EX-10.14
EXHIBIT 10.14
NAME: XXXXXXXXX VENTURE CAPITAL, L.L.C
SUBSCRIPTION AGREEMENT
Xxxxxxxx.xxx, Inc.
000 Xxxxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Gentlemen:
The undersigned understands that Xxxxxxxx.Xxx, Inc., a Delaware corporation (the
"Company"), is offering for sale up to 500,000 shares of its common stock,
$0.00001 par value per share (the "Common Stock"), and a warrant to purchase up
to 700,000 shares of common stock of the Company (the "Warrant"), for the
Purchase Price set forth in Section 4 hereof.
The undersigned further understands that the offering is being made without
registration of the Common Stock under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance on an exemption for transactions by an
issuer not involving a public offering and further understands that the
undersigned is purchasing the Common Stock without being furnished any
prospectus setting forth all of the information that would be required to be
furnished under the Securities Act, and understands further that the offering is
being made only to "accredited investors" (as defined in Rule 501 of Regulation
D under the Securities Act).
1. SUBSCRIPTION. Subject to the terms and conditions of this Subscription
Agreement (this "Agreement"), the undersigned hereby irrevocably subscribes for
that number of shares of Common Stock and a Warrant to purchase that number of
shares of common stock set forth in APPENDIX A hereto.
2. ACCEPTANCE OF SUBSCRIPTION AND ISSUANCE OF SHARES. It is understood and
agreed that the Company has the right to accept or reject this subscription, in
whole or in part, and that this subscription is accepted by the Company only
when it is signed by a duly authorized officer of the Company and delivered to
the undersigned at the Closing referred to in Section 3.
3. THE CLOSING. The closing of the purchase and sale of the Common Stock
and the Warrant (the "Closing") shall take place at the offices of the Company
or such other mutually acceptable place on or before March 23, 2000 or at such
time and place as the Company and the undersigned shall mutually agree upon. The
Company may, at its option, elect to close the purchase and sale of the shares
in one or more Closings.
4. PAYMENT. The undersigned shall make payment in the sum of Five Hundred
Thousand and No/100 Dollars ($500,000.00) (the "Purchase Price"), for the Common
Stock and the Warrant, less a reasonable amount necessary to cover all costs and
expenses, including reasonable attorneys' and professional fees, of the
undersigned incurred in connection with this Agreement. The Purchase Price shall
be paid to the Company via wire transfer to the account designated by the
Company. The Purchase Price, less any and all deductions therefrom as provided
for herein, shall be paid in full to the Company not later than the Closing Date
(as defined below).
5. REPRESENTATIONS OF THE COMPANY. As of the date of the Closing (the
"Closing Date"), the Company represents as follows:
(a) VALID ISSUANCE. The Common Stock and the shares of common stock of the
Company underlying the Warrant, when issued and paid for, will represent validly
authorized, duly issued and fully paid and non-assessable shares of the Company,
and the issuance thereof will not conflict with the Certificate of Incorporation
or Bylaws of the Company nor with any outstanding warrant, option, call,
preemptive right or commitment of any type relating to the Company's capital
stock.
(b) OTHER REPRESENTATIONS AND AGREEMENTS.
(i) REGISTRATION OF SHARES. Not later than ninety (90) days following
the Closing Date (the "Demand Registration Date"), the Company shall cause to
become effective a registration statement under the Securities Act registering
for resale all of the Common Stock and registering for issuance all of the
shares of common stock underlying the Warrant. The Company will bear all
registration expenses, including, but not limited to, any underwriting discounts
and commissions attributable to the sale of the shares of the undersigned, of
all registrations of the securities owned by the undersigned.
If the Company intends to distribute any of the registered shares of
the undersigned and/or any other shareholder and/or the Company pursuant to the
underwriting and the underwriter advises the Company in writing that marketing
factors require a limitation of shares to be underwritten, the number of shares
of the undersigned to be included in such underwriting shall not be reduced, pro
rata or otherwise, unless all other securities are first entirely excluded from
the underwriting or upon receipt of the written consent of the undersigned
waiving such right, which consent may be withheld for any or no reason. If
despite the best efforts of the Company, the total number of shares requested by
the undersigned to be registered cannot be so included, the Company shall
purchase from the undersigned that number of shares which was unable to be
included in the underwritten offering at the price per share received in this
offering.
If the Company shall furnish to the undersigned a certificate signed by
the President of the Company providing that in the good faith judgement of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its stockholders for such registration statement to be filed and it
is therefore essential to deter the filing of such registration statement, the
Company shall have the right to defer taking action with respect to such filing
for a period not to exceed ninety (90) days following the Demand Registration
Date;
provided, however, in the event that the Company shall fail to have a
registration statement declared effective by the United States Securities and
Exchange Commission ("SEC") by the Demand Registration Date for any reasons
whatsoever, including pursuant to the terms of this paragraph, as compensation
for the breach of the terms of this Agreement by the Company, the Company shall
immediately transfer to the undersigned 200,000 shares of common stock of the
Company. For each successive thirty (30) day period commencing on the Demand
Registration Date that the Company does not have an effective registration
statement filed with the SEC, the Company shall transfer to the undersigned an
additional 200,000 shares of common stock of the Company. The Company shall not
have the right to defer registration more than once in any twelve (12) month
period.
(ii) ADDITIONAL REGISTRATION RIGHTS. The undersigned shall be entitled
to unlimited "piggyback" registration rights in connection with all
registrations of securities by the Company under the Securities Act or in
connection with any demand registration of any shareholder of the Company
(except for registrations on Form S-8 or Form S-4). The Company will bear all
registration expenses, including but not limited to, all underwriting discounts
and commissions attributable to the sale of the shares of the undersigned, of
all piggyback registrations by the undersigned.
(iii) SALE OF ADDITIONAL INVESTOR SHARES. From and after the Closing
Date, in the event, that the Company in any non-public offering sells any common
stock at a price per share, or any warrant with an exercise price per share,
that is less than $1.00, then for no additional consideration, the Company shall
immediately transfer to the undersigned that number of shares of common stock of
the Company equal to the difference between (1) the number of shares which would
have been subscribed to hereunder, inclusive of the shares underlying the
Warrant, at the lesser price per share of such subsequently sold securities and
(2) the number of the shares subscribed to hereunder, inclusive of the shares
underlying the Warrant.
(iv) CO-SALE RIGHTS. Xxxxxx X. Xxxx, founder, Chairman of the Board,
President and Chief Operating Officer of the Company, and Xxxxx Xxxx, Vice
President and member of the Board of Directors of the Company (Xxxxxx X. Xxxx
and Xxxxx Xxxx collectively referred to for purposes of this Section 5(b)(iv) as
"Grantors"), individually grant to the undersigned a right of co-sale (on a pro
rata basis) such that upon notice to the undersigned of any non-public sale or
disposition of shares of the Company, including any redemption by the Company,
by either Grantor, the undersigned, upon written notice to such selling Grantor,
shall be entitled to participate, pro rata as determined by each party's
percentage ownership in the Company, in such sale of shares of the Company on
the same terms and conditions as the selling Grantor.
In the event either Grantor sells any shares in contravention of the
co-sale rights of the undersigned contained herein (a "Prohibited Transfer"),
the undersigned, in addition to such other remedies as may be available at law,
in equity or hereunder, shall have the "put" option provided below, and
Grantors, jointly, shall be bound by the applicable provisions of such option.
In the event of a Prohibited Transfer, the undersigned shall have the
right to sell to Grantors, jointly, the number of shares equal to the number of
shares the undersigned would
have been entitled to transfer to the purchaser hereunder had the Prohibited
Transfer been effected pursuant to and in compliance with the terms hereof. Such
sale shall be made on the following terms and conditions:
(1) The price per share at which the shares are to be sold to
Grantors shall be equal to the price per share paid by the purchaser to such
selling Grantor in the Prohibited Transfer. Grantors shall also reimburse the
undersigned for any and all fees and expenses, including reasonable legal fees
and expenses, incurred pursuant to the exercise or the attempted exercise of the
undersigned's rights hereunder.
(2) Within ninety (90) days after the later of the dates on which
the undersigned either (A) received notice of the Prohibited Transfer or (B)
otherwise became aware of the Prohibited Transfer, the undersigned shall, if
exercising the option created hereby, deliver to Grantors the certificate or
certificates representing shares to be sold, each certificate to be properly
endorsed for transfer.
(3) Grantors shall, upon receipt of the certificate or
certificates for the shares to be sold by the undersigned pursuant to this
Subsection, pay the aggregate purchase price therefore and the amount of
reimbursable fees and expense in cash or by other means acceptable to the
undersigned.
(v) MARKETABILITY. The Company shall at all times be in full and
complete compliance with its reporting requirements under the Securities
Exchange Act of 1934, as amended.
(vi) STOCK SPLITS. In order to induce the undersigned to enter into
this subscription agreement and to facilitate the closing of the transaction
contemplated hereby, the Company represents and warrants to the undersigned that
from and after the Closing Date, the Company will not engage in any manner of
reverse split without the prior written consent of the undersigned, which
consent may not be unreasonably withheld.
6. REPRESENTATIONS AND WARRANTIES OF THE UNDERSIGNED. The undersigned
hereby represents and warrants to the Company and to each officer, director and
agent of the Company that:
(a) AUTHORITY. The undersigned has all requisite authority to enter into
this Agreement and to perform all obligations required to be performed by the
undersigned hereunder.
(b) ACCESS TO INFORMATION. The undersigned is familiar with the business
and financial condition, properties, operations and prospects to the Company.
The undersigned has been furnished copies of the financial statements of the
Company and all other documents requested by it and has had an opportunity to
discuss the Company's business and financial condition, properties, operations
and prospects with the Company's management. The undersigned has also had an
opportunity to ask questions of officers of the Company, which questions were
answered to his satisfaction. The undersigned understands that such discussions
were intended to describe certain aspects of the Company's business and
financial condition, properties, operations and prospects, but were not a
thorough or exhaustive description.
(c) REPRESENTATIONS AND WARRANTIES AS OF CLOSING. The undersigned
understands that, unless it notifies the Company in writing to the contrary at
or before the Closing all the undersigned's representations and warranties
contained in this Agreement will be deemed to have been reaffirmed and confirmed
as of the Closing, taking into account all information received by the
undersigned.
(d) RISK FACTORS. The undersigned understands that the purchase of the
Common Stock involves substantial risks.
(e) KNOWLEDGE, SKILL AND EXPERIENCE. The undersigned has such knowledge,
skill and experience in business, financial and investment matters so that it is
capable of evaluating the merits and risks of an investment in the Common Stock
and the Warrant. To the extent necessary, the undersigned has retained, at its
own expense, and relied upon, appropriate professional advice regarding the
investment, tax and legal merits and consequences of this Agreement and owning
the Common Stock and the Warrant.
(f) ACCREDITED INVESTOR. The undersigned is an "accredited investor" as
defined in Rule 501(a) under the Securities Act.
(g) INVESTMENT INTENT. The undersigned is acquiring the Common Stock and
the Warrant solely for its own beneficial account, for investment purposes, and
not with a view to, or for immediate resale in connection with, any improper
distribution of the Common Stock or the shares underlying the Warrant. The
undersigned has not offered or sold any portion of its shares of the Common
Stock or the shares underlying the Warrant and has no present intention of
dividing its shares of the Common Stock or the shares underlying the Warrant
with others or of reselling its shares of the Common Stock or the shares
underlying the Warrant. The undersigned understands that the Common Stock and
the shares underlying the Warrant have not been registered under the Securities
Act or any state securities laws by reason of specific exemptions under the
provisions thereof which depend in part upon the investing intent of the
undersigned and of the other representations made by the undersigned in this
Agreement. The undersigned understands that the Company is relying upon the
representations and agreements contained in this Agreement (and any supplemental
information) for the purpose of determining whether this transaction meets the
requirements for such exemptions.
(h) STOCK TRANSFER RESTRICTIONS. The undersigned agrees: (i) that it will
not sell, assign, pledge, give, transfer or otherwise dispose of the Common
Stock or the shares underlying the Warrant or any interest therein, or make any
offer or attempt to do any of the foregoing, except pursuant to a registration
of the Common Stock and/or the shares underlying the Warrant under the
Securities Act and all applicable state securities laws or in a transaction
which is exempt from the registration provisions of the Securities Act and all
applicable state securities laws; and (ii) that the Company and any transfer
agent or the Company shall not be required to give effect to any purported
transfer of any of the Common Stock or the shares underlying the Warrant except
upon compliance with the foregoing provisions.
7. CONDITIONS TO OBLIGATIONS OF THE UNDERSIGNED AND THE COMPANY. The
obligations of the undersigned to purchase and pay for the number of shares of
the Common Stock specified herein and the Warrant and of the Company to sell the
Common Stock and the
Warrant are subject to the satisfaction at or before the Closing of the
following condition precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained in Section 5 and of the undersigned contained in Section 6
shall be true and correct on and as of the Closing in all respects with the same
effect as though such representations and warranties had been made on and as of
the Closing.
(b) ISSUANCE OF WARRANT. Upon acceptance of this Subscription Agreement by
the Company and payment of the Purchase Price by the undersigned, the issuance
of a warrant in substantially the form attached hereto as APPENDIX C.
8. OBLIGATIONS IRREVOCABLE. The obligations of the undersigned hereunder
shall be irrevocable, except with the consent of the Company, until 3:00 p.m.
Central Standard Time, March 23, 2000.
9. EQUITABLE REMEDIES. Each party hereto acknowledges that a refusal
without just cause by such party to consummate the transactions contemplated
hereby will cause irreparable harm to the other party, for which there may be no
adequate remedy at law. A party not in default at the time of such refusal shall
be entitled, in addition to other remedies at law or in equity, to specific
performance of this Agreement by the party that so refused or failed to
consummate the transactions contemplated hereby. In any action to enforce the
terms of this Agreement, the successful party shall be entitled to recover its
reasonable attorneys' fees, all costs and expenses from the party who refused or
failed to perform this Agreement.
10. WAIVER, AMENDMENT. Neither this Agreement nor any provisions of this
Agreement shall be modified, changed, discharged or terminated except by an
instrument in writing, signed by the party against whom any waiver, change,
discharge or termination is sought.
11. ASSIGNABILITY. Neither this Agreement nor any right, remedy, obligation
or liability arising hereunder or by reason of this Agreement shall be
assignable by the Company without the prior written consent of the undersigned.
The undersigned may assign, transfer, pledge, encumber, mortgage or otherwise
alienate any of the rights afforded to it hereunder and the Company shall be
bound by the terms hereof to such assignee or transferee; provided, however,
that any assignment, transfer, or other alienation of any right hereunder by the
undersigned shall be in compliance with all federal and state securities laws.
12. EXPENSES. The Company shall pay all actual expenses incurred in
connection with this Agreement and the transactions contemplated hereby,
including, but not limited to, any and all reasonable legal costs and expenses
of the undersigned. In any action to enforce the terms of this Agreement, the
successful party shall be entitled to recover its reasonable costs and expenses,
including reasonable attorneys' fees, from the party who refused or failed to
perform this Agreement.
13. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the federal laws of the United States of America and the laws of
the State of Delaware.
14. SECTION AND OTHER HEADINGS. The section and other headings contained in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
16. NOTICES. All notices and other communications provided for herein shall
be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid:
(1) If to the Company, to it at the following address:
000 Xxxxxxxx
Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
(2) If to the undersigned:
Xxxxxxxxx Venture Capital, L.L.C.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
and
Xxxxxx X. Xxxxxxxxx, Xx.
0000 Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
With a copy, which shall not constitute notice, to:
Lock Liddell & Xxxx, LLP
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
or at such other address as either party shall have specified by notice in
writing to the other.
17. BINDING EFFECT. The provisions of this Agreement shall be binding upon
and accrue to the benefit of the parties and their respective successors and
permitted assigns.
18. SURVIVAL. All representations contained in this Agreement shall survive
the closing of the issuance and sale of the shares of Common Stock and the
Warrant.
19. NOTIFICATION OF CHANGES. The undersigned hereby covenants and agrees to
notify the Company upon the occurrence of any event before the closing of the
purchase of the Common Stock pursuant to this Agreement which would cause any
representation, warranty, or covenant of the undersigned contained in this
Agreement to be false or incorrect.
20. CONSTRUCTION. The parties hereto acknowledge that the parties and their
counsel have reviewed this Agreement and that the normal rule of legal
construction, to the effect that any ambiguities are to be resolved against the
drafting party, will not be employed in the interpretation of this Agreement or
any exhibits or amendments hereto.
21. SEVERABILITY. The parties hereto intend all provisions of this
Agreement to be enforced to the fullest extent permitted by law. Accordingly,
should a court of competent jurisdiction determine that the scope of any
provision is too broad to be enforced as written, the parties intend that the
court should reform the provision to such narrower scope as it determines to be
enforceable. If, however, any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future law, such provision shall be
fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision or by its severance, except to the
extent such remaining provisions constitute obligations of another party to this
Agreement corresponding to the unenforceable provision.
22. INTERVENTION. XXXXXX X. XXXX AND XXXXX XXXX, IN THEIR INDIVIDUAL
CAPACITIES, HEREBY INTERVENE IN THIS SUBSCRIPTION AGREEMENT AND EACH DOES HEREBY
(A) ACKNOWLEDGE AND AGREE THAT HE HAS READ THIS SUBSCRIPTION AGREEMENT IN ITS
ENTIRETY, (B) ACKNOWLEDGE, AGREE AND AFFIRM THE RIGHTS GRANTED TO THE
UNDERSIGNED AND THE OBLIGATIONS IMPOSED ON EACH OF THEM BY SECTION 5(B)(IV)
HEREINABOVE, AND (C) AGREE TO BE SUBJECT TO AND BOUND BY THE TERMS THEREOF.
[The immediately following page contains the signatures of the parties]
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement this 27 day of March, 2000.
Name: Shoemann Venture Capital, LLC
BY: /s/ Xxxxxx X. Xxxxxxxxx, Xx.
----------------------------
XXXXXX X. XXXXXXXXX, XX.
Managing Member
INTERVENORS:
/s/ Xxxxxx X. Xxxx
------------------------------------
Xxxxxx X. Xxxx
Individually
/s/ Xxxxx Xxxx
------------------------------------
Xxxxx Xxxx
Individually
Accepted as of
March 22, 2000
XXXXXXXX.XXX, INC.
By: /s/ Xxxxxx X. Xxxx
-----------------------------------
XXXXXX X. XXXX
President and
Chairman of the Board of Directors
APPENDIX A
CONSIDERATION TO BE DELIVERED
------------------------------------------------------------- ------------------------------------------------------
SECURITIES TO BE ACQUIRED AGGREGATE AMOUNT TO BE PAID AT CLOSING
(1) 500,000 shares of common stock $500,000.00 less the amount of any expenses of the
(2) Warrant to purchase 700,000 shares of common stock subscriber incurred in connection with the
subscription agreement
------------------------------------------------------------- ------------------------------------------------------
APPENDIX B
ACCREDITED INVESTOR CERTIFICATE
The undersigned Investor hereby certifies that it is an Accredited
Investor as that term is defined in Regulation D adopted pursuant to the
Securities Act of 1933. The specific category(s) of Accredited Investor
applicable to the undersigned is checked below.
____ a. any natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceeds $1,000,000;
____ b. any natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 and has a reasonable expectation of reaching the same
income level in the current year;
____ c. any bank as defined in section 3(a)(2) of the Securities Act of 1933,
as amended (the "Act"), or any savings and loan association or other
institution as defined in section 3(a)(5)(A) of the Act, whether acting in its
individual or fiduciary capacity; any broker or dealer registered pursuant
to section 15 of the Securities Exchange Act of 1934; any insurance
company as defined in section 2(13) of the Act; any investment company
registered under the Investment Company Act of 1940 (the "1940 Act")
or a business development company as defined in Section 2(a)(48) of the
1940 Act; any Small Business Investment Company licensed by the U.S.
Small Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958; any plan established and maintained
by a state, its political subdivisions for the benefit of its employees,
if such plan has total assets in excess of $5,000,000; any employee
benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 ("ERISA"), if the investment decision is made by a plan
fiduciary, as defined in section 3(21) of ERISA, which is either a bank,
savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets
in excess of $5,000,000; or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors;
_____ d. any private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940;
_____ e. any organization described in section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the securities offered, with total
assets in excess of $5,000,000;
_____ f. any director, executive officer, or general partner of the Company;
X g. any entity in which all of the equity owners are accredited
_____ investors; or
_____ h. any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose purchase is directed
by a sophisticated person as described in section 230.506(b)(2)(ii) of Regulation D
under the Act.
IN WITNESS WHEREOF, the undersigned has executed this Accredited Investor
Certificate as of the ___ day of March, 2000.
XXXXXXXXX VENTURE CAPITAL, LLC
BY: /s/ Xxxxxx X. Xxxxxxxxx, Xx.
----------------------------
Xxxxxx X. Xxxxxxxxx, Xx.
Managing Member
APPENDIX C
FORM OF WARRANT
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR STATE SECURITIES LAWS. NO SALE, TRANSFER OR OTHER
DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (I)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER APPLICABLE
SECURITIES LAWS, OR (II) AN EXEMPTION FROM REGISTRATION UNDER SUCH LAWS
IS AVAILABLE.
WARRANT NO. STOCK PURCHASE WARRANT NO. OF SHARES 700,000
----------- ---------------------
To Subscribe for an Purchase Common Stock of
XXXXXXXX.XXX, INC.
THIS CERTIFIES that, for value received, XXXXXXXXX VENTURE CAPITAL,
L.L.C. (together with any subsequent transferees of all or any portion of this
Warrant, the "Holder"), is entitled, upon the terms and subject to the
conditions hereinafter set forth, to subscribe for and purchase from
XXXXXXXX.XXX, INC., a Delaware corporation (hereinafter called the "Company"),
at the price hereinafter set forth in Section 2, up to 700,000 fully paid and
non-assessable shares (the "Shares") of the Company's Common Stock, $0.00001 par
value per share (the "Common Stock").
1. DEFINITIONS. As used herein the following term shall have the
following meaning:
"ACT" means the Securities Act of 1933, as amended, or a successor
statute thereto and the rules and regulations of the Securities and Exchange
Commission issued under that Act, as they each may, from time to time, be in
effect.
2. PURCHASE RIGHTS. The purchase rights represented by this Warrant
shall be exercisable by the Holder in whole or in part commencing on date
thereof. The purchase rights represented by this Warrant shall expire five (5)
years from the date hereof. This Warrant may be exercised for Shares at a price
of One and No/100 United States dollars (US$1.00) per share, subject to
adjustment as provided in Section 6 (the "Warrant Purchase Price").
3. EXERCISE OF WARRANT. Subject to Section 2 above and the further
provisions of this Section 3, the purchase rights represented by this Warrant
may be exercised, in whole or in part and from time to time, by the surrender of
this Warrant and the duly executed Notice of Exercise (the form of which is
attached as EXHIBIT A) at the principal office of the Company and by the payment
to the Company, by check, of an amount equal to the Warrant Purchase Price per
share
multiplied by the number of Shares then being purchased or via "cashless
exercise" as provided hereinafter. Upon exercise, the Holder shall be entitled
to receive, within a reasonable time, but in no event later than ten (1)
business days from the date of exercise, a certificate or certificates, issued
in the Holder's name or in such name or names as the Holder may direct, for the
number of Shares so purchased. The Shares so purchased shall be deemed to be
issued as of the close of business on the date on which this Warrant shall have
been exercised.
The Company has agreed to, and does hereby covenant to, have all of the
Shares registered under the Act such that upon exercise of this Warrant, the
Holder shall receive the Shares free from any and all restrictions on transfer
or sale, including, but not limited to, restrictions imposed by Rule 144 under
the Securities Act of 1933, as amended.
In lieu of any cash payment required hereunder, the Holder shall have
the right to exercise the Warrant in whole or in part by surrendering the
Warrant in exchange for the number of shares of the Company's common stock equal
to (x) the number of shares as to which the Warrant are being exercised
multiplied by (y) a fraction, the NUMERATOR of which is the Market price (as
defined below) of the common stock less the exercise price of the Warrant being
exercised, and the DENOMINATOR of which is such Market Price. The term "Market
Price" means the average of the closing sale price per share of the common stock
on the principal stock exchange or market on which the common stock is then
quoted or traded on each of the ten (10) consecutive trading days preceding the
date on which written notice of election to exercise the Warrant has been given
to the Company (a "cashless exercise"). If the Holder opts for a cashless
exercise of the Warrant, no other consideration shall be paid to the Company,
other than surrendering the Warrant itself, nor will there be paid any
commission or other remuneration to any other person or entity by the Holder. In
the event that the Holder is not permitted to "tack" the holding period of the
Warrant to the holding period of the common stock received upon the cashless
exercise for purposes of satisfaction of the holding period requirements of
Rules 144(d)(3)(ii) and 144(k) under the Securities Act of 1933, as amended, for
whatever reason and there is no presently filed registration statement effective
as to the shares received or to be received through the cashless exercise of
this Warrant, the Company shall, upon receipt of the written request of the
Holder, promptly prepare and file a registration statement with the SEC with
respect to all of the shares underlying this Warrant.
4. SHARES TO BE ISSUED; RESERVATION OF SHARES. The Company covenants
that the Shares that may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon issuance in accordance herewith, be fully
paid and non-assessable, and free from all liens and charges with respect to the
issue thereof. During the period within which the purchase rights represented by
the Warrant may be exercised, the Company will at all times have authorized and
reserved, for the purpose of issuance upon exercise of the purchase rights
represented by this Warrant, a sufficient number of shares of its Common Stock
to provide for the exercise of the right represented by this Warrant.
5. NO FRACTIONAL SHARES. No fractional shares shall be issued upon the
exercise of this Warrant. In lieu thereof, a cash payment shall be made equal to
such fraction multiplied by the fair market value of such shares of Common Stock
as determined in good faith by the Company's Board of Directors.
6. ADJUSTMENTS OF WARRANT PURCHASE PRICE AND NUMBER OF SHARES. If there
shall be any change in the Common Stock of the Company through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split or
other change in the corporate structure of the Company, appropriate adjustments
shall be made by the Board of Directors of the Company (or if the Company is not
the surviving corporation in any such transaction, the Board of Directors of the
surviving corporation) in the aggregate number and kind of shares subject to
this Warrant, and the number and kind of shares and the price per share then
applicable to shares covered by the unexercised portion of this Warrant.
7. NO RIGHTS AS SHAREHOLDERS. This Warrant does not entitle the Holder
to any voting rights or other rights as a shareholder of the Company prior to
exercise of this Warrant and the payment for the Shares so purchased.
Notwithstanding the foregoing, the Company agrees to transmit to the Holder such
information, documents and reports as are generally distributed to holders of
the capital stock of the Company concurrently with the distribution thereof to
the shareholders. Upon valid exercise of this Warrant, the Holder or the
Holder's designee, as the case may be, shall be deemed a shareholder of the
Company.
8. SALE OR TRANSFER OF THE WARRANT AND THE SHARES; LEGEND. The Warrant
and the Shares shall not be sold or transferred unless either (i) they first
shall have been registered under applicable securities laws, or (ii) such sale
or transfer is exempt from the registration requirements of such laws. Each
certificate representing any Warrant shall bear the legend set out on page 1
hereof. Each certificate representing any Shares shall bear a legend
substantially in the following form, as appropriate:
THE SHARES EVIDENCED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THE IMPROPER SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER
APPLICABLE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION UNDER APPLICABLE
SECURITIES LAWS.
The Warrant and Shares may be subject to additional restrictions on
transfer imposed under applicable state and federal securities law.
9. MODIFICATIONS AND WAIVERS. This Warrant may not be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
against which enforcement of the same is sought.
10. NOTICES. Any notice, requires or other document required or
permitted to be given or delivered to the Holder or the Company shall be
delivered, or shall be sent by certified or registered mail, postage prepaid, to
the Holder at its address shown on the books of the Company or in the case of
the Company, at the address indicated therefor on the signature page of this
Warrant, or, if different, at the principal office of the Company.
11. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company
covenants with the Holder that upon its receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant or any stock certificate and, in the case of any such loss, theft
or destruction, of an indemnity or security reasonably satisfactory to it, and
upon reimbursement to the Company of all reasonable expenses incidental thereto,
and upon surrender and cancellation of this Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock certificate,
of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or
stock certificate.
12. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets, and all of the obligations
of the Company relating to the Shares issuable upon exercise of this Warrant
shall survive the exercise and termination of this Warrant and all of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder.
13. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Delaware.
IN WITNESS WHEREOF, XXXXXXXX.XXX, INC. has caused this Warrant to be
executed by its officer thereunto duly authorized.
XXXXXXXX.XXX, INC.
BY /s/ Xxxxxx X. Xxxx
-------------------------
Xxxxxx X. Xxxx
President
Address: Xxxxxxxx.xxx, Inc.
000 Xxxxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
