Exhibit 10.1
Common Stock Warrant
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS Will
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER. AN INVESTMENT IN
THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. HOLDERS MUST RELY ON THEIR OWN
ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED.
COMMON STOCK WARRANT
SENIOR OPTICIAN SERVICE, INC.
(a Minnesota Corporation)
For value received and relating to that certain promissory note between
SENIOR OPTICIAN SERVICE, INC., (the "Corporation") hereby grants to XXXXXXX X.
XXXXXX, (the "Holder"), subject to the terms and conditions hereinafter set
forth, a common stock warrant to purchase that number of shares of the common
stock of the Corporation (the "Shares") on the terms and conditions set forth
below:
1. Warrant Shares. The Corporation issues Holder a warrant to purchase
Eight Hundred Thousand (800,000) common shares.
2. Warrant Exercise Price. At the option of the Holder the exercise
price will be (a) Fifty (50%) discount of the last share price quoted on March
31, 2006 (March 31, 2006 price was $0.05 discounted 50% equals $0.025 Cents) per
share, or (b) Fifty (50%) discount of the lowest closing bid price per share
between March 31, 2006 and the default or conversion demand date, which ever
price is lowest.
3. Payment of Warrant Price. Payment of the Exercise Price may be made
by either of the following, or a combination thereof, at the election of Holder:
(i) Cash Exercise: cash, bank or cashiers check or wire transfer; or
(ii) Cashless Exercise: surrender of this Warrant at the principal
office of the Company together with notice of cashless election, in which event
the Company shall issue Holder a number of shares of Common Stock computed using
the following formula: X = Y (A-B)/A where: X = the number of shares of Common
Stock to be issued to Holder; Y = the number of shares of Common Stock for which
this Warrant is being exercised; A= the market price of the Common Stock; and B=
the Exercise Price of [as determined upon exercise in paragraph 2].
For purposes of Rule 144 and this section, it is intended, understood
and acknowledged that the Common Stock issuable upon exercise of this Warrant in
a cashless exercise transaction shall be deemed to have been acquired at the
time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
3. Term and Exercise.
(a) The Warrant may be exercised by the Holder for all or part
of the shares upon a change of control event. A change in control event means a
change of a majority of the Corporation's board of directors or capital stock
issuances exceeding twenty (20%) percent of voting control in any rolling twelve
(12) month period. However, notwithstanding anything herein to the contrary, in
no event shall the Holder be permitted to exercise this Warrant for a number of
Shares greater than the number that would cause the aggregate beneficial
ownership of the Company's Common Stock (calculated pursuant to Rule 13d-3 of
the Securities Exchange Act of 1934, as amended) of the Holder and all persons
affiliated with the Holder to equal 9.99% of the Company's Common Stock then
outstanding.
(b) The Holder will surrender the Warrant, if at all, by
delivering to the Corporation, together with the Purchase Form and Subscription
Agreement attached hereto as Exhibits A and B, each duly executed. The Warrant,
the Purchase Form and the Subscription Agreement must be accompanied by payment
in cash or by certified check of the Warrant Price (as that term is defined in
Section 2).
(c) Within thirty (30) business days following the exercise of
the Warrant by the Holder as provided in this paragraph, the Corporation will
cause to be issued in the name of and delivered to the Holder, a certificate or
certificates for the Shares. The Corporation covenants and agrees that all of
the Shares will be fully paid and non-assessable upon such issuance and
delivery. The Corporation agrees at all times to reserve and hold available a
number of shares of the authorized but unissued common stock of the Corporation
which is equal to or greater than the number of shares of common stock issuable
upon the exercise of the Warrant.
(d) The Holder, by accepting the Warrant, agrees that at the
time of exercise, the Holder will sign a written agreement with the Corporation
in which the Holder (i) represents that the Holder is acquiring the Shares
solely for the Holder's own account, for investment and not with a view to
resale or distribute.
4. The Corporation's Merger, Reorganization, Etc. If, during the
exercise period, but before Holder has exercised all of the Warrant rights with
regard to the total number of Shares available for purchase by Holder, the
Shares of the Corporation's common stock are changed into or exchanged for a
different number or different kind of shares or other securities, either the
Corporation's or those of another company, this Agreement will remain in force.
However, there will be substituted for each of the Shares the number and kind of
shares or other securities for which each Share of the Corporation's common
stock was exchanged or into which each Share was changed. The shares or
securities substituted for each Share of the Corporation's common stock may be
purchased by Holder under this Agreement for the price set for each of the
Shares in Paragraph 2.
5. Declaration of Stock Dividends. If the Corporation issues a common
stock dividend on the Corporation's common stock, the number of Shares that may
be purchased by Holder thereafter will be adjusted as follows: To each of the
unpurchased Shares, there will be added the number of Shares issued as a
dividend on each Share of outstanding common stock; each of the Shares together
with the additional Shares applicable to that Share will be bought as one unit
for the price set out for each of the Shares in Paragraph 5.
6. Other Changes in the Corporation's Stock. If there are any changes
in the number or kind of Shares outstanding that affect the Corporation's common
stock or the stock or other securities into which the Corporation's common stock
has been changed, other than those described herein, a majority of the
Corporation's Board of Directors may make such changes in the Shares available
for purchase under this Agreement as the Board of Directors deems appropriate.
7. Anti-Dilution Adjustments.
(a) Stock Dividend. If the Company shall at any time declare a
dividend payable in shares of Common Stock, then Holder, upon Exercise of this
Warrant after the record date for the determination of holders of Common Stock
entitled to receive such dividend, shall be entitled to receive upon Exercise of
this Warrant, in addition to the number of shares of Common Stock as to which
this Warrant is exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.
(b) Recapitalization or Reclassification. If the Company shall
at any time effect a recapitalization, reclassification or other similar
transaction of such character that the shares of Common Stock shall be changed
into or become exchangeable for a larger or smaller number of shares, then upon
the effective date thereof, the number of shares of Common Stock which Holder
shall be entitled to purchase upon Exercise of this Warrant shall be increased
or decreased, as the case may be, in direct proportion to the increase or
decrease in the number of shares of Common Stock by reason of such
recapitalization, reclassification or similar transaction, and the Exercise
Price shall be, in the case of an increase in the number of shares,
proportionally decreased and, in the case of decrease in the number of shares,
proportionally increased. The Company shall give Holder the same notice it
provides to holders of Common Stock of any transaction described in this Section
5(b).
(c) Distributions. If the Company shall at any time distribute
for no consideration to holders of Common Stock cash, evidences of indebtedness
or other securities or assets (other than cash dividends or distributions
payable out of earned surplus or net profits for the current or preceding years)
then, in any such case, Holder shall be entitled to receive, upon Exercise of
this Warrant, with respect to each share of Common Stock issuable upon such
exercise, the amount of cash or evidences of indebtedness or other securities or
assets which Holder would have been entitled to receive with respect to each
such share of Common Stock as a result of the happening of such event had this
Warrant been exercised immediately prior to the record date or other date fixing
shareholders to be affected by such event (the "Determination Date") or, in lieu
thereof, if the Board of Directors of the Company should so determine at the
time of such distribution, a reduced Exercise Price determined by multiplying
the Exercise Price on the Determination Date by a fraction, the numerator of
which is the result of such Exercise Price reduced by the value of such
distribution applicable to one share of Common Stock (such value to be
determined by the Board of Directors of the Company in its discretion) and the
denominator of which is such Exercise Price.
(d) Notice of Consolidation or Merger. The Company shall not,
at any time after the date hereof, effect a merger, consolidation, exchange of
shares, recapitalization, reorganization, or other similar event, as a result of
which shares of Common Stock shall be changed into the same or a different
number of shares of the same or another class or classes of stock or securities
or other assets of the Company or another entity or there is a sale of all or
substantially all the Company's assets (a "Corporate Change"), unless the
resulting successor or acquiring entity (the "Resulting Entity") assumes by
written instrument the Company's obligations under this Warrant, including but
not limited to the Exercise Price reset provisions as provided herein during the
term of the resultant warrants, and agrees in such written instrument that this
Warrant shall be exerciseable into such class and type of securities or other
assets of the Resulting Entity as Holder would have received had Holder
exercised this Warrant immediately prior to such Corporate Change, and the
Exercise Price of this Warrant shall be proportionately increased (if this
Warrant shall be changed into or become exchangeable for a warrant to purchase a
smaller number of shares of Common Stock of the Resulting Entity) or shall be
proportionately decreased (if this Warrant shall be changed or become
exchangeable for a warrant to purchase a larger number of shares of Common Stock
of the Resulting Entity); provided, however, that Company may not affect any
Corporate Change unless it first shall have given thirty (30) days notice to
Holder hereof of any Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the term
"Exercise Price" shall mean the purchase price per share specified in Section 3
of this Warrant, until the occurrence of an event stated in subsection (a), (b),
(c) or (d) of this Section 5, and thereafter shall mean said price as adjusted
from time to time in accordance with the provisions of this Warrant. No such
adjustment under this Section 5 shall be made unless such adjustment would
change the Exercise Price at the time by $0.01 or more; provided, however, that
all adjustments not so made shall be deferred and made when the aggregate
thereof would change the Exercise Price at the time by $0.01 or more. No
adjustment made pursuant to any provision of this Section 5 shall have the net
effect of increasing the Exercise Price in relation to the split adjusted and
distribution adjusted price of the Common Stock. The number of shares of Common
Stock subject hereto shall increase proportionately with each decrease in the
Exercise Price.
(f) Adjustments: Additional Shares, Securities or Assets. In
the event that at any time, as a result of an adjustment made pursuant to this
Section 5, Holder shall, upon Exercise of this Warrant, become entitled to
receive shares and/or other securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock shall be
deemed to refer to and include such shares and/or other securities or assets;
and thereafter the number of such shares and/or other securities or assets shall
be subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
8. The Corporation's Liquidation, Dissolution. If the Corporation
liquidates or dissolves, the Corporation will give Holder at least 3 months'
notice prior to the liquidation or dissolution. Holder will have the right to
exercise the Warrant in full, to the extent that applicable exercise events have
occurred. To the extent that Holder's Warrant rights have not been exercised on
the effective date of the liquidation or dissolution, they will terminate.
9. Violation of Law. The Warrant issued by this Agreement may not be
exercised if its exercise would violate any applicable state securities law, any
registration under or any requirements of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the rules of an
exchange on which the Shares may be traded, any other federal law, or any state
securities laws.
10. Unregistered Stock. If a registration statement for the Shares is
not in effect or if Holder's attorneys require a writing from Holder to avoid
violation of the Securities Act of 1933, as amended, the Corporation may require
a written commitment from the person exercising the Warrant before delivery of
the certificate or certificates for the Shares. The Commitment will be in a form
prescribed by the Corporation. It will state that it is the intent of the person
exercising the Warrant to acquire the Shares for investment only and not with
the intent of transferring or reselling them; that the person exercising the
Warrant has been told that the Shares may be "restricted shares" pursuant to
Rule 144 of the Securities and Exchange Commission and that any resale,
transfer, or other distribution of the Shares may only be made in conformity
with Rule 144, the Securities Act of 1933, as amended, or any other federal
statute, rule, or regulation. The Corporation may place a legend on the face of
the certificate or certificates in accordance with this Commitment and may
refuse to permit transfer of the Shares unless it receives satisfactory evidence
that the transfer will not violate Rule 144, the Securities Act of 1933, as
amended, or any other federal statute, rule, or regulation.
11. Manner in Which Warrant Is Exercised After Holder's Death. If
Holder has not fully exercised the Warrant rights before Holder's death, then
the persons designated by Holder in writing on file with Employer or, if no such
persons have been designated, Holder's executor or administrator, may exercise
any of Holder's Warrant rights during the Warrant period. The rights will be
exercised in the same manner as provided herein except that the person entitled
to exercise the rights will be substituted for Holder or Holder's personal
representative.
12. Modification. No modifications will be effective unless signed by
all parties.
13. Transferability. The Holder may pledge, hypothecate, sell, assign
or otherwise transfer, or encumber the Warrant.
14. Notices. Any notice, offer, acceptance, demand, request, consent,
or other communication required or permitted under the Warrant must be in
writing and will be deemed to have been duly given or made either (1) when
delivered personally to the party to whom it is directed (or any officer or
agent of such party), or (2) three (3) days after being deposited in the United
States' mail, certified or registered, postage prepaid, return receipt
requested, and properly addressed to the party to whom it is directed. A
communication will be deemed to be properly addressed if sent to a party at the
address provided below:
If to the Corporation: Senior Optician Service, Inc.
--------------------- 0000 Xxxx Xxx., Xxxxx, Xxxxx, XX 00000
If to the Holder: Long Lane Capital, Inc., 00000 Xxxx 00xx Xxx.,
---------------- Xxxxxxxxxx, XX 00000
15. Governing Law. This Agreement will be governed by and construed and
enforced in accordance with the laws of the State of Washington.
16. Successors. All of the provisions of this Agreement will bind the
Corporation, its successors and the Holder, unless inconsistent with the
provisions of this agreement.
IN WITNESS OF THE PARTIES' AGREEMENT, SENIOR OPTICIAN SERVICE, INC. has
caused this Agreement to be executed in its corporate name by its duly appointed
and authorized officer, as of this 31st day of March, 2006.
CORPORATION: HOLDER:
SENIOR OPTICIAN SERVICE, INC. XXXXXXX X. XXXXXX
/s/ Xxx Xxxx /s/ Xxxxxxx X. Xxxxxx
----------------------------- -----------------------------
By: Xxx Xxxx By: Xxxxxxx X. Xxxxxx
Title: President Title: President
