EXHIBIT 10.3
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON
STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR (B) AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
Right to Purchase up to 15,000,000 Shares of Common Stock of
Retail Pro, Inc.
(subject to adjustment as provided herein)
COMMON STOCK PURCHASE WARRANT
No. _________________ Issue Date: February 28, 2008
Retail Pro, Inc., a corporation organized under the laws of the State
of Delaware (f/k/a Island Pacific, Inc.) (the "COMPANY"), hereby certifies that,
for value received, VALENS OFFSHORE SPV II, CORP., or assigns (the "HOLDER"), is
entitled, subject to the terms set forth below, to purchase from the Company (as
defined herein) from and after the Issue Date of this Warrant and at any time or
from time to time before 5:00 p.m., New York time, through the close of business
February 28, 2018 (the "EXPIRATION DATE"), up to 15,000,000 fully paid and
non-assessable shares of Common Stock (as hereinafter defined), $0.0001 par
value per share, at the applicable Exercise Price per share (as defined below).
The number and character of such shares of Common Stock and the applicable
Exercise Price per share are subject to adjustment as provided herein.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) COMMON STOCK" means (i) the Company's Common Stock, par
value $0.0001 per share; and (ii) any other securities into which or
for which any of the securities described in the preceding clause (i)
may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(b) "COMPANY" means Retail Pro, Inc. and any person or entity
which shall succeed, or assume the obligations of, Retail Pro, Inc.
hereunder.
(i) "EXERCISE PRICE" means a price of $0.01 per
share.
(c) "OTHER SECURITIES" means any stock (other than Common
Stock) and other securities of the Company or any other person
(corporate or otherwise) which the Holder at any time shall be entitled
to receive, or shall have received, on the exercise of this Warrant, in
lieu of or in addition to Common Stock, or which at any time shall be
issuable or shall have been issued in exchange for or in replacement of
Common Stock or Other Securities pursuant to Section 4 or otherwise.
(d) "PURCHASE AGREEMENT" means the Securities Purchase
Agreement dated as of the date hereof among the Company, the Holder,
the other Purchasers (as defined therein) from time to time party
thereto and LV Administrative Services, Inc., as administrative and
collateral agent for the Purchasers (as defined therein), as amended,
modified, restated and/or supplemented from time to time.
1. EXERCISE OF WARRANT.
1.1 NUMBER OF SHARES ISSUABLE UPON EXERCISE. From and after
the date hereof through and including the Expiration Date, the Holder shall be
entitled to receive, upon exercise of this Warrant in whole or in part, by
delivery of an original or fax copy of an exercise notice in the form attached
hereto as EXHIBIT A (the "EXERCISE NOTICE"), shares of Common Stock of the
Company, subject to adjustment pursuant to Section 4.
1.2 FAIR MARKET VALUE. For purposes hereof, the "Fair Market
Value" of a share of Common Stock as of a particular date (the "DETERMINATION
DATE") shall mean:
(a) If the Company's Common Stock is traded on the
American Stock Exchange or another national exchange or is quoted on
the National or Capital Market of The Nasdaq Stock Market, Inc.
("NASDAQ"), then the closing or last sale price, respectively, reported
for the last business day immediately preceding the Determination Date.
(b) If the Company's Common Stock is not traded on
the American Stock Exchange or another national exchange or on the
Nasdaq but is traded on the NASD Over The Counter Bulletin Board, then
the mean of the average of the closing bid and asked prices reported
for the last business day immediately preceding the Determination Date.
(c) Except as provided in clause (d) below, if the
Company's Common Stock is not publicly traded, then as the Holder and
the Company agree or in the absence of agreement by arbitration in
accordance with the rules then in effect of the American Arbitration
Association, before a single arbitrator to be chosen from a panel of
persons qualified by education and training to pass on the matter to be
decided.
(d) If the Determination Date is the date of a
liquidation, dissolution or winding up, or any event deemed to be a
liquidation, dissolution or winding up pursuant to the Company's
charter, then all amounts to be payable per share to holders of the
Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per
share in respect of the Common Stock in liquidation under the charter,
assuming for the purposes of this clause (d) that all of the shares of
Common Stock then issuable upon exercise of this Warrant are
outstanding at the Determination Date.
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1.3 COMPANY ACKNOWLEDGMENT. The Company will, at the time of
the exercise of this Warrant, upon the request of the Holder acknowledge in
writing its continuing obligation to afford to the Holder any rights to which
the Holder shall continue to be entitled after such exercise in accordance with
the provisions of this Warrant. If the Holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to the Holder any such rights.
1.4 TRUSTEE FOR WARRANT HOLDERS. In the event that a bank or
trust company shall have been appointed as trustee for the Holder pursuant to
Subsection 3.2, such bank or trust company shall have all the powers and duties
of a warrant agent (as hereinafter described) and shall accept, in its own name
for the account of the Company or such successor person as may be entitled
thereto, all amounts otherwise payable to the Company or such successor, as the
case may be, on exercise of this Warrant pursuant to this Section 1.
2. PROCEDURE FOR EXERCISE.
2.1 DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. The
Company agrees that the shares of Common Stock purchased upon exercise of this
Warrant shall be deemed to be issued to the Holder as the record owner of such
shares as of the close of business on the date on which this Warrant shall have
been surrendered and payment made for such shares in accordance herewith. As
soon as practicable after the exercise of this Warrant in full or in part, and
in any event within three (3) business days thereafter, the Company at its
expense (including the payment by it of any applicable issue taxes) will cause
to be issued in the name of and delivered to the Holder, or as the Holder (upon
payment by the Holder of any applicable transfer taxes) may direct in compliance
with applicable securities laws, a certificate or certificates for the number of
duly and validly issued, fully paid and non-assessable shares of Common Stock
(or Other Securities) to which the Holder shall be entitled on such exercise,
plus, in lieu of any fractional share to which the Holder would otherwise be
entitled, cash equal to such fraction multiplied by the then Fair Market Value
of one full share, together with any other stock or other securities and
property (including cash, where applicable) to which the Holder is entitled upon
such exercise pursuant to Section 1 or otherwise.
2.2 EXERCISE.
(a) Payment may be made either (i) in cash by wire
transfer of immediately available funds or by certified or official
bank check payable to the order of the Company equal to the applicable
aggregate Exercise Price, (ii) by delivery of this Warrant, or shares
of Common Stock and/or Common Stock receivable upon exercise of this
Warrant in accordance with the formula set forth in subsection (b)
below, or (iii) by a combination of any of the foregoing methods, for
the number of shares of Common Stock specified in such 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 (or Other Securities)
determined as provided herein.
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(b) Notwithstanding any provisions herein to the
contrary, if the Fair Market Value of one share of Common Stock is
greater than the Exercise 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 exercised) by surrender of
this Warrant at the principal office of the Company together with the
properly endorsed Exercise Notice 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 this Warrant or, if only a portion of this
Warrant is being exercised, the portion of this
Warrant being exercised (at the date of such
calculation)
A = the Fair Market Value of one share of the Company's
Common Stock (at the date of such calculation)
B = the Exercise Price per share (as adjusted to the
date of such calculation)
3. EFFECT OF REORGANIZATION, ETC.; ADJUSTMENT OF EXERCISE PRICE.
3.1 REORGANIZATION, CONSOLIDATION, MERGER, ETC. If there
occurs any capital reorganization or any reclassification of the Common Stock of
the Company, the consolidation or merger of the Company with or into another
person (other than a merger or consolidation of the Company in which the Company
is the continuing entity and which does not result in any reorganization or
reclassification of its outstanding Common Stock) or the sale or conveyance of
all or substantially all of the assets of the Company to another person, then,
as a condition precedent to any such reorganization, reclassification,
consolidation, merger, sale or conveyance, the Holder will be entitled to
receive upon surrender of this Warrant to the Company (x) to the extent there
are cash proceeds resulting from the consummation of such reorganization,
reclassification, consolidation, merger, sale or conveyance, in exchange for
such Warrant, cash in an amount equal to the cash proceeds that would have been
payable to the Holder had the Holder exercised such Warrant immediately prior to
the consummation of such reorganization, reclassification, consolidation,
merger, sale or conveyance, less the aggregate Exercise Price payable upon
exercise of this Warrant, and (y) to the extent that the Holder would be
entitled to receive Common stock (or Other Securities) (in addition to or in
lieu of cash in connection with any such reorganization, reclassification,
consolidation, merger, sale or conveyance), the same kind and amounts of
securities or other assets, or both, that are issuable or distributable to the
holders of outstanding Common Stock (or Other Securities) of the Company with
respect to their Common Stock (or Other Securities) upon such reorganization,
reclassification, consolidation, merger, sale or conveyance, as would have been
deliverable to the Holder had the Holder exercised such Warrant immediately
prior to the consummation of such reorganization, reclassification,
consolidation, merger, sale or conveyance less an amount of such securities
having a value equal to the aggregate Exercise Price payable upon exercise of
this Warrant.
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3.2 DISSOLUTION. In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company, concurrently with any distributions made to holders of its
Common Stock, shall at its expense deliver or cause to be delivered to the
Holder the stock and other securities and property (including cash, where
applicable) receivable by the Holder pursuant to Section 3.1, or, if the Holder
shall so instruct the Company, to a bank or trust company specified by the
Holder and having its principal office in New York, NY as trustee for the Holder
(the "TRUSTEE").
3.3 CONTINUATION OF TERMS. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3, this Warrant shall continue in full force and
effect and the terms hereof shall be applicable to the shares of stock and other
securities and property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or the effective
date of dissolution following any such transfer, as the case may be, and shall
be binding upon the issuer of any such stock or other securities, including, in
the case of any such transfer, the person acquiring all or substantially all of
the properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 4. In the
event this Warrant does not continue in full force and effect after the
consummation of the transactions described in this Section 3, then the Company's
securities and property (including cash, where applicable) receivable by the
Holder will be delivered to the Holder or the Trustee as contemplated by Section
3.2.
4. EXTRAORDINARY EVENTS REGARDING COMMON STOCK. In the event that the
Company shall (a) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock or any preferred stock issued by
the Company, (b) subdivide its outstanding shares of Common Stock, (c) combine
its outstanding shares of the Common Stock into a smaller number of shares of
the Common Stock, then, in each such event, the number of shares of Common Stock
that the Holder shall thereafter, on the exercise hereof as provided in Section
1, be entitled to receive shall be adjusted to a number determined by
multiplying the number of shares of Common Stock that would otherwise (but for
the provisions of this Section 4) be issuable on such exercise by a fraction of
which (a) the numerator is the number of issued and outstanding shares of Common
Stock immediately after such Event, and (b) the denominator is the number of
issued and outstanding shares of Common Stock immediately prior to such Event.
5. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of this Warrant, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or sold or deemed
to have been issued or sold, (b) the number of shares of Common Stock (or Other
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Securities) outstanding or deemed to be outstanding, and (c) the Exercise Price
and the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment and as
adjusted or readjusted as provided in this Warrant. The Company will forthwith
mail a copy of each such certificate to the Holder and any warrant agent of the
Company (appointed pursuant to Section 11 hereof).
6. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANT. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of this Warrant, shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of this Warrant.
7. 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") in whole or in
part. 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 evidence reasonably satisfactory to the
Company demonstrating compliance with applicable securities laws, which shall
include, without limitation, a legal opinion from the Transferor's counsel (at
the Company's expense) that provides that such transfer is exempt from the
registration requirements of 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 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 this Warrant so surrendered by the
Transferor.
8. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.
9. MAXIMUM EXERCISE. Notwithstanding anything herein to the contrary,
in no event shall the Holder be entitled to exercise any portion of this Warrant
in excess of that portion of this Warrant upon exercise of which the sum of (1)
the number of shares of Common Stock beneficially owned by the Holder and its
Affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unexercised portion of this Warrant or the
unexercised or unconverted portion of any other security of the Holder subject
to a limitation on conversion analogous to the limitations contained herein) and
(2) the number of shares of Common Stock issuable upon the exercise of the
portion of this Warrant with respect to which the determination of this proviso
is being made, would result in beneficial ownership by the Holder and its
Affiliates of any amount greater than 9.99% of the then outstanding shares of
Common Stock (whether or not, at the time of such exercise, the Holder and its
Affiliates beneficially own more than 9.99% of the then outstanding shares of
Common Stock). As used herein, the term "AFFILIATE" means any person or entity
that, directly or indirectly through one or more intermediaries, controls or is
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controlled by or is under common control with a person or entity, as such terms
are used in and construed under Rule 144 under the Securities Act of 1933, as
amended. For purposes of the second preceding sentence, beneficial ownership
shall be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended, and Regulations 13D-G thereunder, except as otherwise
provided in clause (1) of such sentence. For any reason at any time, upon
written or oral request of the Holder, the Company shall within one (1) business
day confirm orally and in writing to the Holder the number of shares of Common
Stock outstanding as of any given date. The limitations set forth herein (x)
shall automatically become null and void following notice to the Company upon
the occurrence and during the continuance of an Event of Default (as defined in
the Security Agreement)(as defined in the Note referred to in the Purchase
Agreement) and (y) may be waived by the Holder upon provision of no less than
sixty-one (61) days prior written notice to the Company; provided, however,
that, such written notice of waiver shall only be effective if delivered at a
time when no indebtedness (including, without limitation, principal, interest,
fees and charges) of the Company of which the Holder or any of its Affiliates
was, at any time, the owner, directly or indirectly is outstanding.
10. WARRANT AGENT. The Company may, by written notice to the Holder of
this Warrant, appoint an agent for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1, exchanging
this Warrant pursuant to Section 7, and replacing this Warrant pursuant to
Section 8, or any of the foregoing, and thereafter any such issuance, exchange
or replacement, as the case may be, shall be made at such office by such agent.
11. TRANSFER ON THE COMPANY'S BOOKS. Until this Warrant is transferred
on the books of the Company, the Company may treat the registered holder hereof
as the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.
12. RIGHTS OF SHAREHOLDERS. No Holder shall be entitled to vote or
receive dividends or be deemed the holder of the shares of Common Stock or any
other securities of the Company which may at any time be issuable upon exercise
of this Warrant for any purpose (the "WARRANT SHARES"), nor shall anything
contained herein be construed to confer upon the Holder, as such, any of the
rights of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon the
recapitalization, issuance of shares, reclassification of shares, change of
nominal value, consolidation, merger, conveyance or otherwise) or to receive
notice of meetings, or to receive dividends or subscription rights or otherwise,
in each case, until the earlier to occur of (x) the date of actual delivery to
Holder (or its designee) of the Warrant Shares issuable upon the exercise hereof
or (y) the third business day following the date such Warrant Shares first
become deliverable to Holder, as provided herein.
13. NOTICES, ETC. All notices and other communications from the Company
to the Holder shall be mailed by first class registered or certified mail,
postage prepaid, at such address as may have been furnished to the Company in
writing by the Holder from time to time.
14. MISCELLANEOUS. 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
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is sought. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS. ANY ACTION BROUGHT CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS
WARRANT SHALL BE BROUGHT ONLY IN THE STATE COURTS OF NEW YORK OR IN THE FEDERAL
COURTS LOCATED IN THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT THE HOLDER MAY
CHOOSE TO WAIVE THIS PROVISION AND BRING AN ACTION OUTSIDE THE STATE OF NEW
YORK. The individuals executing this Warrant on behalf of the Company agree to
submit to the jurisdiction of such courts and waive trial by jury. The
prevailing party shall be entitled to recover from the other party its
reasonable attorneys' fees and costs. In the event that any provision of this
Warrant is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of this Warrant. The headings in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision hereof. The Company
acknowledges that legal counsel participated in the preparation of this Warrant
and, therefore, stipulates that the rule of construction that ambiguities are to
be resolved against the drafting party shall not be applied in the
interpretation of this Warrant to favor any party against the other party.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first written above.
WITNESS: RETAIL PRO, INC.
By:
--------------------------- ------------------------------
Name:
Title:
SIGNATURE PAGE TO
COMMON STOCK PURCHASE WARRANT
EXHIBIT A
FORM OF SUBSCRIPTION
(To Be Signed Only On Exercise Of Warrant)
To: Retail Pro, Inc.
_____________________
_____________________
Attention:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No.____) (the "WARRANT"), hereby irrevocably elects to purchase (check
applicable box):
____ ________ shares of the common stock covered by the Warrant; or
____ the maximum number of shares of common stock covered by the Warrant
pursuant to the cashless exercise procedure set forth in Section 2 of
the Warrant.
The undersigned herewith makes payment of the full Exercise Price for
such shares at the price per share provided for in the Warrant, which is
$___________. Such payment takes the form of (check applicable box or boxes):
____ $__________ in lawful money of the United States; and/or
____ the cancellation of such portion of the Warrant as is exercisable for a
total of _______ shares of Common Stock (using a Fair Market Value of
$_______ per share for purposes of this calculation); and/or
____ the cancellation of such number of shares of Common Stock as is
necessary, in accordance with the formula set forth in Section 2.2 of
the Warrant, to exercise this Warrant with respect to the maximum
number of shares of Common Stock purchasable pursuant to the cashless
exercise procedure set forth in Section 2 of the Warrant.
The undersigned requests that the certificates for such shares be
issued in the name of, and delivered to_________________________________________
whose address is_______________________________________________________________.
The undersigned represents and warrants that all offers and sales by
the undersigned of the securities issuable upon exercise of the 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)
Address:
EXHIBIT B
FORM OF TRANSFEROR ENDORSEMENT
(To Be Signed Only On 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 Retail Pro, Inc. into 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 Retail Pro,
Inc. with full power of substitution in the premises.
PERCENTAGE NUMBER
TRANSFEREES ADDRESS TRANSFERRED TRANSFERRED
----------- ------- ----------- -----------
Dated: ________________________ ____________________________________________
(Signature must conform to name of holder as
specified on the face of the Warrant)
Address: ___________________________________
___________________________________
SIGNED IN THE PRESENCE OF:
____________________________________________
(Name)
ACCEPTED AND AGREED:
[TRANSFEREE]
_______________________________
(Name)
