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EXHIBIT 10.16
COM21, Inc.
Warrant Certificate
Dated as of March 6, 2001
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TABLE OF CONTENTS
1. Exercise of Warrant..................................................... 1
1.1 Manner of Exercise........................................ 2
1.2 Conditions to Closing..................................... 2
1.3 When Exercise Effective................................... 3
1.4 Delivery of Warrant and Payment........................... 3
1.5 Delivery of Stock Certificates, etc....................... 3
2. Adjustment of Common Stock Issuable Upon Exercise....................... 4
2.1 General; Warrant Price.................................... 4
2.2 Adjustment of Warrant Price............................... 4
2.3 Treatment of Options and Convertible Securities........... 6
2.4 Treatment of Stock Dividends, Stock Splits, etc........... 8
2.5 Computation of Consideration.............................. 9
2.6 Adjustments for Combinations, etc......................... 10
2.7 Dilution in Case of Other Securities...................... 10
2.8 Minimum Adjustment of Warrant Price....................... 11
3. Consolidation, Merger, etc.............................................. 11
3.1 Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc....................................... 11
3.2 Assumption of Obligations................................. 14
4. Other Dilutive Events................................................... 15
5. No Dilution or Impairment............................................... 15
6. Accountants' Report as to Adjustments................................... 15
7. Notices of Corporate Action............................................. 16
8. Reservation of Shares................................................... 17
9. Transfer and Assignment................................................. 17
10. Lost or Stolen Warrant.................................................. 18
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11. Warrant Agent........................................................... 18
12. Definitions............................................................. 19
12.1 Acquiring Person.......................................... 19
12.2 Acquisition Price......................................... 19
12.3 Additional Shares of Common Stock......................... 20
12.4 Common Stock.............................................. 20
12.5 Convertible Securities.................................... 20
12.6 Excluded Stock............................................ 20
12.7 Issuer.................................................... 20
12.8 Market Price.............................................. 20
12.9 Options................................................... 21
12.10 Other Securities.......................................... 21
12.11 Parent.................................................... 21
12.12 Person.................................................... 21
12.13 Termination Date.......................................... 21
12.14 Voting Securities......................................... 22
13. Remedies................................................................ 22
14. No Rights or Liabilities as Stockholder................................. 22
15. Notices................................................................. 22
16. Amendments.............................................................. 22
17. Descriptive Headings.................................................... 22
18. GOVERNING LAW........................................................... 22
19. Judicial Proceedings; Waiver of Jury.................................... 23
Exhibit 1: Form of Warrant Exercise Notice.................................. 23
Exhibit 2: Form of Warrant Exercise Delivery Notice......................... 25
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Neither the Warrant represented by this certificate nor the
securities issuable upon exercise hereof have been registered
under the Securities Act of 1933, as amended (the "Act") 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 Act and
applicable state securities laws, or unless an exemption from
registration is available.
WARRANT NO. W-1 2,450,000 SHARES OF COMMON STOCK
WARRANT CERTIFICATE
Com21, Inc.
Com21, Inc. (the "Issuer"), a Delaware corporation, for value received,
hereby certifies that Fletcher International, Ltd., or registered assigns, is
entitled to purchase from the Issuer 2,450,000 duly authorized, validly issued,
fully paid and nonassessable shares (subject to the adjustments contained in
this Warrant or the Agreement between Fletcher International, Ltd. and the
Issuer dated as of February 28, 2001 (the "Main Agreement")) of common stock,
par value $0.001 per share (the "Common Stock") of the Issuer at the initial
purchase price of $9.0951 per share (the "Stock Purchase Price") at any time or
from time to time prior to 12:01 A.M., New York City time, on March 7, 2008 (or
such later date as may be determined pursuant to the terms hereof) (the
"Termination Date"), all subject to the terms, conditions and adjustments set
forth below in this Warrant and in the Main Agreement.
1. Exercise of Warrant. The Warrant represented hereby was issued on
March 6, 2001 pursuant to the Main Agreement, and is subject to the terms and
conditions thereof. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings set forth in the Main Agreement. A copy of the
Main Agreement may be obtained by the registered holder hereof upon written
request to the Issuer.
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1.1 Manner of Exercise. This Warrant may be exercised by the holder
hereof, in whole or in part, from time to time, on any Trading Day, by
facsimile, mail or overnight courier delivery of a notice in substantially the
form attached to this Warrant (or a reasonable facsimile thereof) duly executed
by such holder (a "Warrant Exercise Notice"). The closing of each exercise shall
take place (i) on the third Trading Day following the date the Warrant Exercise
Notice is delivered, (ii) such later date as the conditions set forth in Section
1.2 have been waived or satisfied or (iii) any other date upon which the
exercising holder and the Issuer mutually agree (the "Warrant Closing Date").
1.2 Conditions to Closing. It shall be a condition of the exercising
holder's obligation to close that each of the following are satisfied, unless
waived by such holder:
(a) (i) The representations and warranties made by the Issuer in
the Main Agreement shall be true and correct as of the Warrant Closing
Date, except as otherwise disclosed prior to the date of the Warrant
Exercise Notice to the registered holders of the Warrant either in
writing directed to them or in a periodic or current report filed with
the SEC; (ii) the Issuer shall have complied fully with all of the
covenants and agreements in the Main Agreement; (iii) all shares to be
issued upon such exercise are duly listed and admitted to trading on
each securities exchange, if any, on which the Issuer's Common Stock is
listed; and (iv) such holder shall have received a certificate of the
Chief Executive Officer or the Chief Financial Officer of the Issuer
dated such date and to the effect of clauses (i), (ii) and (iii).
(b) On the Warrant Closing Date, the Issuer shall have delivered
to the holder an opinion of Brobeck, Phleger & Harrison LLP (or such
other counsel reasonably satisfactory to such holder) reasonably
satisfactory to such holder, dated the Warranty Closing Date,
substantially in the form attached to the Main Agreement.
(c) On the Warrant Closing Date, all shares to be issued upon
such exercise shall be duly listed and admitted for trading on the
NASDAQ, if the Issuer's Common Stock is so listed.
The Issuer shall use commercially reasonable efforts to cause each of the
foregoing conditions to be satisfied at the earliest possible date. If such
conditions are not satisfied or waived prior to the third Trading Day following
the date the Warrant
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Exercise Notice is delivered, then the holder may, at its sole option, and at
any time, withdraw the Warrant Exercise Notice by written notice to the Issuer
regardless of whether such conditions have been satisfied or waived as of the
withdrawal date and, after such withdrawal, shall have no further obligations
with respect to such Warrant Exercise Notice and may submit a Warrant Exercise
Notice on any future date with respect to the shares referenced in the original
Warrant Exercise Notice. Withdrawal of such Warrant Exercise Notice shall be the
exercising holder's sole remedy for the Issuer's failure to cause such
conditions to be satisfied, except to the extent that such failure constitutes a
breach of the provisions of the Main Agreement.
1.3 When Exercise Effective. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
Trading Day on which the Warrant Exercise Notice is delivered as provided in
Section 1.1, and at such time the Person or Persons in whose name or names any
certificate or certificates for shares of Common Stock (or Other Securities)
shall be issuable upon such exercise as provided in Section 1.4 shall be deemed
to have become the holder or holders of record thereof. Provided that such
exercise shall not be deemed effective if and as of the date that the holder
delivers written notice of withdrawal to the Issuer as set forth in Section 1.2.
1.4 Delivery of Warrant and Payment. On the Warrant Closing Date, the
registered holder shall surrender this Warrant Certificate to the Issuer at the
address set forth for notices to the Issuer in Section 19 of the Main Agreement
and shall deliver payment in cash, by wire transfer to the Issuer's account
designated in Section 19 of the Main Agreement of immediately available funds or
by certified or official bank check payable to the order of the Issuer, or in
the manner provided in Section 6(b)(x) or Section 6(b)(y) of the Main Agreement
in the amount obtained by multiplying (a) the number of shares of Common Stock
(without giving effect to any adjustment thereof) designated in such notice by
(b) the Warrant Price, and such holder shall thereupon be entitled to receive
the number of duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock (or Other Securities) determined as provided in Sections
2, 3 and 4 hereof.
1.5 Delivery of Stock Certificates, etc. On the Warrant Closing Date,
the Issuer at its expense (including the payment by it of any applicable issue
taxes) shall cause to be issued in the name of and delivered to the holder
hereof or as such holder may direct,
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(a) at such address specified by the holder via reputable
overnight courier, one or more certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such holder shall be
entitled upon such exercise plus, in lieu of any fractional share to
which such holder would otherwise be entitled, cash in an amount equal
to the same fraction of the Market Price per share on the Trading Day
next preceding the date of such exercise, and
(b) in case such exercise is in part only, at such address
specified by the holder via reputable overnight courier, a new Warrant
of like tenor, calling in the aggregate on the face or faces thereof for
the number of shares of Common Stock equal (without giving effect to any
adjustment thereof) to the number of such shares called for on the face
of this Warrant minus the number of such shares designated by the holder
upon such exercise as provided in Section 1.1.
2. Adjustment of Common Stock Issuable Upon Exercise.
2.1 General; Warrant Price. The number of shares of Common Stock
which the holder of this Warrant shall be entitled to receive upon each exercise
hereof shall be determined by multiplying the number of shares of Common Stock
which would otherwise (but for the provisions of Section 2, 3 and 4) be issuable
upon such exercise, as designated by the holder hereof pursuant to Section 1.1,
by the fraction of which (a) the numerator is the Stock Purchase Price and (b)
the denominator is the Warrant Price in effect on the date of such exercise. The
"Warrant Price" shall initially be the Stock Purchase Price, and shall be
adjusted and readjusted from time to time as provided in Sections 2, 3 and 4
hereof and, as so adjusted or readjusted, shall remain in effect until a further
adjustment or readjustment thereof is required by Sections 2, 3 and 4 hereof.
2.2 Adjustment of Warrant Price.
(a) Issuance of Additional Shares of Common Stock. In case the
Issuer at any time or from time to time after the date hereof shall
issue or sell Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Section 2.3 or
2.4) without consideration or for a consideration per share less than
the greater of the Market Price and the Warrant Price in effect
immediately prior to such issue or sale, then, and in each such case,
subject to Section 2.8, such Warrant Price
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shall be reduced, concurrently with such issue or sale, to a price
(calculated to the nearest .001 of a cent) determined by multiplying
such Warrant Price by a fraction;
(i) the numerator of which shall be (1) the number of
shares of Common Stock outstanding immediately prior to such
issue or sale plus (2) the number of shares of Common Stock which
the aggregate consideration received by the Issuer for the total
number of such Additional Shares of Common Stock so issued or
sold would purchase at the greater of such Market Price and such
Warrant Price, and
(ii) the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such issue
or sale,
provided that, for the purposes of this Section 2.2(a) (x) immediately
after any Additional Shares of Common Stock are deemed to have been
issued pursuant to Section 2.3 or 2.4, such Additional Shares shall be
deemed to be outstanding, and (y) treasury shares shall not be deemed to
be outstanding.
(b) Dividends and Distributions. In case the Issuer at any time
or from time to time after the date hereof shall declare, order, pay or
make a dividend or other distribution (including, without limitation,
any distribution of other or additional stock or other securities or
property or Options by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement) on the Common
Stock, other than a dividend payable in Additional Shares of Common
Stock, then, subject to Section 2.8, the Warrant Price in effect
immediately prior to the close of business on the record date fixed for
the determination of holders of any class of securities entitled to
receive such dividend or distribution shall be reduced, effective as of
the close of business on such record date, to a price (calculated to the
nearest .001 of a cent) determined by multiplying such Warrant Price by
a fraction
(i) the numerator of which shall be the Market Price in
effect on the Trading Day immediately prior to such record date
or, if the Common Stock trades on an ex-dividend basis, on the
date prior to the commencement of ex-dividend trading, less the
amount of such
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dividend or distribution (as determined in good faith by the
Board of Directors of the Issuer) applicable to one share of
Common Stock, and
(ii) the denominator of which shall be such Market Price.
2.3 Treatment of Options and Convertible Securities. In case the
Issuer at any time or from time to time after the date hereof shall issue, sell,
grant or assume, or shall fix a record date for the determination of holders of
any class of securities entitled to receive, any Options or Convertible
Securities, then, and in each such case, the maximum number of Additional Shares
of Common Stock (as set forth in the instrument relating thereto, without regard
to any provisions contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue, sale, grant or assumption or, in case such a record date
shall have been fixed, as of the close of business on such record date (or, if
the Common Stock trades on an ex-dividend basis, on the date prior to the
commencement of ex-dividend trading), provided that such Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to Section 2.5) of such shares would be less than
the greater of the Market Price and the Warrant Price in effect on the date of
and immediately prior to such issue, sale, grant or assumption or immediately
prior to the close of business on such record date (or, if the Common Stock
trades on an ex-dividend basis, on the date prior to the commencement of
ex-dividend trading), as the case may be, and provided, further, that in any
such case in which Additional Shares of Common Stock are deemed to be issued
(a) no further adjustment of the Warrant Price shall be made upon
the subsequent issue or sale of Convertible Securities or shares of
Common Stock upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, except in the case of any such
Options or Convertible Securities which contain provisions requiring an
adjustment, subsequent to the date of the issue or sale thereof, of the
number of Additional Shares of Common Stock issuable upon the exercise
of such Options or the conversion or exchange of such Convertible
Securities for any reason, each such case to be deemed hereunder to
involve a separate issuance of Additional Shares of Common Stock,
Options or Convertible Securities, as the case may be;
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(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any change in the
consideration payable to the Issuer, or decrease in the number of
Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise), the
Warrant Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or date
prior to the commencement of ex-dividend trading, as the case may be,
with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects
such Options, or the rights of conversion or exchange under such
Convertible Securities, which are outstanding at such time;
(c) upon the expiration (or purchase by the Issuer and
cancellation or retirement) of any such Options which shall not have
been exercised or the expiration of any rights of conversion or exchange
under any such Convertible Securities which (or purchase by the Issuer
and cancellation or retirement of any such Convertible Securities the
rights of conversion or exchange under which) shall not have been
exercised, the Warrant Price computed upon the original issue, sale,
grant or assumption thereof (or upon the occurrence of the record date,
or date prior to the commencement of ex-dividend trading, as the case
may be, with respect thereto), and any subsequent adjustments based
thereon, shall, upon such expiration (or such cancellation or
retirement, as the case may be), be recomputed as if:
(i) in the case of Options for Common Stock or Convert-
ible Securities, the only Additional Shares of Common Stock
issued or sold were the Additional Shares of Common Stock, if
any, actually issued or sold upon the exercise of such Options or
the conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually
received by the Issuer for the issue, sale, grant or assumption
of all such Options, whether or not exercised, plus the
consideration actually received by the Issuer upon such exercise,
or for the issue or sale of all such Convertible Securities which
were actually converted or exchanged, plus the additional
consideration, if any, actually received by the Issuer upon such
conversion or exchange, and
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(ii) in the case of Options for Convertible Securities,
only the Convertible Securities, if any, actually issued or sold
upon the exercise of such Options were issued at the time of the
issue, sale, grant or assumption of such Options, and the
consideration received by the Issuer for the Additional Shares of
Common Stock deemed to have then been issued was the
consideration actually received by the Issuer for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus the consideration deemed to have been received by
the Issuer (pursuant to Section 2.5) upon the issue or sale of
such Convertible Securities with respect to which such Options
were actually exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above
shall have the effect of increasing the Warrant Price by an amount in
excess of the amount of the adjustment thereof originally made in
respect of the issue, sale, grant or assumption of such Options or
Convertible Securities; and
(e) in the case of any such Options which expire by their terms
not more than 30 days after the date of issue, sale, grant or assumption
thereof, no adjustment of the Warrant Price shall be made until the
expiration or exercise of all such Options, whereupon such adjustment
shall be made in the manner provided in subdivision (c) above.
2.4 Treatment of Stock Dividends, Stock Splits, etc. In case the
Issuer at any time or from time to time after the date hereof shall declare or
pay any dividend on the Common Stock payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock), then, and in each such case, Additional Shares of
Common Stock shall be deemed to have been issued (a) in the case of any such
dividend, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend, or (b) in the case of any such subdivision, at the close of business
on the day immediately prior to the day upon which such corporate action becomes
effective.
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2.5 Computation of Consideration. For the purposes of this Section 2,
(a) the consideration for the issue or sale of any Additional
Shares of Common Stock shall, irrespective of the accounting treatment
of such consideration,
(i) insofar as it consists of cash, be computed at the
gross amount of cash received by the Issuer, without deducting
any expenses paid or incurred by the Issuer or any commissions
or compensations paid or concessions or discounts allowed to
underwriters, dealers or others performing similar services in
connection with such issue or sale,
(ii) insofar as it consists of property (including
securities) other than cash, be computed at the fair value
thereof at the time of such issue or sale, as determined in good
faith by the Board of Directors of the Issuer, and
(iii) in case Additional Shares of Common Stock are issued
or sold together with other stock or securities or other assets
of the Issuer for a consideration which covers both, be the
portion of such consideration so received, computed as provided
in clauses (i) and (ii) above, allocable to such Additional
Shares of Common Stock, all as determined in good faith by the
Board of Directors of the Issuer;
(b) Additional Shares of Common Stock deemed to have been issued
pursuant to Section 2.3, relating to Options and Convertible Securities,
shall be deemed to have been issued for a consideration per share
determined by dividing
(i) the total amount, if any, received and receivable by
the Issuer as consideration for the issue, sale, grant or
assumption of the Options or Convertible Securities in question,
plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to
any provision contained therein for a subsequent adjustment of
such consideration to protect against dilution) payable to the
Issuer upon the exercise in full of such Options or the
conversion or exchange of such Convertible Securities or, in the
case of Options for Convertible Securities, the
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exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, in each
case computing such consideration as provided in the foregoing
subdivision (a), by
(ii) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
number to protect against dilution) issuable upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities (including the full conversion or exchange of all
Options and Convertible Securities underlying such Options and
Convertible Securities); and
(c) Additional Shares of Common Stock deemed to have been issued
pursuant to Section 2.4, relating to stock dividends, stock splits,
etc., shall be deemed to have been issued for no consideration.
2.6 Adjustments for Combinations, etc. In case the outstanding shares
of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Warrant Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
2.7 Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of the Issuer (or
any issuer of Other Securities or any other Person referred to in Section 3) or
to subscription, purchase or other acquisition pursuant to any Options issued or
granted by the Issuer (or any such other issuer or Person) for a consideration
such as to dilute, on a basis consistent with the standards established in the
other provisions of this Section 2, the purchase rights granted by this Warrant,
then, and in each such case, the computations, adjustments and readjustments
provided for in this Section 2 with respect to the Warrant Price shall be made
as nearly as possible in the manner so provided and applied to determine the
amount of Other Securities from time to time receivable upon the exercise of the
Warrant, so as to protect the holder or holders of the Warrant against the
effect of such dilution.
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2.8 Minimum Adjustment of Warrant Price. If the amount of any
adjustment of the Warrant Price required pursuant to this Section 2 would be
less than one tenth (1/10) of one percent (1%) of the Warrant Price in effect at
the time such adjustment is otherwise so required to be made, such amount shall
be carried forward and adjustment with respect thereto made at the time of and
together with any subsequent adjustment which, together with such amount and any
other amount or amounts so carried forward, shall aggregate at least one tenth
(1/10) of one percent (1%) of such Warrant Price.
3. Consolidation, Merger, etc.
3.1 Adjustments for Consolidation, Merger, Sale of Assets,
Reorganiza-tion, etc. In case the Issuer after the date hereof is party to (a)
any acquisition of the Issuer by means of merger or other form of corporate
reorganization in which outstanding shares of the Issuer are exchanged for
securities or other consideration issued, or caused to be issued, by the
Acquiring Person or its subsidiary or affiliate, (b) a sale of all or
substantially all of the assets of the Issuer (on a consolidated basis) (c) any
other transaction or series of related transactions in which the power to cast
the majority of the eligible votes at a meeting of the Issuer's stockholders at
which directors are elected is transferred to a single entity or group acting in
concert, or (d) shall effect a capital reorganization or reclassification of the
Common Stock or Other Securities (other than a capital reorganization or
reclassification resulting in the issue of Additional Shares of Common Stock for
which adjustment in the Warrant Price is provided in Section 2.2(a) or 2.2(b))
(any of the above being, a "Merger Transaction"), then, and in the case of each
such transaction, the rights of the holder of this Warrant shall be determined
as follows:
(i) the holder of this Warrant shall be entitled to
exercise this Warrant, in whole or in part, at any time prior to
or simultaneously with the consummation of a Merger Transaction
in accordance with the terms of this Warrant and shall be
entitled to tender into, exchange its Common Stock received in,
or otherwise participate in, any such Merger Transaction;
(ii) in the event that any portion of the Warrant remains
unexercised upon consummation of such transaction, the holder, at
its sole option, may elect to receive consideration for all or
any portion of the Warrant, in an amount equal to 40% of the
aggregate Warrant Price of such unexercised portion of the
Warrant on the Trading Day
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immediately preceding the date of the consummation of such Merger
Transaction, provided, however, (A) that the Issuer shall not
under any circumstances be obligated to pay cash to any holder
and the Issuer's obligation shall be limited to the obligation to
require any Acquiring Person or its Parent to agree to pay such
consideration as a condition to consummating any Merger
Transaction, provided further that the Acquiring Person or its
Parent shall have the sole option to pay such consideration in
cash in immediately available U.S. funds or in the common stock
of the Acquiring Person or its Parent, which such stock
consideration shall be valued at the volume-weighted average
sales price per share for all trades of such common stock
reported on the primary exchange on which it trades on the
Trading Day immediately preceding consummation of such Merger
Transaction as reported by Bloomberg, L.P., except that the
option to pay such consideration in common stock of the Acquiring
Person or the Parent shall be permissible only if (x) the average
of the daily U.S. dollar values traded on its primary exchange
for the thirty (30) Trading Days ended on the Trading Day
immediately prior to consummation of such Merger Transaction of
all such common stock outstanding of the same class or series is
greater than $2,800,000, (y) such volume occurs on the NASDAQ
National Market, the American Stock Exchange, the New York Stock
Exchange or a comparable foreign exchange reasonably acceptable
to the holder hereof, and (z) the common stock received is
registered and freely tradable; and (B) the holder shall not be
obligated to pay any consideration to exercise the Warrant in
order to receive the cash payment specified in this clause (ii).
(iii) in the event that any portion of the Warrant remains
unexercised after the options described in clauses (i) and (ii)
have been either exercised or declined, the Acquiring Person and
its Parent shall, at their sole option, have the right to buy out
the Warrant, in whole or in part, simultaneously with
consummation of such Merger Transaction for consideration in an
amount equal to the price of a European option determined
pursuant to the Black-Scholes formula as computed using the
Bloomberg Professional Service for the then existing Warrant and
the stock of the Company being acquired with the following
variables: (A) the "current price" shall be the closing price per
share for such common stock as reported by the Bloomberg
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Professional Service for the exchange on which such common stock
trades; (B) the "strike price" shall be the Warrant Price as of
the Trading Day immediately prior to the date of the consummation
of such Merger Transaction; (C) the "interest rate" shall be the
yield to maturity for a U.S. Treasury security with a time to
maturity equivalent to the time between the consummation of such
Merger Transaction and the Termination Date; (D) "volatility"
shall be equal to the number reported by the Bloomberg
Professional Service for the 260 Trading Days period as of the
Trading Day immediately prior to consummation of such Merger
Transaction; (E) the "expiration date" shall be the Termination
Date; and (F) "trading date" shall be the date of the
consummation of such Merger Transaction, provided that the
Acquiring Person or its Parent shall have the sole option to pay
the consideration in this Section 3.1(iii) in cash in immediately
available U.S. funds or in the common stock of the Acquiring
Person or its Parent, which such stock consideration shall be
valued at the volume-weighted average trading price of such
common stock on the Trading Day immediately preceding
consummation of such Merger Transaction, except that the option
to pay such consideration in common stock shall be permissible
only if (x) the average of the daily U.S. dollar values traded on
its primary exchange for the thirty (30) trading days ended on
the Trading Day immediately prior to consummation of such Merger
Transaction of all such common stock outstanding of the same
series or class is greater than $2,800,000, (y) such volume
occurs on the NASDAQ National Market, the American Stock Ex-
change, the New York Stock Exchange or a comparable foreign
exchange reasonably acceptable to the holder hereof, and (z) the
common stock received is registered and freely tradable; provided
further that the holder shall not be obligated to pay any
consideration in order to receive the cash payment specified in
this clause (iii).
(iv) in the event that the Acquiring Person and its Parent
decline to exercise in full their option in (iii), the holder of
this Warrant shall be entitled to exercise any remaining portion
of this Warrant from time to time until the Termination Date and
be entitled to receive (at an aggregate price payable by such
holder in effect at the time of such consummation for all Common
Stock or Other Securities issuable upon such exercise immediately
prior to such consummation) the number of shares of common stock
of the Acquir-
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ing Person or its Parent, at the election of the holder (subject
to adjustments, subsequent to such corporate action, as nearly
equivalent as possible to the adjustments provided for in Section
2 and this Section 3), determined by dividing (A) the amount
equal to the product obtained by multiplying (1) the number of
shares of Common Stock (or Other Securities) to which the holder
of this Warrant would have been entitled had such holder
exercised this Warrant immediately prior to such consummation,
times (2) the greater of the Acquisition Price and the Warrant
Price in effect on the Trading Day immediately preceding the
date of such consummation, by (B) the Market Price per share of
the common stock of the Acquiring Person or its Parent, as the
case may be, on the Trading Day immediately preceding the date of
such consummation; and the rights of the holder under this
Section 3 may be reinvoked and shall continue should a subsequent
Merger Transaction occur.
The holder of the Warrant shall make any elections to which it is entitled under
this Section 3.1 at least ten (10) days prior to the scheduled closing of any
Merger Transaction, which such date shall be notified to the holder of the
Warrant at least fifteen (15) days in advance; provided, that in the event such
scheduled closing is later than originally scheduled by more than five (5) days
the holder of the Warrant shall be given the right to make an election or change
any previously made election for such period of time as such scheduled closing
is delayed. In the event that the originally scheduled closing occurs more than
five (5) days sooner than originally scheduled, the holder of this Warrant shall
use its best efforts to notify the Issuer as soon as practicable of its election
under this Section 3.1. The Acquiring Person and its Parent shall make any
elections to which they are entitled under this Section 3.1 within ten (10) days
prior to any such scheduled closing date or such shorter period as necessary to
allow the holder of the Warrant to make or change any election to which it is
entitled under the preceding proviso.
3.2 Assumption of Obligations. Notwithstanding anything contained in
the Warrant or in the Main Agreement to the contrary, the Issuer will not effect
any Merger Transaction unless, prior to the consummation thereof, each Person
(other than the Issuer) which may be required to deliver any stock, securities,
cash or property upon the exercise of this Warrant as provided herein shall
assume, by written instrument delivered to, and reasonably satisfactory to, the
holder of this Warrant, (a) the obligations of the Issuer under this Warrant
(and if the Issuer shall survive the consummation of such Merger Transaction,
such assumption shall be in
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addition to, and shall not release the Issuer from, any continuing obligations
of the Issuer under this Warrant), and (b) the obligation to deliver to such
holder such shares of stock, securities, cash or property as, in accordance with
the foregoing provisions of this Section 3, such holder may be entitled to
receive, and such Person shall have similarly delivered to such holder an
opinion of counsel for such Person, which counsel shall be reasonably
satisfactory to such holder, stating that this Warrant shall thereafter continue
in full force and effect and the terms hereof (including, without limitation,
all of the provisions of this Section 3) shall be applicable to the stock,
securities, cash or property which such Person may be required to deliver upon
any exercise of this Warrant or the exercise of any rights pursuant hereto.
Nothing in this Section 3 shall be deemed to authorize the Issuer to enter into
any transaction not otherwise permitted by Section 10 of the Main Agreement.
4. Other Dilutive Events. In case any event shall occur as to which the provi-
sions of Sections 2 and 3 are not strictly applicable but the failure to make
any adjustment would not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles of such Sections,
then, in each such case, the Issuer shall appoint a firm of independent
certified public accountants of recognized national standing (which shall not be
the regular auditors of the Issuer), which shall give their opinion upon the
adjustment, if any, on a basis consistent with the essential intent and
principles established in Sections 2 and 3, necessary to preserve, without
dilution, the purchase rights represented by this Warrant. Upon receipt of such
opinion, the Issuer will promptly deliver a copy thereof via facsimile and
overnight courier to the holder or holders of this Warrant and shall make the
adjustments described therein.
5. No Dilution or Impairment. The Issuer will not, by amendment of its
certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, 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 of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against dilution or other impairment. Without limiting the
generality of the foregoing, the Issuer (a) will not permit the par value of any
shares of stock receivable upon the exercise of this Warrant to exceed the
amount payable therefor upon such exercise, (b) will take all such action as may
be necessary or appropriate in order that the Issuer may validly and legally
issue fully paid and nonassessable shares of stock on the exercise of the
Warrants from
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time to time outstanding, and (c) will not take any action which results in any
adjustment of the Warrant Price if the total number of shares of Common Stock
(or Other Securities) issuable after the action upon the exercise of all of the
Warrants would exceed the total number of shares of Common Stock (or Other
Securities) then authorized by the Issuer's certificate of incorporation and
available for the purpose of issue upon such exercise.
6. Accountants' Report as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable upon
the exercise of this Warrant, the Issuer at its expense will promptly compute
such adjustment or readjustment in accordance with the terms of this Warrant and
cause independent certified public accountants of recognized national standing
(which may be the regular auditors of the Issuer) selected by the Issuer to
verify such computation (other than any computation of the fair value of
property as determined in good faith by the Board of Directors of the Issuer)
and prepare a report setting forth such adjustment or readjustment and showing
in reasonable detail the method of calculation thereof and the facts upon which
such adjustment or readjustment is based, including a statement of (a) the
consideration received or to be received by the Issuer for any Additional Shares
of Common Stock issued or sold or deemed to have been issued, (b) the number of
shares of Common Stock outstanding or deemed to be outstanding, and (c) the
Warrant Price in effect immediately prior to such issue or sale and as adjusted
and readjusted (if required by Section 2, 3 or 4) on account thereof. The Issuer
will forthwith mail a copy of each such report to each holder of a Warrant and
will, upon the written request at any time of any holder of a Warrant, furnish
to such holder a like report setting forth the Warrant Price at the time in
effect and showing in reasonable detail how it was calculated. The Issuer will
also keep copies of all such reports at its principal office and will cause the
same to be available for inspection at such office during normal business hours
by any holder of a Warrant or any prospective purchaser of a Warrant designated
by the holder thereof.
7. Notices of Corporate Action. In the event of
7.1 any taking by the Issuer of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a regular periodic dividend payable in cash
out of earned surplus in an amount not exceeding the amount of the immediately
preceding cash dividend for such period) or other distribution, or any right to
subscribe for,
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purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, or
7.2 any capital reorganization of the Issuer, any reclassification or
recapitalization of the capital stock of the Issuer or any consolidation or
merger involving the Issuer and any other Person or any transfer of all or
substantially all the assets of the Issuer to any other Person, or
7.3 any voluntary or involuntary dissolution, liquidation or winding-up
of the Issuer,
the Issuer will mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, and (ii) the date or expected date on which any
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place and the time,
if any such time is to be fixed, as of which the holders of record of Common
Stock (or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for the securities or other property deliverable
upon such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, dissolution, liquidation or winding-up. Such notice shall be
mailed at least 45 days prior to the date therein specified.
8. Reservation of Shares. For so long as the Warrant represented hereby has not
been exercised in full, the Issuer shall at all times prior to the Termination
Date reserve and keep available, free from pre-emptive rights, out of its
authorized but unissued capital stock, the number of shares available for
exercise hereunder. In the event the number of Common Shares issuable exceeds
the authorized number of shares of Common Stock or other securities, the Issuer
shall promptly take all actions necessary to increase the authorized number,
including causing its Board of Directors to call a special meeting of
stockholders and recommend such increase.
9. Transfer and Assignment.
9.1 By accepting delivery of this Warrant Certificate, the registered
holder hereof covenants and agrees with the Issuer not to exercise the Warrant
or transfer the Warrant or the Common Shares represented hereby except in
compliance with the terms of the Main Agreement and this Warrant Certificate.
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9.2 By accepting delivery of this Warrant Certificate, the registered
holder hereof covenants and agrees with the Issuer that no Warrant may be sold
or assigned, in whole or in part, unless such sale or assignment complies with
applicable federal and state securities laws and until such holder shall
deliver to the Issuer (i) written notice of such transfer and of the name and
address of the transferee and such notice has been received by the Issuer; (ii)
a written agreement of the transferee to comply with the terms of the Main
Agreement and this Warrant Certificate; and (iii) an opinion of counsel that
such transfer complies with applicable federal and state securities laws;
provided, however that nothing in this Warrant Certificate shall limit the right
or ability of the holder to engage in hedging transactions with respect to the
Warrant or the underlying Common Shares. If a portion of the Warrant is
transferred, all rights of the registered holder hereunder may be exercised by
the transferee provided that any registered holder of the Warrant may deliver a
Warrant Exercise Notice only with respect to the Common Shares subject to such
holder's portion of the Warrant.
9.3 The Issuer will pay all documentary stamp taxes (if any) attributable
to the issuance of Common Shares upon the exercise of the Warrant by the
registered holder hereof; provided, however, that the Issuer shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the registration of the Warrant Certificate or any certificates for
Common Shares in a name other than that of the registered holder of the Warrant
Certificate surrendered upon the exercise of a Warrant, and the Issuer shall not
be required to issue or deliver the Warrant Certificate or certificates for
Common Shares unless or until the person or persons requesting the issuance
thereof shall have paid to the Issuer the amount of such tax or shall have
established to the reasonable satisfaction of the Issuer that such tax has been
paid.
10. Lost or Stolen Warrant. In case this Warrant Certificate shall be mutilated,
lost, stolen or destroyed, the Issuer may in its discretion issue in exchange
and substitution for and upon cancellation of the mutilated Warrant Certificate,
or in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor, but only upon receipt of
evidence reasonably satisfactory to the Issuer of such loss, theft or
destruction of such Warrant Certificate and indemnity, if requested, reasonably
satisfactory to the Issuer. Applicants for a substitute Warrant Certificate
shall also comply with such other reasonable regulations and pay such other
reasonable charges as the Issuer may prescribe.
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11. Warrant Agent. The Issuer (and any corporation into which the Issuer is
merged or any corporation resulting from any consolidation to which the Issuer
is a party) shall serve as warrant agent (the "Warrant Agent") under this
Warrant. The Warrant Agent hereunder shall at all times maintain a register (the
"Warrant Register") of the holders of this Warrant. Upon 30 days' notice to the
registered holder hereof, the Issuer may appoint a new Warrant Agent. Such new
Warrant Agent shall be a corporation doing business and in good standing under
the laws of the United States or any state thereof, and having a combined
capital and surplus of not less than $100,000,000. The combined capital and
surplus of any such new Warrant Agent shall be deemed to be the combined capital
and surplus as set forth in the most recent report of its condition published by
such Warrant Agent prior to its appointment; provided that such reports are
published at least annually pursuant to law or to the requirements of a federal
or state supervising or examining authority. After acceptance in writing of
such appointment by the new Warrant Agent, it shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
herein as the Warrant Agent, without any further assurance, conveyance, act or
deed; but if for any reason it shall be reasonably necessary or expedient to
execute and deliver any further assurance, conveyance, act or deed, the same
shall be done at the expense of the Issuer and shall be legally and validly
executed and delivered by the Issuer. Any corporation into which any new Warrant
Agent may be merged or any corporation resulting from any consolidation to which
any new Warrant Agent shall be a party or any corporation to which any new
Warrant Agent transfers substantially all of its corporate trust or shareholders
services business shall be a successor Warrant Agent under this Warrant without
any further act; provided that such corporation (i) would be eligible for
appointment as successor to the Warrant Agent under the provisions of this
Section 11 or (ii) is a wholly owned subsidiary of the Warrant Agent. Any such
successor Warrant Agent shall promptly cause notice of its succession as Warrant
Agent to be delivered via reputable overnight courier to the registered holder
hereof at such holder's last address as shown on the Warrant Register.
12. Definitions. As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:
12.1 Acquiring Person: With reference to the transactions referred to in
clauses (a) through (d) of section 3.1, the continuing or surviving corporation
of a consolidation or merger with the Issuer (if other than the Issuer), the
transferee of substantially all of the properties or assets of the Issuer, the
corporation consolidating with or merging into the Issuer in a consolidation or
merger in connection with
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which the Common Stock is changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or, in the case of
a capital reorganization or reclassification, the Issuer.
12.2 Acquisition Price: As applied to the Common Stock, (a) the Market
Price on the date immediately preceding the date on which any transaction to
which Section 3 applies is consummated, or (b) if a purchase, tender or exchange
offer is made by the Acquiring Person (or by any of its affiliates) to the
holders of the Common Stock and such offer is accepted by the holders of more
than 50% of the outstanding shares of Common Stock, the greater of (i) the price
determined in accordance with the provisions of the foregoing clause (a) of this
sentence and (ii) the Market Price on the date immediately preceding the
acceptance of such offer by the holders of more than 50% of the outstanding
shares of Common Stock.
12.3 Additional Shares of Common Stock: All shares (including treasury
shares) of Common Stock issued or sold (or, pursuant to section 2.3 or 2.4,
deemed to be issued) by the Issuer after the date hereof, whether or not
subsequently reacquired or retired by the Issuer, other than shares issued upon
the exercise of the Warrants; provided, however, that this term shall not
include Excluded Stock.
12.4 Common Stock: As defined in the introduction to this Warrant, such
term to include any stock into which such Common Stock shall have been changed
or any stock resulting from any reclassification of such Common Stock, and all
other stock of any class or classes (however designated) of the Issuer the
holders of which have the right, without limitation as to amount, either to all
or to a share of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions on any shares entitled to
preference to Common Stock shares.
12.5 Convertible Securities: Any evidences of indebtedness, shares of
stock (other than Common Stock) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
12.6 Excluded Stock: (A) Options and rights to purchase Common Stock,
which options and rights are issued (i) pursuant to the terms of the Benefit
Plans and the 1998 Employee Stock Purchase Plan (or any subsequent plans
approved by the Issuer's stockholders); (ii) in the ordinary course of business,
consistent with past practice of the Company (in the case of the Benefit Plans
other than the 1998 Employee Stock Purchase Plan); and (iii) with an exercise
price not less than the Market Price on the date of grant or, in the case of
shares purchased under the 1998
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Employee Stock Purchase Plan, at a purchase price not less than 85% of the
Market Price on the first or last day of the applicable offering period,
whichever is lower; or (B) Common Stock issued in connection with a Combination.
12.7 Issuer: As defined in the introduction to this Warrant, such term to
include any corporation which shall succeed to or assume the obligations of the
Issuer.
12.8 Market Price: On any date specified herein, the amount per share of
the Common Stock (or, for purposes of determining the Market Price of the common
stock of an Acquiring Person or its Parent under Section 3, the common stock of
such Acquiring Person or such Parent), equal to (a) the daily volume-weighted
average price on the NASDAQ (as defined in the Main Agreement) or, if no such
sale takes place on such date, the average of the closing bid and asked prices
on the NASDAQ thereof on such date, in each case as reported by Bloomberg, L.P.
(or by such other Person as the holder and the Issuer may agree), or (b) if such
Common Stock is not then listed or admitted to trading on the NASDAQ, the higher
of (x) the book value thereof as determined by any firm of independent public
accountants of recognized standing selected by the Board of Directors of the
Issuer as of the last day of any month ending within 60 days preceding the date
as of which the determination is to be made or (y) the fair value thereof
determined in good faith by the Board of Directors of the Issuer as of a date
which is within 18 days of the date as of which the determination is to be made.
12.9 Options: Rights, options or warrants to subscribe for, purchase or
otherwise acquire either Additional Shares of Common Stock or Convertible
Securities.
12.10 Other Securities: Any stock (other than Common Stock) and other
securities of the Issuer or any other Person (corporate or otherwise) which the
holders of the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities.
12.11 Parent: As to any Acquiring Person any corporation which (a)
controls the Acquiring Person directly or indirectly through one or more
intermediaries, (b) is required to include the Acquiring Person in the
consolidated financial statements contained in such Parent's Annual Report on
Form 10-K and (c) is not
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itself included in the consolidated financial statements of any other Person
(other than its consolidated subsidiaries).
12.12 Person: A corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
12.13 Termination Date: The date set forth in the first paragraph hereof,
provided that the Termination Date shall be extended by one day for each day
that the Registration Requirement (as defined in the Main Agreement) is not
satisfied.
12.14 Voting Securities: Stock of any class or classes (or equivalent
interests), if the holders of the stock of such class or classes (or equivalent
interests) are ordinarily, in the absence of contingencies, entitled to vote for
the election of the directors (or persons performing similar functions) of such
business entity, even though the right so to vote has been suspended by the
happening of such a contingency.
13. Remedies. The Issuer stipulates that the remedies at law of the holder of
this Warrant in the event of any default or threatened default by the Issuer in
the performance of or compliance with any of the terms of this Warrant are not
and will not be adequate and that, to the fullest extent permitted by law, such
terms may be specifically enforced by a decree for the specific performance of
any agreement contained herein or by an injunction against a violation of any of
the terms hereof or otherwise.
14. No Rights or Liabilities as Stockholder. Nothing contained in this Warrant
shall be construed as conferring upon the holder hereof any rights as a
stockholder of the Issuer or as imposing any obligation on such holder to
purchase any securities or as imposing any liabilities on such holder as a
stockholder of the Issuer, whether such obligation or liabilities are asserted
by the Issuer or by creditors of the Issuer.
15. Notices. All notices and other communications under this Warrant shall be in
writing and shall be delivered by a nationally recognized overnight courier,
postage prepaid, addressed (a) if to Fletcher or the Issuer, in the manner
provided in the Main Agreement, or (b) if to any other holder of any Warrant, at
the registered address of such holder as set forth in the register kept at the
principal office of the Issuer, provided that the exercise of any Warrant shall
be effective in the manner provided in Section I.
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16. Amendments. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
17. Descriptive Headings. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
18. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
19. Judicial Proceedings; Waiver of Jury. Any judicial proceeding brought
against the Issuer with respect to this Warrant may be brought in any court of
competent jurisdiction in the State of New York or of the United States of
America for the Southern District of New York and, by execution and delivery of
this War rant, the Issuer (a) accepts, generally and unconditionally, the
nonexclusive jurisdic tion of such courts and any related appellate court, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Warrant, subject to any rights of appeal, and (b) irrevocably waives
any objection the Issuer may now or hereafter have as to the venue of any such
suit, action or proceeding brought in such a court or that such court is an
inconvenient forum. The Issuer hereby waives personal service of process and
consents, that service of process upon it may be made by certified or registered
mail, return receipt requested, at its address specified or determined in
accordance with the provisions of Section 15, and service so made shall be
deemed completed on the third Business Day after such service is deposited in
the mail or, if earlier, when delivered. Nothing herein shall affect the right
to serve process in any other manner permitted by law or shall limit the right
of any holder of any Warrant to bring proceedings against the Issuer in the
courts of any other jurisdiction. THE ISSUER HEREBY WAIVES TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING INVOLVING, DIRECTLY, OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS WARRANT OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
This Warrant Certificate shall not be valid unless signed by the Issuer.
[Remainder of Page Left Blank Intentionally]
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IN WITNESS WHEREOF, Com21, Inc. has caused this Warrant Certificate to be
signed by its duly authorized officer.
Dated: March 6, 2001
COM21, INC.
By: /s/ DAVID L. ROBERTSON
-----------------------------------------
Name: David L. Robertson
Title: CFO
28
Exhibit 1
[FORM OF WARRANT EXERCISE NOTICE]
(To Be Executed Upon Exercise Of the Warrant)
[DATE]
Com21, Inc.
750 Tasman Drive
Milpitas, CA 95035
Attention: Chief Financial Officer
Re: Exercise of Warrant
Ladies and Gentlemen:
The undersigned is the registered holder of the above-referenced
warrant (the "Warrant") issued by Com21, Inc. (the "Issuer"), evidenced by copy
of the Warrant Certificate attached hereto, and hereby elects to exercise the
Warrant to purchase 1 Common Shares (as defined in such Warrant Certificate)
[cash exercise: and shall deliver on the Warrant Closing Date via wire transfer
of immediately available funds or by certified or official bank check] [cashless
exercise: and, pursuant to Section 6(b)(x) of the Main Agreement (as defined in
the Warrant Certificate) shall be deemed to have tendered] $________ by wire
transfer or by certified or official bank check to the order of Com21, Inc. as
payment for such Common Shares
- ----------
1 Insert here the number of shares called for on the face of this Warrant
(or, in the case of a partial exercise, the portion thereof as to which
this Warrant is being exercised), in either case without making any
adjustment for Additional Shares of Common Stock or any other stock or
other securities or property or cash which, pursuant to the adjustment
provisions of this Warrant, may be delivered upon exercise. In the case
of partial exercise, a new Warrant or Warrants will be issued and
delivered, representing the unexercised portion of the Warrant, to the
holder surrendering the Warrant.
1-1
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in accordance with the terms of such Warrant Certificate and the Main Agreement
(as defined in the Warrant Certificate).
In accordance with the terms of the attached Warrant Certificate, the
under signed requests that certificates for such shares be registered in the
name of and delivered to the undersigned at the following address:
[TO BE ADDED]
The undersigned will deliver the original of the Warrant Certificate no
later than the second Trading Day after and excluding the date of this notice.
[If the number of Common Shares to be delivered is less than the total
number of Common Shares deliverable under the Warrant, insert the following --
The undersigned requests that a new warrant certificate substantially identical
to the attached Warrant Certificate be issued to the undersigned evidencing the
right to purchase the number of Common Shares equal to (x) the total number of
Common Shares deliverable under the Warrant less (y) the number of Common Shares
to be delivered in connection with this exercise.]
FLETCHER INTERNATIONAL, LTD., by its
duly authorized investment advisor,
FLETCHER ASSET MANAGEMENT, INC.
By:
------------------------------------------
Name:
Title:
By:
------------------------------------------
Name:
Title:
1-2
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Exhibit 2
[FORM OF WARRANT EXERCISE DELIVERY NOTICE]
[date]
Fletcher International, Ltd.
c/o Fletcher Asset Management, Inc.
22 East 67th Street
New York, NY 10021
Attn: [Peter Zayfert]
Telephone: (212) 284-4800
Facsimile: (212) 284-4801
Ladies and Gentlemen:
Reference is made to the Agreement (the "Main Agreement") dated as of
February 28, 2001 by and between Com21, Inc. ("Com21") and Fletcher Interna
tional Ltd. ("Fletcher"). Capitalized terms not otherwise defined herein shall
have the meanings ascribed thereto in the Main Agreement.
This notice confirms that the Warrant has been exercised by Fletcher with
respect to ________ shares of Common Stock at a Warrant Price (as defined in the
Warrant Certificate) of $________. Attached are copies of the front and back of
the ____ original stock certificates, each representing ______ shares of Common
Stock, together with a copy of the overnight courier air bill which will be used
to ship such stock certificates. Also attached is a reissued warrant
certificate, as provided in Section 1.5 of the Warrant Certificate. We will send
the original stock certificates by overnight courier to the following address:
[TO COME]
with a copy to:
Fletcher International, Ltd.
c/o Fletcher Asset Management, Inc.
22 East 67th Street
New York, NY 10021-5805
Attn: [Peter Zayfert]
2-1
31
COM21, INC.
By: /s/ DAVID L. ROBERTSON
----------------------------------------
Name: David L. Robertson
Title: CFO
2-2