THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND NO
INTEREST MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING
SAID SECURITIES, (B) THE COMPANY RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE
HOLDER OF THE SECURITIES SATISFACTORY TO THE COMPANY STATING THAT SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION, OR (C) THE COMPANY OTHERWISE SATISFIES
ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.
No. W- 1 WARRANT TO PURCHASE
ISSUED: _______, 2000 COMMON STOCK
LINEO, INC.
WARRANT
THIS IS TO CERTIFY that, for good and valuable consideration and
subject to these terms and conditions, Metrowerks Holdings, Inc., a Delaware
corporation, or such person to whom this Warrant is transferred (the "Holder"),
is entitled to exercise this Warrant to purchase 2,000,000 fully paid and
nonassessable shares of Lineo, Inc., a Delaware corporation (the "Company"),
Common Stock (the "Warrant Shares") at a price per share of $6.00 (the "Per
Share Exercise Price") (such number of shares, type of security and the Per
Share Exercise Price being subject to adjustment as provided below).
1. METHOD OF EXERCISE
1.1 CASH EXERCISE RIGHT
This Warrant may be exercised by the Holder, at any time after the date
issued, but not later than September __, 2002 (the "Exercise Period"), in whole
or in part, by delivering to the Company at Lineo, Inc., 390 South 400 West,
Lindon, UT 84042 (or such other office or agency of the Company as it may
designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company) (a) this Warrant certificate, (b) a
certified or cashier's check payable to the Company in the amount of the Per
Share Exercise Price multiplied by the number of shares for which this Warrant
is being exercised (the "Purchase Price"), and (c) the Notice of Cash Exercise
attached as Exhibit A duly completed and executed by the Holder.
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1.2 NET ISSUANCE RIGHT
Notwithstanding the payment provisions set forth above, the Holder may
elect to convert this Warrant into Warrant Shares by surrendering this Warrant
at the office of the Company at the address set forth in Section 1.1 and
delivering to the Company the Notice of Net Issuance Exercise attached as
Exhibit B duly completed and executed by the Holder, in which case the Company
shall issue to the Holder the number of Warrant Shares of the Company equal to
the result obtained by (a) subtracting B from A, (b) multiplying the difference
by C, and (c) dividing the product by A as set forth in the following equation:
X = (A - B) x C where:
-----------
A
X = the number of Warrant Shares issuable upon net
issuance exercise pursuant to the provisions of this
Section 1.2.
A = the Fair Market Value (as defined below) of one
Warrant Share on the date of net issuance exercise.
B = the Per Share Exercise Price for one Warrant Share
under this Warrant.
C = the number of Warrant Shares as to which this
Warrant is exercisable pursuant to the provisions of
Section 1.1.
If the foregoing calculation results in a negative number, then no
Warrant Shares shall be issued upon net issuance exercise pursuant to this
Section 1.2.
"Fair Market Value" shall mean:
(a) if a sale of securities or net issuance exercise is in connection
with a transaction specified in Section 4.4(b), the value of the consideration
(determined, in the case of noncash consideration, in accordance with Section
2(d) of that certain Certificate of Designation of the Company filed with the
Delaware Secretary of State on May 3, 2000) to be received pursuant to such
transaction by the holder of one Warrant Share;
(b) if a sale of securities or net issuance exercise is in connection
with the initial public offering or private placement of the Company's shares
(the "Shares"), the price (before deducting commission, discounts or expenses)
at which such securities are sold in such offering or private placement,
proportionately adjusted as a result of any adjustments arising from the
conversion of the Warrant Shares into Shares in contemplation of such public
offering;
(c) if a sale of securities or net issuance exercise is after the
occurrence of the initial public offering of the Company's securities:
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(i) if the Company's securities are traded on an exchange or
are quoted on the Nasdaq National Market, the average of the closing or last
sale price reported for the ten business days immediately preceding the date of
net issuance exercise;
(ii) if the Company's securities are not traded on an exchange
or on the Nasdaq National Market, but are traded in the over-the-counter market,
the average of the closing bid and asked prices reported for the ten market days
immediately preceding the date of net issuance exercise; and
(d) In all other cases, the "Fair Market Value" of the securities shall
be the fair market value thereof as determined in accordance with the Appraisal
Procedure (as defined in Section 10.7), using any appropriate valuation method,
assuming an arms-length sale to an independent party.
2. DELIVERY OF STOCK CERTIFICATES; NO FRACTIONAL SHARES
2.1 Within 10 days after the payment of the Purchase Price following
the exercise of this Warrant (in whole or in part) or after notice of net
issuance exercise and compliance with Section 1.2, the Company at its expense
shall issue in the name of and deliver to the Holder (a) a certificate or
certificates for the number of fully paid and nonassessable Warrant Shares to
which the Holder shall be entitled upon such exercise, and (b) a new Warrant in
substantially the same form to purchase up to that number of Warrant Shares, if
any, as to which this Warrant has not been exercised if this Warrant has not
expired. The Holder shall for all purposes be deemed to have become the holder
of record of such Warrant Shares on the date this Warrant was exercised (the
date the Holder has fully complied with the requirements of Section 1.1 or 1.2),
irrespective of the date of delivery of the certificate or certificates
representing the Warrant Shares; provided that, if the date such exercise is
made is a date when the stock transfer books of the Company are closed, such
person shall be deemed to have become the holder of record of such Warrant
Shares at the close of business on the next succeeding date on which the stock
transfer books are open.
2.2 No fractional shares shall be issued upon the exercise of this
Warrant. In lieu of fractional shares, the Company shall pay the Holder a sum in
cash equal to the fair market value of the fractional shares (as determined
pursuant to Section 2.1 hereof) on the date of exercise.
3. COVENANTS AS TO WARRANT SHARES
The Company covenants that at all times during the Exercise Period
there shall be reserved for issuance and delivery upon exercise of this Warrant
such number of Warrant Shares as is necessary for exercise in full of this
Warrant and, from time to time, it will take all steps necessary to amend the
Certificate of Incorporation to provide sufficient reserves of Warrant Shares.
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4. ADJUSTMENTS FOR CERTAIN DILUTIVE ISSUANCES
The number of shares of Common Stock for which this Warrant is
exercisable and the exercise price shall be subject to adjustment from time to
time as set forth in this Section 4.
4.1 UPON ISSUANCE OF COMMON STOCK
If the Company shall, at any time or from time to time after the date
hereof (the "Original Issue Date"), issue (a) any shares of Common Stock other
than options to purchase or rights to subscribe for Common Stock (other than an
issuance of Common Stock as a dividend, subdivision or split in respect of which
the adjustment provided for in Section 4.3 applies), (b) securities by their
terms convertible into or exchangeable for Common Stock, or (c) options to
purchase or rights to subscribe for such convertible or exchangeable securities,
without consideration or for consideration per share less than the applicable
Per Share Exercise Price in effect immediately prior to the issuance of such
Common Stock or securities, then such applicable Per Share Exercise Price shall
forthwith be lowered to a price equal to the price obtained by multiplying:
(i) the applicable Per Share Exercise Price in effect
immediately prior to the issuance of such Common Stock or securities by
(ii) a fraction of which (x) the denominator shall be the
number of shares of Common Stock outstanding on a fully-diluted basis (after
giving effect to the conversion or exercise, as the case may be, of all
convertible securities, warrants, options, or other rights to purchase or
acquire capital stock of the Company) immediately after such issuance and (y)
the numerator shall be the sum of (i) the number of shares of Common Stock
outstanding on a fully-diluted basis (after giving effect to the conversion or
exercise, as the case may be, of all convertible securities, warrants, options,
or other rights to purchase or acquire capital stock of the Company) immediately
prior to the date of such issuance and (ii) the number of additional shares of
Common Stock which the aggregate consideration for the number of shares of
Common Stock so offered would purchase at the applicable Per Share Exercise
Price.
4.2 PROVISIONS APPLICABLE TO ADJUSTMENTS
For the purposes of any adjustment of the applicable Per Share
Exercise Price pursuant to Section 4.1, in the case of the issuance of options
to purchase or rights to subscribe for Common Stock, securities by their terms
convertible into or exchangeable for Common Stock, or options to purchase or
rights to subscribe for such convertible or exchangeable securities:
(A) the aggregate maximum number of shares
of Common Stock deliverable upon exercise of such options to purchase or rights
to subscribe for Common Stock shall be deemed to have been issued at the time
such options or rights were issued and for a consideration equal to the Fair
Market Value of the consideration, if any,
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received by the Company upon the issuance of such options or rights plus the
minimum purchase price provided in such options or rights for the Common Stock
covered thereby;
(B) the aggregate maximum number of shares
of Common Stock deliverable upon conversion of or in exchange of any such
convertible or exchangeable securities or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have been
issued at the time such securities, options, or rights were issued and for a
consideration equal to the Fair Market Value of the consideration received by
the Company for any such securities and related options or rights (excluding any
cash received on account of accrued interest or accrued dividends), plus the
Fair Market Value of the additional consideration, if any, to be received by the
Company upon the conversion or exchange of such securities or the exercise of
any related options or rights; and
(C) on any change in the number of shares or
exercise price of Common Stock deliverable upon exercise of any such options or
rights or conversions of or exchanges for such securities, other than a change
resulting from the antidilution provisions thereof, the applicable Per Share
Exercise Price shall forthwith be readjusted to such Per Share Exercise Price as
would have been obtained had the adjustment made upon the issuance of such
options, rights or securities not converted prior to such change or options or
rights related to such securities not converted prior to such change been made
upon the basis of such change.
(D) No further adjustment of the applicable
Per Share Exercise Price adjusted upon the issuance of any such options, rights,
convertible securities or exchangeable securities shall be made as a result of
the actual issuance of Common Stock on the exercise of any such rights or
options or any conversion or exchange of any such securities.
4.3 ADJUSTMENTS FOR STOCK SPLITS, DIVIDENDS
If the Company shall subdivide the number of outstanding shares of its
Common Stock into a greater number of shares, then the Per Share Exercise Price
in effect before such dividend or subdivision shall be proportionately reduced
and the number of Warrant Shares at that time issuable pursuant to the exercise
of this Warrant shall be proportionately increased; and, conversely, if the
Company shall reduce the number of outstanding shares of its Common Stock by
combining such shares into a smaller number of shares, then the Per Share
Exercise Price in effect before such combination shall be proportionately
increased and the number of Warrant Shares at that time issuable pursuant to the
exercise or conversion of this Warrant shall be proportionately decreased. Each
adjustment in the number of Warrant Shares issuable shall be to the nearest
whole share.
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4.4 EFFECT OF REORGANIZATION
(a) REORGANIZATION--NO CHANGE IN CONTROL
Upon a merger, consolidation, acquisition of all or substantially all
of the property or stock, liquidation or other reorganization of the Company
(collectively, a "Reorganization") during the Exercise Period, as a result of
which the stockholders of the Company receive cash, stock or other property in
exchange for their Warrant Shares and the holders of the Company's voting equity
securities immediately prior to such Reorganization together own a majority
interest of the voting equity securities of the successor corporation following
such Reorganization, lawful provision shall be made so that the Holder shall
thereafter be entitled to receive, upon exercise of this Warrant, the number of
shares of securities of the successor corporation resulting from such
Reorganization (and cash and other property), to which a holder of the Warrant
Shares issuable upon exercise of this Warrant would have been entitled in such
Reorganization if this Warrant had been exercised immediately prior to such
Reorganization. In any such case, appropriate adjustment (as determined in good
faith by the Company's Board of Directors and reasonably acceptable to the
Holder) shall be made in the application of the provisions of this Warrant with
respect to the rights and interest of the Holder after the Reorganization to the
end that the provisions of this Warrant (including adjustments of the Per Share
Exercise Price and the number and type of securities purchasable pursuant to the
terms of this Warrant) shall be applicable after that event, as near as
reasonably may be, in relation to any shares deliverable after that event upon
the exercise of this Warrant.
(b) REORGANIZATION--CHANGE IN CONTROL; TERMINATION OF
WARRANT
Upon Reorganization during the Exercise Period, as a result of which
the stockholders of the Company receive cash, stock or other property in
exchange for their Warrant Shares and the holders of the Company's voting equity
securities immediately prior to such Reorganization together own less than a
majority interest of the voting equity securities of the successor corporation
following such Reorganization, the Holder shall be given notice of such proposed
action as provided in Section 7. The Holder may attend the meeting of the
Company's stockholders at which such action is considered and voted upon. If the
proposed action is approved according to applicable law by the stockholders of
all corporations or other entities that are parties to the proposed action, the
Holder shall be so notified in writing by the Company by registered or certified
mail at least 10 days before its effectiveness. Notwithstanding the period of
exercisability stated in Section 1.1 of this Warrant, this Warrant shall become
forever null and void to the extent not exercised on or before 5:00 p.m.,
Pacific time, on the seventh day following the delivery of such notice; provided
that if the Reorganization does not close, this Warrant shall not terminate and
the Exercise Period shall continue as stated in Section 1.1 of this Warrant.
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4.6 CERTIFICATE AS TO ADJUSTMENTS
In the case of any adjustment in the Per Share Exercise Price or number
and type of securities issuable upon exercise of this Warrant, the Company will
promptly give written notice to the Holder in the form of a certificate,
certified and confirmed by an officer of the Company, setting forth the
adjustment in reasonable detail.
4.7 DEFERRAL IN CERTAIN CIRCUMSTANCES
In any case in which the provisions of this Section 4 shall require
that an adjustment shall become effective immediately after a record date of an
event, the Company may defer until the occurrence of such event issuing to the
Holder of any Warrant exercised after such record date and before the occurrence
of such event the shares of capital stock issuable upon such exercise by reason
of the adjustment required by such event and issuing to such Holder only the
shares of capital stock issuable upon such exercise before giving effect to such
adjustments; provided, however, that the Company shall deliver to such Holder an
appropriate instrument or due bills evidencing such Holder's right to receive
such additional shares.
4.8 APPRAISAL PROCEDURE
In any case in which the provisions of this Section 4 shall necessitate
that the Appraisal Procedure be utilized for purposes of determining an
adjustment to the applicable Per Share Exercise Price, the Company may defer
until the completion of the Appraisal Procedure and the determination of the
adjustment (1) issuing to the Holder of any Warrant exercised after the date of
the event that requires the adjustment and before completion of the Appraisal
Procedure and the determination of the adjustment, the shares of capital stock
issuable upon such exercise by reason of the adjustment required by such event
and issuing to such Holder only the shares of capital stock issuable upon such
exercise before giving effect to such adjustment and (2) paying to such Holder
any amount in cash in lieu of a fractional share of capital stock pursuant to
Section 2.2 above; provided, however, that the Company shall deliver to such
Holder an appropriate instrument or due bills evidencing such Holder's right to
receive such additional shares or cash.
4.9 ADJUSTMENT OF NUMBER OF SHARES PURCHASABLE
Upon any adjustment of the applicable Per Share Exercise Price as
provided in Section 4.1 and 4.3, the Holders of the Warrants shall thereafter be
entitled to purchase upon the exercise thereof, at the applicable Per Share
Exercise Price resulting from such adjustment, the number of shares of Common
Stock obtained by multiplying the applicable Per Share Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
issuable on the exercise hereof immediately prior to such adjustment and
dividing the product thereof by the applicable Per Share Exercise Price
resulting from such adjustment.
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4.10 LOCK-UP AGREEMENT
Holder agrees not to sell or otherwise transfer or dispose of any
securities of the Company issued pursuant to this Warrant for up to a maximum of
360 days following the effective date (the "Effective Date") of the Company's
first firmly underwritten public offering of its securities (the "Initial Public
Offering"), as provided in this Section 4.10. If the Effective Date occurs on or
before October 1, 2000, then the Holder agrees not to sell or otherwise transfer
or dispose of any securities of the Company issued pursuant to this Warrant for
a period of (i) 180 days from the date of exercise of the Warrant if such
exercise occurs within the first 180 days after the Effective Date, or (ii) up
to a maximum of 360 days from the Effective Date if such exercise occurs on or
after the 181st day after the Effective Date, but before the 360th day after the
Effective Date. If the Effective Date occurs at any time after October 1, 2000,
then the Holder acknowledges that the securities of the Company issued pursuant
to this Warrant are subject only to lock-up pursuant to that certain Investor
Rights Agreement dated as of February 17, 2000, by and among the Company and the
parties thereto, as amended by Amendment No. 3, of even date herewith (the
"Rights Agreement"). Notwithstanding anything to the contrary herein, if (A) the
Holder exercises the Warrant at any time prior to the Effective Date, or (B) the
Holder exercises the Warrant at any time on or after the 361st day after the
Effective Date, the Holder will not be subject to any restrictions on transfer
or disposition of any securities issued pursuant to this Warrant, other than
restrictions imposed by federal and state securities laws, and the Rights
Agreement.
5. SECURITIES LAWS RESTRICTIONS; LEGEND ON WARRANT SHARES
5.1 This Warrant and the securities issuable upon exercise have not
been registered under the Securities Act of 1933, as amended, or applicable
state securities laws, and no interest may be sold, distributed, assigned,
offered, pledged or otherwise transferred unless (a) there is an effective
registration statement under such Act and applicable state securities laws
covering any such transaction involving said securities, (b) the Company
receives an opinion of legal counsel for the holder of the securities
satisfactory to the Company stating that such transaction is exempt from
registration, or (c) the Company otherwise satisfies itself that such
transaction is exempt from registration.
5.2 A legend setting forth or referring to the above restrictions shall
be placed on this Warrant, any replacement and any certificate representing the
Warrant Shares, and a stop transfer order shall be placed on the books of the
Company and with any transfer agent until such securities may be legally sold or
otherwise transferred.
6. EXCHANGE OF WARRANT; LOST OR DAMAGED WARRANT CERTIFICATE
This Warrant is exchangeable upon its surrender by the Holder at the
office of the Company. Upon receipt by the Company of satisfactory evidence of
the loss, theft, destruction or damage of this Warrant and either (in the case
of loss, theft or destruction) reasonable indemnification or (in the case of
damage) the surrender of this Warrant for
8
cancellation, the Company will execute and deliver to the Holder, without
charge, a new Warrant of like denomination.
7. NOTICES OF RECORD DATE
In the event of
(a) any taking by the Company of a record of the holders of Warrant
Shares for the purpose of determining the holders who are entitled to receive
any dividend or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right;
(b) any reorganization of the Company, any reclassification or
recapitalization of the capital structure of the Company, or any transfer of all
or substantially all the assets of the Company to, or consolidation or merger
of, the Company with or into any person;
(c) any voluntary or involuntary dissolution, liquidation or winding-up
of the Company;
(d) any proposed issue or grant by the Company to the holders of
Warrant Shares of any shares of any class or any other securities, or any right
or warrant to subscribe for, purchase or otherwise acquire any units of any
class or any other securities;
(e) the initial public offering of the Company's shares; or
(f) any other event as to which the Company is required to give notice
to any holders of Warrant Shares,
then and in each such event the Company will mail to the Holder a notice
specifying (i) the date on which any such record is to be taken, (ii) the date
on which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as to which the holders of record of
Warrant Shares or securities into which the Warrant Shares are convertible shall
be entitled to exchange their shares for securities or other property
deliverable on such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up, (iii)
the amount and character of any stock or other securities, or rights or
warrants, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made, and (iv) in reasonable detail, the facts, including
the proposed date, concerning any other such event. Such notice shall be
delivered to the Holder at least 20 business days prior to the date specified in
the notice.
8. INVESTMENT INTENT
By accepting this Warrant, the Holder represents that it is acquiring
this Warrant for investment and not with a view to, or for sale in connection
with, any distribution thereof.
9
9. REGISTRATION RIGHTS
The Warrant Shares shall be deemed Registrable Securities under the
Rights Agreement and Holder shall be entitled to receive the same rights to have
the Warrant Shares registered under the Securities Act of 1933, as amended, as
investors are entitled to under the Rights Agreement.
10. MISCELLANEOUS
10.1 HOLDER AS OWNER
The Company may deem and treat the holder of record of this Warrant as
the absolute owner for all purposes regardless of any notice to the contrary.
10.2 NO STOCKHOLDER RIGHTS
This Warrant shall not entitle the Holder to any voting rights or any
other rights as a shareholder of the Company or to any other rights except the
rights stated herein; and no dividend or interest shall be payable or shall
accrue in respect of this Warrant or the Warrant Shares, until this Warrant is
exercised.
10.3 NOTICES
Unless otherwise provided, any notice under this Warrant shall be given
in writing and shall be deemed effectively given (a) upon personal delivery to
the party to be notified, (b) upon confirmation of receipt by fax by the party
to be notified, (c) one business day after deposit with a reputable overnight
courier, prepaid for overnight delivery and addressed as set forth below, or (d)
three days after deposit with the United States Post Office, postage prepaid,
registered or certified with return receipt requested and addressed to the party
to be notified at the address indicated below, or at such other address as such
party may designate by 10 days' advance written notice to the other party given
in the foregoing manner.
If to the Holder:
Metrowerks Holdings, Inc.
9801 Metric Boulevard
Austin, TX 78758
Attention: President
with a copy to:
Motorola, Inc.
Law Department
1303 E. Algonquin Road
Schaumberg, IL 60196
Attention: General Counsel
10
If to the Company:
Lineo, Inc.
390 South 400 West
Lindon, Utah 84042
Attn: President
Fax: (801) 426-6166
10.4 AMENDMENTS AND WAIVERS
Any term of this Warrant may be amended and the observance of any term
may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the holders of Warrants to purchase a majority of the Warrant Shares. Any
amendment or waiver effected in accordance with this Section 10.4 shall be
binding on each future Holder and the Company.
10.5 GOVERNING LAW; JURISDICTION; VENUE
This Warrant shall be governed by and construed under the laws of the
state of Delaware without regard to principles of conflict of laws.
10.6 SUCCESSORS AND ASSIGNS; TRANSFER
The terms and conditions of this Warrant shall inure to the benefit of
and be binding on the respective successors and assigns of the parties. This
Warrant may not be transferred or assigned without the consent of the Company.
10.7 APPRAISAL PROCEDURE
"Appraisal Procedure," if applicable, means the following procedure to
determine the fair market value, as to any security, for purposes of the
definition of "Fair Market Value" or the fair market value, as to any other
property (in either case, the "valuation amount"). The valuation amount shall be
determined in good faith jointly by the Company's Board of Directors (the
"Board") and the Holder; provided, however, that if such parties are not able to
agree on the valuation amount within a reasonable period of time (not to exceed
twenty (20) days) the valuation amount shall be determined by an investment
banking firm of national recognition, which firm shall be reasonably acceptable
to the Board and the Holder. If the Board and the Holder are unable to agree
upon an acceptable investment banking firm within ten (10) days after the date
either party proposed that one be selected, the investment banking firm will be
selected by an arbitrator located in San Francisco, California, selected by the
American Arbitration Association (or if such organization ceases to exist, the
arbitrator shall be chosen by a court of competent jurisdiction). The arbitrator
shall select the investment banking firm (within ten (10) days of his
appointment) from a list, jointly prepared by the Board and the Holder, of not
more than six investment banking firms of national standing in the United
States, of which no more than three may be named by the Board and no more than
11
three may be named by the Holder. The arbitrator may consider, within the
ten-day period allotted, arguments from the parties regarding which investment
banking firm to choose, but the selection by the arbitrator shall be made in its
sole discretion from the list of six. The Board and the Holder shall submit
their respective valuations and other relevant data to the investment banking
firm, and the investment banking firm shall as soon as practicable thereafter
make its own determination of the valuation amount. The final valuation amount
for purposes hereof shall be the average of the two valuation amounts closest
together, as determined by the investment banking firm, from among the valuation
amounts submitted by the Company and the Holder and the valuation amount
calculated by the investment banking firm. The determination of the final
valuation amount by such investment banking firm shall be final and binding upon
the parties. The Company shall pay the fees and expenses of the investment
banking firm and arbitrator (if any) used to determine the valuation amount. If
required by any such investment banking firm or arbitrator, the Company shall
execute a retainer and engagement letter containing reasonable terms and
conditions, including, without limitation, customary provisions concerning the
rights of indemnification and contribution by the Company in favor of such
investment banking firm or arbitrator and its officers, directors, partners,
employees, agents and affiliates.
[Signature page follows.]
12
IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first written above.
Lineo, Inc.
By____________________________
13
NOTICE OF CASH EXERCISE
To: Lineo, Inc.
The undersigned hereby irrevocably elects to purchase ___________
shares of Common Stock of Lineo, Inc. (the "Company"), issuable upon the
exercise of the attached Warrant and requests that certificates for such shares
be issued in the name of and delivered to the address of the undersigned stated
below and, if said number of shares shall not be all the shares that may be
purchased pursuant to the attached Warrant, that a new Warrant evidencing the
right to purchase the balance of such shares be registered in the name of, and
delivered to, the undersigned at the address stated below. The undersigned
agrees with and represents to the Company that said shares are acquired for the
account of the undersigned for investment and not with a view to, or for sale in
connection with, any distribution or public offering within the meaning of the
Securities Act of 1933, as amended.
Payment enclosed in the amount of $___________.
Dated: ________________
Name of Holder of Warrant: ____________________________________________
(Please print)
Address: _____________________________________________________________
Signature: ___________________________________________________________
1
NOTICE OF NET ISSUANCE EXERCISE
To: Lineo, Inc.
The undersigned hereby irrevocably elects to convert the attached
Warrant into such number of shares of Common Stock of Lineo, Inc. (the
"Company") as is determined pursuant to Section 1.2 of the attached Warrant. The
undersigned requests that certificates of such net issuance shares be delivered
to the address of the undersigned stated below. The undersigned agrees with and
represents to the Company that said shares are acquired for the account of the
undersigned for investment and not with a view to, or for sale in connection
with, any distribution or public offering within the meaning of the Securities
Act of 1933, as amended.
Dated: ________________
Name of Holder of Warrant: ____________________________________________
(Please print)
Address: _____________________________________________________________
Signature: ___________________________________________________________
1
ASSIGNMENT
For value received the undersigned sells, assigns and transfers to the
transferee named below the attached Warrant, together with all right, title and
interest, and does irrevocably constitute and appoint the transfer agent of
Lineo, Inc. (the "Company") as the undersigned's attorney, to transfer said
Warrant on the books of the Company, with full power of substitution in the
premises.
Dated: __________________________
Name of Holder of Warrant: ____________________________________________
(Please print)
Address: _____________________________________________________________
Signature: ___________________________________________________________
Name of transferee: ___________________________________________________
(Please print)
Address of transferee: ________________________________________________
1