EXHIBIT 10.11
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 9th day of January,
2004, by and between VisiJet, Inc., a Delaware corporation (the "Company"), and
SBI Brightline II, LLC, a California limited liability company (the
"Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Company and the Purchaser hereby agree as follows:
SECTION 1. PURCHASE AND SALE. Subject to the terms and conditions of
this Agreement, the Company shall issue and sell to the Purchaser, and the
Purchaser shall purchase from the Company, 1,125,000 shares of the Company's
common stock (the "Shares"), par value $.001 per share (the "Common Stock"), and
three warrants, to purchase an aggregate of 900,000 shares of Common Stock, in
the form of Exhibits A-1, A-2 and A-3 hereto (the "Warrants", and, together with
the Shares, the "Securities"). The Company has authorized and has reserved and
covenants to continue to reserve, free of preemptive rights and other similar
contractual rights of stockholders, a sufficient number of its authorized but
unissued shares of its Common Stock to cover the Shares which shall be issued
pursuant to the terms of this Agreement and upon exercise of the Warrants.
SECTION 2. PURCHASE PRICE AND TRANCHES. The purchase price for the
Securities (the "Purchase Price") shall be an aggregate of $2,250,000. The
Securities shall be issued and purchased in three tranches (the "Tranches"), as
follows:
(i) The First Tranche shall be 375,000 shares at $1.50 per
share, plus 300,000 Warrants, with an exercise price of $1.50 per share, in the
form of Exhibit A-1 hereto (the "First Tranche Securities");
(ii) The Second Tranche shall be 375,000 shares at $2.00 per
share, plus 300,000 Warrants, with an exercise price of $2.00 per share, in the
form of Exhibit A-2 hereto (the "Second Tranche Securities"); and
(iii) The Third Tranche shall be 375,000 shares at $2.50 per
share, plus 300,000 Warrants, with an exercise price of $2.50 per share, in the
form of Exhibit A-3 hereto (the "Third Tranche Securities")..
SECTION 3. CLOSING OF THE PURCHASE OF THE SECURITIES; ESCROW.
3.1 Tranche CLOSING DATES.
(a) Subject to the satisfaction or waiver of the conditions precedent
set forth in Sections 3.2 and 3.3, the closing of the purchase of the First
Tranche Securities by the Purchaser pursuant to this Agreement (the "First
Tranche Closing") shall occur at 10:00 a.m. on the second business day following
the date (the "Effective Date") on which the Registration Statement referred to
in Section 7 of this Agreement is declared effective under the Securities Act of
1933, as amended (the "Securities Act"), by the Commission, unless the Company
and the Purchaser have mutually agreed on a different time or date (the time and
date of such Closing is referred to herein as the "First Tranche Closing Date").
(b) Subject to the satisfaction or waiver of the conditions precedent
set forth in Sections 3.2 and 3.3, the closing of the purchase of the Second
Tranche Securities by the Purchaser pursuant to this Agreement (the "Second
Tranche Closing") shall occur at 10:00 a.m. on the tenth business day following
the First Tranche Closing Date, unless the Company and the Purchaser have
mutually agreed on a different time or date with respect to the Closing (the
time and date of the Closing is referred to herein as the "Second Tranche
Closing Date").
(c) Subject to the satisfaction or waiver of the conditions precedent
set forth in Sections 3.2 and 3.3, the closing of the purchase of the Third
Tranche Securities by the Purchaser pursuant to this Agreement (the "Third
Tranche Closing") shall occur at 10:00 a.m. on the tenth business day following
the Second Tranche Closing Date, unless the Company and the Purchaser have
mutually agreed on a different time or date (the time and date of such Closing
is referred to herein as the "Third Tranche Closing Date").
(d) The First Tranche Closing Date, the Second Tranche Closing Date and
the Third Tranche Closing Dates shall be collectively referred to herein as the
"Closing Dates," and the First Tranche Closing, the Second Tranche Closing and
the Third Tranche Closing shall be collectively referred to herein as the
"Closings." The Company may defer any or all of the Closing Dates for up to
thirty calendar days from the date or dates specified herein, upon written
notice to Purchase delivered at least three business days before the Closing
Date to be so deferred. Each of the Warrants, when issued, will reflect an
Expiration Date that is the fifth anniversary of the First Closing Date. Unless
otherwise agreed by the Company and the Purchaser, the Closings shall occur at
the offices of Xxxxxx & Xxxxxx LLP, Newport Beach, California.
3.2 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligation of
the Purchaser to purchase the Securities at each Closing shall be subject to the
satisfaction of the following conditions, or the waiver of such conditions by
the Purchaser, at or prior to the relevant Closing Date:
(a) the representations and warranties of the Company set
forth in Section 4 of this Agreement shall be true and correct with the same
force and effect as though expressly made on and as of such Closing Date, except
for representations or warranties made as of a particular date, which
representations and warranties shall be true and correct as of such date;
(b) the Company shall have complied with all the agreements
hereunder and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date;
(c) the Company shall have delivered to the Purchaser a
certificate executed by the Chairman of the Board or President and the chief
financial or accounting officer of the Company, dated as of such Closing Date,
to the effect that the conditions in clauses 3.2(a), 3.2(b), and 3.2(d) have
been satisfied;
(d) the Registration Statement covering the Securities shall
have been declared effective and shall not have been withdrawn, no stop order
suspending the effectiveness of the Registration Statement shall be in effect,
and no proceedings for the suspension of the effectiveness of the Registration
Statement shall have been instituted or threatened by the Securities and
Exchange Commission (the "Commission"); and
(e) At the First Closing, Xxxxxx & Zepfel LLP, counsel to the
Company, shall have delivered its legal opinion to the Purchaser in form and
substance reasonably satisfactory to the Purchaser.
3.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation
of the Company to issue the Securities at each Closing shall be subject to the
satisfaction of the following conditions, or the waiver of such conditions by
the Company, at or prior to the relevant Closing Date:
(a) the representations and warranties of the Purchaser set
forth in Section 5 of this Agreement shall be true and correct with the same
force and effect as though expressly made on such Closing Date, except for
representations or warranties made as of a particular date, which
representations and warranties shall be true and correct as of such date;
(b) the Purchaser shall have complied with all the agreements
hereunder and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date; and
(c) the Purchaser shall have delivered to the Company a
certificate executed by a duly authorized officer of the Purchaser, dated as of
such Closing Date, to the effect that the conditions in clauses 3.3(a) and
3.3(b) have been satisfied.
3.4 ESCROW AGREEMENT. Upon execution of this Agreement,
Purchaser and the Company shall execute and deliver an Escrow Agreement in the
form of Exhibit B hereto (the "Escrow Agreement") and Purchaser shall deposit
$50,000 into escrow, as specified in the Escrow Agreement.
3.5 THE CLOSINGS. At each Closing, (i) each of the Company and
the Purchaser shall deliver to the other, as applicable, any documents required
to be delivered by Sections 3.2 or 3.3 which have not been delivered prior to
such Closing, (ii) the Purchaser shall pay to the Company, by wire transfer of
immediately available funds to an account designated in writing by the Company
at or prior to the Closing, the Purchase Price (less any amount theretofore
delivered under the Escrow Agreement, but without any other deduction) for the
Securities to be purchased at such Closing, and (iii) the Company shall deliver
to the Purchaser (A) a stock certificate or certificates representing the Shares
to be purchased at such Closing, or shall cause such Shares to be electronically
transferred to the Purchaser, and (B) a Warrant certificates, in the respective
forms of Exhibits A-1 (at the First Tranche Closing), A-2 (at the Second Tranche
Closing) and A-3 (at the Third Tranche Closing), representing the Warrants.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Purchaser as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and the Company is qualified to do business
as a foreign corporation in each jurisdiction in which qualification is
required, except where the failure to so qualify would not individually or in
the aggregate have a material adverse effect on the financial condition, results
of operations, properties or business of the Company taken as a whole. The
Company has all requisite power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits of and
from, and declarations and filings with, all federal, state, local, and other
governmental authorities and all courts and other tribunals, to own, lease,
license, and use its properties and assets and to carry on the businesses in
which it is now engaged and the businesses in which it contemplates engaging.
4.2 SUBSIDIARIES. As of the date of this Agreement the Company
does not have any subsidiaries or hold any equity or equity derivative interest
in any other enterprise, including, without limitation, any corporation,
partnership, limited partnership, limited liability partnership, limited
liability company, trust, or other entity.
4.3 AUTHORIZED AND OUTSTANDING CAPITAL STOCK. The Company has
authorized capital of 50,000,000 shares of Common Stock, of which 21,202,345
shares are issued and outstanding as of the date of this Agreement, and
10,000,000 shares of Preferred Stock, none of which are issued or outstanding as
of the date of this Agreement. The Company's stock option plans provide for the
granting of options to the Company's employees, directors, consultants and
advisors, to purchase an aggregate of up to 3,000,000 shares of Common Stock, of
which, as of the date of this Agreement, options to purchase an aggregate of
1,115,000 shares of Common Stock are outstanding. In addition, as of the date of
this Agreement, there are outstanding warrants to purchase approximately
12,086,712 shares of Common Stock. Except for shares of Common Stock, options
and warrants described in this Section 4.3, there are no authorized or
outstanding options, warrants, convertible or exchangeable securities,
preemptive rights, rights of first refusal or other rights to purchase any
capital stock of the Company or any equity or debt securities convertible into
or exchangeable or exercisable for capital stock of the Company.
4.4 ISSUANCE, SALE AND DELIVERY OF THE SECURITIES.
(a) The Shares have been duly authorized and, when issued and delivered
against payment therefor in the manner set forth in this Agreement, will be duly
validly issued, fully paid and nonassessable. Upon the issuance thereof, the
Shares shall be free and clear of any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership. The Shares
are not subject to any options, warrants, convertible securities or other
rights, agreements, arrangements or commitments of any character relating to
interests therein. There are no voting trusts, member agreements, proxies, or
other agreements or understandings in effect with respect to the voting or
transfer of any of the Shares. No further approval or authority of the
stockholders or the Board of Directors of the Company will be required for the
issuance and sale of the Shares.
(b) The Warrants are legal, valid, and binding obligations of the
Company, each enforceable against the Company in accordance with its respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification agreements
of the Company in Section 7.3 hereof may be legally unenforceable. The shares of
Common Stock issuable upon the exercise of the Warrants (the "Warrant Shares")
have been duly authorized and, when issued and delivered against payment
therefor in the manner set forth in the respective Warrant pursuant to which
such Warrant Shares are to be issued, will be duly validly issued, fully paid
and nonassessable. Upon the issuance thereof, the Warrant Shares shall be free
and clear of any security interest, pledge, mortgage, lien (including, without
limitation, environmental and tax liens), charge, encumbrance, adverse claim,
preferential arrangement or restriction of any kind, including, without
limitation, any restriction on the use, voting, transfer, receipt of income or
other exercise of any attributes of ownership. The Warrant Shares shall not,
upon the issuance thereof, be subject to any options, warrants, convertible
securities or other rights, agreements, arrangements or commitments of any
character relating to interests therein. Upon the issuance thereof, there shall
be no voting trusts, member agreements, proxies, or other agreements or
understandings in effect with respect to the voting or transfer of any of the
Warrant Shares. No further approval or authority of the stockholders or the
Board of Directors of the Company will be required for the issuance and sale of
the Warrants or the Warrant Shares.
4.5 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS.
The Company has full legal right, corporate power and authority to enter into
this Agreement, the Escrow Agreement, and the Warrants (together, the
"Transaction Documents") and to perform the transactions contemplated hereby.
Each of the Transaction Documents has been duly authorized, executed and
delivered by the Company. The Company has taken all requisite corporate action
required to approve the Transaction Documents and the execution, delivery, and
performance thereof by the Company. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation of the
transactions herein contemplated will not violate any provision of the
organizational documents of the Company and will not result in the creation of
any lien, charge, security interest or encumbrance upon any assets or property
of the Company pursuant to the terms or provisions of, or will not conflict
with, result in the breach or violation of, or constitute, either by itself or
upon notice or the passage of time or both, a default under any agreement,
mortgage, deed of trust, lease, franchise, license, indenture, permit or other
instrument to which the Company is a party or by which the Company or any of its
assets or properties may be bound or affected, or any statute or any
authorization, judgment, decree, order, rule or regulation of any court or any
regulatory body, administrative agency or other governmental body applicable to
the Company or any of its properties. No consent, approval, authorization or
other order of any court, regulatory body, administrative agency or other
governmental body is required for the execution, delivery and performance of
this Agreement or the consummation by the Company of the transactions
contemplated hereby, except for compliance with the Blue Sky laws and federal
securities laws applicable to the offering of the Shares. Assuming the valid
execution by the Purchaser of such of the Transaction Documents as to which it
is a party, each of the Transaction Documents will constitute the legal, valid
and binding obligation of the Company, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Company in
Section 7.3 and choice of law provisions hereof may be legally unenforceable.
4.6 NO ACTIONS. There are no legal or governmental actions,
suits or proceedings pending or, to the Company's knowledge, threatened, to
which the Company is or may be a party which seeks to prevent or restrain the
transactions contemplated by this Agreement or to recover damages as a result of
the consummation of such transactions.
4.7 INVESTMENT COMPANY. The Company is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for an investment company, within the meaning of the Investment Company Act of
1940, as amended.
4.8 BROKERS. There is no broker, finder or other party that is
entitled to receive from the Company any brokerage or finder's fee or other fee
or commission as a result of any transactions contemplated by this Agreement.
4.9 BOOKS AND RECORDS; FINANCIAL STATEMENTS.
(a) The books, records and accounts of the Company accurately
and fairly reflect, in reasonable detail, the transactions in, and dispositions
of, the assets of, and the results of operations of, the Company, all to the
extent required by generally accepted accounting principles. The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(b) The financial statements of the Company included in the
documents (the "SEC Documents") filed by the Company with the Securities and
Exchange Commission (the "SEC") are true, correct, and complete in all material
respects and are in accordance with the rules and regulations of the SEC and in
accordance with generally accepted accounting principles in the United States
consistently applied. Each such balance sheet presents fairly the financial
condition, assets, liabilities, and stockholders' equity of the Company as of
its respective date; each such statement of income and statement of
stockholders' equity presents fairly the results of operations of the Company
for the period indicated; and each such statement of cash flows presents fairly
the information purported to be shown therein. The financial statements referred
to herein are in accordance with the books and records of the Company. Since the
last financial statements of Company included in the SEC Documents:
(i) There has at no time been a material adverse
change in the financial condition, results of operations,
businesses, properties, assets, liabilities, or future
prospects of the Company.
(ii) The Company has not authorized, declared, paid,
or effected any dividend or liquidating or other distribution
in respect of its capital stock or any direct or indirect
redemption, purchase, or other acquisition of any stock of the
Company.
(iii) The operations and businesses of the Company
have been conducted in all respects only in the ordinary
course, except as discussed in the SEC Documents.
There is no fact known to the Company which materially adversely affects or in
the future (as far as the Company can reasonably foresee) may materially
adversely affect the financial condition, results of operations, businesses,
properties, assets, liabilities, or future prospects of the Company; provided,
however, that the Company expresses no opinion as to political or economic
matters of general applicability. The Company has made known, or caused to be
made known, to the accountants or auditors who have prepared, reviewed, or
audited the aforementioned consolidated financial statements all material facts
and circumstances which could affect the preparation, presentation, accuracy, or
completeness thereof.
4.10 FOREIGN CORRUPT PRACTICES ACT. Neither the Company, nor
any director, officer, agent, employee, or other person associated with, or
acting on behalf of, the Company, nor any stockholder of the Company has,
directly or indirectly: used any corporate funds for unlawful contributions,
gifts, entertainment, or other unlawful expenses relating to political activity;
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment.
4.11 TRADING MATTERS. At the date hereof and at the date of
each Closing:
(a) the Common Stock is and shall be traded and
quoted in the over-the-counter market;
(b) the Company has and shall have performed or
satisfied all of its undertakings to, and of its obligations
and requirements with, the SEC;
(c) the Company has not, and shall not have taken any
action that would preclude, or otherwise jeopardize, the
inclusion of the Common Stock for quotation on the OTC
Bulletin Board.
4.12 FEDERAL SECURITIES MATTERS. The Common Stock has been
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and the Company is subject to the periodic reporting
requirements of Section 13 of the Exchange Act. Each of the documents (the "SEC
Documents") filed by the Company with the SEC was when filed, and, except to the
extent superseded or corrected by more recently filed SEC Documents, is at the
date hereof, true, complete, and correct in all material respects and complies
in all respects with the rules and regulations of the SEC. No SEC Document
contained when filed, or currently contains (except as superseded by more
recently filed SEC Documents), an untrue statement of material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.
4.12 COMPLIANCE WITH LAWS. The Company is in material
compliance with and is not in violation of applicable federal, state, local or
foreign statutes, laws and regulations (including without limitation, any
applicable building, zoning or other law, ordinance or regulation) affecting its
properties or the operation of its business. The Company is not subject to any
order, decree, judgment or other sanction of any court, administrative agency or
other tribunal.
4.13 REPRESENTATIONS AND WARRANTIES. No representation or
warranty by the Company in this Agreement contains or, and at the date of any
Closing will contain, an untrue statement of material fact or omits or, at such
Closing Date, will omit to state a material fact required to be stated therein
or necessary to make the statements made not misleading. Except for the
representations and warranties contained in this Section 4, the Company makes no
representation or warranty to the Purchaser, express or implied, in connection
with the transactions contemplated by this Agreement.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser represents and warrants to the Company as follows:
5.1 ORGANIZATION AND QUALIFICATION. The Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization.
5.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS.
The Purchaser has full legal right, power and authority to enter into this
Agreement and to perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Purchaser. The
execution, delivery and performance of this Agreement by the Purchaser and the
consummation of the transactions herein contemplated will not violate any
provision of the organizational documents of the Purchaser and will not result
in the creation of any lien, charge, security interest or encumbrance upon any
assets or property of the Purchaser pursuant to the terms or provisions of, or
will not conflict with, result in the breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a default under
any agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the Purchaser is a party or by which the
Purchaser or any of its assets or properties may be bound or affected, or any
statute or any authorization, judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other governmental body
applicable to the Purchaser or any of its properties. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution, delivery and
performance of this Agreement or the consummation by the Purchaser of the
transactions contemplated hereby. Assuming the valid execution hereof by the
Company, this Agreement will constitute the legal, valid and binding obligation
of the Purchaser, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification and choice of law provisions
of the Purchaser in Section 7.3 hereof may be legally unenforceable.
5.3 NO ACTIONS. There are no legal or governmental actions,
suits or proceedings pending or, to the Purchaser's knowledge, threatened to
which the Purchaser is or may be a party which seeks to prevent or restrain the
transactions contemplated by this Agreement or to recover damages as a result of
the consummation of such transactions. To the knowledge of the Purchaser, the
Purchaser has not been and is not currently the subject of an investigation or
inquiry by the Securities and Exchange Commission, the NASD, or any state
securities commission.
5.4 NATURE OF PURCHASER. The Purchaser is knowledgeable,
sophisticated and experienced in making, and is qualified to make, decisions
with respect to investments in shares representing an investment decision like
that involved in the purchase of the Securities, including investments in
securities issued by the Company. The Purchaser is an "accredited investor"
within the meaning of Rule 501(a) of Regulation D promulgated under the
Securities Act. The Purchaser is not a "dealer" within the meaning of the
Securities Act or a "broker" or "dealer" within the meaning of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Purchaser is able to
bear the economic risk of loss of the Purchaser's entire investment in the
Securities.
5.5 ACCESS TO INFORMATION. The Purchaser has requested,
received, reviewed and considered all information it deems relevant in making an
informed decision to purchase the Securities. The Purchaser understands that the
Company is still in the development stage and does not have operating revenues.
5.6 INVESTMENT INTENT. The Purchaser is acquiring the
Securities in the ordinary course of its business and for its own account for
investment only and with no present intention of distributing any of such
Securities or entering into any arrangement or understanding with any other
person regarding the distribution of such Securities (it being understood that
the foregoing does not limit the Purchaser's right to sell Shares pursuant to
the Registration Statement) other than in accordance with the Securities Act.
Neither Purchaser nor any entity under its control has, prior to the execution
of this Agreement, and will not, for a period of eighteen (18) months following
the execution of this Agreement, carry a net short position in the Common Stock,
participate in any short selling activities, recommendations, or collusion,
directly or indirectly, as such activities relate to the Common Stock. A net
short position will include any derivative instruments such as a put option,
collar, swap or any other instrument which would result in a net short position.
5.7 SOLE REPRESENTATIONS AND WARRANTIES. Except for the
representations and warranties contained in this Section 5, the Purchaser makes
no representation or warranty to the Company, express or implied, in connection
with the transactions contemplated by this Agreement.
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in the certificates delivered pursuant hereto shall
survive the execution of this Agreement, the delivery to the Purchaser of the
Securities being purchased and the payment therefor.
SECTION 7. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES
ACT.
7.1 REGISTRATION PROCEDURES AND EXPENSES.
(a) As soon as practicable, but in any event no later than
forty- five (45) days following the date of this Agreement, the Company shall
prepare and file with the Commission a registration statement on Form SB-2 or
other applicable form as determined by the Company (the "Registration
Statement") for the purpose of registering the sale of the Shares and the
Warrant Shares by the Purchaser from time to time on the facilities of any
securities exchange or trading system on which the Common Stock is then traded
or in privately-negotiated transactions, which Registration Statement shall
contain all material non-public information disclosed to the Purchaser by the
Company in connection with the issuance and sale of the Securities. For purposes
of this Section 7, the term "Shares" shall include the Shares, the Warrant
Shares, and any other securities of the Company issued in exchange for, or in
respect of, the Shares or the Warrant Shares, as a dividend on the Shares or the
Warrant Shares or in connection with a stock split or other reorganization
transaction affecting the Shares or the Warrant Shares. The Company shall use
its commercially reasonable efforts to cause the Registration Statement to
become effective as soon as practicable.
(b) The Company shall prepare and file with the Commission
such amendments and supplements to the Registration Statement and the prospectus
forming a part thereof as may be necessary in the reasonable discretion of the
Purchaser or the Company to keep the Registration Statement effective until the
earliest date, after the date on which all of the Shares have been purchased
pursuant to this Agreement or the obligation of the Purchaser to purchase the
Shares pursuant to this Agreement has been terminated, on which (i) all the
Shares have been disposed of pursuant to the Registration Statement, (ii) all of
the Shares then held by the Purchaser may be sold under the provisions of Rule
144 without limitation as to volume, whether pursuant to Rule 144(k) or
otherwise, or (iii) the Company has determined that all Shares then held by the
Purchaser may be sold without restriction under the Securities Act and has
removed any stop transfer instructions relating to such Shares and offered to
cause to be removed any restrictive legends on the certificates, if any,
representing such Shares (the period between the Effective Date and the earliest
of such dates is referred to herein as the "Registration Period"). At any time
after the end of the Registration Period, the Company may withdraw the
Registration Statement and its obligations under this Section 7 (other than its
obligations under Section 7.3) shall automatically terminate.
(c) The Purchaser agrees to comply with all federal and state
securities laws and the rules and regulations promulgated thereunder in
connection with any sale by it of the Shares, whether or not such sale is
pursuant to the Registration Statement. In connection with the sale of any
Shares pursuant to the Registration Statement, but without limiting the
generality of the foregoing sentence, the Purchaser shall (i) comply with the
provisions of Regulation M promulgated under the Exchange Act, and (ii) deliver
to each purchaser of Shares the prospectus forming a part of the Registration
Statement and all relevant supplements thereto which have been provided by the
Company to the Purchaser on or prior to the applicable delivery date.
(d) The Company shall not be obligated to prepare and file a
post- effective amendment or supplement to the Registration Statement or the
prospectus constituting a part thereof during the continuance of a Blackout
Event. A "Blackout Event" means any of the following: (a) the possession by the
Company of material information that is not ripe for disclosure in a
registration statement or prospectus, as determined in good faith by the Chief
Executive Officer or the Board of Directors of the Company or that disclosure of
such information in the Registration Statement or the prospectus constituting a
part thereof would be detrimental to the business and affairs of the Company; or
(b) any material engagement or activity by the Company which would, in the good
faith determination of the Chief Executive Officer or the Board of Directors of
the Company, be adversely affected by disclosure in a registration statement or
prospectus at such time.
(e) At least five (5) days prior to the filing with the SEC of
the Registration Statement (or any amendment thereto) or the prospectus forming
a part thereof (or any supplement thereto), the Company shall provide draft
copies thereof to the Purchaser and shall consider incorporating into such
documents such comments as the Purchaser (and its counsel) may propose to be
incorporated therein. Notwithstanding the foregoing, no prospectus supplement,
the form of which has previously been provided to the Purchaser, need be
delivered in draft form to the Purchaser.
(f) The Company shall promptly notify the Purchaser upon the
occurrence of any of the following events in respect of the Registration
Statement or the prospectus forming a part thereof: (i) receipt of any request
for additional information from the Commission or any other federal or state
governmental authority during the Registration Period, the response to which
would require any amendments or supplements to the Registration Statement or
related prospectus; (ii) the issuance by the Commission or any other federal or
state governmental authority of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose; or (iii) receipt of any notification with respect to the suspension of
the qualification or exemption from qualification of any of the Shares for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose.
(g) The Company shall furnish to the Purchaser with respect to
the Shares registered under the Registration Statement (and to each underwriter,
if any, of such Shares) such number of copies of prospectuses and such other
documents as the Purchaser may reasonably request, in order to facilitate the
public sale or other disposition of all or any of the Shares by the Purchaser
pursuant to the Registration Statement.
(h) The Company shall file or cause to be filed such documents
as are required to be filed by the Company for normal blue sky clearance in
states specified in writing by the Purchaser; provided, however, that the
Company shall not be required to qualify to do business or consent to service of
process in any jurisdiction in which it is not now so qualified or has not so
consented.
(i) With a view to making available to the Purchaser the
benefits of Rule 144, the Company agrees, throughout the Registration Period and
so long as the Purchaser owns Shares purchased pursuant to this Agreement, to:
(A) comply with the provisions of paragraph (c) (1) of
Rule 144; and
(B) file with the Commission in a timely manner all
reports and other documents required to be filed by the Company pursuant to
Section 13 or 15(d) under the Exchange Act; and, if at any time it is not
required to file such reports but in the past had been required to or did file
such reports, it will, upon the request of the Purchaser, make available other
information as required by, and so long as necessary to permit sales of its
Shares pursuant to, Rule 144.
(j) The Company shall bear all expenses incurred by it in
connection with the procedures in paragraphs (a) through (i) of this Section 7.1
and the registration of the Shares pursuant to the Registration Statement. The
Company shall not be responsible for any expenses incurred by the Purchaser in
connection with its sale of the Shares or its participation in the procedures in
paragraphs (a) through (i) of this Section 7.1 including, without limitation,
any fees and expenses of counsel or other advisers to the Purchaser and any
underwriting discounts, brokerage fees and commissions incurred by the
Purchaser.
7.2 COVENANTS OF THE PURCHASER.
(a) The Purchaser acknowledges and understands that the Shares
are "restricted securities" as defined in Rule 144. The Purchaser hereby agrees
not to offer or sell (as such terms are defined in the Securities Act and the
rules and regulations promulgated thereunder) any Shares unless such offer or
sale is made (a) pursuant to an effective registration of the sale or the resale
of the Shares under the Securities Act, or (b) pursuant to an available
exemption from the registration requirements of the Securities Act. The
Purchaser agrees that it will not engage in hedging transactions with regard to
the Shares other than in compliance with the Securities Act. A proposed transfer
shall be deemed to comply with this Section 7.2(a) if the Purchaser delivers to
the Company a legal opinion in form and substance satisfactory to the Purchaser
from counsel satisfactory to the Purchaser to the effect that such transfer
complies with this Section 7.2(a).
(b) If at any time or from time to time after the Effective
Date, the Company notifies the Purchaser in writing that the Registration
Statement or the prospectus forming a part thereof (taking into account any
prior amendments or supplements thereto) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading, the Purchaser shall not offer or sell any Shares or engage in any
other transaction involving or relating to the Shares (other than purchases of
Shares pursuant to this Agreement), from the time of the giving of notice with
respect to such untrue statement or omission until the Purchaser receives
written notice from the Company that such untrue statement or omission no longer
exists or has been corrected or disclosed in an effective post-effective
amendment to the Registration Statement or a valid prospectus supplement to the
prospectus forming a part thereof. Notwithstanding the foregoing, such period
during which the Purchaser is restricted from selling Shares pursuant to the
Registration Statement shall not continue for more than 30 days and not more
frequently than twice annually.
(c) In connection with the sale of any Shares pursuant to the
Registration Statement, the Purchaser shall deliver to the purchaser thereof the
prospectus forming a part of the Registration Statement and all relevant
supplements thereto which have been provided by the Company to the Purchaser on
or prior to the applicable delivery date, all in accordance with the
requirements of the Securities Act and the rules and regulations promulgated
thereunder and any applicable blue sky laws.
(d) The Company may refuse to register (or permit its transfer
agent to register) any transfer of any Shares not made in accordance with this
Section 7.2 and for such purpose may place stop order instructions with its
transfer agent with respect to the Shares.
(e) The Purchaser will cooperate with the Company in all
respects in connection with the performance by the Company of its obligations
under Section 7.1, including timely supplying all information reasonably
requested by the Company (which shall include all information regarding the
Purchaser, and any person who beneficially owns Shares held by the Purchaser
within the meaning of Rule 13d-3 promulgated under the Exchange Act, and the
proposed manner of sale of the Shares required to be disclosed in the
Registration Statement) and executing and returning all documents reasonably
requested in connection with the registration and sale of the Shares. The
Purchaser hereby consents to be named as an underwriter in the Registration
Statement, if applicable, in accordance with current SEC policy and, if
necessary, to join in the request of the Company for the acceleration of the
effectiveness of the Registration Statement.
7.3 INDEMNIFICATION. For the purpose of this Section 7.3, (i)
the term "Purchaser Affiliate" shall mean any person who controls the Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and (ii) the term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in Section 7.1.
(a) The Company agrees to indemnify and hold harmless the
Purchaser, and each Purchaser Affiliate, against any losses, claims, damages,
liabilities or expenses (including reasonable fees and disbursements of
counsel), joint or several, to which such Purchaser or such Purchaser Affiliate
may become subject, under the Securities Act, the Exchange Act, or any other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Company), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, as
amended as of the Effective Date, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A,
or pursuant to Rule 434 promulgated under the Securities Act, or the prospectus,
in the form first filed with the Commission pursuant to Rule 424(b) of the
Regulations, or filed as part of the Registration Statement at the time of
effectiveness if no Rule 424(b) filing is required (the "Prospectus"), or any
amendment or supplement thereto, (ii) the omission or alleged omission to state
in the Registration Statement a material fact required to be stated therein or
necessary to make the statements in the Registration Statement or any
post-effective amendment or supplement thereto, or in the Prospectus or any
amendment or supplement thereto, not misleading, in each case in the light of
the circumstances under which the statements contained therein were made, or
(iii) any inaccuracy in the representations and warranties of the Company
contained in this Agreement, or any failure of the Company to perform its
obligations hereunder, and will reimburse the Purchaser and each such Purchaser
Affiliate for any legal and other expenses as such expenses which are reasonably
incurred by the Purchaser or such Purchaser Affiliate in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon (i) an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by the Purchaser expressly for use therein, or (ii) the failure of the
Purchaser to comply with the covenants and agreements contained in Section 7.2
hereof respecting the sale of the Shares, or (iii) the inaccuracy of any
representations made by the Purchaser herein or (iv) any statement or omission
in any Prospectus that is corrected or disclosed in any subsequent Prospectus
that was delivered to the Purchaser prior to the pertinent sale or sales by the
Purchaser.
(b) The Purchaser will indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of the Securities Act and the Exchange Act, against any losses, claims, damages,
liabilities or expenses to which the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person may become
subject, under the Securities Act, the Exchange Act, or any other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Purchaser) insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof as contemplated below) arise out of
or are based upon (i) any failure to comply with the covenants and agreements
contained in Section 7.2 hereof respecting the sale of the Shares, (ii) the
inaccuracy of any representation made by the Purchaser herein, or (iii) any (x)
untrue or alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or (y) omission or alleged omission to state in the Registration Statement, the
Prospectus or any amendment or supplement thereto a material fact required to be
stated therein or necessary to make the statements in the Registration Statement
or any amendment or supplement thereto, or in the Prospectus or any amendment or
supplement thereto, not misleading, in each case in the light of the
circumstances under which they were made; provided, that the Purchaser's
indemnification obligation under this clause (iii) shall apply to the extent,
and only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by the Purchaser
expressly for use therein, and will reimburse the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person for any legal and other expense reasonably incurred by the
Company, each of its directors, each of its officers who signed the Registration
Statement or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action.
(c) Promptly after receipt by an indemnified party under this
Section 7.3 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 7.3, promptly notify the indemnifying
party in writing thereof; provided, the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party for contribution (except as provided in paragraph (d)) other
than under the indemnity agreement contained in this Section 7.3 or to the
extent it is materially prejudiced as a result of such failure. In case any such
action is brought against any indemnified party and such indemnified party seeks
or intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7.3 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof unless
the indemnified party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of action, in which case the reasonable fees
and expenses of counsel shall be at the expense of the indemnifying party. In
the event that the indemnifying party shall not assume the defense thereof at
its expense, the indemnified party shall assume the defense thereof at the
expense of the indemnifying party.
(d) If the indemnification provided for in this Section 7.3 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a) or (b) of this Section 7.3 in respect to any losses, claims, damages,
liabilities or expenses referred to herein (subject to the limitation of
paragraph (c) of this Section 7.3), then each applicable indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Purchaser from the placement of the Common Stock
contemplated by this Agreement or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
the relative fault of the Company and the Purchaser in connection with the
statements or omissions or inaccuracies in the representations and warranties in
this Agreement that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Purchaser on the other
shall be deemed to be in the same proportion as the amount paid by the Purchaser
to the Company pursuant to this Agreement for the Shares purchased by the
Purchaser that were sold pursuant to the Registration Statement bears to the
difference (the "Difference") between the amount such Purchaser paid for the
Shares that were sold pursuant to the Registration Statement and the amount
received by such Purchaser from such sale. The relative fault of the Company on
the one hand and the Purchaser on the other shall be determined by reference to,
among other things, whether the untrue or alleged statement of a material fact
or the omission or alleged omission to state a material fact or the inaccurate
or the alleged inaccurate representation and/or warranty relates to information
supplied by the Company or by the Purchaser and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement, omission or inaccuracy. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
paragraph (c) of this Section 7.3, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in paragraph (c) of this Section
7.3 with respect to the notice of the threat or commencement of any threat or
action shall apply if a claim for contribution is to be made under this
paragraph (d); provided, however, that no additional notice shall be required
with respect to any threat or action for which notice has been given under
paragraph (c) for purposes of indemnification. The Company and each Purchaser
agree that it would not be just and equitable if contribution pursuant to this
Section 7.3 were determined solely by pro rata allocation or by any other method
of allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding the provisions of this Section
7.3, the Purchaser shall not be required to contribute any amount in excess of
the amount by which the Difference exceeds the amount of any damages that such
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
7.4 INFORMATION AVAILABLE. Until the Purchaser has sold all of
the Shares, the Company will furnish to the Purchaser, upon written request:
(a) as soon as practicable after available, one copy of (i)
its Annual Report to Stockholders (which Annual Report shall contain financial
statements audited in accordance with generally accepted accounting principles
by a firm of certified public accountants), (ii) its Annual Report on Form
10-KSB, (iii), its Quarterly Reports on Form 10-QSB, (iv) its Current Reports on
Form 8-K, and (v) a full copy of the Registration Statement, including exhibits.
SECTION 8. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as addressed as follows:
(a) if to the Company, to:
000 Xxxxxxxxxx, Xxxxx X
Xxxxxx, XX 00000
Phone: 000.000.0000
Facsimile: 949.453.9652
Attn: Xxxxxxxx X. Xxxxxxxxx
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
(b) if to the Purchaser, to:
0000 Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Phone: 949
Facsimile: 949
or to such other person at such other place as the Purchaser shall designate to
the Company in writing, with a copy to:
Reitler Xxxxx LLC
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx Xxxxx.
SECTION 9. ASSIGNMENT. Neither party hereto may assign or delegate any
of such party's rights or obligations under or in connection with this
Agreement, and any attempted assignment or delegation of such rights or
obligations shall be void. Except as expressly provided in Section 7.3 with
respect to Purchaser Affiliates, directors and controlling persons of the
Company and officers of the Company who signed the Registration Statement, no
person, including without limitation any person who purchases or otherwise
acquires or receives any Shares from the Purchaser, is an intended third party
beneficiary of this Agreement, and no party to this Agreement shall have any
obligation arising under this Agreement to any person other than the other party
hereto and, to the extent expressly provided in Section 7.3, Purchaser
Affiliates, directors and controlling persons of the Company and officers of the
Company who signed the Registration Statement.
SECTION 10. AMENDMENTS. This Agreement may not be modified or amended
except pursuant to an instrument in writing signed by the Company and the
Purchaser.
SECTION 11. HEADINGS. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
SECTION 12. SEVERABILITY. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION 13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without regard
to its conflicts of law principles.
SECTION 14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
SBI Brightline II, LLC
By: /S/ XXXXXX XXXXXXX
---------------------------
Xxxxxx Xxxxxxx
VisiJet, Inc.
By /S/ XXXXXXXX X. XXXXXXXXX
---------------------------
Xxxxxxxx X. Xxxxxxxxx
EXHIBIT A-1
THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK
ISSUABLE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), AND MAY NOT BE SOLD, OFFERED FOR
SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT
UNLESS EITHER (I) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (II) THE
SALE OF SUCH SECURITIES IS MADE PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT.
WARRANT TO PURCHASE 300,000 SHARES OF COMMON STOCK,
PAR VALUE $0.001 PER SHARE,
OF
VISIJET, INC.
THIS CERTIFIES THAT, for value received, SBI Brightline II, LLC, or its
permitted registered assigns (the "Holder"), is entitled, subject to the terms
and conditions of this Warrant, at any time before 5:00 p.m. Pacific Time on the
Expiration Date (as hereinafter defined), to purchase from VisiJet, Inc., a
Delaware corporation (the "COMPANY"), Three Hundred Thousand (300,000) shares of
common stock, par value $0.001 per share (the "Common Stock"), of the Company at
a price per share equal to the Purchase Price (as hereinafter defined). Both the
number of shares of Common Stock purchasable upon exercise of this Warrant and
the Purchase Price are subject to adjustment and change as provided herein. 1.
CERTAIN DEFINITIONS. As used in this Warrant, the following terms shall have the
following respective meanings:
"COMMON STOCK" as hereinabove defined.
"EXPIRATION DATE" shall mean ________ ________, 2009.
"FAIR MARKET VALUE" of a share of Common Stock as of a particular date
means the average of the closing prices of sales of Common Stock on the
principal United States securities exchanges on which the Common Stock may at
the time be listed, or, if there have been no sales on such exchange on any day,
the average of the highest bid and lowest asked prices on such exchange at the
end of such day, or, if on any day the Common Stock is not so listed, the
average of the representative bid and asked prices quoted by the OTC Bulletin
Board (the "OTCBB") as of 4:00 P.M., New York time, on such day, or, if on any
day such security is not quoted by the OTCBB, the average of the representative
bid and asked prices quoted on such other electronic communications network (an
"ECN") on which the Common Stock shall then be quoted as of 4:00 P.M., New York
time, on such day, or, if on any day such security is not quoted by any ECN, the
average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar or successor organization, in each such case
averaged over a period of 10 trading days consisting of the day as of which
"Fair Market Value" is being determined and the nine consecutive trading days
prior to such day; provided, that if there is no active public market, the Fair
Market Value shall be the value thereof, as agreed upon by the Company and the
Holder; PROVIDED, FURTHER, HOWEVER, that if the Company and the Holder cannot
agree on such value, such value shall be determined by an independent valuation
firm experienced in valuing businesses such as the Company and jointly selected
in good faith by the Company and the Holder. Fees and expenses of the valuation
firm shall be paid for by the Company.
"PURCHASE PRICE" means $1.50 per share.
"REGISTERED HOLDER" means any Holder in whose name this Warrant is
registered upon the books and records maintained by the Company.
"WARRANT" means this Warrant and any warrant delivered in substitution
or exchange therefor as provided herein.
2. EXERCISE OF WARRANT.
2.1 PAYMENT. Subject to compliance with the terms and
conditions of this Warrant and applicable securities laws, this Warrant may be
exercised, in whole or in part at any time or from time to time, commencing on
the date hereof and terminating on the Expiration Date, by the delivery
(including, without limitation, delivery by facsimile) of the form of Notice of
Exercise attached hereto (the "NOTICE OF EXERCISE"), duly executed by the
Holder, at the principal office of the Company, and as soon as practicable after
such date (the "EXERCISE DATE"), surrendering
(a) this Warrant at the principal office of the Company,
and
(b) payment, (i) in cash (by check) or by wire transfer,
(ii) by cancellation by the Holder of indebtedness of the Company to the Holder;
or (iii) by a combination of (i) and (ii), of an amount equal to the product
obtained by multiplying the number of shares of Common Stock being purchased
upon such exercise by the then effective Purchase Price (the "EXERCISE AMOUNT").
2.2 NET ISSUE EXERCISE. In lieu of the payment methods set
forth in Section 2.1(b) above, the Holder may elect to exchange all or some of
the Warrant for a number of shares (rounded down to the nearest whole share) of
Common Stock equal to the value of the amount of the Warrant being exchanged on
the date of exchange. If the Holder elects to exchange this Warrant as provided
in this Section 2.2, the Holder shall tender to the Company the Warrant with
written notice of the Holder's election to exchange some or all of the Warrant,
and the Company shall issue to the Holder the number of shares (rounded down to
the nearest whole share) of the Common Stock computed as of the date of
surrender of this Warrant to the Company using the following formula:
X = Y (A-B)
-------
A
Where:
X = the number of shares of Common Stock to be issued to the Holder;
Y = the number of shares of Common Stock purchasable under the portion
of the Warrant being exchanged (as adjusted to the date of such
calculation);
A = the Fair Market Value of one share of the Company's Common Stock on
the date the net issue election is made pursuant to Section 2.2;
and
B = Purchase Price in effect under this Warrant on the date the net
issue election is made pursuant to Section 2.2.
All references herein to an "exercise" of the Warrant shall include an
exchange pursuant to this Section 2.2.
2.3 STOCK CERTIFICATES; FRACTIONAL SHARES. On or before the
third (3rd) business day following the Exercise Date, the Company shall issue
and deliver to the person or persons entitled to receive the same a certificate
or certificates for the number of whole shares of Common Stock issuable upon
such exercise, rounded down to the nearest whole share. No fractional shares or
scrip representing fractional shares shall be issued upon an exercise of this
Warrant.
2.4 PARTIAL EXERCISE; DATE OF EXERCISE. In case of any partial
exercise of this Warrant, the Company shall cancel this Warrant upon surrender
hereof and shall execute and deliver a new Warrant of like tenor and date for
the balance of the shares of Common Stock purchasable hereunder. This Warrant
shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above. The person
entitled to receive the shares of Common Stock issuable upon exercise of this
Warrant shall be treated for all purposes as the holder of record of such shares
as of the close of business on the date the Holder is deemed to have exercised
this Warrant.
3. VALID ISSUANCE: TAXES. All shares of Common Stock issued upon the
exercise of this Warrant shall be validly issued, fully paid and non-assessable,
free and clear of all liens, security interests, charges and other encumbrances
or restrictions on sale and free and clear of all preemptive and similar rights,
except encumbrances or restrictions arising under federal or state securities
laws, and the Company shall pay all transfer or stamp taxes and other similar
governmental charges that may be imposed in respect of the issue or delivery
thereof. The Company shall not be required to pay any tax or other charge
imposed in connection with any transfer involved in the issuance of any
certificate for shares of Common Stock in any name other than that of the
Registered Holder of this Warrant, and in such case the Company shall not be
required to issue or deliver any stock certificate or security until such tax or
other charge has been paid, or it has been established to the Company's
reasonable satisfaction that no tax or other charge is due.
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of
shares of Common Stock issuable upon exercise of this Warrant (or any shares of
stock or other securities or property receivable or issuable upon exercise of
this Warrant) and the Purchase Price are subject to adjustment upon occurrence
of the following events:
4.1 ADJUSTMENT FOR STOCK SPLITS, STOCK SUBDIVISIONS OR
COMBINATIONS OF SHARES. The Purchase Price of this Warrant shall be
proportionally decreased and the number of shares of Common Stock issuable upon
exercise of this Warrant (or any shares of stock or other securities at the time
issuable upon exercise of this Warrant) shall be proportionally increased to
reflect any stock split or subdivision of the Common Stock. The Purchase Price
of this Warrant shall be proportionally increased and the number of shares of
Common Stock issuable upon exercise of this Warrant (or any shares of stock or
other securities at the time issuable upon exercise of this Warrant) shall be
proportionally decreased to reflect any combination of the Common Stock.
4.2 ADJUSTMENT FOR DIVIDENDS OR DISTRIBUTIONS OF STOCK OR
OTHER SECURITIES OR PROPERTY. In case the Company shall make or issue, or shall
fix a record date for the determination of eligible holders entitled to receive,
a dividend or other distribution with respect to the Common Stock (or any shares
of stock or other securities at the time issuable upon exercise of the Warrant)
payable in (a) securities of the Company or (b) assets (excluding cash dividends
paid or payable solely out of retained earnings), then, in each such case, the
Holder of this Warrant on exercise hereof at any time after the consummation,
effective date or record date of such dividend or other distribution, shall
receive, in addition to the shares of Common Stock (or such other stock or
securities) issuable on such exercise prior to such date, and without the
payment of additional consideration therefor, the securities or such other
assets of the Company to which such Holder would have been entitled upon such
date if such Holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock available
by it as aforesaid during such period giving effect to all adjustments called
for by this Section 4.
4.3 RECLASSIFICATION. If the Company, by reclassification of
securities or otherwise, shall change any of the securities as to which purchase
rights under this Warrant exist into the same or a different number of
securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities that
were subject to the purchase rights under this Warrant immediately prior to such
reclassification or other change and the Purchase Price therefore shall be
appropriately adjusted, all subject to further adjustment as provided in this
Section 4.
4.4 ADJUSTMENT FOR CAPITAL REORGANIZATION, MERGER OR
CONSOLIDATION. In case of any capital reorganization of the capital stock of the
Company (other than a combination, reclassification, exchange or subdivision of
shares otherwise provided for in this Section 4), or any merger or consolidation
of the Company with or into another corporation, or the sale of all or
substantially all the assets of the Company then, and in each such case, and as
a part of such reorganization, merger, consolidation, sale or transfer, lawful
provision shall be made so that the Holder of this Warrant shall thereafter be
entitled to receive upon exercise of this Warrant, upon payment of the Purchase
Price then in effect, the number of shares of stock or other securities or
property of the successor corporation resulting from such reorganization,
merger, consolidation, sale or transfer that a holder of the shares deliverable
upon exercise of this Warrant would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if this Warrant had been
exercised immediately before such reorganization, merger, consolidation, sale or
transfer, all subject to further adjustment as provided in this Section 4. The
foregoing provisions of this Section 4.4 shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the stock
or securities of any other corporation that are at the time receivable upon the
exercise of this Warrant. If the per-share consideration payable to the Holder
hereof for shares in connection with any such transaction is in a form other
than cash or marketable securities, then the value of such consideration shall
be determined in good faith by the Company's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction, to
the end that the provisions of this Warrant shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.
4.5 COMPANY TO PREVENT DILUTION The Company shall not by any
action, including, without limitation, amending its articles of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issuance 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 actions as may be necessary or
appropriate to protect the rights of the Holder against impairment. Without
limiting the generality of the foregoing, Company will take all such action as
may be necessary or appropriate in order that Company may upon the exercise of
this Warrant validly and legally issue fully paid and nonassessable shares of
Common Stock that are not subject to preemptive or similar rights, including
taking such action as is necessary for the Purchase Price to be not less than
the par value of the shares of Common Stock issuable upon exercise of this
Warrant.
5. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment in the
Purchase Price, or number or type of shares issuable upon exercise of this
Warrant, the Chief Financial Officer of the Company shall compute such
adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based, including a statement of the adjusted Purchase
Price. The Company shall promptly send (by facsimile and by either first class
mail, postage prepaid or overnight delivery) a copy of each such certificate to
the Holder.
6. LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory
to the Company of the ownership of and the loss, theft, destruction or
mutilation of this Warrant, and of indemnity reasonably satisfactory to it, and
(in the case of mutilation) upon surrender and cancellation of this Warrant, the
Company will execute and deliver in lieu thereof a new Warrant of like tenor as
the lost, stolen, destroyed or mutilated Warrant.
7. RESERVATION OF COMMON STOCK. The Company hereby covenants that there
shall be reserved for issuance and delivery upon exercise of this Warrant such
number of shares of Common Stock or other shares of capital stock of the Company
as are from time to time issuable upon exercise of this Warrant and, from time
to time, will promptly take all steps necessary to amend its Certificate of
Incorporation to provide sufficient reserves of shares of Common Stock issuable
upon exercise of this Warrant. All such shares shall be duly authorized, and
when issued upon such exercise, shall be validly issued, fully paid and
non-assessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions on sale and free and clear of all preemptive
and similar rights, except encumbrances or restrictions arising under federal or
state securities laws. Issuance of this Warrant shall constitute full authority
to the Company's officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the exercise of this Warrant.
8. TRANSFER AND EXCHANGE. Subject to the terms and conditions of this
Warrant and compliance with all applicable securities laws, this Warrant and all
rights hereunder (and any shares of Common Stock acquired on exercise of the
Warrant) may be transferred, in whole or in part, only (a) to one or more of its
affiliates if such affiliate is an "accredited investor" under Regulation D
under the Securities Act and agrees to be bound by the terms and obligations of
this Warrant and the Agreement, (b) in a sale effectuated pursuant to Rule 144
promulgated under the Securities Act, (c) in an offering registered under
Section 5 of the Securities Act, or (d) in a private transaction otherwise
exempt from registration under the Securities Act. Any such transfer shall be
made on the books of the Company maintained for such purpose at the principal
office of the Company referred to above, by the Registered Holder hereof in
person, or by duly authorized attorney, upon surrender of this Warrant properly
endorsed and upon payment of any necessary transfer tax or other governmental
charge imposed upon such transfer. Upon any permitted partial transfer of the
Warrant, the Company will issue and deliver to the Registered Holder a new
Warrant or Warrants with respect to the shares of Common Stock not so
transferred. Each taker and holder of this Warrant, by taking or holding the
same, consents and agrees that when this Warrant shall have been so endorsed,
the person in possession of this Warrant may be treated by the Company, and all
other persons dealing with this Warrant, as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented hereby,
any notice to the contrary notwithstanding; PROVIDED, HOWEVER, that until a
transfer of this Warrant is duly registered on the books of the Company, the
Company may treat the Registered Holder hereof as the owner for all purposes.
Upon any full or partial transfer of the Warrant or the shares of Common Stock
acquired on exercise of the Warrant pursuant to clause (b) or clause (c) of the
first sentence of this Section 8, all restrictions applicable to the transfer of
the Warrant or such Common Stock, or portion thereof, so transferred shall
cease.
9. SECURITIES LAW RESTRICTIONS ON TRANSFER. The Holder, by acceptance
hereof, agrees that, absent an effective registration statement filed with the
SEC under the Securities Act covering the disposition or sale of this Warrant or
the Common Stock issued or issuable upon exercise hereof, and registration or
qualification under applicable state securities laws, such Holder will not sell,
transfer, pledge, or hypothecate any or any portion of this Warrant or Common
Stock, as the case may be, unless either (i) the Company has received an opinion
of counsel, in form and substance reasonably satisfactory to the Company, to the
effect that such registration is not required in connection with such
disposition or (ii) the sale of such securities is made pursuant to Rule 144
under the Securities Act.
10. COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the
Holder hereby represents, warrants and covenants that any shares of Common Stock
purchased upon exercise of this Warrant or acquired upon conversion thereof
shall be acquired not with a view to, or for sale in connection with, any
distribution thereof in violation of the Securities Act; that the Holder has had
such opportunity as such Holder has deemed adequate to obtain from
representatives of the Company such information as is necessary to permit the
Holder to evaluate the merits and risks of its investment in the Company; that
the Holder is able to bear the economic risk of holding such shares as may be
acquired pursuant to the exercise of this Warrant for an indefinite period; that
the Holder understands that the shares of Common Stock acquired pursuant to the
exercise of this Warrant will not be registered under the Securities Act and
will be "restricted securities" within the meaning of Rule 144 under the
Securities Act and that the exemption from registration under Rule 144 will not
be available for at least one year from the date of exercise of this Warrant,
and even then may not be available unless a public market then exists for the
Common Stock, adequate information concerning the Company is then available to
the public, and other terms and conditions of Rule 144 are complied with; and
that all stock certificates representing shares of Common Stock issued to the
Holder upon exercise of this Warrant may have affixed thereto a legend
substantially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR WITH ANY
STATE SECURITIES COMMISSION, AND MAY NOT BE TRANSFERRED OR DISPOSED OF
BY THE HOLDER IN THE ABSENCE OF A REGISTRATION STATEMENT WHICH IS
EFFECTIVE UNDER THE ACT AND APPLICABLE STATE LAWS AND RULES, OR,
UNLESS, IMMEDIATELY PRIOR TO THE TIME SET FOR TRANSFER, SUCH TRANSFER
MAY BE EFFECTED WITHOUT VIOLATION OF THE ACT AND OTHER APPLICABLE STATE
LAWS AND RULES.
In addition, the Holder agrees that the Company may place stop transfer orders
with its transfer agents with respect to such certificates. Notwithstanding the
foregoing, it is agreed that, as long as (A) the resale or transfer (including
without limitation a pledge) of Warrant Shares is registered pursuant to an
effective registration statement and the Holder represents in writing to the
Company that such Warrant Shares have been or are being sold pursuant to such
registration statement, (B) such Warrant Shares have been publicly sold pursuant
to Rule 144 and the Holder has delivered to the Company customary Rule 144
broker's and seller's representation letters, or (C) such Warrant Shares can be
publicly sold pursuant to Rule 144(k) under the Securities Act or another
exemption from the registration requirements of such Act, such Warrant Shares,
as the case may be, shall be issued without any legend or other restrictive
language and, with respect to Warrant Shares upon which such legend is stamped,
the Company shall issue new certificates without such legend to the holder
promptly upon request.
11. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not
entitle the Holder to any voting rights or other rights as a stockholder of the
Company. In the absence of affirmative action by such Holder to purchase Common
Stock by exercise of this Warrant, no provisions of this Warrant, and no
enumeration herein of the rights or privileges of the Holder hereof shall cause
such Holder hereof to be a stockholder of the Company for any purpose.
12. NOTICES. All notices and other communications from the Company to
the Holder shall be given to Holder at the address set forth in the books and
records of the Company.
13. HEADINGS. The headings in this Warrant are for purposes of
convenience in reference only, and shall not be deemed to constitute a part
hereof.
14. LAW GOVERNING. This Warrant shall be construed and enforced in
accordance with, and governed by, the laws of the State of Delaware, without
giving effect to principles of conflicts of laws.
15. NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or bylaws, or through reorganization,
consolidation, merger, dissolution, issue or sale of securities, sale of assets
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
Registered Holder of this Warrant against impairment. Without limiting the
generality of the foregoing, the Company (a) will not increase the par value of
any shares of stock issuable upon the exercise of this Warrant above the amount
payable therefor upon such exercise, and (b) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock upon exercise of this
Warrant.
16. NOTICES OF RECORD DATE. In case:
16.1 the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time receivable upon the
exercise of this Warrant), for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or purchase any
shares of stock of any class or any other securities or to receive any other
right; or
16.2 of any consolidation or merger of the Company with or
into another corporation, any capital reorganization of the Company, any
reclassification of the capital stock of the Company, or any conveyance of all
or substantially all of the assets of the Company to another corporation in
which holders of the Company's stock are to receive stock, securities or
property of another corporation; or
16.3 of any voluntary dissolution, liquidation or winding-up
of the Company; or
16.4 of any redemption or conversion of all outstanding Common
Stock;
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation,
winding-up, redemption or conversion is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such stock or
securities as at the time are receivable upon the exercise of this Warrant)
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities), for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be delivered at least
twenty (20) days prior to the date therein specified.
17. SEVERABILITY. If any term, provision, covenant or restriction of
this Warrant is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be effected, impaired or invalidated.
18. COUNTERPARTS. For the convenience of the parties, any number of
counterparts of this Warrant may be executed by the parties hereto and each such
executed counterpart shall be, and shall be deemed to be, an original
instrument.
19. NO INCONSISTENT AGREEMENTS. The Company will not on or after the
date of this Warrant enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the Holder of this Warrant or
otherwise conflicts with the provisions hereof. The rights granted to the Holder
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to holders of the Company's securities under any other
agreements, except rights that have been waived.
20. SATURDAYS, SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a
Saturday, Sunday or legal holiday, the Expiration Date shall automatically be
extended until 5:00 p.m. the next business day.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
___ day of _____________, 2004.
VisiJet, Inc.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx, President
By: /s/ Xxxxxxxx X. Xxxxxxxxx
--------------------------------
Xxxxxxxx X. Xxxxxxxxx, Secretary
EXHIBIT A-2
THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK
ISSUABLE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), AND MAY NOT BE SOLD, OFFERED FOR
SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT
UNLESS EITHER (I) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (II) THE
SALE OF SUCH SECURITIES IS MADE PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT.
WARRANT TO PURCHASE 300,000 SHARES OF COMMON STOCK,
PAR VALUE $0.001 PER SHARE,
OF
VISIJET, INC.
THIS CERTIFIES THAT, for value received, SBI Brightline II, LLC, or its
permitted registered assigns (the "Holder"), is entitled, subject to the terms
and conditions of this Warrant, at any time before 5:00 p.m. Pacific Time on the
Expiration Date (as hereinafter defined), to purchase from VisiJet, Inc., a
Delaware corporation (the "COMPANY"), Three Hundred Thousand (300,000) shares of
common stock, par value $0.001 per share (the "Common Stock"), of the Company at
a price per share equal to the Purchase Price (as hereinafter defined). Both the
number of shares of Common Stock purchasable upon exercise of this Warrant and
the Purchase Price are subject to adjustment and change as provided herein.
1.CERTAIN DEFINITIONS. As used in this Warrant, the following terms
shall have the following respective meanings:
"COMMON STOCK" as hereinabove defined.
"EXPIRATION DATE" shall mean ___________ _____, 2009.
"FAIR MARKET VALUE" of a share of Common Stock as of a particular date
means the average of the closing prices of sales of Common Stock on the
principal United States securities exchanges on which the Common Stock may at
the time be listed, or, if there have been no sales on such exchange on any day,
the average of the highest bid and lowest asked prices on such exchange at the
end of such day, or, if on any day the Common Stock is not so listed, the
average of the representative bid and asked prices quoted by the OTC Bulletin
Board (the "OTCBB") as of 4:00 P.M., New York time, on such day, or, if on any
day such security is not quoted by the OTCBB, the average of the representative
bid and asked prices quoted on such other electronic communications network (an
"ECN") on which the Common Stock shall then be quoted as of 4:00 P.M., New York
time, on such day, or, if on any day such security is not quoted by any ECN, the
average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar or successor organization, in each such case
averaged over a period of 10 trading days consisting of the day as of which
"Fair Market Value" is being determined and the nine consecutive trading days
prior to such day; provided, that if there is no active public market, the Fair
Market Value shall be the value thereof, as agreed upon by the Company and the
Holder; PROVIDED, FURTHER, HOWEVER, that if the Company and the Holder cannot
agree on such value, such value shall be determined by an independent valuation
firm experienced in valuing businesses such as the Company and jointly selected
in good faith by the Company and the Holder. Fees and expenses of the valuation
firm shall be paid for by the Company.
"PURCHASE PRICE" means $2.00 per share.
"REGISTERED HOLDER" means any Holder in whose name this Warrant is
registered upon the books and records maintained by the Company.
"WARRANT" means this Warrant and any warrant delivered in substitution
or exchange therefor as provided herein.
2. EXERCISE OF WARRANT.
2.1 PAYMENT. Subject to compliance with the terms and conditions of
this Warrant and applicable securities laws, this Warrant may be exercised, in
whole or in part at any time or from time to time, commencing on the date hereof
and terminating on the Expiration Date, by the delivery (including, without
limitation, delivery by facsimile) of the form of Notice of Exercise attached
hereto (the "NOTICE OF EXERCISE"), duly executed by the Holder, at the principal
office of the Company, and as soon as practicable after such date (the "EXERCISE
DATE"), surrendering
(a) this Warrant at the principal office of the Company, and
(b) payment, (i) in cash (by check) or by wire transfer, (ii)
by cancellation by the Holder of indebtedness of the Company to the Holder; or
(iii) by a combination of (i) and (ii), of an amount equal to the product
obtained by multiplying the number of shares of Common Stock being purchased
upon such exercise by the then effective Purchase Price (the "EXERCISE AMOUNT").
20.2 NET ISSUE EXERCISE. In lieu of the payment methods set forth in
Section 2.1(b) above, the Holder may elect to exchange all or some of the
Warrant for a number of shares (rounded down to the nearest whole share) of
Common Stock equal to the value of the amount of the Warrant being exchanged on
the date of exchange. If the Holder elects to exchange this Warrant as provided
in this Section 2.2, the Holder shall tender to the Company the Warrant with
written notice of the Holder's election to exchange some or all of the Warrant,
and the Company shall issue to the Holder the number of shares (rounded down to
the nearest whole share) of the Common Stock computed as of the date of
surrender of this Warrant to the Company using the following formula:
X = Y (A-B)
-------
A
Where:
X = the number of shares of Common Stock to be issued to the Holder;
Y = the number of shares of Common Stock purchasable under the portion
of the Warrant being exchanged (as adjusted to the date of such
calculation);
A = the Fair Market Value of one share of the Company's Common Stock on
the date the net issue election is made pursuant to Section 2.2;
and
B = Purchase Price in effect under this Warrant on the date the net
issue election is made pursuant to Section 2.2.
All references herein to an "exercise" of the Warrant shall include an
exchange pursuant to this Section 2.2.
20.3 STOCK CERTIFICATES; FRACTIONAL SHARES. On or before the
third (3rd) business day following the Exercise Date, the Company shall issue
and deliver to the person or persons entitled to receive the same a certificate
or certificates for the number of whole shares of Common Stock issuable upon
such exercise, rounded down to the nearest whole share. No fractional shares or
scrip representing fractional shares shall be issued upon an exercise of this
Warrant.
20.4 PARTIAL EXERCISE; DATE OF EXERCISE. In case of any
partial exercise of this Warrant, the Company shall cancel this Warrant upon
surrender hereof and shall execute and deliver a new Warrant of like tenor and
date for the balance of the shares of Common Stock purchasable hereunder. This
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above. The person
entitled to receive the shares of Common Stock issuable upon exercise of this
Warrant shall be treated for all purposes as the holder of record of such shares
as of the close of business on the date the Holder is deemed to have exercised
this Warrant.
21. VALID ISSUANCE: TAXES. All shares of Common Stock issued upon the
exercise of this Warrant shall be validly issued, fully paid and non-assessable,
free and clear of all liens, security interests, charges and other encumbrances
or restrictions on sale and free and clear of all preemptive and similar rights,
except encumbrances or restrictions arising under federal or state securities
laws, and the Company shall pay all transfer or stamp taxes and other similar
governmental charges that may be imposed in respect of the issue or delivery
thereof. The Company shall not be required to pay any tax or other charge
imposed in connection with any transfer involved in the issuance of any
certificate for shares of Common Stock in any name other than that of the
Registered Holder of this Warrant, and in such case the Company shall not be
required to issue or deliver any stock certificate or security until such tax or
other charge has been paid, or it has been established to the Company's
reasonable satisfaction that no tax or other charge is due.
22. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of
shares of Common Stock issuable upon exercise of this Warrant (or any shares of
stock or other securities or property receivable or issuable upon exercise of
this Warrant) and the Purchase Price are subject to adjustment upon occurrence
of the following events:
22.1 ADJUSTMENT FOR STOCK SPLITS, STOCK SUBDIVISIONS OR
COMBINATIONS OF SHARES. The Purchase Price of this Warrant shall be
proportionally decreased and the number of shares of Common Stock issuable upon
exercise of this Warrant (or any shares of stock or other securities at the time
issuable upon exercise of this Warrant) shall be proportionally increased to
reflect any stock split or subdivision of the Common Stock. The Purchase Price
of this Warrant shall be proportionally increased and the number of shares of
Common Stock issuable upon exercise of this Warrant (or any shares of stock or
other securities at the time issuable upon exercise of this Warrant) shall be
proportionally decreased to reflect any combination of the Common Stock.
22.2 ADJUSTMENT FOR DIVIDENDS OR DISTRIBUTIONS OF STOCK OR
OTHER SECURITIES OR PROPERTY. In case the Company shall make or issue, or shall
fix a record date for the determination of eligible holders entitled to receive,
a dividend or other distribution with respect to the Common Stock (or any shares
of stock or other securities at the time issuable upon exercise of the Warrant)
payable in (a) securities of the Company or (b) assets (excluding cash dividends
paid or payable solely out of retained earnings), then, in each such case, the
Holder of this Warrant on exercise hereof at any time after the consummation,
effective date or record date of such dividend or other distribution, shall
receive, in addition to the shares of Common Stock (or such other stock or
securities) issuable on such exercise prior to such date, and without the
payment of additional consideration therefor, the securities or such other
assets of the Company to which such Holder would have been entitled upon such
date if such Holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock available
by it as aforesaid during such period giving effect to all adjustments called
for by this Section 4.
22.3 RECLASSIFICATION. If the Company, by reclassification of
securities or otherwise, shall change any of the securities as to which purchase
rights under this Warrant exist into the same or a different number of
securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities that
were subject to the purchase rights under this Warrant immediately prior to such
reclassification or other change and the Purchase Price therefore shall be
appropriately adjusted, all subject to further adjustment as provided in this
Section 4.
22.4 ADJUSTMENT FOR CAPITAL REORGANIZATION, MERGER OR
CONSOLIDATION. In case of any capital reorganization of the capital stock of the
Company (other than a combination, reclassification, exchange or subdivision of
shares otherwise provided for in this Section 4), or any merger or consolidation
of the Company with or into another corporation, or the sale of all or
substantially all the assets of the Company then, and in each such case, and as
a part of such reorganization, merger, consolidation, sale or transfer, lawful
provision shall be made so that the Holder of this Warrant shall thereafter be
entitled to receive upon exercise of this Warrant, upon payment of the Purchase
Price then in effect, the number of shares of stock or other securities or
property of the successor corporation resulting from such reorganization,
merger, consolidation, sale or transfer that a holder of the shares deliverable
upon exercise of this Warrant would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if this Warrant had been
exercised immediately before such reorganization, merger, consolidation, sale or
transfer, all subject to further adjustment as provided in this Section 4. The
foregoing provisions of this Section 4.4 shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the stock
or securities of any other corporation that are at the time receivable upon the
exercise of this Warrant. If the per-share consideration payable to the Holder
hereof for shares in connection with any such transaction is in a form other
than cash or marketable securities, then the value of such consideration shall
be determined in good faith by the Company's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction, to
the end that the provisions of this Warrant shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.
22.5 COMPANY TO PREVENT DILUTION The Company shall not by any
action, including, without limitation, amending its articles of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issuance 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 actions as may be necessary or
appropriate to protect the rights of the Holder against impairment. Without
limiting the generality of the foregoing, Company will take all such action as
may be necessary or appropriate in order that Company may upon the exercise of
this Warrant validly and legally issue fully paid and nonassessable shares of
Common Stock that are not subject to preemptive or similar rights, including
taking such action as is necessary for the Purchase Price to be not less than
the par value of the shares of Common Stock issuable upon exercise of this
Warrant.
23. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment in
the Purchase Price, or number or type of shares issuable upon exercise of this
Warrant, the Chief Financial Officer of the Company shall compute such
adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based, including a statement of the adjusted Purchase
Price. The Company shall promptly send (by facsimile and by either first class
mail, postage prepaid or overnight delivery) a copy of each such certificate to
the Holder.
24. LOSS OR MUTILATION. Upon receipt of evidence reasonably
satisfactory to the Company of the ownership of and the loss, theft, destruction
or mutilation of this Warrant, and of indemnity reasonably satisfactory to it,
and (in the case of mutilation) upon surrender and cancellation of this Warrant,
the Company will execute and deliver in lieu thereof a new Warrant of like tenor
as the lost, stolen, destroyed or mutilated Warrant.
25. RESERVATION OF COMMON STOCK. The Company hereby covenants that
there shall be reserved for issuance and delivery upon exercise of this Warrant
such number of shares of Common Stock or other shares of capital stock of the
Company as are from time to time issuable upon exercise of this Warrant and,
from time to time, will promptly take all steps necessary to amend its
Certificate of Incorporation to provide sufficient reserves of shares of Common
Stock issuable upon exercise of this Warrant. All such shares shall be duly
authorized, and when issued upon such exercise, shall be validly issued, fully
paid and non-assessable, free and clear of all liens, security interests,
charges and other encumbrances or restrictions on sale and free and clear of all
preemptive and similar rights, except encumbrances or restrictions arising under
federal or state securities laws. Issuance of this Warrant shall constitute full
authority to the Company's officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for shares of
Common Stock upon the exercise of this Warrant.
26. TRANSFER AND EXCHANGE. Subject to the terms and conditions of this
Warrant and compliance with all applicable securities laws, this Warrant and all
rights hereunder (and any shares of Common Stock acquired on exercise of the
Warrant) may be transferred, in whole or in part, only (a) to one or more of its
affiliates if such affiliate is an "accredited investor" under Regulation D
under the Securities Act and agrees to be bound by the terms and obligations of
this Warrant and the Agreement, (b) in a sale effectuated pursuant to Rule 144
promulgated under the Securities Act, (c) in an offering registered under
Section 5 of the Securities Act, or (d) in a private transaction otherwise
exempt from registration under the Securities Act. Any such transfer shall be
made on the books of the Company maintained for such purpose at the principal
office of the Company referred to above, by the Registered Holder hereof in
person, or by duly authorized attorney, upon surrender of this Warrant properly
endorsed and upon payment of any necessary transfer tax or other governmental
charge imposed upon such transfer. Upon any permitted partial transfer of the
Warrant, the Company will issue and deliver to the Registered Holder a new
Warrant or Warrants with respect to the shares of Common Stock not so
transferred. Each taker and holder of this Warrant, by taking or holding the
same, consents and agrees that when this Warrant shall have been so endorsed,
the person in possession of this Warrant may be treated by the Company, and all
other persons dealing with this Warrant, as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented hereby,
any notice to the contrary notwithstanding; PROVIDED, HOWEVER, that until a
transfer of this Warrant is duly registered on the books of the Company, the
Company may treat the Registered Holder hereof as the owner for all purposes.
Upon any full or partial transfer of the Warrant or the shares of Common Stock
acquired on exercise of the Warrant pursuant to clause (b) or clause (c) of the
first sentence of this Section 8, all restrictions applicable to the transfer of
the Warrant or such Common Stock, or portion thereof, so transferred shall
cease.
27. SECURITIES LAW RESTRICTIONS ON TRANSFER. The Holder, by acceptance
hereof, agrees that, absent an effective registration statement filed with the
SEC under the Securities Act covering the disposition or sale of this Warrant or
the Common Stock issued or issuable upon exercise hereof, and registration or
qualification under applicable state securities laws, such Holder will not sell,
transfer, pledge, or hypothecate any or any portion of this Warrant or Common
Stock, as the case may be, unless either (i) the Company has received an opinion
of counsel, in form and substance reasonably satisfactory to the Company, to the
effect that such registration is not required in connection with such
disposition or (ii) the sale of such securities is made pursuant to Rule 144
under the Securities Act.
28. COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the
Holder hereby represents, warrants and covenants that any shares of Common Stock
purchased upon exercise of this Warrant or acquired upon conversion thereof
shall be acquired not with a view to, or for sale in connection with, any
distribution thereof in violation of the Securities Act; that the Holder has had
such opportunity as such Holder has deemed adequate to obtain from
representatives of the Company such information as is necessary to permit the
Holder to evaluate the merits and risks of its investment in the Company; that
the Holder is able to bear the economic risk of holding such shares as may be
acquired pursuant to the exercise of this Warrant for an indefinite period; that
the Holder understands that the shares of Common Stock acquired pursuant to the
exercise of this Warrant will not be registered under the Securities Act and
will be "restricted securities" within the meaning of Rule 144 under the
Securities Act and that the exemption from registration under Rule 144 will not
be available for at least one year from the date of exercise of this Warrant,
and even then may not be available unless a public market then exists for the
Common Stock, adequate information concerning the Company is then available to
the public, and other terms and conditions of Rule 144 are complied with; and
that all stock certificates representing shares of Common Stock issued to the
Holder upon exercise of this Warrant may have affixed thereto a legend
substantially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR WITH ANY
STATE SECURITIES COMMISSION, AND MAY NOT BE TRANSFERRED OR DISPOSED OF
BY THE HOLDER IN THE ABSENCE OF A REGISTRATION STATEMENT WHICH IS
EFFECTIVE UNDER THE ACT AND APPLICABLE STATE LAWS AND RULES, OR,
UNLESS, IMMEDIATELY PRIOR TO THE TIME SET FOR TRANSFER, SUCH TRANSFER
MAY BE EFFECTED WITHOUT VIOLATION OF THE ACT AND OTHER APPLICABLE STATE
LAWS AND RULES.
In addition, the Holder agrees that the Company may place stop transfer orders
with its transfer agents with respect to such certificates. Notwithstanding the
foregoing, it is agreed that, as long as (A) the resale or transfer (including
without limitation a pledge) of Warrant Shares is registered pursuant to an
effective registration statement and the Holder represents in writing to the
Company that such Warrant Shares have been or are being sold pursuant to such
registration statement, (B) such Warrant Shares have been publicly sold pursuant
to Rule 144 and the Holder has delivered to the Company customary Rule 144
broker's and seller's representation letters, or (C) such Warrant Shares can be
publicly sold pursuant to Rule 144(k) under the Securities Act or another
exemption from the registration requirements of such Act, such Warrant Shares,
as the case may be, shall be issued without any legend or other restrictive
language and, with respect to Warrant Shares upon which such legend is stamped,
the Company shall issue new certificates without such legend to the holder
promptly upon request.
29. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not
entitle the Holder to any voting rights or other rights as a stockholder of the
Company. In the absence of affirmative action by such Holder to purchase Common
Stock by exercise of this Warrant, no provisions of this Warrant, and no
enumeration herein of the rights or privileges of the Holder hereof shall cause
such Holder hereof to be a stockholder of the Company for any purpose.
30. NOTICES. All notices and other communications from the Company to
the Holder shall be given to Holder at the address set forth in the books and
records of the Company.
31. HEADINGS. The headings in this Warrant are for purposes of
convenience in reference only, and shall not be deemed to constitute a part
hereof.
32. LAW GOVERNING. This Warrant shall be construed and enforced in
accordance with, and governed by, the laws of the State of Delaware, without
giving effect to principles of conflicts of laws.
33. NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or bylaws, or through reorganization,
consolidation, merger, dissolution, issue or sale of securities, sale of assets
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
Registered Holder of this Warrant against impairment. Without limiting the
generality of the foregoing, the Company (a) will not increase the par value of
any shares of stock issuable upon the exercise of this Warrant above the amount
payable therefor upon such exercise, and (b) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock upon exercise of this
Warrant.
34. NOTICES OF RECORD DATE. In case:
34.1 the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time receivable upon the
exercise of this Warrant), for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or purchase any
shares of stock of any class or any other securities or to receive any other
right; or
34.2 of any consolidation or merger of the Company with or
into another corporation, any capital reorganization of the Company, any
reclassification of the capital stock of the Company, or any conveyance of all
or substantially all of the assets of the Company to another corporation in
which holders of the Company's stock are to receive stock, securities or
property of another corporation; or
34.3 of any voluntary dissolution, liquidation or winding-up
of the Company; or
34.4 of any redemption or conversion of all outstanding Common
Stock;
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation,
winding-up, redemption or conversion is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such stock or
securities as at the time are receivable upon the exercise of this Warrant)
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities), for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be delivered at least
twenty (20) days prior to the date therein specified.
35. SEVERABILITY. If any term, provision, covenant or restriction of
this Warrant is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be effected, impaired or invalidated.
36. COUNTERPARTS. For the convenience of the parties, any number of
counterparts of this Warrant may be executed by the parties hereto and each such
executed counterpart shall be, and shall be deemed to be, an original
instrument.
37. NO INCONSISTENT AGREEMENTS. The Company will not on or after the
date of this Warrant enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the Holder of this Warrant or
otherwise conflicts with the provisions hereof. The rights granted to the Holder
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to holders of the Company's securities under any other
agreements, except rights that have been waived.
38. SATURDAYS, SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a
Saturday, Sunday or legal holiday, the Expiration Date shall automatically be
extended until 5:00 p.m. the next business day.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
___ day of ________________, 2004.
VisiJet, Inc.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx, President
By: /s/ Xxxxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxxxx X. Xxxxxxxxx, Secretary
EXHIBIT A-3
THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK
ISSUABLE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), AND MAY NOT BE SOLD, OFFERED FOR
SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT
UNLESS EITHER (I) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (II) THE
SALE OF SUCH SECURITIES IS MADE PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT.
WARRANT TO PURCHASE 300,000 SHARES OF COMMON STOCK,
PAR VALUE $0.001 PER SHARE,
OF
VISIJET, INC.
THIS CERTIFIES THAT, for value received, SBI Brightline II, LLC, or its
permitted registered assigns (the "Holder"), is entitled, subject to the terms
and conditions of this Warrant, at any time before 5:00 p.m. Pacific Time on the
Expiration Date (as hereinafter defined), to purchase from VisiJet, Inc., a
Delaware corporation (the "COMPANY"), Three Hundred Thousand (300,000) shares of
common stock, par value $0.001 per share (the "Common Stock"), of the Company at
a price per share equal to the Purchase Price (as hereinafter defined). Both the
number of shares of Common Stock purchasable upon exercise of this Warrant and
the Purchase Price are subject to adjustment and change as provided herein. 39.
CERTAIN DEFINITIONS. As used in this Warrant, the following terms shall have the
following respective meanings:
"COMMON STOCK" as hereinabove defined.
"EXPIRATION DATE" shall mean _______ ________, 2009.
"FAIR MARKET VALUE" of a share of Common Stock as of a particular date
means the average of the closing prices of sales of Common Stock on the
principal United States securities exchanges on which the Common Stock may at
the time be listed, or, if there have been no sales on such exchange on any day,
the average of the highest bid and lowest asked prices on such exchange at the
end of such day, or, if on any day the Common Stock is not so listed, the
average of the representative bid and asked prices quoted by the OTC Bulletin
Board (the "OTCBB") as of 4:00 P.M., New York time, on such day, or, if on any
day such security is not quoted by the OTCBB, the average of the representative
bid and asked prices quoted on such other electronic communications network (an
"ECN") on which the Common Stock shall then be quoted as of 4:00 P.M., New York
time, on such day, or, if on any day such security is not quoted by any ECN, the
average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar or successor organization, in each such case
averaged over a period of 10 trading days consisting of the day as of which
"Fair Market Value" is being determined and the nine consecutive trading days
prior to such day; provided, that if there is no active public market, the Fair
Market Value shall be the value thereof, as agreed upon by the Company and the
Holder; PROVIDED, FURTHER, HOWEVER, that if the Company and the Holder cannot
agree on such value, such value shall be determined by an independent valuation
firm experienced in valuing businesses such as the Company and jointly selected
in good faith by the Company and the Holder. Fees and expenses of the valuation
firm shall be paid for by the Company.
"PURCHASE PRICE" means $2.50 per share.
"REGISTERED HOLDER" means any Holder in whose name this Warrant is
registered upon the books and records maintained by the Company.
"WARRANT" means this Warrant and any warrant delivered in substitution
or exchange therefor as provided herein.
40. EXERCISE OF WARRANT.
40.1 PAYMENT. Subject to compliance with the terms and
conditions of this Warrant and applicable securities laws, this Warrant may be
exercised, in whole or in part at any time or from time to time, commencing on
the date hereof and terminating on the Expiration Date, by the delivery
(including, without limitation, delivery by facsimile) of the form of Notice of
Exercise attached hereto (the "NOTICE OF EXERCISE"), duly executed by the
Holder, at the principal office of the Company, and as soon as practicable after
such date (the "EXERCISE DATE"), surrendering
(a) this Warrant at the principal office of the Company,
and
(b) payment, (i) in cash (by check) or by wire transfer,
(ii) by cancellation by the Holder of indebtedness of the Company to the Holder;
or (iii) by a combination of (i) and (ii), of an amount equal to the product
obtained by multiplying the number of shares of Common Stock being purchased
upon such exercise by the then effective Purchase Price (the "EXERCISE AMOUNT").
40.2 NET ISSUE EXERCISE. In lieu of the payment methods set
forth in Section 2.1(b) above, the Holder may elect to exchange all or some of
the Warrant for a number of shares (rounded down to the nearest whole share) of
Common Stock equal to the value of the amount of the Warrant being exchanged on
the date of exchange. If the Holder elects to exchange this Warrant as provided
in this Section 2.2, the Holder shall tender to the Company the Warrant with
written notice of the Holder's election to exchange some or all of the Warrant,
and the Company shall issue to the Holder the number of shares (rounded down to
the nearest whole share) of the Common Stock computed as of the date of
surrender of this Warrant to the Company using the following formula:
X = Y (A-B)
-------
A
Where:
X = the number of shares of Common Stock to be issued to the Holder;
Y = the number of shares of Common Stock purchasable under the portion
of the Warrant being exchanged (as adjusted to the date of such
calculation);
A = the Fair Market Value of one share of the Company's Common Stock on
the date the net issue election is made pursuant to Section 2.2;
and
B = Purchase Price in effect under this Warrant on the date the net
issue election is made pursuant to Section 2.2.
All references herein to an "exercise" of the Warrant shall include an
exchange pursuant to this Section 2.2.
40.3 STOCK CERTIFICATES; FRACTIONAL SHARES. On or before the
third (3rd) business day following the Exercise Date, the Company shall issue
and deliver to the person or persons entitled to receive the same a certificate
or certificates for the number of whole shares of Common Stock issuable upon
such exercise, rounded down to the nearest whole share. No fractional shares or
scrip representing fractional shares shall be issued upon an exercise of this
Warrant.
40.4 PARTIAL EXERCISE; DATE OF EXERCISE. In case of any
partial exercise of this Warrant, the Company shall cancel this Warrant upon
surrender hereof and shall execute and deliver a new Warrant of like tenor and
date for the balance of the shares of Common Stock purchasable hereunder. This
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above. The person
entitled to receive the shares of Common Stock issuable upon exercise of this
Warrant shall be treated for all purposes as the holder of record of such shares
as of the close of business on the date the Holder is deemed to have exercised
this Warrant.
41. VALID ISSUANCE: TAXES. All shares of Common Stock issued upon the
exercise of this Warrant shall be validly issued, fully paid and non-assessable,
free and clear of all liens, security interests, charges and other encumbrances
or restrictions on sale and free and clear of all preemptive and similar rights,
except encumbrances or restrictions arising under federal or state securities
laws, and the Company shall pay all transfer or stamp taxes and other similar
governmental charges that may be imposed in respect of the issue or delivery
thereof. The Company shall not be required to pay any tax or other charge
imposed in connection with any transfer involved in the issuance of any
certificate for shares of Common Stock in any name other than that of the
Registered Holder of this Warrant, and in such case the Company shall not be
required to issue or deliver any stock certificate or security until such tax or
other charge has been paid, or it has been established to the Company's
reasonable satisfaction that no tax or other charge is due.
42. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of
shares of Common Stock issuable upon exercise of this Warrant (or any shares of
stock or other securities or property receivable or issuable upon exercise of
this Warrant) and the Purchase Price are subject to adjustment upon occurrence
of the following events:
42.1 ADJUSTMENT FOR STOCK SPLITS, STOCK SUBDIVISIONS OR
COMBINATIONS OF SHARES. The Purchase Price of this Warrant shall be
proportionally decreased and the number of shares of Common Stock issuable upon
exercise of this Warrant (or any shares of stock or other securities at the time
issuable upon exercise of this Warrant) shall be proportionally increased to
reflect any stock split or subdivision of the Common Stock. The Purchase Price
of this Warrant shall be proportionally increased and the number of shares of
Common Stock issuable upon exercise of this Warrant (or any shares of stock or
other securities at the time issuable upon exercise of this Warrant) shall be
proportionally decreased to reflect any combination of the Common Stock.
42.2 ADJUSTMENT FOR DIVIDENDS OR DISTRIBUTIONS OF STOCK OR
OTHER SECURITIES OR PROPERTY. In case the Company shall make or issue, or shall
fix a record date for the determination of eligible holders entitled to receive,
a dividend or other distribution with respect to the Common Stock (or any shares
of stock or other securities at the time issuable upon exercise of the Warrant)
payable in (a) securities of the Company or (b) assets (excluding cash dividends
paid or payable solely out of retained earnings), then, in each such case, the
Holder of this Warrant on exercise hereof at any time after the consummation,
effective date or record date of such dividend or other distribution, shall
receive, in addition to the shares of Common Stock (or such other stock or
securities) issuable on such exercise prior to such date, and without the
payment of additional consideration therefor, the securities or such other
assets of the Company to which such Holder would have been entitled upon such
date if such Holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock available
by it as aforesaid during such period giving effect to all adjustments called
for by this Section 4.
42.3 RECLASSIFICATION. If the Company, by reclassification of
securities or otherwise, shall change any of the securities as to which purchase
rights under this Warrant exist into the same or a different number of
securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities that
were subject to the purchase rights under this Warrant immediately prior to such
reclassification or other change and the Purchase Price therefore shall be
appropriately adjusted, all subject to further adjustment as provided in this
Section 4.
42.4 ADJUSTMENT FOR CAPITAL REORGANIZATION, MERGER OR
CONSOLIDATION. In case of any capital reorganization of the capital stock of the
Company (other than a combination, reclassification, exchange or subdivision of
shares otherwise provided for in this Section 4), or any merger or consolidation
of the Company with or into another corporation, or the sale of all or
substantially all the assets of the Company then, and in each such case, and as
a part of such reorganization, merger, consolidation, sale or transfer, lawful
provision shall be made so that the Holder of this Warrant shall thereafter be
entitled to receive upon exercise of this Warrant, upon payment of the Purchase
Price then in effect, the number of shares of stock or other securities or
property of the successor corporation resulting from such reorganization,
merger, consolidation, sale or transfer that a holder of the shares deliverable
upon exercise of this Warrant would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if this Warrant had been
exercised immediately before such reorganization, merger, consolidation, sale or
transfer, all subject to further adjustment as provided in this Section 4. The
foregoing provisions of this Section 4.4 shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the stock
or securities of any other corporation that are at the time receivable upon the
exercise of this Warrant. If the per-share consideration payable to the Holder
hereof for shares in connection with any such transaction is in a form other
than cash or marketable securities, then the value of such consideration shall
be determined in good faith by the Company's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction, to
the end that the provisions of this Warrant shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.
42.5 COMPANY TO PREVENT DILUTION The Company shall not by any
action, including, without limitation, amending its articles of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issuance 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 actions as may be necessary or
appropriate to protect the rights of the Holder against impairment. Without
limiting the generality of the foregoing, Company will take all such action as
may be necessary or appropriate in order that Company may upon the exercise of
this Warrant validly and legally issue fully paid and nonassessable shares of
Common Stock that are not subject to preemptive or similar rights, including
taking such action as is necessary for the Purchase Price to be not less than
the par value of the shares of Common Stock issuable upon exercise of this
Warrant.
43. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment in
the Purchase Price, or number or type of shares issuable upon exercise of this
Warrant, the Chief Financial Officer of the Company shall compute such
adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based, including a statement of the adjusted Purchase
Price. The Company shall promptly send (by facsimile and by either first class
mail, postage prepaid or overnight delivery) a copy of each such certificate to
the Holder.
44. LOSS OR MUTILATION. Upon receipt of evidence reasonably
satisfactory to the Company of the ownership of and the loss, theft, destruction
or mutilation of this Warrant, and of indemnity reasonably satisfactory to it,
and (in the case of mutilation) upon surrender and cancellation of this Warrant,
the Company will execute and deliver in lieu thereof a new Warrant of like tenor
as the lost, stolen, destroyed or mutilated Warrant.
45. RESERVATION OF COMMON STOCK. The Company hereby covenants that
there shall be reserved for issuance and delivery upon exercise of this Warrant
such number of shares of Common Stock or other shares of capital stock of the
Company as are from time to time issuable upon exercise of this Warrant and,
from time to time, will promptly take all steps necessary to amend its
Certificate of Incorporation to provide sufficient reserves of shares of Common
Stock issuable upon exercise of this Warrant. All such shares shall be duly
authorized, and when issued upon such exercise, shall be validly issued, fully
paid and non-assessable, free and clear of all liens, security interests,
charges and other encumbrances or restrictions on sale and free and clear of all
preemptive and similar rights, except encumbrances or restrictions arising under
federal or state securities laws. Issuance of this Warrant shall constitute full
authority to the Company's officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for shares of
Common Stock upon the exercise of this Warrant.
46. TRANSFER AND EXCHANGE. Subject to the terms and conditions of this
Warrant and compliance with all applicable securities laws, this Warrant and all
rights hereunder (and any shares of Common Stock acquired on exercise of the
Warrant) may be transferred, in whole or in part, only (a) to one or more of its
affiliates if such affiliate is an "accredited investor" under Regulation D
under the Securities Act and agrees to be bound by the terms and obligations of
this Warrant and the Agreement, (b) in a sale effectuated pursuant to Rule 144
promulgated under the Securities Act, (c) in an offering registered under
Section 5 of the Securities Act, or (d) in a private transaction otherwise
exempt from registration under the Securities Act. Any such transfer shall be
made on the books of the Company maintained for such purpose at the principal
office of the Company referred to above, by the Registered Holder hereof in
person, or by duly authorized attorney, upon surrender of this Warrant properly
endorsed and upon payment of any necessary transfer tax or other governmental
charge imposed upon such transfer. Upon any permitted partial transfer of the
Warrant, the Company will issue and deliver to the Registered Holder a new
Warrant or Warrants with respect to the shares of Common Stock not so
transferred. Each taker and holder of this Warrant, by taking or holding the
same, consents and agrees that when this Warrant shall have been so endorsed,
the person in possession of this Warrant may be treated by the Company, and all
other persons dealing with this Warrant, as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented hereby,
any notice to the contrary notwithstanding; PROVIDED, HOWEVER, that until a
transfer of this Warrant is duly registered on the books of the Company, the
Company may treat the Registered Holder hereof as the owner for all purposes.
Upon any full or partial transfer of the Warrant or the shares of Common Stock
acquired on exercise of the Warrant pursuant to clause (b) or clause (c) of the
first sentence of this Section 8, all restrictions applicable to the transfer of
the Warrant or such Common Stock, or portion thereof, so transferred shall
cease.
47. SECURITIES LAW RESTRICTIONS ON TRANSFER. The Holder, by acceptance
hereof, agrees that, absent an effective registration statement filed with the
SEC under the Securities Act covering the disposition or sale of this Warrant or
the Common Stock issued or issuable upon exercise hereof, and registration or
qualification under applicable state securities laws, such Holder will not sell,
transfer, pledge, or hypothecate any or any portion of this Warrant or Common
Stock, as the case may be, unless either (i) the Company has received an opinion
of counsel, in form and substance reasonably satisfactory to the Company, to the
effect that such registration is not required in connection with such
disposition or (ii) the sale of such securities is made pursuant to Rule 144
under the Securities Act.
48. COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the
Holder hereby represents, warrants and covenants that any shares of Common Stock
purchased upon exercise of this Warrant or acquired upon conversion thereof
shall be acquired not with a view to, or for sale in connection with, any
distribution thereof in violation of the Securities Act; that the Holder has had
such opportunity as such Holder has deemed adequate to obtain from
representatives of the Company such information as is necessary to permit the
Holder to evaluate the merits and risks of its investment in the Company; that
the Holder is able to bear the economic risk of holding such shares as may be
acquired pursuant to the exercise of this Warrant for an indefinite period; that
the Holder understands that the shares of Common Stock acquired pursuant to the
exercise of this Warrant will not be registered under the Securities Act and
will be "restricted securities" within the meaning of Rule 144 under the
Securities Act and that the exemption from registration under Rule 144 will not
be available for at least one year from the date of exercise of this Warrant,
and even then may not be available unless a public market then exists for the
Common Stock, adequate information concerning the Company is then available to
the public, and other terms and conditions of Rule 144 are complied with; and
that all stock certificates representing shares of Common Stock issued to the
Holder upon exercise of this Warrant may have affixed thereto a legend
substantially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR WITH ANY
STATE SECURITIES COMMISSION, AND MAY NOT BE TRANSFERRED OR DISPOSED OF
BY THE HOLDER IN THE ABSENCE OF A REGISTRATION STATEMENT WHICH IS
EFFECTIVE UNDER THE ACT AND APPLICABLE STATE LAWS AND RULES, OR,
UNLESS, IMMEDIATELY PRIOR TO THE TIME SET FOR TRANSFER, SUCH TRANSFER
MAY BE EFFECTED WITHOUT VIOLATION OF THE ACT AND OTHER APPLICABLE STATE
LAWS AND RULES.
In addition, the Holder agrees that the Company may place stop transfer orders
with its transfer agents with respect to such certificates. Notwithstanding the
foregoing, it is agreed that, as long as (A) the resale or transfer (including
without limitation a pledge) of Warrant Shares is registered pursuant to an
effective registration statement and the Holder represents in writing to the
Company that such Warrant Shares have been or are being sold pursuant to such
registration statement, (B) such Warrant Shares have been publicly sold pursuant
to Rule 144 and the Holder has delivered to the Company customary Rule 144
broker's and seller's representation letters, or (C) such Warrant Shares can be
publicly sold pursuant to Rule 144(k) under the Securities Act or another
exemption from the registration requirements of such Act, such Warrant Shares,
as the case may be, shall be issued without any legend or other restrictive
language and, with respect to Warrant Shares upon which such legend is stamped,
the Company shall issue new certificates without such legend to the holder
promptly upon request.
49. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not
entitle the Holder to any voting rights or other rights as a stockholder of the
Company. In the absence of affirmative action by such Holder to purchase Common
Stock by exercise of this Warrant, no provisions of this Warrant, and no
enumeration herein of the rights or privileges of the Holder hereof shall cause
such Holder hereof to be a stockholder of the Company for any purpose.
50. NOTICES. All notices and other communications from the Company to
the Holder shall be given to Holder at the address set forth in the books and
records of the Company.
51. HEADINGS. The headings in this Warrant are for purposes of
convenience in reference only, and shall not be deemed to constitute a part
hereof.
52. LAW GOVERNING. This Warrant shall be construed and enforced in
accordance with, and governed by, the laws of the State of Delaware, without
giving effect to principles of conflicts of laws.
53. NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or bylaws, or through reorganization,
consolidation, merger, dissolution, issue or sale of securities, sale of assets
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
Registered Holder of this Warrant against impairment. Without limiting the
generality of the foregoing, the Company (a) will not increase the par value of
any shares of stock issuable upon the exercise of this Warrant above the amount
payable therefor upon such exercise, and (b) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock upon exercise of this
Warrant.
54. NOTICES OF RECORD DATE. In case:
54.1 the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time receivable upon the
exercise of this Warrant), for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or purchase any
shares of stock of any class or any other securities or to receive any other
right; or
54.2 of any consolidation or merger of the Company with or
into another corporation, any capital reorganization of the Company, any
reclassification of the capital stock of the Company, or any conveyance of all
or substantially all of the assets of the Company to another corporation in
which holders of the Company's stock are to receive stock, securities or
property of another corporation; or
54.3 of any voluntary dissolution, liquidation or winding-up
of the Company; or
54.4 of any redemption or conversion of all outstanding Common
Stock;
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation,
winding-up, redemption or conversion is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such stock or
securities as at the time are receivable upon the exercise of this Warrant)
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities), for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be delivered at least
twenty (20) days prior to the date therein specified.
55. SEVERABILITY. If any term, provision, covenant or restriction of
this Warrant is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be effected, impaired or invalidated.
56. COUNTERPARTS. For the convenience of the parties, any number of
counterparts of this Warrant may be executed by the parties hereto and each such
executed counterpart shall be, and shall be deemed to be, an original
instrument.
57. NO INCONSISTENT AGREEMENTS. The Company will not on or after the
date of this Warrant enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the Holder of this Warrant or
otherwise conflicts with the provisions hereof. The rights granted to the Holder
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to holders of the Company's securities under any other
agreements, except rights that have been waived.
58. SATURDAYS, SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a
Saturday, Sunday or legal holiday, the Expiration Date shall automatically be
extended until 5:00 p.m. the next business day.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
_______ day of __________, 2004.
VisiJet, Inc.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx, President
By: /s/ Xxxxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxxxx X. Xxxxxxxxx, Secretary
