THE WARRANT EVIDENCED HEREBY, AND THE SECURITIES ISSUABLE HEREUNDER, HAVE BEEN
AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND
SHALL NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE PROPOSED
DISPOSITION IS THE SUBJECT OF A CURRENTLY EFFECTIVE REGISTRATION STATEMENT UNDER
SAID ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SAID ACT
AND SUCH STATE SECURITIES LAWS IN CONNECTION WITH SUCH DISPOSITION.
LIGHTBRIDGE, INC.
COMMON STOCK PURCHASE WARRANT
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Original Issue Date: __________, 1995
Void After: __________, 2000
This Warrant is Issued to
SPECIMEN
----------------------------
(hereinafter called the "Registered Holder," which term shall include its
successors and assigns) by Lightbridge, Inc., a Delaware corporation
(hereinafter referred to as the "Company"). This Warrant may be transferred by
the Registered Holder only in accordance with the provisions of Sections 1.04
and 5 hereof.
1. The Warrant.
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1.01 For value received and subject to the terms and conditions
hereinafter set forth, the Registered Holder is entitled, upon surrender of this
Warrant at any time on or prior to ____________, 2000 (with the subscription
form annexed hereto duly executed) at the office of the Company at 281 Winter
Street, Waltham, Massachusetts 02154, or such other office in the United States
of which the Company shall notify the Registered Holder hereof in writing, to
purchase from the Company, at the purchase price hereinafter specified (the
"Exercise Price"), ________ shares of the Common Stock, $.01 par value per
share, of the Company ("Common Stock"). This Warrant has been issued by the
Company in connection with its issuance to the original Registered Holder of the
Company's Subordinated Promissory Note, dated as of August __, 1995 in the
original principal amount of $___________ (the "Note"). The initial Exercise
Price shall be $4.00 per share.
As promptly as practicable after surrender of this Warrant and receipt of
payment of the Exercise Price, the Company shall issue and deliver to the
Registered Holder a certificate or certificates for the shares purchased
hereunder, in certificates of such denominations and in such names as the
Registered Holder may specify, together with any other stock, securities or
property which such Registered Holder may be entitled to receive pursuant to
Section 1.05 hereof. Payment of the Exercise Price shall be made in by check
made payable to the order of the Company or wire transfer of funds to a bank
account designated by the Company. In the case of the purchase of less than all
the shares purchasable under this Warrant, the Company shall cancel this Warrant
upon the surrender hereof and shall execute and deliver a substitute Warrant of
like tenor and date for the balance of the shares purchasable hereunder.
1.02 During the period within which the rights represented by this Warrant
may be exercised, the Company shall at all times have authorized and reserved
for the purpose of issue upon exercise of the rights evidenced hereby, a
sufficient number of shares of the class of securities issuable upon exercise of
this Warrant to provide for the exercise of such rights. Upon surrender for
exercise, this Warrant shall be cancelled and shall not be reissued; provided,
however, that upon the partial exercise hereof a substitute Warrant representing
the rights to subscribe for and purchase any such unexercised portion hereof
shall be issued.
1.03 This Warrant may be subdivided into one or more Warrants entitling
the Registered Holder to purchase shares of the class of securities issuable
upon exercise of this Warrant in multiples of one or more whole shares, upon
surrender of this Warrant by the Registered Holder for such purpose at the
office of the Company.
1.04 The Company shall maintain at its office (or at such other office or
agency of the Company as it may from time to time designate in writing to the
Registered Holder hereof), a register containing the name and address of the
Registered Holder of this Warrant. The Registered Holder of this Warrant shall
be the person in whose name this Warrant is originally issued and registered,
unless a subsequent holder shall have presented to the Company this Warrant,
duly assigned to such holder, for inspection and a written notice of his
acquisition of this Warrant and designating in writing the address of such
subsequent holder, in which case such subsequent holder of this Warrant shall
become the subsequent Registered Holder. Any Registered Holder of this Warrant
may change his address as shown on such register by written notice to the
Company requesting such change. Any written notice required or permitted to be
given to the Registered Holder of this Warrant shall be mailed by registered or
certified mail, or sent by reputable overnight courier service, to the
Registered Holder at the address as shown on such register.
1.05 The rights of the Registered Holder shall be subject to the following
terms and conditions:
(A) Adjustment to Exercise Price Upon Financing. If and only if (i)
-------------------------------------------
all principal and interest under the Note is paid in full on or before January
31, 1996 and (ii) the price per share paid by investors in the Financing (as
hereinafter defined) exceeds the Exercise
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Price, then the Exercise Price shall be adjusted to be equal to such price per
share, effective upon the closing of the Financing. As used herein, the
"Financing" shall mean the next equity security financing for the account of the
Company in which the aggregate gross proceeds received by the Company equal or
exceed $1,500,000.
(B) Adjustment to Exercise Price for Subdivision or Combination. If the
-----------------------------------------------------------
Company at any time or from time to time after the issuance of this Warrant
subdivides (by any stock split, stock dividend, recapitalization or otherwise)
the outstanding shares of the class of securities issuable upon exercise hereof
into a greater number of shares, the Exercise Price in effect immediately before
that subdivision shall be proportionately decreased. If the Company at any time
or from time to time after the issuance of this Warrant combines (by reverse
stock split or otherwise) the outstanding shares of the class of securities
issuable upon exercise hereof, the Exercise Price in effect immediately before
the combination shall be proportionately increased. Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(C) Adjustment in the Number of Shares for Subdivisions or Combinations.
-------------------------------------------------------------------
Whenever the Exercise Price is adjusted pursuant to Sections 1.05(A) or 1.05(B),
the number of shares of the class of securities issuable upon exercise hereof
also shall be adjusted by multiplying the number of shares subject to this
Warrant immediately prior to the adjustment of the Exercise Price by a fraction
(x) the numerator of which is the Exercise Price immediately prior to the
adjustment and (y) the denominator of which is the adjusted Exercise Price.
(D) Adjustments for Certain Dividends and Distributions. In the event
---------------------------------------------------
that at any time or from time to time after the Original Issue Date the Company
shall make or issue, or fix a record date for the determination of holders of
the class of securities issuable upon exercise hereof who are entitled to
receive a dividend or other distribution payable in securities of the Company,
then and in each such event, unless such dividend or distribution results in an
adjustment of the Exercise Price pursuant to Section 1.05(B), provision shall be
made so that the Registered Holder of this Warrant shall receive upon exercise
hereof in addition to the securities receivable hereupon, the amount of
securities of the Company that he would have received had this Warrant been
exercised on the date of such event and had he thereafter, during the period
from the date of such event to and including the exercise date, retained such
securities receivable by him as aforesaid during such period, giving application
during such period to all adjustments called for herein.
(E) Adjustment for Reclassification, Exchange, or Substitution. In the
----------------------------------------------------------
event that at any time or from time to time after the Original Issue Date, the
class of securities issuable upon the exercise of this Warrant 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 or stock dividend provided for above, or a
merger, consolidation, or sale of assets provided for below), then and in each
such event the Registered Holder of this Warrant shall have the right thereafter
to exercise this Warrant for the kind and amount of shares of stock and other
securities and property receivable upon such
-3-
reorganization, reclassification, or other change, by holders of the number of
shares of the class of securities into which such Warrant might have been
exercisable for immediately prior to such reorganization, reclassification, or
change, all subject to further adjustment as provided herein.
(F) Adjustment for Merger, Consolidation or Sale of Assets. Subject to
------------------------------------------------------
Section 1.05(G) below, in the event that at any time or from time to time after
the Original Issue Date, the Company shall merge or consolidate with or into
another entity or sell all or substantially all of its assets, this Warrant
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 the
class of securities of the Company deliverable upon exercise of this Warrant
would have been entitled upon such consolidation, merger or sale; and, in such
case, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions set forth in this
Section 1.05 with respect to the rights and interest thereafter of the
Registered Holder of this Warrant, to the end that the provisions set forth in
this Section 1.05 (including provisions with respect to changes in and other
adjustments of the Exercise Price) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the exercise of this Warrant.
(G) Effect of Certain Transactions. If the Company is a party to a merger
------------------------------
or reorganization with one or more other corporations or if the Company
consolidates with or into one or more other corporations, and as a result of the
consolidation, merger or reorganization, the stockholders of the Company hold
less than 50% of the equity in the surviving or resulting company, or if the
Company is liquidated or sells or otherwise disposes of substantially all its
assets to another corporation, or in the event of a sale of all or substantially
all of its capital stock (each hereinafter referred to as a "Transaction"), in
any case while this Warrant remains outstanding, this Warrant may be cancelled
by the Board of Directors as of the effective date of such Transaction, provided
that notice of such cancellation shall be given to the registered holder and the
registered holder shall have the right to exercise this Warrant during the
thirty (30) day period preceding the effective date of such Transaction. In the
event that this Warrant is not cancelled by the Board of Directors as set forth
above, after the effective date of such Transaction, this Warrant shall remain
outstanding and shall be exercisable pursuant to the terms of this Warrant.
(H) No Impairment. The Company shall not, by amendment of its Charter or
-------------
By-Laws 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 shall at all times in good
faith assist in the carrying out of all the provisions of this Section 1.05 and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Registered Holder of this Warrant against impairment.
(I) Notice of Adjustment of Number of Shares. Upon any adjustment,
----------------------------------------
readjustment or other change relating to the number of shares purchasable upon
exercise of this Warrant or to the Exercise Price, then, and in each such case,
the Company at its expense shall
-4-
give written notice thereof, in hand or by first class mail, postage prepaid,
addressed to the Registered Holder at the address of such Registered Holder as
shown on the books of the Company, which notice shall state the Exercise Price
resulting from such adjustment and the increase or decrease in the number of
shares (or other denominations of securities) purchasable at the Exercise Price
upon the exercise of this Warrant setting forth in reasonable detail the method
of calculation and the facts upon which such calculation is based.
(J) Notice. In case at any time: (1) the Company shall pay any dividend
------
or make any distribution (other than regular cash dividends from earnings or
earned surplus paid at an established rate) to the holders of the class of
securities issuable upon exercise of this Warrant; (2) the Company shall offer
for subscription pro rata to the holders of the class of securities issuable
upon exercise of this Warrant any additional shares of stock of any class or
other rights; (3) there shall be any capital reorganization or reclassification
of the capital stock of the Company, or consolidation or merger of the Company
with or sale of all or substantially all of its assets to another corporation;
or (4) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company; then, in any one or more of such cases, the Company
shall give written notice, in hand or by first class mail, postage prepaid,
addressed to the Registered Holder at the address of such Registered Holder as
shown on the books of the Company of the date on which (a) the books of the
Company shall close or a record date shall be fixed for determining the
shareholders entitled to such dividend, distribution or subscription rights, or
(b) such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up shall take place, as the case may be.
Such notice shall also provide reasonable details of the proposed transaction
and specify the date as of which the holders of record of the class of
securities issuable upon exercise of this Warrant shall participate in such
dividend, distribution or subscription rights, or shall be entitled to exchange
their securities for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Such written notice shall be
given at least 20 days prior to the action in question and not less than 20 days
prior to the record date or the date on which the Company's transfer books are
closed in respect thereto.
(K) Voting Rights. This Warrant shall not entitle the Registered Holder
-------------
to any voting rights or any other rights as a stockholder of the Company but
upon presentation of this Warrant with the subscription form annexed duly
executed and the tender of payment of the Exercise Price at the office of the
Company pursuant to the provisions of this Warrant the Registered Holder shall
forthwith be deemed a stockholder of the Company in respect of the securities
for which the Registered Holder has so subscribed and paid.
(L) No Change Necessary. The form of this Warrant need not be changed
-------------------
because of any adjustment in the Exercise Price or in the number of shares
issuable upon its exercise. A Warrant issued after any adjustment on any
partial exercise or upon replacement may continue to express the same Exercise
Price and the same number of shares (appropriately reduced in the case of
partial exercise) as are stated on this Warrant as initially issued, and that
Exercise Price and that number of shares shall be considered to have been so
changed as of the close of business on the date of adjustment.
-5-
2. Covenant of the Company. All securities which may be issued upon the
-----------------------
exercise of the rights represented by this Warrant shall, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issue thereof.
3. Fractional Shares. No fractional shares or scrip representing fractional
-----------------
shares shall be issued upon exercise of this Warrant. If, upon exercise of this
Warrant as an entirety, the Registered Holder would be entitled to received a
fractional share, then the Company shall pay in cash to such Registered Holder
an amount equal to such fractional share multiplied by the fair market value of
one share of the class of securities issuable upon exercise of this Warrant (as
determined by the Board of Directors of the Company) on the date of such
exercise.
4. Substitution. In the case this Warrant shall be mutilated, lost, stolen or
------------
destroyed, the Company will issue a new Warrant of like tenor and denomination
and deliver the same (a) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (b) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of evidence satisfactory to the Company of the
loss, theft, or destruction of such Warrant (including a reasonably detailed
affidavit with respect to the circumstances of any loss, theft or destruction),
and of indemnity (or, in the case of the initial Registered Holder or any other
institutional holder, an indemnity agreement) satisfactory to the Company.
5. Transfer Restrictions. This Warrant shall not be sold, transferred, pledged
---------------------
or hypothecated unless the proposed disposition is the subject of a currently
effective registration statement under the Securities Act of 1933, as amended,
or unless the Company has received an opinion of counsel reasonably satisfactory
in form and scope to the Company that such registration is not required.
6. Remedies. The Company stipulates that the remedies at law of the Registered
--------
Holder of this Warrant 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 are not and will not be adequate, and that such terms may be
specifically enforced by a decree for that specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
7. Taxes. The Company shall pay any taxes or other charges that may be imposed
-----
in respect of the issuance and delivery of the Warrant or any securities or
other property upon exercise hereof.
8. Governing Law. This Warrant and its provisions and the rights and
-------------
obligations of the parties hereunder shall be governed by, and construed and
enforced in accordance with, the substantive laws of The Commonwealth of
Massachusetts, without regard to its principles of conflicts of laws.
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9. Miscellaneous. This Warrant and any term hereof may be changed, waived,
-------------
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. The invalidity or unenforceability of any provision hereof shall in no
way affect the validity or enforceability of any other provision.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
President thereunto duly authorized under seal this ______ day of _________,
1995.
ATTEST: LIGHTBRIDGE, INC.
By:
- --------------------------------------- -----------------------------
Assistant Secretary Its President
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