EXHIBIT 10.38
WARRANT AGREEMENT
TO PURCHASE COMMON STOCK OF
XXXXXXXXX.XXX, INC.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE
AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM.
This Warrant Agreement (the "Agreement") is entered into this ____ day of
December, 1999, by and between XxxxxXxxx.xxx ("PhotoLoft") and Xxxxxxx Xxxxxxxx
("BUYER"). For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. Issuance of Warrants. PhotoLoft, subject to the terms and conditions
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hereinafter set forth, hereby issues to BUYER warrants (the "Warrants") to
purchase THIRTEEN THOUSAND (13,000) shares of PhotoLoft common stock (the
"Shares"). The exercise price of the Shares shall be $1.5317 per share (the
"Exercise Price") subject to adjustment in accordance with Paragraph 5 of this
Agreement.
2. Term. The Warrants may be exercised at any time after the Effective Date
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set forth on the signature page hereof and before the expiration of sixty (60)
months from the Effective Date.
3. Exercise.
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(a) BUYER shall exercise the Warrants granted hereunder, in whole or in
part, by delivering to PhotoLoft at the office of PhotoLoft, or at such other
address as PhotoLoft may designate by notice in writing to the holder hereof,
the Notice of Exercise attached hereto as Exhibit A and incorporated herein by
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reference and a certified check or wire transfer in lawful money of the United
States for the Exercise Price for the entire amount of the number of Warrants
being exercised
(b) Upon delivery of all of the items set forth in (a) above, BUYER
shall be entitled to receive a certificate or certificates representing the
Shares. Such Shares shall be validly issued, fully paid and non-assessable.
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(c) Warrants shall be deemed to have been exercised immediately prior
to the close of business on the day of such delivery, and BUYER shall be deemed
the holder of record of the Shares issuable upon such exercise at such time.
(d) Upon any partial exercise of the Warrants, at the request of
PhotoLoft, this Agreement shall be surrendered and a new Agreement evidencing
the right to purchase the number of Shares not purchased upon such exercise
shall be issued to BUYER.
4. Representations and Warranties of BUYER. BUYER hereby represents and
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warrants to PhotoLoft as follows:
(a) Sophistication. BUYER has (i) a preexisting personal or business
relationship with PhotoLoft or one or more of its officers, directors, or
control persons; or (ii) by reason of BUYER's business or financial experience,
or by reason of the business or financial experience or of BUYER's financial
advisor who is unaffiliated with and who is not compensated, directly or
indirectly, by PhotoLoft or any affiliate or selling agent of PhotoLoft, BUYER
is capable of evaluating the risks and merits of this investment and of
protecting BUYER's own interests in connection with this investment.
(b) Accredited Investor. BUYER is an "accredited investor" as such
term is defined under Regulation D of the Securities Act of 1933, as amended
(the "Securities Act").
(c) Investment Intent. BUYER is purchasing the Warrants, and will
purchase the Shares solely for her own account for investment. BUYER has no
present intention to resell or distribute the Warrants or the Shares or any
portion thereof. The entire legal and beneficial interest of the Warrants is
being purchased, and will be held, for BUYER's account only, and neither in
whole or in part for any other person.
(d) Information Concerning Company. BUYER is aware of the business
affairs and financial condition of PhotoLoft and has acquired sufficient
information about PhotoLoft to make an informed and knowledgeable decision to
purchase the Warrants and the Shares.
(e) Economic Risk. BUYER realizes that the purchase of the Warrants
and the Shares will be a highly speculative investment and involves a high
degree of risk. BUYER is able, without impairing its financial condition, to
hold the Warrants and/or the Shares for an indefinite period of time and to
suffer a complete loss of its investment.
5. Anti-dilution Adjustments. The Warrants granted hereunder and the
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Exercise Price thereof shall be subject to adjustment from time to time upon the
happening of certain events as set forth below.
(a) Stock Splits and Dividends. If outstanding shares of PhotoLoft
Common Stock shall be subdivided into a greater number of shares or a dividend
in Common Stock shall be paid in respect of Common Stock, the Exercise Price in
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effect immediately prior to such subdivision or at the record date of such
dividend shall simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend be proportionately reduced.
If outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination
shall, simultaneously with the effectiveness of such combination, be
proportionately increased. When any adjustment is required to be made in the
Exercise Price, the number of Shares purchasable upon the exercise of the
Warrants shall be changed to the number determined by dividing (i) an amount
equal to the number of Shares issuable upon the exercise of the Warrants
immediately prior to such adjustment, multiplied by the Exercise Price in effect
immediately prior to such adjustment, by (ii) the Exercise Price in effect
immediately after such adjustment.
(b) Reclassification, Etc. In case there occurs any reclassification
or change of the outstanding securities of PhotoLoft or any reorganization of
PhotoLoft (or any other corporation the stock or securities of which are at the
time receivable upon the exercise of the Warrants) or any similar corporate
reorganization on or after the date hereof, then and in each such case BUYER,
upon the exercise hereof at any time after the consummation of such
reclassification, change, or reorganization shall be entitled to receive, in
lieu of the stock or other securities and property receivable upon the exercise
hereof prior to such consummation, the stock or other securities or property to
which BUYER would have been entitled upon such consummation if BUYER had
exercised the Warrants immediately prior thereto, all subject to further
adjustment pursuant to the provisions of this Section.
(c) Adjustment Certificate. When any adjustment is required to be made
in the Shares or the Exercise Price pursuant to this Section, PhotoLoft shall
promptly mail to BUYER a certificate setting forth (i) a brief statement of the
facts requiring such adjustment, (ii) the Exercise Price after such adjustment
and (iii) the kind and amount of stock or other securities or property into
which the Warrants shall be exercisable after such adjustment.
6. Reservation of Shares. PhotoLoft shall at all times keep reserved a
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sufficient number of authorized shares of Common Stock to provide for the
exercise of the Warrants in full.
7. Transferability. The Warrants issued hereunder and any and all Shares
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issued upon exercise of the Warrants shall be transferable on the books of
PhotoLoft by the holder hereof in person or by duly authorized attorney subject
to any restrictions imposed by applicable federal or state securities laws. It
shall be a further condition to any transfer of the Warrants that the transferor
(if any portion of the Warrants are retained) and the transferee shall receive
and accept new Warrants, of like tenor and date, executed by PhotoLoft, for the
portion so transferred and for any portion retained, and shall surrender this
Agreement executed.
8. Voting. Nothing contained in this Agreement shall be construed as
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conferring upon BUYER the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect to any meeting of shareholders for
the election of directors of PhotoLoft or for any other purpose not specified
herein.
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9. Miscellaneous.
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(a) Amendment. This Agreement may be amended by written agreement
between PhotoLoft and BUYER.
(b) Notice. Any notice, demand or request required or permitted to be
given under this Agreement will be in writing and will be deemed sufficient when
delivered personally or sent by telegram or forty-eight (48) hours after being
deposited in the U.S. mail, as certified or registered mail, or with a
commercial courier service, with postage prepaid, and addressed, if to
PhotoLoft, at its principal place of business, attention the President, and if
to BUYER, at BUYER's address as shown on the stock records of PhotoLoft.
(c) Further Assurances. Both parties agree to execute any
additional documents and take any further actions necessary to carry out the
purposes of this Agreement.
(d) Severability. If any provision of this Agreement is held by any
court of competent jurisdiction to be illegal, unenforceable or void, such
provision will be enforced to the greatest extent possible and all other
provisions of this Agreement will continue in full force and effect.
(e) Governing Law. This Agreement will be interpreted and enforced in
accordance with California law as applied to agreements made and performed in
California.
(f) Survival. The representations and warranties of the parties hereto
set forth in this Agreement shall survive the closing and consummation of the
transactions contemplated hereby for a period of three (3) years from the date
hereof.
(g) Entire Agreement; Successors and Assigns. This Agreement and the
documents and instruments attached hereto constitute the entire agreement
between BUYER and PhotoLoft relative to the subject matter hereof. Any previous
agreements between the parties are superseded by this Agreement. Subject to any
exceptions specifically set forth in this Agreement, the terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
executors, administrators, heirs, successors and assigns of the parties.
(h) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(i) Headings. The headings of the Sections of this Agreement are for
convenience and shall not by themselves determine the interpretation of this
Agreement.
(j) Attorney Fees. If any action is brought to interpret or enforce
the terms of this Agreement, the prevailing party in such action shall be
entitled to recover its attorneys fees and costs incurred in connection with
such action.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed and delivered by their duly authorized officers as of December ___, 1999
(the "Effective Date").
PHOTOLOFT: XXXXXXXXX.XXX, INC.
By:_______________________
Its:______________________
BUYER: /s/ Xxxxxxx Xxxxxxxx
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Xxxxxxx Xxxxxxxx
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WARRANT
NOTICE OF EXERCISE
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To: XxxxxXxxx.xxx, Inc.
(1) _______________ ("BUYER") hereby elects to purchase ______________
shares of Common Stock of XxxxxXxxx.xxx, Inc. ("PhotoLoft") pursuant to the
terms of the Warrant Agreement dated December ___, 1999, and executed by BUYER
and PhotoLoft, and tenders herewith payment of the purchase price in full,
together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares
in the name of BUYER.
BUYER: _______________________________
