(ii) "Common Stock," for purposes of this Section 4,
includes the Common Stock and any additional class of stock of the Company
having no preference as to dividends or distributions on liquidation, provided
that the shares purchasable pursuant to this Warrant shall include only Common
Stock in respect of which this Warrant is exercisable, or shares resulting
from any subdivision or combination of such Common Stock, or in the case of
any reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Section 4(e) hereof, the stock or other securities or
property provided for in such Section.
(iii) "Closing Bid Price" means, as of any date, (i)
the closing bid price for the shares of Common Stock as reported on the Nasdaq
SmallCap Market by Bloomberg Financial Markets or a comparable reporting
service of national reputation selected by the Company and reasonably
acceptable to the holder hereof if Bloomberg Financial Markets is not then
reporting closing bid prices for the Common Stock (collectively, "Bloomberg"),
or (ii) if the Nasdaq SmallCap Market is not the principal trading market for
the shares of Common Stock, the last reported sale price reported by Bloomberg
on the principal trading market for the Common Stock, or, if there is no sale
price reported, the last bid price reported by Bloomberg, or (iii) if the
foregoing do not apply, the last sale price of such security in the
over-the-counter market on the pink sheets or bulletin board for such security
as reported by Bloomberg, or if no sale price is so reported for such
security, the last bid price of such security as reported by Bloomberg, or
(iv) if the Closing Bid
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Price cannot be calculated as of such date on any of the foregoing bases, the
Closing Bid Price of the Common Stock on such date shall be the fair market
value as reasonably determined by an investment banking firm selected by the
Company and reasonably acceptable to the holder, with the costs of the
appraisal to be borne by the Company. The manner of determining the Closing
Bid Price of the Common Stock set forth in the foregoing definition shall
apply with respect to any other security in respect of which a determination
as to market value must be made hereunder.
(iv) "Market Price" means, as of any date, the
average of the Closing Bid Prices for the Common Stock for the five (5)
consecutive trading days ending on the trading day immediately preceding such
date of determination (subject to equitable adjustment for any stock splits,
stock dividends, reclassifications or similar events occurring during such
five (5) trading day period).
5. Issue Tax. The issuance of certificates for Warrant Shares upon
the exercise of this Warrant shall be made without charge to the holder of
this Warrant or such shares for any issuance tax or other costs in respect
thereof, provided that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than the holder of this Warrant.
6. No Rights or Liabilities as a Stockholder. This Warrant shall
not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision of this Warrant, in the absence of
affirmative action by the holder hereof to purchase Warrant Shares, and no
mere enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such holder for the Exercise Price or as a
stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
7. Transfer, Exchange, Redemption and Replacement of Warrant.
(a) Restriction on Transfer. This Warrant and the rights
granted to the holder hereof are transferable, in whole or in part, upon
surrender of this Warrant, together with a properly executed assignment in the
form attached hereto, at the office or agency of the Company referred to in
Section 7(e) below, provided, however, that any transfer or assignment shall
be subject to the conditions set forth in Sections 7(f) and (g) hereof and to
the provisions of Sections 2(f) and 2(g) of the Securities Purchase Agreement.
Until due presentment for registration of transfer on the books of the
Company, the Company may treat the registered holder hereof as the owner and
holder hereof for all purposes, and the Company shall not be affected by any
notice to the contrary. Notwithstanding anything to the contrary contained
herein, the registration rights described in Section 8 hereof are assignable
only in accordance with the provisions of the Registration Rights Agreement.
(b) Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the holder hereof at the
office or agency of the Company referred to in Section 7(e) below, for new
Warrants of like tenor of different denominations
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representing in the aggregate the right to purchase the number of shares of
Common Stock which may be purchased hereunder, each of such new Warrants to
represent the right to purchase such number of shares as shall be designated
by the holder hereof at the time of such surrender.
(c) Replacement of Warrant. Upon 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, upon delivery of an indemnity agreement reasonably satisfactory
in form and amount to the Company, or, in the case of any such mutilation,
upon surrender and cancellation of this Warrant, the Company, at its expense,
will execute and deliver, in lieu thereof, a new Warrant of like tenor.
(d) Cancellation; Payment of Expenses. Upon the surrender
of this Warrant in connection with any transfer, exchange, or replacement as
provided in this Section 7, this Warrant shall be promptly canceled by the
Company. The Company shall pay all taxes (other than securities transfer
taxes) and all other expenses (other than legal expenses, if any, incurred by
the Holder or transferees) and charges payable in connection with the
preparation, execution, and delivery of Warrants pursuant to this Section 7.
The Company shall indemnify and reimburse the holder of this Warrant for all
costs and expenses (including legal fees) incurred by such holder in
connection with the enforcement of its rights hereunder.
(e) Warrant Register. The Company shall maintain, at its
principal executive offices (or such other office or agency of the Company as
it may designate by notice to the holder hereof), a register for this Warrant,
in which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.
(f) Exercise or Transfer Without Registration. If, at the
time of the surrender of this Warrant in connection with any exercise,
transfer, or exchange of this Warrant, this Warrant (or, in the case of any
exercise, the Warrant Shares issuable hereunder), shall not be registered
under the Securities Act and under applicable state securities or blue sky
laws, the Company may require, as a condition of allowing such exercise,
transfer, or exchange, (i) that the holder or transferee of this Warrant, as
the case may be, furnish to the Company a written opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that such exercise,
transfer, or exchange may be made without registration under the Securities
Act and under applicable state securities or blue sky laws (the cost of which
shall be borne by the Company if the Company's counsel renders such an opinion
and up to $250 of such cost shall be borne by the Company if the holder's
counsel is requested to render such opinion), (ii) that the holder or
transferee execute and deliver to the Company an investment letter in form and
substance acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a) promulgated under the
Securities Act; provided that no such opinion, letter, or status as an
"accredited investor" shall be required in connection with a transfer pursuant
to Rule 144 under the Securities Act.
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(g) Additional Restrictions on Exercise or Transfer.
Notwithstanding anything contained herein to the contrary, unless the holder
hereof delivers a waiver in accordance with the last sentence of this Section
7(g), this Warrant shall not be exercisable by a holder hereof to the extent
(but only to the extent) that (a) the number of shares of Common Stock
beneficially owned by such holder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of
the unexercised portion of the Warrants or the unexercised or unconverted
portion of any other securities of the Company (including the Series A
Preferred Stock) subject to a limitation on conversion or exercise analogous
to the limitation contained herein) and (b) the number of shares of Common
Stock issuable upon exercise of this Warrant (or portion hereof) with respect
to which the determination described herein is being made, would result in
beneficial ownership by such holder and its affiliates of more than 4.99% of
the outstanding shares of Common Stock. To the extent the above limitation
applies, the determination of whether and to what extent this Warrant shall be
exercisable vis-a-vis other securities owned by such holder shall be in the
sole discretion of the holder and submission of this Warrant for full or
partial exercise shall be deemed to be the holder's determination of whether
and the extent to which this Warrant is exercisable, in each case subject to
such aggregate percentage limitation. No prior inability to exercise the
Warrant pursuant to this Section shall have any effect on the applicability of
the provisions of this Section with respect to any subsequent determination of
exerciseability. For purposes of the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended, and Regulation 13D-G
thereunder, except as otherwise provided in clause (a) hereof. Except as
provided in the immediately succeeding sentence, the restrictions contained in
this Section 7(g) may not be amended without the consent of the holder of this
Warrant and the holders of a majority of the Company's then outstanding Common
Stock. Notwithstanding the foregoing, the holder hereof may waive the
restrictions set forth in this Section 7(g) by written notice to the Company
upon not less than sixty- one (61) days prior notice (with such waiver taking
effect only upon the expiration of such sixty-one (61) day notice period).
8. Registration Rights. The initial holder of this Warrant (and
certain assignees thereof) is entitled to the benefit of such registration
rights in respect of the Warrant Shares as are set forth in the Registration
Rights Agreement, including the right to assign such rights to certain
assignees, as set forth therein.
9. Notices. Any notices required or permitted to be given under the
terms of this Warrant shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier, or by confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:
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If to the Company:
CAM Designs Inc.
Birmingham Road
Allesley, Coventry
CV 00 XX
Xxxxxxx, XX
Telecopy: 000 00 0000 407 335
Attention: Xxxx X. Xxxxxxxx
with a copy simultaneously transmitted by like
means to:
Xxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
If to the holder, at such address as such holder shall have provided in
writing to the Company, or at such other address as such holder furnishes by
notice given in accordance with this Section 9.
10. Governing Law; Jurisdiction. This Warrant shall be governed by
and construed in accordance with the laws of the State of Delaware applicable
to contracts made and to be performed in the State of Delaware. The Company
irrevocably consents to the jurisdiction of the United States federal courts
and state courts located in the State of Delaware in any suit or proceeding
based on or arising under this Warrant and irrevocably agrees that all claims
in respect of such suit or proceeding may be determined in such courts. The
Company irrevocably waives any objection to the laying of venue and the
defense of an inconvenient forum to the maintenance of such suit or
proceeding. The Company further agrees that service of process upon the
Company mailed by certified or registered mail shall be deemed in every
respect effective service of process upon the Company in any such suit or
proceeding. Nothing herein shall affect the holder's right to serve process in
any other manner permitted by law. The Company agrees that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any
other lawful manner.
11. Miscellaneous.
(a) Amendments. This Warrant and any provision hereof may
only be amended by an instrument in writing signed by the Company and the
holder hereof.
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(b) Descriptive Headings. The descriptive headings of the
several Sections of this Warrant are inserted for purposes of reference only,
and shall not affect the meaning or construction of any of the provisions
hereof.
(c) Cashless Exercise. Notwithstanding anything to the
contrary contained in this Warrant, if the resale of the Warrant Shares by the
holder is not then registered pursuant to an effective registration statement
under the Securities Act, this Warrant may be exercised at any time after the
first anniversary of the Issue Date until the end of the Exercise Period, by
presentation and surrender of this Warrant to the Company at its principal
executive offices with a written notice of the holder's intention to effect a
cashless exercise, including a calculation of the number of shares of Common
Stock to be issued upon such exercise in accordance with the terms hereof (a
"Cashless Exercise"). In the event of a Cashless Exercise, in lieu of paying
the Exercise Price in cash, the holder shall surrender this Warrant for that
number of shares of Common Stock determined by multiplying the number of
Warrant Shares to which it would otherwise be entitled by a fraction, the
numerator of which shall be the difference between the then current Market
Price of a share of the Common Stock on the date of exercise and the Exercise
Price, and the denominator of which shall be the then current Market Price per
share of Common Stock.
(d) Business Day. For purposes of this Warrant, the term
"business day" means any day, other than a Saturday or Sunday or a day on
which banking institutions in the State of New York are authorized or
obligated by law, regulation or executive order to close.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer.
CAM DESIGNS INC.
By:
Name:
Title:
