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Exhibit 10.7
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE 40,000 SHARES
OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
OF
PORTFIELD INVESTMENTS, INC.
VOID AFTER MARCH 12, 2007
This certifies that, for value received, Xxxxx X. Xxxxxx, or his
registered assigns (the "Holder"), is entitled, subject to the terms set forth
below, to purchase from Portfield Investments, Inc. (the "Company"), a
corporation organized under the laws of the State of Colorado, Forty Thousand
(40,000) shares of the Common Stock of the Company, no par value, as
constituted on the date hereof (the "Warrant Issue Date"), upon surrender
hereof, at the principal office of the Company referred to below, with the
notice of exercise form attached hereto duly executed, and simultaneous payment
therefor in lawful money of the United States or otherwise as hereinafter
provided, at the Exercise Price as set forth in Section 2 below. The number,
character and Exercise Price of such shares of Common Stock are subject to
adjustment as provided below. The term "Warrant" as used herein shall include
this Warrant, and any warrants delivered in substitution or exchange therefor
as provided herein.
1. Term of Warrant.
Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable, in whole or in part, during the term commencing
on the Warrant Issue Date and ending at 5:00 p.m., Mountain Standard Time, on
March 12, 2007, and shall be void thereafter.
2. Exercise Price.
The Exercise Price at which this Warrant may be exercised shall
be $1.75 per share of Common Stock, as may be adjusted from time to time
pursuant to Section 11 hereof.
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3. Exercise of Warrant.
3.1 Manner of Exercise.
The purchase rights represented by this Warrant are
exercisable by the Holder in whole or in part, but not for less than Five
Thousand (5,000) shares at any time, or from time to time, or such lesser
number of shares which may then constitute the maximum number purchasable under
this Warrant, with such number being subject to adjustment as provided in
Section 11 below), during the term hereof as described in Section 1 above, by
the surrender of this Warrant and the Notice of Exercise annexed hereto as
Exhibit A duly completed and executed on behalf of the Holder, at the office of
the Company, or such other office or agency of the Company as it may designate
by notice in writing to the Holder at the address of the Holder appearing on
the books of the Company, upon payment in cash or by check acceptable to the
Company equal to the purchase price of the shares to be purchased.
3.2 Issuance of Shares upon Exercise of Warrant.
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, and the person entitled to receive the shares of
Common Stock issuable upon such exercise shall be treated for all purposes as
the holder of record of such shares as of the close of business on such date.
As promptly as practicable on or after such date and in any event within ten
(10) days thereafter, the Company at its expense shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates
for the number of shares issuable upon such exercise. In the event that this
Warrant is exercised in part, the Company at its expense will execute and
deliver a new Warrant of like tenor exercisable for the number of shares for
which this Warrant may then be exercised.
4. No Fractional Shares or Scrip.
The Company shall not issue any fractional shares or scrip
representing fractional shares upon the exercise of this Warrant. In lieu of
any fractional share to which the Holder would otherwise be entitled, the
Company shall make a cash payment equal to the fair market value of one share
of common stock determined in accordance with Section 3 multiplied by such
fraction.
5. Replacement of Warrant.
On receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant and, in the case of
loss, theft or destruction, on delivery of an indemnity agreement reasonably
satisfactory in form and substance to the Company or, in the case of
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense shall execute and deliver, in lieu of this Warrant, a new warrant of
like tenor and amount.
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6. Rights of Stockholders.
Subject to Sections 9 and 11 of this Warrant, the Holder shall not
be entitled to vote or receive dividends or be deemed the holder of Common
Stock or any other securities of the Company that may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value, or change of
stock to no par value, consolidation, merger, conveyance, or otherwise, or to
receive notice of meetings, or to receive dividends or otherwise until the
Warrant shall have been exercised as provided herein.
7. Transfer of Warrant.
7.1 Warrant Register.
The Company will maintain a register (the "Warrant
Register") containing the names and addresses of the Holder and its
transferees. Any Holder of this Warrant or any portion thereof may change his
address as shown on the Warrant Register by written notice to the Company
requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be delivered or given by mail to such
Holder as shown on the Warrant Register and at the address shown on the Warrant
Register. Until this Warrant is transferred on the Warrant Register of the
Company, the Company may treat the Holder as shown on the Warrant Register as
the absolute owner of this Warrant for all purposes, notwithstanding any notice
to the contrary.
7.2 Agent.
The Company may, by written notice to the Holder, appoint
an agent for the purpose of maintaining the Warrant Register referred to in
Section 7.1 above, issuing the Common Stock or other securities then issuable
upon the exercise of this Warrant, exchanging this Warrant, replacing this
Warrant, or any or all of the foregoing. Thereafter, any such registration,
issuance, exchange, or replacement, as the case may be, shall be made at the
office of such agent.
7.3 No Transfer or Assignment Allowed.
The Holder may not transfer or assign the Warrant in whole
or in part without compliance with all applicable federal and state securities
laws by the transferor and the transferee, including the delivery of investment
representation letters and, if this Warrant is sold, pledged or hypothecated in
whole or in part, legal opinions reasonably satisfactory to the Company, if
such are requested by the Company. Subject to the provisions of this Warrant
with respect to compliance with the Securities Act of 1933, as amended (the
"Act"), title to this Warrant may be transferred by endorsement by the Holder
executing a form of assignment (the "Assignment
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Form") reasonably acceptable to the Company and delivery in the same manner as
a negotiable instrument transferable by endorsement and delivery.
7.4 Issuance of New Warrant(s) to Transferee.
On surrender of this Warrant for exchange, properly
endorsed on the Assignment Form and subject to the provisions of this Warrant
with respect to compliance with the Act and with the limitations on assignments
and transfers and contained in this Section 7, the Company at its expense shall
issue to or on the order of the Holder a new warrant or warrants of like tenor,
in the name of the Holder or as the Holder may direct for the number of shares
of Common Stock issuable upon exercise hereof, upon Xxxxxx's payment of any
applicable transfer taxes.
7.5 Compliance with securities laws:
(a) Unregistered.
The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Common Stock to be issued upon
exercise hereof, if the issuance or resale thereof is unregistered under the
Act, are being acquired solely for the Holder's own account and not as a
nominee for any other party, and for investment, and that the Holder will not
offer, sell or otherwise dispose of this Warrant or any shares of Common Stock
to be issued upon exercise hereof except under circumstances that will not
result in a violation of the Act or any applicable state securities laws. Upon
exercise of this Warrant, the Holder shall, if requested by the Company,
confirm in writing, in a form satisfactory to the Company, that Holder has such
investment intent as is required under the Act, if any.
(b) Legend.
This Warrant and all shares of Common Stock issued
upon exercise hereof that are not registered under the Act shall be stamped or
imprinted with a legend in substantially the following form in addition to any
legend required by state securities laws:
"THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SECURITIES AND ANY SECURITIES OR SHARES ISSUED HEREUNDER OR THEREUNDER MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF
THESE SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF TO THE SECRETARY OF
THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY."
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8. Reservation of Stock.
The Company covenants that during the period this Warrant is
exercisable, the Company will reserve and keep available from its authorized
and unissued Common Stock a sufficient number of shares to provide for the
issuance of all Common Stock issuable upon the exercise of this Warrant and,
from time to time, will take all steps necessary to amend its Certificate of
Incorporation (the "Certificate") to provide sufficient reserves of shares of
Common Stock issuable upon exercise of this Warrant. The Company further
covenants that all shares that may be issued upon the exercise of rights
represented by this Warrant and payment of the Exercise Price, all as set forth
herein, will be duly and validly issued and fully paid and nonassessable, not
subject to preemptive rights, free from all taxes, liens and charges in respect
of the issue thereof, other than taxes in respect of any transfer occurring
contemporaneously or otherwise specified herein. The Company agrees that its
issuance of this Warrant shall constitute full authority to its 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.
Before taking any action which would cause an adjustment reducing
the current Exercise Price below the then par value, if any, of the shares of
Common Stock issuable upon exercise of this Warrant, the Company shall take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of such Common Stock at
such adjusted Exercise Price.
Before taking any action which would result in an adjustment in
the number of shares of Common Stock for which this Warrant is exercisable or
in the current Exercise Price, the Company shall obtain all such authorizations
or exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
9. Notices.
9.1 Issuance of Certificate Upon Adjustment.
Whenever the Exercise Price or number of shares
purchasable hereunder shall be adjusted pursuant to Section 11 hereof, the
Company shall issue a certificate signed by its Chief Financial Officer setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
Exercise Price and number of shares purchasable hereunder after giving effect
to such adjustment, and shall cause a copy of such certificate to be mailed, by
first-class mail, postage prepaid, to the Holder of this Warrant.
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9.2 Other Notices.
In case:
(i) the Company shall take a record of the
holders of its Common Stock 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
(ii) of any capital reorganization of the
Company, any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another corporation, or any
conveyance of all or substantially all of the assets of the Company to another
corporation, or
(iii) of any voluntary or involuntary dissolution,
liquidation or winding-up of the Company, then, and in each such case, the
Company will mail or cause to be mailed to the Holder a notice specifying, as
the case may be, (A) the date on which a record is to be taken for the purpose
of such dividend, distribution or right, and stating the amount and character
of such dividend, distribution or right, or (B) the date on which such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is to take place, and the time, if any
is to be fixed, as of which the holder of record of Common Stock, or such stock
or securities at the time receivable upon the exercise of this Warrant, shall
be entitled to exchange their shares 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 mailed at least fifteen (15) days prior to
the date therein specified.
9.3 Deemed Receipt of Notices.
All such notices, advices and communications shall be
deemed to have been received (i) in the case of personal delivery, on the date
of such delivery, and (ii) in the case of mailing, on the third (3rd) business
day following the date of such mailing.
10. Amendments and Waivers.
Any term of this Warrant may be amended with the written consent
of the Company and the Holder. Any amendment effected in accordance with this
Section 10 shall be binding upon the Holder, each future holder of all rights
pursuant to this Warrant, and the Company. No waivers of, or exceptions to,
any term, condition or provision of this Warrant, in any one or more instances,
shall be deemed to be, or construed as, a further or continuing waiver of any
such term, condition or provision.
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11. Adjustments.
The Exercise Price and the number of shares of Common Stock
purchasable hereunder are subject to adjustment from time to time as follows:
11.1 Reorganizations, Consolidations, Mergers, Sales or
Transfers.
If at any time while this Warrant, or any portion thereof,
is outstanding and unexpired there shall be (i) a reorganization, other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein, (ii) a merger or consolidation of the Company with or into
another corporation in which the Company is not the surviving entity, or a
reverse triangular merger in which the Company is the surviving entity but the
shares of the Company's capital stock outstanding immediately prior to the
merger are converted by virtue of the merger into other property, whether in
the form of securities, cash, or otherwise, (iii) an offering of Common Stock
or any other securities pro rata among the shareholders, or (iv) a sale or
transfer of the Company's properties and assets as, or substantially as, an
entirety to any other person, then, 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, during the period specified herein and upon payment of the
Exercise 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 11. The foregoing provisions of this Section 11.1 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
independent members of the Company's Board of Directors. In all events,
appropriate adjustment, as determined in good faith by the independent members
of 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.
The Company shall not effect any consolidation, merger,
sale or transfer of all or substantially all of its assets, unless prior to the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger, or the corporation into or for the
securities of which the previously outstanding stock of the Company shall be
changed in connection with such consolidation or merger, or the corporation
purchasing or otherwise acquiring such assets, as the case may be, shall assume
by written instrument executed and mailed or delivered to the registered Holder
at the last address of such Xxxxxx appearing on the books of the Company, the
obligation to deliver to such Holder, upon exercise of this Warrant,
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such shares of stock, securities or property, including case, as, in accordance
with the foregoing provisions, such Holder may be entitled to purchase.
11.2 Change in Shares.
If the Company, at any time while this Warrant, or any
portion thereof, remains outstanding and unexpired, 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 Exercise Price therefor shall be
appropriately adjusted, all subject to further adjustment as provided in this
Section 11.
11.3 Splits or Combinations of Shares.
If the Company at any time while this Warrant, or any
portion thereof, remains outstanding and unexpired, shall split, subdivide or
combine the securities as to which purchase rights under this Warrant exist,
into a different number of securities of the same class, the number of
securities for which this Warrant is exercisable shall be proportionately
increased and the Exercise Price for such securities shall be proportionately
decreased in the case of a split or subdivision or the number of securities for
which this Warrant is exercisable shall be proportionately deceased and the
Exercise Price shall be proportionately increased in the case of a combination.
11.4 Stock Dividends and Distributions.
If while this Warrant, or any portion thereof, remains
outstanding and unexpired, the holders of the securities as to which purchase
rights under this Warrant exist at the time shall have received, or, on or
after the record date fixed for the determination of eligible Stockholders,
shall have become entitled to receive, without payment therefor, other or
additional stock or other securities or property (other than cash) of the
Company by way of dividend, then and in each case, this Warrant shall represent
the right to acquire, in addition to the number of shares of the security
receivable upon exercise of this Warrant, and without payment of any additional
consideration therefor, the amount of such other or additional stock or other
securities or property (other than cash) of the Company that such holder would
hold on the date of such exercise had it been the holder of record of the
security receivable upon exercise of 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 during such period by the provisions of this Section 11.
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11.5 New Certificate.
Upon the occurrence of each adjustment or readjustment
pursuant to this Section 11, the Company at its expense shall promptly compute
such adjustment or readjustment in accordance with the terms hereof and furnish
to each Holder of this Warrant a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written request, at any
time, of any such Holder, furnish or cause to be furnished to such Holder a
like certificate setting forth: (i) such adjustments and readjustments; (ii)
the Exercise Price at the time in effect; and (iii) the number of shares and
the amount, if any, of other property that at the time would be received upon
the exercise of the Warrant.
12. Limitation of Liability.
No provision hereof, in the absence of affirmative action by the
Holder to purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of the Holder hereof, shall give rise to any liability of
such Holder for the purchase price of any Common Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
12.1 Miscellaneous.
Except as otherwise expressly provided herein, all notices
referred to in this Warrant will be in writing and will be delivered personally
or by registered or certified mail, return receipt requested, postage prepaid
and will be deemed to have been given when so personally delivered or on the
date of receipt appearing on the return receipt requested or, if refused, on
the date of refusal,
(i) To the Company:
Portfield Investments, Inc.
0000 Xxxxxxx 0 & 00
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx, President
(ii) To the Holder
Xxxxx X. Xxxxxx
000 Xxxxxxx Xxxx Xxxx Xxxxx
Grand Junction, CO 81503
12.2 Other Matters.
The descriptive headings of the several parts and
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The corporate law of the State of Colorado
will govern all questions concerning the relative rights of the Company
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and holders of its securities. All other questions concerning the
construction, validity and interpretation of this Warrant will be governed by
the internal law of the State of Colorado without regard to provisions of
conflicts or choice of law.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated as of March 12, 1997
PORTFIELD INVESTMENTS, INC.,
a Colorado corporation
By:
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Xxxxx Xxxxxx, President
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EXHIBIT A
FORM OF NOTICE OF EXERCISE
To: Portfield Investments, Inc.
(1) The undersigned hereby elects to purchase _____________ shares of
Common Stock of Portfield Investments, Inc., pursuant to the
terms of the attached Warrant.
(2) In exercising this Warrant, the undersigned xxxxxx confirms and
acknowledges that:
(a) unless the shares have been registered under the
Securities Act of 1933, as amended, the shares of Common
Stock are being acquired solely for the account of the
undersigned, and not as a nominee for any other party, and
for investment; and
(b) the undersigned will not offer, sell or otherwise dispose
of any such shares of Common Stock except under
circumstances that will not result in a violation of the
Securities Act of 1933, as amended.
(3) Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such
other name as is specified below:
(4) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other
name as is specified below:
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(Name)
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(Name)
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