EXHIBIT 10.49
THE WARRANT EVIDENCED BY THIS AGREEMENT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE OF SUCH WARRANT HAVE NOT BEEN REGISTERED UNDER STATE OR FEDERAL
SECURITIES LAWS. THIS WARRANT AGREEMENT MAY NOT BE TRANSFERRED EXCEPT AS
PROVIDED IN SECTION 3 BELOW. THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THE WARRANT MAY NOT BE OFFERED OR SOLD, PLEDGED (EXCEPT A PLEDGE PURSUANT TO
THE TERMS OF WHICH ANY OFFER OR SALE UPON FORECLOSURE WOULD BE MADE IN A MANNER
THAT WOULD NOT VIOLATE THE REGISTRATION PROVISIONS OF FEDERAL OR STATE
SECURITIES LAWS) OR OTHERWISE DISTRIBUTED FOR VALUE, NOR MAY THE SHARES OF
COMMON STOCK ISSUED UPON EXERCISE OF THE WARRANT BE TRANSFERRED ON THE BOOKS OF
THE COMPANY, WITHOUT AN OPINION OF COUNSEL, CONCURRED IN BY COUNSEL FOR THE
COMPANY, THAT NO VIOLATION OF SAID REGISTRATION PROVISIONS WOULD RESULT
THEREFROM.
WARRANT AGREEMENT
-----------------
THIS AGREEMENT is entered into as of the 14th day of May, 1997 (the
"Date of Issuance") between XXXXXX CORPORATION, a Washington corporation (the
"Company"), and XXXXX XXXXXXX ("Holder").
AGREEMENT
NOW, THEREFORE, the Company hereby issues, for good and valuable
consideration, to Holder this warrant to purchase, upon the terms and conditions
set forth herein, Ninety Thousand (90,000) shares (the "Shares") of common stock
("Common Stock") in the Company (the "Warrant").
EXERCISE PRICE. The "Exercise Price" for the Warrant shall be $1.375 per
---------------
share of Common Stock, subject to adjustment as provided for in Section 6.
VESTING. The Warrant is fully vested and immediately exercisable.
--------
TRANSFER OF WARRANT. Subject to the provisions of paragraphs 4 and 8
--------------------
hereof and the receipt of prior written consent of the Company, the Warrant and
all rights hereunder are transferable, in whole or in part, by the holder hereof
in person or by duly authorized attorney, upon surrender of this Warrant
properly endorsed. Each taker and holder of this Warrant, by taking and holding
the same, consents and agrees that the bearer of this Warrant, when endorsed,
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 by this Warrant, or to the hereof on the books of the
Company, any notice to the contrary notwithstanding; but until such transfer on
such books, the Company may treat the registered holder hereof as the owner for
all purposes.
INVESTMENT INTENT. By accepting the Warrant, Holder represents and agrees
------------------
for himself and all persons who acquire rights in the Warrant through Holder,
that none of the shares of Common
16
Stock purchased upon exercise of the Warrant will be distributed in violation of
applicable federal and state laws and regulations. If requested by the Company,
Holder shall furnish evidence satisfactory to the Company (including a written
and signed representation letter and a consent to be bound by all transfer
restrictions imposed by applicable law, legend condition or otherwise) to that
effect, prior to delivery of the purchased shares of Common Stock.
TERMINATION OF WARRANT. The Warrant shall terminate, to the extent not
-----------------------
previously exercised, five (5) years from the Date of Issuance.
STOCK. In the case of any stock split, stock dividend or like change in the
------
nature of shares covered by this Agreement, the number of shares and Warrant
price shall be proportionately adjusted as set forth below:
Stock Dividend, Reorganization or Liquidation.
In case the Company shall (i) declare a dividend or make a distribution on its
outstanding shares of Common Stock in shares of Common Stock, (ii) subdivide or
reclassify its outstanding shares of Common Stock into a greater number of
shares, (iii) combine or reclassify its outstanding shares of Common Stock into
a smaller number of shares, or (iv) issue shares of Common Stock upon
conversion of Series A Cumulative Convertible Preferred Stock at a conversion
rate which provides for the issuance of a greater number of shares than provided
by the conversion rate of Series A Cumulative Convertible Preferred Stock as
originally issued, the Exercise Price in effect at the time of the record date
for such dividend or distribution or of the effective date of such subdivision,
combination, reclassification or issuance shall be adjusted so that it shall
equal the price determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such action, and the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such action.
Such adjustment shall be made successively whenever any event listed above shall
occur.
If the Company is liquidated or dissolved, the Company may allow the Holders of
any outstanding Warrants to exercise all or any part of the portion of the
Warrants held by them; provided, however, that such Warrants must be exercised
prior to the effective date of such liquidation or dissolution. If the Warrant
holders do not exercise their Warrants prior to such effective date, each
outstanding Warrant shall terminate as of the effective date of the liquidation
or dissolution.
The foregoing adjustments in the shares subject to Warrants shall be made by the
Company, or by any successor to the Company, or by the applicable terms of any
assumption or substitution document.
The issuance of this Warrant shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure, to merge, consolidate or dissolve, to
liquidate or to sell or transfer all or any part of its business or assets.
17
EXERCISE OF WARRANT.
--------------------
CASH PAYMENT. Each exercise of the Warrant shall be by means of
delivery of a Notice of Election to Exercise (which may be in the form attached
hereto as Exhibit A) to the Secretary of the Company at its principal executive
office, specifying the number of shares of Common Stock to be purchased and
accompanied by payment in cash, or by certified or cashier's check payable to
the order of the Company, of the full exercise price for the Common Stock to be
purchased or by payment method as specified in Section 7(b) below.
Cashless Exercise.
------------------
In addition to and without limiting the rights of the holder of this Warrant
under the terms of this Warrant, the Holder of this Warrant shall have the right
(the "Conversion Right") to convert this Warrant or any portion thereof into
shares of Common Stock as provided in this Section 7(b) at any time or from time
to time and prior to its expiration, subject to the restrictions set forth in
paragraph (b)(3) below. Upon exercise of the Conversion Right with respect to a
particular number of shares subject to this Warrant (the "Converted Warrant
Shares"), the Company shall deliver to the holder of this Warrant, without
payment by the holder of any exercise price or any cash or other consideration,
that number of shares of Common Stock equal to the quotient obtained by dividing
the Net Value (as hereinafter defined) of the Converted Warrant Shares by the
fair market value (as defined in paragraph (b)(4) below) of a single share of
Common Stock, determined in each case as of the close of business on the
Conversion Date (as hereinafter defined). The "Net Value" of the Converted
Warrant Shares shall be determined by subtraction the aggregate warrant purchase
price of the Converted Warrant Shares from the aggregate fair market value of
the Converted Warrant Shares. No fractional shares shall be issuable upon
exercise of the Conversion Right, and if the number of shares to be issued in
accordance with the foregoing formula is other than a whole number, the Company
shall pay to the holder of this Warrant an amount in cash equal to the fair
market value of the resulting fractional share.
The Conversion Right may be exercised by the holder of this Warrant by the
surrender of this Warrant at the principal office of the Company together with a
Notice of Election to Exercise (which may be in the form attached hereto as
Exhibit A) specifying that the Holder thereby intends to exercise the Conversion
Right and indicating the number of shares subject to this Warrant which are
being surrendered (referred to in paragraph (b)(1) above as the Converted
Warrant Shares) in exercise of the Conversion Right. Such conversion shall be
effective upon receipt by the Company of this Warrant together with the
aforesaid documents, or on such later date as is specified therein (the
"Conversion Date"), but not later than the expiration date of this Warrant.
Certificates for the shares of Common Stock issuable upon exercise of the
Conversion Right, together with a check in payment of any fractional share and,
in the case of a partial exercise, a new warrant evidencing the shares remaining
subject to this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the holder of this Warrant promptly following the Conversion Date.
In the event the Conversion Right would, at any time this Warrant remains
outstanding, be deemed by the Company's independent certified public accountants
to give rise to a charge to the Company's earnings for financial reporting
purposes, then the Conversion Right shall automatically terminate upon the
Company's written notice to the holder of this Warrant of such adverse
accounting treatment.
For purposes of this Section 7(b), the "fair market value" of a share of Common
Stock as of a particular date shall be, if the Common Stock is publicly traded,
the last sales price (or, if no last sales price is
18
reported, the average of the high bid and low asked prices) for a share of
Common Stock on that day (or, if that day is not a trading day, on the next
preceding trading day), as reported by the principal exchange on which the
Common Stock is listed, or, if the Common Stock is publicly traded but not
listed on an exchange, as reported by The Nasdaq Stock Market, or if such prices
or quotations are not reported by The Nasdaq Stock Market, as reported by any
other available source of prices or quotations. If none of the foregoing
applies, the "fair market value" shall be determined by the Board of Directors
of the Company in good faith.
Taxes. Holder agrees that he will also pay to the Company the amount
-----
necessary for the Company to satisfy its withholding obligations under the Code,
if any.
HOLDER ACKNOWLEDGMENTS. Holder acknowledges that he has read and
-----------------------
understands the terms of this Warrant, and that:
The issuance of shares of Common Stock pursuant to the exercise of the
Warrant, and any resale of the shares of Common Stock, may only be effected in
compliance with applicable state and federal laws and regulations and that
Holder may be required to execute and deliver representations and warranties to
that effect prior to the exercise of any portion of the Warrant;
Holder is not entitled to any rights as a shareholder with respect to
any shares of Common Stock issuable hereunder until Holder becomes a shareholder
of record;
The shares of Common Stock subject hereto may be adjusted in the event
of certain changes in the capital structure of the Company; and
As a condition to the exercise of the Warrant, Holder may be required
to make such arrangements as the Company requires for the satisfaction of any
federal, state or local withholding tax obligations.
PROFESSIONAL ADVICE. The acceptance and exercise of the Warrant and the
--------------------
sale of Common Stock issued pursuant to the exercise of the Warrant may have
consequences under federal and state tax and securities laws which may vary
depending on the individual circumstances of Holder. Accordingly, Holder
acknowledges that Holder has been advised to consult his personal legal and tax
advisors in connection with this Agreement and Holder's dealings with respect to
the Warrant or the Common Stock.
REGISTRATION RIGHTS. If on or before December 31, 1999, the Company
--------------------
proposes to register any of its shares of Common Stock under the Securities Act
of 1933, as amended (the "Securities Act") in connection with an underwritten
public offering of such Common Stock for the account of the Company solely for
cash on a form that would also permit registration of the shares of Common Stock
issued upon exercise of this Warrant (the "Warrant Shares"), it will promptly
give written notice to Holder of its intention to do so and, upon the written
request of Holder given within twenty (20) days after receipt of any such notice
(which request shall specify the number of Warrant Shares desired to be included
in such underwritten public offering by Holder), the Company will use its
reasonable best efforts to cause all Shares requested by Holder to be included
in such registration to be registered to permit their inclusion in such
underwritten public offering; provided, however, that the Company shall not be
required to cause any Warrant Shares to be so registered or included or to give
notice of registration if in the underwriters' opinion the inclusion will
jeopardize the success of the offering of
19
shares of Common Stock by the Company or if the registration is being effected
pursuant to a contractual demand right of any person which precludes the
inclusion of any of the Warrant Shares in such registration or public offering.
If some but not all shares of Common Stock with respect to which the Company
shall have received requests for registration pursuant to piggyback registration
rights granted hereunder or pursuant to any other agreement shall be excluded
from such registration, the Company shall make appropriate allocation of shares
to be registered among all holders of Common Stock having a contractual right to
register their shares and at the time desiring to register their shares pro rata
in the proportion that the number of shares of Common Stock held by each such
holder bears to the total number of shares of Common Stock held by all such
holders then desiring to have their shares registered for sale. With respect to
the Shares so included, Holder shall bear the cost of any underwriting discount
or selling expenses for the sale of such Shares and the cost of the attorneys'
fees for Holder's own attorney, if any, and the Company shall bear all other
costs and expenses of the registration, including attorneys and accountants
fees, printing costs, SEC and blue sky filing fees and transfer agent fees and
expenses. the Company shall not be required under this section to include any of
the Warrant Shares in an underwriting of shares unless Holder (i) accepts the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it, assuming normal and customary underwriting terms
and (ii) furnishes to the Company such information regarding itself as shall be
reasonably required to effect the registration of the Shares. The rights granted
pursuant to this paragraph may not be assigned by Holder without the Company's
prior written consent. Holder hereby agrees that it shall not, to the extent
required by the Company and the underwriter of the offering giving rise to
piggyback rights hereunder sell or otherwise transfer or dispose of (other than
to donees who agree to be similarly bound) any shares of Common Stock during the
one-hundred-eighty day period following the effective date of a registration
statement filed by the Company under the Securities Act with respect to such
offering. The Company retains the right in its sole discretion to abandon or
withdraw any registration statement at any time.
NOTICES: All notices and other communications called for or required by
--------
this Agreement shall be in writing and shall be addressed to the parties at
their respective addresses stated below or to such other address as a party may
subsequently specify by written notice and shall be deemed to have been received
(i) upon delivery in person, (ii) five days after mailing it by U.S. certified
or registered mail, return receipt requested and postage prepaid, or (iii) two
days after depositing it with a commercial overnight carrier which provides
written verification of delivery:
To the Company: Xxxxxx Corporation
XX Xxx 000
Xxxxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: President
To Holder: Xxxxx Xxxxxxx
00 Xxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxx 00000
GOVERNING LAW. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Washington without giving effect to
principles of conflicts of laws.
20
ENTIRE AGREEMENT. This Warrant, comprises the entire understanding between
-----------------
the Company and Holder, supersedes any oral agreements on the subject matter
hereof. This Agreement may not be amended or modified except in a writing signed
by both parties.
Holder
/s/ Xxxxx Xxxxxxx
-----------------
Xxxxx Xxxxxxx
Xxxxxx Corporation
By: /s/ Xxxx X. World
-----------------
Name:Xxxx X. World
-------------
Title:Executive Vice President
21
Exhibit A
---------
Notice of Election to Exercise
------------------------------
This Notice of Election to Exercise shall constitute proper notice
pursuant to Section 7 of that certain Warrant Agreement (the "Agreement") dated
as of June __, 1997 between Xxxxxx Corporation (the "Company") and the
undersigned.
The undersigned hereby elects to exercise Holder' Warrant to purchase
_______________ shares of the common stock of the Company at a purchase price of
$___________ per share, for aggregate consideration of $___________, on the
terms and conditions set forth in the Agreement. Such aggregate consideration,
in the form specified in Section 7 of the Agreement, accompanies this Notice.
The undersigned has executed this Notice this ____ day of
________________, ______.
___________________________________
Name Typed or Printed
___________________________________
Signature
