EXHIBIT 99.14
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (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. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES AS PERMITTED BY THE SECURITIES PURCHASE
AGREEMENT PURSUANT TO WHICH THE SECURITIES WERE ISSUED.
COMMON STOCK PURCHASE WARRANT NO. 1
To Purchase Shares of Common Stock of
FP TECHNOLOGY HOLDINGS, INC.
This COMMON STOCK PURCHASE WARRANT (this "WARRANT") certifies that, for
value received, TRIDENT GROWTH FUND, L.P., a Delaware limited partnership (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 hereof, September 13, 2005 (the "INITIAL EXERCISE DATE") and on or prior to
the close of business on the fifth anniversary of the Initial Exercise Date (the
"TERMINATION DATE"), to subscribe for and purchase from FP TECHNOLOGY HOLDINGS,
INC., a Delaware corporation (the "COMPANY"), up to such number of shares of
common stock, par value $0.01 per share, of the Company (the "COMMON STOCK"),
subject to adjustment herein (the "WARRANT Shares") as determined by the
following formula.
2,000,000 divided by: 80% of the average price per share of the Common
Stock and Common Stock Equivalents sold to any Person in the first Qualifying
Transaction to be consummated following the Initial Exercise Date (determined by
dividing the total number of shares of Common Stock issued plus shares issuable
under Common Stock Equivalents in such Qualifying Transaction, by the aggregate
consideration received by the Company plus all consideration to be received upon
exercise or conversion of all Common Stock Equivalents issued in such Qualifying
Transaction). With respect to determining the price paid per share in any asset
purchase, only shares of Common Stock actually issued and outstanding shall be
used in determining such per share calculation.
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 1
In the event no Qualifying Transaction has been consummated on or by the
first anniversary hereof, then the number of Warrant Shares purchasable hereby
shall equal 5% (subject to adjustment as set forth in Section 4.16 of the
Purchase Agreement) of then outstanding Common Stock, computed on a Fully
Diluted Basis.
Notwithstanding the foregoing, the parties agree that the number of
Warrant Shares to be issued in accordance herewith shall be adjusted up from the
determination resulting from the foregoing formula by mutual agreement of the
parties in the event that any convertible securities are sold to investors in
any Qualifying Transaction, the parties hereby recognizing that the issuance
thereof, even at an exercise or conversion price above the Exercise Price (as
defined below), would increase the value of the securities issued to such
investors and thus entitle Holder to a greater number of Warrant Shares. The
parties agree to negotiate such determination in good faith;
The purchase price of one share of Common Stock under this Warrant shall
be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Securities Purchase
Agreement (the "PURCHASE AGREEMENT"), of even date herewith, entered into by and
among the Company and the Purchasers signatory thereto.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented
by this Warrant may be made at any time or times on or after the Initial
Exercise Date and on or before the Termination Date (each, an "EXERCISE
DATE") by delivery to the Company of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto (or such other office or agency of
the Company as it may designate by notice in writing to the registered
Holder at the address of such Holder appearing on the books of the
Company); provided, however, within 5 Business Days of the date said
Notice of Exercise is delivered to the Company, the Holder shall have
surrendered this Warrant to the Company and the Company shall have
received payment of the aggregate Exercise Price of the shares thereby
purchased by wire transfer or cashier's check drawn on a United States
bank.
b) Exercise Price. The EXERCISE PRICE (so called herein) of each
share of Common Stock under this Warrant shall be equal to:
(i) 50% of the average price per share of the Common Stock and
Common Stock Equivalents sold to any Person in the first Qualifying
Transaction to be consummated following the Initial Exercise Date
(determined by dividing the total number of shares of Common Stock
issued plus shares issuable under Common Stock Equivalents in such
Qualifying Transaction, by the aggregate consideration received by
the Company plus all consideration to be received upon exercise or
conversion of all Common Stock Equivalents issued in such Qualifying
Transaction). With respect to determining the price paid per share
in any asset purchase, only shares of Common Stock actually issued
and outstanding shall be used in determining such per share
calculation; or
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 2
(ii) if no Qualifying Transaction as described in subsection
(i) above has occurred on or by the first anniversary hereof, $.01
per share.
Notwithstanding the foregoing, the parties agree that the Exercise
Price shall be adjusted down from the determination resulting from the
foregoing formula by mutual agreement of the parties in the event that any
convertible securities are sold to investors in any Qualifying
Transaction, the parties hereby recognizing that the issuance thereof,
even at an exercise or conversion price above the Exercise Price, would
increase the value of the securities issued to such investors and thus
entitle Holder to a greater number of shares of Common Stock upon
conversion hereof. The parties agree to negotiate such determination in
good faith.
c) Cashless Exercise. If at any time after one year from the date of
issuance of this Warrant there is no effective Registration Statement
registering the resale of the Warrant Shares by the Holder, then this Warrant
may also be exercised at such time by means of a "cashless exercise" in which
the Holder shall be entitled to receive a certificate for the number of Warrant
Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = the price of said Common Stock determined by reference to
the last reported sale price for the Common Stock on such day
on the principal securities exchange on which the Common Stock
is listed or admitted to trading or if no such sale takes
place on such date, the average of the closing bid and asked
prices thereof as officially reported, or, if not so listed or
admitted to trading on any securities exchange, the last sale
price for the Common Stock on the National Association of
Securities Dealers national market system on such date, or, if
there shall have been no trading on such date or if the Common
Stock shall not be listed on such system, the average of the
closing bid and asked prices in the over-the-counter market as
furnished by any NASD member firm selected from time to time
by the Company for such purpose or, if the Common Stock is not
traded, then such price as is reasonably determined by the
Company's Board of Directors;
(B) = the Exercise Price of this Warrant, as adjusted; and
(X) = the number of Warrant Shares issuable upon exercise of this
Warrant in accordance with the terms of this Warrant by means
of a cash exercise rather than a cashless exercise.
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 3
Notwithstanding anything herein to the contrary, on the Termination
Date, this Warrant shall be automatically exercised via cashless exercise
pursuant to this Section 2(c).
d) Exercise Limitations. At any time after the Common Stock is
registered under Section 12 of the Exchange Act, the Holder shall not have
the right to exercise any portion of this Warrant, pursuant to Section
2(c) or otherwise, to the extent that after giving effect to such issuance
after exercise, the Holder (together with the Holder's affiliates), as set
forth on the applicable Notice of Exercise, would beneficially own in
excess of 4.99% (or as applicable, 9.99%) of the number of shares of the
Common Stock outstanding immediately after giving effect to such issuance.
For purposes of the foregoing determination, the number of shares of
Common Stock beneficially owned by the Holder and its affiliates shall
include the number of shares of Common Stock issuable upon such exercise
of this Warrant less the number of shares of Common Stock which would be
issuable upon (A) exercise of the remaining, nonexercised portion of this
Warrant and (B) exercise or conversion of the unexercised or unconverted
portion of any other Securities (including, without limitation, any other
Debentures or Warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the
Holder. Except as set forth in the preceding sentence, for purposes of
this Section 2(d), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act. To the extent that the limitation
contained in this Section 2(d) applies, the determination of whether this
Warrant is exercisable (in relation to other securities owned by the
Holder) and of which a portion of this Warrant is exercisable shall be in
the sole discretion of such Holder. For purposes of this Section 2(d), 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 (x) Schedule 3.1(g) to the Purchase Agreement, (y) a more recent public
announcement by the Company or (z) any other notice by the Company or the
Company's Transfer Agent setting forth the number of shares of Common
Stock outstanding. Upon the written or oral request of the Holder, the
Company shall within two Business Days confirm orally and in writing to
the Holder the number of shares of Common Stock then outstanding. The
provisions of this Section 2(d) may be waived by the Holder upon, at the
election of the Holder, not less than 61 days' prior notice to the
Company, and the provisions of this Section 2(d) shall continue to apply
until such 61st day (or such later date, as determined by the Holder, as
may be specified in such notice of waiver).
e) Mechanics of Exercise.
i. Authorization of Warrant Shares. The Company covenants that
all Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant, be duly authorized,
validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than
taxes in respect of any transfer occurring contemporaneously with
such issue). The Company covenants that during the period the
Warrant is outstanding, it 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 shall constitute 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 such Warrant Shares may be issued as
provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which
the Common Stock may be listed.
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 4
ii. Delivery of Certificates Upon Exercise. Certificates for
shares purchased hereunder shall be transmitted by the transfer
agent of the Company to the Holder by crediting the account of the
Holder's prime broker with the Depository Trust Company through its
Deposit Withdrawal Agent Commission ("DWAC") system if the Company
is a participant in such system, and otherwise by physical delivery
to the address specified by the Holder in the Notice of Exercise
within 3 Business Days from the delivery to the Company of the
Notice of Exercise Form, surrender of this Warrant and payment of
the aggregate Exercise Price as set forth above ("WARRANT SHARE
DELIVERY DATE"). This Warrant shall be deemed to have been exercised
on the date the Exercise Price is received by the Company. The
Warrant Shares shall be deemed to have been issued, and Holder or
any other person so designated to be named therein shall be deemed
to have become a holder of record of such shares for all purposes,
as of the date the Warrant has been exercised by payment to the
Company of the Exercise Price and all taxes required to be paid by
the Holder, if any, pursuant to Section 2(e)(vii) prior to the
issuance of such shares, have been paid.
xxx.Xxxxxxxx of New Warrants Upon Exercise. If this Warrant
shall have been exercised in part, the Company shall, at the time of
delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of
Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical
with this Warrant.
iv. Rescission Rights. If the Company fails to cause its
transfer agent to transmit to the Holder a certificate or
certificates representing the Warrant Shares pursuant to this
Section 2(e)(iv) by the Warrant Share Delivery Date, then the Holder
will have the right to rescind such exercise.
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 5
v. Compensation for Buy-In on Failure to Timely Deliver
Certificates Upon Exercise. In addition to any other rights
available to the Holder, if at such time that the Common Stock is
registered under the Exchange Act, the Company fails to cause its
transfer agent to transmit to the Holder a certificate or
certificates representing the Warrant Shares pursuant to an exercise
on or before the Warrant Share Delivery Date, and if after such date
the Holder is required by its broker to purchase (in an open market
transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise (a "BUY-IN"), then
the Company shall (1) pay in cash to the Holder the amount by which
(x) the Holder's total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (A) the number of
Warrant Shares that the Company was required to deliver to the
Holder in connection with the exercise at issue times (B) the price
at which the sell order giving rise to such purchase obligation was
executed, and (2) at the option of the Holder, either reinstate the
portion of the Warrant and equivalent number of Warrant Shares for
which such exercise was not honored or deliver to the Holder the
number of shares of Common Stock that would have been issued had the
Company timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted exercise of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000, under
clause (1) of the immediately preceding sentence the Company shall
be required to pay the Holder $1,000. The Holder shall provide the
Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In, together with applicable confirmations and
other evidence reasonably requested by the Company. Nothing herein
shall limit a Holder's right to pursue any other remedies available
to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with
respect to the Company's failure to timely deliver certificates
representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.
vi. No Fractional Shares or Scrip. No fractional shares or
scrip representing fractional shares shall be issued upon the
exercise of this Warrant. As to any fraction of a share which Holder
would otherwise be entitled to purchase upon such exercise, the
Company shall round such fractional share up to the next whole
number.
vii.Charges, Taxes and Expenses. Issuance of certificates for
Warrant Shares shall be made without charge to the Holder for any
issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall
be paid by the Company, and such certificates shall be issued in the
name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the
Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by
the Holder; and the Company may require, as a condition thereto, the
payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 6
viii. Closing of Books. The Company will not close its
stockholder books or records in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms hereof.
Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while
this Warrant is outstanding: (A) pays a stock dividend or otherwise make a
distribution or distributions on shares of its Common Stock or any other
equity or equity equivalent securities payable in shares of Common Stock
(which, for avoidance of doubt, shall not include any shares of Common
Stock issued by the Company pursuant to this Warrant), (B) subdivides
outstanding shares of Common Stock into a larger number of shares, (C)
combines (including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (D) issues by
reclassification of shares of the Common Stock any shares of capital stock
of the Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding before such
event and of which the denominator shall be the number of shares of Common
Stock outstanding after such event and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted. Any adjustment
made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination or re-classification.
b) Subsequent Equity Sales. If the Company at any time while this
Warrant is outstanding, shall offer, sell, grant any option to purchase or
offer, sell or grant any right to reprice its securities, or otherwise
dispose of or issue (or announce any offer, sale, grant or any option to
purchase or other disposition) any Common Stock or Common Stock
Equivalents entitling any Person to acquire shares of Common Stock, at an
effective price per share less than the then Exercise Price (such lower
price, the "BASE SHARE PRICE" and such issuances collectively, a "DILUTIVE
ISSUANCE"), as adjusted hereunder (if the holder of the Common Stock or
Common Stock Equivalents so issued shall at any time, whether by operation
of purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise, or due to warrants, options or
rights per share which is issued in connection with such issuance, be
entitled to receive shares of Common Stock at an effective price per share
which is less than the Exercise Price, such issuance shall be deemed to
have occurred for less than the Exercise Price), then, the Exercise Price
shall be reduced to equal the Base Share Price and the number of Warrant
Shares issuable hereunder shall be increased such that the aggregate
Exercise Price payable hereunder, after taking into account the decrease
in the Exercise Price, shall be equal to the aggregate Exercise Price
prior to such adjustment. Such adjustment shall be made whenever such
Common Stock or Common Stock Equivalents are issued. The Company shall
notify the Holder in writing, no later than the Business Day following the
issuance of any Common Stock or Common Stock Equivalents subject to this
section, indicating therein the applicable issuance price, or of
applicable reset price, exchange price, conversion price and other pricing
terms (such notice the "DILUTIVE ISSUANCE NOTICE"). For purposes of
clarification, whether or not the Company provides a Dilutive Issuance
Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive
Issuance, after the date of such Dilutive Issuance the Holder is entitled
to receive a number of Warrant Shares based upon the Base Share Price
regardless of whether the Holder accurately refers to the Base Share Price
in the Notice of Exercise.
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 7
c) Pro Rata Distributions. If the Company, at any time prior to the
Termination Date, shall distribute to all holders of Common Stock (and not
to Holders of the Warrants) evidences of its indebtedness or assets or
rights or warrants to subscribe for or purchase any security other than
the Common Stock (which shall be subject to Section 3(b)), then in each
such case the Exercise Price shall be adjusted by multiplying the Exercise
Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the closing bid price of the
Common Stock on the then principal Trading Market determined as of the
record date mentioned above (if the closing bid price of the Common Stock
on the then principal Trading Market shall then be determinable and
otherwise the fair market value per share as determined by the Board of
Directors in good faith, and of which the numerator shall be such closing
bid price of the Common Stock on the then principal Trading Market on such
record date less the then per share fair market value at such record date
of the portion of such assets or evidence of indebtedness so distributed
applicable to one outstanding share of the Common Stock as determined by
the Board of Directors in good faith. In either case the adjustments shall
be described in a statement provided to the Holders of the portion of
assets or evidences of indebtedness so distributed or such subscription
rights applicable to one share of Common Stock. Such adjustment shall be
made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
d) Fundamental Transaction. If, at any time while this Warrant is
outstanding, there occurs 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 issuable upon such
exercise absent such Fundamental Transaction, at the option of the Holder,
(a) upon exercise of this Warrant, the number of shares of Common Stock of
the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and Alternate Consideration receivable upon or as a
result of such reorganization, reclassification, merger, consolidation or
disposition of assets by a Holder of the number of shares of Common Stock
for which this Warrant is exercisable immediately prior to such event or
(b) if the Company is acquired in an all cash transaction, cash equal to
the value of this Warrant as determined by the difference between the
applicable Exercise Price and the amount of cash paid per share to the
shareholders of the Company (the "ALTERNATE CONSIDERATION"). For purposes
of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on
the amount of Alternate Consideration issuable in respect of one share of
Common Stock in such Fundamental Transaction, and the Company shall
apportion the Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Common Stock are
given any choice as to the securities, cash or property to be received in
a Fundamental Transaction, then the Holder shall be given the same choice
as to the Alternate Consideration it receives upon any exercise of this
Warrant following such Fundamental Transaction. To the extent necessary to
effectuate the foregoing provisions, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder
a new warrant consistent with the foregoing provisions and evidencing the
Holder's right to exercise such warrant into Alternate Consideration. The
terms of any agreement pursuant to which a Fundamental Transaction is
effected shall include terms requiring any such successor or surviving
entity to comply with the provisions of this Section 3(d) and insuring
that this Warrant (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 8
e) Exempt Issuance. Notwithstanding the foregoing, no adjustments,
Alternate Consideration nor notices shall be made, paid or issued under
this Section 3 in respect of an Exempt Issuance.
f) Calculations. All calculations under this Section 3 shall 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 shall
not includes shares of Common Stock owned or held by or for the account of
the Company, and the description of any such shares of Common Stock shall
be considered on issue or sale of Common Stock. For purposes of this
Section 3, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Voluntary Adjustment By Company. The Company may at any time
during the term of this Warrant reduce the then current Exercise Price to
any amount and for any period of time deemed appropriate by the Board of
Directors of the Company.
h) Intentionally Omitted.
i) Notice to Holders.
i. Adjustment to Exercise Price. Whenever the Exercise Price
is adjusted pursuant to this Section 3, the Company shall promptly
mail to each Holder a notice setting forth the Exercise Price after
such adjustment and setting forth a brief statement of the facts
requiring such adjustment. If the Company issues a variable rate
security, despite the prohibition thereon in the Purchase Agreement,
the Company shall be deemed to have issued Common Stock or Common
Stock Equivalents at the lowest possible conversion or exercise
price at which such securities may be converted or exercised in the
case of a Variable Rate Transaction (as defined in the Purchase
Agreement), or the lowest possible adjustment price in the case of
an MFN Transaction. The term "MFN Transaction" shall mean a
transaction in which the Company issues or sells any securities in a
capital raising transaction or series of related transactions which
grants to an investor the right to receive additional shares based
upon future transactions of the Company on terms more favorable than
those granted to such investor in such offering.
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 9
ii.Notice to Allow Exercise by Xxxxxx. If (A) the Company
shall declare a dividend (or any other distribution) on the Common
Stock; (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock; (C) the Company
shall authorize the granting to all holders of the Common Stock
rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights; (D) the approval of any
stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to
which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, of any compulsory
share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company; then, in each case, the Company shall
cause to be mailed to the Holder at its last addresses as it shall
appear upon the Warrant Register of the Company, at least 20
calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock of
record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of
record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange; provided, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in such
notice. The Holder is entitled to exercise this Warrant during the
20-day period commencing the date of such notice to the effective
date of the event triggering such notice.
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 10
Section 4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable
securities laws and the conditions set forth in Sections 5(a) and 4(d)
hereof and to the provisions of Section 4.1 of the Purchase Agreement,
this Warrant and all rights hereunder are transferable, in whole or in
part, upon surrender of this Warrant at the principal office of the
Company, together with a written assignment of this Warrant substantially
in the form attached hereto duly executed by the Holder or its agent or
attorney and funds sufficient to pay any transfer taxes payable upon the
making of such transfer. Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants
in the name of the assignee or assignees and in the denomination or
denominations specified in such instrument of assignment, and shall issue
to the assignor a new Warrant evidencing the portion of this Warrant not
so assigned, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned, may be exercised by a new holder for the purchase of
Warrant Shares without having a new Warrant issued.
b) New Warrants. This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in
which new Warrants are to be issued, signed by the Holder or its agent or
attorney. Subject to compliance with Section 4(a), as to any transfer
which may be involved in such division or combination, the Company shall
execute and deliver a new Warrant or Warrants in exchange for the Warrant
or Warrants to be divided or combined in accordance with such notice.
c) Warrant Register. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the "WARRANT
REGISTER"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.
d) Transfer Restrictions. If, at the time of the surrender of this
Warrant in connection with any transfer of this Warrant, the transfer of
this Warrant shall not be registered pursuant to an effective registration
statement under the Securities Act and under applicable state securities
or blue sky laws, the Company may require, as a condition of allowing such
transfer (i) that the Holder or transferee of this Warrant, as the case
may be, furnish to the Company a written opinion of counsel (which opinion
shall be in form, substance and scope customary for opinions of counsel in
comparable transactions) to the effect that such transfer may be made
without registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee execute
and deliver to the Company an investment letter in form and substance
acceptable to the Company and (iii) that the transferee be an "accredited
investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
promulgated under the Securities Act or a qualified institutional buyer as
defined in Rule 144A(a) under the Securities Act.
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 11
Section 5. Put Option. Upon the earlier of (i) the closing of a
Fundamental Transaction; (ii) an assignment by the Company for the benefit of
its creditors, the insolvency of the Company, the inability to pay its debts, or
the filing of any petition for voluntary or involuntary bankruptcy or similar
proceeding for or against the Company; (iii) (any uncured Event of Default under
any of the Transaction Documents; or (iv) the first anniversary of the Initial
Exercise Date if no Registration Statement attempting to register the Underlying
Shares has been declared effective by the SEC in accordance with Section 12 of
the Exchange Act, Holder shall maintain, at its option (but not obligation), the
right, upon written notice to the Company, to put this Warrant (or at least what
portion remains thereof) back to the Company (the "PUT OPTION") for cash in an
amount equal to: the product obtained by multiplying (x) the number of Warrant
Shares subject hereto on the date of such notice (the "PUT OPTION DATE") divided
by the total number of shares of Common Stock issued and outstanding on the Put
Option Date; and (y) the Fair Market Value of the Company (the "PUT OPTION
PRICE"). The Put Option Price shall be paid in cash or by wire transmission by
the 15th day following Put Option Date. For purposes of this Section 5, "FAIR
MARKET VALUE OF THE COMPANY" shall mean the greater of (i) 7 times the Company's
total revenue for the 12 months immediately preceding the Put Option Date less
interest bearing indebtedness plus cash; (ii) 7 times the Company's total annual
revenue for the Company's most recent fiscal year ending prior to the Put Option
Date less interest bearing indebtedness plus cash; or (iii) the valuation given
in connection with any equity raise commenced or closed prior to the Put Option
Date. In the event the Company cannot legally comply with the Put Option or
otherwise fails to comply with the terms hereof, upon Xxxxxx's election, the Put
Option shall automatically become a note payable in the form of the Debenture
(of even date herewith entered into by and between these parties) for the Put
Option Price at the interest rate and term stated therein, and Company hereby
agrees to execute and deliver such debenture or other documents to evidence
same.
Section 6. Covenants.
(a) Negative Covenants. So long as any portion of this Warrant is
outstanding, without the prior written consent of the Holder, which consent may
be withheld in the sole discretion of the Holder, the Company will not and will
not permit any of its Subsidiaries to directly or indirectly:
i. Repayment of Shares. Repay, repurchase or offer to repay,
repurchase or otherwise acquire more than a de minimus number of
shares of its Common Stock or other equity securities or as
otherwise permitted by the Transaction Documents;
ii. Bylaws. Amend its certificate of incorporation, bylaws or
other charter documents so as to adversely affect any rights of the
Holder in its capacity as a holder of the Warrant;
iii. Sale of Assets, Dissolution, Etc. Transfer, sell, assign,
lease or otherwise dispose of any of its properties or assets, or
any assets or properties necessary or desirable for the proper
conduct of its business, or transfer, sell, assign or otherwise
dispose of any of its accounts, or contract rights to any person or
entity, or change the nature of its business, wind-up, liquidate or
dissolve, or agree to any of the foregoing, other than in the
ordinary course of business;
iv. Compensation. Increase the compensation of any of its
officers or consultants making more than $100,000 per year, hire any
relative of any officer, director or shareholder of the Company, or
pay a bonus to any such person;
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 12
v. Subsidiaries. Establish or form a partially or wholly owned
Subsidiary. Sell, transfer or assign any interest in the Company's
existing Subsidiaries;
vi. No Further Issuance of Securities. Other than in
accordance herewith, create, issue or permit the issuance of any
additional securities of the Company or of any of its Subsidiaries
(including with respect to any Qualifying Transaction), if any, or
any rights, options or warrants to acquire any such securities, and
in the event that Company desires to issue securities with
preferences or rights greater than that which the Common Stock has,
the Holder will have the option of purchasing such stock in lieu of
the Common Stock hereby;
vii. No Dividends; No Redemption. Declare any dividend, pay or
set aside for payment any dividend or other distribution, in cash,
stock, or other property, or make any payment to any related
parties, including to any preferred stockholders, as a dividend,
redemption, or otherwise, other than the payment of salaries in the
ordinary course of business;
viii. Stock Splits. Undertake a reverse or forward stock split
or reclassification of the Common Stock; or
ix. Agreement. Enter into any agreement obligating the Company
to undertake any of the matters set forth in this Section 6(a).
(b) Affirmative Covenants. So long as any portion of this Warrant is
outstanding and unless the Holder otherwise consents in writing, which consent
may be withheld in the sole discretion of the Holder, the Company will:
i. True Books. Keep true books of record and account in which
full, true and correct entries will be made of all of its dealings
and transactions, and set aside on its books such reserves as may be
required by GAAP, consistently applied, with respect to all taxes,
assessments, charges, levies and claims referred to in (a) above,
and with respect to its business in general, and include such
reserves in interim as well as year-end financial statements;
ii. Right of Inspection. Permit any person designated by the
Holder, at the Holder's expense, to visit and inspect any of the
properties, books and financial reports of the Company, all at such
reasonable times upon three (3) Business Days prior notice to
Company, and as often as the Holder may reasonably request, provided
the Holder does not unreasonably interfere with the daily operations
of the Company and Holder executes a confidentiality agreement; and
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 13
iii. Financial Reporting. The Company shall provide to Holder
audited annual financial statements, audited by mutually agreed upon
independent certified public accounting firm. Said financial
statements shall be prepared in accordance with GAAP, consistently
applied, and shall be delivered to Holder within ninety (90) days
after the close of the Company's fiscal year. The report of the
auditor that accompanies the financial statements shall not contain
any qualifications or limitations, such auditor to be a mutually
agreeable accounting firm. The Company's fiscal year ends on June
30, and shall not be changed without the prior written consent of
the Holder. The Company shall provide to Holder unaudited monthly
financial statements (including month to date and year to date
actual to prior periods) and a report in such form as is acceptable
to Holder, both presented in accordance with GAAP, consistently
applied (subject to such exceptions for interim financials as may be
noted by the Company thereon), and shall be delivered to Holder
within thirty (30) days after the close of the Company's month. The
Company shall also deliver any other reports reasonably requested by
Xxxxxx. If the statements or reports are not delivered within thirty
(30) days of the close of any month, then the Company will pay a
late fee of $250 per day until the report is delivered in adequate
form in the sole discretion of Holder.
Section 7. Miscellaneous.
a) Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws and Section 4 of this Warrant, this
Warrant and all rights hereunder are transferable, in whole or in part, at
the office or agency of the Company by the Holder in person or by duly
authorized attorney, upon surrender of this Warrant together with the
Assignment Form annexed hereto properly endorsed. The transferee shall
sign an investment letter in form and substance reasonably satisfactory to
the Company.
b) No Rights as Shareholder Until Exercise. This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder
of the Company prior to the exercise hereof. Upon the surrender of this
Warrant and the payment of the aggregate Exercise Price (or by means of a
cashless exercise), the Warrant Shares so purchased shall be and be deemed
to be issued to such Holder as the record owner of such shares as of the
close of business on the later of the date of such surrender or payment.
c) Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that 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 (which, in the case of the Warrant, shall not include
the posting of any bond), and upon surrender and cancellation of such
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
such cancellation, in lieu of such Warrant or stock certificate.
d) Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the expiration of any right required or
granted herein shall be a Saturday, Sunday or a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding
day not a Saturday, Sunday or legal holiday.
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 14
e) Authorized Shares.
The Company covenants that during the period the Warrant is
outstanding, it 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 shall
constitute 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 such Warrant Shares may be
issued as provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which the
Common Stock may be listed.
Except and to the extent as waived or consented to by the Holder,
the Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary 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 the carrying out of all such terms and
in the taking of all such actions as may be necessary or appropriate to
protect the rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the Company
will (a) not increase the par value of any Warrant Shares above the amount
payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares upon the exercise of this Warrant, and (c)
use commercially reasonable efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.
Before taking any action which would result in an adjustment in the
number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any
public regulatory body or bodies having jurisdiction thereof.
f) Jurisdiction. All questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall be
determined in accordance with the provisions of the Purchase Agreement.
g) Restrictions. The Holder acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.
h) Expenses. If the Company willfully and knowingly fails to comply
with any provision of this Warrant, which results in any material damages
to the Holder, the Company shall pay to Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys' fees, including those of appellate proceedings,
incurred by Holder in collecting any amounts due pursuant hereto or in
otherwise enforcing any of its rights, powers or remedies hereunder.
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 15
i) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder by the Company shall be
delivered in accordance with the notice provisions of the Purchase
Agreement.
j) Limitation of Liability. No provision hereof, in the absence of
any affirmative action by Holder to exercise this Warrant or purchase
Warrant Shares, and no enumeration herein of the rights or privileges of
Holder, shall give rise to any liability of Holder for the purchase price
of any Common Stock or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
k) Remedies. Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees
that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and
hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
l) Successors and Assigns. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors of the Company and
the successors and permitted assigns of Holder. The provisions of this
Warrant are intended to be for the benefit of all Holders from time to
time of this Warrant and shall be enforceable by any such Holder or holder
of Warrant Shares.
m) Amendment and Waiver. This Warrant may be modified or amended
only with the written consent of the Company and the Holder. No course of
dealing or any delay or failure to exercise any right hereunder on the
part of Holder shall operate as a waiver of such right or otherwise
prejudice Xxxxxx's rights, powers or remedies, notwithstanding the fact
that all rights hereunder terminate on the Termination Date.
n) Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this Warrant.
o) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
p) Registration Rights. The Holder has certain rights with respect
to the registration of the Warrant Shares upon exercise of this Warrant,
such rights being specifically set forth in the Purchase Agreement entered
into by and between Holder and the Company on the date hereof.
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 16
[Signature Page Follows]
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Page 17
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.
Dated: September 13, 2005
FP TECHNOLOGY HOLDINGS, INC.
By:__________________________________________
Name:
Title:
Common Stock Purchase Warrant (FP Technology Holdings, Inc.), Signature Page
NOTICE OF EXERCISE
TO: FP TECHNOLOGY HOLDINGS, INC.
(1) The undersigned hereby elects to purchase ________ Warrant
Shares of FP Technology Holdings, Inc. pursuant to the terms of the attached
Warrant (only if exercised in full), and tenders herewith payment of the
exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
|_| in lawful money of the United States; or
|_| the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in
subsection 2(c), to exercise this Warrant with respect to the
maximum number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection 2(c).
(3) Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other name as is
specified below:
----------------------------------------
The Warrant Shares shall be delivered to the following:
----------------------------------------
----------------------------------------
----------------------------------------
(4) Accredited Investor. The undersigned is an "accredited investor"
as defined in Regulation D promulgated under the Securities Act of 1933, as
amended.
[SIGNATURE OF HOLDER]
Name of Investing Entity: ______________________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Date: __________________________________________________________________________
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address is
___________________________________________________________________.
___________________________________________________________________
_________ Dated: ______________, _______
Holder's Signature:___________________________
Holder's Address:_____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
