Common Stock Purchase Warrant - Legacy Brands Inc. and Capitol Bay Securities
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES MAY NOT BE SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THE WARRANT
OR SUCH SHARES UNLESS THE HOLDER HEREOF CAN DEMONSTRATE THAT SUCH TRANSFER MAY
BE MADE IN THE ABSENCE OF SUCH REGISTRATION.
Name and Address of Holder: Number of Shares Purchasable: 148,000
Capitol Bay Securities Date: January 30, 1998
2424 Professional Drive
Roseville, CA 95661 Expires January 30, 2003
COMMON STOCK PURCHASE WARRANT
LEGACY BRANDS, INC.
For good and valuable consideration, the receipt and adequacy of which are
duly acknowledged, Legacy Brands, Inc., a California corporation (the "Issuer")
hereby grants to the person or persons designated above as the "Holder" a
warrant (the "Warrant") to purchase from the Issuer that number of shares of
fully paid and non-assessable of Common Stock of the Issuer (the "Warrant
Shares") as is set forth above at a price of $7.50 per share (the "Purchase
Price"), subject to certain adjustments as provided herein.
1. METHOD OF EXERCISE.
1.1 GENERAL. The Holder may exercise this Warrant in full or in part,
beginning on the first anniversary date of this Warrant and at any time
thereafter before the time and date set forth above by surrendering this
Warrant, together with a duly executed notice of exercise in the form attached
to this Warrant, to the Issuer at the Issuer's principal address accompanied by
payment, in cash or by bank check payable to the order of the Issuer, in the
amount of the Purchase Price. The Holder shall be treated for all purposes as
the holder of such shares of record as of the close of business on the date
that the Holder completes all steps necessary to exercise this Warrant and the
Issuer receives the documents described above. If this Warrant is exercised in
part, the Holder shall surrender this Warrant in the manner and at the place
above. Upon any such partial exercise, the Issuer, at its expense, will issue
and deliver to the Holder a new warrant containing the same expiration date and
provisions as this Warrant, for the number of shares not yet purchased. If
there is more than one Holder, the shares of Common Stock shall be issued in
the name of all Holders unless the Issuer receives a notification, signed by
all Holders, that the shares are to be issued in a different name or in the
name of one Holder alone.
1.2 If at any time prior to the Expiration Date, the Issuer shall be
engaged in an offering of its securities, including any time determined, in
good faith by the Issuer or its underwriter, to be "quiet periods"
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during which its securities may not be offered for sale or sold, or if at any
other time or for any reason the Issuer or its underwriter shall, in good
faith, determine that this Warrant may not be exercised (the period during
which such inability to exercise shall exist shall be referred to as the
"Offering Period," which Offering Period may not in each instance exceed a
period of 90 days, it being recognized that such an Offering Period may both
precede and follow an offering of the securities of the Issuer, with each such
period being a separate Offering Period for the purpose of this provision), the
Expiration Date shall be extended by the same number of days as the Offering
Period.
1.3 ALTERNATIVE FORMS OF PAYMENT. The Issuer, at its sole discretion,
may allow the Holder to exercise this Warrant by the surrender of shares of the
Issuer's stock owned by the Holder with a value, as determined by the Issuer,
equal to the Purchase Price, provided that if the Holder is subject to
short-swing profit liability under Section 16 of the Securities Exchange Act,
the timing of the exercise must satisfy the requirements of Rule 16b-3 of the
Securities and Exchange Commission.
1.4 DELIVERY OF STOCK CERTIFICATES UPON EXERCISE. As soon as practicable
after the exercise of this Warrant, and in any event within 30 days thereafter,
the Issuer, at its expense, will cause to be issued in the name of the Holder a
certificate or certificates for the number of fully paid and non-assessable
shares of Common Stock which the Holder has purchased. In lieu of any
fractional share to which the Holder would otherwise be entitled, the Issuer
may pay the Holder cash equal to such fraction multiplied by the then current
fair market value of one full share of Common Stock, together with any other
stock or other securities or property (including cash, where applicable) to
which the Holder is entitled upon such exercise.
1.5 WHEN EXERCISABLE. The Holder may exercise this Warrant at any time
beginning as of the first anniversary date of this Warrant until January 30,
2003 at 5:00 p.m. Pacific Time (the "Expiration Date").
2. STOCK DIVIDENDS, STOCK SPLITS, COMBINATIONS.
2.1 GENERAL. If the Issuer pays a dividend in the form of Common Stock
or effects a split or subdivision of the outstanding shares of Common Stock
without payment of any consideration by such holders of the Common Stock, then,
as of the date of such dividend distribution, split or subdivision, the
Purchase Price shall be proportionately decreased and the number of shares of
Common Stock issuable on exercise of this Warrant shall be increased in
proportion to the increase in the shares of Common Stock outstanding. If the
number of shares of Common Stock outstanding is decreased by a reverse stock
split or other combination of the outstanding shares of Common Stock without
the payment of consideration to the holders of those shares, then, following
the effective date of the reverse stock split or combination, the Purchase
Price shall be proportionately increased and the number of shares of Common
Stock issuable on exercise of this Warrant decreased in proportion to the
decrease in the number of shares of Common Stock outstanding. The Issuer shall
promptly deliver to the Holder a notice stating any adjustment under this
Warrant in the Purchase Price and the number of shares of Common Stock which
may be purchased upon exercise of this Warrant, accompanied by a brief
statement of the facts requiring that adjustment.
2.2 EXEMPTED REVERSE STOCK SPLIT. Notwithstanding anything to the
contrary in Section 2.1, if there is a reverse stock split of the Common Stock
prior to the completion of the Issuer's initial public offering of Common
Stock, the number of shares purchasable upon exercise of this Warrant and the
exercise price shall not be adjusted as a result of that reverse stock split.
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3. SUBJECT TO WARRANT PURCHASE AGREEMENT. Additional rights, obligations and
restrictions of the Holder with respect to the Warrant and the Warrant Shares
are set forth in a Warrant Purchase Agreement, dated as of November 27, 1997,
between the Issuer and the initial Holder of this Warrant (the "Warrant
Purchase Agreement"). Upon acceptance of this Warrant, the Holder hereby agrees
to be bound by the terms and conditions of the Warrant Purchase Agreement.
4. RESTRICTED SECURITIES. Except to the extent that the Warrant Shares may be
registered under the Act pursuant to the terms of the Warrant Purchase
Agreement, each certificate evidencing the Warrant Shares shall bear the
following legend:
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). THESE SHARES MAY NOT BE SOLD, TRANSFERRED
HYPOTHECATED OR OTHERWISE TRANSFERRED IN ANY WAY IN THE ABSENCE OF
A REGISTRATION STATEMENT UNLESS THE HOLDER CAN DEMONSTRATE THAT SUCH
TRANSFER MAY BE MADE WITHOUT REGISTRATION UNDER THE ACT.
THESE SHARES WERE INITIALLY PURCHASED PURSUANT TO THE TERMS OF A
WARRANT PURCHASE AGREEMENT, DATED AS OF NOVEMBER 27, 1997, AND ARE
SUBJECT TO CERTAIN LIMITATIONS ON RESALE PURSUANT TO THE TERMS OF
THAT AGREEMENT. A COPY OF THAT AGREEMENT MAY BE OBTAINED, WITHOUT
CHARGE, FROM THE SECRETARY OF THE CORPORATION AT THE CORPORATION'S
PRINCIPAL EXECUTIVE OFFICES. ALL TRANSFERS IN VIOLATION OF THESE
SALE RESTRICTIONS SHALL BE VOID.
5. SHAREHOLDER RIGHTS. The Issuer shall deliver to the Holder all information
which the Issuer delivers to its shareholder generally, including but not
limited to annual and quarterly reports, proxy and information statements and
notices of shareholders meetings. Except with regard to the right to receive
information as provided herein, the Holder shall not be entitled to any other
rights as a shareholder of the Issuer until such time, and to the extent, that
the Holder exercises this Warrant and purchases the Warrant Shares.
6. ASSIGNMENT. Subject to any restrictions which may be imposed on the
assignment of this Warrant under applicable securities laws, the Holder may
assign this Warrant or any portion thereof upon the execution and delivery to
the Issuer of a Warrant Assignment Form, substantially in the form attached to
this Warrant, together with this Warrant. Upon receipt of this Warrant and the
form of assignment, the Issuer shall issue to the assignee or assignees a
Warrant or Warrants.
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7. MISCELLANEOUS. This Warrant may not be amended, or any right hereunder
waived, except by an instrument in writing signed by both the Issuer and the
Holder. This Warrant is being delivered in California and shall be construed
and enforced in accordance with and governed by the laws of that State. The
headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof.
LEGACY BRANDS, INC.
/s/ THOMAS E. KEES
----------------------------------
Thomas E. Kees, President
/s/ CRAIG C. CONNERTY
----------------------------------
Craig C. Connerty, Secretary
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FORM OF WARRANT EXERCISE
Date: _____________, ____.
Legacy Brand, Inc.
2424 Professional Drive, Suite A
Roseville, CA 95661
Attn: Secretary
Dear Sir or Madam:
I, ______________________, on this _______ day of ________________, 19__
hereby irrevocably exercise this Warrant for and purchase _________ of the
number of shares of Common Stock of Legacy Brands, Inc. purchasable with this
Warrant at a price of $_________ per share, per the rights afforded me under my
Common Stock Purchase Warrant dated January 30, 1998. Enclosed is my payment of
$_________ representing payment in full for the shares referred to above. Please
deliver certificates representing the shares purchased hereby to the address
set forth below:
______________________________________
(Signature of Holder)
______________________________________
(Street Address)
______________________________________
(City, State, Zip Code)
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ASSIGNMENT
Date: _____________, _____.
Legacy Brands, Inc.
2424 Professional Drive, Suite A
Roseville, CA 95661
Attn: Secretary
Dear Sir or Madam:
For consideration received, I hereby assign and transfer to the person
whose name and address appears below my right to purchase __________ shares
of the Common Stock of Legacy Brands, Inc. (the "corporation") pursuant to
the enclosed warrant and hereby appoint __________________________________
as my attorney, with full power of substitution, to effect the transfer of
the aforementioned warrant of the books of the corporation.
Name and Address of Transferee:
___________________________________ __________________________________
(Signature of Holder)
___________________________________
___________________________________ __________________________________
(Printed Name of Holder)
___________________________________