THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH
TRANSACTION OR SUCH TRANSACTION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND LAWS.
COST-U-LESS, INC.
COMMON STOCK PURCHASE WARRANT
RECITALS
A. On March 8, 1991, Xxxxxxx X. Xxxx and Xxxxxxxx Xxxxxxxxxx were each
granted a warrant to purchase 10,000 shares of the Cost-U-Less, Inc., a
Washington Corporation (the "Company") Common Stock, par value $0.001 per share,
at an exercise price of $3.50 per share by the Board of Directors.
B. On January 1, 1992, pursuant to an Asset Exchange Agreement between
Xxxxxxx X. Xxxx and Xxxxxxxx Xxxxxxxxxx, Xxxxxxx X. Xxxx acquired the warrant
held by Xxxxxxxx Xxxxxxxxxx for good and valuable consideration.
C. On January 26, 1994, the Company effected a 5-for-1 stock split, the
result of which is that Xxxxxxx X. Xxxx now holds a warrant to purchase 100,000
shares of the Company's Common Stock at an exercise price of $0.70 per share.
D. The Company expects to effect a 3.38773-for-1 reverse stock split, the
result of which will be that Xxxxxxx X. Xxxx will hold a warrant to purchase
29,518 shares at an exercise price of $2.37 per share.
E. The Company wishes to evidence the warrant in writing for certainty of
the parties.
AGREEMENT
This certifies that for an agreed upon value of $1.00 and other good and
valuable consideration, Xxxxxxx X. Xxxx, or his registered assigns (the
"Holder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or after the date hereof (subject to the provisions of
Sections 1 and 2) to acquire from the Company, in whole or from time to time in
part, up to a maximum of 29,518 fully paid and nonassessable shares of the
Company's Common Stock, ("Warrant Stock") at a purchase price per share (the
"Exercise Price") of $2.37 per share. Such number of shares, type of security
and Exercise Price are
subject to adjustment as provided herein, and all references to "Warrant Stock"
and "Exercise Price" herein shall be deemed to include any such adjustment.
1. EXERCISE OF WARRANT
Subject to the termination provisions of Section 10 hereof, the purchase
rights represented by this Warrant are exercisable by the registered holder
hereof, in whole or in part, at any time and from time to time at or prior to
the Expiration Time by the surrender of this Warrant and the Notice of Exercise
form attached hereto duly executed to the office of the Company at 00000 X.X.
00xx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000 (or such other office or agency of the
Company as it may designate by notice in writing to the registered holder hereof
at the address of such holder appearing on the books of the Company), and upon
payment of the Exercise Price for the shares thereby purchased (by cash or by
check or bank draft payable to the order of the Company or by cancellation of
indebtedness of the Company to the holder hereof, if any, at the time of
exercise in an amount equal to the purchase price of the shares thereby
purchased); whereupon the holder of this Warrant shall be entitled to receive
from the Company a stock certificate in proper form representing the number of
shares of Warrant Stock so purchased.
2. CONVERSION RIGHT
In lieu of exercising this Warrant as specified in Section 1, the Holder
may from time to time convert this Warrant, in whole or in part, into a number
of shares of Warrant Stock determined by dividing (a) the aggregate fair market
value of the Warrant Stock or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Exercise Price of such shares by (b) the
fair market value of one share of Warrant Stock. If the Warrant Stock is traded
in a public market, the fair market value of the Warrant Stock shall be the
closing price of the Warrant Stock reported for the business day immediately
before the Holder exercises its rights pursuant to this Section. If the Warrant
Stock is not traded in a public market, the Board of Directors of the Company
shall determine fair market value based upon the purchase price of the Warrant
Stock in the most recent arm's length transaction prior to the exercise of this
Warrant.
3. SECURITIES ACT COMPLIANCE
As a condition of its delivery of the certificates for the Warrant Stock,
the Company may require the registered holder hereof (or the transferee, if any,
of the Warrant Stock in whose name the shares of Warrant Stock are to be
registered) to deliver to the Company, in writing, representations regarding the
purchaser's sophistication, investment intent, acquisition for its own account
and such other matters as are reasonable and customary for purchasers of
securities in an unregistered private offering and the Company may place
conspicuously upon each certificate representing shares of Warrant Stock a
legend substantially in the following form, the terms of which are agreed to by
the registered holder hereof (including any transferee of this Warrant or the
Warrant Stock):
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THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE
STATE OR FOREIGN SECURITIES LAW, AND NO INTEREST THEREIN MAY BE SOLD,
DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
(I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
APPLICABLE STATE OR FOREIGN SECURITIES LAWS COVERING ANY SUCH TRANSACTION
INVOLVING SAID SECURITIES, (II) THIS CORPORATION RECEIVES AN OPINION OF
LEGAL COUNSEL FOR THE HOLDER OF THESE SECURITIES SATISFACTORY TO THIS
CORPORATION STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR
(III) THIS CORPORATION OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION
IS EXEMPT FROM REGISTRATION.
4. ISSUANCE OF SHARES; NO FRACTIONAL SHARES OR SCRIP
Certificates for shares purchased hereunder shall be delivered to the
holder hereof within a reasonable time after the date on which this Warrant
shall have been exercised in accordance with the terms hereof. The Company
agrees that the shares so issued shall be, and be deemed to be, issued to such
holder as the record owner of such shares as of the close of business on the
date on which this Warrant shall have been exercised in accordance with the
terms hereof. No fractional shares or scrip representing fractional shares
shall be issued upon the exercise of this Warrant. With respect to any fraction
of a share called for upon the exercise of this Warrant, an amount equal to such
fraction multiplied by the then current price at which each share may be
purchased hereunder shall be paid in cash or check to the holder of this
Warrant.
5. CHARGES, TAXES AND EXPENSES
Issuance of certificates for shares of Warrant Stock upon the exercise of
this Warrant shall be made without charge to the holder hereof 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 of this Warrant or
in such name or names as may be directed by the holder of this Warrant;
provided, however, that in the event certificates for shares of Warrant Stock
-------- -------
are to be issued in a name other than the name of the holder of this Warrant,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the holder hereof.
6. NO RIGHTS AS SHAREHOLDER
This Warrant does not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company prior to the exercise hereof.
7. Exchange and Registry of Warrant
This Warrant is exchangeable, upon the surrender hereof by the registered
holder at the above-mentioned office or agency of the Company, for a new Warrant
of like tenor and
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dated as of such exchange. The Company shall maintain at the
above-mentioned office or agency a registry showing the name and address of the
registered holder of this Warrant. This Warrant may be surrendered for
exchange, transfer or exercise, in accordance with its terms and subject to
compliance with applicable laws, at such office or agency of the Company, and
the Company shall be entitled to rely in all respects, prior to written notice
to the contrary, upon such registry.
8. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) upon receipt of indemnity or security reasonably
satisfactory to it, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will make and deliver a new warrant of
like tenor and dated as of such cancellation, in lieu of this Warrant.
9. SATURDAYS, SUNDAYS AND HOLIDAYS
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 or a Sunday or shall
be a legal holiday, then such action may be taken or such right may be exercised
on the next succeeding day that is not a legal holiday.
10. MERGER, SALE OF ASSETS, INITIAL PUBLIC OFFERING, ETC.
If at any time the Company proposes to merge or consolidate with or into
any other corporation, effect any reorganization, or sell or convey all or
substantially all of its assets to any other entity, in a transaction in which
the shareholders of the Company immediately before the transaction will own
immediately after the transaction less than a majority of the outstanding voting
securities of the entity (or its parent) succeeding to the business of the
Company (each such transaction, a "corporate transaction"), then the Company
shall give the holder of this Warrant 20 days' prior written notice of the
proposed effective date of such corporate transaction. If this Warrant has not
been exercised by or on the effective date of such corporate transaction, it
shall terminate.
11. RECLASSIFICATION, CONVERSION, ETC.
If the Company at any time shall, by reclassification of securities or
otherwise, change the Warrant Stock into the same or a different number of
securities of any class or classes, this Warrant shall thereafter entitle the
holder to acquire such number and kind of securities as would have been issuable
in respect of the Warrant Stock (or other securities which were subject to the
purchase rights under this Warrant immediately prior to such reclassification or
other change) as a result of such change if this Warrant had been exercised in
full for cash immediately prior to such change. The Exercise Price hereunder
shall be adjusted if and to the extent necessary to reflect such change. If the
Warrant Stock or other securities issuable upon exercise hereof are subdivided
or combined into a greater or smaller number of shares of such
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security, the number of shares issuable hereunder shall be proportionately
increased or decreased, as the case may be, and the Exercise Price shall be
proportionately decreased or increased, as the case may be, in both cases
according to the ratio which the total number of shares of such security to be
outstanding immediately after such event bears to the total number of shares of
such security outstanding immediately prior to such event. The Company shall
give the holder prompt written notice of any change in the type of securities
issuable hereunder, any adjustment of the Exercise Price for the securities
issuable hereunder, and any increase or decrease in the number of shares
issuable hereunder.
12. REPRESENTATIONS AND WARRANTIES
The Company hereby represents, warrants and covenants to the holder hereof
that:
(a) during the period this Warrant is outstanding, the Company will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Warrant Stock upon the exercise of this
Warrant;
(b) the issuance of this Warrant shall constitute full authority to
the Company's officers who are charged with the duty of executing stock
certificates to execute and issue, or cause to be issued, the necessary
certificates for the shares of Warrant Stock issuable upon exercise of this
Warrant;
(c) the Company has all requisite legal and corporate power to execute
and deliver this Warrant, to sell and issue the Warrant Stock hereunder and
perform its obligations under the terms of this Warrant; and
(d) the Warrant Stock, when issued in compliance with the provisions
of this Warrant and the Company's Articles of Incorporation and Bylaws, will be
validly issued, fully paid and nonassessable, and free of any liens or
encumbrances (other than liens or encumbrances created by or imposed upon the
holder of the Warrant Stock), and will be issued in compliance with all
applicable federal and state securities laws.
13. COOPERATION
The Company will not, by amendment of its Articles of Incorporation or
through any reorganization, recapitalization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such reasonable action as may be necessary or appropriate in order
to protect the rights of the holder of the Warrant against material impairment.
14. GOVERNING LAW
This Warrant shall be governed by and construed in accordance with the laws
of the state of Washington.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer.
COST-U-LESS, INC.
By ___________________________________________
Title Vice President - Chief Financial Officer
ACCEPTED:
_________________________________
Xxxxxxx X. Xxxx
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NOTICE OF EXERCISE
To: Cost-U-Less, Inc.
(1) The undersigned hereby elects to purchase __________ shares of Common
Stock, par value $0.001 per share, of Cost-U-Less, Inc. pursuant to the terms of
the attached Warrant, and tenders herewith payment of the purchase price in
full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
________________________________
(Name)
________________________________
(Address)
(3) The undersigned represents that the aforesaid shares of [Company
Securities] 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.
_______________________________ ______________________________________
(Date) (Signature)
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
_______________________________________________________________________________
(Please Print)
whose address is ______________________________________________________________
(Please Print)
Dated: ____________________________________________________
Holder's Signature: _______________________________________
Holder's Address: _________________________________________
___________________________________________________________
Guaranteed Signature: _________________________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
