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Exhibit 10.10
STOCK PURCHASE WARRANT
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN
ACQUIRED SOLELY FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. SUCH SEAS MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION, AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH SALE, OFFER, PLEDGE OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS.
Void after July 18, 2005
No. 2000 -1 XXXXXX ASSOCIATES, INC.
THIS CERTIFIES THAT, for value received CIS Holdings, Inc., a Nevada
Corporation, (the "Holder") is entitled, subject to the terms set forth below,
to purchase from Xxxxxx Associates, Inc., a Minnesota corporation (the
"Company"), 750,000 shares (as adjusted pursuant to Section 5 hereof) of the
Company's fully paid and nonassessable Common Stock, par value $0.01 per share
(the "Common Stock"), at the exercise price of six dollars and sixty-seven cents
($6.67) per share (the "Exercise Price"), subject to adjustment as provided in
Section 5 hereof. This Warrant is issued in connection with the transactions
described in Section 1.2 of the Warrant Purchase Agreement between the Company
and Holder described therein, dated as of July 18, 2000 (the "Warrant Purchase
Agreement"). The holder of this Warrant is subject to certain restrictions set
forth in the Warrant Purchase Agreement and shall be entitled to certain rights
and privileges set forth therein.
1. Exercise Period. This Warrant shall be exercisable, in whole or in
part, commencing on the date hereof, and shall expire and no longer be
exercisable at 5:00 p.m., Minnesota local time, on July 18, 2005 (the
"Expiration Date").
2. Method of Exercise Payment.
(a) Cash Exercise. The purchase rights represented by this Warrant may
be exercised by the Holder, in whole or in part, by the surrender of this
Warrant (with the notice of exercise form attached hereto as Attachment A duly
executed) at the principal office of the Company, and by the payment to the
Company, by certified, cashier's or other check, of an amount equal to the
aggregate Exercise Price for the number of shares of Common Stock being
purchased provided that if the Holder is subject to HSR Act Restrictions (as
defined in Section 2(e) below), the aggregate Exercise Price shall be paid to
the Company within five (5) business days of the termination of all HSR Act
Restrictions.
(b) Net Issue Exercise. In lieu of exercising this Warrant pursuant to
Section 2(a) above, the Holder may elect to receive, without the payment by the
Holder of any additional
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consideration, shares of Common Stock equal to the value of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with notice of such election, in which event the
Company shall issue to the Holder upon termination of any HSR Act Restrictions a
number of shares of Common Stock of the Company computed using the following
formula:
X = Y - B
----
A
Where X = the number of shares of Common Stock to be issued to the Holder pursuant to the net issue exercise.
Y = the number of shares in respect of which the net issue exercise is made.
A = the fair market value of one share of Common Stock at the time the net issue exercise is made.
B = the Exercise Price (as adjusted to the date of the net issue exercise).
(c) Fair Market Value. For purposes of Section 2(b), the fair market
value of one share of Common Stock as of a particular date shall be determined
as follows: (i) if traded on a securities exchange or through the Nasdaq
National Market, the value shall be deemed to be the average of the closing
prices, as quoted in the Central Edition of the Wall Street Journal of the
Common Stock on such exchange over the ten (10) trading day period ending three
(3) trading days prior to the net issue exercise election; (ii) if traded
over-the-counter, the value shall be deemed to be the average of the closing bid
or sale prices (whichever is applicable), as quoted in the Central Edition of
the Wall Street Journal, over the ten (10) trading day period ending three (3)
trading days prior to the net exercise election; and (iii) if there is no active
public market, the value shall be the fair market value thereof, as determined
in good faith by the Board of Directors of the Company.
(d) Stock Certificates. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of surrender
for exercise as provided above. However, if the Holder is subject to HSR Act
filing requirements, this Warrant shall be deemed to have been exercised on the
date immediately following the date of the expiration of all HSR Act
Restrictions. The person entitled to receive the shares of Common Stock issuable
upon exercise of this Warrant shall be treated for all purposes as the holder of
record of such shares as of the close of business on the date the Holder is
deemed to have exercised this Warrant. In the event of any exercise of purchase
rights represented by this Warrant, certificates for the number of shares of
Common Stock so purchased shall be delivered to the Holder as soon as
practicable thereafter, and in any event within thirty (30) days of the delivery
of the exercise notice, and, unless this Warrant has been fully exercised or has
expired, a new Warrant representing the shares with respect to which this
Warrant shall not have been exercised shall also be issued to the Holder within
such time.
(e) Xxxx-Xxxxx-Xxxxxx Improvements Act of 1976 (the "HSR Act"). The
Company hereby acknowledges that exercise of this Warrant by the Holder may
subject the Company and/or the Holder to the filing requirements of the HSR Act
and that the Holder may
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be prevented from exercising this Warrant until the expiration or early
termination of all waiting periods imposed by the HSR Act ("HSR Act
Restrictions"). If on or before the Expiration Date Holder has sent the notice
of exercise to the Company and the Holder has not been able to complete the
exercise of this Warrant prior to the Expiration Date because of HSR Act
Restrictions, the Holder shall be entitled to complete the process of exercising
this Warrant in accordance with the procedures contained herein notwithstanding
the fact that completion of the exercise of this Warrant would take place after
the Expiration Date.
3. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity reasonably satisfactory to it, and upon reimbursement
to the Company of all reasonable expenses incidental thereto, and upon surrender
and cancellation of this Warrant, if mutilated, the Company will make and
deliver a new Warrant of like tenor and dated as of such cancellation, in lieu
of this Warrant.
4. Stock Fully Paid, Reservation of Shares. All of the Common Stock
issuable upon the exercise of the rights represented by this Warrant will, upon
issuance and receipt of the Exercise Price therefor, be duly and validly issued,
fully paid and nonassessable, and free from all taxes, liens and charges with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company shall at all times
have authorized and reserved for issuance a sufficient number of shares of its
Common Stock to provide for the exercise of the rights represented by this
Warrant.
5. Adjustment of Exercise Price and Number of Shares.
(a) In the event that the Company shall at any time prior to the
expiration of this Warrant subdivide the outstanding shares of Common Stock or
shall issue a stock dividend on its outstanding shares of Common Stock payable
in shares of Common Stock, then the number of shares of Common Stock issuable
upon exercise of this Warrant immediately prior to such subdivision or to the
issuance of such stock dividend shall be proportionately increased, and the
Exercise Price shall be proportionately decreased, and in the event that the
Company shall at any time combine the outstanding shares of Common Stock then
the number of shares of Common Stock issuable upon exercise of this Warrant
immediately prior to such combination shall be proportionately decreased, and
the Exercise Price shall be proportionately increased, effective at the close of
business on the effective date of such subdivision, stock dividend or
combination, as the case may be.
(b) In the case of any reclassification, recapitalization or change in
the Common Stock (other than any action for which adjustment is made pursuant to
Section 5(a) hereof), the Company shall execute a new warrant providing that the
Holder of this Warrant shall have the right to exercise such new warrant and to
procure upon such exercise and payment of the same aggregate Exercise Price, in
lieu of the shares of Common Stock theretofore exercisable upon exercise of this
Warrant, the kind and amount of shares, other securities, money or property
receivable upon such reclassification, recapitalization or change of the Common
Stock. 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 shares of stock or other securities and
property deliverable upon exercise hereof and appropriate
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adjustments shall be made to the purchase price per share payable hereunder,
provided the aggregate purchase price shall remain the same.
(c) No adjustment on account of cash dividends shall be made to the
Exercise Price under this Warrant.
(d) (i) If at any time prior to the expiration of this Warrant the
Company shall issue any Common Stock or securities exercisable for or
convertible into Common Stock without consideration or for a consideration per
share less than the Exercise Price in effect immediately prior to the issuance
of such Common Stock or securities (excluding stock dividends, subdivisions,
combinations, dividends or recapitalizations which are covered by Sections 5(a)
and (b)), the Exercise Price in effect after each such issuance shall thereafter
(except as provided in this Section 5(d)) be adjusted to a price equal to the
quotient obtained by dividing:
(A) an amount equal to the sum of
(1) the total number of shares of Common
Stock outstanding (including any shares of Common
Stock issuable upon exercise of this Warrant or
deemed to have been issued pursuant to subdivision
(ii) (C) of this clause (d) below) immediately prior
to such issuance multiplied by the Exercise Price in
effect immediately prior to such issuance, plus
(2) the consideration received by the
Company upon such issuance, by
(B) the total number of shares of Common Stock
outstanding (including any shares of Common Stock issuable
upon exercise of this Warrant or deemed to have been issued
pursuant to subdivision (ii) (C) of this clause (d) below)
immediately prior to such issuance plus the additional shares
of Common Stock or securities exercisable for or convertible
into Common Stock issued in such issuance (but not including
any additional shares of Common Stock deemed to be issued as a
result of any adjustment in the Exercise Price resulting from
such issuance).
(ii) For purposes of any adjustment of the Exercise Price
pursuant to this clause (d), the following provisions shall be
applicable:
(A) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of
cash paid therefor after deducting any discounts, commissions
or fees paid or incurred by the Company in connection with the
issuance and sale thereof.
(B) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair
market value thereof as determined in good faith by the Board
of Directors of the Company, irrespective of any accounting
treatment; provided, however, that if, at the time of such
determination, the Company's Common Stock is traded in the
over-the-counter market or on a national or regional
securities exchange, such fair market value as determined by
the Board of Directors of the Company shall not exceed the
aggregate fair market value of the shares of
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Common Stock being issued as determined in accordance with the
procedures set forth in Section 2(c) hereof.
(C) In the case of the issuance of (1) options to
purchase or rights to subscribe for Common Stock, (2)
securities by their terms convertible into or exchangeable for
Common Stock, or (3) options to purchase or rights to
subscribe for such convertible or exchangeable securities:
(w) the aggregate maximum number of shares
of Common Stock deliverable upon exercise of such
options to purchase or rights to subscribe for Common
Stock shall be deemed to have been issued at the time
such options or rights were issued and for a
consideration equal to the consideration (determined
in the manner provided in subdivisions (A) and (B)
above), if any, received by the Company upon the
issuance of such options or rights plus the minimum
purchase price provided in such options or rights for
the Common Stock covered thereby;
(x) the aggregate maximum number of shares
of Common Stock deliverable upon conversion of or in
exchange for any such convertible or exchangeable
securities or upon the exercise of options to
purchase or rights to subscribe for such convertible
or exchangeable securities and subsequent conversion
or exchange thereof, shall be deemed to have been
issued at the time such securities were issued or
such options or rights were issued and for
consideration equal to the consideration received by
the Company for any such securities and related
options or rights (excluding any cash received on
account of accrued interest or accrued dividends),
plus the minimum additional consideration, if any, to
be received by the Company upon the conversion or
exchange of such securities or the exercise of any
related options or rights (the consideration in each
case to be determined in the manner provided in
subdivisions (A) and (B) above);
(y) on any change in the number of shares of
Common Stock deliverable upon exercise of any such
options or rights or conversion of or exchange for
such convertible or exchangeable securities, or on
any change in the minimum purchase price of such
options, rights or securities, other than a change
resulting from the antidilution provisions of such
options, rights or securities, the Exercise Price
shall forthwith be readjusted to such Exercise Price
as would have obtained had the adjustment made upon
the issuance of such options, right or securities not
exercised, converted or exchanged prior to such
change, as the case may be, been made upon the basis
of such change; and
(z) on the expiration of any such options or
rights, the termination of any such rights to convert
or exchange or the expiration of any options or
rights related to such convertible or exchangeable
securities, the Exercise Price shall forthwith be
readjusted to such Exercise Price as would have
obtained had the adjustment made upon the issuance of
such options, rights, convertible or exchangeable
securities or options or rights related to such
convertible or exchangeable securities, as the case
may be, been made upon the basis of the issuance of
only the number of shares of Common Stock actually
issued upon the exercise of such options or rights,
upon the conversion or exchange of such convertible
or exchangeable securities or upon the exercise of
the options or rights related to such convertible or
exchangeable securities, as the case may be.
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(iii) Anything herein to the contrary notwithstanding, the
Company shall not be required to make any adjustments to the Exercise
Price upon the occurrence of any of the following events:
(A) the issuance of Common Stock upon conversion of
warrants, options or other instruments or securities directly
or indirectly convertible or exchangeable for Common Stock
outstanding on the date of this Warrant;
(B) the issuance of shares of Common Stock upon
exercise of options granted or to be granted by the Company to
employees, officers, consultants and directors of the Company;
or
(C) the issuance of shares of Common Stock in
accordance with the terms and conditions of the Company's
employee stock ownership plan.
(e) If at any time while this Warrant, or any portion hereof, is
outstanding and unexpired there shall be (i) a reorganization (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), (ii) a merger or consolidation of the Company with or into
another corporation in which the Company is not the surviving entity, or a
reverse triangular merger in which the Company is the surviving entity but the
shares of the Company's capital stock outstanding immediately prior to the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash, or otherwise, or (iii) a sale or transfer of the
Company's properties and assets as, or substantially as, an entirety to any
other person, then, as a part of such reorganization, merger, consolidation,
sale or transfer, lawful provision shall be made so that the holder of this
Warrant shall thereafter be entitled to receive upon exercise of this Warrant,
during the period specified herein and upon payment of the Exercise Price then
in effect, the number of shares of stock or other securities or property of the
successor corporation resulting from such reorganization, merger, consolidation,
sale or transfer that a holder of the shares deliverable upon exercise of this
Warrant would have been entitled to receive in such reorganization,
consolidation, merger, sale or transfer if this Warrant had been exercised
immediately before such reorganization, merger, consolidation, sale or transfer,
all subject to further adjustment as provided in this Section 5. The foregoing
provisions of this Section 5(e) shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the stock
or securities of any other corporation that are at the time receivable upon the
exercise of this Warrant.
6. Notice of Adjustments. Whenever the number of shares of Common Stock
purchasable hereunder or the Exercise Price thereof shall be adjusted pursuant
to Section 5 hereof, the Company shall promptly provide notice to the Holder
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the number of shares of Common Stock which may be purchased and the Exercise
Price therefor after giving effect to such adjustment.
7. Fractional Shares. This Warrant may not be exercised for fractional
shares. In lieu of such fractional shares the Company shall make a cash payment
therefor on the basis of the Exercise Price then in effect.
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8. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant.
9. Representations of the Company. The Company represents that all
corporate actions on the part of the Company, its officers, directors and
shareholders necessary for the sale and issuance of shares of Common Stock and
the performance of the Company's obligations hereunder were taken prior to and
are effective as of the effective date of this Warrant.
10. Restrictive Legend. The Common Stock issuable on exercise of this
Warrant shall (unless registered under the Act) be stamped or imprinted with a
legend in substantially the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT, AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF SUCH ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT. THESE
SECURITIES MAY BE TRANSFERRED ONLY IN JULY 18, 2000 PURSUANT TO WHICH
THE SECURITIES WERE ISSUED AND A WARRANT PURCHASE AGREEMENT, DATED JULY
18, 2000, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE
COMPANY."
11. Restrictions Upon Transfer and Removal of Legend. The Company need
not register a transfer of this Warrant or shares of Common Stock issued on
exercise of this Warrant bearing the restrictive legend set forth in Section 10
hereof, unless the conditions specified in such legend are satisfied. The
Company may also instruct its transfer agent not to register the transfer of the
Shares unless one of the conditions specified in the legend referred to in
Section 10 hereof is satisfied.
12. No Rights as Stockholders. This Warrant does not entitle the Holder
to any additional voting rights or other rights as a stockholder of the Company
prior to the exercise of the Warrants.
13. Notices. All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given upon receipt or, if earlier, (a) five (5) days after
deposit with the U.S. Postal Service or other applicable postal service, (b)
upon delivery, if delivered by hand, (c) two (2) business days after the
business day of deposit with Federal Express or similar overnight courier,
freight prepaid or (d) one (1) business day after the business day of facsimile
transmission, if delivered by facsimile transmission with copy by first class
mail, postage prepaid, and shall be addressed (i) if to the Holder, at the
Holder's address as provided to the Company, and (ii) if
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to the Company, at the address of its principal corporate offices (attention:
Xxxxx XxXxxxxxxx, Vice President, Secretary and Corporate Counsel), or at such
other address as the Company shall have furnished to the other parties hereto in
writing.
14. Amendments and Waivers. Any term of this Warrant may be amended and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder.
15. Attorneys' Fees. If any action of law or equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
16. Headings. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
17. Governing Law. This Warrant and all actions arising out of or in
connection with this Agreement shall be governed by and construed in accordance
with the laws of the State of Minnesota without regard to conflicts of law
provisions.
18. Assignment. This Warrant and the rights represented by this Warrant
may not be transferred, assigned or pledged, in whole or in part, without the
prior written consent of the Company, except that a transfer from the Holder to
any other entity which controls, is controlled by or is under common control
with the Holder, may be effected by delivery by the Holder of a form of transfer
attached hereto as Attachment B duly executed to the principal office of the
Company. The transfer shall be recorded on the books of the Company upon the
surrender of this Warrant, properly endorsed, to the Company at its principal
offices. In the event of a partial transfer, the Company shall issue to the
holders one or more appropriate new warrants.
19. Successors and Assigns. The terms and provisions of this Warrant
and the Warrant Purchase Agreement shall inure to the benefit of, and be binding
upon, the Company and the Holders hereof and their respective successors and
permitted assigns.
20. Entire Agreement. This Warrant constitutes the entire agreement
among the parties hereto and supersedes in its entirety any prior agreements,
whether written or oral, among the parties hereto with respect to the subject
matter hereof.
Issued as of the 18th day of July, 2000.
XXXXXX ASSOCIATES, INC.
By: /s/ X. Xxxxxxx Xxxxxx
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Its: CEO
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