WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION
OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED, (iii) RECEIPT OF A NO-ACTION LETTER(S) FROM THE
APPROPRIATE GOVERNMENTAL AUTHORITY(IES), OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 6 OF THIS WARRANT.
MERIDIAN USA HOLDINGS, INC.
WARRANT TO PURCHASE 698,947 SHARES
OF COMMON STOCK, PAR VALUE $.001 PER SHARE (this "Warrant")
Warrant No. __
MERIDIAN USA HOLDINGS, INC, a Florida corporation (the "Company"), hereby
certifies that, for value received, U.S. Bancorp Investments, Inc. (the
"Holder"), or registered assigns, is the registered holder of a warrant (the
"Warrant") to subscribe for and purchase 698,947 shares of the fully paid and
nonassessable Common Stock, par value $.001 per share (as adjusted pursuant to
Section 4 hereof, the "Warrant Shares") of the Company, at the price of $1.75
per share (such price and such other price as shall result, from time to time,
from the adjustments specified in Section 4 hereof is herein referred to as the
"Warrant Price"), subject to the provisions and upon the terms and conditions
hereinafter set forth. As used herein, (a) the term "Common Stock" shall mean
the Company's presently authorized Common Stock, par value $.001 per share, and
any stock into or for which such Common Stock may hereafter be converted or
exchanged in a transaction described in paragraph (d) of Section 4, (b) the term
"Date of Grant" shall mean June 16, 2000, and (c) the term "Other Warrants"
shall mean any warrant issued upon transfer or partial exercise of this Warrant.
The term "Warrant" as used herein shall be deemed to include Other Warrants
unless the context hereof or thereof clearly requires otherwise. The term
"Securityholder(s)" as used herein means the Holder and the other entity(ies) or
person(s) purchasing securities of the Company in connection with the
transaction pursuant to which Xxxxxx has purchased this Warrant, if any.
1. Term. The purchase right represented by this Warrant is
exercisable, in whole or in part, at any time and from time to time from the
Date of Grant through and including the close of business on the seventh
anniversary of the Date of Xxxxx (the "Expiration Date").
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part and from time to time,
by the surrender of this Warrant (with the notice of exercise form attached
hereto as Exhibit A duly executed) to the Company at its address listed on
the signature page hereto,along with (i) the delivery of cash, or a certified
or official bank check in the amount of such Warrant Price, (ii) by an
instruction to the Company to withhold a number of Warrant Shares then
issuable upon exercise of the particular Warrant pursuant to Section 8.2
below (the "Net Exercise Option"), (iii) the surrender to the Company of shares
of Common Stock previously acquired by the Holder with an aggregate Fair
Market Value (as defined in Section 4(i)) equal to such Warrant Price, or
(iv) any combination of the foregoing. In the event of any withholding of
Warrant Shares or surrender of Common Stock pursuant to clause (ii) or (iii)
above where the number of shares whose Fair Market Value is equal to the
Warrant Price is not a whole number, the number of shares withheld by or
surrendered to the Company shall be rounded down to the nearest whole share;
provided that the Holder is (i) not subject to the Bank Holding Company Act
of 1956, as amended (the "BHCA") or (ii) a bank holding company or an Affiliate
(as defined below) of a bank holding company and has the authority to hold
Capital Stock pursuant to Section 1843(k)(H) of the BHCA. The person or persons
in whose name(s) any certificate(s) representing shares of Common Stock shall
be issuable upon exercise of this Warrant shall be deemed to have become the
holder(s) of record of, and shall be treated for all purposes as the record
holder(s) of, the shares represented thereby (and such shares shall be deemed
to have been issued) immediately prior to the close of business on the date
or dates upon which this Warrant is exercised. In the event of any exercise of
the rights represented by this Warrant, certificates for the shares of stock
so purchased shall be delivered to the holder hereof as soon as possible and in
any event within three (3) business days after such exercise and, unless
this Warrant has been fully exercised, a new Warrant representing the portion
of the Warrant Shares, if any, with respect to which this Warrant shall not
then have been exercised shall also be issued to the holder hereof as soon as
possible and in any event within such three (3) business day period. The
term "Affiliate" means any other person directly or indirectly controlling
or controlled by or under direct or indirect common control with such
Holder.
3. Stock Fully Paid; Reservation of Shares. All Warrant Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance pursuant to the terms and conditions herein, be fully paid and
nonassessable, and free from all taxes (other than any taxes determined with
respect to, or based upon, the income of the person to whom such shares are
issued), liens and charges (other than liens or charges created by actions of
the holder of this Warrant or the person to whom such shares are issued), and
preemptive rights with respect to the issue thereof. The Company shall pay all
transfer taxes, if any, attributable to the issuance of the Warrant Shares upon
the exercise of this Warrant. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of the issue upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Common Stock to provide for the exercise of the rights represented by this
Warrant.
4. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:
a. Warrant Price Adjustments of Common Stock for Certain Dilutive
Issuances, Splits and Combinations. The Warrant Price of the Common Stock shall
be subject to adjustment from time to time as follows:
i. In the event the Company should at any time or from time to time
after the Date of Grant fix a record date for the effectuation of a split or
subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of (i) Common Stock, (ii) warrants, options or
other rights to subscribe for or to purchase Common Stock or Convertible
Securities ("Options"), or (iii) securities convertible into or exchangeable for
Common Stock. ("Convertible Securities," and together with Options, "Common
Stock Equivalents") without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock Equivalents (including the
additional shares of Common Stock issuable upon conversion or exercise thereof),
then, as of such record date (or the date of such dividend distribution, split
or subdivision if no record date is fixed), the Warrant Price shall be
appropriately decreased so that the number of shares of Common Stock issuable
upon the exercise of this Warrant shall be increased in proportion to such
increase in the aggregate number of shares of Common Stock outstanding and
issuable with respect to such Common Stock Equivalents.
ii. If the number of shares of Common Stock outstanding at any time
after the Date of Grant is decreased by a combination of the outstanding shares
of Common Stock, then, following the record date of such combination, the
Warrant Price shall be appropriately increased so that the number of shares of
Common Stock issuable upon the exercise of this Warrant shall be decreased in
proportion to such decrease in outstanding shares.
b. Warrant Price Adjustments for Sale of Shares Below Conversion Price.
i. If at any time or from time to time after the Date of Grant, the
Company issues or sells, or is deemed by the express provisions of this Section
4(b) to have issued or sold, Additional Shares of Common Stock (as defined in
clause v below)), other than upon a subdivision or combination of, or as a
dividend or other distribution on, the Common Stock as provided in Section 4(b),
for an Effective Price less than the then existing Conversion Price, then the
Warrant Price shall independently be reduced, as of the opening of business on
the date of such issue or sale, to the price determined by multiplying the then
existing Warrant Price by a fraction (A) the numerator of which shall be (1) the
number of shares of Common Stock outstanding immediately preceding the date of
such issue or sale, plus (2) the number of shares of Common Stock that the
aggregate consideration received (or by the express provisions hereof deemed to
have been received) by the Company for the total number of Additional Shares of
Common Stock so issued would purchase at the applicable existing Conversion
Price, and (B) the denominator of which shall be the number of shares of Common
Stock outstanding at the close of business on the date of such issue after
giving effect to such issue of Additional Shares of Common Stock; provided,
however, that for the purposes of this clause (i), all shares of Common Stock
that would be issuable upon the exercise in full of this Warrant shall be deemed
to be outstanding.
ii. For the purpose of making any adjustment required under this Section
4(b), the consideration received by the Company for any issue or sale of
securities shall (A) to the extent it consists of cash, be computed at the gross
amount of cash received by the Company before deducting any expenses payable by
the Company and any underwriting or similar commissions, compensation, or
concessions paid or allowed by the Company in connection with such issue or
sale, (B) to the extent it consists of property, be computed as determined in
good faith by the Board and (C) if Additional Shares of Common Stock,
Convertible Securities or rights or options to purchase either Additional Shares
of Common Stock or Convertible Securities are issued or sold together with other
stock or securities or other assets of the Company for a consideration that
covers both, be computed as the portion of the consideration so received that
may be reasonably determined in good faith by the Board to be allocable to such
Additional Shares of Common Stock, Convertible Securities or rights or options,
as the case may be.
iii. For the purpose of the adjustment required under this Section 4(b),if
the Company issues or sells any Options to purchase Common Stock or any
Convertible Securities and if the Effective Price of the Additional Shares of
Common Stock underlying such Options or Convertible Securities is less than the
Warrant Price then in effect, the Company shall be deemed to have issued at the
time of the issuance of such Options or Convertible Securities the maximum
number of Additional Shares of Common Stock issuable upon exercise or conversion
thereof and to have received as consideration for the issuance of such shares an
amount equal to the total amount of the consideration, if any, received by the
Company for the issuance of such Options or Convertible Securities, plus, in the
case of such Options, the minimum amount of consideration, if any, payable to
the Company upon the exercise of such Options, plus, in the case of Convertible
Securities, the minimum amounts of consideration, if any, payable to the Company
(other than by cancellation of liabilities or obligations evidenced by such
Convertible Securities) upon the conversion thereof. No further adjustment of
the Conversion Price, adjusted upon the issuance of such Options or Convertible
Securities, shall be made as a result of the actual issuance of Additional
Shares of Common Stock on the exercise of any such Options or the conversion of
any such Convertible Securities. If the purchase price provided for in any
Option or the additional consideration (if any) payable upon the issue,
conversion or exchange of any Convertible Securities or the rate at which any
Convertible Securities are convertible into or exchangeable for Common Stock
changes at any time, the Warrant Price in effect at the time of such change
shall be adjusted immediately to the Warrant Price that would have been in
effect at such time had such Option or Convertible Security originally provided
for such changed purchase price, additional consideration or conversion rate, as
the case may be, at the time initially granted, issued or sold. For purposes of
this Section 4(b), if the terms of any Option or Convertible Security that was
outstanding as of the Date of Grant are changed in the manner described in the
immediately preceding sentence, then such Option or Convertible Security and the
Common Stock deemed issuable upon exercise, conversion or exchange thereof shall
be deemed to have been issued as of the date of such change; provided, however,
that no such change shall at any time cause the Warrant Price thereunder to be
increased. If any such Options issued after the Date of Grant or the conversion
privilege represented by any such Convertible Securities issued after the Date
of Grant shall expire without having been exercised, the Conversion Price,
adjusted upon the issuance of such Options or Convertible Securities issued
after the Date of Grant shall be readjusted to the Warrant Price that would have
been in effect had an adjustment been made on the basis that the only Additional
Shares of Common Stock so issued were the Additional Shares of Common Stock, if
any, actually issued or sold on the exercise of such Options or rights of
conversion of such Convertible Securities, and such Additional Shares of Common
Stock, if any, were issued or sold for the consideration actually received by
the Company upon such exercise, plus the consideration, if any, actually
received by the Company for the granting of all such Options, whether or not
exercised, plus the consideration received for issuing or selling the
Convertible Securities actually converted, plus the consideration, if any,
actually received by the Company (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the conversion of such
Convertible Securities.
iv. For the purpose of the adjustment required under this Section 4(b), if
the Company issues or sells any Options for the purchase of Convertible
Securities and if the Effective Price of the Additional Shares of Common Stock
underlying such Convertible Securities is less than the Warrant Price in effect,
the Company shall be deemed to have issued at the time of the issuance of such
Options the maximum number of Additional Shares of Common Stock issuable upon
conversion of the total amount of Convertible Securities covered by such Options
and to have received as consideration for the issuance of such Additional Shares
of Common Stock an amount equal to the amount of consideration, if any, received
by the Company for the issuance of such Options, plus the minimum amounts of
consideration, if any, payable to the Company upon the exercise of such Options
and plus the minimum amount of consideration, if any, payable to the Company
(other than by cancellation of liabilities or obligations evidenced by such
Convertible Securities) upon the conversion of such Convertible Securities. No
further adjustment of the Warrant Price, adjusted upon the issuance of such
Options, shall be made as a result of the actual issuance of the Convertible
Securities upon the exercise of such Options or upon the actual issuance of
Additional Shares of Common Stock upon the conversion of such Convertible
Securities. If the purchase price provided for in any Option or the additional
consideration (if any) payable upon the issue, conversion or exchange of any
Convertible Securities or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock changes at any time, the
Warrant Price in effect at the time of such change shall be adjusted immediately
to the Warrant Price that would have been in effect at such time had such option
or Convertible Security originally provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold. For purposes of this Section 4(b), if the
terms of any Option or Convertible Security that was outstanding as of the Date
of Grant are changed in the manner described in the immediately preceding
sentence, then such Option or Convertible Security and the Common Stock deemed
issuable upon exercise, conversion or exchange thereof shall be deemed to have
been issued as of the date of such change; provided that no such change shall at
any time cause the Warrant Price thereunder to be increased. The provisions of
clause (iii) above for the readjustment of the Warrant Price upon the expiration
of Options or the rights of conversion of Convertible Securities shall apply,
the necessary changes having been made, to the Options and Convertible
Securities referred to in this subpart (iv).
v. "Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Company after the Date of Grant ,whether or not subsequently
reacquired or retired by the Company, other than shares of Common Stock issued
(A) upon conversion of the Company's Preferred Stock; (B) to officers,
employees or directors of, or consultants, contractors and advisors to, the
Company or any subsidiary (other than Messrs. Galant, Posner and Xxxxxxxxxx and
their respective family members) pursuant to any stock purchase or stock option
plans or other awards, contracts or arrangements that are approved by the
Company's Board of Directors, which when added together with all such other
plans, awards, contracts, or arrangements, if not to exceed 250,000 shares of
Common Stock in the aggregate (other than Options, warrants or shares described
in clause (D)); (C) a stock split or stock dividend; or (D) pursuant to Options,
warrants, notes or other rights, if any, to acquire securities of the Company,
that are in existence on, or required by the terms of contracts or agreements
existing on, the Date of Grant.
vi. The "Effective Price" of Additional Shares of Common Stock shall mean
the quotient determined by dividing the total number of Additional Shares of
Common Stock issued or sold, or deemed to have been issued or sold by the
Company under this Section 4(b)), into the aggregate consideration received, or
deemed to have been received by the Company for such issue under this Section
4(b), for such Additional Shares of Common Stock.
c. Other Distributions. In the event the Company shall declare a
distribution payable in securities of other persons, evidences of indebtedness
issued by the Company or other persons, assets (excluding cash dividends) or
options or rights not referred to in Section 4(b), then, in each such case for
the purpose of this Section 4(c), the Holder shall be entitled to a share of any
such distribution as though they were the holders of the number of shares of
Common Stock for which this Warrant is exercisable, as of the record date fixed
for the determination of the holders of Common Stock entitled to receive such
distribution.
d. Recapitalizations. If any time or from time to time there shall be a
recapitalization of the Common Stock (other than a subdivision, combination or
merger or sale of assets transaction provided for elsewhere herein) provision
shall be made so that the Holder shall thereafter be entitled to receive upon
exercise of this Warrant the number of shares of stock or other securities or
property of the Company or otherwise, to which a holder of Common Stock
deliverable upon such exercise would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4 with respect to the rights of
the Holder after the recapitalization to the end that the provisions of this
Section 4 (including adjustment of the Warrant Price then in effect and the
number of shares for which this Warrant can be exercised) shall be applicable
after that event as nearly equivalent as may be practicable.
e. No Impairment. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all the provisions of
this Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder against impairment.
f. No Fractional Shares and Certificate as to Adjustments. No fractional
shares shall be issued upon the exercise of this Warrant; in lieu of such
fractional shares the Company shall make a cash payment therefor based on the
Fair Market Value of a share of Common Stock on the date of exercise.
g. Reservation of Stock Issuable Upon Exercise. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the exercise of this Warrant,
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the exercise in full of this Warrant; provided that, if at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the exercise in full of this Warrant, in addition to
such other remedies as shall be available to the Holder, the Company will take
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes, including, without limitation,
engaging in its best efforts to obtain the requisite stockholder approval of any
necessary amendment to its Articles of Incorporation.
h. Adjustment of Number of Shares. Upon each adjustment in the Warrant
Price, the number of Warrant Shares purchasable hereunder shall be adjusted, to
the nearest whole share, to the product obtained by multiplying the number of
Warrant Shares purchasable immediately prior to such adjustment in the Warrant
Price by a fraction, the numerator of which shall be the Warrant Price
immediately prior to such adjustment and the denominator of which shall be the
Warrant Price immediately thereafter calculated to five decimal places.
i. Determination of Fair Market Value. For purposes of this Warrant, "Fair
Market Value" of a share of Common Stock as of a particular date (the
"Determination Date") shall mean (i) if shares of Common Stock are traded on a
national securities exchange (an "Exchange"), the weighted average of the
closing prices of a share of the Common Stock of the Company on the last five
(5) trading days prior to the Determination Date reported on such Exchange as
reported in The Wall Street Journal (weighted with respect to the trading volume
with respect to each such day), (ii) if shares of Common Stock are not traded on
an Exchange but trade in the over-the-counter market and such shares are quoted
on the NASDAQ National Market ("NASDAQ"), (A) the average of the last sale
prices reported on NASDAQ or (B) if such shares are an issue for which last sale
prices are not reported on NASDAQ, the average of the closing bid and ask
prices, in each case on the last five (5) trading days (or if the relevant price
or quotation did not exist on any of such days, the relevant price or quotation
on the next preceding business day on which there was such a price or quotation)
prior to the Determination Date as reported in The Wall Street Journal, or (iii)
if no price can be determined on the basis of the above methods of valuation,
then the judgment of valuation shall be determined in good faith by the Board of
Directors of the Company, which determination shall be described in a duly
adopted board resolution certified by the Company's Secretary or Assistant
Secretary. If the Board of Directors of the Company is unable to determine any
Valuation (as defined below), or if the holders of at least fifty-one percent
(51%) of all of the Warrant Shares then issuable hereunder (collectively, the
"Requesting Holders") disagree with the Board's determination of any Valuation
by written notice delivered to the Company within ten (10) business days after
the determination thereof by the Board of Directors of the Company is
communicated to holders of the Warrants affected thereby, which notice specifies
a majority-in-interest of the Requesting Holders' determination of such
Valuation, then the Company and a majority-in-interest of the Requesting Holders
shall select a mutually acceptable investment banking firm of national
reputation which has not had a material relationship with the Company or any
officer of the Company within the preceding two (2) years, which shall determine
such Valuation. Such investment banking firm's determination of such Valuation
shall be final, binding and conclusive on the Company and the holders of all of
the Warrants issued hereunder and then outstanding. If the Board of Directors
of the Company was unable to determine such Valuation, all costs and fees of
such investment banking firm shall be borne by the Company. If the Requesting
Holders disagreed with the Board's determination of such Valuation, the party
whose determination of such Valuation differed from the Valuation determined by
such investment banking firm by the greatest amount shall bear all costs and
fees of such investment banking firm. For purposes of this Section 4(j), the
term "Valuation" shall mean the determination, to be made initially by the Board
of Directors of the Company, of the Fair Market Value per share of Common Stock
pursuant to clause (iii) above.
j. If, at any time after any adjustment of the Warrant Price shall have
been made hereunder as the result of any issuance, sale or grant of any rights,
options, warrants or convertible or exchangeable securities, any of such rights,
options or warrants or the rights of conversion or exchange associated with such
convertible or exchangeable securities shall expire by their terms or any of
such rights, options, warrants or convertible or exchangeable securities shall
be repurchased by the Company or a subsidiary thereof for a consideration per
underlying share of Common Stock not exceeding the amount of such consideration
received by the Company in connection with the issuance, sale or grant of such
rights, options, warrants or convertible or exchangeable securities, the Warrant
Price then in effect shall forthwith be increased to the Warrant Price that
would have been in effect if such expiring right, option or warrant or rights of
conversion or exchange or such repurchased rights, options, warrants or
convertible or exchangeable securities had never been issued. Similarly, if at
any time after any such adjustment of the Warrant Price shall have been made
pursuant to subparagraph (c) above (i) any additional aggregate consideration is
received or becomes receivable by the Company in connection with the issuance of
exercise of such rights, options, warrants or convertible or exchangeable
securities or (ii) there is a reduction in the conversion or exchange ratio
applicable to such convertible or exchangeable securities so that fewer shares
of Common Stock will be issuable upon the conversion or exchange thereof or
there is a decrease in the number of shares of Common Stock issuable upon
exercise of such rights, options or warrants, the Warrant Price then in effect
shall be forthwith readjusted to the Warrant Price that would have been in
effect had such changes taken place at the time that such rights, options,
warrants or convertible or exchangeable securities were initially issued,
granted or sold. In no event shall any readjustment under this subparagraph (i)
affect the validity of any Warrant Shares issued upon any exercise of this
Warrant prior to such readjustment.
5. Required Notices.
5.1 Notice of Adjustments. Whenever the Warrant Price or the number of
Warrant Shares purchasable hereunder shall be adjusted pursuant to Section 4
hereof, the Company shall promptly deliver to the holder of this Warrant a
certificate signed by its chief financial officer setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the Warrant Price and the
number of Warrant Shares purchasable hereunder after giving effect to such
adjustment. The Company shall, upon the written request at any time of the
Holder, furnish or cause to be furnished to the Holder a like certificate
setting forth (A) the Warrant Price at the time in effect, and (B) the number of
shares of Common Stock and the amount, if any, of other property that at the
time would be received upon the exercise of this Warrant.
5.2 Other Notices. If at any time prior to Expiration Date: (a) the
Company shall declare any dividend payable in any securities or make any
distribution to its shareholders; (b) the Company shall offer to its
shareholders any additional shares of Common Stock or securities convertible
into Common Stock or any right to subscribe for, purchase or otherwise acquire
Common Stock, securities convertible or exchangeable into Common Stock or other
securities or property; or (c) a dissolution or winding up of the company (other
than in connection with a consolidation, merger or sale of all or substantially
all of its property, assets and business as an entirety) shall be proposed; then
in any one or more of such events, the Company shall give notice in writing of
such event to the Holder at least 15 days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution or subscription rights, or
for the determination of shareholders entitled to vote on such proposed
dissolution, liquidation or winding up. Such notice shall specify such record
date or date of the closing of the transfer books, as the case may be.
6. Compliance with Securities Act; Disposition of Warrant or Warrant
Shares.
a. Compliance with Securities Act. The holder of this Warrant, by
acceptance hereof, agrees that this Warrant and the shares of Common Stock to be
issued upon exercise hereof are being acquired for investment and that such
holder will not offer, sell or otherwise dispose of this Warrant, or any shares
of Common Stock to be issued upon exercise hereof except under circumstances
which will not result in a violation of the Securities Act of 1933, as amended
(the "Act"). Upon exercise of this Warrant, the holder hereof shall confirm in
writing, by executing the form attached as Schedule 1 to Exhibit A hereto, that
the shares of Common Stock so purchased are being acquired for investment and
not with a view toward distribution or resale. This Warrant and all shares of
Common Stock issued upon exercise of this Warrant (unless registered under the
Act) shall be stamped or imprinted with a legend in substantially the following
form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION
MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO,
(ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, (iii) RECEIPT OF A NO-ACTION
LETTER(S) FROM THE APPROPRIATE GOVERNMENTAL AUTHORITY(IES), OR (iv) OTHERWISE
COMPLYING WITH THE PROVISIONS OF SECTION 6 OF THE WARRANT UNDER WHICH THESE
SECURITIES WERE ISSUED DIRECTLY OR INDIRECTLY."
In addition, in connection with the issuance of this Warrant, the holder
specifically represents to the Company by acceptance of this Warrant as follows:
i. The holder is aware of the Company's business affairs and financial
condition, and has acquired information about the Company sufficient to reach an
informed and knowledgeable decision to acquire this Warrant. The holder is
acquiring this Warrant for its own account for investment purposes only and not
with a view to, or for the resale in connection with, any "distribution" thereof
for purposes of the Act.
ii. The holder understands that this Warrant and the Warrant Shares
have not been registered under the Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of the holder's investment intent as expressed herein. In this
connection, the holder understands that, in the view of the Securities and
Exchange Commission (the "SEC"), the statutory basis for such exemption
may be unavailable if the holder's representation was predicated solely upon
a present intention to hold the Warrant and the Warrant Shares for the
minimum capital gains period specified under applicable tax laws, for a
peferred sale, for or until an increase or decrease in the market price of the
Warrant and the Warrant Shares, or for a period of one (1) year or any
other fixed period in the future.
iii. The holder further understands that this Warrant and the Warrant
Shares must be held indefinitely unless subsequently registered under the Act
and any applicable state securities laws, or unless exemptions from
registration are otherwise available.
iv. The holder is aware of the provisions of Rule 144 and 144A,
promulgated under the Act, which, in substance, permit limited public resale
of "restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering
subject to the satisfaction of certain conditions, if applicable,
including, among other things: the availability of certain public
information about the Company, the resale occurring not less than one (1)
year after the party has purchased and paid for the securities to be sold; the
sale being made through a broker in an unsolicited "broker's transaction" or
in transactions directly with a market maker (as said term is defined under
the Securities Exchange Act of 1934, as amended) and the amount of securities
being sold during any three-month period not exceeding the specified
limitations stated therein.
v. The holder further understands that at the time it wishes to sell
this Warrant and the Warrant Shares there may be no public market upon which to
make such a sale, and that, even if such a public market then exists, the
Company may not be satisfying the current public information requirements of
Rule 144 and 144A, and that, in such event, the holder may be precluded from
selling this Warrant and the Warrant Shares under Rule 144 and 144A even if
the one (1)-year minimum holding period had been satisfied.
vi. The holder further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the
Act, compliance with Regulation A, or some other registration exemption will
be required; and that, notwithstanding the fact that Rule 144 and 144A is
not exclusive, the Staff of the SEC has expressed its opinion that
persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 and 144A will have
a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at
their own risk.
b. Disposition of Warrant or Warrant Shares. With respect to any
offer, sale or other disposition of this Warrant, or any Warrant Shares acquired
pursuant to the exercise of this Warrant prior to registration of such Warrant
or Warrant Shares, the holder hereof and each subsequent holder of this Warrant
agrees to give written notice to the Company prior thereto, describing briefly
the manner thereof, together with a written opinion of such holder's counsel, if
reasonably requested by the Company, to the effect that such offer, sale or
other disposition may be effected without registration or qualification (under
the Act as then in effect or any federal or state law then in effect) of this
Warrant or such Warrant Shares and indicating whether or not under the Act
certificates for this Warrant or such Warrant Shares to be sold or otherwise
disposed of require any restrictive legend as to applicable restrictions on
transferability in order to ensure compliance with applicable law. Promptly
upon receiving such written notice and reasonably satisfactory opinion, if so
requested, the Company, as promptly as practicable, shall notify such holder
that such holder may sell or otherwise dispose of this Warrant or such Warrant
Shares, all in accordance with the terms of the notice delivered to the Company.
If a determination has been made pursuant to this subsection (b) that the
opinion of counsel for the holder is not reasonably satisfactory to the Company,
the Company shall so notify the holder promptly after such determination has
been made and neither this Warrant nor any Warrant shall be sold or otherwise
disposed of until such disagreement has been resolved. The foregoing
notwithstanding, this Warrant or such Warrant Shares may, as to such federal
laws, be offered, sold or otherwise disposed of in accordance with Rule 144 and
144A under the Act, provided that the Company shall have been furnished with
such information as the Company may reasonably request to provide a reasonable
assurance that the provisions of Rule 144 and 144A have been satisfied. Each
certificate representing this Warrant or the Warrant Shares thus transferred
(except a transfer pursuant to Rule 144) shall bear a legend as to the
applicable restrictions on transferability in order to ensure compliance with
such laws, unless in the aforesaid opinion of counsel for the holder, such
legend is not required in order to ensure compliance with such laws. The
Company may issue stop transfer instructions to its transfer agent or, if acting
as its own transfer agent, the Company may stop transfer on its corporate books,
in connection with such restrictions.
7. Rights as Stockholders; Information. No holder of this Warrant, as
such, shall be entitled to vote or receive dividends or be deemed the holder of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the holder of this Warrant, as such, any of
the rights of a stockholder of the Company or any right to vote for the election
of the directors or upon any matter submitted to stockholders at any meeting
thereof, or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until this Warrant shall have been exercised
and the Warrant Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein. The foregoing notwithstanding, the Company
will transmit to the holder of this Warrant such information, documents and
reports as are generally distributed to the holders of any class or series of
the securities of the Company concurrently with the distribution thereof to the
stockholders.
8. Additional Rights.
8.1 Mergers. In the event that the Company undertakes to (i) sell,
lease, exchange, convey or otherwise dispose of all or substantially all of its
property or business, or (ii) merge into or consolidate with any other
corporation (other than a wholly-owned subsidiary of the Company), or effect any
transaction (including a merger or other reorganization) or series of related
transactions, in which more than 50% of the voting power of the Company is
disposed of, the Company will use its best efforts to provide at least thirty
(30) days notice of the terms and conditions of the proposed transaction.
8.2 Right to Convert Warrant into Common Stock; Net Issuance.
a. Right to Convert. In addition to and without limiting the rights of
the holder under the terms of this Warrant, the holder shall have the right to
convert this Warrant or any portion thereof (the "Conversion Right") into shares
of Common Stock as provided in this Section 8.2 at any time or from time to time
during the term of this Warrant. Upon exercise of the Conversion Right with
respect to a particular number of shares subject to this Warrant (the "Converted
Warrant Shares"), the Company shall deliver to the holder (without payment by
the holder of any exercise price or any cash or other consideration) that number
of shares of fully paid and nonassessable Common Stock equal to the quotient
obtained by dividing (i) the value of this Warrant (or the specified portion
hereof) on the Conversion Date (as defined in subsection (b) hereof), which
value shall be equal to (A) the aggregate Fair Market Value of the Converted
Warrant Shares issuable upon exercise of this Warrant (or the specified portion
hereof) on the Conversion Date less (B) the aggregate Warrant Price of the
Converted Warrant Shares immediately prior to the exercise of the Conversion
Right by (ii) the Fair Market Value of one (1) share of Common Stock on the
Conversion Date.
Expressed as a formula, such conversion shall be computed as follows:
X = A - B
-------
Y
Where: X = the number of shares of Common Stock that may be issued to
holder
Y = the Fair Market Value (FMV) of one (1) share of Common Stock
A = the aggregate FMV (i.e., FMV x Converted Warrant Shares)
B = the aggregate Warrant Price (i.e., Converted Warrant Shares x
Warrant Price)
No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the Fair Market Value of the resulting
fractional share on the Conversion Date. For purposes of Section 8 of this
Warrant, shares issued pursuant to the Conversion Right shall be treated as if
they were issued upon the exercise of this Warrant.
b. Method of Exercise. The Conversion Right may be exercised by the
holder by the surrender of this Warrant at the principal office of the Company
together with a written statement specifying that the holder thereby intends to
exercise the Conversion Right and indicating the number of shares subject to
this Warrant which are being surrendered (referred to in subsection (a) hereof
as the Converted Warrant Shares) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"). Certificates for the shares issuable
upon exercise of the Conversion Right and, if applicable, a new warrant
evidencing the balance of the shares remaining subject to this Warrant, shall be
issued as of the Conversion Date and shall be delivered to the holder within
thirty (30) days following the Conversion Date.
9. Representations and Warranties. The Company represents and warrants
to the holder of this Warrant as follows:
a. This Warrant has been duly authorized and executed by the Company
and is a valid and binding obligation of the Company enforceable in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors;
b. The Warrant Shares have been duly authorized and reserved for issuance
by the Company and, when issued in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable;
c. The rights, preferences, privileges and restrictions granted to or
imposed upon the Common Stock and the holders thereof are as set forth in the
certificate of incorporation of the Company, as amended to the Date of Grant (as
so amended, the "Charter"), a true and complete copy of which has been delivered
to the original holder of this Warrant;
d. The execution and delivery of this Warrant are not, and the issuance of
the Warrant Shares upon exercise of this Warrant in accordance with the terms
hereof will not be, inconsistent with the Charter or by-laws of the Company, do
not and will not contravene, in any material respect, any governmental rule or
regulation, judgment or order applicable to the Company, and do not and will not
conflict with or contravene any provision of, or constitute a default under, any
indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound or require the consent or approval of, the giving
of notice to, the registration or filing with or the taking of any action in
respect of or by, any Federal, state or local government authority or agency or
other person, except for the filing of notices pursuant to federal and state
securities laws, which filings will be effected by the time required thereby and
except for such conflicts and contraventions as will not, individually or in the
aggregate, have or reasonably be expected to have, a material adverse effect on
the Warrant Shares so issued or the Company's ability to perform its obligations
hereunder;
e. There are no actions, suits, audits, investigations or proceedings
pending or, to the knowledge of the Company, threatened against the Company in
any court or before any governmental commission, board or authority which, if
adversely determined, will have a material adverse effect on the ability of the
Company to perform its obligations under this Warrant;
f. The authorized capital stock of the Company consists of the following:
i. 20,000,000 shares of Common Stock, 6,191,399 of which are issued
and outstanding as of the Date of Grant.
ii. 1,000,000 shares of Preferred Stock, $1.00 par value (the
"Preferred Stock"), 3,500 of which have been designated Series I Preferred
Stock (the "Series I Preferred") (3,500 of which are issued and outstanding as
of the Date of Grant); and 8,500 of which as of the Date of Grant will have been
designated Series II Preferred Stock (the "Series II Preferred") (none of
which shall be issued and outstanding at the Date of Grant.)
g. Other than as set forth in Schedule 9, there are no subscriptions,
warrants, options, convertible securities, and other rights (contingent or
otherwise) to purchase or otherwise acquire (directly or indirectly) equity
securities of the Company (the "Other Securities"). Schedule 9 includes the
number of shares of equity securities underlying such Other Securities, the
exercise or conversion price of such Other Securities, the date such Other
Securities were issued, the date such Other Securities are exercisable or
convertible and any expiration date with respect thereto. The Company has
reserved 2,063,030 shares of Common Stock for issuance upon conversion of the
currently outstanding shares of Preferred Stock and exercise or conversion of
the Other Securities.
h. The Company has reserved 492,500 shares of Common Stock for issuance of
options and restricted stock to directors, employees or consultants pursuant to
stock plans or other compensatory arrangements approved by the Board of
Directors of the Corporation, of which shares 392,500 have been issued and are
outstanding as of the date hereof.
Except (i) as set forth above in this Section g, (ii) for the rights
granted in this Warrant, the $8,000,000 aggregate principal amount of Series A
Convertible Notes of the Company due 2010, and the Series II Preferred, and
(iii) for the rights granted to holders of Series I Preferred pursuant to the
Series I Designation, as of the date hereof there are outstanding no
subscriptions, options, calls, warrants, conversion privileges, preemptive
rights, rights of first refusal or other similar commitments or rights to which
the Company is a party or by which the Company is bound, with respect to the
purchase or other acquisition of any of the authorized but unissued capital
stock of the Company. All of the outstanding securities of the Company were
issued in compliance with all applicable Federal and state securities laws.
i. The Company is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its Common
Stock or any security convertible into or exchangeable for any of its Common
Stock.
10. Modification and Waiver. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
11. Notices. Unless otherwise specifically provided herein, all
communications under this Warrant shall be in writing and shall be deemed to
have been duly given (i) on the date of service if served personally on the
party to whom notice is to be given, (ii) on the day of transmission if sent by
facsimile transmission to the number given below, and telephonic confirmation of
receipt is obtained promptly after completion of transmission, (iii) on the day
after delivery to Federal Express or similar overnight courier, or (iv) on the
fifth day after mailing, if mailed to the party to whom notice is to be given,
by first class mail, registered or certified, postage prepaid, and properly
addressed, return receipt requested, to each such holder at its address as shown
on the books of the Company or to the Company at the address indicated therefor
on the signature page of this Warrant. Any party hereto may change its address
for purposes of this Section 11 by giving the other party written notice of the
new address in the manner set forth herein.
12. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets, and all of the obligations of
the Company relating to the Common Stock issuable upon the exercise or
conversion of this Warrant shall survive the exercise, conversion and
termination of this Warrant and all of the covenants and agreements of the
Company shall inure to the benefit of the successors and assigns of the holder
hereof. The Company will, at the time of the exercise or conversion of this
Warrant, in whole or in part, upon request of the holder hereof but at the
Company's expense, acknowledge in writing its continuing obligation to the
holder hereof in respect of any rights to which the holder hereof shall continue
to be entitled after such exercise or conversion in accordance with this
Warrant; provided, that the failure of the holder hereof to make any such
request shall not affect the continuing obligation of the Company to the holder
hereof in respect of such rights.
13. Lost Warrants or Stock Certificates. The Company covenants to the
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any loss, theft or destruction, upon
receipt of an executed lost securities bond or indemnity reasonably satisfactory
to the Company, or in the case of any such mutilation upon surrender and
cancellation of such Warrant or stock certificate, the Company will make and
deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate.
14. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
15. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York, without giving effect to conflict of law principles.
16. Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the holder hereof contained
herein shall survive the Date of Grant, the exercise or conversion of this
Warrant (or any part hereof) and the termination or expiration of rights
hereunder. All agreements of the Company and the holder hereof contained herein
shall survive indefinitely until, by their respective terms, they are no longer
operative.
17. Remedies. In case any one (1) or more of the covenants and agreements
contained in this Warrant shall have been breached, the holders hereof (in the
case of a breach by the Company), or the Company (in the case of a breach by a
holder), may proceed to protect and enforce their or its rights either by suit
in equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Warrant.
18. Acceptance. Receipt of this Warrant by the holder hereof shall
constitute acceptance of and agreement to the foregoing terms and conditions.
19. No Impairment of Rights. The Company will not, by amendment of its
Articles of Incorporation or through any other means, 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 of this Warrant against impairment.
[Signature page follows.]
Signature Page 1 of 1
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on
its behalf by one of its officers thereunto duly authorized.
MERIDIAN USA HOLDINGS, INC.
By: /s/ Xxxx Xxxxxxxxxx
Name: Xxxx Xxxxxxxxxx
Title: President
Address:0000 0xx Xxxxxx
Xxxxx X-00
Xxxx Xxxxx, XX 00000
Dated: as of June 16, 2000
EXHIBIT A
NOTICE OF EXERCISE
To: MERIDIAN USA HOLDINGS, INC.
1. The undersigned hereby elects to purchase shares of Common
Stock of Meridian USA Holdings, Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
_______________________________
(Name)
_______________________________
_______________________________
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
In support thereof, the undersigned has executed an Investment Representation
Statement attached hereto as Schedule 1.
__________________________________
(Signature)
_____________________
(Date)
SCHEDULE 1
INVESTMENT REPRESENTATION STATEMENT
Purchaser:
Company: Meridian USA Holdings, Inc.
Security: Common Stock
Amount:
Date:
In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to the Company as
follows:
(a) The Purchaser is aware of the Company's business affairs and financial
condition, and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. The Purchaser is
purchasing the Securities for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Act").
(b) The Purchaser understands that the Securities have not been registered
under the Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of the Purchaser's
investment intent as expressed herein. In this connection, the Purchaser
understands that, in the view of the Securities and Exchange Commission ("SEC"),
the statutory basis for such exemption may be unavailable if the Purchaser's
representation was predicated solely upon a present intention to hold these
Securities for the minimum capital gains period specified under applicable tax
laws, for a deferred sale, for or until an increase or decrease in the market
price of the Securities, or for a period of one year or any other fixed period
in the future.
(c) The Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Act or unless an exemption
from registration is otherwise available. In addition, the Purchaser
understands that the certificate evidencing the Securities will be imprinted
with the legend referred to in the Warrant under which the Securities are being
purchased.
(d) The Purchaser is aware of the provisions of Rule 144 and 144A,
promulgated under the Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: The availability of certain public information about the Company, the
resale occurring not less than one (1) year after the party has purchased and
paid for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended) and the amount of securities being sold during any three-month period
not exceeding the specified limitations stated therein.
(e) The Purchaser further understands that at the time it wishes to sell
the Securities there may be no public market upon which to make such a sale, and
that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144 and 144A, and
that, in such event, the Purchaser may be precluded from selling the Securities
under Rule 144 and 144A even if the one-year minimum holding period had been
satisfied.
(f) The Purchaser further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the Act,
compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden or proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
Purchaser:__________________________
Date:__________________
