Exhibit 10.9
WARRANT TO PURCHASE STOCK
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS
OF ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS
AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN
THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
EXEMPT FROM REGISTRATION.
WARRANT TO PURCHASE STOCK
Company: Genio Group, Inc., a Delaware corporation
Number of Shares: 250,000
Class of Stock: Common
Warrant Price: $1.0625
Issue Date: May 2, 2004
Expiration Date: April ___, 2009
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
other good and valuable consideration, IIG Capital, LLC, as agent for the IIG
Trade Opportunities Fund N.V. ("Holder") is entitled to purchase 250,000 shares
of fully paid and nonassessable shares of common stock, par value $0.001 per
share (the "Shares") of the company (the "Company") at the Warrant Price, all as
set forth above and as adjusted pursuant to Article 2 of this Warrant, subject
to the provisions and upon the terms and conditions set forth in this Warrant.
ARTICLE 1. EXERCISE.
Method of Exercise. Holder may exercise this Warrant by delivering a duly
executed Notice of Exercise in substantially the form attached as Appendix 1 to
the principal office of the Company. Unless Holder is exercising the conversion
right set forth in Article 1.2, Holder shall also deliver to the Company a wire
transfer of immediately available funds (to an account designated by the
Company), or other form of payment acceptable to the Company for the aggregate
Warrant Price for the Shares being purchased.
Conversion Right. In lieu of exercising this Warrant as specified in
Article 1.1, Holder may from time to time convert this Warrant, in whole or in
part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the Shares or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Warrant Price of such
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Shares by (b) the fair market value of one Share. The fair market value of the
Shares shall be determined pursuant to Article 1.3.
Fair Market Value. If the Company's common stock is traded in a public
market and the shares are common stock, the fair market value of each Share
shall be the average closing price of a Share reported for the twenty (20)
business days immediately before Holder delivers its Notice of Exercise to the
Company (or in the instance where the Warrant is exercised immediately prior to
the effectiveness of the Company's initial public offering, the "price to
public" per share price specified in the final prospectus relating to such
offering). If the Company's common stock is traded in a public market and the
Shares are preferred stock, the fair market value of a Share shall be the
average closing price of a share of the Company's common stock reported for the
twenty (20) business days immediately before Holder delivers its Notice of
Exercise to the Company (or, in the instance where the Warrant is exercised
immediately prior to the effectiveness of the Company's initial public offering,
the initial "price to public" per share price specified in the final prospectus
relating to such offering), in both cases, multiplied by the number of shares of
the Company's common stock into which a Share is convertible. If the Company's
common stock is not traded in a public market, the Board of Directors of the
Company shall determine fair market value in its reasonable good faith judgment.
Delivery of Certificate and New Warrant. Promptly after Holder exercises or
converts this Warrant and, if applicable, the Company receives payment of the
aggregate Warrant Price, the Company shall deliver to Holder certificates for
the Shares acquired and, if this Warrant has not been fully exercised or
converted and has not expired, a new Warrant representing the Shares not so
acquired.
Replacement of Warrants. 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 amount to the Company or, in the case of
mutilation, or surrender and cancellation of this Warrant, the Company shall
execute and deliver, in lieu of this Warrant, a new warrant of like tenor.
Treatment of Warrant Upon Acquisition of Company.
"Acquisition". For the purpose of this Warrant, "Acquisition"
means any sale or other disposition of all or substantially all of the assets of
the Company, or any reorganization, consolidation, or merger of the Company
where the holders of the Company's securities immediately before the transaction
beneficially own less than 50% of the outstanding voting securities of the
surviving entity after the transaction.
Treatment of Warrant at Acquisition.
A) Upon the written request of the Company, Holder agrees that, in the
event of an Acquisition in which the sole consideration is cash, either (a)
Holder shall exercise its conversion or purchase right under this Warrant and
such exercise will be deemed effective immediately prior to the consummation of
such Acquisition or (b) if Holder elects not to exercise the Warrant, this
Warrant will expire upon the consummation of such Acquisition. The Company shall
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provide the Holder with written notice of its request relating to the foregoing
(together with such reasonable information as the Holder may request in
connection with such contemplated Acquisition giving rise to such notice), which
is to be delivered to Holder not less than ten (10) days prior to the closing of
the proposed Acquisition.
B) Upon the written request of the Company, Holder agrees that, in the
event of an Acquisition that is an "arms length" sale of all or substantially
all of the Company's assets (and only its assets) to a third party that is not
an Affiliate (as defined below) of the Company (a "True Asset Sale"), either (a)
Holder shall exercise its conversion or purchase right under this Warrant and
such exercise will be deemed effective immediately prior to the consummation of
such Acquisition or (b) if Holder elects not to exercise the Warrant, this
Warrant will continue until the Expiration Date if the Company continues as a
going concern following the closing of any such True Asset Sale. The Company
shall provide the Holder with written notice of its request relating to the
foregoing (together with such reasonable information as the Holder may request
in connection with such contemplated Acquisition giving rise to such notice),
which is to be delivered to Holder not less than ten (10) days prior to the
closing of the proposed Acquisition.
C) Upon the closing of any Acquisition other than those particularly
described in subsections (A) and (B) above, the successor entity shall assume
the obligations of this Warrant, and this Warrant shall be exercisable for the
same securities, cash, and property as would be payable for the Shares issuable
upon exercise of the unexercised portion of this Warrant as if such Shares were
outstanding on the record date for the Acquisition and subsequent closing. The
Warrant Price and/or number of Shares shall be adjusted accordingly.
As used herein "Affiliate" shall mean any person or entity that owns or
controls directly or indirectly ten (10) percent or more of the stock of
Company, any person or entity that controls or is controlled by or is under
common control with such persons or entities, and each of such person's or
entity's officers, directors, joint venturers or partners, as applicable.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
-------------------------
2.1 Stock Dividends, Splits, Etc. If after the date hereof the Company
declares or pays a dividend on the Shares payable in common stock, or other
securities, then upon exercise of this Warrant, for each Share acquired, Holder
shall receive, without cost to Holder, the total number and kind of securities
to which Holder would have been entitled had Holder owned the Shares of record
as of the date the dividend occurred. If the Company subdivides the Shares by
reclassification or otherwise into a greater number of shares or takes any other
action which increase the amount of stock into which the Shares are convertible,
the number of shares purchasable hereunder shall be proportionately increased
and the Warrant Price shall be proportionately decreased. If the outstanding
shares are combined or consolidated, by reclassification or otherwise, into a
lesser number of shares, the Warrant Price shall be proportionately increased
and the number of Shares shall be proportionately decreased.
2.2 Reclassification, Exchange, Combinations or Substitution. Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall
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be entitled to receive, upon exercise or conversion of this Warrant, the number
and kind of securities and property that Holder would have received for the
Shares if this Warrant had been exercised immediately before such
reclassification, exchange, substitution, or other event. The Company or its
successor shall promptly issue to Holder an amendment to this Warrant setting
forth the number and kind of such new securities or other property issuable upon
exercise or conversion of this Warrant as a result of such reclassification,
exchange, substitution or other event that results in a change of the number
and/or class of securities issuable upon exercise or conversion of this Warrant.
The amendment to this Warrant shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article 2 including, without limitation, adjustments to the Warrant Price and to
the number of securities or property issuable upon exercise of the new Warrant.
The provisions of this Article 2.2 shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events.
2.3 Adjustments for Diluting Issuances. The Warrant Price and the number of
Shares issuable upon exercise of this Warrant or, if the Shares are Preferred
Stock, the number of shares of common stock issuable upon conversion of the
Shares, shall be subject to adjustment, from time to time in the manner set
forth in the Company's Articles or Certificate of Incorporation as if the Shares
were issued and outstanding on and as of the date of any such required
adjustment. The provisions set forth for the Shares in the Company's Articles or
Certificate (as applicable) of Incorporation relating to the above in effect as
of the Issue Date may not be amended, modified or waived, without the prior
written consent of Holder unless such amendment, modification or waiver affects
the rights associated with the Shares in the same manner as such amendment,
modification or waiver affects the rights associated with all other shares of
the same series and class as the Shares granted to the Holder.
2.4 No Impairment. The Company shall not, by amendment of its Articles or
Certificate (as applicable) of Incorporation or through a reorganization,
transfer of assets, consolidation, merger, dissolution, issue, or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed under this
Warrant by the Company, but shall at all times in good faith assist in carrying
out of all the provisions of this Article 2 and in taking all such action as may
be necessary or appropriate to protect Holder's rights under this Article
against impairment.
2.5 Fractional Shares. No fractional Shares shall be issuable upon exercise
or conversion of the Warrant and the number of Shares to be issued shall be
rounded down to the nearest whole Share. If a fractional share interest arises
upon any exercise or conversion of the Warrant, the Company shall eliminate such
fractional share interest by paying Holder the amount computed by multiplying
the fractional interest by the fair market value of a full Share.
2.6 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price, the Company shall promptly notify Holder in writing, and, at the
Company's expense, promptly compute such adjustment, and furnish Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and the
facts upon which such adjustment is based. The Company shall, upon written
request, furnish Holder a certificate setting forth the Warrant Price in effect
upon the date thereof and the series of adjustments leading to such Warrant
Price.
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ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company represents and warrants to
the Holder as follows:
(a) All Shares which may be issued upon the exercise of the purchase
right represented by this Warrant, and all securities, if any, issuable
upon conversion of the Shares, shall, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable, and free of any liens and
encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws.
(b) The Capitalization Table provided to Holder on the Issue Date
shall be true and complete as of the Issue Date.
3.2 Notice of Certain Events. If the Company proposes at any time (a) to
declare any dividend or distribution upon any of its stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for sale additional shares of any class or series of the Company's
stock; (c) to effect any reclassification or recapitalization of any of its
stock; (d) to merge or consolidate with or into any other corporation, or sell,
lease, license, or convey all or substantially all of its assets, or to
liquidate, dissolve or wind up; or (e) offer holders of registration rights the
opportunity to participate in an underwritten public offering of the company's
securities for cash, then, in connection with each such event, the Company shall
give Holder: (1) at least 10 days prior written notice of the date on which a
record will be taken for such rights (and specifying the date on which the
holders of common stock will be entitled thereto) or for determining rights to
vote, if any, in respect of the matters referred to in (c) and (d) above; (2) in
the case of the matters referred to in (c) and (d) above at least 10 days prior
written notice of the date when the same will take place (and specifying the
date on which the holders of common stock will be entitled to exchange their
common stock for securities or other property deliverable upon the occurrence of
such event); and (3) in the case of the matter referred to in (e) above, the
same notice as is given to the holders of such registration rights.
3.3 Registration Under Securities Act of 1933, as amended. The Company
agrees that the Shares or, if the Shares are convertible into common stock of
the Company, such common stock, shall have certain incidental, or "Piggyback,"
registration rights pursuant to and as set forth in the Company's Investor
Rights Agreement or similar agreement. The provisions set forth in the Company's
Investors' Right Agreement or similar agreement relating to the above in effect
as of the Issue Date may not be amended, modified or waived without the prior
written consent of Holder unless such amendment, modification or waiver affects
the rights associated with the Shares in the same manner as such amendment,
modification, or waiver affects the rights associated with all other shares of
the same series and class as the Shares granted to the Holder.
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3.4 No Shareholder Rights. Except as provided in this Warrant, the Holder
will not have any rights as a shareholder of the Company until the exercise of
this Warrant.
ARTICLE 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER. The Holder represents and
warrants to the Company as follows:
4.1 Purchase for Own Account. This Warrant and the securities to be
acquired upon exercise of this Warrant by the Holder will be acquired for
investment for the Holder's account, not as a nominee or agent, and not with a
view to the public resale or distribution within the meaning of the Act. Holder
also represents that the Holder has not been formed for the specific purpose of
acquiring this Warrant or the Shares.
4.2 Disclosure of Information. The Holder has received or has had full
access to all the information it considers necessary or appropriate to make an
informed investment decision with respect to the acquisition of this Warrant and
its underlying securities. The Holder further has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of this Warrant and its underlying securities and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Holder or to which the
Holder has access.
4.3 Investment Experience. The Holder understands that the purchase of this
Warrant and its underlying securities involves substantial risk. The Holder has
experience as an investor in securities of companies in the development stage
and acknowledges that the Holder can bear the economic risk of such Holder's
investment in this Warrant and its underlying securities and has such knowledge
and experience in financial or business matters that the Holder is capable of
evaluating the merits and risks of its investment in this Warrant and its
underlying securities and/or has a preexisting personal or business relationship
with the Company and certain of its officers, directors or controlling persons
of a nature and duration that enables the Holder to be aware of the character,
business acumen and financial circumstances of such persons.
4.4 Accredited Investor Status. The Holder is an "accredited investor"
within the meaning of Regulation D promulgated under the Act.
4.5 The Act. The Holder understands that this Warrant and the Shares
issuable upon exercise or conversion hereof have not been registered under the
Act in reliance upon a specific exemption therefrom, which exemption depends
upon, among other things, the bona fide nature of the Holder's investment intent
as expressed herein. The Holder understands that this Warrant and the Shares
issued upon any exercise or conversion hereof must be held indefinitely unless
subsequently registered under the 1933 Act and qualified under applicable state
securities laws, or unless exemption from such registration and qualification
are otherwise available.
ARTICLE 5. MISCELLANEOUS.
5.1 Term: This Warrant is exercisable in whole or in part at any time and
from time to time on or before the Expiration Date.
5.2 Legends. This Warrant and the Shares (and the securities issuable,
directly or
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indirectly, upon conversion of the Shares, if any) shall be imprinted with a
legend in substantially the following form:
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE ACT, OR THE SECURITIES LAWS OF ANY STATE
AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW,
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION OF LEGAL
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION
IS EXEMPT FROM REGISTRATION.
5.3 Compliance with Securities Laws on Transfer. This Warrant and the
Shares issuable upon exercise of this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by the Company). The Company shall not require Holder to provide an
opinion of counsel if the transfer is to any affiliate of Holder. Additionally,
the Company shall also not require an opinion of counsel if there is no material
question as to the availability of current information as referenced in Rule
144(c), Holder represents that it has complied with Rule 144(d) and (e) in
reasonable detail, the selling broker represents that it has complied with Rule
144(f), and the Company is provided with a copy of Holder's notice of proposed
sale.
5.4 Transfer Procedure. Subject to the provisions of Article 5.3 and upon
providing Company with written notice, Holder and any subsequent Holder may
transfer all or part of this Warrant or the Shares issuable upon exercise of
this Warrant (or the Shares issuable directly or indirectly, upon conversion of
the Shares, if any) to any transferee, provided, however, in connection with any
such transfer, Holder or any subsequent Holder will give the Company notice of
the portion of the Warrant being transferred with the name, address and taxpayer
identification number of the transferee and Holder will surrender this Warrant
to the Company for reissuance to the transferee(s) (and Holder if applicable).
The Company may refuse to transfer this Warrant or the Shares to any person who
directly competes with the Company, unless, in either case, the stock of the
Company is publicly traded.
5.5 Notices. All notices and other communications from the Company to the
Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may (or on the first business day after transmission by
facsimile) be, in writing by the Company or such holder from time to time.
Effective upon receipt of the fully executed Warrant and the initial transfer
described in Article 5.4 above, all notices to the Holder shall be addressed as
follows until the Company receives notice of a change of address in connection
with a transfer or otherwise:
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IIG Capital LLC, as agent for the IIG Trade Opportunities Fund N.V.
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Fax Number: (000) 000-0000
Notice to the Company shall be addressed as follows until the Holder
receives notice of a change in address:
Genio Group, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Fax Number: (000) 000-0000
5.6 Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
5.7 Attorney's Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorney's fees.
5.8 Automatic Conversion upon Expiration. In the event that, upon the
Expiration Date, the fair market value of one Share (or other security issuable
upon the exercise hereof) as determined in accordance with Section 1.3 above is
greater than the Exercise Price in effect on such date, then this Warrant shall
automatically be deemed on and as of such date to be converted pursuant to
Section 1.2 above as to all Shares (or such other securities) for which it shall
not previously have been exercised or converted, and the Company shall promptly
deliver a certificate representing the Shares (or such other securities) issued
upon such conversion to the Holder.
5.9 Counterparts. This Warrant may be executed in counterparts, all of
which together shall constitute one and the same agreement.
5.10 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.
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"COMPANY"
GENIO GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxx By:
----------------------------------- -------------------------------------
Name: Xxxxxx X. Xxxxxxxx Name:
--------------------------------- -----------------------------------
(Print) (Print)
Title: Senior Vice President, CFO Title:
-------------------------------- ----------------------------------
"HOLDER"
IIG CAPITAL, LLC, AS AGENT FOR THE
IIG TRADE OPPORTUNITIES FUND N.V.
By: /s/ Xxxxxx Silver
-----------------------------------
Name: Xxxxxx Silver
---------------------------------
(Print)
Title:
--------------------------------
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APPENDIX 1
NOTICE OF EXERCISE
1. Holder elects to purchase ___________ shares of the Common/Series
______ Preferred [strike one] Stock of __________________ pursuant to the terms
of the attached Warrant, and tenders payment of the purchase price of the shares
in full.
[or]
1. Holder elects to convert the attached Warrant into Shares/cash
[strike one] in the manner specified in the Warrant. This conversion is
exercised for _____________________ of the Shares covered by the Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing the shares
in the name specified below:
-------------------------------------
Holder's Name
-------------------------------------
-------------------------------------
(Address)
3. By its execution below and for the benefit of the Company, Holder
hereby restates each of the representations and warranties in Article 4 of the
Warrant as the date hereof.
HOLDER:
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
(Date):
---------------------------------
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APPENDIX 2
ASSIGNMENT
For value received, IIG Capital, LLC, as agent for the IIG Trade
Opportunities Fund N.V. hereby sells, assigns and transfers unto
Name:
-------------------------
Address:
-----------------------
Tax ID:
-------------------------
that certain Warrant to Purchase Stock issued by [insert Borrower Name]
(the "Company"), on [insert Issue Date] (the "Warrant") together with
all rights, title and interest therein.
IIG CAPITAL, LLC, as agent for the IIG Trade
Opportunities Fund, N.V.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Date: [insert Issue Date]
----------------------------
By its execution below, and for the benefit of the Company,
____________________ makes each of the representations and warranties set forth
in Article 4 of the Warrant as of the date hereof.
--------------------------------------------
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
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