Exhibit 4.11
Name: Xxxxxxxxx Venture Capital, L.L.C.
---------------------------------
WARRANT SUBSCRIPTION AGREEMENT
Affinity International Travel Systems, Inc.
000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000 X
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Gentlemen:
The undersigned understands that Affinity International Travel Systems, Inc., a
Nevada corporation (the "Company"), is offering for sale a warrant (the
"Warrant") to purchase 2,750,000 shares of its Common Stock, $0.001 par value
per share (the "Common Stock"), at $2.00 per share.
The undersigned further understands that the offering of the Warrant and any
subsequent exercise of the Warrant and purchase of the Common Stock are being
made without registration of the Warrant and/or the Common Stock subject to the
Warrant under the Securities Act of 1933, as amended (the "Securities Act"), in
reliance on an exemption for transactions by an issuer not involving a public
offering, and further understands that the undersigned is purchasing the Warrant
and upon exercise of the Warrant, the Common Stock, without being furnished any
prospectus setting forth all of the information that would be required to be
furnished under the Securities Act, and understands further that the offering is
being made only to "accredited investors" (as defined in Rule 501 of Regulation
D under the Securities Act).
1. Subscription. Subject to the terms and conditions of this Warrant, the
undersigned hereby irrevocably subscribes for that number of Warrants to
purchase the shares of Common Stock set forth in Appendix A. The consideration
for the Warrant shall be the execution of the Subscription Agreement by and
between the Company and the undersigned dated of even date herewith (the
"Subscription Agreement") and the payment of the consideration for the Note as
set forth in Section 1 of the Subscription Agreement; provided, however, that
the execution, delivery and performance of the Subscription Agreement in full by
Purchaser shall be a condition precedent of the obligations of the Company
hereunder.
2. Acceptance of Warrant Subscription and Issuance of Shares. It is understood
and agreed that the Company has the right to accept or reject this subscription,
in whole or in part, and that this subscription is accepted by the Company only
when it is signed by a duly authorized officer of the Company and delivered to
the undersigned at the Closing referred to in Section 3.
3. The Closing. The closing of the purchase and sale of the Common Stock (the
"Closing") shall take place at the offices of the Company or such other mutually
acceptable place on or before June 10, 1999 or at such time and place as the
Company and the undersigned shall mutually agree
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upon. The Company may, at its option, elect to close the transaction
contemplated hereby in one or more Closings.
4. Exercise of Warrant and Payment for Shares. The Warrant is exercisable
commencing on the date hereof and shall expire on the date which is five (5)
years from the date hereof. Upon exercise of the Warrant, the undersigned shall
make payment in the amount of $2.00 per share for the Common Stock as set forth
on Appendix A hereof, to the Company via certified check, personal check, or
wire transfer to the account designated by the Company or via cashless exercise
pursuant to Section 5(b)(ix) hereof.
5. Representations of the Company. As of the date of the Closing (the "Closing
Date"), the Company represents as follows:
(a) Valid Issuance. Upon issuance of the Warrant and upon exercise of the
Warrant and issuance of the Common Stock in accordance with this Warrant
Agreement, the Common Stock will represent validly authorized, duly issued and
fully paid and non-assessable shares of the Company, and the issuance thereof
will not conflict with the Certificate of Incorporation or Bylaws of the Company
nor with any outstanding warrant, option, call, preemptive right or commitment
of any type relating to the Company's capital stock.
(b) Other Representations and Agreements.
(i) Use of Proceeds. Upon exercise of this Warrant, the Company
agrees that it, or a wholly owned subsidiary of the Company, shall use not less
than twenty percent (20%) of the proceeds received upon conversion of the
Warrants granted pursuant to this subscription for the Information Technology
(as that term is understood by the undersigned and the Company) requirements of
the Company or any wholly owned subsidiary of the Company and not less than ten
percent (10%) of the proceeds received upon conversion of the Warrants granted
pursuant to this subscription for the direct marketing purposes of the Company
or any wholly owned subsidiary of the Company. The remainder of the proceeds
received from this subscription upon exercise of this Warrant shall only be used
by the Company or any wholly owned subsidiary of the Company for directly
related operating expenses of the Company or any wholly owned subsidiary of the
Company, but in no event shall the proceeds from this subscription be used for
present or future compensation, whether regular or special, of any officer or
director of the Company.
(ii) Sale of Additional Investor Shares. Except for transactions
involving the undersigned, from and after the date hereof, in the event that the
Company sells any common stock or warrants to purchase common stock at a price
per share or an exercise price per share for warrants that is less than $2.00,
then the Company shall immediately adjust the purchase price and/or the number
of shares which are the subject of this Warrant Subscription Agreement such that
the price per share and/or the number of shares hereunder is or are equal to the
difference between (1) the number of shares which would have been subscribed to
at the lesser price per share of such subsequently sold securities and (2) the
number of the shares subscribed to herein.
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(iii) Cashless Exercise. At any time following the date hereof, the
warrant holder, whether the undersigned or otherwise, in lieu of any cash
payment required under the Warrants, shall have the rights to exercise the
Warrants in whole or in part by surrendering the Warrants in exchange for the
number of shares of the Company's common stock equal to (x) the number of shares
as to which the Warrants are being exercised multiplied by (y) a fraction, the
numerator of which is the Market Price (as defined below) of the common stock
less the exercise price of the Warrants being exercised, and the denominator of
which is such Market Price. The term "Market Price" means the average of the
closing sale price per share of the common stock on the principal stock exchange
or market on which the common stock is then quoted or traded on each of the ten
(10) consecutive trading days preceding the date on which written notice of
election to exercise the Warrants has been given to the Company (a "cashless
exercise"). If the warrant holder opts for a cashless exercise of the warrants,
no other consideration shall be paid to the Company, other than surrendering the
warrant itself, nor will there be paid any commission or other remuneration to
any other person or entity by the warrant holder. In the event that the warrant
holder is not permitted to "tack" the holding period of the warrants to the
holding period of the common stock received upon the cashless exercise for
purposes of satisfaction of the holding period requirements of Rules
144(d)(3)(ii) and 144(k) under the Securities Act of 1933, as amended, for
whatever reason and there is no presently filed registration statement effective
as to the shares received or to be received through the cashless exercise of
this Warrant, the Company shall, upon receipt of the written request of the
warrant holder, promptly prepare and file a registration statement with the U.S.
Securities and Exchange Commission with respect to all of the shares underlying
this Warrant.
6. Representations and Warranties of the Undersigned. The undersigned hereby
represents and warrants to the Company and to each officer, director, and agent
of the Company that:
(a) Authority. The undersigned has all requisite authority to enter
into this Agreement and to perform all the obligations required to be
performed by the undersigned hereunder.
(b) Access to Information. The undersigned is familiar with the
business and financial condition, properties, operations and prospects of
the Company. The undersigned has been furnished copies of the Financial
Statements and all other documents requested by it and has had an
opportunity to discuss the Company's business and financial condition,
properties, operations and prospects with the Company's management. The
undersigned has also had an opportunity to ask questions of officers of
the Company, which questions were answered to his satisfaction. The
undersigned understands that such discussions were intended to describe
certain aspects of the Company's business and financial condition,
properties, operations and prospects, but were not a thorough or
exhaustive description.
(c) Representations and Warranties as of Closing. The undersigned
understands that, unless it notifies the Company in writing to the
contrary at or before the Closing, all the undersigned's representations
and warranties contained in this Agreement will be deemed to
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have been reaffirmed and confirmed as of the Closing, taking into account
all information received by the undersigned.
(d) Risk Factors. The undersigned understands that the purchase of
the Common Stock involves substantial risks.
(e) Knowledge, Skill and Experience. The undersigned has such
knowledge, skill and experience in business, financial and investment
matters so that is capable of evaluating the merits and risks of an
investment in Common Stock. To the extent necessary, the undersigned has
retained, at his own expense, and relied upon, appropriate professional
advice regarding the investment, tax and legal merits and consequences of
this Agreement and owning Common Stock.
(f) Accredited Investor. The undersigned is an "accredited investor"
as defined in Rule 501(a) under the Securities Act.
(g) Investment Intent. The undersigned is acquiring the Warrant
solely for his own beneficial account, for investment purposes, and not
with a view to, or for resale in connection with, any distribution of the
common stock of the Company. The undersigned has not offered or sold any
portion of its shares of Common Stock and has no present intention of
dividing its shares of Common Stock with others or of reselling his shares
of Common Stock. The undersigned understands that the Warrant and the
Common Stock have not been registered under the Securities Act or any
State Securities Laws by reason of specific exemptions under the
provisions thereof which depend in part upon the investment intent of the
undersigned and the other representations made by the undersigned in this
Agreement. The undersigned understands that the Company is relying upon
the representations and agreements contained in this Agreement (and any
supplemental information) for the purpose of determining whether this
transaction meets the requirements for such exemptions.
(h) Stock Transfer Restrictions. The undersigned agrees: (A) that it
will not sell, assign, pledge, give, transfer or otherwise dispose of the
Warrant or the Common Stock or any interest therein, or make any offer or
attempt to do any of the foregoing, except pursuant to a registration of
the Warrant or the Common Stock under the Securities Act and all
applicable State Securities Laws or in a transaction which is exempt from
the registration provisions of the Securities Act and all applicable State
Securities Laws; and (B) that the Company and any transfer agent for the
Common Stock shall not be required to give effect to any purported
transfer of any of the Common Stock except upon compliance with the
foregoing provisions.
7. Conditions to Obligations of the Undersigned and the Company. The
obligations of the undersigned to accept this Warrant and of the Company to
grant the Warrant are subject to the satisfaction at or before the Closing of
the following condition precedent:
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(a) Representations and Warranties. The representations and
warranties of the Company contained in Section 5 and of the undersigned
contained in Section 6 shall be true and correct on and as of the Closing
in all respects with the same effect as though such representations and
warranties had been made on and as of the Closing.
(b) Subscription Agreement. On or prior to the date hereof, the
Company and the undersigned shall have entered into a Subscription
Agreement for a Convertible Note (principal amount $1,000,000.00) on
mutually acceptable terms and the undersigned shall have paid the
consideration as set forth in Section 1 of such Subscription Agreement.
(c) Consulting Agreement. On or prior to the date hereof, the
Company and the undersigned shall have amended and restated the consulting
agreement entered into by and between the Company and the undersigned on
April 23, 1999 to reflect the current agreement of the parties thereto.
8. Obligations Irrevocable. The obligations of the undersigned hereunder
shall be irrevocable, except with the consent of the Company, until 3:00 p.m.
EDT, June 10, 1999.
9. Equitable Remedies. Each party hereto acknowledges that a refusal
without just cause by such party to consummate the transactions contemplated
hereby will cause irreparable harm to the other party, for which there may be no
adequate remedy at law. A party not in default at the time of such refusal shall
be entitled, in addition to other remedies at law or in equity, to specific
performance of this Agreement by the party that so refused or failed to
consummate the transactions contemplated hereby. In any action to enforce the
terms of this Agreement, the successful party shall be entitled to recover its
reasonable attorneys' fees, all costs and expenses from the party who refused or
failed to perform this Agreement.
10. Waiver, Amendment. Neither this Agreement nor any provisions of this
Agreement shall be modified, changed, discharged or terminated except by an
instrument in writing, signed by the party against whom any waiver, change,
discharge or termination is sought.
11. Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason of this Agreement shall
be assignable by the Company without the prior written consent of the
undersigned. The undersigned may assign, transfer, pledge, encumber, mortgage or
otherwise alienate any of the rights afforded to it hereunder and the Company
shall be bound by the terms hereof to such assignee or transferee; provided,
however, that any assignment, transfer, or other alienation of any right
hereunder by the undersigned shall be in compliance with all federal and state
securities laws.
12. Expenses. The Company shall pay all actual expenses incurred in
connection with this Warrant and the transactions contemplated hereby,
including, but not limited to, any and all legal, travel, lodging, meals and
other related transaction expenses of the undersigned and, upon request,
submission of appropriate receipts or invoices. In any action to enforce the
terms of this Agreement, the successful party shall be entitled to recover its
reasonable costs and expenses, including reasonable attorneys' fees, from the
party who refused or failed to perform this Agreement.
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13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the federal laws of the United State of America and the laws of
the State of Nevada.
14. Section and Other Headings. The section and other headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
16. Notices. All notices and other communications provided for herein
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid:
(1) If to the Company, to it at the following address:
000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000 X
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
FAX: (000) 000-0000
and
with a copy, which shall not constitute notice, to:
Xxxxx Xxxxxxx Freed & Gesmer
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
(2) If to the undersigned:
Xxxxxxxxx Venture Capital, L.L.C.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
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and
Xxxxxx X. Xxxxxxxxx, Xx.
0000 Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
with a copy, which shall not constitute notice, to:
Xxxxx Liddell & Xxxx LLP
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
FAX: (000) 000-0000
or at such other address as either party shall have specified by notice in
writing to the other.
17. Binding Effect. The provisions of this Agreement shall be binding upon
and accrue to the benefit of the parties and their respective successors and
permitted assigns.
18. Survival. All representations contained in this Agreement shall
survive the closing of the grant of the Warrant and the issuance and sale of the
shares of Common Stock upon exercise of the Warrant.
19. Notification of Changes. The undersigned hereby covenants and agrees
to notify the Company upon the occurrence of any event before the issuance of
the Common Stock pursuant to this Agreement which would cause any
representation, warranty, or covenant of the undersigned contained in this
Agreement to be false or incorrect.
[The immediately following page contains the signatures of the parties]
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IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement this 10th day of June, 1999.
Name: Xxxxxxxxx Venture Capital, LLC
BY: /s/ Xxxxxx X. Xxxxxxxxx, Xx.
----------------------------
XXXXXX X. XXXXXXXXX, XX.
Managing Member
Accepted as of
June 10, 1999
AFFINITY INTERNATIONAL
TRAVEL SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------
XXXXXX X. XXXXXXXX
President and
Chief Executive Officer
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APPENDIX A
CONSIDERATION TO BE DELIVERED
-------------------------------------------------------------------------------
Consideration for Warrant Aggregate Amount to Be Number of Warrant Shares
------------------------ Paid Upon Exercise of ------------------------
Warrant (assuming all
warrant shares are
exercised)
----------
Execution of
Subscription Agreement
for a Convertible Note $5,500,000.00 2,750,000
($1,000,000.00 principal (or cashless exercise)
amount) and payment of
the purchase price set
forth in Section 1
thereof
-------------------------------------------------------------------------------
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APPENDIX B
ACCREDITED INVESTOR CERTIFICATE
The undersigned Investor hereby certifies that it is an Accredited
Investor as that term is defined in Regulation D adopted pursuant to the
Securities Act of 1933. The specific category(s) of Accredited Investor
applicable to the undersigned is checked below.
___ a. any natural person whose individual net worth, or joint
net worth with that person's spouse, at the time of his
purchase exceeds $1,000,000;
___ b. any natural person who had an individual income in
excess of $200,000 in each of the two most recent years
or joint income with that person's spouse in excess of
$300,000 and has a reasonable expectation of reaching
the same income level in the current year;
___ c. any bank as defined in section 3(a)(2) of the Securities
Act of 1933, as amended (the "Act"), or any savings and
loan association or other institution as defined in
section 3(a)(5)(A) of the Act, whether acting in its
individual or fiduciary capacity; any broker or dealer
registered pursuant to section 15 of the Securities
Exchange Act of 1934; any insurance company as defined
in section 2(13) of the Act; any investment company
registered under the Investment Company Act of 1940 (the
"1940 Act") or a business development company as defined
in section 2(a)(48) of the 1940 Act; any Small Business
Investment Company licensed by the U.S. Small Business
Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958; any plan established
and maintained by a state, its political subdivisions
for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; any employee benefit
plan within the meaning of the Employee Retirement
Income Security Act of 1974 ("ERISA"), if the investment
decision is made by a plan fiduciary, as defined in
section 3(21) of ERISA, which is either a bank, savings
and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has
total assets in excess of $5,000,000; or, if a
self-directed plan, with investment decisions made
solely by persons that are accredited investors;
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___ d. any private business development company as defined in
section 202(a)(22) of the Investment Advisers Act of
1940;
___ e. any organization described in section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or
similar business trust, or partnership, not formed for
the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
___ f. any director, executive officer, or general partner of
the Company;
X g. any entity in which all of the equity owners are
accredited investors; or
___ h. any trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the
securities offered, whose purchase is directed by a
sophisticated person as described in section
230.506(b)(2)(ii) of Regulation D under the Act.
IN WITNESS WHEREOF, the undersigned has executed this Accredited Investor
Certificate as of the 10th day of June, 1999.
XXXXXXXXX VENTURE CAPITAL, LLC
BY: /s/ Xxxxxx X. Xxxxxxxxx, Xx.
----------------------------
Xxxxxx X. Xxxxxxxxx, Xx.
Managing Member
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