Exhibit 4.5
Name: Xxxxxxxxx Venture Capital, L.L.C.
---------------------------------
WARRANT SUBSCRIPTION AGREEMENT
Affinity International Travel Systems, Inc.
000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000 X
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Gentlemen:
The undersigned understands that Affinity International Travel Systems, Inc., a
Nevada corporation (the "Company"), is offering for sale a warrant (the
"Warrant") to purchase 250,000 shares of its Common Stock, $0.001 par value per
share (the "Common Stock"), at $0.35 per share.
The undersigned further understands that the offering of the Warrant and any
subsequent exercise of the Warrant and purchase of the Common Stock are being
made without registration of the Warrant and/or the Common Stock subject to the
Warrant 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 Warrant
and upon exercise of the Warrant, 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 Agreement, the
undersigned hereby irrevocably subscribes for that number of Warrants to
purchase the shares of Common Stock set forth in Appendix A. The consideration
for the Warrant shall be the execution of the Subscription Agreement by and
between the Company and the undersigned (the "Subscription Agreement") on or
prior to the date hereof and the payment of the purchase price for the Common
Stock as set forth in Section 1 of the Subscription Agreement; provided,
however, that the execution, delivery and performance of the Subscription
Agreement by Purchaser shall be a condition precedent of the obligations of the
Company hereunder.
2. Acceptance of Warrant 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 (the
"Closing") shall take place at the offices of the Company or such other mutually
acceptable place at such time
and place as the Company shall designate by notice to the undersigned. The
Company may, at its option, elect to close the purchase and sale of the shares
in one or more Closings.
4. Exercise of Warrant and Payment for Shares. The Warrant is exercisable
commencing on the date hereof and shall expire on the date which is two (2)
years from the date hereof. Upon exercise of the Warrant, the undersigned shall
make payment in the amount of $0.35 per share for the Common Stock as set forth
on Appendix A hereof, to the Company via certified check, personal check, or
wire transfer to the account designated by the Company.
5. Representations of the Company. As of the date of the Closing (the "Closing
Date"), the Company represents as follows:
(a) Valid Issuance. Upon issuance of the Warrant and upon exercise of the
Warrant and issuance of the Common Stock, the Common Stock 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 270 days from the date
hereof, the Company shall effect a registration under the Securities Act of all
shares of common stock owned by the undersigned and which the undersigned
requests to be registered within thirty (30) days of receipt of written notice
from the Company of such intention to register the shares. The Company will bear
all registration expenses (exclusive of underwriting discounts and commissions)
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 an 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, 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 the
offering.
If the Company shall furnish to the undersigned a certificate
signed by the Chief Executive Officer of the Company providing that in the good
faith judgment 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 defer 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;
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") within 270 days of the date
hereof for any reason whatsoever, including pursuant to the terms of this
paragraph, as compensation for the breach of the terms of this Subscription
Agreement by the Company, the Company shall immediately transfer to the
undersigned 100,000 shares of common stock. For each successive thirty (30) day
period commencing on the 271st day from the date hereof that the Company does
not have an effective registration statement filed with the SEC, the Company
shall transfer to the undersigned an additional 100,000 shares of common stock.
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 of 1933 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 (exclusive of underwriting discounts and commissions) of
all piggyback registrations of securities owned by the undersigned.
(iii) Co-Sale Rights. The Company shall, and shall cause its
officers and directors (collectively with the Company the "Shareholders") to,
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 by such Shareholders and/or the Company, the undersigned, upon written
notice to the Company and/or the selling Shareholders, 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 Company and/or the selling Shareholders.
In the event the Company or a Shareholder sells any shares in
contravention of the co-sale rights of the undersigned under this Agreement (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 the Company and the Shareholders 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 the Company 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
the Company shall be equal to the price per share paid by the purchaser to the
Shareholder or the Company in the Prohibited Transfer. The Company shall also
reimburse the undersigned for any and all fees and expenses, including legal
fees and expense, 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 the Company the certificate or
certificates representing shares to be sold, each certificate to be properly
endorsed for transfer.
(3) The Company 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.
(iv) Marketability. The Company shall maintain adequate current
public information in satisfaction of the requirements for resales of restricted
stock pursuant to Rule 144 promulgated under the Securities Act of 1933 and Rule
15c-2(11) promulgated under the Securities Exchange Act of 1934, including, but
not limited to, the publication over a nationally recognized reporting service
or newswire of annual audited financial statements and semi-annual interim
unaudited balance sheets and income statements.
(v) Use of Proceeds. Upon exercise of this Warrant, the Company
agrees that it, or a wholly owned subsidiary of the Company, shall only use the
proceeds received from this subscription for directly related operating expenses
of the Company or any wholly owned subsidiary of the Company, but in no event
shall the proceeds from this subscription be used for present or future
compensation, whether regular or special, of any officer or director of the
Company.
(vi) Right of First Refusal - Future Financing. For eighteen (18)
months from and after the date hereof, in the event that the Company solicits,
or is advised by an investment banker or financing specialist to solicit,
investment capital by means of any private placement of securities or other
financing efforts utilizing securities of the Company, the Company shall first
offer to the undersigned the ability to participate in all or part of such
private placement or financing. The undersigned shall accept or reject the offer
within five business (5) days of receipt of the offer. Such response shall be
made in writing via certified mail, return receipt requested, or via overnight
mail. In the event that the undersigned agrees to provide such future financing,
the undersigned shall be required to provide such financing at a discounted
commission rate of five percent (5%). This provision shall not be effective for
any investment opportunity not generated through the initial efforts of the
Company.
(vii) Sale of Additional Investor Shares. From and after the date
hereof, in the event that the Company in any non-public offering sells any
common stock at a price per share that is less than that which is agreed to be
paid by the undersigned herein, then the Company shall immediately adjust the
purchase price and/or the number of shares which are the subject of this Warrant
Subscription Agreement such that the price per share and/or the number of shares
hereunder is or are equal to the difference between (1) the number of shares
which would have been subscribed to at the lesser price per share of such
subsequently sold securities and (2) the number of the shares subscribed to
herein; provided, however, that this provision shall not be operative any time
the price
per share of the Company's common stock as reported on the Over-the-Counter
Bulletin Board quotation system or any national securities exchange is below
$0.625.
(viii) Stock Splits. In order to induce the undersigned to enter
into this Warrant Subscription Agreement and to facilitate the closing of the
transactions contemplated hereby, the Company represents and warrants to the
undersigned that from and after the date hereof, the Company will not engage in
any manner of reverse split without the prior written consent of the
undersigned, which consent may be withheld for any or no reason.
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 the 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 of
the Company. The undersigned has been furnished copies of the Financial
Statements 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 is capable of evaluating the merits and risks of an
investment in Common Stock. To the extent necessary, the undersigned has
retained, at his own expense, and relied upon, appropriate professional
advice regarding the investment, tax and legal merits and consequences of
this Agreement and owning Common Stock.
(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 Warrant
solely for his own beneficial account, for investment purposes, and not
with a view to, or for immediate resale in connection with, any
distribution of the common stock of the Company. The undersigned has not
offered or sold any portion of its shares of Common Stock and has no
present intention of dividing its shares of Common Stock with others or of
reselling his shares of Common Stock. The undersigned understands that the
Warrant and the Common Stock 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 investment 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: (A) that it
will not sell, assign, pledge, give, transfer or otherwise dispose of the
Warrant or the Common Stock or any interest therein, or make any offer or
attempt to do any of the foregoing, except pursuant to a registration of
the Warrant or the Common Stock 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 (B) that the Company and any transfer agent for the
Common Stock shall not be required to give effect to any purported
transfer of any of the Common Stock except upon compliance with the
foregoing provisions.
7. Conditions to Obligations of the Undersigned and the Company. The
obligations of the undersigned to accept this Warrant and of the Company to
grant 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) Subscription Agreement. On or prior to the date hereof, the
Company and the undersigned shall have enter into a Subscription Agreement
on mutually acceptable terms and the undersigned shall have paid the
purchase price as set forth in Section 1 of the Subscription Agreement.
8. Obligations Irrevocable. The obligations of the undersigned hereunder
shall be irrevocable, except with the consent of the Company, until 3:00 p.m.
EST, January 15, 1999.
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. Applicable Law. This Agreement shall be governed by and construed in
accordance with the federal laws of the United State of America and the laws of
the State of Nevada.
13. 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.
14. 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.
15. 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 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000 X
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
FAX: (000) 000-0000
(2) If to the undersigned:
Xxxxxxxxx Venture Capital, L.L.C.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
with a copy, which shall not constitute notice, to:
Locke, Purnell, Rain, Xxxxxxx
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
FAX: (000) 000-0000
and
Xxxxxx X. Xxxxxxxxx, Xx.
0000 Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
or at such other address as either party shall have specified by notice in
writing to the other.
16. Binding Effect. The provisions of this Agreement shall be binding upon
and accrue to the benefit of the parties and their respective successors and
assigns.
17. Survival. All representations contained in this Agreement shall
survive the closing of the grant of the Warrant and the issuance and sale of the
shares of Common Stock upon exercise of the Warrant.
18. Notification of Changes. The undersigned hereby covenants and agrees
to notify the Company upon the occurrence of any event before the issuance 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.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement this 15th day of January, 1999.
Name: Xxxxxxxxx Venture Capital, LLC
/s/ Xxxxxx X. Xxxxxxxxx, Xx.
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XXXXXX X. XXXXXXXXX, XX.
Managing Member
Accepted as of
January 15, 1999
AFFINITY INTERNATIONAL
TRAVEL SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
XXXXXX X. XXXXXXXX
President and
Chief Executive Officer
APPENDIX A
CONSIDERATION TO BE DELIVERED
--------------------------------------------------------------------------------
Consideration for Warrant Aggregate Amount to Be Paid Number of Warrant Shares
Upon Exercise of Warrant
Execution of Subscription $87,500.00 250,000.00
Agreement and payment of
the purchase price set
forth in Section 1 thereof
--------------------------------------------------------------------------------
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 15th day of January, 1999.
XXXXXXXXX VENTURE CAPITAL, LLC
BY: /s/ Xxxxxx X. Xxxxxxxxx, Xx.
----------------------------------
Xxxxxx X. Xxxxxxxxx, Xx.
Managing Member
