Common Stock Purchase Warrant with Marshall Blonstein
COMMON STOCK PURCHASE WARRANT
200,000 Common Shares
DCC Compact Classics, Inc.
(a Colorado corporation)
Dated: April 15,1994
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND CANNOT BE SOLD, TRANSFERRED, DISPOSED
OF, PLEDGED OR HYPOTHECATED IN ANY MANNER WHATSOEVER UNLESS REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR, IF IN THE OPINION OF THE COMPANY COUNSEL
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS IS IN FACT APPLICABLE TO SAID
SECURITIES.
THIS CERTIFIES THAT MARSHALL BLONSTEIN (hereinafter called the "Holder")
is entitled to purchase from DCC Compact Classics, Inc., a Colorado corporation
(hereinafter called the "Company"), during a period hereinafter specified,
200,000 shares (the shares of Common Stock underlying the Warrants being
hereinafter referred to, in part or in whole, as the "Shares") of the Company's
common stock, par value $0.001 per share ("Com non Stock"), at an exercise price
of $0.25 per Share (the "Exercise Price"). The right to purchase the Shares
under this Warrant is exercisable, in part or in whole, by the Holder hereof
commencing on the date hereof and shall expire on April 15, 1999, and the Holder
shall have no further right to purchase any of such Shares, effective 5:00 p.m.
on April 15, 1999.
1. EXERCISE RIGHTS. The right to purchase the Shares under this Warrant
is exercisable in part or in whole commencing on the date hereof.
2. EXERCISE OF WARRANTS. The rights represented by this Warrant may be
exercised at any time within the period above specified, in whole or in part, by
(i) the surrender of this Warrant (with the purchase form at the end hereof
properly executed) at the principal executive office of the Company (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); and (ii) payment to the Company of the Exercise Price then in effect
for the number of Shares specified in the above-mentioned purchase form. This
Warrant shall be deemed to have been exercised, in whole or in part to the
extent specified, immediately prior to the close of business on the date this
Warrant is surrendered any payment is made in accordance with the foregoing
provisions of this Warrant, and the person or persons in whose name or names the
certificates for Shares shall be issuable upon such exercise shall become the
holder or holders of record of such Shares at that time and date. The
certificates for the Shares so purchased shall be delivered to the Holder within
a reasonable time after the rights represented by this Warrant shall have been
so exercised.
3. RESTRICTED SECURITIES. Unless the Shares shall have been registered
with the Securities and Exchange Commission, as hereinafter provided, all Shares
acquired upon the exercise of the Warrant shall be "restricted Securities" as
that term is defined in Rule 144 promulgated under the Securities Act of 1933,
as amended (the "Act"). In such event, the certificate(s) representing the
Shares shall bear an appropriate legend restricting their transfer and such
Shares cannot be sold, transferred, assigned or otherwise hypothecated without
registration under the Act or unless a valid exemption from registration is then
available under applicable federal and state securities laws and the Company has
been furnished with an opinion of counsel satisfactorily in for and substance to
it that such registration is not required.
4. TRANSFER OF WARRANT. This Warrant may be sold, transferred, assigned,
or otherwise disposed of at any time by the Holder providing that the Company
shall be furnished with an opinion of counsel in form and substance
satisfactorily to it that such sale, transfer, assignment or other disposition
does not require registration under the Act and a valid exemption is available
under applicable federal and state securities laws. Upon any such disposition,
the right to accelerate the lapsing of the Company's right to repurchase through
obtaining the aforementioned financing's shall be effected by the Holder (i)
completing and executing the form of assignment, attached hereto, and (ii)
surrendering this Warrant with such duly completed and executed assignment form
for cancellation, accompanied by funds sufficient to pay any transfer tax, at
the principal executive office of the Company, accompanied by a written
representation from each such assignee addressed to the Company stating that
such assignee agrees to be bound by the terms of this Warrant; whereupon the
Company shall issue, in the name or names specified by the Holder (including the
Holder) a new Warrant or Warrants of like tenor with appropriate legends
restricting transfer under the Act and reciting the Company s right to
repurchase and representing in the aggregate rights to purchase the same number
of Shares as are purchasable hereunder.
5. REGISTRATION RIGHTS. Through April 15, 1999, the Holder shall have
piggyback registration rights for all Shares underlying this Warrant in
connection with any registration statement filed through such dates by the
Company to register securities of the Company for sale to the public (except a
registration statement filed in connection with an exchange offering or a
registration statement filed to register securities in connection with a Company
employee benefit plan). The Company shall give prompt written notice to Holder
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of any such proposed registration, and Holder shall inform the Company, within
20 days after receipt of such notice, if it wished to register any of its Shares
in the Company's registration statement. If Holder does not so inform the
Company, the Company shall have the right to assume that Holder does not wish to
register any of its Shares in the Company's registration statement. The Company
shall pay all costs and expenses of such registration, excluding fees and
expenses of counsel for Holder and underwriting discounts, commissions or
expenses of Holder with respect to the sale of its Shares. The Company shall
also register Holder's Shares in one (1) jurisdiction; provided, however, that
the Company shall not be required to qualify to do business in such jurisdiction
as a condition to the registration of the sale of the Shares in such
jurisdiction or commit to a general consent to service of process within the
jurisdiction. Subject to the right of Holder to sell its Shares under Rule 144
(as set forth below), Holder agrees to restrict the public sale of its Shares
under any such registration (which agreement shall not affect any other shares
of Common Stock or other securities of the Company which Holder may own) to the
extent requested by an underwriter of the Company's offering of securities;
provided, however, that Holder shall no be required to lock up its Shares for a
period exceeding six months from the effective date of the Company's
registration statement. Notwithstanding anything herein to the contrary, Holder
may sell shares of the Common Stock which it owns (including the shares as to
which it has registration rights) in the public marketplace pursuant to Rule 144
under the Act, to the extent that the provisions of the rule are satisfied. The
Company shall use its best efforts to make any such registration effective.
In the case of each registration pursuant to this Section 6, the Company
(i) will keep Holder advised in writing as to the initiation and progress of
proceedings for such registration and as to the completion thereof, and (ii) at
its expense, subject to the limitations as provided above, will keep such
registration effective for a period of at least nine months from the latter of
the initial effective date of the registration or the underwriter's restrictive
lock up period. Holder agrees to provide such information to the Company as is
reasonably requested by the Company which the Company believes is necessary in
order to allow the Company to register Holder's Shares.
6. STATUS OF SHARES. The Company covenants and agrees that all Shares
purchased hereunder will, upon issuance, be duly and validly issued, fully paid
and nonassessable and no personal liability will attach to the Holder thereof.
The Company further covenants and agrees that during the period within which
this Warrant may be exercised, the Company will at all times have authorized and
reserved a sufficient number of shares of Common Stock to provide for the
issuance of this Warrant.
7. NO VOTING RIGHTS. This Warrant shall not entitle the Holder to any
voting rights or other rights as a stockholder of the Company, either at law or
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in equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.
8. ADJUSTMENTS. The initial per share exercise price of $0.25 per share
and/or the number of Shares issuable upon exercise of each Warrant shall be
subject to adjustment from time to time as follows:
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock, or (iv) issue by reclassification of its shares of Common Stock of
the Company (including any such reclassification in connection with a
consolidation or merger in which the Company is the surviving corporation), the
number of Shares purchasable upon exercise of each Warrant immediately prior
thereto shall be adjusted so that the holder of each Warrant shall be entitled
to receive the kind and number of Shares or other securities of the Company
which he would have owned or have been entitled to receive after the happening
of any of the events described above, had such Warrants been exercised
immediately prior to the happening of such event or any record date with respect
thereto. An adjustment made pursuant to this paragraph (a) shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) In case the Company shall issue rights, options or warrants to
all holders of its outstanding Common Stock, without any charge to such holders,
entitling them (for a period within 45 days after the record date mentioned
below) to subscribe for or purchase shares of Common Stock at a price per share
which is lower at the record date mentioned below than either the Per Share
Exercise Price in effect immediately prior thereto or the then current market
price per share of Common Stock (as defined in paragraph (i) below) the number
of Shares thereafter purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of Shares theretofore purchasable upon
exercise of each Warrant by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding on the date of issuance of such
rights, options or warrants plus the number of additional shares of Common Stock
offered for subscription or purchase, and of which the denominator shall be the
number of shares of Common Stock outstanding on the date of issuance of such
rights, option or warrants plus the number of shares which the aggregated
offering price of the total number of shares of Common Stock so offered would
purchase at the higher of the Per Share Exercise Price in effect immediately
prior thereto or the current market price per share of Common Stock at such
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record date. Such adjustment shall be made whenever such rights, options or
warrants are issued, and shall become effective immediately after the record
date for the determination or stockholders entitled to receive such rights,
options or warrants.
(c) In case the Company shall distribute to all holders of its
shares of Common Stock (including any such distribution made in connection with
a consolidation or merger in which the Company is the continuing corporation)
evidences of its indebtedness or assets (excluding cash dividends or
distributions payable out of consolidated earnings or earned surplus and
dividends or distributions or distributions referred to in paragraph (b) above
or in the paragraph immediately following this paragraph) or rights, options or
warrants, or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock (excluding those referred to in
paragraph (b) above), then in each case the number of Shares thereafter
purchasable upon the exercise of each Warrant shall be determined by multiplying
the number of Shares theretofore purchasable upon the exercise of each warrant
by a fraction, of which the numerator shall be the then current market price per
share of Common Stock on the date of such distribution, and of which the
denominator shall be the then currently market price per share of Common Stock
less the fair value (as determined by the Board of Directors of the Company,
whose determination shall be conclusive) of the portion of the assets or
evidences of indebtedness so distributed or of such subscription rights, options
or warrants, or such convertible or exchangeable securities applicable to one
share of Common Stock. Such adjustment shall be made whenever any such
distribution is made, and shall become effective on the date of distribution
retroactive to the record date for the determination of stockholders entitled to
receive such distribution.
In the event the Company shall distribute to all holders of its
shares of Common Stock, stock of a subsidiary of securities convertible into or
exercisable for such stock, then in lieu of an adjustment in the number of
Shares purchasable upon the exercise of each Warrant, the holder of each
Warrant, upon the exercise thereof at any time after such distribution, shall be
entitled to receive from the Company, such subsidiary or both, as the Company
shall determine, the stock or other securities to which such holder would have
been entitled if such holder had exercised such Warrant immediately prior
thereto, all subject to further adjustment as provided in this paragraph (c);
provided, however, that no adjustment in respect of dividends or interest on
such stock or other securities shall be made during the term of a Warrant or
upon the exercise of a Warrant.
(d) In case the Company shall issue shares of its Common Stock, or
rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock (excluding shares
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issued (i) in any of the transactions described in paragraphs (a), (b) and (c)
above, or (ii) to stockholders of any corporation is acquired by, merged into or
becomes part of the Company in an arm's length transaction) for a consideration
per share less than either the Per Share Exercise Price in effect immediately
prior thereto or the current market price per share on the date the Company
fixes the offering price of such additional shares, then in each case the number
of Shares thereafter purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of Shares theretofore purchasable by a
fraction, of which the numerator shall be the number of Shares of Common Stock
outstanding immediately after the issuance of such additional shares, and of
which the denominator shall be the total number of shares of Common Stock
outstanding immediately prior to the issuance of such additional shares plus the
number of shares of Common Stock which the aggregate consideration received
(determined as provided in paragraph (g) below) for the issuance of such
additional shares would purchase at the higher of the Per Share Exercise Price
in effect immediately prior thereto or such current market price per share of
Common Stock. Such adjustment shall be made successively whenever such issuance
is made.
(e) In case the Company shall issue any securities convertible into
or exchangeable for its Common Stock (excluding securities issued in transaction
described above) for a consideration per share of Common Stock initially
deliverable upon conversion or exchange of such securities (determined as
provided in paragraph (g) below) less than either the Per Share Exercise Price
or the current market price per share, in either case, as in effect immediately
prior to the issuance of such securities, then in each case the number of Shares
thereafter purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of Shares theretofore purchasable by a fraction, of which
the numerator shall be the number of Shares of Common Stock out standing
immediately prior to such issuance plus the maximum number of shares of Common
Stock of the Company deliverable upon conversion or exchange price or rate, and
of which the denominator shall be the number of shares of Common Stock which the
aggregate consideration received (determined as provided in paragraph (g) below)
for such securities would purchase at the higher on such Per Share Exercise
Price or such current market price per share of Common Stock. Such adjustment
shall be made successively whenever such issuance is made.
(f) In case the Company shall issue shares of its Common Stock under
a dividend reinvestment plan at a price per share less than the current market
price per share of the Common Stock, then in each case the number of Shares
thereafter purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of Shares theretofore purchasable by a fraction, of which
the numerator shall be the number of Shares of Common Stock outstanding
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immediately after the issuance of such additional shares, and of which the
denominator shall be the total number of shares of Common Stock outstanding
immediately prior to the issuance of such additional shares plus the number of
shares of Common Stock which the aggregate consideration for the total number of
shares issued under the dividend reinvestment plan would purchase at such
current market price. Such adjustment shall be made successively whenever such
an issuance is made.
(g) For purposes of any computation respecting consideration
received pursuant to paragraphs (d), (e) and (f) above, the following shall
apply:
(i) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that in
no cash shall any deduction be made for any commission, discounts or other
expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith;
(ii) in the case of this issuance of shares of Common Stock for
a consideration in whole or in part other than cash (including, to the
extent permitted by applicable law, property and services rendered), the
consideration other than cash shall be deemed to be the fair market value
thereof as determined in good faith by the Board of Directors of the
Company (irrespective of the accounting treatment thereof), whose
determination shall be conclusive; and
(iii) in the case of the issuance of securities convertible into
or exchangeable for shares of Common Stock, the aggregate consideration
received therefor shall be deemed to be the consideration received by the
Company for the issuance of such securities plus the additional minimum
consideration, if any, to be received by the Company upon the conversion
or exchange thereof (the consideration in each case to be determined in
the same manner as provided in clauses (i) and (ii) of this paragraph
(g)).
(h) For the purpose of any computation under paragraphs (b), (c),
(d), (e) and (f)of this Section 8, the current market price per share of Common
Stock at any date shall be the average of the daily closing prices for 20
consecutive trading days commencing 30 trading days before the date of such
computation. The closing price for each day shall be the last such reported
sales price regular way or, in case no such reported sale takes place on such
day, the average of the closing bid and asked prices regular way for such day,
in each case on the principal national securities exchange on which the shares
of Com non Stock are listed or admitted to trading or, if not listed or admitted
to trading, the last sales price regular way for the Common Stock or closing
price published in the National Association of Securities Dealers Automated
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Quotation System ("NASDAQ"), or if such last sales price is not so published by
NASDAQ or if no such sale takes place on such day, the average of the closing
bid and asked prices of the Common Stock as reported by NASDAQ or any comparable
system, the average of the closing bid and asked prices as furnished by two
members of the National Association of Securities Dealers, Inc. selected from
time to time by the Company for that purpose.
(i) No adjustment in the number of Shares purchasable hereunder
shall be required unless such adjustment would require an increase or decrease
of at least on percent (1%) in the number of Shares purchasable upon the
exercise of each Warrant; provided, however, that any adjustments which by
reason of this paragraph (i) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
shall be made to the nearest one-thousandth of a share.
(j) Whenever the number of Shares purchasable upon the exercise of
each Warrant is adjusted, as herein provided, the Per Share Exercise Price
payable upon the exercise of each Warrant shall be adjusted by multiplying such
Per Share Exercise Price immediately prior to such adjustment by a fraction, of
which the numerator shall be the number of Shares purchasable upon the exercise
of each Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of Share purchasable immediately thereafter.
Notwithstanding the foregoing, the Per Share Exercise Price shall not be less
than the par value per Share.
(k) No adjustment in the number of shares purchasable upon the
exercise of each Warrant need be made under the paragraphs (b) and (c) if the
Company issues or distributes to each holder of Warrants the rights, options,
warrants or convertible or exchangeable securities, or evidences of indebtedness
or assets referred to in those paragraphs which each Holder of Warrants would
have been entitled to received had the Warrants been exercised prior to the
happening of such event or the record date with resect thereto. No adjustment
need be made for a change in the par value of the Shares, provided that the
Company shall not increase the par value per share of Common Stock so long as
this Certificate is outstanding.
(l) For the purpose of this Section 8, the term "shares of Common
Stock" shall mean (i) the class of stock designated as the Common Stock of the
Company at the date of this Agreement, or (ii) any other class of stock
resulting from successive changes or reclassification of such shares consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value. In the event that at any time, as a result of an
adjustment made pursuant to paragraph (a) above, the holders shall become
entitled to purchase any securities of the Company other than shares of common
stock, thereafter, the number of such other shares so purchasable upon exercise
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of each Warrant and the Warrant Price of such shares shall be subject to
adjustment from time to time in a manner and with respect to the Shares
contained in paragraphs (a) through (j), inclusive, above, and the provisions of
this Certificate with respect to the Shares shall apply on like terms to any
such other securities.
(m) Upon the expiration of any rights, options, warrants or
conversion or exchange privileges, if any thereof shall not have been exercised,
the Warrant price and the number of shares of Common Stock purchasable upon the
exercise of each Warrant shall, upon such expiration, be readjusted and shall
thereafter be such as it would have been had it been originally adjusted (or had
the original adjustment not been require, as the case may be) as if (A) the only
shares of Common Stock so issued were the shares of Common Stock, if any,
actually issued or sold upon the exercise rights, options, warrants or
conversion or exchange rights, and (B) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually received by the
Company for the issuance, sale or grant of all such rights, options, warrants or
conversion or exchange rights whether or not exercised; provided, further, that
no such readjustment shall have the effect of increasing the Warrant Price or
decreasing the number of share of Common Stock purchasable upon the exercise of
each Warrant by an amount in excess of the amount of the adjustment initially
made in resect to the issuance, sale or grant of such rights, options, warrants
or conversion or exchange rights.
(n) Whenever the number of Shares purchasable upon the exercise of
each Warrant or the Per Share Exercise Price of such Shares is adjusted, as
herein provided, the Company shall promptly mail by first class, postage
prepaid, to each holder notice of such adjustment or adjustments and a
certificate (a "Certificate of Adjustment") of the Chief Financial Officer of
the Company setting forth (i) the number of Shares purchasable upon the exercise
of each Warrant and the Per Share Exercise Price of such Shares after such
adjustment, (ii) a brief statement of the facts requiring such adjustment, and
(iii) the computation by which such adjustment was made. The Certificate of
Adjustment shall be conclusive evidence of the correctness of such adjustment
unless within thirty (30) days after receipt of such notice a holder requests
that a Certificate of Adjustment be rendered by a firm of independent public
accountants selected by the Board of Directors of the Company (who may be the
regular accountants employed by the Company), in which case the Company shall
cause such a Certificate of Adjustment to be surrendered and promptly mailed to
each holder. Any Certificate of Adjustment of such accountants shall be
conclusive evidence of the correctness of the adjustment as set forth therein.
(o) Except as provided in this Section 8, no adjustment in respect
of any dividends shall be made during the term of a Warrant or upon the exercise
of a Warrant.
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9. GOVERNING LAWS. This Warrant shall be governed by and in accordance
with the laws of the State of Florida and may not be amended other than by
written instrument executed by the parties hereto.
IN WITNESS WHEREOF, DCC Compact Classics, Inc. has caused this Warrant to
be signed by its duly authorized officer and this Warrant to be dated as of
April 15, 1994.
DCC COMPACT CLASSICS, INC.
By:/s/MILTON H. BARBAROSH, PRESIDENT
---------------------------------
Authorized Officer
Attest: ACCEPTED AND AGREED:
1-26-95 By:/s/MARSHALL BLONSTEIN
- ---------------------------- --------------------------------
Secretary Marshall Blonstein
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