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Exhibit 4.3
PACIFIC SOFTWORKS, INC.
AND
AMERICAN SECURITIES TRANSFER, INCORPORATED
Warrant Agent
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WARRANT AGREEMENT
Dated March , 1999
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TABLE OF CONTENTS*
Section 1 Warrants......................................................................... 1
Section 2 Detachability.................................................................... 1
Section 3 Warrant Certificates............................................................. 2
Section 4 Registration of Transfers and Exchanges.......................................... 2
Section 5 Exercise of Warrants............................................................. 2
Section 6 Redemption of Warrants........................................................... 3
Section 7 Payment of Taxes................................................................. 4
Section 8 Mutilated or Missing Warrant Certificates........................................ 5
Section 9 Reservation of Shares............................................................ 5
Section 10 Registration of Shares Issuable Upon Exercise of Warrants........................ 5
Section 11 Adjustments of Exercise Price and Either Shares Purchasable or
Number of Warrants............................................................... 5
Section 12 Fractional Warrants and Fractional Shares........................................ 11
Section 13 Notices to Warrant Holders....................................................... 11
Section 14 Rights of Warrant Holders........................................................ 12
Section 15 Warrant Agent.................................................................... 13
Section 16 Merger, Consolidation or Change of Name of Warrant Agent......................... 14
Section 17 Change of Warrant Agent.......................................................... 15
Section 18 Notices.......................................................................... 15
Section 19 Supplements and Amendments....................................................... 16
Section 20 Successors....................................................................... 17
Section 21 Termination...................................................................... 17
Section 22 Governing Law.................................................................... 17
Section 23 Benefits of This Agreement....................................................... 17
Section 24 Agreement Available to Warrant Holders........................................... 17
Section 25 Counterparts..................................................................... 17
EXHIBIT A................................................................................... 19
FORM OF WARRANT CERTIFICATE................................................................. 21
ASSIGNMENT.................................................................................. 21
EXERCISE.................................................................................... 21
*This Table of Contents does not constitute a part of this Agreement or have any
bearing upon the interpretation of any of its terms and provisions.
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THIS WARRANT AGREEMENT, dated as of ___________, is between PACIFIC
SOFTWORKS, INC. ("Company"), a California corporation, and AMERICAN SECURITIES
TRANSFER, INCORPORATED (called, as well as any successor acting as warrant agent
under this Agreement, the "Warrant Agent").
WHEREAS, the Company has one class of common stock, $0.001 par value
(the "Common Stock"), and the Company will issue shares of its Common Stock
pursuant to Registration Statement No. ___-_____ that the Company has filed with
the United States Securities and Exchange Commission; and
WHEREAS, in connection with the issuance of said shares of Common Stock,
the Company will issue Warrants: all shares of Common Stock, $0.001 par value,
and, if appropriate after certain adjustments provided for in this Agreement, of
such other classes of securities or property to be purchased upon the exercise
of the Warrants being called the "Shares"; and
WHEREAS, the Company will issue the Shares and Warrants in units (the
"Units"), each Unit consisting of one Share and one Warrant (evidenced by a
"Warrant Certificate"); and
WHEREAS, each Warrant will entitle the Warrant Holder to purchase one
Share; and
WHEREAS, the Company desires to enter into this Agreement to establish
the terms and conditions of the Warrants, to set forth the rights of the
registered holders of the Warrants (collectively the "Warrant Holders"), and to
provide for the transfer and exercise of the Warrants and other matters; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company and the Warrant Agent is willing so to act under the terms of this
Agreement:
NOW THEREFORE, in consideration of the mutual agreements stated in this
Agreement, the Company and the Warrant Agent agree as follows:
SECTION 1 WARRANTS. Subject to the provisions of this Agreement, each
Warrant shall entitle the Warrant Holder by exercising the Warrant to purchase
from the Company one fully-paid and nonassessable Share at an initial price of
$7.50 per Share. The price at which a Warrant is exercisable at a particular
time shall be called the "Exercise Price."
The Warrants will expire at 5:00 p.m. Los Angeles, California time, on
___________ or such later date as is determined pursuant to the terms of Section
19 hereof (the actual time of expiration of the Warrants being called the
"Expiration Date"). At the time of expiration of the Warrants, any unexercised
Warrants will become void and all rights of the Warrant Holders under the terms
of the Warrant Certificate, this Agreement, and otherwise shall cease.
SECTION 2 DETACHABILITY. The Common Stock and Warrants comprising the
Units will be detachable immediately. A Warrant Certificate may be presented for
exercise, sold, assigned, or otherwise conveyed on the books of the Warrant
Agent either separate from (if the Common Stock and Warrants are then
detachable) or together with a certificate representing shares of the Company's
Common Stock.
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SECTION 3 WARRANT CERTIFICATES.
(a) The Warrant Certificates shall be in registered form only.
The text of the Warrant Certificates, including the forms of exercise
and assignment to be printed on the reverse side of the Warrant
Certificates, shall be substantially in the form set forth in Exhibit A
attached to this Agreement. Warrant Certificates shall be signed by, or
shall bear the facsimile signatures of the Chairman of the Board, the
President or a Vice President of the Company, and the Secretary or an
Assistant Secretary of the Company and shall bear a facsimile of the
Company's corporate seal. If any person whose facsimile signature has
been placed upon any Warrant Certificate as the signature of an officer
of the Company shall have ceased to be such officer before such Warrant
Certificate is countersigned, issued, and delivered, such Warrant
Certificate may be countersigned, issued, and delivered with the same
effect as if such person had not ceased to be such officer. Any Warrant
Certificate may be signed by, or may bear the facsimile signature of,
any person who at the actual date of the preparation of such Warrant
Certificate shall be a proper officer of the Company to sign such
Warrant Certificate even though such person was not such an officer upon
the date of this Agreement.
(b) Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so
countersigned. The Warrant Agent is hereby authorized to countersign and
deliver to, or in accordance with the instructions of, any Warrant
Holder any Warrant Certificate which is properly issued under the terms
of this Agreement.
SECTION 4 REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) The Warrant Agent shall from time to time register the
transfer of any outstanding Warrants upon records to be maintained by
the Warrant Agent for such purpose upon surrender of a Warrant
Certificate to the Warrant Agent for transfer, accompanied by
appropriate instruments of transfer in form satisfactory to the Company
and the Warrant Agent and duly executed by the Warrant Holder or a duly
authorized attorney. Upon any such registration of transfer, new Warrant
Certificates shall be issued in the name of and delivered to the
transferee, and the surrendered Warrant Certificate shall be cancelled.
(b) Any outstanding Warrant Certificate may be surrendered to
the Warrant Agent in exchange for other Warrant Certificates of like
tenor, subject to subsection (f) of Section 11, and representing in the
aggregate the same number of Warrants, subject to any adjustment under
subsection (d) of Section 11. Warrant Certificates so surrendered for
exchange shall be cancelled.
SECTION 5 EXERCISE OF WARRANTS.
(a) Any whole number or all of the Warrants evidenced by any
Warrant Certificate may be exercised upon any single occasion on or
before the Expiration Date. A Warrant shall be exercised by the Warrant
Holder by surrendering to the Warrant Agent the Warrant Certificate
attached to or detached from the Share Certificate, with the exercise
form on the reverse of such Warrant Certificate duly completed and
executed, together with payment in lawful money of the United States of
America in cash
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or by certified or cashier's check or bank draft payable to the order of
the Company, for the Exercise Price for the total number of Shares to be
purchased.
(b) Subject to Section 5(d) and Section 10, upon receipt of a
Warrant Certificate with the exercise form thereon duly executed,
together with payment in full of the Exercise Price for the Shares for
which Warrants then are being exercised, the Warrant Agent shall
requisition from any transfer agent for the Shares (which transfer agent
may be the Warrant Agent pursuant to its appointment therefor separately
from this Agreement) and upon receipt shall make delivery of
certificates evidencing the total number of whole Shares for which
Warrants are then being exercised in such names and denominations as are
required for delivery to, or in accordance with the instructions of the
Warrant Holder, provided that if fewer than all Shares issuable on
exercise of a Warrant Certificate are purchased, the Warrant Agent (if
so requested) shall issue a Warrant Certificate for the balance of the
Shares. Subject to the payment of the Exercise Price becoming collected
funds, such certificates for the Shares shall be deemed to be issued,
and the person to whom such Shares are issued of record shall be deemed
to have become a holder of record of such Shares, as of the date of the
surrender of such Warrant Certificate and payment of the Exercise Price,
whichever shall last occur, provided that if the books of the Company
with respect to the Shares shall be closed as of such date, the
certificates for such Shares shall be deemed to be issued, and the
person to whom such Shares are issued of record shall be deemed to have
become a record holder of such Shares, as of the date on which such
books shall next be open (whether before, on, or after the applicable
Expiration Date) but at the Exercise Price and upon the other conditions
in effect upon the date of surrender of the Warrant Certificate and
payment of the Exercise Price, whichever shall have last occurred, to
the Warrant Agent.
(c) All Warrant Certificates surrendered upon exercise of
Warrants shall be cancelled.
(d) Upon the exercise, or conversion of any Warrant, the Warrant
Agent shall promptly deposit the payment into an account established by
mutual agreement of the Company and the Warrant Agent at a federally
insured commercial bank. All funds deposited in the account will be
disbursed on a weekly basis to the Company, once they have been
determined by the Warrant Agent to be collected funds. Once the funds
are determined to be collected, the Warrant Agent shall cause the Share
certificate(s) representing the exercised Warrants to be issued as
provided in Section 5(b) hereof.
SECTION 6 REDEMPTION OF WARRANTS.
(a) The Company may redeem the Warrants at $0.05 per Warrant
(the "Redemption Price") upon 30 days' prior written notice any time
after a period of 20 consecutive trading days that the closing price of
the Common Stock exceeds $8.00. For these purposes, the closing price of
the Common Stock will be determined by the closing bid price, as
reported by NASDAQ, or if the Common Stock is listed on a national stock
exchange or on the NASDAQ National Market System, the closing price will
be determined by the closing sale price on the primary exchange on which
the Common Stock is traded or on the NASDAQ National Market System, if
such shares are not listed on a national stock exchange. Notwithstanding
the foregoing, the Company will not be entitled to call any of the
Warrants for redemption or redeem any of the Warrants at a time when the
Warrants are not exercisable because the Company has not maintained a
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current registration statement as described in Section 10 hereof. On the
redemption date, the Warrant Holders of record of redeemed Warrants
shall be entitled to payment of the Redemption Price upon surrender of
such redeemed Warrants to the Company at the principal office of the
Warrant Agent.
(b) Notice of redemption of any Warrants shall be given by
mailing, by registered or certified mail, return receipt requested, a
copy of such notice to all of the affected Warrant Holders of record as
of two days prior to the mailing date at their respective addresses
appearing on the books or transfer records of the Company or such other
address designated in writing by the Warrant Holder of record to the
Warrant Agent not less than _______ (__) days prior to the redemption
date and shall be effective upon receipt.
(c) Notwithstanding any other provision of this Agreement, from
and after the redemption date, all rights of the affected Warrant
Holders (except the right to receive the Redemption Price) shall
terminate, but only if (i) on or prior to the redemption date the
Company shall have irrevocably deposited with the Warrant Agent, as
paying agent, a sufficient amount to pay on the redemption date the
Redemption Price for all Warrants called for redemption and (ii) the
notice of redemption shall have stated the name and address of the
Warrant Agent and the intention of the Company to deposit such amount
with the Warrant Agent on or before the redemption date.
(d) The Warrant Agent shall pay to the Warrant Holders of record
of redeemed Warrants all monies received by the Warrant Agent for the
redemption of Warrants to which the Warrant Holders of record of such
redeemed Warrants are entitled under the provisions of this Agreement.
(e) Any amounts deposited with the Warrant Agent which are not
required for redemption of the Warrants may be withdrawn by the Company.
Any amounts deposited with the Warrant Agent which shall be unclaimed
after six (6) months after the redemption date may be withdrawn by the
Company, and thereafter the Warrant Holders of the Warrants called for
redemption for which such funds were deposited shall look solely to the
Company for payment. The Company shall be entitled to the interest, if
any, on funds deposited with the Warrant Agent, and the Warrant Holders
of redeemed Warrants shall have no right to any such interest.
(f) If the Company fails to make a sufficient deposit with the
Warrant Agent as provided above, the Warrant Holder of any Warrants
called for redemption may at the option of the Warrant Holder (i) by
notice to the Company declare the notice of redemption a nullity, or
(ii) maintain an action against the Company for the Redemption Price. If
the Warrant Holder brings such an action, the Company will pay
reasonable attorneys' fees of the Warrant Holder. If the Warrant Holder
fails to bring an action against the Company for the Redemption Price
within ninety (90) days after the redemption date, the Warrant Holder
shall be deemed to have elected to declare the notice of redemption to
be a nullity and such notice shall be without any force or effect.
SECTION 7 PAYMENT OF TAXES. The Company will pay all taxes attributable
to the initial issuance of Shares upon exercise of Warrants. The Company shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue of any Warrant Certificates or in the issue of
any certificates for Shares in a name other than that of the Warrant Holder upon
the exercise of any Warrant.
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SECTION 8 MUTILATED OR MISSING WARRANT CERTIFICATES. If any Warrant
Certificate is mutilated, lost, stolen, or destroyed, the Company and the
Warrant Agent may, on such terms as to indemnity or otherwise as they may in
their discretion impose (which shall, in the case of a mutilated Warrant
Certificate, include the surrender thereof), and upon receipt of evidence
satisfactory to the Company and the Warrant Agent of such mutilation, loss,
theft, or destruction, issue a substitute Warrant Certificate of like
denomination and tenor as the Warrant Certificate so mutilated, lost, stolen or
destroyed, subject to subsection (f) of Section 11. Applicants for such
substitute Warrant Certificate shall also comply with such other reasonable
regulations and pay any reasonable charges as the Company or the Warrant Agent
may prescribe. If any Warrant Certificate is mutilated, lost, stolen, or
destroyed, and the Warrant Holder desires to exercise any Warrants evidenced
thereby, the Company and the Warrant Agent may authorize such exercise upon
receipt of such evidence and indemnity in lieu of issuing any substitute Warrant
Certificate to evidence the Warrants so exercised.
SECTION 9 RESERVATION OF SHARES.
(a) 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 the Company's Common Stock, for the purpose of
enabling it to satisfy any obligation to issue Shares upon exercise of
Warrants, the full number of Shares issuable upon the exercise of all
outstanding Warrants.
(b) The Company covenants that all Shares which may be issued
upon exercise of Warrants will upon issue be fully paid and
nonassessable by the Company and free from all taxes, liens, charges,
and security interests with respect to the issue thereof.
SECTION 10 REGISTRATION OF SHARES ISSUABLE UPON EXERCISE OF WARRANTS. If
any Shares issuable upon the exercise of Warrants require the maintenance of a
current registration statement under the Securities Act of 1933, as amended (the
"Act"), with respect to such Shares before such Shares may be validly and
lawfully issued, the Company will in good faith endeavor to maintain such
current registration statement under the Act, provided that in no event shall
such Shares be issued, and the Company shall have the authority to suspend the
exercise of any or all Warrants while such registration statement is not
current. Similarly, a Warrant Holder residing in a state where a required
registration or governmental approval of issuance of the Shares is not in effect
as of or has not been obtained within a reasonable time after the surrender date
of the Warrant Certificate for exercise shall not be entitled to exercise
Warrants, unless in the opinion of counsel to the Company such registration or
approval in such state shall not be required or the Company otherwise authorizes
the issuance. In such event, the Warrant Holder shall be entitled to transfer
the Warrants to others, but only prior to the Expiration Date for the Warrants
being transferred.
SECTION 11 ADJUSTMENTS OF EXERCISE PRICE AND EITHER SHARES PURCHASABLE
OR NUMBER OF WARRANTS. The Exercise Price and either the number of Shares
purchasable upon exercise of the Warrants or the number of Warrants outstanding
shall be subject to adjustment from time to time as provided in this Section.
(a) In case the Company shall (i) declare a stock dividend or
make a distribution on its outstanding shares of Common Stock in shares
of Common Stock, (ii) subdivide or reclassify its outstanding shares of
Common Stock into a greater number of shares of Common Stock, or (iii)
combine or reclassify its outstanding shares of
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Common Stock into a smaller number of shares of Common Stock, the
Exercise Price in effect at the time of the record date for such
dividend or distribution or of the effective date of such subdivision,
combination, or reclassification shall be adjusted so that it shall
equal the price determined by multiplying the Exercise Price by a
fraction, the denominator of which shall be the number of shares of
Common Stock outstanding after giving effect to such action, and the
numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such action.
(b) In case the Company shall fix a record date for the issuance
of rights or warrants to all holders of its Common Stock entitling them
to subscribe for or purchase shares of Common Stock (or securities
convertible into Common Stock) at a price (the "Subscription Price") (or
having a conversion price per share of Common Stock) less than the
current market price of the Common Stock (as defined in subsection (k)
of this Section 11) on the record date mentioned below, the Exercise
Price shall be adjusted so that the same shall equal the price
determined by multiplying the Exercise Price in effect immediately prior
to the date of such issuance by a fraction, the numerator of which shall
be the sum of the number of shares of Common Stock outstanding on the
record date mentioned below and the number of additional shares of
Common Stock which the aggregate offering price of the total number of
shares of Common Stock so offered (or the aggregate conversion price of
the convertible securities so offered) would purchase at such current
market price per share of the Common Stock, and the denominator of which
shall be the sum of the number of shares of Common Stock outstanding on
such record date and the number of additional shares of Common Stock
offered for subscription or purchase (or into which the convertible
securities so offered are convertible). Such adjustment shall be made
successively whenever such rights or tie warrants are issued and shall
become effective immediately after the record date for the determination
of stockholders entitled to receive such rights or warrants: and to the
extent that shares of Common Stock are not delivered (or securities
convertible into Common Stock are not delivered) after the expiration of
such rights or warrants, the Exercise Price shall be readjusted to the
Exercise Price which would then be in effect had the adjustments made
upon the issuance of such rights or warrants been made upon the basis of
delivery of only the number of shares of Common Stock (or securities
convertible into Common Stock) actually delivered.
(c) In case the Company shall hereafter distribute to the
holders of its Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions and dividends or
distributions referred to in subsection (a) of this Section) or
subscription rights or warrants (excluding those referred to in
subsection (b) of this Section), then in each such case the Exercise
Price in effect thereafter shall be determined by multiplying the
Exercise Price in effect immediately prior thereto by a fraction, the
numerator of which shall be the total number of shares of Common Stock
outstanding multiplied by the current market price per share of Common
Stock (as defined in subsection (k) of this Section), less the fair
market value (as determined by the Company's Board of Directors) of said
assets or evidences of indebtedness so distributed or of such rights or
warrants, and the denominator of which shall be the total number of
shares of Common Stock outstanding multiplied by such current market
price per share of Common Stock. Such adjustment shall be made
successively whenever such a record date is fixed. Such adjustment shall
be made whenever any such distribution is made and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such distribution.
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(d) In case the Company shall issue shares of its Common Stock
(excluding shares issued (i) in any of the transactions described in
subsections (a), (b), and (c) above, (ii) upon the issuance or exercise
of options granted to the Company's directors, employees, and
consultants under a plan or plans adopted by the Company's Board of
Directors and approved by its stockholders, if such shares would
otherwise be included in this subsection (d) of this Section (but only
to the extent that the aggregate number of shares excluded hereby and
issued after the date hereof shall not exceed 10% of the Company's
Common Stock outstanding at the time of any issuance), (iii) upon
exercise of rights, options, and warrants outstanding or authorized for
grant or contractually bound to be issued at April ___, 1999, upon
exercise of the options that were originally a part of the original
option issued to the Underwriter pursuant to the Underwriting Agreement,
dated April ___, 1999, between the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Securities, Inc., or upon exercise of any Warrants or the overallotment
option granted to the Underwriter pursuant to the Underwriting
Agreement, (iv) to stockholders of any corporation which merges into the
Company or from which the Company acquires assets and some or all of the
consideration consists of equity securities of the Company in proportion
to their stock holdings of such corporation immediately prior to such
merger or acquisition, upon such merger or acquisition, (v) issued in a
bona fide public offering pursuant to a firm commitment underwriting,
but only if no adjustment is required pursuant to any other specific
subsection of this Section 11 (without regard to subsection (i) of this
Section) with respect to the transaction giving rise to such rights, and
(vi) in connection with any nonregistered offering of Common Stock or
securities convertible into or exercisable for Common Stock, unless the
issuance or sale price is less than 85% of the current market price of
the Common Stock on the date of issuance, in which case the adjustment
shall only be for the difference between 85% of the current market price
and the issue or sale price) for a consideration per share (the
"Offering Price") less than the current market price per share (as
defined in Subsection (k) of this Section) on the date the Company fixes
the offering price of such additional shares, then the Exercise Price
shall be adjusted immediately thereafter so that it shall equal the
price determined by multiplying the Exercise Price in effect immediately
prior thereto by a fraction, the numerator of which shall be the sum of
the number of shares of Common Stock outstanding immediately prior to
the issuance of such additional shares and the number of shares of
Common Stock which the aggregate consideration received (determined as
provided in subsection (j) of this Section) for the issuance of such
additional shares would purchase at such current market price per share
of Common Stock, and the denominator of which shall be the number of
shares of Common Stock outstanding immediately after the issuance of
such additional shares. Such adjustment shall be made successively
whenever such an issuance is made.
(e) In case the Company shall issue any securities convertible
into or exchangeable for its Common Stock (excluding securities issued
in transactions described in subsections (a), (b), and (c) of this
Section and subject to the limitations in subsection (d) of this
Section) for a consideration per share of Common Stock (the "Conversion
Price") initially deliverable upon conversion or exchange of such
securities (determined as provided in subsection (j) of this Section)
less than the current market price per share (as defined in subsection
(k) of this Section) in effect immediately prior to the issuance of such
securities, then the Exercise Price shall be adjusted immediately
thereafter so that it shall equal the price determined by multiplying
the Exercise Price in effect immediately prior thereto by a fraction,
the numerator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to the issuance of such
securities and the number of shares of Common Stock which the aggregate
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consideration received (determined as provided in subsection (i) of this
Section) for such securities would purchase at such current market price
per share of Common Stock, and the denominator of which shall be the sum
of the number of shares of Common Stock outstanding immediately prior to
such issuance and the maximum number of shares of Common Stock of the
Company deliverable upon conversion of or in exchange for such
securities at the initial conversion or exchange price or rate. Such
adjustment shall be made successively whenever such an issuance is made.
(f) Unless the Company shall have exercised its election as
provided in subsection (g) of this Section, whenever any adjustment of
the Exercise Price becomes effective pursuant to the terms of this
Section the number of Shares purchasable upon the exercise of each
affected outstanding Warrant shall be simultaneously adjusted to the
number determined by dividing (i) the product of the number of Shares
purchasable upon the exercise of each outstanding Warrant prior to such
adjustment multiplied by the applicable Exercise Price in effect prior
to such adjustment by (ii) the applicable Exercise Price in effect after
such adjustment.
(g) On or after the date any adjustment of the number of Shares
purchasable upon exercise of a Warrant may be made as provided in
subsection (f) of this Section, the Company may elect to adjust the
number of Warrants in substitution for any such adjustment in the number
of Shares purchasable upon exercise of a Warrant. All Warrants
outstanding after such adjustment of the number of Warrants shall be
exercisable for one Share. Each Warrant held of record prior to such
adjustment of the number of Warrants shall become the number of Warrants
(calculated to the nearest hundredth) obtained by (i) multiplying the
number of Warrants held of record prior to adjustment of the number of
Warrants by the Exercise Price in effect prior to adjustment of the
Exercise Price and (ii) dividing the product so obtained by the Exercise
Price in effect after adjustment of the Exercise Price. The Company
shall give notice to the Warrant Holders and the Warrant Agent of its
election to adjust the number of Warrants, indicating the record date
for the adjustment and, if known at the time, the amount of the
adjustment to be made. Such record date may be the date on which the
adjustment to the Exercise Price becomes effective or any date
thereafter but shall be at least 10 days later than the date of the
notice to Warrant Holders. Upon each adjustment of the number of
Warrants pursuant to this subsection (g) the Company shall, as promptly
as practicable, either distribute to Warrant Holders on such record date
Warrant Certificates evidencing the additional Warrants to which such
Warrant Holders shall be entitled as a result of such adjustment or
distribute to such Warrant Holders in substitution and replacement for
the Warrant Certificates held by them prior to the date of adjustment,
and upon surrender thereof if required by the Company, new Warrant
Certificates evidencing all the Warrants to which such holders shall be
entitled after such adjustment. Warrant Certificates so distributed
shall be issued, executed and countersigned in the manner specified in
this Agreement (but may bear, at the option of the Company, the adjusted
Exercise Price) and shall be registered in the names of the holders of
record of Warrant Certificates on the record date specified in the
notice to Warrant Holders given pursuant to this subsection (g).
(h) In any case in which this Section shall require that an
adjustment shall become effective immediately after a record date for an
event, the Company may defer until the actual occurrence of such event
(i) issuing to the Warrant Holder of any Warrant exercised after such
record date and before the occurrence of such event the additional
Shares issuable upon such exercise by reason of the adjustment required
by such event
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over and above the Shares Issuable upon such exercise before giving
effect to such adjustment and (ii) paying to such Warrant Holder any
amount of cash in lieu of a fractional Share, provided the Company shall
deliver to such Warrant Holder a due ▇▇▇▇ or other appropriate
instrument evidencing the right of such Warrant Holder to receive such
additional Shares or such cash upon the occurrence of the event
requiring such adjustment.
(i) Subject to the provisions of subsection (h) of this Section,
the form of Warrant Certificate need not be changed because of any
adjustment in the Exercise Price, the number of Shares purchasable upon
the exercise of a Warrant, or the number of Warrants outstanding and
Warrant Certificates issued after any such adjustment may state the same
Exercise Price, the same number of Warrants, and the same number of
Shares purchasable upon exercise of a Warrant as are stated in the
Warrant Certificates issued before such adjustment as if such adjustment
had not occurred. However, the Company may at any time in its sole
discretion (which shall be conclusive) make any change in the form of
Warrant Certificate that it may deem appropriate and that does not
affect the substance thereof, and any Warrant Certificate may be in the
form as so changed.
(j) For purposes of any computation respecting consideration
received pursuant to subsections (d) and (e) of this Section, the
following shall apply:
(A) in the case of the issuance of shares of Common Stock
for cash, the consideration shall be the amount of such cash,
provided that in no case shall any deduction be made for any
commissions, discounts, or other expenses incurred by the
Company for any underwriting of the issue or otherwise in
connection therewith;
(B) in the case of the issuance of shares of Common Stock
for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair
market value thereof as determined in good faith by the Board of
Directors of the Company (irrespective of the accounting
treatment thereof), whose determination shall be conclusive;
(C) in the case of the issuance of securities convertible
into or exchangeable for shares of Common Stock, the aggregate
consideration received therefor shall be deemed to be the
consideration received by the Company for the issuance of such
securities plus the additional minimum consideration, if any, to
be received by the Company upon the conversion or exchange
thereof (the consideration in each case to be determined in the
same manner as provided in clauses (A) and (B) of this
subsection j) of this Section); and
(D) in case the Company shall sell and issue Common Stock,
together with one or more other securities as part of a unit at
a price per unit, then in determining a consideration per share
of Common Stock for purposes of this Section, the Board of
Directors of the Company shall determine, in good faith, whose
determination shall be described in a duly adopted board
resolution certified by the Company's Secretary, or Assistant
Secretary, the fair value of the shares of Common Stock then
being sold as part of such unit, and such
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determination, in the absence of fraud or bad faith, shall be
binding upon the holders of the Warrants.
(k) For the purpose of any computation under subsections (b),
(c), (d), and (e) of this Section, the current market price per share of
Common Stock at any date shall be deemed to be the average Fair Market
Value of a share of Common Stock for 30 consecutive business days before
such date.
"Fair Market Value" shall mean an amount that is determined as
follows: (i) if the Common Stock is listed on the New York Stock
Exchange, the American Stock Exchange, or such other securities exchange
designated by the Board of Directors of the Company, or admitted to
unlisted trading privileges on any such exchange, or if the Common Stock
is quoted on a National Association of Securities Dealers, Inc. system
that reports closing prices, the Fair Market Value shall be the closing
price of the Common Stock as reported by the Wall Street Journal on the
day the Fair Market Value is to be determined, or if no such price is
reported for such day, then the determination of such closing price
shall be as of the last immediately preceding day on which the closing
price is so reported; or (ii) if the Common Stock is not so listed or
admitted to unlisted trading privileges or so quoted, the Fair Market
Value shall be the average of the last reported highest bid and the
lowest asked prices quoted on the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or, if not so
quoted, then by the National Quotation Bureau, Inc. on the day the Fair
Market Value is determined; or (iii) if the Common Stock is not so
listed or admitted to unlisted trading privileges or so quoted, and bid
and asked prices are not reported, the Fair Market Value shall be
determined in such reasonable manner as may be presented by the Board of
Directors of the Company.
(l) No adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least five
cents ($0.05) in such price; provided, however, that any adjustments
which by reason of this subsection (l) of this Section are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment required to be made hereunder. All calculations
under this Section shall be made to the nearest cent or to the nearest
one-hundredth of a Share, as the case may be. Anything in this Section
to the contrary notwithstanding, the Company shall be entitled, but
shall not be required, to make such changes in the Exercise Price, in
addition to those required by this Section, as it shall determine, in
its sole discretion, to be advisable in order that any dividend or
distribution in shares of Common Stock, or any subdivision,
reclassification, or combination of Common Stock, hereafter made by the
Company shall not result in any federal income tax liability to the
holders of Common Stock or securities convertible into Common Stock.
(m) In the event that at any time, as a result of an adjustment
made pursuant to subsection (a) of this Section, the Holder of the
Warrants thereafter shall become entitled to receive any securities of
the Company, other than Common Stock, thereafter the number of such
other securities so receivable upon exercise of the Warrants shall be
subject to adjustment from time-to-time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in subsections (a) to (l), inclusive, of this
Section.
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SECTION 12 FRACTIONAL WARRANTS AND FRACTIONAL SHARES.
(a) Notwithstanding any other provision of this Agreement or any
Warrant Certificate, the Company shall not be required to issue
fractions of Warrants on any distribution of Warrant Certificates
pursuant to subsection (f) of Section 11 or to distribute Warrant
Certificates which evidence fractional Warrants. In lieu of issuing any
fraction of a Warrant otherwise called for upon any adjustment pursuant
to subsection (d) of Section 11, the Company shall pay to the Warrant
Holder entitled thereto an amount in cash equal to such fraction
multiplied by the current market value of one such Warrant determined as
follows:
(1) If the Warrants are listed on the New York Stock
Exchange, the American Stock Exchange, or such other national
stock exchange specified by the Board of Directors of the
Company, or admitted to unlisted trading privileges on any such
exchange, or if the Warrants are quoted on a National
Association of Securities Dealers, Inc. system that reports
closing prices, the current market value shall be the closing
price of the Warrants as reported by the Wall Street Journal for
the last trading day prior to the date of such adjustment
pursuant to subsection (d) of Section 11, or, if no such price
is reported for such day, then the determination of such closing
price shall be as of the last immediately preceding day on which
the closing price is so reported, or
(2) If the Warrants are not so listed or admitted to
unlisted trading privileges or so quoted, the current market
value shall be the mean of the last reported bid and asked
prices reported by NASDAQ, if the Warrants are quoted on NASDAQ,
and if not, the mean of the last reported bid and asked prices
reported by the National Quotation Bureau, Inc., in either case
on the last business day prior to the date of such adjustment
pursuant to subsection (d) of Section 11; or
(3) If neither subparagraph (1) or (2) is applicable, the
current market value shall be an amount determined in such
reasonable manner as may be prescribed by the Board of Directors
of the Company.
(b) Notwithstanding any other provision of this Agreement or any
Warrant Certificate, the Company shall not be required to issue
fractions of Shares upon exercise of the Warrants or to distribute
certificates which evidence fractions of Shares. With respect to any
fraction of a Share called for upon exercise of any Warrant, the Company
in lieu of issuing such fractional Shares shall pay to, or in accordance
with the instructions of, the Warrant Holder exercising such Warrant an
amount in cash equal to such fraction multiplied by the Fair Market
Value of one share of Common Stock.
SECTION 13 NOTICES TO WARRANT HOLDERS.
(a) Upon any adjustment of the Exercise Price, the Company
within 20 days thereafter shall (a) cause to be filed with the Warrant
Agent a certificate, signed by the Chairman of the Board, the President,
or a Vice President of the Company and by its Treasurer or an Assistant
Treasurer, setting forth the Exercise Price after such adjustment and
setting forth in reasonable detail the method of calculation and the
facts upon which any such calculation is based and setting forth either
(1) the number of Shares (or portion thereof) purchasable upon exercise
of an affected Warrant after such
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adjustment of the Exercise Price, or (2) the number of Warrants into
which each outstanding affected Warrant will be changed as a result of
such adjustment in the Exercise Price, which certificate shall be
conclusive evidence of the correctness of the matters set forth therein,
and (b) cause written notice of such adjustments to be given to each
affected Warrant Holder as of the record date applicable to such
adjustment. 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.
(b) Whenever the Company shall
(i) expect to effect any capital reclassification of
the capital stock of the Company (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), any sale, lease, or conveyance of all or
substantially all of the assets of the Company or any
consolidation or merger of the Company with another
corporation (other than a merger with a subsidiary in which
merger the Company is the continuing corporation and which
does not result in any reclassification or change of the
Shares issuable upon exercise of the Warrants), or
(ii) expect to be involved in any voluntary or
involuntary dissolution, liquidation, or winding up of the
Company, then in any such case the Company shall cause to be
mailed to each Warrant Holder, at the earliest practicable
time (and in any event not less than 20 days before any
record date or other date set for definitive, action)
written notice of such event and of the date on which the
books of the Company shall close or the date when such
reclassification, sale, lease, conveyance, consolidation,
merger, dissolution, liquidation, or winding up shall take
place, as the case may be. Such notice shall also set forth
such facts as shall indicate the effect of such action (to
the extent such effect may be known at the date of notice)
on each Exercise Price and the kind and amount of the Shares
and other securities and property deliverable upon exercise
of the Warrants before and after any adjustment for the
occurrence of such event. Such notice shall also specify the
date as of which the holders of the shares of Common Stock
of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable
upon such reclassification, sale, lease, conveyance, merger,
dissolution, liquidation, or winding up, as the case may be.
(c) Without limiting the obligation of the Company hereunder to
provide notice to each Warrant Holder, it is agreed that failure of the
Company to give notice shall not invalidate any corporate action taken
by the Company.
SECTION 14 RIGHTS OF WARRANT HOLDERS.
(a) No Warrant Holder, as such, shall have any rights of a
stockholder of the Company, either at law or equity, and the rights of
the Warrant Holders, as such, are limited to those rights expressly
provided in this Agreement or in the Warrant Certificates.
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(b) When any Warrant Certificate shall have been surrendered for
exercise accompanied by payment of the Exercise Price, as provided in
this Agreement, certificates for the Shares purchased upon such exercise
shall be issuable and any person designated to be the record holder of
such Shares shall be deemed to have become a holder of record of such
Shares as of the date of such surrender and payment, whichever last
occurs; provided that if at such date the transfer books for the shares
of Common Stock shall be closed, the certificates for the Shares shall
be issuable on the date on which such books shall next be open (whether
before, on, or after an Expiration Date) and until then the Company
shall be under no duty to deliver any certificate for such Shares; and
further provided that such books, unless otherwise required by law,
shall not be closed at any one time for a period longer than 20 days.
(c) The Company and the Warrant Agent may treat the registered
Warrant Holder in respect of any Warrant Certificate as the absolute
owner thereof for all purposes notwithstanding any notice to the
contrary.
SECTION 15 WARRANT AGENT.
(a) The Company hereby appoints the Warrant Agent to act as the
agent of the Company in accordance with this Agreement, and the Warrant
Agent hereby accepts such appointment.
(b) The Warrant Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and conditions by all
of which the Company and every Warrant Holder by acceptance of any
Warrant Certificate, shall be bound:
(1) The statements contained in this Agreement and in the
Warrant Certificates shall be taken as statements of the Company
and the Warrant Agent assumes no responsibility for the
correctness of any of the same except such as described the
Warrant Agent or action taken or to be taken by it.
(2) The Warrant Agent shall not be responsible for any
failure of the Company to comply with any of the Company's
covenants contained in this Agreement or in the Warrant
Certificates.
(3) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the
Warrant Agent shall incur no liability or responsibility to the
Company or to any Warrant Holder in respect of any action taken,
suffered, or omitted by it hereunder in good faith and in
accordance with the opinion or the advice of such counsel,
provided the Warrant Agent shall have exercised reasonable care
in the selection and continued employment of such counsel.
(4) The Warrant Agent shall incur no liability or
responsibility to the Company or to any Warrant Holder for any
action taken in reliance on any notice, resolution, waiver,
consent, order, certificate, or other paper, document, or
instrument believed by it to be genuine and to have been signed,
sent, or presented by the proper party or parties.
(5) The Company agrees to pay to the Warrant Agent the
Warrant Agent's standard published rates in effect on the date
of this Agreement, as the
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same may be changed from time to time upon thirty (30) days
prior written notice from the Warrant Agent to the Company, for
all services rendered by the Warrant Agent in the execution of
this Agreement, to reimburse the Warrant Agent for all expenses,
taxes, and governmental charges and other charges of any kind
and nature incurred by the Warrant Agent in the execution of
this Agreement and to indemnify the Warrant Agent and save it
harmless against any and all liabilities, including judgments,
costs, and counsel fees, for anything done or omitted by the
Warrant Agent in the execution of this Agreement except as a
result of the Warrant Agent's, negligence or bad faith.
(6) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any
other action likely to involve expense unless the Company or one
or more Warrant Holders shall furnish the Warrant Agent with
reasonable security and indemnity for any costs and expenses
which may be incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as the Warrant
Agent may consider proper, whether with or without any such
security or indemnity. All rights of action under this Agreement
or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any of the Warrant Certificates
or the production thereof at any trial or other proceeding
relative thereto, and any such action, suit, or proceeding
instituted by the Warrant Agent shall be brought in its name as
Warrant Agent, and any recovery of judgment shall be for the
ratable benefit of the Warrant Holders as their respective
rights or interests may appear.
(7) The Warrant Agent and any stockholder, director, officer
or employee of the Warrant Agent may buy, sell, or deal in any
of the Warrants or other securities of the Company or become
pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company
or otherwise act as fully and freely as through it were not
Warrant Agent under this Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for
the Company or for any other legal entity.
(8) The Warrant Agent shall act hereunder solely as agent
for the Company, and its duties shall be determined solely by
the provisions hereof and those provisions of the Act, the
Securities Exchange Act of 1934, and those Rules and Regulations
of the Securities and Exchange Commission applicable to the
duties of the Warrant Agent hereunder.
SECTION 16 MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT.
(a) Any corporation into which the Warrant Agent may be merged
or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion, or consolidation to which the
Warrant Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Warrant Agent, shall be the successor to
the Warrant Agent hereunder without the execution or filing of any paper
or any further act on the part of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Warrant
Agent under the provisions of Section 17 of this Agreement. In case at
the time such successor to the Warrant Agent shall succeed to the agency
created by this Agreement, and in case at that time any of the
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Warrant Certificates shall have been countersigned but not delivered,
any such successor to the Warrant Agent may adopt the countersignature
of the original Warrant Agent; and in case at that time any of the
Warrant Certificates shall not have been countersigned, any successor to
the Warrant Agent may countersign such Warrant Certificates either in
the name of the predecessor Warrant Agent or in the name of the
successor Warrant Agent: and in all such cases such Warrant Certificates
shall have the full force provided in the Warrant Certificates and in
this Agreement.
(b) In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent may adopt the
countersignature under its prior name; and in case at that time any of
the Warrant Certificates shall not have been countersigned, the Warrant
Agent may countersign such Warrant Certificates either in its prior name
or in its changed name, and in all such cases such Warrant Certificates
shall have the full force provided in the Warrant Certificates and in
this Agreement.
SECTION 17 CHANGE OF WARRANT AGENT. The Warrant Agent may resign and be
discharged from its duties under this Agreement by giving to the Company notice
in writing, and by giving notice in writing to each Warrant Holder at his
address appearing in the Warrant register, specifying a date when such
resignation shall take effect, which notice shall be sent at least 90 days prior
to the date so specified. If the Warrant Agent shall resign or shall otherwise
become incapable of acting, the Company shall appoint a successor to the Warrant
Agent. If the Company shall fail to make such appointment within a period of 90
days after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Warrant Agent or by any Warrant Holder, then any
Warrant Holder may apply to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Pending appointment of a
successor to the Warrant Agent, either by the Company or by such court, the
duties of the Warrant Agent shall be carried out by the Company. Any successor
Warrant Agent, whether appointed by the Company or by such a court, shall be a
bank or trust company or transfer agent, in good standing, organized under the
laws of any state of the United States of America and having at the time of its
appointment as Warrant Agent a combined capital and surplus of at least
$2,000,000. After appointment, the successor Warrant Agent shall be vested with
the same powers, rights, duties, and responsibilities as if it had been
originally named as Warrant Agent without further act or deed, and the former
Warrant Agent shall deliver and transfer to the successor Warrant Agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act, or deed necessary for the purpose. Failure to give
any notice provided for in this Section, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Warrant
Agent or the appointment of the successor Warrant Agent, as the case may be.
SECTION 18 NOTICES. Any notice or demand authorized by this Agreement to
be given or made by the Warrant Agent or by any Warrant Holder to or on the
Company shall be sufficiently given or made if sent by mail, first class or
registered, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent) as follows:
PACIFIC SOFTWORKS, INC.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
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Any notice or demand authorized by this Agreement to be given or made by any
Warrant Holder or by the Company to or on the Warrant Agent shall be
sufficiently given or made if sent by mail, first class or registered, postage
paid, addressed (until another address is filed in writing by the Warrant Agent
with the Company) as follows:
American Securities Transfer, Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: _________________
Any distribution, notice, or demand required or authorized by this Agreement to
be given or made by the Company or the Warrant Agent to or on the Warrant
Holders shall be sufficiently given or made if sent by mail, first class or
registered, postage prepaid, addressed to the Warrant Holders at their last
known addresses as they shall appear on the registration books for the Warrant
Certificates maintained by the Warrant Agent.
SECTION 19 SUPPLEMENTS AND AMENDMENTS.
(a) The Company and the Warrant Agent may from time to time
supplement or amend this Agreement without the approval of any Warrant
Holders in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with
any other provision herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Company and the Warrant
Agent may deem necessary or desirable and which shall not adversely
affect the interests of the Warrant Holders, including (but not limited
to) any extension of the Expiration Date for such period or periods as
the Board of Directors of the Company may determine, and any conditional
or unconditional reduction in the Exercise Price.
(b) With the consent of the Warrant Holders of at least
two-thirds of all remaining outstanding Warrants, given as set forth in
this subsection (b) of this Section, the Warrant Agent and the Company
may make any other amendment in this Agreement; provided that no such
change may shorten the time of exercise of any Warrant or increase the
Exercise Price of any Warrant without the consent of all Warrant
Holders. Consent of the Warrant Holders under this subsection (b) shall
be evidenced by either (i) a consent in writing to the amendment, which
consent need not set forth the specific form of amendment, but shall be
sufficient if it agrees to the general substance thereof, and which
shall be executed by the Warrant Holders and notarized or acknowledged
(any consent so given in respect of a particular Warrant shall be
binding upon any subsequent owner thereof), or (ii) by the affirmative
vote of the requisite Warrant Holders at a meeting of Warrant Holders
called by the Company or the Warrant Agent and held at such time and
place as may be specified in a written notice of the meeting to be
mailed to each Warrant Holder not less than I0 days nor more than 60
days prior to the date set for the meeting. The Company or the Warrant
Agent may establish a record date for the determination of Warrant
Holders entitled to vote at any meeting of Warrant Holders, which record
date shall be not more than 60 days prior to the date of mailing notice
thereof. The Company and the Warrant Agent may make reasonable
regulations for the conduct of such meeting and for the appointment of a
chairman and a secretary thereof and of inspectors of votes. Proxies may
be used at any such meeting in the same manner as is provided in the
Company's bylaws with respect to proxies for meetings of its
stockholders.
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SECTION 20 SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 21 TERMINATION. Subject to extensions under Section 19, this
Agreement shall terminate at the close of business on the Expiration Date or
such earlier date upon which all Warrants have been exercised. The provisions of
Section 15 shall survive such termination.
SECTION 22 GOVERNING LAW. This Agreement and each Warrant Certificate
issued hereunder shall be deemed to be a contract under the laws of the State of
California and for all purposes shall be construed in accordance with the laws
of said State.
SECTION 23 BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Warrant Agent, and the Warrant Holders any legal or equitable right, remedy, or
claim under this Agreement, but this Agreement shall be for the sole and
exclusive benefit of the Company, the Warrant Agent, and the Warrant Holders.
SECTION 24 AGREEMENT AVAILABLE TO WARRANT HOLDERS. A copy of this
Agreement shall be available at all reasonable times at the office of the
Warrant Agent for inspection by any Warrant Holder. As a condition of such
inspection, the Warrant Agent may require any Warrant Holder to submit a Warrant
Certificate held of record for inspection.
SECTION 25 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of such counterparts shall for all purposes be deemed to be
an original and all such counterparts shall together constitute but one and the
same instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
PACIFIC SOFTWORKS, INC.
S E A L
By
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Chairman of the Board
Attest:
------------------------------
: Secretary
-------------------
AMERICAN SECURITIES TRANSFER,
INCORPORATED
S E A L
By
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President
Attest:
------------------------------
: Secretary
-------------------
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE]
The Warrants evidenced by this certificate were issued as part of a Unit
consisting of one share of Common Stock and one Warrant. Each Warrant entitles
the Warrant Holder to purchase one share of Common Stock. The Warrants may not
be exercised if the shares of Common Stock which are issuable upon exercise of
the Warrants have not been registered pursuant to a registration statement under
the Securities Act of 1933, as amended, that is effective and current and the
shares have not been qualified for sale in the state of residence of the Warrant
Holder unless exemptions from such registration and qualification are available.
The Warrants are subject to redemption and may not be exercised after the
redemption date.
VOID AFTER ________, 2004
W Warrant
-------------------------------
CUSIP _________
WARRANT CERTIFICATE
PACIFIC SOFTWORKS, INC.
This Warrant Certificate certifies that
__________________________________________ or registered assigns (the "Warrant
Holder"), is the registered owner of the above-indicated number of Warrants
("Warrants") expiring at 5:00 p.m., Los Angeles, California time, on ___________
(the "Expiration Date"). Each full Warrant entitles the Warrant Holder to
purchase from PACIFIC SOFTWORKS, INC., a California corporation (the "Company"),
on or before the Expiration Date, one fully paid and nonassessable share of
Common Stock ($0.001 par value per share) of the Company at the initial purchase
price of $7.50 per share (the "Exercise Price") through _____________, in lawful
money of the United States of America for each full Warrant represented hereby
upon surrender of this Warrant Certificate with the exercise form hereon duly
completed and executed, with payment of the Exercise Price at the office of
American Securities Transfer, Incorporated (herein called the "Warrant Agent"),
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
_________________, but only subject to the conditions set forth herein and in a
Warrant Agreement, dated _______________ (the "Warrant Agreement"), between the
Company and the Warrant Agent. The Company may redeem the Warrants at $0.05 per
Warrant upon 20 days' prior written notice any time after a period of 20
consecutive trading days that the closing price of the Common Stock exceeds
$8.00. For these purposes, the closing price of the Common Stock will be
determined by the closing bid price, as reported by NASDAQ, or if the Common
Stock is listed on a national stock exchange or on the NASDAQ National Market
System, the closing price will be determined by the closing sale price on the
primary exchange on which the Common Stock is traded or on the NASDAQ National
Market System, if such shares are not listed on a national stock exchange.
The Exercise Price, the number of shares purchasable upon exercise of
each Warrant, the number of Warrants outstanding, and the Expiration Date are
subject to adjustments upon the occurrence of certain events set forth in the
Warrant Agreement. Reference is hereby made to the provisions on the reverse
side of this Warrant Certificate and the provisions of the Warrant Agreement,
all of which are hereby incorporated by reference in and made a part of this
Warrant Certificate and which shall for all purposes have the same effect as
though fully set forth at this place.
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Upon due presentment for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants, subject to any adjustments made in accordance with the provisions
of the Warrant Agreement, shall be issued to the transferee in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, upon payment of the transfer fee and any tax or other governmental
charge imposed in connection with such transfer.
The holder of the Warrants evidenced by this Warrant Certificate may
exercise all or any whole number of such Warrants during the exercise period and
in the manner stated hereon. The Exercise Price is payable in lawful money of
the United States of America by certified or cashier's check payable to the
order of the Company. Upon any exercise of any Warrants evidenced by this
Warrant Certificate in an amount less than the number of Warrants so evidenced,
there shall be issued to the Warrant Holder a new Warrant Certificate evidencing
the number of Warrants not so exercised. No adjustment shall be made for any
dividends on any shares issued upon exercise of this Warrant.
No warrant may be exercised after 5:00 p.m., Los Angeles, California
time, on the Expiration Date and any Warrant not exercised by such time shall
become void.
[The remainder of this page intentionally left blank.]
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This Warrant Certificate shall not be valid unless manually
countersigned by the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed by its Chairman of the Board or its President and by its Secretary,
each by a facsimile of his signature, and has caused a facsimile of its
corporate seal to be imprinted hereon.
Dated: PACIFIC SOFTWORKS, INC.
a California corporation
By:
-------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman of the Board and
Chief Executive Officer
By:
-------------------------------------------
, Secretary
------------------------
Countersigned:
AMERICAN SECURITIES TRANSFER, INCORPORATED
Warrant Agent
By:
-------------------------------
Authorized Signatory
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[REVERSE]
FORM OF WARRANT CERTIFICATE
This Warrant Certificate, when surrendered to the Warrant Agent at its
principal office by the Warrant Holder, in person or by attorney duly authorized
in writing, may be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, upon the payment of any tax or other
governmental charge imposed in connection with such exchange, for another
Warrant Certificate or Warrant Certificates of like tenor and evidencing a like
number of Warrants, subject to any adjustments made in accordance with the
provisions of the Warrant Agreement.
The Company and the Warrant Agent may deem and treat the registered
holder hereof as the absolute owner of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone) for all
purposes, and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary. No Warrant Holder, as such, shall have any rights of a
holder of the Common Stock of the Company, either at law or at equity, and the
rights of the Warrant Holder, as such, are limited to those rights expressly
provided in the Warrant Agreement and in the Warrant Certificate.
Under the Warrant Agreement, the Exercise Price is subject to adjustment
if the Company shall effect any stock split or stock combination with respect to
the Common Stock. Any such adjustment of the Exercise Price will also result in
an adjustment of the number of shares of Common Stock purchasable upon exercise
of a Warrant or, if the Company should elect, an adjustment of each outstanding
Warrant into a different number of Warrants.
The Company shall not be required to issue fractions of Warrants upon
any such adjustment or to issue fractions of shares upon the exercise of any
Warrants after any such adjustment, but the Company, in lieu of issuing any such
fractional interest, shall pay an amount in cash equal to such fraction times
the current market value of one Warrant or one share of Common Stock, as the
case may be, determined in accordance with the Warrant Agreement.
The Warrant Agreement is subject to amendment upon the approval of
holders of at least two-thirds of the outstanding Warrants as a group, except
that no such approval is required for the reduction of the Exercise Price or
extension of the Expiration Date. No amendment shall accelerate the Expiration
Date or increase the Exercise Price without the approval of all the holders of
all outstanding Warrants. A copy of the Warrant Agreement will be available at
all reasonable times at the office of the Warrant Agent for inspection by any
Warrant Holder. As a condition of such inspection, the Warrant Agent may require
any Warrant Holder to submit his Warrant Certificate for inspection.
IMPORTANT: The Warrants represented by this Certificate may not be exercised by
a Warrant Holder unless at the time of exercise the underlying shares of Common
Stock are qualified for sale, by registration or otherwise, in the state where
the Warrant Holder resides or unless the issuance of the shares of Common Stock
would be exempt under the applicable state securities laws. Further, a
registration statement under the Securities Act of 1933, as amended, covering
the issuance of shares of Common Stock upon the exercise of this Warrant must be
in effect and current at the time of exercise unless the issuance of shares of
Common Stock upon any exercise is exempt from the registration requirements of
the Securities Act of 1933. Unless such registration statement is in effect and
current at the time of exercise, or unless such an exemption is available, the
Company may decline to permit the exercise of this Warrant.
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ASSIGNMENT
(Form of Assignment to be Executed if the Warrant Holder Desires to
Transfer Warrants Evidenced Hereby)
FOR VALUE RECEIVED, _________________________________________________
hereby sells, assigns, and transfers to
_______________________________________________ (Please print name and address
including zip code.)
Please insert social security
or other identifying number.
________________________________________
________________________________________________________________
Warrants represented by this Warrant Certificate and does hereby irrevocably
constitute and appoint
______________________________________________________________________ Attorney,
to transfer said Warrants on the books of the Warrant Agent with full power of
substitution in the premises.
Dated:_________________________________
___________________________________________
Signature
(Signature must confirm in all respects to
name of holder as specified on the face of
this Warrant Certificate)
Signature Guaranteed:
_______________________________
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EXERCISE
(Form of Exercise to be Executed if the Warrant Holder
Desires to Exercise Warrants Evidenced Hereby)
WARRANT AGENT:
The undersigned hereby irrevocably elects to exercise _________ Warrants
represented by this Warrant Certificate and to purchase thereunder the full
number of shares of Common Stock issuable upon exercise of such Warrants.
Enclosed is $___________ as the purchase price therefor. The undersigned
requests that certificates for such shares of Common Stock be issued in the name
of, and cash for any fractional Shares be paid to,
________________________________________________________________________________
(Please print name and address including zip code).
Please insert social security or other identifying number_______________________
and, if said number of Warrants not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the unexercised number
of Warrants evidenced by this Warrant Certificate be delivered to the Warrant
Holder except as such unexercised number of Warrants may be assigned under the
form of assignment appearing hereon.
Dated: ______________, _____
__________________________________
Signature
(Signature must confirm in
all respects to name of the
Warrant Holder as specified
on the face of this Warrant
Certificate)
Signature Guaranteed:
________________________________
NOTICE: Signature must be guaranteed by a member of the Medallion
Signature Guaranty Program.
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