Exhibit No. 10.16
Form 10-KSB
Buyers United, Inc.
File No. 0-26917
WARRANT AGREEMENT
BUYERS UNITED, INC.
Warrant for the Purchase of
Shares of Common Stock
Par Value $0.0001
THE HOLDER OF THIS WARRANT, BY ACCEPTANCE HEREOF, BOTH WITH RESPECT TO THE
WARRANT AND COMMON STOCK ISSUABLE UPON EXERCISE OF THE WARRANT, AGREES AND
ACKNOWLEDGES THAT THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT OR OTHER COMPLIANCE UNDER THE SECURITIES
ACT OR THE LAWS OF THE APPLICABLE STATE OR A "NO ACTION" OR INTERPRETIVE
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER, AND ITS COUNSEL, TO THE EFFECT THAT THE
SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH
STATE STATUTES.
This is to certify that, for value received ____________ (the "Holder")
is entitled to purchase from BUYERS UNITED, INC. (the "Company"), on the terms
and conditions hereinafter set forth, all or any part of ___________ shares
("Warrant Shares") of the Company's common stock, par value $0.0001 (the
"Common Stock"), at the purchase of $2.50 per share or the lowest price
provided to any third party individual or entity in the three (3) months prior
to the last "Closing," defined hereinafter (this or the "Warrant"). Upon
exercise of this Warrant in whole or in part, a certificate for the Warrant
Shares so purchased shall be issued and delivered to the Holder. If less than
the total warrant is exercised, a new warrant of similar tenor shall be issued
for the unexercised portion of this Warrant. By acceptance hereof, the Holder
agrees to be bound by the terms and conditions of this Warrant.
This Warrant is granted subject to the following further terms and
conditions:
1. This Warrant has vested and is exercisable immediately and through the
period ending 5:00 p.m. Salt Lake City time, two (2) years from the
"Closing," as defined in paragraph 10 of that certain "Loan Agreement,"
(the "Loan Agreement"), executed on even date herewith by the Company
and Holder) (the "Exercise Period"). In order to exercise this Warrant
with respect to all or any part of the Warrant Shares for which this
Warrant is at the time exercisable, Holder (or in the case of exercise
after Xxxxxx's death, Xxxxxx's executor, administrator, heir or
legatee, as the case may be) must take the following actions:
(a) Deliver to the Corporate Secretary of the Corporation an executed
notice of exercise in substantially the form of notice attached to this
Agreement (the "Exercise Notice") in which there is specified the number
of Warrant Shares which are to be purchased under the exercised warrant.
(b) Pay the aggregate Warrant Price for the purchased shares through
full payment in cash or by check made payable to the Corporation's order
(c) Furnish to the Corporation appropriate documentation that the person
or persons exercising the Warrant (if other than Holder) have the right
to exercise this Warrant.
(d) For purposes of this Agreement, the Exercise Date shall be the date
on which the executed Exercise Notice shall have been delivered to the
Company. Except to the extent the sale and remittance procedure
specified above is utilized in connection with the warrant exercise,
payment of the Warrant Price for the purchased shares must accompany such
Exercise Notice.
(e) Upon such exercise, the Company shall issue and cause to be
delivered with all reasonable dispatch (and in any event within three
business days of such exercise) to or upon the written order of the
Holder at its address, and in the name of the Holder, a certificate or
certificates for the number of full Warrant Shares issuable upon the
exercise together with such other property (including cash) and
securities as may then be deliverable upon such exercise. Such
certificate or certificates shall be deemed to have been issued and the
Holder shall be deemed to have become a holder of record of such Warrant
Shares as of the Exercise Date.
2. The Warrant Shares have not and may not be registered as of the date of
exercise of this Warrant under the Securities Act or the securities laws
of any state. This Warrant and the Warrant Shares issuable on exercise
of the Warrant, when and if issued, are and may be "restricted
securities" as defined in Rule 144 promulgated by the Securities and
Exchange Commission and must be held indefinitely unless subsequently
registered under the Securities Act and any other applicable state
registration requirements, or an exemption from such registration
requirements for resale is available. The Warrant Shares carry one piggy
back registration right. Other than the foregoing, the Company is under
no obligation to register the securities under the Securities Act or
under applicable state statutes. In the absence of such a registration
or an available exemption from registration, sale of the Warrant Shares
will be prohibited for not less than one (1) year following exercise and
until the Holder receives a Letter of Opinion from the Company stating
the Holder's decision to sale said Warrant Shares is in compliance with
the terms of sale under Rule 144. The Holder shall confirm to the
Company the representations set forth above in connection with the
exercise of all or any portion of this Warrant.
3. The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Warrant Price per share shall be subject to adjustment
from time to time subject to the following terms. If the outstanding
shares of Common Stock of the Company are increased, decreased, changed
into or exchanged for a different number or kind of shares of the Company
through reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, the Company or its
successors and assigns shall make an appropriate and proportionate
adjustment in the number or kind of shares, and the per-share Warrant
Price thereof, which may be issued to the Holder under this Agreement
upon exercise of the Warrants granted under this Agreement. If any
capital reorganization or reclassification of Common Stock, or
consolidation or merger of the Company with another corporation or the
sale of all or substantially all of its assets to another corporation
shall be effected in such a way that holders of Common Stock shall be
entitled to receive stock, securities, or assets with respect to or in
exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful adequate
provisions shall be made whereby the Holder of this Warrant shall
thereafter have the right to acquire and receive on exercise hereof such
shares of stock, securities, or assets as would have been issuable or
payable (as part of such reorganization, reclassification, consolidation,
merger or sale) with respect to or in exchange for such number of
outstanding shares of Common Stock as would have been received on
exercise of this Warrant immediately before such reorganization,
reclassification, consolidation, merger or sale. In any such case,
appropriate provision shall be made with respect to the rights and
interests of the Holder of this Warrant to the end that the provisions
hereof shall thereafter be applicable in relation to any shares of stock,
securities, or assets thereafter deliverable on the exercise of this
Warrant. The Company will not effect any such consolidation, merger, or
sale unless prior to the consummation thereof the successor corporation
resulting from such consolidation or merger or the corporation purchasing
such assets shall assume, by written instrument mailed or delivered to
the Holder hereof at its last address appearing on the books of the
Company, the obligation to deliver to such Holder such shares of stock,
securities, or assets as, in accordance with the foregoing provisions,
such Holder may be entitled to acquire on exercise of this Warrant. The
purchase rights represented by this Warrant shall not be exercisable with
respect to a fraction of a share of Common Stock. Any fractional shares
of Common Stock arising from the dilution or other adjustment in the
number of shares subject to this Warrant shall be rounded up to the
nearest whole share.
4. The Company covenants and agrees that all Warrant Shares which may be
delivered upon the exercise of this Warrant will, upon delivery, be free
from all taxes, liens, and charges with respect to the purchase thereof;
provided, that the Company shall have no obligation with respect to any
income tax liability of the Holder.
5. The Company agrees at all times to reserve or hold available a sufficient
number of shares of Common Stock to cover the number of Warrant Shares
issuable upon the exercise of this and all other warrants of like tenor
and other convertible securities then outstanding.
6. This Warrant shall not entitle the Holder hereof to any voting rights or
other rights as a shareholder of the Company, or to any other rights
whatsoever, except the rights herein expressed, and no dividends shall be
payable or accrue in respect of this Warrant or the interest represented
hereby or the Warrant Shares purchasable hereunder until or unless, and
except to the extent that, this Warrant shall be exercised.
7. The Company may deem and treat the registered owner of this Warrant as
the absolute owner hereof for all purposes and shall not be affected by
any notice to the contrary.
8. In the event that any provision of this Agreement is found to be invalid
or otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein invalid or unenforceable, and all such other provisions
shall be given full force and effect to the same extent as though the
invalid or unenforceable provision were not contained herein.
9. This Agreement shall be governed by and construed in accordance with the
internal laws of the state of Utah, without regard to the principles of
conflicts of law thereof.
10. In case this Warrant shall be mutilated, lost, stolen, or destroyed, the
Company may at its discretion issue and deliver in exchange and
substitution for and on cancellation of the mutilated Warrant, or in lieu
of and substitution for the Warrant lost, stolen, or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest;
but only on receipt of evidence satisfactory to the Company of such loss,
theft, or destruction of this Warrant and indemnity satisfactory to the
Company. The Holder shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may
prescribe.
11. This Agreement shall be binding on and inure to the benefit of the
Company and the person to whom a warrant is granted hereunder, and such
person's heirs, executors, administrators, legatees, personal
representatives, assignees, and transferees.
12. For purposes of the Warrant's Exercise Period, the following definition
of the "Closing" (the "Closing") referenced in paragraph 1 hereof shall
apply: On even date herewith, the Company and the Holder entered into the
Loan Agreement, which Loan Agreement defines a term "Closing" in section
9 thereof. The Closing for purposes of this Warrant Agreement shall have
the same definition as the term "Closing" as defined in section 9 of the
Loan Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
the signature of its duly authorized officer on this _____________, 2002
BUYERS UNITED, INC.
____________________________________
By: Xxxx Xxxxxx
Its: Chief Operating Officer
