Exhibit 10.35.1
WARRANT
TO PURCHASE
SHARES OF
COMMON STOCK
OF
NATURAL WONDERS, INC.
TABLE OF CONTENTS
PAGE
1. General Terms......................................................................................1
1.1 Right to Acquire Securities...............................................................1
1.2 Exercise of Warrant.......................................................................2
1.3 Record Holder.............................................................................2
1.4 Payment of Taxes..........................................................................2
1.5 Transfer and Exchange.....................................................................3
2. Transfer of Securities.............................................................................3
2.1 Restrictions of Transfer..................................................................3
2.2 Cooperation...............................................................................5
3. Registration Rights................................................................................5
3.1 Definitions...............................................................................5
3.2 Demand Registration.......................................................................6
3.3 Piggyback Registration....................................................................7
3.4 Expenses..................................................................................9
3.5 Company Responsibilities..................................................................9
3.6 Indemnification..........................................................................10
3.7 Holder's Obligations.....................................................................11
3.8 Assignment...............................................................................11
4. Adjustments to Exercise Price and Warrant Shares..................................................11
4.1 Subdivision or Combination...............................................................11
4.2 Adjustment for Reorganization, Consolidation, Merger.....................................12
4.3 Miscellaneous Exercise Matters...........................................................13
4.4 No Dilution or Impairment................................................................13
4.5 Notice of Adjustment.....................................................................13
4.6 Duty to Make Fair Adjustments in Certain Cases...........................................13
5. Miscellaneous.....................................................................................14
5.1 Entire Agreement.........................................................................14
5.2 Successors and Assigns...................................................................14
5.3 Governing Law............................................................................14
5.4 Notices, Etc.............................................................................14
5.5 Delays or Omissions......................................................................14
5.6 Survival.................................................................................14
5.7 Waivers and Amendments...................................................................15
5.8 Cashless Exercise........................................................................15
5.9 Severability.............................................................................16
5.10 Registered Holder........................................................................17
5.11 Titles and Subtitles.....................................................................17
i
WARRANT
TO PURCHASE SHARES OF COMMON STOCK OF
NATURAL WONDERS, INC.
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A) COVERED
BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT, (B) IN COMPLIANCE WITH
RULE 144 UNDER SUCH ACT, OR (C) THE COMPANY HAS BEEN FURNISHED WITH AN OPINION
OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT NO REGISTRATION IS REQUIRED
FOR SUCH TRANSFER.
60,000 Shares of Common Stock
1. GENERAL TERMS.
1.1 RIGHT TO ACQUIRE SECURITIES.
(a) This Warrant certifies that for value received Xxxxxxxx
X. Factor (the "Holder"), or registered assigns, are entitled at any
time before 5:00 p.m., San Francisco, California time, on the
Expiration Date (as such term is defined herein) to purchase from
NATURAL WONDERS, INC., a Delaware corporation (the "Company"), 60,000
shares (the "Warrant Shares") of the fully paid and non-assessable
Common Stock of the Company ("Common Stock") as constituted on the
date hereof (the "Issuance Date"), at a price of $1.50 per share (the
"Exercise Price"), such number of shares and price per share subject
to adjustment as provided herein and all subject to the conditions set
forth herein. This Warrant may be exercised at any time on or before
three years from the date hereof (the "Expiration Date").
Upon any partial exercise hereof, there shall be issued to the Holder
a new Warrant or Warrants with respect to the shares of Common Stock not so
exercised. No fractions of a share of Common Stock will be issued upon the
exercise of this Warrant, but if a fractional share would be issuable upon
exercise the Company will pay in cash the fair market value thereof as
determined by the Board of Directors of the Company in good faith.
(b) The Warrant may be subdivided, at the Warrantholder's
option, into several warrants to purchase the Warrant Shares
(collectively, also referred to as the "Warrant"). Such subdivision
may be accomplished in accordance with the provisions of Section 1.5
hereof.
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1.2 EXERCISE OF WARRANT.
(a) The Holder or any person or entity to whom the Holder
has assigned its right under this Warrant (collectively referred to as
the "Warrantholder") may exercise the Warrant, in whole or in part, at
any time or from time to time, prior to its expiration, on any
business day, by delivering a written notice in the form attached
hereto (the "Exercise Notice") to the Company at the offices of the
Company designated in Section 5.4 hereof, exercising the Warrant and
specifying (i) the total number of shares of Common Stock the
Warrantholder will purchase pursuant to such exercise and (ii) a place
and date not less than one nor more than 20 business days from the
date of the Exercise Notice for the closing of such purchase.
(b) At any closing under Section 1.2(a) hereof, (i) the
Warrantholder will surrender the Warrant and make payment to the
Company of the aggregate Exercise Price for the shares of Common Stock
so purchased by delivering: (x) a bank, cashier's or certified check;
or (y) a written notice of an election to effect a Cashless Exercise
(as defined in Section 5.8 hereof); and (ii) the Company will deliver
to the Warrantholder a certificate or certificates for the number of
shares of Common Stock issuable upon such exercise, together with
cash, in lieu of any fraction of a share, as provided in Section
1.1(a) above. Upon any partial exercise, a new warrant or warrants of
the same tenor and expiration date for the purchase of the number of
such shares not purchased upon such exercise shall be issued by the
Company to the registered holder thereof.
1.3 RECORD HOLDER. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided in Section 1.2(b) above, and the person entitled to receive
the shares of Common Stock issuable upon such exercise shall be treated for all
purposes as the holder of such shares of record as of the close of business on
such date.
1.4 PAYMENT OF TAXES. The Company shall pay all taxes and other
governmental charges that may be imposed in respect of the issue or delivery of
the Warrant Shares or any portion thereof. The Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for the Warrant Shares or any portion
thereof in any name other than that of the registered holder of the Warrant
surrendered in connection with the purchase of such shares, and in such case the
Company shall not be required to issue or deliver any certificate until such tax
or other charge has been paid or it has been established to the Company's
satisfaction that no tax or other charge is due.
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1.5 TRANSFER AND EXCHANGE.
(a) Subject to the terms hereof, including, without
limitation, Section 2.1, the Warrant and all rights thereunder are
transferable, in whole or in part, on the books of the Company
maintained for such purpose at its office designated in Section 5.4
hereof by the registered holder hereof in person or by duly authorized
attorney, upon surrender of the Warrant properly endorsed and upon
payment of any necessary transfer tax or other governmental charge
imposed upon such transfer. Upon any partial transfer, the Company
will issue and deliver to such holder a new warrant or warrants with
respect to the Warrant Shares not so transferred. Each taker and
holder of the Warrant, by taking or holding the same, consents and
agrees that the Warrant when endorsed in blank shall be deemed
negotiable, and that when the Warrant shall have been so endorsed, the
holder may be treated by the Company and all other persons dealing
with the Warrant as the absolute owner of such Warrant for any purpose
and as the person entitled to exercise the rights represented thereby,
or to the transfer on the books of the Company, any notice to the
contrary notwithstanding; but until such transfer on such books, the
Company may treat the registered holder of the Warrant as the owner
for all purposes. The term "Warrant" as used herein shall include the
Warrant and, any warrants delivered in substitution or exchange
therefor as provided herein.
(b) The Warrant is exchangeable for a warrant or warrants
for the same aggregate number of Warrant Shares, each new Warrant to
represent the right to purchase such number of shares as the holder
shall designate at the time of such exchange.
2. TRANSFER OF SECURITIES.
2.1 RESTRICTIONS OF TRANSFER. Neither the Warrant nor the Warrant Shares
shall be transferable except upon the conditions specified in this Section 2.1,
which conditions are intended to insure compliance with the provisions of the
Securities Act of 1933 (the "1933 Act") in respect to the transfer of the
Warrant and the Warrant Shares.
(a) Unless and until otherwise permitted by this Section
2.1, the Warrant and each certificate or other document evidencing any
of the Warrant Shares shall be endorsed with a legend substantially in
the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS (A) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT
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UNDER SUCH ACT, (B) IN COMPLIANCE WITH RULE 144 UNDER SUCH ACT, OR (C)
THE COMPANY HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT NO REGISTRATION IS
REQUIRED FOR SUCH TRANSFER"
(b) Neither the Warrant nor the Warrant Shares shall be
transferred, and the Company shall not be required to register any
such transfer, unless and until one of the following events shall have
occurred:
(i) the Company shall have received an opinion of
counsel, in form and substance reasonably acceptable to the Company
and its counsel, stating that the contemplated transfer is exempt
from registration under the 1933 Act as then in effect, and the
Rules and Regulations of the Securities and Exchange Commission (the
"Commission") thereunder. Within five business days after delivery
to the Company and its counsel of such an opinion, the Company
either shall deliver to the proposed transferor a statement to the
effect that such opinion is not satisfactory in the reasonable
opinion of its counsel (and shall specify in detail the legal
analysis supporting any such conclusion) or shall authorize the
Company's transfer agent to make the requested transfer;
(ii) the Company shall have been furnished with a letter
from the Commission in response to a written request in form and
substance acceptable to counsel for the Company setting forth all of
the facts and circumstances surrounding the contemplated transfer,
stating that the Commission will take no action with regard to the
contemplated transfer;
(iii) the Warrant or the Warrant Shares are transferred
pursuant to a registration statement which has been filed with the
Commission and has become effective; or
(iv) the Warrant or the Warrant Shares are transferred
in accordance with the provisions of Rule 144 promulgated by the
Commission under the 1933 Act.
(c) The restrictions on transfer imposed by this Section 2.1
shall cease and terminate as to the Warrant and the Warrant Shares
when (i) such securities shall have been effectively registered under
the 1933 Act and sold by the holder thereof in accordance with such
registration, (ii) an acceptable opinion as described in Section
2.l(b)(i) or a "no action" letter described in Section 2.l(b)(ii)
states that future transfers of such securities by
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the transferor or the contemplated transferee would be exempt from
registration under the 1933 Act, or (iii) such securities may be sold
in accordance with the provisions of Rule 144 promulgated under the
1933 Act. When the restrictions on transfer contained in this Section
2.1 have terminated as provided above, the holder of the securities as
to which such restrictions shall have terminated or the transferee of
such holder shall be entitled to receive promptly from the Company,
without expense to him, new certificates not bearing the legend set
forth in Section 2.1(a) hereof.
2.2 COOPERATION. The Company shall cooperate in supplying such
information as may be reasonably requested by the Warrantholder to complete and
file any information reporting forms presently or subsequently required by the
Commission as a condition to the availability of an exemption, presently
existing or subsequently adopted, from the 1933 Act for the sale of the Warrant
or the Warrant Shares.
3. REGISTRATION RIGHTS.
3.1 DEFINITIONS. For purposes of Section 3 hereof, terms not otherwise
defined herein shall have the following meanings:
(a) The terms "register," "registered" and "registration"
refer to the preparation and filing of a registration statement in
compliance with the 1933 Act and the rules promulgated thereunder, and
the declaration of the effectiveness of such registration statement,
or the taking of similar action under a successor statute or
regulation.
(b) The term "Registrable Securities" means the shares of
Common Stock issuable upon conversion of the Debenture or exercise of
the Warrant, and any securities issued or issuable with respect to
such Warrant Shares by way of a stock dividend or stock split or in
connection with a combination or shares, recapitalization, merger,
consolidation or other reorganization.
(c) The term "Holder" means any registered holder or holders
of Registrable Securities.
(d) The term "Prospectus" means a prospectus that complies
with applicable provisions of the 1933 Act.
(e) The term "Debenture" refers to the Subordinated
Convertible Debenture issued to Holders on September 11, 2000 along
with the Warrants.
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3.2 DEMAND REGISTRATION.
(a) On any date after March 15, 2001, the Holders of at
least fifty percent (50%) of the Registrable Securities then
outstanding (the "Initiating Holders") may request in writing
registration under the 1933 Act (a "Demand Registration"). The Demand
Registration request shall specify the amount of the Registrable
Securities proposed to be sold, the intended method of disposition
thereof and the jurisdictions in which registration is desired. Upon
the receipt of the Demand Registration request, the Company promptly
shall take such steps as are necessary or appropriate to prepare for
the registration of the Registrable Securities to be registered.
Within fifteen (15) days after the receipt of such request, the
Company shall give written notice thereof to all other Holders and
include in such registration all Registrable Securities held by a
Holder from whom the Company has received a written request for
inclusion therein at least ten (10) days prior to the filing of the
registration statement. Each such request will also specify the number
of Registrable Securities to be registered, the intended method of
disposition thereof and the jurisdictions in which registration is
desired.
(b) The Company shall use its reasonable best efforts to
cause any such Demand Registration to become effective not later than
one hundred twenty (120) days after it receives a request under this
Section 3.2. A registration requested pursuant to this Section 3.2
shall not count as the one Demand Registration to which the Holders
are entitled to thereunder unless such registration statement is
declared effective and remains effective for at least ninety (90)
days.
(c) If Holders of a majority of the Registrable Securities
proposed to be registered by the Initiating Holders so elect, the
offering of such Registrable Securities pursuant to such Demand
Registration shall be in the form of a firm commitment underwritten
offering. If any Demand Registration of Registrable Securities is in
the form of an underwritten offering, the Holders holding a majority
of the Registrable Securities proposed to be registered by the
Initiating Holders shall select and obtain an investment banking firm
of national reputation to act as the managing underwriter of the
offering (the "Approved Underwriter"); provided, that the Approved
Underwriter shall, in any case, be acceptable to the Company in its
reasonable judgment.
(d) The Company shall not be obligated to effect any
registration under this Section 3.2 except in accordance with the
following provisions:
(i) The Company shall not be obligated to use its
reasonable best efforts to file and cause to become effective more
than
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one registration statement with respect to Registrable Securities
held by the Holders initiated pursuant to this Section 3.2;
provided, however, that any registration proceeding begun
pursuant to this Section 3.2 that is subsequently withdrawn at
the request of the Holders shall not be so counted if such
withdrawal is based upon material adverse information relating to
the Company or its condition, business, or prospects which is
different from that generally known to the Rights Holders at the
time of their request.
(ii) The Company may delay the filing or effectiveness
of any registration statement for a period of up to ninety (90) days
after the date of a request for registration pursuant to this
Section 3.2 if (x) at the time of such request the Company is
engaged, or has formal plans to engage within sixty (60) days of the
time of such request, in an underwritten public offering of shares
of Common Stock, (y) the Board of Directors of the Company
determines in good faith that (A) it is in possession of material,
non-public information concerning an acquisition, merger,
recapitalization, consolidation, reorganization or other material
transaction by or of the Company or concerning pending or threatened
litigation and (B) disclosure of such information would jeopardize
any such transaction or litigation or otherwise materially harm the
Company, or (z) the Company shall furnish to the Holders a
certificate signed by the Chief Executive Officer or President of
the Company stating that, in the good faith judgment of the Board of
Directors of the Company, it would otherwise be seriously
detrimental to the Company and its investors for such registration
statement to be filed and it is therefore essential to defer the
filing of such registration statement.
3.3 PIGGYBACK REGISTRATION.
(a) If, at any time, through and including the third
anniversary of the date of this Warrant, the Company proposes to
register any of its securities under the 1933 Act (other than in
connection with a merger, acquisition, reorganization or similar
transaction pursuant to a Form S-4 Registration Statement or an
employee stock compensation plan pursuant to a Form S-8 Registration
Statement), it will give written notice by registered mail, at least
(30) days prior to the filing of each such registration statement, to
the Holder of its intention to do so. If the Holder notifies the
Company within 20 days after receipt of any such notice of its desire
to include any Registrable Securities in such proposed registration
statement, the Company shall afford such Holder the opportunity to
have any of the Registrable Securities registered
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under such registration statement and included in any underwriting
involved with respect thereto.
(b) Notwithstanding the provisions of Section 3.3 hereof:
(i) the Company shall have the right at any time after it shall have
given written notice pursuant to this Section 3 (irrespective of
whether a written request for inclusion of any Registrable Securities
shall have been made) to elect not to file any such proposed
registration statement, or to withdraw the same after the filing but
prior to the effective date thereof; and (ii) in the event a
registration under Section 3.3 hereof relates to an underwritten
public offering which does not include any securities being offered
and sold on behalf of selling shareholders, the inclusion of any
Registrable Securities may, at the election of the Company, be
conditioned upon the Holder agreeing that the public offering of such
Registrable Securities shall not commence until 90 days after the
effective date of such registration.
(c) The rights of the Holder pursuant to Section 3.3 hereof
shall be conditioned upon such Xxxxxx's participation in the
underwriting with respect thereto and the inclusion of such Xxxxxx's
Registrable Securities in such underwriting (unless otherwise mutually
agreed by the Company, the managing underwriter or, if none, a
majority of the underwriters, and such Holder) to the extent provided
herein.
(d) Notwithstanding any other provision of this Warrant, if
the managing underwriter or, if none, a majority of the underwriters,
determines that marketing factors require a limitation of the number
of shares to be underwritten or a complete exclusion of such shares,
such underwriter or underwriters may limit the number of Registrable
Securities that may be included in the registration and underwriting
or exclude all of the Registrable Securities, as appropriate. In the
case of an underwritten registration in which the number of
Registrable Securities that may be included is limited, the Company
shall advise the Holder of the limited number of Registrable
Securities that may be included in the registration, and the number of
Registrable Securities that may be included in the registration and
underwriting shall be allocated among all Holders thereof in
proportion, as nearly as practicable, to the respective amounts of
Registrable Securities entitled to inclusion in such registration held
by such Holders at the time of filing the registration statement.
(e) The Company shall (together with all Holders proposing
to distribute their securities through an underwriting) enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for the underwriting.
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3.4 EXPENSES.
All expenses incurred in connection with any registration pursuant to this
Warrant or Warrant Shares, including without limitation, all registration,
filing and qualification fees, printing expenses, fees and disbursements of
counsel for the Company, and expenses of any special audits incidental to or
required by such registration, shall be borne by the Company; provided however
the Company shall not be required to pay:
(a) fees of legal counsel of any Holder, or underwriters'
fees, discounts, commissions or expenses relating to Registrable
Securities; and
(b) for expenses that the Company is prohibited from paying
under Blue Sky laws or by Blue Sky administrators.
3.5 COMPANY RESPONSIBILITIES.
In the case of a piggyback registration of Warrant Shares, the Company
shall use its best efforts to keep the Holder advised in writing as to the
initiation, effectiveness and completion of such registration. At its expense
the Company shall:
(a) prepare and file a registration statement (and such
amendments and supplements thereto) with respect to such Registrable
Securities and use its best efforts to cause such registration
statement to become and remain effective for a period of 180 days or
until the Holder or Holders have completed the distribution described
in the registration statement relating thereto, whichever first
occurs;
(b) furnish such number of copies of a Prospectus in
conformity with the requirements of applicable law, and such other
documents incident thereto as a Holder from time to time may
reasonably request; and
(c) use every reasonable effort to register or qualify the
Registrable Securities covered by such registration statement under
the state Blue Sky laws of such jurisdictions as the Company's Board
of Directors may reasonably determine, and do any and all other acts
and things which may be necessary under said Blue Sky laws to enable
the sellers of the Registrable Securities to consummate the public
sale or other disposition of the Registrable Securities owned by them
in such jurisdictions, except that the Company shall not for any
purpose be required to qualify to do business as a foreign corporation
in any jurisdiction wherein the Registrable Securities are so
qualified.
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3.6 INDEMNIFICATION.
(a) The Company shall indemnify the Holder, with respect to
such registration effected pursuant to Section 3 hereof, against all
claims, losses, damages and liabilities (or actions in respect
thereto) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration
statement or related Prospectus, or based on any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
any violation by the Company of any rule or regulation promulgated
under any securities law applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, and shall reimburse the Holder, for any legal and any
other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, provided
that the Company shall not be liable in any such case to the extent
that any such claim, loss, damage or liability arises out of or is
based on any untrue statement or omission based upon written
information furnished to the Company in an instrument duly executed by
such Holder specifically for use therein.
(b) The Holder shall, if Registrable Securities held by or
issuable to the Holder are included in the securities as to which such
registration is being effected, indemnify the Company, each of its
directors and officers who sign such registration statement, each
underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company within
the meaning of the 1933 Act, and each other Holder, against all
claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such
registration statement or related Prospectus, or any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and shall reimburse the Company and such Holders for any
legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability, or
action, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement or related Prospectus
in reliance upon and in conformity with written information furnished
to the Company in an instrument duly executed by such Holder
specifically for use therein.
(c) Each party entitled to indemnification under this
Section 3.4 (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party")
promptly after such
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Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall be approved by
the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense
at such party's expense; and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve
the Indemnifying Party of its obligations under this Section 3.4. No
Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement, which does not
include as an unconditional term thereof, the giving by the claimant
or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation.
3.7 HOLDER'S OBLIGATIONS. The Holder shall furnish to the Company such
written information regarding such Holder and the distribution proposed by such
Holder as the Company may reasonably request in writing and as shall be required
in connection with any registration referred to in this Warrant.
3.8 ASSIGNMENT. The rights granted to the Holder pursuant to this
Warrant may be assigned to a transferee or assignee of the Warrant or any of the
Registrable Securities, provided that the transferee or assignee is an
affiliated entity of the Holder and the Company is given written notice at the
time of or within 10 days after said transfer, stating the name and address of
said transferee or assignee and identifying the Registrable Securities with
respect to which such registration rights are being assigned.
4. ADJUSTMENTS TO EXERCISE PRICE AND WARRANT SHARES. The Exercise Price
in effect from time to time and the number of Warrant Shares shall be subject
to adjustment in certain cases as set forth in this Section 4.
4.1 SUBDIVISION OR COMBINATION. In the event the outstanding Common
Stock shall be subdivided into a greater number of shares of Common Stock, the
Exercise Price for the Warrant Shares shall, simultaneously with the
effectiveness of such subdivision, be proportionately reduced and the number of
Warrant Shares proportionately increased, and conversely, in case the
outstanding Common Stock shall be combined into a smaller number of shares of
Common Stock, the Exercise Price shall, simultaneously with the effectiveness of
such combination, be proportionately increased and the number of Warrant Shares
proportionately reduced.
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4.2 ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER.
(a) In case of any reorganization of the Company (or any
other corporation the stock or other securities of which are
receivable on the exercise of the Warrant) after the date on which
this Warrant is first issued (the "Issuance Date"), or in case, after
such date, the Company (or any such other corporation) shall
consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then and in
each such case the Warrantholder, upon exercise of the Warrant as
provided in Section 1.2 hereof at any time after the consummation of
such reorganization, consolidation, merger or conveyance, shall be
entitled to receive, in lieu of the stock or other securities and
property receivable upon the exercise of the Warrant prior to such
consummation, the stock or other securities or property to which the
Warrantholder would have been entitled upon such consummation if the
Warrantholder had exercised or converted the Warrant immediately prior
thereto; in each such case, the terms of this Warrant, including the
exercise provisions of Section 1.2, shall be applicable to the shares
of stock or other securities or property receivable upon the exercise
or conversion of the Warrant after such consummation.
(b) The Company shall not effect any consolidation, merger
or conveyance of all or substantially all of its assets unless prior
to the consummation thereof the successor corporation (if other than
the Company) resulting from such consolidation or merger or the
corporation into or for the securities of which the previously
outstanding stock of the Company shall be changed in connection with
such consolidation or merger, or the corporation purchasing such
assets, as the case may be, shall assume by written instrument, in
form and substance satisfactory to the Warrantholder, executed and
delivered in accordance with Section 5.4 hereof, the obligation to
deliver to the Warrantholder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, the
Warrantholder is entitled to purchase.
(c) If a purchase, tender or exchange offer is made to and
accepted by the holders of more than 50% of the outstanding shares of
Common Stock of the Company, the Company shall not effect any
consolidation, merger or sale with the Person having made such offer
or with any Affiliate of such Person, unless prior to consummation of
such consolidation, merger or sale the Warrantholder shall have been
given a reasonable opportunity to then elect to receive either the
stock, securities or assets then issuable upon the exercise or
conversion of the Warrant or, if different, the stock, securities or
assets, or the equivalent, issued to previous holders of the Common
Stock in accordance with such offer, computed as though the
Warrantholder hereof had been, at the time of such offer, a holder of
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the stock, securities or assets then purchasable upon the exercise or
conversion of the Warrant. As used in this paragraph (c), the term
"Person" shall mean and include an individual, a partnership, a
corporation, a trust, a joint venture, an unincorporated organization
and a government or any department or agency thereof, and an
"Affiliate" of any Person shall mean any Person directly or indirectly
controlling, controlled by or under direct or indirect common control
with, such other Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies
of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
4.3 MISCELLANEOUS EXERCISE MATTERS. The Company shall at all times
reserve and keep available out of its authorized but unissued Common Stock the
full number of Warrant Shares deliverable upon exercise of the Warrant Shares,
as such number may change from time to time. Also, the Company shall, at its own
expense, take all such actions and obtain all such permits and orders as may be
necessary to enable the Company lawfully to issue the Warrant Shares upon the
exercise of the Warrant.
4.4 NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its
certificate of incorporation or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of the 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 in order to protect the rights of the Warrantholder against dilution
or other impairment. Without limiting the generality of the foregoing, the
Company will take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and non-assessable
shares upon the exercise or conversion of the Warrant.
4.5 NOTICE OF ADJUSTMENT. When any adjustment is required to be made in
either the Exercise Price or the number of shares issuable upon exercise of the
Warrant, the Company shall promptly notify the Warrantholder of such event, of
the calculation by which such adjustment is to be made and of the resulting
Exercise Price or conversion rate, as the case may be.
4.6 DUTY TO MAKE FAIR ADJUSTMENTS IN CERTAIN CASES. If any event occurs
as to which in the opinion of the Board of Directors the other provisions of
this Section 4 are not strictly applicable or if strictly applicable would not
fairly protect the purchase and exercise rights of the Warrant in accordance
with the essential intent and principles of such provisions, then the Board of
Directors shall make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to protect such
purchase rights as aforesaid.
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5. MISCELLANEOUS.
5.1 ENTIRE AGREEMENT. This Warrant constitutes the full and entire
understanding and agreements between the parties hereto with respect to the
subjects hereof and thereof.
5.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this Warrant
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties hereto, except as expressly provided otherwise herein.
5.3 GOVERNING LAW. This Warrant shall be governed by and construed under
the laws of the State of California.
5.4 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery or upon the seventh day following mailing by registered
air mail, postage prepaid, addressed (a) if to the Warrantholder, at 000 X.
Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxxx X.
Factor, or at such other address as it shall have furnished to the Company in
writing, (b) if to the Company, a copy should be sent to 0000 Xxxxxxxxxx Xxxxx,
Xxxxxxx, XX 00000, and addressed to the attention of the corporate secretary, or
at such other address as the Company shall have furnished in writing to the
Warrantholder, or (c) if to any other holder of any Warrant or of Warrant Shares
issued upon conversion of the Warrant, at such address as such holder shall have
furnished to the Company in writing, or, until such holder so furnishes an
address to the Company, then to and at the address of the last holder of such
Warrant or Warrant Shares who so furnished an address to the Company.
5.5 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any holder of any securities issued or sold or to be
issued or sold hereunder, upon any breach or default of the Company under this
Agreement, shall impair any such right, power or remedy of such holder nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or in any similar breach or default thereafter occurring, nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any holder of any breach or
default under this Agreement, or any waiver on the part of any holder of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
5.6 SURVIVAL. The representations, warranties, covenants and agreements
made herein and or made pursuant to this Agreement shall survive the
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execution and delivery of this Agreement, except as expressly provided otherwise
herein.
5.7 WAIVERS AND AMENDMENTS. With the written consent of the record or
beneficial holders of more than 50% of the Warrant Shares (treated as if
converted), the obligations of the Company and the rights of the holders of the
Warrant and the Warrant Shares may be waived (either generally or in a
particular instance, either retroactively or prospectively and either for a
specified period of time or indefinitely), and with the same consent the
Company, when authorized by resolution of its Board of Directors, may enter into
a supplemental agreement for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Warrant; provided,
however, that no such waiver or supplemental agreement shall reduce the
aforesaid percentage of the Warrant Shares, the holders of which are required to
consent to any waiver or supplemental agreement, without the consent of the
record or beneficial holders of all of the Warrant Shares (treated as if
converted). Upon the effectuation of each such waiver, consent, agreement of
amendment or modification, the Company promptly shall give written notice
thereof to the record holders of the Warrant and the Warrant Shares. This
Warrant or any provision hereof may not be changed, waived, discharged or
terminated orally, but only by a statement in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, except to the extent provided in this Section 5.7.
5.8 CASHLESS EXERCISE.
(a) This Warrant may be exercised at any time or from time
to time prior to the Expiration Date, by presentation and surrender of
this Warrant to the Company at its principal executive offices with a
written notice of the Holder's intention to effect a cashless
exercise, including a calculation of the number of shares of Common
Stock to be issued upon such exercise in accordance with the terms
hereof (a "Cashless Exercise"). In the event of a Cashless Exercise in
lieu of paying the Exercise Price in cash, the holder shall surrender
this Warrant for that number of shares of Common Stock determined by
multiplying (i) the number of Warrant Shares to which it would
otherwise be entitled by (ii) a fraction, the numerator of which shall
be the difference between the then current Market Price per share of
the Common Stock and the Exercise Price, and the denominator of which
shall be the Market Price per share of Common Stock.
(b) The following definitions shall apply to this Section
5.8.
(i) "Business Day" means any day, other than a Saturday
or Sunday or a day on which banking institutions in the State of
California are authorized or obligated by law, regulation or
executive order to close.
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(ii) "Closing Price" shall mean for the Common Stock as
of any date, the last price of such security on the principal United
States securities exchange or trading market on which such security
is listed or traded as reported by the Research Service of Nasdaq
Trading and Market Services (or a comparable reporting service of
national reputation selected by the Holder and reasonably acceptable
to the Company if the Research Service of Nasdaq Trading and Market
Services is not then reporting last price of such security)
(collectively, "NTMS"), or if the foregoing does not apply, the last
reported sale price of such security in the over-the-counter market
on the electronic bulletin board for such security as reported by
NTMS, or, if no sale price is reported for such security by NTMS,
the average of the bid prices of any market makers for such security
as reported in the "pink sheets" by the National Quotation Bureau,
Inc., in each case for such date or, if such date was not a Trading
Day (as defined below) for such security, on the next preceding day
which was a Trading Day. If the Closing Price cannot be calculated
for a share of Common Stock as of either of such dates on any of the
foregoing bases, the Closing Price of such security on such date
shall be the fair market value as determined by an investment
banking firm selected by mutual agreement of the Holder and the
Company, with the costs of such appraisal to be borne equally by the
Company and the Holder. The manner of determining the Closing Price
of the Common Stock set forth in the foregoing definition shall
apply with respect to any other security in respect of which a
determination as to market value must be made.
(iii) "Market Price" shall mean, with respect to any
date of determination, the average Closing Price during the ten (10)
Trading Days ending on the Trading Day immediately preceding such
date of determination, appropriately adjusted to reflect any stock
dividend, stock split or similar transaction during either such
relevant period. The manner of determining the Market Price of the
Common Stock set forth in the foregoing definition shall apply with
respect to any other security in respect of which a determination as
to market value must be made hereunder.
(iv) "Trading Day" shall mean a Business Day on which at
least 1,000 shares of Common Stock are traded on the principal
United States securities exchange or trading market on which such
security is listed or traded as reported by NTMS.
5.9 SEVERABILITY. If one or more provisions of this Warrant are held to
be invalid, illegal or unenforceable under applicable law, such provision shall
be
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modified in such manner as to be valid, legal and enforceable, but so as to
most nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Agreement as if such
provision were not included, in either case, and the balance of this Warrant
shall not in any way be affected or impaired thereby and shall be enforceable in
accordance with its terms.
5.10 REGISTERED HOLDER. The Company may deem and treat the registered
Holder(s) hereof as the absolute owner(s) of this Warrant (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise or conversion hereof, of any distribution to the Holder(s)
hereof, and for all other purposes, and the Company shall not be affected by any
notice to the contrary. Other than as set forth herein, this Warrant does not
entitle any Holder hereof to any rights of a stockholder of the Company.
5.11 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Warrant are for convenience and are not to be considered in construing this
Warrant.
IN WITNESS WHEREOF, Company has caused this Warrant to be signed by its
duly authorized officer and issued as of the date set forth below.
Dated: September 11, 2000
NATURAL WONDERS, INC.
By:
--------------------------------------
Its:
--------------------------------------
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EXERCISE NOTICE
(To be executed only upon exercise of Warrant)
The undersigned registered owner of a Warrant of NATURAL WONDERS, INC.
(the "Company"), originally issued to _________________ irrevocably exercises
such Warrant for the purchase of shares of Common Stock of the Company,
purchasable with the Warrant, and hereby sets the place and date for the closing
of such purchase as follows, all on the terms and conditions specified in the
Warrant.
Place of Closing: __________________________
Date of Closing: __________________________
The undersigned requests that a certificate for such shares be
registered in the name of __________________________________________________,
whose address is _____________________________________________________. If
said number of shares is less than all of the shares of Common Stock
purchasable under the Warrant, the undersigned requests that a new Warrant
representing the remaining balance of such shares be registered in the name
of __________________________________________________, whose address is
__________________________________________________.
Dated: ____________________
_________________________________
Signature of Registered Owner
_________________________________
Street Address
_________________________________
City State Zip
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FORM OF ASSIGNMENT
FOR VALUED RECEIVED, the undersigned registered owner of this Warrant
issued by NATURAL WONDERS, INC. hereby sells, assigns and transfers unto the
Assignee named below all of the rights of the undersigned under the within
Warrant, with respect to the number of Shares of Common Stock set forth below:
Name of Assignee Address No. of Shares
and does hereby irrevocably constitute and appoint ____________________________
attorney to make such transfer on the books of _________________________
maintained for such purpose, with full power of substitution in the premises.
Dated: ____________________
________________________________
Signature of Registered Owner
________________________________
Witness
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