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EXHIBIT 10.30
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, THE OREGON SECURITIES LAW OR SECURITIES LAWS OF
ANY OTHER STATE. THIS WARRANT MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE WARRANT UNDER
APPLICABLE FEDERAL AND STATE LAWS, OR AN OPINION OF COUNSEL
(IN A FORM AND FROM COUNSEL ACCEPTABLE TO THE COMPANY) THAT
SUCH REGISTRATION IS NOT REQUIRED.
G.I. JOE'S, INC.
COMMON STOCK PURCHASE WARRANT
___ Shares of Common Stock
Issue Date: ______________
Expiration Date: [ten years]
This Warrant evidences the right of Xxxxx Orkney ("ORKNEY" or
"Registered Owner"), to purchase from G.I. Joe's, Inc., an Oregon corporation
(the "Company"), _______ shares of the Common Stock of the Company (the "Common
Stock"), representing 5 percent of the outstanding stock of the Company, at the
purchase price and during the period set forth below (including shares issuable
upon the exercise or conversion of all options, warrants and convertible
securities currently outstanding).
1. General Terms.
1.1 Purchase Price. The purchase price, subject to adjustment as set
forth below, shall be 70 percent of the fair market value of the shares of
Common Stock being purchased at the time of purchase. The fair market value of
the Common Stock shall be as mutually agreed upon by the Company and Orkney. If
the Company and Orkney are unable to agree upon the fair market value of the
Common Stock within 30 days following Orkney's exercise of his right to purchase
shares of the Common Stock, the fair market value shall be determined by an
appraiser who is selected by Orkney and the Company. Such appraisal shall be
completed no later than 60 days following the date of Orkney's notice of his
election to purchase the shares of Common Stock. This Warrant shall expire ten
years following the date of issuance. The purchase rights represented by this
Warrant are exercisable at any time, at the
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option of the Registered Owner in whole, or in part from time to time; provided,
however, that such purchase rights shall not be exercisable with respect to a
fraction of a share of Common Stock.
1.2 Reservation of Shares. The Company agrees at all times to reserve
or hold available a sufficient number of shares of Common Stock to cover the
shares issuable upon the exercise of this Warrant.
1.3 No Rights as a Shareholder. This Warrant shall not entitle the
Registered Owner to any voting rights or other rights as a shareholder of the
Company, or to any other rights whatsoever except the rights herein expressed,
and no dividends shall be payable or shall accrue in respect of this Warrant or
the interest represented hereby or the shares purchasable hereunder until or
unless, and except to the extent that, this Warrant shall be exercised.
1.4 No Other Warrant Issuable. ORKNEY agrees that this Warrant is the
only warrant that the Company is obligated to issue to ORKNEY, and any and all
other warrants previously discussed between the Company and ORKNEY are
encompassed within this Warrant.
2. Dilution Protection. The number and class of shares for which this
Warrant may be exercised are subject to adjustment from time to time upon the
happening of certain events as hereinafter provided:
2.1 Changes in Number of Shares Outstanding. If the outstanding shares
of the Company's Common Stock are divided into a greater number of shares, the
number of shares of Common Stock purchasable upon the exercise of this Warrant
shall be proportionately increased and, conversely, if the outstanding shares of
Common Stock are combined into a smaller number of shares of Common Stock, the
number of shares purchasable upon the exercise of this Warrant shall be
proportionately reduced.
2.2 Other Changes to Capital Stock. In the event of the grant or
issuance by the Company of any additional options, warrants or convertible
securities, any change in the Company's capital stock through issuance of
additional shares of any class (other than shares issuable upon the exercise or
conversion of outstanding options, warrants, or other convertible securities
which will already have been included in the number of shares purchasable under
this Warrant), merger, consolidation, reclassification, reorganization, partial
or complete liquidation or other change in the capital structure of the Company,
including, but not limited to, any change in the Company's capital stock, then,
as a condition of the grant, issuance, merger, consolidation, reclassification,
reorganization, recapitalization or other change in the capital structure of the
Company, lawful and adequate provision shall be made
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so that the Registered Owner will have the right thereafter to receive upon the
exercise of this Warrant the kind and amount of shares of stock or other
securities or property to which it would have been entitled if, immediately
prior to such grant, issuance, merger, consolidation, reclassification,
reorganization, recapitalization or other change in the capital structure, the
Registered Owner had held the number of shares obtainable upon the exercise of
this Warrant. In any such case, appropriate adjustment also shall be made in the
applications of the provisions set forth herein with respect to the rights and
interest thereafter of the Registered Owner, to the end that the provisions set
forth herein shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable upon
the exercise of this Warrant.
2.3 Certificate of Change. Whenever an event occurs requiring any
adjustment to be made pursuant to Section 2.1 or 2.2, the Company shall promptly
file with its Secretary at its principal office and with its stock transfer
agent, if any, a certificate of its President, Chief Executive Officer, Chief
Financial Officer or Secretary specifying such adjustment, setting forth in
reasonable detail the acts requiring such adjustment, and stating such other
facts as shall be necessary to show the manner and figures used to compute such
adjustment. Such certificate shall be made available at all reasonable times for
inspection by the Registered Owner. Promptly after each such adjustment, the
Company shall provide a copy of such certificate by first class mail, postage
prepaid, to the Registered Owner.
2.4 Maintenance of 5 Percent Equity Interest. The increases and
reductions provided for in this Section 2 shall be made with the intent and, as
nearly as practicable, the effect that neither the percentage of the total
equity of the Company (or of any entity into which the Company merges or is
otherwise combined) obtainable on exercise of this Warrant nor the price payable
for such percentage shall be affected by any event described in this Section 2,
and that the Registered Owner shall be entitled to acquire 5 percent of the
issued and outstanding capital stock of the Company (or such other entity),
including shares issuable upon exercise or conversion of all options, warrants
and other convertible securities outstanding at the time this warrant is
exercised.
3. Mechanics of Exercise.
3.1 Requirements of Exercise. In order to exercise this Warrant, the
Registered Owner shall surrender it to the Company's principal office
accompanied by (a) written notice of exercise as to all or any portion of the
shares subject to exercise and (b) funds in the amount of the appropriate
purchase price. Such notice shall also state, if different from the Registered
Owner, the name or names in which the stock certificate shall be issued. As
promptly as practicable after the receipt of such notice
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and the surrender of this Warrant, the Company shall issue and shall deliver to
the Registered Owner a certificate or certificates for the number of full shares
of stock issuable upon exercise of this Warrant (or the specified portion
thereof). No fractional shares shall be issued, but instead shall be forfeited.
The exercise of this Warrant shall be effective immediately upon receipt by the
Company of this Warrant, the notice of exercise, and the payment of the exercise
price. At such date, the Registered Owner's rights as to the portion of this
Warrant exercised shall cease and the person in whose name the certificate or
certificates for shares of Common Stock are to be issued shall be deemed to have
become the owner of record of the shares represented thereby.
3.2 Partial Exercise. In the case of exercise of a portion of this
Warrant, the Company shall execute and deliver to the Registered Owner thereof,
at the expense of the Company, a new Warrant of like tenor and date for the
unexercised portion of this Warrant.
3.3 Notice of Changes to Capital Stock. In case any voluntary or
involuntary dissolution, liquidation or winding up of the Company or merger or
consolidation or similar transaction in which the Company will not be the
surviving entity shall at any time be proposed, the Company shall give at least
15 days' prior written notice thereof to the Registered Owner stating the date
on which such event is to take place and, in the event of a dissolution,
liquidation or winding up of the Company or merger, consolidation or similar
transaction in which the Company will not be the surviving entity, the date
(which shall be at least 30 days after the giving of such notice) as of which
the registered owner of the Common Stock of record shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such event.
In the event that any such dissolution, liquidation or winding up shall actually
take place, this Warrant and all rights with respect hereto shall terminate on
the date specified in such notice on which such event is to take place. Notices
pursuant to this paragraph shall be given by first-class mail, postage prepaid,
addressed to the Registered Owner at the address specified below or such other
address as the Registered Owner shall advise the Company in writing.
4. Covenants of the Company. For so long as the Warrant remains outstanding
and is held by ORKNEY, the Company makes the following covenants:
4.1 Financial Statements. The Company will furnish to ORKNEY the
Company's internally prepared annual and quarterly financial statements as soon
as practicable after the statements are available.
4.2 Notice of Meetings. The Company will give ORKNEY notice of all
meetings of the Board of Directors and shareholders of the Company and permit a
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representative of ORKNEY to attend all such meetings. The Chairman of the Board
or President of the Company may, in either's sole discretion, exclude the
representative from portions of meetings of the Board of Directors at which
confidential matters are discussed.
4.3 Termination of Covenants. The Company's covenants in this Section
4 shall automatically terminate upon the consummation of the Company's sale of
Common Stock pursuant to a firm commitment underwritten public offering of its
securities to the general public or when the Company first becomes subject to
the periodic reporting requirements of Section 2(g) or 15(d) of the Securities
Act of 1934 (the "1934 Act"), whichever event shall first occur.
5. Registration Rights.
5.1 Definition of Certain Terms. The following terms shall have the
following meanings in this Section 5:
5.1.1 "Act" shall mean the Securities Act of 1933, as amendment.
5.1.2 "Commission" shall mean the Securities and Exchange
Commission.
5.1.3 "Holder" means any person owning or having the right to
acquire Registrable Securities.
5.1.4 "Register," "registered," and "registration" shall mean a
registration effected by preparing and filing a registration statement in
compliance with the Act and the declaration or ordering of effectiveness of such
registration statement.
5.1.5 "Registrable Securities" shall mean (i) the Common Stock
issuable upon conversion of this Warrant and (ii) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of, the Securities,
excluding in all cases, however, any Registrable Securities sold by a person in
a transaction in which such person's rights under Section 5 are not assigned.
5.1.6 "Registration Expenses" shall mean all expenses incurred by
the Company in complying with Section 5 of this Warrant, including without
limitation all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, and blue sky fees and expenses.
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5.1.7 "Selling Expenses" shall mean all underwriting discounts
and selling commissions applicable to the sale of Registrable Securities of a
Holder and all fees and disbursements of counsel for such Holder.
5.2 Company Registrations.
5.2.1 If at any time the Company determines to register any of
its capital stock for sale to the general public solely for cash on a form that
would also permit sale of the Registrable Securities, either for its own account
or the account of a security holder or holders exercising demand registration
rights, the Company will (i) promptly give to each Holder written notice thereof
and (ii) use its best efforts to include in such registrations and in any
related underwriting all Registrable Securities specified in a written request
by any Holder (which request shall state the intended method of distribution of
the Registrable Securities), received by the Company within 15 days after
receipt of such written notice from the Company by any Holder, except as set
forth in Section 5.2.2 below.
5.2.2 If the registration of which the Company gives notice under
this Section 5.2 is for a registered public offering involving an underwriting,
the Company will so advise the Holders as a part of the written notice given
such Holders pursuant to Section 5.2.1. In such event the right of any Holder to
registration pursuant to this Section 5 will be conditioned on such Holder's
participation in such underwriting and the inclusion of such Holder's shares in
the underwriting to the extent provided herein. All Holders proposing to
distribute shares through such underwriting will (together with the Company and
the other Holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company. Notwithstanding any
other provision of this Section 5.2, if the underwriter of the offering
determines that marketing factors require a limitation on the number of shares
to be sold for the account of security holders, the Company may exclude all
Registrable Securities from, or limit the number of Registrable Securities to be
included in, the registration and underwriting. If less than all Registrable
Securities for which registration is sought are to be included in the
registration and underwriting, the number of Registrable Securities included
will be reduced pro rata among the Holders requesting registration based on the
number of Registrable Securities of such Holders for which registration is
sought.
5.3 Limits on Registrations. Notwithstanding any other provision of
this Section 5, the Company shall not be obligated to register any Registrable
Securities if it furnishes the Holder thereof a written opinion of counsel to
the Company that such Holder will be able to sell all the Registrable Securities
that such
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Holder in good faith wishes to sell in a three-month period pursuant to Rule 144
(or a comparable successor rule adopted by the Commission).
5.4 Indemnification.
5.4.1 The Company will indemnify each Holder distributing shares
pursuant to an underwriting provided for in Section 5.2, any officers,
directors, or partners of the Holder, if the Holder is an entity, and any person
controlling a Holder, to the extent shares of such Holder have been registered,
qualified, or for which compliance has been effected pursuant to this Section 5,
and each underwriter, if any, and each person who controls any underwriter,
against all claims, losses, damages, and liabilities or actions in respect
thereof arising out of or based on any untrue statement or alleged untrue
statement of a material fact contained in any prospectus, offering circular or
other document, including any related registration statement, notification, or
the like, incident to any such registration, qualification or compliance, or
based on any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse such Holder, each of its officers, directors, or
partners, as the case may be, and each person controlling such Holder, each such
underwriter, and each person who controls any such underwriter, for any legal
and any other expenses reasonably incurred by each such person so indemnified in
connection with investigating or defending any such claim, loss, damage,
liability, or action; provided, however, that the Company will not be liable in
any such case to the extent any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission based on written
information furnished to the Company by such Holder or underwriter specifically
for use in the prospectus or offering circular.
5.4.2 Each Holder whose shares are included in the securities for
which any such registration, qualification or compliance is being effected will
indemnify to the extent permitted by law the Company, each of its directors and
officers, each legal counsel and independent accountant of the Company, each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of the Act, and each other shareholder whose shares are included in such
registration, and each of such other shareholder's officers and directors and
each person controlling such other shareholder, against all claims, losses,
damages, and liabilities or actions in respect thereof arising out of or based
on any untrue statement of a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such shareholder, and such directors, officers, persons, underwriters,
or control persons for any legal or any other expenses reasonably incurred by
such persons in connection with investigating or defending any such claim, loss,
damage, liability, or action, in each case to the extent,
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but only to the extent, that such untrue statement or alleged untrue statement
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular, or other document in reliance on and in
conformity with written information furnished to the Company by the Holder
furnishing the same specifically for use therein; provided, however, that the
obligations of any indemnifying Holder hereunder will be limited to an amount
equal to the proceeds to such Holder from the sale of such Holder's shares in
such registration.
5.4.3 Each party entitled to indemnification under this Section
5.4 (the "Indemnified Party") will give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and will
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who will conduct the defense of such claim or litigation, is approved by
the Indemnified Party (whose approval will not unreasonably be withheld), and
the Indemnified Party may participate in such defense at such party's expense;
provided, however, that, if the Indemnified Party is advised by its counsel that
there may be differing defenses, expenses of counsel will be paid by the
Indemnifying Party, and, provided further, that the failure of any Indemnified
Party to give notice as provided herein will not relieve the Indemnifying Party
of its obligations under this Section 5.4. No Indemnifying Party, in the defense
of any such claim or litigation, will, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation.
5.5 Expenses.
5.5.1 All Registration Expenses incurred in connection with a
registration pursuant to Section 5.2 will be borne by the Company.
5.5.2 All Selling Expenses will be borne by the Holder or Holders
of the securities so registered apportioned on a pro rata basis.
5.5.3 Notwithstanding any other provision of this Section 5.5,
the provisions of this Section 5.5 shall be deemed amended to incorporate and
comply with the provisions of any applicable state securities laws, regulations,
and administrative policies, and the rules of the National Association of
Securities Dealers, Inc. and stock exchanges upon which the Registrable
Securities are or will be eligible for listing.
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5.6 Procedures. Whenever required under Section 5.2 to use its best
efforts to effect the registration of any of the Registrable Securities, the
Company will, as expeditiously as reasonably possible: (a) prepare and file with
the Commission a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration statement to
become and remain effective; (b) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to comply with the provisions
of the Act with respect to the disposition of all securities covered by such
registration statement; (c) furnish to each Holder with respect to whom
Registrable Securities are included in such registration statement such numbers
of copies of a prospectus, including a preliminary prospectus, and such other
documents as the Holder reasonably may require to facilitate the disposition of
such Registrable Securities; and (d) use its reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as reasonably are appropriate
for the distribution of the securities covered by such registration statement;
provided, however, that the Company will not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such state or jurisdiction unless the Company is
already subject to service in such jurisdiction; and, provided further, that in
connection with any proposed registration, the Company will in no event be
obligated to cause any such registration to remain effective for more than 90
days.
5.7 Information from Holders. Each Holder whose shares are included in
any registration under Section 5.2 of this Agreement will furnish in writing to
the Company such information regarding such Holder and the distribution proposed
by such Holder as the Company may request in writing and as may be required in
connection with registration, qualification or compliance referred to in Section
5.2.
5.8 Assignment. Subject to compliance with the restrictions on
transfer of this Warrant, the Registered Owner's registration rights under
Section 5 may be assigned by the Registered Owner to a transferee or assignee of
the shares if the Company is given written notice of the transfer, stating the
name and address of the transferee or assignee and identifying the securities
with respect to which such registration rights are being assigned; provided,
however, that such assignment will be effective only if immediately following
such assignment the transferee or assignee holds at least 50 percent of the
Registrable Securities.
5.9 Stand-Off Agreement. No Holder who participates in the
registration, if so requested by the Company and an underwriter of securities of
the Company, will sell or otherwise transfer or dispose of any other securities
of the
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Company held by such Holder other than pursuant to the registration statement
during the 180-day period following and including the effective date of a
registration statement; provided, however, that such Holder's agreement in this
Section 5.9 will only apply if all officers and directors of the Company enter
into similar agreements in writing in a form satisfactory to the Company and
such underwriter covering shares of Common Stock owned by such officers and
directors. The Company may impose stop transfer instructions with respect to the
securities subject to the restriction in this Section 5.9 until the end of the
180-day period.
6. Restriction on Transfer. This Warrant may not be sold, transferred,
pledged, or hypothecated without the consent of the Company, which consent shall
not unreasonably be withheld. Prior to any transfer, the proposed transferee
must agree in writing to comply with the terms of this Warrant, and the transfer
must comply with applicable federal and state securities laws. Until such time
as the Company shall have received written notification of a change in the
identity of the Registered Owner, accompanied by such supporting documentation
as the Company may require, the Company may treat the Registered Owner named
above as the absolute Registered Owner of this Warrant for all purposes.
7. Legend on Stock Certificates. At the time of the exercise of this
Warrant (or any portion thereof), a certificate or certificates representing the
shares of Common Stock (or other securities) issuable upon the exercise shall
bear substantially the following legend, if counsel to the Company deems it
appropriate, plus additional legends as may be required under applicable state
and federal securities laws:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, THE OREGON SECURITIES LAW OR
SECURITIES LAWS OF ANY OTHER STATE. THE SECURITIES MAY NOT
BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER APPLICABLE FEDERAL AND STATE LAWS, OR AN
OPINION OF COUNSEL (IN A FORM AND FROM COUNSEL ACCEPTABLE TO
THE COMPANY) THAT SUCH REGISTRATION IS NOT REQUIRED.
8. Amendment. This Warrant may be amended with the written consent of the
Company and the Registered Owner. If this Warrant or the shares issued upon
exercise of this Warrant have been validly transferred by the Registered Owner,
an amendment to this Warrant may be approved by the Company and the holders of a
majority of the aggregate shares issued and issuable upon the exercise of this
Warrant.
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9. Conversion to Parent Company Shares. In the event that the undersigned
Joe's Holdings, Inc. ("Parent"), an Oregon Company which owns all of the issued
and outstanding Common Stock of the Company, at any time determines to register
any of its capital stock for sale to the general public as described Section
5.2.1 above, then the Registered Holder shall have the right to convert the
shares of capital stock of the Company which it has previously purchased
pursuant to this Warrant and the number of shares of the capital stock of the
Company which remain subject to this Warrant to shares of the Capital stock of
Parent equal to 5 percent of the capital stock of Parent outstanding at the time
of the conversion, including shares issuable upon exercise or conversion of all
options, warrants and convertible securities then outstanding, and thereafter
all of the terms of this Warrant shall apply to Parent. This provision shall be
binding on Parent and its successors and assigns.
By order of and upon authority from the Board of Directors of G.I. Joe's,
Inc.:
G.I JOE'S, INC.
By XXXX XXXXXXX
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Xxxx Xxxxxxx
President
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Agreed to with respect to Section 9:
JOE'S HOLDINGS, INC.
By /s/
--------------------------------------
Title
-----------------------------------
Address of Registered Owner:
Xxxxx Orkney
0000 X.X. Xxxxxxxxxx
Xxxxxxxx, Xxxxxx 00000
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