Exhibit 10.2
COMMON STOCK PURCHASE WARRANT
To Purchase ______________ Shares of Common Stock of
TERRA NOVA FINANCIAL GROUP, INC.
THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies that, for
value received, _______________ (the "Holder"), is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date hereof (the "Initial Exercise Date") and on or
prior to the close of business on the fifth anniversary of the Initial Exercise
Date (the "Termination Date") but not thereafter, to subscribe for and purchase
from Terra Nova Financial Group, Inc., a Texas corporation (the "Company"), up
to ____________shares (the "Warrant Shares") of Common Stock, par value $0.01
per share, of the Company (the "Common Stock"). The purchase price of one share
of Common Stock under this Warrant shall be equal to the Exercise Price, as
defined in Section 1(c).
Section 1. Exercise.
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(a) Exercise of Warrant. Exercise of the purchase rights
represented by this Warrant may be made, in whole or in part, at any time
or times on or after the Initial Exercise Date and on or before the
Termination Date by delivery to the Company of a duly executed facsimile
copy of the Notice of Exercise Form annexed hereto (or such other office
or agency of the Company as it may designate by notice in writing to the
registered Holder at the address of such Holder appearing on the books of
the Company); provided, however, within 5 Trading Days of the date said
Notice of Exercise is delivered to the Company, if this Warrant is
exercised in full, the Holder shall have surrendered this Warrant to the
Company and the Company shall have received payment of the aggregate
Exercise Price of the shares thereby purchased by wire transfer or
cashier's check drawn on a United States bank. Notwithstanding anything
herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has purchased all
of the Warrant Shares available hereunder and the Warrant has been
exercised in full. Partial exercises of this Warrant resulting in
purchases of a portion of the total number of Warrant Shares available
hereunder shall have the effect of lowering the outstanding number of
Warrant Shares purchasable hereunder in an amount equal to the applicable
number of Warrant Shares purchased. The Holder and the Company shall
maintain records showing the number of Warrant Shares purchased and the
date of such purchases. The Company shall deliver any objection to any
Notice of Exercise Form within 1 Business Day of receipt of such notice.
In the event of any dispute or discrepancy, the records of the Holder
shall be controlling and determinative in the absence of manifest error.
The Holder and any assignee, by acceptance of this Warrant, acknowledge
and agree that, by reason of the provisions of this paragraph, following
the purchase of a portion of the Warrant Shares hereunder, the number of
Warrant Shares available for purchase hereunder at any given time may be
less than the amount stated on the face hereof.
(b) Initial Exercise Date and Vesting Schedule. The Warrant
Shares available hereunder shall vest and be exercisable at the following
times, provided, however, that no Warrant Shares may be exercised prior
to the amendment of the Company's Articles of Incorporation to increase
the Company's authorized capital:
25% after 12 months;
an additional 25% after 24 months (for an aggregate of 50%); and
the remaining 50% after 36 months (for an aggregate of 100%).
(c) Exercise Price. The exercise price of the Common Stock
under this Warrant shall be $_____, subject to adjustment hereunder (the
"Exercise Price").
(d) Cashless Exercise. At any time after one year from the date
of issuance of this Warrant, the vested portion of this Warrant may be
exercised at by payment of the Exercise Price in cash or by means of a
"cashless exercise" in which the Holder shall be entitled to receive a
certificate for the number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
(A)= the VWAP on the Trading Day immediately preceding
the date of such election;
(B)= the Exercise Price of this Warrant, as adjusted; and
(X)= the number of Warrant Shares issuable upon exercise
of this Warrant in accordance with the terms of this
Warrant by means of a cash exercise rather than a
cashless exercise.
Notwithstanding anything herein to the contrary, on the Termination Date,
this Warrant shall be automatically exercised via cashless exercise pursuant to
this Section 2(d).
(e) Mechanics of Exercise.
i. Authorization of Warrant Shares. The Company
covenants that all Warrant Shares which may be issued upon
the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights
represented by this Warrant, be duly authorized, validly
issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof
(other than taxes in respect of any transfer occurring
contemporaneously with such issue).
ii. Delivery of Certificates Upon Exercise. Certificates
for shares purchased hereunder shall be transmitted by the
transfer agent of the Company to the Holder by physical
delivery to the address specified by the Holder in the
Notice of Exercise within ten Trading Days from the
delivery to the Company of the Notice of Exercise Form,
surrender of this Warrant (if required) and payment of the
aggregate Exercise Price as set forth above ("Warrant Share
Delivery Date"). This Warrant shall be deemed to have been
exercised on the date the Exercise Price is received by the
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Company. The Warrant Shares shall be deemed to have been
issued, and Holder or any other person so designated to be
named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the
Warrant has been exercised by payment to the Company of the
Exercise Price and all taxes required to be paid by the
Holder, if any, pursuant to Section 1(e)(vi) prior to the
issuance of such shares, have been paid.
iii. Delivery of New Warrants Upon Exercise. If this
Warrant shall have been exercised in part, the Company
shall, at the request of a Holder and upon surrender of
this Warrant certificate, at the time of delivery of the
certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of
Holder to purchase the unpurchased Warrant Shares called
for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant.
iv. Rescission Rights. If the Company fails to cause its
transfer agent to transmit to the Holder a certificate or
certificates representing the Warrant Shares pursuant to
this Section 1(e)(iv) by the Warrant Share Delivery Date,
then the older will have the right to rescind such
exercise.
v. No Fractional Shares or Scrip. No fractional shares
or scrip representing fractional shares shall be issued
upon the exercise of this Warrant. As to any fraction of a
share which Holder would otherwise be entitled to purchase
upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to
such fraction multiplied by the Exercise Price.
vi. Charges, Taxes and Expenses. Issuance of
certificates for Warrant Shares shall be made without
charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid
by the Company, and such certificates shall be issued in
the name of the Holder.
vii. Closing of Books. The Company will not close its
stockholder books or records in any manner which prevents
the timely exercise of this Warrant, pursuant to the terms
hereof.
Section 2. Certain Adjustments.
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(a) Stock Dividends and Splits. If the Company, at any time while this
Warrant is outstanding: (A) pays a stock dividend or otherwise make a
distribution or distributions on shares of its Common Stock or any other equity
or equity equivalent securities payable in shares of Common Stock (which, for
avoidance of doubt, shall not include any shares of Common Stock issued by the
Company pursuant to this Warrant), (B) subdivides outstanding shares of Common
Stock into a larger number of shares, (C) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares,
or (D) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be
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multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event and the number of shares issuable
upon exercise of this Warrant shall be proportionately adjusted. Any adjustment
made pursuant to this Section 3(a) shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re classification.
(b) Fundamental Transaction. If, at any time while this Warrant is
outstanding, (A) the Company effects any merger or consolidation of the Company
with or into another Person, (B) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions or
(C) any tender offer or exchange offer (whether by the Company or another
Person) is completed pursuant to which holders of Common Stock are permitted to
tender or exchange their shares for other securities, cash or property, upon the
closing of the Fundamental Transaction the Company and Warrants hereunder shall
become fully vested notwithstanding Section 1(b) hereof.
(c) Calculations. All calculations under this Section 2 shall be made
to the nearest cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Section 2, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the number of
shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.
(d) Notice to Holders.
i. Adjustment to Exercise Price. Whenever the Exercise Price
is adjusted pursuant to this Section 2, the Company shall promptly
mail to each Holder a notice setting forth the Exercise Price
after such adjustment and setting forth a brief statement of the
facts requiring such adjustment.
ii. Notice to Allow Exercise by Xxxxxx. If (A) the Company
shall declare a dividend (or any other distribution) on the Common
Stock; (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock; (C) the Company
shall authorize the granting to all holders of the Common Stock
rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights; (D) the approval of
any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation
or merger to which the Company is a party, any sale or transfer of
all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property; (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company; then, in each case, the
Company shall cause to be mailed to the Holder at its last address
as it shall appear upon the Warrant Register of the Company, at
least 20 calendar days prior to the applicable record or effective
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date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is
not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to
mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to
be specified in such notice. The Holder is entitled to exercise
this Warrant to the extent it is vested during the 20-day period
commencing on the date of such notice to the effective date of the
event triggering such notice.
Section 3. Transfer of Warrant.
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(a) Transferability. During the lifetime of the Grantee, the Warrant
shall be exercised only by the Grantee. A Warrant granted under this Plan is not
transferable by the Grantee by operation of law or otherwise, except that in the
event of death of the Grantee while in the employ, or while serving as a
director or consultant, of the Company or a subsidiary, a Warrant granted
hereunder may be exercised for a period of one year by the duly appointed
personal representative of the Grantee, or by any person or persons who shall
acquire such Warrant directly from the Grantee by bequest or inheritance.
(b) New Warrants. This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder or its agent or attorney.
The Company shall thereupon execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
(c) Warrant Register. 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 Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.
Section 4. Miscellaneous.
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(a) No Rights as Shareholder Until Exercise. This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price (or by means of a cashless exercise),
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the Warrant Shares so purchased shall be and be deemed to be issued to such
Xxxxxx as the record owner of such shares as of the close of business on the
later of the date of such surrender or payment.
(b) Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.
(c) Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
(d) Authorized Shares.
Subject to receipt of Shareholder Approval, the Company covenants
that during the period the Warrant is outstanding, it will reserve from
its authorized and unissued Common Stock a sufficient number of shares to
provide for the issuance of the Warrant Shares upon the exercise of any
purchase rights under this Warrant. The Company further covenants that
its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon
the exercise of the purchase rights under this Warrant. The Company will
take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading
Market upon which the Common Stock may be listed.
Except and to the extent as waived or consented to by the Holder,
the Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, 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 the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate
to protect the rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the Company
will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully
paid and nonassessable Warrant Shares upon the exercise of this Warrant,
and (c) use commercially reasonable efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under this Warrant.
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Before taking any action which would result in an adjustment in
the number of Warrant Shares for which this Warrant is exercisable or in
the Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any
public regulatory body or bodies having jurisdiction thereof.
(e) Jurisdiction. All questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall be
determined in accordance with the laws of the State of Texas.
(f) Restrictions. The Holder acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered,
will have restrictions upon resale imposed by state and federal
securities laws.
(g) Nonwaiver and Expenses. No course of dealing or any delay
or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice Xxxxxx's rights,
powers or remedies, notwithstanding the fact that all rights hereunder
terminate on the Termination Date. If the Company willfully and knowingly
fails to comply with any provision of this Warrant, which results in any
material damages to the Holder, the Company shall pay to Holder such
amounts as shall be sufficient to cover any costs and expenses including,
but not limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or
remedies hereunder.
(h) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder by the Company shall be
delivered to the Holder's address on file with the Company.
(i) Limitation of Liability. No provision hereof, in the
absence of any affirmative action by Holder to exercise this Warrant or
purchase Warrant Shares, and no enumeration herein of the rights or
privileges of Holder, shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
(j) Remedies. Holder, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Warrant. The
Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of
this Warrant and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(k) Successors and Assigns. Subject to applicable securities
laws and the restrictions upon transfer herein, this Warrant and the
rights and obligations evidenced hereby shall inure to the benefit of and
be binding upon the successors of the Company and the successors and
permitted assigns of Holder. The provisions of this Warrant are intended
to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by any such Holder or holder of Warrant Shares.
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(l) Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the
Holder.
(m) Severability. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions
of this Warrant.
(n) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized.
Dated: __________________, 2006
TERRA NOVA FINANCIAL GROUP, INC.
By: ________________________________
Name: X. Xxxxxxxx Xxxx
Title: Chief Financial Officer
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NOTICE OF EXERCISE
TO: TERRA NOVA FINANCIAL GROUP, INC.
(1) The undersigned hereby elects to purchase ________ Warrant Shares
of the Company pursuant to the terms of the attached Warrant (only if exercised
in full), and tenders herewith payment of the exercise price in full, together
with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection
2(d), to exercise this Warrant with respect to the maximum number
of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(3) Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other name as is
specified below:
_______________________________
The Warrant Shares shall be delivered to the following:
_______________________________
_______________________________
[SIGNATURE OF HOLDER]
Name of Employee: __________________________________________________________
Signature of Employee: _____________________________________________________
Date:_______________________________________________________________________
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