EXHIBIT 4.2
AMERICAN FAMILY HOLDINGS, INC.
(A Delaware Corporation)
Warrant to Purchase
Shares of Common Stock
1. GRANT OF WARRANT. For value received, American Family Holdings, Inc.,
a Delaware corporation ("Company"), hereby grants to _______________ or his
registered assigns ("Holder"), the right to purchase from the Company
("Warrant") two shares ("Shares") of Company Common Stock, $0.001 par value,
("Common Stock"). The per share exercise price for such Warrant shall be 80% of
the closing market price for the Common Stock on the trading date immediately
preceding the date of the exercise of the Warrant ("Exercise Price").
2. RIGHT AND MANNER OF EXERCISE. This Warrant shall be exercisable for a
730-day period commencing on the Issuance Date (as herein defined) (the
"Exercise Period"). The Holder may elect to exercise this Warrant anytime
during the Exercise Period only as to both of the Shares by delivering written
notice of exercise to the Company (as provided in Section 11) in the form
attached hereto as Exhibit A accompanied by a certified or bank cashier's check
in an amount equal to two times the Exercise Price, as such may have been
adjusted pursuant to the terms of this Agreement. For purposes of this
Agreement the term "Issuance Date" shall mean fifth business day after the
consummation of the Acquisition described in the prospectus included in the
Company's Registration Statement on Form S-4 filed by the Company with the U.S.
Securities and Exchange Commission in October 1997.
3. RESERVATION AND AVAILABILITY OF SHARES. The Company will at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued shares of Common Stock for the purpose of enabling
it to satisfy any obligation to issue Shares upon exercise of this Warrant the
full number of Shares deliverable upon the exercise or conversion of the entire
outstanding amount of this Warrant. Before taking any action which would cause
an adjustment pursuant to Section 5 reducing the Exercise Price, the Company
will take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable Shares at the Exercise Price as so adjusted. The Company
covenants that all Shares which may be issued upon exercise of this Warrant
will, upon issue, be fully paid and non-assessable and free from all taxes
liens, charges security interests with respect to the issue thereof.
4. ISSUANCE OF SHARES AND NEW WARRANT. If the purchase rights evidenced
by this Warrant are exercised, one or more certificates for the Shares shall be
issued as soon as practicable thereafter to the Holder exercising such rights.
Upon such issuance, this Warrant will be cancelled automatically.
5. ADJUSTMENT OF EXERCISE PRICE/ANTI-DILUTION. The Exercise Price and
the number and kind of securities purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the happening of the
events enumerated in this Section 5.
5.1. STOCK SPLITS AND COMBINATIONS. If the Company shall at any time
subdivide or combine its outstanding Common Stock, or fix a record date for
payment of a dividend in Common Stock or other securities of the Company
exercisable, convertible or exchangeable for Common Stock (in which latter event
the maximum number of shares of Common Stock issuable upon the exercise,
conversion or exchange of such securities shall be deemed to have been
distributed), after that subdivision, combination or dividend, the number of
Shares shall be adjusted to that number of Shares which is determined by (A)
multiplying the number of shares of Common Stock purchasable immediately prior
to such adjustment by the Exercise Price in effect immediately prior to such
adjustment, and then (B) dividing that product by the Exercise Price in effect
immediately after such adjustment. If the Company shall at any time subdivide
the outstanding shares of Common Stock or fix a record date for payment of a
dividend in Common Stock or other securities exercisable, convertible or
exchangeable into shares of Common Stock, the Exercise Price then in effect
immediately before that subdivision or dividend shall be proportionately
decreased, and, if the Company shall at any time combine the outstanding shares
of Common Stock, then the Exercise Price in effect immediately before that
combination shall be proportionately increased. Any adjustment under this
Section 5.1 shall become effective at the close of business on the date the
subdivision or combination becomes effective or the dividend is distributed.
5.2 RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the Shares
issuable upon exercise of the Warrant shall be changed into the same or a
different number of shares of any other class or classes of securities, whether
by capital reorganization, reclassification, or otherwise (other than a
subdivision or combination or payment of dividend of securities provided for
above), the Holder of this Warrant shall, on its exercise, be entitled
to purchase for the same aggregate consideration, in lieu of the Shares which
the Holder would have become entitled to purchase but for such change, a
number of shares of such other class or classes of securities which such
Holder would have been entitled to receive as the holder of that number of
Shares subject to purchase by the Holder on exercise of this Warrant
immediately before that change.
5.3 REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. If
at any time there shall be a capital reorganization of the Common Stock (other
than a subdivision, combination, payment of dividend, reclassification or
exchange of Common Stock provided for above), or merger or consolidation of the
Company with or into another corporation, or the sale of the Company's
properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such reorganization, merger, consolidation or sale, lawful
provision shall be made so that the Holder of this Warrant shall thereafter be
entitled to receive upon exercise of this Warrant, during the period specified
in this Warrant and upon payment of the Exercise Price then in effect, the
number of Shares or other securities or property of the Company, or of the
successor corporation resulting from such merger or consolidation, to which a
Holder of the Shares issuable upon exercise of this Warrant would have been
entitled in such capital reorganization, merger, or consolidation or sale if
this Warrant had been exercised immediately before that capital reorganization,
merger, consolidation, or sale. In any such case, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made in
the application of the provisions of this Warrant with respect to the rights and
interests of the Holder of this Warrant after the reorganization, merger,
consolidation, or sale such that the provisions of this Warrant (including
adjustment of the Exercise Price then in effect and number and kind of
securities purchasable upon exercise of this Warrant) shall be applicable after
that event in relation to any securities purchasable after that event upon
exercise of this Warrant.
5.4 MINIMUM EXERCISE PRICE ADJUSTMENT. No adjustment in the Exercise
Price shall be required unless such adjustment would require an increase or
decrease of at least one-half of one percent (0.005) or more of the Exercise
Price, provided, however, that any adjustments which by reason of this
Subsection 5.4 are not required to be made shall carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 5
shall be made to the nearest cent or to the nearest one-hundredth of a Share as
the case may be.
6. NOTICES TO HOLDER. Upon any adjustment of the Exercise Price pursuant
to Section 5, the Company within 20 days thereafter shall cause to be given to
the Holder pursuant to Section I 1 hereof written notice of such adjustment,
which notice shall set forth a brief statement of the facts requiring such
adjustment and set forth the computation by which such adjustment was made.
Where appropriate, such notice may be given in advance and included as a part of
the notice required to be mailed under the other provisions of this Section 6.
In the event of any of the following:
6.1 the Company shall authorize the issuance to its holders of shares
of Common Stock of rights or warrants to subscribe for or purchase shares of
Common Stock or of any other subscription rights or warrants; or
6.2 the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other than
cash dividends not exceeding $0.01 per share of Common Stock payable during any
three-month period or distributions or dividends payable in shares of Common
Stock); or
6.3 any consolidation or merger to which the Company is a party and
for which approval of any shareholder of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company as, or
substantially as, an entirety, or of any reclassification or change of
outstanding shares of Common Stock issuable upon exercise of this Warrant (other
than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination); or
6.4 the voluntary or involuntary dissolution, liquidation or winding
up of the Company; or
6.5 the Company proposes to take any action (other than actions of
the character described in Subsection 5.1 except as required under Subsection
6.3 above) which would require an adjustment of the Exercise Price pursuant
to Section 5;
then the Company shall cause to be given to the Holder, at least 20 days (or ten
days in any case specified in Subsections 6.1 or 6.2 above) prior to the
applicable record date hereinafter specified, a written notice stating (i) the
date as of which the holders of record of shares of Common Stock to be entitled
to receive any such rights, warrants, or distribution is to be determined, or
(ii) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation, or winding up is expected to become effective, and the
date as of which it is that holders of
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record of shares of Common Stock shall be entitled to exchange their shares
of Common Stock for securities or other property, if any, deliverable upon
such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation, or winding up. The failure to give the notice
required by this Section 6 or any defect therein shall not affect the
legality or validity of any distribution, right, warrant, consolidation,
merger, conveyance, merger, dissolution, liquidation, or winding up, or the
vote upon any such action.
7. TRANSFERS. The holder acknowledges that this Warrant and the Common
Stock underlying this Warrant have been registered with the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "Act").
8. FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued in connection with any exercise of this Warrant. In lieu of the issuance
of such fractional share, the Company shall make a cash payment equal to the
then fair market value of such fractional share as determined in good faith by
the Company's Board of Directors.
9. PRIVILEGE OF STOCK OWNERSHIP. The Holder shall for all purposes be
deemed to have become the holder of record of Shares issued upon an exercise
of this Warrant on, and the certificate evidencing such Shares shall be
dated, the date upon which the holder presents to the Company a notice of an
intent to exercise this Warrant pursuant to Section 2 together with a
certified or bank cashier's check for the Exercise Price. Prior to exercise
of this Warrant, the holder shall not be entitled to any rights as a
shareholder of the Company, including (without limitation) the right to vote,
receive dividends or other distributions, exercise preemptive rights or be
notified of shareholder meetings, and such holder shall not be entitled to
any notice or other communication concerning the business or affairs of the
Company except as otherwise provided herein.
10. SUCCESSORS AND ASSIGNS. The terms and provisions of this Warrant
shall inure to the benefit of, and be binding upon the Company and the Holder
hereof and their respective successors and assigns.
11. NOTICES. All notices, requests, demands and other communications
(collectively, "Notices") under this Warrant shall be in writing and shall be
deemed to have been duly given on the date of service if served personally on
the party to whom Notice is to be given, or on the third business day after the
date of mailing if mailed to the party to whom Notice is to be given, by first
class mail, registered to the Holder, at his address as shown in the Company
records; and if to the Company, at its principal office. Any party may change
its address for purposes of this Section by giving the other party written
Notice of the new address in the manner set forth above.
12. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to principles
of conflicts of laws.
13. LOSS OR MUTILATION OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company regarding the loss, theft, mutilation or destruction
of this Warrant and upon delivery of appropriate indemnification with respect
thereto or upon surrender or cancellation of the mutilated Warrant, the Company
will make and deliver to the Holder a new Warrant of like tenor.
Dated: _______________, 1997 AMERICAN FAMILY HOLDINGS, INC.
By
--------------------------
Xxxxx X. Xxxxxx, President
By
---------------------------
Xxxxx X. Xxxx, Secretary
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned sell(s), assign(s), and transfer(s)
unto _______________________, of ___________________________, the right to
purchase Shares evidenced by the within Warrant, and does hereby irrevocable
constitute and appoint __________________ to transfer such right on the books
of the Company, with full power of substitution.
DATED: _______________________, 199_
____________________________________
SIGNATURE
______________________________________________________________________________
NOTICE:
The signature to this Assignment must correspond with the name as written
upon the face of the within Warrant, in every particular, without alteration
or enlargement or any change whatsoever.
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EXHIBIT A
EXERCISE NOTICE
AMERICAN FAMILY HOLDINGS, INC.
0000 Xxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Gentlemen:
The undersigned hereby elects to purchase, pursuant to the provisions of
the American Family Holdings, Inc. Warrant dated ______________, 1997 held by
the undersigned, two shares of the Common Stock of American Family Holdings,
Inc.
A certified or cashier's check as payment of the purchase price of
$__________ per share of Common Stock (based on the closing market price of the
Common Stock on _______________, 19__) in U.S. funds required under such Warrant
accompanies this Exercise Notice.
DATED:______________________, 199_
Signature: ________________________________________
Address: ________________________________________
________________________________________
Tax I.D. No. ________________________________________
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