NEITHER THIS WARRANT NOR THE SECURITIES INTO WHICH THIS WARRANT IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
International DisplayWorks, Inc.
WARRANT
Warrant No. [IDW- 044] Number of Shares: 166,666
International DisplayWorks, Inc. (the "Company"), hereby certifies that,
for value received, Xxxx Capital Partners, LLC, or its registered assigns (the
"Holder"), is entitled, subject to the terms set forth below, to purchase on the
Vesting Date (as defined in Section 1 of this Warrant) from the Company upon
surrender of this Warrant, up to a total of One Hundred Sixty Six Thousand Six
Hundred Sixty Six (166,666) shares of Common Stock, no par value (the "Common
Stock"), of the Company (each such share, a "Warrant Share" and all such shares,
the "Warrant Shares") at the "Exercise Price" (as defined herein) at any time,
but not after 11:59 PM Pacific Standard Time on the Expiration Date (as defined
in Section 1 of this Warrant).
1. EXERCISE OF WARRANT.
1.1 Issuance Date. The Issuance Date shall be December 23, 2003.
1.2 Warrant Exercise Price. The Exercise Price shall be $1.75 per
share, subject to adjustments in Section 4 of this Warrant.
1.3 Vesting Date. The Vesting Date shall be the Issuance Date, as
provided in Section 1.1.
1.4 Method of Exercise. The Holder of this Warrant, on the Vesting
Date and from time to time until 11:59 PM Pacific Standard
Time on December 23, 2008 (the "Expiration Date") (the may
exercise in whole or in part the purchase rights evidenced
by this Warrant, provided that the Holder exercises the
purchase rights evidenced by this Warrant with respect to at
least Ten Thousand (10,000) shares of Common Stock, unless
the remaining balance of such shares is less than Ten
Thousand (10,000). Such exercise shall be effected by:
(a) the surrender of the Warrant, together with a duly
executed copy of the form of Subscription attached
hereto, to the Assistant Secretary of the Company at its
principal offices;
(b) the payment to the Company in U.S. funds, by check or
bank draft payable to its order or the cancellation
of indebtedness of the Company to the Holder, of an
amount equal to the aggregate share purchase price
for the number of shares which the purchase rights
hereunder are being exercised; or
notice to the Company that the Holder of the
Subscription attached hereto of the Holder's election
to utilize cashless exercise, in which event the Company
shall issue to the Holder the number of Warrant Shares
determined as follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be
issued to the Holder.
Y = the number of Warrant Shares with
respect to which this Warrant is being
exercised.
A = the average of the closing prices for
the five Trading Days immediately prior
to (but not including) the Exercise
Date.
B = the Exercise Price; and
(c) the delivery to the Company, if necessary, to assure
compliance with federal and state securities laws, of an
instrument executed by the Holder certifying that the
shares are being acquired for the sole account of the
Holder and not with a view to any resale or distribution
prior to the filing of a registration statement. For
purposes of Rule 144 promulgated under the Securities
Act, it is intended, understood and acknowledged that
the Warrant Shares issued in a cashless exercise
transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares
shall be deemed to have commenced, on the date this
Warrant was originally issued.
1.5 Satisfaction with Requirements of Securities Act of 1933.
Notwithstanding the provisions of Subsection 1.4 and Section 7, each and every
exercise of this Warrant is contingent upon the Company's satisfaction that the
issuance of Common Stock upon the exercise is exempt from the requirements of
the Securities Act and all applicable state securities laws at the relevant
time(s). The Holder of this Warrant agrees to execute any and all documents
deemed necessary by the Company to effect the exercise of this Warrant.
1.6 Issuance of Shares and New Warrant. In the event the purchase rights
evidenced by this Warrant are exercised in whole or in part, one or more
certificates for the purchased shares shall be issued as soon as practicable
thereafter to the person exercising such rights. Such Holder shall also be
issued at such time a new Warrant representing the number of shares (if any) for
which the purchase rights under this Warrant remain unexercised and continue in
force and effect.
2. TRANSFERS.
2.1 Transfers. Subject to Section 7 hereof, this Warrant and all rights
hereunder are transferable. To transfer rights, the transfer form below must be
completed. The transfer shall be recorded on the books of the Company upon the
surrender of this Warrant, properly endorsed, to the Secretary of the Company at
its principal offices and the payment to the Company of all transfer taxes and
other governmental charges imposed on such transfer. In the event of a partial
transfer, the Company shall issue to the several Holders one or more appropriate
new forms of Warrant.
2.2 Registered Holder. The Holder agrees that until such time as any
transfer pursuant to Subsection 2.1 is recorded on the books of the Company, the
Company may treat the registered Holder of this Warrant as the absolute owner;
provided that nothing herein affects any requirement that the transfer of any
share of Common Stock issued or issuable upon the exercise hereof be subject to
securities law compliance.
2.3 Form of New Warrant. All new forms of Warrant issued in connection with
transfers of this Warrant shall bear the same date as this Warrant and shall be
substantially identical in form and provision to this Warrant except for the
number of shares purchasable thereunder.
3. FRACTIONAL SHARES.
Notwithstanding that the number of shares purchasable upon the exercise of
this Warrant may have been adjusted pursuant to the terms hereof, the Company
shall nonetheless not be required to issue fractions of shares upon the exercise
of this Warrant or to distribute certificates that evidence fractional shares
nor shall the Company be required to make any cash payments in lieu thereof upon
exercise of this Warrant. Holder hereby waives any right to receive fractional
shares.
4. ANTI-DILUTION PROVISIONS.
4.1 Stock Splits and Combinations. If the Company shall at any time
subdivide or combine its outstanding shares of Common Stock, this Warrant shall,
after that subdivision or combination, evidence the right to purchase the number
of shares of Common Stock that would have been issuable as a result of that
change with respect to the shares of Common Stock that were purchasable under
this Warrant immediately before that subdivision or combination. If the Company
shall at any time subdivide the outstanding shares of Common Stock, the Exercise
Price then in effect immediately before that subdivision shall be
proportionately decreased, and, if the Company shall at any time combine the
outstanding shares of Common Stock, the Exercise Price then in effect
immediately before that combination shall be proportionately increased. Any
adjustment under this Section 4.1 shall become effective at the close of
business on the date the subdivision or combination becomes effective.
4.2 Reclassification, Exchange and Substitution. If the Common Stock
issuable upon exercise of this Warrant shall be changed into the same or a
different number of shares of any other class or classes of stock, whether by
capital reorganization, reclassification or otherwise (other than a subdivision
or combination of shares provided for above), the Holder of this Warrant shall,
on its exercise, be entitled to purchase for the same aggregate consideration,
in lieu of the Common Stock that the Holder would have become entitled to
purchase but for such change, a number of shares of such other class or classes
of stock equivalent to the number of shares of Common Stock that would have been
subject to purchase by the Holder on exercise of this Warrant immediately before
that change.
4.3 Reorganizations, Mergers, Consolidations or Sale of Assets. If at any
time there shall be a capital reorganization of the Company's Common Stock
(other than a subdivision, stock split, combination, reclassification, exchange
or substitution of shares provided for elsewhere above) or merger or
consolidation of the Company with or into another company, or the sale of
substantially all of the Company's properties and assets as, or substantially
as, an entirety to any other person, then, as a part of such reorganization,
merger, consolidation or sale, lawful provision shall be made so that the Holder
of this Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified in this Warrant and upon payment of the
Exercise Price then in effect, the number of shares of Common Stock or other
securities or property of the Company, or of the successor company resulting
from such merger or consolidation, to which a Holder of the Common Stock
deliverable upon exercise of this Warrant would have been entitled in such
capital reorganization, merger, consolidation or sale if this Warrant had been
exercised immediately before that capital reorganization, merger, consolidation
or sale. In any such case, appropriate adjustment (as determined in good faith
by the Company's Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interests of the
Holder of this Warrant after the reorganization, merger, consolidation or sale
to the end that the provisions of this Warrant (including adjustment of the
stock purchase price then in effect and number of shares purchasable upon
exercise of this Warrant) shall be applicable after that event, as near as
reasonably may be, in relation to any shares or Stock Purchase Warrants or other
property deliverable after that event upon exercise of this Warrant. The Company
shall, within thirty (30) days after making such adjustment, give written notice
(by first class mail, postage prepaid) to the registered holder of this Warrant
at the address of that Holder shown on the Company's books. That notice shall
set forth, in reasonable detail, the event requiring the adjustment and the
method by which the adjustment was calculated and specify the Stock Purchase
Price then in effect after the adjustment and the increased or decreased number
of shares purchasable upon exercise of this Warrant. When appropriate, that
notice may be given in advance and included as part of the notice required under
other provisions of this Warrant.
4.4 Common Stock Dividends; Distributions. In the event the Company should
at any time prior to the expiration of this Warrant fix a record date for the
determination of the Holders of Common Stock entitled to receive a dividend or
other distribution (excluding a cash dividend or distribution) payable in
additional shares of Common Stock or other securities or rights convertible into
or entitling the Holder thereof to receive, directly or indirectly, additional
shares of Common Stock (hereinafter referred to as the "Common Stock
Equivalents") without payment of any consideration by such Holder for the
additional shares of Common Stock or Common Stock Equivalents (including the
additional shares of Common Stock issuable upon conversion or exercise thereof),
then, as of such record date (or the date of such distribution, split or
subdivision if no record date is fixed), the Exercise Price shall be
appropriately decreased and the number of shares of Common Stock issuable upon
exercise of the Warrant shall be appropriately increased in proportion to such
increase of outstanding shares.
4.5 Adjustments of Other Distributions. In the event the Company shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by the Company or other persons, assets (excluding cash
dividends), or options or rights not referred to in Subsection 4.4, then, in
each such case for the purpose of this Subsection 4.5, upon exercise of this
Warrant, the Holder hereof shall be entitled to a proportionate share of any
such distribution as though such Holder was the Holder of the number of shares
of Common Stock of the Company into which this Warrant may be exercised as of
the record date fixed for the determination of the Holders of Common Stock of
the Company entitled to receive such distribution.
4.6 Certificate as to Adjustments. In the case of each adjustment or
readjustment of the Exercise Price pursuant to this Section 4, the Company will
promptly compute such adjustment or readjustment in accordance with the terms
hereof and cause a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based,
to be delivered to the Holder of this Warrant. The Company will, upon the
written request at any time of the Holder of this Warrant, furnish or cause to
be furnished to such Holder a certificate setting forth:
(a) such adjustments and readjustments;
(b) the stock purchase price at the time in effect; and
(c) the number of shares of Common Stock issuable upon exercise
of the Warrant and the amount, if any, of other property at
the time receivable upon the exercise of the Warrant.
4.7 Reservation of Stock Issuable Upon Exercise. The Company shall at all
times reserve and keep available out of its authorized but un-issued shares of
Common Stock solely for the purpose of effecting the exercise of this Warrant
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the exercise of this Warrant, and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the exercise of this Warrant, in addition to such other remedies as shall
be available to the Holder of this Warrant, the Company will use its best
efforts to take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes.
5. RIGHTS PRIOR TO EXERCISE OF WARRANT.
This Warrant does not entitle the Holder to any of the rights of a
stockholder of the Company, including, without limitation, the right to receive
dividends or other distributions, to exercise any preemptive rights, to vote, or
to consent or to receive notice as a stockholder of the Company. If, however, at
any time prior to the expiration of this Warrant and prior to its exercise, any
of the following events shall occur:
(a) the Company shall declare any dividend payable in any
securities upon its shares of Common Stock or make any
distribution (other than a regular cash dividend) to the
Holders of its shares of Common Stock; or
(b) the Company shall offer to the Holders of its shares of
Common Stock any additional shares of Common Stock or
securities convertible into or exchangeable for shares of
Common Stock or any right to subscribe for or purchase any
thereof; or
(c) a dissolution, liquidation, or winding up of the Company
(other than in connection with a consolidation, merger,
sale, transfer or lease of all or substantially all of its
property, assets and business as an entirety) shall be
proposed and action by the Company with respect thereto has
been approved by the Company's Board of Directors,
then in any one or more of said events the Company shall give notice in writing
of such event to the Holder at his last address as it shall appear on the
Company's records at least twenty (20) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividends, distribution or subscription rights, or
for the determination of stockholders entitled to vote on such proposed
dissolution, liquidation or winding up. Such notice shall specify such record
date or the date of closing the transfer books, as the case may be. Failure to
publish, mail or receive such notice or any defect therein or in the publication
or mailing thereof shall not affect the validity of any action taken in
connection with such dividend, distribution or subscription rights, or such
proposed dissolution, liquidation or winding up. Each person in whose name any
certificate for shares of Common Stock is to be issued shall for all purposes be
deemed to have become the Holder of record of such shares on the date on which
this instrument was surrendered and payment of the stock purchase price was
made, irrespective of the date of delivery of such stock certificate, except
that, if the date of such surrender and payment is a date when the stock
transfer books of the Company are closed, such person shall be deemed to have
become the Holder of such shares of Common Stock at the close of business on the
next succeeding date on which the stock transfer books are open.
6. COMPANY'S RIGHT TO REDEEM WARRANTS.
The Warrants will not be subject to redemption.
7. RESTRICTED SECURITIES.
In order to enable the Company to comply with the Securities Act and
applicable state laws, the Company may require the Holder as a condition of the
transfer or exercise of this Warrant to give written assurances satisfactory to
the Company that the Warrant is being acquired, or in the case of an exercise
hereof, that the shares subject to this Warrant are being acquired, for its own
account, for investment only, with no view to the distribution of the same, and
that any disposition of all or any portion of this Warrant or the shares
issuable upon the due exercise of this Warrant shall not be made, unless and
until:
(a) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration
statement; or
(b)(i) the Holder has notified the Company of the proposed
disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the
proposed disposition, and
(ii) the Holder has furnished the Company with an opinion of
counsel, satisfactory to the Company, that such disposition
will not require registration of such securities under the
Securities Act and applicable state law.
The Holder acknowledges that this Warrant is, and each of the shares of
Common Stock issuable upon the due exercise hereof will be, restricted
securities, that it understands the provisions of Rule 144 of the Securities and
Exchange Commission, and that the certificate or certificates evidencing such
shares of Common Stock will bear a legend substantially similar to the
following:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
LAWS OF ANY STATE. THEY MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
COVERING THESE SECURITIES UNDER THE SAID ACT OR LAWS, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT REGISTRATION
IS NOT REQUIRED THEREUNDER."
8. SUCCESSORS AND ASSIGNS.
The terms and provisions of this Warrant shall inure to the benefit of, and
be binding upon, the Company and the Holder thereof and their respective
successors and permitted assigns.
9. LOSS OR MUTILATION.
Upon receipt by the Company of satisfactory evidence of the ownership of
and the loss, theft, destruction, or mutilation of any Warrant, and (i) in the
case of loss, theft or destruction, upon receipt by the Company of indemnity
satisfactory to it, or (ii) in the case of mutilation, upon receipt of such
Warrant and upon surrender and cancellation of such Warrant, the Company shall
execute and deliver in lieu thereof a new Warrant representing the right to
purchase an equal number of shares of Common Stock.
10. NOTICES.
All notices, requests, demands and other communications under this Warrant
shall be in writing and shall be deemed to have been duly given on the date of
service if served personally on the party to whom notice is to be given, or on
the date of mailing if mailed to the party to whom notice is to be given, by
first class mail, registered or certified, postage prepaid, and properly
addressed as follows:
If to the Company: Xxxxxxx X. Xxxxxxx,
-----------------
Chairman and CEO
International DisplayWorks, Inc.
000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
With a Copy to: Xxxxx X. Xxxxx.
--------------
Xxxxxx Eng & Xxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxxxx 00000
If to the Holder: Xxxxx Xxxxxxxx
Xxxx Capital Partners, LLC
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
11. GOVERNING LAW.
This Warrant and any dispute, disagreement or issue of construction or
interpretation arising hereunder whether relating to its execution, its
validity, the obligations provided herein or performance, shall be governed or
interpreted according to the internal laws of the State of California without
regard to conflicts of law.
12. ARBITRATION.
Disputes arising under this Warrant shall be settled by one arbitrator
pursuant to the rules of the American Arbitration Association (the "AAA") for
Commercial Arbitration (the "Rules"). Such arbitration shall be held in
Sacramento County, California, or at such other location as mutually agreed to
by the parties to the dispute. Subject to any applicable limitations contained
in this Warrant, arbitration may be commenced at any time by any party giving
notice to the other party that a dispute has been referred to arbitration under
this Section. The arbitrator shall be selected by the joint agreement of the
parties hereto, but if they do not so agree within Twenty (20) days after the
date of the notice referred to above, the selection shall be made pursuant to
the Rules from the panel of arbitrators maintained by the AAA. Any award of the
arbitrator shall be accompanied by a written opinion giving the reasons for the
award. The expense of the arbitration shall be borne by the parties in the
manner determined in writing by the arbitrator. This arbitration provision shall
be specifically enforceable by the parties. The determination of the arbitrator
pursuant to this Section shall be final and binding on the parties and may be
entered for enforcement before any court of competent jurisdiction.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, this Warrant has been executed as of the date first
written above.
International DisplayWorks, Inc.
By: _________________________________
Xxxxxxx X. Xxxxxxx
Chairman & CEO
