Exhibit 4.1
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY
COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT
To Purchase 150,000 Shares of Common Stock of
Semotus Solutions, Inc.
Dated as of January 18, 2002 (the "Effective Date")
WHEREAS, Semotus Solutions, Inc., a Nevada corporation (the
"Company"), and 2007978 Ontario, Inc., an Ontario corporation (the
"Warrantholder"), desire to enter into that certain Stock Purchase Agreement
(the "Purchase Agreement"), dated of even date herewith, by and among the
Company, Warrantholder and Xxxx Xxxxxx, pursuant to which, among other things,
Warrantholder will purchase stock in Application Design Associates, Inc., a
subsidiary of the Company.
WHEREAS, a condition to Warrantholder's obligations under the
Purchase Agreement is that the Company issue Warrantholder a warrant to purchase
up to 150,000 shares of Common Stock of the Company.
WHEREAS, in consideration for Warrantholder agreeing to enter into
the Purchase Agreement, the Company has agreed to grant Warrantholder the right
to purchase 150,000 shares of Common Stock of the Company upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt sufficiency of which is hereby
acknowledged, the Company and Warrantholder agree as follows:
1. GRANT OF THE RIGHT TO PURCHASE COMMON STOCK. The Company hereby grants to
Warrantholder, upon the terms and subject to the conditions set forth herein,
the right to purchase from the Company, 150,000 fully paid and non-assessable
shares of Common Stock of the Company ("Common Stock"), at an exercise price of
$0.75 per share (the "Exercise Price"). The Exercise Price and the number of
shares of Warrant Stock exercisable under this Warrant are subject to adjustment
as provided in Section 6 hereof.
2. TERM OF THE WARRANT. The term of this Warrant and the right to purchase
the Common Stock hereunder shall expire (the "Termination Date") five years from
the Effective Date.
3. EXERCISE OF THE PURCHASE RIGHTS.
The Warrantholder may exercise its purchase rights under this
Warrant, in whole or in part, at any time or from time to time prior to the
Termination Date by tendering to the Company a notice of exercise in the form
attached hereto as Exhibit A (the "Notice of Exercise"), duly completed and
executed, together with payment for purchase price. Warrantholder may pay the
Exercise Price by cash, check or cancellation of debt. Promptly upon receipt of
the Notice of Exercise (but in no event later than ten business days) the
Company shall issue to Warrantholder a certificate for the number of shares of
Common Stock purchased pursuant to the Notice of Exercise and send to
Warrantholder an Acknowledgment of Exercise in the form attached hereto as
Exhibit B that indicates the number of shares of Common Stock which remain
subject to future purchases, if any.
In the event of a partial exercise, the Company shall promptly issue
Warrantholder an amended warrant representing the remaining number of shares of
Common Stock purchasable hereunder. All other terms and conditions of such
amended warrant shall be identical to those contained herein, including, but not
limited to, the Termination Date.
4. RESERVATION OF SHARES.
(a) From and after the Effective Date for the remainder of the term
of this Warrant, the Company will at all times have authorized and reserved a
sufficient number of shares of its Common Stock to be issued upon the exercise
of this Warrant.
(b) If any shares of Common Stock required to be reserved hereunder
require registration with or approval of any governmental authority under any
Federal or state law (other than any registration under the Act), or listing on
any domestic securities exchange, before such shares may be issued upon exercise
of this Warrant, the Company will, at its expense and as expeditiously as
possible, use its reasonable best efforts to cause such shares to be duly
registered, listed or approved for listing on such domestic securities exchange,
as the case may be.
5. NO RIGHTS AS SHAREHOLDER. This Warrant does not entitle the Warrantholder
to any voting rights or other rights as a shareholder of the Company prior to
the exercise of the Warrant.
6. ADJUSTMENT RIGHTS. The exercise prices and the number of shares of Common
Stock purchasable hereunder are subject to adjustment, as follows:
(a) Reclassification of Common Stock. If the Company at any time
shall by combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant exist into the same or a different number of securities of any other
class or classes, this Warrant shall thereafter represent the right to acquire
such number and kind of securities as would have been issuable as the result of
such
2
change with respect to the securities which were subject to the purchase rights
under this Warrant immediately prior to such combination, reclassification,
exchange, subdivision or other change.
(b) Adjustments for Stock Dividends. The Exercise Price and the
number of shares of Common Stock issuable upon exercise of this Warrant shall be
proportionally adjusted to reflect any stock dividend or other similar event
altering the number of outstanding shares of the Common Stock.
(c) Subdivision or Combination of Common Stock. If the Company at
any time shall combine or subdivide its Common Stock, the Exercise Price shall
proportionately be decreased in the case of a subdivision, or proportionately
increased in the case of a combination.
(d) Merger and Sale of Assets. If at any time there shall be a
merger or consolidation of the Company with or into another entity, whether or
not the Company is the surviving corporation, or the sale, lease or other
disposition of all or substantially all of the Company's assets to any other
person (collectively referred to as a "Merger Event"), then, as a part of such
Merger Event, lawful provision shall be made so that the Warrantholder shall
thereafter be entitled to receive, upon exercise of the Warrant, the number of
shares of stock or other securities of the entity surviving or resulting from
such Merger Event equivalent in value to that which would have been issuable if
Warrantholder had exercised this Warrant immediately prior to the Merger Event.
In any such case, appropriate adjustment (as determined in good faith by the
Company's Board of Directors) shall be made in the application of the provisions
of this Warrant with respect to the rights and interest of the Warrantholder
after the Merger Event to the end that the provisions of this Warrant (including
adjustments of the Exercise Price and number of shares of Common Stock
purchasable hereunder) shall be applicable to the greatest extent possible.
(e) Notice of Adjustment. The Company shall notify Warrantholder in
writing at least 20 days prior to the effective date of a transaction that would
result in an adjustment under this Section 6. Such notice shall include a
description of the event requiring the adjustment, the amount of the adjustment,
the method by which such adjustment was calculated, the new Exercise Price and
the number of shares of Common Stock subject to purchase hereunder.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Common Stock, when issued in accordance with the provisions
of this Warrant, will be duly authorized, validly issued, fully paid and
non-assessable shares of capital stock of the Company, and will be free of any
taxes, liens, charges or encumbrances whatsoever. The issuance of certificates
for shares of Common Stock upon exercise of the Warrant shall be made without
charge to the Warrantholder for any issuance tax in respect thereof, or other
cost incurred by the Company in connection with such exercise and the related
issuance of shares of Common Stock.
(b) The execution and delivery by the Company of this Warrant and
the performance of all obligations of the Company hereunder, including the
issuance of the Warrant
3
and the right to purchase Common Stock have been duly authorized by all
necessary corporate action on the part of the Company, and this Warrant is not
inconsistent with the Company's Certificate of Incorporation or Bylaws, does not
contravene any law or governmental rule, regulation or order applicable to it,
does not and will not contravene any provision of, or constitute a default
under, any indenture, mortgage, contract or other instrument to which the
Company is a party or by which it is bound, and this Warrant constitutes the
legal, valid and binding agreement of the Company, enforceable in accordance
with its terms.
(c) No consent or approval of, giving of notice to, registration
with, or taking of any other action in respect of any state, Federal or other
governmental authority or agency is required with respect to the execution,
delivery and performance by the Company of its obligations under this Warrant,
except for any filing required by applicable state securities law, which filings
will be effective by the time required thereby.
(d) Subject to the accuracy of Warrantholder's representations
herein, the issuance of the Warrant Stock upon exercise of this Warrant will
constitute a transaction exempt from the registration requirements of Section 5
of the Act.
8. REPRESENTATIONS AND WARRANTIES OF THE WARRANTHOLDER.
(a) This Warrant is being issued to Warrantholder in reliance upon
Warrantholder's representation to the Company, which by Warrantholder's
execution of this Warrant, Warrantholder hereby confirms, that this Warrant and
the Common Stock (collectively, the "Securities") will be acquired for
investment for Warrantholder's own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and that
Warrantholder has no present intention of selling, granting any participation
in, or otherwise distributing the same. By executing this Warrant, Warrantholder
further represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Securities.
(b) Warrantholder is an investor in securities of companies in the
development stage and acknowledges that it is able to fend for itself in
transactions such as the one contemplated by this Warrant, can bear the economic
risk of its investment, and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of the
investment in the Securities. If other than an individual, Warrantholder
represents it has not been organized for the purpose of acquiring the
Securities.
(c) Warrantholder is an "accredited investor" within the meaning of
Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as
presently in effect. Warrantholder understands that the Securities it is
purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act only in certain limited circumstances. In this connection, such Investor
represents that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed
9. TRANSFERS. This Warrant and all rights hereunder are transferable.
4
10. MISCELLANEOUS.
(a) Successors and Assigns. This Warrant shall be binding upon any
successors or assigns of the Company.
(b) Governing Law. This Warrant shall be governed by and construed
for all purposes under and in accordance with the laws of the State of Nevada,
without regard to principles of conflict of laws.
(c) Counterparts; Entire Agreement. This Warrant may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Warrant
constitutes the entire agreement between the parties with respect to the subject
matter contained herein.
(d) No Impairment of Rights. The Company will not, by amendment of
its Certificate of Incorporation, or through any other means, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in carrying out all such terms and taking
all such actions as may be necessary or appropriate in order to protect the
rights of Warrantholder against impairment.
(e) Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery,
facsimile transmission (provided the original is sent by personal delivery or
mail as hereinafter set forth) or after deposit in the United States mail by
registered or certified mail, addressed (i) in the case of Warrantholder, to
Endgame Systems, Inc., 000 Xxxxxxx Xxxxx, Xxxxxxxx, XX X0X 0X0, Attn: Xxx
Xxxxxxxx and (ii) 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxx Xxxx, XX 00000, Attn:
Xxxx XxXxxx in the case of the Company, to or at such other address as any such
party may subsequently designate by written notice to the other party.
(f) Survival. The representations, warranties, covenants and
conditions of the respective parties contained herein or made pursuant to this
Warrant shall survive the execution and delivery of this Warrant.
(g) Severability. In the event any one or more of the provisions of
this Warrant shall for any reason be held invalid, illegal or unenforceable, the
remaining provisions of this Warrant shall be unimpaired, and the invalid,
illegal or unenforceable provision shall be replaced by a mutually acceptable
valid, legal and enforceable provision which comes closest to the intention of
the parties underlying the invalid, illegal or unenforceable provision.
(h) Amendments. Any provision of this Warrant may be amended only by
a written instrument signed by both the Company and the Warrantholder.
5
IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be
executed by its officers thereunto duly authorized as of the date first written
above.
SEMOTUS SOLUTIONS, INC.
By: /s/ Xxxxxxx X. XxXxxx
------------------------------
Name: Xxxxxxx X. XxXxxx
Title: President and CEO
2007978 Ontario, Inc.
By: /s/ Xxx Xxxxxxxx
------------------------------
Name: Xxx Xxxxxxxx
Title: COO
[SIGNATURE PAGE TO SEMOTUS WARRANT]
EXHIBIT A
NOTICE OF EXERCISE
To: Semotus Solutions, Inc. (the "Company")
The undersigned hereby elects to purchase ___________________ shares
of Common Stock at an exercise price per share as set forth in the Warrant
issued to Warrantholder by the Company, dated January __, 2002.
The undersigned hereby tenders payment in the amount of $_________
by way of cash, check and/or by cancellation of debt, which constitutes the
aggregate exercise price for such shares of Common Stock.
The undersigned requests that the Company issue a certificate or
certificates representing said shares of the Common Stock in the name of the
undersigned or in such other name as is specified below and hereby confirms and
acknowledges the investment representations and warranties made in Section 8 of
the Warrant:
------------------------------------
(Print Name)
Please issue a new Warrant for the unexercised portion of the
Warrant in the name of the undersigned or in such other name as is specified
below:
------------------------------------------
[Name]
----------------- ------------------------------------------
[Date] [Signature]
EXHIBIT B
ACKNOWLEDGMENT OF EXERCISE
The undersigned, Semotus Solutions, Inc., hereby acknowledges
receipt of the Notice of Exercise from ______________ to purchase ______
shares of the Common Stock of Semotus Solutions, Inc., pursuant to the terms
of the Warrant, and further acknowledges that _________ shares remain subject
to purchase under the terms of the Warrant.
SEMOTUS SOLUTIONS, INC.
By: _____________________________
Name: _____________________________
Title: _____________________________
Date: _____________________________
