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FORM OF WARRANT
WARRANT TO PURCHASE COMMON STOCK
OF
SONIC SYSTEMS CORPORATION
THIS WARRANT AND THE SHARES OF COMMON STOCK
ISSUABLE PURSUANT TO THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT OR
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE
FOR VALUE RECEIVED
Sonic Systems Corporation, a Delaware corporation (the "Company"), grants the following rights to , having an address at ("Holder").
ARTICLE 1. DEFINITIONS
As used herein, the following terms shall have the following meanings, unless the context shall otherwise require:
ARTICLE 2. EXERCISE
This Warrant shall entitle Holder to purchase up to shares of Common Stock (the
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"Shares") at the Exercise Price. This Warrant shall be exercisable at any time and from time to time prior to the Expiration Date (the "Exercise Period"). This Warrant and the right to purchase Shares hereunder shall expire and become void at the Expiration Date.
The Company shall have the right, at any time after the occurrence of a Call Event, to accelerate the Exercise Period by sending to the Holder, at the Holder's address written above, a Notice of Acceleration in substantially the form attached as Appendix I hereto (the "Notice"). In the event the Company does accelerate the Exercise Period, (a) if the Shares underlying the Warrant are, as of the date of the Notice, the subject of a filed registration statement under the Securities Act of 1933, as amended (the "Act"), holders shall have twenty (20) days from the date the Holder receives the Notice within which to exercise this Warrant in the manner provided for in Section 2.3, or (b) if the Shares underlying the Warrant are not, as of the date of the Notice, the subject of a filed registration statement under the Act, the Holder shall have ninety (90) days from the date the Holder receives the Notice within which to exercise this Warrant. If this Warrant is not exercised within the applicable period, thereafter this Warrant and the right to purchase the Shares hereunder, to the extent not previously exercised, shall expire and become void. If mailed, the Holder shall be deemed to have received the Notice five (5) days after the date the Notice is deposited with a national mail.
All rights of the Holder in this Warrant, to the extent they have not previously expired or been exercised, shall terminate on the Expiration Date.
Prior to its exercise pursuant to Section 2.3 above, this Warrant shall not entitle the Holder to any voting or other rights as holder of Shares.
In case of any reclassification, capital reorganization, stock dividend, or other change of outstanding shares of Common Stock, or in case of any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification, capital reorganization, stock dividend, or other change of outstanding shares of Common Stock), or in case of any sale or conveyance to another corporation of the property of the Company as, or substantially as, an
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entirety (other than a sale/leaseback, mortgage or other financing transaction), the Company shall cause effective provision to be made so that the Holder shall have the right thereafter, by exercising this Warrant, to purchase the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization, stock dividend, or other change, consolidation, merger, sale or conveyance as the Holder would have been entitled to receive had the Holder exercised this Warrant in full immediately before such reclassification, capital reorganization, stock dividend, or other change, consolidation, merger, sale or conveyance. Any such provision shall include provision for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 2.6. The foregoing provisions shall similarly apply to successive reclassifications, capital reorganizations, stock dividends, and other changes of outstanding shares of Common Stock and to successive consolidations, mergers, sales or conveyances.
No fractional Shares shall be issuable upon exercise or conversion of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional Share interest arises upon any exercise or conversion of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder the amount computed by multiplying the fractional interest by the closing bid price of a full Share on the date of the Notice of Exercise.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY
The Company hereby represents and warrants to the Holder as follows:
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will use its reasonable efforts to cause such Shares to become the subject of a registration statement filed under the Act as soon as practicable after the date of the Notice.
ARTICLE 4. MISCELLANEOUS
This Warrant is issued as a part of Units issued by the Company and may not be transferred or assigned separately from the Shares which, with this Warrant, comprise such Units. This Warrant may not be transferred or assigned, in whole or in part, at any time, except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of an investment representation letter and a legal opinion reasonably satisfactory to the Company), provided that this Warrant may not be transferred or assigned such that either the Holder or any transferee will, following such transfer or assignment, hold a Warrant for the right to purchase fewer than 25,000 Shares.
Subject to the provisions of Section 4.1, Holder may transfer or assign this Warrant by giving the Company notice setting forth the name, address and taxpayer identification number of the transferee or assignee, if applicable, and surrendering this Warrant to the Company for reissuance to the transferee or assignee (and the Holder, in the event of a transfer or assignment of this Warrant in part). (Each of the persons or entities in whose name any such new Warrant shall be issued are herein referred to as a Holder.)
If this Warrant shall become mutilated or defaced or be destroyed, lost or stolen, the Company shall execute and deliver a new Warrant in exchange for and upon surrender and cancellation of such mutilated or defaced Warrant or, in lieu of and in substitution for such Warrants so destroyed, lost or stolen, upon the Holder filing with the Company evidence satisfactory to it that such Warrant has been so mutilated, defaced, destroyed, lost or stolen. However, the Company shall be entitled, as a condition to the execution and delivery of such new Warrant, to demand indemnity satisfactory to it and payment of the expenses and charges incurred in connection with the delivery of such new Warrant. Any Warrant so surrendered to the Company shall be canceled.
All notices and other communications from the Company to the Holder or vice versa shall be deemed delivered and effective when given personally (including by recognized courier delivery), by facsimile transmission and confirmed in writing, or three (3) days after being mailed by first-class national mail, postage prepaid, at such address and/or facsimile number as may have been furnished to the Company or the Holder, as the case may be, in writing by the Company or the Holder from time to time; provided, however, that the Notice of Exercise may not be delivered by facsimile transmission.
This Warrant and any term hereof may be changed, waived, or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.
This Warrant shall be governed by and construed in accordance with the laws of the State of Washington, without giving effect to its principles regarding conflicts of law.
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If the Shares underlying the Warrants are not the subject of an effective registration statement under the Act upon issuance by the Company, legends stating that such Shares have not been registered and referring to restrictions on transferability and sale of the Shares may be placed upon all certificates or other documents evidencing ownership, and stop-order instructions prohibiting transfer of the Shares or similar notations may be made on the Company's records to prevent the disposition of Shares other than in accordance with applicable law.
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APPENDIX I
NOTICE OF ACCELERATION
Dated:
Sonic Systems Corporation (the "Company") does hereby notify you of its election to exercise its right, pursuant to Section 2.2 of the Warrant issued to you by the Company on (the "Warrant"), to accelerate the exercise period of such Warrant with respect to Shares. Please be advised that you have [twenty (20) days]/[ninety (90) days] from the date you receive this Notice of Acceleration (the "[Twenty-Day]/ [Ninety-Day] Period") to exercise your Warrant in the manner provided for in the Warrant. You will be deemed to have received this Notice of Acceleration five (5) days after the date when this Notice of Acceleration was first deposited in a national mail, if mailed, or upon receipt if delivered personally or by facsimile.
You will automatically forfeit your right to purchase shares of common stock issuable upon exercise of such Warrant, unless the Warrant is exercised with respect to such numbers of Shares before the end of the [Twenty-Day]/[Ninety-Day] Period.
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APPENDIX II
NOTICE OF EXERCISE
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