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EXHIBIT 4.2
XXXXXX COMMUNICATIONS, INC.
STOCK PURCHASE WARRANT
OCTOBER ___, 1996
FOR VALUE RECEIVED, XXXXXX COMMUNICATIONS, INC., a Delaware corporation
(the "Company"), hereby certifies that HIGHAM, XXXXXXXXX & XXXXXXX is the
registered owner of 150,000 warrants (each, a "Warrant"), each of which
represents the right to purchase from the Company, at any time or from time to
time, on or after the date which is sixty (60) days after the date hereof and on
or before 5:00 P.M., California time, on the date which is five years after the
date hereof (the "Exercise Period"), initially one share of the common stock,
par value $.001 per share, of the Company ("Common Stock") at the price of
$.65625 per share, subject to the terms and conditions hereof.
For the purposes of this Agreement: (i) the common stock of the
Company, together with any other equity securities which may be issued by the
Company in substitution therefor, is referred to as the "Common Stock"; (ii) the
shares of the Common Stock purchasable hereunder are referred to as the "Warrant
Shares"; (iii) the aggregate exercise price payable for all of the Warrant
Shares is referred to as the "Aggregate Exercise Price"; and (iv) the price
payable hereunder for each of the Warrant Shares is referred to as the "Per
Share Exercise Price". The Per Share Exercise Price, the Aggregate Exercise
Price and the number of Warrant Shares are subject to adjustment as hereinafter
provided.
1. EXERCISE OF WARRANT.
1.1 GENERAL TERMS. This Warrant may be exercised, in whole or
in part, at any time or from time to time, during the Exercise Period by the
holder of this Warrant (the "Holder") by the surrender of this Warrant (with the
subscription form at the end hereof duly executed) at the principal office of
the Company, which is currently located at 00000 Xxxxx Xxxxx, Xxxxx, Xxxxxxxxxx
00000, together with proper payment of the Per Share Exercise Price for each of
the Warrant Shares as to which the Warrant is being exercised. Any such payment
of the Per Share Exercise Price is to be: (i) in cash, (ii) by certified or
official bank or bank cashier's check (or by wire transfer) payable to the order
of the Company; (iii) by tender of shares of Common Stock (which may be shares
of Common Stock to be received by the Holder pursuant to a concurrent exercise
of Warrants), valued as hereinafter set forth, or (iv) by any combination of the
foregoing. For purposes of the payment of the Per Share Exercise Price, each
share of Common Stock tendered by the Holder in payment of the Per Share
Exercise Price shall be deemed to have a value equal to the average of the
closing per share sales prices of a
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share of Common Stock on The NASDAQ (Small Cap) Stock Market ("NASDAQ") during
the ten (10) trading days immediately preceding the Exercise Date (as defined
herein) (the "Market Value"). In the event that the Holder elects to pay the Per
Share Exercise Price through the delivery of shares of Common Stock to be
received by the Holder pursuant to the concurrent exercise of Warrants (the
"Cashless Exercise Shares"), the Holder shall not be obligated to pay the Per
Share Exercise Price for any such Cashless Exercise Shares and the value of each
such Cashless Exercise Share, for purposes of the payment of the Per Share
Exercise Price for the shares of Common Stock to be delivered to and retained by
the Holder, shall be an amount equal to the Market Value minus the Per Share
Exercise Price. If at the time of any valuation of shares of Common Stock, the
shares of Common Stock are not then listed on NASDAQ, the Market Value shall be
the average of the closing per share sales price of a share of Common Stock on
the principal United States securities exchange registered under the Exchange
Act (as defined herein) on which the shares of Common Stock are then listed
during the ten (10) trading days immediately preceding the Exercise Date, or if
shares of Common Stock are not then listed on any such stock exchange, the
average of the bid and asked prices with respect to a share of Common Stock for
such ten (10) trading days, as furnished by a member of the New York Stock
Exchange regularly making a market in the Common Stock selected by the Holder,
or if no such member firm is then making a market in Common Stock, the fair
market value of a share of Stock on the date of issuance as determined by an
appraisal of the Company (an "Appraisal"). An "Appraisal" shall be prepared by a
mutually acceptable investment banking firm (the "Appraiser"). If the Holder and
the Company cannot agree on an Appraiser within ten (10) days following written
notice from either the Holder or the Company, each of the Holder and the Company
shall appoint an appraiser within ten (10) days following expiration of such
period. If the Holder or the Company fails to timely appoint their respective
Appraiser, the timely appointed Appraiser shall be the sole Appraiser. Those two
(2) appraisers shall jointly appoint a third appraiser within ten (10) days
after their appointment. All three (3) Appraisers shall deliver their appraisal
to the Company within thirty (30) days following the appointment of the last
Appraiser and the middle appraisal shall be the value of the Common Stock. The
costs, fees and expenses of each appointed Appraiser shall be paid by the
appointing party. The cost, fees and expenses of the third appraiser or the
mutually agreed upon Appraiser shall be shared equally by the Holder and the
Company.
1.2 ADDITIONAL PROVISIONS.
(a) If this Warrant is exercised in part, this Warrant must be
exercised for a number of whole shares of the Common Stock and the Company shall
execute a new Warrant of the same tenor and covering the number of Warrant
Shares with respect to which this Warrant has not been exercised, which Warrant
shall be registered in such name or names as may be directed in writing by the
Holder, and the Company shall deliver such Warrant to the person or entity to
receive the same, subject to the limitations set forth herein.
(b) Upon surrender of this Warrant in conformity with the
foregoing provisions, the Company (or the Acquiring Company in the case of a
Transaction) shall transfer
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to or upon the written order of the Holder, appropriate evidence of ownership of
any shares of Common Stock or other securities or property and any money to
which the Holder is entitled, registered or otherwise placed in, or payable to
the order of, such name or names as may be directed in writing by the Holder,
and shall deliver such evidence of ownership and any money to the person or
persons entitled to receive the same, together with an amount in cash in lieu of
any fraction of a share as hereinafter provided in paragraph (e) below.
(c) A Warrant shall be deemed to have been exercised or sold
immediately prior to the close of business on the date of the surrender for such
exercise or sale of the Warrant (the "Exercise Date") and, for all purposes
hereof the person entitled to receive any shares of Common Stock or other
securities or property (including any money) deliverable upon such exercise or
sale shall, as between such person and the Company (or the Acquiring Company in
the case of a Transaction), be deemed to be the holder of such shares of Common
Stock or other securities or property (including any money) of record as of the
close of business on such date and shall be entitled to receive, and the Company
shall deliver to such person, the shares of Common Stock or other securities or
property (including any money) to which such Holder would have been entitled had
such Holder been the record holder of such Common Stock on such date.
(d) Without limiting the foregoing, if, on any Exercise Date,
the transfer books for the shares of Common Stock or other securities
purchasable upon the exercise of the Warrants shall be closed, the certificates
for the shares of Common Stock or other securities in respect of which such
Warrants are then exercised, shall be transferred when such transfer book shall
next be opened (whether on or after the 5th anniversary of the date hereof), and
until such date the Company (or the Acquiring Company in the case of a
Transaction) shall be under no duty to deliver any certificates for such shares
of Common Stock or other securities; provided, however, that the transfer books
of record, unless required by law, shall not be closed at any time for a period
longer than 20 days.
(e) Notwithstanding anything to the contrary contained herein,
the Company shall not be required to issue any fraction of a share of Common
Stock or to distribute stock certificates that evidence fractional shares of
Common Stock. If any fraction of a share of Common Stock would, except for the
provisions of this paragraph (e), be issuable on the exercise of any Warrant or
Warrants, the Company shall purchase such fraction for an amount in cash equal
to such fraction of the then current Market Value. The Holder, by its acceptance
of this Warrant, expressly waives its right to receive any fraction of a share
of Common Stock or a stock certificate representing a fraction of a share of
Common Stock. Notwithstanding the foregoing, the Company shall issue Warrants
representing a fractional interest of a Warrant; provided that, the exercise of
such fractional Warrant shall be subject to the provisions of this paragraph
(e).
1.3 COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Before taking any action
that would cause an adjustment reducing the Per Share Exercise Price below the
then par value
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of any of the shares of Common Stock issuable upon exercise of the Warrants, the
Company will take any corporate action that 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 of such Common Stock at such adjusted Per Share
Exercise Price.
The Company covenants that if any federal or state law or any
rule or regulation of any national securities exchange requires that the shares
of Common Stock reserved for issuance upon exercise of the Warrants be
registered with or approved by any governmental authority or listed on any
national securities exchange before such shares may be issued upon exercise, the
Company will in good faith and as expeditiously as possible endeavor to cause
such shares to be duly registered, approved or listed, as the case may be.
1.4 RIGHTS UPON DISSOLUTION OR LIQUIDATION. Notwithstanding any other
provisions of this Warrant, in the event that, at any time after the date hereof
and prior to the expiration hereof and the termination of the rights of the
Holder hereof as provided in this Section 1, there shall be a voluntary or
involuntary dissolution, liquidation or winding up of the Company, then the
Company shall give notice by first class mail to the Holder at such Xxxxxx's
address as it appears on the books and records of the Company at the earliest
practicable time (and, in any event, not less than 20 days before any date set
for definitive action), of the date on which such dissolution, liquidation or
winding up shall take place. Such notice shall also specify the date as of which
the holders of the shares of record of Common Stock or other securities
underlying the Warrants shall be entitled to exchange their shares for
securities, money or other property deliverable upon such dissolution,
liquidation or winding up, on which date the Holder shall receive the
securities, cash or other property which it would have been entitled to receive
had the Warrants been exercisable and exercised immediately prior to such
dissolution, liquidation or winding up (net of the then applicable Per Share
Exercise Price), and the rights to exercise the Warrants shall terminate.
1.5 RIGHTS UPON A CHANGE IN CONTROL. Notwithstanding any other
provisions of this Warrant, in the event that, at any time after the date hereof
and prior to the expiration hereof and the termination of the rights of the
Holder hereof as provided in this Section 1, there shall have been a change in
control of the Company of a nature that would be required to be reported in
response to item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), at a price
less than $___________ per share (or the pro rata equivalent in the case of the
acquisition of assets), then the Holder shall be entitled to receive a payment
equal to the difference between the acquisition price per share (or the pro rata
equivalent in the case of the acquisition of assets) and $______________
multiplied by the number of unexercised or unexpired Warrants. For purposes of
this section, a "change in control" will be deemed to have occurred if any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of (i) securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities, or (ii) assets of the Company representing 25% or more
of the Company's
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assets. The sales price per share shall be adjusted upon the occurrence of, and
in a manner consistent with, the events specified in Section 3.2 and 3.3.
2. RESERVATION OF WARRANT SHARES. The Company agrees that, prior to the
expiration of this Warrant, the Company will at all times have authorized and in
reserve, and will keep available, solely for issuance or delivery upon the
exercise of this Warrant, the shares of the Common Stock and other securities
and properties as from time to time shall be receivable upon the exercise of
this Warrant.
3. ADJUSTMENTS.
3.1 DISTRIBUTION WITH RESPECT TO COMMON STOCK. If, at any time
or from time to time after the date of this Warrant, the Company shall
distribute to the holders of the Common Stock, without payment therefor: (i)
securities (including, without limitation, options, warrants, rights and
convertible or exchangeable securities), other than shares of the Common Stock;
or (ii) property, other than cash, with respect to the Common Stock, then, and
in each such case, subject to Section 3.5 hereof, the Holder, upon the exercise
of this Warrant, shall be entitled to receive the securities and properties
which the Holder would hold on the date of such exercise if, on the date of such
distribution, the Holder had been the holder of record of the number of shares
of the Common Stock subscribed for upon such exercise and, during the period
from the date of such distribution to and including the date of such exercise,
had retained such shares and the securities and properties receivable by the
Holder during such period.
3.2 STOCK SPLITS, ETC. If, at any time or from time to time
after the date of this Warrant, the Company shall issue to the holders of the
Common Stock shares of the Common Stock by way of a stock dividend or stock
split or increase the number of shares of Common Stock outstanding by
reclassification of its Common Stock, then, and in each such case, the Per Share
Exercise Price shall be adjusted, or further adjusted, to a price (to the
nearest whole cent) determined by dividing: (i) an amount equal to the number of
shares of the Common Stock outstanding immediately prior to such issuance
multiplied by the Per Share Exercise Price as it existed immediately prior to
such issuance; by (ii) the total number of shares of the Common Stock
outstanding immediately after such issuance. Upon each such adjustment in the
Per Share Exercise Price, the number of Warrant Shares shall be adjusted by
dividing the Aggregate Exercise Price by the Per Share Exercise Price in effect
immediately after such adjustment.
3.3 REVERSE SPLITS, ETC. If, at any time or from time to time
after the date of this Warrant, the number of shares of Common Stock outstanding
is decreased by way of combination of shares or reverse split or
reclassification of Common Stock, then, and in each such case, the Per Share
Exercise Price shall be adjusted, or further adjusted, to a price (to the
nearest whole cent) determined by dividing: (i) an amount equal to the number of
shares of the Common Stock outstanding immediately prior to such event
multiplied by the Per Share Exercise Price as it existed immediately prior to
such event; by (ii) the total number of shares of the Common Stock outstanding
immediately after such event. Upon each such adjustment in the Per
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Share Exercise Price, the number of Warrant Shares shall be adjusted by dividing
the Aggregate Exercise Price by the Per Share Exercise Price in effect
immediately after such adjustment.
3.4 SALE OF STOCK. If, at any time or from time to time after
the date of this Warrant, the Company shall sell any shares of Common Stock for
a consideration per share less than the Per Share Exercise Price, then, and
thereafter, upon each further sale, the Per Share Exercise Price shall be
correspondingly adjusted to reduce the Per Share Exercise Price to match such
lower sale price.
3.5 CHANGES IN COMMON STOCK. If the Company shall be a party
to any transaction (including, without limitation, a merger, consolidation, sale
of all or substantially all of the Company's assets, or recapitalization of the
Common Stock) in which the previously outstanding Common Stock shall be changed
into or exchanged for different securities of the Company or common stock or
other securities of another corporation or interests in a non-corporate entity
or other property (including cash) or any combination of the foregoing (each
such transaction being herein called a "Transaction") then, as a condition of
the consummation of the Transaction, the Company, in the case of the
recapitalization of the Common Stock, or such other corporation or entity, in
the case of a merger, consolidation or such sale (the "Acquiring Company", and
the common stock or equivalent equity interests of the Acquiring Company, the
"Acquirer's Common Stock"), shall make lawful and adequate provision so that,
upon the exercise thereof at any time on or after the consummation of the
Transaction, the Holder shall be entitled to receive and each Warrant shall
represent the right to receive, in lieu of the Common Stock issuable upon such
conversion prior to such consummation, the securities or other property
(including cash) to which the Holder would have been entitled upon consummation
of the Transaction if the Holder had exercised such Warrant immediately prior
thereto, subject to adjustments from and after the consummation date as nearly
equivalent as possible to the adjustments provided for in this Section 3. The
Company shall not effect any Transaction unless prior to the consummation
thereof each corporation or entity (other than the Company) which may be
required to deliver any securities or other property upon the exercise of the
Warrants as provided herein shall assume, by written instrument delivered to the
Holder, the obligation to deliver to the Holder such securities or other
property as in accordance with the foregoing provisions the Holder may be
entitled to receive. The foregoing provisions of this Subsection 3.5 shall
similarly apply to successive mergers, consolidations, sales of assets,
liquidations and recapitalizations.
3.6 NOTICE OF ADJUSTMENT. Whenever the Per Share Exercise
Price and the number of shares of Common Stock and other property, if any,
purchasable upon exercise of Warrants is adjusted, in accordance with this
Section 3, as herein provided, the Company shall mail to the Holder at its
address as it appears in the warrant register established under Section 6, a
copy of a certificate of the Chief Financial Officer of the Company setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was calculated and specifying the Per Share Exercise
Price and the number of shares of Common
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Stock and other property, if any, purchasable upon exercise of Warrants after
giving effect to such adjustment.
3.7 NOTICE OF CERTAIN CORPORATE ACTION. If the Company shall
propose to take any of the actions specified in Sections 3.1, 3.2, 3.3, 3.4 or
3.5 hereof, the Company shall give to the Holder a notice of such proposed
action to be mailed to the Holder at its address in the warrant register, which
shall specify the date on which a record is to be taken for the purpose of such
dividend, distribution or right, or the date such issuance is to take place and
the date of participation therein by the holders of Common Stock, if any such
date is to be fixed, and shall indicate the effect of such action on the Common
Stock and the number and kind of any other shares of stock and other property,
if any, and the Per Share Exercise Price after giving effect to any adjustment
which will be required as a result of such transaction. Such notice shall be so
given in the case of any action covered by Section 3.1, 3.2, 3.3 or 3.4 at least
30 days prior to the record date for determining holders of the Common Stock for
purposes of such action.
3.8 STATEMENTS ON WARRANT. The form of this Warrant need not
be changed because of any adjustment made pursuant to this Section 3, and any
Warrant issued after such adjustment may state the same Per Share Exercise Price
and the same number of shares of Common Stock as are stated in this Warrant.
3.9 NO IMPAIRMENT. While this Warrant is outstanding, the
Company shall not, by amendment of its Certificate of Incorporation or through a
Transaction, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed under this Warrant by the Company, but shall
at all times in good faith assist in carrying out all of the provisions of this
Section 3 and in taking all such action as may be necessary or appropriate to
protect (but not increase) the Holder's rights hereunder against impairment.
4. FULLY PAID STOCK; TAXES. The Company agrees that the shares of the
Common Stock represented by each and every certificate for Warrant Shares
delivered on the exercise of this Warrant shall, at the time of such delivery,
be validly issued and outstanding, fully paid and non-assessable. The Company
further covenants and agrees that it will pay, when due and payable, any and all
federal and state stamp, original issue or similar taxes which may be payable in
respect of the issue of any Warrant Share or certificate therefor; 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 issuance of any certificate
for Warrant Shares in a name other than that of the Holder upon any exercise of
this Warrant.
5. TRANSFER PROCEDURE. The Holder may transfer all or any part of this
Warrant by executing and delivering to the Company the Assignment Form attached
hereto.
6. WARRANT REGISTER. This Warrant is transferable only upon the books
of the Company which it shall cause to be maintained for such purpose. The
Company may treat the
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registered holder of this Warrant as he, she or it appears on the Company's
books at any time as the Holder for all purposes, notwithstanding the Company's
receipt of any notice to the contrary.
7. LOSS, ETC., OF WARRANT. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and of
indemnity reasonably satisfactory to the Company, if lost, stolen or destroyed,
and upon surrender and cancellation of this Warrant if mutilated, and upon
reimbursement of the Company's reasonable incidental expenses, the Company shall
execute and deliver to the Holder a new Warrant of like date, tenor and
denomination. Each substitute Warrant executed and delivered pursuant to this
Section in lieu of any lost, stolen, destroyed, or mutilated Warrant shall
represent an additional contractual obligation of the Company and shall be
entitled to the benefits of this Warrant equally and proportionately with any
and all other Warrants duly executed and delivered by the Company pursuant
hereto.
8. WARRANT XXXXXX HAS NO SHAREHOLDER RIGHTS. This Warrant does not
confer upon the Holder any right to vote or to consent or to receive notice as a
shareholder of the Company, as such, with respect to any matters whatsoever, or
any other rights or liabilities as a shareholder, prior to the exercise hereof.
9. COMMUNICATION. Any notice required or permitted to be given
hereunder shall be in writing and shall be given personally, via commercial
overnight courier service or by deposit in the United States mail, postage
prepaid, registered or certified, return receipt requested, addressed to each
party in the following manner:
To the Company: Xxxxxx Communications, Inc.
00000 Xxxxx Xxxxx
Xxxxx, Xxxxxxxxxx 00000
Attention: President
To the Holder: Higham, XxXxxxxxx & Xxxxxxx
00000 Xxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Notices shall be deemed given upon the earliest to occur of: (i)
receipt; (ii) the day after delivery to a commercial overnight courier service;
or (iii) five (5) days after deposit in the United States mail. The Company and
the Holder may change the address to which such notices are to be addressed to
them by giving the other party notice in the manner set forth herein.
10. HEADINGS. The headings of this Warrant have been inserted as a
matter of convenience and shall not affect the construction hereof.
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11. ADVICE OF COUNSEL. Each party hereto acknowledges that it has been
advised to seek independent legal counsel for advice regarding the effect of the
terms and provisions hereof, and has either obtained such advice of independent
legal counsel, or has voluntarily and without compulsion elected to enter into
and be bound by the terms of this Agreement without such advice of independent
legal counsel.
12. SEVERABILITY. If any provision of this Warrant is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remainder of
the provisions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
13. APPLICABLE LAW. This Warrant shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without giving
effect to the conflict of laws principles thereof.
IN WITNESS WHEREOF, this Warrant has been duly executed as of the date
first above written.
XXXXXX COMMUNICATIONS, INC.
By:________________________
Its:_______________________
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FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto___________________ the right to purchase_____ shares of Common Stock
evidenced by the within Warrant, and hereby appoints__________________________
to transfer the same on the books of XXXXXX COMMUNICATIONS, INC. with full power
of substitution in the premises.
Date:________________, 19__
_______________________
(Signature)
Note: Signature must
conform in all respects
to the name of the
Warrant Holder as
specified on the face
of this Warrant in
every particular,
without alteration or
enlargement or any
change whatsoever.
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EXERCISE FORM
TO: XXXXXX COMMUNICATIONS, INC.
The undersigned (_____________________________)
Please insert Social Security or other identifying
number of Holder
hereby irrevocably elects to exercise the right of purchase represented by the
within Warrant for, and to purchase thereunder, shares of Common Stock provided
for therein and tenders payment herewith the Per Share Exercise Price for each
such share of Common Stock. The undersigned requests that certificates for such
shares of Common Stock be issued as follows:
Name: _________________________________
Address: ______________________________
Deliver to: ___________________________
Address: ______________________________
Date: ___________________, 19__
_______________________
(Signature)
Note: Signature must
conform in all respects
to the name of the
Warrant Holder as
written upon the face
of this Warrant in
every particular,
without alteration or
enlargement or any
change whatsoever.
The undersigned represents and warrants to XXXXXX COMMUNICATIONS, INC. that the
undersigned is acquiring the shares referred to above solely for its own account
and not as a nominee for any other person or entity and not with a view toward
the resale or distribution thereof except in compliance with applicable
securities laws.
_______________________
(Signature)
_______________________
(Date)
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