Exhibit 10.17
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED EXCEPT IN COMPLIANCE WITH THE ACT AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER.
Warrant to Purchase Common Stock
of
ALPHA VIRTUAL, INC.
No. BWC-8 Date of Issuance - December 7, 2001
Void after December 10, 2001
Alpha Virtual, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, Global Alpha Corporation, a British Virgin
Islands company (including any successors and assigns, "Holder"), is entitled,
subject to the terms set forth below, to purchase from the Company (including
any corporation which shall succeed to or assume the obligations of the Company
hereunder) at any time or from time to time before 5:00 PM Pacific time, on
December 10, 2001, (the "Expiration Date") up to One Hundred Seventy-five
Thousand Dollars ($175,00) of fully paid and nonassessable shares of common
stock, par value $0.001 per share ("Common Stock"), of the Company. The purchase
price per share of such Common Stock upon exercise of this Warrant shall be the
fair market value or Twenty-Two and One-Half Cents ($0.225) whichever is less,
subject to adjustment as provided in Section 7 hereof (the "Purchase Price").
The fair market value shall be the "bid" price of the Company's Common Stock on
the Over-the-Counter:Bulletin Board at the close of business on the fifth (5th)
business day preceding the exercise of this Warrant. (For example, if the lowest
price is $0.225 per share, then the Holder would divide $175,000 by $0.225 and
the Company would issue 777,778 of its shares of Common Stock.)
1. Series of Warrants. This Warrant is one of a series of warrants
issued pursuant to a Securities Purchase Agreement dated April 5, 2001, as
amended on August 3, 2001, and on November 5, 2001, and as amended on December
7, 2001 (as amended, the "Securities Purchase Agreement") between the Company
and the Holder. The term "Stock Warrants," as used herein, shall refer to this
Warrant and the other warrants issued pursuant to the Securities Purchase
Agreement.
2. Initial Exercise Date; Expiration. This Warrant may be exercised by
the Holder, in full or in part, at any time or from time to time before 5:00 PM,
Pacific time, on December 10, 2001 (the "Exercise Period").
3. Exercise of Warrant; Partial Exercise. This Warrant may be
exercised in full or in part by the Holder by surrender of this Warrant,
together with the form of subscription attached hereto as Schedule 1, duly
executed by the Holder, to the Company at its principal office, accompanied by
payment, in cash or by certified or official bank check payable to the order of
the Company or by wire transfer, of the Purchase Price for the shares of Common
Stock to be purchased hereunder. For any partial exercise hereof, the Holder
shall designate in a subscription in the form of Schedule 1 attached hereto
delivered to the Company the number of shares of Common Stock that it wishes to
purchase. On any such partial exercise, the Company, at its expense, shall
forthwith issue and deliver to the Holder a new warrant of like tenor, in the
name of the Holder, which shall be exercisable for such number of shares of
Common Stock represented by this Warrant which have not been purchased upon such
exercise.
4. Termination of Warrant. In the event that any Stock Warrant is not
exercised in full prior to its expiration, then immediately following the
expiration of such Stock Warrant, this Warrant shall be terminated.
5. When Exercise Effective. The exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
business day on which this Warrant is surrendered to the Company as provided in
Section 3 and, at such time, the person in whose name any certificate for shares
of Common Stock shall be issuable upon such exercise shall be deemed to be the
record holder of such Common Stock for all purposes.
6. Delivery on Exercise. As soon as practicable after the exercise of
this Warrant in full or in part, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the Holder, or as the Holder may direct, a certificate or
certificates for the number of fully paid and nonassessable full shares of
Common Stock to which the Holder shall be entitled on such exercise (rounded up
to the next nearest whole number in the case of fractional shares).
7. Adjustment of Purchase Price and Number of Shares. The Purchase
Price and the number of shares purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the occurrence of certain
events described in this Section 7. Upon each adjustment of the Purchase Price,
the Holder of this Warrant shall thereafter be entitled to purchase, at the
Purchase Price resulting from such adjustment, the number of shares obtained by
multiplying the Purchase Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment, and dividing the product thereof by the Purchase Price resulting
from such adjustment.
7.1 Subdivision or Combination of Stock. In case the Company shall
at any time subdivide its outstanding shares of Common Stock into a greater
number of shares, the Purchase Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Purchase Price in effect immediately prior to such
combination shall be proportionately increased.
7.2 Dividends in Common Stock, Other Stock, Property,
Reclassification. If at any time or from time to time the holders of Common
Stock (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefor,
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(A) Common Stock or any shares of stock or other securities
which are at any time directly or indirectly convertible into or exchangeable
for Common Stock, or any rights or options to subscribe for, purchase or
otherwise acquire any of the foregoing by way of dividend or other distribution,
(B) any cash paid or payable otherwise than as a cash
dividend, or
(C) Common Stock or additional stock or other securities or
property (including cash) by way of spinoff, split-up, reclassification,
combination of shares or similar corporate rearrangement, (other than (i) shares
of Common Stock issued as a stock split, adjustments in respect of which shall
be covered by the terms of Section 7.1 above or (ii) an event for which
adjustment is otherwise made pursuant to Section 7.3 below), then and in each
such case, the Holder hereof shall, upon the exercise of this Warrant, be
entitled to receive, in addition to the number of shares of Common Stock
receivable thereupon, and without payment of any additional consideration
therefor, the amount of stock and other securities and property (including cash
in the cases referred to in clauses (B) and (C) above) which such Holder would
hold on the date of such exercise had he been the holder of record of such
Common Stock as of the date on which holders of Common Stock received or became
entitled to receive such shares or all other additional stock and other
securities and property.
7.3 Reorganization, Reclassification, Consolidation, Merger or
Sale. If any capital reorganization of the capital stock of the Company, or any
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation shall be effected
in such a way that holders of Common Stock shall be entitled to receive stock,
securities, or other assets or property, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provisions shall be made whereby the holder hereof shall thereafter
have the right to purchase and receive (in lieu of the shares of the Common
Stock of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby) such shares of stock, securities or
other assets or property as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby. In any
reorganization described above, appropriate provision shall be made with respect
to the rights and interests of the Holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for adjustments of
the Purchase Price and of the number of shares purchasable and receivable upon
the exercise of this Warrant) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof. The Company will not effect any such
consolidation, merger or sale unless, prior to the consummation thereof, the
successor corporation (if other than the Company) resulting from such
consolidation or the corporation purchasing such assets shall assume by written
instrument, executed and mailed or delivered to the registered Holder hereof at
the last address of such Holder appearing on the books of the Company, the
obligation to deliver to such Holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such Holder may be entitled to
purchase.
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7.4 Notice of Adjustment. Upon any adjustment of the Purchase
Price or any increase or decrease in the number of shares purchasable upon the
exercise of this Warrant, the Company shall give written notice thereof to the
registered Holder of this Warrant. The notice shall be signed by the Company's
chief financial officer and shall state the Purchase Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
7.5 Other Notices. If at any time:
(A) the Company shall declare any cash dividend upon its
Common Stock;
(B) the Company shall declare any dividend upon its Common
Stock payable in stock or make any special dividend or other distribution to the
holders of its Common Stock;
(C) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
(D) there shall be any capital reorganization or
reclassification of the capital stock of the Company; or consolidation or merger
of the Company; or consolidation or merger of the Company with, or sale of all
or substantially all of its assets to, another corporation; or
(E) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give (a) at least
thirty (30) days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, at least thirty (30) days' prior written notice of the date when the
same shall take place. Any notice given in accordance with the foregoing clause
(a) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto. Any notice given in accordance with the foregoing clause (b)
shall also specify the date on which the holders of Common Stock shall been
entitled to exchange their Common Stock for securities or to other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, winding-up or conversion, as the case may be.
7.6 Certain Events. If any change in the outstanding Common Stock
of the Company or any other event occurs as to which the other provisions of
this Section 7 are not strictly applicable or if strictly applicable would not
fairly protect the purchase rights of the Holder of the Warrant in accordance
with such provisions, then the Board of Directors of the Company shall make an
adjustment in the number and class of shares available under the Warrant, the
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Purchase Price or the application of such provisions, so as to protect such
purchase rights as aforesaid. The adjustment shall be such as will give the
Holder of the Warrant upon exercise for the same aggregate Purchase Price the
total number, class and kind of shares as he would have owned had the Warrant
been exercised prior to the event and had he continued to hold such shares until
after the event requiring adjustment.
8. Replacement of Warrants. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver to the Holder, in lieu thereof, a new Warrant
of like tenor.
9. No Rights or Liability as a Shareholder. This Warrant does not
entitle the Holder hereof to any voting rights or other rights as a shareholder
of the Company. No provisions hereof, in the absence of affirmative action by
the Holder to purchase Common Stock, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the Holder as a
shareholder of the Company.
10. Miscellaneous.
10.1 Transfer of Warrant. This Warrant is transferable and
assignable, in whole or in part, by Holder provided that any such assignment or
transfer is made in compliance with applicable federal or state securities laws.
All covenants, agreements and undertakings in this Warrant by or on behalf of
any of the parties shall bind and inure to the benefit of the respective
successors and assigns of the parties whether so expressed or not.
10.2 Notices. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, or (c) two (2) business days after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the Company at the address as set
forth on the signature page hereof, to the Holder at Craigmuir Xxxxxxxx, P.O.
Box 71, Road Town, Tortola, British Virgin Islands, or at such other address as
the Company or Holder may designate by ten (10) days advance written notice to
the other party hereto.
10.3 Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Warrant, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and disbursements
in addition to any other relief to which such party may be entitled.
10.4 Amendments and Waivers. This Warrant may be amended or
modified only upon the written consent of both Holder and the Company. This
Warrant and any provision hereof may be waived only by an instrument in writing
signed by the party against which enforcement of the same is sought.
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10.5 Severability. If one or more provisions of this Warrant are
held to be unenforceable under applicable law, such provision shall be excluded
from this Warrant and the balance of the Warrant shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
10.6 Governing Law. This Warrant shall be governed by and
construed and enforced in accordance with the laws of the State of California,
without giving effect to its conflicts of laws principles.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated: December 7, 2001 ALPHA VIRTUAL, INC.,
a Delaware corporation
By: /s/ Xxx Xxxxx
--------------------------------
Xxx Xxxxx
Title: Chief Executive Officer
Address:
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
ATTEST:
Xxxx Xxxxxxx, Secretary
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SCHEDULE 1
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
To: ALPHA VIRTUAL, INC.
The undersigned, the holder of the Warrant attached hereto, hereby
irrevocably elects to exercise the purchase rights represented by such Warrant
for, and to purchase thereunder, ________* shares of common stock of Alpha
Virtual, Inc., and herewith makes payment of $_______ therefor, and requests
that the certificates for such shares be issued in the name of, and delivered to
_________________, whose address is ___________________________________________.
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(Signature must conform in all respects
to name of the Holder as specified on
the face of the Warrant)
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(Print Name)
By:
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Title:
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Dated:
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* Insert here the number of shares as to which the Warrant is being exercised.
