COMMON STOCK AND WARRANT AGREEMENT
EXHIBIT
10.25
This
Common Stock and Warrant Agreement (the “Agreement”) is made and entered into as
of August 27, 2007, by and between NNRF, Inc., a Nevada corporation (“Company”)
and Xxxxx Xxxx Separate Property Rev. Trust 10/01/02 (“Recipient”). The Company
and Recipient are collectively referred to herein as the “Parties”.
RECITALS
WHEREAS,
on August 27, 2007, the Company and Professional Offshore Opportunity Fund,
Ltd.
(“POOF”) entered into that certain Revolving Credit Facility Agreement (“Credit
Agreement”) relating to the provision of up to TWO MILLION FIVE HUNDRED THOUSAND
($2,500,000) dollars to the Company on the terms stated therein;
WHEREAS,
in consideration for the provision of funds under the Credit Agreement,
Recipient has entered into that certain Pledge Agreement (“Pledge Agreement”)
with POOF;
WHEREAS,
pursuant to the terms of the Pledge Agreement, Recipient has pledged (“Pledge”),
for the benefit of the Company, 1,395,240 shares of common stock, par value
$0.001, represented by common stock certificate numbers 1890 (1,100,000 shares)
and 2066 (295,240 shares) (“Pledged Shares”);
WHEREAS,
pursuant to the terms of the Credit Agreement and Pledge Agreement, POOF may
transfer Pledged Shares into its name and sell Pledge Shares in a market
transaction to reduce the outstanding amount under the credit facility;
WHEREAS,
in consideration for the Pledge, the Company desires to issue Recipient , on
the
terms set forth herein, shares of common stock of the Company as well as
warrants to purchase shares of common stock (“Warrants”) of the Company;
and
WHEREAS,
Recipient desires to receive the Shares and Warrants in consideration for the
Pledge.
NOW,
THEREFORE, in consideration of the mutual promises, agreements, covenants,
understandings, undertakings, representations and warranties hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Company and Consultant covenant and agree
as
follows:
1. ISSUANCE
OF SHARES AND WARRANTS.
In
consideration for Recipient entering into the Pledge Agreement, the Company
agrees to issue Recipient the following: (i) 2,092,060 shares of common stock
(“Shares”); and (ii) a warrant to purchase 1,395,240 shares of common stock
(“Warrant”), attached hereto as Exhibit A.
2. CANCELLATION
OF SHARES. In
the
event POOF sells less than all of the Pledged Shares, to be applied as payment
towards the then outstanding principal and accrued interest under the Credit
Facility, then the Shares shall be reduced in proportion to the percentage
of
Pledged Shares not sold by POOF. For illustration purposes only, if POOF elects
to sell 50% of the Pledged Shares, then Recipient shall return 50% of the Shares
to the Company and such shares shall become treasury stock. A
final
determination shall be made regarding the cancellation of a portion of the
Shares upon final payment of the Credit Facility by the Company. Until such
time
as a final determination is made on the foregoing, Recipient shall be prohibited
from selling, collectively, Shares greater than the following:
X/Y
* Z
X
= Number of Pledged Shares sold by POOF
Y
= Number of Pledged Shares
Z
= Number of Shares
3. REGISTRATION
RIGHTS. Recipient
shall have one (1) demand right, which may be exercised any time following
the
60-day anniversary of effectiveness of the Company registration statement on
Form 10-SB. All registration expenses shall be borne exclusively by the Company,
and all selling expenses shall be borne exclusively by Recipient.
4. GENERAL
PROVISIONS.
(a) Recitals.
The
recitals set forth above are true and correct and are incorporated
herein.
(b) Notice.
Any and
all notices required under this Agreement shall be in writing and shall be
either (I) hand-delivered; (ii) mailed, first-class postage prepaid, certified
mail, return receipt requested; or (iii) delivered via an international
recognized overnight courier service, addressed to:
| Company: | NNRF, Inc. | ||
| 0000 Xxxx Xx., #000 | |||
| Xxxxx Xxxxxxx, XX 00000 | |||
| Facsimile: 000-000-0000 | |||
| Attn: Xxxx Xxxxxxxx, CFO | |||
| Recipient: | Xxxxx Xxxx Separate Property Rev Trust 10/01/02 | ||
| Facsimile: _____________________________ |
All
notices hand-delivered shall be deemed delivered when actually delivered. All
notices mailed or delivered via overnight courier shall be deemed delivered
as
of three (3) business days after the date postmarked or officially received
by
overnight carrier. Any changes in any of the addresses listed herein shall
be
made by notice.
(c) Assignment.
The
rights, benefits and obligations of the parties hereto under this Agreement
shall not be assignable without the prior written consent of the non-assigning
party, which consent may be withheld in the non-assigning party’s sole and
absolute discretion. Notwithstanding the foregoing, this Agreement shall be
binding on the heirs, successors and assigns of the parties hereto.
(d) Amendment.
No
amendment or modification of this Agreement shall be deemed effective unless
and
until it is executed in writing by both the Company and the
Consultant.
(e) Severability.
It is
mutually agreed that all of the terms, covenants, provisions and agreements
contained herein are severable and that, in the event any of them shall be
held
to be invalid by any competent court, this Agreement shall be interpreted as
if
such invalid term, covenant, provision or agreement were not contained
herein.
(f) Governing
Law; Binding Arbitration.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Nevada, United States of America, in effect on the date of this
Agreement without resort to any conflict of laws principles Any and all
disputes, controversies, claims, or other disagreements arising out of or
relating to this Agreement or the actual or alleged breach thereof shall be
settled via binding arbitration in accordance with rules of the American
Arbitration Association in Los Angeles, California.
(g) Entire
Agreement.
This
Agreement contains the entire agreement between the parties, and the parties
hereby agree that no other oral representations or agreements have been entered
into in connection with the Consultant performing the services described
hereunder.
(h) Counterparts.
This
Agreement may be executed at different times and in multiple counterparts,
each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(i) Neutral
Interpretation.
The
provisions contained herein shall not be construed in favor of or against any
party because that party or its counsel drafted this Agreement, but shall be
construed as if all parties prepared this Agreement, and any rules of
construction to the contrary are hereby specifically waived. The terms of this
Agreement were negotiated at arm’s length by the parties hereto.
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the date first written
above.
| COMPANY: | RECIPIENT: | |||
| NNRF, INC. | XXXXX XXXX SEPARATE PROPERTY REV TRUST 10/01/02 | |||
| By: | /s/ J.P. Xxxx Xxxxxxxx | By: | /s/ Xxxxx Xxxx | |
|
J.P. Xxxx Xxxxxxxx
Chief Financial Officer
|
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Name: Xxxxx
Xxxx
Title: Trustee
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EXHIBIT
A
WARRANT
TO PURCHASE COMMON STOCK
THE
SECURITIES REPRESENTED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SHARES UNDER THE SECURITIES
ACT OR AN EXEMPTION FROM THE SECURITIES ACT. ANY SUCH TRANSFER MAY ALSO BE
SUBJECT TO COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS AND THE LAWS OF
OTHER APPLICABLE JURISDICTIONS.
COMMON
STOCK PURCHASE WARRANT
For
the
Purchase of 1,395,240 Shares
of
Common
Stock, $0.001 par value
of
A
Nevada
Corporation
For
value
received, Xxxxx
Xxxx Separate Property Rev. Trust 10/01/02
(the
“Holder”), or his assigns, is entitled to, on or before the date specified below
on which this Common Stock Purchase Warrant (the “Warrant”) expires, but not
thereafter, to subscribe for, purchase and receive the number of fully paid
and
nonassessable shares of the common stock, no par value (the “Common Stock”), of
NNRF, Inc., a Nevada corporation (the “Company”) set forth above, at
a
price
of $2.95 per share
(the
“Exercise Price”), upon presentation and surrender of this Warrant and upon
payment by bank check of the Exercise Price for such shares of Common Stock
to
the Company at its principal office.
1. Exercise
of Warrant.
This
Warrant may be exercised in whole or in part, from time to time, commencing
on the date hereof (the “Issue Date”) and expiring on the second (2nd)
anniversary date hereof, by
presentation and surrender hereof to the Company, with the Exercise Form annexed
hereto duly executed and accompanied by payment by bank check of the Exercise
Price for the number of shares specified in such form, together with all federal
and state taxes applicable upon such exercise, if any. If this Warrant should
be
exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the right of the
Holder to purchase the balance of the shares purchasable hereunder. Upon receipt
by the Company of this Warrant and the Exercise Price at the office of the
Company, in proper form for exercise, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that certificates representing such shares of Common Stock
shall
not then be actually delivered to the Holder. If the subscription rights
represented hereby shall not be exercised at or before 5:00 P.M., Pacific Time,
on the expiration date specified above, this Warrant shall become void and
without further force or effect, and all rights represented hereby shall cease
and expire.
2. Rights
of the Holder.
Prior
to exercise of this Warrant, the Holder shall not, by virtue hereof, be entitled
to any rights of a shareholder in the Company, either at law or equity, and
the
rights of the Holder are limited to those expressed in this Warrant and are
not
enforceable against the Company except to the extent set forth herein.
3. Adjustment
in Number of Shares.
(A) Adjustment
for Reclassifications.
In case
at any time, or from time to time, after the Issue Date the holders of the
Common Stock of the Company (or any shares of stock or other securities at
the
time receivable upon the exercise of this Warrant) shall have received, or,
on
or after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive, without payment therefore, other or
additional stock or other securities or property (including cash) by way of
stock-split, spinoff, reclassification, combination of shares or similar
corporate rearrangement (exclusive of any stock dividend of its or any
subsidiary’s capital stock), then and in each such case the Holder(s) of this
Warrant, upon the exercise hereof as provided in Section 1, shall be entitled
to
receive the amount of stock and other securities and property which such
Holder(s) would hold on the date of such exercise if on the Issue Date they
had
been the holder of record of the number of shares of Common Stock of the Company
called for on the face of this Warrant and had thereafter, during the period
from the Issue Date, to and including the date of such exercise, retained such
shares and/or all other or additional stock and other securities and property
receivable by them as aforesaid during such period, giving effect to all
adjustments called for during such period. In the event of a declaration of
a
dividend payable in shares of any equity security of a subsidiary of the
Company, then the Company may cause to be issued a warrant to purchase shares
of
the subsidiary (“Springing Warrant”) in an amount equal to such number of shares
of the subsidiary’s securities to which the Holders would have been entitled,
but conditioned upon the exercise of this Warrant as a prerequisite to receiving
the shares issuable pursuant to the Springing Warrant.
(B) Adjustment
for Reorganization, Consolidation, Merger.
In case
of any reorganization of the Company (or any other corporation the stock or
other securities of which are at the time receivable on the exercise of this
Warrant) after the Issue Date, or in case, after such date, the Company (or
any
such other corporation) shall consolidate with or merge into another corporation
or convey all or substantially all of its assets to another corporation, then
and in each such case the Holder(s) of this Warrant, upon the exercise hereof
as
provided in Section 1, at any time after the consummation of such
reorganization, consolidation, merger or conveyance, shall be entitled to
receive, in lieu of the stock or other securities and property receivable upon
the exercise of this Warrant prior to such consummation, the stock or other
securities or property to which such Holder(s) would be entitled had the Holders
exercised this Warrant immediately prior thereto, all subject to further
adjustment as provided herein; in each such case, the terms of this Warrant
shall be applicable to the shares of stock or other securities or property
receivable upon the exercise of this Warrant after such
consummation.
4. Officer’s
Certificate.
Whenever the number of shares of Common Stock issuable upon exercise of this
Warrant or the Exercise Price shall be adjusted as required by the provisions
hereof, the Company shall forthwith file in the custody of its Secretary at
its
principal office, an officer’s certificate showing the adjusted number of shares
of Common Stock or Exercise Price determined as herein provided and setting
forth in reasonable detail the facts requiring such adjustment. Each such
officer’s certificate shall be made available at all reasonable times for
inspection by the Holder(s) and the Company shall, forthwith after each such
adjustment, deliver a copy of such certificate to the Holder(s). Such
certificate shall be conclusive as to the correctness of such
adjustment.
5. Restrictions
on Transfer.
Certificates for the shares of Common Stock to be issued upon exercise of this
Warrant shall bear the following legend:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SHARES UNDER THE SECURITIES ACT OR
AN
EXEMPTION FROM THE SECURITIES ACT. ANY SUCH TRANSFER MAY ALSO BE SUBJECT TO
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS AND THE LAWS OF OTHER
APPLICABLE JURISDICTIONS.
The
Holder, by acceptance hereof, agrees that, absent an effective registration
statement under the Securities Act of 1933, as amended (the “Act”), covering the
disposition of this Warrant or the Common Stock issued or issuable upon exercise
hereof, such Holder(s) will not sell or transfer any or all of this Warrant
or
such Common Stock without first providing the Company with an opinion of counsel
reasonably satisfactory to the Company to the effect that such sale or transfer
will be exempt from the registration and prospectus delivery requirements of
the
Act. The Holder agrees that the certificates evidencing the Warrant and Common
Stock which will be delivered to the Holder by the Company shall bear
substantially the following legend: The Holder of this Warrant, at the time
all
or a portion of such Warrant is exercised, agrees to make such written
representations to the Company as counsel for the Company may reasonably
request, in order that the Company may be reasonably satisfied that such
exercise of the Warrant and consequent issuance of Common Shares will not
violate the registration and prospectus delivery requirements of the Act, or
other applicable state securities laws.
6. Loss
or Mutilation.
Upon
receipt by the Company of evidence satisfactory to it (in the exercise of
reasonable discretion) of the ownership of and the loss, theft, destruction
or
mutilation of any Warrant and (in the case of loss, theft or destruction) of
indemnity satisfactory to it (in the exercise of reasonable discretion), and
(in
the case of mutilation) upon surrender and cancellation thereof, the Company
will execute and deliver in lieu thereof a new Warrant of like
tenor.
7. Reservation
of Common Stock.
The
Company shall at all times reserve and keep available for issue upon the
exercise of the Warrants such number of its authorized but unissued shares
of
Common Stock as will be sufficient to permit the exercise in full of all
outstanding Warrants.
8. Notices.
All
notices and other communications from the Company to the Holder of this Warrant
shall be mailed by first class registered or certified mail, postage prepaid,
to
the address furnished to the Company in writing by the Holder.
9. Change;
Waiver.
Neither
this Warrant nor any term hereof may be changed, waived, discharged or
terminated orally but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.
10. Law
Governing.
This
Warrant shall be construed and enforced in accordance with and governed by
the
laws of Nevada.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer on August 27, 2007.
| NNRF, INC. | ||
| |
|
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| By: | /s/ J.P. Xxxx Xxxxxxxx | |
|
J.P. Xxxx Xxxxxxxx |
||
| Chief Financial Officer | ||
Form
to be used to exercise Warrant:
TO: NNRF,
INC. DATE:
___________________
The
undersigned hereby elects irrevocably to exercise the within Warrant and to
purchase _____________________ shares
of
the Common Stock of the Company called for thereby, and hereby makes payment
by
cashier’s check of $______________ in
payment of the Exercise Price pursuant thereto. Please issue the shares of
the
Common Stock as to which this Warrant is exercised to:
___________________________
___________________________
___________________________
and
if
said number of Warrants shall not be all the Warrants evidenced by the within
Warrant Certificate, issue a new Warrant Certificate for the balance remaining
of such Warrants to _____________________ at the address stated
above.
| By: | ||
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| Print Name: | ||
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