Exhibit 4.11
WARRANTS
TO PURCHASE COMMON STOCK
OF
CNE GROUP, INC.
THESE WARRANTS ARE ISSUED PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION PROVISIONS OF THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT") AND QUALIFICATION PROVISIONS OF APPLICABLE
STATE SECURITIES LAWS. NEITHER THEY NOR THE SHARES OF COMMON
STOCK FOR WHICH THEY CAN BE EXERCISED MAY BE SOLD,
HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS REGISTERED
PURSUANT TO THE SECURITIES ACT AND QUALIFIED UNDER
APPLICABLE STATE LAW OR, IN THE OPINION OF COUNSEL TO THE
COMPANY, AN EXEMPTION THEREFROM IS AVAILABLE.
WHEREAS, at a meeting of the Board of Directors of CNE Group, Inc. (the
"Company") duly called and held on _____________, the Board authorized the
granting of _______ Class BB Warrants (the "BB Warrants"), each to purchase,
initially, one share of the Company's Common Stock, par value $0.00001, (the
"Common Stock") to ________________ (the "Holder"), with an address at
_________________________________ in accordance with the terms set forth herein;
and
WHEREAS, each BB Warrant permits the holder thereof, for a period commencing on
the date hereof and terminating on _________________, to purchase, initially,
one share (collectively the "BB Warrant Shares") of Common Stock at $_.__ per
share; and
WHEREAS, the Company desires to set forth the terms of the BB Warrants and the
Holder desires to accept such terms;
NOW, THEREFORE, in consideration of the premises, the parties hereto agree as
follows:
1. Grant of Warrants.
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The Company hereby grants to the Holder the right to purchase one BB Warrant
Share for each BB Warrant granted hereby for a price of $_.__ as hereinafter
adjusted (the "Exercise Price"). The BB Warrants may be exercised, except as
otherwise provided herein, in whole or in part at any time commencing upon the
date hereof and terminating at 5:00 P.M., New York time, on _______________ (the
"Expiration Date").
Common Stock Purchase Warrant (Class BB) F 1/21/04
issued by CNE Group, Inc.
to David B. Batzer
2. Manner of Exercise.
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(a) Cash Exercise. The BB Warrants underlying this BB Warrant Agreement may be
exercised in whole or in part by surrender of this BB Warrant Agreement, with
the form of subscription at the end hereof duly executed by the Holder, to the
Company at its principal office, and, except as provided in Paragraph 2 (b)
below, accompanied by payment in full in cash or by certified or official bank
check to the order of the Company of the Exercise Price of the shares to be
purchased. As soon as practicable, but in no event more than 15 days after the
Holder has given the aforesaid written notice and made the aforesaid payment,
the Company shall, without charging stock issue or transfer taxes to the Holder,
issue the number of shares of duly authorized Common Stock issuable upon such
exercise, which shall be duly issued, fully paid and non-assessable, and shall
deliver to the Holder a certificate or certificates therefor, registered in the
Holder's name. In the event of a partial exercise of this BB Warrant Agreement,
the Company shall also issue and deliver to the Holder a new BB Warrant
Agreement of like tenor, in the name of the Holder, for the exercise of the
number of BB Warrant Shares for which such BB Warrant Agreement may still be
exercised.
(b) Cashless Exercise. Notwithstanding anything contained herein to the
contrary, the Holder may, at his election exercised in his sole discretion,
exercise the BB Warrants underlying this B Warrant Agreement, in whole or in
part, and, in lieu of making the cash payment otherwise contemplated to be made
to the Company upon such exercise in payment of the Exercise Price, elect
instead to receive upon such exercise the "Net Number" of shares of Common Stock
determined according to the following formula (a "Cashless Exercise"):
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Net Number = (A x B) - (A x C)
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B
For purposes of the foregoing formula:
A = the total number of shares with respect to which this
Warrant is then being exercised.
B = the Closing Sale Price of the Common Stock on the
trading day immediately preceding the date of the Exercise
Notice.
C = the Warrant Exercise Price then in effect for the
applicable Warrant Shares at the time of such exercise.
(c) Restrictions on Exercise. Notwithstanding anything to the contrary contained
herein, none of the Warrants may be exercised without the consent of the
Company, following the Company's determination that such exercise will result in
an ownership change as defined in Section 382 of the Internal Revenue Code of
1986, as amended, and the Treasury Regulations thereunder (an "Ownership
Change"); and the Company may
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Common Stock Purchase Warrant (Class BB) F 1/21/04
issued by CNE Group, Inc.
to David B. Batzer
require such information from the Holder as may be necessary to determine
whether an Ownership Change will occur.
3. Investment Representation.
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The Holder acknowledges that the BB Warrants underlying this BB Warrant
Agreement as well as the BB Warrant Shares for which these BB Warrants may be
exercised, have not been and, except as otherwise provided herein, will not be
registered under the Securities Act of 1933 (the "Act") or qualified under
applicable state securities laws and that the transferability thereof is
restricted by the registration provisions of the Act as well as such state laws.
The Holder represents that he is acquiring the BB Warrants and will acquire the
BB Warrant Shares for his own account, for investment purposes only and not with
a view to resale or other distribution thereof, or with the intention of
selling, transferring or otherwise disposing of all or any part of such
securities for any particular event or circumstance, except selling,
transferring or disposing of them upon full compliance with all applicable
provisions of the Act, the Securities Exchange Act of 1934 (the "Exchange Act"),
the Rules and Regulations promulgated by the Securities and Exchange Commission
(the "Commission") thereunder, and any applicable state securities laws. The
Holder further understands and agrees that (i) neither the BB Warrants nor the
BB Warrant Shares may be sold unless they are subsequently registered under the
Act and qualified under any applicable state securities laws or, in the opinion
of the Company's counsel, an exemption from such registration and qualification
is available; (ii) any routine sales of the Company's securities made in
reliance upon Rule 144 promulgated by the Commission under the Act, can be
effected only in the amounts set forth in and pursuant to the other terms and
conditions, including applicable holding periods, of that Rule; and (iii) except
as otherwise set forth herein, the Company is under no obligation to register
the BB Warrants or the BB Warrant Shares on his behalf or to assist him in
complying with any exemption from registration under the Act. The Holder agrees
that each certificate representing any BB Warrant Shares for which the BB
Warrants may be exercised will bear on its face a legend in substantially the
following form:
These securities have not been registered under the Securities Act of 1933
or qualified under any state securities laws. They may not be sold,
hypothecated or otherwise transferred in the absence of an effective
registration statement under that Act or qualification under applicable
state securities laws without an opinion acceptable to counsel to the
Company that such registration and qualification are not required.
4. Holder Not Deemed Stockholder.
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The Holder shall not, as holder of the BB Warrants, be entitled to vote or to
receive dividends, except as may be provided in Section 5 below, or be deemed
the holder of Common Stock that may at any time be issuable upon exercise of the
BB Warrants for any purpose whatsoever, nor shall anything contained herein be
construed to confer upon the Holder, as holder of the BB Warrants, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to
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Common Stock Purchase Warrant (Class BB) F 1/21/04
issued by CNE Group, Inc.
to David B. Batzer
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issue or reclassification
of stock, change of par value or change of stock to no par value, consolidation,
merger or conveyance or otherwise), or to receive notice of meetings, or to
receive dividends or subscription rights, until the Holder shall have exercised
the BB Warrants and been issued shares of Common Stock in accordance with the
provisions hereof.
5. Warrant Adjustments.
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The Exercise Price and the number of shares purchasable upon exercise of the BB
Warrants shall be subject to adjustment with respect to events after the date
hereof as follows:
(a) Adjustment for Change in Capital Stock. Except as provided in Paragraph 5
(h) below, if the Company shall (i) declare a dividend on its outstanding Common
Stock in shares of its capital stock, (ii) subdivide its outstanding Common
Stock, (iii) combine its outstanding Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock by reclassification of its
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation),
then in each such case the Exercise Price in effect immediately prior to such
action shall be adjusted so that if the BB Warrants are thereafter exercised,
the Holder may receive the number and kind of shares which he would have owned
immediately following such action if he had exercised the BB Warrants
immediately prior to such action. Such adjustment shall be made successively
whenever such an event shall occur. The adjustment shall become effective
immediately after the record date in the case of a dividend or distribution and
immediately after the effective date in the case of a subdivision, combination
or reclassification. If after an adjustment the Holder upon exercise of the BB
Warrants may receive shares of two or more classes of capital stock of the
Company, the Company's Board of Directors shall determine the allocation of the
adjusted Exercise Price between the classes of capital stock. After such
allocation, the Exercise Price of each class of capital stock shall thereafter
be subject to adjustment on terms comparable to those applicable to Common Stock
in this Section 5.
(b) Action to Permit Valid Issuance of Common Stock. Before taking any action
which would cause an adjustment reducing the Exercise Price below the then par
value, if any, of the shares of Common Stock issuable upon exercise of the BB
Warrants, the Company will take all corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and legally
issue shares of such Common Stock at such adjusted Exercise Price.
(c) Minimum Adjustment. No adjustment in the Exercise Price shall be required if
such adjustment is less than $0.05; provided, however, that any adjustments,
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which by reason of this Paragraph 5 (c) are not required to be made, shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 5 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be. Anything to the contrary
notwithstanding, the Company shall be entitled
4
Common Stock Purchase Warrant (Class BB) F 1/21/04
issued by CNE Group, Inc.
to David B. Batzer
to make such reductions in the conversion price, in addition to those required
by this Paragraph 5 (c), as it in its discretion shall determine to be advisable
in order that any stock dividends, subdivision of shares, distribution of rights
to purchase stock or securities, or distribution of securities convertible into
or exchangeable for stock hereafter made by the Company to its stockholders
shall not be taxable.
(d) Referral of Adjustment. In any case in which this Section 5 shall
require that an adjustment in the Exercise Price be made effective as of a
record date for a specified event, if the BB Warrants shall have been exercised
after such record date the Company may elect to defer until the occurrence of
such event issuing to the Holder the shares, if any, issuable upon such exercise
over and above the shares, if any, issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment; provided, however, that
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the Company shall deliver to the Holder a due bill or other appropriate
instrument evidencing the Holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
(e) Number of Shares. Upon each adjustment of the Exercise Price as a
result of the calculations made in the Paragraphs of this Section 5, the BB
Warrants shall thereafter evidence the right to purchase, at the adjusted
Exercise Price, that number of shares (calculated to the nearest thousandth)
obtained by dividing (i) the product obtained by multiplying the number of
shares purchasable upon exercise of the BB Warrants prior to adjustment of the
number of shares by the Exercise Price in effect prior to adjustment of the
Exercise Price by (ii) the Exercise Price in effect after such adjustment of the
Exercise Price.
(f) Transactions Not Requiring Adjustments. No adjustment need be made for
a transaction referred to in Paragraphs of this Section 5 if the Holder is
permitted to participate in the transaction on a basis no less favorable than
any other party and at a level that would preserve the Holder's percentage
equity participation in the Common Stock upon exercise of the BB Warrants. No
adjustment need be made for sales of Common Stock pursuant to a Company plan for
reinvestment of dividends or interest, the granting of options and/or the
exercise of options outstanding under any of the Company's currently existing
stock option plans, the exercise of currently existing incentive stock options
or incentive stock options which may be granted in the future, or the exercise
of any other of the Company's currently outstanding options. No adjustment need
be made for a change in the par value or no par value of the Common Stock. If
the BB Warrants become exercisable solely into cash, no adjustment need be made
thereafter. Interest will not accrue on the cash.
(g) Notice of Adjustments. Whenever the Exercise Price is adjusted, the
Company shall promptly mail to the Holder a notice of the adjustment together
with a certificate from the Company's Chief Financial Officer briefly stating
(i) the facts requiring the adjustment, (ii) the adjusted Exercise Price and the
manner of computing it; and (iii) the date on which such adjustment becomes
effective. The certificate shall be prima facia evidence that the adjustment is
correct, absent manifest error.
5
Common Stock Purchase Warrant (Class BB) F 1/21/04
issued by CNE Group, Inc.
to David B. Batzer
(h) Reorganization of Company. If the Company and/or the holders of Common
Stock are parties to a merger, consolidation or a transaction in which (i) the
Company transfers or leases substantially all of its assets; (ii) the Company
reclassifies or changes its outstanding Common Stock; or (iii) the Common Stock
is exchanged for securities, cash or other assets; the person who is the
transferee or lessee of such assets or is obligated to deliver such securities,
cash or other assets shall assume the terms of the BB Warrants. If the issuer of
securities deliverable upon exercise of the BB Warrants is an affiliate of the
surviving, transferee or lessee corporation, that issuer shall join in such
assumption. The assumption agreement shall provide that the Holder may exercise
the BB Warrants into the kind and amount of securities, cash or other assets
that he would have owned immediately after the consolidation, merger, transfer,
lease or exchange if he had exercised the BB Warrants immediately before the
effective date of the transaction. The assumption agreement shall provide for
adjustments that shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 5. The successor company shall mail to
the Holder a notice briefly describing the assumption agreement. If this
Paragraph applies, Paragraph 5 (a) above does not apply.
(i) Dissolution, Liquidation. In the event of the dissolution or total
liquidation of the Company, then after the effective date thereof, the BB
Warrants and all rights thereunder shall expire.
(j) Notices. If (i) the Company takes any action that would require an
adjustment in the Exercise Price pursuant to this Section 5; or (ii) there is a
liquidation or dissolution of the Company, the Company shall mail to the Holder
a notice stating the proposed record date for a distribution or effective date
of a reclassification, consolidation, merger, transfer, lease, liquidation or
dissolution. The Company shall mail the notice at least 15 days before such
date. Failure to mail the notice or any defect in it shall not affect the
validity of the transaction.
(k) Determination by Company Conclusive. Any determination that the Company
or its Board of Directors must make pursuant to this Section 5 shall be
conclusive, absent manifest error.
6. Fractional Shares.
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If the number of BB Warrant Shares purchasable upon the exercise of the BB
Warrants is adjusted pursuant to Section 5 hereof, the Company shall
nevertheless not be required to issue fractions of shares upon exercise of the
BB Warrants or otherwise, or to distribute certificates that evidence fractional
shares. Instead the Company will round any fractional share to the nearest share
so that if the fraction is less than 0.5 no share shall be issued and if the
fraction is 0.5 or higher the Company shall issue one full share
7. Inclusion of B Warrant Shares in Registration Statement; Right to
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"Piggy-Back" Registration.
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(a) "Piggy Back" Registration Rights. If at any time after the date hereof,
the
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Common Stock Purchase Warrant (Class BB) F 1/21/04
issued by CNE Group, Inc.
to David B. Batzer
Company proposes to file a Registration Statement under the Act with respect to
any of its securities (except one relating to employee benefit plans or a merger
or similar transaction) (a "Public Offering"), it shall give written notice of
its intention to effect such filing to the Holder at least 30 days prior to
filing such Registration Statement (the "Piggy-Back Registration Statement"). If
the Holder desires to include his BB Warrant Shares (the "Registerable
Securities") in the Piggy-Back Registration Statement, he shall notify the
Company in writing within 10 days after receipt of such notice from the Company,
in which event the Company shall include the Holder's Registerable Securities in
the Piggy-Back Registration Statement. If the Holder elects to include his
Registerable Securities in the Piggy-Back Registration Statement as set forth
herein, he shall, in a timely fashion, provide the Company and its counsel with
such information and execute such documents as its counsel may reasonably
require to prepare and process the Piggy-Back Registration Statement. Anything
to the contrary notwithstanding, in the event that the offering for which the
Piggy-Back Registration Statement has been filed is to be effected through or
with the assistance of an underwriter, the Holder will consent to restrict the
sale of his Registerable Securities or reduce the number of his Registerable
Securities that may be included in such registration statement in accordance
with the requirements of such underwriter.
(b) Copies of Registration Statements and Prospectuses. The Company will
provide the Holder with a copy of the Piggy-Back Registration Statement and any
amendments thereto, and copies of the final prospectus included therein in such
quantities as may reasonably be required to permit the Holder to sell his
Registerable Securities after the Piggy-Back Registration Statement is declared
effective by the Commission (the "Effective Date").
(c) The Company's Obligation to Bear Expenses of Registration. The Company
will bear all expenses (except underwriting discounts and commission, if any,
and the legal fees and expenses, if any, of counsel to the Holder) necessary and
incidental to the performance of its obligations under this Section 7.
(d) Indemnification. The Company and the Holder, if the Holder's
Registerable Securities are included in a Registration Statement pursuant to
this Section 7, shall provide appropriate cross indemnities to each other
covering the information supplied by the indemnifying party for inclusion in
such Registration Statement.
(e) Restriction on Registration Rights. Anything to the contrary not
withstanding, the Company shall not be required to register any Registerable
Securities that, in the reasonable opinion of the Company's counsel, may be sold
pursuant to the exemption from registration provided by Section (k) of Rule 144
promulgated under the Act.
8. Covenants of the Company.
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The Company covenants that it will at all times reserve and keep available out
of its authorized Common Stock, solely for the purpose of issue upon exercise of
Warrants,
7
Common Stock Purchase Warrant (Class BB) F 1/21/04
issued by CNE Group, Inc.
to David B. Batzer
such number of shares of Common Stock as shall then be issuable upon the
exercise of all outstanding Warrants. The Company covenants that all shares of
Common Stock which shall be issuable upon exercise of the Warrants shall, at the
time of delivery thereof, be duly and validly issued and fully paid and
nonassessable and free from all preemptive or similar rights, taxes, liens and
charges with respect to the issue thereof, and that upon issuance such shares
shall be listed on each securities exchange, if any, on which the other shares
of outstanding Common Stock of the Company are then listed.
9. Amendments.
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This Agreement shall not be amended, modified or revoked except by agreement in
writing, signed by the Company and the Holder.
10. Governing Law.
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The BB Warrants shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, the Company has caused these BB Warrants to be executed on
its behalf by an officer thereunto duly authorized and the Holder has executed
this Agreement as ___________________.
CNE Group, Inc.
By:
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George W. Benoit, Chairman of the Board Warrant holder
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SUBSCRIPTION FORM
To Be Executed by the Holder
in Order to Exercise BB Warrants
The undersigned Holder hereby irrevocably elects to exercise the BB Warrants,
and to purchase the shares of Common Stock issuable upon the exercise thereof,
and requests that certificates for such shares shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
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[please print or type name and address]
and be delivered to
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[please print or type name and address]
and if such number of shares of Common Stock shall not be all the shares
issuable upon the exercise of the BB Warrants, that new BB Warrants exercisable
for the balance of the shares issuable upon the exercise of the BB Warrants be
delivered to the Holder at the address stated below.
Dated: X
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Address
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Taxpayer Identification Number
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Signature Guaranteed
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