EXHIBIT 10.18
NEITHER THIS WARRANT NOR THE COMMON STOCK WHICH MAY BE ACQUIRED UPON THE
EXERCISE HEREOF EVIDENCED BY THIS INSTRUMENT MAY BE SOLD OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("1933 ACT") AND APPLICABLE SECURITIES LAWS
OF ANY STATE OR JURISDICTION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
THE REGISTERED HOLDER OF THIS WARRANT BY ITS ACCEPTANCE HEREOF, AGREES THAT IT
WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE WARRANT EXCEPT AS HEREIN
PROVIDED.
VOID AFTER 5:00 P.M. EASTERN TIME August 28, 2011.
August 29, 2001 For the Purchase of
1,200,000 shares of
Common Stock
WARRANT FOR THE PURCHASE OF
SHARES OF COMMON STOCK
OF
XXXXXX HOLDING CORP.
Xxxxxx Holding Corp., a Delaware corporation ("Company"), hereby certifies that
for value received, X.X. Xxxxxxx & Co., Inc., with offices at 00 Xxxx Xxxxxx,
Xxx Xxxx, XX 00000, or its registered assigns ("Holder"), is entitled, subject
to the terms set forth below, to purchase from the Company, at any time or from
time to time during the period commencing on the date hereof and ending at 5:00
p.m. eastern time on August 28, 2011 ("Expiration Date"), 1,200,000 shares of
common stock ("Common Stock"), $.0001 par value, of the Company ("Warrant
Shares"), at an exercise price equal to $1.50 per share. The number of shares of
Common Stock purchasable upon exercise of this Warrant, and the exercise price
per share, each as adjusted from time to time pursuant to the provisions of this
Warrant, are hereinafter referred to as the "Warrant Shares" and the "Exercise
Price," respectively.
IT IS AGREED:
1. Method of Exercise.
1.1 Notice to the Company. The Warrant may be exercised in whole
or in part by written notice in the form attached hereto as Exhibit A directed
to the Company at its principal place of business accompanied by full payment as
hereinafter provided of the Exercise Price for the number of Warrant Shares
specified in the notice.
1.2 Delivery of Warrant Shares. The Company shall deliver a
certificate for the Warrant Shares to the Holder as soon as practicable after
payment therefor.
1.3 Payment of Purchase Price.
1.3.1 Cash Payment. The Holder shall make cash payments by
wire transfer, certified or bank check or personal check, in each case payable
to the order of the Company. The Company shall not be required to deliver
certificates for Warrant Shares until the Company has confirmed the receipt of
good and available funds in payment of the Exercise Price thereof.
1.3.2 Payment through Bank or Broker. The Company, in its sole
discretion, may permit the Holder to make arrangements satisfactory to the
Company with a bank or a broker who is member of the National Association of
Securities Dealers, Inc. to either (a) sell on the exercise date a sufficient
number of the Warrant Shares being purchased so that the net proceeds of the
sale transaction will at least equal the Exercise Price multiplied by the number
of Warrant Shares being purchased pursuant to such exercise and pursuant to
which the bank or broker undertakes irrevocably to deliver the full Exercise
Price multiplied by the number of Warrant Shares being purchased pursuant to
such exercise to the Company on a date satisfactory to the Company, but no later
than the date on which the sale transaction would settle in the ordinary course
of business or (b) obtain a "margin commitment" from the bank or broker pursuant
to which the bank or broker undertakes irrevocably to deliver the full Exercise
Price multiplied by the number of Warrant Shares being purchased pursuant to
such exercise to the Company, immediately upon receipt of the Warrant Shares.
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1.3.3 Stock Payment. The Company, in its sole discretion, may
allow Holder to use Common Stock of the Company owned by him to make any
required payments by delivery of stock certificates in negotiable form which are
effective to transfer good and valid title thereto to the Company, free of any
liens or encumbrances. Shares of Common Stock used for this purpose shall be
valued at the "Fair Market Value". Fair Market Value means, as of any given
date: (i) if the Common Stock is listed on a national securities exchange or
quoted on the Nasdaq National Market or Nasdaq SmallCap Market, the last sale
price of the Common Stock in the principal trading market for the Common Stock
on the last trading day preceding the date in question, as reported by the
exchange or Nasdaq, as the case may be; (ii) if the Common Stock is not listed
on a national securities exchange or quoted on the Nasdaq National Market or
Nasdaq SmallCap Market, but is traded in the over-the-counter market, the
closing bid price for the Common Stock on the last trading day preceding the
date in question for which such quotations are reported by the National
Quotation Bureau, Incorporated or similar publisher of such quotations; and
(iii) if the fair market value of the Common Stock cannot be determined pursuant
to clause (i) or (ii) above, such price as the Board of Directors of the Company
shall determine, in good faith.
1.3.4 Cashless Payment. At the election of the Holder, the
Exercise Price for any or all of the Warrant Shares to be acquired may be paid
by the surrender of any exercisable but unexercised portion of the Warrant
having a "value" equal to the Exercise Price multiplied by the number of Warrant
Shares to be exercised. The "value" of a surrendered portion of the Warrant
means, as of the exercise date, an amount equal to the excess of the total Fair
Market Value of the shares of Common Stock underlying the surrendered portion of
the Warrant over the total Exercise Price of such shares of Common Stock
underlying the surrendered portion of the Warrant.
2. Security Interest in Warrant Shares Collateralizing
Obligations Owed to the Company. Notwithstanding anything in this Agreement to
the contrary, the Holder hereby grants Xxxxxx Securities, Inc. ("Xxxxxx
Securities") a security interest in 945,000 of the Warrant Shares to secure the
payment of any monies that the Holder (or if the Holder is a transferee of a
prior holder of this Warrant, the original holder of this Warrant) owes Xxxxxx
Securities ("Amount Due") arising from the obligations of the Holder (or if the
Holder is a transferee of a prior holder of this Warrant, the original holder of
this Warrant) under the Purchase Agreement, dated April 3, 2001, among the
Holder, Xxxxxx Securities, the Company, et al. ("April 2001 Agreement"). The
Holder hereby agrees to execute, promptly upon request by Xxxxxx Securities,
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such instruments and to take such action as may be useful for Xxxxxx Securities
to perfect and/or exercise such security interest, and hereby irrevocably grants
Xxxxxx Securities the right to retain, in full or partial payment of the Amount
Due, up to the following number of Warrant Shares upon any whole or partial
exercise of the Warrant: a fraction, the numerator of which is the Amount Due,
and the denominator of which is the Fair Market Value of the Company's common
stock as of the date of such exercise; provided that the fraction set forth in
the preceding clause shall be rounded up to the nearest whole number. The
security interest set forth herein shall be cumulative to all, and not in lieu
of, any other remedies to available to Xxxxxx Securities with respect to any
Amount Due. This security interest shall expire two years after the date of
initial issuance of this Warrant unless on the second anniversary there is still
pending a claim by Xxxxxx Securities against the Holder (or if the Holder is a
transferree of a prior holder of this Warrant, the original holder of this
Warrant) under the April 2001 Agreement, in which case the lien shall continue
until the final resolution of such claim.
3. Nonassignability. The Warrant may all not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner.
Notwithstanding the foregoing, this restriction shall not apply to transfers
made to stockholders of the Holder or M.S. Holdings Corp.; provided that no such
permitted transfer shall be effective to bind the Company unless the Company
shall have been furnished with written notice thereof, such other evidence as
the Company may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions of the
Warrant, an opinion of counsel satisfactory to the Company that registration is
not required under the Securities Act of 1933, as amended ("1933 Act"), and, if
only a portion of the Warrant is being transferred to the intended transferee, a
statement as to whether the Warrant Shares underlying the portion of the Warrant
are subject to the lien provided in Section 2.
4. Company Representations. The Company hereby represents and
warrants to the Holder that:
(a) the Company, by appropriate and all required action, is
duly authorized to issue this Warrant; and
(b) the Warrant Shares, when issued and delivered by the
Company to the Holder in accordance with the terms and conditions hereof, will
be duly and validly issued and fully paid and non-assessable.
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5. Holder Representations. The Holder hereby represents and
warrants to the Company that:
(a) it is acquiring the Warrant and shall acquire the
Warrant Shares for its own account and not with a view towards the
distribution thereof;
(b) it has received a copy of all reports and documents
required to be filed by the Company with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as
amended, within the last 24 months and all reports issued by the
Company to its stockholders;
(c) it understands that it must bear the economic risk of
the investment in the Warrant Shares, which cannot be sold unless they
are registered under the Securities Act of 1933 ("1933 Act") or an
exemption therefrom is available thereunder and that the Company is
under no obligation to register the Warrant Shares for sale under the
1933 Act;
(d) it is an accredited investor within the meaning of Rule
501(a) promulgated under the 1933 Act;
(e) it has had both the opportunity to ask questions and
receive answers from the officers and directors of the Company and all
persons acting on its behalf concerning the terms and conditions of
the offer made hereunder and to obtain any additional information to
the extent the Company possesses or may possess such information or
can acquire it without unreasonable effort or expense necessary to
verify the accuracy of the information obtained pursuant to clause (b)
above;
(f) it is aware that the Company shall place stop transfer
orders with its transfer agent against the transfer of the Warrant
Shares in the absence of registration under the 1933 Act; and
(g) the certificates evidencing the Warrant Shares shall
bear the following legend:
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"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said
Act."
6. Restriction on Transfer of Warrant Shares.
6.1 Securities Act Compliance. Anything in this Agreement to
the contrary notwithstanding, Holder hereby agrees that it shall not sell,
transfer by any means or otherwise dispose of the Warrant Shares acquired by it
without registration under the 1933 Act, or in the event that they are not so
registered, unless (i) an exemption from the 1933 Act registration requirements
is available thereunder, and (ii) the Holder has furnished the Company with
notice of such proposed transfer and the Company's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
6.2 Lock-up. Anything in this Agreement to the contrary
notwithstanding, Holder hereby agrees that it shall not sell, transfer by any
means or otherwise dispose of the Warrant Shares acquired by it until the first
anniversary of the date hereof with respect to such Warrant Shares without the
prior written consent of the Company. Holder further agrees that the Company
shall place stop transfer orders with its transfer agent against the Warrant
Shares and shall place an appropriate restrictive legend on the Warrant Shares
until such restriction has expired.
7. Adjustments. In the event of any merger, reorganization,
consolidation, recapitalization, dividend (other than a cash dividend), stock
split, reverse stock split, or other change in corporate structure affecting the
Common Stock, such substitution or adjustment shall be made in the aggregate
number of Warrant Shares subject to this Warrant as may be determined to be
appropriate by the Board of Directors of the Company in order to prevent
dilution or enlargement of rights, provided that any fractional shares resulting
from such adjustment shall be eliminated by rounding to the next lower whole
number of shares.
8. Miscellaneous.
8.1 Notices. All notices, requests, deliveries, payments, demands
and other communications which are required or permitted to be given under this
Agreement shall be in writing and shall be either delivered personally or sent
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by registered or certified mail, or by private courier to the parties at their
respective addresses set forth herein, or to such other address as either shall
have specified by notice in writing to the other. Notice shall be deemed duly
given hereunder when delivered or mailed as provided herein.
8.2 Holder and Stockholder Rights. The Holder shall not have any
of the rights of a stockholder with respect to the Warrant Shares until such
shares have been issued after the due exercise of this Warrant.
8.3 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
8.4 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supercedes any and all prior agreements with respect to the Warrant. This
Agreement may not be amended except by writing executed by the Holder and the
Company.
8.5 Binding Effect; Successors. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
8.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without regard
to choice of law provisions).
8.7 Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the day and year first above written:
XXXXXX HOLDING CORP. Address: 0000 Xxxxxxx Xxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
/s/ Xxxxxxx X. Xxxxxxxx
By:___________________________________
Xxxxxxx X. Xxxxxxxx, President
EXHIBIT A
FORM OF NOTICE OF EXERCISE OF WARRANT
----------------------------
DATE
Xxxxxx Holding Corp.
Attention: Board of Directors
Re: Purchase of Warrant Shares
Gentlemen:
In accordance with my Warrant dated as of August 29, 2001 with Xxxxxx
Holding Corp. (the "Company"), I hereby irrevocably elect to exercise the right
to purchase _________ shares of the Company's common stock, par value $.0001 per
share ("Common Stock"), which are being purchased for investment and not resale.
As payment for my shares, enclosed is (check and complete applicable
box[es]):
|_| a [personal check] [certified check] [bank check] payable to
the order of the Company in the sum of $_________;
|_| confirmation of wire transfer in the amount of
$_____________;
|_| with the consent of the Company, a certificate for
__________ shares of the Company's Common Stock, free and
clear of any encumbrances, duly endorsed, having a Fair
Market Value (as such term is defined in Section 1.3.3 of
the Warrant) of $_________;
|_| with the consent of the Company, through broker payment (see
broker letter attached); and/or
|_| I hereby surrender the portion of the unexercised, but
exercisable, portion of the Warrant having a value equal to
the Exercise Price multiplied by the number of shares of
Common Stock being purchased hereunder, to wit: the Warrant
to purchase _______ Warrant Shares.
(i) I am acquiring the Warrant and shall acquire the Warrant
Shares for my own account, for investment, and not with a view towards the
distribution thereof;
(ii) I have received a copy of all reports and documents
required to be filed by the Company with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934 within the last 24 months and
all reports issued by the Company to its stockholders;
(iii) I understand that I must bear the economic risk of the
investment in the Warrant Shares, which cannot be sold by me unless they are
registered under the Securities Act of 1933 (the "1933 Act") or an exemption
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therefrom is available thereunder and that the Company is under no obligation to
register the Warrant Shares for sale under the 1933 Act;
(iv) I am an accredited investor within the meaning of Rule
501(a) promulgated under the 1933 Act;
(v) I agree that I will not sell, transfer by any means or
otherwise dispose of the Warrant Shares acquired by me hereby until August 29,
2002 for such Warrant Shares without the prior written consent of the Company. I
agree that the Company shall place stop transfer orders with its transfer agent
against the transfer of the Warrant Shares and the Certificates evidencing the
Warrant Shares shall bear an appropriate restrictive legend until such
restriction expires;
(vi) I have had both the opportunity to ask questions and
receive answers from the officers and directors of the Company and all persons
acting on its behalf concerning the terms and conditions of the offer made
hereunder and to obtain any additional information to the extent the Company
possesses or may possess such information or can acquire it without unreasonable
effort or expense necessary to verify the accuracy of the information obtained
pursuant to clause (ii) above;
(vii) I am aware that the Company shall place stop transfer
orders with its transfer agent against the transfer of the Warrant Shares in the
absence of registration under the 1933 Act or an exemption therefrom as provided
herein;
(viii) My rights with respect to the Warrant Shares, in all
respects, are subject to the terms and conditions of this Agreement; and
(ix) If, at the time of issuance of the Warrant Shares, the
issuance of such shares has not been registered under the 1933 Act, the
certificates evidencing the Warrant Shares shall bear an appropriate restrictive
legend.
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
---------------------------------- ---------------------------------
(Signature) (Address)
---------------------------------
---------------------------------
(Print Name)
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