EXHIBIT 10.15
The securities represented hereby have not been registered under the
Securities Act of 1933, as amended, or any state securities laws and neither
the securities nor any interest therein may be offered, sold, transferred,
pledged or otherwise disposed of except pursuant to an effective registration
statement under such Act and such laws or an exemption from registration under
such Act and such laws which, in the opinion of counsel for the holder, which
counsel and opinion are reasonably satisfactory to counsel for this
corporation, is available.
WARRANT AGREEMENT
This Agreement (the "Agreement") dated November 7, 1997, between International
Veronex Resources Ltd., a British Columbia corporation (the "Company" and the
"Warrant Agent") and those individuals and entities purchasing the "Units" in a
private offering by the Company,
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company proposes to offer privately (the "Private Offering") up
to 1,200,000 Units to individuals and entities, each Unit to consist of one
share of the Company's common stock (the "Common Stock"), and one warrant to
purchase one additional share of Common Stock, such right to be evidenced by a
"Warrant", with the Warrants being collectively referred to herein as the
"Warrants";
WHEREAS, in connection with the proposed Private Offering, the Company
anticipates its issuance of not less than 500,000 Warrants to purchase up to an
aggregate of 500,000 shares of Common Stock and not more than 1,200,000 Warrants
to purchase up to an aggregate of 1,200,000 shares of Common Stock, subject to
increase upon the occurrence of certain events (the "Warrant Shares");
WHEREAS, the Company desires to provide for the issuance of certificates
representing the Warrants;
WHEREAS, the Company desires to act as its own warrant agent in connection
with the issuance, registration, transfer and exchange of certificates and the
exercise of the Warrants;
NOW, THEREFORE, in consideration of the above and foregoing premises and the
mutual promises and agreements hereinafter set forth, it is agreed that:
1. Warrant Certificates.
--------------------
(a) (i) Each Warrant shall entitle the holder (the "Registered Holder,"
or, in the aggregate, the "Registered Holders") in whose name the certificate
shall be registered on the books maintained by the Company to purchase one (1)
share of Common Stock on the exercise thereof, subject to modification and
adjustment as provided in Section 9 hereof. Warrant certificates shall be
executed by the Company's Chief Executive Officer and attested to by the
Company's Secretary. The Warrant certificates shall be immediately detachable
from certificates
representing shares of Common Stock and shall be distributed to the purchasers
thereof simultaneously with the closing of the Private Offering.
(b) Subject to the provisions of Sections 3, 5, and 7 hereof, the Company
shall deliver Warrant certificates in required whole number denominations to
Registered Holders in connection with any transfer or exchange permitted under
this Agreement. Except as provided in Section 7 hereof, no certificates shall be
issued except (i) certificates initially issued hereunder, (ii) certificates
issued on or after their initial issuance date upon the exercise of any Warrant
to evidence the unexercised Warrants held by the exercising Registered Holder
and (iii) Warrant certificates issued after their initial issuance date, upon
any transfer or exchange of certificates or replacements of lost or mutilated
certificates.
2. Form and Execution of Certificates.
----------------------------------
(a) The Warrant certificates shall be dated the date of their issuance,
whether on initial transfer or exchange or in lieu of mutilated, lost, stolen or
destroyed certificates. The form of Warrant certificate is attached hereto as
Exhibit A.
(b) Each Warrant certificate shall be numbered serially in accordance with
the Common Stock initially attached thereto. Each Warrant certificate shall have
set forth thereon the designation "RPA."
(c) The Warrant certificates shall be manually signed on behalf of the
Company by a proper officer thereof and shall not be valid for any purpose
unless so signed. In the event any officer of the Company who executed
certificates shall cease to be an officer of the Company such certificates may
be issued and delivered by the Company or transferred by the Registered Holders
with the same force and effect as though the person who signed such certificate
had not ceased to be an officer of the Company; and any certificate signed on
behalf of the Company by any person, who at the actual date of the execution of
such certificate was a proper officer of the Company, shall be proper
notwithstanding that at the date of execution of this Agreement any such person
was not such an officer.
3. Exercise.
--------
(a) (i) Subject to the provisions of Sections 5 and 9 hereof, the
Warrants, as they may be adjusted as set forth herein, may be exercised at a
price (the "Warrant Exercise Price") of $8.00 per share of Common Stock subject
to adjustment, in whole or in part at any time during the period (the "Warrant
Exercise Period") commencing November 7, 1997 (the "Initial Warrant Exercise
Date"), and terminating on a date (the "Warrant Expiration Date") ending five
years after the final closing of the Private Offering (unless extended by a
majority vote of the Board of Directors for such length of time as they, in
their sole discretion, deem reasonable and necessary).
(b) Each Warrant shall be deemed to have been exercised immediately prior
to the close of business on the date (each, an "Exercise Date") of the surrender
for exercise of the Warrant certificate. The exercise form shall be executed by
the Warrant Holder thereof or his attorney duly authorized in writing and shall
be delivered together with payment to the Company at its corporate offices
located at 00000 Xxx Xxxx Xxxxxx, Xxxxx XX0, Xxxxxx, Xxxxxxxxxx 00000 (the
"Corporate Office"), or at any such other office or agency as the Company may
designate, in cash
-2-
or by official bank or certified check, of an amount equal to
the aggregate Exercise Price, in lawful money of the Untied States of America.
(c) Unless Warrant Shares may not be issued as provided herein, the person
entitled to receive the number of Warrant Shares deliverable on exercise shall
be treated for all purposes as the holder of such Warrant Shares as of the close
of business on the Exercise Date. The Company shall not be obligated to issue
any fractional share interest in Warrant Shares issuable or deliverable on the
exercise of any Warrant or scrip or cash therefore and such fractional shares
shall be of no value whatsoever.
(d) Within three business days after the Exercise Date and in any event
prior to the Warrant Expiration Date, the Company, at its own expense, shall
cause to be issued and delivered to the person or persons entitled to receive
the same, a certificate or certificates in the name requested by the Registered
Holder of the Warrants for the number of Warrant Shares deliverable on such
exercise. No adjustment shall be made in respect of cash dividends on Warrant
Shares delivered on exercise of any Warrant. All shares of Common Stock or other
securities delivered upon the exercise of the Warrants shall be validly issued,
fully paid and non-assessable.
(e) The Company may deem and treat the Registered Holder of the Warrants
at any time as the absolute owners thereof for all purposes, and the Company
shall not be affected by any notice to the contrary. The Warrants shall not
entitle the Registered Holders thereof to any of the rights of shareholders or
to any dividend declared on the Common Stock unless such holder or holders shall
have exercised the Warrants prior to the record date fixed by the Board of
Directors for the determination of holders of Common Stock entitled to such
dividends or other rights.
4. Adjustment to Initial Exercise Price and Grant of Additional Warrants.
---------------------------------------------------------------------
If the Company generates less than $24,000,000 in gross revenues during the
period that commenced September 11, 1997, and terminates November 30, 1998, then
the exercise price of each Warrant will be reduced automatically and permanently
to $2.00, subject to further adjustment for stock splits and recapitalizations.
In addition, the Company has agreed to grant, on a pro rata basis, to the
Registered Holders of the Warrants (as of December 1, 1998) additional warrants
(on terms identical to the Warrants) in accordance with the schedule set forth
below.
Additional Warrants Gross Revenues of the Company
------------------- -----------------------------
(Per Warrant Sold in
the Private Offering)
0 in excess of $24,000,000
.5 $20,000,000 C $24,000,000
1.0 $16,000,000 C $19,999,999
1.5 $12,000,000 C $15,999,999
2.0 $ 8,000,000 C $11,999,999
2.5 $ 4,000,000 C $ 7,999,999
3.0 $0 C $ 3,999,000
-3-
5. Registration Rights.
-------------------
The Registered Holders of Warrants shall have the registration rights under
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations promulgated thereunder by the Securities and Exchange Commission
(the "Commission"), provided for in that certain Registration Rights Agreement
executed by the Company and the Registered Holders on even date herewith (the
"Registration Rights Agreement"). The Registration Rights Agreement is
incorporated herein by this reference in its entirety as if fully set forth
herein.
6. Reservation of Shares; Redemption of Warrants and Procedure Therefor; and
--------------------------------------------------------------------------
Payment of Taxes.
----------------
(a) Reservation of Shares. The Company covenants that it shall at all
---------------------
times reserve and have available from its authorized Common Stock such number of
shares as shall then be issuable on the exercise of all outstanding Warrants.
The Company covenants that all Warrant Shares shall be duly and validly issued,
fully paid and non-assessable, and shall be free from all taxes, liens and
charges with respect to the issuance thereof.
(b) Redemption of Warrants and Procedure Therefor. No Warrants may be
---------------------------------------------
redeemed by the Registered Holder, nor may any Warrant Shares be issued or
delivered by the Company unless on the Exercise Date (i) a Registration
Statement for the Warrant Shares has been declared effective by the Commission,
(ii) the Warrant Shares are listed on a national exchange or the Nasdaq Stock
Market, (iii) the closing bid price (or last sales price) of the Common Stock as
recorded by such exchange on which the Common Stock is then traded (or as
reported by Nasdaq) is not less than $10.00 per share for 20 consecutive
business days ending not less than 10 trading days prior to the date of the
notice of redemption, and (iv) the trading volume of the Common Stock is not
less than 30,000 shares per trading day.
In the event that fewer than all of the then outstanding Warrants are to be
redeemed, the Warrants to be redeemed shall be determined by lot or pro rata as
may be determined by the Board of Directors or any other method selected by the
Board of Directors which is not inconsistent with applicable law.
In the event the Company shall redeem the Warrants, notice of such redemption
(the "Notice of Redemption") shall be given by first class mail, postage
prepaid, mailed not less than 30, nor more than 60, days prior to the redemption
date, to each holder of record of the Warrants to be redeemed at such holder's
address as the same appears on the stock register of the Company. Each such
notice shall state: (i) the redemption date; (ii) the aggregate number of
Warrants to be redeemed from all holders of record, and, if less than all the
Warrants to be redeemed from all holders of record, and, if less than all the
Warrants held by a holder are to be redeemed from such holder, the number of
Warrants to be redeemed from such holder; (iii) the redemption price; and (iv)
the place or places where certificates for such Warrants are to be surrendered
for payment of the redemption price.
Notice having been mailed as provided in this Section 6(b), from and after the
redemption date (unless default shall be made by the Company in providing money
for the payment of the redemption price of the Warrants called for redemption),
and such Warrants shall no longer be deemed to be outstanding, and all rights of
the holders thereof as Warrantholders of the Company (except the right to
receive from the Company the redemption price) shall cease. Upon
-4-
surrender, in accordance with the Notice of Redemption of the certificates for
any Warrants so redeemed (properly endorsed or assigned for transfer, if the
Board of Directors shall so require and the Notice of Redemption shall so
state), such Warrants shall be redeemed by the Company at the aforesaid
redemption price. In the event that fewer than all the Warrants represented by
any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed Warrants without cost to the holder thereof.
(c) Payment of Taxes. The Company shall pay all documentary, stamp or
----------------
similar taxes and other government charges that may be imposed with respect of
the issuance of the Warrants, and/or the issuance, transfer or delivery of any
Common Stock constituting the Warrant Shares on the exercise or redemption of
the Warrants. In the event the Common Stock constituting the Warrant Shares are
to be delivered in a name other than the name of the Registered Holder of the
certificate, no such delivery shall be made unless the person requesting the
same has paid to the Company the amount of any such taxes, charges, or transfer
fees incident thereto.
7. Registration of Transfer.
------------------------
(a) The Warrant certificates may, subject to provisions of the Federal
Securities Laws, be transferred in whole or in part. Certificates to be
exchanged shall be surrendered to the Company at its Corporate Office. The
Company shall execute, issue and deliver in exchange therefor the Warrant
certificates that the holder making the transfer shall be entitled to receive.
(b) The Company shall keep transfer books at its Corporate Office which
shall register certificates and the transfer thereof. On due presentment for
registration of transfer of any certificate at the Corporate Office, the Company
shall execute, issue and deliver to the transferee or transferees a new
certificate or certificates representing an equal aggregate number of
securities. All such certificates shall be duly endorsed or be accompanied by a
written instrument or instruments of transfer in form reasonably satisfactory to
the Company. The established transfer fee for any registration of transfer of
certificates shall be paid by the Warrant Holder or the person presenting the
certificate for transfer.
(c) Prior to due presentment for registration or transfer thereof, the
Company may treat the Registered Holder of any certificate as the absolute owner
thereof (notwithstanding any notations of ownership or writing thereon made by
anyone), and the parties hereto shall not be affected by any notice to the
contrary.
8. Loss or Mutilation.
------------------
On receipt by the Company of evidence satisfactory as to the ownership of and
the loss, theft, destruction or mutilation of any Warrant certificate, the
Company shall execute and deliver in lieu thereof a new certificate representing
an equal number of Warrants. In the case of loss, theft or destruction of any
certificate, the individual representing reissuance of a new certificate shall
be required to indemnify the Company and also to post an open-penalty insurance
or indemnity bond. In the event a certificate is mutilated, such certificate
shall be surrendered and canceled by the Company prior to delivery of a new
certificate. Applicants for a new certificate shall also comply with such other
regulations and pay such other reasonable charges as the Company may prescribe.
-5-
9. Adjustment of Initial Exercise Price and Number of Shares Purchasable.
---------------------------------------------------------------------
For purposes hereof, the term "Initial Exercise Price" shall mean, with
respect to the Warrants, $8.00. The Initial Exercise Price and the number of
shares of Common Stock purchasable pursuant to the Warrants shall be subject to
adjustment from time to time as hereinafter set forth in this Section 9;
provided, however, that no adjustment shall be made unless by reason of the
happening of any one or more of the events hereinafter specified, the Exercise
Price then in effect shall be changed by one percent or more, but any adjustment
that would otherwise be required to be made but for this proviso shall be
carried forward and shall be made at the time of and together with any
subsequent adjustment which, together with any adjustment or adjustments so
carried forward, amounts to one percent or more.
(a) Adjustment to Initial Exercise Price. See Section 4.
(b) Right to Reduce Exercise Price. The Company shall have the right to
reduce the Warrant Exercise Price at any time and from time to time that such
appears in the Company's best interests to do so.
(c) Anti-Dilution Provisions. The Exercise Price shall be subject to
further adjustment as follows:
(i) Adjustment Upon Issuances of Common Stock Below the Exercise
------------------------------------------------------------
Price. In case the Company shall issue any shares of Common Stock other than
-----
Excluded Stock (as hereinafter defined) for a consideration per share less than
$4.00 per share, as adjusted for stock splits and recapitalization as set forth
below, the Exercise Price in effect immediately prior to each such issuance
shall be reduced to a price determined by dividing (A) the sum of (x) the number
of shares of Common Stock outstanding immediately prior to such issue,
multiplied by the Exercise Price in effect immediately prior to such issue, plus
(y) the consideration, if any, received by the Company upon such issue, by (B)
the number of shares of Common Stock outstanding immediately after such issue.
For the purposes of this clause 9(c)(i), the following provisions shall also be
applicable:
(1) Convertible Securities, Options, and Rights. If the Company
-------------------------------------------
shall issue any stock, warrant, security, obligation, option, or other right
which directly or indirectly may be converted, exchanged, or satisfied in shares
of Common Stock other than Excluded Stock (as hereinafter defined), the maximum
total number of shares of Common Stock issuable upon such Exercise, exchange, or
other exercise of such securities or rights shall thereupon be deemed to have
been issued and to be outstanding, and the consideration received by the Company
therefor shall be deemed to include the sum of the consideration received for
the issue of such securities or rights and the minimum additional consideration
payable upon such Exercise, exchange or other exercise of such securities or
rights. No further adjustment shall be made for the actual issuance of Common
Stock upon such Exercise, exchange, or other exercise of any such securities or
rights. If the provisions of any such securities or rights with respect to
purchase price or shares purchasable shall change or expire, any adjustment
previously made hereunder therefor shall be readjusted to such as would have
been obtained on the basis of the securities or rights as modified by such
change or expiration.
(2) Stock Dividends and Splits. In case the Company shall declare
--------------------------
a dividend or other distribution payable in Common Stock or shall subdivide
Common
-6-
Stock into a greater number of shares of Common Stock, such issue of
Common Stock shall be deemed to have been made without consideration.
(3) Consideration. In case the Company shall issue shares of
-------------
Common Stock for consideration wholly or partly other than cash, the amount of
the consideration other than cash received by the Company shall be deemed to be
the fair value of such consideration as determined by the Board of Directors by
any method that the Board of Directors deems appropriate; provided, however,
that in the event that any such shares of Common Stock are to be issued to any
person or entity in which any director or directors of the Company has an
interest, such determination shall be made solely by those members of the board
of Directors who have no such interest.
(4) Record Dates. In case the Company shall take a record of the
------------
holders of Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock, or (ii) to subscribe for
or purchase Common Stock, then such record date shall be deemed to be the date
of issue or sale of the shares of Common Stock deemed to have been issued upon
the declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
(5) Treasury Stock. The number of shares of Common Stock
--------------
outstanding at any given time shall include shares owned or held by or for the
account of the Company, and the disposition of any such shares so owned or held
shall not be considered an issue of Common Stock.
(6) Excluded Stock. The term "Excluded Stock" shall mean (i) the
--------------
shares of Common Stock issuable upon exercise of the warrant to be issued to the
Placement Agent in connection with the placement of the Warrants; (ii) up to
250,000 shares of Common Stock issuable upon exercise of options and shares of
Common Stock issuable under the Company's Stock Option Plans approved by the
shareholders; and (iii) all shares of Common Stock to be issued in accordance
with, or in contemplation of, the transactions set forth in the Property
Purchase Agreement, as amended, between the Company and Xxxxxx X. Xxxxx (dated
as of January 14, 1997), and the Agreement of Merger among the Company, PCS
Acquisition Corp., a wholly-owned subsidiary of the Company, and Promax
Conceptual Strategies (dated as of January 14, 1997).
(ii) Adjustments for Changes in Capital Stock. If the Company (A) pays
----------------------------------------
a dividend in Shares of Common Stock to holders of Common Stock; (B) subdivides
outstanding shares of Common Stock into a greater number of shares; (C) combines
outstanding shares of Common Stock into a smaller number of shares; (D) pays a
dividend on shares of Common Stock in shares of capital stock other than Common
Stock or makes a distribution on Common Stock in shares of capital stock other
than Common Stock; or (E) issues by reclassification of shares of Common Stock
any shares of its capital stock; then the Exercise Price in effect immediately
prior to such action shall be adjusted so that the holder of Warrants thereafter
exercised may receive the number of shares of capital stock of the Company which
such holder would have owned immediately following such action if such holder
had exercised his Warrant immediately prior to such action.
For a dividend or distribution, the adjustment shall become effective
immediately after the record date for the dividend or distribution. For a
subdivision, combination, or
-7-
reclassification, the adjustment shall become effective immediately after the
effective date of the subdivision, combination, or reclassification.
If, after an adjustment, a holder of a Warrant upon Exercise thereof may
receive shares of two or more classes of capital stock of the Company, the Board
of Directors shall determine the allocation of the adjusted Exercise Price
between or among the classes of capital stock. After such allocation, the
Exercise Price of the classes of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock contained in
Section 9(c), above.
(iii) Voluntary Adjustment. The Company at any time may decrease the
--------------------
Exercise Price, temporarily or otherwise, by any amount but in no event shall
such Exercise Price result in the issuance of Common Stock at a price less than
the par value of the Common Stock at the time such decrease is made. Any such
decreased Exercise Price shall be available for at least 20 days from the date
on which notice of such decrease is filed by the Company with the transfer agent
for the Common Stock, and such decrease shall be irrevocable during such period.
The Company shall notify each holder of a Warrant at least 15 days prior to the
date on which the reduced Exercise Price takes effect.
(iv) When Adjustment May be Deferred, Etc. No adjustment in the
-------------------------------------
Exercise Price need be made under this Section 9(c) unless cumulative
adjustments equal at least $.125. Any adjustments which are not made shall be
carried forward and taken into account in any subsequent adjustment. No
adjustment of the Exercise Price will be made for cash distributions or cash
dividends paid out of funds legally available therefor. All calculations under
this Section 9(c) shall be made to the nearest cent or to the nearest 1/100th of
a share, as the case may be.
(v) Notice of Adjustment. Whenever the Exercise Price is adjusted, the
--------------------
Company shall calculate the adjustment to be made and shall promptly mail to
holders of the Warrants at such holder's address as set forth in the stock
register of the Company and to the transfer agent of the Company a certificate
from an officer of the Company briefly stating the facts requiring the
adjustment and the manner of computing it. The certificate shall be conclusive
evidence that the adjustment is correct, absent manifest error.
(d) No fractional shares or scrip representing fractional shares. No
fractional shares or scrip representing fractional shares of Common Stock shall
be issued upon Exercise of the Warrants. If more than one Warrant certificate
shall be surrendered for Exercise at one time by the same holder, the number of
full shares issuable upon exercise thereof shall be computed on the basis of the
aggregate number of Warrants so surrendered. Instead of any fractional share of
Common Stock that would otherwise be issuable upon Exercise of any Warrants, the
Company will pay a cash adjustment in respect of such fractional interest in an
amount equal to the same fraction of the Exercise Price.
(e) Stock Options; Placement Agent Warrants.
(i) The provisions of this Section 9 shall not apply to the issuance
of up to 250,000 shares of Common Stock in accordance with the Company's current
stock option or share bonus plan provided, however, that the equity securities
issued in such offerings (or the equity securities to be received upon
conversion of debt incurred in connection with such offerings) are not priced
less than $4.00 per share in the case of Common Stock.
-8-
(ii) The Company has agreed, as more fully described in the
Confidential Private Placement Memorandum providing for the Private Offering, to
issue to the Placement Agent certain Placement Agent Warrants which, upon
exercise, will entitle the Placement Agent or its permitted assigns to acquire
up to 240,000 shares of Common Stock, subject to increase of up to 20% upon the
same circumstances as the increase in Warrants.
(f) Terminology of "Shares." Whenever reference is made in this Section 9
to the issue or sale of shares of Common Stock, or simply shares, such term
shall mean any stock of any class of the Company other than preferred stock with
a fixed limit on dividends and a fixed amount payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company.
The shares issuable upon exercise of the Warrants shall, however, be shares of
Common Stock of the Company, without par value, as constituted at the date
hereof, except as otherwise provided in this Section 9(c).
(g) Prior Notice to Warrant Holders. In the event that at any time:
(1) The Company shall pay any dividend payable in stock upon its
Common Stock or make any distribution (other than cash dividends) to the
holders of its Common Stock; or
(2) The Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or any
other rights; or
(3) The Company shall effect any capital reorganization or any
reclassification of or change in the outstanding capital stock of the
Company (other than a change in par value, or a change from par value to
no par value, or a change from no par value to par value, or a change
resulting solely from a subdivision or combination of outstanding shares),
or any consolidation or merger, any sale, transfer or other disposition of
all or substantially all of its property, assets, business and goodwill as
an entirety, or the liquidation, dissolution or winding up of the Company;
or
(4) The Company shall declare a dividend upon its Common Stock payable
otherwise than out of earnings or earned surplus or otherwise than in
shares or any stock or obligations directly or indirectly convertible into
or exchangeable for shares;
then, in any such event, the Company shall cause at least thirty (30) days'
prior written notice to be mailed to each Warrant Holder at the address of such
holder shown on the books of the Company. The notice shall also specify the
date on which the books of the Company shall close or a record be taken for such
stock dividend, distribution or subscription rights, or the date on which such
reclassification, reorganization, consolidation, merger, sale, transfer,
disposition, liquidation, dissolution, winding up, or dividend, as the case may
be, shall take place, and the date of participation therein by the holders of
shares of Common Stock if any such date is to be fixed, and shall also set forth
such facts with respect thereto as shall be reasonably necessary to indicate the
effect of such action on the rights of the holder.
-9-
(h) Disputes. In the event that there is any dispute as to the computation
of the Exercise Price or the number of shares of Common Stock required to be
issued upon the exercise of the Warrants, the Company will retain an independent
and nationally recognized accounting firm to conduct an audit of the
computations pursuant to the terms hereof involved in such dispute, including
the financial statements or other information upon which such computations were
based. The determination of such nationally recognized accounting firm shall, in
the absence of manifest error, be binding. If there shall be a dispute as to the
selection of such nationally recognized accounting firm, such firm shall be
appointed by the American Institute of Certified Public Accountants ("AICPA") if
willing, otherwise the American Arbitration Association ("AAA"). If the Exercise
Price or number of shares of Common Stock as determined by such accounting firm
is one percent or more higher or lower than the calculations thereof computed by
the Company, the expenses of such accounting firm and, if any, of AICPA and AAA,
shall be borne completely by the Company. In all other cases, they shall be
borne by the complaining Warrant Holders, as applicable.
(i) Corporate Action. Before taking any action which would cause an
adjustment reducing the Exercise Price below the then par value of the shares of
Common Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and non-assessable
shares of Common Stock at the adjusted Exercise Price.
10. Notices.
-------
All notices, demands, elections, opinions or requests (however characterized
or described) required or authorized hereunder shall be deemed given
sufficiently if in writing and sent by registered or certified mail, return
receipt requested and postage prepaid, or by confirmed telex, telegram,
facsimile transmission or cable to, in the case of the Company:
International Veronex Resources Ltd.
00000 Xxx Xxxx Xxxxxx, Xxxxx XX0
Xxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Chief Executive Officer
and if to the Warrant Holder at the address of such holder as set forth on the
books maintained by or on behalf of the Company.
11. Binding Agreement.
-----------------
This Agreement shall be binding upon and inure to the benefit of the Company
and the Warrant Holders. Nothing in this Agreement is intended or shall be
construed to confer upon any other person any right, remedy or claim or to
impose on any other person any duty, liability or obligation.
12. Further Instruments.
-------------------
The parties shall execute and deliver any and all such other instruments and
take any and all other actions as may be reasonably necessary to carry out the
intention of this Agreement.
-10-
13. Severability.
------------
If any provision of this Agreement shall be held, declared or pronounced void,
voidable, invalid, unenforceable, or inoperative for any reason by any court of
competent jurisdiction, government authority or otherwise, such holding,
declaration or pronouncement shall not affect adversely any other provision of
this Agreement, which shall otherwise remain in full force and effect and be
enforced in accordance with its terms, and the effect of such holding,
declaration or pronouncement shall be limited to the territory or jurisdiction
in which made.
14. Waiver.
------
No delay or failure on the part of any party in the exercise of any right or
remedy arising from a breach of this Agreement shall operate as a waiver of any
subsequent right or remedy arising from a subsequent breach of this Agreement.
15. Relevant Markets.
----------------
For the purposes of this Agreement, it is assumed that the Common Stock is
quoted on the Nasdaq OTC Bulletin Board; however, in the event the Common Stock
is:
(a) listed on a national securities exchange or admitted to unlisted trading
privileges on such exchange, the price of the Common Stock to be determined
during any applicable trading period, e.g., the periods set forth in Section
6(b), above, shall be the last reported sale price of the Common Stock on such
exchange; or
(b) not quoted on the Nasdaq OTC Bulletin Board or is not so listed or
admitted to unlisted trading privileges, the price of the Common Stock to be
determined during any applicable trading period shall be the high closing bid as
reported on the "pink sheets" by the National Quotation Bureau, Inc.
16. General Provisions.
------------------
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
GOVERNED BY, THE LAWS OF THE STATE OF CALIFORNIA. This Agreement may not be
modified or amended or any term or provision hereof waived or discharged except
in writing by the party against which such amendment, modification, waiver or
discharge is sought to be enforced. The headings of this Agreement are for
convenience and reference only and shall not limit or otherwise affect the
meaning hereof.
-11-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the date first set forth above.
[CORPORATE SEAL] INTERNATIONAL VERONEX RESOURCES, LTD.
By: _____________________________________
Xxxxx X. Xxxx
Chief Executive Officer
ATTEST: ________________________
Secretary
WARRANT HOLDERS:
By: XXXX XXXX XXXXXXX CLEARING CORP.,
as Placement Agent
By: ________________________________
-12-
EXHIBIT A
The securities represented hereby have not been registered under the
Securities Act of 1933, as amended, or any state securities laws and
neither the securities nor any interest therein may be offered, sold,
transferred, pledged or otherwise disposed of except pursuant to an
effective registration statement under such Act and such laws or an
exemption from registration under such Act and such laws which, in the
opinion of counsel for the holder, which counsel and opinion are reasonably
satisfactory to counsel for this corporation, is available.
WARRANT CERTIFICATE
INTERNATIONAL VERONEX RESOURCES LTD.
Warrant No. RPA-________ No. of Warrants: __________
This certifies that, for value received and subject to the terms and
conditions set forth herein, ________________________________ or his registered
assign (the "Warrant Holder") is the registered holder of
______________________________ warrants.
1. Exercise. The warrants evidenced hereby ("Warrants"), as they may be
adjusted from time to time, may be exercised at a price of $8.00 per Warrant to
acquire one (1) share of the common stock of International Veronex Resources
Ltd. which is without par value (the "Common Stock" and the "Company,"
respectively). (The Common Stock acquirable upon exercise hereof is referred to
herein as "Warrant Stock.") If, at the time of any exercise of a Warrant, the
Shares deliverable upon exercise of such Warrant shall not be registered under
the Securities Act, the Company may require, as a condition of allowing such
exercise, that the holder or transferee of such Warrant, furnish to the Company
an opinion of counsel or recognized standing in securities law, to the effect
that such exercise may be made without registration under the Securities Act,
provided that subject to receipt of the aforementioned opinion, the exercise of
the Warrant shall at all times be within the control of such holder or
transferee, as the case may be, and, if required by the Company, by written
representation that the shares being acquired by the exercise of the Warrant are
being purchased for investment and not for distribution; acknowledging that such
shares have not been registered under the Securities Act of 1933, as amended
(the "1933 Act"); and agreeing that such shares may not be sold or transferred
unless there is an effective Registration Statement for them under the 1933 Act,
or in the opinion of counsel to the Company such sale or transfer is not in
violation of the 1933 Act. No fractional shares may be acquired upon exercise
hereof.
2. Term of Warrant. This Warrant may be exercised at any time and from time to
time in whole or in part commencing the date of issuance, and ending at 5:00
P.M. on the date five years thereafter.
3. Adjustment of Exercise Price; Grant of Additional Warrants. The number of
shares purchasable upon exercise of this Warrant is subject to adjustment if the
Company shall, prior to exercise of any Warrants, effect one or more stock
splits, stock dividends or other increases or reductions in the number of shares
of Common Stock outstanding in certain circumstances. No such anti-dilution
provisions shall apply in the event of a merger, acquisition or consolidation
should any of these events occur prior to the exercise of the Warrants;
provided, however, that the
-13-
price negotiated for the sale of any shares of Common Stock issuable upon such
event is not less than the exercise price of the Common Stock then acquirable
under the terms and conditions of the Warrant Agreement governing the issuance
of these Warrants.
Further, if the Company generates less than $24,000,000 in gross revenues
during the period that commenced September 11, 1997, and terminates November 30,
1998, then the exercise price of each Warrant will be reduced automatically and
permanently to $2.00, subject to further adjustment for stock splits and
recapitalizations. In addition, the Company has agreed to grant, on a pro rata
basis, to the Registered Holder hereof (as of December 1, 1998) additional
warrants (on terms identical to this Warrant) in accordance with the schedule
set forth below.
Additional Warrants Gross Revenues of the Company
------------------- -----------------------------
(Per Warrant Sold in
the Private Offering)
0 in excess of $24,000,000
.5 $20,000,000 C $24,000,000
1.0 $16,000,000 C $19,999,999
1.5 $12,000,000 C $15,999,999
2.0 $8,000,000 C $11,999,999
2.5 $4,000,000 C $ 7,999,999
3.0 $0 C $ 3,999,000
4. Reservation of Common Stock. The Company agrees that the number of shares
of Common Stock sufficient to provide for the exercise of the Warrants upon the
basis set forth herein will at all times during the term of this Warrant be
reserved for the exercise hereof.
5. Manner of Exercise. Exercise, or redemption, may be made of all or any part
of the Warrants by surrendering this certificate, with the purchase form to be
provided by the Company, duly executed by the Warrant Holder or by the Warrant
Holder's duly authorized attorney, plus, in the case of exercise, payment of the
exercise price therefor in cash at the office of the Company or its designated
assign.
6. Issuance of Common Stock upon Exercise. The Company, at its own expense,
shall cause to be issued, within three (3) business days after exercise of this
Warrant, a certificate or certificates in the name requested by the Warrant
Holder of the number of shares of Common Stock to which the Warrant Holder is
entitled upon such exercise. All shares of Common Stock or other securities
delivered upon the exercise of this Warrant shall be validly issued, fully paid
and non-assessable.
Irrespective of the date of issuance and delivery of any shares of Common
Stock upon the exercise of this Warrant, each person in whose name any such
certificate is to be issued will for all purposes be deemed to have become the
holder of record of the Common Stock acquired on the date on which a duly
executed notice of exercise of this Warrant and payment for the number of shares
exercised are received by the Company.
7. Registration Rights. The Warrant Shares are the subject of certain
incidental registration rights by virtue of an agreement to be entered into
between the Company and the investors (the "Registration Rights Agreements").
The Registration Rights Agreement provide for regis-
-14-
tration of the Warrant Shares (the "Registrable Securities") during the period
in which the securities remain subject to the registration requirements set
forth under the Securities Act prior to sale, in the event that the Company
proposes to register any other shares of Common Stock under the Securities Act.
8. No Right as Shareholder. The Warrant Holder is not, by virtue of his
ownership of this Warrant, entitled to any rights whatsoever as a shareholder of
the Company.
9. Assignment. This Warrant may not be assigned without providing the Company
an opinion satisfactory to its counsel that an exemption from registration for
the transfer exists.
10. State Legends.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THE CONFIDENTIAL PRIVATE OFFERING
MEMORANDUM GOVERNING THE ISSUANCE OF THESE SECURITIES. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
11. Warrant Agreement. The actual terms and conditions of this Warrant are
contained in a Warrant Agreement entered into by and between the Company and the
Warrant holder, the terms and conditions of which are incorporated herein by
this reference as if fully set forth herein and made a part hereof. To the
extent of any conflict herewith, the terms and conditions of the Warrant
Agreement shall apply.
///
///
///
///
///
///
-15-
IN WITNESS WHEREOF, the Company has caused this Warrant certificate to be
signed on its behalf by its President, his signature to be attested to by its
Secretary, and its corporate seal to be hereunto affixed this 7th day of
November, 1997.
[SEAL] INTERNATIONAL VERONEX RESOURCES LTD.
on behalf of the Company
and as Warrant Agent
By: ________________________________
Xxxxx X. Xxxx
Chief Executive Officer
Attest: _______________________________
Name: __________________________
Title: _________________________
-16-
FORM OF SUBSCRIPTION AGREEMENT
(To be signed and delivered
upon exercise of Warrant)
INTERNATIONAL VERONEX RESOURCES LTD.
00000 Xxx Xxxx Xxxxxx
Xxxxx XX0
Xxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
The undersigned, the holder of the within Warrant, hereby irrevocably elects
to exercise the purchase right represented by such Warrant for, and to purchase
thereunder, __________ shares of common stock, no par value per share (the
"Stock"), of INTERNATIONAL VERONEX RESOURCES LTD. (the "Company") and herewith
makes payment of ______________ Dollars (US$__________) therefor and requests
that the certificates for such shares be issued in the name of, and delivered
to,
_______________________________________________________________________________
whose address is ______________________________________________________________
_______________________________________________________________________________
If the exercise of this Warrant is not covered by a registration statement
effective under the Securities Act of 1933, as amended (the "Securities Act"),
the undersigned represents that
(i) the undersigned is acquiring such Stock for investment for its
own account, not as nominee or agent, and not with a view to the distribution
thereof and the undersigned has not signed or otherwise arranged for the
selling, granting any participation in, or otherwise distributing the same,
(ii) the undersigned has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of the
undersigned's investment in the Stock,
(iii) the undersigned has received all of the information the
undersigned has requested from the Company and considers necessary or
appropriate for deciding whether to purchase the shares of Stock,
(iv) the undersigned has the ability to bear the economic risks of
its prospective investment,
(v) the undersigned is able, without materially impairing its
financial condition, to hold the shares of Stock for an indefinite period of
time and to suffer complete loss on its investment,
-1-
(vi) the undersigned understands and agrees that (A) it may be
unable to readily liquidate its investment in the shares of Stock and that the
shares must be held indefinitely unless a subsequent disposition thereof is
registered or qualified under the Securities Act and applicable state securities
or Blue Sky laws or is exempt from such registration or qualification, and that
the Company is not required to register the same or to take any action or make
such an exemption available except to the extent provided in the within Warrant;
and (B) the exemption from registration under the Securities Act afforded by
Rule 144 promulgated by the Securities and Exchange Commission ("Rule 144")
depends upon the satisfaction of various conditions by the undersigned and the
Company and that, if applicable, Rule 144 affords the basis for sales under
certain circumstances in limited amounts, and that if such exemption is utilized
by the undersigned, such conditions must be fully complied with by the
undersigned and the Company, as required by Rule 144,
(vii) the undersigned either (A) is familiar with the definition of
and the undersigned is an "accredited investor" within the meaning of such term
under Rule 501 of Regulation D promulgated under the Securities Act, or (B) is
providing representations and warranties reasonably satisfactory to the Company
and its counsel, to the effect that the sale and issuance of Stock upon exercise
of such Warrant may be made without registration under the Securities Act or any
applicable state securities and Blue Sky laws, and
(viii) the address set forth below is the true and correct address for
the undersigned.
DATED: ____________________
___________________________
___________________________
___________________________
(Address)
-2-
