EXHIBIT 99.1
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") AND MAY NOT BE OFFERED OR SOLD UNLESS REGISTERED UNDER THE ACT OR IN
THE OPINION OF COUNSEL AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE.
Void after 5:00 P.M., Los Angeles Time on September 30, 2006
(the "Expiration Date")
RECOM MANAGED SYSTEMS, INC.
A Delaware Corporation
WARRANT TO PURCHASE
200,000
SHARES OF COMMON STOCK
AS HEREIN DESCRIBED
Dated: as of September 19, 2002
This certifies that, for value received
SIM XXXXX
000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
or his registered assigns (the "Holder") is entitled, subject to the terms set
forth herein, to purchase from Recom Managed Systems, Inc. (the "Company"), a
Delaware corporation having its offices at c/o Xxx X. Xxxxxx, 000 00xx Xxxxxx,
Xxxxx 00000, Xxxxxx, Xxxxxxxx, 00000, two hundred thousand (200,000) shares of
the Company's common stock subject to adjustment as set forth herein.
1. DEFINITIONS. Unless otherwise provided herein, the following terms shall
be defined as follows:
1.1 "Common Stock" or "Common Shares" shall initially refer to the
Company's common stock including Underlying Securities, as more fully set
forth in Section 4 hereof.
1.2 "Company" shall mean Recom Managed Systems, Inc., its successors and
assigns.
1.3 "Effective Date" shall mean September 1, 2003.
1.4 "Expiration Date" shall mean September 30, 2006.
1.5 "Holder" shall mean Sim Xxxxx or his registered assigns.
1.6 "Warrant" shall mean the Holder's right to purchase the Common
Shares pursuant to the terms contained herein.
1.7 "Warrant Price" or "Common Share Price" shall be Two Dollars ($2.00)
per Share, which is above fair market value as of the date of this grant,
subject to adjustment as set forth herein.
1.8 "Purchase Form" shall mean the form attached hereto as Exhibit "A".
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1.9 "Underlying Securities" or "Underlying Shares" or "Underlying Stock"
shall refer to the Common Shares or other securities or property issuable or
issued upon exercise of the Warrants.
1.10 "Registrable Securities" means:
(a) The Common Stock issuable or previously issued on the exercise
of the Warrant and any Common Stock issued as a dividend or other distribution
with respect to, or in exchange for or in replacement of, the Common Stock
issued on such exercise.
1.11 "Registrable Securities Holder" means any holder of outstanding
Registrable Securities, provided, however, that for the purpose of this
definition the holder of this Warrant shall be deemed to be the Holder of the
Registrable Securities into which that security is then exercisable.
2. TERMS OF WARRANT.
2.1 EXERCISE OF WARRANT.
(a) Exercise by Payment. Subject to the terms of this Warrant, the
purchase rights represented by this Warrant may be exercised by the Holder
hereof, in whole or in part (but not as to less than a whole Common Share), at
any time, and from time to time, during the period commencing on the Effective
Date and terminating on the Expiration Date. A Warrant may be exercised by
the Holder upon presentation of this Warrant, with the Purchase Form duly
executed, at the Company's office (or such office or agency of the Company as
it may designate in writing to the Holder hereof by notice pursuant to the
terms hereof), specifying the number of Common Shares as to which the Warrant
is being exercised, and upon payment by the Holder to the Company of the
Warrant Price. Such payment shall be made by cash, by certified check, bank
draft or confirmed wire transfer, in an amount equal to the Warrant Price
times the number of Common Shares then being purchased hereunder.
(b) Effect of Exercise. Company agrees that the Holder hereof
shall be deemed the record owner of such Underlying Securities as of the close
of business on the date on which this Warrant shall have been presented and
payment made for such Underlying Securities as aforesaid. Certificates for
the Underlying Securities so obtained shall be delivered to the Holder hereof
within a reasonable time, not exceeding fourteen (14) days, after the rights
represented by this Warrant shall have been so exercised. If this
Warrant shall be exercised in part only or transferred in part by this Warrant
for cancellation or partial transfer, upon request by the Holder the Company
shall deliver a new Warrant evidencing the rights of the Holder hereof to
purchase the balance of the Underlying Shares which such Holder is entitled to
purchase hereunder. Exercise in full of the rights represented by this
Warrant shall not extinguish any rights granted related to registration of the
Underlying shares under the Securities Act of 1933, as amended (the "Act"), as
may be set forth elsewhere herein.
(c) Cashless (Net Issue) Exercise. Notwithstanding any provisions
herein to the contrary, if the fair market value of one share of the Company's
Common Stock is greater than the Stock Purchase Price (at the date of
calculation as set forth below), in lieu of exercising this Warrant for cash,
the Holder may elect to receive shares equal to the value (as determined
below) of this Warrant (or the portion thereof being canceled) by surrender of
this Warrant at the principal office of the Company together with the properly
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endorsed Form of Subscription and notice of such election in which event the
Company shall issue to the Holder a number of shares of Common Stock computed
using the following formula:
X = Y (A-B)
----------
A
Where X = the number of shares of Common Stock to be issued to the Holder;
Y = the number of shares of Common Stock purchasable under the Warrant or, if
only a portion of the Warrant is being exercised, the portion of the Warrant
being canceled (as of one day prior to the date of such calculation);
A = the fair market value of one share of the Company's Common Stock (as of
one day prior to the date of such calculation); and
B = Stock Purchase Price (as adjusted to one day prior to the date of such
calculation).
For purposes of the above calculation, the fair market value of one share of
Common Stock shall mean:
(A) If traded on a securities exchange, the fair market value of the
Common Stock shall be deemed to be the average of the closing prices of the
Common Stock on such exchange over the 30-day period ending five business days
prior to the net issuance exercise date;
(B) If traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the fair market value of the Common Stock shall be deemed to be the
average of the last reported sales prices of the Common Stock on such market
over the 30-day period ending five business days prior to the net issuance
exercise date;
(C) If traded over-the-counter other than on the Nasdaq National Market
or the Nasdaq SmallCap Market, the fair market value of the Common Stock shall
be deemed to be the average of the closing bid prices of the Common Stock over
the 30-day period ending five business days prior to the net issuance exercise
date; and
(D) If there is no public market for the Common Stock, then fair market
value shall be determined by mutual agreement of the Holder and the Company,
and if the Holder and the Company are unable to so agree, at the Company's
sole expense, by an investment banker of national reputation selected by the
Company and reasonably acceptable to the Holder.
In the case of any dispute with respect to an exercise, the Company shall
promptly issue such number of shares of Common Stock as are not disputed in
accordance with this Warrant. If such dispute involves the calculation of the
Stock Purchase Price, the Company shall submit the disputed calculations to a
"Big Six" independent accounting firm (selected by the Company) via facsimile
within three (3) business days of receipt of the Form of Subscription. The
accounting firm shall audit the calculations and notify the Company and the
converting Holder of the results no later than two (2) business days from the
date it receives the disputed calculations. The accounting firm's calculation
shall be deemed conclusive, absent manifest error. The Company shall then
issue the appropriate number of shares of Common Stock in accordance with this
Section.
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2.2. EXCHANGE OF WARRANT. Subject to the provision of restrictions on
transfer related to the requirement for registration under the Act and such
other restrictions as may be set forth herein; (i) this Warrant is
exchangeable at the option of the Holder at the aforesaid office of the
company for other Warrants of different denominations entitling the Holder
thereof to purchase in the aggregate the same number of Common Shares as are
purchasable hereunder; and (ii) this Warrant may be divided or combined with
other Warrants which carry the same rights, in either case, upon presentation
hereof at the aforesaid office of the company together with a written notice,
signed by the Holder hereof, specifying the names and denominations in which
new Warrants are to be issued, and the payment of any transfer tax due in
connection therewith.
3. ADJUSTMENT OF WARRANT AND NUMBER OF SHARES. Subject and pursuant to the
provisions of this Section 3, the Warrant Price and number of Common Shares
subject to this Warrant shall be subject to adjustment from time to time as
set forth hereinafter in this Section 3.
3.1 SUBDIVISION OF SHARES. If the Company shall at any time subdivide
its outstanding common Shares by recapitalization, reclassification, stock
dividend, or split-up thereof or other means, the number of Common Shares
subject to this Warrant immediately prior to such subdivision shall be
proportionately increased and the Warrant Price shall be proportionately
decreased, and if the Company shall at any time combine the outstanding common
Shares by recapitalization, reclassification or combination thereof or other
means, the number of Common Shares subject to this Warrant immediately prior
to such combination shall be proportionately decreased and the Warrant Price
shall be proportionately increased. Any such adjustment and adjustment to the
Warrant Price shall become effective at the close of business on the record
date for such subdivision or combination.
3.2 DISTRIBUTION OF SECURITIES OR OTHER ASSETS. If the Company after
the date hereof shall distribute to all of the holders of its common shares
any securities including, but not limited to Common Shares, or other assets
(other than a cash distribution made as a dividend payable out of earnings or
out of any earned surplus legally available for dividends under the laws of
the jurisdiction of incorporation of the company), the Company shall be
required to make such equitable adjustment in the Warrant Price and the type
and/or number of Underlying Securities in effect immediately prior to the
record date of such distribution as may be necessary to preserve to the Holder
of this Warrant rights substantially proportionate to and economically
equivalent to those enjoyed hereunder by such Holder immediately prior to the
happening of such distribution. Any such adjustment made reasonably and in
good faith by the Company shall be final and binding upon the Holders and
shall become effective as of the record date for such distribution.
3.3 MINIMUM ADJUSTMENT. No adjustment in the number of Common shares
subject to this Warrant or the Warrant Price shall be required under this
Section 3 unless such adjustment would require an increase or decrease in such
number of shares of at least 1% of the then adjusted number of Common shares
issuable upon exercise of the Warrant, provided, however, that any adjustments
which by reason of the foregoing are not required at the time to be made shall
be carried forward and taken into account and included in determining the
amount of any subsequent adjustment. If the Company shall make a record of
the Holders of its Common Shares for the purpose of entitling them to receive
any dividend or adjustment in the number of Common Shares subject to the
Warrant shall be required by reason of the making of such record.
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3.4 REORGANIZATION. In case of any capital reorganization or
reclassification or change of the outstanding Common Shares (exclusive of a
change covered by Section 3.1 hereof or which solely affects the par value of
such Common Shares) or in the case of any merger or consolidation of the
company with or into another corporation (other than a consolidated or merger
in which the Company is the continuing corporation and which does not result
in any reclassification, change, capital reorganization or change in the
ownership of the outstanding Common Shares), or in the case of any sale or
conveyance or transfer of all or substantially all of the property of the
Company and in connection with which the Company is dissolved, the Holder of
this Warrant shall have the right thereafter (until the expiration of the
right of exercise of this Warrant) to receive upon the exercise hereof, for
the same aggregate Warrant Price payable hereunder immediately prior to such
event, the kind and amount of shares of stock or other securities or property
receivable upon such reclassification, change, capital reorganization, merger
or consolidation, or upon the dissolution following any sale or other
transfer, by a holder of the number of Common Shares of the Company equal to
the number of common shares obtainable upon exercise of this Warrant
immediately prior to such event; and if any reorganization, reclassification,
change, merger, consolidation, sale or transfer also results in a change in
Common Shares covered by Section 3.1, then such adjustment shall be made
pursuant to both this Section 3.4 and Section 3.1. The provisions of this
Section 3.4 shall similarly apply to successive reclassification, or capital
reorganizations, mergers or consolidations, changes, sales or other transfers.
3.5 FRACTIONAL SHARES. The Company shall not be required to issue
fractional Common Shares upon any exercise of this Warrant. As to any final
fraction of a Common Share which the Holder of this Warrant would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash
adjustment in respect of such final fraction in an amount equal to the same
fraction of the market value of a share of such stock on the business day
preceding the day of exercise or book value as determined by the Company's
independent public accountants if not publicly traded. The Holder of this
Warrant, by his acceptance hereof, expressly waives any right to receive any
fractional shares of stock upon exercise of this Warrant. As used herein, the
current market price per share at any date shall be the price of Common Shares
on the business day immediately preceding the event requiring an adjustment
hereunder and shall be (A) if the principal trading market for such securities
is an exchange or NASDAQ NMS, the closing price on such exchange or NASDAQ NMS
on such day provided if trading of such Common Shares is listed on any
consolidated tape, the price shall be the closing price set forth on such
consolidated tape or (B) if the principal market for such securities is the
over-the-counter market, the high bid price on such date as set forth by
NASDAQ SmallCap or the NASDAQ Electronic Bulletin Board (or its announced
successor, the Bulletin Board Exchange), if the security is not quoted on
NASDAQ SmallCap or the NASDAQ Electronic Bulletin Board (or its announced
successor, the Bulletin Board Exchange), the high bid price as set forth in
the National Quotation Bureau sheet listing such securities for such day.
Notwithstanding the foregoing, if there is no reported closing price or high
bid price, as the case may be, on a date prior to the event requiring an
adjustment hereunder, then the current market price shall be determined as of
the latest date prior to such day for which such closing price or high bid
price is available.
3.6 CERTIFICATE. Irrespective of any adjustments pursuant to this
Section 3 in the Warrant Price or in the number, or kind, or class of shares
or other securities or other property obtainable upon exercise of this
Warrant, and Without impairing any such adjustment, this certificate
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representing this Warrant may continue to express the Warrant Price and the
number of Common Shares obtainable upon exercise at the same price and number
of Common Shares as are stated herein.
3.7 DETERMINATION OF SHARES AND WARRANT PRICE. Until this Warrant is
exercised, the Underlying Shares, and the Warrant Price shall be determined
exclusively pursuant to the provisions hereof.
3.8 ADJUSTMENT NOTICE. Upon any adjustment of this Warrant the Company
shall give written notice thereof to the Holder which notice shall include the
number of Underlying Securities purchasable and the price per share upon
exercise of this Warrant and shall set forth in reasonable detail the events
which resulted in such adjustment.
4. COMMON STOCK. For the purposes of this Warrant, the terms "Common
Shares" or "Common Stock" shall mean (i) the class of stock designated as the
common stock of the Company on the Effective Date or (ii) any other class of
stock resulting from successive changes or reclassification of such Common
Stock consisting solely of changes from par value to no par value, or from no
par value to par value or changes in par value. If at any time, as a result
of an adjustment made pursuant to Section 3, the securities or other property
obtainable upon exercise of this Warrant shall include shares or other
securities of another corporation or other property, then thereafter, the
number of such other shares or other securities or property so obtainable
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Common
Shares contained in Section 3, and all other provisions of this Warrant with
respect to Common Shares shall apply on like terms to any such other shares or
other securities or property. Subject to the foregoing, and unless the
context requires otherwise, all references herein to Common Shares shall, in
the event of an adjustment pursuant to Section 3, be deemed to refer also to
any other shares or other securities or property when obtainable as a result
of such adjustments.
5. OBLIGATIONS OF THE COMPANY. The Company covenants and agrees that:
(a) During the period within which the rights represented by this
Warrant may be exercised, the Company shall, at all times, reserve and keep
available out of its authorized capital stock, solely for the purposes of
issuance upon exercise of this Warrant, such number of its Common Shares as
shall be issuable upon the exercise of this Warrant and at its expense will
obtain the listing thereof on all quotation systems or national securities
exchanges on which the Common Shares are then listed; and if at any time the
number of authorized Common Shares shall not be sufficient to effect the
exercise of this Warrant, the Company will take such corporate action as may
be necessary to increase it authorized but unissued Common Shares to such
number of shares as shall be sufficient for such purpose; the Company shall
have analogous obligations with respect to any other securities or property
issuable upon exercise of this Warrant:
(b) All Common Shares which may be issued upon exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully
paid, nonassessable and free from all taxes, liens and charges with respect to
the issuance thereof; and
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(c) All original issue taxes payable in respect of the issuance of
Common Shares upon the exercise of the rights represented by this Warrant
shall be borne by the Company, but in no event shall the Company be
responsible or liable for income taxes or transfer taxes upon the transfer of
any Warrants.
6. VOTING RIGHTS. Until exercised, this Warrant shall not entitle the
Holder hereof to any voting rights or other rights as a shareholder of the
Company, except that the Holder of this Warrant shall be deemed to be a
shareholder of the company for the purpose of bringing suit on the ground that
the issuance of shares of stock of the Company is improper under the Delaware
General Corporation Law.
7. REGISTRATION RIGHTS OF HOLDERS.
If the Company shall at any time during the period that this Warrant is
exercisable by the Holder hereof prepare and file one or more notifications
pursuant to Section 3 of the Act or registration statements under the Act with
respect to the public offering of any class of equity or debt security of the
Company, whenever authorized, the Company shall give written notice thereof to
the Holder, and shall, upon the written request of the Holders, given within
twenty (20) days after such notice from the Company is received by the Holder,
include in such registration statement or notification such number of shares
underlying this Warrant as such Holder may request to be sold on a time to
time basis and the Company agrees to keep such notification or registration
statement and prospectus effective and current under the Act permitting the
sale of the shares covered thereby to be sold on a time to time basis at its
expense for a period of six (6) months after the effective date of such
registration statement or notification. Such inclusion shall be at no cost to
the Holder and shall be at the sole cost and expense of the Company except
with respect to any underwriting discounts or commissions or other selling
expenses denominated as such in any notification, registration statement or
prospectus and the Holders' own legal fees and expenses incurred in connection
therewith. In the event the Company fails to receive written request from the
Holder within twenty (20) days after the receipt by the Holder of such written
notice of the Company, then the Company shall treat such failure with the same
force and effect as if the Holder advised the Company that the Holder does not
intend to include their shares in such registration statement or notification.
The provisions of this Section shall not apply to any notification or
registration statement if such notification or registration statement solely
to any employee benefit plan or to a transaction of the nature contemplated by
Rule 145, promulgated under the Act. The rights granted under this section
shall not apply if, in the opinion of counsel to the Company, the Holder could
resell the shares proposed to be included in the registration statement or
notification without registration under the act or if, in the reasonable
opinion of an Underwriter, the inclusion of such shares would materially
impair the prospects of the offering to which the registration statement or
notification relates. Notwithstanding anything herein to the contrary, the
Company shall only be required to give a notice under this Section on one
occasion.
8. TRANSFERS. The Warrant shall not be transferable otherwise than by will
or by the laws of descent and distribution, and the Warrant may be exercised
during the lifetime of the Warrantee only by it.
9. LOST, STOLEN OR MUTILATED WARRANTS. If this Warrant is lost, stolen,
mutilated or destroyed, the Company shall, on such terms as to indemnity or
otherwise as the Company may reasonably impose, issue a new Warrant of like
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denomination, tenor and date. Any such new Warrant shall constitute an
original contractual obligation of the Company, whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable
by anyone.
10. ISSUANCE OF SUCCESSOR WARRANT. Any Warrant issued pursuant to the
provisions of Section 9, or upon transfer, exchange, division or partial
exercise of this Warrant or combination thereof with another Warrant or
Warrants, shall set forth each provision set forth in this Warrant as each
such provision is set forth herein, and shall be duly executed on behalf of
the Company by its chief executive officer.
11. SURRENDER OF WARRANT. Upon surrender of this Warrant for transfer or
exchange or upon the exercise hereof, this Warrant shall be canceled by the
Company, and shall not be reissued by the Company and, except as provided in
Section 2 in case of a partial exercise or an exchange or Section 8 in case of
a transfer, or Section 9 in case of mutilation. Any new Warrant certificate
shall be issued promptly but not later than fourteen (14) days after receipt
of the old Warrant certificate.
12. SUCCESSORS. This Warrant shall inure to the benefit of and be binding
upon the Holder hereof, the Company and their respective successors, heirs,
executors, legal representatives and assigns.
13. NOTICES. All notices required hereunder shall be in writing and shall be
deemed given when telegraphed, delivered personally, or within two (2) days
after being sent by Federal Express, Airborne Express, UPS or other recognized
international overnight courier, to the party to whom such notice is intended,
at the address of such other party as set forth on the first page hereof, or
at such other address of which the Company or Holder has been advised by the
notice hereunder.
14. SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and
of the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the
Holders shall be enforceable to the fullest extent permitted by law.
15. APPLICABLE LAW. The validity, interpretation and performance of this
Warrant and of the terms and provisions hereof shall be governed by the laws
of the State of California applicable to agreements entered into and performed
entirely in such state. The Federal and State Courts that sit in the County
of Los Angeles, State of California shall have exclusive jurisdiction over any
dispute arising hereunder.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of this 19th day of September 2002.
Recom Managed Systems, Inc.,
By:/s/ Xxxxx Xxxxxx
Its: President
ACCEPTED AS OF THE EFFECTIVE DATE
/s/ Sim Xxxxx
Name : SIM XXXXX
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EXHIBIT "A"
RECOM MANAGED SYSTEMS, INC.
A Delaware Corporation
PURCHASE FORM
To Be Executed
Upon Exercise of Warrant
The undersigned record holder of the within Warrant hereby irrevocably
elects to exercise the right to purchase _________________ Common Shares
evidenced by the within Warrant dated ______________________, according to the
terms and conditions thereof, and herewith makes payment of the purchase price
in full.
The undersigned requests that certificates for such shares and Warrants
shall be issued in the name set forth below.
Dated:_________________________
By: _____________________________________
Signature
_____________________________________
Print Name and Title of Signatory
Social Security No. or other identifying number: ___________________________
__________________________________
Name to who certificates are to be
issued if different from above.
Address:
_____________________________________________________________________________
_____________________________________________________________________________
Social Security No. or other identifying number: ____________________________
If said number of shares and Warrants shall not be all of the shares
purchasable under the within Warrant, the undersigned requests that a new
Warrant for the unexercised portion be registered in the name of:
__________________________________________
(Please Print)
Address:_____________________________________________________________________
Social Security No. or other identifying number: ____________________________
Signature: ________________________________
Print Name of Signatory
