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EXHIBIT 10.3
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. IT MAY
NOT BE SOLD OR OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER
SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO THE COMPANY
OR HOLDER'S COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED TO EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT
TO RULE 144.
XXX.XXX, INC.
WARRANT
THIS CERTIFIES that, subject to the terms and conditions of this
Warrant, US Xpress, Inc. (the "Warrantholder"), for value received, is entitled
to subscribe for and purchase up to Four Thousand (4,000) fully-paid and
non-assessable shares (the "Shares") of the Common Stock (the "Stock"), of
XXX.xxx, Inc., a Delaware corporation (the "Company"), at the exercise price of
Ten Dollars and Fifty cents ($10.50) per share (the "Initial Exercise Price"),
which number of Shares and Initial Exercise Price will be adjusted pursuant to
the provisions of Section 7 hereof (the "Exercise Price").
1. Term. Except as otherwise provided for herein, the term of this
Warrant and the right to purchase shares as granted herein will be exercisable,
at any time and from time to time, during the period commencing on August 30,
1999 (the "Warrant Grant Date") and terminating at 5:00 p.m. on the fifth
anniversary of the Warrant Grant Date (the "Termination Date"), unless earlier
terminated pursuant to Section 2(c) of this Warrant.
2. Exercise of Purchase Rights.
(a) Exercise. The purchase rights represented by this Warrant
are exercisable by the Warrantholder, in whole or in part, at any time, or from
time to time during the period set forth in Section 1 above, by tendering the
Company at its principal office a notice of exercise in the form attached hereto
as Exhibit A (the "Notice of Exercise"), duly completed and executed. Upon
receipt of the Notice of Exercise and the payment of the Exercise Price in
accordance with the terms set forth below, the Company will issue to the
Warrantholder a certificate for the number of shares of Stock of the Company
purchased and will execute the Notice of Exercise indicating the number of
shares of Stock which remain subject to future purchases, if any. The person or
persons in whose name(s) any certificate(s) representing shares of Stock will be
issued upon exercise of this Warrant will be deemed to have become the holder(s)
of, the Shares represented thereby (and such shares will be deemed to have been
issued) immediately prior to the close of business on the date or dates upon
which this Warrant is exercised. In the event of any exercise of the rights
represented by this Warrant, certificates for the Shares so purchased will be
delivered to the Warrantholder or its designee as soon as practical and in any
event within thirty (30) days after receipt of such notice
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and, unless this Warrant has been fully exercised or expired, a new Warrant
representing the remaining portion of the Shares, if any, with respect to which
this Warrant will not then have been exercised will also be issued to the
Warrantholder as soon as possible and in any event within such thirty (30) day
period.
(b) Method of Exercise. The purchase rights hereby represented
may be exercised, at the election of the Warrantholder, by the tender of the
Notice of Election and the surrender of this Warrant at the principal office of
the Company and by the payment to the Company, by check, cancellation of
indebtedness or other form of payment acceptable to the Company, of an amount
equal to the then applicable Exercise Price per share multiplied by the number
of Shares then being purchased.
(c) Termination in the Event of Initial Public Offering.
Notwithstanding any other term or provision of this Warrant, this Warrant will
terminate immediately upon the effectiveness of a registration statement under
the Securities Act of 1933, as amended, and sale of the Company's Stock in a
firm commitment underwritten public offering. The Company will give written
notice thereof to the Warrantholder stating the date on which such event is to
take place (which will be at least ten (10) days after the giving of such
notice). The Warrantholder may condition exercise of this Warrant upon the
Securities and Exchange Commission declaring the registration statement
effective.
3. Reservation of Shares.
(a) Authorization and Reservation of Shares. The Company will
at all times have authorized and reserved a sufficient number of Shares to
provide for the exercise of the rights to purchase Stock as provided herein.
(b) Registration or Listing. If any shares of Stock required
to be reserved for purposes of exercise of this Warrant require registration
with or approval of any governmental authority under any Federal or State law
(other than any registration under the Securities Act of 1933, as then in
effect, or any similar Federal statute then enforced, or any state securities
law, required by reason of any transfer), or listing on any domestic securities
exchange, or if at the time of exercise the class of Stock into which this
Warrant is then exercisable is listed on any domestic securities exchange, the
Company will, at its expense and as expeditiously as possible, use its best
efforts to cause such shares to be duly registered, listed or approved for
listing on such domestic securities exchange, as the case may be.
4. No Fractional Shares. No fractional shares or scrip representing
fractional shares will be issued upon the exercise of the Warrantholder's rights
to purchase Stock, but in lieu of such fractional shares the Company will make a
cash payment therefor upon the basis of the fair market value of a share of that
stock at the time of Exercise.
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5. No Rights as Shareholder. This Warrant does not entitle the
Warrantholder to any voting rights or other rights as a shareholder of the
Company prior to the exercise of the Warrantholder's rights to purchase Stock as
provided for herein.
6. Warrantholder Registry. The Company will maintain a registry showing
the name and address of the registered holder of this Warrant.
7. Adjustment Rights. The Exercise Price and the number of Shares of
Stock purchasable hereunder are subject to adjustment from time to time, as
follows:
(a) Reclassification or Merger. In case of any
reclassification, change or conversion of securities of the class issuable upon
exercise of this Warrant into the same or a different number of securities of
any other class or classes, 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, will duly execute and deliver to the holder of
this Warrant, so that the holder of this Warrant will 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 Stock
theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification, change or merger by a holder of the number of Shares of Stock
then purchasable under this Warrant. Such new Warrant will provide for
adjustment that will be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 7. The provisions of this subparagraph
(a) will similarly apply to successive reclassifications, changes, mergers and
transfers.
(b) Subdivision or Combination of Shares. If the Company at
any time will subdivide its Stock, the Exercise Price will be proportionately
decreased and the number of Shares issuable pursuant to this Warrant will be
proportionately increased. If the Company at any time will combine its Stock,
the Exercise Price will be proportionately increased and the number of Shares
issuable pursuant to this Warrant will be proportionately decreased.
(c) Stock Dividends. If the Company at any time will pay a
dividend payable in, or make any other distribution (except any distribution
specifically provided for in the foregoing subsections (a) or (b)) of Stock,
then the Exercise Price will be adjusted, from and after the date of
determination of stockholders entitled to receive such dividend or distribution
of stockholders to that price determined by multiplying the Exercise Price in
effect immediately prior to such date of determination by a fraction (i) the
numerator of which will be the total number of shares of Stock outstanding
immediately prior to such dividend or distribution, and (ii) the denominator of
which will be the total number of shares of Stock outstanding immediately after
such dividend or distribution. The Warrantholder will thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
Shares of Stock (calculated to the nearest whole share) obtained by multiplying
(i) the Exercise Price in effect immediately prior to such adjustment
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by (ii) the number of Shares of Stock issuable upon the exercise hereof
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment.
(d) Reserved Shares Adjustment. The number of shares reserved
for issuance pursuant to this Warrant will automatically be adjusted without
further action by the Company in the event of any adjustment of the number of
Shares issuable pursuant to this Warrant.
8. Compliance with Securities Act; Disposition of Warrant or Shares of
Stock.
(a) Compliance with Securities Act. The Warrantholder, by
acceptance hereof, agrees that this Warrant, and the Shares of Stock to be
issued upon exercise hereof, are being acquired for investment and that such
Warrantholder will not offer, sell or otherwise dispose of this Warrant, or any
Shares of Stock to be issued upon exercise hereof except under circumstances
which will not result in a violation of the Securities Act of 1933, as amended
(the "Securities Act"), or any applicable state securities laws. At the time of
exercise, the Warrantholder will execute an Investment Letter in the form
attached hereto as Exhibit B stating (among other things) that the shares issued
pursuant to the Warrant have not been registered under federal or state
securities laws, and that such shares may not be transferred unless the shares
are so registered or unless the Company has received an opinion of the Company's
counsel or such holder's counsel reasonably acceptable to the Company that such
transfers are exempt from registration.
(b) This Warrant and all shares of Stock issued upon exercise
of this Warrant (unless registered under the Securities Act and any applicable
state securities laws) will be stamped or imprinted with a legend in
substantially the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO UNDER SAID ACT OR UNLESS THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED TO EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT
TO RULE 144."
(c) Representations and Warranties of Warrantholder. In
addition, in connection with the issuance of this Warrant, the Warrantholder
specifically represents to the Company by acceptance of this Warrant as follows:
(i) The Warrantholder is aware of the Company's
business affairs and financial condition, and has acquired information about the
Company sufficient to reach an informed and knowledgeable decision to acquire
this Warrant. The Warrantholder is acquiring this Warrant for its own account
for investment purposes only and not with a view to, or for the resale in
connection with, any "distribution" thereof in violation of the Securities Act.
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(ii) The Warrantholder understands that this Warrant
has not been registered under the Securities Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the bona
fide nature of the Warrantholder's investment intent as expressed herein.
(iii) The Warrantholder further understands that this
Warrant and any shares of Stock to be issued upon exercise hereof must be held
indefinitely unless subsequently registered under the Securities Act and
qualified under any applicable state securities laws, or unless exemptions from
registration and qualification are otherwise available.
(d) Disposition of Warrant or Shares. Subject to the terms and
conditions of Section 8(e), with respect to any offer, sale or other disposition
of this Warrant or any Shares of Stock acquired pursuant to the exercise of this
Warrant prior to registration of such Warrant or Shares, the holder agrees to
give written notice to the Company prior thereto, describing briefly the manner
thereof, together with an opinion of the Company's counsel or such holder's
counsel reasonably satisfactory to the Company, or other evidence, if reasonably
requested by the Company, to the effect that such offer, sale or other
disposition may be effected without registration or qualification (under the
Securities Act as then in effect or any federal or state securities law then in
effect) of this Warrant or such shares of Stock and indicating whether or not
under the Securities Act certificates for this Warrant or such shares of Stock
to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with
such law. Promptly upon receiving such written notice and reasonably
satisfactory opinion or other evidence, if so requested, the Company, as
promptly as practicable but no later than five (5) days after receipt of the
written notice, will notify such holder that such holder may sell or otherwise
dispose of this Warrant or such shares of Stock, all in accordance with the
terms of the notice delivered to the Company. Notwithstanding the foregoing,
this Warrant or such shares of Stock may, as to such federal laws, be offered,
sold or otherwise disposed of in accordance with Rule 144 or 144A under the
Securities act, provided that the Company will have been furnished with such
information as the Company may reasonably request to provide a reasonable
assurance that the provisions of Rule 144 or 144A have been satisfied. Each
certificate representing this Warrant or the shares of Stock thus transferred
(except a transfer pursuant to Rule 144 or 144A) will bear a legend as to the
applicable restrictions on transferability in order to ensure compliance with
such laws, unless in the aforesaid opinion of counsel for the Company or the
Warrantholder or pursuant to Rule 144 or 144A, such legend is not required in
order to ensure compliance with such laws. The Company may issue stop transfer
instruction to its transfer agent in connection with such restrictions.
Notwithstanding the foregoing, (i) until a public market develops for the
securities of the Company, neither the Warrantholder nor any subsequent
transferee may transfer the Warrant or any Warrant Shares to any competitor of
the Company; and (ii) any transferee of the Warrantholder and any subsequent
transferee will expressly agree in writing with the Company to be bound by and
to comply with all applicable provisions of this Warrant.
(e) If in connection with the initial public offering of
shares of Common Stock of the Company registered pursuant to the Securities Act,
the managing underwriter for such
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registration will so request, the Warrantholder will not sell, make any short
sale of, grant any option for the purchase of, or otherwise dispose of any
Warrant Shares (other than those shares of Common Stock included in such
registration) without the prior written consent of the Company for a period
designated by the Company in writing to the Warrantholder, which period will
begin not more than ten (10) days prior to the effectiveness of the registration
statement pursuant to which such public offering will be made and will not last
more than one hundred eighty (180) days (or such other period as the officers
and directors of the Company and holders of greater than ten percent (10%) of
all securities registered pursuant to the registration statement mutually agree)
after the effective date of such registration statement. The holders hereby
agree to execute such form of agreement evidencing this obligation as any
underwriter requests.
(f) Prohibition Against Transfer. This Warrant, the rights of
the Warrantholder hereunder and the Shares may not be assigned or transferred
except to a parent or subsidiary entity of the Warrantholder that, in the case
of a parent, owns at least 80% of the Warrantholder, and, in the case of a
subsidiary, is 80% owned by the Warrantholder; provided however that such
transferee shall be bound by the terms and provisions hereof and the prohibition
on transfer of the Shares in this Section 8(f) shall terminate upon the
termination of all of the Company's rights to repurchase the Shares pursuant to
Section 1 hereof.
9. Miscellaneous.
(a) Attorney's Fees. In any litigation, arbitration or court
proceeding between the Company and the Warrantholder relating hereto, the
prevailing party will be entitled to attorneys' fees and expenses and all costs
of proceedings incurred in enforcing this Warrant.
(b) Governing Law. This Warrant Agreement will be governed by
and construed for all purposes under and in accordance with the laws of the
State of Delaware without respect to the principles of the choice of law or the
conflict of laws.
(c) Descriptive Headings. The descriptive headings of the
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
(d) Notices. Any notice required or permitted hereunder will
be given in writing and will be deemed effectively given upon personal delivery
or upon deposit in the United States mail, by registered or certified mail,
addressed (i) to the Warrantholder, at the address in the Warrant Register
maintained by the Company, and (ii) to the Company, 00000 X.X. 00xx Xxxxxx,
Xxxxx Xxxxxxx, Xxxxxxx 00000, Attention: R. Xxxxxxx Xxxxxx, or at such other
address as any such party may subsequently designate by written notice to the
other party.
(e) Lost Warrants. The Company covenants to the Warrantholder,
that upon 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, upon receipt of an
indemnity reasonably satisfactory to the Company, or in the case of any such
mutilation, upon surrender and cancellation of such Warrant or stock
certificate, the
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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.
(f) Severability. In the event any one or more of the
provisions of this Warrant will for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant will be unimpaired, and
the invalid, illegal or unenforceable provision will be replaced by a mutually
acceptable valid, legal and enforceable provision, which comes closest to the
intention of the parties underlying the invalid, illegal or unenforceable
provision.
(g) Modification and Waiver. This Warrant and any provision
hereof may be amended, waived, discharged or terminated only by an instrument in
writing signed by the party against whom enforcement of the same is sought.
(h) Application of Securityholders' Agreement. The
Warrantholder understands and acknowledges that there is in effect that certain
Amended and Restated SecurityHolders' and Exchange Agreement, as amended, (a
copy of which has been provided to the Warrantholder) and that the Shares and
the Warrantholder shall be subject to the terms and conditions thereof.
(i) Entire Agreement. This Warrant constitutes the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
IN WITNESS WHEREOF, this warrant has been duly executed and delivered
by the undersigned.
XXX.XXX, INC.
By: /s/
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Xxxxxx X. Xxxxxxxx, President
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EXHIBIT A
FORM OF
NOTICE OF EXERCISE
The undersigned hereby exercises the right to purchase _________ shares of
Common Stock which the undersigned is entitled to purchase by the terms of the
within Warrant according to the conditions thereof, and herewith makes payment
of $__________ therefor.
All shares to be issued pursuant hereto shall be issued in the name of and the
initial address of such person to be entered on the books of the Company shall
be:
The shares are to be issued in certificates of the following denominations:
-----------------------------------
[Type Name of Holder]
By:
--------------------------------
Title:
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Dated:
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EXHIBIT B
FORM OF
INVESTMENT LETTER
-----------, -----
XXX.xxx, Inc.
00000 X.X. 00xx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxx 00000
Attention: R. Xxxxxxx Xxxxxx
Gentlemen:
The undersigned, ________________________ ("Purchaser") intends to
acquire up to _________ shares (the "Shares") of the Common Stock of XXX.xxx,
Inc. (the "Company") from the Company pursuant to the exercise of certain
Warrant held by Purchaser. The Shares will be issued to Purchaser in a
transaction not involving a public offering and pursuant to an exemption from
registration under the Securities Act of 1933, as amended (the "1933 Act"). In
connection with such purchase and in order to comply with the exemption from
registration relied upon by the Company, Purchaser represents, warrants and
agrees as follows:
1. Purchaser is acquiring the Shares for Purchaser's own account, to
hold for investment, and Purchaser will not make any sale, transfer or other
disposition of the Shares in violation of the 1933 Act or the rules and
regulations promulgated thereunder by the Securities and Exchange Commission or
in violation of any applicable state securities law.
2. Purchaser has been advised that the issuance of the Shares is not
being registered under the 1933 Act on the ground that this transaction is
exempt from registration under Section 3(b) or 4(2) of the 1933 Act, as not
involving any public offering, and that reliance by the Company on such
exemptions is predicated in part on Purchaser's representations set forth in
this letter. Purchaser also has been advised that neither the Shares nor the
issuance thereof are being registered under the securities laws of any state.
3. Purchaser has been informed that the Shares must be held
indefinitely unless subsequently registered under the 1933 Act and applicable
state securities laws, or unless exemptions from such registration are available
with respect to any proposed transfer or disposition by Purchaser of the Shares.
Purchaser understands and agrees that the Company, as a condition to the
transfer of any of the Shares, may require that the request for transfer be
accompanied by an opinion of counsel satisfactory to the Company, in form and
substance satisfactory to the Company, to the effect that the proposed transfer
is exempt from registration under 1933 Act and applicable state securities laws,
unless such transfer is covered by an effective registration statement under the
1933 Act and all applicable state securities laws.
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4. Purchaser understands and agrees that there will be placed on the
certificates for the Shares, or any substitutions therefor, a legend stating in
substance:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO UNDER SAID ACT OR UNLESS THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED TO EFFECTUATE SUCH TRANSACTION OR UNLESS PURSUANT
TO RULE 144."
5. Purchaser has been furnished with or has had access to the
information it has requested from the Company in connection with the investment
represented by the Shares and has had an opportunity to discuss with the
officers and management of the Company the Company's business and financial
affairs. Purchaser has such knowledge and experience in business and financial
matters and with respect to investments in securities or in privately held
companies so as to enable it to understand and evaluate the risks of such
investment and form an investment decision with respect thereto.
Very truly yours,
------------------------------------
Name:
-------------------------------
Accepted as of the _____ day of ____________, 19____.
XXX.XXX, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
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