Exhibit 10.5
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE BLUE SKY LAW
OF ANY STATE. TRANSFER OR SALE OF THIS WARRANT
SHALL NOT BE MADE EXCEPT IN ACCORDANCE WITH
THE TERMS HEREOF.
WARRANT TO PURCHASE TWENTY THOUSAND (20,000) SHARES
OF COMMON STOCK, $0.01 PAR VALUE PER SHARE,
OF GREENBRIAR CORPORATION
THIS CERTIFIES THAT for $200 and for services rendered and good and
valuable consideration received, Xxx X. Xxxxxx or any subsequent holder
(hereinafter called the "Holder"), is entitled, subject to the terms and
conditions hereinafter set forth, to purchase from Greenbriar Corporation, a
Nevada corporation (the "Company"), all or any part of Twenty Thousand (20,000)
fully paid and nonassessable shares of the Company's Common Stock, $0.01 par
value per share (the "Common Stock"), at an exercise price of Three and 58/100
Dollars ($3.58) per share (the "Exercise Price"). The Company is subject to a
special covenant contained in an Acquisition Agreement dated October 12, 2004
(the "Acquisition Agreement") requiring presentation of a transaction to the
Company's stockholders, together with a mandatory exchange of a series of
Preferred Stock for Common Stock (all the "Transaction"). If stockholder
approval of the Transaction does not occur, the holders of the series of
Preferred Stock have an opportunity exercisable from October 1, 2005, until
September 30, 2006 to rescind the Transaction (the "Recission").
1. Term; Warrant Purchase Price. Subject to the terms and conditions hereof,
this Warrant shall be exercisable in whole or in part from time to time, from
9:00 A.M. local Dallas, Texas time, on the day following the date of the
stockholder approval of the Transaction to and until 3:00 p.m., local Dallas,
Texas time, on October 31, 2009 (the "Exercisable Term"); prior to the date of
stockholder approval of the Transaction, this Warrant shall not be exercisable.
The Company hereby acknowledges receipt from Holder and its acceptance of $200
($0.01 per share of Common Stock covered hereby) of adequate consideration for
the issuance of this Warrant to Holder (the "Warrant Purchase Price"), which
amount shall be applied against and in reduction of the Exercise Price per share
at the time of first exercise of part or all of this Warrant. Notwithstanding
any other provision of this Warrant, if stockholder approval of the Transaction
does not occur prior to October 1, 2005, and if Recission does occur, this
Warrant shall on such date of Recission become null and void by its terms and
all rights of Holder to exercise this Warrant shall expire. If stockholder
approval of the Transaction does occur, the Company and Holder shall execute an
acknowledgment of that fact which shall be attached to this Warrant to evidence
its continued effectiveness.
(a) Exercise. This Warrant may be exercised by the Holder as to the whole at any
time, or in part from time to time, during the Exercisable Term hereof set forth
in paragraph 1 above (but not as to a fractional share of Common Stock): by
completing the Subscription Form, a copy of which is attached hereto and made a
part hereof (which written notice and subscription shall [i] state the election
to exercise the Warrant and the number of shares in respect to which it is being
exercised and [ii] be signed by the person so exercising the Warrant on behalf
of the Holder), and delivering such Subscription Form to the Secretary of the
Company; by presenting and surrendering this Warrant, duly endorsed, at the
principal executive office of the Company in the city and state where then
located; by delivery to the Company of an investment letter as set forth in
paragraph 14(b)
(b) hereof and upon payment to the Company of the amount of the Exercise Price
for shares so purchased either by (i) delivering to the Company, by check or by
wire transfer, an amount equal to the Exercise Price per Share, multiplied by
the number of Shares then being purchased, or (ii) by indicating in the notice
of exercise form that the Exercise Price should be paid by deducting from the
number of Shares to be received by the exercising Holder that number of Shares
which has an aggregate Specified Value (as defined herein) on the date of
exercise equal to the aggregate Exercise Price for all Shares then being
purchased (a "Net Exercise"). "Specified Value" per Share at any date shall be
the fair market value of such Share as determined in good faith by the Board of
Directors of the Company. Thereupon this Warrant shall be deemed to have been
exercised in whole or in part and the Holder exercising the same shall become a
holder of record of shares of Common Stock purchased hereunder, and certificates
for such shares so purchased shall be delivered to the purchaser within a
reasonable time after this Warrant shall have been exercised. If this Warrant
shall be exercised in respect of only a part of the shares of Common Stock
covered hereby, the Holder shall be entitled to receive a similar warrant of
like tenor and date covering the number of shares in respect of which this
Warrant shall not have been exercised. No fractional shares of Common Stock
shall be issued hereunder.
(c) Transferability. Subject to the terms and conditions hereof, this Warrant
may be assigned by Holder to any assignee with or without consideration;
provided, however, that except for transfers or assignments by will or the laws
of descent and distribution, no partial assignment of this Warrant shall be made
and any transfer of this Warrant shall be made only with respect to all of the
shares of Common Stock covered hereby or with respect to which this Warrant
shall then be exercisable. No assignment of this Warrant shall be effective as
against the Company unless and until the Company and Holder shall have received
from such assignee an investment letter in form and content as set forth in
paragraph 14(c) hereof, and in any event, satisfactory in form and content to
Company and Company's counsel, the Company shall have been notified in writing,
in a manner satisfactory to the Company, and as set forth in paragraph 16
hereof, by Holder and assignee of the fact of such assignment and the Company
shall have prepared and sent to assignee in exchange hereof, a new warrant of
like tenor and date to this Warrant, specifying assignee as the new holder
thereof, the Company shall have received from the Holder or his assignee funds
sufficient to pay any applicable transfer tax, and Holder and/or assignee shall
have complied with any such other directions, instructions and requests, if any,
as may be reasonably made or given by Company in order to satisfy Company as to
the validity and legality of such assignment. Any such new Warrant issued will
bear the same or similar legends as does this Warrant and will be subject to the
investment and transfer restrictions stated herein.
2. Substitution. Upon receipt of evidence 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, upon delivery of a bond of indemnity
satisfactory to the Company, or in the case of any such mutilation, upon
surrender or cancellation of this Warrant, the Company will issue to the Holder
a new warrant of like tenor, in lieu of this Warrant, representing the right to
subscribe for and purchase the number of shares which may be subscribed for and
purchased hereunder. Any such new Warrant executed and delivered shall
constitute only the same contractual obligation on the part of the Company as
this Warrant.
3. Company Actions. The existence of this Warrant shall not affect in any way
the right or power of the Company or its shareholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stocks ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
(a) Recapitalization. The shares with respect to which this Warrant is
issued are shares of Common Stock as presently constituted on the date
of this Warrant, but if, and whenever, prior to the delivery by the
Company of any of the shares of the Common Stock with respect to which
this Warrant is issued, the Company shall effect a subdivision or
consolidation of shares or other capital adjustment, the payment of a
stock dividend, or other increase or decrease of the number of shares
of the Common Stock outstanding, without receiving compensation
therefor in money, services or property, then in the event of an
increase in the number of such shares outstanding, the number of shares
of Common Stock then remaining subject to and purchasable under this
Warrant shall be proportionately increased, and the Exercise Price
payable per share shall be proportionately reduced (but not below the
par value $0.01 per share); and conversely in the event of a reduction
in the number of such shares outstanding, the number of shares of
Common Stock then remaining subject to and purchasable under this
Warrant shall be proportionately reduced, and the Exercise Price
payable per share shall be proportionately increased. Any dividend paid
or distributed upon the Common Stock in any class of stock or any
securities of the Company convertible into or exchangeable for shares
of Common Stock of the Company shall be treated as a dividend paid in
Common Stock to the extent that shares of Common Stock are issuable
upon the conversion or exchange thereof.
4. Effect of Merger or Consolidation. After a merger of one or more corporations
into the Company, or after a consolidation of the Company and one or more
corporations in which the Company shall be the surviving corporation, Holder
shall, without any change in, or payment in addition to, the Exercise Price, be
entitled upon any exercise of this Warrant to receive (subject to any required
action by shareholders) in lieu of the number of shares as to which this Warrant
shall then be so exercisable, the number and class of shares of stock or other
securities, or the amount of cash, property or assets to which the Holder would
have been entitled pursuant to the terms of the agreement of merger or
consolidation, if immediately prior to such merger or consolidation the Holder
had been the holder of record of a number of shares of Common Stock of the
Company equal to the number of shares of Common Stock of the Company covered by
the then unexercised portion of this Warrant. In the event of any merger or
consolidation to which the Company is a party in which the Company is not the
surviving corporation:
(i) the Company, prior to consummation, shall take all steps necessary
to assure that all provisions of this Warrant shall thereafter be
applicable, as nearly as reasonably may be, to any securities or other
consideration so deliverable on exercise of this Warrant,
(ii) prior to consummation, the successor corporation shall have
assumed the obligations of this paragraph and this Warrant by written
instrument executed and delivered to the Holder at its address on the
books of the Corporation, and
(iii) the Holder shall be entitled to receive, upon notice of exercise,
in lieu of the number of shares as to which this Warrant shall then be
so exercisable immediately prior to such merger or consolidation, the
number and class of shares of stock or other securities, or the amount
of cash, property or assets of the surviving corporation to which the
Holder would have been entitled pursuant to the terms of the agreement
of merger or consolidation, if immediately prior to such merger or
consolidation the Holder had been the holder of record of a number of
shares of Common Stock of the Company equal to the number of shares of
Common Stock covered by the then unexercised portion of this Warrant.
5. Nonadjustment. Except as herein expressly provided, the issue by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of options, rights or warrants to subscribe therefor,
or upon conversion of shares or obligations of the Company convertible into such
shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock subject to this Warrant.
6. Computation of Adjustment. Upon the occurrence of each event requiring an
adjustment of the Exercise Price and the number of shares purchasable pursuant
to this Warrant in accordance with, and as required by, the terms hereof, the
Company shall mail forthwith to Holder a copy of its computation of such
adjustment which shall be conclusive and shall be binding upon Holder unless
contested by Holder by written notice to the Company within ninety (90) days
after receipt thereof by Holder.
7. Record Dates, Etc. In case:
(a) the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend payable
otherwise than in cash, or any other distribution in respect of the
Common Stock (including cash), pursuant to, without limitation, any
spin-off, split-off or distribution of the Company's assets; or
(b) of any classification, reclassification or other reorganization of
the capital stock of the Company, consolidation or merger of the
Company with or into another corporation, or conveyance of all or
substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company;
and in any such case, the Company shall mail to Holder, at least fifteen (15)
days prior thereto, a notice stating the date or expected date on which a record
is to be taken for the purpose of such dividend, distribution or rights, or the
date on which such classification, reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place, as the case may be. Such notice shall also specify the date or
expected date, if any is to be fixed, as of which holders of Common Stock of
record shall be entitled to participate in said dividend, distribution or
rights, or shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such classification,
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up, as the case may be.
8. Liquidation, Dissolution. In case the Company shall at any time while this
Warrant or any portion hereof shall remain unexpired and unexercised, sell all
or substantially all its property or dissolve, liquidate or wind up its affairs,
the Holder may thereafter receive upon exercise hereof in lieu of each share of
Common Stock of the Company which Holder would have been entitled to receive,
the same kind and amount of any securities or assets as may be issuable,
distributable or payable upon any such sale, dissolution, liquidation or winding
up with respect to each share of Common Stock of the Company. In the event that
the Company shall at any time prior to the expiration of this Warrant make any
partial distribution of its assets, in the nature of a partial liquidation,
whether payable in cash or in kind (but excluding the distribution of a cash
dividend payable out of earned surplus and designated as such) then in such
event the Exercise Price then in effect shall be reduced, on the payment date of
such distribution, in proportion to the percentage reduction in the tangible
book value of the shares of the Company's Common Stock (determined in accordance
with generally accepted accounting principles) resulting by reason of such
distribution.
9. Company Performance. The Company will not, by amendment of its Articles of
Incorporation or through reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act or deed, avoid or seek to avoid
the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by the Company, but will at all
times in good faith assist, insofar as it is able, in the carrying out of all
provisions hereof, and in the taking of all other legally available action which
may be necessary in order to protect the rights of the Holder against dilution,
subject to the terms hereof. Without limiting the generality of the foregoing,
the Company agrees that it will not establish a par value for shares of its
Common Stock above the Exercise Price then in effect, and that, before taking
any action which would cause an adjustment reducing the Exercise Price hereunder
below the then par value of the shares of Common Stock, the Company will take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable shares of its Common Stock at the Exercise Price as so adjusted.
10. Covenants and Representations of the Company.
(a) All shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance in accordance with the
terms hereof, be fully paid and nonassessable and free from all taxes,
liens and charges with respect to the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously with such issue.
(b) The Company hereby agrees that at all times there shall be
authorized and reserved for issuance a sufficient number of shares of
Common Stock to provide for the exercise of the rights represented by
this Warrant.
(c) So long as any Common Stock of the Company is listed on the
American Stock Exchange or any other national securities exchange, the
Company shall use its best lawful efforts to list on such exchange,
upon official notice of issuance upon the exercise of this Warrant, and
to maintain the listing of, all shares of Common Stock issuable upon
the exercise of the Warrant; and the Company will use its best efforts
to so list on the American Stock Exchange or any such other national
securities exchange, and to maintain such listing of any other
securities of the Company which may be acquired upon exercise of this
Warrant, if so adjusted or modified pursuant to the terms of paragraph
7 hereof.
11. Covenants and Representations of the Holder.
(a) The Holder of this Warrant understands that neither this Warrant
nor the underlying shares have been registered under the Securities Act
of 1933 or any applicable securities laws of any state. The Holder of
this Warrant hereby represents and warrants that this Warrant is being
acquired by him solely with a view to investment and not to
distribution or resale.
(b) This Warrant or the shares of Common Stock issuable on exercise
hereof or any other security issued or issuable upon exercise of this
Warrant may not be sold, transferred or otherwise disposed of except to
a person who, in the opinion of counsel satisfactory to the Company, is
a person to whom this Warrant or such Warrant Shares may be legally
transferred without registration and with the delivery of a current
Prospectus under the Securities Act of 1933 with respect thereto and
then only against receipt of an agreement of such person to comply with
the provisions of this paragraph 14 with respect to any resale or other
disposition of such securities.
(c) Upon the exercise of all or any part of this Warrant, the Holder of
this Warrant shall represent and warrant to the Company that Holder is
acquiring the shares issuable pursuant to such exercise for investment
and not with a view to distribution or resale and, as evidence of such
representation and warranty, the Holder agrees that Holder will execute
an investment letter, satisfactory to counsel for the Company, which
will state, in part, that Holder will not distribute, sell or otherwise
transfer such shares without having obtained an opinion of counsel
satisfactory to the Company that any such transfer will not violate the
Securities Act of 1933 or any applicable state securities law. The
Holder agrees and understands that each certificate representing such
shares of Common Stock or any other security issued or issuable upon
the exercise of this Warrant not theretofore distributed to the public
pursuant to a Registration Statement will bear the following legend to
enforce such restrictions unless counsel for the Company is of the
opinion as to any such certificate that such legend is unnecessary:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE 'ACT') AND
ARE 'RESTRICTED SECURITIES' AS THAT TERM IS DEFINED IN RULE
144 UNDER THE ACT. THE SHARES MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF
WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY."
(d) Upon the transfer and assignment of this Warrant as set forth in
paragraph 3 hereof, the new holder of this Warrant shall represent and
warrant to the Company that he is acquiring the Warrant (and the
underlying shares issuable pursuant to any exercise thereof) for
investment and not with a view to distribution or resale and, as
evidence of such representation and warranty, the new holder will
execute an investment letter, satisfactory to counsel for the Company,
which will state, in part, that he will not distribute, sell or
otherwise transfer such warrant (or underlying shares) without having
satisfied the Company that any such transfer will not violate the
Securities Act of 1933 or any applicable state securities law. Any such
new warrant issued will bear such legends as the Company deems
appropriate to enforce such restrictions.
12. Taxes. The Company shall pay all transfer taxes arising from the issuance to
Holder of this Warrant and the issuance to Holder of shares upon the exercise of
this Warrant.
13. Notices. All notices relating to this Warrant shall be in writing and
delivered against receipt or sent by registered mail. All notices to the Company
shall be addressed to its principal office in Dallas County, Texas. All notices
to the Holder of this Warrant shall be to his last known address as shown on
records of the Company. Each notice under this Warrant shall be deemed to have
been effectively given when mailed by registered mail or when delivered against
receipt to the proper address.
14. Fractional Shares. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. With respect to any
fraction of a share called for upon any exercise hereof, the Company shall pay
to the Holder an amount in cash equal to such fraction multiplied by the current
market value of such fractional share determined as follows:
(a) if the Common Stock is listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange, the current
value shall be the last reported sale price of the Common Stock on such
exchange on the last business day prior to the date of exercise of this
Warrant or, if no such sale is made on such day, the average closing
bid and asked prices for such day on such exchange; or
(b) if the Common Stock is not so listed or admitted to unlisted
trading privileges, the current value shall be the mean of the last
reported bid and asked prices reported by the National Quotation
Bureau, Inc. on the last business day prior to the date of the exercise
of this Warrant; or
(c) if the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the
current value shall be an amount not less than the book value
determined in such reasonable manner as may be prescribed by the Board
of Directors of the Company, such determination to be final and binding
on the Holder.
15. Modification. The terms and provisions of this Warrant cannot be changed or
modified in any way except by an instrument in writing and signed by the
parties.
16. Benefits of Warrant. This Warrant shall inure to the benefit of and be
binding upon each and any successor of the Company and the successors of the
Holder.
17. Shareholders' Rights and Registration. Until the valid exercise of this
Warrant, the Holder hereof shall not be entitled to any rights of a shareholder
of Common Stock by virtue of this Warrant; but immediately upon the valid
exercise of this Warrant and upon payment as provided herein, the Holder hereof
shall be deemed a record holder of the Common Stock.
18. Violation of Law. Notwithstanding any of the provisions hereof, Holder
hereby agrees that he will not exercise this Warrant, and that the Company will
not be obligated to issue any shares to the Holder hereunder, if the exercise
thereof or the issuance of such shares shall constitute a violation by the
Holder or the Company of any provision of any law or regulation of any
governmental authority. The Company shall in no event be obligated to register
any securities pursuant to the Securities Act of 1933 (as now in effect or as
hereafter amended) or to take any other affirmative action in order to cause the
exercise of the Warrant or the issuance of shares pursuant thereto to comply
with any law or regulation of any governmental authority unless the Holder
otherwise possesses contractual rights to cause the Company to do so.
19. Applicable Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Nevada.
Dated: October 20, 2004.
ATTEST:
/s/ Xxxxx Xxxxx By /s/ Xxxx X. Xxxxxxxx
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Xxxxx Xxxxx, Secretary Xxxx X. Xxxxxxxx, President
GREENBRIAR CORPORATION.
ADDRESS OF HOLDER: HOLDER:
/s/ Xxx X. Xxxxxx
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Xxx X. Xxxxxx
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(facsimile)
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SUBSCRIPTION FORM
Dated: ____________________
(To be executed and completely filled in upon partial or
full exercise of the attached Warrant)
TO: Greenbriar Corporation
The undersigned registered Holder of the within Warrant irrevocably
exercises the attached Warrant and for purchases ________________ Shares of
Common Stock of Greenbriar Corporation (the "Company") and either (check one):
o herewith makes payment therefore in the amount of
$_____________, all at the price and on the terms and
conditions specified in the attached Warrant
o elects to make a Net Exercise as defined and on the terms and
conditions specified in the attached Warrant.
The undersigned registered Holder of the attached Warrant requests that a
certificate for the Shares of Common Stock of the Company hereby purchased to be
issued in accordance with the "Instructions for Registration of Stock" below and
delivered to the person designated and, if such Shares of Common Stock do not
include all the Shares of Common Stock issuable as provided in the attached
Warrant, that a new Warrant of like tenor for the number of Shares of Common
Stock of the Company not being purchased hereunder be issued in the name of the
Holder.
__________________________________
Signature
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name____________________________________________________________________________
(please typewrite or print in block letters)
Address_________________________________________________________________________
________________________________________________________________________________
Signature_______________________________________________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, ____________________________ hereby sell, assign
and transfer unto:
Name____________________________________________________________________________
(please typewrite or print in block letters)
Address_________________________________________________________________________
________________________________________________________________________________
the right to purchase the Common Stock represented by Warrant No. _______ issued
by __________________________ to the extent of _________ shares as to which such
right is exercisable and does hereby irrevocably constitute and appoint
attorney to transfer the same on the books of the Company with full power of
substitution in the premises.
Dated:__________________________ Signature____________________________
