1
EXHIBIT 10.4
THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES 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
SECURITIES ACT, OR (C) IF REGISTERED UNDER THE SECURITIES 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.
------------------------------
LAHAINA ACQUISITIONS, INC.
COMMON STOCK PURCHASE WARRANT
--------------------------------------------------------------------------------
No. 3
Number of shares: 50,000 Holder: GCA Strategic Investment
Fund Limited
Mechanics Xxxxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxx XX XX, Xxxxxxx
For identification only. The governing terms of this Warrant
are set forth below.
--------------------------------------------------------------------------------
Lahaina Acquisitions, Inc., a Colorado corporation (the "Company"), hereby
certifies that, for value received, GCA Strategic Investment Fund Limited or
assigns, is entitled, subject to the terms set forth below, to purchase from
the Company at any time or from time to time after the date hereof and prior to
the fifth anniversary hereof (the "Exercise Period"), at the Purchase Price
hereinafter set forth, Fifty Thousand (50,000) shares of the fully paid and
nonassessable shares of Common Stock of the Company. The number and character
of such shares of Common Stock and the Purchase Price are subject to adjustment
as provided herein.
The purchase price per share of Common Stock issuable upon exercise of
this Warrant (the "Purchase Price") shall initially be equal to 102% of the
simple average of the weighted average sales price as published by Bloomberg,
L.P. ("Bloomberg") of the Common Stock on the NASDAQ Stock Market or, if the
NASDAQ Market is not the principal trading market for such
2
security, the simple average sales price of such security on the principal
securities exchange or trading market where such security is listed or traded
as reported by Bloomberg, or if the foregoing do not apply, the simple average
sales price of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, for the ten (10)
completed trading days immediately preceding the date hereof; provided,
however, that the Purchase Price shall be adjusted from time to time as
provided herein.
Capitalized terms used herein not otherwise defined shall have the
meanings ascribed thereto in the Purchase Agreement. As used herein the
following terms, unless the context otherwise requires, have the following
respective meanings:
(a) The term "Company" shall include American
International Petroleum Corporation and any corporation that shall
succeed or assume the obligations of such corporation hereunder.
(b) The term "Common Stock" includes (a) the Company's
common stock, no par value per share, (b) any other capital stock of
any class or classes (however designated) of the Company, authorized
on or after such date, the Holders of which shall have the right,
without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to
preference, and the Holders of which shall ordinarily, in the absence
of contingencies, be entitled to vote for the election of a majority
of directors of the Company (even though the right so to vote has been
suspended by the happening of such a contingency) and (c) any other
securities into which or for which any of the securities described in
(a) or (b) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock
(other than Common Stock) and other securities of the Company or any
other person (corporate or otherwise) that the Holder of this warrant
at any time shall be entitled to receive, or shall have received, on
the exercise of this Warrant, in lieu of or in addition to Common
Stock, or that at any time shall be issuable or shall have been issued
in exchange for or in replacement of Common Stock or Other Securities
pursuant to Section 4 or otherwise.
1. Exercise of Warrant.
1.1 Method of Exercise.
(a) This warrant may be exercised in whole or in part
(but not as to a fractional share of Common Stock), at any time and
from time to time during the Exercise Period by the Holder hereof by
delivery of a notice of exercise (a "Notice of Exercise")
substantially in the form attached hereto as Exhibit A via facsimile
to the Company. Promptly thereafter the Holder shall surrender this
Warrant to the Company at
3
its principal office, accompanied by payment of the Purchase Price
multiplied by the number of shares of Common Stock for which this
Warrant is being exercised (the "Exercise Price"). Payment of the
Exercise Price shall be made, at the option of the Holder, (i) by
check or bank draft payable to the order of the Company, (ii) by wire
transfer to the account of the Company, (iii) in shares of Common
Stock having a Market Value on the Exercise Date (as hereinafter
defined) equal to the aggregate Exercise Price, or (iv) by
presentation and surrender of this Warrant to the Company for cashless
exercise (a "Cashless Exercise"), which such surrender being deemed a
waiver of the Holder's obligation to pay all or any portion of the
Exercise Price. In the event the Holder elects a Cashless Exercise
(which such election shall be irrevocable) the Holder shall exchange
this Warrant for that number of shares of Common Stock determined by
multiplying the number of shares of Common Stock being exercised by a
fraction, the numerator of which shall be the difference between the
then current Market Value of the Common Stock and the Purchase Price,
and the denominator of which shall be the then current Market Value of
the Common Stock. If the amount of the payment received by the Company
is less than the Exercise Price, the Holder will be notified of the
deficiency and shall make payment in that amount within five (5)
business days. In the event the payment exceeds the Exercise Price,
the Company will promptly refund the excess to the Holder. Upon
exercise, the Holder shall be entitled to receive, promptly refund the
excess to the Holder. Upon exercise, the Holder shall be entitled to
receive, promptly after payment in full, one or more certificates,
issued in the Holder's name or in such name or names as the Holder may
direct, subject to the limitations on transfer contained herein, for
the number of shares of Common Stock so purchased. The shares of
Common Stock so purchased shall be deemed to be issued as of the close
of business on the date on which the Company shall have received from
the Holder payment in full of the Exercise Price (the "Exercise
Date").
(b) Notwithstanding anything to the contrary set forth
herein, upon exercise of all or a portion of this Warrant in
accordance with the terms hereof, the Holder shall not be required to
physically surrender this Warrant to the Company. Rather, records
showing the amount so exercised and the date of exercise shall be
maintained on a ledger substantially in the form of Annex B attached
hereto (a copy of which shall be delivered to the Company or transfer
agent with each Notice of Exercise). It is specifically contemplated
that the Holder hereof shall act as the calculation agent for all
exercises of this Warrant. In the event of any dispute or
discrepancies, such records maintained by the Holders 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 an exercise of a portion of this Warrant, the number of
shares of Common Stock represented by this Warrant will be the amount
indicated on Annex B attached hereto (which may be less than the
amount stated on the face hereof).
1.2 Regulation D Restrictions. The Holder hereof
represents and warrants to the Company that it has acquired this Warrant and
anticipates acquiring the shares of Common
4
Stock issuable upon exercise of the Warrant solely for its own account for
investment purposes and not with a view to or for resale of such securities
unless such resale has been registered with the Commission or an applicable
exemption is available therefor. At the time this Warrant is exercised, the
Company may require the Holder to state in the Notice of Exercise such
representations concerning the Holder as are necessary or appropriate to assure
compliance by the Holder with the Securities Act.
1.3 Company Acknowledgment. The Company will, at the time
of the exercise of this Warrant, upon request of the Holder hereof, acknowledge
in writing its continuing obligation to afford to such Holder the registration
rights to which such Holder shall continue to be entitled after such exercise
in accordance with the provisions of a Registration Rights Agreement dated the
date hereof (the "Registration Rights Agreement"). If the Holder shall fail to
make any such request, such failure shall not affect the continuing obligation
of the Company to afford such Holder any such rights.
1.4 Limitation on Exercise. Notwithstanding the rights of
the Holder to exercise all or a portion of this Warrant as described herein,
such exercise rights shall be limited, solely to the extent set forth in the
Purchase Agreement as if such provisions were specifically set forth herein. In
addition, the number of shares of Common Stock issuable upon exercise of this
Warrant is subject to reduction as specified in Section 10.3 of the Purchase
Agreement.
2. Delivery of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant, and in any event within five
(5) business days thereafter, the Company at its expense (including the payment
by it of any applicable issue, stamp or transfer taxes) will cause to be issued
in the name of and delivered to the Holder thereof, or, to the extent
permissible hereunder, to such other person as such Holder may direct, a
certificate or certificates for the number of fully paid and nonassessable
shares of Common Stock (or Other Securities) to which such Holder shall be
entitled on such exercise, plus, in lieu of any fractional share to which such
Holder would otherwise be entitled, cash equal to such fraction multiplied by
the then applicable Purchase Price, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.
3. Adjustment for Extraordinary Events. The Purchase Price to be
paid by the Holder upon exercise of this Warrant, and the consideration to be
received upon exercise of this Warrant, shall be adjusted in case at any time
or from time to time pursuant to Article XI of the Purchase Agreement as if
such provisions were specifically set forth herein.
4. No Impairment. The Company will not, by amendment of 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 action as may be
necessary or appropriate in order to protect the rights of the Holder of this
warrant against
5
impairment. Without limiting the generality of the foregoing, the Company (a)
will not increase the par value of any shares of stock receivable on the
exercise of this Warrant above the amount payable therefor on such exercise,
(b) will take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and unassessable shares of
stock on the exercise of this Warrant, and (c) will not transfer all or
substantially all of its properties and assets to any other person (corporate
or otherwise), or consolidate with or merge into any other person or permit any
such person to consolidate with or merge into the Company (if the Company is
not the surviving person), unless such other person shall expressly assume in
writing and will be bound by all the terms of this Warrant.
5. Accountant's Certificate as to Adjustments. In each case of
any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of this Warrant, the Company at its
expense will promptly cause independent certified public accountants of
national standing selected by the Company to compute such adjustment or
readjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company for
any additional shares of Common Stock (or Other Securities) issued or sold or
deemed to have been issued or sold, (b) the number of shares of Common Stock
(or Other Securities) outstanding or deemed to be outstanding, and (c) the
Purchase Price and the number of shares of Common Stock to be received upon
exercise of this Warrant, in effect immediately prior to such issue or sale and
as adjusted and readjusted as provided in this Warrant. The Company will
forthwith mail a copy of each such certificate to the Holder of this Warrant,
and will, on the written request at any time of the Holder of this Warrant,
furnish to such Holder a like certificate setting forth the Purchase Price at
the time in effect and showing how it was calculated.
6. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of
the Holders of any class or securities for
the purpose of determining the Holders
thereof who are entitled to receive any
dividend or other distribution, or any
right to subscribe for, purchase or
otherwise acquire any shares of stock of
any class or any other securities or
property, or to receive any other right, or
(b) any capital reorganization of the Company,
any reclassification or recapitalization of
the capital stock of the Company or any
transfer of all or substantially all the
assets of the Company to or consolidation
or merger of the Company with or into any
other person, or
(c) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
6
then and in each such event the Company will mail or cause to be mailed to the
Holder of this Warrant a notice specifying (i) the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right,
and (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any, as of which the Holders of
record of Common Stock (or Other Securities) shall be entitled to exchange
their shares of Common Stock (or Other Securities) for then and in each such
event the Company will mail or cause to be mailed to the Holder of this Warrant
a notice specifying (i) the date on which any such record is to be taken for
the purpose of such dividend, distribution or right, and stating the amount of
character of such dividend, distribution or right, and (ii) the date on which
any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any, as of which the Holders of record of Common Stock (or
Other Securities) shall be entitled to exchange their shares of Common Stock
(or Other Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up. Such notice shall be mailed at
least 20 days prior to the date specified in such notice on which any action is
to be taken.
7. Reservation of Stock, etc. Issuable on Exercise of Warrant.
The Company will at all times reserve and keep available, solely for issuance
and delivery on the exercise of this Warrant, all shares of Common Stock (or
Other Securities) from time to time issuable on the exercise of this Warrant.
8. Exchange of Warrant.
(a) On surrender for exchange of this Warrant, properly
endorsed and in compliance with the restrictions on transfer set forth in the
legend on the face of this Warrant, to the Company, the Company at its expense
will issue and deliver to or on the order of the Holder thereof a new Warrant
of like tenor, in the name of such Holder or as such Holder (on payment by such
Holder of any applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Common Stock called
for on the face of the Warrant so surrendered.
(b) Upon written notice from the Purchasers pursuant to
Section 2.5(b)(iii) of the Purchase Agreement that the Purchasers have elected
to transfer amongst each other a portion of this Warrant, and on surrender for
amendment and restatement of this Warrant, the Company at its expense will
issue and deliver to or on the order of the Holder thereof a new Warrant of
like tenor, in the name of such Holder as the Purchasers (on payment by such
Holder of any applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Common Stock as set
forth in such notice reflecting such transfer.
9. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security
7
reasonably satisfactory in form and amount to the Company or, in the case of
any such mutilation, on surrender and cancellation of this Warrant, the Company
at its expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
10. Remedies. The Company stipulates that the remedies at law of
the Holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
11. Negotiability, etc. This Warrant is issued upon the following
terms, to all of which each Holder or owner hereof by the taking hereof
consents and agrees:
(a) title to this Warrant may be transferred by
endorsement and delivery in the same manner as in the case of a negotiable
instrument transferable by endorsement and delivery.
(b) any person in possession of this Warrant properly
endorsed is authorized to represent himself as absolute owner hereof and is
empowered to transfer absolute title hereto by endorsement and delivery hereof
to a bona fide purchaser hereof for value; each prior taker or owner waives and
renounces all of his equities or rights in this Warrant in favor of such bona
fide purchaser, and each such bona fide purchaser shall acquire absolute title
hereto and to all rights represented hereby;
(c) until this Warrant is transferred on the books of the
Company, the Company may treat the registered Holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the contrary; and
(d) notwithstanding the foregoing, this Warrant may be
sold, transferred or assigned except pursuant to an effective registration
statement under the Securities Act or pursuant to an applicable exemption
therefrom.
12. Registration Rights. The Company is obligated to register the
shares of Common Stock issuable upon exercise of this Warrant in accordance
with the terms of the Registration Rights Agreement.
13. Notices, etc. All notices and other communications from the
Company to the Holder of this Warrant shall be mailed by first class registered
or certified mail, postage prepaid, at such address as may have been furnished
to the Company in writing by such Holder or, until any such Holder furnishes to
the Company any address, then to, and at the address of, the last Holder of
this Warrant who has so furnished an address to the Company.
14. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. This Warrant shall be
8
construed and enforced in accordance with and governed by the internal laws of
the State of New York. The headings in this Warrant are for the purposes of
reference only, and shall not limit or otherwise affect any of the terms
hereof. The invalidity or unenforceability of any provision hereof shall in no
way affect the validity or enforceability of any other provision.
[SIGNATURE PAGE FOLLOWS]
9
DATED as of August __, 1999.
LAHAINA ACQUISITIONS, INC.
By:
Name:
Title:
[Corporate Seal]
Attest:
By:
Secretary
10
EXHIBIT A
FORM OF NOTICE EXERCISE - WARRANT
(To be executed only upon exercise
of the Warrant in whole or in part)
To ____________________________________________
The undersigned registered Holder of the accompanying Warrant, hereby
exercises such Warrant or portion thereof for, and purchases thereunder,
__________ (1) shares of Common Stock (as defined in such Warrant) and herewith
makes payment therefor in the amount and manner set forth below, as of the date
written below. The undersigned requests that the certificates for such shares
of Common Stock be issued in the name of, and delivered to, ________________
whose address is .
The Exercise Price is paid as follows:
[ ] Bank draft payable to the Company in the amount of
$_____________.
[ ] Wire transfer to the account of the Company in the amount
of $___________.
[ ] Cashless exercise. Surrender of ___________ shares
purchasable under this Warrant for such shares of Common
Stock issuable in exchange therefor pursuant to the Cashless
Exercise provisions of the Warrant, as provided in Section
1.1(iv) thereto.
Upon exercise pursuant to this Notice of Exercise, the Holder will be
in compliance with the Limitation on Exercise (as defined in the Securities
Purchase Agreement pursuant to which this Warrant was issued).
Date:
(Name must conform to name of Holder as
specified on the face of the Warrant)
By:
Name:
Title:
Address of Holder:
Date of exercise:
--------------------
(1) Insert the number of shares of Common Stock as to which the
accompanying Warrant is being exercised. In the case of a partial exercise, a
new Warrant or Warrants will be issued and delivered, representing the
unexercised portion of the accompanying Warrant, to the Holder surrendering the
same.
11
ANNEX B
WARRANT EXERCISE LEDGER
------------------------------------------------------------------------------------------------------------------------------
ORIGINAL NUMBER WARRANTS EXERCISE PRICE NEW BALANCE ISSUER HOLDER
DATE OF WARRANTS EXERCISED PAID OF WARRANTS INITIALS INITIALS
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
