EXHIBIT 10.37
FORM OF CLASS B WARRANT
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THIS WARRANT MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT.
EUROPEAN MICRO HOLDINGS, INC.
WARRANT TO PURCHASE COMMON STOCK
Warrant No.: 001 Number of Shares: 500,000
Date of Issuance: August 24, 2000
European Micro Holdings, Inc., a Nevada corporation (the "COMPANY"), hereby
certifies that, for Ten United States Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, May Davis Group, Inc., the registered holder hereof or its
permitted assigns, is entitled, subject to the terms set forth below, to
purchase from the Company upon surrender of this Warrant, at any time or times
on or after the date hereof, but not after 11:59 P.M. Eastern Time on the
Expiration Date (as defined herein) Five Hundred Thousand (500,000) fully paid
and nonassessable shares of Common Stock (as defined herein) of the Company (the
"WARRANT SHARES") at the purchase price per share provided in Section 1(b)
below; provided, however, that in no event shall the holder be entitled to
exercise this Warrant for a number of Warrant Shares in excess of that number of
Warrant Shares which, upon giving effect to such exercise, would cause the
aggregate number of shares of Common Stock beneficially owned by the holder and
its affiliates to exceed 4.99% of the outstanding shares of the Common Stock
following such exercise, except within 60 days of the Expiration Date. For
purposes of the foregoing proviso, the aggregate number of shares of Common
Stock beneficially owned by the holder and its affiliates shall include the
number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which the determination of such proviso is being made, but shall
exclude shares of Common Stock which would be issuable upon (i) exercise of the
remaining, unexercised Warrants beneficially owned by the holder and its
affiliates and (ii) exercise or conversion of the unexercised or unconverted
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portion of any other securities of the Company beneficially owned by the holder
and its affiliates (including, without limitation, any convertible notes or
preferred stock) subject to a limitation on conversion or exercise analogous to
the limitation contained herein. Except as set forth in the preceding sentence,
for purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended. For purposes of this Warrant, in determining the number of outstanding
shares of Common Stock a holder may rely on the number of outstanding shares of
Common Stock as reflected in (1) the Company's most recent Form 10-Q or Form
10-K, as the case may be, (2) a more recent public announcement by the Company
or (3) any other notice by the Company or its transfer agent setting forth the
number of shares of Common Stock outstanding. Upon the written request of any
holder, the Company shall promptly, but in no event later than one (1) Business
Day following the receipt of such notice, confirm in writing to any such holder
the number of shares of Common Stock then outstanding. In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect to
the exercise of Warrants (as defined below) by such holder and its affiliates
since the date as of which such number of outstanding shares of Common Stock was
reported.
Section 1.
(a) PLACEMENT AGENT AGREEMENT. This Warrant is one of
the common stock purchase warrants (the "Warrants") issued pursuant to the
Placement Agent Agreement dated as of August 24, 2000 between the Company and
May Davis Group, Inc. (the "PLACEMENT AGENT AGREEMENT").
(b) DEFINITIONS. The following words and terms as
used in this Warrant shall have the following meanings:
(i) "ADVANCE" means the amount of funds
payable by the Investor to the Company on any Advance Date for the purchase of
Common Stock pursuant to the Credit Agreement.
(ii) "ADVANCE DATE" means each date on
which the Investor makes payment of an Advance to the Company pursuant to the
Credit Agreement.
(iii) "ADVANCE NOTICE DATE" means each date
on which the Company delivers to the Investor a notice requiring the Investor to
make payment of an Advance to the Company pursuant to the Credit Agreement.
(iv) "APPROVED STOCK PLAN" means any
employee benefit plan which has been approved by the Board of Directors of the
Company, pursuant to which the Company's securities may be issued to any
employee, officer or director for services provided to the Company.
(v) "BUSINESS DAY" means any day other
than Saturday, Sunday or other day on which commercial banks in the City of New
York are authorized or required by law to remain closed.
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(vi) "CLOSING BID PRICE" means the closing
bid price of Common Stock as quoted on the Principal Market (as reported by
Bloomberg Financial Markets ("BLOOMBERG") through its "Volume at Price"
function).
(vii) "COMMON STOCK" means (i) the Company's
common stock, par value $0.01 per share, and (ii) any capital stock into which
such Common Stock shall have been changed or any capital stock resulting from a
reclassification of such Common Stock.
(viii) "CREDIT AGREEMENT" means the Equity
Line of Credit Agreement dated as of August 24, 2000 between the Company and the
Investor named therein for the purchase of Common Stock by the Investor.
(ix) "EXCLUDED SECURITIES" means, provided
such security is issued at a price which is greater than or equal to the
arithmetic average of the Closing Bid Prices of the Common Stock for the ten
(10) consecutive trading days immediately preceding the date of issuance, any of
the following: (a) any issuance by the Company of securities in connection with
a strategic partnership or a joint venture (the primary purpose of which is not
to raise equity capital), (b) any issuance by the Company of securities as
consideration for a merger or consolidation or the acquisition of a business,
product, license, or other assets of another person or entity and (c) options to
purchase shares of Common Stock, provided (I) such options are issued after the
date of this Warrant to employees of the Company within 30 days of such
employee's starting his employment with the Company, and (II) the exercise price
of such options is not less than the CLOSING BID PRICE of the Common Stock on
the date of issuance of such option.
(x) "EXPIRATION DATE" means the date five
(5) years from the Issuance Date of this Warrant or, if such date falls on a
Saturday, Sunday or other day on which banks are required or authorized to be
closed in the City of New York or the State of New York or on which trading does
not take place on the Principal Exchange or automated quotation system on which
the Common Stock is traded (a "HOLIDAY"), the next date that is not a Holiday.
(xi) "ISSUANCE DATE" means the date hereof.
(xii) "OPTIONS" means any rights, warrants
or options to subscribe for or purchase Common Stock or Convertible Securities.
(xiii) "OTHER SECURITIES" means (i) those
options and warrants of the Company issued prior to, and outstanding on, the
Issuance Date of this Warrant, (ii) the shares of Common Stock issuable on
exercise of such options and warrants, provided such options and warrants are
not amended after the Issuance Date of this Warrant and (iii) the shares of
Common Stock issuabale upon exercise of this Warrant.
(xiv) "PERSON" means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
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(xv) "PRINCIPAL MARKET" means the New York
Stock Exchange, the American Stock Exchange, the Nasdaq National Market, the
Nasdaq SmallCap Market, whichever is at the time the principal trading exchange
or market for such security, or the over-the-counter market on the electronic
bulletin board for such security as reported by BLOOMBERG or, if no bid or sale
information is reported for such security by BLOOMBERG, then the average of the
bid prices of each of the market makers for such security as reported in the
"pink sheets" by the National Quotation Bureau, Inc.
(xvi) "REGISTRATION RIGHTS AGREEMENT" means
the Registration Rights Agreement dated as of August 24, 2000 between the
Company and May Davis with respect to the registration rights pertaining to the
Common Stock issuable upon exercise of this Warrant.
(xvii) "SECURITIES ACT" means the Securities
Act of 1933, as amended.
(xviii) "WARRANT" means this Warrant and all
Warrants issued in exchange, transfer or replacement thereof.
(xvix) "WARRANT EXERCISE PRICE" shall be
$10.00 with respect to that number of Warrant Shares the holder is entitled to
purchase on or after the Advance Date specified in the Advance Notice Date, as
determined pursuant to Section 2(b) below.
(xx) "WARRANT SHARES" means the shares of
Common Stock issuable at any time upon exercise of this Warrant.
(c) OTHER DEFINITIONAL PROVISIONS.
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(i) Except as otherwise specified herein,
all references herein (A) to the Company shall be deemed to include the
Company's successors and (B) to any applicable law defined or referred to herein
shall be deemed references to such applicable law as the same may have been or
may be amended or supplemented from time to time.
(ii) When used in this Warrant, the words
"HEREIN", "HEREOF", and "HEREUNDER", and words of similar import, shall refer to
this Warrant as a whole and not to any provision of this Warrant, and the words
"SECTION", "Schedule", and "EXHIBIT" shall refer to Sections of, and Schedules
and Exhibits to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires, the
neuter gender includes the masculine or feminine, and the singular number
includes the plural, and vice versa.
Section 2. EXERCISE OF WARRANT.
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(a) Subject to the terms and conditions hereof, this
Warrant may be exercised by the holder hereof then registered on the books of
the Company, pro rata as hereinafter provided, at any time on any Business Day
on or after the opening of business on such Business Day, commencing with the
first Advance Date, and prior to 11:59 P.M. Eastern Time on the Expiration
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Date, by (i) delivery of a written notice, in the form of the subscription
notice attached as EXHIBIT A hereto (the "EXERCISE Notice"), of such holder's
election to exercise this Warrant, which notice shall specify the number of
Warrant Shares to be purchased, (ii) (A) payment to the Company of an amount
equal to the Warrant Exercise Price(s) applicable to the Warrant Shares being
purchased, multiplied by the number of Warrant Shares (at the applicable
Warrant Exercise Price) as to which this Warrant is being exercised (plus any
applicable issue or transfer taxes) (the "AGGREGATE EXERCISE PRICE") in cash
or wire transfer of immediately available funds or (B) notification to the
Company that this Warrant is being exercised pursuant to a Cashless Exercise
(as defined in Section 2(f)) and (iii) the surrender of this Warrant (or an
indemnification undertaking with respect to this Warrant in the case of its
loss, theft or destruction) to a common carrier for overnight delivery to the
Company as soon as practicable following such date. In the event of any
exercise of the rights represented by this Warrant in compliance with this
Section 2(a), the Company shall on the second Business Day following the date
of receipt of the Exercise Notice, the Aggregate Exercise Price (or notice of
a Cashless Exercise) and this Warrant (or an indemnification undertaking with
respect to this Warrant in the case of its loss, theft or destruction) and,
except for a Cashless Exercise, the receipt of the representations of the
holder specified in Section 6 hereof, if requested by the Company. (the
"EXERCISE DELIVERY DOCUMENTS"), credit such aggregate number of shares of
Common Stock to which the holder shall be entitled to the holder's or its
designee's balance account with The Depository Trust Company; provided,
however, if the holder who submitted the Exercise Notice requested physical
delivery of any or all of the Warrant Shares, then the Company shall, on or
before the second Business Day following receipt of the Exercise Delivery
Documents, issue and surrender to a common carrier for overnight delivery to
the address specified in the Exercise Notice, a certificate, registered in the
name of the holder, for the number of shares of Common Stock to which the
holder shall be entitled pursuant to such request. Upon delivery of the
Exercise Notice and Aggregate Exercise Price referred to in clause (ii)(A)
above or notification to the Company of a Cashless Exercise referred to in
Section 2(e), the holder of this Warrant shall be deemed for all corporate
purposes to have become the holder of record of the Warrant Shares with
respect to which this Warrant has been exercised,. In the case of a dispute as
to the determination of the Warrant Exercise Price, the Closing Bid Price or
the arithmetic calculation of the Warrant Shares, the Company shall promptly
issue to the holder the number of Warrant Shares that is not disputed and
shall submit the disputed determinations or arithmetic calculations to the
holder via facsimile within one (1) Business Day of receipt of the holder's
Exercise Notice. If the holder and the Company are unable to agree upon the
determination of the Warrant Exercise Price or arithmetic calculation of the
Warrant Shares within one (1) day of such disputed determination or arithmetic
calculation being submitted to the holder, then the Company shall immediately
submit via facsimile (i) the disputed determination of the Warrant Exercise
Price or the Closing Bid Price to an independent, reputable investment banking
firm or (ii) the disputed arithmetic calculation of the Warrant Shares to its
independent, outside accountant The Company shall cause the investment banking
firm or the accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the holder of the results no later
than forty-eight (48) hours from the time it receives the disputed
determinations or calculations. Such investment banking firm's or accountant's
determination or calculation, as the case may be, shall be deemed conclusive
absent manifest error.
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(b) This Warrant shall be exercisable pro rata on or
after each Advance Date with respect to that number of Warrant Shares equal to
the product obtained by multiplying 500,000 by a fraction, the numerator of
which is the amount of the Advance payable on the applicable Advance Date and
the denominator of which is $20,000,000. Warrant Shares which become eligible
for purchase on any Advance Date with respect to which this Warrant remains
unexercised may be purchased on any subsequent Business Day for the applicable
Warrant Exercise Price in accordance with the provisions of Section 2(a).
(c) Unless the rights represented by this Warrant
shall have expired or shall have been fully exercised, the Company shall, as
soon as practicable and in no event later than five (5) Business Days after any
exercise and at its own expense, issue a new Warrant identical in all respects
to this Warrant exercised except it shall represent rights to purchase the
number of Warrant Shares purchasable immediately prior to such exercise under
this Warrant exercised, less the number of Warrant Shares with respect to which
such Warrant is exercised. The holder shall have the right to exchange this
Warrant for a new warrant or warrants, at any time, such that one warrant
represents the portion of this Warrant that is present exercisable and the other
warrant represents the unexercisable portion of this Warrant as described in
Section 2(b).
(d) No fractional Warrant Shares are to be issued
upon any pro rata exercise of this Warrant, but rather the number of Warrant
Shares issued upon such exercise of this Warrant shall be rounded up or down to
the nearest whole number.
(e) If the Company or its Transfer Agent shall fail
for any reason or for no reason to issue to the holder within ten (10) Business
Days of receipt of the Exercise Delivery Documents, a certificate for the number
of Warrant Shares to which the holder is entitled or to credit the holder's
balance account with The Depository Trust Company for such number of Warrant
Shares to which the holder is entitled upon the holder's exercise of this
Warrant, the Company shall, in addition to any other remedies under this Warrant
or the Placement Agent Agreement or otherwise available to such holder, pay as
additional damages in cash to such holder on each day the issuance of such
certificate for Warrant Shares is not timely effected an amount equal to 0.5% of
the product of (A) the sum of the number of Warrant Shares not issued to the
holder on a timely basis and to which the holder is entitled, and (B) the
Closing Bid Price of the Common Stock for the trading day immediately preceding
the last possible date which the Company could have issued such Common Stock to
the holder without violating this Section 2.
(f) If within ten (10 ) Business Days after the
Companys receipt of the Exercise Delivery Documents, the Company fails to
deliver a new Warrant to the holder for the number of Warrant Shares to which
such holder is entitled pursuant to Sections 2(b) and 2(c) hereof, then, in
addition to any other available remedies under this Warrant or the Placement
Agent Agreement, or otherwise available to such holder, the Company shall pay as
additional damages in cash to such holder on each day after such tenth (10th )
Business Day that such delivery of such new Warrant is not timely effected in an
amount equal to 0.25% of the product of (A) the number of Warrant Shares
represented by the portion of this Warrant which is not being exercised and (B)
the Closing Bid Price of the Common Stock for the trading day immediately
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preceding the last possible date which the Company could have issued such
Warrant to the holder without violating this Section 2.
(g) If the Warrant Shares are not covered by an
effective registration statement for the resale of the Warrant Shares, the
holder of this Warrant may, at its election exercised in its sole discretion,
exercise this Warrant to the extent then exercisable, in lieu of making payment
of the Aggregate Exercise Price in cash, elect instead to receive upon such
exercise the "Net Number" of shares of Common Stock determined according to the
following formula (a "CASHLESS EXERCISE"):
Net Number = (A X B) - (A X C)
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B
For purposes of the foregoing formula:
A= the total number of Warrant Shares with
respect to which this Warrant is then being
exercised.
B= the Closing Bid Price of the Common Stock on
the date of exercise of the Warrant.
C= the Warrant Exercise Price then in effect for
the applicable Warrant Shares at the time of such
exercise.
For purposes of this paragraph 2(g), each portion of this Warrant on
any Advance Date shall be treated as a separate Warrant.
Section 3. COVENANTS AS TO COMMON STOCK. The Company hereby
covenants and agrees as follows:
(a) This Warrant is, and any Warrants issued in
substitution for or replacement of this Warrant will upon issuance be, duly
authorized and validly issued.
(b) All Warrant Shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof.
(c) During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized and reserved at least 100% of the number of shares of Common Stock
needed to provide for the exercise of the rights then represented by this
Warrant and the par value of said shares will at all times be less than or equal
to the applicable Warrant Exercise Price.
(d) The Company shall promptly file a registration
statement with the Securities and Exchange Commission to secure the listing of
the Warrant Shares on the Principal Market in accordance with the terms and
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conditions regarding the registration rights of holders of Warrants set forth in
the Registration Rights Agreement and shall maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all Warrant Shares
from time to time issuable upon the exercise of this Warrant; and the Company
shall so list on each national securities exchange or automated quotation
system, as the case may be, and shall maintain such listing of, any other shares
of capital stock of the Company issuable upon the exercise of this Warrant if
and so long as any shares of the same class shall be listed on such national
securities exchange or automated quotation system.
(e) The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed by it hereunder, 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 reasonably be requested by the holder of
this Warrant in order to protect the exercise privilege of the holder of this
Warrant against dilution or other impairment, consistent with the tenor and
purpose of this Warrant. The Company will not increase the par value of any
shares of Common Stock receivable upon the exercise of this Warrant above the
Warrant Exercise Price then in effect, and (ii) will take all such actions as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant.
(f) This Warrant will be binding upon any entity
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
Section 4. TAXES. The Company shall pay any and all taxes,
except any applicable withholding, which may be payable with respect to the
issuance and delivery of Warrant Shares upon exercise of this Warrant.
Section 5. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except
as otherwise specifically provided herein, no holder, as such, of this Warrant
shall be entitled to vote or receive dividends or be deemed the holder of shares
of the Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the holder of this Warrant of the Warrant Shares which he or she is
then entitled to receive upon the due exercise of this Warrant. In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities
on such holder to purchase any securities (upon exercise of this Warrant or
otherwise) or as a stockholder of the Company, whether such liabilities are
asserted by the Company or by creditors of the Company. Notwithstanding this
Section 5, the Company will provide the holder of this Warrant with copies of
the same notices and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the stockholders.
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Section 6. REPRESENTATIONS OF HOLDER. The holder of this
Warrant, by the acceptance hereof, represents that it is acquiring this Warrant
and the Warrant Shares for its own account for investment only and not with a
view towards, or for resale in connection with, the public sale or distribution
of this Warrant or the Warrant Shares, except pursuant to sales registered or
exempted under the Securities Act; provided, however, that by making the
representations herein, the holder does not agree to hold this Warrant or any of
the Warrant Shares for any minimum or other specific term and reserves the right
to dispose of this Warrant and the Warrant Shares at any time in accordance with
or pursuant to a registration statement or an exemption under the Securities
Act. The holder of this Warrant further represents, by acceptance hereof, that,
as of this date, such holder is an "accredited investor" as such term is defined
in Rule 501(a)(1) of Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act (an "ACCREDITED INVESTOR"). Upon exercise of
this Warrant, other than pursuant to a Cashless Exercise, the holder shall, if
requested by the Company, confirm in writing, in a form satisfactory to the
Company, that the Warrant Shares so purchased are being acquired solely for the
holder's own account and not as a nominee for any other party, for investment,
and not with a view toward distribution or resale and that such holder is an
Accredited Investor. If such holder cannot make such representations because
they would be factually incorrect, it shall be a condition to such holder's
exercise of this Warrant, other than pursuant to a Cashless Exercise, that the
Company receive such other representations as the Company considers reasonably
necessary to assure the Company that the issuance of its securities upon
exercise of this Warrant shall not violate any United States or state securities
laws.
Section 7. OWNERSHIP AND TRANSFER.
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(a) The Company shall maintain at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee. The
Company may treat the person in whose name any Warrant is registered on the
register as the owner and holder thereof for all purposes, notwithstanding any
notice to the contrary, but in all events recognizing any transfers made in
accordance with the terms of this Warrant.
(b) The Company is obligated to register the Warrant
Shares for resale under the Securities Act pursuant to the Registration Rights
Agreement and the initial holder of this Warrant (and certain assignees thereof)
is entitled to the registration rights in respect of the Warrant Shares as set
forth in the Registration Rights Agreement.
Section 8. ADJUSTMENT OF WARRANT EXERCISE PRICE AND NUMBER
OF SHARES. For purposes of this Section 8, the portion of each Warrant which
becomes exercisable on an Advance Date shall be treated as if it were a separate
Warrant based on the Warrant Exercise Price as determined on the Advance Date
and as if such portion of this Warrant were exercisable on the Issuance Date.
The Warrant Exercise Price and the number of shares of Common Stock issuable
upon exercise of this Warrant shall be adjusted from time to time as follows:
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(a) ADJUSTMENT OF WARRANT EXERCISE PRICE AND NUMBER
OF SHARES UPON ISSUANCE OF COMMON STOCK. If and whenever on or after the
Issuance Date of this Warrant, the Company issues or sells, or is deemed to have
issued or sold, any shares of Common Stock (other than (i) Excluded Securities
and (ii) shares of Common Stock which are issued or deemed to have been issued
by the Company in connection with an Approved Stock Plan or upon exercise or
conversion of the Other Securities) for a consideration per share less than a
price (the "APPLICABLE PRICE") equal to the Warrant Exercise Price in effect
immediately prior to such issuance or sale, then immediately after such issue or
sale the Warrant Exercise Price then in effect shall be reduced to an amount
equal to such consideration per share. Upon each such adjustment of the Warrant
Exercise Price hereunder, the number of Warrant Shares issuable upon exercise of
this Warrant shall be adjusted to the number of shares determined by multiplying
the Warrant Exercise Price in effect immediately prior to such adjustment by the
number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such adjustment and dividing the product thereof by the Warrant
Exercise Price resulting from such adjustment.
(b) EFFECT ON WARRANT EXERCISE PRICE OF CERTAIN
EVENTS. For purposes of determining the adjusted Warrant Exercise Price under
Section 8(a) above, the following shall be applicable:
(i) ISSUANCE OF OPTIONS. If after the date
hereof, the Company in any manner grants any Options and the lowest price per
share for which one share of Common Stock is issuable upon the exercise of any
such Option or upon conversion or exchange of any Convertible Securities
issuable upon exercise of any such Option is less than the Applicable Price,
then such share of Common Stock shall be deemed to be outstanding and to have
been issued and sold by the Company at the time of the granting or sale of such
Option for such price per share. For purposes of this Section 8(b)(i), the
lowest price per share for which one share of Common Stock is issuable upon
exercise of such Options or upon conversion or exchange of such Convertible
Securities shall be equal to the sum of the lowest amounts of consideration (if
any) received or receivable by the Company with respect to any one share of
Common Stock upon the granting or sale of the Option, upon exercise of the
Option or upon conversion or exchange of any Convertible Security issuable upon
exercise of such Option. No further adjustment of the Warrant Exercise Price
shall be made upon the actual issuance of such Common Stock or of such
Convertible Securities upon the exercise of such Options or upon the actual
issuance of such Common Stock upon conversion or exchange of such Convertible
Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If
the Company in any manner issues or sells any Convertible Securities and the
lowest price per share for which one share of Common Stock is issuable upon the
conversion or exchange thereof is less than the Applicable Price, then such
share of Common Stock shall be deemed to be outstanding and to have been issued
and sold by the Company at the time of the issuance or sale of such Convertible
Securities for such price per share. For the purposes of this Section 8(b)(ii),
the lowest price per share for which one share of Common Stock is issuable upon
such conversion or exchange shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to one
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share of Common Stock upon the issuance or sale of the Convertible Security and
upon conversion or exchange of such Convertible Security. No further adjustment
of the Warrant Exercise Price shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible Securities, and if
any such issue or sale of such Convertible Securities is made upon exercise of
any Options for which adjustment of the Warrant Exercise Price had been or are
to be made pursuant to other provisions of this Section 8(b), no further
adjustment of the Warrant Exercise Price shall be made by reason of such issue
or sale.
(iii) CHANGE IN OPTION PRICE OR RATE OF
CONVERSION. If the purchase price provided for in any Options, the additional
consideration, if any, payable upon the issue, conversion or exchange of any
Convertible Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock changes at any time, the
Warrant Exercise Price in effect at the time of such change shall be adjusted to
the Warrant Exercise Price which would have been in effect at such time had such
Options or Convertible Securities provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold and the number of Warrant Shares issuable
upon exercise of this Warrant shall be correspondingly readjusted. For purposes
of this Section 8(b)(iii), if the terms of any Option or Convertible Security
that was outstanding as of the Issuance Date of this Warrant are changed in the
manner described in the immediately preceding sentence, then such Option or
Convertible Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the
date of such change. No adjustment pursuant to this Section 8(b) shall be made
if such adjustment would result in an increase of the Warrant Exercise Price
then in effect.
(c) EFFECT ON WARRANT EXERCISE PRICE OF CERTAIN
EVENTS. For purposes of determining the adjusted Warrant Exercise Price under
Sections 8(a) and 8(b), the following shall be applicable:
(i) CALCULATION OF CONSIDERATION RECEIVED.
If any Common Stock, Options or Convertible Securities are issued or sold or
deemed to have been issued or sold for cash, the consideration received
therefore will be deemed to be the net amount received by the Company therefore.
If any Common Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of such consideration received by the
Company will be the fair value of such consideration, except where such
consideration consists of marketable securities, in which case the amount of
consideration received by the Company will be the Market Price of such
securities on the date of receipt of such securities. If any Common Stock,
Options or Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving
entity, the amount of consideration therefore will be deemed to be the fair
value of such portion of the net assets and business of the non-surviving entity
as is attributable to such Common Stock, Options or Convertible Securities, as
the case may be. The fair value of any consideration other than cash or
securities will be determined jointly by the Company and the holders of Warrants
representing at least two-thirds (b) of the Warrant Shares issuable upon
exercise of the Warrants then outstanding. If such parties are unable to reach
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agreement within ten (10) days after the occurrence of an event requiring
valuation (the "VALUATION EVENT"), the fair value of such consideration will be
determined within five (5) Business Days after the tenth (10th) day following
the Valuation Event by an independent, reputable appraiser jointly selected by
the Company and the holders of Warrants representing at least two-thirds (b) of
the Warrant Shares issuable upon exercise of the Warrants then outstanding. The
determination of such appraiser shall be final and binding upon all parties and
the fees and expenses of such appraiser shall be borne jointly by the Company
and the holders of Warrants.
(ii) INTEGRATED TRANSACTIONS. In case any
Option is issued in connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the Options
will be deemed to have been issued for a consideration of $.01.
(iii) TREASURY SHARES. The number of shares
of Common Stock outstanding at any given time does not include shares owned or
held by or for the account of the Company, and the disposition of any shares so
owned or held will be considered an issue or sale of Common Stock.
(iv) RECORD DATE. If the Company takes a
record of the holders of Common Stock for the purpose of entitling them (1) to
receive a dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (2) to subscribe for or purchase Common Stock, Options
or Convertible Securities, then such record date will be deemed to be the date
of the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(d) ADJUSTMENT OF WARRANT EXERCISE PRICE UPON
SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any time after the
date of issuance of this Warrant subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, any Warrant Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced and
the number of shares of Common Stock obtainable upon exercise of this Warrant
will be proportionately increased. If the Company at any time after the date of
issuance of this Warrant combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, any Warrant Exercise Price in effect immediately prior
to such combination will be proportionately increased and the number of Warrant
Shares issuable upon exercise of this Warrant will be proportionately decreased.
Any adjustment under this Section 8(d) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(e) DISTRIBUTION OF ASSETS. If the Company shall
declare or make any dividend or other distribution of its assets (or rights to
acquire its assets) to holders of Common Stock, by way of return of capital or
otherwise (including, without limitation, any distribution of cash, stock or
other securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement or other similar transaction) (a
"DISTRIBUTION"), at any time after the issuance of this Warrant, then, in each
such case:
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(i) any Warrant Exercise Price in effect
immediately prior to the close of business on the record date fixed for the
determination of holders of Common Stock entitled to receive the Distribution
shall be reduced, effective as of the close of business on such record date, to
a price determined by multiplying such Warrant Exercise Price by a fraction of
which (A) the numerator shall be the Closing Sale Price of the Common Stock on
the trading day immediately preceding such record date minus the value of the
Distribution (as determined in good faith by the Company's Board of Directors)
applicable to one share of Common Stock, and (B) the denominator shall be the
Closing Sale Price of the Common Stock on the trading day immediately preceding
such record date; and
(ii) either (A) the number of Warrant
Shares obtainable upon exercise of this Warrant shall be increased to a number
of shares equal to the number of shares of Common Stock obtainable immediately
prior to the close of business on the record date fixed for the determination of
holders of Common Stock entitled to receive the Distribution multiplied by the
reciprocal of the fraction set forth in the immediately preceding clause (i), or
(B) in the event that the Distribution is of common stock of a company whose
common stock is traded on a national securities exchange or a national automated
quotation system, then the holder of this Warrant shall receive an additional
warrant to purchase Common Stock, the terms of which shall be identical to those
of this Warrant, except that such warrant shall be exercisable into the amount
of the assets that would have been payable to the holder of this Warrant
pursuant to the Distribution had the holder exercised this Warrant immediately
prior to such record date and with an exercise price equal to the amount by
which the exercise price of this Warrant was decreased with respect to the
Distribution pursuant to the terms of the immediately preceding clause (i).
(f) CERTAIN EVENTS. If any event occurs of the type
contemplated by the provisions of this Section 8 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Warrant Exercise Price and the number of shares of Common Stock obtainable upon
exercise of this Warrant so as to protect the rights of the holders of the
Warrants; provided that no such adjustment pursuant to this Section 8(f) will
increase the Warrant Exercise Price or decrease the number of shares of Common
Stock obtainable as otherwise determined pursuant to this Section 8.
(g) NOTICES.
(i) Immediately upon any adjustment of the
Warrant Exercise Price, the Company will give written notice thereof to the
holder of this Warrant, setting forth in reasonable detail, and certifying, the
calculation of such adjustment.
(ii) The Company will give written notice
to the holder of this Warrant at least ten (10) days prior to the date on which
the Company closes its books or takes a record (A) with respect to any dividend
or distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to holders of Common Stock or (C) for determining rights to
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vote with respect to any Organic Change (as defined below), dissolution or
liquidation, provided that such information shall be made known to the public
prior to or in conjunction with such notice being provided to such holder.
(iii) The Company will also give written
notice to the holder of this Warrant at least ten (10) days prior to the date on
which any Organic Change, dissolution or liquidation will take place, provided
that such information shall be made known to the public prior to or in
conjunction with such notice being provided to such holder.
Section 9. PURCHASE RIGHTS; REORGANIZATION, RECLASSIFICATION,
CONSOLIDATION, MERGER OR SALE.
--------------------------------------------------
(a) In addition to any adjustments pursuant to
Section 8 above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock (the
"PURCHASE RIGHTS"), then the holder of this Warrant will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which such holder could have acquired if such holder had held the number of
shares of Common Stock acquirable upon complete exercise of this Warrant
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights.
(b) Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets to another Person or other transaction in each case which is
effected in such a way that holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities or assets
with respect to or in exchange for Common Stock is referred to herein as an
"ORGANIC CHANGE". Prior to the consummation of any (i) sale of all or
substantially all of the Company's assets to an acquiring Person or (ii) other
Organic Change following which the Company is not a surviving entity, the
Company will secure from the Person purchasing such assets or the successor
resulting from such Organic Change (in each case, the "ACQUIRING ENTITY") a
written agreement (in form and substance satisfactory to the holders of Warrants
representing at least two-thirds (b) of the Warrant Shares issuable upon
exercise of the Warrants then outstanding) to deliver to each holder of Warrants
in exchange for such Warrants, a security of the Acquiring Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant
and satisfactory to the holders of the Warrants (including an adjusted warrant
exercise price equal to the value for the Common Stock reflected by the terms of
such consolidation, merger or sale, and exercisable for a corresponding number
of shares of Common Stock acquirable and receivable upon exercise of the
Warrants without regard to any limitations on exercise, if the value so
reflected is less than any Applicable Warrant Exercise Price immediately prior
to such consolidation, merger or sale). Prior to the consummation of any other
Organic Change, the Company shall make appropriate provision (in form and
substance satisfactory to the holders of Warrants representing a majority of the
Warrant Shares issuable upon exercise of the Warrants then outstanding) to
insure that each of the holders of the Warrants will thereafter have the right
to acquire and receive in lieu of or in addition to (as the case may be) the
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Warrant Shares immediately theretofore issuable and receivable upon the exercise
of such holder's Warrants (without regard to any limitations on exercise), such
shares of stock, securities or assets that would have been issued or payable in
such Organic Change with respect to or in exchange for the number of Warrant
Shares which would have been issuable and receivable upon the exercise of such
holder's Warrant as of the date of such Organic Change (without taking into
account any limitations or restrictions on the exercisability of this Warrant).
Section 10. FORCED CONVERSION. The Company shall have the
right to force conversion provided that the Closing Bid Price of the Company's
Common Stock is $15.00 or higher per share for ten (10) consecutive trading
days.
Section 11. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If
this Warrant is lost, stolen, mutilated or destroyed, the Company shall
promptly, on receipt of an indemnification undertaking (or, in the case of a
mutilated Warrant, the Warrant), issue a new Warrant of like denomination and
tenor as this Warrant so lost, stolen, mutilated or destroyed.
Section 12. NOTICE. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this Warrant
must be in writing and will be deemed to have been delivered: (i) upon receipt,
when delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of receipt is received by the sending party, transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:
If to the Holder:
May Davis Group, Inc.
1 World Trade Center, Suite 8735
New York, NY 10048
Telephone: (212) 775-7400
Facsimile: (212) 775-8166
Attention: Michael Jacobs
with Copy to:
Butler Gonzalez LLP
1000 Stuyvesant Avenue
Suite # 6
Union, NJ 07083
Telephone: (908) 810-8588
Facsimile: (908) 810-0973
Attention: David Gonzalez, Esq.
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If to the Company:
European Micro Holdings, Inc.
6073 N.W. 167th Street
Unit C-25
Miami, Fl 33015
Telephone: (305) 825-2458
Facsimile: (305) 362-4854
Attention: John B. Gallagher, Co-President
with a copy to:
Kirkpatrick & Lockhart
201 Biscayne Blvd.
Suite 2000
Miami, Fl 33131
Telephone:(305) 539-3306
Facsimile:(305) 358-7095
Attention: Clayton Parker, Esq.
If to a holder of this Warrant, to it at the address and facsimile number set
forth in the Credit Agreement, with copies to such holder's representatives as
set forth in such Credit Agreement, or at such other address and facsimile as
shall be delivered to the Company upon the issuance or transfer of this Warrant.
Each party shall provide five days' prior written notice to the other party of
any change in address or facsimile number. Written confirmation of receipt (A)
given by the recipient of such notice, consent, facsimile, waiver or other
communication, or (B)provided by a nationally recognized overnight delivery
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
Section 13. DATE. The date of this Warrant is August 24,
2000. This Warrant, in all events, shall be wholly void and of no effect after
the close of business on the Expiration Date, except that notwithstanding any
other provisions hereof, the provisions of Section (b) shall continue in full
force and effect after such date as to any Warrant Shares or other securities
issued upon the exercise of this Warrant.
Section 14. AMENDMENT AND WAIVER. Except as otherwise
provided herein, the provisions of the Warrants may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of the holders of Warrants representing at least two-thirds (b) of the
Warrant Shares issuable upon exercise of the Warrants then outstanding; provided
that no such action may increase the Warrant Exercise Price or decrease the
number of shares or class of stock obtainable upon exercise of any Warrant
without the written consent of the holder of such Warrant.
Section 15. DESCRIPTIVE HEADINGS; GOVERNING LAW. The
descriptive headings of the several sections and paragraphs of this Warrant are
inserted for convenience only and do not constitute a part of this Warrant. The
corporate laws of the State of Nevada shall govern all issues concerning the
relative rights of the Company and its stockholders. All other questions
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concerning the construction, validity, enforcement and interpretation of this
Warrant shall be governed by the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York, or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by John B. Gallagher, its Co-President, as of the 24th day of August, 2000.
EUROPEAN MICRO HOLDINGS, INC.
By: /s/ John B. Gallagher
-----------------------------
Name: John B. Gallagher
Title: Co-President
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<PAGE>
EXHIBIT A TO WARRANT
--------------------
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
EUROPEAN MICRO HOLDINGS, INC.
The undersigned holder hereby exercises the right to purchase
_________________ of the shares of Common Stock ("WARRANT SHARES") of European
Micro Holdings, Inc., a Nevada corporation (the "COMPANY"), evidenced by the
attached Warrant (the "WARRANT"). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.
1. Form of Warrant Exercise Price. The Holder intends that payment of
the Warrant Exercise Price shall be made as:
____________ a "CASH EXERCISE" with respect to
_________________ Warrant Shares; and/or
____________ a "CASHLESS EXERCISE" with respect to
_______________ Warrant Shares (to the
extent permitted by the terms of the Warrant).
2. Payment of Warrant Exercise Price. In the event that the holder
has elected a Cash Exercise with respect to some or all of the Warrant Shares to
be issued pursuant hereto, the holder shall pay the sum of $___________________
to the Company in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares. The Company shall deliver to the
holder __________ Warrant Shares in accordance with the terms of the Warrant.
Date: _______________ __, ______
Name of Registered Holder
By:
-----------------------------------------
Name:
Title:
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EXHIBIT B TO WARRANT
--------------------
FORM OF WARRANT POWER
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer
to ________________, Federal Identification No. __________, a warrant to
purchase ____________ shares of the capital stock of European Micro Holdings,
Inc., a Nevada corporation, represented by warrant certificate no. _____,
standing in the name of the undersigned on the books of said corporation. The
undersigned does hereby irrevocably constitute and appoint ______________,
attorney to transfer the warrants of said corporation, with full power of
substitution in the premises.
Dated: _________, ____
------------------------------------
By:
-----------------------------
Its: -----------------------------
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