EXHIBIT 10.4
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
STOCK PURCHASE WARRANT
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This Stock Purchase Warrant (this "Warrant"), dated March 2, 1998, is
issued to RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC., a Texas
corporation (the "Holder"), by LA-MAN CORPORATION, a Nevada corporation (the
"Company").
1. Purchase of Shares. Subject to the terms and conditions hereinafter
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set forth, the Holder is entitled, upon surrender of this Warrant at the
principal office of the Company (or at such other place as the Company shall
notify the holder hereof in writing), to purchase from the Company 100,000 fully
paid and non-assessable shares of Common Stock, $.001 par value (the "Common
Stock"), of the Company (as adjusted pursuant to Section 7 hereof, the "Shares")
for the purchase price specified in Section 2 below.
2. Purchase Price. The purchase price for the Shares is $4.32 per share.
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Such price shall be subject to adjustment pursuant to Section 7 hereof (such
price, as adjusted from time to time, is herein referred to as the "Warrant
Price").
3. Exercise Period. This Warrant is exercisable in whole or in part at
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any time from the date hereof through March 2, 2003.
4. Method of Exercise. While this Warrant remains outstanding and
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exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) surrender of this Warrant, together with a duly executed copy of
the form of Exercise Notice attached hereto, to the Secretary of the Company at
its principal offices, and the payment to the Company of an amount equal to the
aggregate purchase price for the number of Shares being purchased; or
(b) if the Company's Common Stock is publicly traded as of such date,
the instruction to retain that number of Shares having a value equal to the
aggregate exercise price of the Shares as to which this Warrant is being
exercised and to issue to the Holder the remainder of such Shares computed using
the following formula:
X = Y(A-B)
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A
Where: X = the number of shares of Common Stock to be issued to the Holder.
Y = the number of shares of Common Stock as to which this Warrant is
being exercised.
A = the fair market value of one share of Common Stock.
B = the Warrant Price.
As used herein, the "fair market value of one share of Common Stock" shall
mean:
(1) Except in the circumstances described in clause (2) or (3)
hereof, the closing price of the Company's Common Stock, as reported in the Wall
Street Journal, on the trading day immediately prior to the date of exercise;
(2) If such exercise is in conjunction with a merger,
acquisition or other consolidation pursuant to which the Company is not the
surviving entity, the value received by the holders of the Common Stock pursuant
to such transaction for each share; or
(3) If such exercise is in conjunction with the initial public
offering of the Company, the price at which the Common Stock is sold to the
public in such offering.
5. Certificates for Shares. Upon the exercise of the purchase rights
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evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.
6. Reservation of Shares. The Company covenants that it will at all
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times keep available such number of authorized shares of its Common Stock, free
from all preemptive rights with respect thereto, which will be sufficient to
permit the exercise of this Warrant for the full number of Shares specified
herein. The Company further covenants that such Shares, when issued pursuant to
the exercise of this Warrant, will be duly and validly issued, fully paid and
non-assessable and free from all taxes, liens and charges with respect to the
issuance thereof.
7. Adjustment of Warrant Price and Number of Shares. The number and kind
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of securities purchasable upon exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time as follows:
(a) Stock Dividends, Subdivisions, Combinations and Other Issuances.
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If the Company shall at any time prior to the expiration of this Warrant
subdivide its Common Stock, by stock split or otherwise, combine its Common
Stock or issue additional shares of its Common Stock
2
as a dividend with respect to any shares of its Common Stock, the number of
Shares issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend and
proportionately decreased in the case of a combination. Appropriate adjustments
shall also be made to the purchase price payable per share, but the aggregate
purchase price payable for the total number of Shares purchasable under this
Warrant (as adjusted) shall remain the same. Any adjustment under this Section
7(a) shall become effective at the close of business on the date the subdivision
or combination becomes effective or as of the record date of such dividend, or,
in the event that no record date is fixed, upon the making of such dividend.
(b) Reclassification, Reorganization, Merger, Sale or Consolidation.
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In the event of any reclassification, capital reorganization or other change in
the Common Stock of the Company (other than as a result of a subdivision,
combination or stock dividend provided for in Section 7(a) above) or in the
event of a consolidation or merger of the Company with or into, or the sale of
all or substantially all of the properties and assets of the Company, to any
person, and in connection therewith consideration is payable to holders of
Common Stock in cash, securities or other property, then as a condition of such
reclassification, reorganization or change, consolidation, merger or sale,
lawful provision shall be made, and duly executed documents evidencing the same
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant immediately prior to such
event, the kind and amount of cash, securities or other property receivable in
connection with such reclassification, reorganization or change, consolidation,
merger or sale, by a holder of the same number of shares of Common Stock as were
exercisable by the Holder immediately prior to such reclassification,
reorganization or change, consolidation, merger or sale. In any such case,
appropriate provisions shall be made with respect to the rights and interest of
the Holder so that the provisions hereof shall thereafter be applicable with
respect to any cash, securities or property deliverable upon exercise hereof.
Notwithstanding the foregoing, (i) if the Company merges or consolidates with,
or sells all or substantially all of its property and assets to, any other
person, and consideration is payable to holders of Common Stock in exchange for
their Common Stock in connection with such merger, consolidation or sale which
consists solely of cash, or (ii) in the event of the dissolution, liquidation or
winding up of the Company, then the Holder shall be entitled to receive
distributions on the date of such event on an equal basis with holders of Common
Stock as if this Warrant had been exercised immediately prior to such event,
less the Warrant Price. Upon receipt of such payment, if any, the rights of the
Holder shall terminate and cease, and this Warrant shall expire. In case of any
such merger, consolidation or sale of assets, the surviving or acquiring person
and, in the event of any dissolution, liquidation or winding up of the Company,
the Company shall promptly, after receipt of this surrendered Warrant, make
payment by delivering a check in such amount as is appropriate (or, in the case
of consideration other than cash, such other consideration as is appropriate) to
such person as it may be directed in writing by the Holder surrendering this
Warrant.
(c) Certain Distributions. In case the Company shall fix a record
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date for the making of a dividend or distribution of cash, securities or
property to all holders of Common Stock (excluding any dividends or
distributions referred to in Sections 7(a) or 7(b) above, the number of Shares
purchasable upon an exercise of this Warrant after such record date shall be
adjusted to equal
3
the product obtained by multiplying the number of Shares purchasable upon an
exercise of this Warrant immediately prior to such record date by a fraction,
the numerator of which shall be the Warrant Price immediately prior to such
distribution, and the denominator of which shall be the Warrant Price
immediately prior to such distribution, less the fair market value per Share, as
determined by the Holder, of the cash, securities or property so distributed.
Such adjustment shall be made successively whenever any such distribution is
made and shall become effective on the effective date of distribution.
8. Pre-Exercise Rights. Prior to exercise of this Warrant, the Holder
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shall not be entitled to any rights of a shareholder with respect to the Shares,
including without limitation, the right to vote such Shares, receive preemptive
rights or be notified of shareholder meetings, and the Holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company.
9. Restricted Securities. The Holder understands that this Warrant and
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the Shares purchasable hereunder constitute "restricted securities" under the
federal securities laws inasmuch as they are being, or will be, acquired from
the Company in transactions not involving a public offering and accordingly may
not, under such laws and applicable regulations, be resold or transferred
without registration under the Securities Act of 1933, as amended, or an
applicable exemption from registration. In this connection, the Holder
acknowledges that Rule 144 of the Securities and Exchange Commission is not now,
and may not in the future be, available for resales of the Shares purchased
hereunder. The Holder further acknowledges that the Shares and any other
securities issued upon exercise of this Warrant shall bear a legend
substantially in the form of the legend appearing on the face hereof.
10. Certification of Investment Purpose. Unless a current registration
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statement under the Securities Act of 1933, as amended, shall be in effect with
respect to the securities to be issued upon exercise of this Warrant, the Holder
hereof, by accepting this Warrant, covenants and agrees that, at the time of
exercise hereof, the Holder will deliver to the Company a written certification
that the securities acquired by the Holder are acquired for investments purposes
only and that such securities are not acquired with a view to, or for sale in
connection with, any distribution thereof.
11. Registration Rights. This Warrant and the Shares shall be subject to
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the registration rights set forth in the Convertible Loan Agreement of even date
herewith by and among La-Man Corporation, Renaissance Capital Growth & Income
Fund III, Inc., Renaissance US Growth & Income Trust PLC and Renaissance Capital
Group, Inc., as Agent, and the Holder shall be entitled to all rights and
benefits thereof.
12. Successors and Assigns. The terms and provisions of this Warrant
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shall inure to the benefit of, and be binding upon, the Company and the Holder
and their respective successors and assigns.
13. Governing Law. This Warrant shall be governed by the laws of the
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State of Texas, excluding the conflicts of laws provisions thereof.
4
LA-MAN CORPORATION
By: /s/ J. Xxxxxxx Xxxxxxxx
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J. Xxxxxxx Xxxxxxxx
President and Chief Executive Officer
5
EXERCISE NOTICE
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Dated _________, ____
The undersigned hereby irrevocably elects to exercise the Stock Purchase
Warrant, dated March 2, 1998, issued by La-Man Corporation, a Nevada corporation
(the "Company") to the undersigned to the extent of purchasing ___________
shares of Common Stock and hereby makes payment of $_________ in payment of the
aggregate Warrant Price of such Shares.
RENAISSANCE CAPITAL GROWTH &
INCOME FUND III, INC.
By:_________________________
Title:______________________
