THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND IS SUBJECT TO RESTRICTIONS ON EXERCISE AND TRANSFER AS SET FORTH HEREIN WARRANT To Purchase Common Stock of Proginet Corporation
Exhibit 4.3i
THIS
WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF
1933 AND IS SUBJECT TO RESTRICTIONS ON EXERCISE
AND
TRANSFER AS SET FORTH HEREIN
WARRANT
To
Purchase Common Stock of Proginet Corporation
1.
Grant and Exercise of Warrant.
1.1.
Grant of Warrants.
THIS
WARRANT (the “Warrant”) CERTIFIES THAT, for value received, Xxxxxxx Xxxxxx (the
“Holder”), is entitled to purchase at a price of $0.54 per share (the “Warrant
Price”) from Proginet Corporation a Delaware corporation (the “Company”), shares
of common stock of the Company (the “Common Stock”) on the following terms and
conditions. This Warrant permits the Holder to purchase from the Company upon
approval thereof by the Vancouver Stock Exchange which approval the Company
shall seek, in a timely manner in good faith, or upon listing of the Common
Stock on any U.S. Exchange, including the NASDAQ Bulletin Board, whichever
comes
first, (I) 150,000 shares of Common Stock at the Warrant Price at any time
during the five year period commencing on the date hereof, (ii) 100,000 shares
of Common Stock at the Warrant Price at any time during the five year period
commencing on the vesting thereof, provided that the Warrant referred to in
this
clause (ii) will vest and may only be exercised in the event the Common Stock
trades on the principal securities market trading the Common Stock (the
“Market1’) at a price equal to or greater than $1 25 per share at any time
during the five year period commencing on the date hereof. Upon listing of
the
Common Stock on any U.S. Exchange including the NASDAQ Bulletin Board, the
Company shall grant (iii) 100,000 shares of Common Stock at the Warrant Price
at
any time during the five year period commencing on the date of vesting thereof,
provided that the Warrant referred to in this clause (iii) will vest and may
only be exercised in the event the Common Stock trades on the Market at a price
equal to or greater than $2.25 per share at any time during the five year period
commencing on the date hereof, (iv) 100,000 shares of Common Stock at the
Warrant Price at any time during the five year period commencing on the vesting
thereof, provided that the Warrant referred to in this clause (iv) will vest
and
may only be exercised in the event the Common Stock trades on the principal
securities market trading the Market at a price equal to or greater than $3.25
per share at any time during the five year period commencing on the date hereof,
(v) 50,000 shares of Common Stock at the Warrant Price at any time during the
five year period commencing on the date of vesting thereof, provided that the
Warrant referred to in this clause (v) will vest and may only be exercised
in
the event the Common Stock trades on the Market at a price equal to r greater
than $4.25 per share at any time during the five year period commencing on
the
date hereof; and (vi) 200,000 shares of Common Stock at the Warrant Price at
any
time during the five year period commencing on the vesting hereof, provided
that
the agreement renews beyond its expiration which occurs one (1) year after
the
date hereof.
In
the
event of a Change of Control,” as defined herein, the Warrants referred to in
clauses (ii), (iii), (iv), and (v), above shall immediately vest and be
exercisable, however Advisor agrees to continue the duties for the term of
such
Agreement as requested by the then Management. “Change of Control” shall mean
the occurrence of any of the following: (i) the sale, lease, transfer,
conveyance or other disposition, in one or a series of related transactions,
of
all or substantially all of the assets of the Company to any “person” or “group”
(as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Securities
Exchange Act of 1934 as amended (Exchange Act), (ii) any person or group is
or
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a person shall be deemed to have “beneficial
ownership” of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total voting power of the voting
stock of the Company, including by way of merger, consolidation or otherwise.
For purposes of this Section 1, in order for the Warrants to vest, the market
price of the Common Stock must maintain an average closing price for five (5)
days.
1.2.
Exercise of Warrants.
To
exercise the Warrants in whole or in part, the Holder shall deliver to the
Company at its principal office (a) a written notice of the Holder’s election to
exercise this Warrant, which notice shall specify the number of shares of Common
Stock to be purchased, (b) cash or a certified check payable to the Company
in
an amount equal to the aggregate purchase price of the number of shares of
Common Stock being purchased, and (c) this Warrant. The Company shall as
promptly as practicable, and in any event within 20 days thereafter, execute
and
deliver or cause to be executed and delivered, in accordance with such notice,
a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in such notice. The stock certificate or certificates
so
delivered shall be in the denomination of 5,000 shares each or such lesser
or
greater denomination as may be specified in such notice and shall be issued
in
the name of the Holder or such other name as shall be designated in such notice.
Such certificate or certificates shall be deemed to have been issued and the
Holder or any other person so designated to be named therein shall be deemed
for
all purposes to have become a holder of record of such shares as of the date
such notice is received by the Company as aforesaid. If this Warrant shall
have
been exercised only in part, the Company shall, at the time of delivery of
said
certificate or certificates, deliver to the Holder a new Warrant evidencing
the
rights of the Holder to purchase the remaining shares of Common Stock provided
for by this Warrant, which new Warrant shall in all other respects be identical
to this Warrant, or, at the request of the Holder, appropriate notation may
be
made on this Warrant and the same returned to the Holder. The Company shall
pay
all expenses, taxes and other charges payable in connection with the
preparation, issue and delivery of such stock certificates and new Warrants,
except that, in case such stock certificates or new Warrants shall be registered
in a name or names other than the name of the Holder, funds sufficient to pay
all stock transfer taxes that are payable upon the issuance of such stock
certificate or certificates or new Warrants shall be paid by the Holder at
the
time of delivering the notice of exercise mentioned above. Prior to the issuance
of any shares of Common Stock upon exercise of this Warrant, the Company shall
use its best efforts to secure the listing of such shares of Common Stock upon
each securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed (subject to official notice of issuance
upon exercise of this Warrant) and shall maintain, so long as any other shares
of Common Stock shall be so listed, such listing of all shares of Common Stock
from time to time issuable upon the exercise of this Warrant.
2.
Representations and Warranties.
The
Company hereby represents and warrants that:
2.1.
Organization, Standing, Capitalization, etc.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation and has all requisite corporate
power and authority to enter into this Warrant. The Company has delivered to
the
Holder a complete and correct copy of the Articles of Incorporation of the
Company, and all amendments thereto, as in effect on the date hereof, and a
complete and correct copy of the Bylaws of the Company as in effect on the
date
hereof, The Company has an authorized equity capitalization as described in
the
Articles of Incorporation. All of the outstanding shares of capital stock of
the
Company have been duly authorized and validly issued and are fully paid and
nonassessable.
2.2.
Qualification.
The
Company is duly qualified and in good standing as a foreign corporation
authorized to transact business in each jurisdiction where the conduct of the
Company’s business or the ownership of its properties requires such
qualification, or, if not so qualified, the Company’s failure so to qualify will
not have a material adverse effect on the Company, its financial condition
or
operations and will not impair the Company’s right to enforce any material
agreement to which it is a party.
2.3.
Agreement Authorization.
This
Warrant has been duly authorized, executed and delivered by or on behalf of
the
Company and constitutes the legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as such may be affected by
applicable bankruptcy or insolvency laws.
2.4.
Authorization and Legality of the Warrants and the Common
Stock.
The
Board of Directors of the Company has duly authorized the grant of the Warrants.
There are no preemptive rights or similar rights on the part of the holders
of
shares of the Company’s capital stock. No approval or authorization of the
shareholders of the Company is required for the issuance and sale of the
Warrants as contemplated herein, The shares of Common Stock issuable upon
exercise of the Warrants have been duly authorized and, when delivered to the
Holder upon such exercise, will be validly issued and outstanding and fully
paid
and nonassessable. The issuance of the securities and the consummation of the
other transactions contemplated hereby will not conflict with, or result in
a
breach or violation of any of the terms or provisions of, or constitute a
default under, with or without notice or lapse of time or both, (a) any
contract, indenture, mortgage, deed of trust, loan agreement, understanding
or
other agreement or instrument to which the Company or any of its subsidiaries
is
a party or by which the Company or any of its subsidiaries is or may be bound
or
to which any of the property or assets of the Company or any of its subsidiaries
is or may be subject, which breach, violation or default could reasonably be
expected to have a material adverse effect on the Company or its subsidiaries
taken as a whole, or (b) the Articles of Incorporation or Bylaws of the Company
or of any order, judgment or decree of any court or governmental agency,
authority or instrumentality having jurisdiction over the Company or any of
its
subsidiaries or any of their material properties.
2.5.
Disclosure.
Neither
this Warrant nor any certificate or other document referenced herein or therein
and furnished to the Holder by the Company contains any untrue statement of
a
material fact or omits to state a material fact necessary in order to make
the
statements contained therein or herein, in light of the circumstances under
which they were made, not misleading.
3.
Covenants of the Company.
3.1.
Registration Obligations.
The
Company covenants and agrees:
(a)
If,
at any time after the Common Stock is listed on the NASDAQ small cap market
or
any other U.S. Exchange other than the NASDAQ Bulletin Board Holder requests
that the Company file a registration statement under the Securities Act of
1933
(the “Securities Act”), as soon as practicable thereafter the Company shall use
its best efforts to file a registration statement with respect to any or all
Warrants, or any or all of the Common Stock issuable upon exercise of the
Warrants (the “Warrant Shares”), (whether for primary offering and sale by the
Company to the Holder, or for a subsequent secondary offering and sale by the
Holder), that the Company has been so requested to include and obtain the
effectiveness thereof, and to take all other action necessary under any Federal
or state law or regulation to permit the Warrants or the Warrant Shares
specified in the notice of the Holder to be sold or otherwise disposed of,
and
the Company shall maintain such compliance with each such Federal and state
law
and regulation for the period necessary for Holder to effect the proposed sale
or other disposition; provided, however, the Company shall be entitled to defer
such registration for a period of up to 60 days if and to the extent that its
Board of Directors shall determine that such registration would interfere with
a
pending corporate transaction. The Holder shall be entitled to register,
reregister or qualify, all or any portion of the Warrant Shares, and the Company
shall be required to effect a registration, re-registration or qualification
as
requested by the Holder pursuant to this subsection 3.1(a) on four occasions.
(b)
If at
any time or from time to time prior to the Expiration Date, the Company proposes
to register any of its securities under the Securities Act on any form for
the
registration of securities under such Act, whether or not for its own account
(other than by a registration statement on Form S-S or Form S-4 or other form
which does not included substantially the same information as would be required
in a form for the general registration of securities or would not be available
for the Common Stock) (a “Piggyback Registration”), it shall as expeditiously as
possible give written notice to the Holders of this intention to do so and
of
such Holder’s rights under this Section 3.1(c). Such rights are referred to
hereinafter as “Piggyback Registration Rights.” Upon the written request of the
Holder made within 20 days after receipt of any such notice (which request
shall
specify the registrable securities intended to be disposed of by such Holder),
the Company shall include in the Registration Statement the registrable
securities which the Company has been so requested to register by the Holder
thereof and the Company shall keep such registration statement in effect and
maintain compliance with each Federal and state law or regulation for the period
necessary for such Holder to effect the proposed sale or other disposition.
If
a
Piggyback Registration involves an offering by or through underwriters, the
Company, except as otherwise provided herein, shall not be required to include
registrable shares therein if and to the extent the underwriter managing the
offering reasonably believes in good faith and advises in writing each Holder
requesting to have registrable securities included in the Company’s Registration
Statement that marketing factors require a limitation on the number of shares
to
be underwritten; provided that any such reduction or elimination shall be pro
rata to all other holders of the securities of the Company exercising “Piggyback
Registration Rights” similar to those set forth herein in proportion to the
respective number of shares they have requested to be registered.
(c)
The
Company shall pay all Registration Expenses in connection with the registrations
provided for the Section 3.1 (a) and (b).
(d)
To
update the Holder regarding any material developments related to the
registrations referred to above, including any stop orders issued by the
Securities and Exchange Commission or any other circumstances that make such
registration unavailable for any reason.
3.2.
Financial Statements.
So long
as any of the Warrants are outstanding, the Company shall deliver to the Holder
such periodic reports and other information as is generally made available
to
shareholders or is filed with any regulatory agency or body or stock exchange.
3.3.
Notices.
In case
the Company proposes
(a)
to
pay any dividend payable in stock (of any class or classes) or in convertible
securities upon its Common Stock or make any distribution (other than ordinary
cash dividend) to the holders of its Common Stock, or
(b)
to
grant to the holders of its Common Stock generally any rights or options, or
(c)
to
effect any capital reorganization or reclassification of capital stock of the
Company, or
(d)
to
consolidate with, or merge into, any other corporation or to transfer its
property as an entirety or substantially as an entirety, or
(e)
to
effect the liquidation, dissolution or winding up of the Company, then the
Company shall cause notice of any such intended action to be given to the Holder
not less than 30 days before the date on which the transfer books of the Company
shall Close or a record be taken for such stock dividend, distribution or
granting of rights or options, or the date when such capital reorganization,
reclassification, consolidation, merger, transfer, liquidation, dissolution
or
winding up shall be effective, as the case may be.
3.4.
Reservation of Shares.
The
Company covenants and agrees that it will at all times reserve and set apart
and
have, free from preemptive rights, a sufficient number of shares of authorized
but unissued Common Stock, sufficient to permit the exercise in full of the
Warrants.
4.
Expenses.
The
Company will pay (a) all costs and expenses of the Company’s performance of and
compliance with all agreements and conditions contained herein on Its part
to be
performed or complied with, including registration, tiling and qualification
fees, blue sky fees, printing expenses and accounting fees; and (b) the cost
of
complying with the securities or blue sky laws of any jurisdiction with respect
to the offering or sale of the Common Stock issued upon exercise of the
Warrants.
5.
Indemnification.
(a)
In
connection with any registration by the Company of the Common Stock issuable
upon exercise or conversation thereof, to the extent permitted by law, the
Company will indemnify and hold the Holder harmless against any losses, claims,
damages, or liabilities, joint or several, to which the Holder may become
subject under the 1933 Act or otherwise insofar as such losses,
claims, damage, or liabilities (or actions in respect thereof) arise, out of
or
are based on any untrue or alleged untrue statement of any material tact
contained in any registration statement filed by the Company, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading or arise out of
any
violation by the Company of any rule or regulation promulgated under the 1933
Act applicable to the Company and relating to action or inaction required of
the
Company in connection with any such registration; and will reimburse the Holder
for any legal or other expenses reasonably incurred by the Holder in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld) nor shall
the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in
connection with such registration statement, preliminary prospectus, final
prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with written information furnished expressly for use by the Holder
in
connection with such registration.
(b)
In
connection with any registration statement described in Section 6(a), to the
extent permitted by law, the Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
registration statement, each person, if any, who controls the Company within
the
meaning of the 1933 Act, arid each agent and any underwriter for the Company
(within .the meaning of the 0000 Xxx) against any losses, claims, damages,
or
liabilities to which the Company or any such director, officer, controlling
person, agent, or underwriter may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereto) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material tact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent that such untrue statement
or
alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or final prospectus, or amendments or
supplements thereto, in reliance upon and in conformity with written information
furnished by the Holder expressly for use in connection with such registration;
and the Holder will reimburse any legal or other expenses reasonably incurred
by
the Company or any such director, officer, controlling person, agent, or
underwriter in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this Section 6(b) shall not apply to amounts paid in settlement
of
any such loss, claim, damage liability, or action if such settlement is effected
without the Holder’s consent (which consent shall not be unreasonably withheld).
6.
Survival of Representations and Warranties, etc.
All
agreements, representations and warranties contained herein or made in writing
by the Holder or on behalf of the Company in connection with the transactions
contemplated hereby shall survive the execution and delivery of this Warrant.
All the statements contained in any instrument executed and delivered by the
Company or its duly authorized officers pursuant hereto in connection with
the
transactions contemplated hereby shall be deemed representations by the Company
hereunder.
7.
Limitation of Liability; Not a Stockholder.
No
provision of this Warrant shall be construed as conferring upon the Holder
the
right to vote or to consent or to receive dividends or to receive notice as
a
stockholder in respect of meetings of stockholders for the election of directors
of the Company or any other matter whatsoever as a stockholder of the Company.
No provision hereof, in the absence of affirmative action by the Holder to
purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the Holder for
the
purchase price or as a stockholder of the Company, whether such liability is
asserted by the Company, creditors of the Company or others.
8.
Loss, Destruction, etc. of Warrant.
Upon
receipt of evidence satisfactory to the Company of the loss, theft, mutilation
or destruction of this Warrant, and in the case of any such loss, theft or
destruction upon delivery of a bond of indemnity in such form and amount as
shall be reasonably satisfactory to the company, or in the event of such
mutilation upon surrender and cancellation of the Warrant, the Company will
make
and deliver a new Warrant, of Like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of
this
Section in lieu of any Warrant alleged to be lost, destroyed or stolen, or
of
any mutilated Warrant, shall constitute an original contractual obligation
on
the part of the Company.
9.
Adjustments.
In the
event the Company engages in any reorganization, recapitalization, stock
dividend, stock split, merger, liquidation or any other transaction described
in
Section 3.3 hereof, appropriate and equitable adjustment in the number and
type
of equity units issuable upon exercise of this Warrant and in the purchase
price
thereof and in the Market price at which the Warrant granted in clauses (i),
(ii), (iii), (iv), (v), and (vi) of Section 1.1 vests shall be made in order
that the Holder1s economic interest in this Warrant is preserved without
dilution or prejudice. The Holder of the Warrants will also have full ratchet
protection until the Warrant and/or its vesting rights expire if the shares
of
common stock or other equity equivalent securities are issued below the Warrant
price.
10.
Notices.
All
notices, requests, consents and other communications hereunder shall be in
writing and shall be mailed by first-class registered or certified mail, postage
prepaid, if to the Holder, at do Xxxxxxx Xxxxxx Inc., 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000, or at such other address as may have been furnished
to the Company by the Holder in writing, or if the Company, at Proginet
Corporation, 000 Xxxxxx Xxxx Xxxxx, Xxxxxx Xxxx, XX 00000 or at such other
address as may have been furnished to the Holder in writing by the Company.
11.
Amendments and Waivers.
Except
as otherwise provided herein, neither this Agreement nor any term hereof may
be
changed, waived, discharged or terminated orally or in writing, except that
any
term of this Agreement may be amended and the observance of any such term may
be
waived (either generally or in a particular instance and either retroactively
or
prospectively) with (but only with) the written consent of the Holder and the
Company,
12.
Split Up, Combination, Exchange, Transfer and Assignment.
This
Warrant may be split up, combined or exchanged for another Warrant or Warrants
containing the same terms to purchase a like aggregate number of Warrant Shares.
If the Holder desires to split up, combine or exchange this Warrant, he shall
make such request in writing delivered to the Company and shall surrender to
the
Company this Warrant and any other Warrants to be so split- up, combined or
exchanged. Upon any such surrender for a split-up, combination or exchange,
the
Company shall execute and deliver to the person entitled thereto a Warrant
or
Warrants, as the case may be, as so requested. The Company shall not be required
to effect any splitup, combination or exchange which will result in the issuance
of a Warrant entitling the Holder to purchase upon exercise a fraction of a
share of Common Stock or a fractional Warrant The Company may require such
Holder to pay a sum sufficient to cover any tax or governmental charge that
may
be imposed in connection with any split-up, combination or exchange of Warrants.
This Warrant and the Warrant Shares may only be sold, transferred, assigned,
encumbered, pledged or hypothecated in accordance with and subject to the
provisions of the applicable Securities Act and the rules and regulations
promulgated thereunder. No transfer of the Warrants or Warrant Shares may be
effected if, pursuant to a written opinion signed by the Company’s regular
outside Counsel and delivered to the Holder, such transfer would violate
applicable securities laws.
13.
Adjustments Affecting Registrable Securities.
The
Company will not take any action outside the ordinary course of business, or
permit any change within its control to occur outside the ordinary course of
business, with respect to the Warrants or Warrant Shares which is without a
bona
fide business purpose, and which is intended to interfere with the ability
of
the Company to include such securities in a registration undertaken pursuant
to
this Agreement.
14.
Severability.
In the
event that any one or more of the provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provisions
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
15.
Miscellaneous.
This
Agreement shall be construed and enforced in accordance with the laws of the
State of New York. All the terms of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto. The headings in this Agreement are for
convenience of reference only, and shall not limit or otherwise affect the
meaning hereof. This Agreement may be executed in two or more counterparts,
each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
16.
Expiration.
This
Warrant shall expire on the last day of the last vesting period to be triggered
pursuant to the terms of Section 1.1 hereof.
IN
WITNESS WHEREOF, Proginet has caused this Warrant to be signed and delivered
by
its duly authorized officer as of this 22nd day of September, 1999
Proginet
Corporation
By:
/s/Xxxxx X. Xxxxx
a
Delaware corporation
