EXHIBIT 10.5
FORM OF WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
SUPERCLICK, INC.
COMMON STOCK PURCHASE WARRANT
("CATCH-UP WARRANT")
1. Issuance. In consideration of good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by SUPERCLICK, INC., a
Washington corporation (the "Company"), CHICAGO VENTURE PARTNERS, L.P., an
Illinois limited partnership, or registered assigns (the "Holder") is hereby
granted the right to purchase, at any time, on or after the occurrence of a
Prepayment Event (as defined below) until 5:00 P.M., Chicago time, on the
Expiration Date (as defined below), a number of fully paid and nonassessable
shares of the Company's Common Stock, par value $.0006 per share (the "Common
Stock") equal to the Exercisable Shares (as defined below), at an initial
exercise price per share (the "Exercise Price") of $.0006, subject to further
adjustment as set forth herein. As used herein: (i) "Prepayment Event" shall
mean the payment, prior to the Maturity Date, of all or a portion of the
outstanding principal of the Convertible Debentures; and (ii) "Exercisable
Shares" shall mean the aggregate number of shares of Common Stock into which the
Convertible Debenture that is the subject of the Prepayment Event is
convertible, calculated as the Relevant Conversion Shares minus the Relevant
Payment Shares, where "Relevant Conversion Shares" equals the amount of any such
prepayment divided by the then-current Conversion Price, and "Relevant Payment
Shares" equals the amount of any such prepayment divided by the closing price of
the Common Stock on the last Trading Day preceding the Prepayment Event. This
Warrant is being issued pursuant to the terms of that certain Securities
Purchase Agreement, dated as of August 1, 2005 (the "Agreement"), to which the
Company and Holder (or Holder's predecessor in interest) are parties.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Agreement. This Warrant was originally issued to the Holder or
the Holder's predecessor in interest on August 1, 2005 (the "Issue Date").
2. Exercise of Warrants.
2.1 General.
(a) This Warrant is exercisable in whole or in part at any time and
from time to time commencing on a Prepayment Date (as defined below), subject to
Section 1 hereof. Such exercise shall be effectuated by submitting to the
Company (either by delivery to the Company or by facsimile transmission as
provided in Section 8 hereof) a completed and duly executed Notice of Exercise
(substantially in the form attached to this Warrant Certificate) as provided in
the Notice of Exercise (or revised by notice given by the Company as
contemplated by the Section headed "NOTICES" in the Agreement). The date such
Notice of Exercise is faxed to the Company shall be the "Exercise Date". The
Notice of Exercise shall be executed by the Holder of this Warrant and shall
indicate (i) the number of shares then being purchased pursuant to such exercise
and (ii) if applicable (as provided below), whether the exercise is a cashless
exercise.
(b) If the Notice of Exercise form elects a "cashless" exercise, the
Holder shall thereby be entitled to receive a number of shares of Common Stock
equal to (w) the excess of the Current Market Value (as defined below) over the
total cash exercise price of the portion of the Warrant then being exercised,
divided by (x) the Market Price of the Common Stock. For the purposes of this
Warrant, the terms (y) "Current Market Value" shall mean an amount equal to the
Market Price of the Common Stock, multiplied by the number of shares of Common
Stock specified in such Notice of Exercise Form, and (z) "Market Price of the
Common Stock" shall mean the Closing Price of the Common Stock on the Exercise
Date.
(c) If the Notice of Exercise form elects a "cash" exercise (or if
the cashless exercise referred to in the immediately preceding paragraph (b) is
not available in accordance with its terms), the Exercise Price per share of
Common Stock for the shares then being exercised shall be payable, at the
election of the Holder, in cash or by certified or official bank check or by
wire transfer in accordance with instructions provided by the Company at the
request of the Holder.
(d) Upon the appropriate payment, if any, of the Exercise Price for
the shares of Common Stock purchased, together with the surrender of this
Warrant Certificate (if required), the Holder shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. The
Company shall deliver such certificates representing the Warrant Shares in
accordance with the instructions of the Holder as provided in the Notice of
Exercise (the certificates delivered in such manner, the "Warrant Share
Certificates") within three (3) Trading Days (such third Trading Day, a "Warrant
Share Delivery Date") of (i) with respect to a "cashless exercise," the Exercise
Date or, (ii) with respect to a "cash" exercise, the later of the Exercise Date
or the date the payment of the Exercise Price for the relevant Warrant Shares is
received by the Company.
(e) The Holder shall be deemed to be the holder of the shares
issuable to it in accordance with the provisions of this Section 2.1 on the
Exercise Date.
(f) The Holder may elect to exercise a portion of this Warrant
without electing to redeem the balance of this Warrant.
2.2 Limitation on Exercise. Notwithstanding the provisions of this
Warrant, the Agreement or of the other Transaction Agreements, in no event
(except (i) as specifically provided in this Warrant as an exception to this
provision, (ii) during the forty-five (45) day period prior to the Expiration
Date, or (iii) while there is outstanding a tender offer for any or all of the
shares of the Company's Common Stock) shall the Holder be entitled to exercise
this Warrant, or shall the Company have the obligation to issue shares upon such
exercise of all or any portion of this Warrant to the extent that, after such
exercise the sum of (1) the number of shares of Common Stock beneficially owned
by the Holder and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unexercised portion of
the Warrants or other rights to purchase Common Stock or through the ownership
of the unconverted portion of convertible securities), and (2) the number of
shares of Common Stock issuable upon the exercise of the Warrants with respect
to which the determination of this proviso is being made, would result in
beneficial ownership by the Holder and its affiliates of more than 4.99% of the
outstanding shares of Common Stock (after taking into account the shares to be
issued to the Holder upon such exercise). For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), except as otherwise provided in clause (1) of such sentence.
The Holder, by its acceptance of this Warrant, further agrees that if the Holder
transfers or assigns any of the Warrants to a party who or which would not be
considered such an affiliate, such assignment shall be made subject to the
transferee's or assignee's specific agreement to be bound by the provisions of
this Section 2.2 as if such transferee or assignee were the original Holder
hereof.
2.3 Certain Definitions. As used herein, each of the following terms
has the meaning set forth below, unless the context otherwise requires:
(a) "Expiration Date" means the date on which the Convertible
Debentures have been paid in full by the Company.
(b) "Prepayment Date" means the date on which a Prepayment Event
occurs.
3. Reservation of Shares. The Company hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant, the Reservation Percentage of the number of shares of
its Common Stock as shall be required for issuance of the Warrant Shares for the
then unexercised portion of this Warrant. For the purposes of such calculations,
the Company should assume that the outstanding portion of this Warrants were
exercisable in full at any time, without regard to any restrictions which might
limit the Holder's right to exercise any portion of this Warrant held by the
Holder.
4. Mutilation or Loss of Warrant. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) receipt of reasonably
satisfactory indemnification, and (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will execute and deliver a new Warrant
of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant
shall thereupon become void.
5. Rights of the Holder. Except as set forth in this Section 5, the Holder
shall not, by virtue hereof, be entitled to any rights of a stockholder in the
Company, either at law or equity, and the rights of the Holder are limited to
those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein. Notwithstanding the provisions of this
Warrant, the Agreement or of the other Transaction Agreements, if the Company
shall declare a dividend upon the Common Stock (whether payable out of earnings
or earned surplus or otherwise), then the Company shall pay to the Holder an
amount equal to the dividend payment which would have been paid to the Holder
had all of the Holder's unexercised Warrants outstanding on the record date for
determining the amount of dividend payments to be paid to security holders of
the Company been exercised as of the close of business on the Trading Day
immediately before such record date.
6. Protection Against Dilution and Other Adjustments.
6.1 Adjustment Mechanism. If an adjustment of the Exercise Price is
required pursuant to this Section 6 (other than pursuant to Section 6.4), the
Holder shall be entitled to purchase such number of shares of Common Stock as
will cause (i) (x) the total number of shares of Common Stock Holder is entitled
to purchase pursuant to this Warrant following such adjustment, multiplied by
(y) the adjusted Exercise Price per share, to equal the result of (ii) (x) the
dollar amount of the total number of shares of Common Stock Holder is entitled
to purchase before adjustment, multiplied by (y) the total Exercise Price before
adjustment.
6.2 Capital Adjustments. In case of any stock split or reverse stock
split, stock dividend, reclassification of the Common Stock, recapitalization,
merger or consolidation (where the Company is not the surviving entity), the
provisions of this Section 6 shall be applied as if such capital adjustment
event had occurred immediately prior to the date of this Warrant and the
original Exercise Price had been fairly allocated to the stock resulting from
such capital adjustment; and in other respects the provisions of this Section
shall be applied in a fair, equitable and reasonable manner so as to give
effect, as nearly as may be, to the purposes hereof. A rights offering to
stockholders shall be deemed a stock dividend to the extent of the bargain
purchase element of the rights. The Company will not effect any consolidation or
merger, unless prior to the consummation thereof, the successor or acquiring
entity (if other than the Company) and, if an entity different from the
successor or acquiring entity, the entity whose capital stock or assets the
holders of the Common Stock of the Company are entitled to receive as a result
of such consolidation or merger assumes by written instrument the obligations
under this Warrant (including under this Section 6) and the obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the holder may be entitled to
acquire.
6.3 Adjustment for Spin Off. If, for any reason, prior to the
exercise of this Warrant in full, the Company spins off or otherwise divests
itself of a part of its business or operations or disposes all or of a part of
its assets in a transaction (the "Spin Off") in which the Company does not
receive compensation for such business, operations or assets, but causes
securities of another entity (the "Spin Off Securities") to be issued to
security holders of the Company, then the Company shall cause (i) to be reserved
Spin Off Securities equal to the number thereof which would have been issued to
the Holder had all of the Holder's unexercised Warrants outstanding on the
record date (the "Record Date") for determining the amount and number of Spin
Off Securities to be issued to security holders of the Company (the "Outstanding
Warrants") been exercised as of the close of business on the Trading Day
immediately before the Record Date (the "Reserved Spin Off Shares"), and (ii) to
be issued to the Holder on the exercise of all or any of the Outstanding
Warrants, such amount of the Reserved Spin Off Shares equal to (x) the Reserved
Spin Off Shares, multiplied by (y) a fraction, of which (I) the numerator is the
amount of the Outstanding Warrants then being exercised, and (II) the
denominator is the amount of the Outstanding Warrants.
6.4 Adjustment for Certain Transactions. Reference is made to the
provisions of Section 4(g) of the Agreement, the terms of which are incorporated
herein by reference. The number of shares covered by this Warrant and the
Exercise Price shall be adjusted as provided in the applicable provisions of
said Section 4(g) of the Agreement.
7. Transfer to Comply with the Securities Act; Registration Rights.
7.1 Transfer. This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or issuable upon exercise of this Warrant
may be sold, transferred, pledged or hypothecated in the absence of an effective
registration statement under the Act relating to such security or an opinion of
counsel satisfactory to the Company that registration is not required under the
Act. Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
7.2 Registration Rights. (a) Reference is made to the Registration
Rights Agreement. The Company's obligations under the Registration Rights
Agreement and the other terms and conditions thereof with respect to the Warrant
Shares, including, but not necessarily limited to, the Company's commitment to
file a registration statement including the Warrant Shares, to have the
registration of the Warrant Shares completed and effective, and to maintain such
registration, are incorporated herein by reference.
(b) In addition to the registration rights referred to in the
preceding provisions of Section 7.2(a), effective after the expiration of the
effectiveness of the Registration Statement as contemplated by the Registration
Rights Agreement, the Holder shall have piggy-back registration rights with
respect to the Warrant Shares then held by the Holder or then subject to
issuance upon exercise of this Warrant (collectively, the "Remaining Warrant
Shares"), subject to the conditions set forth below. If, at any time after the
Registration Statement has ceased to be effective, the Company participates
(whether voluntarily or by reason of an obligation to a third party) in the
registration of any shares of the Company's stock (other than a registration on
Form S-8 or on Form S-4), the Company shall give written notice thereof to the
Holder and the Holder shall have the right, exercisable within ten (10) Trading
Days after receipt of such notice, to demand inclusion of all or a portion of
the Holder's Remaining Warrant Shares in such registration statement. If the
Holder exercises such election, the Remaining Warrant Shares so designated shall
be included in the registration statement at no cost or expense to the Holder
(other than any costs or commissions which would be borne by the Holder under
the terms of the Registration Rights Agreement). The Holder's rights under this
Section 7 shall expire at such time as the Holder can sell all of the Remaining
Warrant Shares under Rule 144 without volume or other restrictions or limit.
8. Buy-In Amount.
(a) If, after the Holder has submitted a Notice of Exercise (such Holder,
an "Exercising Holder"), the Company fails for any reason to deliver the stock
certificates representing the Warrant Shares ("Warrant Share Certificates") by
the relevant Delivery Date, and at any time thereafter prior to the actual
delivery of the Warrant Share Certificates, the Exercising Holder purchases, in
an arm's-length open market transaction or otherwise, shares of Common Stock
(the "Covering Shares") in order to make delivery in satisfaction of a sale of
Common Stock by the Exercising Holder (the "Sold Shares"), which delivery such
Exercising Holder anticipated to make using the shares to be issued upon such
exercise (a "Buy-In"), the Exercising Holder shall have the right to require the
Company to pay to the Exercising Holder, in addition to and not in lieu of all
other amounts contemplated in other provisions of the Transaction Agreements,
the Warrant Share Buy-In Adjustment Amount (as defined below). The Company shall
pay the Warrant Share Buy-In Adjustment Amount to the Exercising Holder in
immediately available funds immediately upon demand by the Exercising Holder.
(b) The term "Warrant Share Buy-In Adjustment Amount" means the amount
equal to the excess, if any, of (i) the Exercising Holder's total purchase price
(including brokerage commissions, if any) for the Covering Shares over (ii) the
net proceeds (after brokerage commissions, if any) received by the Exercising
Holder from the sale of the Sold Shares. By way of illustration and not in
limitation of the foregoing, if the Exercising Holder purchases shares of Common
Stock having a total purchase price (including brokerage commissions) of $11,000
to cover a Buy-In with respect to shares of Common Stock it sold for net
proceeds of $10,000, the Warrant Share Buy-In Adjustment Amount which the
Company will be required to pay to the Exercising Holder will be $1,000.
9. Notices. Any notice required or permitted hereunder shall be given in
manner provided in the Section headed "NOTICES" in the Agreement, the terms of
which are incorporated herein by reference.
10. Supplements and Amendments; Whole Agreement. This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
hereto. This Warrant contains the full understanding of the parties hereto with
respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.
11. Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of Illinois for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the County of Cook or the
state courts of the State of Illinois sitting in the County of Cook in
connection with any dispute arising under this Warrant and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Buyer in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
12. JURY TRIAL WAIVER. The Company and the Holder hereby waive a trial by
jury in any action, proceeding or counterclaim brought by either of the Parties
hereto against the other in respect of any matter arising out or in connection
with this Warrant.
13. Remedies. The Company stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
[Balance of page intentionally left blank]
15. Descriptive Headings. Descriptive headings of the several Sections of
this Warrant are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the 1st day of August, 2005.
SUPERCLICK, INC.
By:________________________________
-----------------------------------
(Print Name)
-----------------------------------
(Title)
NOTICE OF EXERCISE OF WARRANT
TO: SUPERCLICK, INC. VIA FAX: (000) 000-0000
00000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, XX 00000
Attn: Chief Executive Officer
AND TO: XXXX X.XXXXXXX VIA FAX (000) 000-0000
0000 Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn: Chairman
The undersigned hereby irrevocably elects to exercise the right,
represented by the Common Stock Purchase Warrant, dated as of
_____________________, 20___ , to purchase ___________ shares of the Common
Stock, par value $0.0006 per share ("Common Stock"), of SUPERCLICK, INC. and
tenders herewith payment in accordance with Section 2 of said Common Stock
Purchase Warrant, as follows:
CASH:$___________________________ = (Exercise Price x Exercise Shares)
Payment is being made by:
enclosed check
wire transfer
other
CASHLESS EXERCISE [if available pursuant to Section 2.1(b)]:
Net number of Warrant Shares to be issued to Holder : _________*
* based on: Current Market Value - (Exercise Price x Exercise Shares)
---------------------------------------------------------
Market Price of Common Stock
where:
Market Price of Common Stock ["MP"] = $_______________
Current Market Value [MP x Exercise Shares] = $_______________
It is the intention of the Holder to comply with the provisions of Section
2.2 of the Warrant regarding certain limits on the Holder's right to exercise
thereunder. Based on the analysis on the attached Worksheet Schedule, the Holder
believes this exercise complies with the provisions of said Section 2.2.
Nonetheless, to the extent that, pursuant to the exercise effected hereby, the
Holder would have more shares than permitted under said Section, this notice
should be amended and revised, ab initio, to refer to the exercise which would
result in the issuance of shares consistent with such provision. Any exercise
above such amount is hereby deemed void and revoked.
As contemplated by the Warrant, this Notice of Conversion is being sent by
facsimile to the telecopier number and officer indicated above.
If this Notice of Exercise represents the full exercise of the outstanding
balance of the Warrant, the Holder either (1) has previously surrendered the
Warrant to the Company or (2) will surrender (or cause to be surrendered) the
Warrant to the Company at the address indicated above by express courier within
five (5) Trading Days after delivery or facsimile transmission of this Notice of
Exercise.
The certificates representing the Warrant Shares should be transmitted by
the Company to the Holder
via express courier, or
by electronic transfer
after receipt of this Notice of Exercise (by facsimile transmission or
otherwise) to:
___________________________________________________
___________________________________________________
___________________________________________________
Dated:
-----------------------
-----------------------------
[Name of Holder]
By:
-----------------------------
NOTICE OF EXERCISE OF WARRANT
WORKSHEET SCHEDULE
1. Current Common Stock holdings of Holder and Affiliates _________
2. Shares to be issued on current exercise _________
3. Other shares to be issued on other current exercise(s) and
other current conversion(s)(1) _________
4. Other shares eligible to be acquired within next 60 days
without restriction _________
5. Total [sum of Lines 1 through 4] _________
6. Outstanding shares of Common Stock(2) _________
7. Adjustments to Outstanding
a. Shares known to Holder as previously issued
to Holder or others but not included in Line 6 _________
b. Shares to be issued per Line(s) 2 and 3 _________
c. Total Adjustments [Lines 7a and 7b] _________
8. Total Adjusted Outstanding [Lines 6 plus 7c] _________
9. Holder's Percentage [Line 5 divided by Line 8] _________%
[Note: Line 9 not to be above 4.99%]
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(1)Includes shares issuable on conversion of convertible securities (including
assumed payment of interest or dividends) or exercise of other rights, including
other warrants or options
(2)Based on latest SEC filing by Company or information provided by executive
officer of Company, counsel to Company or transfer agent
