EXHIBIT 10(c)
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
FORTEL INC.
REPRICING WARRANT
Warrant No. Dated: July 18, 2000
FORTEL Inc., a California corporation (the "Company"), hereby certifies
that for value received __________________________________, or its registered
assigns ("Holder"), is entitled to purchase from the Company the total number of
shares of common stock, no par value per share (the "Common Stock"), of the
Company (each such share, a "Warrant Share" and all such shares, the "Warrant
Shares") calculated pursuant to Section 3 of this Warrant (subject to adjustment
for certain events as set forth herein) at an exercise price equal to $.001 per
share (the "Exercise Price"). Subject to the conditions for exercise set forth
herein, the Holder may acquire Warrant Shares hereunder at any time and from
time to time from the 22nd Trading Day (as defined in EXHIBIT A) following the
first date of issuance of this Warrant through the earlier to occur of (x) an
Expiration Event (as defined in Section 3(c)) and (y) 6:30 p.m. (New York City
time) on the 540th day following the Effective Date (as defined in EXHIBIT A)
(the early of (x) and (y), the "Expiration Date" and the period during which the
Holder may acquire Warrant Shares hereunder, the "Exercise Period"). This
Warrant is subject to the terms and conditions set forth below. Certain
capitalized terms used in this Warrant are defined in EXHIBIT A attached hereto.
1. REGISTRATION OF WARRANT. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.
EXHIBIT 10(c)-1.
2. RESTRICTION ON ASSIGNMENTS AND REGISTRATION OF TRANSFERS. (a) The
Company shall register the transfer of this Warrant in the Warrant Register upon
surrender of this Warrant, with the Form of Assignment attached hereto duly
completed and signed, to the Company at the address specified in Section 12.
Upon any such registration or transfer, a new warrant to purchase Common Stock,
in the form of this Warrant (any such new warrant, a "New Warrant"), evidencing
the portion of this Warrant so transferred shall be issued to the transferee.
The acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance of such transferee of all of the rights and obligations of a holder
of a Warrant.
(b) This Warrant may only be assigned together with the assignment
of the shares of Common Stock purchased pursuant to the
Purchase Agreement.
3. DURATION AND EXERCISE.
(a) On any day during the Exercise Period on which the Adjustment
Price (as defined in EXHIBIT A) is less than $2.7375 (which
amount shall be subject to equitable adjustment for stock
splits, reverse splits and similar events), the Holder may
acquire up to a number of Warrant Shares calculated pursuant
to Section 3(b) by delivering to the Company a Form of
Election to Purchase.
(b) On any date of calculation during the Exercise Period, the
number of Warrant Shares available for purchase by the Holder
shall be calculated in accordance with the following formula:
(Applicable Share Number) x [(1.2 x Purchase Price) - (Adjustment Price)]
-------------------------------------------------------------------------
Adjustment Price
If the number calculated in accordance with the foregoing
formula is zero or a negative number, the Holder shall not be obligated to
transfer any shares of Common Stock to the Company.
(c) If (i) after the Effective Date, the Per Share Market Value
(as defined in EXHIBIT A) for 22 consecutive Trading Days is
equal to or greater than $4.5625 (which amount shall be
subject to equitable adjustment for stock splits, reverse
splits and similar events), (ii) during each of the Trading
Days used to satisfy clause (i) above the Underlying Shares
Registration Statement (as defined in Exhibit A) was effective
and the prospectus thereunder available for use by the Holder
to resell all of the Warrant Shares, (iii) during each of the
Trading Days used to satisfy clause (i) above the Common Stock
was listed for trading on the New York Stock Exchange,
American Stock Exchange, Nasdaq National Market or Nasdaq
SmallCap Market, and (iv) the Company has a sufficient number
of available shares of Common Stock reserved to issue upon
exercise of this Warrant (an "EXPIRATION EVENT"), then all
Warrant Shares remaining unexercised hereunder shall expire
and the Holder shall have no further right to exercise this
Warrant, provided that any Form of Elections to Purchase
delivered prior to the Expiration Event shall be honored in
accordance with the terms hereof.
EXHIBIT 10(c)-2.
(d) Subject to Section 3, this Warrant shall be exercisable by the
Holder on any Business Day during the Exercise Period before
6:30 P.M., New York City time. At 6:30 P.M., New York City
time on the Expiration Date, the portion of this Warrant not
exercised prior thereto shall be and become void and of no
value.
(e) This Warrant shall be exercisable, either in its entirety or,
from time to time, for a portion of the number of Warrant
Shares. The Holder shall not be required to deliver this
Warrant to the Company in order to acquire Warrant Shares
hereunder. Instead, the Holder shall prepare and deliver to
the Company a Form of Election to Purchase in the form
attached hereto, indicating thereon the Holder's calculation
of the number of Warrant Shares to which such exercise relates
and the Applicable Share Number at such time.
4. DELIVERY OF WARRANT SHARES.
(a) Upon delivery of the Form of Election to Purchase to the
Company at its address for notice set forth in Section 12 and
upon payment of the Exercise Price multiplied by the number of
Warrant Shares that the Holder intends to purchase hereunder,
the Company shall promptly (but in no event later than three
Business Days after the Date of Exercise (as defined herein))
issue and deliver to the Holder, a certificate for the Warrant
Shares issuable upon such exercise, free of restrictive
legends except (i) either in the event that a registration
statement covering the resale of the Warrant Shares and naming
the Holder as a selling stockholder thereunder is not then
effective or the Warrant Shares are not freely transferable
without volume restrictions pursuant to Rule 144(k)
promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), or (ii) if this Warrant shall have been
issued pursuant to a written agreement between the original
Holder and the Company, as required by such agreement. Any
person so designated by the Holder to receive Warrant Shares
shall be deemed to have become holder of record of such
Warrant Shares as of the Date of Exercise of this Warrant. The
Company shall, upon request of the Holder, if available, use
its best efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or
another established clearing corporation performing similar
functions.
(b) If the Company fails to deliver to the Holder certificate or
certificates representing the Warrant Shares pursuant to
Section 4(a) by the third Trading Day after the Date of
Exercise, the Company shall pay to such Holder, in cash, as
liquidated damages and not as a penalty, $3,000 for each day
after such third Trading Day until such certificates are
delivered. Nothing herein shall limit the Holder's right to
pursue actual damages for the Company's failure to deliver
certificates representing shares of Common Stock upon exercise
within the period specified herein and the Holder shall have
the right to pursue all remedies available to it at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief. The exercise of any such
rights shall not prohibit the Holder from seeking to enforce
damages pursuant to any other Section hereof or under
applicable law.
EXHIBIT 10(c)-3.
(c) In addition to any other rights available to the Holder, if
the Company fails to deliver to the Holder certificate or
certificates representing the Warrant Shares pursuant to
Section 4(a) by the third Trading Day after the Date of
Exercise, and if after such third Trading Day the Holder
purchases (in an open market transaction or otherwise) shares
of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated
receiving upon such exercise (a "Buy-In"), then the Company
shall pay (1) in cash to the Holder the amount by which (x)
the Holder's total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A)
the number of Warrant Shares that the Company was required to
deliver pursuant to Section 4(b) to deliver to the Holder in
connection with the exercise at issue by (B) the Per Share
Market Value at the time of the obligation giving rise to such
purchase obligation and (2) deliver to the Holder the number
of shares of Common Stock that would have been issued had the
Company timely complied with its exercise and delivery
obligations under Section 4(b). For example, if the Holder
purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with a market price on the
date of exercise totaled $10,000, under clause (A) of the
immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in
respect of the Buy-In.
(d) The Company's obligations to issue and deliver Warrant Shares
in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the
Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against
any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of
any obligation to the Company or any violation or alleged
violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in
connection with the issuance of Warrant Shares. If the Company
breaches its obligations under this Warrant, then, in addition
to any other liabilities the Company may have hereunder and
under applicable law, the Company shall pay or reimburse the
Holder on demand for all costs of collection and enforcement
(including reasonable attorneys fees and expenses).
5. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
EXHIBIT 10(c)-4.
6. REPLACEMENT OF WARRANT. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity, if requested. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.
7. RESERVATION OF WARRANT SHARES. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holder (taking into account the adjustments and
restrictions of Section 8). The Company covenants that all Warrant Shares that
shall be so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable.
8. CERTAIN ADJUSTMENTS. This Warrant is subject to the adjustments set
forth in this Section.
(i) If the Company (i) shall pay a stock dividend (except
scheduled dividends paid on outstanding preferred
stock as of the date hereof which contain a stated
dividend rate) or otherwise make a distribution or
distributions on shares of its Common Stock or on any
other class of capital stock payable in shares of
Common Stock, (ii) subdivide outstanding shares of
Common Stock into a larger number of shares, or (iii)
combine outstanding shares of Common Stock into a
smaller number of shares, then the Adjustment Price
shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding
before such event and of which the denominator shall
be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding after such
event. Any adjustment made pursuant to this Section
shall become effective immediately after the record
date for the determination of stockholders entitled
to receive such dividend or distribution and shall
become effective immediately after the effective date
in the case of a subdivision or combination, and
shall apply to successive such events.
(ii) In case of any reclassification of the Common Stock
or any compulsory share exchange pursuant to which
the Common Stock is converted into other securities,
cash or property, then the Holder shall have the
right thereafter to exercise this Warrant only into
the shares of stock and other securities and property
receivable upon or deemed to be held by holders of
Common Stock following such reclassification,
transfer or share exchange, and the Holder shall be
entitled upon such event to receive such
EXHIBIT 10(c)-5.
amount of securities or property equal to the amount
of Warrant Shares such Holder would have been
entitled to had such Holder exercised this Warrant
immediately prior to such reclassification or share
exchange. The terms of any such reclassification or
share exchange shall include such terms so as to
continue to give to the Holder the right to receive
the securities or property set forth in this Section
upon any exercise following any such
reclassification or share exchange.
(iii) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of
Common Stock (and not to holders of this Warrant)
evidences of its indebtedness or assets or rights or
warrants to subscribe for or purchase any security
(excluding those referred to in Sections 8(i), (ii)
and (iv)), then in each such case the Adjustment
Price shall be determined by multiplying the
Adjustment Price in effect immediately prior to the
record date fixed for determination of stockholders
entitled to receive such distribution by a fraction
of which the denominator shall be the Adjustment
Price determined as of the record date mentioned
above, and of which the numerator shall be such
Adjustment Price on such record date less the then
fair market value at such record date of the portion
of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of
Common Stock on a fully diluted basis as determined
by the Company's independent certified public
accountants that regularly examines the financial
statements of the Company (an "Appraiser").
(iv) If the Company or any subsidiary thereof, as
applicable with respect to Common Stock Equivalents
(as defined below), at any time while this Warrant is
outstanding, shall issue shares of Common Stock or
rights, warrants, options or other securities or debt
that are convertible into or exchangeable for shares
of Common Stock ("COMMON STOCK EQUIVALENTS") (other
than (i) granting of options or warrants to
employees, officers, consultants and directors and
the issuance of shares upon exercise of options or
warrants granted under any stock option or employee
stock purchase plan heretofore or hereafter duly
adopted by the Company, (ii) issuance of shares of
Common Stock issuable upon exercise of any currently
outstanding warrants, disclosed in SCHEDULE 2.1(c) to
the Securities Purchase Agreement and (iii) issuance
of shares of Common Stock issuable upon exercise of
the Warrants in accordance with their terms),
entitling any person to acquire shares of Common
Stock at a price per share less than the Adjustment
Price on the date of calculation (if the holder of
the Common Stock or Common Stock Equivalent so issued
shall at any time, whether by operation of purchase
price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise,
or due to warrants, options or rights issued in
connection with such issuance, be entitled to receive
shares of Common Stock at a price less than the
Adjustment Price, such issuance shall be deemed to
have occurred for less than the Adjustment Price),
then at the option of the Holder, the
EXHIBIT 10(c)-6.
Adjustment Price shall equal the lowest purchase
price, reset purchase price, exchange price or
conversion price applicable to such Common Stock
or Common Stock Equivalent (which may be expressed
as discounts to the market price of the Common Stock
at the option of the Holder if so expressed in such
Common Stock or Common Stock Equivalent). Adjustments
under this Section shall be made at the time of the
issuance of such Common Stock or Common Stock
Equivalent so that the Holder need not wait until
actual conversion, rest or exchange to effect an
adjustment hereunder. The Company shall provide the
Holder written notice of the issuance of any Common
Stock or Common Stock Equivalent which would trigger
the operation of this Section within two Business
Days of the date of such issuance.
(v) In case of any (1) merger or consolidation of the
Company with or into another Person, or (2) sale by
the Company of more than one-half of the assets of
the Company (on a book value basis) in one or a
series of related transactions, the Holder shall have
the right thereafter to (A) exercise this Warrant for
the shares of stock and other securities, cash and
property receivable upon or deemed to be held by
holders of Common Stock following such merger,
consolidation or sale, and the Holder shall be
entitled upon such event or series of related events
to receive such amount of securities, cash and
property as the Common Stock for which this Warrant
could have been exercised immediately prior to such
merger, consolidation or sales would have been
entitled or (B) in the case of a merger or
consolidation, (x) require the surviving entity to
issue common stock purchase warrants equal to the
number Warrant Shares to which this Warrant then
permits, which newly warrant shall be identical to
this Warrant, and (y) simultaneously with the
issuance of such warrant, shall have the right to
exercise such warrant only into shares of stock and
other securities, cash and property receivable upon
or deemed to be held by holders of Common Stock
following such merger or consolidation. In the case
of clause (B), the exercise price for such new
warrant shall be based upon the amount of securities,
cash and property that each share of Common Stock
would receive in such transaction and the Adjustment
Price of this Warrant immediately prior to the
effectiveness or closing date for such transaction.
The terms of any such merger, sale or consolidation
shall include such terms so as continue to give the
Holder the right to receive the securities, cash and
property set forth in this Section upon any
conversion or redemption following such event. This
provision shall similarly apply to successive such
events.
(vi) For the purposes of this Section 8, the following
clauses shall also be applicable:
(1) RECORD DATE. In case the Company shall take
a record of the holders of its Common Stock
for the purpose of entitling them (A) to
receive a dividend or other distribution
payable in Common
EXHIBIT 10(c)-7.
Stock or in securities convertible or
exchangeable into shares of Common Stock,
or (B) to subscribe for or purchase Common
Stock or securities convertible or
exchangeable into shares of Common Stock,
then such record date shall be deemed to be
the date of the issue or sale of the
shares of Common Stock deemed to have
been issued or sold upon the declaration of
such dividend or the making of such other
distribution or the date of the granting of
such right of subscription or purchase, as
the case may be.
(2) TREASURY SHARES. The number of shares of
Common Stock outstanding at any given time
shall not include shares owned or held by or
for the account of the Company, and the
disposition of any such shares shall be
considered an issue or sale of Common Stock.
(vii) All calculations under this Section 8 shall be made
to the nearest cent or the nearest 1/100th of a
share, as the case may be.
(viii) If (i) the Company shall declare a dividend (or any
other distribution) on its Common Stock; (ii) the
Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock;
(iii) the Company shall authorize the granting to all
holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock
of any class or of any rights; (iv) the approval of
any stockholders of the Company shall be required in
connection with any reclassification of the Common
Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or
any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or
property; or (v) the Company shall authorize the
voluntary dissolution, liquidation or winding up of
the affairs of the Company, then the Company shall
cause to be mailed to each Holder at their last
addresses as they shall appear upon the Warrant
Register, at least 10 calendar days prior to the
applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such
dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date
as of which the holders of Common Stock of record to
be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined
or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share
exchange is expected to become effective or close,
and the date as of which it is expected that holders
of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities,
cash or other property deliverable upon such
reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or
winding up; PROVIDED, that the failure to mail such
notice or any defect therein or in the mailing
thereof shall not affect the validity of the
corporate action required to be specified in such
notice.
EXHIBIT 10(c)-8.
9. PAYMENT OF EXERCISE PRICE. The Holder may pay the Exercise Price in
one of the following manners:
(a) CASH EXERCISE. The Holder may deliver immediately available
funds; or
(b) CASHLESS EXERCISE. The Holder may indicate in the Form of
Election to Purchase that it will be utilizing cashless
exercise, in which event the Company shall issue to the Holder
the number of Warrant Shares determined as follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be
issued
to the Holder.
Y = the number of Warrant Shares with
respect to which this Warrant is being
exercised.
A = the average of the closing sale
prices of the Common Stock for the five
trading days immediately prior to (but
not including) the Date of Exercise as
reported by Bloomberg Information
Systems, Inc. (or any successor to its
function of reporting stock prices).
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have been
commenced, on the issue date.
10. CERTAIN EXERCISE RESTRICTIONS.
(a) A Holder may not exercise this Warrant to the extent such
exercise would result in the Holder, together with any
affiliate thereof, beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the
rules promulgated thereunder) in excess of 4.999% of the then
issued and outstanding shares of Common Stock, including
shares issuable upon such exercise and held by such Holder
after application of this Section. Since the Holder will not
be obligated to report to the Company the number of shares of
Common Stock it may hold at the time of an exercise hereunder,
unless the exercise at issue would result in the issuance of
shares of Common Stock in excess of 4.999% of the then
outstanding shares of Common Stock without regard to any other
shares which may be beneficially owned by the Holder or an
affiliate thereof, the Holder shall have the authority and
obligation to determine whether the restriction contained in
this Section will limit any particular exercise hereunder and
to the extent that the Holder determines that the limitation
contained in this Section applies, the
EXHIBIT 10(c)-9.
determination of which portion of this Warrant is
exercisable shall be the responsibility and obligation
of the Holder. If the Holder has delivered a Form of
Election to Purchase for a number of Warrant Shares that,
without regard to any other shares that the Holder or its
affiliates may beneficially own, would result in the issuance
in excess of the permitted amount hereunder, the Company
shall notify the Holder of this fact
and shall honor the exercise for the maximum portion of this
Warrant permitted to be exercised on such Date of Exercise in
accordance with the periods described herein and return such
excess portion of the Warrant to the Holder. The provisions of
this Section may be waived by a Holder (but only as to itself
and not to any other Holder) upon not less than 61 days prior
notice to the Company. Other Holders shall be unaffected by
any such waiver.
(b) A Holder may not exercise this Warrant to the extent such
exercise would result in the Holder, together with any
affiliate thereof, beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the
rules promulgated thereunder) in excess of 9.999% of the then
issued and outstanding shares of Common Stock, including
shares issuable upon such exercise and held by such Holder
after application of this Section. Since the Holder will not
be obligated to report to the Company the number of shares of
Common Stock it may hold at the time of an exercise hereunder,
unless the exercise at issue would result in the issuance of
shares of Common Stock in excess of 9.999% of the then
outstanding shares of Common Stock without regard to any other
shares which may be beneficially owned by the Holder or an
affiliate thereof, the Holder shall have the authority and
obligation to determine whether the restriction contained in
this Section will limit any particular exercise hereunder and
to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which
portion of this Warrant is exercisable shall be the
responsibility and obligation of the Holder. If the Holder has
delivered a Form of Election to Purchase for a number of
Warrant Shares that, without regard to any other shares that
the Holder or its affiliates may beneficially own, would
result in the issuance in excess of the permitted amount
hereunder, the Company shall notify the Holder of this fact
and shall honor the exercise for the maximum portion of this
Warrant permitted to be exercised on such Date of Exercise in
accordance with the periods described herein and return such
excess portion of the Warrant to the Holder. The provisions of
this Section may be waived by a Holder (but only as to itself
and not to any other Holder) upon not less than 61 days prior
notice to the Company. Other Holders shall be unaffected by
any such waiver.
(c) If the Company Stock is then listed for trading on the Nasdaq
or the Nasdaq SmallCap Market and the Company has not obtained
the Shareholder Approval (as defined below), then the Company
may not, upon exercise of this Warrant, issue in excess of the
product of (i) 5,341,126 Warrant Shares (which equals19.999%
of the number of shares of Common Stock outstanding on the
Closing Date) and (ii) the quotient obtained by dividing (x)
the number of shares of Common Stock issued and sold to the
original Holder on the Closing Date by (y) the number of
shares of Common Stock issued and sold by the Company on the
Closing Date (such number of shares, the "Issuable Maximum").
If any
EXHIBIT 10(c)-10.
Holder shall no longer hold Warrants then such Holder's
remaining portion of the Issuable Maximum shall be allocated
pro-rata among the remaining Holders. If on any Date of
Exercise (A) the Company Stock is listed for trading on the
Nasdaq or the Nasdaq SmallCap Market, (B) the aggregate number
of shares of Common Stock that would then be issuable upon
exercise in full of this Warrant, together with any shares of
Common Stock previously issued upon exercise of this Warrant,
would equal or exceeds the Issuable Maximum, and (C) the
Company shall not have previously obtained the vote of
shareholders, if any, as may be required by the applicable
rules and regulations of the Nasdaq Stock Market to approve
the issuance of shares of Common Stock in excess of the
Issuable Maximum pursuant to the terms hereof (the
"Shareholder Approval"), then the Company shall issue to the
Holder a number of shares of Common Stock equal to the
Issuable Maximum and, with respect to the shares whose
issuance would result in an issuance of shares of Common Stock
in excess of the Issuable Maximum, (the "Excess Warrant
Shares"), the Holder shall have the option to require the
Company to either (1) use its best efforts to obtain the
Shareholder Approval applicable to such issuance as soon as
possible, but in any event no later than 60 days after such
request (such 60th day, the "Target Date") or (2) pay to the
Holder, within three (3) Trading Day's from the request
therefor, an amount in cash equal to the product of (x) the
Excess Warrant Shares multiplied by (y) the closing sales
price of the Common Stock on the Date of Exercise giving rise
to the obligation to seek Shareholder Approval (the "Cash
Payment"). In the event the Holder has elected to require the
Company to seek the Shareholder Approval pursuant to clause
(1) of the immediately preceding sentence and the Company does
not obtain the Shareholder Approval on or prior to the Target
Date, then, on the Target Date, the Company shall pay the Cash
Payment to the Holder. If the Company fails to pay the Cash
Payment in full pursuant to this Section within seven (7) days
after the date payable, the Company will pay interest on such
amount at a rate of 18% per annum, or such lesser maximum
amount that is permitted to be paid by applicable law, to the
Holder, accruing daily from the date payable until such
amount, plus all such interest thereon, is paid in full. The
Company and the Holder understand and agree that shares of
Common Stock issued upon exercise of this Warrant and then
held by the Holder or an affiliate thereof may not cast votes
or be deemed outstanding for purposes of any vote to obtain
the Shareholder Approval.
11. FRACTIONAL SHARES. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 11, be issuable
on the exercise of this Warrant, the Company shall pay an amount in cash equal
to the Exercise Price multiplied by such fraction.
12. NOTICES. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile
EXHIBIT 10(c)-11.
telephone number specified in this Section prior to 6:30 P.M. (New York City
time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified in this Section later than 6:30 P.M.
(New York City time) on any date and earlier than 11:59 P.M. (New York City
time) on such date, (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given. The
addresses for such communications shall be: (i) if to the Company, to ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, attention
Chief Financial Officer or (ii) if to the Holder, to the Holder at the
address or facsimile number appearing on the Warrant Register or such other
address or facsimile number as the Holder may provide to the Company in
accordance with this Section.
13. WARRANT AGENT.
(a) The Company shall serve as warrant agent under this Warrant.
Upon thirty days' notice to the Holder, the Company may
appoint a new warrant agent.
(b) Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent
shall be a party or any corporation to which the Company or
any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a
successor warrant agent under this Warrant without any further
act. Any such successor warrant agent shall promptly cause
notice of its succession as warrant agent to be mailed (by
first class mail, postage prepaid) to the Holder at the
Holder's last address as shown on the Warrant Register.
14. MISCELLANEOUS.
(a) This Warrant shall be binding on and inure to the benefit of
the parties hereto and their respective successors and
assigns. This Warrant may be amended only in writing signed by
the party against whom such amendment is sought to be
enforced.
(b) Subject to Section 14(a), above, nothing in this Warrant shall
be construed to give to any person or corporation other than
the Company and the Holder any legal or equitable right,
remedy or cause under this Warrant. This Warrant shall inure
to the sole and exclusive benefit of the Company and the
Holder.
(c) The corporate laws of the State of California shall govern all
issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall
be governed by and construed and enforced in accordance with
the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. The Company and
the Holder hereby irrevocably submit to the exclusive
jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan, for the adjudication
of any dispute hereunder
EXHIBIT 10(c)-12.
or in connection herewith or with any
transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, or
that such suit, action or proceeding is improper. Each of the
Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any
such suit, action or proceeding by receiving a copy thereof
sent to the Company at the address in effect for notices to it
under this instrument and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by
law.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to
limit or affect any of the provisions hereof.
(e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of
this Warrant shall not in any way be affected or impaired
thereby and the parties will attempt in good faith to agree
upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this
Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by its authorized officer as of the date first indicated above.
FORTEL INC.
By:
----------------------
Name:
Title:
EXHIBIT 10(c)-13.
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares
of Common Stock under the foregoing Warrant)
To Fortel, Inc.
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase _____________
shares of common stock ("Common Stock"), no par value per share, of Fortel, Inc.
and, if such Holder is not utilizing the cashless exercise provisions set forth
in this Warrant, encloses herewith $________ in cash, certified or official bank
check or checks, which sum represents the aggregate Exercise Price (as defined
in the Warrant) for the number of shares of Common Stock to which this Form of
Election to Purchase relates, together with any applicable taxes payable by the
undersigned pursuant to the Warrant.
(Applicable Share Number) x [(1.2 x Purchase Price) - (Adjustment Price)]
------------------------------------------------------------------------
Adjustment Price
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY
OR TAX IDENTIFICATION NUMBER
-----------------------------
------------------------------------------------------------------------------
(Please print name and address)
Dated: Name of Holder:
----------------------
(Print)
----------------------------
(By:)
----------------------------
(Name:)
----------------------------
(Title:)
----------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
FORM OF ELECTION TO PURCHASE
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto the right represented by this Warrant to purchase all Warrant Shares to
which this Warrant currently or in the future relates and appoints
________________ attorney to transfer said right on the books of Fortel, Inc.
with full power of substitution in the premises.
Dated:
---------------, ----
------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
------------------------------------------
Address of Transferee
------------------------------------------
------------------------------------------
In the presence of:
--------------------
FORM OF ASSIGNMENT
EXHIBIT A
- "Adjustment Price" means the average of the two lowest Per Share
Market Values (which need not occur on consecutive Trading Days) during the 10
Trading Days preceding a Date of Exercise (which may include Trading Days prior
to the date on which the Holder may first exercise this Warrant) PROVIDED, that
such 10 Trading Day period shall be extended for the number of Trading Days
during such period in which (A) trading in the Common Stock is suspended by the
Nasdaq or a Subsequent Market on which the Common Stock is then listed, or (B)
after the Effective Date, the Underlying Shares Registration Statement is either
not effective, or the Prospectus included in the Underlying Shares Registration
Statement may not be used by the Holder for the resale of Underlying Shares. The
Adjustment Price as used in the calculation to determine the number of Warrant
Shares which may be acquired hereunder pursuant to Section 3(b) is subject to
adjustment in accordance with Section 8. The Adjustment Price as considered in
Section 3(a) shall not be subject to adjustment in accordance with Section 8.
- "Applicable Share Number" means the number of shares of Common Stock
purchased by the Holder pursuant to the Purchase Agreement and then owned by the
Holder, less the aggregate number of such shares used previously by the Holder
to calculate the number of Warrant Shares available to the extent such Warrant
Shares were actually issued hereunder pursuant to a Form of Election to
Purchase.
- "Business Day" shall have the meaning set forth in the Purchase
Agreement.
- "Closing Date" shall have the meaning set forth in the Purchase
Agreement.
- "Commission" means the Securities and Exchange Commission.
- "Date of Exercise" means the date on which the Holders shall have
delivered to the Company (i) the Form of Election to Purchase attached hereto
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the holder hereof to be
purchased.
- "Effective Date" the date on which the Underlying Shares Registration
Statement is first declared effective by the Commission.
- "Nasdaq" means the Nasdaq Smallcap Market.
- "Per Share Market Value" means on any particular date (a) the closing
bid price per share of the Common Stock on such date on the Nasdaq or on any
Subsequent Market on which the Common Stock is then listed or quoted, as
reported by Bloomberg Information Services, Inc. (or any successor entity
succeeding to its function of reporting prices), or if there is no such price on
such date, then the closing bid price on the Nasdaq or on such Subsequent Market
on the date nearest preceding such date, as reported by Bloomberg Information
Services, Inc. (or any successor entity succeeding to its function of reporting
prices), or (b) if the Common Stock is not then listed or quoted on the Nasdaq
or a Subsequent Market, the closing bid price for a share of Common Stock in the
over-the-counter market, as reported by the National Quotation
EXHIBIT A-1.
Bureau Incorporated or similar organization or agency succeeding to its
functions of reporting prices) at the close of business on such date, or (c)
if the Common Stock is not then reported by the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to its functions
of reporting prices), then the average of the "Pink Sheet" quotes for the
relevant conversion period, as determined in good faith by the Holder, or (d)
if the Common Stock is not then publicly traded the fair market value of a
share of Common Stock as determined by an Appraiser selected in good faith by
the Holders of a majority of the applicable Warrant Shares.
- "Purchase Agreement" means the Securities Purchase Agreement, dated
the date hereof to which the Company and the original Holder are parties and
pursuant to which this Warrant was issued.
- "Purchase Price" means $2.28125, which number shall be subject to
equitable adjustment for stock splits, recombinations and similar events.
- "Registration Rights Agreement" means the Registration Rights
Agreement, dated the date hereof to which the Company and the original Holder
are parties.
- "Subsequent Market" shall mean any of the New York Stock Exchange,
American Stock Exchange or Nasdaq National Market.
- "Trading Day" means (a) a day on which the Common Stock is traded on
the Nasdaq or on the Subsequent Market on which the Common Stock is then listed
or quoted, as the case may be, or (b) if the Common Stock is not listed on the
Nasdaq or a Subsequent Market, a day on which the Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board , or (c) if the
Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or any similar organization or agency succeeding
its functions of reporting prices); PROVIDED, that in the event that the Common
Stock is not listed or quoted as set forth in (a), (b) and (c) hereof, then
Trading Day shall mean a Business Day.
"Transaction Documents" shall have the meaning set forth in the
Purchase Agreement.
"Underlying Shares Registration Statement" shall have the meaning set
forth in the Purchase Agreement.
EXHIBIT A-2.
