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EXHIBIT 10.103
LEASE AGREEMENT ENTERED INTO BY AND BETWEEN XX. XXXXXX XXXXXXXX (HEREINAFTER
REFERRED TO AS THE "LESSOR") AND WILSHIRE INTERNATIONAL DE MEXICO S.A. DE C.V.,
REPRESENTED HEREIN BY XXXXX X. XXXXXXXX (HEREINAFTER REFERRED TO AS THE
"LESSEE"), PURSUANT TO THE FOLLOWING RECITALS AND CLAUSES.
RECITALS
I. LESSOR hereby states that:
A. He is the owner of the industrial building, located at San Antonio del
Mar 20301 A, Tijuana, B.C. Mexico (hereinafter referred to as the
"LEASED PREMISES"), which location, metes and bounds are contained in
Exhibit "A" hereto, which forms an integral part hereof.
B. For purposes of this agreement its domicile is located at the following
address: Xxxxx 0 Xxxxx Xx. 000 XX. Xxxxxxxxxx, Xxxxxxx, X.X..
C. He is willing to lease the LEASED PREMISES to the LESSEE pursuant to the
terms and conditions of this agreement.
II. LESSEE hereby states that:
A. It is a corporation duly organized and existing according to the Laws of
the Mexican Republic.
B. For the purposes of this agreement its domicile is located at the LEASED
PREMISES, that is San Antonio del Mar 20301-A Tijuana, B.C.
C. It wishes to lease from the LESSOR the LEASED PREMISES pursuant to the
terms and conditions hereunder.
IN VIEW OF THE FOREGOING, the parties hereto agree as follows:
CLAUSES
FIRST: LEASE AND DELIVERY
The LESSOR hereby leases to the LESSEE and the LESSEE hereby leases from
the LESSOR the LEASED PREMISES, which are located at San Antonio del Mar 20301
A, in Tijuana, B.C., and which are described in Exhibit "A" hereto.
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SECOND: OCCUPANCY BY LESSEE
The LESSEE shall use the LEASED PREMISES for any lawful purposes in
accordance with applicable zoning, environmental and land use restrictions and
regulations.
Accordingly, it is hereby agreed that:
2.1. The LESSEE may, at its own risk and expense, install on the
LEASED PREMISES such fixtures, equipment and furniture as it may
deem necessary.
2.2 The LESSEE shall repair all damages caused to the LEASED PREMISES
during installation or removal of the fixtures, equipment and
furniture mentioned in the preceding paragraph.
2.3 The LESSEE shall perform the installation or removal of its
equipment and furniture in accordance with all applicable laws,
ordinances, and regulations, being liable for any violations
thereto.
2.4 The LESSEE agrees to retrieve such fixtures, equipment, furniture
and /or improvements it may have installed in the LEASED PREMISES
on or before the date of termination of this lease. Should the
LESSEE fail to retrieve such fixtures, equipment, furniture
and/or improvements from the LEASED PREMISES as provided above,
the LESSOR shall be entitled to either retrieve such fixtures,
equipment, furniture and/or improvements from the LEASED PREMISES
at the LESSEE's risk and expense, or deem that said fixtures,
equipment , furniture and /or improvements have been left in the
LEASED PREMISES by the LESSEE to gratuitously inure in favor of
the LESSOR.
2.5 The LESSEE may not modify the structure, facade or public
services of the LEASED PREMISES, nor may it perform any works or
make alterations without the LESSOR'S prior written consent, that
affect the structure, facade, or public services of the LEASED
PREMISES
THIRD: LEASE TERM
3.1 The term of this Lease shall commence on January 1, 1998 and
shall end on December 31, 2002.
3.2 Notwithstanding the foregoing, this lease by written consent of
both parties shall be renewed for two (2) additional five (5)
years terms.
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3.3 Should LESSEE lease or acquire any other industrial building
controlled by LESSOR, the LESSEE shall be entitled to terminate
this lease.
FOURTH. RENT
The LESSEE shall punctually and without deductions (except for those
provided by the applicable tax laws) pay to the LESSOR, at its Address or any
other address as instructed by the LESSOR.
4.1 For the first twelve months the rent will be $10,000.00 (Ten
Thousand Dollars 00/100) payable in advance during the first five
(5) business days of each month. The rent shall be payable in
U.S. Dollars or in Mexican pesos as desired by LESSEE.
4.2 As of the second year of this lease, the then monthly rent shall
be annually increased in accordance with the annualized
percentage increase of the Consumer Price Index for the San
Diego, California Metropolitan Area published by the U.S.
Department for the immediate preceding year.
4.3 For purposes of calculating the monthly rent in Mexican pesos,
the parties shall use the highest market rate of exchange for
sales of the day of payment or the immediately preceding business
day in case the day of payment is a holiday for the banking
institutions of Mexico.
4.4 All rental payments made after the term set forth above shall
accrue delinquent interest at a rate of five percent (5%) per
month).
FIFTH. IMPROVEMENTS
The LESSOR agrees to complete the improvements listed in Exhibit"B"
hereto accordingly to the specifications contained in the referred Exhibit "B"
on or before December 31, 1997.
SIXTH. INSURANCE
6.1 During the life of this agreement, the LESSEE, shall obtain and
maintain in full force an insurance policy to cover the LESSEE
and the LESSOR or designate LESSOR as additional insured on
LESSEE'S blanket insurance policy against any civil liability
claims, demands, lawsuits or actions, or against the accidents or
decease of any person, or from any damages to the goods of any
third party in connection with the use by the LESSEE of the
LEASED PREMISES. The corresponding insurance policy shall cover
an insurable value of at least $200,000.00 dollars.
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6.2 During the life of this agreement, the LESSEE shall obtain and
maintain in full force an insurance policy in favor of the LESSOR
to cover the payment of rents unpaid for any reason. The
corresponding insurance policy shall cover an insurable value
equal to the monthly rent, taxes and insurable costs for a period
of six (6) months.
6.3 The insurance policies referred to in paragraphs 6.1 and 6.2
above, shall be obtained with any insurance company authorized to
do business in Mexico acceptable to the LESSOR. Likewise, the
policies shall provide that the same may not be amended without
the prior written authorization of the LESSOR. Additionally, said
insurance policies shall provide that they shall not be subject
to cancellation or change, except after at least thirty (30) days
written notice to the LESSOR. Finally, the policies, or their
duly executed certificates, together with copies or receipts for
payment of the premiums thereof, shall be delivered to the LESSOR
at first domicile within the fifteen (15) days following the date
of execution of this agreement. All documents evidencing the
renewal of such policies shall be delivered to the LESSOR at
least thirty (30) days prior to the expiration of the term of
such coverage.
6.4 During the life of this agreement, the LESSEE agrees to obtain an
insurance policy in favor of the LESSOR to cover the LEASED
PREMISES against fire, lightning, explosion, falling aircraft,
collision, smoke, storms, hail, vehicle damage, earthquakes,
volcanic eruption, strikes, riots, civil commotion, vandalism,
flood and any other risks currently covered or which in the
future may be covered under the so called "extended coverage"
policy (including windows and gas tank coverage). In view of the
foregoing, the LESSEE hereby waives any right to demand payment
from the LESSOR for damages caused by fire, explosion and other
unforeseen events. The corresponding insurance policy shall cover
an insurable value of $400,000.00 (Four Hundred Thousand Dollars
and 00/100).
6.5 The coverage mentioned in paragraphs 6.1, 6.2, and 6.4 above
shall be annually increased thereafter in accordance with the
annualized percentage increase of the Consumer Price Index for
the San Diego, California Metropolitan Area, published by the
U.S. Department of Labor for the immediately preceding year.
SEVENTH. TAXES AND COSTS
The LESSOR shall be responsible of payment of the income and assets
taxes to which it is obligated. On its part, the LESSEE shall be responsible for
the payment of the corresponding value added tax, property tax and any other
taxes or costs which may affect the LEASED PREMISES, which may derive from this
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agreement or which may derive form the use of the LEASED PREMISES by the LESSEE.
The LESSEE shall submit to the LESSOR evidence satisfactorily to the LESSOR that
such taxes have been paid at least ten(10) days before said taxes become due and
payable.
EIGHTH. REPAIRS AND MAINTENANCE
8.1 LESSOR
8.1.1 After written notice from the LESSEE, the LESSOR shall repair the
structural or construction defects of the exterior wall, and roof
of the LEASED PREMISES caused as a consequence of the normal use
of the same. The LESSOR shall not be responsible for the repairs
of the LEASED PREMISES, unless the LESSEE informs such
circumstance immediately to the LESSOR.
8.1.2 The LESSOR shall not be responsible, or have the obligation to
repair the damages caused by the LESSEE's negligence, or that of
LESSEE's workers, clients, contractors, or guests.
8.2. LESSEE
8.2.1 LESSEE shall be responsible for the repairs to the damages
suffered in the LEASED PREMISES other than those referred to in
clause 8.1 herein above. The damages referred to in this
paragraph include, but are not limited to, the damages and
maintenance that shall be given to the plumbing systems, sewage,
telephone, gas, as well as for the equipment, interior walls,
interior painting, doors and windows, etc, of the LEASED
PREMISES. All the expenses resulting of disregarding and the
negligence of the LEASED PREMISES, or a violation and the
obligations of the LESSEE set herein, shall be borne by the
LESSEE.
8.2.2 The LESSEE shall maintain the LEASED PREMISES and its
improvements free from any liens.
NINTH. IDEMNIFICATION
9.1 If the LESSOR is held responsible for any obligation undertaken
by the LESSEE, the LESSEE agrees to indemnify and hold LESSOR
harmless from any and all claims for damages or losses of any
kind, and to restore or reimburse any all such costs and expenses
to the LESSOR.
9.2 If the LESSEE is held responsible for any obligation undertaken
by the LESSOR, the LESSOR agrees to indemnify and hold LESSEE
harmless
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from any and all claims for damages or losses of any kind, and to
restore or reimburse any all such costs and expenses to the
LESSEE.
TENTH. UTILITY SERVICES
10.1 LESSOR represents and warrants that utility service, including
water, electricity and telephone are available at the LEASED
PREMISES, and that LESSEE may secure at least three (3) telephone
lines at LESSEE'S expense.
10.2 The LESSEE agrees to request directly from the corresponding
utility companies that the public services be rendered by such
companies, to pay for the corresponding connection fees and to
promptly pay for any and all utilities and related services
furnished to the LESSEE in the LEASED PREMISES, including but not
limited to water, gas, electricity, and telephone charges.
ELEVENTH. ASSIGNMENT AND SUBLETTING
11.1 The LESSEE may not assign its rights and obligations under this
agreement, nor may it sublet the LEASED PREMISES unless it
obtains the prior written authorization of the LESSOR not
unreasonably withheld.
11.2 The LESSOR shall be entitled to assign, in whole or in part, its
rights and obligations under this agreement. Consequently, the
LESSEE hereby grants authorization to the LESSOR so that the
latter may formalize, the assignments which it may deem
appropriate. Likewise, LESSOR shall be expressly entitled to
guarantee any of its present of future obligations with its
rights under this agreement.
TWELFTH. ACCESS TO THE LEASED PREMISES
12.1 The LESSOR or its authorized representatives shall have the right
to enter the LEASED PREMISES during all of LESSEE's business
hours, and in emergencies at all times, to make repairs,
additions, or alterations to the LEASED PREMISES which may be
authorized or obligated to do under this agreement.
12.2 LESSOR, within a ninety (90) day period prior to the termination
of this agreement, shall have the right to show the LEASED
PREMISES to any prospective clients. Likewise, and during the
above mentioned term, the LESSOR shall have the right to post the
signs which it may deem appropriate in the facade of the LEASED
PREMISES in order to promote the same.
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12.3 Except in case of emergency, the LESSOR shall give notice to the
LESSEE before entering the LEASED PREMISES, and the LESSEE shall
have the right to escort any representatives of the LESSOR and
prospective clients.
THIRTEENTH. DAMAGE OR DESTRUCTION
13.1 TOTAL
In the event the whole or substantial part of the LEASED PREMISES
are damaged or destroyed so as to impede the LESSEE's operation
for the purposes for which the same were leased, the LESSOR
shall, within ten (10) days from such destruction, determine
whether the LEASED PREMISES can be restored within the following
three (3) months and notify the LESSEE of such determination. If
the LESSOR determines that the LEASED PREMISES cannot be restored
within the following three (3) months, either the LESSOR or the
LESSEE shall have the right and option to immediately terminate
this Lease Agreement by means of a written notice to the other
party. If the LESSOR determines that the LEASED PREMISES can be
restored within said three (3) month period, the LESSOR shall, at
its own expense, proceed diligently to reconstruct the LEASED
PREMISES, but only up to the amount which it may obtain from the
insurance coverage mentioned in clause Sixth above.
13.2 PARTIAL
In the event the referred damages do not prevent the LESSEE, in a
substantial way, from continuing the normal operation of its
business on the LEASED PREMISES, the LESSOR or the LESSEE, as the
case may be, shall repair said damages under the terms of clause
EIGHT above.
13.3 If the damage in question is caused by a negligent or willful act
of the LESSEE or its employees, the LESSEE agrees to punctually
pay the rent hereunder.
FOURTEENTH. CAUSES FOR TERMINATION OF LEASE.
The LESSEE will have the right to terminate this lease at any time in
case that for any circumstance of force majeure, fortuitous case or acts
of government (expropriation, seizure, etc.) he cannot continue
industrial operations within the leased premises. In such a case the
LESSEE will notify the LESSOR of his intention to terminate the lease 30
days in advance of the effective date of termination.
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FIFTEENTH. LESSOR'S RIGHT TO PERFORM THE LESSEE'S COVENANTS
If the LESSEE shall at any time fail to perform any one or more of its
covenants made in this lease, the LESSOR, after five (5) business days
written notice to the LESSEE (or without notice in the event the act or
acts to be performed in fulfillment of the breached covenant require an
immediate action) and without waiving or releasing the LESSEE from any
obligation of the LESSEE contained in this Lease, may (but shall be
under no obligation to ) perform any act on the LESSEE's part to be
performed as provided in this lease, and may enter upon the LEASED
PREMISES for that purpose and take all such actions thereon as may be
necessary therefor. All sums paid by the LESSOR and all costs and
expenses incurred by the LESSOR in connection with the performance of
any such obligation of the LESSEE, shall be payable by the LESSEE to the
LESSOR on demand, in the understanding that the late reimbursement of
costs and expenses shall accrue delinquent interest at a rate of five
percent (5) per month.
SIXTEENTH. GUARANTIES
16.1 LESSOR hereby acknowledges to have received from the LESSEE, as
deposit, the amount of U.S. $30,000 (Thirty Thousand U.S. Dollars
and 00/100) upon execution of lease in order to guarantee its
obligations hereunder. The deposit shall be reimbursed to the
LESSEE, without interest, after the LESSOR carries out an
inspection of the condition on which the LEASED PREMISES are
returned.
16.2 The LESSEE shall deliver to the LESSOR within the thirty days
following the execution of this lease agreement, a warrant (in
the form of Exhibit C) to purchase 50,000 shares of common stock
of Wilshire Technologies Inc, at the market price on the date
this lease agreement is executed.
16.3 In case of early termination for any cause attributable to the
LESSEE, the LESSOR shall be entitled to keep any amounts
delivered to the LESSOR as prepaid rent or deposit, regardless of
any other rights which the LESSOR may be entitled to .
16.4 LESSEE shall provide yearly financial information throughout the
course of the lease.
SEVENTEENTH. COVENANTS, CONDITIONS AND RESTRICTIONS
17.1 The LESSEE agrees to fully comply with the covenants, conditions
and restrictions of Parque Industrial Xxxxx del Sur CC&R,
Tijuana, Baja California.
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17.2 LESSEE will pay park maintenance fees of US $0.50 per square
meter of land per year, beginning July 1, 1998.
EIGHTEENTH. NOTICES
18.1 Any notice to be given to the LESSOR under this agreement shall
be sent to the address mentioned in recital I.B. or to such other
addressses which may from time to time be notified by the LESSOR
to the LESSEE.
18.2 Any notice to be given to the LESSEE under this agreement shall
be addressed to the LEASED PREMISES.
18.3 Said notices shall be in writing, and shall be delivered
personally to the legal representative of the party in question,
or sent by certified mail, postage prepaid to the addresses
mentioned above, in which case the corresponding notice shall be
deemed delivered fourteen (14) days after the date of mailing
thereof.
NINETEENTH. EARLY TERMINATION
The LESSOR may terminate this agreement with proper written notification
or default in any of the following circumstances:
19.1 In case the term expressed in clause THIRD above expires.
19.2 The LESSEE's failure to pay any monthly rent due and payable
hereunder.
19.3 Default in the performance of any of the LESSEE's covenants,
agreements, or obligations hereunder.
19.4 The filing of a petition of bankruptcy against the LESSEE, that
is dismissed within one hundred eighty (180) days after filing.
19.5 Any other cause provided in the corresponding civil code.
TWENTY. MISCELLANEOUS
20.1 In case any party fails to execute any action against the other
as to project a certain right under this agreement, said failure
shall not be construed as a waiver of any other rights derived
herefrom.
20.2. This agreement may only be modified by written agreement signed
by the authorized representatives of the parties.
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20.3 In case any party hereto exercises an action against the other in
order to demand the performance of this agreement, the prevailing
party shall be entitled to reasonable attorney's fees.
20.4 The parties agree that this Lease Agreement shall be governed by
the laws of State of Baja California. For everything pertaining
to the interpretation and compliance of this Lease agreement the
parties hereby expressly submit to the jurisdiction of the Civil
Courts of the City of Tijuana, Baja California, waiving any other
jurisdiction which might be applicable by reason of their present
or future domiciles or otherwise.
TWENTY FIRST. PURCHASE OPTION
21.1 In the event LESSEE purchases a facility from LESSOR the term of
the lease can be terminated.
21.2 LESSEE will have right of first refusal to lease the building
site on the north side of the LEASED PREMISES.
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IN WITNESS WHEREOF, the parties have executed this agreement in the places and
on the dates stated herein below:
LESSOR LESSEE
/s/ Lic. Xxxxxx Xxxxxx Xxxxxxxx /s/ Xxxxx X. Xxxxxxxx
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November, 25, 1997 Wilshire International
Tijuana, B.C. Mexico de Mexico S.A. De C.V.
November 25,1997
Tijuana, B.C. Mexico
GUARANTOR
/s/ Xxxx Xxx Xxxxxx
Wilshire Technologies, Inc
Chief Executive Officer
November 25, 1997
Tijuana, B.C. Mexico
/s/ Xxxxxxx Xxxxxxxxx Xxxxxxx /s/ Xxxx Xxxx Xxxxxxx
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Witness Witness
Lease contract Wilshire
Draft - November 25, 1997
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EXHIBIT 10.103a
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES
NOR ANY INTEREST THEREIN MAY BE TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR
SUCH LAWS AND THE RULES AND REGULATIONS THEREUNDER.
Warrant No. RM-1 November 25, 1997
WARRANT TO PURCHASE SHARES OF COMMON
STOCK OF WILSHIRE TECHNOLOGIES, INC.
This certifies that XX. XXXXXX XXXXXXXX, (the "Holder"), for value
received is entitled, subject to the adjustment and to the other terms set forth
below, to purchase from WILSHIRE TECHNOLOGIES, INC., a California corporation
(the "Company"), Fifty Thousand (50,000) fully paid and nonassessable shares of
the Company's Common Stock, no par value per share (the "Stock"), at a per share
price calculated in the manner set forth in Section 1, below (the "Stock
Purchase Price"), at any time on or after November 25, 1997 (the "Commencement
Date") but not later than 5:00 p.m. (Pacific Time) on the Expiration Date (as
defined below), upon surrender to the Company at its principal office at 0000
Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000 (or at such other location as the
Company may advise Holder in writing) of this Warrant properly endorsed with the
Form of Subscription Agreement attached hereto duly filled in and signed and
upon payment in cash or cashier's check of the aggregate Stock Purchase Price
for the number of shares for which this Warrant is being exercised determined in
accordance with the provisions hereof. The Stock Purchase Price and, in some
cases, the number of shares purchasable hereunder are subject to adjustment as
provided in Section 3 of this Warrant. This Warrant and all rights hereunder, to
the extent not exercised in the manner set forth herein shall terminate and
become null and void on the Expiration Date. "Expiration Date" means the fifth
anniversary of the Commencement Date; provided, however, that if the Lease
Agreement dated November 25, 1997, between the Holder and the Company (the
"Lease Agreement") shall be terminated by Holder in accordance with the
provisions as set forth in Section 19 of the Lease Agreement prior to the
occurrence of such fifth anniversary, the Expiration Date shall be accelerated
to a date that is thirty (30) days following such termination date. This Warrant
is issued in conjunction with the Lease Agreement.
This Warrant is subject to the following terms and conditions:
1. Exercise; Stock Purchase Price; Issuance of Certificates; Payment for
Shares. This Warrant is exercisable at the option of Holder at any time or from
time to time but not earlier than the Commencement Date or later than 5:00 p.m.
(Pacific Time) on the Expiration Date for all or a portion of the shares of
Stock which may be purchased hereunder. The Company agrees that the shares of
Stock purchased under this Warrant shall be and are deemed to be issued to
Holder as the record owner of such shares as of the close of business on the
date on which this Warrant shall have been surrendered and payment made for such
shares. The per share Stock Purchase Price shall be
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$0.60, which is the mean average of the bid and asked prices on November 25,
1997, the effective date of the Lease Agreement. Subject to the provisions of
Section 2, certificates for the shares of Stock so purchased, together with any
other securities or property to which Holder is entitled upon such exercise,
shall be delivered to Holder by the Company's transfer agent at the Company's
expense within a reasonable time after the rights represented by this Warrant
have been exercised. Each stock certificate so delivered shall be in such
denominations of Stock as may be requested by Holder and shall be registered in
the name of Holder or such other name as shall be designated by Holder, subject
to the limitations contained in Section 2. If, upon exercise of this Warrant,
fewer than all of the shares of Stock evidenced by this Warrant are purchased
prior to the Expiration Date of this Warrant, one or more new warrants
substantially in the form of, and on the terms in, this Warrant will be issued
for the remaining number of shares of Stock not purchased upon exercise of this
Warrant.
2. Shares to Be Fully Paid; Reservation of Shares. The Company covenants
and agrees that all shares of Stock which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all preemptive rights
of any shareholder and free of all taxes, liens and charges with respect to the
issue thereof. The Company covenants that it will reserve and keep available a
sufficient number of shares of its authorized but unissued Stock for such
exercise. The Company will take all such reasonable action as may be necessary
to assure that such shares of Stock may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of any
domestic securities exchange or automated quotation system upon which the Stock
may be listed.
3. Adjustment of Stock Purchase Price and Number of Shares. The Stock
Purchase Price and, in some cases, the number of shares purchasable upon the
exercise of this Warrant shall be subject to adjustment from time to time upon
the occurrence of certain events described in this Section 3.
3.1 Subdivision or Combination of Stock and Stock Dividend. In
case the Company shall at any time subdivide its outstanding shares of Stock
into a greater number of shares or declare a dividend upon its Stock payable
solely in shares of Stock, the Stock Purchase Price in effect immediately prior
to such subdivision or declaration shall be proportionately reduced, and the
number of shares issuable upon exercise of the Warrant shall be proportionately
increased. Conversely, in case the outstanding shares of Stock of the Company
shall be combined into a smaller number of shares, the Stock Purchase Price in
effect immediately prior to such combination shall be proportionately increased,
and the number of shares issuable upon exercise of the Warrant shall be
proportionately reduced.
3.2 Notice of Adjustment. Promptly after adjustment of the Stock
Purchase Price or any increase or decrease in the number of shares purchasable
upon the exercise of this Warrant, the Company shall give written notice
thereof, by first class mail, postage prepaid, addressed to the registered
holder of this Warrant at the address of such holder as shown on the books of
the Company. The notice shall be signed by the Company's chief financial officer
and shall state the effective date of the adjustment and the Stock Purchase
Price resulting from such
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adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
3.3 Other Notices. If at any time:
(a) the Company shall declare any cash dividend upon
its Stock;
(b) the Company shall declare any dividend upon its
Stock payable in stock (other than a dividend payable solely in shares of Stock)
or make any special dividend or other distribution to the holders of its Stock;
(c) there shall be any consolidation or merger of the
Company with another corporation, or a sale of all or substantially all of the
Company's assets to another corporation; or
(d) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give, by certified or
registered mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder, as shown on the books of the Company, (i)
at least 30 days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
dissolution, liquidation or winding-up; (ii) at least 10 days' prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger or sale, and (iii) in
the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, at least 30 days' written notice
of the date when the same shall take place. Any notice given in accordance with
clause (i) above shall also specify, in the case of any such dividend,
distribution or option rights, the date on which the holders of Stock shall be
entitled thereto. Any notice given in accordance with clause (iii) above shall
also specify the date on which the holders of Stock shall be entitled to
exchange their Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, as the case may be. If the Holder of the Warrant does
not exercise this Warrant prior to the occurrence of an event described above,
except as provided in Sections 3.1 and 3.4, the Holder shall not be entitled to
receive the benefits accruing to existing holders of the Stock in such event.
Notwithstanding anything herein to the contrary, if and to the extent the Holder
chooses to exercise this Warrant within the ten-day period following receipt of
the notice specified in clause (ii) above, the Holder may elect to pay the
aggregate Stock Purchase Price by delivering to the Company cash or a cashier's
check in the amount of the aggregate par value of the shares of Stock to be
purchased and the Holder's full recourse Promissory Note in the amount of the
balance of the aggregate Stock Purchase Price, which Note shall be payable to
the order of the Company in a single sum on the 30th day following the date of
receipt of such notice and shall bear interest at the lowest applicable federal
short term rate (using monthly compounding) as established pursuant to Section
1274(d) of
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the Internal Revenue Code of 1986, as amended, or any successor provision;
provided, however, that if the Holder elects to deliver such a Promissory Note
to the Company, the Holder will pledge to the Company all Stock issued in
connection with the exercise of this Warrant, and the Company shall retain
possession of the certificates evidencing such Stock, until such time as the
Note is paid in full.
3.4 Changes in Stock. In case at any time following the
Commencement Date, the Company shall be a party to any transaction (including,
without limitation, a merger, consolidation, sale of all or substantially all of
the Company's assets or recapitalization of the Stock) in which the previously
outstanding Stock shall be changed into or exchanged for different securities of
the Company or common stock or other securities of another corporation or
interests in a noncorporate entity or other property (including cash) or any
combination of any of the foregoing (each such transaction being herein called
the "Transaction" and the date of consummation of the Transaction being herein
called the "Consummation Date"), then, as a condition of the consummation of the
Transaction, lawful and adequate provisions shall be made so that each Holder,
upon the exercise hereof at any time on or after the Consummation Date, shall be
entitled to receive; and this Warrant shall thereafter represent the right to
receive, in lieu of the stock issuable upon such exercise prior to the
Consummation Date, the highest amount of securities or other property to which
such Holder would actually have been entitled as a shareholder upon the
consummation of the Transaction if such Holder had exercised such Warrant
immediately prior thereto. The provisions of this Section 3.4 shall similarly
apply to successive Transactions.
4. Issue Tax. The issuance of certificates for shares of Stock upon the
exercise of the Warrant shall be made without charge to the holder of the
Warrant for any issue tax in respect thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the then holder of the Warrant being exercised.
5. No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon the holder
hereof the right to vote or to consent or to receive notice as a shareholder in
respect of meetings of shareholders for the election of directors of the Company
or any other matters or any rights whatsoever as a shareholder of the Company.
Except for the adjustment to the Stock Purchase Price pursuant to Section 3.1 in
the event of a dividend on the Stock payable in shares of Stock, no dividends or
interest shall be payable or accrued in respect of this Warrant or the interest
represented hereby or the shares purchasable hereunder until, and only to the
extent that, this Warrant shall have been exercised. No provisions hereof, in
the absence of affirmative action by the holder to purchase shares of Stock, and
no mere enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such holder for the Stock Purchase Price or
as a shareholder of the Company whether such liability is asserted by the
Company or by its creditors.
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6. Restrictions on Transferability of Securities; Compliance With
Securities Act.
6.1 Restrictions on Transferability. This Warrant and the Stock
issuable upon exercise hereof (collectively, the "Securities") shall be
transferable only in accordance with the provisions of the Securities Act of
1933, as amended, and the state securities and Blue Sky laws.
6.2 Restrictive Legend. Each certificate representing the
Securities or any other securities issued in respect of the Securities upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event, shall (unless otherwise permitted by the provisions of the Purchase
Agreement) be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required under applicable state
securities laws):
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID
ACT OR SUCH LAWS AND THE RULES AND REGULATIONS THEREUNDER."
7. Registration Rights. Holder shall have the registration rights set
forth in Exhibit A attached hereto and incorporated herein by this reference.
8. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
9. Notices. Any notice, request or other document required or permitted
to be given or delivered to the holder hereof or the Company shall be delivered
or shall be sent by certified or registered mail, postage prepaid, to each such
holder at its address as shown on the books of the Company or to the Company at
the address indicated therefor in the first paragraph of this Warrant.
10. Descriptive Headings and Governing Law. The descriptive headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of California.
11. Lost Warrants or Stock Certificates. The Company represents and
warrants to Holder that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of any Warrant or stock
certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity and, if requested, bond reasonably satisfactory to the
Company, or in the case of any such mutilation, upon surrender and cancellation
of such Warrant or
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stock certificate, the Company at its expense will make and deliver a new
Warrant or stock certificate, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant or stock certificate.
12. Fractional Shares. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share pay the holder entitled to such fraction a sum in cash equal to the fair
market value of any such fractional interest as it shall appear on the public
market, or if there is no public market for such shares, then as shall be
reasonably determined by the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer, thereunto duly authorized as of this 25th day of November, 1997.
WILSHIRE TECHNOLOGIES, INC.
By: /s/Xxxx Xxx Xxxxxx By: /s/Xxxxx X. Xxxxxxxx
--------------------------------- --------------------------------
President & Chief Executive Vice President & Chief Financial
Officer Officer
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FORM OF SUBSCRIPTION AGREEMENT
(To be signed and delivered upon execution of Warrant)
WILSHIRE TECHNOLOGIES, INC.
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _______________ shares of common stock, no par value per
share (the "Stock"), of WILSHIRE TECHNOLOGIES, INC. (the "Company") and herewith
makes payment of ____________________ Dollars ($______) therefor and requests
that the certificates for such shares be issued in the name of, and delivered
to, _____________________ whose address is __________________________.
If the exercise of this Warrant is not covered by a registration
statement effective under the Securities Act of 1933, as amended (the
"Securities Act"), the undersigned represents that
(i) the undersigned is acquiring such Stock for investment for its
own account, not as nominee or agent, and not with a view to the distribution
thereof and the undersigned has not signed or otherwise arranged for the
selling, granting any participation in, or otherwise distributing the same;
(ii) the undersigned has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of the
undersigned's investment in the Stock;
(iii) the undersigned has received all of the information the
undersigned has requested from the Company and considers necessary or
appropriate for deciding whether to purchase the shares of Stock;
(iv) the undersigned has the ability to bear the economic risks of
its prospective investment;
(v) the undersigned is able, without materially impairing its
financial condition, to hold the shares of Stock for an indefinite period of
time and to suffer complete loss on its investment;
(vi) the undersigned understands and agrees that (A) it may be
unable to readily liquidate its investment in the shares of Stock and that the
shares must be held indefinitely unless a subsequent disposition thereof is
registered or qualified under the Securities Act and applicable
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state securities or Blue Sky laws or is exempt from such registration or
qualification, and that the Company is not required to register the same or to
take any action or make such an exemption available except to the extent
provided in the within Warrant; and (B) the exemption from registration under
the Securities Act afforded by Rule 144 promulgated by the Securities and
Exchange Commission ("Rule 144") depends upon the satisfaction of various
conditions by the undersigned and the Company and that, if applicable, Rule 144
affords the basis for sales under certain circumstances in limited amounts, and
that if such exemption is utilized by the undersigned, such conditions must be
fully complied with by the undersigned and the Company, as required by Rule 144;
(vii) the undersigned either (A) is familiar with the definition of
and the undersigned is an "accredited investor" within the meaning of such term
under Rule 501 of Regulation D promulgated under the Securities Act, or (B) is
providing representations and warranties reasonably satisfactory to the Company
and its counsel, to the effect that the sale and issuance of Stock upon exercise
of such Warrant may be made without registration under the Securities Act or any
applicable state securities and Blue Sky laws; and
(viii) the address set forth below is the true and correct address for
the undersigned.
DATED: ___________________________
________________________________________
________________________________________
________________________________________
(Address)
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Exhibit A to Warrant to Purchase Shares
of Common Stock of Wilshire Technologies, Inc.
1. Certain Definitions. As used herein, the following terms shall have
the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Conversion Stock" means the Stock issued or issuable pursuant to this
Warrant.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations of the
commission thereunder, all as the same shall be in effect at the time.
"Registrable Securities" means (i) the Conversion Stock; and (ii) any
Stock of the Company issued or issuable in respect of the Conversion Stock or
other securities issued or issuable pursuant to the conversion of the Stock upon
any stock split, stock dividend, recapitalization, or similar event, or any
Common Stock otherwise issued or issuable with respect to the Stock; provided,
however, that shares of Common Stock or other securities shall only be treated
as Registrable Securities if and so long as they have not been (A) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold or are available for sale in the opinion of
counsel to the Company in a single transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are or may be removed
upon the consummation of such sale.
The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing with the Commission a registration
statement in compliance with the Securities Act, and the declaration or ordering
of the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except Selling Expenses
as defined below, incurred by the Company in complying with Sections 2 and 3
hereof, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company, blue sky fees and expenses, the expenses of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company) and the reasonable fees and disbursements of counsel for Holder.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the securities registered by Holder.
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2. Company Registration.
(a) Notice of Registration. If, at any time or from time to
time, the Company shall determine to register any of its securities, either for
its own account or the account of a security holder or holders, other than (i) a
registration relating solely to employee benefit plans or (ii) a registration
relating solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to Holder written notice thereof; and
(ii) include in such registration (and any related
qualification under blue sky laws, or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request,
made within 20 days after receipt of such written notice from the Company, by
Holder.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holder as a part of the written notice given
pursuant to Section 2(a)(i). In such event, the right of Holder to registration
pursuant to this Section 2 shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting to the extent provided herein. If Holder proposes to
distribute its Registrable Securities through such underwriting, Holder,
together with the Company, shall enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company. Notwithstanding any other provision of this Section 2, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter, in its sole
discretion, may limit the Registrable Securities to be included in such
registration, and the Company shall promptly so advise Holder thereof. If Holder
disapproves of the terms of any such underwriting, Holder may elect to withdraw
therefrom by written notice to the Company and the managing underwriter. Any
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration, and shall not be transferred in a public distribution prior
to 90 days after the effective date of the registration statement relating
thereto, or such other shorter period of time as the underwriter may require.
The Company may include shares of Stock held by shareholders other than Holder
in a registration statement pursuant to this Section 2.
(c) Right to Terminate Registration. The Company shall have
the right to terminate or withdraw any registration initiated by it under this
Section 2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
3. Expenses of Registration. All Registration Expenses incurred in
connection with any registration pursuant hereto, shall be borne by the Company,
and all Selling Expenses incurred in connection with any registration pursuant
hereto shall be borne by Holder.
4. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant hereto, the Company
will keep Holder advised in writing
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as to the initiation of each registration, qualification and compliance and as
to the completion thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least ninety (90)
days, and prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for at least
ninety (90) days, provided that no such registration shall constitute a shelf
registration under Rule 415 promulgated by the Commission under the Securities
Act;
(b) Enter into a written underwriting agreement in customary
form and substance reasonably satisfactory to the Company, the Holder and the
managing underwriter or underwriters of the public offering of such securities,
if the offering is to be underwritten in whole or in part;
(c) Furnish to the Holder and to the underwriters of the
securities being registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other documents as
such underwriter may reasonably request in order to facilitate the public
offering of such securities;
(d) Notify the Holder, promptly after it shall receive notice
thereof, of the time when such registration statement has been effective or a
supplement to any prospectus forming a part of such registration statement has
been filed;
(e) Notify Holder promptly of any request by the Commission
for the amending or supplementing of such registration statement or prospectus
or for additional information;
(f) Prepare and file with the Commission promptly upon the
request of Holder, any amendments or supplements to such registration statement
or prospectus which, in the reasonable opinion of counsel for Holder, is
required under the Securities Act or the rules and regulations thereunder in
connection with the distribution of the Registrable Securities by Holder;
(g) Prepare and promptly file with the Commission, and
promptly notify Holder of the filing of, such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of material fact or omit to
state any material fact necessary to make the statements therein not misleading
in light of the circumstances in which they were made;
(h) In case Holder or any underwriter for Holder is required
to deliver a prospectus at a time when the prospectus then in effect may no
longer be used under the Securities Act, prepare promptly upon request such
amendment or amendments to such registration statement
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and such prospectuses as may be necessary to permit compliance with the
requirements of the Securities Act;
(i) Advise Holder, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued; and
(j) At the request of Holder, furnish on the effective date of
the registration statement and, if such registration includes an underwritten
public offering, at the closing provided for in the underwriting agreement, (i)
an opinion, dated each such date, of the counsel representing the Company for
the purposes of such registration, addressed to the underwriters, if any, and to
the Holder, covering such matters with respect to the registration statement,
the prospectus and each amendment or supplement thereto, proceedings under state
and federal securities laws, other matters relating to the Company, the
securities being registered and the offer and sale of such securities as are
customarily the subject of opinions of issuer's counsel provided to underwriters
in underwritten public offerings, and (ii) to the extent the Company's
accounting firm is willing to do so, a letter dated each such date, from the
independent certified public accountants of the Company, addressed to the
underwriters, if any, and to the Holder, stating that they are independent
certified public accountants within the meaning of the Securities Act and that
in the opinion of such accountants the financial statements and other financial
data of the Company included in the registration statement or the prospectus or
any amendment or supplement thereto comply in all material respects with the
applicable accounting requirements of the Securities Act, and additionally
covering such other financial matters, including information as to the period
ending not more than five (5) business days prior to the date of such letter
with respect to the registration statement and prospectus, as the underwriters
or Holder may reasonably request.
5. Information by Holder. The Holder shall furnish the Company such
information regarding Holder, the Registrable Securities held by Holder and the
distribution proposed by Holder as the Company may request in writing and as
shall be required in connection with any registration, qualification or
compliance referred to herein.
6. Indemnification.
(a) The Company will indemnify Holder, each of its officers,
directors and partners, and each person controlling Holder within the meaning of
Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant hereto, and each
underwriter, if any, and each person who controls any underwriter within the
meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state
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therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, or any violation by the Company of the Securities Act or any rule or
regulation promulgated under the Securities Act applicable to the Company in
connection with any such registration, qualification or compliance, and the
Company will reimburse Holder, each of its officers and directors, and each
person controlling Holder, each such underwriter and each person who controls
any such underwriter, for any legal and any other expenses reasonably incurred
in connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement of omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by Holder,
such controlling person or underwriter and stated to be specifically for use
therein.
(b) Holder will, if Registrable Securities held by Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of a or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company, such
directors, officers, persons, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by Holder and stated to be specifically for use therein.
Notwithstanding the foregoing, the liability of Holder under this subsection (b)
shall be limited to an amount equal to the initial public offering price of the
shares sold by Holder, unless such liability arises out of or is based on
willful conduct by Holder.
(c) Each party entitled to indemnification under this Section
6 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations hereunder unless the failure to give such notice is materially
prejudicial to an Indemnifying Party's ability to defend such action and
provided further, that the Indemnifying Party shall not assume the defense
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for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgement or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
7. No Transfer of Registration Rights. The rights to cause the
Company to register securities granted hereunder may not be assigned to any
transferee or assignee of the Registrable Securities.
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