EXHIBIT 10.8
NEITHER THIS WARRANT NOR THE COMMON STOCK ISSUABLE HEREUNDER HAS BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR WITH ANY STATE
SECURITIES COMMISSIONER. NEITHER THIS WARRANT NOR THE COMMON STOCK MAY BE SOLD
OR TRANSFERRED UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND QUALIFIED UNDER ALL APPLICABLE STATE SECURITIES LAWS, OR UNLESS EXEMPTIONS
FROM SUCH REGISTRATION AND QUALIFICATION ARE AVAILABLE.
QUIETPOWER SYSTEMS, INC.
COMMON STOCK PURCHASE WARRANT
No. W-___ __________, 1996
Reference is hereby made to that certain $__________ Secured Promissory
Note (the "Bridge Loan Note") dated as of the date hereof of QuietPower Systems,
Inc., a Delaware corporation (the "Company"), in favor of __________________
("Purchaser"), the terms of which are incorporated by this reference. The Bridge
Loan Note is one of a series of substantially identical Notes being sold to
DayStar Partners, L.P. ("DayStar") and others. Purchaser, DayStar and the other
purchasers of the Bridge Loan Notes are collectively referred to as the
"Purchasers." As used herein, an "IPO" means an offering of the Company's
securities registered under the Securities Act of 1933, as amended, from which
the Company receives gross proceeds of at least $3,000,000.
The Company hereby certifies that, for value received, Purchaser or any
transferee who has received this Warrant (the "Holder"), is entitled on the
terms set forth below to purchase from the Company, on or before the Expiration
Date (as defined below), for $0.01 per share (the "Exercise Price"), the number
of shares of common stock of the Company (the "Common Stock") determined by
dividing $__________ by the following per share price:
(1) if an IPO occurs on or before November 24, 1996, the offering
price of such shares;
(2) if an IPO does not occur by such date, Five Dollars ($5.00) per
share.
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If the IPO is of units rather than common shares, this Warrant shall be
for such units rather than common shares and the number of units shall be
calculated based on the offering price of the units in the IPO.
1. Expiration Date. This Warrant shall be exercisable in whole or in part
until 5:00 p.m. (San Francisco time) on May 31, 2001, provided, however, that
notwithstanding such expiration date, this Warrant shall not expire unless and
until not less than 30 nor more than 90 days shall have passed since the Company
gave the Holder notice of the anticipated expiration hereof, and further
provided, that absent such notice to Holder, this Warrant shall expire on
November 30, 2002.
2. Exercise of Warrant. This Warrant shall be exercisable in whole or in
part immediately following such time (and from time to time thereafter) as the
number of shares for which it is exercisable as set forth above may be
determined with certainty. This Warrant shall be exercised by surrendering it to
the Company at its principal office, with a duly executed Subscription Form (in
substantially the form appearing at the end of this document), together with
payment of the Exercise Price. Promptly after exercise, the Company shall issue
and deliver to or upon the order of the Holder a certificate or certificates for
the number of shares of Common Stock issuable upon such exercise, and the
Company will pay all issue taxes in connection therewith. All shares of Common
Stock which may be issued upon exercise of this Warrant will, upon issuance by
the Company in accordance with the terms of this Warrant, be validly issued,
fully paid and non-assessable, and free from all taxes and liens with respect to
the issuance thereof. To the extent permitted by law, this 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 herein, even if the Company's
stock transfer books are at that time closed, and the Holder shall be treated
for all purposes as the holder of record of the Common Stock to be issued upon
such exercise as of the close of business on such date. Upon any partial
exercise, the Company will issue to or upon the order of the Holder a new
Warrant for the number of shares of Common Stock as to which this Warrant has
not been exercised.
3. Adjustment of Exercise Price. The Exercise Price and the number of
shares subject to this Warrant shall be subject to adjustment from time to time
as described below.
3.1 Adjustment for Stock Splits, Stock Combinations and Common Stock
Dividends. If at any time or from time to time after the date of this Warrant
(the "Issue Date") the number of shares of Common Stock outstanding is increased
by a stock dividend payable in shares of Common Stock (or in options to purchase
or rights to subscribe for Common Stock, or securities by their terms
convertible into or exchangeable for Common Stock, or options to purchase or
rights to subscribe for such convertible or exchangeable securities
(collectively, "Common Stock Rights")) or by a subdivision or split-up of shares
of Common Stock, then, on the date such payment is made or such change is
effective, the Exercise Price shall be decreased, and the number of shares of
Common Stock which the Holder shall be entitled to purchase hereunder shall be
increased, in direct proportion to such increase in outstanding shares; and if
the number of shares of Common Stock outstanding at any time after the date
hereof is decreased by a combination of the outstanding shares of Common Stock,
then, on the effective date of such combination, the Exercise Price shall be
increased, and the number of shares of
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Common Stock which the Holder shall be entitled to purchase hereunder shall be
decreased, in direct proportion to such decrease in outstanding shares (it being
assumed, in each case, for purposes of calculating such proportional
adjustments, that all Common Stock Rights outstanding on the date the
adjustments are to be made are exercised into the maximum number of shares of
Common Stock into which they may be converted).
3.2 Adjustment for Dividends in Other Stock or Property;
Reclassifications. In case at any time or from time to time after the holders of
the Common Stock receive or, on or after the record date fixed for the
determination of eligible stockholders, become entitled to receive, without
payment therefor, (i) other or additional stock or other securities or cash or
other property by way of dividend, or (ii) other or additional stock or other
securities or cash or other property by way of stock split, spin-off, split-up,
reclassification, combination of shares or similar corporate rearrangement (in
each case other than additional shares of Common Stock of the Company, or any
other stock or securities into which such Common Stock had been changed, or any
Common Stock Rights, issued as a stock dividend or stock-split), then, and in
each such case, the Holder, upon the exercise of this Warrant, will be entitled
to receive the amount of stock, securities and/or property (including cash)
which the Holder would have received on or before the date of such exercise if
on the Issue Date he had been the holder of record of the number of shares of
Common Stock of the Company which he would have been able to acquire upon
exercise in full of this Warrant and had thereafter, during the period from the
Issue Date to and including the date of such exercise, retained such shares
and/or all other or additional stock and other securities and cash or other
property receivable by him as aforesaid during such period.
3.3 Adjustment for Reorganization, Consolidation, Merger. In case of
any reorganization of the Company (or any other corporation, the stock or other
securities of which are at the time receivable on the exercise of this Warrant),
or in case the Company (or such other corporation) consolidates with, merges
into or conveys all or substantially all its assets to another corporation after
the Issue Date, then the Holder, upon the exercise of this Warrant at any time
after the consummation of such reorganization, consolidation, merger or
conveyance, will be entitled to receive, in lieu of the stock or other
securities and property receivable upon the exercise of this Warrant prior to
such consummation, the stock, securities or property to which the Holder would
have been entitled upon such consummation if the Holder had converted this
Warrant immediately prior thereto. The provisions of this Paragraph 3.3 shall
similarly apply to successive reorganizations, consolidations, mergers or
conveyances.
3.4 Other Restrictions Relating to Acquisitions. The Company shall
not permit a third party to acquire substantially all of its stock or assets, or
to merge with it, prior to the Company's IPO without the written consent of the
Holder of this Warrant, which consent may be refused unless in connection
therewith the Company pays all amounts then owing under the Bridge Loan Notes
plus a premium equal to 12 1/2% of such amount. If the acquisition price for
QPS's shares is at least 250% of the exercise price of this Warrant, then the
Company may terminate this Warrant if it has not been exercised by the Holder
within 30 days following the Closing of such acquisition.
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3.5 Minimal Adjustments. No adjustment in the Exercise Price need be
made if such adjustment would result in a change in the Exercise Price of less
than one percent (1%); no adjustment in the number of shares of Common Stock
subject to this Warrant need be made if such adjustment would result in a change
of less than one percent (1%) in the number of shares subject hereto. Any
adjustment less than these amounts which is not made shall be carried forward
and shall be made at the time of and together with any subsequent adjustment
which, on a cumulative basis, amounts to an adjustment of at least this amount.
3.6 Reorganization of Company. If the Company consolidates or merges
with or into, or transfers or leases all or substantially all its assets to, any
person, upon consummation of such transaction this Warrant shall automatically
become exercisable for the kind and amount of securities, cash or other assets
which the Holder of a Warrant would have owned immediately after the
consolidation, merger, transfer or lease if the Holder had exercised the Warrant
immediately before the effective date of the transaction. Concurrently with the
consummation of such transaction, the corporation formed by or surviving any
such consolidation or merger if other than the Company, or the person to which
such sale or conveyance shall have been made, shall enter into a supplemental
Warrant Agreement so providing and further providing for adjustments which shall
be as nearly equivalent as may be practical to the adjustments provided for in
this Section. The successor Company shall mail to Warrant Holders a notice
describing the supplemental Warrant Agreement. If the issuer of securities
deliverable upon exercise of Warrants under the supplemental Warrant Agreement
is an affiliate of the formed, surviving, transferee or lessee corporation, that
issuer shall join in the supplemental Warrant Agreement. If this subsection
applies, other subsections of this Section 3 shall not apply.
3.7 Certificate as to Adjustments. Upon the occurrence of each
adjustment pursuant to this Paragraph 3 or pursuant to the initial paragraph of
this Warrant, the Company, at its expense, shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and prepare and
furnish to the Holder a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon written request at any time of
the Holder, furnish or cause to be furnished to the Holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the then effective
number of shares of Common Stock subject to the Warrant, and (iii) the then
effective amount of securities (other than Common Stock) and other property, if
any, which would be received upon exercise of the Warrant.
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 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 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 of
Common Stock upon the exercise of this Warrant and will take no action to amend
its Certificate of Incorporation which would change to the
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detriment of the holders of Common Stock (whether or not any Common Stock is
outstanding at the time) the dividend or voting rights of the Company's Common
Stock as constituted on the date hereof.
5. Reservation of Stock Issuable on Exercise of Warrant. The Company will
at all times reserve and keep available, solely for issuance and delivery upon
the exercise of this Warrant, all such shares of Common Stock and other stock,
securities and property as from time to time are receivable upon the exercise of
this Warrant. If at any time the number of authorized but unissued shares of
Common Stock (or other stock, securities or property) shall not be sufficient to
effect the exercise of this Warrant, the Company will use its best efforts to
take such corporate action as may be necessary, in the opinion of its counsel,
to increase its authorized but unissued shares of Common Stock (or other stock,
securities or property) to such number of shares as shall be sufficient for such
purpose.
6. Fractional Shares. No fractional shares of the Common Stock will be
issued in connection with any exercise of this Warrant, but in lieu of such
fractional shares the Company shall make a cash payment therefor upon the basis
of the Exercise Price then in effect.
7. Notice of Record Date. In case (i) the Company takes a record of the
holders of its Common Stock (or other stock or securities at the time receivable
upon the exercise of the Warrant) for the purpose of entitling them to receive
any dividend (other than a cash dividend at the same rate as the rate of the
last cash dividend theretofore paid) or other distribution, or any right to
subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right, or (ii) of any capital reorganization
of the Company, any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another corporation, or any
conveyance of all or substantially all of the assets of the Company to another
corporation, or (iii) of any voluntary dissolution, liquidation or winding-up of
the Company, then, and in each such case, the Company will mail or cause to be
mailed to the Holder a notice specifying, as the case may be, (a) the date on
which a record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right, or (b) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up is to
take place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock (or such other stock or securities at the time receivable
upon the exercise of the Warrant) will be entitled to exchange their shares of
Common Stock (or such other stock or securities) for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up. Such notice shall be
mailed at least fifteen (15) days prior to the date specified therein.
8. Warrant Register. The Company, or its duly appointed agent, shall
maintain a register for this Warrant and other warrants of similar tenor on
which it shall register the issuance and transfer of such warrants. The duly
registered holder ("Registered Owner") of each warrant shall be deemed the
actual owner of the warrant so registered until the Company, or its agent, is
required to record a transfer thereof.
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9. Transfer.
9.1 Transfer. This Warrant may be transferred, in whole or in part,
without the consent of the Company. The Company acknowledges that one or more of
the Purchasers may wish to transfer their Warrants to a stock brokerage firm
which would then exercise the Warrant and sell the underlying stock. If the
Company is notified that one or more of the Purchasers wish to proceed in this
manner, the Company will cooperate with the parties and use reasonable efforts
to assist the brokerage firm in disposing of the underlying securities in
accordance with applicable law.
9.2 Registration or Exemption. 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 of 1933, as amended (the "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 Act.
9.3 Legend. 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."
The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act or otherwise.
10. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the initial issuance of Warrant Shares upon the exercise of
Warrants; provided, however, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for Warrant Shares in a
name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
11. Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) upon delivery of
an indemnity agreement or bond in such reasonable amount as the Company may
determine or (in the case of mutilations) upon surrender and cancellation
hereof, the Company, at its expense, will issue a replacement.
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12. Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been delivered one business day after deposit with a reputable overnight
delivery service, or two business days after deposit in the mail with the United
States Postal Service addressed as follows:
(a) If to any Holder, addressed to such Holder at its address
as shown on the books of the Company, or at such other address as such
Holder may specify from time to time by written notice to the Company,
with a copy to Xxxxx Xxxxx, Coblentz, Cahen, XxXxxx & Breyer, LLP, 000
Xxxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxx Xxxxxxxxx, XX 00000; or
(b) If to the Company, at the address set forth below, or at
such other address as the Company may specify from time to time by written
notice to the Holder, with a copy to Xxxx Xxxxxxxx, Xxxxxxx & Xxxxxx, 000
Xxxxx Xxxxxx, Xxx Xxxx, XX 00000;
and such notices and other communications shall for all purposes of this Warrant
be treated as being effective or having been given upon delivery, if delivered
personally, or, if sent by mail, seventy-two (72) hours after the same has been
deposited in a regularly maintained receptacle for the deposit of United States
mail, addressed and postage prepaid as aforesaid.
13. Survival of Covenants, Representations and Warranties, etc. All
covenants, representations and warranties made in, pursuant to, or in connection
with this Warrant shall survive the execution and delivery hereof.
14. Severability. Should any one or more of the provisions of this Warrant
be determined to be illegal or unenforceable, all other provisions of this
Warrant shall be given effect separately from the provision or provisions
determined to be illegal or unenforceable and shall not be affected thereby.
15. Parties in Interest. All the terms and provisions of this Warrant
shall be binding upon and inure to the benefit of and be enforceable by the
respective transferees, successors, assigns, administrators, executors, heirs,
and legal representatives of the Holder and the Company, whether so expressed or
not.
16. Changes; Waiver. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
17. Headings. The headings in this Warrant are for purposes of convenience
of reference only, and shall not be deemed to constitute a part hereof.
18. Governing Law. Because the issuer of this Warrant is a Delaware
corporation, this Warrant shall be construed in accordance with and governed by
the laws of that State. Any litigation or arbitration between the parties which
arises out of this Warrant shall be instituted and prosecuted only in the
appropriate California or Federal court or other tribunal, situated in
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San Francisco, California. The Company hereby specifically submits itself and
its properties to the exclusive jurisdiction of such courts for purposes of any
such action and the enforcement of any judgment or order arising therefrom. The
parties hereto each waive any right to a change of venue and any and all
objections to the jurisdiction of the California courts. Notwithstanding the
foregoing, the Purchasers may take such actions in a foreign jurisdiction with
they deem necessary and appropriate to enforce or collect any court judgment in
any dispute arising out of the Warrant or to seek and obtain other relief as is
necessary to enforce the terms of this Warrant. Each party agrees that service
upon such party in any such action or proceeding maybe made as provided above
for the giving of notices.
19. Expiration. If the last day on which this Warrant may be exercised, or
on which it may be exercised at a particular Exercise Price, is a Sunday or a
legal holiday or a day on which banking institutions doing business in the City
of San Francisco are authorized by law to close, this Warrant may be exercised
prior to 5:00 p.m. (San Francisco time) on the next succeeding full business day
with the same force and effect and at the same Exercise Price as if exercised on
such last day specified herein.
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20. Securities Act Registration. All shares issuable upon exercise of this
Warrant shall be registered by the Company in its IPO and, to the extent not
sold, in any subsequent registered offering. The Company and the Holder shall
enter into a Registration Rights Agreement substantially in the form attached
hereto as of the Issue Date.
IN WITNESS WHEREOF, the Company has caused this Common Stock Purchase
Warrant to be duly executed and delivered on the date first set forth above.
QUIETPOWER SYSTEMS, INC.,
a Delaware corporation
By:
--------------------------------------
Its:
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Address: 0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: President
ACCEPTANCE BY PURCHASER:
By:
-----------------------------
Its:
----------------------------
Address: _______________________
_______________________
_______________________
Dated: _____________, 1996
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SUBSCRIPTION FORM
The undersigned hereby irrevocably elects to exercise the within Warrant
to the extent of purchasing _______ shares of the Common Stock of QUIETPOWER
SYSTEMS, INC. and hereby delivers $______________ in payment of the Exercise
Price thereof, in accordance with the Common Stock Purchase Warrant dated
____________________, ________.
DATED: _______________, _____
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Name of Warrant Holder
By
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Authorized Signature
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