EXHIBIT 4.2
THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDE THE
SECURITIES ACT OF 1933 ACT, AS AMENDED (THE "1933 ACT"). THE HOLDER HEREOF,
BY PURCHASING THIS COMMON STOCK PURCHASE WARRANT, AGREES FOR THE BENEFIT OF
THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE 1933 ACT, OR (C) IF REGISTERED UNDER THE 1933 ACT
AND ANY APPLICABLE STATE SECURITIES LAWS. IN ADDITION, A SECURITIES
PURCHASE AGREEMENT ("PURCHASE AGREEMENT"), DATED THE DATE HEREOF, A COPY OF
WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE,
CONTAINS CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTIES, INCLUDING,
WITHOUT LIMITATION, PROVISIONS WHICH LIMIT THE EXERCISE RIGHTS OF THE
HOLDER AND SPECIFY MANDATORY REDEMPTION OBLIGATIONS OF THE COMPANY.
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KAHIKI FOODS, INC.
COMMON STOCK PURCHASE WARRANT
Number of shares: 294,117
Holder: Barron Partners LP
c/o Andrew Barron Worden
Managing Partner
730 Fifth Avenue, 9th Floor
New York NY 10019
tel 212-659-7790
fax 646-607-2223
cell 917-854-0036
abw@barronpartners.com
Expiration Date: February 27, 2009
Exercise Price per Share: $2.25
Kahiki Foods, Inc. Inc, a company organized and existing under the laws of the
State of Ohio (the "Company"), hereby certifies that, for value received, Barron
Partners LP, or its registered assigns (the "Warrant Holder"), is entitled,
subject to the terms set forth below, to purchase from the Company 294,117
shares (the "Warrant Shares") of common stock, no par value (the "Common
Stock"), of the Company (each such share, a "Warrant Share" and all such shares,
the "Warrant Shares") in exchange for (a) one (1) Warrant and (b) $2.25 per
share (as adjusted from time to time as provided in Section 7, per Warrant Share
(the "Exercise Price"), at any time and from time to time from and after the
date thereof and through and including 5:00 p.m. New York City time on February
27, 2009 (or eighteen months of effectiveness of a Registration Statement
subsequent to the issuance herein, whichever is longer)(the "Expiration Date"),
and subject to the following terms and conditions:
a Registration of Warrant. The Company shall register this Warrant upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Warrant Holder hereof from time
to time. The Company may deem and treat the registered Warrant Holder
of this Warrant as the absolute owner hereof for the purpose of any
exercise hereof or nay distribution to the Warrant Holder, and for all
other purposes, and the Company shall not be affected by notice to the
contrary.
b Investment Representation. The Warrant Holder by accepting this
Warrant represents that the Warrant Holder is acquiring this Warrant
for its own account or the account of an affiliate for investment
purposes and not with the view to any offering or distribution and
that the Warrant Holder will not sell or otherwise dispose of this
Warrant or the underlying Warrant Shares in violation of applicable
securities laws. The Warrant Holder acknowledges that the certificates
representing any Warrant Shares will bear a legend indicating that
they have not been registered under the United States Securities Act
of 1933, as amended (the "1933 Act") and may not be sold by the
Warrant Holder except pursuant to an effective registration statement
or pursuant to an exemption from registration requirements of the 1933
Act and in accordance with federal and state securities laws. If this
Warrant was acquired by the Warrant Holder pursuant to the exemption
from the registration requirements of the 1933 Act afforded by
Regulation S thereunder, the Warrant Holder acknowledges and covenants
that this Warrant may not be exercised by or on behalf of a Person
during the one year distribution compliance period (as defined in
Regulation S) following the date hereof. "Person" means an individual,
partnership, firm, limited liability company, trust, joint venture,
association, corporation, or any other legal entity.
c Validity of Warrant and Issue of Shares. The Company represents and
warrants that this Warrant has been duly authorized and validly issued
and warrants and agrees that all of Common Stock that may be issued
upon the exercise of the rights represented by this Warrant will, when
issued upon such exercise, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof. The Company further warrants and agrees
that during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have
authorized and reserved a sufficient number of Common Stock to provide
for the exercise of the rights represented by this Warrant.
d Registration of Transfers and Exchange of Warrants.
a. Subject to compliance with the legend set forth on the face of
this Warrant, the Company shall register the transfer of any
portion of this Warrant in the Warrant in the Warrant Register,
upon surrender of this Warrant with the Form of Assignment
attached hereto duly completed and signed, to the Company at the
office specified in or pursuant to Section 9. Upon any such
registration or transfer, a new warrant to purchase Common Stock,
in substantially the form of this Warrant (any such new warrant,
a "New Warrant"), evidencing the portion of this Warrant so
transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so
transferred, if any, shall be issued to the transferring Warrant
Holder. The acceptance of the New Warrant by the transferee
thereof shall be deemed the acceptance of such transferee of all
of the rights and obligations of a Warrant Holder of a Warrant.
b. This Warrant is exchangeable, upon the surrender hereof by the
Warrant Holder to the office of the Company specified in or
pursuant to Section 9 for one or more New Warrants, evidencing in
the aggregate the right to purchase the number of Warrant Shares
which may then be purchased hereunder. Any such New Warrant will
be dated the date of such exchange.
e Exercise of Warrants.
a. Upon surrender of this Warrant with the Form of Election to
Purchase attached hereto duly completed and signed to the
Company, at its address set forth in Section 9, and upon payment
and delivery of the Exercise Price per Warrant Share multiplied
by the number of Warrant Shares that the Warrant Holder intends
to purchase hereunder, in lawful money of the United States of
America, in cash or by certified or official bank check or
checks, to the Company, all as specified by the Warrant Holder in
the Form of Election to Purchase, the Company shall promptly (but
in no event later than 7 business days after the Date of Exercise
[as defined herein]) issue or cause to be issued and cause to be
delivered to or upon the written order of the Warrant Holder and
in such name or names as the Warrant Holder may designate
(subject to the restrictions on transfer described in the legend
set forth on the face of this Warrant), a certificate for the
Warrant Shares issuable upon such exercise, with such restrictive
legend as required by the 1933 Act. Any person so designated by
the Warrant Holder to receive Warrant Shares shall be deemed to
have become holder of record of such Warrant Shares as of the
Date of Exercise of this Warrant.
b. A "Date of Exercise" means the date on which the Company shall
have received (i) this Warrant (or any New Warrant, as
applicable), with the Form of Election to Purchase attached
hereto (or attached to such New Warrant) appropriately completed
and duly signed, and (ii) payment of the Exercise Price for the
number of Warrant Shares so indicated by the Warrant Holder to be
purchased.
c. This Warrant shall be exercisable at any time and from time to
time for such number of Warrant Shares as is indicated in the
attached Form of Election To Purchase. If less than all of the
Warrant Shares which may be purchased under this Warrant are
exercised at any time, the Company shall issue or cause to be
issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares for which no
exercise has been evidenced by this Warrant.
d. (i) Notwithstanding anything contained herein to the contrary,
the holder of this Warrant may, at its election exercised in its
sole discretion, exercise this Warrant 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
Aggregate 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"): Net
Number = (A x (B - C))/B
(ii) For purposes of the foregoing formula:
A= the total number shares with respect to which this
Warrant is then being exercised.
B= the last reported sale price (as reported by
Bloomberg) of the Common Stock on immediately
preceding the date of the Exercise Notice.
C= the Warrant Exercise Price then in effect at the
time of such exercise.
e. The holder of this Warrant agrees not to elect for a period of
one (1) year a Cashless Exercise. The holder of this Warrant also
agrees not to elect a Cashless Exercise so long as there is an
effective registration statement for the shares underlying this
Warrant.
f Call by the Company. This Warrant contains a callable feature until
February 27, 2005 requiring the automatic exercise at any time prior
to the Expiration Date if the closing public market price of the
Company's common stock is equal to or in excess of the callable price
of $3.50 for a period of twenty (20) consecutive days and there is an
effective Registration Statement covering the shares of Common Stock
underlying this Warrant ("Automatic Exercise")during such twenty (20)
consecutive day period. Upon occurrence of the Automatic Exercise, the
Company shall provide the Holder with notice of such Automatic
Conversion ("Automatic Exercise Notice"). Upon receipt of the
Automatic Exercise Notice, the Holder must (i) exercise, in whole or
in part, this Warrant within ten (10) days; or (ii) notify the Company
of its intent to transfer this Warrant pursuant to Section 4 of this
Warrant. In the event that the Holder elects to transfer this Warrant
pursuant to Section 4 of this Warrant, then the subsequent holder of
this Warrant must exercise this Warrant on or before the thirtieth
(30) day after notification of intent to transfer this Warrant. In the
event that this Warrant is exercised, the Holder must deliver to the
Company at its office at 3004 East 14th Avenue, Columbus, Ohio
Attention: President, on or before 5:00 p.m., Eastern Time, on the
required date, (i) Form of Election to Purchase properly executed and
completed by Holder or an authorized officer thereof, (ii) a check
payable to the order of the Company, in an amount equal to the product
of the Exercise Price multiplied by the number of Warrant Shares
specified in the Exercise Notice, and (iii) this Warrant. If the
Holder does not exercise this Warrant within ten (10) days from
receipt of the Automatic Exercise Notice or, in the event that this
Warrant has been transferred pursuant to Section 4 of this Warrant,
the subsequent holder of this Warrant does not exercise this Warrant
within thirty (30) days after notification of intent to transfer this
Warrant, then this Warrant will expire.
g Adjustment of Exercise Price and Number of Shares. The character of
the shares of stock or other securities at the time issuable upon
exercise of this Warrant and the Exercise Price therefor, are subject
to adjustment upon the occurrence of the following events:
a. Adjustment for Stock Splits, Stock Dividends, Recapitalizations,
Etc. The Exercise Price of this Warrant and the number of shares
of Common Stock or other securities at the time issuable upon
exercise of this Warrant shall be appropriately adjusted to
reflect any stock dividend, stock split, combination of shares,
reclassification, recapitalization or other similar event
affecting the number of outstanding shares of stock or
securities.
b. Adjustment for Reorganization, Consolidation, Merger, Etc. In
case of any consolidation or merger of the Company with or into
any other corporation, entity or person, or any other corporate
reorganization, in which the Company shall not be the continuing
or surviving entity of such consolidation, merger or
reorganization (any such transaction being hereinafter referred
to as a "Reorganization"), then, in each case, the holder of this
Warrant, on exercise hereof at any time after the consummation or
effective date of such Reorganization (the "Effective Date"),
shall receive, in lieu of the shares of stock or other securities
at any time issuable upon the exercise of the Warrant issuable on
such exercise prior to the Effective Date, the stock and other
securities and property (including cash) to which such holder
would have been entitled upon the Effective Date if such holder
had exercised this Warrant immediately prior thereto (all subject
to further adjustment as provided in this Warrant).
c. Certificate as to Adjustments. In case of any adjustment or
readjustment in the price or kind of securities issuable on the
exercise of this Warrant, the Company will promptly give written
notice thereof to the holder of this Warrant in the form of a
certificate, certified and confirmed by the Board of Directors of
the Company, setting forth such adjustment or readjustment and
showing in reasonable detail the facts upon which such adjustment
or readjustment is based.
d. Adjustment for Earnings. For any unexecuted Warrants, based on
the Company's 9 month earnings for the period ended September 30,
2004, the exercise price of this Warrant shall be adjusted upon
release of such unaudited numbers for that period, which release
should be by November 30, 2004, based on the Company's 9 month
earnings from recurring operations, before any one non-recurring
income or loss, and before income tax, depreciation and
amortization ("EBITDA") in a straight line in accordance with the
following formula:
$3.15 Million or $2.5395 $1.929 Million or
EBITDA More Million Less
Warrant Exercise Price $2.75 $1.50 $.25
For the purposes of this paragraph, the Company's EBITDA shall be
calculated without taking into account any discount caused by the sale of the
Shares or any outstanding unexercised Warrants.
h Fractional Shares. The Company shall not be required to issue or cause
to be issued fractional Warrant Shares on the exercise of this
Warrant. The number of full Warrant Shares that shall be issuable upon
the exercise of this Warrant shall be computed on the basis of the
aggregate number of Warrants Shares purchasable on exercise of this
Warrant so presented. If any fraction of a Warrant Share would, except
for the provisions of this Section 8, be issuable on the exercise of
this Warrant, the Company shall, at its option, (i) pay an amount in
cash equal to the Exercise Price multiplied by such fraction or (ii)
round the number of Warrant Shares issuable, up to the next whole
number.
i Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given (i) on the date they
are delivered if delivered in person; (ii) on the date initially
received if delivered by facsimile transmission followed by registered
or certified mail confirmation; (iii) on the date delivered by an
overnight courier service; or (iv) on the third business day after it
is mailed by registered or certified mail, return receipt requested
with postage and other fees prepaid as follows:
If to the Company:
Kahiki Foods, Inc.
3004 East 14th Avenue
Columbus, Ohio 43215
Attn: Michael Tsao
Telephone: (614) 252-3040
If to the Warrant Holder:
Andrew Barron Worden
Managing Partner
Barron Partners LP
730 Fifth Avenue, 9th Floor
New York NY 10019
tel 212-659-7790
j Miscellaneous.
a. This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns. This Warrant may be amended only in writing and signed
by the Company and the Warrant Holder.
b. Nothing in this Warrant shall be construed to give to any person
or corporation other than the Company and the Warrant Holder any
legal or equitable right, remedy or cause of action under this
Warrant; this Warrant shall be for the sole and exclusive benefit
of the Company and the Warrant Holder.
c. This Warrant shall be governed by, construed and enforced in
accordance with the internal laws of the State of Ohio without
regard to the principles of conflicts of law thereof.
d. The headings herein are for convenience only, do not constitute a
part of this Warrant and shall not be deemed to limit or affect
any of the provisions hereof.
e. In case any one or more of the provisions of this Warrant shall
be invalid or unenforceable in any respect, the validity and
enforceablilty of the remaining terms and provisions of this
Warrant shall not in any way be affected or impaired thereby and
the parties will attempt in good faith to agree upon a valid and
enforceable provision which shall be a commercially reasonably
substitute therefore, and upon so agreeing, shall incorporate
such substitute provision in this Warrant.
f. The Warrant Holder shall not, by virtue hereof, be entitled to
any voting or other rights of a shareholder of the Company,
either at law or equity, and the rights of the Warrant Holder are
limited to those expressed in this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by the authorized officer as of the date first above stated.
Kahiki Foods, Inc.
By:
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Name:
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Title:
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FORM OF ELECTION TO PURCHASE
(To be executed by the Warrant Holder to exercise the right to purchase shares
of Common Stock under the foregoing Warrant)
To: Kahiki Foods, Inc.
In accordance with the Warrant enclosed with this Form of Election to Purchase,
the undersigned hereby irrevocably elects to purchase ______________ shares of
Common Stock ("Common Stock"), no par value, of Kahiki Foods, Inc. and encloses
one warrant and $2.25 for each Warrant Share being purchased or an aggregate of
$________________ in cash or certified or official bank check or checks, which
sum represents the aggregate Exercise Price (as defined in the Warrant) together
with any applicable taxes payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of:
(Please print name and address)
(Please insert Social Security or Tax Identification Number)
If the number of shares of Common Stock issuable upon this exercise shall not be
all of the shares of Common Stock which the undersigned is entitled to purchase
in accordance with the enclosed Warrant, the undersigned requests that a New
Warrant (as defined in the Warrant) evidencing the right to purchase the shares
of Common Stock not issuable pursuant to the exercise evidenced hereby be issued
in the name of and delivered to:
(Please print name and address)
Dated: Name of Warrant Holder:
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(Print)
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(By:)
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(Name:)
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(Title:)
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Signature must conform in all respects to name of
Warrant Holder as specified on the face of the
Warrant