EXHIBIT 10.2
THE SECURITIES REPRESENTED BY THESE WARRANTS AND THE COMMON STOCK ISSUABLE
THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW. THE SECURITIES
REPRESENTED BY THESE WARRANTS MAY NOT BE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER
APPLICABLE SECURITIES LAWS.
WARRANTS
to Purchase Common Stock of
STELLAR TECHNOLOGIES, INC.
Expiring on May 1, 2011
Warrant No. 2006-1
This Common Stock Purchase Warrant (the "WARRANT") certifies that for
value received, Trident Growth Fund, LP (the "HOLDER") or its assigns, is
entitled to subscribe for and purchase from the Company (as hereinafter
defined), in whole or in part, 1,745,000 shares of duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock (as hereinafter
defined) at an initial Exercise Price as hereinafter defined, subject, however,
to the provisions and upon the terms and conditions hereinafter set forth. The
number of Warrants (as hereinafter defined), the number of shares of Common
Stock purchasable hereunder, and the Exercise Price therefore are subject to
adjustment as hereinafter set forth. These Warrants and all rights hereunder
shall expire on May 1, 2011 (the "EXPIRATION DATE").
ARTICLE I
Definitions
As used herein, the following terms shall have the meanings set forth
below:
I.1 "COMPANY" shall mean Stellar Technologies, Inc. a Colorado
corporation, and shall also include any successor thereto with respect to the
obligations hereunder, by merger, consolidation or otherwise.
I.2 "COMMON STOCK" shall mean and include the Company's common stock,
$.001 par value per share, authorized on the date of the original issue of this
Warrant and shall also include (i) in case of any reorganization,
reclassification, consolidation, merger, share exchange or sale, transfer or
other disposition of assets, the stock or other securities provided for herein,
and (ii) any other shares of common stock of the Company into which such shares
of Common Stock may be converted.
I.3 "EXERCISE PRICE" shall be $.40 per share of Common Stock payable upon
exercise of the Warrants subject to adjustment at the times, and in accordance
with the provisions set forth herein with respect to same.
I.4 "MARKET PRICE" for any day, when used with reference to Common Stock,
shall mean the price of said Common Stock determined by reference to the last
reported sale price for the Common Stock on such day on the principal securities
exchange on which the Common Stock is listed or admitted to trading or if no
such sale takes place on such date, the average of the closing bid and asked
prices thereof as officially reported, or, if not so listed or admitted to
trading on any securities exchange, the last sale price for the Common Stock on
the National Association of Securities Dealers national market system on such
date, or, if there shall have been no trading on such date or if the Common
Stock shall not be listed on such system, the average of the closing bid and
asked prices in the over-the-counter market as furnished by any NASD member firm
selected from time to time by the Company for such purpose or, if the Common
Stock is not traded, then such price as is reasonably determined by the
Company's Board of Directors.
I.5 "WARRANT" shall mean the right upon exercise to purchase one Warrant
Share.
I.6 "WARRANT SHARES" shall mean the shares of Common Stock purchased or
purchasable by the holder hereof upon the exercise of the Warrants.
ARTICLE II
Exercise of Warrants
II.1 Method of Exercise. The Warrants represented hereby may be exercised
by the holder hereof, in whole or in part, at any time and from time to time on
or after the date hereof until 5:00 p.m., Houston, Texas time, on the Expiration
Date. To exercise the Warrants, the holder hereof shall deliver to the Company,
at the Warrant Office designated herein, (i) a written notice in the form of the
Subscription Notice attached as an exhibit hereto, stating therein the election
of such holder to exercise the Warrants in the manner provided in the
Subscription Notice; (ii) payment in full of the Exercise Price (A) in cash or
by bank check for all Warrant Shares purchased hereunder, or (B) through a
"cashless" or "net-issue" exercise of each such Warrant ("CASHLESS EXERCISE");
the holder shall exchange each Warrant subject to a Cashless Exercise for that
number of Warrant Shares determined by multiplying the number of Warrant Shares
issuable hereunder by a fraction, the numerator of which shall be the difference
between (x) the Market Price and (y) the Exercise Price for each such Warrant,
and the denominator of which shall be the Market Price; the Subscription Notice
shall set forth the calculation upon which the Cashless Exercise is based, or
(C) a combination of (A) and (B) above; and (iii) these Warrants. The Warrants
shall be deemed to be exercised on the date of receipt by the Company of the
Subscription Notice, accompanied by payment for the Warrant Shares and surrender
of these Warrants, as aforesaid, and such date is referred to herein as the
"EXERCISE DATE". Upon such exercise, the Company shall, as promptly as
practicable and in any event within five business days, issue and deliver to
such holder a certificate or certificates for the full number of the Warrant
Shares purchased by such holder hereunder, and shall, unless the Warrants have
expired, deliver to the holder hereof a new Warrant representing the number of
Warrants, if any, that shall not have been exercised, in all other respects
identical to these Warrants. As permitted by applicable law, the person in whose
name the certificates for Common Stock are to be issued shall be deemed to have
become a holder of record of such Common Stock on the Exercise Date and shall be
entitled to all of the benefits of such holder on the Exercise Date, including
without limitation the right to receive dividends and other distributions for
which the record date falls on or after the Exercise Date and to exercise voting
rights.
II.2 Expenses and Taxes. The Company shall pay all expenses and taxes
(including, without limitation, all documentary, stamp, transfer or other
transactional taxes) other than income taxes attributable to the preparation,
issuance or delivery of the Warrants and of the shares of Common Stock issuable
upon exercise of the Warrants.
II.3 Reservation of Shares. Company shall reserve at all times so long as
the Warrants remain outstanding, free from preemptive rights, out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the exercise of the Warrants, a sufficient number of shares of Common
Stock to provide for the exercise of the Warrants.
II.4 Valid Issuance. All shares of Common Stock that may be issued upon
exercise of the Warrants will, upon issuance by the Company, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof and, without limiting the generality of the
foregoing, the Company shall take no action or fail to take any action which
will cause a contrary result (including, without limitation, any action that
would cause the Exercise Price to be less than the par value, if any, of the
Common Stock).
II.5 Loan Agreement. The Warrants represented hereby were issued on
conjunction with that certain Loan Agreement dated on or about April 1, 2005, as
amended (the "LOAN AGREEMENT") between the Company and the Holder. The Holder
shall be entitled to the rights to registration under the Securities Act and any
applicable state securities or blue sky laws to the extent set forth in the
registration rights provision found in the Loan Agreement. The terms of the
registration rights provisions are hereby incorporated herein for all purposes
and shall be considered a part of this Warrant as if they had been fully set
forth herein.
II.6 Acknowledgment of Rights. At the time of the exercise of the Warrants
in accordance with the terms hereof and upon the written request of the holder
hereof, the Company will acknowledge in writing its continuing obligation to
afford to such holder any rights (including, without limitation, any right to
registration of the Warrant Shares) to which such holder shall continue to be
entitled after such exercise in accordance with the provisions of these
Warrants; provided, however, that if the Holder hereof shall fail to make any
such request, such failure shall not affect the continuing obligation of the
Company to afford to such Holder any such rights.
II.7 No Fractional Shares. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of these Warrants. If more
than one Warrant shall be presented for exercise at the same time by the same
holder, the number of full shares of Common Stock which shall be issuable upon
such exercise shall be computed on the basis of the aggregate number of whole
shares of Common Stock purchasable on exercise of the Warrants so presented. If
any fraction of a share of Common Stock would, except for the provisions of this
Section, be issuable on the exercise of this Warrant, the Company shall pay an
amount in cash calculated by it to be equal to the Market Price of one share of
Common Stock at the time of such exercise multiplied by such fraction computed
to the nearest whole cent.
ARTICLE III
Transfer
III.1 Warrant Office. The Company shall maintain an office for certain
purposes specified herein (the "WARRANT OFFICE"), which office shall initially
be the Company's offices at Stellar Technologies, Inc., 0000 Xxxxxxx Xxxxxxx
Xxxx, Xxxxx 000, Xxxxxx, XX 00000 and may subsequently be such other office of
the Company or of any transfer agent of the Common Stock in the continental
United States as to which written notice has previously been given to the
Holder. The Company shall maintain, at the Warrant Office, a register for the
Warrants in which the Company shall record the name and address of the Person in
whose name these Warrants has been issued, as well as the name and address of
each permitted assignee of the rights of the registered owner hereof.
III.2 Ownership of Warrants. The Company may deem and treat the Person in
whose name the Warrants are registered as the holder and owner hereof until
provided with notice to the contrary. The Warrants may be exercised by an
assignee for the purchase of Warrant Shares without having new Warrants issued.
III.3 Restrictions on Transfer of Warrants. These Warrants may be
transferred, in whole or in part, by the Holder. The Company agrees to maintain
at the Warrant Office books for the registration and transfer of the Warrants.
The Company, from time to time, shall register the transfer of the Warrants in
such books upon surrender of this Warrant at the Warrant Office properly
endorsed or accompanied by appropriate instruments of transfer and written
instructions for transfer. Upon any such transfer and upon payment by the holder
or its transferee of any applicable transfer taxes, new Warrants shall be issued
to the transferee and the transferor (as their respective interests may appear)
and the surrendered Warrants shall be cancelled by the Company. The Company
shall pay all taxes (other than securities transfer taxes or income taxes) and
all other expenses and charges payable in connection with the transfer of the
Warrants pursuant to this Section.
III.4 Compliance with Securities Laws. Subject to the terms of the
Registration Rights Agreement and notwithstanding any other provisions contained
in these Warrants, the Holder understands and agrees that the following
restrictions and limitations shall be applicable to all Warrant Shares and to
all resales or other transfers thereof pursuant to the Securities Act:
III.4.1 The holder hereof agrees that the Warrant Shares may not be sold
or otherwise transferred unless the Warrant Shares are registered under the
Securities Act and applicable state securities or blue sky laws or are exempt
therefrom.
III.4.2 A legend in substantially the following form will be placed on the
certificate(s) evidencing the Warrant Shares:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND, ACCORDINGLY, THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE RESOLD, PLEDGED, OR
OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER, THE
SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES
LAWS."
ARTICLE IV
Anti-Dilution
IV.1 Intentionally Deleted.
IV.2 Intentionally Deleted.
IV.3 Intentionally Deleted.
IV.4 Split up or Combination of Shares: In case issued and
outstanding shares of Common Stock shall be subdivided or split up into a
greater number of shares of the Common Stock, the Exercise Price shall be
proportionately decreased, and in case issued and outstanding shares of Common
Stock shall be combined into a smaller number of shares of Common Stock, the
Exercise Price shall be proportionately increased, such increase or decrease, as
the case may be, becoming effective at the time of record of the split-up or
combination, as the case may be.
IV.5 The term "ADDITIONAL COMMON STOCK" herein shall mean in the most
broadest sense all shares of Common Stock hereafter issued by the Company
(including, but not limited to Common Stock held in the treasury of the Company
and common stock purchasable via derivative security or option on the date of
such grant), except Common Stock issued upon the exercise of this warrant or the
Convertible Notes.
IV.6 In the event of distribution to all Common Stock holders of any
stock, indebtedness of the Company or assets or other rights to purchase
securities or assets, then, after such event, the Exercise Price reduced to so
as to entitle the Holder to the economic interest he had immediately prior to
the occurrence of such event.
IV.7 In case of any capital reorganization, reclassification of the stock
of the Company (other than a change in par value or as a result of a stock
dividend, subdivision, split up or combination of shares), the Exercise Price
reduced to so as to entitle the Holder to the economic interest he had
immediately prior to the occurrence of such event. The provisions of the
foregoing sentence shall similarly apply to successive reorganizations,
reclassifications, consolidations, exchanges, leases, transfers or other
dispositions or other share exchanges.
IV.8 Notice of Adjustment. (A) In the event the Company shall propose to
take any action which shall result in an adjustment in the Exercise Price, the
Company shall give notice to the Holder, which notice shall specify the record
date, if any, with respect to such action and the date on which such action is
to take place. Such notice shall be given on or before the earlier of 10 days
before the record date or the date which such action shall be taken. Such notice
shall also set forth all facts (to the extent known) material to the effect of
such action on the Exercise Price and the number, kind or class of shares or
other securities or property which shall be deliverable or purchasable upon the
occurrence of such action or deliverable upon exercise of this warrant (B)
Following completion of an event wherein the Exercise Price shall be adjusted,
the Company shall furnish to the Holder a statement, signed by an authorized
officer of the Company of the facts creating such adjustment and specifying the
resultant adjusted Exercise Price then in effect.
ARTICLE V
Miscellaneous
V.1 Entire Agreement. These Warrants, together with the Loan Agreement,
contain the entire agreement between the holder hereof and the Company with
respect to the Warrant Shares purchasable upon exercise hereof and the related
transactions and supersedes all prior arrangements or understandings with
respect thereto.
V.2 Governing Law. This warrant shall be governed by and construed in
accordance with the laws of the State of Texas in the courts located in Dallas,
Texas.
V.3 Waiver and Amendment. Any term or provision of these Warrants may be
waived at any time by the party which is entitled to the benefits thereof and
any term or provision of these Warrants may be amended or supplemented at any
time by agreement of the holder hereof and the Company, except that any waiver
of any term or condition, or any amendment or supplementation, of these Warrants
shall be in writing. A waiver of any breach or failure to enforce any of the
terms or conditions of these Warrants shall not in any way effect, limit or
waive a party's rights hereunder at any time to enforce strict compliance
thereafter with every term or condition of these Warrants.
V.4 Illegality. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of these Warrants shall not, at the election of the party for whom
the benefit of the provision exists, be in any way impaired.
V.5 Copy of Warrant. A copy of these Warrants shall be filed among the
records of the Company.
V.6 Notice. Any notice or other document required or permitted to be given
or delivered to the holder hereof shall be in writing and delivered at, or sent
by certified or registered mail to such holder at, the last address shown on the
books of the Company maintained at the Warrant Office for the registration of
these Warrants or at any more recent address of which the holder hereof shall
have notified the Company in writing.
V.7 Limitation of Liability; Not Stockholders. No provision of these
Warrants shall be construed as conferring upon the holder hereof the right to
vote, consent, receive dividends or receive notices (other than as herein
expressly provided) in respect of meetings of stockholders for the election of
directors of the Company or any other matter whatsoever as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by the holder
hereof to purchase shares of Common Stock, and no mere 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 shares of Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
V.8 Exchange, Loss, Destruction, etc. of Warrant. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, mutilation or
destruction of these Warrants, and in the case of any such loss, theft or
destruction upon delivery of an appropriate affidavit in such form as shall be
reasonably satisfactory to the Company and include reasonable indemnification of
the Company, or in the event of such mutilation upon surrender and cancellation
of these Warrants, the Company will make and deliver new Warrants of like tenor,
in lieu of such lost, stolen, destroyed or mutilated Warrants. Any Warrants
issued under the provisions of this Section in lieu of any Warrants alleged to
be lost, destroyed or stolen, or in lieu of any mutilated Warrants, shall
constitute an original contractual obligation on the part of the Company. These
Warrants shall be promptly canceled by the Company upon the surrender hereof in
connection with any exchange or replacement. The Company shall pay all taxes
(other than securities transfer taxes or income taxes) and all other expenses
and charges payable in connection with the preparation, execution and delivery
of Warrants pursuant to this Section.
V.9 Headings. The Article and Section and other headings herein are for
convenience only and are not a part of this Warrant and shall not affect the
interpretation thereof.
[signature page to follow]
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name dated May 1, 2006.
Stellar Technologies, Inc.
/s/ Xxxx Xxxxxxx
----------------
Xxxx Xxxxxxx
Title: Chief Executive Officer
SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrants, hereby elects to
exercise purchase rights represented thereby for, and to purchase thereunder,
_______ shares of the Common Stock covered by such Warrants, and herewith makes
payment in full for such shares, and requests (a) that certificates for such
shares (and any other securities or other property issuable upon such exercise)
be issued in the name of, and delivered to, and (b), if such shares shall not
include all of the shares issuable as provided in such Warrants, that new
Warrants of like tenor and date for the balance of the shares issuable
thereunder be delivered to the undersigned.
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Date:
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ASSIGNMENT
For value received, ____________________________, hereby sells, assigns
and transfers unto these Warrants, together with all rights, title and interest
therein, and does irrevocably constitute and appoint _________________________
attorney, to transfer such Warrants on the books of the Company, with full power
of substitution.
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Date:
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