EXHIBIT 10.3
THIS WARRANT AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED UPON THE
EXERCISE OF THIS WARRANT HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE, OFFER,
PLEDGE OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER ARE SUBJECT TO THE CONDITIONS
SPECIFIED IN THE REGISTRATION RIGHTS AGREEMENT, DATED AS OF MAY 19, 2006 AND ANY
AMENDMENT THERETO OR RESTATEMENTS THEREOF (SUCH AGREEMENT INCLUDING ANY SUCH
AMENDMENT OR RESTATEMENTS, THE "AGREEMENT") AMONG XXX.XXX, INC. AND CERTAIN
OTHER SIGNATORIES THERETO, AND NO TRANSFER OF THIS WARRANT OR SUCH SHARES SHALL
BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED.
XXX.XXX, INC.
COMMON STOCK PURCHASE WARRANT
No. 1
Issue Date: ____________________ 200___
Void Five Years from Issue Date
THIS CERTIFIES THAT, for value received, (the "Holder") is entitled to
subscribe for and purchase number of shares of the fully paid and nonassessable
Common Stock, $0.01 par value (the "Shares"), of Xxx.xxx, Inc., a Minnesota
corporation (the "Company"), at the exercise price of Six Dollars and No/100
($6.00) (the "Exercise Price"), subject to the provisions and upon the terms and
conditions hereinafter set forth.
1. Method of Exercise; Payment.
(a) Cash Exercise. The purchase rights represented by this Warrant may
be exercised by the Holder, in whole or in part, by the surrender of this
Warrant (with the notice of exercise form attached hereto as Exhibit A duly
executed) at the principal office of the Company, and by the payment to the
Company, by certified, cashier's or other check acceptable to the Company or by
wire transfer to an account designated by the Company, of an amount equal to the
aggregate Exercise Price of the Shares being purchased.
(b) Net Exercise. At the election of the Holder, the Holder may
exercise this Warrant, in whole but not in part, by the surrender of this
Warrant (with the notice of exercise form attached hereto as Exhibit A duly
executed with the "net exercise" provision checked) at the principal office of
the Company. In such event, the Company will (i) calculate the aggregate
Exercise Price of the Shares being purchased (the "Exercise Price"), (ii)
calculate the market value of such Shares (the "Aggregate Value") (based upon
the NASDAQ closing price of such Shares on the trading day (the "Valuation
Date") preceding the date on which the Company receives the Holder's delivery
specified above, and (iii) disburse to the Holder the net number of Shares
having a value (based upon the NASDAQ closing price of such Shares on the
Valuation Date) equal to the difference between the Aggregate Value and the
Exercise Price.
(c) Stock Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the Shares so purchased shall be
delivered to the Holder within a reasonable time and, unless this Warrant has
been fully exercised or has expired, a new Warrant representing the shares with
respect to which this Warrant shall not have been exercised shall also be issued
to the Holder within such time.
2. Stock Fully Paid; Reservation of Shares. All of the Shares issuable upon
the exercise of the rights represented by this Warrant will, upon issuance and
receipt of the Exercise Price therefor, be fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the issue thereof. During
the period within which the rights represented by this Warrant may be exercised,
the Company shall at all times have authorized and reserved for issuance
sufficient shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.
3. Adjustments. The number and kind of securities purchasable upon the
exercise of this Warrant and the Exercise Price therefor shall be subject to
adjustment from time to time upon the occurrence of certain events, as follows:
(a) Reclassification. In the case of any reclassification or change of
securities of the class issuable upon exercise of this Warrant (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), or in case of any
merger of the Company with or into another corporation (other than a merger with
another corporation in which the Company is the acquiring and the surviving
corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of this Warrant), or in case of
any sale of all or substantially all of the assets of the Company, the Company,
or such successor or purchasing corporation, as the case may be, shall duly
execute and deliver to the holder of this Warrant a new Warrant (in form and
substance reasonably satisfactory to the holder of this Warrant), or the Company
shall make appropriate provision without the issuance of a new Warrant, so that
the holder of this Warrant shall have the right to receive, at a total purchase
price not to exceed that payable upon the exercise of the unexercised portion of
this Warrant, and in lieu of the shares of Common Stock theretofore issuable
upon exercise of this Warrant, (i) the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification, change,
merger or sale by a holder of the number of shares of Common Stock then
purchasable under this Warrant, or (ii) in the case of such a merger or sale in
which the consideration paid consists all or in part of assets other than
securities of the successor or purchasing corporation, at the option of the
Holder of this Warrant, the securities of the successor or purchasing
corporation having a value at the time of the transaction equivalent to the fair
market value of the Common Stock at the time of the transaction. The provisions
of this subparagraph (a) shall similarly apply to successive reclassifications,
changes, mergers and transfers.
(b) Stock Splits, Dividends and Combinations. In the event that the
Company shall at any time subdivide the outstanding shares of Common Stock or
shall issue a stock dividend on its outstanding shares of Common Stock the
number of Shares issuable upon exercise of this Warrant immediately prior to
such subdivision or to the issuance of such stock dividend shall be
proportionately increased, and the Exercise Price shall be proportionately
decreased, and in the event that the Company shall at any time combine the
outstanding shares of Common Stock the number of Shares issuable upon exercise
of this Warrant immediately prior to such combination shall be proportionately
decreased, and the Exercise Price shall be proportionately increased, effective
at the close of business on the date of such subdivision, stock dividend or
combination, as the case may be.
4. Notice of Adjustments. Whenever the number of Shares purchasable
hereunder or the Exercise Price thereof shall be adjusted pursuant to Section 3
hereof, the Company shall provide notice to the Holder setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the number
and class of shares which may be purchased thereafter and the Exercise Price
therefor after giving effect to such adjustment.
5. Fractional Shares. This Warrant may not be exercised for fractional
shares. In lieu of fractional shares the Company shall make a cash payment
therefor based upon the Exercise Price then in effect and the fair market value
of the shares then obtaining.
6. Representations of the Company. The Company represents that all
corporate actions on the part of the Company, its officers, directors and
shareholders necessary for the sale and issuance of the Shares pursuant hereto
and the performance of the Company's obligations hereunder were taken prior to
and are effective as of the effective date of this Warrant.
7. Representations and Warranties by the Holder. The Holder represents and
warrants to the Company as follows:
(a) This Warrant and the Shares issuable upon exercise thereof are
being acquired for its own account, for investment and not with a view to, or
for resale in connection with, any distribution or public offering thereof
within the meaning of the Securities Act of 1933, as amended (the "Act"). Upon
exercise of this Warrant, the Holder shall, if so requested by the Company,
confirm in writing, in a form satisfactory to the Company, that the securities
issuable upon exercise of this Warrant are being acquired for investment and not
with a view toward distribution or resale.
(b) The Holder understands that the Warrant and the Shares have not
been registered under the Act by reason of their issuance in a transaction
exempt from the registration and prospectus delivery requirements of the Act
pursuant to Section 4(2) thereof, and that they must be held by the Holder
indefinitely, and that the Holder must therefore bear the economic risk of such
investment indefinitely, unless a subsequent disposition thereof is registered
under the Act or is exempted from such registration.
(c) The Holder has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
purchase of this Warrant and the Shares purchasable pursuant to the terms of
this Warrant and of protecting its interests in connection therewith.
(d) The Holder is able to bear the economic risk of the purchase of
the Shares pursuant to the terms of this Warrant.
8. Restrictive Legend.
The Shares (unless registered under the Act) shall be stamped or imprinted
with a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF, AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT
STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE CONDITIONS SPECIFIED IN THE
REGISTRATION RIGHTS AGREEMENT, DATED AS OF MAY 19, 2006, AND ANY AMENDMENT
THERETO OR RESTATEMENTS THEREOF (SUCH AGREEMENT INCLUDING ANY SUCH AMENDMENT OR
RESTATEMENTS, THE "AGREEMENT") AMONG XXX.XXX, INC. AND CERTAIN OTHER SIGNATORIES
THERETO, AND NO TRANSFER OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL
SUCH CONDITIONS HAVE BEEN FULFILLED.
9. Restrictions Upon Transfer and Removal of Legend.
(a) The Company need not register a transfer of this Warrant or Shares
bearing the restrictive legend set forth in Section 8 hereof, unless the
conditions specified in such legend are satisfied. The Company may also instruct
its transfer agent not to register the transfer of the Shares, unless one of the
conditions specified in the legend referred to in Section 8 hereof is satisfied.
(b) Notwithstanding the provisions of paragraph (a) above, no opinion
of counsel shall be necessary for a transfer without consideration by any holder
(i) if such holder is a partnership, to a partner or retired partner of such
partnership who retires after the date hereof or to the estate of any such
partner or retired partner, or (ii) if such holder is a corporation, to a
shareholder of such corporation, or to any other corporation under common
control, direct or indirect, with such holder.
(c) The holder agrees not to sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise transfer or dispose of any shares
of Common Stock (or other securities) of the Company held by such holder during
a period of time determined by the Company (not to exceed 90 days) following the
effective date of a registration statement of the Company filed under the
Securities Act, as amended. The Company may impose stop-transfer instructions
with respect to the Common Stock (or other securities) subject to the foregoing
restriction until the end of said period.
(d) If the Holder is a natural person, the Holder may transfer this
Warrant or any Shares to members of the Holder's immediate family, by the laws
of descent and distribution or to a estate planning trust or similar entity,
provided, however, that (i) any person who receives a transfer of this Warrant
or any Shares pursuant to this subsection (d) may not make any subsequent
transfer of this Warrant or any Shares pursuant to this subsection (d) and (ii)
any transfer of this Warrant or any Shares under this subsection (d) may be
subject to such requirements as the Company may reasonably require to confirm
the identity of the transferee, satisfy the requirements of the Registration
Rights Agreement and otherwise ensure compliance with applicable securities
laws.
10. Rights of Shareholders. No holder of this Warrant shall be entitled, as
a Warrant holder, to vote or receive dividends or be deemed the holder of any
Shares or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein. The holder of this
Warrant will not be entitled to share in the assets of the Company in the event
of a liquidation, dissolution or the winding up of the Company.
11. Notices. All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given upon receipt or, if earlier, (a) five (5) days after
deposit with the U.S. Postal Service or other applicable postal service, if
delivered by first class mail, postage prepaid, (b) upon delivery, if delivered
by hand, (c) one business day after the business day of deposit with Federal
Express or similar overnight courier, freight prepaid or (d) one business day
after the business day of facsimile transmission, if delivered by facsimile
transmission with copy by first class mail, postage prepaid, and shall be
addressed (i) if to the Holder, at the Holder's address as set forth on the
books of the Company, and (ii) if to the Company, at the address of its
principal corporate offices (attention: President and CEO) or at such other
address as a party may designate by ten days advance written notice to the other
party pursuant to the provisions above.
12. Registration Rights Agreement. The registration rights of the Holder
(including Holders' successors) are as provided in the Agreement.
13. Governing Law. This Warrant and all actions arising out of or in
connection with this Agreement shall be governed by and construed in accordance
with the laws of the State of Georgia, without regard to the conflicts of law
provisions of the State of Georgia or of any other state.
Issued this ________ day of _______________, 200___.
XXX.XXX, INC
_________________________________
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EXHIBIT A
NOTICE OF EXERCISE
TO: Xxx.xxx, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: President
1. The undersigned hereby elects to purchase __________ Shares of Xxx.xxx,
Inc. pursuant to the terms of the attached Warrant.
2. Method of Exercise (Please initial the applicable blank):
___ The undersigned elects to exercise the attached Warrant by means
of a cash payment, and tenders herewith or by concurrent wire transfer payment
in full for the purchase price of the shares being purchased, together with all
applicable transfer taxes, if any.
___ The undersigned elects to exercise the attached Warrant by means
of the net exercise provisions of Section 1(b) of the Warrant.
3. Please issue a certificate or certificates representing said Shares in
the name of the undersigned or in such other name as is specified below:
_________________________________
(Name)
_________________________________
_________________________________
(Address)
4. The undersigned hereby represents and warrants that the aforesaid Shares
are being acquired for the account of the undersigned for investment and not
with a view to, or for resale, in connection with the distribution thereof, and
that the undersigned has no present intention of distributing or reselling such
shares and all representations and warranties of the undersigned set forth in
Section 7 of the attached Warrant are true and correct as of the date hereof.
By: _________________________________
Name: _________________________________
Title: _________________________________
