Exhibit 4.3
This Stock Purchase Warrant (this "Warrant") and any securities acquired
upon the exercise of this Warrant have not been registered under the Securities
Act of 1933, as amended (the "Securities Act"), or the securities laws of any
state. None of this warrant, such securities or any interest therein may be
sold, transferred, pledged or hypothecated except pursuant to an effective
registration statement under the Securities Act and such registration or
qualification as may be necessary under the securities laws of any jurisdiction
or pursuant to a written opinion of counsel (which counsel and opinion shall be
reasonably satisfactory to the Company) that such registration or qualification
is not required.
GRACE DEVELOPMENT INC.
STOCK PURCHASE WARRANT
This certifies that, for good and valuable consideration, Grace Development
Inc., a Colorado corporation (the "Company"), grants to [Purchaser] (the
"Warrantholder"), the right to subscribe for and purchase from the Company
_____________________________ (___________) validly issued, fully paid and
nonassessable shares (the "Warrant Shares") of Common Stock, no par value per
share, of the Company (the "Common Stock"), at the purchase price per share of
$1.00 (the "Exercise Price"), at any time prior to 5:00 p.m., New York, New York
time, on the Expiration Date, all subject to the terms, conditions and
adjustments herein set forth.
1. Duration and Exercise of Warrant, Limitation on Exercise, Payment of
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Taxes.
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1.1. Duration and Exercise of Warrant. Subject to the terms and
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conditions set forth herein, this Warrant may be exercised, in whole or in part,
by the Warrantholder by:
(a) the surrender of this Warrant to the Company, with a duly
executed Exercise Form specifying the number of Warrant Shares to be purchased,
during normal business hours on any Business Day prior to the Expiration Date;
and
(b) the delivery of payment to the Company, for the account of
the Company, by cash, wire transfer, certified or official bank check or any
other means approved by the Company, of the Exercise Price for the number of
Warrant Shares specified in the Exercise Form in lawful money of the United
States of America. In addition to and without limiting the rights of the
Warrantholder under the terms hereof, the Warrantholder shall have the right, in
exercising this Warrant in whole or in part at any time or from time to time in
accordance with its terms, to deliver to the Company, in lieu of a payment by
cash, wire transfer, certified or official bank check or any other means
approved by the Company, written notice that the Warrantholder elects to apply
the Exercise Price against the outstanding principal balance of the Note
executed by the Company payable to the Warrantholder. The credit of the Exercise
Price against the Note shall in all respects be deemed to constitute payment in
full of such Exercise Price.
The Company agrees that such Warrant Shares shall be deemed to be issued to
the Warrantholder as the record holder of such Warrant Shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for the Warrant Shares as aforesaid. Notwithstanding the
foregoing, no such surrender shall be effective to constitute the Person
entitled to receive such shares as the record holder thereof while the transfer
books of the Company for the Common Stock are closed for any purpose (but not
for any period in excess of five Business Days); but any such surrender of this
Warrant for exercise during any period while such books are so closed shall
become effective for exercise immediately upon the reopening of such books, as
if the exercise had been made on the date this Warrant was surrendered and for
the number of shares of Common Stock and at the Exercise Price in effect at the
date of such surrender.
1.2. Cashless Exercise Right.
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(a) Subject to Section 1.1(b), at any time or from time to time,
in lieu of the payment of the Exercise Price, the Warrantholder shall have the
right (but not the obligation), to require the Company to convert this Warrant,
in whole or in part, into Common Stock (a "Cashless Exercise Right") as provided
for in this Section 1.2. Upon exercise of the Cashless Exercise Right, the
Company shall deliver to the Warrantholder within five Business Days after
receipt of the Exercise Form by the Company (without payment by the
Warrantholder of any of the Exercise Price) in accordance with Section 1.1 that
number of shares of Common Stock equal to the quotient obtained by dividing (i)
the value of the Warrant at the time the Cashless Exercise Right is exercised
(determined by subtracting, the Aggregate Exercise Price of the Warrant Shares
in effect immediately prior to the exercise of the Cashless Exercise Right from
the aggregate Market Price (as defined below) of the Warrant Shares in effect
immediately prior to the exercise of the Cashless Exercise Right) by (ii) the
Market Price of one share of Common Stock immediately prior to the exercise of
the Cashless Exercise Right.
(b) The Cashless Exercise Right may be exercised by the
Warrantholder, at any time or from time to time, on any Business Day by
delivering this Warrant, with a duly executed Exercise Form with the conversion
section completed, to the Company, exercising the Cashless Exercise Right and
specifying the total number of shares of Common Stock that, the Warrantholder
will be issued pursuant to such conversion. No fractional shares arising out of
the formula in Section 1.2(a) for determining the number of shares issuable
under the Cashless Exercise Right shall be issued, and the Company shall in lieu
thereof make payment to the Warrantholder of cash in the amount of such fraction
multiplied by the Market Price of one Share of Common Stock on the date of
conversion, provided that in the event that sufficient funds are not legally
available for such cash payment any fractional shares of Common Stock shall be
rounded up to the next whole number. Notwithstanding anything to the contrary in
this Warrant, the Cashless Exercise Right shall become null and void, and of no
further force and effect, upon the registration of this Warrant or the Warrant
Shares pursuant to an effective registration statement under the Securities Act.
1.3. Warrant Shares Certificate. A stock certificate or certificates
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for the Warrant Shares specified in the Exercise Form shall be delivered to the
Warrantholder within
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five Business Days after receipt of the Exercise Form by the Company and payment
of the purchase price; provided, however, that if a determination by the
Company's Board of Directors (the "Board") is necessary pursuant to Section 1.2,
such delivery shall be made promptly after such determination is made (such
determination shall be made with reasonable promptness but no more frequently
than on a quarterly basis). If this Warrant shall have been exercised only in
part, the Company shall, at the time of delivery of the stock certificate or
certificates, deliver to the Warrantholder a new Warrant evidencing the, rights
to purchase the remaining Warrant Shares, which new Warrant shall in all other
respects be identical with this Warrant.
1.4. Reservation of Warrant Shares. The Company covenants that it will
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at all times, keep available such number of authorized shares of its Common
Stock, free from all preemptive rights with respect thereto, which will be
sufficient to permit the exercise of this Warrant for the full number of Warrant
Shares specified herein, upon exercise of this Warrant. The Company further
covenants that such Warrant Shares, when issued pursuant to the exercise of this
Warrant, will be duly and validly issued, fully paid and non-assessable, and
free from all taxes, liens and charges with respect to the issuance thereof.
1.5. Payment of Taxes. The issuance of certificates for Warrant
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Shares shall be made without charge to the Warrantholder for any stock transfer
or other issuance tax in respect thereto; provided, however, that the
Warrantholder shall be required to pay any and all taxes that may be payable in
respect of any transfer involved in the issuance and delivery of any certificate
in a name other than that of the then Warrantholder as reflected upon the books
of the Company.
2. Restrictions on Transfer; Restrictive Legends.
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2.1. Restrictions on Transfer. This Warrant may not be offered, sold,
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transferred, pledged or otherwise disposed of, in whole or in part, to any
Person other than an Affiliate of the Warrantholder without the prior written
consent of the Company, which shall not be unreasonably withheld.
2.2. Restrictive Legends. Except as otherwise permitted by this
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Section 2, each Warrant (and each Warrant issued in substitution for any
Warrant) shall be stamped or otherwise imprinted with a legend in substantially
the following form:
This Warrant and any securities acquired upon the exercise of this warrant
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state. None of this
warrant, such securities or any interest therein may be sold, transferred,
pledged or hypothecated except pursuant to an effective registration
statement under the Securities Act and such registration or qualification
as may be necessary under the securities laws of any jurisdiction or
pursuant to a written opinion of counsel (which counsel and opinion shall
be reasonably satisfactory to the Company) that such registration or
qualification is not required.
Except as otherwise permitted by this Section 2, each stock certificate for
Warrant Shares issued upon the exercise of any Warrant and each stock
certificate issued upon the direct or
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indirect transfer of any such Warrant Shares shall be stamped or otherwise
imprinted with a legend in substantially the following form:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or the
securities laws of any state. The securities may not be sold, transferred,
pledged or hypothecated except pursuant to an effective registration
statement under the Securities Act and such registration or qualification
as may be necessary under the securities laws of any jurisdiction or
pursuant to a written opinion of counsel (which counsel and opinion shall
be reasonably satisfactory to the Company) that such registration or
qualification is not required.
Notwithstanding the foregoing, the Warrantholder may require the Company to
issue a Warrant or a stock certificate for Warrant Shares, in each case without
a legend, if either (i) such Warrant or such Warrant Shares, as the case may be,
have been registered for resale under the Securities Act, (ii) the Warrantholder
has delivered to the Company an opinion of legal counsel (from a firm reasonably
satisfactory to the Company) which opinion shall be addressed to the Company and
be reasonably satisfactory in form and substance to the Company's counsel, to
the effect that such registration is not required with respect to such Warrant
or such Warrant Shares, as the case may be or (iii) such Warrant or Warrant
Shares may be, sold pursuant to Rule 144 (or any successor provision then in
effect) under the Securities Act.
3. Loss or Destruction of Warrant. Subject to the terms and conditions
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hereof, upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant and, in the case of
loss, theft or destruction, of such bond or indemnification as the Company may
reasonably require, and, in the case of such mutilation, upon surrender and
cancellation of this Warrant the Company will execute and deliver a new Warrant
of like tenor.
4. Ownership of Warrant. The Company may deem and treat the person in
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whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the Company, until presentation of this Warrant for registration of transfer.
5. Antidilution Provisions. During the exercise period or until fully
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exercised, the Exercise Price and the number of Warrant Shares issuable pursuant
to this Warrant shall be subject to adjustment from time to time as provided in
this Section 5. In the event that any adjustment of the Exercise Price as
required herein results in a fraction of a cent, such Exercise Price shall be
rounded up or down to the nearest cent.
(a) Adjustment of Exercise Price and Number of Shares upon Issuance of
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Common Stock. Except as otherwise provided in Section 5(c) and 5(d) hereof, if
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and whenever after the First Closing Date, the Company issues or sells, or in
accordance with Section 5(b) hereof is deemed to have issued or sold, any shares
of Common Stock for no consideration or for a consideration per share less than
the Market Price on the date of issuance (a "Dilutive
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Issuance"), then effective immediately upon the Dilutive Issuance, the Exercise
Price will be adjusted in accordance with the following formula:
E' = (E) (O + P/M) / (CSDO)
where:
E' = the adjusted Exercise Price;
E = the then current Exercise Price;
M = the then current Market Price; provided, however, that
in the case of stock issued in stock for stock
acquisitions with unaffiliated third parties, "M" will
be deemed to be the lesser of (i) (a) $0.70 per share
in the case of issuances after the First Closing and
(b) $1.00 per share in the case of issuances on or
after the Second Closing to the extent the Second
Closing occurs (as such per share amounts are adjusted
for stock splits, stock dividends and other
recapitalizations after the date of this Agreement);
and (ii) the then current Market Price;
O = the number of shares of Common Stock outstanding
immediately prior to the Dilutive Issuance;
P = the aggregate consideration, calculated as set forth in
Section 5(b) hereof, received by the Company upon such
Dilutive Issuance; and
CSDO = the total number of shares of Common Stock Deemed
Outstanding (as herein defined) immediately after the
Dilutive Issuance.
(b) Effect on Exercise Price of Certain Events. For purposes of
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determining the adjusted Exercise Price under Section 5(a) hereof, the following
will be applicable:
(i) Issuance of Rights or Options. If the Company in any manner
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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 price
per share, for which Common Stock is issuable upon the exercise of such Options
is less than the Market Price on the date of issuance ("Below Market Options"),
then the maximum total number of shares of Common Stock issuable upon the
exercise of all such Below Market Options (assuming full exercise, conversion or
exchange of Convertible Securities, if applicable) will, as of the date of the
issuance or grant of such Below Market Options, be deemed to be outstanding and
to have been issued and sold by the Company for such price per share. For
purposes of the preceding sentence, the price per share for which Common Stock
is issuable upon the exercise of such Below Market Options is determined by
dividing (i) the total amount, if any, received or receivable by the Company as
consideration for the issuance or granting of
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such Below Market Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of all such
Below Market Options, plus, in the case of Convertible Securities issuable upon
the exercise of such Below Market Options, the minimum aggregate amount of
additional consideration payable upon the exercise, conversion or exchange
thereof at the time such Convertible Securities first become exercisable,
convertible or exchangeable, by (ii) the maximum total number of shares of
Common Stock issuable upon the exercise of all such Below Market Options
(assuming full conversion of Convertible Securities, if applicable). No further
adjustment to the Exercise Price will be made upon the actual issuance of such
Common Stock upon the exercise of such Below Market Options or upon the
exercise, conversion or exchange of Convertible Securities issuable upon
exercise of such Below Market Options.
(ii) Issuance of Convertible Securities.
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(A) If the Company in any manner issues or sells any
Convertible Securities, whether or not immediately convertible (other than where
the same are issuable upon the exercise of Options) and the price per share for
which Common Stock is issuable upon such exercise, conversion or exchange (as
determined pursuant to Section 5(b)(ii)(B) if applicable) is less than the
Market Price on the date of issuance, then the maximum total number of shares of
Common Stock issuable upon the exercise, conversion or exchange of all such
Convertible Securities will, as of the date of the issuance of such Convertible
Securities, be deemed to be outstanding and to have been issued and sold by the
Company for such price per share. For the purposes of the preceding sentence,
the price per share for which Common Stock is issuable upon such exercise,
conversion or exchange is determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the issuance or sale
of all such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise,
conversion or exchange thereof at the time such Convertible Securities first
become exercisable, convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the exercise, conversion or
exchange of all such Convertible Securities. No further adjustment to the
Exercise Price will be made upon the actual issuances of such Common Stock upon
exercise, conversion or exchange of such Convertible Securities.
(B) If the Company in any manner issues or sells any
Convertible Securities with a fluctuating conversion or exercise price or
exchange ratio, then the price per share for which Common Stock is issuable upon
such exercise, conversion or exchange for purposes of the calculation
contemplated by Section 5(b)(ii)(A) shall be deemed to be the lowest price per
share which would be applicable assuming that all holding period and other
conditions to any discounts contained in such Convertible Security have been
satisfied.
(iii) Change in Option Price or Conversion Rate. If there is a
change at any time after the First Closing Date 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 or any Convertible Securities; or (iii) the
rate at which any Convertible Securities are convertible into or
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exchangeable for Common Stock (other than under or by reason of provisions
designed to protect against dilution), the Exercise Price in effect at the time
of such change will be readjusted to the Exercise Price, which would have been
in effect at such time had such Options or Convertible Securities still
outstanding provided for such changed additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold.
(iv) Treatment of Expired Options and Unexercised Convertible
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Securities. If, in any case, the total number of shares of Common Stock
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issuable upon exercise of any Options or upon exercise, conversion or exchange
of any Convertible Securities is not, in fact, issued and the rights to exercise
such option or to exercise, convert or exchange such Convertible Securities
shall have expired or terminated, the Exercise Price then in effect will be
readjusted to the Exercise Price which would have been in effect at the time of
such expiration or termination had such Options or Convertible Securities, to
the extent outstanding immediately prior to such expiration or termination
(other than in respect of the actual number of shares of Common Stock issued
upon exercise or conversion thereof), never been issued.
(v) Calculation of Consideration Received. If any Common Stock,
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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 except where such consideration consists of freely-
tradeable securities, in which case the amount of consideration received by the
Company will be the Market Price thereof as of the date of receipt. In case any
Common Stock, Options or Convertible Securities are issued in connection with my
merger or consolidation in which the Company is the Surviving corporation, the
amount of consideration therefor will be deemed to be the fair market value of
such portion of the net assets and business of the non-surviving corporation as
is attributable to such Common Stock, Options or Convertible Securities, as the
case may be. The fair market value of any consideration other than cash or
securities will be determined in the good faith reasonable business judgment of
the Board of Directors.
(vi) Exceptions to Adjustment of Exercise Price. No adjustment
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to the Exercise Price will be made (i) upon the exercise of any warrants,
options or convertible securities issued and outstanding on the date hereof in
accordance with the terms of such securities as of such date; (ii) upon the
issuance of the Sale Shares or the Notes (each as defined in the Securities
Purchase Agreement) or the Warrant in accordance with terms of the Securities
Purchase Agreement; or (iii) upon the exercise of the Warrant or conversion of
the Note.
(c) Subdivision or Combination of Common Stock. If the Company, at
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any time after the First Closing Date, subdivides (by any stock split, stock
dividend, recapitalization, reorganization, reclassification or otherwise) its
shares of Common Stock into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect
7
immediately prior to such subdivision will be proportionately reduced. If the
Company, at any time after the initial issuance of this Warrant, combines (by
reverse stock split, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a smaller number of shares, then,
after the date of record for effecting such combination, the Exercise Price in
effect immediately prior to such combination will be proportionately increased.
(d) Major Transaction. If, after the First Closing Date, the Company
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shall consolidate or merge with any other corporation or entity (other than a
merger in which the Company is the surviving or continuing entity) or there
shall occur any share exchange pursuant to which all of the outstanding shares
of Common Stock are converted into other securities or property or any
reclassification or change of the outstanding shares of Common Stock (each of
the foregoing being a "Major Transaction"), then each holder of a Warrant may
thereafter, at its option, be entitled, at its election, either to (i) in the
event that the Common Stock remains outstanding or holders of Common Stock
receive any common stock or substantially similar equity interest in each of the
foregoing cases which is publicly traded, retain its Warrant and such Warrant
shall continue to apply to such Common Stock or shall apply, as nearly as
practicable, to such other common stock or equity interest, as the case may be,
or (ii) regardless of whether clause (i) applies, receive consideration, in
exchange for such Warrant, equal to the number of shares of stock or securities
or property of the Company, or of the entity resulting from such Major
Transaction (the "Major Transaction Consideration"), to which a holder of the
number of shares of Common Stock delivered upon the exercise of such Warrant
would have been entitled upon such Major Transaction had such holder exercised
the Warrant (without regard to any limitations on conversion or elsewhere
contained) on the trading date immediately preceding the consummation of such
Major Transaction and had such Common Stock been issued and outstanding and had
such Warrantholder been the holder of record of such Common Stock at the time of
the consummation of such Major Transaction; and the Company shall make lawful
provision for the foregoing as a part of such Major Transaction and shall cause
the issuer of any security in such transaction which constitutes Registrable
Securities under that certain Registration Rights Agreement dated as of the date
hereof among the Company and the signatories thereto (the "Registration Rights
Agreement") to assume all of the Company's obligations under the Registration
Rights Agreement. No later than five Business Days prior to the consummation of
the Major Transaction, but not prior to the public announcement of such Major
Transaction, the Company shall deliver written notice ("Notice of Major
Transaction") to each holder of a Warrant of such Notice of Major Transaction.
Such Notice of Major Transaction shall indicate the amount and type of the Major
Transaction consideration which such holder of a Warrant would receive under
this Section.
(e) Distribution of Assets. In case the Company shall declare or make
----------------------
any distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or
otherwise (including any dividend or distribution to the Company's shareholders
of cash or shares (or rights to acquire shares) of capital stock of a
subsidiary) (a "Distribution"), at any time after the First Closing Date, then
the Warrantholder shall be entitled upon exercise of this Warrant for the
purchase of any or all of the shares of Common Stock subject hereto, to receive
the amount of such assets (or rights) which would have been payable to the
Warrantholder had such Warrantholder been the holder of such
8
shares of Common Stock on the record date for the determination of shareholders
entitled to such Distribution.
(f) Notices of Adjustment. Upon the occurrence of any event which
---------------------
requires any adjustment of the Exercise Price or in the number or kind of shares
purchasable upon exercise of the Warrant, then, and in each such case, the
Company shall give notice thereof to the Warrantholder, which notice shall state
the Exercise Price resulting from such adjustment and the increase or decrease
in the number of Warrant Shares (or other securities or property) purchasable,
as applicable, at such price upon exercise, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based.
Such calculation shall be certified by the chief financial officer of the
Company.
(g) Minimum Adjustment of Exercise Price. No adjustment of the
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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.
(h) No Fractional Shares. No fractional shares of Common Stock are to
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be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock; provided that in the event that sufficient funds are not legally
available for the payment of such cash adjustment any fractional shares of
Common Stock shall be rounded up to the next whole number.
(i) Other Notices. In case at any time:
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(i) the Company shall declare any dividend upon the Common Stock
payable in shares of stock of any class or make any other distribution to the
holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any class or other
rights;
(iii) there shall be any capital reorganization of the Company, or
reclassification of the Common Stock or consolidation or merger of the Company
with or into, or sale of all or substantially all of its assets to, another
corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution
liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the Warrantholder (A) notice
of the date on which the books of the Company shall close or a record shall be
taken for determining the holders of Common Stock entitled to receive any such
dividend, distribution, or subscription rights or for determining the holders of
Common Stock entitled to vote in respect of any such
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reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up and (B) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable
approximation thereof by the Company) when the same shall take place. Such
notice shall also specify the date on which the holders of Common Stock shall be
entitled to receive such dividend, distribution, or subscription rights or to
exchange their Common Stock for stock or other securities or property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, or winding-up, as the case may be. Such notice
shall be given at least 30 days prior to the record date or the date on which
the Company's books are closed in respect thereto, but in no event earlier than
public announcement of such proposed transaction or event. Failure to give any
such notice or any defect therein shall not affect the validity of the
proceedings referred to in clauses (i), (ii), (iii) and (iv) above.
6. Amendments. Any provision of this Warrant may be amended and the
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observance thereof waived only with the written consent of the Company and the
Warrantholder.
7. Definitions. As used herein, unless the context otherwise requires,
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the following terms have the following respective meanings:
"Affiliate" means, with respect to any Person, any other Person who
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controls, is controlled by or is under common control with such Person.
"Aggregate Exercise Price" means the dollar amount equal to (i) the total
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number of Warrant Shares set forth in the notice of exercise delivered pursuant
to Section 1.2 multiplied by (ii) the Exercise Price in effect immediately prior
to such exercise.
"Below Market Options" has the meaning specified in Section 5(b)(i).
--------------------
"Board" has the meaning specified in Section 1.3.
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"Business Day" means any day other than a Saturday, Sunday or a day on
------------
which national banks are authorized by law to close in the State of New York.
"Cashless Exercise Right" has the meaning specified in Section 1.2(a).
-----------------------
"Common Stock" has the meaning specified on the cover of this Warrant.
------------
"Common Stock Deemed Outstanding" means the number of shares of Common
-------------------------------
Stock actually outstanding (not including shares of Common Stock held in the
treasury of the Company), plus (x) in case of any adjustment required by Section
5(a) resulting from the issuance of any Options, the maximum total number of
shares of Common Stock issuable upon the exercise of the Options for which the
adjustment is required (including any Common Stock issuable upon the conversion
of Convertible Securities issuable upon the exercise of such Options), and (y)
in the case of any adjustment required by Section 5(a) resulting from the
issuance of any Convertible Securities, the maximum total number of shares of
Common Stock
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issuable upon the exercise, conversion or exchange of the Convertible Securities
for which the adjustment is required, as of the date of issuance of such
Convertible Securities, if any.
"Company" has the meaning specified on the cover of this Warrant.
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"Convertible Securities" has the meaning specified in Section 5(b)(i).
----------------------
"Dilutive Issuance" has the meaning specified in Section 5(a).
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"Distribution" has the meaning specified in Section 5(e).
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"Exercise Form" means an Exercise Form in the form annexed hereto as
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Exhibit A.
"Exercise Price" has the meaning specified on the cover of this Warrant.
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"Expiration Date" means the fifth anniversary of the date of issuance of
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this Warrant.
"First Closing Date" has the meaning specified in the Securities Purchase
------------------
Agreement.
"Major Transaction" has the meaning specified in Section 5(d).
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"Major Transaction Consideration" has the meaning specified in Section
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5(d).
"Market Price" means, as of any date, (i) the average of the Closing Bid
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Prices for the shares of Common Stock as reported to The Nasdaq National Market
for the 15 trading days immediately preceding such date, or (ii) if The Nasdaq
National Market is not the principal trading market for the Common Stock, the
average of the last reported bid prices on the principal trading market for the
Common Stock, during the same period, or, if there is no bid price for such
period, the last reported sales price for such period, or (iii) if market value
cannot be calculated as of such date on any of the foregoing bases, the Market
Price shall be the average fair market value as reasonably determined by an
investment banking firm selected by the Company and reasonably acceptable to the
holders of a majority in interest of the Warrant, with the costs of the
appraisal to be borne by the Company. 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.
"Notice of Major Transaction" has the meaning specified in Section 5(d).
---------------------------
"Options" has the meaning specified in Section 5(b)(i).
-------
"Person" means any individual, firm, corporation, partnership, limited
------
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, or other entity of any kind, and shall include any
successor (by merger or otherwise) of such entity.
"Registration Rights Agreement" has the meaning specified in Section 5(d).
-----------------------------
11
"Securities Act" has the meaning specified on the cover of this Warrant, or
--------------
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act, shall include a reference to the
comparable section, if any, of any such similar Federal statute.
"Securities Purchase Agreement" means the Securities Purchase Agreement
-----------------------------
dated April 14, 2000 among the Company and certain purchasers named therein.
"Subsidiary" means, as to any Person, a corporation, partnership, limited
----------
liability company or other entity of which 50% or more of the voting power of
the outstanding voting equity securities or 50% or more of the economic equity
interest is held, directly or indirectly, by such Person.
"Warrantholder" has the meaning specified on the cover of this Warrant.
-------------
"Warrant Shares" has the meaning specified on the cover of this Warrant.
--------------
8. Miscellaneous.
-------------
8.1. Section and Other Headings. The section and other headings
--------------------------
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
8.2. Notices. All notices, demands and other communications
-------
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier,
courier service, overnight mail or personal delivery:
(a) if to the Warrantholder:
[Name of Warrantholder]
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxx and Xxxxx Xxxxxxx
(b) if to the Company:
Grace Development Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: President
12
All such notices and communications shall be deemed to have been duly given
when delivered by hand, if personally delivered, when delivered by courier or
overnight mail, if delivered by commercial courier service or overnight mail;
five Business Days after being deposited in the mail, postage prepaid, if
mailed; and return receipt is mechanically acknowledged, if telecopied. Any
party may by notice given in accordance with this Section 9.2 designate another
address or Person for receipt of notices hereunder.
8.3. Severability. Any term or provision of this Warrant which is
------------
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the terms and provisions of this Warrant or
affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
8.4. GOVERNING LAW. THIS WARRANT AND THE VALIDITY AND ENFORCEABILITY
-------------
HEREOF SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICT OF LAWS RULES OR
CHOICE OF LAWS RULES THEREOF.
8.5. No Rights or Liabilities as Stockholder. Nothing contained in
---------------------------------------
this Warrant shall be determined as conferring upon the Warrantholder any rights
as a stockholder of the Company or as imposing any liabilities on the
Warrantholder to purchase any securities whether such liabilities are asserted
by the Company or by creditors or stockholders of the Company or otherwise.
[Signature Page Follows]
13
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer.
GRACE DEVELOPMENT INC.
By: _____________________________
Name:
Title:
Dated: April ____, 2000
14
EXERCISE FORM
-------------
(To be executed upon exercise of this Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase _________________ of the Warrant Shares
and [herewith tenders payment for such Warrant Shares to the order of Grace
Development Inc. [hereby elects to apply the Exercise Price (as defined in the
Warrant) against the outstanding principal balance of the Note executed by Grace
Development Inc. payable to the undersigned] in the amount of $__________]
[hereby exercises its Cashless Exercise Right] in accordance with the terms of
this Warrant. The undersigned requests that a certificate for [such Warrant
Shares] [that the number of Warrant Shares to which the undersigned is entitled
as calculated pursuant to Section 1.2 of the Warrant] be registered in the name
of the undersigned and that such certificates be delivered to the undersigned's
address below.
The undersigned represents that it is acquiring such Warrant Shares
for its own account for investment and not with a view to or for sale in
connection with any distribution thereof (subject, however, to any requirement
of law that the disposition thereof shall at all times be within its control).
Dated: ___________________
________________________________
Signature
________________________________
(Print Name)
________________________________
(Xxxxxx Xxxxxxx)
________________________________
(City) (State) (Zip Code)
Signed in the presence of:
____________________________________
Name:
15
