COMMON STOCK PURCHASE WARRANT To purchase up to 400,000 shares of common stock of iMEDIA INTERNATIONAL, INC. Dated: May14, 2008
EXHIBIT 10.3
Neither this security nor the securities for which this security is exercisable have been
registered with the Securities and Exchange Commission or the securities commission of any state.
These securities are issued in reliance upon an exemption from registration under the Securities
Act of 1933 (the “Securities Act”), and, accordingly, may not be offered or sold except pursuant to
an effective registration statement under the Securities Act or pursuant to an available exemption
from, or in a transaction not subject to, the registration requirements of the Securities Act and
in accordance with applicable state securities laws as evidenced by a legal opinion of counsel to
the transferor to such effect, the substance of which shall be reasonably acceptable to the
company.
To purchase up to 400,000 shares of common stock of
iMEDIA INTERNATIONAL, INC.
Dated: May14, 2008
This common stock purchase warrant (the “Warrant”) certifies that, for value
received, Sawtooth Properties, LLLP. (the “Holder”), is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on or after the date
given above (the “Initial Exercise Date”) and by the close of business on the third anniversary of
the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and
purchase from iMedia International, Inc., a Delaware corporation (the
“Company”), up to 400,000 shares (the “Warrant Shares”) of common stock, par value $0.001 per share, of the Company (the
“Common Stock”), as calculated based the total investment amount per the related Securities
Purchase Agreement of the same date. The purchase price of one share of Common Stock under this
Warrant is equal to the Exercise Price, as defined in Section 2(a).
1. Definitions. Capitalized terms used and not otherwise defined in this Warrant have the same
meanings ascribed to them in the Securities Purchase Agreement (the “Purchase Agreement”), dated
April 10, 2008, by and between the Company and the Holder as Purchaser.
2. Exercise.
(a) Exercise Price. The exercise price of the Common Stock under this Warrant is $0.225.
(b) Exercise of Warrant. The Holder may exercise the purchase rights represented by this
Warrant at any time from the Initial Exercise Date until 5:00 p.m., Pacific Standard Time,
on the Termination Date by delivering to the Company (i) a duly executed facsimile copy of
the annexed Exercise Notice (attached hereto as Exhibit A) no less than 61 days
prior to the exercise date designated therein, and (ii) no later than 5 Trading Days after
the exercise date designated in the Exercise Notice delivered to the Company, (A) this
Warrant, and (B) payment to the Company of the aggregate Exercise Price for the number of
Warrant Shares being purchased by the Holder in connection with such Exercise Notice (the
“Exercise Amount”). For the purposes hereof, “Trading Day” shall mean any day on which the
New York Stock Exchange is open for trading.
(c) Exercise limitations.
(i) The Holder may not exercise any portion of this Warrant if,
immediately after the Warrant Shares are issued, the Holder (together with the
Holder’s affiliates) would beneficially own a number of shares of Common Stock in
excess of the Beneficial Ownership Limitation (as defined below) . For the purposes
of the foregoing sentence, the number of shares of Common Stock beneficially owned
by the Holder and its affiliates includes the number of shares of Common Stock
issuable upon the exercise of this Warrant, but excludes the number of shares of
Common Stock that would be issuable upon (i) the Holder’s exercise of the remaining,
unexercised portion of this Warrant and (ii) the Holder’s or its affiliates’
exercise or conversion of the unexercised or nonconverted portion of any other
securities of the Company that the Holder or any of its affiliates own beneficially.
Except as set forth in the foregoing sentence, for the purposes of this Section
2(c), beneficial ownership shall be calculated in accordance with Section 13(d) of
the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). The
“Beneficial Ownership Limitation” shall be 4.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The Holder, upon not
less than 61 days’ prior notice to the Company, may increase or decrease the
Beneficial Ownership Limitation provisions of this Section 2(c)(i) or may waive the
application of the Beneficial Ownership Limitation of this Section 2(c)(i)
altogether until any subsequent election under this Section 2(c)(i). Any such
increase, decrease or waiver will not be effective until the 61st day
after such notice is delivered to the Company and shall only apply to such Holder
and no other Holder. The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.
(ii) The Holder acknowledges that the Company is not representing to the
Holder that the calculation described in Section 2(c) complies with Section 13(d) of
the Exchange Act, and the Holder is solely responsible for any schedules required to
be filed in accordance with the Exchange Act. The determination of whether this
Warrant is exercisable (in relation to other securities owned by the Holder and its
affiliates) is in the sole discretion of the Holder, and the submission of an
Exercise Notice is deemed to be the Holder’s declaration that the Holder has
determined that this Warrant is exercisable as set out in the Exercise Notice and
subject to the limitations in this Section 2(c). The Company is not obliged to
verify or confirm the accuracy of the Holder’s determination.
(iii) For the purposes of this Section 2(c), in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number of outstanding
shares of Common Stock as reflected in the most recent of (A) the latest filed of
the Company’s Form 10-QSB and Form 10-KSB, (B) a public announcement by the Company
stating the number of shares of Common Stock outstanding, or (C) any other notice by
the Company or the Company’s transfer agent stating the number of shares of Common
Stock outstanding. Within two Trading Days of the Holder’s written request to the
Company, the Company shall confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.
(d) Payment. Payment may be made either in cash or by certified or official bank check
payable to the order of the Company equal to the applicable aggregate Exercise Price for the
number of shares of Common Stock specified in the Exercise Notice (as such exercise number
shall be adjusted to reflect any adjustment in the total number of shares of Common Stock
issuable to the Holder per the terms of this Warrant), and the Holder shall thereupon be
entitled to receive the number of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock determined as provided herein.
(e) Authorization of Warrant Shares. The Company will issue all Warrant Shares as
duly authorized, validly issued, fully paid and non-assessable, and free from all taxes,
liens and charges (other than taxes in respect of any transfer occurring contemporaneously
with the issue).
(f) Delivery of certificates upon exercise. The Company will instruct its
transfer agent to deliver certificates for Warrant Shares to the Holder to the address
specified by the Holder in the Exercise Notice within 5 Trading Days from the later of (A)
61 days following the Company’s receipt of the Exercise Notice, (B) the Holder’s surrender
of this Warrant, and (C) the Company’s receipt of the Exercise Amount as set out in Section
2(b) (the “Warrant Share Delivery Date”). This Warrant shall be deemed to have been
exercised on the later of (1) the date the Exercise Amount is received by the Company and
(2) 61 days following the Company’s receipt of the Exercise Notice (the “Exercise Date”);
and the Warrant Shares shall be deemed to have been issued, and the Holder shall be deemed
to have become a holder of record of the shares for all purposes, on the Exercise Date.
(g) Delivery of new Warrants upon exercise. If this Warrant is exercised in part,
the Company, when it instructs its transfer agent to deliver the certificate or certificates
representing Warrant Shares, will deliver to the Holder a new Warrant evidencing the rights
of the Holder to purchase the unpurchased Warrant Shares, identical in all other respects
with this Warrant.
(h) Rescission rights. If the Company fails to instruct its transfer agent to
transmit to the Holder a certificate or certificates representing the Warrant Shares
pursuant to this Section 2(h) by the Warrant Share Delivery Date, then the Holder may
rescind the exercise.
(i) No fractional shares or scrip. No fractional shares or scrip representing
fractional shares may be issued upon the exercise of this Warrant. If the Holder would
otherwise be entitled to fractional shares upon the exercise, the Company will pay a cash
adjustment in respect of the fraction in an amount equal to the fraction multiplied by the
Exercise Price.
(j) Charges, taxes and expenses. The Company will issue certificates for Warrant
Shares in the name of the Holder and will not charge the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of the certificate.
(k) Closing of books. The Company will not close its stockholder books or records
in any manner that prevents the timely exercise of this Warrant.
3. Certain Adjustments.
(a) Stock dividends and splits. If the Company, at any time while this Warrant is
outstanding, (i) pays a stock dividend or otherwise makes a distribution on shares of its
Common Stock or any other Common Stock equivalent (which, for avoidance of doubt, does not
include any shares of Common Stock issued by the Company pursuant to this Warrant), (ii)
subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines
outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by
reclassification of shares of the Common Stock any shares of capital stock of the Company,
then the Exercise Price must be multiplied by a fraction of which the numerator is the
number of shares of Common Stock (excluding treasury shares, if any) outstanding before the
event and of which the denominator is the number of shares of Common Stock outstanding after
the event, and the number of shares issuable upon exercise of this Warrant must be
proportionately adjusted by this fraction. Any adjustment made pursuant to this Section
3(a) is effective immediately after the record date for the determination of stockholders
entitled to receive the dividend or distribution and is effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
(b) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the
Company merges or consolidates with or into another person, (ii) the Company sells all or
substantially all of its assets in one or a series of related transactions, (iii) any person
completes a tender offer or exchange offer by which holders of Common Stock are permitted to
tender or exchange their shares for other securities, cash or property, or (iv) the Company
reclassifies its Common Stock or completes any compulsory share exchange pursuant to which
the Common Stock is effectively converted into or exchanged for other securities, cash or
property (any such case, a “Fundamental Transaction”), then, upon any subsequent conversion
of this Warrant, the Holder shall have the right to receive, for each Warrant Share that
would have been issued upon the exercise absent the Fundamental Transaction, the same
consideration as the Company has given its other holders of its Common Stock for the
conversion of their Common Stock outstanding at the time of the Fundamental Transaction (the
“Alternate Consideration”). Any successor to the Company or surviving entity in a
Fundamental Transaction must issue to the Holder a new warrant consistent with the foregoing
provisions with evidence of the Holder’s right to exercise the warrant into Alternate
Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is
completed must include terms requiring the successor or surviving entity to comply with the
provisions of this Section 3(b) and ensuring that this Warrant (or any replacement security)
is similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.
(c) Calculations. All calculations under this Section 3 must be made to the nearest cent or
the nearest 1/100th of a share, as the case may be. The number of shares of
Common Stock outstanding at any given time does not include shares of Common Stock owned or
held by or for the account of the Company. For the purposes of this Section 3, the number
of shares of Common Stock deemed to be issued and outstanding as of a given date is the sum
of the number of shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.
(d) Notice to Holders. If the Company makes adjustments under this Section 3, the Company
will promptly mail to the Holder a notice containing a description of the event that
required the adjustment. If the Company proposes any transaction that affects the rights of
the holders of its Common Stock, then the Company will notify the Holder of the proposal at
least twenty days before the record date set for the transaction.
4. Warrant register. The Company will register this Warrant on its warrant register and will treat
the registered Holder as the absolute owner for all purposes.
5. Miscellaneous.
(a) Assignment; Exchange of Warrant. Subject to compliance with applicable securities laws,
this Warrant, and the rights evidenced hereby, may be transferred by any registered holder
hereof (a “Transferor”). On the surrender for exchange of this Warrant, with the
Transferor’s endorsement in the form of Exhibit B attached hereto (the “Transferor
Endorsement Form”) and together with an opinion of counsel reasonably satisfactory to the
Company to the effect that the transfer of this Warrant will be in compliance with
applicable securities laws, the Company at its expense, but with payment by the Transferor
of any applicable transfer taxes, will issue and deliver to or on the order of the
Transferor thereof a new Warrant or Warrants of like tenor, in the name of the Transferor
and/or the transferee(s) specified in such Transferor Endorsement Form (each a
“Transferee”), calling in the aggregate on the face or faces thereof for the number of shares of Common Stock
called for on the face or faces of the Warrant so surrendered by the
Transferor. No such transfers shall result in a public distribution of the Warrant.
(b) No rights as shareholder until Exercise Date. This Warrant does not entitle the Holder
to any voting rights or other rights as a shareholder of the Company before the Exercise
Date. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price,
the Company will issue the Warrant Shares to the Holder as the record owner of the Warrant
Shares as of the close of business on the Exercise Date.
(c) Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant or any stock certificate relating to the Warrant Shares, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender
and cancellation of the Warrant or stock certificate, if mutilated, the Company will make
and deliver a new Warrant or stock certificate of like tenor and dated as of the
cancellation, in lieu of the Warrant or stock certificate.
(d) Saturdays, Sundays, Holidays. If the last date for taking any action under this Warrant
falls on a Saturday, Sunday or a legal holiday, then the action may be taken on the next
succeeding Trading Day.
(e) Authorized Shares.
(i) While the Warrant is outstanding, the Company will reserve from its authorized
and unissued Common Stock a sufficient number of shares to provide for the issuance
of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant constitutes full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant Shares
upon the exercise of the purchase rights under this Warrant. The Company will take
all such reasonable action as may be necessary to assure that the Warrant Shares are
issued as
provided without a violation of any applicable law or regulation or of any
requirements of the trading market upon which the Common Stock may be listed or
quoted.
(ii) Unless waived or consented to by the Holder, the Company will not by any action
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in carrying out all of its terms
and take whatever action is necessary or appropriate to protect the rights of the
Holder under this Warrant from impairment.
(f) Jurisdiction. All questions concerning the construction, validity, enforcement and
interpretation of this Warrant will be determined in accordance with the provisions of the
Purchase Agreement.
(g) Restrictions. The Holder acknowledges that the Holder’s sale or transfer of the Warrant
Shares, if not registered, will be subject to restrictions upon resale imposed by state and
federal securities laws.
(h) No waiver. No course of dealing or any delay or failure to exercise any right hereunder
on the part of the Holder will operate as a waiver of the right or otherwise prejudices the
Holder’s rights, powers or remedies.
(i) Notice. Any notice, request or other document required or permitted to be given or
delivered by either party to the other must be delivered in accordance with the notice
provisions of the Purchase Agreement.
(j) Successors and Assigns. Subject to applicable securities laws, this Warrant inures to
the benefit of and binds the successors and permitted assigns of the Company and the Holder.
(k) Amendment. Any amendment of this Warrant must be in writing and signed by both the
Company and the Holder.
(l) Severability. Wherever possible, each provision of this Warrant will be interpreted
under applicable law, but if any provision of this Warrant is prohibited by or invalid under
applicable law, the provision will be ineffective to the extent of the prohibition or
invalidity without invalidating the remaining provisions of this Warrant.
(m) Headings. The headings used in this Warrant are for the convenience of reference only
and are not, for any purpose, deemed a part of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly
authorized officer.
Dated: May 14, 2008
| iMEDIA INTERNATIONAL, INC. |
||||
| By: | /s/ XXXXX X. XXXXXXXXXX | |||
| Name: | Xxxxx X. Xxxxxxxxxx | |||
| Title: | Chief Executive Officer | |||
EXHIBIT A
EXERCISE NOTICE
(To be signed only upon exercise of Warrant)
(To be signed only upon exercise of Warrant)
TO: iMedia International, Inc.
The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby
irrevocably elects to purchase shares of the Common Stock covered by such Warrant on
, which date shall be no earlier than 61 days after the date on which this
Exercise Notice is delivered to the Company.
The undersigned herewith makes payment of the full Exercise Price for such shares at the price
per share provided for in such Warrant, which is an aggregate of $ , in
lawful money of the United States.
The undersigned requests that the certificates for such shares be issued in the name of, and
delivered to
whose address is .
whose address is .
The undersigned represents and warrants that all offers and sales by the undersigned of the
securities issuable upon exercise of the within Warrant shall be made pursuant to registration
of the Common Stock under the Securities Act of 1933, as amended (the “Securities Act”), or
pursuant to an exemption from registration under the Securities Act.
Dated: |
|||||
| (Signature must conform to name of holder as specified on the face of the Warrant) |
EXHIBIT B
FORM OF TRANSFEROR ENDORSEMENT
(To be signed only upon transfer of Warrant)
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferees” the right represented by the within
Warrant to purchase the percentage and number of shares of Common Stock of iMEDIA
INTERNATIONAL, INC. to which the within Warrant relates specified under the headings
“Percentage Transferred” and “Number Transferred,” respectively, opposite the name(s) of such
person(s) and appoints each such person Attorney to transfer its respective right on the books
of iMEDIA INTERNATIONAL, INC. with full power of substitution in the premises.
| Transferees | Percentage Transferred | Number Transferred | ||
Dated: |
, | |||||||||
(Signature must conform to name of
holder as specified on the face of the
xxxxxx) |
||||||||||
| Signed in the presence of: | ||||||||||
| (Name) | (address) | |||||||||
| |
||||||||||
| ACCEPTED AND AGREED: | ||||||||||
| [TRANSFEREE] | ||||||||||
| (Name) |
(address) | |||||||||
