EXHIBIT 10.7
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THE WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
(COLLECTIVELY, THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES OR
BLUE SKY LAWS ("BLUE SKY LAWS"). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THIS WARRANT OR THE SECURITIES OR ANY
INTEREST THEREIN MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE BLUE SKY LAWS OR (B) IF
THE CORPORATION HAS BEEN FURNISHED WITH BOTH AN OPINION OF COUNSEL FOR THE
HOLDER, WHICH OPINION AND COUNSEL SHALL BE SATISFACTORY TO THE CORPORATION, TO
THE EFFECT THAT NO REGISTRATION IS REQUIRED BECAUSE OF THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE BLUE SKY
LAWS, AND ASSURANCES THAT THE TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION WILL BE MADE ONLY IN COMPLIANCE WITH THE CONDITIONS OF ANY
SUCH REGISTRATION OR EXEMPTION.
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WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF
SEVEN VENTURES, INC.
WARRANT NO.: EQTX-1 APRIL 14, 2004
THIS CERTIFIES THAT, for value received, Equitex, Inc. or its
successors or assigns (collectively, the "Holder") is entitled to purchase from
Seven Ventures, Inc. (the "Corporation"), Eight Hundred Thousand (800,000) fully
paid and nonassessable shares (the "Shares") of the Corporation's common stock
(the "Common Stock"), at an exercise price of Ten Cents ($0.10) per Share (the
"Exercise Price"), subject to adjustment as herein provided. This Warrant may be
exercised by Holder at any time after the consummation of the merger of Seven
Ventures Newco, Inc. with and into Chex Services, Inc. pursuant to that certain
Agreement and Plan of Merger by and among Seven Ventures Newco, Inc., Chex
Services, Inc. and the Corporation, of even date herewith; PROVIDED, HOWEVER,
that, Holder shall in no event have the right to exercise this Warrant or any
portion thereof after five years from the date thereof, at which time all of
Holder's rights hereunder shall expire.
This Warrant is subject to the following provisions, terms and
conditions:
1. EXERCISE OF WARRANT. The rights represented by this Warrant may be
exercised by the Holder, in whole or in part (but not as to any fractional
shares of Common Stock), by the surrender of this Warrant (properly endorsed, if
required, at the Corporation's principal office, or such other office or agency
of the Corporation as the Corporation may designate by notice in writing to the
Holder at the address of such Holder appearing on the Corporation's books at any
time within the period above named), and upon payment to it by certified check,
bank draft or cash of the purchase price for such Shares. The Corporation agrees
that the Shares so purchased shall be deemed to be issued to the Holder as the
record owner of such Shares as of the close of business on the date on which
this Warrant shall have been surrendered and payment for such Shares shall have
been made as aforesaid. Certificates for the Shares so purchased shall be
delivered to the Holder within a reasonable time, not exceeding 30 days, after
the rights represented by this Warrant shall have been so exercised and, unless
this Warrant has expired, a new Warrant representing the number of Shares, if
any, with respect to which this Warrant shall not then have been exercised shall
also be delivered to the Holder within
such time. The Corporation may require that any such new Warrant or any
certificate for Shares purchased upon the exercise hereof bear a legend
substantially similar to that which is contained on the face of this Warrant.
2. TRANSFERABILITY OF THIS WARRANT. This Warrant is issued upon the
following terms, to which Holder consents and agrees:
(a) Until this Warrant is transferred on the books of the
Corporation, the Corporation will treat the Holder of this Warrant,
registered as such on the books of the Corporation, as the absolute
owner hereof for all purposes without effect given to any notice to the
contrary.
(b) This Warrant may not be exercised, and this Warrant and the
Shares underlying this Warrant shall not be transferable, except in
compliance with all applicable state and federal securities laws,
regulations and orders, and with all other applicable laws, regulations
and orders.
(c) The Warrant may not be transferred, and the Shares issuable upon
exercise of this Warrant, may not be transferred without the Holder
obtaining an opinion of counsel, which opinion and counsel are
satisfactory to the Corporation, stating that the proposed transaction
will not result in a prohibited transaction under the Securities Act
and applicable Blue Sky Laws. By accepting this Warrant, the Holder
agrees to act in accordance with any conditions imposed on such
transfer by any such opinion of counsel.
(d) Neither the issuance of this Warrant nor the issuance of the
Shares issuable upon exercise of this Warrant have been registered
under the Securities Act.
3. CERTAIN COVENANTS OF THE CORPORATION. The Corporation covenants and
agrees that all Shares which may be issued upon the exercise of the rights
represented by this Warrant, upon issuance and full payment for the Shares so
purchased, will be duly authorized and issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue hereof, except
those that may be created by or imposed upon the Holder or its property; and,
without limiting the generality of the foregoing, the Corporation covenants and
agrees that it will from time to time take all such actions as may be required
to ensure that the par value per share of the Common Stock is at all times equal
to or less than the Exercise Price per Share issuable pursuant to this Warrant.
The Corporation further covenants and agrees that during the period within which
the rights represented by this Warrant may be exercised, the Corporation will at
all times have authorized and reserved, free of preemptive or other rights, for
the purpose of issue upon exercise of the purchase rights evidenced by this
Warrant, a sufficient number of shares of its Common Stock to provide for the
full exercise of the rights represented by this Warrant.
4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise
Price and number of Shares are subject to the following adjustments:
(a) STOCK DIVIDEND, STOCK SPLIT OR STOCK COMBINATION. If (i) any
dividends on any class of the Corporation's capital stock payable in
Common Stock or securities convertible into or exercisable for Common
Stock (collectively, "Common Stock Equivalents") shall be paid by the
Corporation, (ii) the Corporation shall divide its then-outstanding
shares of Common Stock into a greater number of shares, or (iii) the
Corporation shall combine its outstanding shares of Common Stock, by
reclassification or otherwise, then, in any such event, the Exercise
Price in effect immediately prior to such event shall (until adjusted
again pursuant hereto) be adjusted immediately after such event to a
price (calculated to the nearest full cent) equal to the quotient of
(x) the number of shares of Common Stock outstanding immediately prior
to such event, multiplied by the Exercise Price in effect immediately
prior to such event, divided by (y) the total number of shares of
Common Stock outstanding immediately after such event. No adjustment of
the Exercise Price shall be made if the amount of such adjustment shall
be less than $.05 per Share; but any such adjustment not required then
to be made shall be carried forward and shall be made at the time and
together with the any subsequent adjustment(s) which, together with any
adjustment(s) so carried forward, shall amount to not less than $.05
per Share.
(b) NUMBER OF SHARES ISSUABLE ON EXERCISE OF WARRANTS. Upon each
adjustment of the Exercise Price pursuant to this Section, the Holder
shall thereafter (until another such adjustment) be entitled to
purchase, at the adjusted Exercise Price, the number of Shares,
calculated to the nearest full Share, equal to the quotient of (i) the
product of (A) the number of Shares issuable under this Warrant (as
then adjusted pursuant hereto prior to the current adjustment),
multiplied by (B) the Exercise Price in effect prior to such
adjustment, divided by (ii) the adjusted Exercise Price.
(c) NOTICE OF ADJUSTMENT. Upon any adjustment of the Exercise Price
and any increase or decrease in the number of Shares of Common Stock
issuable upon the exercise of the Warrant, then, and in each such case,
the Corporation shall within 30 days thereafter give written notice
thereof, by first-class mail, postage prepaid, addressed to each Holder
as shown on the books of the Corporation. Any such notice shall state
the adjusted Exercise Price and adjusted number of Shares issuable upon
the exercise of the Warrant, and shall set forth in reasonable detail
the methods of calculation of such adjustments and the facts upon which
such calculations were based.
(d) EFFECT OF REORGANIZATION, RECLASSIFICATION OR MERGER. If at any
time while this Warrant is outstanding there should be (i) any
reorganization of the Corporation's capital stock (other than splits or
combinations of Common Stock contemplated by and provided for in
Section 4(a)), (ii) any consolidation or merger of the Corporation with
another corporation, limited liability Corporation, partnership or
other business entity, or any sale, conveyance, lease or other transfer
by the Corporation of all or substantially all of its property to any
other corporation, limited liability Corporation, partnership or other
business entity, which is effected in such a manner that the holders of
Common Stock shall be entitled to receive cash, stock, securities or
assets with respect to or in exchange for Common Stock, or (iii) any
dividend or any other distribution upon any class of the Corporation's
capital stock payable in capital stock of a different class, other
securities of the Corporation, or other Corporation property (other
than cash), then, as a part of such transaction, lawful provision shall
be made so that Holder shall have the right thereafter to receive, upon
the exercise hereof, the number of shares of stock or other securities
or property of the Corporation or of the successor entity resulting
from a consolidation or merger, or of the entity to which the property
of the Corporation has been sold, conveyed, leased or otherwise
transferred, as the case may be, which the Holder would have been
entitled to receive upon such capital reorganization, reclassification
of capital stock, consolidation, merger, sale, conveyance, lease or
other transfer, if this Warrant had been exercised immediately prior to
such capital reorganization, reclassification of capital stock,
consolidation, merger, sale, conveyance, lease or other transfer. In
any such case, appropriate adjustments (as determined by the
Corporation's board of directors) shall be made in the application of
the provisions of this Warrant to the end that the provisions set forth
herein shall thereafter be applicable, as near as reasonably may be, in
relation to any shares or other property thereafter deliverable upon
the exercise of the Warrant as if the Warrant had been exercised
immediately prior to such capital reorganization, reclassification of
capital stock, such consolidation, merger, sale, conveyance, lease or
other transfer and the Holder had carried out the terms of the exchange
as provided for by such capital reorganization, consolidation or
merger. The Corporation shall not effect any such capital
reorganization, consolidation, merger or transfer unless, upon or prior
to the consummation thereof, the successor entity or the entity to
which the property of the Corporation has been sold, conveyed, leased
or otherwise transferred shall assume in writing the obligation to
deliver to the Holder such shares of stock, securities, cash or
property which the Holder shall be entitled to purchase in accordance
with the foregoing provisions.
5. NO RIGHTS AS SHAREHOLDER. This Warrant shall not entitle the Holder
hereof to any voting rights or other rights as a shareholder of the Corporation.
6. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of Minnesota without regard to its
conflicts-of-law provisions.
7. AMENDMENTS AND WAIVERS. The provisions of this Warrant may not be
amended, modified or supplemented, and waiver or consents to departures from the
provisions hereof may not be given, unless the Corporation agrees in writing and
has obtained the written consent of the Holder.
8. SUCCESSORS AND ASSIGNS. All the terms and conditions of this Warrant
shall be binding upon and inure to the benefit of the permitted successors and
assigns of the Corporation and Holder.
9. HEADINGS AND REFERENCES. The headings of this Warrant are for
convenience only and shall not affect the interpretation of this Warrant. Unless
the context indicates otherwise, all references herein to Sections are
references to Sections of this Warrant.
10. NOTICES. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing. Notices sent to the Holder
shall be mailed, hand delivered or faxed and confirmed to the Holder at his, her
or its address set forth in the Corporation's records. Notices sent to the
Corporation shall be mailed, hand delivered or faxed and confirmed to Seven
Ventures, Inc., c/o Xxxx Xxxxx, 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxxx 00000, or to such other address as the Corporation or the Holder shall
notify the other as provided in this Section.
11. COUNTERPARTS. This warrant may be executed by the Corporation and
attested to in counterparts.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
signed by its duly authorized officer on the date first set forth above.
SEVEN VENTURES, INC.
By /s/ Xxxxx Xxxx
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XXXXX XXXX
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ATTEST:
By /s/ Xxxx Xxxxx
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XXXX XXXXX, CHIEF FINANCIAL OFFICER
