EXHIBIT B
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 TAXES.
1.1. DURATION AND EXERCISE OF WARRANT. Subject to the terms
and 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.
(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 Art.
1.3. WARRANT SHARES CERTIFICATE. A stock certificate or
certificates for the Warrant Shares specified in the Exercise
Form shall be delivered to the Warrantholder within 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 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 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.
2.1. RESTRICTIONS ON TRANSFER. This Warrant may not be
offered, sold, 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 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
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 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 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 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 COMMON STOCK. Except as otherwise provided in
Section 5(c) and 5(d) hereof, if 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 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 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 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 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.
(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 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 SECURITIES. If, in any case, the total number of
shares of Common Stock 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, 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 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 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 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 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 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 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 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:
(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 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 observance thereof waived only with the written consent
of the Company and the Warrantholder.
7. DEFINITIONS. As used herein, unless the context
otherwise requires, the following terms have the following
respective meanings:
"AFFILIATE" means, with respect to any Person, any other
Person who controls, is controlled by or is under common control
with such Person.
"AGGREGATE EXERCISE PRICE" means the dollar amount equal to
(i) the total 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.
"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 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.
"CONVERTIBLE SECURITIES" has the meaning specified in
Section 5(b)(i).
"DILUTIVE ISSUANCE" has the meaning specified in Section
5(a).
"DISTRIBUTION" has the meaning specified in Section 5(e).
"EXERCISE FORM" means an Exercise Form in the form annexed
hereto as Exhibit A.
"EXERCISE PRICE" has the meaning specified on the cover of
this Warrant.
"EXPIRATION DATE" means the fifth anniversary of the date of
issuance of this Warrant.
"FIRST CLOSING DATE" has the meaning specified in the
Securities Purchase Agreement.
"MAJOR TRANSACTION" has the meaning specified in Section
5(d).
"MAJOR TRANSACTION CONSIDERATION" has the meaning specified
in Section 5(d).
"MARKET PRICE" means, as of any date, (i) the average of the
Closing Bid 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).
"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
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]
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
EXHIBIT A
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)
(Street Address)
(City) (State) (Zip Code)
Signed in the presence of:
Name:
