Exhibit 10.35
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR UNDER THE
SECURITIES LAWS OF ANY STATE. THE SHARES MAY NOT BE TRANSFERRED BY SALE, GIFT,
PLEDGE OR OTHERWISE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT AND SUCH REGISTRATION OR QUALIFI-CATION AS MAY BE NECESSARY UNDER THE
SECURITIES LAWS OF ANY STATE OR, AN OPINION OF COUNSEL AND OTHER ASSURANCES
SATISFACTORY TO THE CORPORATION THAT REGISTRATION AND QUALIFICATION ARE NOT
REQUIRED.
Dated July 22 ,1999
--------------------
WARRANT
To Purchase share of Common Stock
100,000 shares at $0.30 per share exercisable until October 31, 1999
100,000 shares at $0.40 per share exercisable until July 31, 2000
100,000 shares at $0.40 per share exercisable until December 31, 2000
100,000 shares at $0.45 per share exercisable until December 31, 2001
100,000 shares at $0.45 per share exercisable until December 31, 2001
100,000 shares at $0.53 per share exercisable until December 31, 2001
THIS IS TO CERTIFY THAT, for value received, R. XXXXXXX XXXXX, or
registered assigns is entitled to purchase from WELLINGTON HALL, LTD., a North
Carolina corporation (the "Corporation"), at any time and from time to time
prior to 5:00 p.m., Lexington, North Carolina time, on the dates stated above,
at the principal office of the Corporation which is currently 000 Xxxx Xxxx
Xxxx, Xxxx Xxxxxx Xxx 0000, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 (or such other
address as the Corporation shall specify by notice to all Warrant Holders), at
the Exercise Price set forth above, the number of shares of
Common Stock, $0.001 par value (the "Common Stock"), of the Corporation set
forth above, all subject to adjustment and upon the terms conditions as
hereinafter provided, and is entitled also to exercise the other appurtenant
rights, powers and privileges hereinafter described. This Warrant and all rights
granted herein shall terminate prior to the dates set forth above upon
termination of the Marketing Agreement dated May 4, 1999 between the Corporation
and Furniture Classics Ltd. by voluntary action of Furniture Classics Ltd., by
the Corporation for Cause of failure of said parties to renew the term thereof.
Certain terms used in this Warrant are defined in Article VI hereof.
ARTICLE I
EXERCISE OF WARRANT
1.1 METHOD OF EXERCISE AND PAYMENT.
(a) METHOD OF EXERCISE. To exercise this Warrant in whole or in part,
the Holder shall deliver to the Corporation, at the principal office of the
Corporation, (a) this Warrant, (b) a written notice, in substantially the
form of the Subscription Notice attached hereto, of such Holder's election
to exercise this Warrant, which notice shall specify the number of shares
of Common Stock to be purchased, the denominations of the share certificate
or certificates desired and the name or names in which such certificates
are to be registered, and (c) payment to the Corporation of the amount
equal to the product of the Exercise Price multiplied by the number of
shares of Common Stock then being purchased pursuant to one of the payment
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methods permitted under Section 1.1(b) below.
(b) METHOD OF PAYMENT. Payment shall be made either (1) by cash, money
order, certified or bank cashier's check, (2) by wire transfer, or (3) by
any combination of the foregoing at the option of the Holder.
(c) MECHANICS. The Corporation shall, as promptly as practicable after
delivery of a Subscription Notice as described above, execute and deliver
or cause to be executed and delivered, in accordance with such Subscription
Notice, a certificate or certificates representing the aggregate number of
shares of Common Stock specified in said Subscription Notice. The share
certificate or certificates so delivered shall be in such denominations as
may be specified in such Subscription Notice or, if such Subscription
Notice shall not specify denominations, in denominations of one hundred
thousand (100,000) shares each, and shall be issued in the name of the
Holder or such other name or names as shall be designated in such
Subscription Notice. Such certificate or certificates shall be deemed to
have been issued (and this Warrant or the portion thereof specified in the
Subscription Notice shall be deemed to have been exercised), and such
Holder or any other person so designated to be named therein shall be
deemed for all purposes to have become a Holder of record of such shares,
as of the date the aforementioned Subscription Notice is received by the
Corporation (the "Exercise Date"). If this Warrant shall have been
exercised only in part, the Corporation shall, at the the time of delivery
of the certificate or certificates, deliver to the Holder a new Warrant
evidencing the rights to purchase the remaining shares of Common Stock
called for by this Warrant, which new Warrant shall in all
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other respects be identical with this Warrant, or, at the request of the
Holder, appropriate notation may be made on this Warrant which shall then
be returned to the Holder.
1.2 SHARES TO BE FULLY PAID AND NONASSESSABLE. All shares of Common Stock
issued upon the exercise of this Warrant shall be validly issued, fully
paid and nonassessable.
1.3 NO FRACTIONAL SHARE TO BE ISSUED. The Corporation shall not be required to
issue fractions of shares of Common Stock, upon exercise of this Warrant.
If any fraction of a share would, but for this Section, be issuable upon
any exercise of this Warrant, in lieu of such fractional share the
Corporation may pay to the Holder in cash, an amount equal to such fraction
of the fair market value (as determined in good faith by the Board) per
share of outstanding Common Stock of the Corporation in the Business Day
immediately prior to the date of such exercise.
1.4 SHARE LEGENDS. Each certificate for shares of Common Stock issued upon
exercise of this Warrant, unless at the time of exercise such shares are
registered under the Securities Act, shall bear the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") OR UNDER THE SECURITIES LAWS OF ANY STATE. THE SHARES MAY NOT
BE TRANSFERRED BY SALE, GIFT, PLEDGE OR OTHERWISE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE
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ACT AND SUCH REGISTRATION OR QUALIFICATION AS MAY BE NECESSARY UNDER
THE SECURITIES LAWS OF ANY STATE OR , AN OPINION OF COUNSEL AND OTHER
ASSURANCES SATISFACTORY TO THE CORPORATION THAT REGISTRATION AND
QUALIFICATION ARE NOT REQUIRED.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend shall also bear such legend unless, in the
opinion of counsel selected by the Holder of such cerfificate and
reasonably acceptable to the Corporation, the securities represented
thereby need no longer be subject to restrictions on resale under the
Securities Act.
1.5 RESERVATION: AUTHORIZATION. The corporation has reserved and will keep
available for issuance upon exercise of the Warrant the total number of
shares of Common Stock deliverable upon exercise of all Warrants from time
to time outstanding.
1.6 RESULT OF EXERCISE. On the Exercise Date, the rights of the Holder of such
Warrant as such Holder will cease and the Person or Persons in whose name
or names any certificate or certificates for shares of Common Stock are to
be issued upon such exercise will be deemed to have become the Holder or
Holders of record of the shares of Common Stock represented thereby.
1.7 BOOKS NOT CLOSED UNTIL EXERCISE. The Corporation will not close its books
against the transfer of this Warrant or shares of Common Stock issued or
issuable upon exercise of this Warrant in any manner which interferes with
the timely exercise of this Warrant.
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ARTICLE II
TRANSFER, EXCHANGE AND REPLACEMENT OF WARRANTS
2.1 OWNERSHIP OF WARRANT. The Corporation may deem and treat the Person in
whose name this Warrant is registered as the Holder and owner hereof for
all purposes and shall not be affected by any notice to the contrary, until
this Warrant is presented for registration of transfer as provided in this
Article II.
2.2 TRANSFER OF WARRANT. The Corporation agrees to maintain books for the
registration of transfers of the Warrant, and any transfer, in whole or in
part, of this Warrant and all rights hereunder shall be registered on such
books, upon surrender of this Warrant at the principal office of the
Corporation together with a written assignment of this Warrant duly
executed by the Holder or his, her or its duly authorized agent or attorney
and funds sufficient to pay any transfer taxes payable upon such transfer.
Upon surrender the Corporation shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the denominations
specified in the instrument of assignment, and this Warrant shall promptly
be canceled. Notwithstanding the foregoing, a Warrant may be exercised by a
new Holder without having a new Warrant issued. This Warrant may not be
transferred in whole or in part, and the Corporation shall not be required
to register any transfers unless the Corporation has received an opinion of
counsel selected by the transferor and reasonably satisfactory to the
Corporation that such transfer is exempt from the registration requirements
of the Securities Act and the securities laws of any applicable State.
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2.3 DIVISION OR COMBINATION OF WARRANTS. This Warrant may be divided or
combined with other Warrants upon surrender hereof and of any Warrant or
Warrants with which this Warrant is to be combined at the Corporation,
together with a written notice specifying the names and denominations in
which the new Warrant or Warrants are to be issued, signed by the Holders
hereof and thereof or their respective duly authorized agents or attorneys.
Subject to compliance with Section 2.2 as to any transfer which may be
involved in the division or combination, the Corporation shall execute and
deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
to be divided or combined in accordance with such notice.
2.4 LOSS, THEFT, DESTRUCTION OF WARRANT CERTIFICATES. Upon receipt of evidence
reasonably satisfactory to the Corporation of the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security reasonably satisfactory
to the Corporation or, in the case of any such mutilation, upon surrender
and cancellation of such Warrant, the Corporation will make and deliver, in
lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of
like tenor and representing the right to purchase the same aggregate number
of shares of Common Stock.
ARTICLE III
CAPITAL ADJUSTMENTS AFFECTING COMMON STOCK
3.1 ADJUSTMENTS. If the outstanding shares of the Common Stock of the
Corporation are increased, decreased, changed into or exchanged for a
different number or kind
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of shares or securities of the Corporation or shares of a different par
value through reorganization, recapitalization, reclassification, stock
dividend, stock split, amendment to the Corporation's Articles of
Incorporation, reverse stock split, merger or consolidation, an appropriate
adjustment shall be made in the number and/or kind of securities allocated
to the Warrant without change in the aggregate purchase price applicable to
the unexercised portion of the outstanding Warrant but with a corresponding
adjustment in the price of each share or other unit of any security covered
by the Warrant.
ARTICLE IV
LIQUIDATION, DISSOLUTION, DISTRIBUTIONS OR DIVIDENDS
4.1 LIQUIDATION OR DISSOLUTION. In case the Corporation at any time while this
Warrant shall remain unexpired and unexercised, shall dissolve, liquidate,
or wind up its affairs, the Holder shall have the right to exercise this
Warrant for a period of sixty (60) days after the later of (i) such event
having occurred and (ii) receipt by the Holder of a notice from the Company
indicating the kind and amount of securities or assets issuable or
distributable to Holders of shares of Common Stock with respect to such
event, and upon exercise of this Warrant during such period, the Holder
shall have the right to receive in lieu of each share of the Warrant Stock,
the same kind and amount of any securities or assets as may be issuable,
distributable, or payable upon any such dissolution, liquidation, or
winding up with respect to each of the shares of the Common Stock.
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ARTICLE V
DEFINITIONS
The following terms as used in this Warrant have the following respective
meanings:
"BOARD" means the Corporation's Board of Directors
"COMMISSION" means the Securities and Exchange Commission
"EXERCISE PRICE" means the price per share of Common Stock set forth above
subject to adjustments as set forth in Article III hereof.
"HOLDER" means the Person in whose name this Warrant is registered on the
books of the Corporation maintained for such purpose.
"PERSON" means an individual, a partnership, corporation, limited liability
company, association, joint stock company, trust, joint venture, unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"SECURITIES ACT" means the Federal Securities Act of 1933, as amended.
"WARRANT HOLDER" means a Holder of a Warrant.
ARTICLE VI
MISCELLANEOUS
6.1 NOTICES. Notices and other communications provided for herein shall be in
writing and shall be given by hand delivery, overnight courier, telecopy or
first class mail. In the case of the Holder, such notices and
communications shall be addressed to his, her or its address as shown on
the books maintained by the Corporation, unless the Holder shall notify the
Corporation that notices and communication should be sent
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to a different address (or telecopy number), in which case such notices and
communications shall be sent to the address (or telecopy number) specified
by the Holder. In the case of the Corporation, all notices shall be
addressed to the following, subject to change by proper notice:
Corporation: WELLINGTON HALL, LTD
000 Xxxx Xxxx Xxxx
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxx, XX 00000
6.2 WAIVER; AMENDMENTS. No failure or delay of the Holder in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment
or discontinuance of steps to enforce such a right or power, preclude any
other or future exercise thereof or the exercise of any other right or
power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and
only with) the written consent of the Corporation and the Warrant Holders
voting as a single class, entitling such Warrant Holders to purchase a
majority of the Common Stock subject to purchase upon exercise of such
Warrants at the time outstanding (exclusive of Warrants then owned by the
Corporation or any Subsidiary thereof); provided, HOWEVER, that no such
amendment, modification or waiver shall, without the written consent of
each Holder of Warrants whose interest might be adversely affected by such
amendment, modification or waiver which would, (a) change the number of
shares of Common Stock subject to purchase upon exercise of this
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Warrant, the Exercise price or provisions for payment thereof or (b) amend,
modify or waive the provision of this Section or Article III or IV hereof.
Any such amendment, modification or waiver effected pursuant to this
Section shall be binding upon the Holders of all Warrants and Warrant
Stock, upon each future Holder thereof and upon the Corporation. In the
event of any such amendment, modification or waiver, the Corporation shall
give prompt notice thereof to all Warrant Holders and, if appropriate,
notation thereof shall be made on all Warrants thereafter surrendered for
registration of transfer or exchange.
6.3 GOVERNING LAW. This Warrant shall be construed in accordance with and
governed by the laws of the State of North Carolina, without regard to
principles of conflicts of laws.
6.4 COVENANTS TO BIND SUCCESSOR AND ASSIGNS. All covenants, stipulations,
promises and agreements in this Warrant contained by or on behalf of the
Corporation shall bind its successors and assigns, whether so expressed or
not.
6.5 SECTION HEADINGS. The section headings used herein are for convenience of
reference only, are not part of this Warrant and are not to affect the
construction of or be taken into consideration interpreting this Warrant.
6.6 NO RIGHTS AS STOCKHOLDER. This Warrant shall not entitle the Warrant Holder
to any rights as a stockholder of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed
in its corporate name by one of its officers thereunto duly authorized, and its
corporate seal
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to be hereunto affixed, attested by its Secretary or an Assistant Secretary, all
as of the day and year first above written
WELLINGTON HALL LTD.,
a North Carolina corporation
By: /s/ Xxxx Xxxxxxx, Xx.
--------------------------
Officer
ATTEST:
/s/ X.X. Xxxxxxxx
--------------------
Secretary
( CORPORATE SEAL )
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SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
TO: WELLINGTON HALL LTD.
000 Xxxx Xxxx Xxxx
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxx, XX 00000
THE UNDERSIGNED hereby irrevocably elects to exercise the right of purchase
represented by the attached Warrant for , and to purchase thereunder,
_______________ shares of Common Stock, as provided for therein, and tenders
herewith payment of the Exercise Price in full in the form of certified or bank
cashier's check or wire transfer.
Please issue a certificate or certificates for such shares of Common Stock
in the following name or names and denomination:
-------------------------------------------
-------------------------------------------
Social Security No.:
----------------------
If said number of shares shall not be all the shares issuable upon exercise
of the attached Warrant, a new Warrant is to be issued in the name of the
undersigned for the balance remaining of such shares less any fraction of a
share paid in cash.
Dated:____________
-----------------------------------
NOTE: The above signature should
correspond exactly with the name on the
face of the attached Warrant or with the
name of the assignee appearing in the
assignment form below.
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ASSIGNMENT
(To be Executed upon assignment of Warrant)
For value received, _____________________ hereby sells, assigns and
transfers unto ______________________ the attached Warrant, together with all
right, title and interest therin, and does hereby irrevocably constitute and
appoint ____________________ attorney to transfer said Warrant on the books of
WELLINGTON HALL LTD., with full power of substitution in the premises.
Dated:__________________________
__________________________________(SEAL)
NOTE: The above signature should
correspond exactly with the name on the
face of the attached Warrant.
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