Exhibit 10.6
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE BLUE SKY LAW
OF ANY STATE. TRANSFER OR SALE OF THIS WARRANT
SHALL NOT BE MADE EXCEPT IN ACCORDANCE WITH
THE TERMS HEREOF.
WARRANT TO PURCHASE ONE HUNDRED SEVENTY THOUSAND (170,000)
SHARES OF COMMON STOCK, $0.01 PAR VALUE PER SHARE,
OF GREENBRIAR CORPORATION
THIS CERTIFIES THAT for $1,700 and for services rendered and good and
valuable consideration received, Xxxxxxx X. Xxxxxx or any subsequent holder
(hereinafter called the "Holder"), is entitled, subject to the terms and
conditions hereinafter set forth, to purchase from Greenbriar Corporation, a
Nevada corporation (the "Company"), all or any part of One Thousand Seven
Hundred Thousand (170,000) fully paid and nonassessable shares of the Company's
Common Stock, $0.01 par value per share (the "Common Stock"), at an exercise
price of Three and 58/100 Dollars ($3.58) per share (the "Exercise Price"). The
Company is subject to a special covenant contained in an Acquisition Agreement
dated October 12, 2004 (the "Acquisition Agreement") requiring presentation of a
transaction to the Company's stockholders, together with a mandatory exchange of
a series of Preferred Stock for Common Stock (all the "Transaction"). If
stockholder approval of the Transaction does not occur, the holders of the
series of Preferred Stock have an opportunity exercisable from October 1, 2005,
until September 30, 2006 to rescind the Transaction (the "Recission").
i. Term; Warrant Purchase Price. Subject to the terms and conditions
hereof, this Warrant shall be exercisable in whole or in part from time
to time, from 9:00 A.M. local Dallas, Texas time, on the day following
the date of the stockholder approval of the Transaction to and until
3:00 p.m., local Dallas, Texas time, on October 31, 2009 (the
"Exercisable Term"); prior to the date of stockholder approval of the
Transaction, this Warrant shall not be exercisable. The Company hereby
acknowledges receipt from Holder and its acceptance of $1,700 ($0.01
per share of Common Stock covered hereby) of adequate consideration for
the issuance of this Warrant to Holder (the "Warrant Purchase Price"),
which amount shall be applied against and in reduction of the Exercise
Price per share at the time of first exercise of part or all of this
Warrant. Notwithstanding any other provision of this Warrant, if
stockholder approval of the Transaction does not occur prior to October
1, 2005, and if Recission does occur, this Warrant shall on such date
of Recission become null and void by its terms and all rights of Holder
to exercise this Warrant shall expire. If stockholder approval of the
Transaction does occur, the Company and Holder shall execute an
acknowledgment of that fact which shall be attached to this Warrant to
evidence its continued effectiveness.
ii. Exercise. This Warrant may be exercised by the Holder as to the whole
at any time, or in part from time to time, during the Exercisable Term
hereof set forth in paragraph 1 above (but not as to a fractional share
of Common Stock): by completing the Subscription Form, a copy of which
is attached hereto and made a part hereof (which written notice and
subscription shall [i] state the election to exercise the Warrant and
the number of shares in respect to which it is being exercised and [ii]
be signed by the person so exercising the Warrant on behalf of the
Holder), and delivering such Subscription Form to the Secretary of the
Company; by presenting and surrendering this Warrant, duly endorsed, at
the principal executive office of the Company in the city and state
where then located; by delivery to the Company of an investment letter
as set forth in paragraph 14(b) hereof and upon payment to the Company
of the amount of the Exercise Price for shares so purchased either by
(i) delivering to the Company, by check or by wire transfer, an amount
equal to the Exercise Price per Share, multiplied by the number of
Shares then being purchased, or (ii) by indicating in the notice of
exercise form that the Exercise Price should be paid by deducting from
the number of Shares to be received by the exercising Holder that
number of Shares which has an aggregate Specified Value (as defined
herein) on the date of exercise equal to the aggregate Exercise Price
for all Shares then being purchased (a "Net Exercise"). "Specified
Value" per Share at any date shall be the fair market value of such
Share as determined in good faith by the Board of Directors of the
Company. Thereupon this Warrant shall be deemed to have been exercised
in whole or in part and the Holder exercising the same shall become a
holder of record of shares of Common Stock purchased hereunder, and
certificates for such shares so purchased shall be delivered to the
purchaser within a reasonable time after this Warrant shall have been
exercised. If this Warrant shall be exercised in respect of only a part
of the shares of Common Stock covered hereby, the Holder shall be
entitled to receive a similar warrant of like tenor and date covering
the number of shares in respect of which this Warrant shall not have
been exercised. No fractional shares of Common Stock shall be issued
hereunder.
iii. Transferability. Subject to the terms and conditions hereof, this
Warrant may be assigned by Holder to any assignee with or without
consideration; provided, however, that except for transfers or
assignments by will or the laws of descent and distribution, no partial
assignment of this Warrant shall be made and any transfer of this
Warrant shall be made only with respect to all of the shares of Common
Stock covered hereby or with respect to which this Warrant shall then
be exercisable. No assignment of this Warrant shall be effective as
against the Company unless and until the Company and Holder shall have
received from such assignee an investment letter in form and content as
set forth in paragraph 14(c) hereof, and in any event, satisfactory in
form and content to Company and Company's counsel, the Company shall
have been notified in writing, in a manner satisfactory to the Company,
and as set forth in paragraph 16 hereof, by Holder and assignee of the
fact of such assignment and the Company shall have prepared and sent to
assignee in exchange hereof, a new warrant of like tenor and date to
this Warrant, specifying assignee as the new holder thereof, the
Company shall have received from the Holder or his assignee funds
sufficient to pay any applicable transfer tax, and Holder and/or
assignee shall have complied with any such other directions,
instructions and requests, if any, as may be reasonably made or given
by Company in order to satisfy Company as to the validity and legality
of such assignment. Any such new Warrant issued will bear the same or
similar legends as does this Warrant and will be subject to the
investment and transfer restrictions stated herein.
iv. Substitution. Upon receipt of evidence 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, upon delivery of a bond of
indemnity satisfactory to the Company, or in the case of any such
mutilation, upon surrender or cancellation of this Warrant, the Company
will issue to the Holder a new warrant of like tenor, in lieu of this
Warrant, representing the right to subscribe for and purchase the
number of shares which may be subscribed for and purchased hereunder.
Any such new Warrant executed and delivered shall constitute only the
same contractual obligation on the part of the Company as this Warrant.
v. Company Actions. The existence of this Warrant shall not affect in any
way the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business, or
any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or prior preference stocks ahead of or affecting
the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part
of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
vi. Recapitalization. The shares with respect to which this Warrant is
issued are shares of Common Stock as presently constituted on the date
of this Warrant, but if, and whenever, prior to the delivery by the
Company of any of the shares of the Common Stock with respect to which
this Warrant is issued, the Company shall effect a subdivision or
consolidation of shares or other capital adjustment, the payment of a
stock dividend, or other increase or decrease of the number of shares
of the Common Stock outstanding, without receiving compensation
therefor in money, services or property, then in the event of an
increase in the number of such shares outstanding, the number of shares
of Common Stock then remaining subject to and purchasable under this
Warrant shall be proportionately increased, and the Exercise Price
payable per share shall be proportionately reduced (but not below the
par value $0.01 per share); and conversely in the event of a reduction
in the number of such shares outstanding, the number of shares of
Common Stock then remaining subject to and purchasable under this
Warrant shall be proportionately reduced, and the Exercise Price
payable per share shall be proportionately increased. Any dividend paid
or distributed upon the Common Stock in any class of stock or any
securities of the Company convertible into or exchangeable for shares
of Common Stock of the Company shall be treated as a dividend paid in
Common Stock to the extent that shares of Common Stock are issuable
upon the conversion or exchange thereof.
vii. Effect of Merger or Consolidation. After a merger of one or more
corporations into the Company, or after a consolidation of the Company
and one or more corporations in which the Company shall be the
surviving corporation, Holder shall, without any change in, or payment
in addition to, the Exercise Price, be entitled upon any exercise of
this Warrant to receive (subject to any required action by
shareholders) in lieu of the number of shares as to which this Warrant
shall then be so exercisable, the number and class of shares of stock
or other securities, or the amount of cash, property or assets to which
the Holder would have been entitled pursuant to the terms of the
agreement of merger or consolidation, if immediately prior to such
merger or consolidation the Holder had been the holder of record of a
number of shares of Common Stock of the Company equal to the number of
shares of Common Stock of the Company covered by the then unexercised
portion of this Warrant. In the event of any merger or consolidation to
which the Company is a party in which the Company is not the surviving
corporation:
1) the Company, prior to consummation, shall take all steps
necessary to assure that all provisions of this Warrant shall
thereafter be applicable, as nearly as reasonably may be, to
any securities or other consideration so deliverable on
exercise of this Warrant,
2) prior to consummation, the successor corporation shall have
assumed the obligations of this paragraph and this Warrant by
written instrument executed and delivered to the Holder at its
address on the books of the Corporation, and
3) the Holder shall be entitled to receive, upon notice of
exercise, in lieu of the number of shares as to which this
Warrant shall then be so exercisable immediately prior to such
merger or consolidation, the number and class of shares of
stock or other securities, or the amount of cash, property or
assets of the surviving corporation to which the Holder would
have been entitled pursuant to the terms of the agreement of
merger or consolidation, if immediately prior to such merger
or consolidation the Holder had been the holder of record of a
number of shares of Common Stock of the Company equal to the
number of shares of Common Stock covered by the then
unexercised portion of this Warrant.
viii. Nonadjustment. Except as herein expressly provided, the issue by the
Company of shares of stock of any class, or securities convertible into
shares of stock of any class, for cash or property, or for labor or
services either upon direct sale or upon the exercise of options,
rights or warrants to subscribe therefor, or upon conversion of shares
or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock
subject to this Warrant.
ix. Computation of Adjustment. Upon the occurrence of each event requiring
an adjustment of the Exercise Price and the number of shares
purchasable pursuant to this Warrant in accordance with, and as
required by, the terms hereof, the Company shall mail forthwith to
Holder a copy of its computation of such adjustment which shall be
conclusive and shall be binding upon Holder unless contested by Holder
by written notice to the Company within ninety (90) days after receipt
thereof by Holder.
x. Record Dates, Etc. In case:
(i) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend
payable otherwise than in cash, or any other distribution in
respect of the Common Stock (including cash), pursuant to,
without limitation, any spin-off, split-off or distribution of
the Company's assets; or
(ii) of any classification, reclassification or other
reorganization of the capital stock of the Company,
consolidation or merger of the Company with or into another
corporation, or conveyance of all or substantially all of the
assets of the Company; or
(iii) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
and in any such case, the Company shall mail to Holder, at least fifteen (15)
days prior thereto, a notice stating the date or expected date on which a record
is to be taken for the purpose of such dividend, distribution or rights, or the
date on which such classification, reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place, as the case may be. Such notice shall also specify the date or
expected date, if any is to be fixed, as of which holders of Common Stock of
record shall be entitled to participate in said dividend, distribution or
rights, or shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such classification,
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up, as the case may be.
xi. Liquidation, Dissolution. In case the Company shall at any time while
this Warrant or any portion hereof shall remain unexpired and
unexercised, sell all or substantially all its property or dissolve,
liquidate or wind up its affairs, the Holder may thereafter receive
upon exercise hereof in lieu of each share of Common Stock of the
Company which Holder would have been entitled to receive, the same kind
and amount of any securities or assets as may be issuable,
distributable or payable upon any such sale, dissolution, liquidation
or winding up with respect to each share of Common Stock of the
Company. In the event that the Company shall at any time prior to the
expiration of this Warrant make any partial distribution of its assets,
in the nature of a partial liquidation, whether payable in cash or in
kind (but excluding the distribution of a cash dividend payable out of
earned surplus and designated as such) then in such event the Exercise
Price then in effect shall be reduced, on the payment date of such
distribution, in proportion to the percentage reduction in the tangible
book value of the shares of the Company's Common Stock (determined in
accordance with generally accepted accounting principles) resulting by
reason of such distribution.
xii. Company Performance. The Company will not, by amendment of its Articles
of Incorporation or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act or deed,
avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed
hereunder by the Company, but will at all times in good faith assist,
insofar as it is able, in the carrying out of all provisions hereof,
and in the taking of all other legally available action which may be
necessary in order to protect the rights of the Holder against
dilution, subject to the terms hereof. Without limiting the generality
of the foregoing, the Company agrees that it will not establish a par
value for shares of its Common Stock above the Exercise Price then in
effect, and that, before taking any action which would cause an
adjustment reducing the Exercise Price hereunder below the then par
value of the shares of Common Stock, the Company will take any
corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable shares of its Common Stock at the Exercise Price as so
adjusted.
xiii. Covenants and Representations of the Company.
(i) All shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance in accordance
with the terms hereof, be fully paid and nonassessable and
free from all taxes, liens and charges with respect to the
issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue.
(ii) The Company hereby agrees that at all times there shall be
authorized and reserved for issuance a sufficient number of
shares of Common Stock to provide for the exercise of the
rights represented by this Warrant.
(iii) So long as any Common Stock of the Company is listed on the
American Stock Exchange or any other national securities
exchange, the Company shall use its best lawful efforts to
list on such exchange, upon official notice of issuance upon
the exercise of this Warrant, and to maintain the listing of,
all shares of Common Stock issuable upon the exercise of the
Warrant; and the Company will use its best efforts to so list
on the American Stock Exchange or any such other national
securities exchange, and to maintain such listing of any other
securities of the Company which may be acquired upon exercise
of this Warrant, if so adjusted or modified pursuant to the
terms of paragraph 7 hereof.
xiv. Covenants and Representations of the Holder.
(i) The Holder of this Warrant understands that neither this
Warrant nor the underlying shares have been registered under
the Securities Act of 1933 or any applicable securities laws
of any state. The Holder of this Warrant hereby represents and
warrants that this Warrant is being acquired by him solely
with a view to investment and not to distribution or resale.
(ii) This Warrant or the shares of Common Stock issuable on
exercise hereof or any other security issued or issuable upon
exercise of this Warrant may not be sold, transferred or
otherwise disposed of except to a person who, in the opinion
of counsel satisfactory to the Company, is a person to whom
this Warrant or such Warrant Shares may be legally transferred
without registration and with the delivery of a current
Prospectus under the Securities Act of 1933 with respect
thereto and then only against receipt of an agreement of such
person to comply with the provisions of this paragraph 14 with
respect to any resale or other disposition of such securities.
(iii) Upon the exercise of all or any part of this Warrant, the
Holder of this Warrant shall represent and warrant to the
Company that Holder is acquiring the shares issuable pursuant
to such exercise for investment and not with a view to
distribution or resale and, as evidence of such representation
and warranty, the Holder agrees that Holder will execute an
investment letter, satisfactory to counsel for the Company,
which will state, in part, that Holder will not distribute,
sell or otherwise transfer such shares without having obtained
an opinion of counsel satisfactory to the Company that any
such transfer will not violate the Securities Act of 1933 or
any applicable state securities law. The Holder agrees and
understands that each certificate representing such shares of
Common Stock or any other security issued or issuable upon the
exercise of this Warrant not theretofore distributed to the
public pursuant to a Registration Statement will bear the
following legend to enforce such restrictions unless counsel
for the Company is of the opinion as to any such certificate
that such legend is unnecessary:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE 'ACT') AND
ARE 'RESTRICTED SECURITIES' AS THAT TERM IS DEFINED IN RULE
144 UNDER THE ACT. THE SHARES MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF
WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY."
(iv) Upon the transfer and assignment of this Warrant as set forth
in paragraph 3 hereof, the new holder of this Warrant shall
represent and warrant to the Company that he is acquiring the
Warrant (and the underlying shares issuable pursuant to any
exercise thereof) for investment and not with a view to
distribution or resale and, as evidence of such representation
and warranty, the new holder will execute an investment
letter, satisfactory to counsel for the Company, which will
state, in part, that he will not distribute, sell or otherwise
transfer such warrant (or underlying shares) without having
satisfied the Company that any such transfer will not violate
the Securities Act of 1933 or any applicable state securities
law. Any such new warrant issued will bear such legends as the
Company deems appropriate to enforce such restrictions.
xv. Taxes. The Company shall pay all transfer taxes arising from the
issuance to Holder of this Warrant and the issuance to Holder of shares
upon the exercise of this Warrant.
xvi. Notices. All notices relating to this Warrant shall be in writing and
delivered against receipt or sent by registered mail. All notices to
the Company shall be addressed to its principal office in Dallas
County, Texas. All notices to the Holder of this Warrant shall be to
his last known address as shown on records of the Company. Each notice
under this Warrant shall be deemed to have been effectively given when
mailed by registered mail or when delivered against receipt to the
proper address.
xvii. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant.
With respect to any fraction of a share called for upon any exercise
hereof, the Company shall pay to the Holder an amount in cash equal to
such fraction multiplied by the current market value of such fractional
share determined as follows:
(i) if the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such
exchange, the current value shall be the last reported sale
price of the Common Stock on such exchange on the last
business day prior to the date of exercise of this Warrant or,
if no such sale is made on such day, the average closing bid
and asked prices for such day on such exchange; or
(ii) if the Common Stock is not so listed or admitted to unlisted
trading privileges, the current value shall be the mean of the
last reported bid and asked prices reported by the National
Quotation Bureau, Inc. on the last business day prior to the
date of the exercise of this Warrant; or
(iii) if the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so
reported, the current value shall be an amount not less than
the book value determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company, such
determination to be final and binding on the Holder.
xviii. Modification. The terms and provisions of this Warrant cannot be
changed or modified in any way except by an instrument in writing and
signed by the parties.
xix. Benefits of Warrant. This Warrant shall inure to the benefit of and be
binding upon each and any successor of the Company and the successors
of the Holder.
xx. Shareholders' Rights and Registration. Until the valid exercise of this
Warrant, the Holder hereof shall not be entitled to any rights of a
shareholder of Common Stock by virtue of this Warrant; but immediately
upon the valid exercise of this Warrant and upon payment as provided
herein, the Holder hereof shall be deemed a record holder of the Common
Stock.
xxi. Violation of Law. Notwithstanding any of the provisions hereof, Holder
hereby agrees that he will not exercise this Warrant, and that the
Company will not be obligated to issue any shares to the Holder
hereunder, if the exercise thereof or the issuance of such shares shall
constitute a violation by the Holder or the Company of any provision of
any law or regulation of any governmental authority. The Company shall
in no event be obligated to register any securities pursuant to the
Securities Act of 1933 (as now in effect or as hereafter amended) or to
take any other affirmative action in order to cause the exercise of the
Warrant or the issuance of shares pursuant thereto to comply with any
law or regulation of any governmental authority unless the Holder
otherwise possesses contractual rights to cause the Company to do so.
xxii. Applicable Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Nevada.
Dated: October 20, 2004.
ATTEST: GREENBRIAR CORPORATION.
/s/ Xxxxx Xxxxx By /s/ Xxxx X. Xxxxxxxx
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Xxxxx Xxxxx, Secretary Xxxx X. Xxxxxxxx, President
ADDRESS OF HOLDER: HOLDER:
/s/ Xxxxxxx X. Xxxxxx
--------------------------- ---------------------------
Xxxxxxx X. Xxxxxx
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(facsimile)
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SUBSCRIPTION FORM
Dated: ____________________
(To be executed and completely filled in upon partial or
full exercise of the attached Warrant)
TO: Greenbriar Corporation
The undersigned registered Holder of the within Warrant irrevocably
exercises the attached Warrant and for purchases ________________ Shares of
Common Stock of Greenbriar Corporation (the "Company") and either (check one):
o herewith makes payment therefore in the amount of
$_____________, all at the price and on the terms and
conditions specified in the attached Warrant
o elects to make a Net Exercise as defined and on the terms and
conditions specified in the attached Warrant.
The undersigned registered Holder of the attached Warrant requests that a
certificate for the Shares of Common Stock of the Company hereby purchased to be
issued in accordance with the "Instructions for Registration of Stock" below and
delivered to the person designated and, if such Shares of Common Stock do not
include all the Shares of Common Stock issuable as provided in the attached
Warrant, that a new Warrant of like tenor for the number of Shares of Common
Stock of the Company not being purchased hereunder be issued in the name of the
Holder.
z___________________________________________
Signature
INSTRUCTIONS FOR REGISTRATION OF STOCK
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name____________________________________________________________________________
(please typewrite or print in block letters)
Address_________________________________________________________________________
________________________________________________________________________________
Signature_______________________________________________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, ____________________________ hereby sell, assign
and transfer unto:
Name____________________________________________________________________________
(please typewrite or print in block letters)
Address_________________________________________________________________________
________________________________________________________________________________
the right to purchase the Common Stock represented by Warrant No. _______ issued
by __________________________ to the extent of _________ shares as to which such
right is exercisable and does hereby irrevocably constitute and appoint
attorney to transfer the same on the books of the Company with full power of
substitution in the premises.
Dated:__________________________ Signature____________________________
