1
EXHIBIT 10.2
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR QUALIFIED UNDER ANY STATE SECURITIES LAW,
AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS THEY HAVE BEEN
REGISTERED UNDER SUCH LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
, 1998
FORM OF WARRANT CERTIFICATE TO PURCHASE
COMMON STOCK OF
ALPHA MICROSYSTEMS
This Warrant Certificate (the " Warrant Certificate") is to certify that
ING Equity Partners II, L.P. or its registered assigns (the "Warrantholder") is
entitled, at any time after the date hereof but prior to the Expiration Date, to
purchase, at the Exercise Price (as hereinafter defined), shares of the Common
Stock (as modified pursuant to Section 4.3, the "Initial Exercise Amount") of
Alpha Microsystems, Inc. (the "Company"). Unless earlier exercised in full and
subject to the conditions set forth herein, this warrant shall expire at 5:00
P.M., New York City time, on , 2008 (the "Expiration Date"). Capitalized
terms used but not otherwise defined herein shall have the meanings given to
them in the Securities Purchase Agreement between the Investor (as defined
therein) and the Company dated as of August 7, 1998 (the "Purchase Agreement").
1. Exercise of Warrant.
1.1 This Warrant Certificate is exercisable by the Warrantholder at the
Exercise Price per share of Common Stock issuable hereunder, payable in cash, by
certified or official bank check or by surrender of other Securities of the
Company whose aggregate principal amount or stated liquidation value, together
with any accrued but unpaid interest or principal due thereon, is equal to the
Exercise Price. In lieu of payment of the Exercise Price as provided above, the
Warrantholder may elect a cashless net exercise. In the case of such cashless
net exercise, the Warrantholder shall surrender this Warrant Certificate for
cancellation and receive in exchange therefor the full number of duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock
specified, subject to adjustment in accordance with Section 5, less the number
of shares of Common Stock with an aggregate Fair Market Value as of the Business
Day on which the Warrantholder surrenders this Warrant to the Company (the
"Exercise Date") equal to the aggregate Exercise Price that would have been
payable upon such exercise absent election of the cashless net exercise
alternative. Upon surrender of this Warrant Certificate with the attached
Subscription Form duly completed and executed, together with any required
payment of the Exercise Price for the shares of Common Stock being purchased, at
the Company's principal executive offices presently located at 2722 South
Fairview Street, Santa Ana, California 92704, the Warrantholder shall be
entitled to receive a certificate or certificates for the shares of Common Stock
so purchased.
1.2 The purchase rights represented by this Warrant Certificate are
exercisable at the option of the Warrantholder, in whole or in part (but not as
to fractional shares of Common Stock), at any time and from time to time prior
to the Expiration Date during the period in which this Warrant Certificate may
be exercised as set forth above.
1.3 In the case of the purchase of less than all the shares of Common
Stock purchasable under this Warrant Certificate, the Company shall cancel this
Warrant Certificate upon the surrender hereof and shall execute and deliver a
new Warrant Certificate as soon as practicable to the Warrantholder of like
tenor for the balance of the shares of Common Stock purchasable hereunder.
C-1
2
2. Issuance of Stock Certificates.
2.1 The issuance of certificates for shares of Common Stock upon the
exercise of this Warrant Certificate shall be made as soon as practicable
thereafter or in any event within thirty (30) days of such exercise without
charge to the Warrantholder, including, without limitation, any tax that may be
payable in respect thereof, and such certificates shall (subject to the
provisions of this Section 2) be issued in the name of, or in such names as may
be directed by, the Warrantholder; provided, however, that the Company shall not
be required to pay any income tax to which the Warrantholder may be subject in
connection with the issuance of this Warrant Certificate or of shares of Common
Stock upon the exercise of this Warrant Certificate; provided, further, that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any such certificate in a
name other than that of the Warrantholder and the Company shall not be required
to issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
2.2 All shares of Common Stock issued upon the exercise of this Warrant
Certificate shall be validly issued, fully paid and nonassessable.
2.3 Each person in whose name any such certificate for shares of Common
Stock is issued shall for all purposes be deemed to have become the holder of
record of such shares on the date on which the Warrant Certificate was
surrendered and payment of the Exercise Price and any applicable taxes was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
3. Restrictions on Transfer.
3.1 Investment Representation and Transfer Restriction Legend. The
Warrantholder, by acceptance of this Warrant Certificate, represents and
warrants to the Company that it is acquiring this Warrant Certificate and the
shares of Common Stock issued or issuable upon exercise hereof (the "Warrant
Shares") for investment purposes only and not with a view towards the resale or
other distribution thereof. Each certificate representing Warrant Shares, unless
at the same time of exercise such Warrant Shares are registered under the Act,
shall bear a legend in substantially the following form on the face thereof:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAW, AND MAY
NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS THEY HAVE BEEN
REGISTERED UNDER SUCH LAWS OR AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a distribution under a registration statement covering the securities
represented thereby) shall also bear such legend unless, in the opinion of
counsel to the Company, the securities represented thereby may be transferred as
contemplated by such Warrantholder without violation of the registration
requirements of the Act.
4. Exercise Price and Exercise Amount.
4.1 Initial and Adjusted Exercise Price. The initial exercise price of
this Warrant Certificate shall be $1.50 per share of Common Stock; provided,
that in the event the Second Closing is consummated in full, the initial
Exercise Price of Warrants issued in connection with the First Closing shall for
all purposes be retroactively adjusted and shall be deemed to have been $2.50
per share of Common Stock on the Original Issue Date, and any adjustments to the
Exercise Price or Exercise Amount pursuant to Section 5 hereof between the First
Closing and the Second Closing shall be recalculated as if the initial Exercise
Price as of the First Closing was $2.50 per share of Common Stock. In addition,
the Exercise Price may be further modified from time to time pursuant to the
provisions of Section 5 hereof.
C-2
3
4.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price depending upon the
context.
4.3 Exercise Amount. The term "Exercise Amount" shall mean the Initial
Exercise Amount or the adjusted Exercise Amount determined pursuant to Section 5
depending upon the context; provided, however, that the Initial Exercise Amount
shall be deemed to be the number of shares equal to the Initial Exercise Amount
plus any Incremental Dilution Amount, each as indicated on or determined
pursuant to the Warrant Schedule to the Purchase Agreement, in the event the
indicated Closings reflected on the Warrant Schedule are consummated.
5. Adjustment of Exercise Amount and Number of Shares.
5.1 For purposes of this Section 5, the following definitions shall apply:
(a) "Option" shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire Common Stock or Convertible Securities,
excluding the options described on Schedule 5.1 hereto.
(b) "Original Issue Date" shall mean the date this Warrant was
granted.
(c) "Convertible Securities" shall mean any evidences of indebtedness,
shares or other securities directly or indirectly convertible into or
exchangeable for Common Stock.
(d) "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued (or, pursuant to Section 5.2 below, deemed to be
issued) by the Company after the Original Issue Date, other than shares of
Common Stock issued or issuable:
(i) to employees or consultants of the Company pursuant to any plan
adopted by the Board and, in the event the Board includes any Preferred
Directors, agreed to by the Preferred Directors;
(ii) for so long as the Investor is a Significant Holder, in
connection with any dividend or distribution, where the approval of such
transaction requires the affirmative consent of the Significant Holder,
such approval has been granted and such transaction is consummated on
terms consistent with such approval.
(iii) in connection with the acquisition (by stock or asset
purchase, merger or other form of business combination) of another
company or business other than any such acquisition of or from any
Person or Persons that are Affiliates of the Company immediately prior
to such issuance;
(iv) to a lender to the Company (other than any lender which is an
Affiliate of the Company) in connection with a bona fide financing;
(v) in connection with an underwritten public offering of shares of
Common Stock registered pursuant to the Securities Act; or
(vi) upon the sale of any Warrants as set forth in the Warrant
Schedule or upon the issuance of Common Stock upon exercise of such
Warrants.
5.2 The Exercise Amount specified in Section 5 hereof shall be subject to
adjustment from time to time as follows:
(a) Issue of Securities Deemed Issue of Additional Shares of Common
Stock. For purposes of this Section 5.2, if the Company at any time or from
time to time after the Original Issue Date shall issue any Options or
Convertible Securities or shall fix a record date for the determination of
holders of any class of securities entitled to receive any such Options or
Convertible Securities, then the maximum number of shares of Common Stock
(as set forth in the instrument relating thereto without regard to any
provision 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 or, in case such a record date
shall have been fixed, as of the close of business on such record date;
provided, that Additional Shares of Common Stock shall not be deemed to
have been issued unless
C-3
4
the consideration per share (determined pursuant to Section 5.2(c) hereof)
of such Additional Shares of Common Stock would be less than the Fair
Market Value of the Common Stock on the date of and immediately prior to
such issue, or such record date, as the case may be; provided, further,
that in any such case in which Additional Shares of Common Stock are deemed
to be issued:
(i) No further adjustment in the Exercise Amount shall be made upon
the subsequent issue of Convertible Securities or shares of Common Stock
upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(ii) If such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of
shares of Common Stock issuable, upon the exercise, conversion or
exchange thereof, the Exercise Amount computed upon the original issue
thereof (or upon the occurrence of a record date 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;
(iii) No readjustment pursuant to clause (ii) above shall have the
effect of adjusting the Exercise Amount to an amount which is less than
(i) the Exercise Amount on the original adjustment date, or (ii) the
Exercise Amount that would have resulted from any issuance of Additional
Shares of Common Stock between the original adjustment date and such
readjustment date;
(iv) Notwithstanding clause (ii) above, upon the expiration or
termination of any unexercised Option or cancellation of unconverted
Convertible Securities, the Exercise Amount shall be readjusted as if
such Option or Convertible Security had not been issued; and
(v) In the event of any increase in the number of shares of Common
Stock issuable upon the exercise, conversion or exchange of any Option
or Convertible Security, including, but not limited to, an increase
resulting from the antidilution provisions thereof (other than an
increase resulting from an adjustment pursuant to this Section 5.2), the
Exercise Amount then in effect shall forthwith be readjusted to such
Exercise Amount as would have obtained had the adjustment (if any) which
was made upon the issuance of such Option or Convertible Security not
exercised or converted prior to such increase been made upon the basis
of such increased number of shares, but no further adjustment shall be
made for the actual issuance of Common Stock upon the exercise or
conversion of any such Option or Convertible Security.
(b) Adjustment of Exercise Amount Upon Issuance of Additional Shares
of Common Stock. In the event the Company shall at any time after the
Original Issue Date issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section
5.2(a), but excluding shares issued as a dividend or distribution as
provided in Section 5.2(e) or upon a stock split or combination as provided
in Section 5.2(d)), without consideration or for a consideration per share
less than the Exercise Price on the date of and immediately prior to such
issue (a "Dilutive Issuance"), then and in such event, the Initial Exercise
Amount then in effect shall be increased by the Incremental Dilution
Amount, determined as follows:
(i) x = Fair Market Value
(ii) y = The number of Additional Shares of Common Stock issued in
the Dilutive Issuance
(iii) z = The issue price of any Common Stock and/or the exercise,
conversion or similar strike price, if any, of any Convertible
Securities issued in the Dilutive Issuance.
(iv) Effective Dilution Percentage = the number of Additional
Shares of Common Stock deemed issued in the Dilutive Issuance divided by
the sum of (A) the number of shares of Common Stock outstanding on an
Adjusted Fully-Diluted Basis prior to the Dilutive Issuance plus (B) the
number of Additional Shares of Common Stock deemed issued in the
Dilutive Issuance. As used herein, "Adjusted Fully-Diluted Basis" means
the number of Common Stock Equivalents outstanding on the relevant date
of determination, giving effect to the full exercise of any Options and
the full
C-4
5
conversion of any Convertible Securities which have an exercise,
conversion or similar strike price equal to or less than the Exercise
Price as of the relevant date of determination.
(v) Total Dilution Value = (x - z) multiplied by y
(vi) Intended Percentage = the cumulative aggregate percentage of
Common Stock (on an Adjusted Fully-Diluted Basis) the parties intended
the Investor to own after the most recent Closing as set forth on the
Warrant Schedule, subject to appropriate adjustment by the Company and
the Investor in the event of non-dilutive issuances of Securities prior
to such Closing.
(vii) Investor Dilution Imposed = Intended Percentage multiplied by
(1 - Effective Investor Dilution Percentage).
(viii) Total Dilution Value Imposed on Investor = Investor Dilution
Imposed multiplied by Total Dilution Value.
(ix) Incremental Dilution Amount = Total Dilution Value Imposed on
Investor divided by (Fair Market Value -- Investor Exercise Price).
Examples of the calculation of this adjustment are attached as Annex A
hereto.
In addition, the applicable Exercise Amount shall not be so increased
at such time if the amount of such increase would be an amount less than a
whole share of Common Stock, but any such amount shall be carried forward
and an increase with respect thereto made at the time of and together with
any subsequent increase which, together with such amount and any other
amount or amounts so carried forward, shall aggregate a whole share of
Common Stock or more.
(c) Determination of Consideration. For purposes of this Section 5.2,
the consideration received by the Company for the issue of any Additional
Shares of Common Stock shall be computed as follows:
(i) Cash and Property: Such consideration shall:
(x) insofar as it consists of cash, be computed at the aggregate
of cash received by the Company, excluding amounts paid or payable
for accrued interest or accrued dividends;
(y) insofar as it consists of property other than cash, be
computed at the fair market value thereof at the time of such issue,
as determined in good faith by the Board; and
(z) in the event Additional Shares of Common Stock are issued
together with other shares or securities or other assets of the
Company for consideration which covers both, be the proportion of
such consideration so received, computed as provided in clauses (x)
and (y) above, as determined in good faith by the Board.
(ii) Options and Convertible Securities. The consideration per
share received by the Company for Additional Shares of Common Stock
deemed to have been issued pursuant to Section 5.2(a), relating to
Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or receivable by the
Company as consideration for the issue of such Options or Convertible
Securities, 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) payable to the Company upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible Securities, by
(y) 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)
issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of
C-5
6
such Options for Convertible Securities and the conversion or
exchange of such Convertible Securities.
(d) Adjustment for Stock Splits and Combinations. If the Company shall
at any time or from time to time after the Original Issue Date effect a
subdivision of the outstanding Common Stock, the Exercise Amount then in
effect immediately before the subdivision shall be proportionately
increased. If the Company shall at any time or from time to time after the
Original Issue Date combine the outstanding shares of Common Stock, the
Exercise Amount then in effect immediately before the combination shall be
proportionately decreased. Any adjustment under this paragraph shall become
effective at the close of business on the date the subdivision or
combination becomes effective.
(e) Adjustment for Certain Dividends and Distributions. In the event
the Company at any time, or from time to time, after the Original Issue
Date shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other
distribution payable in additional shares of Common Stock, then in each
such event the Exercise Amount then in effect shall be increased as of the
time of such issuance or, in the event such a record date shall have been
fixed, as of the close of business on such record date, to an amount equal
to the amount determined by multiplying the Exercise Amount then in effect
by a fraction:
(i) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the
number of shares of Common Stock issuable in payment of such dividend or
distribution; and
(ii) the denominator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date;
provided, however, if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on the
date fixed therefor, the Exercise Amount shall be recomputed accordingly as
of the close of business on such record date and thereafter the Exercise
Amount shall be adjusted pursuant to this paragraph as of the time of
actual payment of such dividends or distributions.
(f) Adjustments for Other Dividends and Distributions. In the event
the Company at any time or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution
payable in Securities of the Company or any Subsidiary or Affiliate thereof
other than shares of Common Stock, then and in each such event provision
shall be made so that the Warrantholder shall receive upon exercise
thereof, in addition to the number of shares of Common Stock receivable
thereupon, the amount and type of Securities that it would have received
had its Warrant Certificate been exercised for shares of Common Stock on
the date of such event and had it thereafter, during the period from the
date of such event to and including the actual exercise date, retained such
securities receivable by it as aforesaid during such period giving
application to all adjustments called for during such period. In the event
of a Spinoff Transaction, the Warrantholder shall be entitled to receive,
without any requirement that this Warrant be exercised, Warrants (the "New
Warrants") with terms substantially equivalent to the terms of this Warrant
Certificate, to purchase the amount and type of Securities (the "Spinoff
Securities") that it would have received in such Spinoff Transaction had
this Warrant been exercised immediately prior to such Spinoff Transaction.
The exercise price of the New Warrants (the "New Warrant Exercise Price")
shall be equal to the Exercise Price in effect immediately prior to the
Spinoff Transaction multiplied by the product of (A) the relative value per
share of the business or assets subject to the Spinoff Transaction as
compared to the total value per share of the Company at the time of the
Spinoff Transaction (as mutually determined by the Company and Equity
Partners) times (B) one (1) minus the percentage of such business or assets
retained by the Company, if any. The Exercise Price shall thereafter be
reduced by the amount of the New Warrant Exercise Price such that the sum
of the New Warrant Exercise Price plus the Exercise Price shall not exceed
the Exercise Price as in effect immediately prior to the Spinoff
Transaction. In the event a Spinoff Transaction involves a third party
whose contribution to the entity or
C-6
7
business subject to the Spinoff Transaction is other than cash or other
consideration to the Company, the Company and Equity Partners shall
mutually determine the appropriate adjustment in the application of the
provisions in this Section 5 with respect to the rights and interest
thereafter of the Warrantholder.
(g) Adjustment for Reclassification, Exchange, or Substitution. If the
Common Stock issuable upon exercise of this Warrant Certificate shall be
changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification, or
otherwise (other than a subdivision or combination of shares of stock
dividend provided for above, or a reorganization, merger, consolidation, or
sale of assets provided for below), then and in each such event the
Warrantholder shall have the right thereafter to exercise this Warrant
Certificate for the kind and amount of shares of stock and other securities
and property receivable upon such reorganization, reclassification, or
other change, by holders of the number of shares of Common Stock into which
this Warrant Certificate was exercisable immediately prior to such
reorganization, reclassification, or change, all subject to further
adjustment as provided herein.
(h) Adjustment for Merger or Reorganization, etc. In case of any
consolidation or merger of the Company with or into another Person or the
sale of all or substantially all of the assets of the Company to another
Person, this Warrant Certificate shall thereafter be exercisable for the
kind and amount of shares of stock or other securities or property to which
a holder of the number of shares of Common Stock of the Company deliverable
upon exercise of this Warrant Certificate would have been entitled upon
such consolidation, merger or sale; and, in such case, appropriate
adjustment (as determined in good faith by the Board) shall be made in the
application of the provisions in this Section 5 with respect to the rights
and interest thereafter of the Warrantholder, to the end that the
provisions set forth in this Section 5 (including provisions with respect
to changes in and other adjustments of the Exercise Amount) shall
thereafter be applicable, as nearly as reasonably may be, in relation to
any shares of stock or other property thereafter deliverable upon exercise
of this Warrant Certificate.
(i) No Impairment. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the Company but will at all times in good faith assist in the carrying out
of all the provisions of this Section 5 and in the taking of all such
action as may be necessary or appropriate in order to protect the exercise
rights of the Warrantholder against impairment.
(j) Certificate as to Amendments. Upon the occurrence of each
adjustment or readjustment of the Exercise Price pursuant to this Section
5, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms thereof and furnish to each
Warrantholder a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment
is based. The Company shall, upon the written request at any time of any
Warrantholder, furnish or cause to be furnished to such holder a similar
certificate setting forth (i) such adjustments and readjustments, (ii) the
Exercise Amount then in effect, and (iii) the number of shares of Common
Stock and the amount, if any, of other property which then would be
received upon exercise of this Warrant Certificate.
(k) Notice of Record Date. In the event:
(i) that the Company declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other
securities of the Company;
(ii) that the Company subdivides or combines its outstanding shares
of Common Stock;
(iii) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of
Common Stock or a stock dividend or stock distribution thereon), or of
any consolidation or merger of the Company into or with another
corporation, or of the sale of all or substantially all of the assets of
the Company; or
(iv) of the inventory or voluntary dissolution, liquidation or
winding up of the Company;
C-7
8
then the Company shall cause to be filed at its principal office or at
the office of the transfer agent of the Common Stock, and shall cause to
be mailed to the Warrantholders at their last addresses as shown on the
records of the Company or such transfer agent, at least 15 days prior to
the record date specified in (A) below or 30 days before the date
specified in (B) below, a notice stating
(A) the record date of such dividend, distribution, subdivision
or combination, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such
dividend, distribution, subdivision or combination are to be
determined, or
(B) the date on which such reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities or other property deliverable
upon such reclassification, consolidation, merger, sale, dissolution
or winding up.
5.3 Regulatory Compliance. Notwithstanding the foregoing provisions of
this Section 5, in the event any adjustment of the Exercise Amount pursuant to
this Section 5 shall cause the Investor to be entitled to acquire, upon exercise
of this Warrant Certificate, a number of shares of Common Stock which would
exceed the 20% threshold established in The Nasdaq Stock Market Marketplace Rule
4460(i)(D) or any successor rule or regulation (the "20% NASD Limit"), the
Exercise Amount shall be reduced to allow the Company to comply with the NASD
20% Limit until such time as the Company shall be in compliance with Rule
4460(i)(D), whether by obtaining requisite stockholder approval or otherwise.
6. Exchange and Replacement of Warrant Certificate.
6.1 On surrender for exchange of this Warrant Certificate, or any Warrant
Certificate or Warrant Certificates issued upon subdivision, exercise, or
transfer in whole or in part of this Warrant Certificate, properly endorsed, to
the Company, the Company at its expense will issue and deliver to or on the
order of the holder thereof a new Warrant Certificate or Warrant Certificates of
like tenor, in the name of such holder or as such holder (on payment by such
holder of any applicable transfer taxes) may direct, calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for on
the face or faces of the Warrant Certificate or Warrant Certificates so
surrendered.
6.2 In the event this or any subsequently issued Warrant Certificate is
lost, stolen, mutilated or destroyed, the Company may, upon receipt or a proper
affidavit (and surrender of any mutilated Warrant Certificate) and an indemnity
agreement or security reasonably satisfactory in form and amount to the Company,
in each instance protecting the Company, issue a new Warrant Certificate of like
denomination, tenor and date as the Warrant Certificate so lost, stolen,
mutilated or destroyed. Any such new Warrant Certificate shall constitute an
original contractual obligation of the Company, whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
7. Elimination of Fractional Interests.
7.1 The Company shall not issue any fraction of a share in connection with
the exercise of this Warrant Certificate, but in any case where the
Warrantholder would, except for the provisions of this Section 7, be entitled
under the terms of this Warrant Certificate to receive a fraction of a share
upon the exercise of this Warrant Certificate, the Company shall, upon the
exercise of the Warrant Certificate for the largest number of full shares then
called for thereby and receipt of the Exercise Price thereof, pay a sum in cash
equal to the Fair Market Value of such fraction of a share on the day preceding
such exercise. The Warrantholder expressly waives its rights to receive any
fraction of a share or a Warrant Certificate representing a fractional share
upon exercise thereof.
7.2 If the taking of any action would cause an adjustment in the Exercise
Price so that the exercise of this Warrant Certificate while such Exercise Price
is in effect would cause shares to be issued at a price below their then par
value, the Company will take such action as may, in the opinion of its counsel,
be necessary in
C-8
9
order that it may validly and legally issue fully paid and nonassessable shares
of Common Stock upon the exercise of this Warrant Certificate.
8. Reservation and Listing of Shares.
The Company will cause to be reserved and kept available out of its
authorized and unissued shares of Common Stock the number of whole shares of
Common Stock sufficient to permit the exercise in full of this Warrant
Certificate.
9. Rights of Warrantholder.
9.1 The Company may deem and treat the person in whose name this Warrant
Certificate is registered with it as the absolute owner for all purposes
whatever (notwithstanding any notation of ownership or other writing thereon
made by anyone other than the Company) and the Company shall not be affected by
any notice to the contrary. The terms "Warrantholder" and "holder of the Warrant
Certificate" and all other similar terms used herein shall mean only such
person(s) in whose name(s) this Warrant Certificate if properly registered on
the Company's books. However, notwithstanding the foregoing, no person, entity
or group may become a Warrantholder other than the Warrantholder unless and
until (a) the provisions of Section 3.1 hereof have been complied with, (b) the
Company has received an assignment transferring all right, title and interest in
and to this Warrant Certificate, and (c) such person, entity or group represents
and warrants in writing that it will be the sole legal and beneficial owner
thereof.
9.2 Each Person who is a Warrantholder shall be entitled to be issued a
share of Voting Preferred Stock from the Company at such time as such Person
becomes a Warrantholder. Each Warrantholder agrees to surrender such share of
Voting Preferred Stock to the Company at such time as he no longer is a
Warrantholder; provided, that any such share may be transferred by a
Warrantholder to any transferee of such Warrantholder.
10. Notices.
Any notice or demand authorized by this Warrant Certificate to be given or
made by the Warrantholder to or on the Company or to be given or made by the
Company to or on the Warrantholder shall be sufficiently given or made if sent
in writing by first-class mail, postage prepaid, addressed as follows:
(a) If to the Warrantholder, to the address for such holder as shown
on the books of the Company; or
(b) If to the Company, to:
Alpha Microsystems
2722 South Fairview Street
Santa Ana, California 92704
Attention: President
or at such other address as the registered holder or the Company may hereafter
have advised the other.
11. Successors.
All the covenants, agreements, representations and warranties contained in
this Warrant Certificate shall bind the parties hereto and their respective
heirs, executors, administrators, distributees, successors and assigns.
12. Headings.
The Section headings in this Warrant Certificate have been inserted for
purposes of convenience only and shall have no substantive effect.
C-9
10
13. Law Governing.
This Warrant Certificate is delivered in the State of New York and shall be
construed and enforced in accordance with, and governed by, the laws of the
State of New York (without giving effect to the choice of law principle of such
state), regardless of the jurisdiction of creation or domicile of the Company or
its successors or of the holder at any time hereof.
14. Remedies.
The Company stipulates that the remedies at law of the holder of this
Warrant Certificate in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant Certificate are not and will not be adequate, and that 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.
C-10
11
IN WITNESS WHEREOF, the Company has executed this Warrant Certificate by
its duly authorized officer as of the day and year first above written.
ALPHA MICROSYSTEMS
By:
Name:
Title:
C-11