ANNEX I
TO
SECURITIES PURCHASE AGREEMENT
[PROTOTYPE FOR EACH ISSUANCE]
FORM OF WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
CLASS 2004-___1
BVR TECHNOLOGIES LTD.
COMMON STOCK PURCHASE WARRANT
1. Issuance. In consideration of good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by BVR TECHNOLOGIES
LTD., an Israeli corporation (the "Company"), _____________________________ or
registered assigns (the "Holder") is hereby granted the right to purchase at any
time until 5:00 P.M., New York City time, on the Expiration Date (as defined
below), _________________ Thousand __________ (____________)2 fully paid and
nonassessable shares of the Company's Ordinary Shares, nominal value NIS 0.01
each (the "Common Stock"), [for Class C : subject to the provisions of Section
2.4 hereof,] at an initial exercise price per share (the "Exercise Price") of
US$___3 per share, subject to further adjustment as set forth herein. This
Warrant is being issued pursuant to the terms of that certain Securities
Purchase Agreement, dated as of April 16, 2004 (the "Agreement"), to which the
Company and Holder (or Holder's predecessor in interest) are parties.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Agreement. This Warrant was originally issued to the Holder or
the Holder's predecessor in interest on _____________, 20044 (the "Issue Date").
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1 Insert appropriate Class identification: A, B or C
2 Insert, for each Class, number equal to 100% of the number of the Purchased
Shares.
3 Insert amounts, as follows: Class A - US$0.20; Class B - US$0.35; and Class C
- US$0.50.
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2. Exercise of Warrants.
2.1 General.
(a) This Warrant is exercisable in whole or in part at any time and
from time to time commencing on the Commencement Date (as defined below). Such
exercise shall be effectuated by submitting to the Company (either by delivery
to the Company or by facsimile transmission as provided in Section 8 hereof) a
completed and duly executed Notice of Exercise (substantially in the form
attached to this Warrant Certificate) as provided in this paragraph. The date
such Notice of Exercise is faxed to the Company shall be the "Exercise Date,"
provided that, if such exercise represents the full exercise of the outstanding
balance of the Warrant, the Holder of this Warrant tenders this Warrant
Certificate to the Company within five (5) business days thereafter. The Notice
of Exercise shall be executed by the Holder of this Warrant and shall indicate
(i) the number of shares then being purchased pursuant to such exercise and (ii)
if applicable (as provided below), whether the exercise is a cashless exercise.
(b) The provisions of this Section 2.1(b) shall only be applicable
(i) on or after the first anniversary of the Closing Date, and (ii) if, and only
if, on such first anniversary of the Closing Date, the Registration Statement
covering the Registrable Securities has not yet been declared effective. If the
Notice of Exercise form elects a "cashless" exercise, the Holder shall thereby
be entitled to receive a number of shares of Common Stock equal to (A) the
excess of the Current Market Value (as defined below) over the total cash
exercise price of the portion of the Warrant then being exercised, divided by
(B) the Market Price of the Common Stock as of the trading day immediately prior
to the Exercise Date. For the purposes of this Warrant, the terms (x) "Current
Market Value" shall mean an amount equal to the Market Price of the Common Stock
as of the trading day immediately prior to the Exercise Date, multiplied by the
number of shares of Common Stock specified in such Notice of Exercise Form, and
(y) "Market Price of the Common Stock" shall mean the Closing Price for the
relevant date.
(c) If the Notice of Exercise form elects a "cash" exercise (or if
the cashless exercise referred to in the immediately preceding paragraph (b) is
not available in accordance with its terms), the Exercise Price per share of
Common Stock for the shares then being exercised shall be payable to the Company
in cash or by certified or official bank check or by wire transfer in accordance
with instructions provided by the Company at the request of the Holder.
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4 Insert the Closing Date.
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(d) Upon the appropriate payment, if any, of the Exercise Price for
the shares of Common Stock purchased, together with the surrender of this
Warrant Certificate (if required), the Holder shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased.
(e) The Holder shall be deemed to be the holder of the shares
issuable to it in accordance with the provisions of this Section 2.1 on the
Exercise Date.
2.2 Limitation on Exercise. Notwithstanding the provisions of this
Warrant, the Agreement or of the other Transaction Agreements, in no event
(except (i) as specifically provided in this Warrant as an exception to this
provision, (ii) during the forty-five (45) day period prior to the Expiration
Date, or (iii) while there is outstanding a tender offer for any or all of the
shares of the Company's Common Stock) shall the Holder be entitled to exercise
this Warrant, or shall the Company have the obligation to issue shares upon such
exercise of all or any portion of this Warrant to the extent that, after such
exercise the sum of (1) the number of shares of Common Stock beneficially owned
by the Holder and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unexercised portion of
the Warrants or other rights to purchase Common Stock or through the ownership
of the unconverted portion of convertible securities), and (2) the number of
shares of Common Stock issuable upon the exercise of the Warrants with respect
to which the determination of this proviso is being made, would result in
beneficial ownership by the Holder and its affiliates of more than 4.99% of the
outstanding shares of Common Stock (after taking into account the shares to be
issued to the Holder upon such exercise). For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), except as otherwise provided in clause (1) of such sentence.
The Holder, by its acceptance of this Warrant, further agrees that if the Holder
transfers or assigns any of the Warrants to a party who or which would not be
considered such an affiliate, such assignment shall be made subject to the
transferee's or assignee's specific agreement to be bound by the provisions of
this Section 2.2 as if such transferee or assignee were the original Holder
hereof.
2.3 Commencement Date and Expiration Date.
(a) The term "Commencement Date" means the earlier of (i) the date
which is sixty-five (65) days after the Issue Date, or (ii) the Effective Date.
(b) The term "Expiration Date" means [for Class A: the date which is
eight (8) months after the Effective Date, but not counting for such purposes
the days, if any, during which sale of Registrable Securities was suspended
after the Effective Date.5] [for Class B ________________ and Class C:
___________, 200__.6] -----------
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[The following Section 2.4 is for Class C only:]
2.4 Number of Shares. Reference is made to the Class 2004-A Warrants
originally issued to the Holder or the Holder's predecessor in interest on the
Issue Date (the "Class A Warrants"). Anything in this Warrant to the contrary
notwithstanding the number of shares which may exercised pursuant to this
Warrant shall be equal to the Class C Exercisable Shares (as defined below). The
term "Class C Exercisable Shares" means the number of shares equal to (x) the
number of shares specified in Section 1 of this Warrant (as the same may be
adjusted pursuant to the term of this Warrant), multiplied by (y) a fraction, of
which (i) the numerator is the number of shares for which one or more notices of
exercise pursuant to the Class A Warrants have been duly submitted (and the
appropriate purchase price paid for) as contemplated therein by the initial
Holder thereof (and any direct or indirect transferee, assignee or designee of
such initial Holder), and (ii) the denominator is the number of shares which
could purchased pursuant to the terms of the Class A Warrants on the Issue Date
(as such numerator and denominator may be adjusted to reflect stock splits,
reverse stock splits and similar changes in the capital structure of the
Company).
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5 By way of illustration: If the Effective Date is June 30, 2004, the initial
Class A Expiration Date would be February 28, 2005. If, however, the of
Registrable Securities was suspended in for ten (10) days, the applicable Class
A Expiration Date will be March 10, 2005. If on March 5, 2005, the sale of
Registrable Securities was suspended again for five (5) days, the Class A
Expiration Date will be March 15, 2005.
6 For Class B and Class C, insert date which is the last calendar day of the
month in which the third anniversary of the Closing Date occurs.
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[End of Section 2.4 for Class C only.]
3. Reservation of Shares. The Company hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant one hundred ten percent (110%) of the Warrant Shares.
4. Mutilation or Loss of Warrant. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) receipt of reasonably
satisfactory indemnification, and (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will execute and deliver a new Warrant
of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant
shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or 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.
6. Protection Against Dilution and Other Adjustments.
6.1 Adjustment Mechanism. If an adjustment of the Exercise Price is
required pursuant to this Section 6, the Holder shall be entitled to purchase
such number of shares of Common Stock as will cause (i) (x) the total number of
shares of Common Stock Holder is entitled to purchase pursuant to this Warrant
following such adjustment, multiplied by (y) the adjusted Exercise Price per
share, to equal the result of (ii) (x) the dollar amount of the total number of
shares of Common Stock Holder is entitled to purchase before adjustment,
multiplied by (y) the total Exercise Price before adjustment.7
6.2 Capital Adjustments. In case of any stock split or reverse stock
split, stock dividend, reclassification of the Common Stock, recapitalization,
merger or consolidation (where the Company is not the surviving entity), the
provisions of this Section 6 shall be applied as if such capital adjustment
event had occurred immediately prior to the date of this Warrant and the
original Exercise Price had been fairly allocated to the stock resulting from
such capital adjustment; and in other respects the provisions of this Section
shall be applied in a fair, equitable and reasonable manner so as to give
effect, as nearly as may be, to the purposes hereof. A rights offering to
stockholders shall be deemed a stock dividend to the extent of the bargain
purchase element of the rights.
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7 Example: Assume 10,000 shares remain under Warrant at original stated Exercise
Price of US$[Class A - 0.20; Class B - 0.35; Class C - 0.50]. Total exercise
price (clause (y) in text) is (i) 10,000 x (ii) US$[Class A - 0.20; Class B -
0.35; Class C - 0.50], or US [Class A - 2,000; Class B - 3,500; Class C -5,000].
Company effects 2:1 stock split. Exercise Price is adjusted to US [Class A -
0.10; Class B - 0.175; Class C - 0.25]. Number of shares covered by Warrant is
adjusted to 20,000, because (applying clause (x) in text) (i) 20,000 x (ii)
US$[Class A - 0.10; Class B - 0.175; Class C - 0.25] = US$[Class A - 2,000;
Class B - 3,500; Class C -5,000].
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t 18 0 6.3 Adjustment for Spin Off. If, for any reason, prior to the
exercise of this Warrant in full, the Company spins off or otherwise divests
itself of a material part of its business or operations or disposes all or of a
part of its assets in a transaction (the "Spin Off") in which the Company does
not receive compensation for such business, operations or assets, but causes
securities of another entity (the "Spin Off Securities") to be issued to
security holders of the Company, then the Company shall cause (i) to be reserved
Spin Off Securities equal to the number thereof which would have been issued to
the Holder had all of the Holder's unexercised Warrants outstanding on the
record date (the "Record Date") for determining the amount and number of Spin
Off Securities to be issued to security holders of the Company (the "Outstanding
Warrants") been exercised as of the close of business on the trading day
immediately before the Record Date (the "Reserved Spin Off Shares"), and (ii) to
be issued to the Holder on the exercise of all or any of the Outstanding
Warrants, such amount of the Reserved Spin Off Shares equal to (x) the Reserved
Spin Off Shares, multiplied by (y) a fraction, of which (I) the numerator is the
amount of the Outstanding Warrants then being exercised, and (II) the
denominator is the amount of the Outstanding Warrants.
6.4 Adjustment for Certain Transactions. Reference is made to
the provisions of Section 4(g) of the Agreement, the terms of which are
incorporated herein by reference. The number of shares covered by this Warrant
and the Exercise Price shall be adjusted as provided in the applicable
provisions of said Section 4(g) of the Agreement.
7. Transfer to Comply with the Securities Act; Registration Rights.
7.1 Transfer. This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or issuable upon exercise of this Warrant
may be sold, transferred, pledged or hypothecated in the absence of an effective
registration statement under the Act relating to such security or an opinion of
counsel satisfactory to the Company that registration is not required under the
Act. Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
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7.2 Registration Rights. (a) Reference is made to the Registration
Rights Agreement. The Company's obligations under the Registration Rights
Agreement and the other terms and conditions thereof with respect to the Warrant
Shares, including, but not necessarily limited to, the Company's commitment to
file a registration statement including the Warrant Shares, to have the
registration of the Warrant Shares completed and effective, and to maintain such
registration, are incorporated herein by reference.
(b) In addition to the registration rights referred to in the
preceding provisions of Section 7.2(a), effective after the expiration of the
effectiveness of the Registration Statement as contemplated by the Registration
Rights Agreement, the Holder shall have piggy-back registration rights with
respect to the Warrant Shares then held by the Holder or then subject to
issuance upon exercise of this Warrant (collectively, the "Remaining Warrant
Shares"), subject to the conditions set forth below. If, at any time after the
Registration Statement has ceased to be effective, the Company participates
(whether voluntarily or by reason of an obligation to a third party) in the
registration of any shares of the Company's stock (other than a registration on
Form S-8 or on Form S-4), the Company shall give written notice thereof to the
Holder and the Holder shall have the right, exercisable within ten (10) business
days after receipt of such notice, to demand inclusion of all or a portion of
the Holder's Remaining Warrant Shares in such registration statement. If the
Holder exercises such election, the Remaining Warrant Shares so designated shall
be included in the registration statement at no cost or expense to the Holder
(other than any costs or commissions which would be borne by the Holder under
the terms of the Registration Rights Agreement). The Holder's rights under this
Section 7 shall expire at such time as the Holder can sell all of the Remaining
Warrant Shares under Rule 144 without volume or other restrictions or limit.
8. Notices. Any notice required or permitted hereunder shall be
given in manner provided in the Section headed "NOTICES" in the Agreement, the
terms of which are incorporated herein by reference.
9. Supplements and Amendments; Whole Agreement. This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
hereto. This Warrant contains the full understanding of the parties hereto with
respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.
10. Governing Law. This Warrant shall be deemed to be a contract
made under the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the County of New
York or the state courts of the State of New York sitting in the County of New
York in connection with any dispute arising under this Warrant and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non conveniens, to the bringing of any such proceeding
in such jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Buyer in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
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11. JURY TRIAL WAIVER. The Company and the Holder hereby waive a
trial by jury in any action, proceeding or counterclaim brought by either of the
Parties hereto against the other in respect of any matter arising out or in
connection with this Warrant.
12. Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
[Balance of page intentionally left blank]
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13. Descriptive Headings. Descriptive headings of the several Sections of
this Warrant are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the th day of _____________________________, 200__.
BVR TECHNOLOGIES LTD.
By: ____________________________________
________________________________________
(Print Name)
________________________________________
(Title)
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NOTICE OF EXERCISE OF WARRANT
TO: BVR TECHNOLOGIES LTD. VIA FAX:(011 972 3) 699-6262
Raoul Wallenberg 12
Ramat Hachayal
Tel Aviv, Israel 69719
Attn: President
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of ________________, 20___ , to
purchase ___________ shares of the Ordinary Shares, nominal value NIS 0.01 each
("Common Stock"), of BVR TECHNOLOGIES LTD. and tenders herewith payment in
accordance with Section 1 of said Common Stock Purchase Warrant.
|_| CASH: US$_________________________ = (Exercise Price x Exercise Shares)
Payment is being made by:
|_| enclosed check
|_| wire transfer
|_| other
|_| CASHLESS EXERCISE [if available pursuant to Section 2.1(b)]
Net number of Warrant Shares to be issued to Holder : _________*
* based on: Current Market Value - (Exercise Price x Exercise Shares)
---------------------------------------------------------
Market Price of Common Stock
where:
Market Price of Common Stock ["MP"] = US$_____________
Current Market Value [MP x Exercise Shares] = US$_____________
It is the intention of the Holder to comply with the provisions of Section
2.2 of the Warrant regarding certain limits on the Holder's right to exercise
thereunder. Based on the analysis on the attached Worksheet Schedule, the Holder
believe this exercise complies with the provisions of said Section 2.2.
Nonetheless, to the extent that, pursuant to the exercise effected hereby, the
Holder would have more shares than permitted under said Section, this notice
should be amended and revised, ab initio, to refer to the exercise which would
result in the issuance of shares consistent with such provision. Any exercise
above such amount is hereby deemed void and revoked.
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As contemplated by the Warrant, this Notice of Conversion is being sent by
facsimile to the telecopier number and officer indicated above.
If this Notice of Exercise represents the full exercise of the outstanding
balance of the Warrant, the Holder either (1) has previously surrendered the
Warrant to the Company or (2) will surrender (or cause to be surrendered) the
Warrant to the Company at the address indicated above by express courier within
five (5) business days after delivery or facsimile transmission of this Notice
of Exercise.
The certificates representing the Warrant Shares should be transmitted by
the Company to the Holder
|_| via express courier, or
|_| by electronic transfer
after receipt of this Notice of Exercise (by facsimile transmission or
otherwise) to:
_______________________________________
_______________________________________
_______________________________________
Dated: ______________________
_____________________________
[Name of Holder]
By: _________________________
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NOTICE OF EXERCISE OF WARRANT
WORKSHEET SCHEDULE
1. Current Common Stock holdings of Holder and Affiliates _____________
2. Shares to be issued on current exercise _____________
3. Other shares to be issued on other current exercise(s) and
other current conversion(s)1 _____________
4. Other shares eligible to be acquired within next 60 days
without restriction _____________
5. Total [sum of Lines 1 through 4] _____________
6. Outstanding shares of Common Stock2 _____________
7. Adjustments to Outstanding
a. Shares known to Holder as previously issued
to Holder or others but not included in Line 6 _____________
b. Shares to be issued per Line(s) 2 and 3 _____________
c. Total Adjustments [Lines 7a and 7b] _____________
8. Total Adjusted Outstanding [Lines 6 plus 7c] _____________
9. Holder's Percentage [Line 5 divided by Line 8]
____________%
[Note: Line 9 not to be above 4.99%]
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1 Includes shares issuable on conversion of convertible securities (including
assumed payment of interest or dividends) or exercise of other rights, including
other warrants or options
2 Based on latest SEC filing by Company or information provided by executive
officer of Company, counsel to Company or transfer agent
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