Exhibit 10.7
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT OR THE RULES AND REGULATIONS THEREUNDER.
WARRANT TO PURCHASE
SHARES OF
MINDARROW SYSTEMS, INC.
COMMON STOCK
XX. 000 XXX 00, 0000
XxxxXxxxx Systems, Inc., a Delaware corporation (the "Company") hereby
issues to EastWest Capital Associates, Inc. (the "Holder") this warrant to
purchase from the Company, at any time or from time to time on or before the
third anniversary of the date of this warrant (or any earlier date specified by
the Company in a written notice given by the Company to the Holder), for a price
per share equal to $0.50, 1,500,000 shares of common stock of the Company.
Notwithstanding the foregoing, if the Company decides not to close the
transactions contemplated in the term sheet dated May 10, 2002 between the
Company and the Holder, then the price per share shall be equal to $0.10 for
1,500,000 shares of common stock of the Company.
This warrant is subject to the following terms and conditions:
1. Exercise. The rights represented by this warrant may be
exercised, at any time or from time to time in whole or in part, by (a) the
surrender of this warrant, along with the purchase form attached as exhibit A-1
(the "Purchase Form"), properly executed, at the address of the Company set
forth in section 7.2 (or such other address as the Company may designate by
notice in writing to the Holder at its address set forth in section 7.2) and (b)
the payment to the Company of the exercise price by check, payable to the order
of the Company, for the number of shares specified in the Purchase Form,
together with any applicable stock transfer taxes. A certificate representing
the shares so purchased and, in the event of an exercise of fewer than all the
rights represented by this warrant, a new warrant in the form of this warrant
issued in the name of the Holder or its designee(s) and representing a new
warrant to purchase a number of shares equal to the number of shares as to which
this warrant was theretofore exercisable less the number of shares as to which
this warrant shall theretofore have been exercised, shall be delivered to the
Holder or such designee(s) as promptly as practicable, but in no event later
than three business days, after this warrant shall have been so exercised.
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2. Adjustment of the Number of Shares. If the Company shall (a)
pay a dividend in common stock or make a distribution in common stock, (b)
subdivide its outstanding common stock, (c) combine its outstanding common stock
into a smaller number of shares of common stock, (d) make a distribution on its
common stock in shares of its capital stock other than common stock, or (e)
issue by reclassification of its common stock, spin-off, split-up,
recapitalization, merger, consolidation or any similar corporate event or
arrangement other securities of the Company, the kind and number of shares of
common stock purchasable upon exercise of this warrant shall be adjusted
immediately prior to the exercise of this warrant so that the Holder shall be
entitled to receive the kind and number of shares or other securities of the
Company to which the Holder would have been entitled to receive after the
happening of any of the events described above had this warrant been exercised
immediately prior to the happening of such event or the record date with respect
to such event.
3. Reservation of Shares. From and after the date of this
warrant, the Company shall at all times reserve and keep available for issuance
upon the exercise of this warrant a number of its authorized but unissued shares
of common stock sufficient to permit the exercise in full of this warrant.
4. Transfer. Subject to applicable law, this warrant may be
transferred at any time, in whole or in part, to any entity, entities, person or
persons. Any transfer shall be effected by the surrender of this warrant, along
with the form of assignment attached as exhibit A-2, properly executed, at the
address of the Company set forth in section 7.2 (or such other address as the
Company may designate by notice in writing to the Holder at its address set
forth in section 7.2). Thereupon, the Company shall issue in the name or names
specified by the Holder a new warrant or warrants of like tenor and representing
a warrant or warrants to purchase in the aggregate a number of shares equal to
the number of shares to which this warrant was theretofore exercisable less the
number of shares as to which this warrant shall theretofore have been exercised.
5. Payment of Taxes. The Company shall cause all shares of common
stock issued upon the exercise of this warrant to be validly issued, fully paid
and nonassessable and not subject to preemptive rights. The Company shall pay
all expenses in connection with, and all taxes and other governmental charges
that may be imposed with respect to, the issuance or delivery of the shares of
common stock upon exercise of this warrant, unless such tax or charge is imposed
by law upon the Holder.
6. Piggyback Registration.
6.1 Inclusion in Registration. If at any time after the
date of this warrant until the expiration of this warrant, the Company proposes
to register any of its shares of common stock under the Securities Act of 1933
(other than in connection with a merger or pursuant to Form S-8 or S-4 or a
comparable registration statement) it will promptly give notice to the Holder of
its intention to do so. If the Holder notifies the Company within twenty (20)
days after receipt of any such notice of its desire to include any Warrant
Shares (as defined in section 6.3) in such proposed registration, the Company
shall afford the Holder the opportunity to have such Warrant Shares registered
under such registration statement.
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Notwithstanding anything in this section 6 to the contrary,
the Company shall have the right at any time after it shall have given any
notice pursuant to this section 6 (irrespective of whether a written request for
inclusion of any Warrant Shares shall have been made), to elect to postpone or
not to file such proposed registration statement or to withdraw the same after
filing but prior to the effective date thereof.
6.2 Underwriting Requirements. In connection with any
offering involving an underwriting of shares being sold by the Company, the
Company shall not be required under this section 6 to include any Warrant Shares
in such underwriting unless the Holder accepts the terms of the underwriting as
agreed upon between the Company and the underwriters selected by it, and then
only in such quantity as will not, in the opinion of the underwriters,
jeopardize the success of the offering by the Company. If the total number of
shares, including the Warrant Shares, requested by shareholders, including the
Holder, to be included in the offering exceeds the number of shares sold other
than by the Company that the underwriters reasonably believe compatible with the
success of the offering, then the number of selling shareholders' shares that
may be included in the offering shall be apportioned pro rata among the selling
shareholders according to the total number of shares entitled to be included in
the offering owned by each selling shareholder or in such other proportions as
shall mutually be agreed to by the selling shareholders.
6.3 Definition. As used in this section 6, the term
"Warrant Shares" means shares of common stock of the Company issued or issuable
upon the exercise of this warrant
7. Miscellaneous.
7.1 Securities Act Restrictions. The Holder acknowledges
that this warrant may not be sold, transferred or otherwise disposed of without
registration under the Securities Act of 1933 (the "Act") or an applicable
exemption from the registration requirements of the Act and, accordingly, this
warrant and all certificates representing the common stock and any other
securities issuable upon the exercise of this warrant shall bear a legend in the
form set forth on the top of page one of this warrant.
7.2 Notices. All notices and other communications under
this agreement shall be in writing and may be given by any of the following
methods: (a) personal delivery; (b) facsimile transmission; (c) registered or
certified mail, postage prepaid, return receipt requested; or (d) overnight
delivery service. Notices shall be sent to the appropriate party at its, his or
her address or facsimile number given below (or at such other address or
facsimile number for that party as shall be specified by notice given under this
section 7.2):
if to the Holder, to it at:
EastWest VentureGroup, LLC
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx
Fax: (000) 000-0000
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with a copy to:
East-West Capital Associates, Inc.
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Fax: (000) 000-0000
Buchalter, Nemer, Fields & Younger
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
if to the Company, to it at:
MindArrow Systems, Inc.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, CEO
Fax: (000) 000-0000
All such notices and communications shall be deemed received upon (a) actual
receipt by the addressee, (b) actual delivery to the appropriate address or (c)
in the case of a facsimile transmission, upon transmission by the sender and
issuance by the transmitting machine of a confirmation slip confirming that the
number of pages constituting the notice have been transmitted without error. In
the case of notices sent by facsimile transmission, the sender shall
contemporaneously mail a copy of the notice to the addressee at the address
provided for above. However, such mailing shall in no way alter the time at
which the facsimile notice is deemed received.
7.3 Amendment. This warrant may be modified or amended or
the provisions of this warrant may be waived only with the written consent of
the Company and the Holder.
7.4 Mutilated or Missing Warrant. In case this warrant
shall be mutilated, lost, stolen or destroyed, the company shall, as soon as
practicable upon receiving notice of such event, issue, in exchange and
substitution for and upon cancellation of the mutilated warrant, or in lieu of
and substitution for the warrant lost, stolen or destroyed, a new warrant of
like tenor and representing a warrant to purchase in the aggregate a number of
shares equal to the number of shares to which this warrant was previously
exercisable, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such warrant and indemnity, if
requested, also reasonably satisfactory to it or, in the case of any such
mutilation, upon surrender and cessation of such warrant. Applicants for such
substitute warrant shall also
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comply with such other reasonable requests and pay such other reasonable charges
as the Company may prescribe.
7.5 Governing Law. This warrant shall be governed by the
law of the state of Delaware, without regard to the provisions thereof relating
to conflicts of laws.
MINDARROW SYSTEMS, INC.
By: ______________________________________
Xxxxxxx X. Xxxxxx,
CFO
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EXHIBIT A-1
PURCHASE FORM
[To be executed only upon exercise of warrant]
The undersigned registered owner of this warrant irrevocably exercises
this warrant for the purchase of ________________ shares of common stock of
MindArrow Systems, Inc. and herewith makes payment therefor, all at the price
and on the terms and conditions specified in this warrant and requests that
certificates for the shares of common stock hereby purchased be issued in the
name of and delivered to _________________________________ whose address is
________________________________________________________ and, if such shares of
common stock shall not include all of the shares of common stock issuable as
provided in this warrant, that a new warrant of like tenor and date for the
balance of the shares of common stock issuable hereunder be delivered to the
undersigned.
Dated: _________________________
________________________________________
(Name of Registered Owner)
________________________________________
(Signature of Registered Owner)
________________________________________
(Street Address)
________________________________________
(City) (State) (Zip Code)
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EXHIBIT A-2
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this warrant
hereby sells, assigns and transfers to the assignee named below all of the
rights of the undersigned under this warrant with respect to the number of
shares of common stock set forth below:
No. of shares
Name and Address of Assignee Common Stock
____________________________ ____________________________
and does hereby irrevocably constitute and appoint _____________________________
attorney-in-fact to register such transfer on the books of MindArrow Systems,
Inc. maintained for the purpose, with full power of substitution in the
premises.
Dated: __________________ Print Name: ________________________________
Signature: _________________________________
Witness: ___________________________________
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