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EXHIBIT 10.18
NEITHER THIS WARRANT NOR ANY SHARES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR UNDER ANY STATE
SECURITIES LAWS. NEITHER THIS WARRANT NOR ANY SUCH SHARES MAY BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND STATE SECURITIES LAWS OR THE AVAILABILITY OF AN
EXEMPTION FROM SUCH REGISTRATION.
FOR THE PURCHASE OF 180,362 SHARES
AXCESS INC.
NON-VOTING COMMON STOCK PURCHASE WARRANT
The following recitals are true and constitute the basis for this Warrant:
A. This Warrant represents the first in a series of up to three separate
Warrants to be issued to Amphion Ventures, L.P., a Delaware limited
partnership, or its successors in interest, assigns or transferees
(collectively, the "Warrant Holder"), in consideration for it making
advances to AXCESS Inc., a Delaware corporation (the "Company") pursuant to
the terms of that certain Convertible Note of even date herewith executed
by the Company payable to the Warrant Holder in the stated principal amount
of up to $6,000,000 (the "Note");
B. The total number of shares of the Company's Non-Voting Common Stock (as
defined in Section 9(a) hereof) (the "Warrant Shares") to be issued to the
Warrant Holder in consideration of its advances to the Company under the
Note shall be based upon ten percent (10%) of the outstanding principal
balance of the Note on the date hereof and on each of the first two
anniversary dates of the Note. Each Warrant shall be in the form hereof,
with the exception that the Warrant Shares to be granted upon the exercise
of each such Warrant shall be exercisable at any time and from time to time
on or prior to the date which is five years from the date of issuance of
each such Warrant; and
C. The number of Warrant Shares to be issued on the date hereof and on each of
the first two anniversary dates of the Note shall be determined by dividing
ten percent (10%) of the principal balance of the Note on each applicable
date by $2.10. The aggregate number of Warrant Shares to be issued under
the series of Warrants shall not, however, exceed 857,143 Warrant Shares
(subject to the antidilution provisions of the Warrants).
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THIS CERTIFIES THAT, for value received, the Warrant Holder is entitled to
purchase from the Company, 180,362 Warrant Shares at the exercise price of Two
Dollars and Ten Cents ($2.10) per share (the "Exercise Price"). The number of
Warrant Shares and the Exercise Price shall be adjusted and readjusted or
changed from time to time in accordance with Section 4 hereof.
This Warrant may be exercised at any time and from time to time on or prior
to September 30, 2004.
SECTION 1. EXERCISE OF WARRANT.
The rights represented by this Warrant may be exercised by the Warrant
Holder, in whole or in part, by (a) delivering to the Company a duly executed
notice of exercise in the form of Annex A hereto and (b) at the Warrant Holder's
option, either (i) delivering a check payable to (or wire transfer to the
account of) the Company in an amount equal to the product of (x) the Exercise
Price times (y) the number of Warrant Shares as to which this Warrant is being
exercised (such product, the "Total Exercise Price") or (ii) delivering to the
Company a letter (the "Conversion Letter") requesting conversion or exchange of
a portion of any indebtedness owed by the Company to the Warrant Holder in an
amount equal to the Total Exercise Price or (iii) surrendering to the Company a
portion of this Warrant with a "Value" (as defined below) equal to the Total
Exercise Price. For the purpose of clause (b) (iii) above, "Value" shall mean
the product of (I) the amount by which the average closing price per share of
the Company's Common Stock over the ten trading days preceding the date of
exercise, as reported in The Wall Street Journal, exceeds the Exercise Price and
(II) the number of Warrant Shares as to which this Warrant is surrendered for
the purpose of effecting payment for Warrant Shares. This Warrant shall be
deemed to have been exercised immediately prior to the close of business on the
date of delivery of a duly executed notice of exercise together with the amount
(in cash or by delivering the Conversion Letter or by surrender of a portion of
this Warrant) payable upon exercise of this Warrant and, as of such moment, (i)
the rights of the Warrant Holder, as such, with respect to the number of Warrant
Shares as to which this Warrant is being exercised (and, if applicable,
surrendered as payment of the Total Exercise Price) shall cease, and (ii) such
Warrant Holder shall be deemed to be the record holder of the shares of
Non-Voting Common Stock issuable upon such exercise. As soon as practicable
after the exercise, in whole or in part, of this Warrant, and in any event
within 5 business days thereafter, the Company at its expense (including the
payment by it of any applicable issuance or stamp taxes) will cause to be issued
in the name of and delivered to the Warrant Holder, or as the Warrant Holder
(upon payment by the Warrant Holder of any applicable transfer taxes) may
direct, a certificate or certificates for the number of fully paid and
nonassessable shares of Non-Voting Common Stock to which the Warrant Holder
shall be entitled upon such exercise. In the event of partial exercise of this
Warrant and, if applicable, partial surrender of this Warrant pursuant to clause
(b)(iii) of this Section, the Warrant need not be delivered to the Company;
provided that the Warrant Holder agrees to make a notation of such partial
exercise and, if applicable, surrender on the Warrant. If this Warrant is
delivered to the Company, the Company shall issue and deliver to the Warrant
Holder a new Warrant evidencing the rights to purchase the remaining Warrant
Shares, which new Warrant shall in all other respects be identical to this
Warrant.
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Notwithstanding the foregoing or any other term or provision of this
Warrant, the Warrant Holder shall not be permitted, without the prior written
consent of the Company, to exercise its rights to acquire Warrant Shares
hereunder until such time as the Company shall have received the authorization
of its stockholders to issue Warrant Shares to the Warrant Holder upon the
exercise of all or any portion of this Warrant by the Warrant Holder. The
Company hereby agrees to submit such a proposal to its stockholders for approval
at the Company's 2000 annual meeting of stockholders and to use its best efforts
to obtain such approval.
SECTION 2. INVESTMENT REPRESENTATION.
By accepting this Warrant, the Warrant Holder represents that the Warrant
Holder is acquiring this Warrant for investment purposes and will not sell or
otherwise dispose of this Warrant or the underlying Warrant Shares in violation
of applicable securities laws. The Warrant Holder acknowledges that the
certificates representing any Warrant Shares will bear a legend indicating that
they have not been registered under the Act, and may not be sold by the Warrant
Holder except pursuant to an effective registration statement or pursuant to an
exemption from registration.
SECTION 3. VALIDITY OF WARRANT AND ISSUE OF SHARES.
The Company represents and warrants that this Warrant has been duly
authorized and validly issued and covenants and agrees that all shares of
Non-Voting Common Stock that may be issued upon the exercise of the rights
represented by this Warrant will, when issued upon such exercise, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof. The Company further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved a sufficient number of shares of Non-Voting Common Stock to provide
for the exercise of the rights represented by this Warrant.
SECTION 4. ANTIDILUTION PROVISIONS.
The terms of this Warrant shall be subject to adjustment as follows:
(a) If the Company shall (i) pay a stock dividend or make a distribution to
holders of Non- Voting Common Stock or common stock in shares of its Non-Voting
Common Stock or common stock, as the case may be, (ii) subdivide its outstanding
shares of Non-Voting Common Stock or common stock, (iii) combine its outstanding
shares of Non-Voting Common Stock or common stock into a smaller number of
shares, or (iv) issue by reclassification of its shares of Non-Voting Common
Stock or common stock any shares of capital stock of the Company, (A) the
Exercise Price shall be increased or decreased as the case may be, to an amount
which shall bear the same relation to the Exercise Price in effect immediately
prior to such action as the total number of shares outstanding immediately prior
to such action shall bear to the total number of shares outstanding immediately
after such action and (B) this Warrant automatically shall be adjusted so that
it shall thereafter evidence the right to purchase the kind and number of
Warrant Shares or other securities which the Warrant Holder would have owned and
would have been entitled to receive after such action if this Warrant had been
exercised immediately prior to such action or any record date with respect
thereto. An adjustment made pursuant to this subsection shall become effective
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retroactively immediately after the record date in the case of a dividend or
distribution of Non-Voting Common Stock or common stock and shall become
effective immediately after the effective date in the case of a subdivision,
combination or reclassification.
(b) If the Company shall fix a record date for the making of a distribution
to all holders of Non-Voting Common Stock or its common stock (including any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of (i) assets (other than cash dividends
or cash distributions payable out of consolidated net income or retained
earnings or dividends payable in Non-Voting Common Stock or common stock), (ii)
evidences of indebtedness or other debt or equity securities of the Company, or
of any corporation other than the Company (except for the Non-Voting Common
Stock or common stock of the Company) or (iii) subscription rights, options or
warrants to purchase any of the foregoing assets or securities, whether or not
such rights, options or warrants are immediately exercisable (hereinafter
collectively called "Distributions on Common Stock"), the Company shall make
provisions for the Warrant Holder to receive upon exercise of this Warrant, a
proportional amount (depending upon the extent to which this Warrant is
exercised) of such assets, evidences of indebtedness, securities or such other
rights, as if such Warrant Holder had exercised this Warrant on or before such
record date.
(c) In the case of any consolidation or merger of the Company with or into
another corporation or the sale of all or substantially all the assets of the
Company to another person or entity, this Warrant thereafter shall be
exercisable for the kind and amount of shares of stock or other securities or
property to which a holder of the number of shares of Non-Voting Common Stock of
the Company deliverable upon exercise of this Warrant would have been entitled
upon such consolidation, merger or sale; and, in such case, appropriate
adjustment shall be made in the application of the provisions in this Section 4,
to the end that the provisions set forth in this Section 4 (including provisions
with respect to changes in and adjustments of the exercise price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other securities or property thereafter deliverable upon the
exercise of this Warrant.
(d) Upon the occurrence of each adjustment or readjustment of the exercise
price or any change in the number of Warrant Shares or in the shares of stock or
other securities or property deliverable upon exercise of this Warrant pursuant
to this Section 4, the Company at its expense shall promptly compute such
adjustment or readjustment and change in accordance with the terms hereof and
furnish to each holder hereof a certificate signed by the Chief Financial
Officer of the Company, setting forth such adjustment or readjustment and change
and showing in detail the facts upon which such adjustment or readjustment and
change is based. The Company shall, upon the written request at any time of the
Warrant Holder, furnish or cause to be furnished to such Holder, a similar
certificate setting forth (i) such adjustment or readjustment and change, (ii)
the Exercise Price then in effect, and (iii) the number of Warrant Shares and
the amount, if any, of other shares of stock and other securities and property
which would be received upon the exercise of the Warrant.
(e) The Company shall not be required upon the exercise of this Warrant to
issue any fraction of shares, but shall make any adjustment therefor by rounding
the number of shares obtainable upon exercise to the next highest whole number
of shares.
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SECTION 5. TRANSFER OF RIGHTS.
This Warrant is transferable in whole or in part, at the option of the
Warrant Holder, upon delivery of a duly executed Warrant Assignment Form in the
form annexed as Annex B hereto. The Company shall execute and deliver a new
Warrant or Warrants in the form of this Warrant with appropriate changes to
reflect the issuance of subsequent Warrants in the name of the assignee or
assignees named in such instrument of assignment, and if the Warrant Holder's
entire interest is not being transferred or assigned, in the name of the Warrant
Holder, and this Warrant shall promptly be canceled. Any transfer or exchange of
this Warrant shall be without charge to the Warrant Holder, and any new Warrant
or Warrants issued shall be dated the date hereof. The term "Warrant" as used
herein includes any Warrants into which this Warrant may be divided or for which
it may be exchanged. The Warrant Holder (and not the Company) will be
responsible for any stamp, transfer or other taxes payable on any such transfer.
SECTION 6. LOST, MUTILATED OR MISSING WARRANT.
Upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and upon surrender and
cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like denomination and date.
SECTION 7. RIGHTS OF WARRANT HOLDER.
The Warrant Holder shall not, by virtue hereof, be entitled to any voting
or other rights of a shareholder of the Company, either at law or equity, and
the rights of the Warrant Holder are limited to those expressed in this Warrant.
SECTION 8. SUCCESSORS.
All the provisions of this Warrant by or for the benefit of the Company or
the Warrant Holder shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 9. MISCELLANEOUS.
(a) As used herein, the term "Non-Voting Common Stock" shall mean and
include the Company's currently authorized non-voting common stock, $.01 par
value per share, and stock of any other class or other consideration into which
such currently authorized Non-Voting Common Stock may hereafter have been
changed.
(b) This Warrant shall be construed in accordance with and governed by the
laws of the State of Delaware.
(c) The caption headings used in this Warrant are for convenience of
reference only and shall not be construed in any way to affect the
interpretation of any provisions of this Warrant.
SECTION 10. NOTICES.
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Any notice pursuant to this Warrant shall be effective if sent by first
class mail, postage prepaid, or delivered by facsimile transmission, addressed
as follows:
If to the Company, then to it at:
AXCESS Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
(or to such other address as the Company may have furnished in writing to
the Warrant Holder for this purpose); and
If to the Warrant Holder, then to it at such address as such Warrant Holder
may have furnished in writing to the Company for this purpose.
IN WITNESS WHEREOF, the Company, intending to be legally bound hereby, has
caused this Warrant to be signed by its Chairman of the Board and attested by
its Secretary or Assistant Secretary as of the date set forth below.
AXCESS INC.
By:/s/ XXXXX X. XXXXX
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Xxxxx X. Xxxxx, Chief Financial Officer
Attest:
/s/ XXXXXXX X. XXXXX
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Xxxxxxx X. Xxxxx, Assistant Secretary
ISSUANCE DATE: SEPTEMBER 30, 1999
