Contract
Execution
Version
THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED, TRANSFERRED, HYPOTHECATED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER OR
EXEMPTION FROM SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS OR AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO XXXXXXX INDUSTRIES, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED. A COPY OF THE WARRANT IS AVAILABLE AT THE OFFICES
OF THE COMPANY.
| Right to Purchase 2,443,269 shares of Common Stock of Xxxxxxx Industries, Inc. (subject to adjustment as provided herein) |
| No. 0000-X-000 |
Xxxxxxx,
Xxxxx
|
|
Issue
Date: October 14,
2008
|
XXXXXXX
INDUSTRIES, INC., a corporation organized under the laws of the State of
Delaware (the “Company”),
hereby certifies that, for value received, Intervale Capital, LLC, a Delaware
limited liability company, or its assigns (the “Holder”),
is
entitled, subject to the terms set forth below, to purchase from the Company
at
any time after October 14, 2008 (“Issue
Date”)
until
5:00 p.m., Houston, Texas time, on the fifth anniversary of the Issue Date
(the
“Expiration
Date”),
up to
2,443,269 duly authorized, validly issued, fully paid and nonassessable shares
of Common Stock at a per share purchase price of $0.25. The aforedescribed
purchase price per share, as adjusted from time to time as herein provided,
is
referred to herein as the “Purchase
Price.”
The
number and character of such shares of Common Stock and the Purchase Price
are
subject to adjustment as provided herein. The Company may reduce the Purchase
Price without the consent of the Holder.
As
used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:
(a) The
term
“Company”
shall
include Xxxxxxx Industries, Inc. and any Person that shall succeed to or assume
the obligations of Xxxxxxx Industries, Inc. hereunder.
(b) The
term
“Common
Stock”
includes (i) the Company’s Common Stock, $0.001 par value per share, and (ii)
any other securities into which or for which any of the securities described
in
clause (i) above may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, reclassification, merger, sale of assets
or
otherwise.
(c) The
term
“Person”
shall
include an individual, a partnership, a limited liability company, a
corporation, an association, a joint stock company, a trust, a joint venture,
an
unincorporated organization or any federal, state, county or municipal
governmental or quasi-governmental agency, department, commission, board,
bureau, instrumentality or similar entity, foreign or domestic, having
jurisdiction over either the Company or any Holder.
(d) The
term
“Other
Securities”
refers
to any stock (other than Common Stock) and other securities of the Company
or
any other Person (i) that the Holder at any time shall be entitled to receive,
or shall have received, on the exercise of the Warrant, in lieu of or in
addition to Common Stock, and (ii) that at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to the terms hereof.
(e) The
term
“Warrant
Shares”
shall
mean the shares of Common Stock or Other Securities issued or issuable upon
exercise of this Warrant, in each case as such number may be adjusted from
time
to time pursuant to the terms hereof.
(f) The
term
“2008
Warrants”
shall
mean this Warrant and other Common Stock Purchase Warrants in substantially
the
form hereof, and any Warrants issued in exchange or substitution therefor or
in
replacement thereof.
1. Exercise
of Warrant.
1.1 Number
of Shares Issuable upon Exercise.
From
and after the Issue Date through and including the Expiration Date, the Holder
hereof shall be entitled to receive, upon exercise of this Warrant in whole
in
accordance with the terms of Section
1.2
or upon
exercise of this Warrant in part in accordance with Section
1.3,
shares
of Common Stock of the Company, subject to adjustment pursuant to Section
2.
1.2 Full
Exercise.
Subject
to Section
1.8,
this
Warrant may be exercised in full by the Holder hereof by delivery of an original
or facsimile copy of the form of subscription attached as Exhibit
A
hereto
(the “Subscription
Form”)
duly
executed by such Holder and surrender of the original Warrant within four
(4)
business days of exercise, to the Company at its principal office or at the
office of its Warrant Agent (as provided hereinafter), accompanied by payment,
in cash, by wire transfer, by certified or official bank check payable to
the
order of the Company, or by cancellation of Warrant Shares, with any such
Warrant Shares so surrendered being credited against such payment in an amount
equal to the Fair Market Value thereof on the date of such surrender, or
by any
combination of any of the foregoing methods, in the amount obtained by
multiplying (a) the number of shares of Common Stock for which this Warrant
is
then exercisable (without giving effect to any adjustments thereof) by (b)
the
Purchase Price then in effect.
1.3 Partial
Exercise.
Subject
to Section
1.8,
this
Warrant may be exercised in part (but not for a fractional share) by surrender
of this Warrant in the manner, including payment, provided in Section
1.2
except
that the amount payable by the Holder on such partial exercise shall be the
amount obtained by multiplying (a) the number of whole shares of Common Stock
designated by the Holder in the Subscription Form by (b) the Purchase Price
then
in effect. Upon any such partial exercise, the Company, at its sole expense,
will forthwith issue and deliver to or upon the order of the Holder hereof
a new
Warrant or Warrants of like tenor, dated the date hereof, in the name of
the
Holder hereof or as such Holder (upon payment by such Holder of any applicable
transfer taxes) may request, for the whole number of shares of Common Stock
for
which such Warrant may still be exercised.
2
1.4 Fair
Market Value.
Fair
Market Value of a share of Common Stock as of a particular date (the
“Determination
Date”)
shall
mean:
(a) If
the
Company’s Common Stock is traded on an exchange or is quoted on an automated
quotation system, then the closing or last sale price, respectively, reported
for the last trading day immediately preceding the Determination
Date;
(b) If
the
Company’s Common Stock is not traded on an exchange or quoted on an automated
quotation system, but is traded in the over-the-counter market, then the
average
of the closing sales prices reported for the last three trading days immediately
preceding the Determination Date;
(c) Except
as
provided in clause (d) below, if the Company’s Common Stock is not publicly
traded, then as the Holder and the Company agree, without premium for control
and without discount for minority interests, illiquidity or restrictions
on
transfer, or in the absence of such an agreement within fifteen (15) days
of the
Determination Date, then by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, before a single
arbitrator to be chosen from a panel of persons qualified by education and
training to pass on the matter to be decided and without premium for control
and
without discount for minority interests, illiquidity or restrictions on
transfer; or
(d) If
the
Determination Date is the date of a liquidation, dissolution or winding up,
or
any event deemed to be a liquidation, dissolution or winding up pursuant
to the
Company’s Certificate of Incorporation, as amended (the “Charter”),
then
all amounts to be payable per share to holders of the Common Stock pursuant
to
the Charter in the event of such liquidation, dissolution or winding up,
plus
all other amounts to be payable per share in respect of the Common Stock
in
liquidation under the Charter, assuming for the purposes of this clause (d)
that
all of the shares of Common Stock then issuable upon exercise of all of the
2008
Warrants are outstanding at the Determination Date.
1.5 Company
Acknowledgment.
The
Company will, at the time of each exercise of this Warrant, upon the request
of
the Holder hereof, acknowledge in writing its continuing obligation to afford
to
such Holder all rights to which such Holder shall continue to be entitled
after
such exercise in accordance with the provisions of this Warrant. If the Holder
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.
3
1.6 Trustee
for Warrant Holders.
In the
event that a bank or trust company shall have been appointed as trustee for
the
Holder of the Warrants pursuant to Section
2.3
or
2.4,
such
bank or trust company shall have all the powers and duties of a Warrant Agent
(as hereinafter defined) and shall accept, in its own name for the account
of
the Company or such successor person as may be entitled thereto, all amounts
otherwise payable to the Company or such successor, as the case may be, on
exercise of this Warrant pursuant to this Section
1.
1.7 Delivery
of Stock Certificates, etc. on Exercise.
The
Company agrees that the shares of Common Stock purchased upon exercise of
this
Warrant shall be deemed to be issued to the Holder hereof 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 as aforesaid.
Notwithstanding the foregoing, the Holder may, upon written notice delivered
to
the Company concurrently with the surrender of this Warrant for exercise
as
provided in Section
1,
elect
that the exercise of all or any portion of this Warrant be conditioned upon
the
consummation of any transaction or event, in which case (a) such exercise
shall
not be deemed to be effective unless and until the consummation of such
transaction or event occurs and (b) such exercise may be revoked by the Holder
at any time prior to the consummation of such transaction or event. If such
transaction or event is not consummated or is so revoked, the Company shall
promptly return the surrendered Warrant to such Holder, unless otherwise
instructed by such Holder. As soon as practicable after the exercise of this
Warrant in full or in part, and in any event within four (4) business days
thereafter, the Company at its sole expense (including the payment by it
of any
applicable issue taxes) will cause to be issued in the name of and delivered
to
the Holder hereof, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct in compliance with applicable securities
laws, (i) a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock (or Other
Securities) to which such Holder shall be entitled on such exercise, plus,
in
lieu of any fractional share to which such Holder would otherwise be entitled,
one full share of Common Stock, together with any other stock or other
securities and property (including cash, where applicable) to which such
Holder
is entitled upon such exercise pursuant to Section
1
or
otherwise and (ii) in case such exercise is in part only, a new Warrant or
Warrants as set forth in Section
1.3.
4
1.8 Cashless
Exercise.
If at
any time after April 14, 2008, the Warrant Shares cannot be sold without
restriction pursuant to an effective registration statement under the Securities
Act of 1933, as amended (the “Act”),
with
a current prospectus available, in lieu of exercising this Warrant in the
manner
set forth in Section
1.2
or
1.3
above,
then the Warrant may be exercised by surrender of the Warrant without payment
of
any other consideration, commission or remuneration and by delivery of an
original or facsimile copy of the form of cashless exercise subscription
attached as Exhibit
B
hereto
(the “Cashless
Exercise Subscription Form”)
duly
executed by such Holder. The Holder shall be entitled to receive the number
of
Warrant Shares equal to the quotient determined by dividing [(A-B) x C] by
A,
where:
A
=
the
Fair
Market Value of one share of Common Stock on the date of receipt of the Cashless
Exercise Subscription Form;
B
=
the
Purchase Price per share then in effect; and
C
= The
number
of Warrant Shares issuable upon such exercise of the Warrant, or part
thereof,
had the Warrant been exercised with a cash payment.
2. Adjustment
of
Warrant Shares Issuable Upon Exercise.
2.1 General;
Number of Warrant Shares.
The
number of Warrant Shares that the Holder shall be entitled to receive upon
each
exercise hereof shall be determined by multiplying the number of Warrant
Shares
that would otherwise (but for the provisions of this Section
2)
be
issuable upon such exercise, as designated by the Holder pursuant to
Section
1,
by a
fraction (a) the numerator of which is the Purchase Price and (b) the
denominator of which is the Purchase Price in effect on the date of such
exercise.
2.2 Reorganization,
Consolidation, Merger, etc.
(a)
In
case at any time or from time to time, the Company shall (i) effect a
reorganization or reclassification of the Warrant Shares or its Common Stock,
(ii) consolidate with or merge into any other Person and shall not be the
continuing or surviving corporation of such consolidation or merger, (iii)
permit any other Person to consolidate with or merge into the Company and
the
Company shall be the continuing or surviving Person but, in connection with
such
consolidation or merger, the Warrant Shares or the Common Stock shall be
changed
into or exchanged for stock or other securities of any other Person or cash
or
any other property, or (iv) transfer all or substantially all of its properties
or assets to any other Person, then, in each such case, as a condition to
the
consummation of such a transaction, proper and adequate provision shall be
made
by the Company whereby the Holder of this Warrant, on the exercise hereof
as
provided in Section
1,
at any
time after the consummation of such transaction, shall receive, in lieu of
the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation, the greatest amount of stock and other securities and property
(including cash) to which such Holder would have been entitled as an equity
holder upon such consummation if such Holder had so exercised this Warrant,
immediately prior thereto, all subject to further adjustment thereafter as
provided in this Section
2.
5
(b)
In
case at any time within 180 days after the Issue Date, the Company shall
issue
(i) shares of Common Stock at a purchase price less than the Purchase Price
or
(ii) securities that are convertible, exercisable or exchangeable for shares
of
Common Stock (except in connection with (A) the Company’s issuance of Common
Stock or the issuances or grants of options to purchase Common Stock pursuant
to
a Company employee benefit plan in effect as of the Issue Date, (B) as a
result
of the exercise of any option, warrant, or other right to acquire shares
of
Common Stock existing or outstanding as of the Issue Date, (C) as the result
of
the conversion or exchange of any securities outstanding as of the Issue
Date
that are convertible or exchangeable into shares of Common Stock, or (C)
as a
result of the exercise of this Warrant (collectively, the “Excepted
Issuances”),
for a
price or value less than the Purchase Price (such shares of Common Stock
and,
together with such shares of Common Stock into which such securities are
convertible, exercisable or exchangeable, the “Additional
Shares”),
the
number of Warrant Shares that the Holder shall be entitled to receive upon
the
exercise hereof shall automatically and without any further action be increased
by the product of the Additional Shares multiplied by 9.99% and the Purchase
Price for such additional Warrant Shares shall be the Purchase Price in effect
on the date of such issuance.
2.3 Dissolution.
In the
event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, prior to such
dissolution, shall at its expense (a) appoint a bank or trust company (a
“Trustee”)
having
its principal office in Houston, TX and otherwise reasonably satisfactory
to the
Holder, as trustee for the Holder of the Warrants, pursuant to documentation
reasonably satisfactory to the Holder and (b) deliver or cause to be delivered
to such Trustee the stock and other securities and property (including cash,
where applicable) receivable by the Holder of the Warrants after the effective
date of such dissolution pursuant to this Section
2.
2.4 Continuation
of Terms.
Upon
any reorganization, reclassification, consolidation, merger or transfer (and
any
dissolution following any transfer) referred to in this Section
2,
this
Warrant shall continue in full force and effect and the terms hereof shall
be
applicable to the Other Securities and property (including cash, where
applicable) receivable upon the exercise of this Warrant after the consummation
of such reorganization, reclassification, consolidation or merger or the
effective date of dissolution following any such transfer, as the case may
be,
and shall be binding upon the issuer of any Other Securities, including,
in the
case of any such transfer, the Person acquiring all or substantially all
of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant. In the event (a) this Warrant
does
not continue in full force and effect after the consummation of the transactions
described in this Section
2,
or (b)
the Holders do not receive an opinion of counsel for any Person (other than
the
Company) that may be required to deliver any Other Securities and property
receivable upon the exercise of this Warrant as provided herein, which opinion
of counsel shall be reasonably satisfactory to such Holder, stating that
this
Warrant shall thereafter continue in full force and effect and the terms
hereof
shall be applicable to the Other Securities and property that such Person
may be
required to deliver upon any exercise of this Warrant or the exercise of
any
rights pursuant thereto, then the Company shall appoint a Trustee in accordance
with Section
2.3
and
deliver to such Trustee all of the Company’s securities and property (including
cash, where applicable) receivable by the Holder of the Warrants as contemplated
by this Section
2.
6
2.5 Extraordinary
Events Regarding Common Stock.
In the
event that the Company shall (a) subdivide (by any stock split, stock dividend,
recapitalization or otherwise) its outstanding shares of Common Stock into
a
greater number of shares of Common Stock or pays a dividend or makes a
distribution to holders of the shares of Common Stock in the form of additional
shares of Common Stock, or (b) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each
such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction,
the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the
number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect.
The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon
the
happening of any successive event or events described herein in this
Section
2.
3. Other
Dilutive Events. If
any
event shall occur as to which the provisions of Section
2
is not
strictly applicable but with respect to which the failure to make any adjustment
would not fairly protect the Holders or fairly preserve and give effect to
the
anti-dilution rights represented by this Warrant in accordance with its
essential intent and principles, then, in each such case, the Company shall
promptly adjust (the “Company
Dilutive Adjustment”),
on a
basis consistent with the essential intent and principles established in
Section
2,
the
shares of Common Stock (or Other Securities) issuable on the exercise of
the
Warrants to the extent necessary to preserve, without dilution, the rights
represented by this Warrant. If the Holder shall object to the adjustment
or the
facts upon which such adjustment is based, the Holder shall prepare a
calculation of what it believes to be the proper adjustment (the “Holder
Dilutive Adjustment”)
and
submit such calculation to the Company; provided,
that,
the
Company Dilutive Adjustment shall remain in effect regardless of any dispute
by
the Holder of such adjustment. If the Company and the Holder cannot agree
upon a
final adjustment within ten (10) days after the Company’s receipt of such
notice, the difference between the Company Dilutive Adjustment, as such
adjustment was readjusted in writing and delivered to the Holder prior to
the
initiation by written demand of arbitration hereby (the “Adjusted
Company Dilutive Adjustment”),
and
the Holder Dilutive Adjustment, as such adjustment was readjusted in writing
and
delivered to the Company prior to the initiation by written demand of
arbitration hereby (the “Adjusted
Holder Dilutive Adjustment”),
shall
be settled finally, completely and conclusively by binding arbitration in
Houston, Xxxxxx County, Texas by a single arbitrator, to be selected from
a
panel of persons qualified by education and training to pass on the matter
to be
decided, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Arbitration shall be initiated by written demand
by the
party seeking arbitration. This agreement to arbitrate shall be specifically
enforceable only in the District Court of Xxxxxx County, Texas. A decision
of
the arbitrator (the “Arbitrated
Dilutive Adjustment”)
shall
be final, conclusive, and binding on all parties, and judgment may be entered
thereon in the District Court of Xxxxxx County, Texas, to enforce such decision
and the benefits thereof. Any costs and expenses related to such arbitration
and
required to be paid prior to the delivery of the arbitrator’s decision (the
“Initial
Arbitration Costs”)
shall
initially be paid by the party commencing arbitration. All costs and expenses
related to such arbitration shall ultimately be paid by the party whose adjusted
dilutive adjustment referenced above was further from the Arbitrated Dilutive
Adjustment and such party shall, if necessary, promptly reimburse the other
party for the Initial Arbitration Costs paid by such other party.
7
4. Certificate
as to Adjustments.
In each
case of any adjustment or readjustment in the shares of Common Stock (or
Other
Securities) issuable on the exercise of the Warrants, the Company, at its
sole
expense, will promptly cause its Chief Financial Officer or other appropriate
designee to compute such adjustment or readjustment and, upon written request
of
a Holder, cause independent certified public accountants (which may be the
regular auditors of the Company) selected by the Company to verify such
computation (other than any computation of the Fair Market Value, which shall
be
determined in accordance with the definition thereof), in each case, in
accordance with the terms of the Warrant, and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon
which
such adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares
of
Common Stock (or Other Securities) issued or sold or deemed to have been
issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such adjustment or readjustment and as adjusted
or readjusted as provided in this Warrant. The Company will forthwith mail
a
copy of each such certificate to the Holder of the Warrant.
The
Company will also keep copies of all such reports at its chief executive
office
and will cause the same to be available for inspection, upon reasonable notice
to the Company, at such office during normal business hours by any Holder
or any
prospective purchaser of this Warrant designated by the Holder.
5. No
Dilution or Impairment.
The
Company shall not, by amendment of its Charter or through any consolidation,
merger, reorganization, reclassification, transfer of assets, dissolution,
issue
or sale of securities or any other voluntary action, avoid or seek to avoid
the
observance or performance of any of the terms of this Warrant, but will at
all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to
protect
the rights of the Holder against dilution or other impairment. Without limiting
the generality of the foregoing, the Company (a) will take all such action
as
may be necessary or appropriate in order that the Company may validly and
legally issue the Warrant Shares upon exercise of this Warrant and (b) will
not
take any action that results in any adjustment of the Purchase Price if the
total number of Warrant Shares issuable upon exercise of the Warrant after
such
action would exceed the total number of shares of Common Stock (or Other
Securities, if applicable) then authorized by its Charter and available for
the
purpose of issuance upon such exercise.
6. Reservation
of Stock, etc. Issuable on Exercise of Warrant; Financial
Statements.
The
Company will at all times reserve and keep available, solely for issuance
and
delivery on the exercise of the Warrants, all shares of Common Stock (or
Other
Securities) from time to time issuable on the exercise of the Warrant. All
Warrant Shares issuable upon exercise of this Warrant shall be duly authorized
and, when issued upon such exercise, shall be validly issued and, in the
case of
shares, fully paid and nonassessable, with no liability on the part of the
Holders thereof.
7. Assignment;
Exchange of Warrant.
Subject
to compliance with applicable securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a
“Transferor”).
On
the surrender for exchange of this Warrant, with the Transferor’s endorsement in
the form of Exhibit
C
attached
hereto (the “Transferor
Endorsement Form”),
the
Company, at its sole expense, but with payment by the Transferor of any
applicable transfer taxes, will issue and deliver to or on the order of the
Transferor thereof a new Warrant or Warrants of like tenor, dated the date
hereof, in the name of the Transferor and/or the transferee(s) specified
in such
Transferor Endorsement Form (each a “Transferee”),
calling in the aggregate on the face or faces thereof for the number of shares
of Common Stock called for on the face or faces of the Warrant so surrendered
by
the Transferor. No such transfers shall result in a public distribution of
the
Warrant.
8
8. Replacement
of Warrant.
Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss,
theft or destruction of this Warrant by any Person other than the Holder,
on
delivery of an indemnity agreement reasonably satisfactory in form and amount
to
the Company or, in the case of any such mutilation, on surrender of this
Warrant
for cancellation, the Company at its sole expense, will execute and deliver,
in
lieu thereof, a new Warrant of like tenor and dated the date
hereof.
9. Registration
Rights.
The
Holder of this Warrant has been granted certain registration rights by the
Company. These registration rights are set forth in the Registration Rights
Agreement dated as of October 14, 2008, (the “Registration
Rights Agreement”),
between the Company and Holder. The terms of the Registration Rights Agreement
are incorporated herein by this reference.
10. Restrictions
on Transfer.
The
Holder of this Warrant, by acceptance thereof, agrees that, this Warrant
and the
Warrant Shares issuable upon the exercise hereof have not been registered
under
the Act, or any state securities laws. This Warrant and the Warrant Shares
issuable upon exercise hereof, may not be sold, offered for sale, pledged,
transferred, hypothecated or otherwise disposed of in the absence of an
effective registration statement under or exemption from the Act and all
applicable state securities laws. Such Holder agrees that, upon the failure
of
the Holder to comply with this Section
10,
the
Company may issue instructions to its transfer agent to place, or may itself
place, a “stop order” on transfers with respect to the Warrant and Warrant
Shares. The certificates evidencing the Warrant and Warrant Shares which
will be
delivered to such Holder by the Company shall bear substantially the following
legend:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THE SECURITIES
EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER OR EXEMPTION FROM SUCH ACT AND ALL
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO XXXXXXX INDUSTRIES, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
9
Each
Holder of this Warrant and the Warrant Shares, at the time all or a portion
of
such Warrant or Warrant Share is transferred or exercised, as applicable,
agrees
to make such written representations to the Company as counsel for the Company
may reasonably request, in order that the Company may be reasonably satisfied
that such transfer of the Warrant, exercise of the Warrant and consequent
issuance of Warrant Shares, or transfer of the Warrant Shares, as applicable,
will not violate the registration and prospectus delivery requirements of
the
Act, or other applicable state securities laws.
11. Warrant
Agent.
The
Company may, by written notice to the Holder of the Warrant, appoint an agent
(a
“Warrant
Agent”)
for
the purpose of issuing Common Stock (or Other Securities) on the exercise
of
this Warrant pursuant to Section
1,
exchanging this Warrant pursuant to Section
7,
and
replacing this Warrant pursuant to Section
8,
or any
of the foregoing, and thereafter any such issuance, exchange or replacement,
as
the case may be, shall be made at such office by such Warrant
Agent.
12. Transfer
on the Company’s Books.
Until
this Warrant is transferred on the books of the Company, the Company may
treat
the registered holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary. The Company shall not close its
books against the transfer of this Warrant or any Warrant Shares in any manner
which interferes with the timely exercise of this Warrant in accordance with
the
express terms hereof.
13. Governmental
Filings and Approvals.
The
Company shall assist and cooperate with the Holder in making any required
governmental filings or obtaining any required governmental approvals prior
to
or in connection with any exercise of this Warrant (including, without
limitation, making any filings required to be made by the Company).
14. Notices
of Corporation Action.
If, at
any time prior to the Expiration Date of this Warrant and prior to its exercise
in full, any one or more of the following events shall occur: (a) any taking
by
the Company of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of Common Stock of the Company or any Other
Securities or property, or to receive any other right; (b) any capital
reorganization of the Company, any reclassification or recapitalization of
the
Common Stock of the Company, any consolidation or merger involving the Company
and any other Person or any transfer of all or substantially all the assets
of
the Company to any other Person; (c) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or (d) any issuance of any additional
shares of Common Stock (or Other Securities) other than Excepted Issuances,
then
in any such event, the Company will mail to each Holder a notice specifying
(i)
in respect of subsection (a) above, the date or expected date on which any
such
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right, (ii)
in
respect of subsection (b) or (c) above, the date or expected date on which
any
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place, (iii)
in
respect of subsection (b) or (c) above, the date, if any such date is to
be
fixed, as of which the holders of record of shares of Common Stock (or Other
Securities) shall be entitled to exchange their shares of Common Stock (or
Other
Securities) for the cash, capital stock or other property deliverable upon
such
reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up and a description in reasonable
detail of the transaction and (iv) in respect of subsection (d) above, the
expected date of such issuance, together with a description of the Common
Stock
(or Other Securities) to be issued and the consideration to be received by
the
Company therefor. In respect of such notices described in clauses (i), (ii)
and
(iii) above, such notice shall be mailed at least thirty (30) days prior
to the
date therein specified; in respect of notices described in clause (iv) above,
such notice shall be mailed as soon as is reasonably practicable under the
attendant circumstances but in no event later than five (5) business days
prior
to the date therein specified.
10
15. Notices.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery or facsimile, addressed as set forth below or
to
such other address as such party shall have specified most recently by written
notice. Any notice or other communication required or permitted to be given
hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or
the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: (i) if to the Company to: Xxxxxxx Industries, Inc.,
0000 Xxxxx Xxxxxxx Xxxx, Xxxxxx, Xxxxx 00000, Attn: President, CEO, telecopier
number: (000) 000-0000, with a copy by telecopier only to: Indeglia &
Xxxxxx, telecopier number: (000) 000-0000, Attn: Xxxx X. Xxxxxxxx and (ii)
if to
the Holder, to: Intervale Capital, LLC, 0000
Xxxx
Xxx Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000,
Attn:
Xxxxxx X. Xxxx, telecopier number: (000) 000-0000, with an additional copy
by
telecopier only to: Fulbright & Xxxxxxxx, L.L.P., telecopier number: (000)
000-0000, Attn: Xxxx X. Xxxxx. The Holder and the Company agree to promptly
advise the other parties hereto of any change of address from that so set
forth.
16. Miscellaneous.
This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought. This Warrant
shall
be construed and enforced in accordance with and governed by the laws of
the
State of Texas. Any dispute relating to this Warrant shall be adjudicated
in
Xxxxxx County, Texas. The headings in this Warrant are for purposes of reference
only and shall not limit or otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
[Signature
Page Follows]
11
IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.
| XXXXXXX INDUSTRIES, INC. | ||
| By: | ||
| Name: Xxxxxxx X. Xxxxxxxx | ||
| Title: Chief Financial Officer | ||
|
WITNESS:
|
||
12
Exhibit
A
FORM
OF
SUBSCRIPTION
(To
be
signed only on exercise of Warrant
pursuant
to Section 1.2 or 1.3 of the Common Stock Purchase Warrant)
TO:
XXXXXXX INDUSTRIES, INC.
The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase ________ shares of the Common
Stock covered by such Warrant (without giving effect to any adjustments
thereof).
The
undersigned herewith makes payment of the full purchase price for such shares
at
the price per share provided for in such Warrant, which is $___________ in
the
aggregate. Such payment takes the form of (check applicable box or
boxes):
|
[___]
|
$__________
in lawful money of the United States (including certified or official
bank
check).
|
| [___] |
Cancellation
of __________ Warrant Shares.
|
The
undersigned requests that the certificates for such shares be issued in the
name
of, and delivered to _____________________________________________________
whose
address is
The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of the Common Stock under the Securities Act of
1933,
as amended (the “Securities
Act”),
or
pursuant to an exemption from registration under the Securities
Act.
| Dated: | |||
| (Signature must conform to name of holder as specified on the face of the Warrant) | |||
| (Address) |
Exhibit
B
FORM
OF
CASHLESS EXERCISE SUBSCRIPTION
(To
be
signed only on exercise of Warrant
pursuant
to Section 1.8 of the Common Stock Purchase Warrant)
TO:
XXXXXXX INDUSTRIES, INC.
The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to exercise the attached Warrant with
respect to ________ shares of the Common Stock covered by such Warrant pursuant
to Section 1.8 of the Common Stock Purchase Warrant, and makes payment therefore
in full by surrender and delivery of this Warrant. The calculations supporting
this exercise are attached hereto.
The
undersigned requests that the certificates for such shares be issued in the
name
of, and delivered to _____________________________________________________
whose
address is
The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of the Common Stock under the Securities Act of
1933,
as amended (the “Securities
Act”),
or
pursuant to an exemption from registration under the Securities
Act.
| Dated: | |||
| (Signature must conform to name of holder as specified on the face of the Warrant) | |||
| (Address) |
Exhibit
C
FORM
OF
TRANSFEROR ENDORSEMENT
(To
be
signed only on transfer of Warrant)
For
value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferee” the right represented by
the within Warrant to purchase the number of shares of Common Stock of XXXXXXX
INDUSTRIES, INC. to which the within Warrant relates specified under the
heading
“Number Transferred,” respectively, opposite the name(s) of such person(s) and
appoints each such person Attorney to transfer its respective right on the
books
of XXXXXXX INDUSTRIES, INC. with full power of substitution in the
premises.
|
Transferee
|
Number
Transferred
|
|
The
undersigned transferor represents and warrants to XXXXXXX INDUSTRIES, INC.
that
the transfer(s) contemplated herein are in compliance with applicable securities
laws.
| Dated: | |||
| (Signature must conform to name of holder as specified on the face of the Warrant) | |||
| Signed in the presence of: | |||
| (Name) | |||
| (Address) | |||
|
ACCEPTED
AND AGREED:
(TRANSFEREE)
|
|||
| (Name) | |||
| (Address) | |||
