EXHIBIT 4.2
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OR CONVERSION HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED,
ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS COVERING ANY SUCH TRANSACTION OR SUCH TRANSACTION IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND LAWS.
COMMON STOCK PURCHASE WARRANT
Focal, Inc.
THIS CERTIFIES that, for value received, , is entitled,
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upon the terms and subject to the conditions hereinafter set forth, at any
time on or after the date hereof and at or prior to 11:59 p.m., Eastern time,
on April 12, 2000 (the "Expiration Time"), but not thereafter, to acquire
from Focal, Inc., a Delaware corporation (the "Company"), in whole or from
time to time in part, up to fully paid and nonassessable shares of
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Common Stock of the Company ("Warrant Stock") at a purchase price per share
(the "Exercise Price") of $0.37. Such number of shares, type of security and
Exercise Price are subject to adjustment as provided herein, and all
references to "Warrant Stock" and "Exercise Price" herein shall be deemed to
include any such adjustment.
1. Exercise of Warrant
The purchase rights represented by this Warrant are exercisable by the
registered holder hereof, in whole or in part, at any time and from time to
time at or prior to the Expiration Time by the surrender of this Warrant and
the Notice of Exercise form attached hereto duly executed to the office of
the Company at ▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (or such other office or
agency of the Company as it may designate by notice in writing to the
registered holder hereof at the address of such holder appearing on the books
of the Company), and upon payment of the Exercise Price for the shares
thereby purchased (by cash or by check or bank draft payable to the order of
the Company or by cancellation of indebtedness of the Company to the holder
hereof, if any, at the time of exercise in an amount equal to the purchase
price of the shares thereby purchased); whereupon the holder of this Warrant
shall be entitled to receive from the Company a stock certificate in proper
form representing the number of shares of Warrant Stock so purchased.
2. Right to Convert Warrant
The registered holder hereof shall have the right to convert this
Warrant, in whole or in part, at any time and from time to time at or prior
to the Expiration Time, by the surrender of this Warrant and the Notice of
Conversion form attached hereto duly executed to the office of the Company at
the address set forth in Section 1 hereof (or such other office or agency of
the Company as it may designate by notice in writing to the registered holder
hereof at the address of such holder appearing on the books of the Company),
into shares of Warrant Stock as provided in this Section 2. Upon exercise of
this conversion right, the holder hereof shall be entitled to receive that
number of shares of Warrant Stock of the Company equal to the quotient
obtained by dividing [(A -B)(X)] by (A), where:
A = the Fair Market Value (as defined below) of one share of
Warrant Stock on the date of conversion of this Warrant.
B = the Exercise Price for one share of Warrant Stock under
this Warrant.
X = the number of shares of Warrant Stock as to which this
Warrant is being converted.
If the above calculation results in a negative number, then no shares of
Warrant Stock shall be issued or issuable upon conversion of this Warrant.
"Fair Market Value" of a share of Warrant Stock shall mean:
(a) if the conversion right is being exercised in connection with a
transaction specified in Section 10 hereof, the value of the consideration
(determined, in the case of noncash consideration, in good faith by the Board
of Directors of the Company) to be received pursuant to such transaction by
the holder of one share of Warrant Stock;
(b) if the conversion right is being exercised after the occurrence of
an initial public offering of common stock of the Company ("Common Stock"),
the average of the high and low trading prices of a share of Common Stock as
reported by the Nasdaq National Market (or equivalent recognized source of
quotations) for the previous five trading days; or
(c) in all other cases, the fair value as determined in good faith by
the Company's Board of Directors.
In the event that this Warrant has not been exercised or converted by the
Expiration Time or in the event that the Company gives notice to the holder
hereof that this Warrant will expire due to anticipated completion by the
Company of a transaction described in Section 10 hereof, and, as of the
Expiration Time or completion of a Section 10 transaction the holder has not
exercised or converted this Warrant, this Warrant shall be deemed to be
converted in accordance with this Section 2 at the Expiration Time or the
completion of a Section 10 transaction, as the case may be.
Upon conversion of this Warrant in accordance with this Section 2, the
registered holder hereof shall be entitled to receive a certificate for the
number of shares of Warrant Stock determined in accordance with the foregoing.
3. Issuance of Shares; No Fractional Shares or Scrip
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Certificates for shares purchased hereunder or issuable upon conversion
hereof shall be delivered to the holder hereof within a reasonable time after
the date on which this Warrant shall have been exercised or converted in
accordance with the terms hereof. The Company hereby represents and warrants
that all shares of Warrant Stock which may be issued upon the exercise or
conversion of this Warrant will, upon such exercise or conversion, be duly
and validly authorized and issued, fully paid and nonassessable and free from
all taxes, liens and charges in respect of the issuance thereof (other than
liens or charges created by or imposed upon the holder of the Warrant Stock).
The Company agrees that the shares so issued shall be and be deemed to be
issued to such holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been exercised or
converted in accordance with the terms hereof. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise or
conversion of this Warrant. With respect to any fraction of a share called
for upon the exercise or conversion of this Warrant, an amount equal to such
fraction multiplied by the then current price at which each share may be
purchased hereunder shall be paid in cash to the holder of this Warrant.
4. Charges, Taxes and Expenses
Issuance of certificates for shares of Warrant Stock upon the exercise or
conversion of this Warrant shall be made without charge to the holder hereof
for any issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in the name of the
holder of this Warrant or in such name or names as may be directed by the
holder of this Warrant; provided, however, that in the event certificates for
shares of Warrant Stock are to be issued in a name other than the name of the
holder of this Warrant, this Warrant when surrendered for exercise or
conversion shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof.
5. No Rights as Shareholders
This Warrant does not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company prior to the exercise or
conversion hereof.
6. Registration Rights. The Company hereby grants to the holder hereof,
with respect to the Warrant Stock, registration rights identical to those set
forth in that certain Restated Investor Rights Agreement dated as of April
12, 1996, as amended, among the Company and the parties listed on the
signature pages thereto, and the holder hereof and the Company hereby agree
to be bound by all the provisions of such Agreement which relate to
registration rights, including without limitation the definitions in Section
1 thereof and the registration rights provisions of Section 2 thereof
(consisting of subsections 2.5 through 2.16), as if the holder hereof was a
"Holder" of "Registrable Securities" as those terms are defined in such
Agreement.
7. Exchange and Registry of Warrant
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This Warrant is exchangeable, upon the surrender hereof by the registered
holder at the above-mentioned office or agency of the Company, for a new
Warrant of like tenor and dated as of such exchange. The Company shall
maintain at the above-mentioned office or agency a registry showing the name
and address of the registered holder of this Warrant. This Warrant may be
surrendered for exchange, transfer, exercise or conversion, in accordance
with its terms, at such office or agency of the Company, and the Company
shall be entitled to rely in all respects, prior to written notice to the
contrary, upon such registry.
8. Loss, Theft, Destruction or Mutilation of Warrant
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and in case of
loss, theft or destruction of indemnity or security reasonably satisfactory
to it, and upon reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of this Warrant, if
mutilated, the Company will make and deliver a new Warrant of like tenor and
dated as of such cancellation, in lieu of this Warrant.
9. Saturdays, Sundays and Holidays
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday or a
Sunday or shall be a legal holiday, then such action may be taken or such
right may be exercised on the next succeeding day not a legal holiday.
10. Initial Public Offering, Merger, Sale of Assets, Etc.
If at any time the Company proposes (i) to effect an initial firm
commitment underwritten public offering of its equity securities or (ii) to
merge or consolidate with or into any other corporation, effect any
reorganization, or sell or convey all or substantially all of its assets to
any other entity, in a transaction in which the shareholders of the Company
immediately before the transaction will own immediately after the transaction
less than a majority of the outstanding voting securities of the entity (or
its parent) succeeding to the business of the Company, then the Company shall
give the holder of this Warrant forty-five (45) days' prior written notice of
the proposed effective date of such initial public offering or business
combination transaction, and if this Warrant has not been exercised or
converted by or on the closing date of such initial public offering effective
date of such transaction, it shall terminate.
11. Reclassification, Conversion, Etc.
If the Company at any time shall, by reclassification of securities or
otherwise, change the Warrant Stock into the same or a different number of
securities of any class or classes, this Warrant shall thereafter entitle the
holder to acquire such number and kind of securities as would have been
issuable in respect of the Warrant Stock (or other securities which were
subject to the purchase rights under this Warrant immediately prior to such
subdivision, combination, reclassification or other change) as the result of
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such change if this Warrant had been exercised in full for cash immediately
prior to such change. The Exercise Price hereunder shall be adjusted if and
to the extent necessary to reflect such change. If the Warrant Stock or
other securities issuable upon exercise or conversion hereof are subdivided
or combined into a greater or smaller number of shares of such security, the
number of shares issuable hereunder shall be proportionately increased or
decreased, as the case may be, and the Exercise Price shall be
proportionately reduced or increased, as the case may be, in both cases
according to the ratio which the total number of shares of such security to
be outstanding immediately after such event bears to the total number of
shares of such security outstanding immediately prior to such event. The
Company shall give the holder prompt written notice of any change in the type
of securities issuable hereunder, any adjustment of the Exercise Price for
the securities issuable hereunder, and any increase or decrease in the number
of shares issuable hereunder.
12. Transferability
Prior to the Expiration Time and subject to compliance with applicable
laws, this Warrant and all rights hereunder are transferable by the holder
hereof, in whole or in part, at the office or agency of the Company referred
to in Section 1 hereof. Any such transfer shall be made in person or by the
holder's duly authorized attorney, upon surrender of this Warrant together
with the Assignment Form attached hereto properly endorsed.
13. Representations and Warranties
The Company hereby represents and warrants to the holder hereof that:
(a) During the period this Warrant is outstanding, the Company will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Warrant Stock upon the exercise or
conversion of this Warrant;
(b) The issuance of this Warrant shall constitute full authority to the
Company's officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the shares
of Warrant Stock issuable upon exercise or conversion of this Warrant;
(c) The Company has all requisite legal and corporate power to execute
and deliver this Warrant, to sell and issue the Warrant Stock hereunder and
to carry out and perform its obligations under the terms of this Warrant; and
(d) All corporate action on the part of the Company, its directors and
shareholders necessary for the authorization, execution, delivery and
performance of this Warrant by the Company, the authorization, sale, issuance
and delivery of the Warrant Stock, the grant of registration rights as
provided herein and the performance of the Company's obligations hereunder
has been taken;
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(e) The Warrant Stock, when issued in compliance with the provisions of
this Warrant and the Company's Certificate of Incorporation, will be validly
issued, fully paid and nonassessable, and free of any liens or encumbrances,
and will be issued in compliance with all applicable federal and state
securities laws; and
(f) The issuance of the Warrant Stock will not be subject to any
preemptive rights, rights of first refusal or similar rights.
14. Cooperation
The Company will not, by amendment of its Articles or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid or seek
to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of the Warrant against impairment.
15. Governing Law
This Warrant shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer.
Dated Effective as of: April 12, 1996
FOCAL, INC.
By:
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W. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Vice President and Chief
Financial Officer
ACCEPTED:
By:
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Title:
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NOTICE OF EXERCISE
To: Focal, Inc.
(1) The undersigned hereby elects to purchase shares of Common
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Stock of Focal, Inc. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price in full, together with all
applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
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(Name)
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(Address)
(3) The undersigned represents that the aforesaid shares of Common Stock
are being acquired for the account of the undersigned for investment and not
with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or
reselling such shares.
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(Date) (Signature)
NOTICE OF CONVERSION
To: Focal, Inc.
(1) The undersigned hereby elects to convert the attached Warrant into
such number of shares of Common Stock of Focal, Inc. as is determined
pursuant to Section 3 of such Warrant, which conversion shall be effected
pursuant to the terms of the attached Warrant.
(2) Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
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(Name)
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(Address)
(3) The undersigned represents that the aforesaid shares of Common Stock
are being acquired for the account of the undersigned for investment and not
with a view to, or for resale in connection with, the distribution thereof
and that the undersigned has no present intention of distributing or
reselling such shares.
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(Date) (Signature)
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
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(Please Print)
whose address is
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(Please Print)
Dated:
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Holder's Signature:
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Holder's Address:
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Guaranteed Signature:
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NOTE: The signature to this Assignment Form must correspond with the name as
it appears on the face of the Warrant, without alteration or enlargement or
any change whatever, and must be guaranteed by a bank or trust company.
Officers of corporations and those acting in a fiduciary or other
representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
