EXHIBIT 10.3
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE SECURITIES LAWS. THIS WARRANT HAS BEEN ISSUED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SHARES ISSUABLE
UPON EXERCISE HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE
PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE STATE LAWS.
STOCK PURCHASE WARRANT
To Purchase 140,000 Shares of Common Stock of
LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
THIS CERTIFIES that, for value received, Crossover Ventures, Inc. (the
"Holder"), is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after
February 14, 2003 (the "Initial Exercise Date") and on or prior to the close of
business on February 14, 2006 (the "Termination Date") but not thereafter, to
subscribe for and purchase from Lumenon Innovative Lightwave Technology, Inc., a
corporation incorporated in the State of Delaware (the "Company"), up to 140,000
shares (the "Warrant Shares") of Common Stock, $.001 par value per share, of the
Company (the "Common Stock"). The purchase price of one share of Common Stock
(the "Exercise Price") under this Warrant shall be $0.21. The Exercise Price and
the number of Warrant Shares for which the Warrant is exercisable shall be
subject to adjustment as provided herein. In the event of any conflict between
the terms of this Warrant and the Common Stock Purchase Agreement dated as of
August 14, 2002 pursuant to which this Warrant has been issued (the "Purchase
Agreement"), the Purchase Agreement shall control. CAPITALIZED TERMS USED AND
NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS SET FORTH FOR SUCH TERMS IN
THE PURCHASE AGREEMENT.
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1. TITLE TO WARRANT. Subject to the provisions of Section 7 hereof,
prior to the Termination Date and subject to compliance with applicable laws,
this Warrant and all rights hereunder are transferable, in whole or in part, at
the office or agency of the Company by the Holder in person or by duly
authorized attorney, upon surrender of this Warrant together with the Assignment
Form annexed hereto properly endorsed.
2. AUTHORIZATION OF SHARES. The Company will at all times reserve and
keep available, solely for issuance and delivery upon exercise of this Warrant,
such number of Warrant Shares and other securities, cash and/or property, as
from time to time may be issuable upon the exercise of this Warrant.
3. EXERCISE OF WARRANT.
(a) Except as provided in Section 4 herein, exercise of the
purchase rights represented by this Warrant by the registered Holder
may be made at any time or times on or after the Initial Exercise Date
and on or before the close of business on the Termination Date by the
surrender of this Warrant and the Notice of Exercise Form annexed
hereto duly executed by the registered Holder, at the office of the
Company (or such other office or agency of the Company as it may
designate by notice in writing to the registered Holder at the address
of such Holder appearing on the books of the Company) and upon payment
in full of the Exercise Price of the shares thereby purchased by wire
transfer or cashier's check drawn on a United States bank, or by means
of a cashless exercise, the Holder shall be entitled to receive a
certificate for the number of Warrant Shares so purchased. Certificates
for shares purchased hereunder shall be delivered to the Holder within
five (5) Trading Days after the date on which this Warrant shall have
been exercised as aforesaid. This Warrant shall be deemed to have been
exercised and such certificate or certificates shall be deemed to have
been issued, and Holder or any other person so designated to be named
therein shall be deemed to have become a holder of record of such
Warrant Shares for all purposes, as of the date the Warrant has been
exercised in accordance with this subsection 3(a) to the Company of the
Exercise Price and all taxes required to be paid by the Holder, if any,
pursuant to Section 5 prior to the issuance of such shares, have been
paid. If the Company fails to deliver to the Holder a certificate or
certificates representing the Warrant Shares pursuant to this Section
3(a) by the fifth Trading Day after the date of exercise, then the
Holder will have the right to rescind such exercise. In addition to any
other rights available to the Holder, if the Company fails to deliver
to the Holder a certificate or certificates representing the Warrant
Shares pursuant to an exercise by the eighth Trading Day after the date
of exercise, and if after such eighth Trading Day the Holder purchases
(in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant Shares
which the Holder anticipated receiving upon such exercise (a "Buy-In"),
then the Company shall (1) pay in cash to the Holder the amount by
which (x) the Holder's total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (A) the number of
Warrant Shares that the Company was required to deliver to the Holder
in connection with the exercise at issue times (B) the
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closing bid price of the Common Stock at the time of the obligation
giving rise to such purchase obligation, and (2) at the option of
the Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was not
honored or deliver to the Holder the number of shares of Common Stock
that would have been issued had the Company timely complied with its
exercise and delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with a market price on the date of exercise totaled
$10,000, under clause (1) of the immediately preceding sentence the
Company shall be required to pay the Holder $1,000. The Holder shall
provide the Company written notice indicating the amounts payable to
the Holder in respect of the Buy-In. Nothing herein shall limit a
Holder's right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company's
failure to timely deliver certificates representing shares of Common
Stock upon exercise of the Warrant as required pursuant to the terms
hereof.
(b) If this Warrant shall have been exercised in part, the
Company shall, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to Holder a new
Warrant evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
(c) This Warrant shall also be exercisable by means of a
"cashless exercise" in which the Holder shall be entitled to receive a
certificate for the number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
(A) = the VWAP on the Trading Day preceding the date of such
election;
(B) = the Exercise Price of this Warrant; and
(X) = the number of Warrant Shares issuable upon exercise of
this Warrant in accordance with the terms of this Warrant
and the Notice of Exercise.
(d) Notwithstanding anything herein to the contrary, in no
event shall the Holder be permitted to exercise this Warrant for
Warrant Shares to the extent that (i) the number of shares of Common
Stock owned by such Holder (other than Warrant Shares issuable upon
exercise of this Warrant) plus (ii) the number of Warrant Shares
issuable upon such exercise would be equal to or exceed 9.999% of the
number of shares of Common Stock then issued and outstanding, including
shares issuable upon such exercise of this Warrant. As used herein,
beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act. With respect to the limitation contained in
this Section 3(d), the determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder) and
of which portion of this Warrant is exercisable shall be in the sole
discretion of such Holder, and the submission of a Notice of Exercise
shall be deemed to be such Holder's determination of whether, and shall
constitute a representation and warranty by the Holder to the effect
that, this Warrant is exercisable
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(in relation to other securities owned by such Holder) and of which
portion of this Warrant is exercisable, in each case subject to
such aggregate percentage limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination (but
shall be entitled to do so, in its sole discretion). Nothing contained
herein shall be deemed to restrict the right of a Holder to exercise
this Warrant into Warrant Shares at such time as such exercise will not
violate the provisions of this Section 3(d). The provisions of this
Section 3(d) may be waived by the Holder upon, at the election of the
Holder, with not less than 61 days' prior notice to the Company, and
the provisions of this Section 3(d) shall continue to apply until such
61st day (or such later date as may be specified in such notice of
waiver). No exercise of this Warrant in violation of this Section 3(d)
but otherwise in accordance with this Warrant shall affect the status
of the Warrant Shares as validly issued, fully-paid and nonassessable.
(e) In no event may the Purchaser exercise this
Warrant in whole or in part unless the Purchaser is an "accredited
investor" as defined in Regulation D promulgated under the Securities
Act.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the VWAP on the date of such exercise.
5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for Warrant
Shares shall be made without charge by the Company to the Holder for any issue
or other incidental expense in respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or names as may be
directed by the Holder; PROVIDED, HOWEVER, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder,
such issuance shall be subject to compliance by the Holder with subsection 7(a)
and this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder; and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
6. CLOSING OF BOOKS. The Company will not close its stockholder books
or records in any manner which prevents the timely exercise of this Warrant.
7. TRANSFER, DIVISION AND COMBINATION.
(a) This Warrant and the Warrant Shares shall not be sold or
transferred unless either (i) they first shall have been registered
under the Securities Act, or (ii) the Company first shall have been
furnished with an opinion of legal counsel, reasonably satisfactory to
the Company, to the effect that such sale or transfer is exempt from
the registration requirements of the Securities Act. Notwithstanding
the foregoing, no registration or opinion of counsel shall be required
for (i) a transfer by a Holder which is an entity to a wholly owned
subsidiary of such entity, a transfer by a Holder which is a
partnership to a partner of such partnership or a retired partner of
such partnership or to
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the estate of any such partner or retired partner, or a transfer
by a Holder which is a limited liability company to a member of
such limited liability company or a retired member or to the estate
of any such member or retired member, provided that the transferee in
each case agrees in writing to be subject to the terms of this Section
7, or (ii) a transfer made in accordance with Rule 144 under the
Securities Act.
(b) Each certificate representing Warrant Shares shall bear a
legend substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL SUCH SECURITIES ARE REGISTERED
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS
NOT REQUIRED"
(c) Subject to compliance with any applicable securities laws,
and subsection 7(a), transfer of this Warrant and all rights hereunder,
in whole or in part, shall be registered on the books of the Company to
be maintained for such purpose, upon surrender of this Warrant at the
principal office of the Company, together with a written assignment of
this Warrant substantially in the form attached hereto duly executed by
the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute and
deliver a new Warrant or Warrants in the name of the assignee or
assignees and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled. A Warrant, if properly assigned,
may be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued.
(d) Subject to compliance with subsections 7(a) and 7(c), this
Warrant may be divided or combined with other Warrants upon
presentation hereof at the principal office of the Company, together
with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder or its agent or
attorney. Subject to compliance with Section 7(a) and Subsection 7(c),
as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.
(e) The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under
this Section 7.
(f) The Company agrees to maintain, at its principal office,
books for the registration and the registration of transfer of the
Warrants.
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8. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof. Upon the exercise of the Warrant in
accordance with Subsection 3(a), the Warrant Shares so purchased shall be deemed
to be issued to such Holder as the record owner of such shares as of the close
of business on the date of such exercise.
9. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant, and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to it (which shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant, if mutilated, the Company will make and deliver a
new Warrant of like tenor in lieu of such Warrant.
10. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal, national holiday in the United States or Canada.
11. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
(a) STOCK SPLITS, ETC. The number and kind of securities
purchasable upon the exercise of this Warrant and the Exercise Price
shall be subject to adjustment from time to time upon the happening of
any of the following. In case the Company shall (i) pay a dividend in
shares of Common Stock or make a distribution in shares of Common Stock
to holders of its outstanding Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares,
(iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or (iv) issue any shares of its
capital stock in a reclassification of the Common Stock, then the
number of Warrant Shares purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder shall be
entitled to receive the kind and number of Warrant Shares or other
securities of the Company which it would have owned or have been
entitled to receive had such Warrant been exercised in advance thereof.
Upon each such adjustment of the kind and number of Warrant Shares or
other securities of the Company which are purchasable hereunder, the
Exercise Price shall be adjusted by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of Warrant
Shares purchasable pursuant hereto immediately prior to such adjustment
and dividing such product by the number of Warrant Shares purchasable
pursuant hereto immediately following such adjustment. An adjustment
made pursuant to this paragraph shall become effective at the close of
business on the date such event becomes effective.
(b) ANTI-DILUTION PROVISIONS. During the Exercise Period, the
Exercise Price and the number of Warrant Shares issuable hereunder and
for which this Warrant is then exercisable shall be subject to
adjustment from time to time as provided in this Section 11(b). 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
to the nearest cent.
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(i) ADJUSTMENT OF EXERCISE PRICE. If and whenever the Company
issues or sells, or is deemed to have issued or sold, any shares of
Common Stock for consideration per share (as calculated in subsection
11(b)(ii)(E)) less than the Exercise Price (the "Base Share Price") or
for no consideration (collectively, a "Dilutive Issuance"), then
effective immediately upon the Dilutive Issuance, the Exercise Price
will be reduced so that the Exercise Price will equal the Exercise
Price in effect immediately prior to the Dilutive Issuance multiplied
by a fraction, of which the denominator shall be the number of shares
of the Common Stock (excluding treasury shares, if any) outstanding on
the date of the Dilutive Issuance plus the number of shares of (A)
Common Stock or (B) Common Stock Equivalents as described in
subsections 11(b)(ii)(A) and (B)) offered in such Dilutive Issuance,
and of which the numerator shall be the number of shares of the Common
Stock (excluding treasury shares, if any) outstanding on the date of
the Dilutive Issuance plus the number of shares which the aggregate
consideration received or to be received for the total number of shares
of Common Stock or Common Stock Equivalents so offered would purchase
at the Exercise Price in effect immediately prior to the Dilutive
Issuance.
(ii) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes
of determining the adjusted Exercise Price under Section 11(b), hereof,
the following will be applicable:
(A) 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 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 consideration
per share (as calculated in subsection 11(b)(ii)(E)) for which
Common Stock is issuable upon the exercise of such Options is
less than the Exercise Price ("Below Base Price Options"),
then the maximum total number of shares of Common Stock
issuable upon the exercise of all such Below Base Price
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 Base Price Options, be
deemed to Common Stock Equivalents.
(B) ISSUANCE OF CONVERTIBLE SECURITIES. 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 consideration per share (as calculated in subsection
11(b)(ii)(E) for which Common Stock is issuable upon such
exercise, conversion or exchange is less than the Exercise
Price, then the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such
Convertible Securities will, as
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of the date of the issuance of such Convertible Securities,
be deemed to be Common Stock Equivalents.
(C) 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 obtained had such revised terms been in effect at
the time such Options or Convertible Securities were initially
granted, issued or sold.
(D) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
CONVERTIBLE SECURITIES. If any unexercised Option or
unconverted or un-exchanged (as applicable) Convertible
Security 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 Security never been
issued.
(E) 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 Company will be the fair market value of such
consideration, as determined in good faith by the Board of
Directors. The consideration per share received by the Company
for Common Stock Equivalents deemed to have been issued
pursuant to subsections 11(b)(ii)(A) and 11(b)(ii)(B),
relating to Options and Convertible Securities, shall be
determined by dividing:
(I) the total amount, if any, received or
receivable by the Company as consideration for the
issue of such Options or Convertible Securities,
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
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Company upon the exercise 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 conversion or
exchange of such Convertible Securities, 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
consideration) issuable upon the exercise of such
Options or the conversion or exchange of such
Convertible Securities.
(F) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No
adjustment to the Exercise Price will be made (i) upon the
exercise of this Warrant or any other warrant of this series
or the issuance of any Common Stock pursuant to the Purchase
Agreement; (ii) upon the exercise of or conversion of any
Convertible Securities, Options or warrants issued and
outstanding on the initial issuance date of this Warrant;
(iii) upon the grant or exercise of any Convertible Securities
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
Convertible Securities 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; (iv) upon
the issuance of Common Stock or Convertible Securities in any
transaction of the nature contemplated by Rule 145,
promulgated under the Securities Act; (v) by reason of a
dividend, stock split, subdivision, combination or other event
that is covered by subsection 11(a); (vi) in connection with
any strategic partnership or joint venture or acquisition or
key consulting agreements (the primary purpose of which is not
to raise equity capital for the Company); or (vii) upon
issuance of warrants to or exercise thereof by Xxxxxx and
Xxxxxxx, Inc., in its capacity as placement agent for the
Company in connection with the transactions contemplated by
the Purchase Agreement. No adjustment to the Exercise Price
shall be made as a result of the issuance of shares of Common
Stock or Common Stock Equivalents if the consideration per
share (calculated pursuant to subsection 11(b)(ii)(E)) for
such shares of Common Stock or Common Stock Equivalents issued
or deemed to be issued by the Company is equal to or greater
than the Exercise Price in effect immediately prior to the
issuance or deemed issuance of such shares of Common Stock or
Common Stock Equivalents. No adjustment to the Exercise Price
will be made upon the actual issuance of Common Stock upon
exercise, conversion or exchange of Options or Convertible
Securities.
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(iii) 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.
(c) VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at
any time during the term of this Warrant reduce the then current
Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.
(d) NOTICE OF ADJUSTMENT. Whenever the number of Warrant
Shares or number or kind of securities or other property purchasable
upon the exercise of this Warrant or the Exercise Price is adjusted, as
herein provided, the Company shall promptly mail by registered or
certified mail, return receipt requested, to the Holder notice of such
adjustment or adjustments setting forth the number of Warrant Shares
(and other securities or property) purchasable upon the exercise of
this Warrant and the Exercise Price of such Warrant Shares (and other
securities or property) after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Such notice, in the
absence of manifest error, shall be conclusive evidence of the
correctness of such adjustment.
12. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder shall have the right thereafter to elect to
receive, (i) upon exercise of this Warrant at the Exercise Price written herein
and consummation of the applicable event, the number of shares of common stock
of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and Other Property receivable upon or as if this Warrant
had been exercised as a result of such reorganization, reclassification, merger,
consolidation or disposition of assets immediately prior to such event, or (ii)
cash equal to the value of this Warrant as determined in accordance with the
Black-Scholes option pricing formula. For purposes of this Section 12, "common
stock of the successor or acquiring corporation" shall include stock of such
corporation of any class which is not preferred as to dividends or assets over
any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for any such
stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any
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warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 12 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets, as described herein.
13. NOTICE OF CORPORATE ACTION. If at any time:
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences
of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right,
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company (other than a
consolidation or merger in which the Company is the surviving entity
and its Common Stock is not converted into or exchanged for any other
securities or property) with, or any sale, transfer or other
disposition of all or substantially all the property, assets or
business of the Company to, another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder, if
lawful and practicable to do so, (i) at least 10 days' prior written notice of
the date on which a record date shall be selected for such dividend,
distribution or right or for determining rights to vote in respect of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 10 days' prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (i) the date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, the date on which the holders of Common Stock shall be entitled to any
such dividend, distribution or right, and the amount and character thereof, and
(ii) the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is to take place and the time, if any such time is to be fixed, as of which
the holders of Common Stock shall be entitled to exchange their shares of common
Stock for securities or other property deliverable upon such disposition,
dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of the Company and delivered in accordance with Section
15(d).
14. NO IMPAIRMENT. The Company shall not by any action, including,
without limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder against
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impairment. Without limiting the generality of the foregoing, the Company will
(a) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (b)
use commercially reasonable efforts to take all such action as may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c)
use commercially reasonable efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under this Warrant.
15. MISCELLANEOUS.
(a) JURISDICTION. This Warrant shall constitute a contract
under the laws of New York, without regard to its conflict of law,
principles or rules, and be subject to arbitration pursuant to the
terms set forth in the Purchase Agreement.
(b) RESTRICTIONS. The Holder acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered,
will have restrictions upon resale imposed by state and federal
securities laws.
(c) NONWAIVER AND EXPENSES. No course of dealing or any delay
or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice Holder's
rights, powers or remedies. If the Company willfully and knowingly and
for reasons within its control fails to comply with any provision of
this Warrant, which results in any material damages to the Holder, the
Company shall pay to Holder such amounts as shall be sufficient to
cover any costs and expenses including, but not limited to, reasonable
attorneys' fees, including those of appellate proceedings, incurred by
Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.
(d) NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the Holder by the Company shall
be delivered in accordance with the notice provisions of the Purchase
Agreement.
(e) LIMITATION OF LIABILITY. No provision hereof, in the
absence of affirmative action by Holder to purchase Warrant Shares, and
no enumeration herein of the rights or privileges of Holder, shall give
rise to any liability of Holder for the purchase price of any Common
Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.
(f) SUCCESSORS AND ASSIGNS. Subject to applicable securities
laws and the provisions of this Warrant, this Warrant and the rights
and obligations evidenced hereby shall inure to the benefit of and be
binding upon the successors of the Company and the successors and
permitted assigns of Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this
Warrant and shall be enforceable by any such Holder or holder of
Warrant Shares.
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(g) AMENDMENT. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and
the Holder.
(h) SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Warrant shall
be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
(i) HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed
a part of this Warrant.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: August 14, 2002
LUMENON INNOVATIVE LIGHTWAVE TECHNOLOGY, INC.
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------------------
Xxxx X. Xxxxxxxxx, President and CEO
14
NOTICE OF EXERCISE
To: Lumenon Innovative Lightwave Technology, Inc.
(1) The undersigned hereby elects to purchase ________ Warrant Shares, of
Lumenon Innovative Lightwave Technology, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant Shares
as is necessary, in accordance with the formula set
forth in subsection 3(c), to exercise this Warrant
with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise
procedure set forth in subsection 3(c).
(3) Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is specified
below:
----------------------------------------
The Warrant Shares shall be delivered to the following:
----------------------------------------
----------------------------------------
----------------------------------------
(4) ACCREDITED INVESTOR. The undersigned is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.
[PURCHASER]
By: _________________________________
Name:
Title:
Dated: _____________________________
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the rights of the undersigned under the foregoing
Warrant are hereby assigned to
_______________________________________________ whose address is
________________________________________________________________.
________________________________________________________________
Dated: ______________, _______
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
