EXHIBIT 10.55
PREFERRED STOCK WARRANT PURCHASE AGREEMENT
THIS PREFERRED STOCK WARRANT PURCHASE AGREEMENT (the "Agreement") is
made and entered into as of the ________ day of November 2000, by and among
INTERACTIVE TELESIS INC. a Delaware corporation (the "Company"), and XXXXXXXXX &
XXXXX GUARANTY FINANCE, LLC, a California limited liability company ("H&QGF").
H&QGF shall be referred to herein as the "Investor." As used in this Agreement,
the term "Shares" shall mean the shares of the Company's Series A Convertible
Preferred Stock (and shares of such class of stock into which it is convertible,
if applicable) issuable from time to time upon exercise of the Warrants, as
defined in Section 1.1 below, or upon exercise of the rights to convert the
Warrants, as provided under Section 7 of the Warrant (the "Conversion Rights").
THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE 1. SALE AND PURCHASE OF WARRANTS; CLOSING.
1.1 SALE AND PURCHASE OF WARRANTS. The Company
agrees to sell to the Investor and the Investor agrees to purchase from the
Company for a purchase price of three thousand nine hundred forty-seven dollars
and thirty-seven cents ($3,947.37), a warrant in the form attached hereto as
Exhibit A to purchase 394,737 shares of the Company's Series A Convertible
Preferred Stock (the "Preferred Stock") at an initial per share exercise price
of $1.52 at any time on or before November ___, 2007. The warrants to be issued
to Investor hereunder shall be referred to collectively herein as the "Warrants"
and individually as a "Warrant".
1.2 CLOSING. The issuance of the Warrants shall take
place on the even date hereof, or on such other date as the parties shall
mutually agree (the "Closing"). At the Closing, the Company shall cause to be
delivered to the Investor the Warrants issued in the name of such Investor and
Investor shall pay the Company $3,947.37 by check, wire transfer or such other
means as shall be reasonably designated by the Company.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby agrees and represents and warrants to the Investor as follows:
2.1 CORPORATE STATUS. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has all requisite legal and
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corporate power and authority to own, lease and operate its properties and
assets and to carry on its business as now conducted and as proposed to be
conducted.
2.2 CAPITALIZATION. Immediately prior to the Closing,
the authorized capitalization of the Company will consist of that which is
described on Schedule 1. Except as provided in Schedule 1, there are no
outstanding rights, options, warrants or agreements for the purchase or
acquisition from the Company of any shares of its capital stock.
2.3 AUTHORIZATION. All corporate action on the
part of the Company, its officers, directors and shareholders necessary for the
authorization, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including the
authorization, issuance and delivery of the Warrants, the reservation of the
Shares issuable upon the exercise thereof, the reservation of shares of Common
Stock issuable upon the conversion of such Shares, and the grant of registration
rights to the Investor, has been taken or will be taken prior to Closing. The
person signing this Agreement has full power and authority to enter into this
Agreement on behalf of the Company. When executed and delivered, this Agreement
will constitute a valid and binding obligation of the Company.
2.4 CORPORATE POWER. The Company has all requisite
legal and corporate power and authority to enter into this Agreement and all
requisite legal and corporate power and authority to issue and deliver the
Warrants and the Shares and to carry out and perform its obligations under the
terms and conditions of this Agreement.
2.5 VALIDITY OF WARRANTS. The Warrants to be
issued and delivered pursuant to this Agreement shall constitute a valid and
binding obligations of the Company. The Shares and the shares of Common Stock
issuable upon conversion of the Shares have been duly and validly reserved, and
when issued in accordance with the terms of the Warrants shall be duly
authorized, validly issued, fully paid and nonassessable and free of any liens
or encumbrances except for restrictions on transfer provided for under
applicable federal and state securities laws. During the period within which the
purchase rights represented by the Warrants may be exercised, the Company shall
at all times have authorized, and reserved for issuance upon exercise of the
Warrants or upon exercise of the Conversion Right, a sufficient number of shares
of Preferred Stock to provide for the issuance of the Shares and issuance of
shares of Common Stock upon conversion of the Shares. The issuance of such
Preferred Stock and Common Stock is not and will not be subject to any
preemptive rights or rights of first refusal except such as have been
effectively waived.
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2.6 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is
not in violation of, conflict with or default under (i) any provision of its
amended and restated certificate of incorporation or bylaws, or (ii) any
contract, instrument, judgment, order, writ or decree to which it or any of its
subsidiaries is a party or by which it or any of them is bound, or, to the best
of its knowledge, of any provision of any federal or state statute, rule or
regulation applicable to the Company or any of its subsidiaries, except in the
case of clause (ii) as would not have a material adverse effect on the assets,
condition, or properties of the Company and its subsidiaries taken as a whole,
financial or otherwise (a "MAE"). The execution, delivery and performance of
this Agreement, and the consummation of the transactions contemplated hereby,
including the authorization, issuance and delivery of the Warrants, the
reservation of the Shares issable upon exercise thereof and the grant of
registration rights to the Investor, will not, with or without the passage of
time and giving of notice, result in any such violation, conflict or default, or
an event that results in the creation of any material lien, charge or
encumbrance upon any assets of the Company or any of its subsidiaries or the
suspension, revocation, impairment or forfeiture of any material permit,
license, authorization, or approval applicable to the Company or any of its
subsidiaries.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The
Investor represents and warrants to the Company that:
3.1 AUTHORIZATION. The person signing this Agreement
has full power and authority to enter into this Agreement on behalf of the
Investor. When executed and delivered, this Agreement will constitute the
Investor's valid and legally binding obligation.
3.2 INVESTMENT REPRESENTATIONS.
(a) The Investor understands that the
Warrants and the Shares have not been registered under the Securities Act of
1933, as amended (the "Act"), and will be issued pursuant to an exemption from
registration contained in the Act based in part upon the representations of the
Investor contained herein.
(b) The Investor is acquiring the Warrants
and the Shares solely for its own account and not as a nominee for any other
party and not with a view toward the resale or distribution thereof.
(c) The Investor is a sophisticated
investor experienced in venture capital investing and able to fend for itself.
The Investor is able to bear the economic risk of the purchase of the Warrants
and the Shares, including a complete loss of the Investor's investment. The
Investor has been afforded an opportunity to ask such questions of the Company's
officers, employees, agents, accountants
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and representatives concerning the Company's business, operations, financial
condition, assets, liabilities and other relevant matters as it has deemed
necessary or desirable.
ARTICLE 4. CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT THE CLOSING. The
obligation of the Investor to purchase the Warrants is subject to the
fulfillment to its satisfaction, or its written waiver thereof, prior to or at
the Closing, of each of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company contained in Article 2 hereof
shall be true and correct in all material respects on and as of the Closing.
4.2 CORPORATE ACTION. All corporate action on the
part of the Company, its officers, directors and shareholders necessary for the
authorization, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby shall have been taken.
4.3 OPINION OF COUNSEL. There shall have been
delivered to the Investor an opinion of the Company's counsel dated as of the
date of the Closing in substantially the form attached hereto as Exhibit B.
4.4 DELIVERY OF WARRANTS. There shall have been
delivered to the Investor the Warrants.
4.5 GOVERNMENTAL CONSENTS. All permits, consents,
approvals, orders and authorizations, if any, which the Company is required to
obtain from, and all registrations, qualifications, designations, declarations
and filings which the Company is required to make with, any Federal or state
governmental authority of the United States in connection with the execution,
delivery or performance of this Agreement, the consummation of the transactions
contemplated hereby or the issuance and delivery of the Warrants to the Investor
pursuant to this Agreement, except post-sale filings, which may be required
under the Blue Sky laws of any applicable states, shall have been duly obtained
or made and shall be effective on and as of the Closing.
4.6 REGISTRATION RIGHTS. The Company shall provide
the Investor such evidence as the Investor may require that all corporate action
on the part of the Company, its officers, directors and shareholders necessary
for the grant of registration rights pursuant to Section 6 hereof has been taken
prior to the Closing.
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4.7 DELIVERY OF OTHER DOCUMENTS. The Company shall
have delivered the Registration Rights Agreement to the Investor in satisfactory
form.
ARTICLE 5. CONDITION OF THE COMPANY'S OBLIGATIONS AT THE CLOSING. The
obligation of the Company to issue the Warrants to the Investor is subject to
the fulfillment to its satisfaction, or its written waiver thereof, prior to or
at the Closing, of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Investor contained in Article 3 hereof
shall be true and correct on and as of the Closing.
5.2 PAYMENT OF PURCHASE PRICE. The Investor shall
pay the Company an aggregate of $3,947.37.
5.3 GOVERNMENTAL CONSENTS. All permits, consents,
approvals, orders and authorizations, if any, which the Company is required to
obtain from, and all registrations, qualifications, designations, declarations
and filings which the Company is required to make with, any Federal or state
governmental authority of the United States in connection with the execution,
delivery or performance of this Agreement, the consummation of the transactions
contemplated hereby or the issuance and delivery of the Warrants to the Investor
pursuant to this Agreement, except post-sale filings, which may be required
under the Blue Sky laws of any applicable states (which the Company hereby
agrees to make in accordance with such laws), shall have been duly obtained or
made and shall be effective on and as of the Closing.
ARTICLE 6. REGISTRATION RIGHTS. The Company shall use its best efforts
to cause the Registration Rights Agreement, dated as of even date herewith, to
remain in full force and effect and the Company shall comply in all respects
with the terms thereof.
6.1 "REGISTRATION STATEMENT" means a registration
statement filed by the Company with the Commission for a public offering and
sale of securities of the Company on Form X-0, XX-0 or SB-2 and maintained in
full force and effect during the Commitment Period and up until and including
the one-year anniversary of the expiration of the Equity Line of Credit
Agreement sufficient to cover registration of the maximum amount of Common Stock
issuable upon conversion of the Warrant Shares offered to the Investor under
this Warrant Purchase Agreement (if use of such form is then available to the
Company pursuant to the rules of the SEC and, if not, on such other form
promulgated by the SEC for which the Company then qualifies and which counsel
for the Company shall deem appropriate and which form shall be available for the
resale of the Registrable Securities to be registered thereunder in accordance
with the provisions of this Agreement, the Registration Rights Agreement, and
the Warrant and in accordance with the intended
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method of distribution of such securities), for the registration of the resale
by the Investor of the Registrable Securities under the Securities Act.
6.2 "REGISTRABLE SECURITIES" shall mean the Common
Stock issuable upon the conversion of (a) the Put Shares, (b) the Dividend
Shares, (c) the Warrant Shares, (d) the Blackout Shares and any securities
issued or issuable with respect to any of the foregoing by way of exchange,
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise. As
to any particular Registrable Securities, once issued such securities shall
cease to be Registrable Securities when (w) the Registration Statement has been
declared effective by the SEC and all Registrable Securities have been disposed
of pursuant to the Registration Statement, (x) all Registrable Securities have
been, or could be in any three-month period, sold under circumstances under
which all of the applicable conditions of Rule 144 (or any similar provision
then in force) under the Securities Act ("Rule 144") are met, (y) such time as
all Registrable Securities have been otherwise transferred to holders who may
trade such shares without restriction under the Securities Act, and the Company
has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend or (z) in the opinion of counsel to
the Company, which counsel shall be reasonably acceptable to the Investor, all
Registrable Securities may be sold without registration or the need for an
exemption from any registration requirements and without any time, volume or
manner limitations pursuant to Rule 144(k) (or any similar provision then in
effect) under the Securities Act.
ARTICLE 7. TRANSFERS OF CERTAIN RIGHTS
7.1 TRANSFERS. The rights granted under Article 6 may
be transferred to any person or entity acquiring Warrants or Shares; provided,
however, that the Company is given written notice by the transferor and the
transferee at the time of such transfer stating the name and address of the
transferee and identifying the securities with respect to which such rights are
being assigned and provided, further, that as a condition to such transfer, any
such transferee deliver to the Company a written instrument by which such
transferee agrees to be bound by the obligations imposed upon Investor under
Article 6 and Article 9 to the same extent as if such transferees were an
Investor hereunder.
7.2 SUBSEQUENT TRANSFERS A transferee to whom
rights are transferred pursuant to this Article 7 may not again transfer such
rights to any other person or entity, other than as provided in Section 7.1
above.
ARTICLE 8. FINANCIAL STATEMENTS. So long as the Investor
continues to hold a Warrant or any Registrable Shares, the Company shall deliver
to the Investor, in the form and substance satisfactory to the Investor:
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a) Immediately upon filing with the SEC, all financial
statements so filed; or,
b) In the event that the Company is no longer required to file
periodic or other reports with the SEC, as soon as practicable (i)
after the end of each fiscal year, and in any event within 90 days
thereafter, the Company will provide the Investor with the Company's
annual audited consolidated financial statements (consisting of a
consolidated profit or loss statement for such fiscal year, a
consolidated balance sheet of the Company as of the close of the fiscal
year, and a consolidated statement of cash flows for such fiscal year,
certified by independent public accountants of recognized national
standing selected by the Company and satisfactory to Investor) and (ii)
as soon as practicable after the end of each of the first three fiscal
quarters and in any event within forty five (45) days thereafter, the
Company will provide the Investor with quarterly unaudited consolidated
financial statements. The right to receive financial statements under
this Section 8 may be transferred to any subsequent holder of the
Warrants who acquires the right to purchase not fewer than 25% of the
Shares acquired pursuant to this Agreement (as appropriately adjusted
for stock splits, stock dividends, stock subdivision and stock
combinations with respect to underlying shares).
ARTICLE 9. MISCELLANEOUS.
9.1 AGREEMENT IS ENTIRE CONTRACT. This Agreement,
including the Exhibits and Schedule 1 hereto, constitutes the entire contract
between the parties hereto with respect to the subject matter hereof.
9.2 EXPENSES. Each party to this Agreement shall
bear its own expenses incurred in connection with the negotiation, preparation,
execution and consummation of this Agreement; however, the Company shall pay the
legal fees and expenses in reimbursement of fees paid by Investor to its counsel
in connection with the preparation and negotiation of the Warrants and all
disbursements and expenses of the counsel to the Investor.
9.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations, warranties, covenants and agreements of the Company and the
Investor contained herein or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing.
9.4 SEVERABILITY. If one or more provisions of this
Agreement are held to be invalid, illegal or unenforceable under applicable law,
portions of such provisions, or such provisions in their
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entirety, to the extent necessary, shall be severed from this Agreement, and the
balance of this Agreement shall be enforceable in accordance with its terms.
9.5 COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COMPANY:
INTERACTIVE TELESIS INC.
By:
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Name: Xxxxxxx X. Xxxxx
---------------------------------------
Title: Secretary and Chief Financial Officer
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INVESTOR:
XXXXXXXXX & XXXXX GUARANTY FINANCE, LLC
By:
--------------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
------------------------------------------------
Title: Chief Executive Officer
-----------------------------------------------
EXHIBIT A TO WARRANT PURCHASE AGREEMENT
THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND
RULES. NO SALE, OFFER TO SELL OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS
WARRANT OR ISSUABLE UPON THE EXERCISE HEREOF SHALL BE MADE UNLESS A REGISTRATION
STATEMENT UNDER SUCH ACT, AND APPLICABLE STATE SECURITIES LAWS WITH RESPECT TO
SUCH SECURITIES IS THEN IN EFFECT, OR PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS FOR SUCH LAWS AS MAY THEN BE IN EFFECT, OR AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE SHARES
OF CONVERTIBLE PREFERRED STOCK
Company: Interactive Telesis Inc. (the
"Company"), and any corporation that
shall succeed to the obligations of the
Company under this Warrant.
Number of Shares: 394,737
Class of Stock: Series A Convertible Preferred Stock
Initial Warrant Price: $1.52
Expiration Date: November ___, 2007
Date of Grant: November ___, 2000
THIS CERTIFIES THAT, for $3,947.37, Xxxxxxxxx & Xxxxx Guaranty Finance,
LLC, a California limited liability company ("H&QGF"), or nominees, is entitled
to purchase the above number (as adjusted pursuant to Section 5 hereof) of fully
paid and nonassessable shares of the above Class of Stock of the Company at the
Warrant Price (as defined in Section 1.5 hereof), subject to the provisions and
upon the terms and conditions set forth herein.
DEFINITIONS. As used herein, the following terms, unless the
context otherwise requires, shall have the following meanings:
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1.1 "ACT" shall mean the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations thereunder, as
shall be in effect from time to time.
1.2 "COMMON STOCK" shall mean shares of the presently
authorized common stock of the Company and any stock into which such common
stock may hereafter be exchanged.
1.3 "HOLDER" shall mean any person who shall at the
time be the holder of this Warrant.
1.4 "SHARES" shall mean the shares of the Class of Stock that
the Holder is entitled to purchase upon exercise of this Warrant, as adjusted
pursuant to Section 5 hereof.
1.5 "WARRANT PRICE" shall be the Initial Warrant Price at
which this Warrant may be exercised, as adjusted pursuant to Section 5 hereof.
2. TERM. The purchase right represented by this Warrant is exercisable,
in whole or in part, on or before the Expiration Date; provided, however, that
the Warrant may not be exercised prior to the sixty-first (61st) day after the
expiration of the Commitment Period (as defined in that Equity Line of Credit
Agreement dated November ____, 2000 between the Company and H&QGF, as amended
(the "Equity Agreement") unless (a) the number of shares of Registrable
Securities issuable to H&QGF upon exercise of the Warrant and any prior warrant
issued to H&QGF (assuming conversion of the Class of Stock into Common Stock),
together with (b) the Put Shares which the Company is then entitled to Put (as
such terms are defined in the Equity Agreement) (assuming conversion of such Put
Shares into Registrable Securities) would not exceed the limitation set forth in
Section 7.2(h) of the Equity Agreement.
3. EXERCISE OF WARRANT; PAYMENT; ISSUANCE OF NEW WARRANT.
3.1 Subject to Section 2 hereof, the purchase rights
represented by this Warrant may be exercised by the Holder, in whole or
in part, by the surrender of this Warrant (with the notice of exercise
form attached hereto as Appendix A duly executed) at the principal
office of the Company and by the payment to the Company, by check made
payable to the Company drawn on a United States bank and for United
States dollars, or by wire transfer to an account of the Company, of an
amount equal to the then applicable Warrant Price per share multiplied
by the number of Shares then being purchased. In the event of any
exercise of the purchase right described in this Section 3, a
certificate(s) for the Shares so purchased shall be delivered to the
Holder within thirty (30) days of receipt of such payment and, unless
this Warrant has been fully exercised or expired, a new Warrant (dated
as of the date hereof) representing the portion of the Shares, if any,
with respect to which this Warrant shall not then have been exercised
shall also be
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issued to the Holder within such thirty (30) day period. All shares of
the Class of Stock, Common Stock or other securities issued upon the
exercise of this Warrant shall be validly issued, fully paid and
nonassessable, and the Company will pay all taxes in respect of the
issuance thereof (other than any transfer tax or any income or capital
gain taxes payable by the Holder).
3.2 Unless covered by an effective registration statement at
that time, the Company may require that such certificate or certificates and any
new Warrant contain on the face thereof a legend substantially as follows:
The securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, or applicable state
securities laws and rules. No sale, offer to sell or transfer of the securities
represented by this certificate shall be made unless a registration statement
under such act, and applicable state securities laws with respect to such
securities is then in effect, or pursuant to an exemption from such registration
requirements for such laws as may then be in effect, or an opinion of counsel
reasonably satisfactory to Company and its counsel that such registration is not
required.
4. ADJUSTMENT OF NUMBER AND KIND OF SHARES AND ADJUSTMENT OF WARRANT PRICE.
4.1 CERTAIN DEFINITIONS: As used in this Section 4,
the following terms shall have the following respective meanings:
(a) OPTIONS: rights, options or warrants to subscribe
for, purchase or otherwise acquire shares of Common Stock or Convertible
Securities.
(b) CONVERTIBLE SECURITIES: any evidence of
indebtedness, shares of stock or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
4.2 ADJUSTMENTS: The number and kind of securities purchasable
upon the exercise of this Warrant and the Warrant Price shall be subject to
adjustment from time to time upon the occurrence of certain events, as follows:
(a) RECLASSIFICATION, REORGANIZATION, CONSOLIDATION OR
MERGER. In the case of any reclassification of the Common Stock, or any
reorganization, consolidation or merger of the Company with or into
another corporation (other than a merger or reorganization with respect
to which the Company is the continuing corporation and which does not
result in any reclassification of the Common Stock) (a
"Reclassification"), the Company, or such successor corporation, as the
case may be, shall execute a new warrant providing that the Holder
shall have the right to exercise such new warrant and upon such
exercise to receive, in lieu of each share of the Class
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of Stock theretofore issuable upon exercise of this Warrant, the
number and kind of securities receivable upon such reclassification,
reorganization, consolidation or merger by a holder of shares of the
Class of Stock for each such share of the Class of Stock. The
aggregate Warrant Price of the new warrant shall be the aggregate
Warrant Price in effect immediately prior to the Reclassification, and
the Warrant Price per share shall be appropriately increased or
decreased. Such new warrant shall provide for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 4 including, without limitation,
adjustments to the Warrant Price and to the number of shares issuable
upon exercise of this Warrant. The provisions of this subsection (a)
shall similarly apply to successive Reclassifications.
(b) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant remains outstanding; and
unexpired shall split, subdivide or combine the Class of Stock for
which this Warrant is then exercisable, the Warrant Price shall be
proportionately decreased in the case of a split or subdivision or
proportionately increased in the case of a combination. Any adjustment
under this subsection (b) shall become effective when the split,
subdivision or combination becomes effective.
(c) STOCK DIVIDENDS. If the Company at any time while this
Warrant remains outstanding and unexpired shall pay a dividend with
respect to the Class of Stock for which this Warrant is then
exercisable, payable in shares of that Class of Stock, Options, or
Convertible Securities, the Warrant Price shall be adjusted, from and
after the date of determination of the shareholders entitled to receive
such dividend or distributions, to that price determined by multiplying
the Warrant Price in effect immediately prior to such date of
determination by a fraction (i) the numerator of which shall be the
total number of shares of that Class of Stock outstanding immediately
prior to such dividend or distribution, and (ii) the denominator of
which shall be the total number of shares of the same Class of Stock
outstanding immediately after such dividend or distribution (including
shares of that Class of Stock issuable upon exercise, conversion or
exchange of any Option or Convertible Securities issued as such
dividend or distribution). If the Options or Convertible Securities
issued as such dividend or distribution by their terms provide, with
the passage of time or otherwise, for any decrease in the consideration
payable to the Company, or any increase in the number of shares
issuable upon exercise, conversion or exchange thereof (by change of
rate or otherwise), the Warrant Price shall, upon any such decrease or
increase becoming effective, be reduced to reflect such decrease or
increase as if such decrease or increase became effective immediately
prior to the issuance of the Options or Convertible Securities as the
dividend or distribution. Any adjustment under this subsection (c)
shall become effective on the record date.
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(d) OTHER SECURITIES. In the event the Company at any time or
from time to time after the issuance of this Warrant makes, or fixes a
record date for the determination of holders of Common Stock entitled
to receive, a dividend or other distribution payable in securities of
the Company other than shares of Common Stock, then, and in each such
event, provision shall be made so that the Holder shall receive, upon
exercise hereof, in addition to the number of shares of Common Stock
receivable thereupon, the amount of securities of the Company which the
Holder would have received had this Warrant been exercised (assuming
conversion of the Class of Stock into Common Stock) on the date of such
event and had the Holder thereafter, during the period from the date of
such event to and including the date of exercise, retained such
securities receivable by such Holder as aforesaid during such period,
subject to all other adjustments called for during such period under
this Section 4 with respect to the rights of the Holder.
(e) NEW SECURITIES. If the Company, at any time while this
Warrant remains outstanding and unexpired, shall issue additional
shares of Common Stock, Options or Convertible Securities at a price
per share below the Warrant Price (except for (i) issuances under the
Equity Agreement, and (ii) grants of awards of options or restricted
stock to employees or consultants of the Company approved by the
Company's Board of Directors pursuant to an equity incentive or similar
plan, and (iii) issuances of up to and including $1,000,000 under the
Xxxxxxxxx Transaction), the Warrant Price shall be reduced to such
price. Notwithstanding the foregoing, the Company shall not be required
to make any adjustment to the Warrant Price in the case of the issuance
of shares of Common Stock, Options or Convertible Securities upon the
exercise of any options or warrants outstanding as of the Date of
Grant.
4.3 ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in
the Warrant Price pursuant to Section 4.2 hereof, the number of Shares issuable
upon exercise of this Warrant shall be adjusted to the product obtained by
multiplying the number of Shares issuable immediately prior to such adjustment
in the Warrant Price by a fraction (a) the numerator of which shall be the
Warrant Price immediately prior to such adjustment, and (b) the denominator of
which shall be the Warrant Price immediately after such adjustment.
5. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price shall be adjusted
pursuant to Section 4 hereof, the Company shall issue a certificate signed by
its chief financial officer or chief executive officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated and the Warrant
Price after giving effect to such adjustment and shall cause a copy of such
certificate to be mailed (by first class mail, postage prepaid) to the Holder.
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6. RIGHT TO CONVERT WARRANT INTO STOCK.
6.1 CONVERSION PRICE. The conversion price ("Conversion
Price") of one share of the Class of Stock for which this Warrant is then
exercisable is determined as, for the three months prior to any conversion of
the Warrant into such Class of Stock:
(a) if the Common Stock is publicly traded, the product of
(a) the highest closing sale price or, if no closing sale price is
reported, the highest daily average between the ask and bid prices of
the Common Stock quoted on any exchange or over-the-counter market on
which the Common Stock is listed, whichever is applicable, as
published in the Western Edition of THE WALL STREET JOURNAL, and (b)
the number of shares of Common Stock into which each share of the
Class of Stock for which this Warrant is then exercisable is then
convertible, if applicable; or,
(b) if the Common Stock is not traded in an over-the-counter
market or on an exchange, the highest fair market value of a single
share of the Class of Stock for which this Warrant is then exercisable,
as determined in good faith by the Company's Board of Directors'
provided; however, that if the Holder disputes in writing the fair
market value determined by the Board of Directors within thirty (30)
days of being informed of such fair market value, the fair market value
shall be determined by an independent appraiser, appointed in good
faith by the Company's Board of Directors.
6.2 RIGHT TO CONVERT. In addition to the rights granted
under Section 3 of this Warrant, the Holder shall have the right to require the
Company to convert this Warrant (the "Conversion Right") into shares of the
Class of Stock for which the Warrant is then exercisable, as provided in this
Section 6. Upon exercise of the Conversion Right, the Company shall deliver to
the Holder (without payment by the Holder of any Warrant Price) that number of
shares of stock equal to the quotient obtained by dividing (x) the value of this
Warrant at the time of the Conversion Right is exercised (determined by
subtracting the aggregate Warrant Price immediately prior to the exercise of the
Conversion Right from the aggregate Conversion Price) by (y) the Conversion
Price.
6.3 METHOD OF EXERCISE. The Conversion Right may be exercised
at any time by the Holder by the surrender of this Warrant at the principal
office of the Company together with a written statement specifying that the
Holder thereby intends to exercise the Conversion Right. Certificates evidencing
the Shares issuable exercise of the Conversion Right shall be delivered to the
Holder within thirty (30) days following determination of the Conversion Price.
Page 6
6.4 AUTOMATIC CONVERSION PRIOR TO EXPIRATION. To the extent
this Warrant is not previously exercised, and if the Conversion Price is greater
than the Warrant Price per share on the expiration date, this Warrant shall be
deemed automatically exercised in accordance with Section 6.2 hereof (even if
not surrendered) immediately before its expiration. To the extent this Warrant
or any portion thereof is deemed automatically exercised pursuant to this
Section 6.4, the Company agrees to notify Holder within a reasonable period of
time of the number of shares of the Class of Stock, if any, Holder is to receive
by reason of such automatic exercise. The Company shall issue to the Holder
certificates for the Shares issued upon such automatic conversion in accordance
with Section 6.3 above, although the Company may condition receipt of the
certificate upon surrender of the Warrant to the Company.
7. TRANSFERABILITY AND NON-NEGOTIABILITY OF WARRANTS AND SHARES. This
Warrant and the Shares issued upon exercise hereof may not be transferred or
assigned in whole or in part without compliance with applicable federal and
state securities laws by the transferor and the transferee (including, without
limitation, the delivery of investment representation letters and legal opinions
reasonably satisfactory to the Company, if reasonably requested by the Company).
Subject to the provisions of this Section 7, title to the Warrant may be
transferred in the same manner as a negotiable instrument transferable by
endorsement and delivery.
8. NOTICES. The Company shall mail any notice hereunder to the
registered Holder of the Warrant, at its last known post office address
appearing on the books of the Company, not less than ten (10) days prior to the
date on which (a) a record will be made for the purpose of determining the
Holders of Common Stock entitled to dividends or subscription rights, or (b) a
record will be made (or in lieu thereof, the transfer books will be closed) for
the purpose of determining the Holders of Common Stock entitled to notice of and
to vote at a meeting of stockholders at which any capital reorganization,
reclassification of shares of Common Stock, consolidation, merger, dissolution,
liquidation, winding up or sale of substantially all of the Company's assets
shall be considered and acted upon.
9. MISCELLANEOUS. No fractional shares shall be issued in connection
with any exercise hereunder, but in lieu of such fractional Shares the Company
shall make a cash payment therefor upon the basis of the fair market value of
the fractional share. The terms and provisions of this Warrant shall inure to
the benefit of, and be binding upon, the Company and the Holders hereof and
their respective successors and assigns. This Warrant shall be construed under
the laws of the State of Delaware, without regard to choice of law provisions.
The parties agree to submit to the jurisdiction of the Delaware courts for the
purpose of resolving any such disputes, and further agree that venue for any
action brought hereunder shall lie exclusively in such courts. The
representations, warranties and agreements herein contained shall survive the
exercise of this Warrant. References to the "holder of" include the immediate
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Holder of shares purchased on the exercise of this Warrant, and the word
"Holder" shall include the plural thereof. The titles of the sections and the
subscriptions of this Warrant are for convenience only and are not to be
considered in construing this Warrant. All pronouns used in the Warrant shall be
deemed to include masculine, feminine and neuter forms.
IN WITNESS WHEREOF, this War-rant has been duly executed by the
undersigned, as of the Date of Grant shown above.
INTERACTIVE TELESIS INC.
By: ----------------------------------------------
Name: Xxxxxxx X. Xxxxx
----------------------------------------------
Title: Secretary and Chief Financial Officer
----------------------------------------------
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APPENDIX A TO WARRANT
NOTICE OF EXERCISE
The undersigned, the Holder of the foregoing Warrant, hereby irrevocably
elects, pursuant to Section 3 of the Warrant, to exercise the purchase rights
represented by such Warrant for, and to purchase thereunder, _____ shares of the
Class of Stock of to which such Warrant relates and herewith makes payment of
$___________ therefor in cash, wire transfer or by certified check and requests
to be delivered to the undersigned, the address for which is set forth below the
signature of the undersigned.
Dated: ___________________
Name of Holder: __________________________
By: __________________________________________
(Signature of Authorized Officer)
Name: __________________________________________
Title: _________________________________________
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XXXXXXXX X TO WARRANT
NOTICE OF EXCHANGE
The undersigned, the Holder of the foregoing Warrant, hereby elects,
pursuant to Section 6 of the Warrant, to exercise the purchase rights to
purchase shares of the Class of Stock covered by such Warrant and herewith makes
payment in full therefor by surrender of such Warrant, and requests that
certificates for such Shares (and any other securities or property deliverable
upon such exchange including a revised warrant) be issued in the name of the
undersigned and delivered to its address as set forth in the Warrant.
Dated: ____________________________________
Name of Holder:
By: _______________________________________________
(Signature of Authorized Officer)
Title: ______________________________________________
Page 2
EXHIBIT B TO WARRANT PURCHASE AGREEMENT
(LETTERHEAD OF COMPANY COUNSEL)
TO: XXXXXXXXX & XXXXX GUARANTY FINANCE
Ladies and Gentlemen:
We have acted as counsel to Interactive Telesis Inc., a Delaware
corporation (the "Company"), in connection with the issuance and sale to you of
the warrants (the "Warrants") to purchase an aggregate of 394,737 shares of
Series A Convertible Preferred Shares of the Company pursuant to that certain
Warrant Purchase Agreement, dated as of EVEN DATE HEREWITH (the "Agreement"),
between you and the Company. We are rendering this opinion pursuant to Section
4.3 of the Agreement. Capitalized terms not otherwise defined herein have the
meanings assigned to them in the Agreement.
As counsel to the Company, we participated in the preparation, execution
and delivery of the Agreement and the Warrants and have made such legal and
factual examinations and inquiries as we have deemed advisable or necessary for
the purpose of rendering this opinion. In addition, we have examined originals
or copies of documents, corporate records and other writings which we consider
relevant for the purposes of this opinion.
Based upon and subject to the foregoing and subject to the qualifications
contained herein, we are of the opinion that:
1. All corporate action on the part of the Company and its officers,
directors and stockholders necessary for the due and valid execution and
delivery of the Agreement and for the consummation of the transactions
contemplated thereby, including, but not limited to, the issuance and sale of
the Warrants to you, has been taken.
2. The Agreement has been duly executed and delivered by the Company and
represents a valid and binding obligation of the Company.
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3. The Warrants have been duly and validly issued and represents a valid
and binding obligation of the Company.
4. The shares of Company's Series A Convertible Preferred Stock (and shares
of the Common Stock into which it is convertible) issuable upon exercise of the
Warrants have been duly and validly reserved for issuance and, if issued
pursuant to the terms and conditions of the Warrants shall be duly authorized,
validly issued, fully paid and non-assessable.
Very truly yours,
___________________________
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EXHIBIT D
FORM OF LEGAL OPINION ON SUBSCRIPTION DATE
November ___, 0000
Xxxxxxxxx & Xxxxx Guaranty Finance, LLC
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
We have acted as counsel for Interactive Telesis Inc., a Delaware corporation
(the "Company"), in connection with the Loan and Security Agreement and the
Equity Line of Credit Agreement dated as of November ___, 2000 (the
"Agreements") between the Company and Xxxxxxxxx and Xxxxx Guaranty Finance, LLC
(H&QGF). The capitalized terms used herein shall have the same meanings as those
defined in the Agreements, unless otherwise defined herein.
As such counsel for the Company, we have made such legal and factual
examinations and inquiries as we have deemed advisable or necessary for the
purpose of rendering this opinion, including those relating to the
authorization, execution and delivery of the Agreements, and we have examined,
among other things, originals, certified copies, or copies otherwise identified
to us as being true copies of the originals, of the following:
(a) the Certificate of Incorporation of the Company, as amended to date;
(b) the Bylaws of the Company, as amended to date;
(c) minutes of the meetings of the Board of Directors of the Company with
respect to the transactions covered by this opinion;
(d) executed copies of the Loan and Security Agreement, the Equity Line of
Credit Agreement, the Warrant Purchase Agreement, the Form of Warrant
as set forth as an exhibit thereto and the Registration Rights
Agreement (the "Transaction Documents");
(e) the Certificate of Officer of the Company executed by the Chief
Executive Officer of the Company, dated as of the date hereof; and
(f) the other documents delivered on the Closing Date.
In addition, we have obtained from public officials, officers of the Company and
the Company's transfer agent such other certificates and assurances, and we have
examined such corporate records, other
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documents and questions of law, as we have considered necessary or appropriate
for purposes of this opinion.
In rendering this opinion, we have assumed the genuineness of all signatures on
original documents, the authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies thereof, the legal capacity of natural persons and the due execution and
delivery by parties other than the Company, of all documents where due execution
and delivery are a prerequisite to effectiveness thereof. In addition, we have
assumed that the representatives and warranties made in the Transaction
Documents, and pursuant thereto, are true and correct.
Based upon and subject to the foregoing, and subject to further assumptions,
limitations, qualifications and exceptions set forth herein, we are of the
opinion that when executed and delivered by the Company to H&QGF, the
Transaction Documents will be the legal, valid, and binding obligations of the
Company, enforceable by H&QGF against the Company in accordance with their
respective terms.
As used in this opinion, the expressions "to our knowledge", "known to us" and
similar phrases with reference to matters of fact mean that, after an
examination of documents made available to us by the Company, and after
inquiries of officers of the Company, but without any further independent
factual investigation except as otherwise described herein, we find no reason to
believe that the opinions expressed herein are factually incorrect. Further, the
expressions "to our knowledge", "known to us" and similar phrases with reference
to matters of fact refer to the actual knowledge of the attorneys of this firm
who have thoroughly reviewed the Transaction Documents and the transactions
contemplated thereby for the Company. Except to the extent expressly set forth
herein or as we otherwise believe to be necessary to our opinion, we have not
undertaken any independent investigation to determine the existence or absence
of any fact, and not inference as to our knowledge of the existence or absence
of any fact should be drawn from our representation of the Company or the
rendering of the opinions set forth below.
The opinions set forth above are subject to the following qualifications,
limitations and exceptions:
(a) The legality, validity, binding nature and enforceability of the
Company's obligations under the Transaction Documents may be subject to or
limited by (i) the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other laws relating to or affecting the enforceability of
creditors' rights generally; (ii) the remedies of specific performance,
injunctive relief or similar equitable relief, which may be subject to equitable
defenses or to the discretion of the court before which enforcement is sought;
(iii) the validity, binding effect or enforceability of any provisions
indemnifying any person against or relieving any person of liability for its own
negligent or wrongful acts or in any other circumstances, where enforcement of
such provisions may be subject to principles of public policy; (iv) the
validity, binding effect or enforceability of provisions pertaining to
cumulative remedies; (v) the
Page 2
compliance or noncompliance with applicable state and federal anti-fraud
statutes, rules and regulations concerning the issuance or transfer of
securities; (vi) the enforceability of provisions of the Transaction Documents
purporting to set evidentiary standards or provisions purporting to waive or
establish jurisdiction, venue, service of process, the right to a jury trial or
statutes of limitations; (vii) the enforceability of provisions in the
Transaction Documents purporting to provide for indemnification and/or
contributions under certain circumstances; and (viii) the enforceability of
provisions of the Transaction Documents purporting to (A) require a party to pay
or reimburse attorneys' fees incurred by another party, or indemnify another
party therefor, which provisions may be limited by applicable statutes and
decisions relating to the collection and award of attorneys' fees, (B) authorize
a party to act in its sole discretion, (C) waive procedural, substantive or
constitutional rights or defenses, or (D) impose penalties, forfeitures,
liquidated damages or an increased rate upon delinquency (to the extent the same
is deemed to be a penalty) in payment or upon the occurrence of a default.
The opinions hereinafter expressed are further subject to the qualification
that, in rendering the opinion in paragraph 3 below as to the number of shares
of capital stock of the Company issued and outstanding, please be advised that
we have not served as the Company's transfer agent, and, therefore we have
relied upon the Company and its transfer agent for this factual information. In
addition, as you know, the consummation of the transactions contemplated by the
Agreements are subject to the approval of _____________________________ of the
Company.
Based upon and subject to the foregoing and any exceptions noted in the
Officers' Certificate, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all
requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. The Company is
duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such a qualification
necessary, other than those in which the failure so to qualify would
not have a Material Adverse Effect.
2. Each of the Transaction Documents has been duly and validly
authorized, executed and delivered by the Company and constitute a
valid and binding agreement of the Company, enforceable against the
Company in accordance with its respective terms.
3. Based solely on information provided to us by the Company's transfer
agent, the authorized capital stock of the Company consists of (i)
__________________ shares of Common Stock,
Page 3
$0.001 par value per share, of which _____ shares were issued and
outstanding as of November ___, 2000; and (ii) _______________ shares
of Preferred Stock, of which _____________ shares were designated
Series A Convertible Preferred Stock, of which ___________ shares are
issued and outstanding. The outstanding shares of Common Stock and
Preferred Stock have been duly authorized and validly issued and are
fully paid and nonassessable.
4. Except as set forth in the Transaction Documents, including the
schedules thereto, there are no options, warrants, or rights to
subscribe to, securities, right or obligations convertible into or
exchangeable for or giving any right to subscribe for any shares of
capital stock of the Company.
5. The execution and delivery of the Transaction Documents by the Company
do not violate any provision of the Company's Certificate of
Incorporation, as amended, or Bylaws and do not, to our knowledge,
violate or contravene (i) any governmental statute, rule or regulation
applicable to the Company or (ii) any order, writ, judgement,
injunction, decree, determination or award which has been entered
against the Company and of which we are aware, in any case, the
violation or contravention of which would have a Material Adverse
Effect.
6. Except as set forth in the Agreements, there are no lawsuits or
proceedings pending or, to our knowledge, threatened, against the
Company before any court or administrative agency which question the
validity of the Transaction Documents or which might have, either
individually or in the aggregate, a Material Adverse Effect.
This opinion is rendered as of the date hereof only, and we do not assume any
responsibility to update or modify such opinion based upon new or additional
information or facts which arise or come to our attention subsequent to the
delivery of this opinion letter to you. This opinion is furnished by us, as
counsel to the Company, to you and is solely for your benefit and may not be
made available to or replied upon by, nor may copies be delivered to, any other
persons or entities or for any other purpose without our prior written consent.
Very truly yours,
Page 4
EXHIBIT E
LIST OF OPINIONS TO BE GIVEN ON ANY EFFECTIVE DATE
Based upon and subject to the foregoing and any exceptions noted in the
Officers' Certificate, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted or property owned by it makes such a
qualification necessary, other than those in which the failure so to qualify
would not have a Material Adverse Effect.
2. The Company has authorized capital stock as set forth in the
Registration Statement and Prospectus. All of the outstanding shares of Capital
Shares are duly and validly authorized and issued, are fully paid and
nonassessable and were not issued in violation of or subject to any preemptive
rights. The Put Shares to be delivered on the Closing Date have been duly and
validly authorized and, when delivered by the Company in accordance with the
Equity Agreement, will be duly and validly issued, fully paid and nonassessable
and will not have been issued in violation of or subject to any preemptive
rights. The rights, preferences and privileges of the Put Shares are as stated
in the Certificate of Determinations duly filed with the Secretary of State of
the State of Delaware. The Capital Shares and the Put Shares conform to the
descriptions thereof contained in the Registration Statement and the Prospectus.
3. To our knowledge, there are no lawsuits or proceedings pending or, to
our knowledge, threatened, against the Company, of a character required to be
disclosed in the Registration Statement and the Prospectus, which have not been
properly disclosed therein.
4. To our knowledge, all agreements, instruments, franchises, licenses or
permits required to be described in the Registration Statement and the
Prospectus or required to be filed as exhibits to the Registration Statements
have been so described and so filed.
5. The Registration Statement and the Prospectus and any amendments thereof
or supplements thereto (other than the financial statements and schedules and
other financial data derived therefrom, as to which we express no opinion)
comply as to form in all material respects with the requirements of the Act.
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6. The Registration Statement is effective under the Act, and, to our
knowledge, no stop order suspending the effectiveness of either of the
Registration Statement has been issued and no proceedings therefor have been
initiated or threatened by the SEC.
Page 2
EXHIBIT F
OFFICER'S CERTIFICATE
OF
INTERACTIVE TELESIS INC.
Reference is made to the Equity Line of Credit Agreement (the "Equity
Agreement") and Registration Rights Agreement (the "Registration Rights
Agreement"), both dated as of November ___, 2000 by, and between Xxxxxxxxx &
Xxxxx Guaranty Finance, LLC ("H&QGF") and Interactive Telesis Inc. (the
"Company").
The undersigned, Xxxxxx X. Xxxxxxx, being the duly elected, qualified, and
authorized President and Chief Executive Officer of the Company, hereby
certifies as of the date hereof as follows:
1. This Certificate is delivered pursuant to Section 7.2(k) of the
Equity Agreement. Terms used and not defined herein shall have the meanings
set forth in the Equity Agreement.
2. All the representations and warranties of the Company in the Equity
Agreement and in the Registration Rights Agreement are true and correct in
all material respects as at the date hereof (except for representations and
warranties specifically made as of a particular date).
3. All of the conditions precedent to the right of the Company to
issue and sell Put Shares in the Equity Agreement and other matters
provided for in the Equity Agreement and Registration Rights Agreement
which are required to have been complied with in connection with the
Company's exercise of its right to sell Put Shares to H&QGF have been fully
complied with in all material respects.
IN WITNESS WHEREOF, I have hereunto set my hand to this Certificate
as of this _____ day of _________________, 200__.
_______________________________
Xxxxxxx X. Xxxxx
Secretary and Chief Financial Officer
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EXHIBIT G
TRANSFER AGENT INSTRUCTIONS
November ____, 2000
PACIFIC CORPORATE TRUST
000-000 Xxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Attn: Xxxxxx Xxxxxxxxxx
Re: Interactive Telesis Inc.
Ladies and Gentlemen:
You are hereby irrevocably instructed from time to time upon transfer of
shares of our Common Stock issued upon conversion of shares of our Series ___
Preferred Stock (the "Registrable Securities") by Xxxxxxxxx & Xxxxx Guaranty
Finance, LLC (the "Investor") to issue certificates evidencing such Registrable
Securities free of restrictive legends during the following periods and under
the following circumstances and with consultation by you with us or our counsel
and without the need for any further advice or instruction or documentation to
you by or from us or our counsel or the Investor.
(a) At any time after the effective date of the Registration Statement
on Form X-0, XX-0, or SB-2 under the Securities Act or such other form
that the Company is elegible to use or that the SEC deems appropriate
covering resale of the Registrable Securities (the "Registration
Statement"), upon surrender of one or more certificates evidencing
Registrable Securities that bear a restrictive legend referring to the
Securities Act of 1933, as amended (the "Legend"), to the extent
accompanied by a notice requesting the issuance of new certificates
free of the Legend to replace those surrendered; provided that (i) the
Registration Statement shall then be effective and (ii) if reasonably
requested by you, the Investor confirms to you that the Investor has
complied with the prospectus delivery requirement of the Securities
Act.
At any time upon any surrender of one or more certificates evidencing
Registrable Securities that bear the Legend, to the extent accompanied by a
notice requesting the issuance of new certificates free of the Legend to replace
those surrendered and containing representations that (i) the Investor is
permitted to dispose of such Registrable Securities without limitation as to
amount or manner of sale pursuant to Rule 144(k) under the Securities Act or
(ii) the Investor has sold, pledged or otherwise transferred or agreed to
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sell, pledge or otherwise transfer such Registrable Securities in a manner other
than pursuant to an effective registration statement, to a transferee who shall
upon such transfer be entitled to freely tradable securities.
Sincerely yours,
INTERACTIVE TELESIS INC.
By: ____________________________________
Title: _________________________________
cc: Xxxxxxxxx & Xxxxx Guaranty Finance, LLC
Page 2
