VOID AFTER 5:00 P.M., NEW YORK TIME ON NOVEMBER _, 2001
WARRANT TO PURCHASE 200,000 SHARES OF COMMON STOCK
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WARRANT TO PURCHASE COMMON STOCK
OF
ACCORD ADVANCED TECHNOLOGIES, INC.
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THIS WARRANT AND THE SHARES OF COMMON STOCK
ISSUABLE PURSUANT TO THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND ARE BEING
ISSUED PURSUANT TO RULE 504 OF REGULATION D.
FOR VALUE RECEIVED, Accord Advanced Technologies, Inc., a
Nevada corporation (the "Company"), grants the following rights to GEM
Management, Ltd. P. 0. Box 000, 00 Xxxx Xxxxxx, Xx. Xxxxxx, Xxxxxx, Xxxxxxx
Xxxxxxx JE4 OYZ and/or its assigns ("Holder"):
ARTICLE 1. DEFINITIONS.
As used herein, the following terms shall have the following meanings, unless
the context shall otherwise require:
(a) "Common Stock" shall mean the common stock, par
value $.001 per share, of the Company.
(b) "Corporate Office" shall mean the office of the
Company (or its successor) at which at any particular time its principal
business shall be administered.
(c) "Closing" shall have the same meaning as defined
in the Convertible Debenture Purchase Agreement.
(d) "Exercise Date" shall mean any date upon which
the Holder shall give the Company a Notice of Exercise.
(e) "Exercise Price" shall mean the price to be paid
to the Company for each share of Common Stock to be purchased upon exercise of
this Warrant in accordance with the terms hereof which, Exercise Price shall be
$.01 per share of Common Stock.
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(f) "Expiration Date" shall mean 5:00 p.m. (New York
time) on November 3 0, 200 1. Commission.
(g) "SEC" shall mean the United States Securities and
Exchange
(h) "Escrow Agent" shall mean Xxxxxx, Xxxxxxxxxx &
Xxxxxxxx, LLP, 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000, as the Company's
escrow agent, or its authorized successor, as such.
(i) "Underlying Shares" shall mean the shares of the
Common Stock issuable upon exercise of the Warrant.
ARTICLE 2. EXERCISE AND AGREEMENTS.
2.1 Exercise of Warrant. This Warrant shall entitle Holder to
purchase up to 200,000 (two hundred thousand) shares of Common Stock (the
"Shares") at the Exercise Price. This Warrant shall be exercisable at any time
and from time to time prior to the Expiration Date (the "Exercise Period"). This
Wan-ant and the right to purchase Shares hereunder shall expire and become void
at the Expiration Date.
2.2 Manner of Exercise.
(a) Holder may exercise this Warrant at any time,
starting at the time of Closing and from time to time during the Exercise
Period, in whole or in part (but not in denominations of fewer than 1,000
Shares, except upon an exercise of this Wan-ant with respect to the remaining
balance of Shares purchasable hereunder at the time of exercise), by delivering
to the Escrow Agent (as defined in an escrow agreement dated of the same date
between the Company and the Holder) (i) a duly executed Notice of Exercise in
substantially the form attached as Appendix 1 hereto, (ii) a bank cashier's or
certified check for the aggregate Exercise Price of the Shares being purchased,
and (iii) a bank cashier's, certified check or wire transfer of $350 to the
Escrow Agent for an exercise fee. At the option of the Holder, the exercise
price and exercise fee may be paid directly by the Escrow Agent to the Company
and to the Escrow Agent, respectively, out of the fees of the transaction as per
the term sheet dated November 4, 1998.
(b) From time to time upon exercise of this Warrant,
in whole or part, in accordance with its terms, the Escrow Agent will deliver
stock certificates to the Holder representing the number of Shares being
purchased pursuant to such exercise, subject to adjustment as described herein.
(c) Promptly following any exercise of this Wan-ant,
if the Wan-ant has not been fully exercised and has not expired, the Company
will deliver to the Holder a new Warrant for the balance of the Shares covered
hereby.
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2.3 Termination. All rights of the Holder in this Warrant, to
the extent they have not been exercised, shall terminate on the Expiration Date.
2.4 No Rights Prior to Exercise. Prior to its exercise
pursuant to Section 2.2 above, this Warrant shall not entitle the Holder to any
voting or other rights as holder of Shares.
2.5 Adjustments. In case of any reclassification, capital
reorganization, stock dividend or other change of outstanding shares of Common
Stock, or in case of any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification,
capital reorganization, stock dividend or other change of outstanding shares or
Common Stock), or in case of any sale or conveyance to another corporation of
the property of the Company as, or substantially as, an entirety (other than a
sale/leaseback, mortgage or other financing transaction), the Company shall
cause effective provision to be made so that the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and number of
shares of stock or other securities or property (including cash) receivable upon
such reclassification, capital reorganization, stock dividend or other change,
consolidation, merger, sale or conveyance as the Holder would have been entitled
to receive had the Holder exercised this Warrant in full immediately before such
reclassification, capital reorganization, stock dividend or other change,
consolidation, merger, sale or conveyance. Any such provision shall include
provision for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 2.5. The foregoing
provisions shall similarly apply to successive reclassifications, capital
reorganizations, stock dividends and other changes of outstanding shares of
Common Stock and to successive consolidations, mergers, sales or conveyances.
2.6 Fractional Shares. No fractional Shares shall be issuable
upon exercise of this Warrant and the number of Shares to be issued shall be
rounded up to the nearest whole Share. If a fractional Share interest arises
upon any exercise of the Warrant, the Company shall eliminate such fractional
Share interest by issuing Holder an additional full Share.
2.7 Escrow. The Company agrees to enter into the escrow
agreement attached hereto as Exhibit A (the "Escrow Agreement"), and to issue
into said Escrow certificates to be held by the Escrow Agent (as defined in the
Escrow Agreement), registered in the name of the Purchaser, free of any
restrictive legends, representing a number of shares of Common Stock (in 10,000
share certificates) equal to the number of shares of this Warrant.
2.8 Account with Broker-Dealer. Upon the exercise of the
Warrants and the receipt of the Underlying Shares, the Holder shall deposit such
Shares into an account with the NASD registered broker-dealer, which
broker-dealer has been chosen by the Company.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
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3.1 Representations and Warranties. The Company hereby
represents and warrants to the Holder as follows:
(a) All Shares which may be issued upon the exercise
of the purchase right represented by this Warrant shall, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable, and free of any liens
and encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws, and not subject to any
pre-emptive rights.
(b) The Company is a corporation duly organized and
validly existing under the laws of the State of Nevada, and has the full power
and authority to issue this Warrant and to comply with the terms hereof The
execution, delivery and performance by the Company of its obligations under this
Warrant, including, without limitation, the issuance of the Shares upon any
exercise of the Warrant have been duly authorized by all necessary corporate
action. This Warrant has been duly executed and delivered by the Company and is
a valid and binding obligation of the Company, enforceable in accordance with
its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting enforceability of
creditors' rights generally and except as the availability of the remedy of
specific enforcement, injunctive relief or other equitable relief is subject to
the discretion of the court before which any proceeding therefor may be brought.
(c) The Company is not subject to or bound by any
provision of any certificate or articles of incorporation or by-laws, mortgage,
deed of trust, lease, note, bond, indenture, other instrument or agreement,
license, permit, trust, custodianship, other restriction or any applicable
provision of any law, statute, rule, regulation, judgment, order, writ,
injunction or decree of any court, governmental body, administrative agency or
arbitrator which could prevent or be violated by or under which there would be a
default (or right of termination) as a result of the execution, delivery and
performance by the Company of this Warrant.
(d) The Company is not subject to the reporting
requirements of Section 13 or Section 15d of the Securities Exchange Act of
1934, as amended. The Company is eligible to issue the Warrants and the
Underlying Shares pursuant to Rule 504 of Regulation D promulgated under the
Securities Act. There are no restrictions on the resale or transfer of the
Warrants and Underlying Shares.
ARTICLE 4. SHELF REGISTRATION
If the Company shall propose to file with the SEC any registration
statement other than a Form 10 which would cause, or have the effect of causing,
the Company to become subject to the reporting requirements of Section 13 or 15
(d) of the Exchange Act (a "Reporting Issuer") or to take any other action the
effect of which would be to cause the Underlying Shares to be issued upon
exercise of any then outstanding Warrants to be restricted securities (as such
term is defined in Rule 144 promulgated under the Securities Act), the Company
agrees to give written notification of such to the Holders of the Warrants then
outstanding at least two weeks prior to
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such filing or taking of the proposed action. If any Warrants are outstanding at
the end of such notice period, the Company agrees to file a registration
statement on Form S-1 or SB-2, or such other form of registration statement in
which the Underlying Shares may be included, and to include in such registration
statement the Underlying Shares issuable upon exercise of any then outstanding
Warrants so as to permit the public resale thereof. All costs and expenses of
registration shall be borne by the Company.
Notwithstanding the foregoing, if the Company for any reason shall
become a Reporting Issuer, or shall have taken any action the effect of which
would be to cause the Underlying Shares to be issued upon exercise of any then
outstanding Warrants to be restricted securities (as such term is defined in
Rule 144 promulgated under the Securities Act), the Company agrees to
immediately file with the SEC and cause to become effective a registration
statement which would permit the public resale of such Underlying Shares in such
states of the United States as the Holders thereof shall reasonably request. All
costs and expenses of such registration shall be borne by the Company.
ARTICLE 5. LOSS OF EXEMPTION UNDER RULE 504
If any of the shares of Common Stock required to be reserved for
purposes of exercise of the Warrant hereunder require registration with approval
of any governmental authority under any federal (including but not limited to
the Act or similar federal statute than in force) or state law, or listing on
any national securities exchange, before such shares may be issued upon
exercise; for reasons including but not limited to a material change in Rule 504
of Regulation D of the Act, the Company will, at its expense as expeditiously as
possible to cause such shares to be duly registered or approved or listed on the
relevant national securities exchange, as the case may be. Shares of Common
Stock issued upon exercise of the Warrant shall be registered by the Company
under the Act if required by Article 4 of the Warrant and subject to the
conditions stated therein.
ARTICLE 6. MISCELLANEOUS.
6.1 Transfer. This Warrant may not be transferred or assigned,
in whole or in part, at any time, except in compliance with applicable federal
and state securities laws by the transferor and the transferee (including,
without limitation, the delivery of an investment representation letter and a
legal opinion reasonably satisfactory to the Company), provided that this
Warrant may not be transferred or assigned such that either the Holder or any
transferee will, following such transfer or assignment, hold a Warrant for the
night to purchase fewer than 1,000 Shares.
6.2 Transfer Procedure. Subject to the provisions of Section
6. 1, Holder may transfer or assign this Warrant by giving the Company notice
setting forth the name, address and taxpayer identification number of the
transferee or assignee, if applicable (the "Transferee") and surrendering this
Warrant to the Company for reissuance to the Transferee (and the Holder, in the
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event of a transfer or assignment of this Warrant in part). (Each of the persons
or entities in whose name any such new Warrant shall be issued are herein
referred to as a Holder").
6.3 Loss, Theft, Destruction or Mutilation. If this Warrant
shall become mutilated or defaced or be destroyed, lost or stolen, the Company
shall execute and deliver a new Warrant in exchange for and upon surrender and
cancellation of such mutilated or defaced Warrant or, in lieu of and in
substitution for such Warrant so destroyed, lost or stolen, upon the Holder
filing with the Company evidence satisfactory to it that such Warrant has been
so mutilated, defaced, destroyed, lost or stolen. However, the Company shall be
entitled, as a condition to the execution and delivery of such new Warrant, to
demand indemnity satisfactory to it and payment of the expenses and charges
incurred in connection with the delivery of such new Warrant. Any Warrant so
surrendered to the Company shall be canceled.
6.4 Notices. All notices and other communications from the
Company to the Holder or vice versa shall be deemed delivered and effective when
given personally, by facsimile transmission and confirmed in writing or mailed
by first-class registered or certified mail, postage prepaid at such address
and/or facsimile number as may have been furnished to the Company or the Holder,
as the case may be, in writing by the Company or the Holder from time to time.
6.5 Waiver. This Warrant and any term hereof may be changed,
waived, or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
6.6 Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to its principles regarding conflicts of law.
Dated: 11/22/98
ACCORD ADVANCED TECHNOLOGIES, INC.
Attest: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: President
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APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase shares of the
Common Stock per value, of Accord Advanced Technologies, Inc. pursuant to the
terms of the attached Warrant, and tenders herewith payment of the purchase
price of such shares in full.
2. Please issue a certificate or certificates representing
said shares in the name of the undersigned or in such other name as is specified
below:
3. The undersigned represents it is acquiring the shares
solely for its own account and not with a view toward the resale or distribution
thereof except in compliance with applicable securities laws.
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(Signature)
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(Date)
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