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EXHIBIT 10.22
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW.
Warrant to Purchase
4,375 Shares of Common Stock
Dated as of June 23, 2000
WARRANT
TO PURCHASE COMMON STOCK OF
X-XXXXXXX.XXX INC.
THIS CERTIFIES that Gamma Fund LLC (the "Holder"), is entitled to purchase
from x-Xxxxxxx.xxx Inc. (herein called the "Company"), a corporation organized
and existing under the laws of Delaware, at any time after the date hereof and
until 5:00 P.M. (Eastern Time) on the seventh anniversary hereof, 4,375 fully
paid and nonassessable shares (the "Warrant Shares") of Class A Common Stock of
the Company, $.001 par value per share (the "Common Stock"), subject to
adjustment as provided herein, at a purchase equal to the Warrant Price (as
hereafter defined).
1. Definitions. As used in this Warrant, the following terms have the
respective meanings set forth below:
"Appraised Value" means, in respect of any share of Common Stock on any
date herein specified, the value attributable to such share of Common Stock if
all of the assets of the Company and its subsidiaries were sold for the
appraised value thereof as of the last day of a fiscal month to end within 60
days prior to such date specified, and thereafter liquidated in accordance with
the terms of the Company's Certificate of Incorporation, as determined in good
faith by the Board of Directors of the Company.
"Book Value" means, in respect of any share of Common Stock on any date
herein specified, the value attributable to such share of Common Stock if all of
the assets of the Company and its subsidiaries were sold for the consolidated
book value thereof as of the last day of any month immediately preceding such
date, and thereafter liquidated in accordance with the Company's Certificate of
Incorporation, as determined in accordance with generally accepted accounting
principles in the United States.
"Business Day" means any day that is not a Saturday or Sunday or a day on
which banks are required or permitted to be closed in the State of New York.
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"Current Market Price" means, in respect of the Common Stock on any date
herein specified, the higher of (a) the Book Value per share of Common Stock at
such date and (b) the Appraised Value per share of Common Stock as at such date,
or if there shall then be a public market for the Stock, the average of the
daily market prices for 30 consecutive Business Days commencing 45 days before
such date. The daily market price for each such Business Day shall be (i) the
last sale price on such date on the principal stock exchange on which the Common
Stock is then listed or admitted to trading, (ii) if no sale takes place on such
day on any such exchange, the average of the last reported closing bid and asked
prices on such day as officially quoted on any such exchange, (iii) if the
Common Stock is not then listed or admitted to trading on any stock exchange,
the average of the last reported closing bid and asked prices on such day in the
over-the-counter market, as furnished by the National Association of Securities
Dealers Automatic Quotation System or the national Quotation Bureau, Inc., (iv)
if neither such corporation at the time is engaged in the business of reporting
such prices, as furnished by any similar firm then engaged in such business, or
(v) if there is no such firm, as furnished by any member of the National
Association of Securities Dealers, Inc. ("NASD") selected by the Company.
"Expiration Date" means the date which is the seventh anniversary of the
date of this Warrant.
"Outstanding" means, when used with reference to Common Stock or any class
thereof, at any date as of which the number of shares thereof is to be
determined, all issued shares of Common Stock or of the relevant class, except
shares then owned or held by or for the account of the Company or any subsidiary
thereof, and shall include all shares issuable in respect of outstanding scrip
or any certificates representing fractional interests in shares of Common Stock
or of the relevant class.
"Subsequent Financing" means the sale by the Company, to one or more third
parties, of equity securities of the Company equal to or exceeding $5,000,000
(or a lesser amount as agreed by the Holder) in aggregate gross proceeds to the
Company.
"Warrant Price" means $2.00; provided, however, that the Warrant Price
shall be $.50 if the Subsequent Financing does not occur on or prior to July 31,
2000 and shall be $.01 if the Subsequent Financing does not occur on or prior to
August 31, 2000.
2. Exercise of Warrant. This Warrant shall be exercisable at any time after
the Closing Date until the expiration of the Warrant as provided in Section 3
hereof, in the manner set forth in Section 4 hereof.
3. Expiration of Warrant. This Warrant, to the extent not exercised, shall
expire and cease to be of force and effect at 5:00 P.M. (Eastern Time) on the
Expiration Date.
4. Method of Exercise. This Warrant may be exercised in whole or in part
(but not as to fractional shares) by the surrender of the Warrant, with the
Purchase Agreement attached hereto
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as ANNEX A properly completed and duly executed, at the principal office of the
Company or such other location which at that time shall be the principal office
of the Company (the "Principal Office"), and upon payment to it of the Warrant
Price for each Warrant Share to be purchased upon such exercise (the aggregate
of the Warrant Price for all shares to be exercised being referred to herein as
the "Purchase Price"). The Purchase Price shall be paid by delivering either:
(i) a certified check, bank draft or wire transfer of immediately available
funds to the order of the Company or (ii) this Warrant with instructions that
the Company retain as payment of the Purchase Price such number of Warrant
Shares as shall be determined under the next sentence (a "Cashless Exercise").
In the event of a Cashless Exercise, the Holder shall receive that number of
Warrant Shares determined by multiplying the number of Warrant Shares for which
the Cashless Exercise is made by a fraction, the numerator of which shall be the
difference between the then Current Market Price per Warrant Share and the
Warrant Price, and the denominator of which shall be the then Current Market
Price per share of Common Stock. The remaining Warrant Shares for which Cashless
Exercise has been made shall be deemed to have been paid to the Company as the
Purchase Price. The Holder shall be treated for all purposes as the holder of
the Warrant Shares as of the close of business on the date of exercise, and
certificates for the Warrant Shares so purchased shall be delivered to the
person so entitled, properly endorsed for transfer or accompanied by appropriate
stock powers, within a reasonable time, not exceeding five days, after such
exercise. Unless this Warrant shall have expired, a new Warrant of like tenor
and for such number of Warrant Shares as the Holder shall direct, representing
in the aggregate the right to purchase that number of Warrant Shares with
respect to which this Warrant shall not have been exercised, shall also be
issued to the Holder within such time.
5. Certain Covenants.
(a) The Company shall cause all Warrant Shares to be listed on each
national securities exchange or securities quotation system, if any, on which
the other outstanding shares of Common Stock of the Company are then listed or
quoted.
(b) The Company shall (i) use its best efforts to comply with the
current public information requirements of Rule 144 ("Rule 144") under the 1933
Act and (ii) at all times Rule 144 is available for use by Xxxxxx, furnish the
Holder upon request with all information within the possession of the Company
required for the preparation and filing of Rule 144.
(c) The Company shall not sell, assign, transfer, give, donate, pledge,
hypothecate, create a security interest in, place in trust or otherwise
voluntarily or involuntarily dispose or otherwise encumber any of the Warrant
Shares.
(d) The Company shall add a legend to the certificates representing the
Warrant Shares as follows:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THAT CERTAIN WARRANT DATED JUNE 23, 2000 AND MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, GIVEN, DONATED,
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PLEDGED, HYPOTHECATED, PLACED IN TRUST OR OTHERWISE VOLUNTARILY OR
INVOLUNTARILY DISPOSED OF OR OTHERWISE ENCUMBERED EXCEPT PURSUANT TO THE
TERMS OF SUCH WARRANT.
(e) The Company shall cause its transfer agent to remove the legend set
forth in Section 5(d) upon delivery to the Holder of the certificates
representing the Warrant Shares pursuant to Section 4.
6. Adjustment of Purchase Price and Number of Shares. The number of shares
of Common Stock purchasable upon the exercise of this Warrant and/or the
Exercise Price shall be subject to adjustment from time to time upon the
happening of certain events as follows:
6.1 Stock Dividends, Subdivisions or Combinations. If the Company at
any time while the Warrant remains outstanding and unexpired shall:
(a) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock,
(b) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or
(c) pay a dividend or make a distribution in shares of its Common
Stock,
then the number of shares of Common Stock purchasable upon the exercise of
this Warrant immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock that a record holder
of the same number of shares of Common Stock represented by this Warrant
immediately prior to the occurrence of such event would own or be entitled
to receive after the happening of such event and the Warrant Price shall be
proportionately adjusted.
6.2 Certain Other Distributions. If at any time the Company shall take
a record of the holders of its Common Stock for the purpose of entitling
them to receive any dividend or other distribution of:
(a) cash (other than a cash distribution or dividend payable out
of earnings or earned surplus legally available for the payment of
dividends under the laws of the jurisdiction of incorporation of the
Company),
(b) any evidences of its indebtedness, any shares of its stock or
any other securities or property of any nature whatsoever (other than
cash), or
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(c) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash).
then the number of shares of Common Stock issuable upon exercise of this
Warrant shall be adjusted to equal the product of the number of shares of
Common Stock issuable upon exercise of this Warrant immediately prior to
such adjustment by a fraction (i) the numerator of which shall be the
Current Market Price per share of Common Stock at the date of taking such
record and (ii) the denominator of which shall be such Current Market Price
per share of Common Stock minus the amount allocable to one share of Common
Stock of any such cash so distributable and of the fair value (as
determined in good faith by the Board of Directors of the Company) of any
and all such evidences of indebtedness, shares of stock, other securities
or property or warrants or other subscription or purchase rights so
distributable and the Warrant Price shall be proportionately reduced. A
reclassification of the Common Stock (other than a change in par value, or
from par value to no par value or from no par value to par value) into
shares of Common Stock and shares of any other class of stock shall be
deemed a distribution by the Company to the holders of its Common Stock of
such shares of such other class of stock within the meaning of this Section
6.2 and, if the outstanding shares of Common Stock shall be changed into a
larger or smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock within the
meaning of Section 6.1.
6.3 Reclassification, Consolidation or Merger. At any time while this
Warrant remains outstanding and unexpired, in case of any reclassification
or change of outstanding securities issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or
from no par value to par value or as a result of an event described in
Sections 6.1(a) or (b) above) or in case of any consolidation or merger of
the Company with or into another corporation (other than a merger with
another corporation in which the Company is a continuing corporation and
which does not result in any reclassification or change, other than a
change in par value, or from par value to no par value, or from no par
value to par value), or in the case of any sale or transfer to another
corporation of the property of the Company as an entirety or substantially
as an entirety, the Company shall, without payment of any additional
consideration therefor, execute a new Warrant providing that the Holder
shall have the right to exercise such new Warrant (upon terms not less
favorable to the Holder than those then applicable to this Warrant) and to
receive upon such exercise, in lieu of each share of Common Stock of the
Company theretofore issuable upon exercise of this Warrant, the kind and
amount of shares of stock, other securities, money or property receivable
upon such reclassification, change, consolidation, merger, sale or transfer
by the Holder of one share of Common Stock issuable upon exercise of this
Warrant had this Warrant been exercised immediately prior to such
reclassification, change, consolidation, merger, sale or transfer. Such new
Warrant shall provide for adjustments which shall be as nearly equivalent
as may be practicable to the adjustments provided for in
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this Section 6. The provisions of this Section 6.3 shall similarly apply to
successive reclassification, changes, consolidations, mergers, sales and
transfers.
6.4 Liquidating Dividends, Etc. If the Company at any time while this
Warrant remains outstanding and unexpired makes a distribution of its
assets to the holders of its Common Stock as a dividend in liquidation or
by way of return of capital or other than as a dividend payable out of
earnings or surplus legally available for dividends under applicable law or
any distribution to such holders made in respect of the sale of all or
substantially all of the Company's assets (other than under the
circumstances otherwise provided for in this Section 6), the holder of this
Warrant shall be entitled to receive upon the exercise hereof, in addition
to the shares of Common Stock receivable upon such exercise, and without
payment of any consideration other than the Warrant Price, an amount in
cash equal to the value of such distribution per share of Common Stock
multiplied by the number of shares of Common Stock which, on the record
date for such distribution, are issuable upon exercise of this Warrant
(with no further adjustment being made following any event which causes a
subsequent adjustment in the number of shares of Common Stock issuable upon
the exercise hereof), and an appropriate provision therefor should be made
a part of any such distribution. The value of a distribution which is paid
in other than cash shall be determined in good faith by the Company's Board
of Directors.
6.5 Issuance of Securities.
(a) If at any time while this Warrant remains outstanding and
unexpired, the Company shall issue any shares of Common Stock
(otherwise than as provided in Sections 6.1, 6.2, 6.3, or 6.4) at a
price per share which is less then the Warrant Price in effect
immediately prior to such issuance, then the Warrant Price shall be
reduced to such price per share. No adjustment of the Warrant Price
shall be made pursuant to this Section 6.5, however, upon the issuance
of any shares of Common Stock which are issued pursuant to the
exercise of any warrants, options or other purchase or subscription
rights or pursuant to the exercise of any conversion or exchange
rights in any convertible securities if any such adjustments were
previously made upon the issuance of any such warrants, options, other
purchase or subscription rights or convertible or exchangeable
securities (or upon the issuance of any warrants, options or any other
rights therefor) pursuant to Sections 6.5(b) or (c); or
(b) If at any time while this Warrant remains outstanding and
unexpired, the Company shall issue any warrants, options or other
rights to subscribe or purchase any shares of Common Stock (otherwise
than as provided in Sections 6.1, 6.2, 6.3, or 6.4) containing an
exercise or purchase price per share of Common Stock that is less then
the Warrant Price in effect immediately prior to such issuance, then
the Warrant Price shall be reduced to such exercise or purchase price
per share; and
(c) If at any time while this Warrant remains outstanding and
unexpired, the Company shall issue any securities convertible into or
exchangeable for shares of
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Common Stock (otherwise than as provided in Sections 6.1, 6.2, 6.3, or
6.4) containing a conversion or exchange price per share of Common
Stock that is less then the Warrant Price in effect immediately prior
to such issuance, then the Warrant Price shall be reduced to such
conversion or exchange price per share. No adjustment of the Warrant
Price shall be made pursuant to this Section 6.5(c) upon the issuance
of any convertible or exchangeable securities which are issued
pursuant to the exercise of any warrants, options or other purchase or
subscription rights, if any such adjustments were previously made upon
the issuance of any such warrants, options or other rights pursuant to
Sections 6.5(b).
6.6 Other Action Affecting Common Stock. If after the date hereof the
Company shall take any action affecting the outstanding number of shares of
Common Stock, other than an action described in any of the foregoing
subsections of Section 6 hereof, inclusive, that would have a materially
adverse effect upon the rights of the Holder, the Warrant Shares and the
Warrant Price shall be adjusted in such manner and at such time as the
Company's Board of Directors on the advice of the Company's independent
public accountants may in good faith determine to be equitable in the
circumstances.
6.7 Other Provisions Applicable to Adjustment under this Section. The
following provisions shall be applicable to the making of any adjustment of
the number of shares of Common Stock issuable upon exercise of this Warrant
provided for in this Section 6:
(a) When Adjustments to Be Made. The adjustments required by this
Section 6 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the
number of shares of Common Stock issuable upon exercise of the Warrant
that would otherwise be required may be postponed (except in the case
of a subdivision or combination of shares of the Common Stock, as
provided for in Section 6.1) up to, but not beyond the date of
exercise if such adjustment either by itself or with other adjustments
not previously made adds or subtracts less than 1% of the shares of
Common Stock issuable upon exercise of the Warrant immediately prior
to the making of such adjustment. Any adjustment representing a change
less than such minimum amount (except as aforesaid) which is postponed
shall be carried forward and made as soon as such adjustment, together
with other adjustments required by this Section 6 and not previously
made, would result in a minimum adjustment or on the date of exercise.
For the purpose of any adjustment, any specified event shall be deemed
to have occurred at the close of business on the date of its
occurrence.
(b) Fractional Interest. In computing adjustments under this
Section 6, fractional interests in Common Stock shall be taken into
account to the nearest 1/10th of a share.
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(c) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution to
stockholders thereof, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the taking of
such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.
(d) Escrow of Warrant Stock. If after any property becomes
distributable pursuant to this Section 6 by reason of the taking of
any record of the holders of Common Stock, but prior to the occurrence
of the event for which such record is taken, and the Holder exercises
this Warrant, any additional shares of Common Stock obtainable upon
exercise by reason of such adjustment shall be deemed the last shares
of Common Stock for which this Warrant is exercised (notwithstanding
any other provision to the contrary herein) and such shares or other
property shall be held in escrow for the Holder by the Company to be
transferred to the Holder upon and to the extent that the event
actually takes place, upon payment of the Warrant Price.
Notwithstanding any other provision to the contrary herein, if the
event for which such record was taken fails to occur or is rescinded,
then such escrowed shares shall be canceled by the Company and
escrowed property returned.
7. Legend. Each certificate for shares obtained upon exercise of this
Warrant shall bear the following legend:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"). Such
securities have been acquired for investment and may not be sold or
transferred in the absence of an effective registration statement for
such securities under the 1933 Act, unless, in the opinion (which
shall be in form and substance satisfactory to the Company) of counsel
satisfactory to the Company, such registration is not required."
In addition, the certificate shall bear such additional legend with respect to
state securities or blue sky laws as reasonably determined by counsel to the
Company.
8. Notice of Adjustments. Whenever the number of shares of Common Stock
issuable upon exercise of this Warrant shall be adjusted pursuant to Section 6
hereof, the Company shall promptly notify the Holder in writing of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Company's
Board of Directors made any determination hereunder), and the number of shares
of Common Stock obtainable upon exercise
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of this Warrant after giving effect to such adjustment. Such notice shall be
mailed (by first class and postage prepaid) to the Holder.
9. Voting. The Holder shall not have any voting rights with respect to the
Warrant Shares until the exercise of this Warrant, and thereafter, the Holder
shall have all voting rights with respect to the Warrant Shares for which
exercise is made hereunder.
10. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Holder as follows:
(a) This Warrant has been duly authorized by all necessary corporate
action on the part of the Company and has been duly executed by a duly
authorized officer of the Company and constitutes a valid and binding obligation
of the Company.
(b) Neither the execution and delivery of this Warrant, nor the
consummation of the transactions contemplated hereby, will violate or result in
any violation of or be in conflict with or constitute a default under any term
of the charter or bylaws of the Company or of any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
the Company.
(c) Upon exercise of this Warrant and payment of the Warrant Price by
the Holder (i) the Warrant Shares will be duly issued, fully paid and
nonassessable shares of Common Stock and free from all taxes, liens and changes
with respect to the issuance thereof and (ii) the Holder shall receive valid
title to all of the Warrant Shares in all cases free and clear of all liens,
mortgages, security interests, pledges, defects of title or other claims,
charges or encumbrances of any nature.
11. Loss, Theft, Destruction or Mutilation. Upon receipt by the Company of
evidence reasonably satisfactory to it that this Warrant has been mutilated,
destroyed, lost or stolen, and in the case of any destroyed, lost or stolen
Warrant, a bond of indemnity reasonably satisfactory to the Company, or in the
case of a mutilated Warrant, upon surrender and cancellation thereof, the
Company will execute and deliver in the Holder's name, in exchange and
substitution for the Warrant so mutilated, destroyed, lost or stolen, a new
Warrant of like tenor substantially in the form thereof with appropriate
insertions and variations.
12. Successors and Assigns. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the Holder.
13. Amendment. This Warrant may be modified with the written consent of the
Company and the Holder.
14. Transferability. This Warrant, and any Warrant Shares issued upon
exercise of this Warrant, may be sold, pledged or otherwise transferred or
encumbered by the Holder.
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15. Injunctive Relief. It is acknowledged that it will be impossible to
measure the damages that would be suffered by a party if another party fails to
comply with the provisions hereof and that in the event of any such failure,
each non-breaching party may not have an adequate remedy at law. Therefore, any
party shall be entitled to obtain specific performance of another party's
obligations hereunder and to obtain injunctive relief. No party shall argue, as
a defense to any proceeding for such specific performance or injunctive relief,
that another party has no adequate remedy at law.
16. Headings. The descriptive headings of the several sections of this
Warrant are inserted for convenience only and do not constitute a part of this
Warrant.
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17. Governing Law. This Warrant shall be governed by the laws of the State
of Delaware without regard to the provisions thereof relating to conflict of
laws.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer, attested by its duly authorized officer, on the date of
this Warrant.
X-XXXXXXX.XXX INC.
By:
Name:
Title:
GAMMA FUND LLC
By:
Name: Xxxxxx X. Xxxxxxx, Xx.
Its: Managing Member
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Annex A
PURCHASE AGREEMENT
Date:
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TO: x-Xxxxxxx.xxx Inc.
(1) The undersigned, pursuant to the provisions set forth in the attached
Warrant, hereby irrevocably agrees to purchase ________ shares of Common Stock
covered by such Warrant, and makes payment herewith in full therefor at the
price per share of $______ provided by this Warrant.
(2) The undersigned, pursuant to the provisions set forth in the attached
Warrant, hereby irrevocably elects to make a Cashless Exercise, as provided for
in Section 4 of such Warrant, with respect to _________ Warrant Shares,
_________ Warrant Shares of which shall be retained by the Company in payment of
the Purchase Price (as defined in the Warrant).
Signature:
Address:
