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EXHIBIT 10.5
THIS WARRANT AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED UPON THE
EXERCISE OF THIS WARRANT HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
OWNERTEL, INC.
COMMON STOCK PURCHASE WARRANT
NO. 001 VOID SEPTEMBER 21, 2002
WARRANT TO PURCHASE SHARES OF COMMON STOCK
THIS CERTIFIES THAT, for value received, TRANSNET CONNECT, INC. (along
with any permitted transferees pursuant to Section 7, the "Holder") can
purchase 500,000 shares (as adjusted pursuant to Section 3 hereof) of the fully
paid and nonassessable Common Stock, $0.001 par value per share (each share, a
"Warrant Share"), of OwnerTel, Inc., a Georgia corporation (the "Company"), at
an exercise price of $1.50 per Warrant Share (the "Exercise Price") (as
adjusted pursuant to Section 3), subject to the provisions and upon the terms
and conditions hereinafter set forth.
1. Method of Exercise; Payment.
(a) Exercise. The Holder can exercise the purchase
rights represented by this Warrant, in whole or in part, by
surrendering this Warrant (with the notice of exercise form attached
as Exhibit A, duly executed) at the Company's principal office, and by
paying the Company, by certified, cashier's or other check acceptable
to the Company or promissory note on terms and conditions satisfactory
to the Company, an amount equal to the aggregate Exercise Price of the
Warrant Shares being purchased.
(b) Reserved
(c) Stock Certificates. In the event of any exercise of
the rights represented by this Warrant, the Company will deliver (i)
certificates for the Warrant Shares so purchased to the Holder within
a reasonable time and, unless this Warrant has been fully exercised or
has expired, (ii) a new Warrant representing the Warrant Shares with
respect to which this Warrant will not have been exercised.
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2. Stock Fully Paid; Reservation of Shares. All of the Warrant
Shares issuable upon the exercise of the rights represented by this Warrant
will, upon issuance and receipt of the Exercise Price for such Warrant Shares,
be fully paid and nonassessable, and free from all taxes, liens and charges
with respect to that issuance. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times
have authorized and reserved for issuance sufficient Warrant Shares to provide
for the exercise of the rights represented by this Warrant.
3. Adjustments. The number and kind of securities purchasable
upon the exercise of this Warrant and the Exercise Price therefor will be
subject to adjustment from time to time upon the occurrence of certain events,
as follows:
(a) Reclassification. In case of any reclassification or
change of the Warrant Shares (other than a change in par value, or as
a result of a subdivision or combination), the Company will execute a
new Warrant, providing that the Holder will have the right to exercise
that new Warrant, and procure upon that exercise and payment of the
same aggregate Exercise Price, in lieu of the Warrant Shares
previously issuable upon exercise of this Warrant, the kind and amount
of shares of stock, other securities, money and property receivable
upon that reclassification or change, by a holder of an equivalent
number of shares of Company common stock. That new Warrant will
provide for adjustments that will be equivalent to the adjustments
provided for in this Section 3. The provisions of this subsection 3(a)
will similarly apply to successive reclassifications or changes.
(b) Stock Splits, Dividends and Combinations. In the
event that the Company will at any time subdivide the outstanding
shares of Company common stock or will issue a stock dividend on its
outstanding shares of Company common stock, the number of Warrant
Shares issuable upon exercise of this Warrant immediately prior to
such subdivision or to the issuance of that stock dividend will be
proportionately increased, and the Exercise Price will be
proportionately decreased, and in the event that the Company will at
any time combine the outstanding shares of Company common stock, the
number of Warrant Shares issuable upon exercise of this Warrant
immediately prior to that combination will be proportionately
decreased, and the Exercise Price will be proportionately increased,
effective at the close of business on the date of that subdivision,
stock dividend or combination, as the case may be.
(c) Reserved.
(d) Consolidation, Merger, or Sale. In the event the
Company consolidates or merges with another corporation (other than a
consolidation or merger in which the Company is the surviving entity
and that does not result in any change in the Warrant Shares), or any
sale or other transfer or disposition by the Company of all or
substantially all of its assets to any other corporation, then the
Holder will thereafter, upon exercise of this Warrant, be entitled to
receive the number of Warrant Shares or other securities or property
of the Company, or of the successor corporation resulting from such
consolidation or merger, as the case may be, to which the Holder would
have been
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entitled upon such consolidation, merger, sale, or other disposition
if this Warrant had been exercised immediately prior to such
consolidation, merger, sale, or other disposition. In any such case,
appropriate adjustment will be made in the application of the
provisions set forth in this Warrant with respect to the rights and
interests thereafter of the Holder to the end that the provisions set
forth in this Warrant (including those relating to adjustments of the
Exercise Price and the number of Warrant Shares issuable upon the
exercise of this Warrant) will thereafter be applicable in relation to
any shares or other property thereafter deliverable upon the exercise
of this Warrant as if this Warrant had been exercised immediately
prior to such consolidation, merger, sale, or other disposition and
the Holder had carried out the terms of the exchange as provided for
by such consolidation, or merger. The Company will not effect any such
consolidation or merger unless, upon or prior to consummating it, the
successor corporation will assume by written instrument the obligation
to deliver to the Holder such shares of stock or other securities,
cash, or property as the Holder will be entitled to purchase in
accordance with the foregoing provisions. Notwithstanding any other
provisions of this Warrant, in the event of sale or other disposition
of all or substantially all of the assets of the Company as a part of
a plan for liquidation of the Company, all rights to exercise the
Warrant will terminate upon the earlier of the expiration of the
Exercise Period and 60 days after the Company gives written notice to
the Holder that such sale or other disposition has been consummated.
4. Notice of Adjustments. Whenever the number of Warrant Shares
purchasable under this Warrant or the Exercise Price is adjusted pursuant to
Section 3, the Company will provide notice to the Holder setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, how the adjustment was calculated, and the number and class of
Warrant Shares that may be purchased and the Exercise Price therefor after
giving effect to such adjustment.
5. Representations and Warranties by the Holder. The Holder
represents and warrants to the Company as follows:
(a) This Warrant and the Warrant Shares issuable upon
exercise of this Warrant are being acquired for its own account, for
investment and not with a view to, or for resale in connection with,
any distribution or public offering thereof within the meaning of the
Securities Act of 1933 (the "1933 Act"). Upon exercise of this
Warrant, the Holder will, if so requested by the Company, confirm in
writing, in a form satisfactory to the Company, that the Warrant
Shares issuable upon exercise of this Warrant are being acquired for
investment and not with a view toward distribution or resale.
(b) The Holder understands that this Warrant and the
Warrant Shares have not been registered under the Act by reason of
their issuance in a transaction exempt from the registration and
prospectus delivery requirements of the 1933 Act pursuant to Section
4(2) thereof, and that they must be held by the Holder indefinitely,
and that the Holder must therefore bear the economic risk of such
investment indefinitely, unless a subsequent disposition thereof is
registered under the 1933 Act or is exempted from such
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registration. The Holder further understands that the Warrant Shares
have not been registered under any applicable state securities laws.
(c) The Holder has such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks of the purchase of this Warrant and the Warrant
Shares issuable upon exercise of this Warrant and of protecting its
interests in connection therewith.
(d) The Holder is able to bear the economic risk of the
purchase of the Warrant Shares pursuant to the terms of this Warrant.
6. Restrictive Legend.
The Warrant Shares (unless registered under the 0000 Xxx) will be
stamped or imprinted with a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE
SECURITIES ACT OF 1933 AND ANY APPLICABLE SECURITIES LAWS.
7. Restrictions Upon Transfer and Removal of Legend.
(a) The Company need not register a transfer of this
Warrant or Warrant Shares bearing the restrictive legend set forth in
Section 6 of this Warrant unless the conditions specified in that
legend are satisfied. The Company can also instruct its transfer agent
not to register the transfer of the Warrant Shares, unless one of the
conditions specified in the legend referred to in Section 6 of this
Warrant is satisfied.
(b) Notwithstanding the provisions of subsection (a)
above, the Company must register a transfer of this Warrant or Warrant
Shares without consideration by the Holder (i) to an affiliate of the
Holder, (ii) if the Holder is a partnership or a limited liability
company, to any current and former constituent partners, members and
shareholders, (iii) if the Holder is a corporation, to a shareholder
of such corporation, or to any other corporation under common control,
direct or indirect, with the Holder, or (iv) if the Holder is an
individual, by gift, will or intestate succession to (A) a transferee
or assignee who is a spouse, lineal descendant, father, mother,
brother or sister (each, a "Family Member") of the Holder or (B) to a
trust, the beneficiaries of which are exclusively the Holder and/or
Family Members, provided, in each case, that: (y) the Company is,
within a reasonable time after that transfer, furnished with written
notice of the name and address of that transferee or assignee and the
number of Warrant Shares under this Warrant that are being assigned;
and (z) that transferee or assignee agrees in
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writing to be bound by and subject to the terms and conditions of this
Warrant to the same extent as if that transferee were the original
Holder of this Warrant.
8. Rights of Shareholders. No Holder will be entitled, as a
Holder, to vote or receive dividends or be deemed the holder of the Warrant
Shares or any other securities of the Company that may at any time be issuable
on the exercise hereof for any purpose, nor will anything contained herein be
construed to confer upon the Holder, as a Holder, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value,
consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until
this Warrant will have been exercised and the Warrant Shares issuable upon the
exercise of this Warrant will have become deliverable, as provided in this
Warrant.
9. Expiration of Warrant. The terms and provisions of this
Warrant will terminate and expire and this Warrant will no longer be
exercisable on the five-year anniversary of the date hereof.
10. Notices. All notices and other communications required or
permitted hereunder will be in writing, will be effective when given, and will
in any event be deemed to be given upon receipt or, if earlier, (a) on the date
shown on the return receipt, if sent by first class mail, postage prepaid,
return receipt requested, (b) upon delivery, if delivered by hand, (c) on the
date of receipt shown in the courier's documentation, if sent by Federal
Express or similar overnight courier, freight prepaid or (d) one business day
after the business day of facsimile transmission with confirmation of receipt,
if delivered by facsimile transmission with copy by first class mail, postage
prepaid, return receipt requested, and will be addressed (i) if to the Holder,
at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxx, XX 00000, Attn: Xxxx Xxxxx, Fax:
(000) 000-0000 and (ii) if to the Company, at 0000 Xxxxxxxxx Xxxx, #000,
Xxxxxxx, Xxxxxxx 00000, Attn: Xxxxxxx X. Head, III, Fax: (000) 000-0000, or at
such other address as a party may designate by ten days advance written notice
to the other party pursuant to the provisions above.
11. Governing Law. This Warrant and all rights, obligations and
liabilities arising herein shall be construed and governed by the substantive
Law of the state of Georgia, without giving effect to the principles of
conflicts of law thereof.
12. Interpretation. References to "Section" and "Exhibit" are to
the Sections and Exhibits respectively of this Warrant.
13. Amendment; Integration; Waiver. This Warrant may not be
amended without a written agreement signed by both parties. This Warrant
contains the entire agreement of the parties hereto and supercedes any prior
agreements and understanding of the parties hereto, written or oral, with
respect to this subject matter. No failure or delay by any party in exercising
any right, power or privilege hereunder will operate as a waiver thereof nor
will any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other
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right, power or privilege. The rights and remedies herein provided will be
cumulative and not exclusive of any rights or remedies provided by law.
Issued this 21st day of September, 2001.
OWNERTEL, INC.
By /s/ Xxxxxxx X. Head, III
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Xxxxxxx X. Head, III
President
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EXHIBIT A
NOTICE OF EXERCISE
TO: OwnerTel, Inc.
#000
0000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
1. The undersigned hereby elects to purchase __________ Warrant
Shares pursuant to the terms of the attached Warrant.
2. The undersigned elects to exercise the attached Warrant by
means of a cash payment, and tenders herewith payment in full for the purchase
price of the shares being purchased, together with all applicable transfer
taxes, if any.
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:
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(Name)
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(Address)
4. The undersigned hereby represents and warrants that the
aforesaid Warrant Shares are being acquired for the account of the undersigned
for investment and not with a view to, or for resale, in connection with the
distribution thereof, and that the undersigned has no present intention of
distributing or reselling such shares and all representations and warranties of
the undersigned set forth in Section 6 of the attached Warrant are true and
correct as of the date hereof.
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(Signature)
Title
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(Date)
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EXHIBIT B
FORM OF TRANSFER
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________________________________________ the right
represented by the attached Warrant to purchase ____________ Warrant Shares to
which the attached Warrant relates, and appoints ______________ Attorney to
transfer such right on the books of [_____________], with full power of
substitution in the premises.
Dated:
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(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant)
(Address)
Signed in the presence of:
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