EXHIBIT 4.3
ANNEX VI
TO
SECURITIES PURCHASE AGREEMENT
FORM OF WARRANT
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR
OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
NATURAL HEALTH TRENDS CORP.
COMMON STOCK PURCHASE WARRANT
1. Issuance; Certain Definitions. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by NATURAL HEALTH
TRENDS CORP., a Florida corporation (the "Company"), _____________ or registered
assigns (the "Holder") is hereby granted the right to purchase at any time until
5:00 P.M., New York City time, on ______________ ,200(1) (the "Expiration
Date"),_________ Thousand (___________)(2) fully paid and nonassessable shares
of the Company's Common Stock, par value $.001 per share (the "Common Stock") at
an initial exercise price per share (the "Exercise Price") of $_____(3) per
share, subject to further adjustment as set forth herein. This Warrant is being
issued pursuant to the terms of that certain Securities Purchase Agreement,
dated as of March , 2000 (the "Securities Purchase Agreement"), to which the
Company and Holder (or Holder's predecessor in interest) are parties.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Securities Purchase Agreement.
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(1)Insert date which is last day of month in which fifth anniversary of
the relevant Closing Date occurs.
(2)Insert an amount equal to 20% of the Purchase Price of Preferred Stock
purchased by the Holder on the Closing Date divided by 110% of the closing bid
price of the Common Stock on the trading day immediately before the Closing
Date.
(3)Insert 110% of closing bid price on trading day immediately before the
Closing Date.
2. Exercise of Warrants.
2.1 General. This Warrant is exercisable in whole or in part at any
time and from time to time. Such exercise shall be effectuated by submitting to
the Company (either by delivery to the Company or by facsimile transmission as
provided in Section 8 hereof) a completed and duly executed Notice of Exercise
(substantially in the form attached to this Warrant Certificate) as provided in
this paragraph. The date such Notice of Exercise is faxed to the Company shall
be the "Exercise Date," provided that the Holder of this Warrant tenders this
Warrant Certificate to the Company within five (5) business days thereafter. The
Notice of Exercise shall be executed by the Holder of this Warrant and shall
indicate the number of shares then being purchased pursuant to such exercise.
Upon surrender of this Warrant Certificate with, together with appropriate
payment of the Exercise Price for the shares of Common Stock purchased, the
Holder shall be entitled to receive a certificate or certificates for the shares
of Common Stock so purchased. If the Notice of Exercise Form elects a "cash"
exercise, the Exercise Price per share of Common Stock for the shares then being
exercised shall be payable in cash or by certified or official bank check. If
the Notice of Exercise Form elects a "cashless" exercise, the Holder shall
thereby be entitled to receive a number of shares of Common Stock equal to (x)
the excess of the Current Market Value (as defined below) over the total cash
exercise price of the portion of the Warrant then being exercised, divided by
(y) the Current Price of the Common Stock as of the trading day immediately
prior to the Exercise Date. For the purposes of this Section 2,(q) "Current
Market Value" shall be an amount equal to the Current Price of the Common Stock
as of the trading day immediately prior to the Exercise Date, multiplied by the
number of shares of Common Stock specified in such Notice of Exercise Form, and
(r) "Current Price of the Common Stock" shall be the closing price of the Common
Stock as reported by Bloomberg, LP or, if not so reported, as reported by the
securities exchange or automated quotation system on which the Common Stock is
listed or on the over-the-counter market for the relevant date. The Holder shall
be deemed to be the holder of the shares issuable to it in accordance with the
provisions of this Section 2.1 on the Exercise Date.
2.2 Limitation on Exercise. Notwithstanding the provisions of this
Warrant, the Securities Purchase Agreement or of the other Transaction
Agreements, in no event (except (i) with respect to an automatic conversion, if
any, of the Preferred Stock as provided in the Certificate of Designations, (ii)
as specifically provided in this Warrant as an exception to this provision, or
(iii) while there is outstanding a tender offer for any or all of the shares of
the Company's Common Stock) shall the Holder be entitled to exercise this
Warrant, or shall the Company have the obligation to issue shares upon such
exercise of all or any portion of this Warrant, to the extent that, after such
exercise the sum of (1) the number of shares of Common Stock beneficially owned
by the Holder and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unconverted portion of
the Preferred Stock or unexercised portion of the Warrants), and (2) the number
of shares of Common Stock issuable upon the exercise of the Warrants with
respect to which the determination of this proviso is being made, would result
in beneficial ownership by the Holder and its affiliates of more than 9.99% of
the outstanding shares of Common Stock (after taking into account the shares to
be issued to the Holder upon such exercise). For purposes of the proviso to the
immediately preceding
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sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act"),
except as otherwise provided in clause (1) of such sentence. The Holder, by its
acceptance of this Warrant, further agrees that if the Holder transfers or
assigns any of the Warrants to a party who or which would not be considered such
an affiliate, such assignment shall be made subject to the transferee's or
assignee's specific agreement to be bound by the provisions of this Section 2.2
as if such transferee or assignee were the original Holder hereof.
3. Reservation of Shares. The Company hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant such number of shares of its Common Stock as shall be
required for issuance upon exercise of this Warrant (the "Warrant Shares").
4. Mutilation or Loss of Warrant. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) receipt of reasonably
satisfactory indemnification, and (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will execute and deliver a new Warrant
of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant
shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.
6. Protection Against Dilution.
6.1 Adjustment Mechanism. If an adjustment of the Exercise Price is
required pursuant to this Section 6, the Holder shall be entitled to purchase
such number of additional shares of Common Stock as will cause (i) the total
number of shares of Common Stock Holder is entitled to purchase pursuant to this
Warrant, multiplied by (ii) the adjusted Exercise Price per share, to equal
(iii) the dollar amount of the total number of shares of Common Stock Holder is
entitled to purchase before adjustment multiplied by the total Exercise Price
before adjustment.
6.2 Capital Adjustments. In case of any stock split or reverse
stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation, or like capital adjustment affecting
the Common Stock of the Company, the provisions of this Section 6 shall be
applied as if such capital adjustment event had occurred immediately prior to
the date of this Warrant and the original Exercise Price had been fairly
allocated to the stock resulting from such capital adjustment; and in other
respects the provisions of this Section shall be applied in a fair, equitable
and reasonable manner so as to give effect, as nearly as may be, to the purposes
hereof. A rights offering to stockholders shall be deemed a stock dividend to
the extent of the bargain purchase element of the rights.
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6.3 Adjustment for Spin Off. If, for any reason, prior to the
exercise of this Warrant in full, the Company spins off or otherwise divests
itself of a part of its business or operations or disposes all or of a part of
its assets in a transaction (the "Spin Off") in which the Company does not
receive compensation for such business, operations or assets, but causes
securities of another entity (the "Spin Off Securities") to be issued to
security holders of the Company, then
(a) the Company shall cause (i) to be reserved Spin Off Securities
equal to the number thereof which would have been issued to the Holder had
all of the Holder's unexercised Warrants outstanding on the record date
(the "Record Date") for determining the amount and number of Spin Off
Securities to be issued to security holders of the Company (the
"Outstanding Warrants") been exercised as of the close of business on the
trading day immediately before the Record Date (the "Reserved Spin Off
Shares"), and (ii) to be issued to the Holder on the exercise of all or
any of the Outstanding Warrants, such amount of the Reserved Spin Off
Shares equal to (x) the Reserved Spin Off Shares multiplied by (y) a
fraction, of which (I) the numerator is the amount of the Outstanding
Warrants then being exercised, and (II) the denominator is the amount of
the Outstanding Warrants; and
(b) the Exercise Price on the Outstanding Warrants shall be adjusted
immediately after consummation of the Spin Off by multiplying the Exercise
Price by a fraction (if, but only if, such fraction is less than 1.0), the
numerator of which is the Average Market Price of the Common Stock (as
defined below) for the five (5) trading days immediately following the
fifth trading day after the Record Date, and the denominator of which is
the Average Market Price of the Common Stock on the five (5) trading days
immediately preceding the Record Date; and such adjusted Exercise Price
shall be deemed to be the Exercise Price with respect to the Outstanding
Warrants after the Record Date. As used herein, the term "Average Market
Price of the Common Stock" means the average closing bid price of a share
of Common Stock, as reported by Bloomberg, LP or, if not so reported, as
reported on the over-the-counter market for the relevant period.
7. Transfer to Comply with the Securities Act; Registration Rights.
7.1 Transfer. This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or issuable upon exercise of this Warrant
may be sold, transferred, pledged or hypothecated in the absence of an effective
registration statement under the Act relating to such security or an opinion of
counsel satisfactory to the Company that registration is not required under the
Act. Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
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7.2 Registration Rights. (a) Reference is made to the Registration
Rights Agreement. The Company's obligations under the Registration Rights
Agreement and the other terms and conditions thereof with respect to the Warrant
Shares, including, but not necessarily limited to, the Company's commitment to
file a registration statement including the Warrant Shares, to have the
registration of the Warrant Shares completed and effective, and to maintain such
registration, are incorporated herein by reference.
(b) In addition to the registration rights referred to in the
preceding provisions of Section 7.2(a), effective after the expiration of the
effectiveness of the Registration Statement as contemplated by the Registration
Rights Agreement, the Holder shall have piggy-back registration rights with
respect to the Warrant Shares then held by the Holder or then subject to
issuance upon exercise of this Warrant (collectively, the "Remaining Warrant
Shares"), subject to the conditions set forth below. If, at any time after the
Registration Statement has ceased to be effective, the Company participates
(whether voluntarily or by reason of an obligation to a third party) in the
registration of any shares of the Company's stock (other than a registration on
Form S-8), the Company shall give written notice thereof to the Holder and the
Holder shall have the right, exercisable within ten (10) business days after
receipt of such notice, to demand inclusion of all or a portion of the Holder's
Remaining Warrant Shares in such registration statement. If the Holder exercises
such election, the Remaining Warrant Shares so designated shall be included in
the registration statement at no cost or expense to the Holder (other than any
costs or commissions which would be borne by the Holder under the terms of the
Registration Rights Agreement). The Holder's rights under this Section 7 shall
expire at such time as the Holder can sell all of the Remaining Warrant Shares
under Rule 144 without volume or other restrictions or limit.
8. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage pre-paid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission,
or, if mailed, two days after the date of deposit in the United States mails, as
follows:
(i) if to the Company, to:
Natural Health Trends Corp.
380 Lashley Street
Longmont, CO 80501
Attn: Mark Woodburn
Telephone No.: (303) 682-4637
Telecopier No.: (303) 682-4236
with a copy to:
Silverman, Collura & Chernis, P.C.
381 Park Avenue South, Suite 1601
New York, NY 10016
Attn: Martin C. Licht, Esq.
Telephone No.: (212) 779-8600
Telecopier No.: (212) 779-8858
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(ii) if to the Holder, to:
ATTN:
Telephone No.: ( ) -
Telecopier No.: ( ) -
with a copy to:
Krieger & Prager LLP, Esqs.
39 Broadway
Suite 1440
New York, NY 10006
Attn: Samuel Krieger, Esq.
Telephone No.: (212) 363-2900
Telecopier No. (212) 363-2999
Any party may be notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
9. Supplements and Amendments; Whole Agreement. This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
hereto. This Warrant of even date herewith contain the full understanding of the
parties hereto with respect to the subject matter hereof and thereof and there
are no representations, warranties, agreements or understandings other than
expressly contained herein and therein.
10. Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of New York for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Warrant and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Holder in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
11. Counterparts. This Warrant may be executed in any number of
counterparts and 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.
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12. Descriptive Headings. Descriptive headings of the several Sections of
this Warrant are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the __th day of _________ , 2000.
NATURAL HEALTH TRENDS CORP.
By:
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Name:-------------------
Its:--------------------
Attest:
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Name:
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Title:
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NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of _____________ , ________ , to
purchase __________ shares of the Common Stock, par value $.001 per share, of
NATURAL HEALTH TRENDS CORP. and tenders herewith payment in accordance with
Section 1 of said Common Stock Purchase Warrant.
Please deliver the stock certificate to:
Dated:
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[Name of Holder]
By:
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|_| CASH: $
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|_| CASHLESS EXERCISE