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ECO SOIL SYSTEMS, INC.
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AMENDED AND RESTATED
COMMON STOCK PURCHASE WARRANT
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Expiring August 25, 2005
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TABLE OF CONTENTS
1. Exercise of Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1. Manner of Exercise. . . . . . . . . . . . . . . . . . . . . . . .1
1.2. When Exercise Deemed Effected . . . . . . . . . . . . . . . . . .2
1.3. Delivery of Stock Certificates, etc.. . . . . . . . . . . . . . .2
1.4. Company to Reaffirm Obligations . . . . . . . . . . . . . . . . .3
1.5. Payment by Application of the Notes . . . . . . . . . . . . . . .3
2. Adjustment of Common Stock Issuable Upon Exercise.. . . . . . . . . . . . . .4
2.1. Number of Shares; Warrant Price.. . . . . . . . . . . . . . . . .4
2.2. Adjustment of Warrant Price . . . . . . . . . . . . . . . . . . .4
2.2.1. Issuance of Additional Shares of Common Stock. . . . . . .4
2.2.2. Extraordinary Dividends and Distributions. . . . . . . . .5
2.3. Treatment of Options and Convertible Securities . . . . . . . . .6
2.4. Treatment of Stock Dividends, Stock Splits, etc.. . . . . . . . .9
2.5. Computation of Consideration. . . . . . . . . . . . . . . . . . .9
2.6. Adjustments for Combinations, etc.. . . . . . . . . . . . . . . 11
2.7. Dilution in Case of Other Securities. . . . . . . . . . . . . . 11
2.8. Minimum Adjustment of Warrant Price . . . . . . . . . . . . . . 12
3. Consolidation, Merger, Sale of Assets, Reorganization, etc. . . . . . . . . 12
4. Other Dilutive Events . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5. No Dilution or Impairment . . . . . . . . . . . . . . . . . . . . . . . . . 13
6. Accountants' Report as to Adjustments . . . . . . . . . . . . . . . . . . . 14
7. Notices of Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . 15
8. Restrictions on Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.1. Restrictive Legends . . . . . . . . . . . . . . . . . . . . . . 16
8.2. Notice of Proposed Transfer; Opinions of Counsel. . . . . . . . 16
8.3. Termination of Restrictions . . . . . . . . . . . . . . . . . . 18
9. Registration under Securities Act, etc.. . . . . . . . . . . . . . . . . . . 18
10. Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . 18
11. Reservation of Stock, etc.. . . . . . . . . . . . . . . . . . . . . . . . . 18
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12. Listing on Securities Exchange. . . . . . . . . . . . . . . . . . . . . . . 19
13. Ownership, Transfer and Substitution of Warrants. . . . . . . . . . . . . . 19
13.1. Ownership of Warrants . . . . . . . . . . . . . . . . . . . . . 19
13.2. Transfer and Exchange of Warrants . . . . . . . . . . . . . . . 19
13.3. Replacement of Warrants . . . . . . . . . . . . . . . . . . . . 19
14. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
15. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
16. No Rights or Liabilities as Stockholder . . . . . . . . . . . . . . . . . . 26
17. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
18. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
19. Expiration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Form of Subscription
Form of Notice
Schedule of Outstanding Options
ii
Amended and Restated
Common Stock Purchase Warrant
Expiring August 25, 2005
New York, New York
August 25, 1998
PPN# 278858 1 1 3
No. W-3
ECO SOIL SYSTEMS, INC., a Nebraska corporation (the "Company"), for
value received, hereby certifies that ALBION ALLIANCE MEZZANINE FUND, L.P.,
or registered assigns, is entitled to purchase from the Company 353,313 duly
authorized, validly issued, fully paid and nonassessable shares of Common
Stock, par value $.005 per share, of the Company (the "Common Stock") at the
purchase price per share of $.01, at any time or from time to time on or
after December 21, 1999 and prior to 3 P.M., New York City time, on August
25, 2005 (or such later date as may be determined pursuant to section 20),
all subject to the terms, conditions and adjustments set forth below in this
Amended and Restated Warrant.
This Warrant is one of the Amended and Restated Common Stock
Purchase Warrants (the "Warrants", such term to include all Warrants issued
in substitution therefor) originally issued in connection with the issue and
sale by the Company of $15,000,000 aggregate principal amount of its 12.00%
Notes due August 25, 2003 (together with all notes issued in substitution
therefor, the "Notes"), pursuant to the Note and Warrant Purchase Agreements
(collectively, the "Purchase Agreement"), each dated as of August 25, 1998
and amended from time to time, between the Company and the institutional
investors named therein; and amended and restated on December 21, 1999. The
Warrants originally so issued evidenced rights to purchase an aggregate of
262,500 shares of Common Stock and the Warrants as so amended and restated
evidence rights to purchase an additional 399,961 shares of Common Stock, for
an aggregate of 662,461 shares; all subject to adjustment as provided herein.
Certain capitalized terms used in this Warrant are defined in section 14.
1. EXERCISE OF WARRANT. 1.1. MANNER OF EXERCISE. This Warrant may
be exercised by the holder hereof, in whole or in part, during normal business
hours on
any Business Day by surrender of this Warrant, with the form of subscription
at the end hereof (or a reasonable facsimile thereof) duly executed by such
holder, to the Company at its principal office (or, if such exercise shall be
in connection with an underwritten Public Offering of shares of Common Stock
(or Other Securities) subject to this Warrant, at the location at which the
Company shall have agreed to deliver the shares of Common Stock (or Other
Securities) subject to such offering), accompanied by payment, in cash or by
certified or official bank check payable to the order of the company or by
the application of Notes in the manner provided in section 1.5 (or by any
combination of such methods), in the amount obtained by multiplying (A) the
number of shares of Common Stock (without giving effect to any adjustment
therein) designated in such form of subscription by (B) $.01 and such holder
shall thereupon be entitled to receive the number of duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock (or Other
Securities) determined as provided in sections 2 through 4.
1.2. WHEN EXERCISE DEEMED EFFECTED. Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of
business on the Business Day on which this Warrant shall have been
surrendered to the Company as provided in section 1.1, and at such time the
person or persons in whose name or names any certificate or certificates for
shares of Common Stock (or Other Securities) shall be issuable upon such
exercise as provided in section 1.3 shall be deemed to have become the holder
or holders of record thereof.
1.3. DELIVERY OF STOCK CERTIFICATES, ETC. As soon as practicable
after the exercise of this Warrant, in whole or in part, and in any event
within five Business Days thereafter (unless such exercise shall be in
connection with an underwritten Public Offering of shares of Common Stock (or
Other Securities) subject to this Warrant, in which event concurrently with
such exercise), the Company at its expense (including the payment by it of
any applicable taxes other than transfer taxes) will cause to be issued in
the name of and delivered to the holder hereof or, subject to section 8, as
such holder (upon payment by such holder of any applicable transfer taxes)
may direct,
(a) a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock (or
Other
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Securities) to which such holder shall be entitled upon such exercise
plus, in lieu of any fractional share to which such holder would otherwise
be entitled, cash in an amount equal to the same fraction of the Market
Price per share of such Common Stock (or Other Securities) on the Business
Day next preceding the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant or Warrants
of like tenor, calling in the aggregate on the face or faces thereof for
the number of shares of Common Stock equal (without giving effect to any
adjustment therein) to the number of such shares called for on the face of
this Warrant minus the number of such shares designated by the holder upon
such exercise as provided in section 1.1.
1.4. COMPANY TO REAFFIRM OBLIGATIONS. The Company will, at the
time of or at any time after each exercise of this Warrant, upon the request
of the holder hereof or of any shares of Common Stock (or Other Securities)
issued upon such exercise, acknowledge in writing its continuing obligation
to afford to such holder all rights (including, without limitation, any right
of registration of any shares of Common Stock (or Other Securities) issuable
upon exercise of this Warrant pursuant to the Registration Rights Agreement)
to which such holder shall continue to be entitled after such exercise in
accordance with the terms of this Warrant, PROVIDED that if any such holder
shall fail to make any such request, the failure shall not affect the
continuing obligation of the Company to afford such rights to such holder.
1.5. PAYMENT BY APPLICATION OF THE NOTES. Upon any exercise of
this Warrant, the holder hereof may, at its option, instruct the Company, by
so specifying in the form of subscription submitted therewith as provided in
section 1.1, to apply to the payment required by section 1.1 all or any part
of the principal amount then unpaid and of the interest on such principal
amount then accrued on any one or more Notes at the time held by such holder,
in which case the Company will accept the aggregate amount of principal and
accrued interest on such principal specified in such form of subscription in
satisfaction of a like amount of such payment. In case less than the entire
unpaid principal amount of any Note shall be so specified, the principal
amount so specified shall be credited, as of the date of such exercise,
against the installments of principal then
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remaining unpaid on such Note either in the inverse order of their maturity
dates or in the direct order of their maturity dates as such holder shall
instruct in such form of subscription. Within five days after receipt of any
such notice, the Company will pay to the holder of the Notes submitting such
form of subscription, in the manner provided in such Notes and the Purchase
Agreement, all unpaid interest accrued to the date of exercise of such
Warrant on the principal amount so specified in such form of subscription
that is not applied to the payment required by section 1.1 under this section
1.5. In the event that the entire unpaid principal amount of any Note is
applied to the payment required by section 1.1 under this section 1.5, such
Note shall be promptly surrendered and canceled in accordance with the
provisions of section 15 of the Purchase Agreement.
2. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE. 2.1.
NUMBER OF SHARES; WARRANT PRICE. The number of shares of Common Stock which
the holder of this Warrant shall be entitled to receive upon each exercise
hereof shall be determined by multiplying the number of shares of Common
Stock which would otherwise (but for the provisions of this section 2) be
issuable upon such exercise, as designated by the holder hereof pursuant to
section 1.1, by a fraction of which (I) the numerator is $.01 and (II) the
denominator is the Warrant Price in effect on the date of such exercise. The
"Warrant Price" shall initially be $.01 per share, shall be adjusted and
readjusted from time to time as provided in this section 2 and, as so
adjusted or readjusted, shall remain in effect until a further adjustment or
readjustment thereof is required by this section 2.
2.2. ADJUSTMENT OF WARRANT PRICE. 2.2.1. ISSUANCE OF ADDITIONAL
SHARES OF COMMON STOCK. In case the Company, at any time or from time to
time after August 25, 1998 (the "Initial Date"), shall issue or sell
Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to section 2.3 or 2.4) without
consideration or for a consideration per share less than the Base Price in
effect, in each case, on the date of and immediately prior to such issue or
sale, then, and in each such case, subject to section 2.8, such Warrant Price
shall be reduced, concurrently with such issue or sale, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such
Warrant Price by a fraction,
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(a) the numerator of which shall be (I) the number of shares of
Common Stock outstanding immediately prior to such issue or sale plus (II)
the number of shares of Common Stock which the aggregate consideration
received by the Company for the total number of such Additional Shares of
Common Stock so issued or sold would purchase at the Base Price, and
(b) the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such issue or sale,
PROVIDED that, for the purposes of this section 2.2.1, (X) immediately after any
Additional Shares of Common Stock are deemed to have been issued pursuant to
section 2.3 or 2.4, such Additional Shares shall be deemed to be outstanding,
and (Y) treasury shares shall not be deemed to be outstanding.
2.2.2. EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS. In case the Company
at any time or from time to time after the Initial Date shall declare, order,
pay or make a dividend or other distribution (including, without limitation, any
distribution of other or additional stock or other securities or property or
Options by way of dividend or spin-off, reclassification, recapitalization or
similar corporate rearrangement) on any Common Stock, other than (A) a dividend
payable in Additional Shares of Common Stock or in Options for Common Stock or
(B) a regular, periodic dividend payable in cash and declared out of the earned
surplus of the Company as at the date hereof as increased by any credits (other
than credits resulting from a revaluation of property) and decreased by any
debits made thereto after such date, then, and in each such case, subject to
section 2.8, the Warrant Price in effect immediately prior to the close of
business on the record date fixed for the determination of holders of any class
of securities entitled to receive such dividend or distribution shall be
reduced, effective as of the close of business on such record date, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such
Warrant Price by a fraction,
(i) the numerator of which shall be the Current Market Price in
effect on such record date or, if the Common Stock trades on an ex-dividend
basis, on the date prior to the commencement of ex-dividend trading, less
the value of such dividend or distribution (as determined in good faith by
the Board of Directors of
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the Company) applicable to one share of Common Stock, and
(ii) the denominator of which shall be such Current Market Price.
2.3. TREATMENT OF OPTIONS AND CONVERTIBLE SECURITIES. In case the
Company at any time or from time to time after the Initial Date shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities entitled to receive, any Options or
Convertible Securities, then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to, any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be issued for
purposes of section 2.2.1 as of the time of such issue, sale, grant or
assumption or, in case such a record date shall have been fixed, as of the
close of business on such record date (or, if the Common Stock trades on an
ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), PROVIDED that such Additional Shares of Common Stock shall not be
deemed to have been issued unless the consideration per share (determined
pursuant to section 2.5) of such shares would be less than the Base Price in
effect, in each case, on the date of and immediately prior to such issue,
sale, grant or assumption or immediately prior to the close of business on
such record date (or, if the Common Stock trades on an ex-dividend basis, on
the date prior to the commencement of ex-dividend trading), as the case may
be, and PROVIDED, FURTHER, that in any such case in which Additional Shares
of Common Stock are deemed to be issued,
(a) no further adjustment of the Warrant Price shall be made upon the
subsequent issue or sale of Additional Shares of Common Stock or
Convertible Securities upon the exercise of such Options or the conversion
or exchange of such Convertible Securities;
(b) if such Options or Convertible Securities by their terms provide,
with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of
Additional Shares of Common Stock issuable, upon the
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exercise, conversion or exchange thereof (by change of rate or otherwise),
the Warrant Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or date
prior to the commencement of ex-dividend trading, as the case may be, with
respect thereto), and any subsequent adjustments based thereon, shall,
upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options, or
the rights of conversion or exchange under such Convertible Securities,
which are outstanding at such time;
(c) upon the expiration of any such Options or of the rights of
conversion or exchange under any such Convertible Securities which shall
not have been exercised (or upon purchase by the Company and cancellation
or retirement of any such Options which shall not have been exercised or of
any such Convertible Securities the rights of conversion or exchange under
which shall not have been exercised), the Warrant Price computed upon the
original issue, sale, grant or assumption thereof (or upon the occurrence
of the record date, or date prior to the commencement of ex-dividend
trading, as the case may be, with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case may be), be recomputed as if:
(i) in the case of Options for Common Stock or of Convertible
Securities, the only Additional Shares of Common Stock issued or sold were
the Additional Shares of Common Stock, if any, actually issued or sold upon
the exercise of such Options or the conversion or exchange of such
Convertible Securities and the consideration received therefor was (X) an
amount equal to (A) the consideration actually received by the Company for
the issue, sale, grant or assumption of all such Options, whether or not
exercised, plus (B) the consideration actually received by the Company upon
such exercise, minus (C) the consideration paid by the Company for any
purchase of such Options which were not exercised, or (Y) an amount equal
to (A) the consideration actually received by the Company for the issue,
sale, grant or assumption of all such Convertible Securities
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which were actually converted or exchanged, plus (B) the additional
consideration, if any, actually received by the Company upon such
conversion or exchange, minus (C) the consideration paid by the Company
for any purchase of such Convertible Securities the rights of conversion
or exchange under which were not exercised, and
(ii) in the case of Options for Convertible Securities, only the
Convertible Securities, if any, actually issued or sold upon the exercise
of such Options were issued at the time of the issue, sale, grant or
assumption of such Options, and the consideration received by the Company
for the Additional Shares of Common Stock deemed to have then been issued
was an amount equal to (X) the consideration actually received by the
Company for the issue, sale, grant or assumption of all such Options,
whether or not exercised, plus (Y) the consideration deemed to have been
received by the Company (pursuant to section 2.5) upon the issue or sale of
the Convertible Securities with respect to which such Options were actually
exercised, minus (Z) the consideration paid by the Company for any purchase
of such Options which were not exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above shall
have the effect of increasing the Warrant Price by an amount in excess of
the amount of the adjustment thereof originally made in respect of the
issue, sale, grant or assumption of such Options or Convertible Securities;
and
(e) in the case of any such Options which expire by their terms not
more than 30 days after the date of issue, sale, grant or assumption
thereof, no adjustment of the Warrant Price shall be made until the
expiration or exercise of all such Options, whereupon such adjustment shall
be made in the manner provided in subdivision (c) above.
In case at any time after the Initial Date the Company shall be
required to increase the number of Additional Shares of Common Stock subject
to any Option or into which any Convertible Securities (other than the
Warrants) are convertible or exchangeable pursuant to the operation of
anti-dilution provisions applicable thereto,
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such Additional Shares shall be deemed to be issued for purposes of section
2.1 as of the time of such increase.
2.4. TREATMENT OF STOCK DIVIDENDS, STOCK SPLITS, ETC. In case the
Company at any time or from time to time after the Initial Date shall declare
or pay any dividend or other distribution on any class of stock of the
Company payable in Common Stock, or shall effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in
Common Stock) , then, and in each such case, Additional Shares of Common
Stock shall be deemed to have been issued (A) in the case of any such
dividend, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend, or (B) in the case of any such subdivision, at the close of
business on the day immediately prior to the day upon which such corporate
action becomes effective.
2.5. COMPUTATION OF CONSIDERATION. For the purposes of this
section 2:
(a) The consideration for the issue or sale of any Additional Shares
of Common Stock or for the issue, sale, grant or assumption of any Options
or Convertible Securities, irrespective of the accounting treatment of such
consideration, shall
(i) insofar as it consists of cash, be computed at the amount of
cash received by the Company, after deducting any expenses paid or
incurred by the Company or any commissions or compensation paid or
concessions or discounts allowed to underwriters, dealers or others
performing similar services and any accrued interest or dividends in
connection with such issue or sale,
(ii) insofar as it consists of consideration (including
securities) other than cash, be computed at the Fair Value thereof at
the time of such issue or sale, after deducting any expenses paid or
incurred by the Company for any commissions or compensation paid or
concessions or discounts allowed to underwriters, dealers or others
performing similar services and any accrued
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interest or dividends in connection with such issue or sale, and
(iii) in case Additional Shares of Common Stock are issued or
sold or Convertible Securities are issued, sold, granted or assumed
together with other stock or securities or other assets of the Company
for a consideration which covers both, be the proportion of such
consideration so received, computed as provided in subdivisions (i)
and (ii) above, allocable to such Additional Shares of Common Stock or
Convertible Securities, as the case may be, all as determined in good
faith by the Board of Directors of the Company.
(b) All Options issued, sold, granted or assumed together with other
stock or securities or other assets of the Company for a consideration
which covers both, all Additional Shares of Common Stock, Options or
Convertible Securities issued in payment of any dividend or other
distribution on any class of stock of the Company and all Additional Shares
of Common Stock issued to effect a subdivision of the outstanding shares of
Common Stock into a greater number of shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in Common
Stock) shall be deemed to have been issued without consideration.
(c) Additional Shares of Common Stock deemed to have been issued for
consideration pursuant to section 2.3, relating to Options and Convertible
Securities, shall be deemed to have been issued for a consideration per
share determined by dividing
(i) the total amount, if any, received and receivable by the
Company as consideration for the issue, sale, grant or assumption of
the Options or Convertible Securities in question, plus the minimum
aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration)
payable to the Company upon the exercise in full of such Options or
the conversion or exchange of such Convertible Securities or, in the
case of Options for Convertible Securities, the exercise of such
Options for Convertible Securities and the
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conversion or exchange of such Convertible Securities, in each case
computing such consideration as provided in the foregoing
subdivision (a),
by
(ii) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or the conversion
or exchange of such Convertible Securities.
(d) Additional Shares of Common Stock issued or deemed to have been
issued pursuant to the operation of anti-dilution provisions applicable to
Convertible Securities (other than the Warrants), Options or other
securities of the Company (either as a result of the adjustments provided
for by the Warrants or otherwise) shall be deemed to have been issued
without consideration.
2.6. ADJUSTMENTS FOR COMBINATIONS, ETC. In case the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification
or otherwise, into a lesser number of shares of Common Stock, the Warrant
Price in effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
2.7. DILUTION IN CASE OF OTHER SECURITIES. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale
upon the conversion or exchange of any stock (or Other Securities) of the
Company (or any issuer of Other Securities or any other Person referred to in
section 3) or to subscription, purchase or other acquisition pursuant to any
Options issued or granted by the Company (or any such other issuer or Person)
for a consideration such as to dilute, on a basis consistent with the
standards established in the other provisions of this section 2, the purchase
rights granted by this Warrant, then, and in each such case, the
computations, adjustments and readjustments provided for in this section 2
with respect to the Warrant Price shall be made as nearly as possible in the
manner so provided and applied to determine
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the amount of Other Securities from time to time receivable upon the exercise
of the Warrants, so as to protect the holders of the Warrants against the
effect of such dilution.
2.8. MINIMUM ADJUSTMENT OF WARRANT PRICE. If the amount of any
adjustment of the Warrant Price required pursuant to this section 2 would be
less than one one-hundredth (.01) of a cent, such amount shall be carried
forward and adjustment with respect thereto made at the time of and together
with any subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least one
one-hundredth (.01) of a cent.
3. CONSOLIDATION, MERGER, SALE OF ASSETS, REORGANIZATION, ETC..
In case the Company, after the Initial Date, (A) shall consolidate with or
merge into any other Person and shall not be the continuing or surviving
corporation of such consolidation or merger, or (B) shall permit any other
Person to consolidate with or merge into the Company and the Company shall be
the continuing or surviving Person but, in connection with such consolidation
or merger, Common Stock or Other Securities shall be changed into or
exchanged for cash, stock or other securities of any other Person or any
other property, or (C) shall transfer all or substantially all of its
properties and assets to any other Person, or (D) shall effect a capital
reorganization or reclassification of Common Stock or Other Securities (other
than a capital reorganization or reclassification resulting in the issue of
Additional Shares of Common Stock for which adjustment in the Warrant Price
is provided in section 2.2.1 or 2.2.2), then, and in the case of each such
transaction, the Company shall give written notice thereof to each holder of
any Warrant not less than 30 days prior to the consummation thereof and
proper provision shall be made so that, upon the basis and the terms and in
the manner provided in this section 3, the holder of this Warrant, upon the
consummation of such transaction, shall be entitled to receive, at the
aggregate Warrant Price in effect at the time of such consummation for all
Common Stock (or Other Securities) issuable upon such exercise immediately
prior to such consummation, in lieu of the Common Stock (or Other Securities)
issuable upon such exercise prior to such consummation, the highest amount of
cash, securities or other property to which such holder would actually have
been entitled as a shareholder upon such consummation if such holder had
exercised this Warrant immediately prior thereto, subject to adjustments
(subsequent to such consummation) as
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nearly equivalent as possible to the adjustments provided for in section 2
and this section 3, PROVIDED that if a purchase, tender or exchange offer
shall have been made to and accepted by the holders of Common Stock under
circumstances in which, upon completion of such purchase, tender or exchange
offer, the maker thereof, together with members of any group (within the
meaning of Rule 13d-5(b)(1) under the Exchange Act) of which such maker is a
part, and together with any affiliate or associate of such maker (within the
meaning of Rule 12b-2 under the Exchange Act) and any members of any such
group of which any such affiliate or associate is a part, own beneficially
(within the meaning of Rule 13d-3 under the Exchange Act) more than 50% of
the outstanding shares of Common Stock, and if the holder of this Warrant so
designates in such notice given to the Company, the holder of this Warrant
shall be entitled to receive the highest amount of cash, securities or other
property to which such holder would actually have been entitled as a
shareholder if the holder of this Warrant had exercised this Warrant prior to
the expiration of such purchase, tender or exchange offer, accepted such
offer and all of the Common Stock held by such holder had been purchased
pursuant to such purchase, tender or exchange offer, subject to adjustments
(from and after the consummation of such purchase, tender or exchange offer)
as nearly equivalent as possible to the adjustments provided for in section 2
and this section 3.
4. OTHER DILUTIVE EVENTS. In case any event shall occur as to
which the provisions of section 2 or section 3 are not strictly applicable
but the failure to make any adjustment would not fairly protect the purchase
rights represented by this Warrant in accordance with the essential intent
and principles of such sections, then, in each such case, the Company shall
appoint a firm of independent public accountants of recognized national
standing (which may be the regular auditors of the Company), which shall give
their opinion upon the adjustment, if any, on a basis consistent with the
essential intent and principles established in sections 2 and 3, necessary to
preserve, without dilution, the purchase rights represented by this Warrant.
Upon receipt of such opinion the Company will promptly mail a copy thereof to
the holder of this Warrant and shall make the adjustments described therein.
5. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment
of its certificate of incorporation or through any consolidation, merger,
reorganization, transfer
13
of assets, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder of this
Warrant against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (A) will not permit the par value of
any shares of stock receivable upon the exercise of this Warrant to exceed
the amount payable therefor upon such exercise, (B) will take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of stock upon the exercise
of all of the Warrants from time to time outstanding, (C) will not take any
action which results in any adjustment of the Warrant Price if the total
number of shares of Common Stock (or Other Securities) issuable after the
action upon the exercise of all of the Warrants would exceed the total number
of shares of Common Stock (or other Securities) then authorized by the
Company's certificate of incorporation and available for the purpose of issue
upon such exercise and, (D) will not issue any capital stock of any class
which has the right to more than one vote per share or which is preferred as
to dividends or as to the distribution of assets upon voluntary or
involuntary dissolution, liquidation or winding-up, unless such stock is sold
for a cash consideration at least equal to the amount of its preference upon
voluntary or involuntary dissolution, liquidation or winding-up and the
rights of the holders thereof shall be limited to a fixed percentage (not
exceeding 15%) of such cash consideration in respect of participation in
dividends.
6. ACCOUNTANTS' REPORT AS TO ADJUSTMENTS. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable upon the exercise of the Warrants, the Company at its
expense will promptly compute such adjustment or readjustment in accordance
with the terms of the Warrants and cause independent public accountants of
recognized national standing selected by the Company (which may be the
regular auditors of the Company) to verify such computation and prepare a
report setting forth such adjustment or readjustment and showing in
reasonable detail the method of calculation thereof and the facts upon which
such adjustment or readjustment is based, including without limitation a
statement of (a) the consideration received or to be
14
received by the Company for any Additional Shares of Common Stock issued or
sold or deemed to have been issued, (b) the number of shares of Common Stock
outstanding or deemed to be outstanding, and (c) the Warrant Price in effect
immediately prior to such issue or sale and as adjusted and readjusted (if
required by section 2) on account thereof. The Company will forthwith mail a
copy of each such report to each holder of a Warrant and will, upon the
written request at any time of any holder of a Warrant, furnish to such
holder a like report setting forth the Warrant Price at the time in effect
and showing in reasonable detail how it was calculated. The Company will
also keep copies of all such reports at its principal office and will cause
the same to be available for inspection at such office during normal business
hours by any holder of a Warrant or any prospective purchaser of a Warrant
designated by the holder thereof.
7. NOTICES OF CORPORATE ACTION. In the event of
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a regular periodic dividend
payable in cash out of earned surplus) or other distribution, or any right
to subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right,
or
(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any
consolidation or merger involving the Company and any other Person or any
transfer of all or substantially all the assets of the Company to any other
Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company will mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, and (ii) the date or expected date on which any
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place and the time,
if any such time is to be fixed, as of
15
which the holders of record of Common Stock (or Other Securities) shall be
entitled to exchange their shares of Common Stock (or Other Securities) for
the securities or other property deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
20 days prior to the date therein specified, in the case of any date referred
to in the foregoing subdivision (i), and at least 90 days prior to the date
therein specified, in the case of the date referred to in the foregoing
subdivision (ii).
8. RESTRICTIONS ON TRANSFER. 8.1. RESTRICTIVE LEGENDS. Except
as otherwise permitted by this section 8, each Warrant originally issued
pursuant to the Purchase Agreement and each Warrant issued upon direct or
indirect transfer or in substitution for any Warrant pursuant to section 13
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and any shares acquired upon the exercise of this
Warrant have not been registered under the Securities Act of 1933 and may
not be transferred in the absence of such registration or an exemption
therefrom under such Act."
Except as otherwise permitted by this section 8, each certificate for Common
Stock (or Other Securities) issued upon the exercise of any Warrant and each
certificate issued upon the direct or indirect transfer of any such Common
Stock (or Other Securities) shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred in the absence
of such registration or an exemption therefrom under such Act. Such shares
are also subject to certain restrictions on transferability imposed by
Common Stock Purchase Warrants expiring August 25, 2005, a copy of which is
on file at the offices of the Company."
8.2. NOTICE OF PROPOSED TRANSFER; OPINIONS OF COUNSEL. Prior to any
transfer of any Restricted Securities which are not registered under an
effective registration statement under the Securities Act (other than a transfer
pursuant to Rule 144 or any comparable rule under such Act), the holder thereof
will give written notice to the Company
16
of such holder's intention to effect such transfer and to comply in all other
respects with this section 8.2. Each such notice (a) shall describe the
manner and circumstances of the proposed transfer in sufficient detail to
enable counsel to render the opinions referred to below, and (b) shall
designate counsel for the holder giving such notice (who may be in-house
counsel for such holder). The holder giving such notice will submit a copy
thereof to the counsel designated in such notice. The following provisions
shall then apply:
(i) If in the opinion of counsel for the holder the proposed transfer
may be effected without registration, such holder shall thereupon be
entitled to transfer such Restricted Securities in accordance with the
terms of the notice delivered by such holder to the Company. Each Warrant
or certificate, if any, issued upon or in connection with such transfer
shall bear the appropriate restrictive legend set forth in section 8.1
unless, in the opinion of such counsel, such legend is no longer required
to insure compliance with the Securities Act.
(ii) If the opinion of such counsel for the holder is not to the
effect that the proposed transfer may legally be effected without
registration of such Restricted Securities under the Securities Act, such
holder shall not be entitled to transfer such Restricted Securities (other
than in a transfer pursuant to Rule 144 or any comparable rule under the
Securities Act) until the conditions specified in subdivision (i) above
shall be satisfied or until registration of such Restricted Securities
under the Securities Act has become effective.
Notwithstanding the foregoing provisions of this section 8.2, the holder of
any Restricted Securities shall be permitted to transfer any such Restricted
Securities pursuant to Rule 144A under the Securities Act, PROVIDED that each
transferee agrees in writing to be bound by all the restrictions on transfer
of such Restricted Securities contained in this section 8.2. The Company
will pay the reasonable fees and disbursements of counsel (other than
in-house counsel) for any holder of Restricted Securities and of counsel for
the Company in connection with all opinions rendered by them pursuant to this
section 8.2 and pursuant to section 8.3.
17
8.3. TERMINATION OF RESTRICTIONS. The restrictions imposed by
this section 8 upon the transferability of Restricted Securities shall cease
and terminate as to any particular Restricted Securities (a) when such
securities shall have been effectively registered under the Securities Act
and disposed of in accordance with the registration statement covering such
Restricted Securities, (b) when, in the opinions of both counsel for the
holder thereof and counsel for the Company, such restrictions are no longer
required in order to insure compliance with the Securities Act, or (c) when
such securities have been beneficially owned, by a person who has not been an
affiliate of the Company for at least three months, for a period of at least
two years, all as determined under Rule 144 under the Securities Act.
Whenever such restrictions shall terminate as to any Restricted Securities,
as soon as practicable thereafter and in any event within five days, the
holder thereof shall be entitled to receive from the Company, without expense
(other than transfer taxes, if any), new securities of like tenor not bearing
the applicable legend set forth in section 8.1 hereof.
9. REGISTRATION UNDER SECURITIES ACT, ETC. The shares issuable
upon exercise of this Warrant shall be entitled to the registration rights
set forth in the Registration Rights Agreement.
10. AVAILABILITY OF INFORMATION. The Company will cooperate with
each holder of any Restricted Securities in supplying such information as may
be necessary for such holder to complete and file any information reporting
forms presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Restricted Securities. The Company will furnish to each holder of any
Warrants, promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its stockholders, and copies of all regular and
periodic reports and all registration statements and prospectuses filed by
the Company with any securities exchange or with the Commission.
11. RESERVATION OF STOCK, ETC. The Company will at all times
reserve and keep available, solely for issuance and delivery upon exercise of
the Warrants, the number of shares of Common Stock (or Other Securities) from
time to
18
time issuable upon exercise of all Warrants at the time outstanding. All
shares of Common Stock (or Other Securities) shall be duly authorized and,
when issued upon such exercise, shall be validly issued and, in the case of
shares, fully paid and nonassessable with no liability on the part of the
holders thereof.
12. LISTING ON SECURITIES EXCHANGE. The Company will list on each
national securities exchange on which any Common Stock may at any time be
listed, subject to official notice of issuance upon exercise of the Warrants,
and will maintain such listing of, all shares of Common Stock from time to
time issuable upon exercise of the Warrants. The Company will also so list
on each national securities exchange, and will maintain such listing of, any
other securities if at the time any securities of the same class shall be
listed on such national securities exchange by the Company.
13. OWNERSHIP, TRANSFER AND SUBSTITUTION OF WARRANTS. 13.1.
OWNERSHIP OF WARRANTS. The Company may treat the person in whose name any
Warrant is registered on the register kept at the principal office of the
Company as the owner and holder thereof for all purposes, notwithstanding any
notice to the contrary, except that, if and when any Warrant is properly
assigned in blank, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes, notwithstanding
any notice to the contrary. Subject to section 8, a Warrant, if properly
assigned, may be exercised by a new holder without first having a new Warrant
issued.
13.2. TRANSFER AND EXCHANGE OF WARRANTS. Upon the surrender of
any Warrant, properly endorsed, for registration of transfer or for exchange
at the principal office of the Company, the Company at its expense will
(subject to compliance with section 8, if applicable) execute and deliver to
or upon the order of the holder thereof a new Warrant or Warrants of like
tenor, in the name of such holder or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Common Stock called
for on the face or faces of the Warrant or Warrants so surrendered.
13.3. REPLACEMENT OF WARRANTS. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the
19
case of any such loss, theft or destruction of any Warrant held by a Person
other than any institutional investor, upon delivery of indemnity reasonably
satisfactory to the Company in form and amount or, in the case of any such
mutilation, upon surrender of such Warrant for cancellation at the principal
office of the Company, the Company at its expense will execute and deliver,
in lieu thereof, a new Warrant of like tenor.
14. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
ACQUIRING PERSON: the continuing or surviving corporation of a
consolidation or merger with the Company (if other than the Company), the
transferee of substantially all of the properties and assets of the Company,
the corporation consolidating with or merging into the Company in a
consolidation or merger in connection with which the Common Stock is changed
into or exchanged for stock or other securities of any other Person or cash
or any other property, or, in the case of a capital reorganization or
reclassification, the Company.
ACQUISITION PRICE: as applied to the Common Stock, with respect to
any transaction to which section 3 applies, (a) the price per share equal to
the greater of the following, determined in each case as of the date
immediately preceding the date of consummation of such transaction: (i) the
Market Price of the Common Stock and (ii) the highest amount of cash plus the
Fair Value of the highest amount of securities or other property which the
holder of this Warrant would have been entitled as a shareholder to receive
upon such consummation if such holder had exercised this Warrant immediately
prior thereto, or (b) if a purchase, tender or an exchange offer is made by
the Acquiring Person (or by any of its affiliates) to the holders of the
Common Stock and such offer is accepted by the holders of more than 50% of
the outstanding shares of Common Stock, the greater of (i) the price
determined in accordance with the foregoing, subdivision (a) and (ii) the
price per share equal to the greater of the following, determined in each
case as of the date immediately preceding the acceptance of such offer by the
holders of more than 50% of the outstanding shares of Common Stock: (x) the
Market Price of the Common Stock and (y) the highest amount of cash plus the
Fair Value of the highest amount of securities or other property which the
holder of this Warrant would be
20
entitled as a shareholder to receive pursuant to such offer if such holder
had exercised this Warrant immediately prior to the expiration of such offer
and accepted the same.
ADDITIONAL SHARES OF COMMON STOCK: all shares (including treasury
shares) of Common Stock issued or sold (or, pursuant to section 2.3 or 2.4,
deemed to be issued) by the Company after the Initial Date hereof, whether or
not subsequently reacquired or retired by the Company, other than (a) shares
of Common Stock issued upon the exercise of Warrants and (b) the Options
listed on Schedule A hereto.
BASE PRICE: as of any date of determination, the lesser of (a)
$4.00 and (b) the Current Market Price as of such date.
BUSINESS DAY: any day other than a Saturday or a Sunday or a day
on which commercial banking institutions in the City of New York are
authorized by law to be closed, PROVIDED that, in determining the period
within which certificates or Warrants are to be issued and delivered pursuant
to section 1.3 at a time when shares of Common Stock (or Other Securities)
are listed or admitted to trading on any national securities exchange or in
the over-the-counter market and in determining the Market Price of any
securities listed or admitted to trading on any national securities exchange
or in the over-the-counter market, "Business Day" shall mean any day when the
principal exchange in which securities are then listed or admitted to trading
is open for trading or, if such securities are traded in the over-the-counter
market in the United States, such market is open for trading, and PROVIDED,
FURTHER, that any reference to "days" (unless Business Days are specified)
shall mean calendar days.
COMMISSION: the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act or the Exchange
Act, whichever is the relevant statute for the particular purpose.
COMMON STOCK: the Company's Common Stock, par value $.005 per
share, as constituted on the date hereof, any stock into which such Common
Stock shall have been changed or any stock resulting from any
reclassification of such Common Stock, and all other stock of any class or
classes (however designated) of the Company the holders of which have the
right, without limitation as to amount,
21
either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference.
COMPANY: Eco Soil Systems, Inc., a Nebraska corporation.
CONVERTIBLE SECURITIES: any evidences of indebtedness, shares of
stock (other than Common Stock) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
CURRENT MARKET PRICE: on any date specified herein, (a) with
respect to Common Stock, (i) the lesser of (x) the average daily Market Price
during the period of the most recent 20 consecutive Business Days ending on
such date and (y) the Market Price on the Business Day immediately preceding
such date, or (ii) if shares of Common Stock are not then listed or admitted
to trading on any national securities exchange and if the closing bid and
asked prices thereof are not then quoted or published in the over-the-counter
market, the Market Price on such date; and (b) with respect to any other
securities, the Market Price on such date.
EXCHANGE ACT: the Securities Exchange Act of 1934, or any similar
Federal statute, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect at the time. Reference to a particular
section of the Securities Exchange Act of 1934 shall include a reference to
the comparable section, if any, of any such similar Federal statute.
FAIR VALUE: with respect to any securities or other property, the
Fair Value thereof as of a date which is within 15 days of the date as of
which the determination is to be made (a) determined by an agreement between
the Company and the Requisite Holders of Warrants or (b) if the Company and
the Requisite Holders of Warrants fail to agree, determined jointly by an
independent investment banking firm retained by the Company and by an
independent investment banking firm retained by the Requisite Holders of
Warrants, either of which firms may be an independent investment banking firm
regularly retained by the Company or any such holder or (c) if the Company or
such holders shall fail so to retain an independent investment banking firm
within five Business Days of the retention of such firm by such holders
22
or the Company, as the case may be, determined solely by the firm so retained
or (d) if the firms so retained by the Company and by such holders shall be
unable to reach a joint determination within 15 Business Days of the
retention of the last firm so retained, determined by another independent
investment banking firm which is not a regular investment banking firm of the
Company or any such holder chosen by the first two such firms.
INITIAL DATE: the meaning specified in section 2.2.
MARKET PRICE: on any date specified herein, (a) with respect to
Common Stock, the amount per share equal to (i) the last sale price of shares
of such security, regular way, on such date or, if no such sale takes place
on such date, the average of the closing bid and asked prices thereof on such
date, in each case as officially reported on the principal national
securities exchange on which the same are then listed or admitted to trading,
or (ii) if no shares of such security are then listed or admitted to trading
on any national securities exchange but such security is designated as a
national market system security by the NASD, the last trading price of such
security on such date, or if such security is not so designated, the average
of the reported closing bid and asked prices thereof on such date as shown by
the NASD automated quotation system or, if no shares thereof are then quoted
in such system, as published by the National Quotation Bureau, Incorporated
or any successor organization, and in either case as reported by any member
firm of the New York Stock Exchange selected by the Company, or (iii) if no
shares of such security are then listed or admitted to trading on any
national exchange or designated as a national market system security and if
no closing bid and asked prices thereof are then so quoted or published in
the over-the-counter market, the higher of (x) the book value thereof as
determined by agreement between the Company and the Requisite Holders of
Warrants, or if the Company and the Requisite Holders of Warrants fail to
agree, by any firm of independent public accountants of recognized standing
selected by the Board of Directors of the Company, as of the last day of any
month ending within 60 days preceding the date as of which the determination
is to be made or (y) the fair value thereof determined in good faith by the
Board of Directors of the issuer thereof as of a date which is within 15 days
of the date as of which the determination is to be made; and (b) with respect
to any other securities, the fair value thereof determined in good
23
faith by the Board of Directors of the Company as of a date which is within
15 days of the date as of which the determination is to be made.
NASD: the National Association of Securities Dealers.
NOTES: the meaning specified in the opening paragraphs of this
Warrant.
OPTIONS: rights, options or warrants to subscribe for, purchase or
otherwise acquire either Additional Shares of Common Stock or Convertible
securities.
OTHER SECURITIES: any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) which the
holders of the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
section 3 or otherwise.
PARENT: as to any Acquiring Person, any corporation which (a)
controls the Acquiring Person directly or indirectly through one or more
intermediaries, (b) is required to include the Acquiring Person in its
consolidated financial statements under generally accepted accounting
principles and (c) is not itself included in the consolidated financial
statements of any other Person (other than its consolidated subsidiaries).
PERSON: an individual, a partnership, an association, a joint
venture, a corporation, a limited liability company, a business, a trust, an
unincorporated organization or a government or any department, agency or
subdivision thereof.
PUBLIC OFFERING: any offering of Common Stock to the public
pursuant to an effective registration statement under the Securities Act.
PURCHASE AGREEMENT: the meaning specified in the opening
paragraphs of this Warrant.
REGISTRATION RIGHTS AGREEMENT: that certain Registration Rights
Agreement, dated December 21, 1999,
24
among the Company, Albion Alliance Mezzanine Fund, L.P. and Paribas Capital
Funding LLC.
REQUISITE HOLDERS OF WARRANTS: the holders of at least 60% of all
the Warrants at the time outstanding determined on the basis of the number of
shares of Common Stock or Other Securities deliverable upon exercise thereof.
RESTRICTED SECURITIES: (a) any Warrants bearing the applicable
legend set forth in section 8.1, (b) any shares of Common Stock (or Other
Securities) which have been issued upon the exercise of Warrants and which
are evidenced by a certificate or certificates bearing the applicable legend
set forth in such section, and (c) unless the context otherwise requires, any
shares of Common Stock (or Other Securities) which are at the time issuable
upon the exercise of Warrants and which, when so issued, will be evidenced by
a certificate or certificates bearing the applicable legend set forth in such
section.
SECURITIES ACT: the Securities Act of 1933, or any similar Federal
statute, and the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the time. Reference to a particular section
of the Securities Act of 1933 shall include a reference to the comparable
section, if any, of any such similar Federal statute.
SUBSIDIARY: any corporation, association or other business entity
at least 50% (by number of votes) of the Voting Common Stock of which is at
the time owned by the Company or by one or more Subsidiaries or by the
Company and one or more Subsidiaries.
TRANSFER: unless the context otherwise requires, any sale,
assignment, pledge or other disposition of any security, or of any interest
therein, which could constitute a "sale" as that term is defined in section
2(3) of the Securities Act.
VOTING COMMON STOCK: with respect to any corporation, association
or other business entity, stock of any class or classes (or equivalent
interest) , if the holders of the stock of such class or classes (or
equivalent interests) are ordinarily, in the absence of contingencies,
entitled to vote for the election of a majority of the directors (or persons
performing similar functions) of such corporation, association or business
entity, even if the
25
right so to vote has been suspended by the happening of such a contingency.
WARRANT PRICE: the meaning specified in section 2.1.
WARRANTS: the meaning specified in the opening paragraphs of this
Warrant.
15. REMEDIES. The Company stipulates that the remedies at law of
the holder of this Warrant in the event of any default or threatened default
by the Company in the performance of or compliance with any of the terms of
this Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
16. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in
this Warrant shall be construed as conferring upon the holder hereof any
rights as a stockholder of the Company or as imposing any liabilities on such
holder to purchase any securities or as a stockholder of the Company, whether
such liabilities are asserted by the Company or by creditors or stockholders
of the Company or otherwise.
17. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be delivered by hand, facsimile
transmission or courier service, or mailed by registered or certified mail,
return receipt requested, addressed (a) if to any holder of any Warrant or
any holder of any Common Stock (or Other Securities), at the registered
address of such holder as set forth in the register kept at the principal
office of the Company, or (b) if to the Company, to the attention of its
Chief Financial Officer, at its principal office, PROVIDED that the exercise
of any Warrant shall be effected in the manner provided in section 1.
18. MISCELLANEOUS. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver,
discharge or termination is sought. The agreements of the Company contained
in this Warrant, other than those applicable
26
solely to the Warrants and the holders thereof, shall inure to the benefit of
and be enforceable by any holder or holders at the time of any Common Stock
(or Other Securities) issued upon the exercise of Warrants, whether so
expressed or not. This Warrant shall be construed and enforced in accordance
with and governed by the laws of the State of New York. The section headings
in this Warrant are for purposes of convenience only and shall not constitute
a part hereof.
[SIGNATURE APPEARS ON THE FOLLOWING PAGE]
27
19. EXPIRATION. The right to exercise this Warrant shall expire at 3
P.M., New York City time, on August 25, 2005.
ECO SOIL SYSTEMS, INC.
By:
---------------------
Title:
28
FORM OF SUBSCRIPTION
(To be executed only upon exercise of Warrant)
To _________________
The undersigned registered holder of the within Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder, ____________
(1) shares of Common Stock of ECO SOIL SYSTEMS, INC., a Nebraska corporation,
and herewith makes payment of $________ therefor [by application pursuant to
section 1.5 of such Warrant of $________ aggregate principal amount of Notes
(as defined in such Warrant) plus $________ accrued interest thereon],(2) and
requests that the certificates for such shares be issued in the name of, and
delivered to ________ whose address is ________.
[The undersigned hereby instructs you to credit the principal amount
of each Note so applied against the installments of principal remaining unpaid
on such Note in the ________ order of their maturity dates.]
Dated: ______________
---------------------
(Signature must conform in all respects to name of
holder as specified on the face of this Warrant)
[insert address]
---------------------
(1) Insert here the number of shares called for on the face of this Warrant
(or, in the case of a partial exercise, the portion thereof as to which this
Warrant is being exercised), in either case without making any adjustment
for additional Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of this
Warrant, may be delivered upon exercise. In the case of a partial exercise,
a new warrant or Warrants will be issued and delivered, representing the
unexercised portion of this Warrant, to the holder surrendering the same.
(2) Delete inapplicable language in brackets.
FORM OF ASSIGNMENT
(To be executed only upon transfer of Warrant)
For value received, the undersigned registered holder of the within
Warrant hereby sells, assigns and transfers unto ________ the right
represented by such Warrant to purchase ________ shares of Common Stock of
ECO SOIL SYSTEMS, INC., a Nebraska corporation, to which such Warrant
relates, and appoints ________ Attorney to make such transfer on the books
of ________ maintained for such purpose, with full power of substitution in
the premises.
Dated: _____________
--------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of this Warrant)
[insert address]
Signed in the presence of:
----------------------------
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