VALUESTAR CORPORATION
EXHIBIT 4.13
Warrant #98B-__
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER SET FORTH HEREIN AND IN THAT CERTAIN SUBSCRIPTION
AGREEMENT THEREFOR DATED MAY 12, 1998 BETWEEN THE COMPANY AND THE ORIGINAL
HOLDER HEREOF.
VALUESTAR CORPORATION
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, VALUESTAR CORPORATION, a
Colorado corporation (the "Company"), hereby grants to _____________ ("Holder")
the right to purchase from the Company up to _______________ (_________) shares
of the Common Stock of the Company (the "Warrant Shares"), subject to the
following terms and conditions:
1. Series. This Warrant is one of a duly authorized series of warrants
of the Company (which are identical except for the variations necessary to
express the identification numbers, names of the holder, number of common shares
issuable upon exercise thereof and warrant issue dates) designated as its "1998
Series B Warrants" issued pursuant to and subject to that certain Subscription
Agreement of even date herewith.
2. Term. This Warrant may be exercised in whole or in part at any time
during the period from the date of issuance of this Warrant until 5:00 p.m.,
California time, on April 30, 2003 (the "Exercise Period").
3. Purchase Price. The purchase price for each Warrant Share
purchasable hereunder shall be Two United States Dollars (U.S. $2.00) (the
"Warrant Exercise Price") subject to adjustment for stock splits, combinations
and the like.
4. Exercise of Warrant. The purchase rights represented by this Warrant
may be exercised by the Holder, in whole or in part, at any time and from time
to time before the end of the Exercise Period by surrender of this Warrant at
the principal office of the Company in Alameda, California (or such other office
or agency of the Company as may be designated by notice in writing to the Holder
at the address of the Holder appearing on the books of the Company), together
with the Notice of Exercise annexed hereto duly completed and executed on behalf
of the Holder accompanied by payment in full of the amount of the aggregate
Warrant Exercise Price in immediately available funds in United States Dollars.
Certificates for shares purchased hereunder shall be delivered to the Holder
within ten (10) business days after the date on which this Warrant shall have
been exercised as aforesaid, but Holder shall be deemed the record owner of such
Warrant Shares as of and from the close of business on the date on which this
Warrant shall be surrendered.
5. Fractional Interest. The Company shall not be required to issue any
fractional shares on the exercise of this Warrant.
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6. Redemption of Warrants. The Company may elect on one occasion, by
written notice as provided herein (the "Company Notice"), to redeem all
outstanding Warrants including this Warrant, in whole but not in part, on any
date (the "Redemption Date") fixed by the Company at a price of $.01 per
outstanding Warrant Share (the "Redemption Price") following such time as the
Closing Bid Price (as defined below) of the Company's Common Stock for the
twenty (20) consecutive Trading Days (as defined below) equals or exceeds two
hundred twenty five percent (225%) of the Warrant Exercise Price; provided,
however, that this Warrant may be exercised at any time prior to 5:00 p.m.,
California time, on the business day immediately preceding the Redemption Date.
No notice shall be effective, unless otherwise agreed by Holder, unless the
Warrant Shares issuable are duly registered under the Securities Act of 1933, as
amended. Holder shall, in any event, cooperate with the Company to register such
Warrant Shares as the Company may reasonably request.
For purposes hereof, (i) the term "Trading Day" shall mean any day on
which securities are traded on the applicable securities exchange or in the
applicable securities market; and (ii) the term "Closing Bid Price" in respect
of a Trading Day shall mean the reported last closing bid price, on the
principal national securities exchange on which the Common Stock of the Company
is listed or admitted to trading or, if not listed or admitted to trading on any
national securities exchange, on the Nasdaq Stock Market or, if not admitted to
trading or quoted on the Nasdaq Stock Market, the closing bid price in the
over-the-counter market as furnished by any quotation medium or any member firm
of a national securities exchange or the Nasdaq Stock Market selected from time
to time by the Company for that purpose.
The Company shall provide at least 10 days written notice to the Holder
("Company Notice") prior to the Redemption Date specified in such written
notice.
7. Warrant Confers No Rights of Shareholder. Holder shall not have any
rights as a shareholder of the Company with regard to the Warrant Shares prior
to actual exercise resulting in the purchase of the Warrant Shares.
8. Investment Representation. Neither this Warrant nor the Warrant
Shares issuable upon the exercise of this Warrant have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or under any
applicable state securities laws. Holder acknowledges by acceptance of this
Warrant that (a) it has acquired this Warrant for investment and not with a view
toward distribution; (b) it has a pre-existing personal or business relationship
with the Company, or its executive officers, or by reason of its business or
financial experience it has the capacity to protect its own interests in
connection with the transaction; and (c) except as so notified to the Company in
writing, it is an accredited investor as that term is defined in Regulation D
promulgated under the Securities Act. Holder agrees that any Warrant Shares
issuable upon exercise of this Warrant will be acquired for investment and not
with a view toward distribution; and acknowledges that to the extent such
Warrant Shares will not be registered under the Securities Act and applicable
state securities laws, that such Warrant Shares may have to be held indefinitely
unless they are subsequently registered or qualified under the Securities Act
and applicable state securities laws; or, based on an opinion of counsel
reasonably satisfactory to the Company, an exemption from such registration and
qualification is available. Holder, by acceptance hereof, consents to the
placement of the following restrictive legends, or similar legends, on each
certificate to be issued to Holder by the Company in connection with the
issuance of such Warrant Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER SET FORTH IN THAT CERTAIN
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SUBSCRIPTION AGREEMENT THEREFOR DATED MAY 12, 1998 BETWEEN THE
CORPORATION AND THE ORIGINAL HOLDER HEREOF.
9. Reservation of Shares. The Company agrees at all times during the
Exercise Period to have authorized and reserved, for the exclusive purpose of
issuance and delivery upon exercise of this Warrant, a sufficient number of
shares of its Common Stock to provide for the exercise of the rights represented
hereby.
10. Adjustment for Re-Classification of Capital Stock. If the Company
at any time during the Exercise Period shall, by subdivision, combination or
re-classification of securities, change any of the securities to which purchase
rights under this Warrant exist under the same or different number of securities
of any class or classes, this Warrant shall thereafter entitle the Holder to
acquire such number and kind of securities as would have been issuable as a
result of such change with respect to the Warrant Shares immediately prior to
such subdivision, combination or re-classification. If shares of the Company's
common stock are subdivided into a greater number of shares of common stock, the
purchase price for the Warrant Shares upon exercise of this Warrant shall be
proportionately reduced and the Warrant Shares shall be proportionately
increased; and conversely, if shares of the Company's common stock are combined
into a smaller number of common stock shares, the price shall be proportionately
increased, and the Warrant Shares shall be proportionately decreased.
11. Public Offering Lock-Up. In connection with any public registration
of this Company's securities, the Holder (and any transferee of Holder) agrees,
upon the request of the Company or the underwriter(s) managing such underwritten
offering of the Company's securities, not to sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise dispose of this Warrant, any
of the shares of Common Stock issuable upon exercise of this Warrant or any
other securities of the Company heretofore or hereafter acquired by Holder
(other than those included in the registration) without the prior written
consent of the Company and such underwriter(s), as the case may be, for a period
of time not to exceed one hundred eighty (180) days from the effective date of
the registration. Upon request by the Company, Holder (and any transferee of
Holder) agrees to enter into any further agreement in writing in a form
reasonably satisfactory to the Company and such underwriter(s). The Company may
impose stop-transfer instructions with respect to the securities subject to the
foregoing restrictions until the end of said 180-day period. Any shares issued
upon exercise of this Warrant shall bear an appropriate legend referencing this
lock-up provision.
12. Registration Rights. (a) As promptly as possible following the completion of
the audited statements for the fiscal year ended June 30, 1998 and the filing of
the Form 10-KSB (due September 30, 1998), the Company shall use its best efforts
to file a registration statement to include all of the Warrant Shares if the
Warrant Shares can be registered within the same registration statement selected
by the Company for the Conversion Shares related to the Note to which this
Warrant relates. The Company's intention is to file with the SEC to register the
Warrant Shares pursuant to Form S-3, Form SB-2 or other appropriate form and to
use its best efforts to keep such registration statement effective for a minimum
period of nine months when, if and after it becomes effective. The Warrant
Shares registered under such Registration Statement shall be registered at the
Company's sole cost and expense provided that the Noteholder enters into such
agreements, including indemnification provisions as outlined below, as the
Company may reasonably request. The Company will not be required to register any
Warrant Shares issued prior to an effective registration. Other than provided in
this paragraph and below, the Company shall have no obligation to amend such
registration or file a further registration on the Warrant Shares.
(b) If, at any time during the Exercise Period, the Company proposes to
prepare and file any registration statements covering its Common Stock (in
either case, other than in connection with a merger or acquisition, pursuant to
Form S-8 or any successor form, or pursuant to any other form or type of
registration in which Registrable Securities (as defined below) cannot be
appropriately included) (collectively, the "Registration Statements"), it will
give written notice as provided herein at least thirty (30) days prior to the
filing of each such Registration Statement to the Holders of the Warrants and/or
Warrant Shares of its intention to do so. If the Holders of the Warrants and/or
Warrant Shares notify the Company within twenty (20) days after receipt of any
such notice of its or their desire to include the shares of Common Stock
issuable upon exercise of the Warrant or the Warrant Shares (collectively, the
"Registrable Securities") in such proposed registration statement, the Company
shall afford the Holders of the Warrant and/or Warrant Shares the opportunity to
have any such Registrable Securities registered
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under such registration statement at the Company's sole cost and expense
provided that the Holder enters into such agreements, including indemnification
provisions as outlined below as the Company or its underwriters may reasonably
request.
(c) Notwithstanding the provisions hereof, the Company shall have the
right at any time after it shall have given written notice pursuant hereto
(irrespective of whether a written request for inclusion of any such securities
shall have been made) to elect not to file any such proposed registration
statement, or to withdraw the same after the filing but prior to the effective
date thereof.
(d) Notwithstanding any other provision of this Section, if the
underwriter managing such registration notifies the Holders in writing that
market or economic conditions limit the amount of securities which may
reasonably be expected to be sold, the Holders of such Registrable Securities
will be allowed to register only those Registrable Securities permitted by such
underwriter pro rata based on the number of shares of Registrable Securities
held by such Holders, respectively. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration.
(e) Each Holder of Warrants and Warrant Shares to be sold pursuant to
any Registration Statement (each, a "Distributing Holder") shall severally, and
not jointly, indemnify and hold harmless the Company, its officers and
directors, each underwriter and each person, if any, who controls the Company
and such underwriter, against any loss, claim, damage, expense or liability,
joint or several, as incurred, to which any of them may become subject under the
Securities Act or any other statute or at common law, in so far as such loss,
claim, damage, expense or liability (or actions in respect thereof) arises out
of or is based upon any untrue statement or alleged untrue statement of any
material fact contained in any such Registration Statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Distributing Holder specifically for use therein. Such Distributing Holder shall
reimburse the Company, such underwriter and each such officer, director or
controlling person for any legal or other expenses reasonably incurred by any of
them in connection with investigating or defending any such liability, as
incurred. Notwithstanding the foregoing, such indemnity with respect to such
preliminary prospectus or such final prospectus shall not inure to the benefit
of the Company, its officers or directors, or such underwriter (or such
controlling person of the Company or the underwriter) if the person asserting
any such loss, claim, damage, expense or liability purchased the securities that
are the subject thereof and did not receive a copy of the final prospectus (or
the final prospectus as then amended, revised or supplemented) at or prior to
the time such furnishing is required by the Securities Act in any case where any
such untrue statement or omission of a material fact contained in the
preliminary prospectus was corrected in the final prospectus (or, if contained
in the final prospectus, was subsequently corrected by amendment, revision or
supplement).
13. Assignment. With respect to any offer, sale or other disposition of
this Warrant or any underlying securities, the Holder will give written notice
to the Company prior thereto, describing briefly the manner thereof, together
with a written opinion of such Holder's counsel, to the effect that such offer,
sale or other distribution may be effected without registration or qualification
(under any applicable federal or state law then in effect). Furthermore, no such
transfer shall be made unless the transferee meets the same investor suitability
standards set forth in Section 8 of this Warrant and corresponding Subscription
Agreement hereto. Promptly upon receiving such written notice and reasonably
satisfactory opinion, if so requested, the Company, as promptly as practicable,
shall notify such Holder that such Holder may sell or otherwise dispose of this
Warrant or the underlying securities, as the case may be, all in accordance with
the terms of the written notice delivered to the Company. If a determination has
been made pursuant to this Section 13 that the opinion of counsel for the Holder
is not reasonably satisfactory to the Company, the Company shall so notify the
Holder promptly after such determination has been made. Each Warrant thus
transferred shall bear the same legends appearing on this Warrant, and
underlying securities thus transferred shall bear the legends required by
Section 8. The Company may impose stop-transfer instructions in connection with
such restrictions. Subject to any restrictions on transfer described elsewhere
herein, the rights and
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obligations of the Company and the Holder of this Warrant shall be binding upon
and benefit the successors, assigns, heirs, administrators and transferees of
the parties hereto.
14. Notice. Any notice, demand, consent or other communication
hereunder shall be in writing addressed to the other party at its principal
office or, in respect of Holder, as its address as shown on the books of the
Company, or to such other address as such party shall have theretofore furnished
by like notice, and either served personally, sent by express, registered or
certified first class mail, postage prepaid, sent by facsimile transmission, or
delivered by reputable commercial courier. Such notice shall be deemed given (i)
when so personally delivered, or (ii) if mailed as aforesaid, five (5) days
after the same shall have been posted, or (iii) if sent by facsimile
transmission, as soon as sender receives written or telephonic confirmation that
the message has been received and such facsimile is followed the same day by
mailing by prepaid first class mail, or (iv) if delivered by commercial courier,
upon receipt.
15. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California, applicable to contracts
between California residents entered into and to be performed entirely within
the State of California. Venue for all purposes hereunder shall be Alameda
County, California.
16. Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and disbursements in addition to
any other relief to which such party may be entitled.
17. Descriptive Headings. The headings used herein are descriptive only
and for the convenience of identifying provisions, and are not determinative of
the meaning or effect of any such provisions.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
duly authorized officer as of this 12th day of May, 1998.
VALUESTAR CORPORATION
/s/ JAMES A. BARNES
James A. Barnes, Treasurer
Authorized Officer
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