Exhibit 10.5
THE SECURITIES REPRESENTED BY THESE WARRANTS AND THE COMMON STOCK ISSUABLE
THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW. THE SECURITIES
REPRESENTED BY THESE WARRANTS MAY NOT BE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER
APPLICABLE SECURITIES LAWS.
WARRANTS
to Purchase Common Stock of
International Travel CD's, Inc.
Expiring on January 16, 2008
Warrant No. 2003-1
This Common Stock Purchase Warrant (the "Warrant") certifies that for
value received, Trident Growth Fund, L.P. (the "Holder") or its assigns, is
entitled to subscribe for and purchase from the Company (as hereinafter
defined), in whole or in part, 100,000 shares of duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock (as hereinafter
defined) at an initial Exercise Price (as hereinafter defined) of $1.50,
subject, however, to the provisions and upon the terms and conditions
hereinafter set forth. The number of Warrants (as hereinafter defined), the
number of shares of Common Stock purchasable hereunder, and the Exercise Price
therefore are subject to adjustment as hereinafter set forth. These Warrants and
all rights hereunder shall expire on 5:00 p.m., Houston, Texas time, January 16,
2008 (the "Expiration Date").
ARTICLE I
Definitions
As used herein, the following terms shall have the meanings set forth
below:
1.1 "Company" shall mean International Travel CD's, Inc., a Colorado
corporation, and shall also include any successor thereto with respect to the
obligations hereunder, by merger, consolidation or otherwise.
1.2 "Common Stock" shall mean and include the Company's common stock,
$0.001 par value per share, authorized on the date of the original issue of
these Warrants and shall also include (i) in case of any reorganization,
reclassification, consolidation, merger, share exchange or sale, transfer or
other disposition of assets, the stock or other securities provided for herein,
and (ii) any other shares of common stock of the Company into which such shares
of Common Stock may be converted.
1.3 "Exercise Price" shall mean the initial exercise price of$1.50, as
adjusted from time to time pursuant to the provisions hereof.
1.4 "Market Price" for any day, when used with reference to Common
Stock, shall mean the price of said Common Stock determined by reference to the
last reported sale price for the Common Stock on such day on the principal
securities exchange on which the Common Stock is listed or admitted to trading
or if no such sale takes place on such date, the average of the closing bid and
asked prices thereof as officially reported, or, if not so listed or admitted to
trading on any securities exchange, the last sale price for the Common Stock on
the National Association of Securities Dealers national market system on such
date, or, if there shall have been no trading on such date or if the Common
Stock shall not be listed on such system, the average of the closing bid and
asked prices in the over-the-counter market as furnished by any NASD member firm
selected from time to time by the Company for such purpose or, if the Common
Stock is not traded, then such price as is reasonably determined by the
Company's Board of Directors.
1.5 "Warrant" shall mean the right upon exercise to purchase one
Warrant Share.
1.6 "Warrant Shares" shall mean the shares of Common Stock purchased or
purchasable by the holder hereof upon the exercise of the Warrants.
ARTICLE II
Exercise of Warrants
II.1 METHOD OF EXERCISE. The Warrants represented hereby may be
exercised by the holder hereof, in whole or in part, at any time and from time
to time on or after the date hereof until 5:00 p.m., Houston, Texas time, on the
Expiration Date. To exercise the Warrants, the holder hereof shall deliver to
the Company, at the Warrant Office designated herein, (i) a written notice in
the form of the Subscription Notice attached as an exhibit hereto, stating
therein the election of such holder to exercise the Warrants in the manner
provided in the Subscription Notice; (ii) payment in full of the Exercise Price
(A) in cash or by bank check for all Warrant Shares purchased hereunder, or (B)
through a "cashless" or "net-issue" exercise of each such Warrant ("Cashless
Exercise"); the holder shall exchange each Warrant subject to a Cashless
Exercise for that number of Warrant Shares determined by multiplying the number
of Warrant Shares issuable hereunder by a fraction, the numerator of which shall
be the difference between (x) the Market Price and (y) the Exercise Price for
each such Warrant, and the denominator of which shall be the Market Price; the
Subscription Notice shall set forth the calculation upon which the Cashless
Exercise is based, or (C) a combination of (A) and (B) above; and (iii) these
Warrants. The Warrants shall be deemed to be exercised on the date of receipt by
the Company of the Subscription Notice, accompanied by payment for the Warrant
Shares and surrender of these Warrants, as aforesaid, and such date is referred
to herein as the "Exercise Date". Upon such exercise, the Company shall, as
promptly as practicable and in any event within five business days, issue and
deliver to such holder a certificate or certificates for the full number of the
Warrant Shares purchased by such holder hereunder, and shall, unless the
Warrants have expired, deliver to the holder hereof a new Warrant representing
the number of Warrants, if any, that shall not have been exercised, in all other
respects identical to these Warrants. As permitted by applicable law, the person
in whose name the certificates for Common Stock are to be issued shall be deemed
to have become a holder of record of such Common Stock on the Exercise Date and
shall be entitled to all of the benefits of such holder on the Exercise Date,
including without limitation the right to receive dividends and other
distributions for which the record date falls on or after the Exercise Date and
to exercise voting rights.
II.2 EXPENSES AND TAXES. The Company shall pay all expenses and taxes
(including, without limitation, all documentary, stamp, transfer or other
transactional taxes) other than income taxes attributable to the preparation,
issuance or delivery of the Warrants and of the shares of Common Stock issuable
upon exercise of the Warrants.
II.3 RESERVATION OF SHARES. The Company shall ensure that there is
reserved at all times so long as the Warrants remain outstanding, free from
preemptive rights, out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the exercise of the Warrants, a sufficient
number of shares of Common Stock to provide for the exercise of the Warrants.
II.4 Valid Issuance. All shares of Common Stock that may be issued upon
exercise of the Warrants will, upon issuance by the Company, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof and, without limiting the generality of the
foregoing, the Company shall take no action or fail to take any action which
will cause a contrary result (including, without limitation, any action that
would cause the Exercise Price to be less than the par value, if any, of the
Common Stock).
II.5 LOAN AGREEMENT. The Warrants represented hereby were issued on
conjunction with a Loan Agreement dated around of approximate date hereof (the
"Loan Agreement") between the Company and the Holder. The Holder shall be
entitled to the rights to registration under the Securities Act and any
applicable state securities or blue sky laws to the extent set forth in the
registration rights provision found
in the Loan Agreement. The terms of the registration rights provisions are
hereby incorporated herein for all purposes and shall be considered a part of
this Warrant as if they had been fully set forth herein.
II.6 ACKNOWLEDGMENT OF RIGHTS. At the time of the exercise of the
Warrants in accordance with the terms hereof and upon the written request of the
holder hereof, the Company will acknowledge in writing its continuing obligation
to afford to such holder any rights (including, without limitation, any right to
registration of the Warrant Shares) to which such holder shall continue to be
entitled after such exercise in accordance with the provisions of these
Warrants; provided, however, that if the Holder hereof shall fail to make any
such request, such failure shall not affect the continuing obligation of the
Company to afford to such Holder any such rights.
II.7 NO FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of these Warrants. If more
than one Warrant shall be presented for exercise at the same time by the same
holder, the number of full shares of Common Stock which shall be issuable upon
such exercise shall be computed on the basis of the aggregate number of whole
shares of Common Stock purchasable on exercise of the Warrants so presented. If
any fraction of a share of Common Stock would, except for the provisions of this
Section, be issuable on the exercise of this Warrant, the Company shall pay an
amount in cash calculated by it to be equal to the Market Price of one share of
Common Stock at the time of such exercise multiplied by such fraction computed
to the nearest whole cent.
ARTICLE III
Transfer
III.1 WARRANT OFFICE. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's offices at 000 Xxxxxxxxxxxx Xxxx., Xxxxx 000, Xxxx Xxxxxx, XX
00000 and may subsequently be such other office of the Company or of any
transfer agent of the Common Stock in the continental United States as to which
written notice has previously been given to the Holder. The Company shall
maintain, at the Warrant Office, a register for the Warrants in which the
Company shall record the name and address of the Person in whose name these
Warrants has been issued, as well as the name and address of each permitted
assignee of the rights of the registered owner hereof.
III.2 OWNERSHIP OF WARRANTS. The Company may deem and treat the Person
in whose name the Warrants are registered as the holder and owner hereof until
provided with notice to the contrary. The Warrants may be exercised by an
assignee for the purchase of Warrant Shares without having new Warrants issued.
III.3 RESTRICTIONS ON TRANSFER OF WARRANTS. These Warrants may be
transferred, in whole or in part, by the Holder. The Company agrees to maintain
at the Warrant Office books for the registration and transfer of the Warrants.
The Company, from time to time, shall register the transfer of the Warrants in
such books upon surrender of this Warrant at the Warrant Office properly
endorsed or accompanied by appropriate instruments of transfer and written
instructions for transfer. Upon any such transfer and upon payment by the holder
or its transferee of any applicable transfer taxes, new Warrants shall be issued
to the transferee and the transferor (as their respective interests may appear)
and the surrendered Warrants shall be cancelled by the Company. The Company
shall pay all taxes (other than securities transfer taxes or income taxes) and
all other expenses and charges payable in connection with the transfer of the
Warrants pursuant to this Section.
III.4 COMPLIANCE WITH SECURITIES LAWS. Subject to the terms of the
Registration Rights provision of the Loan Agreement and notwithstanding any
other provisions contained in these Warrants, the Holder understands and agrees
that the following restrictions and limitations shall be applicable to all
Warrant Shares and to all resales or other transfers thereof pursuant to the
Securities Act:
III.4.l The holder hereof agrees that the Warrant Shares may
not be sold or otherwise transferred unless the Warrant Shares are registered
under the Securities Act and applicable state securities or blue sky laws or
are exempt therefrom.
IIIA.2 A legend in substantially the following form will be
placed on the certificate (s) evidencing the Warrant Shares:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND,
ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
RESOLD, PLEDGED, 0 R OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM
REGISTRA TION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY
OTHER APPLICABLE SECURITIES LAWS."
ARTICLE IV
Anti-Dilution
IV.I If and whenever any Additional Common Stock (as herein defined)
shares shall be issued by the Company (the "Stock Issue Date") for a
consideration per share less than the Exercise Price, then in each such case the
initial Exercise Price shall be reduced to a new Exercise Price in an amount
equal to the consideration per share received by the Company for the additional
shares of Common Stock then issued and the number of shares issuable to Holder
upon conversion shall be proportionately increased; and, in the case of shares
issued without consideration, the initial Exercise Price shall be reduced in
amount and the number of shares issued upon conversion shall be increased in an
amount so as to maintain for the Holder the right to exereise into shares equal
in amount to the same percentage interest in the Common Stock of the Company as
existed for the Holder immediately preceding the Stock Issue Date.
IV.2 Sale of Shares: In case of the issuance of Additional Common Stock
for a consideration part or all of which shall be cash, the amount of the cash
consideration therefore shall be deemed to be the amount of the cash received by
Company for such shares, after any compensation or discount in the sale,
underwriting or purchase thereof by underwriters or dealers or others performing
similar services or for any expenses incurred in connection therewith. In case
of the issuance of any shares of Additional Common Stock for a consideration
part or all of which shall be other than cash, the amount of the consideration
therefore, other than cash, shall be deemed to be the then fair market value of
the property received as determined by an investment banking firm selected by
Xxxxxx.
IV.3 Reclassification of Shares: In case of the reclassification of
securities into shares of Common Stock, the shares of Common Stock issued in
such reclassification shall be deemed to have been issued for a consideration
other than cash. Shares of Additional Common Stock issued by way of dividend or
other distribution on any class of stock of the Company shall be deemed to have
been issued without consideration.
IV.4 Split up or Combination of Shares: In case issued and outstanding
shares of Common Stock shall be subdivided or split up into a greater number of
shares of the Common Stock, the Exercise Price shall be proportionately
decreased, and in case issued and outstanding shares of Common Stock shall be
combined into a smaller number of shares of Common Stock, the Exercise Price
shall be proportionately increased, such increase or decrease, as the case may
be, becoming effective at the time of record of the split-up or combination, as
the case may be.
IV.5 Exceptions: The term "Additional Common Stock" herein shall mean
in the most broadest sense all shares of Common Stock hereafter issued by the
Company (including, but not limited to Common Stock held in the treasury of the
Company and common stock purchasable via derivative security or option on the
date of such grant), except Common Stock issued upon the exercise of this
warrant or the Convertible Notes.
IV.6 In the event of distribution to all Common Stock holders of any
stock, indebtedness of the Company or assets or other rights to purchase
securities or assets, then, after such event, the Exercise Price reduced to so
as to entitle the Holder to the economic interest he had immediately prior to
the occurrence of such event.
IV.7 In case of any capital reorganization, reclassification of the
stock of the Company (other than a change in par value or as a result of a stock
dividend, subdivision, split up or combination of shares), the Exercise Price
reduced to so as to entitle the Holder to the economic interest he had
immediately prior to the occurrence of such event. The provisions of these
foregoing sentences shall similarly apply to successive reorganizations,
reclassifications, consolidations, exchanges, leases, transfers or other
dispositions or other share exchanges.
IV.8 Notice of Adjustment. (A) In the event the Company shall propose
to take any action which shall result in an adjustment in the Exercise Price,
the Company shall give notice to the Holder, which notice shall specify the
record date, if any, with respect to such action and the date on which such
action is to take place. Such notice shall be given on or before the earlier of
10 days before the record date or the date which such action shall be taken.
Such notice shall also set forth all facts (to the extent known) material to the
effect of such action on the Exercise Price and the number, kind or class of
shares or other securities or property which shall be deliverable or purchasable
upon the occurrence of such action or deliverable upon exercise of this warrant
(B) Following completion of an event wherein the Exercise Price shall be
adjusted, the Company shall furnish to the Holder a statement, signed by an
authorized officer of the Company of the facts creating such adjustment and
specifying the resultant adjusted Exercise Price then in effect.
ARTICLE V
Miscellaneous
V.I ENTIRE AGREEMENT. These Warrants, together wit the Loan Agreement,
contain the entire agreement between the holder hereof and the Company with
respect to the Warrant Shares purchasable upon exercise hereof and the related
transactions and supersedes all prior arrangements or understandings with
respect thereto.
V.2 GOVERNING LAW. This warrant shall be governed by and construed in
accordance with the laws of the State of Texas in the courts located in Dallas,
Texas.
V.3 WAIVER AND AMENDMENT. Any term or provision of these Warrants may
be waived at any time by the party which is entitled to the benefits thereof and
any term or provision of these Warrants may be amended or supplemented at any
time by agreement of the holder hereof and the Company, except that any waiver
of any term or condition, or any amendment or supplementation, of these Warrants
shall be in writing. A waiver of any breach or failure to enforce any of the
terms or conditions of these Warrants shall not in any way effect, limit or
waive a party's rights hereunder at any time to enforce strict compliance
thereafter with every term or condition of these Warrants.
V.4 ILLEGALITY. In the event that anyone or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of these Warrants shall not, at the election of the party for whom
the benefit of the provision exists, be in any way impaired.
V.5 COPY OF WARRANT. A copy of these Warrants shall be filed among the
records of the Company.
V.6 NOTICE. Any notice or other document required or permitted to be
given or delivered to the holder hereof shall be in writing and delivered at, or
sent by certified or registered mail to such holder at, the last address shown
on the books of the Company maintained at the Warrant Office for the
registration of these Warrants or at any more recent address of which the holder
hereof shall have notified the Company in writing.
V.7 LIMITATION OF LIABILITY; NOT STOCKHOLDERS. No provision of these
Warrants shall be construed as conferring upon the holder hereof the right to
vote, consent, receive dividends or receive notices (other than as herein
expressly provided) in respect of meetings of stockholders for the election of
directors of the Company or any other matter whatsoever as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by the holder
hereof to purchase shares of Common 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 purchase price of any shares of Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
V.8 EXCHANGE, LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, mutilation
or destruction of these Warrants, and in the case of any such loss, theft or
destruction upon delivery of an appropriate affidavit in such form as shall be
reasonably satisfactory to the Company and include reasonable indemnification of
the Company, or in the event of such mutilation upon surrender and cancellation
of these Warrants, the Company will make and deliver new Warrants of like tenor,
in lieu of such lost, stolen, destroyed
or mutilated Warrants. Any Warrants issued under the provisions of this Section
in lieu of any Warrants alleged to be lost, destroyed or stolen, or in lieu of
any mutilated Warrants, shall constitute an original contractual obligation on
the part of the Company. These Warrants shall be promptly canceled by the
Company upon the surrender hereof in connection with any exchange or
replacement. The Company shall pay all taxes (other than securities transfer
taxes or income taxes) and all other expenses and charges payable in connection
with the preparation, execution and delivery of Warrants pursuant to this
Section.
V.9 HEADINGS. The Article and Section and other headings herein are for
convenience only and are not a part of this Warrant and shall not affect the
interpretation thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name dated January 16,2003.
International Travel CD's, Inc.
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Xxxxxx Xxxxxxxxxx
Title: President
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Witness
SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrants, hereby elects to
exercise purchase rights represented thereby for, and to purchase thereunder,
____________ shares of the Common Stock covered by such Warrants, and herewith
makes payment in full for such shares, and requests (a) that certificates for
such shares (and any other securities or other property issuable upon such
exercise) be issued in the name of, and delivered to, and (b), if such shares
shall not include all of the shares issuable as provided in such Warrants, that
new Warrants of like tenor and date for the balance of the shares issuable
thereunder be delivered to the undersigned.
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Date: ________________________
ASSIGNMENT
For value received, _____________________, hereby sells, assigns and
transfers unto __________ these Warrants, together with all rights, title and
interest therein, and does irrevocably constitute and appoint
_______________________ attorney, to transfer such Warrants on the books of the
Company, with full power of substitution.
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Date: ________________________
