XXXXXXXXXXXX.XXX, INC., INC.
----------------------------
Subscription Procedure
----------------------
Each prospective investor for the Units will be required to complete,
execute and return to the Company the following documents:
1. SUBSCRIPTION AGREEMENT: Please complete all the open lines on page 1
and complete all open lines, date and sign on page 5.
2. PURCHASER QUESTIONNAIRE: Please complete, date and sign the
Purchaser Questionnaire attached to the Subscription Agreement. All items on
pages i-iv need to be completed.
3. The minimum investment is two (2) Units ($240,300), subject to
acceptance by the Company of subscriptions for lesser or fractional amounts of
Units.
4. Return the completed forms with payment in full by check of $120,150
per Unit subscribed for payable to "XXXXXXXXXXXX.XXX, INC."
SUBSCRIPTION AGREEMENT
----------------------
XXXXXXXXXXXX.XXX, INC., INC.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 0
Xxxx Xxxxx, XX 00000
Gentlemen:
The undersigned is writing to advise you of the following terms and
conditions under which the undersigned hereby offers to subscribe (the "Offer")
for Units (the "Units") of Convertible Promissory Notes (the "Notes"), which are
convertible into common stock, par value $.02 per share (the "Common Stock"), of
XXXXXXXXXXXX.XXX, INC.,(the "Company"), at a price of $120,150 per Unit. Each
Unit consists of one (1) Note in the principal amount of $120,150. The minimum
investment is for two Units ($240,300), subject to the right of the Company to
accept subscriptions for a lesser or fractional amount of Units.
1. Subscription.
Subject to the terms and conditions hereinafter set forth in
this Subscription Agreement, the undersigned hereby offers to purchase ____
Unit(s) for an aggregate purchase price of $__.
If the Offer is accepted, the Unit(s) shall be paid for by the
delivery of $____ by cash, check, money order payable to the order of
"XXXXXXXXXXXX.XXX, INC.", or by wire transfer pursuant to your written wire
instructions, which is being delivered contemporaneously herewith.
2. Conditions to Offer.
The offering is made subject to the following conditions: (i)
that you shall have the right to accept or reject this Offer, in whole or in
part, for any reason whatsoever; and (ii) that the undersigned agrees to comply
with the terms of this Subscription Agreement and to execute and deliver any and
all further documents necessary to become a security holder in the Company.
The offering period for the Units is through December 24,
1999, although the Company, in its sole discretion, may extend the termination
date.
Acceptance of this Offer shall be deemed given by the
countersigning of this Subscription Agreement on behalf of the Company.
3A. Representations and Warranties of the Undersigned.
The undersigned, in order to induce the Company to accept this
Offer, hereby warrants and represents as follows:
(A) The undersigned has sufficient liquid assets to sustain a
loss of the undersigned's entire investment.
(B) The undersigned represents that he (or she or it) has
assets in excess of $10,000,000 in the case of institutions, or net
worth in excess of $5,000,000 or annual income exceeding $1,000,000 in
the case of individuals.
(C) The Company has not made any representations or warranties
to the undersigned with respect to the Company except as contained
herein or included in the Company's public information filed with the
Securities and Exchange Commission.
(D) The undersigned represents that he is a highly
sophisticated investor and has substantial knowledge and experience in
financial, investment and business matters so that he is capable of
evaluating the merits and risks of the prospective investment in the
securities of the Company. The undersigned has consulted with such
independent legal counsel or other advisers as he has deemed
appropriate to assist the undersigned in evaluating his proposed
investment in the Company.
(E) The undersigned represents that he (i) has adequate means
of providing for his current financial needs and possible personal
contingencies, and has no need for liquidity of investment in the
Company; (ii) can afford (a) to hold unregistered securities for an
indefinite period of time and (b) sustain a complete loss of the entire
amount of the subscription; and (iii) has not made an overall
commitment to investments which are not readily marketable which is
disproportionate so as to cause such overall commitment to become
excessive.
(F) The undersigned has been afforded the opportunity to ask
questions of, and receive answers from the officers and/or directors of
the Company acting on its behalf concerning the terms and conditions of
this transaction and to obtain any additional information, to the
extent that the Company possesses such information or can acquire it
without unreasonable effort or expense, necessary to verify the
accuracy of the information furnished; and has availed himself of such
opportunity to the extent he considers appropriate in order to permit
him to evaluate the merits and risks of an investment in the Company.
It is understood that all documents, records and books pertaining to
this investment have been made available for inspection, and that the
books and records of the Company will be available upon reasonable
notice for inspection by investors during reasonable business hours at
its principal place of business.
2
(G) The undersigned acknowledges that the Units and the
underlying securities have not been registered under the Securities Act
of 1933 (the "Act") in reliance on an exemption for transactions by an
issuer in an offshore transaction as defined in SEC Rule 902(h) that is
exempt from the registration requirements of Section 5 of the Act
pursuant to the safe harbor provided by SEC Regulation S. With respect
to that exemption, the Undersigned further represents and warrants to
the Company that:
(1) The Undersigned is not a U.S. Person as defined in SEC
Rule 902(k).
(2) The offer to sell the Shares to the Undersigned was not
made in the United States, and was made in Xxxxxxx, Xxxxxxx.
(3) The Undersigned's buy order for the Shares was made
outside the United States, and was made in Xxxxxxx, Xxxxxxx.
(4) The Undersigned has complied with all of the conditions
required of it by SEC Rule 903(b)(3).
(5) At no time was the undersigned presented with or solicited
by or through any leaflet, public promotional meeting, television advertising or
any other form of general solicitation or advertising, or any solicitation in
the United States.
(H) The undersigned further acknowledges that this offering
has not been passed upon or the merits thereof endorsed or approved by
any state or federal authorities.
(I) The Units and the underlying securities being subscribed
for are being acquired solely for the account of the undersigned for
personal investment and not with a view to, or for resale in connection
with, any distribution except as may be permitted by federal and state
securities laws. By such representation, the undersigned means that no
other person has a beneficial interest in the Units or underlying
securities subscribed for hereunder, and that no other person has
furnished or will furnish directly or indirectly, any part of or
guarantee the payment of any part of the consideration to be paid to
the Company in connection therewith. The undersigned does not intend to
dispose of all or any part of the Units or underlying securities except
in compliance with the provisions of the Act and applicable state
securities laws, and understands that the Units are being offered
pursuant to a specific exemption under the provisions of the Act, which
exemption(s) depends, among other things, upon the compliance with the
provisions of the Act.
(J) The undersigned further represents and agrees that the
undersigned will not sell, transfer, pledge or otherwise dispose of or
encumber the Units or the underlying securities except pursuant to the
applicable rules and regulations under the Act or applicable state
securities laws, and prior to any such sale, transfer, pledge,
disposition or encumbrance, the undersigned will, upon request, furnish
the Company and its transfer agent with an opinion of counsel
satisfactory to the Company in form and substance that registration
under the Act and any applicable state securities laws is not required.
3
(K) The undersigned hereby agrees that the Company may insert
the following or similar legend on the face of the certificates
evidencing shares of Common Stock, underlying the Notes if required in
compliance with the Act or state securities laws:
"THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE. THESE SECURITIES ARE BEING OFFERED
PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED
OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS SUCH TERM
IS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT) UNLESS
THE SECURITIES ARE REGISTERED UNDER THE ACT, PURSUANT TO
REGULATION S OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND THE SELLER WILL BE
PROVIDED WITH OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS
IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH EXEMPTIONS ARE
AVAILABLE. FURTHER HEDGING TRANSACTIONS INVOLVING THE
SECURITIES MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT."
(L) The undersigned will not engage in any hedging
transactions as precluded by Regulation S under the Act.
The undersigned certifies that each of the foregoing
representations and warranties set forth in subsections (A) through (L)
inclusive of this Section 3 are true as of the date hereof and shall
survive such date.
3B. Representations and Warranties of the Company.
The Company, in order to induce the undersigned to make this
Offer, and by accepting this Offer, hereby warrants and represents to the
undersigned as follows:
(A) Organization and Qualification
4
The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Idaho, and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted. The Company is not qualified as a foreign corporation to do business
in any other jurisdiction. The Company has no subsidiaries.
(B) Authorization, Enforcement, Compliance with Other
Instruments.
(1) The Company has the requisite corporate power and
authority to enter into and perform this Agreement, and to issue the Units, the
convertible note evidencing the Units, the common stock into which that note is
convertible, the warrant that is part of the Units, the registration rights
agreement with respect to the common stock underlying that note and warrant, and
all other documents to be delivered by the Company to the undersigned in
connection with this Offering (all of the foregoing, collectively, the
"Transaction Documents").
(2) the execution and delivery of the Transaction Documents by
the Company, and the consummation by it of the transactions contemplated hereby,
have been duly authorized by the Company's Board of Directors and no further
consent or authorization is required by the Company, its Board of Directors or
its stockholders;
(3) the note and other Transaction Documents to be executed
and delivered by the Company will have been duly executed and delivered by the
Company and the persons signing on behalf of the Company have full power and
authority to do so; and
(4) the Transaction Documents constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with
their respective terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation, or similar laws relating to, or affecting generally,
the enforcement of creditors' rights and remedies.
(C) No Undisclosed Events, Liabilities, Developments, or
Circumstances
No suit, claim, event, liability, development, or circumstance
has occurred or exists, or is contemplated to occur, with respect to the Company
or its businesses, properties, prospects, operations, or financial condition,
which could be material but which has not been publicly announced or disclosed
in writing to the undersigned
(D) No General Solicitation
Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of the Units.
(E) No Integrated Offering
5
Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would require registration of the Units under the Securities
Act or cause this offering of the Units to be integrated with prior offerings by
the Company for purposes of the Securities Act or any applicable stockholder
approval provisions.
(F) Internal Accounting Controls
The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (a) transactions are executed in
accordance with management's general or specific authorizations, (b)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (c) access to assets is permitted only in
accordance with management's general or specific authorization, and (d) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(G) No Materially Adverse Contracts, Etc.
The Company is not subject to any charter, corporate, or other
legal restriction, or any judgment, decree, order, rule, or regulation which in
the judgment of the Company's officers has, or is expected in the future to
have, a material adverse effect on the business, properties, operations,
financial condition, results of operations, or prospects of the Company. The
Company is not a party to any contract or agreement which in the judgment of the
Company's officers has, or is expected to have, a material adverse effect on the
business, properties, operations, financial condition, results of operations, or
prospects of the Company.
(H) Tax Status
The Company has made or filed all federal and state income and
all other tax returns, reports, and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company has set
aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes), and has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such
returns, reports, and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports,
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
(I) Certain Transactions
6
Except for arm's length transactions pursuant to which the
Company makes payments in the ordinary course of business upon terms no less
favorable than the Company could obtain from third parties, none of the
officers, directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees, officers,
and directors), including any contract, agreement, or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director, or such employee or, to the knowledge of the Company, any
corporation, partnership, trust, or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee, or partner.
(J) Regulation S Exemption
The Company understands that the undersigned is purchasing the
Units in reliance on the exemption from the registration requirements of Section
5 of the Securities Act for offshore transactions as defined in SEC Rule 902(h),
and that the undersigned is relying in part upon the truth and accuracy of, and
the Company's compliance with, the representations, warranties, agreements,
acknowledgments, and understandings of the Company set forth herein in order to
determine the availability of such exemptions and the eligibility of the Company
to issue and sell the Units to the undersigned without having complied with
those registration requirements. With respect to that exemption, the Company
further represents and warrants to the Undersigned that:
(a) The Company has not offered any of the Units to a U.S.
Person (as defined in SEC Rule 902(k)) or to a person in the United States.
(b) The offer and sale of the Units to the undersigned is
being made in an offshore transaction as defined in SEC Rule 902(h).
(c) The Company has not engaged in any directed selling
efforts, as defined in SEC Rule 902(c), with respect to the Units.
(d) The Company has complied with all of the conditions
required of it under SEC Rule 902(b)(3).
4. No Waiver.
Notwithstanding any of the representations, warranties,
acknowledgments or agreements made herein by the undersigned, the undersigned
does not thereby or in any manner waive any rights granted to the undersigned
under federal or state securities laws.
5. Miscellaneous.
7
(A) All notices or other communications given or made
hereunder shall be in writing and shall be mailed by registered or certified
mail, return receipt requested, postage prepaid, or by international delivery
services such as DHL or Federal Express, to the undersigned at its address set
forth below and to XXXXXXXXXXXX.XXX, INC., Inc., 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx
0, Xxxx Xxxxx, XX 00000.
(B) This Subscription Agreement, together with the other
Transaction Documents constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and may be amended only by a writing
executed by all parties.
(C) The provisions of this Subscription Agreement shall
survive the execution thereof.
6. Certification.
The undersigned certifies that it has read this entire
Subscription Agreement and that every statement on its part made and set forth
herein is true and complete in all material respects.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on the date his signature has been subscribed and sworn to below.
By ___________________________
Name _________________________
Title ________________________
Accepted as of the ___ day of December, 1999.
XXXXXXXXXXXX.XXX, INC., INC.
By:
Xxxxxx Xxxxxx, Xx., Chairman and
Chief Executive Officer
8
THIS NOTE, AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE, HAVE NOT BEEN
REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE. THE SECURITIES ARE BEING OFFERED PURSUANT TO
A SAFE HARBOR FROM REGISTRATION UNDER REGULATIONS S PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES ARE "RESTRICTED
AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS SUCH
TERM IS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT) UNLESS THE SECURITIES
ARE REGISTERED UNDER THE ACT, PURSUANT TO REGULATION S OR PURSUANT TO AVAILABLE
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND THE SELLER WILL BE
PROVIDED WITH OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE. FURTHER HEDGING
TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH
THE ACT.
8% CONVERTIBLE PROMISSORY NOTE
------------------------------
(This 8% Convertible Promissory Note is one of
a series of promissory notes of like tenor and terms)
December __, 1999. $
---------
FOR VALUE RECEIVED, the undersigned, XXXXXXXXXXXX.XXX, INC., an Idaho
corporation ("Maker"), hereby promises to pay to the order of ("Payee") the
principal sum of ________ ($____) with interest on the unpaid principal amount
at the rate of 8% per annum and on any overdue payment of principal or interest
at the rate of 10% per month (18% per annum), and with the principal balance and
all accrued interest being due and payable on April 30, 2000, all as hereinafter
provided.
This Note is being issued pursuant to a Confidential Term Sheet (the
"Term Sheet") and a Subscription Agreement relating thereto between the Maker
and the Payee and constitutes payment in full for ___ Units offered thereby.
1. Payments of Interest and Principal.
a. Interest. Maker shall pay interest to Payee on the unpaid
outstanding principal balance owed to Payee hereunder at the rate of 8% per
annum. Interest shall be payable at the time of maturity of this Note commencing
as of the date of receipt of Payee's investment with the Maker pursuant to the
Term Sheet, through maturity at April 30, 2000.
b. Principal. Maker shall have no duty or obligation to pay
any portion of the outstanding principal owed hereunder, except as hereinafter
provided, until April 30, 2000. On April 30 , 2000 all accrued interest and
outstanding principal shall be due and payable, and shall be paid, to Payee.
c. Payments. All payments made hereunder shall be applied as
made first to the payment of interest then due, and the balance of said payment
shall be applied to the payment of the principal sum.
2. Place of Payment. So long as Payee shall hold this Note, all
payments of principal and interest shall be made at the principal office of
Payee, _____, as specified by Payee in writing upon presentment of this Note.
3. Conversion and Redemption.
a. Conversion. Until payment by the Maker, any or all of this
Note allocatable to the principal amount of $_____ is convertible by the Payee
into duly authorized, validly issued, fully paid and non-assessable shares of
Common Stock, par value $.02, of the Maker commencing on the date of this Note,
at the rate of one share of each $1.50 of the Indebtedness, subject to such
adjustment(s), if any, set forth below. The first $300.00 of principal of this
note is convertible by the Payee into duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock, par value $.02, of the Maker
commencing on the date of this Note at the rate of one share of each $.02 of the
Indebtedness for a total of 15,000 shares, subject to such adjustments(s), if
any, set forth below. The Payee shall exercise the option to convert by sending
this Note and written election to such effect to the Maker's transfer agent,
which election shall specify the amount of Indebtedness to be converted as well
as which allocable portion of the Indebtedness is to be converted.
b. Adjustments. In the event that the outstanding Common Stock
of the Maker hereafter is restructured or revised by recapitalization,
reclassification, combination of shares, stock split or split-up or stock
dividend, the aggregate number and kind of Common Stock subject to conversion
under this Note shall be adjusted appropriately, both as to the number of shares
of Common Stock and the conversion price. No fractional shares will be issued
upon any conversion, but an adjustment therefor in cash will be made with
respect to any fraction of a share which would otherwise be issuable based upon
the market price for one share of the Maker's Common Stock on the trading day
immediately preceding any notice of conversion hereunder multiplied by such
fraction or, in the alternative, at the election of the Maker, the fractional
share may be rounded up to the nearest whole share.
2
c. Sale, Exchange, etc. In case of any sale, exchange, tender
offer, redemption or buyout of the Maker's shares, or any consolidation of the
Maker with or merger of the Maker into another corporation, or in case of any
sale, transfer or lease to another corporation of all or substantially all other
property of the Maker, the Maker or such successor or purchasing corporation, as
the case may be, shall execute with the Payee an agreement that the Payee shall
have the right thereafter, upon payment of the per share conversion price in
effect immediately prior to such action, to convert, on the same basis which it
would have or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had such conversion been
accomplished immediately prior to such action. Such agreement shall provide for
adjustments, which shall be as nearly equivalent as may be practicable to the
adjustments provided herein. These provisions shall similarly apply to
successive consolidations, mergers, sales, transfers or leases. This right shall
terminate following notice by the Maker and failure of Payee to exercise the
option to convert as provided in subparagraph (a) above.
d. Covenants. The Maker covenants and agrees that: (i) all
shares of Common Stock delivered upon conversion (in accordance with the terms
and conditions set forth herein) of this Note will, upon delivery, be duly and
validly authorized and issued, fully paid and non-assessable and free from all
liens and charges with respect to the purchase thereof; and (ii) it will at all
times reserve and keep available an authorized number of shares of its Common
Stock sufficient to permit the exercise in full of all outstanding options,
warrants and rights, including the conversion rights under this Note.
4. Security. This Note is secured by _____ shares of Common Stock of
the Maker owned by certain executives of the Maker pursuant to the terms of
pledge agreement dated as of the date hereof.
5.1 Default and Remedies.
a. Default. The occurrence of any of the following shall
constitute an event of default ("Event of Default"):
(1) Failure to Pay. Maker fails to pay, when due, any
of the obligations provided for in this Note at their due date, and such failure
continues unremedied for a period of two (2) days after written notice from
Payee to Maker of such failure.
(2) Denominated Events. The occurrence of any event
expressly denominated as an Event of Default in this Note;
(3) Failure to Perform. Maker fails to perform or
observe any material covenant, term or condition of this Note to be performed or
observed by Maker and such failure continues unremedied for a period of ten (10)
days after written notice from Payee to Maker of such failure;
3
(4) Petition By or Against Maker. There is filed by
or against Maker any petition or complaint with respect to its own financial
condition under any state or federal bankruptcy law or any amendment thereto
(including without limitation a petition for reorganization, arrangement or
extension of debts) or under any other similar insolvency laws providing for the
relief of debtors and such petition or complaint is not set aside, stayed or
terminated within sixty (60) days after filing; or
(5) Appointment of Receiver. A receiver, trustee,
conservator or liquidator is appointed for Maker, or for all or a substantial
part of its assets; or Maker shall be adjudicated bankrupt, insolvent or in need
of any relief provided to debtors by any court and such appointment or
adjudication is not set aside, stayed or terminated within sixty (60) days after
filing.
5.2 Remedies. Upon the occurrence of an Event of Default and
for so long as such default is continuing:
(1) The total amount of (i) this Note and the other
outstanding promissory notes issued as part of this series and all other sums
which are (A) then due and unpaid or (B) thereafter to become due and payable;
and (ii) interest on the foregoing sums, at the rate of 10% per month from said
occurrence until paid in full (the "Default Amount") shall, at the option of
Payee, become immediately due and payable without notice or demand.
(2) Payee may exercise any of the other remedies
provided under applicable laws.
(3) Maker shall be liable for all costs, charges and
expenses incurred by Payees including reasonable attorney's fees, by reason of
the occurrence of any Event of Default or the exercise of Payees' remedies with
respect thereto.
6. Offshore Investment Intent. This Note is given to Payee with the
understanding that Payee is acquiring this Note and the underlying shares of
Common Stock in an offshore transaction as defined in S.E.C. Rule 902(h) and not
with a view to, for resale in connection with, or with an intent of
participating directly or indirectly in any distribution in the Unites States or
to U.S. persons as defined in S.E.C. Rule 902(k) within the meaning of the
Securities Act of 1933, as amended.
4
7. Miscellaneous.
7.1 Waivers. No waiver of any term or condition of this Note
shall be construed to be a waiver of any succeeding breach of the same term or
condition. No failure or delay of Payee to exercise any power hereunder, or to
insist upon strict compliance by Maker of any obligations hereunder, and no
custom or other practice at variance with the terms hereof shall constitute a
waiver of the right of Payee to demand exact compliance with such terms. Maker
hereby waives demand, presentment, dishonor, and notice of dishonor of this
note.
7.2 Invalid Terms. In the event any provision contained in
this Note shall, for any reason, be held invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Note, and this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
7.3 Successors. This Note shall be binding upon Maker, its
legal representatives, successors and assigns, and inure to the benefit of
Payee, its legal representatives, successors and assigns.
7.4 Controlling Law. This Note shall be read, construed and
governed in all respects in accordance with the laws of the _________; provided
however that: if any provision of this note is invalid or unenforceable under
___ law but is enforceable under Florida law, then Florida law shall govern the
construction and enforcement of that provision. The Maker and Payee each (a)
agrees that any legal suit, action or proceeding arising out of or relating to
this Note shall be instituted exclusively in ____ (b) waives any objection which
the Maker or such Payee may have now or hereafter to the venue of any such suit,
action or proceeding, and (c) irrevocably consents to the in personam
jurisdiction in ____, in any such suit, action or proceeding. The Maker and
Payee each further agrees to accept and acknowledge service of any and all
process which may be served in any such suit, action or proceeding in ____ and
agrees that service of process upon the Maker or the Payee mailed by certified
mail to their respective addresses shall be deemed in every respect effective
service of process upon the Maker or the Payee, as the case may be, in any such
suit, action or proceeding.
7.5 Amendments. This Note may be amended only by an instrument
in writing executed by the party against which enforcement of the amendment is
sought.
7.6 Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be sufficiently
given if addressed to the Maker at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0, Xxxx
Xxxxx, Xxxxxxx 00000 and to Payee at ____ in the Subscription Agreement executed
by Payee, posted by certified or registered mail, return receipt requested or by
international overnight delivery carrier such as Federal Express, etc.. Any
party may change said address by giving the other party hereto notice of such
change of address. Notice given as
5
hereinabove described shall be deemed given on the date of its deposit in the
mail or delivered to the delivery service and, unless sooner received, shall be
deemed received by the party to whom it is addressed on the fifth calendar day
following the date on which said notice is deposited in the mail.
7.7 Construction of Terms. Whenever the context so requires,
any gender is deemed to include any other, and the singular is deemed to include
the plural, and conversely.
7.8 Time of Essence. Time is of the essence in this Note and
each and every provision hereof.
7.9 Headings. All section and subsection headings herein,
wherever they appear, are for convenience only and shall not affect the
construction of any terms herein.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
by its duly authorized officer and its seal affixed hereto, as of the day and
year first above written.
XXXXXXXXXXXX.XXX, INC.
By:____________________________
Name: _________________________
Its: __________________________
ATTEST:
By:_______________________
Secretary
6
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of December __, 1999, by and between xxxxxxxxxxxx.xxx, inc., an
Idaho corporation (the "Company"), and (the "Subscriber" or the "Holder").
Preliminary Statements
In connection with the Subscriber's purchase of the Company's 8%
Secured Convertible Promissory Note (the "Note") in the principal amount of
US$___ dated December __, 1999, pursuant to a Subscription Agreement in
connection therewith, and the consummation of the transactions contemplated
thereby, the Company has agreed, upon the terms and subject to the conditions of
the Note, at the option of the Subscriber or other holders of the Notes to
convert the Notes into shares of the Company's Common Stock (the "Conversion
Shares").
The Company has also agreed to issue to the Agent (or the Holder) a
Warrant (the "Agent's Warrant") to purchase ________ shares of the Company's
Common Stock (the "Warrant") (the "Agent's Warrant Shares") and to issue to the
Agent a Contingent Warrant (the "Agent's Contingent Warrant") to purchase and
additional 150,000 shares of the Company's Common Stock (the "Agent's Contingent
Warrant Shares").
The Warrant, the Agent's Warrant Shares and the Agent's Contingent
Warrant Shares are collectively referred to as the Warrant Shares. The
Conversion Shares and the Warrant Shares are hereinafter collectively referred
to as the "Registrable Securities."
To induce the Subscriber to purchase the Note, the Company has agreed,
pursuant to the terms and conditions of this Agreement, to provide certain
registration rights with respect to the Registrable Securities.
Agreement
In consideration of the foregoing, the mutual covenants and conditions
set forth in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to become legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
"Agent" shall mean Thomson Kernaghan & Co. Limited.
"Agent's Contingent Warrant," "Agent's Contingent Warrant Shares,"
"Agent's Warrant" and "Agent's Warrant Shares" each shall have the meaning
ascribed to such term in the Preliminary Statements to this Agreement.
"Agreement" shall mean this Registration Rights Agreement.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Conversion Shares" shall have the meaning ascribed to such term in the
Preliminary Statements to this Agreement.
"Company" shall mean xxxxxxxxxxxx.xxx Inc., an Idaho company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as in effect from time to time.
"Filing Deadline" shall have the meaning ascribed to such term in
Section 2.1 of this Agreement.
"Holder" or "Holders" shall mean (a) the Agent, or the Subscriber for
whom the agent may be acting for and (b) any Person holding Registrable
Securities as a transferee of the Agent or Subscriber (directly or indirectly,
including subsequent transfers).
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing with the Commission one or more
registration statements covering Registrable Securities in compliance with the
Registrable Securities Act that is declared or ordered effective by the
Commission.
2
" Registrable Securities" shall mean the Conversion Shares and
theWarrant Shares and any shares of capital stock issued or issuable with
respect to the Conversion Shares and the Warrant Shares as a result of any stock
split, stock dividend, recapitalization, exchange or similar event; provided,
however, that such Registrable Securities shall cease to be Registrable
Securities when (a) a registration statement with respect to such Registrable
Securities shall have been declared effective under the Registrable Securities
Act and such Registrable Securities shall have been disposed of pursuant to the
registration statement, (b) such Registrable Securities are distributed to the
public pursuant to Rule 144(k) (or any successor provisions) promulgated under
the Securities Act or (c) such Registrable Securities shall have ceased to be
outstanding.
"Registration Deadline" shall have the meaning ascribed to such term in
Section 2.1 of this Agreement.
"Registration Expenses" shall mean all expenses incurred in order to
comply with Article II hereof, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel for the
Company, reasonable fees and disbursements of one (1) counsel for the Holders,
blue sky fees and expenses, and the expense of any special audits incident to or
required by any such registration, but excluding the compensation of regular
employees of the Company (which shall be paid in any event by the Company) and
excluding Selling Expenses.
"Restricted Registrable Securities" shall mean Registrable Securities
that are "restricted Registrable Securities" as defined in Rule 144 under the
Securities Act.
"Registrable Securities" shall have the meaning ascribed to such term
in the Preliminary Statements to this Agreement.
"Securities Act" shall mean the Registrable Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as in effect from time to time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions incurred in connection with the sale of Registrable Securities
pursuant to a registration effected hereunder.
"Warrant Shares" shall have the meaning ascribed to such term in the
Preliminary Statements to this Agreement.
Capitalized terms used in this Agreement and not otherwise defined
herein shall have the respective meanings ascribed to such terms in the Loan
Agreement.
3
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Mandatory Registration.
(a) The Company shall prepare and file with the Commission
within sixty (60) days from the date of this Agreement (the "Filing
Deadline") a registration statement or registration statements (as is
necessary) covering the issuance and the resale of all of the
Registrable Securities. Such registration statement shall initially
register for resale at least ____ Conversion Shares, and ______
Warrant Shares. The Company shall use its best efforts to have the
registration statement declared effective by the Commission within one
hundred and twenty (120) days after the Filing Deadline (the
"Registration Deadline"). The Company shall permit the registration
statement to become effective within five (5) business days after
receipt of a "no review" notice from the Commission. Such registration
statement shall be kept current and effective for the greater of (i) a
period of at least three (3) years from the Closing Date and (ii) a
period of at least ninety (90) days after (x) all of the Notes shall
have been converted into Conversion Shares or paid in full, and (y) the
Agent's Warrant and the Agent's Warrant shall have been fully exercised
or expired. If a registration statement with respect to the Registrable
Securities is not effective on the Registration Deadline date, the
Company agrees to and shall pay the Agent liquidated damages equal to
the value of investment at the rate of 2% of the investment amount for
each month after April 30, 2000. These liquidated damages are payable
monthly,pro-rated for partial months, until the registration statement
is effective.
Section 2.2 Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to Section 2.1 shall be borne by the Company; and all Selling Expenses
in connection with such registration, qualification or compliance shall be borne
by the holders of the Registrable Securities so registered pro rata on the basis
of the number of shares so registered.
Section 2.3 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Article II,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense, the Company will:
(a) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to
comply with the provisions of the Registrable Securities Act with
respect to the disposition of all Registrable Securities covered by
such registration statement;
4
(b) furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirement of the Registrable Securities Act, and such other documents
as they may reasonably request (including a conformed copy of the
registration statement filed with the Commission and any amendments
thereto and an original executed underwriting agreement entered into in
connection with such registration) in order to facilitate the
disposition of Registrable Registrable Securities owned by them;
(c) use reasonable efforts to register and qualify the
Registrable Securities covered by such registration statement under
such other Registrable Securities or blue sky laws of one (1)
jurisdiction (in addition to those jurisdictions in which the Company
has otherwise agreed to so register and qualify such Registrable
Securities) as shall be reasonably requested by the Holders, provided
that the Company shall 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 states or jurisdictions;
(d) in the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement with
the managing underwriter(s) of such offering; each Holder participating
in such underwriting shall also enter into and perform its obligations
under such underwriting agreement;
(e) notify each Holder of Registrable Securities covered by
such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing; and
(f) furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Article II, on
the date that such Registrable Securities are delivered to the
underwriters for sale in connection with registration pursuant to this
Article II, if such Registrable Securities are being sold through
underwriters, or on the date that the registration statement with
respect to such Registrable Securities becomes effective, if such
Registrable Securities are not being sold through underwriters, (i) a
copy of any opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, addressed to the
underwriters of the Company, and (ii) a copy of any letter, dated such
date, from the independent accountants of the Company, addressed to the
underwriters of the Company.
5
Each Holder of Registrable Securities agrees that upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (f) of this Section 2.3, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of a supplemented or amended prospectus and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense), all copies, other
than permanent file copies then in such Holder's possession, of the prospectus
covering such Registrable Securities that was in effect prior to such amendment
or supplement. In the event the Company shall give any such notice, the period
set forth in clause (a) of this Section 2.3 shall be extended by the number of
days during the period from and including the date of the giving of such notice
pursuant to clause (e) of this Section 2.3 to and including the date when each
seller of Registrable Securities covered by such registration statement shall
have received the copies of a supplemented or amended prospectus.
Section 2.4 Indemnification.
(a) The Company will indemnify each Holder, each Holder's
officers, directors and partners, and each Person controlling such
Holder (collectively, "Holder's Parties"), participating in any
registration, qualification, or compliance effected pursuant to this
Article II with respect to Registrable Securities held by such Holder
and each underwriter, if any, and each Person who controls any
underwriter, against all claims, losses, damages and liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, to which they
may become subject under the Registrable Securities Act, the Exchange
Act or other federal or state law, arising out of or based on (i) any
untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other similar
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, or (ii) any violation by
the Company of any federal, state or common law rule or regulation
applicable to the Company in connection with any such registration,
qualification or compliance, and will reimburse each such Holder's
Parties each such underwriter, and each Person who controls any such
underwriter, for any legal and any other expenses reasonably incurred
in connection with investigating or defending any such claim, loss,
damage, liability or action, as incurred, provided that the Company
will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any
untrue statement or omission, made in reliance on and in conformity
with written information furnished to the Company by such Holder's
Parties or underwriter or Person controlling such underwriter
specifically for use in the preparation thereof.
6
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the Registrable Securities as to which such
registration, qualification or compliance is being effected, severally
and not jointly, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company Registrable
Securities covered by such a registration statement, and each Person
who controls the Company or such underwriter within the meaning of the
Registrable Securities Act, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on
(i) any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering
circular or other similar document, or 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 the Company, such directors, officers, Persons,
underwriters or control Persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, as incurred, in each
case to the extent, 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 upon and in conformity with the written
information furnished to the Company by such Holder specifically for
use in the preparation thereof, or (ii) any violation by any such
Holder of any federal, state or common law rule or regulation
applicable to such Holder in connection with the distribution of
Registrable Securities pursuant to a registration statement, and will
reimburse the Company, such Holders, such directors, officers, Persons,
underwriters or control Persons for any legal any other expenses
reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability, or action, as incurred; provided,
however, that the obligations of each such Holder hereunder shall be
limited to an amount equal to the aggregate proceeds received by such
Holder in such offering.
(c) Each party entitled to indemnification under this Section
2.4 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has received written notice of any claim as to
which indemnity may be sought, and shall 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 shall
conduct the defense of such claim or litigation, shall be approved by
the Indemnified Party (whose approval shall not unreasonably be
withheld). The Indemnified Party may participate in such defense at
such party's expense; provided, however, that the Indemnifying Party
shall bear the expense of such defense of one counsel representing the
Indemnified Party if representation of both parties by the same counsel
would be inappropriate due to actual or potential conflicts of
interest. The failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 2.4, except to the extent such failure
to give notice shall materially and adversely prejudice the
Indemnifying Party in the defense of any such claim or any such
litigation. No Indemnifying Party, in the defense of any such claim or
7
litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement that 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.
(d) (i) If the indemnification provided for in this Section
2.4 is held by a court of competent jurisdiction to be
unavailable to an Indemnified Party with respect to any loss,
liability, claim, damage or expense referred to herein, then
the Indemnifying Party hereunder shall contribute to the
amount paid or payable by such Indemnified Party as a result
of such loss, liability, claim, damage or expense, in such
proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and the Indemnified
Party on the other hand in connection with the statements or
omissions which resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party
and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a
material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the
parties' relevant intent, knowledge, access to information and
opportunities to correct or prevent such statement or
omission.
(ii) The parties agree that it would not be just and
equitable if contribution pursuant to this Section 2.4 were
determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable
considerations referred to above. The amount paid or payable
by an Indemnified Party as a result of the claims, losses,
damages and liabilities referred to above shall be deemed to
include, subject to the limitations set forth above, any legal
or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such
action or claim.
(iii) No Holder that is a seller of Registrable
Securities covered by such registration statement or Person
controlling such seller other than the Company shall be
obligated to make contribution hereunder that in the aggregate
exceeds the total public offering price of the Registrable
Securities sold by such Holder, less the aggregate amount of
any damages that such Holder and its controlling Persons have
otherwise been required to pay pursuant to this Section 2.4.
The obligations of such Holders to contribute are several in
proportion to their respective ownership of the Registrable
Securities covered by such registration statement and not
joint.
(iv) The indemnity and contribution provided herein
shall be in addition to, and not in lieu of, any other
liability that one party may have to another.
8
Section 2.5 Information by Holder. Each Holder of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder and the distribution proposed by such Holder
as the Company may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this Article
II.
Section 2.6 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission that may at any time
permit the sale of the Restricted Registrable Securities to the public without
registration, the Company agrees to:
(a) use its best efforts to facilitate the sale of the
Restricted Registrable Securities to the public without registration
under the Registrable Securities Act, pursuant to Rule 144 under the
Registrable Securities Act;
(b) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Registrable Securities
Act, at all times after the effective date of the first registration
statement filed by the Company for an offering of its Registrable
Securities to the general public;
(c) file with the Commission in a timely manner all reports
and other documents required of the Company under the Registrable
Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements); and
(d) so long as a Holder owns any Restricted Registrable
Securities to furnish to the Holder forthwith upon request a written
statement by the Company as to its compliance with the public
information requirements of said Rule 144, and the reporting
requirements of the Registrable Securities Act and the Exchange Act, a
copy of the most recent annual or quarterly report of the Company, and
such other reports and documents so filed by the Company as a Holder
may reasonably request in availing itself of any rule or regulation of
the Commission allowing a Holder to sell any such Registrable
Securities without registration.
Section 2.7 Transfer of Registration Rights. The rights granted under
this Article II may be assigned or otherwise conveyed by any Holder of
Registrable Securities to any transferee, subject to compliance with all
applicable Registrable Securities laws and regulations.
9
Section 2.8 Certain Limitations in Connection with Future Grants
of Registration Rights.
From and after the date of this Agreement, without the prior written
consent of the Holders of a majority of the Registrable Securities, the Company
shall not enter into any agreement with any holder or prospective holder of any
Registrable Securities of the Company providing for the granting to such holder
of registration rights that would be superior to those granted to Holders
pursuant to Section 2.1.
Section 2.9 Restrictions on Market Manipulation. In the event any
shares of Common Stock are offered or sold by any Holder in a registration, each
such Holder will:
(a) advise the Company in writing of any offer, sale or other
disposition by it of any Common Stock in any manner other than as set
forth in the registration statement or any prospectus included therein
on or for the 30-day period prior to the filing of such registration
statement until the distribution under the registration statement has
been completed;
(b) not effect any stabilization activity in connection with
the Company's Common Stock;
(c) not bid or purchase, for any account in which it has a
beneficial interest, any Common Stock except as may be permitted
pursuant to Rule 10b-6 under the Exchange Act (if applicable);
(d) not until it has sold all of such shares of Common Stock,
attempt to induce any Person to purchase any Common Stock except as may
be permitted pursuant to Rule 10b-6; and
(e) not until it has sold all such shares of Common Stock, pay
any compensation for soliciting another to purchase any Registrable
Securities of the Company, except as may be permitted pursuant to Rule
10b-6.
ARTICLE III
MISCELLANEOUS
Section 3.1 Governing Law; Jurisdiction and Venue. This Agreement shall
be governed by and interpreted in accordance with the laws of the State of
Florida; provided, however, that if any provision of this Agreement is
unenforceable under the laws of the State of Florida, but is enforceable under
the laws of _____, then such provision shall be governed by and interpreted in
accordance with the laws of the _____. The parties agree that the courts of
_____, shall have exclusive jurisdiction and venue for the adjudication of any
civil action between them arising out of relating to this Agreement, and hereby
irrevocably consent to such jurisdiction and venue.
10
Section 3.2 Successors and Assignees. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assignees, heirs, executors and administrators (as the
case may be) of the parties hereto.
Section 3.3 Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.
Section 3.4 Notices, etc. All notices given under this Agreement and
under the other Loan Documents shall be in writing, addressed to the parties as
set forth below, and shall be effective on the earliest of (i) the date
received, or (ii) if given by facsimile transmittal on the date given if
transmitted before 5:00 p.m. the recipient's time, otherwise it is effective the
next day, or (iii) on the second business day after delivery to a major
international air delivery or air courier service (such as Federal Express or
Network Couriers):
If to the Subscriber: If to the Company:
xxxxxxxxxxxx.xxx, inc.
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxxx, Xx., CEO
Facsimile No. (000) 000-0000
Section 3.5 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any Holder of any Registrable Securities,
upon any breach or default of the Company under this Agreement, shall impair any
such right, power or remedy of such Holder nor shall it be construed to be a
waiver of any such breach or default or an acquiescence therein or of or in any
similar breach or default thereunder occurring nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any Holder of any breach or default under
this Agreement or any waiver on the part of any Holder of any provisions or
conditions of this Agreement must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any Holder shall be cumulative
and not alternative.
Section 3.6 Counterparts. This Agreement may be executed in any number
of counterparts, each of which may be executed by less than all of the parties
hereto, each of which shall be enforceable against the parties actually
executing such counterparts and all of which together shall constitute one
instrument.
Section 3.7 Severability. In the event any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 3.8 Amendments. The provisions of this Agreement may be amended
at any time and from time to time, and particular provisions of this Agreement
may be waived, with and only with, an agreement or consent in writing signed by
11
the Company and by the Holders of a majority of the Registrable Securities
voting as a single class.
The parties have executed this Registration Rights Agreement as of the
date first written above.
The Subscriber: The Company:
[Insert Subcriber Information] NEWAGECITIES,COM, INC.
By _____________________________
Name ___________________________
Title __________________________
Date signed_____________________
12
WARRANT
WARRANT
Warrant No. 60
Void after 5:00 p.m. _____, on December __, 2005
Warrant to Purchase Shares of Common Stock
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THE SECURITIES
ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE
SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES
OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S PROMULGATED UNDER
THE ACT) UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, PURSUANT TO
REGULATION S OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND THE SELLER WILL BE PROVIDED WITH OPINION OF COUNSEL
OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
EXEMPTIONS ARE AVAILABLE. FURTHER HEDGING TRANSACTIONS INVOLVING THE SECURITIES
MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT.
-------------------------------------------------------------
WARRANT TO PURCHASE _______ SHARES OF COMMON STOCK
OF
XXXXXXXXXXXX.XXX, INC.
----------------------------------------------------------------
This it to certify that, FOR VALUE RECEIVED, _______________________
or assigns ("Holder") is entitled to purchase, subject to the provisions of this
Warrant, from XXXXXXXXXXXX.XXX, INC., an Idaho corporation (the "Company"), the
fully paid, validly issued and non-assessable shares of Common Stock, $0.02 par
value, of the Company ("Common Stock") at any time or from time to time during
the period from the date hereof, through and including June 30, 2005, but not
later than 5:00 p.m. Toronto, Ontario time, on June 30, 2005 (the "Exercise
Period"), at the price of US$2.50 per share (the "Exercise Price"). The total
number of shares of Common Stock to be issued upon exercise of this Warrant
shall be _______ shares. The price to be paid for each share of Common Stock may
be adjusted from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Shares" and the respective
exercise price of a share of Common Stock in effect at any time and as adjusted
from time to time is hereinafter sometimes referred to as the "Exercise Price."
The Company has agreed to register the issuance and resale of the
Common Stock issuable upon exercise of this Warrant under the U.S. Securities
Act of 1933, as amended (the "Securities Act"), pursuant to a Registration
Rights Agreement between the Company and the Holder of even date herewith.
In addition, as an alternative to payment of the aggregate exercise
price in accordance with the preceding paragraphs, but only in the event that
the issuance and resale of the Warrant Shares are not subject to a current
effective registration statement under the Securities Act, then the Holder may
elect to effect a cashless exercise by so indicating on the Exercise Form and
including a calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless Exercise").
In the event of a Cashless Exercise, the Holder shall surrender this Warrant for
that number of Common Shares determined by multiplying the number of Warrant
Shares for which this warrant is being exercised by the result obtained from
subtracting the exercise price in effect at such time from the closing price for
the Common Stock on the principal market for the Common Stock on the date
preceding the date of exercise.
A. EXERCISE OF WARRANT
This Warrant may be exercised in whole or in part at any time or from
time to time during the Exercise Period; provided, however, that (i) if the last
day of the Exercise Period is a day on which banking institutions in the City of
Toronto are authorized by law to close, then the Exercise Period shall terminate
on the next succeeding day that shall not be such a day, and during such period
the Holder shall have the right to exercise this Warrant into the kind and
amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of shares of Common Stock into which this
Warrant might have been exercisable immediately prior thereto. This Warrant may
be exercised by presentation and surrender hereof to the Company at its
principal office, with the Exercise Form annexed hereto duly executed and
accompanied by payment of the Exercise Price for the number of Warrant Shares
specified in such form. As soon as practicable after each such exercise of the
Warrants, but not later than seven (7) days from the date of such exercise, the
Escrow Holder shall, to the extent that the Company has deposited shares of
Common Stock with the Escrow Holder for that purpose, issue and deliver to the
Holder a certificate or certificates for the designee. If this Warrant should be
exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the rights of the
Holder thereof to purchase the balance of Warrant Shares purchasable thereunder.
Upon receipt by the Company of this Warrant at its principal office, or by the
stock transfer agent of the Company at its office, in proper form for exercise,
the Holder shall be deemed to be holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such shares
of Common Stock shall not then be physically delivered to the Holder.
2
THIS WARRANT MAY BE EXERCISED ONLY (i) BY A PERSON WHO IS NOT A U.S.
PERSON (AS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT), (ii) IF NOT
EXERCISED ON BEHALF OF A U.S. PERSON, (iii) IF NO U.S. PERSON HAS ANY INTEREST
IN THE WARRANTS BEING EXERCISED OR THE UNDERLYING SECURITIES TO BE ISSUED UPON
EXERCISE, AND (iv) OUTSIDE THE UNITED STATES AND THE WARRANT SHARES UNDERLYING
THE WARRANTS ARE TO BE DELIVERED OUTSIDE THE UNITED STATES. IF THE ABOVE CANNOT
BE COMPLIED WITH, THEN THE WARRANT CAN BE EXERCISED ONLY IF A WRITTEN OPINION OF
COUNSEL, THE FORM AND SUBSTANCE OF WHICH IS ACCEPTABLE TO THE COMPANY, IS
DELIVERED TO THE COMPANY PRIOR TO EXERCISE OF THE WARRANTS BEING EXERCISED THAT
REGISTRATION IS NOT REQUIRED, OR THE UNDERLYING SECURITIES DELIVERED UPON
EXERCISE HAVE BEEN REGISTERED UNDER THE ACT.
B. RESERVATION OF SHARES AND COVENANTS OF THE COMPANY
The Company shall at all times have allotted and reserved for issuance,
and deposited with the Escrow Holder for delivery upon exercise of this Warrant
such number of shares of its Common Stock as shall be required for issuance and
delivery upon exercise of the Warrant.
The Company covenants with the Holder that so long as any Warrants
remain outstanding and may be exercised:
1. it will cause the shares of Common Stock and the certificates
representing the Common Stock subscribed and paid for pursuant
to the exercise of the Warrants to be duly issued and
deposited with the Escrow Holder for delivery in accordance
herewith and the terms hereof;
2. all shares of Common Stock that shall be issued upon exercise
of the right to purchase provided for herein, upon payment of
the prevailing Exercise Price herein provided, shall be fully
paid and non-assessable;
3. it will use its best efforts to maintain its corporate
existence; and
4. generally, it will well and truly perform and carry out all of
the acts or things to be done by it as provided herein.
C. FRACTIONAL SHARES
No fractional shares or script 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 a share, determined as follows:
3
1. If the Common Stock is listed on a National Securities
Exchange or admitted to unlisted trading privileges on such
exchange or listed for trading on the NASDAQ system, the
current market value shall be the last reported sale price of
the Common Stock on such exchange or system on the last
business day prior to the date of exercise of this Warrant or,
if no such sale is made (or reported) on such day, the average
closing bid and asked prices for such day on such exchange or
system; or
2. If the Common Stock is not so listed or admitted to unlisted
trading privileges, the current market value shall be the mean
to the last reported bid and ask prices reported by the
Electronic Bulletin Board or National Quotation Bureau, Inc.
on the last business day prior to the date of the exercise of
this Warrant; or
3. If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and ask prices are not so reported,
the current market value shall be an amount, not less than
book value thereof as at the end of the most recent fiscal
year of the Company ending prior to the date of the exercise
of the Warrant, determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
D. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT
This Warrant is exchangeable, without expense, at the option of the
Holder, upon presentation and surrender hereof to the Company for other warrants
of different denominations entitling the holder thereof to purchase in the
aggregate the same number of shares of Common Stock purchasable hereunder. Upon
surrender of this Warrant to the Company at its principal office, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay any
applicable transfer tax, the Company shall, without charge, execute and deliver
a new Warrant in the name of the assignee named in such Assignment Form and this
Warrant shall promptly be canceled. This Warrant may be divided or combined with
other warrants that carry the same rights upon presentation hereof at the
principal office of the Company, together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed by the
Holder hereof. The term "Warrant" as used herein includes any Warrants into
which this Warrant may be divided or exchanged. Upon receipt of 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) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed or mutilated shall be at
any time enforceable by anyone.
This Warrant and the Common Stock issuable upon exercise of this
Warrant were issued under Regulation S under the Act and may be transferred only
in accordance therewith and as provided in the legends set forth in this
Warrant.
4
E. RIGHTS OF THE HOLDER
The Holder shall not, by virtue hereof, be entitled to any rights of a
shareholder in the Company, either at law or equity, and the rights of the
Holder are limited to those expressed in the Warrant and are not enforceable
against the Company except to the extent set forth herein.
F. ANTI-DILUTION PROVISIONS
The respective Exercise Price in effect at any time and the number and
kind of securities purchasable upon the exercise of the Warrant shall be subject
to adjustment from time to time upon the happening of certain events are
follows:
1. In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in
shares of Common Stock, (ii) subdivide or reclassify its
outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify its outstanding shares
of Common Stock into a smaller number of shares, the
respective Exercise Price in effect at the time of the record
date for such dividend or distribution or of the effective
date of such subdivision, combination or reclassification
shall be adjusted so that it shall equal the price determined
by multiplying the respective Exercise Price by a fraction,
the denominator of which shall be the number of shares of
Common Stock outstanding after giving effect to such action,
and the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such action.
Such adjustment shall be made successively whenever any event
listed above shall occur.
2. Whenever the respective Exercise Price payable upon exercise
of each Warrant is adjusted pursuant to Subsection (1) above,
the number of Shares purchasable upon exercise of this Warrant
shall simultaneously be adjusted by multiplying the respective
number of Shares initially issuable upon exercise of this
Warrant by a fraction, the denominator of which shall be the
Exercise Price after giving effect to such action and the
numerator of which shall be the Exercise Price in effect
immediately prior to such action.
5
3. No adjustment in the respective Exercise Price shall be
required unless such adjustment would require an increase or
decrease of at least one cent ($0.01) in such price; provided,
however, that any adjustment that by reason of this Subsection
(3) is not required to be made shall be carried forward and
taken into account in any subsequent adjustment required to be
made hereunder. All calculations under this Section (F) shall
be made to the nearest cent or to the nearest one-hundredth of
a share, as the case may be. Anything in this Section (F) to
the contrary notwithstanding, the Company shall be entitled,
but shall not be required, to make such changes in the
respective Exercise Price, in addition to those required by
this Section (F), as it shall determine, in its sole
discretion, to be advisable in order that any dividend or
distribution in shares of Common Stock, or any subdivision,
reclassification or combination of Common Stock, hereafter
made by the Company shall not result in any federal income tax
liability to the holders of Common Stock or securities
convertible into Common Stock (including the Warrants).
4. In the event that at any time, as a result of an adjustment
made pursuant to Subsection (1) above, the Holder of this
Warrant thereafter shall become entitled to receive any shares
of the Company, other than Common Stock, thereafter the number
of such other shares so receivable upon exercise of this
Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in
Subsections (1) to (3) inclusive above.
5. Irrespective of any adjustments in the respective Exercise
Price or the related number or kind of shares purchasable upon
exercise of this Warrant, Warrants theretofore or thereafter
issued may continue to express the same price and number and
kind of shares as are stated in the similar Warrants initially
issuable pursuant to this Warrant.
G. OFFICER'S CERTIFICATE
Whenever the respective Exercise Price shall be adjusted as required by
the provisions of the foregoing Section (F), the Company shall forthwith file in
the custody of its Secretary or an Assistant Secretary at its principal office,
an officer's certificate showing the adjusted Exercise Price determined as
herein provided, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of related additional shares of
Common Stock, if any, and such other facts as shall be necessary to show the
reason for and the manner of computing such adjustment. Each such officer's
certificate shall be made available at all reasonable times for inspection by
the holder or any holder of a Warrant executed and delivered pursuant to Section
(A) and the Company shall, forthwith after each such adjustment, mail a copy by
certified mail of such certificate to the Holder or any such holder.
H. NOTICES TO WARRANT HOLDERS
6
So long as this Warrant shall be outstanding, (i) if the Company shall
pay any dividend or make any distribution upon the Common Stock or (ii) if the
Company shall offer to the holders of Common Stock for subscription or purchase
by them any share of any class or any other rights, options or warrants (other
than this Warrant) or (iii) if a capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, at least fifteen (15) days prior
to the date specified, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which a record date
is to be determined for the purpose of such dividend, distribution or issue of
rights, options, or warrants or such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding up
is to take place and the date, if any is to be fixed as of which the holders of
Common Stock or other securities shall receive cash or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up. The failure to give such
notice shall not otherwise affect the action take by the Company.
I. RECLASSIFICATION, REORGANIZATION OR MERGER
In case of any reclassification, capital reorganization or other change
of outstanding shares Common Stock of the Company, or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger with a subsidiary in which merger the Company is the continuing
corporation and that does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
class issuable upon exercise of this Warrant) or in case of any sale, lease or
conveyance to another corporation of the property of the Company as an entirety,
the Company shall, as a condition precedent to such transaction, cause effective
provisions to be made so that the Holder shall have the right thereafter, by
exercising this Warrant at any time prior to the expiration of the Warrant, to
purchase the kind and amount of shares of stock an other securities and property
receivable upon such reclassification, capital reorganization and other change,
consolidation, merger, sale or conveyance by a holder of such number of shares
of Common Stock that might have been purchased upon exercise of this Warrant
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance. Any such provision shall include provision for adjustments that
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Warrant. The foregoing provisions of this Section (I) shall
similarly apply to successive reclassifications, capital reorganizations and
changes of shares of Common Stock and to successive consolidations, mergers,
sales or conveyances. In the event that in connection with any such capital
reorganization or reclassification, consolidation, merger, sale or conveyance,
additional shares of Common Stock shall be issued in exchange, conversion,
substitution or payment, in whole or in part, for a security of the Company
other than Common Stock, any such issue shall be treated as an issue of Common
Stock covered by the provisions of Subsection (1) of Section (F) hereof.
7
J. WARRANTS TO RANK PARI PASSU
All Warrants shall rank pari passu, whatever may be the actual date of
issue of the same.
K. GOVERNING LAW; JURISDICTION AND VENUE
This Warrant shall be governed by and interpreted in accordance with
the laws of the State of Florida; provided, however, that if any provision of
this Agreement is unenforceable under the laws of the State of Florida, but is
enforceable under the laws of the ___________________________, then such
provision shall be governed by and interpreted in accordance with the laws of
the Province of Ontario.
The parties agree that the courts of the ___________________________,
shall have exclusive jurisdiction and venue for the adjudication of any civil
action between them arising out of relating to this Agreement, and hereby
irrevocably consent to such jurisdiction and venue.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by the undersigned, each being duly authorized, as of the date
below.
xxxxxxxxxxxx.xxx, Inc..
By:_____________________________
Its:____________________________
DATED: December __, 1999
ATTEST:
_______________________
_______________________
8
AGENTS' CONTINGENT WARRANT
Warrant No. 61
Void after 5:00 p.m. Toronto, Ontario time, on December 22, 0000
Xxxxxxx to Purchase Shares of Common Stock
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THE SECURITIES
ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE
SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES
OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S PROMULGATED UNDER
THE ACT) UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, PURSUANT TO
REGULATION S OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND THE SELLER WILL BE PROVIDED WITH OPINION OF COUNSEL
OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
EXEMPTIONS ARE AVAILABLE. FURTHER HEDGING TRANSACTIONS INVOLVING THE SECURITIES
MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT.
-------------------------------------------------------------
CONTINGENT WARRANT TO PURCHASE 150,000 SHARES OF COMMON STOCK
OF
XXXXXXXXXXXX.XXX, INC.
----------------------------------------------------------------
This it to certify that, FOR VALUE RECEIVED, limited or assigns
("Holder") is entitled to purchase, subject to the provisions of this Warrant,
from XXXXXXXXXXXX.XXX, INC., an Idaho corporation (the "Company"), the fully
paid, validly issued and non-assessable shares of Common Stock, $0.02 par value,
of the Company ("Common Stock") at any time or from time to time during the
period from the date hereof, through and including June 30, 2005, but not later
than 5:00 p.m. time, on June 30, 2005 (the "Exercise Period"), at the price of
US$ 2.50 per share (the "Exercise Price"). The total number of shares of Common
Stock to be issued upon exercise of this Warrant shall be shares. The price to
be paid for each share of Common Stock may be adjusted from time to time as
hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant Shares" and the respective exercise price of a share of Common
Stock in effect at any time and as adjusted from time to time is hereinafter
sometimes referred to as the "Exercise Price."
This warrant is exercisable if, and only if, an any time during the
Exercise Period, the closing bid price of the Common Stock shall be less than
US$ 1.26 for 20 consecutive trading days. Upon the happening of such event, this
warrant shall be and remain fully exercisable until the expiration of the
Exercise Period.
The Company has agreed to register the issuance and resale of the
Common Stock issuable upon exercise of this Warrant under the U.S. Securities
Act of 1933, as amended (the "Securities Act"), pursuant to a Registration
Rights Agreement between the Company and the Holder of even date herewith.
In addition, as an alternative to payment of the aggregate exercise
price in accordance with the preceding paragraphs, but only in the event that
the issuance and resale of the Warrant Shares are not subject to a current
effective registration statement under the Securities Act, then the Holder may
elect to effect a cashless exercise by so indicating on the Exercise Form and
including a calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless Exercise").
In the event of a Cashless Exercise, the Holder shall surrender this Warrant for
that number of Common Shares determined by multiplying the number of Warrant
Shares for which this warrant is being exercised by the result obtained from
subtracting the exercise price in effect at such time from the closing price for
the Common Stock on the principal market for the Common Stock on the date
preceding the date of exercise.
A. EXERCISE OF WARRANT
2
This Warrant may be exercised in whole or in part at any time or from
time to time during the Exercise Period; provided, however, that (i) if the last
day of the Exercise Period is a day on which banking institutions in the City of
Toronto are authorized by law to close, then the Exercise Period shall terminate
on the next succeeding day that shall not be such a day, and during such period
the Holder shall have the right to exercise this Warrant into the kind and
amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of shares of Common Stock into which this
Warrant might have been exercisable immediately prior thereto. This Warrant may
be exercised by presentation and surrender hereof to the Company at its
principal office, with the Exercise Form annexed hereto duly executed and
accompanied by payment of the Exercise Price for the number of Warrant Shares
specified in such form. As soon as practicable after each such exercise of the
Warrants, but not later than seven (7) days from the date of such exercise, the
Escrow Holder shall, to the extent that the Company has deposited shares of
Common Stock with the Escrow Holder for that purpose, issue and deliver to the
Holder a certificate or certificates for the designee. If this Warrant should be
exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the rights of the
Holder thereof to purchase the balance of Warrant Shares purchasable thereunder.
Upon receipt by the Company of this Warrant at its principal office, or by the
stock transfer agent of the Company at its office, in proper form for exercise,
the Holder shall be deemed to be holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such shares
of Common Stock shall not then be physically delivered to the Holder.
THIS WARRANT MAY BE EXERCISED ONLY (i) BY A PERSON WHO IS NOT A U.S.
PERSON (AS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT), (ii) IF NOT
EXERCISED ON BEHALF OF A U.S. PERSON, (iii) IF NO U.S. PERSON HAS ANY INTEREST
IN THE WARRANTS BEING EXERCISED OR THE UNDERLYING SECURITIES TO BE ISSUED UPON
EXERCISE, AND (iv) OUTSIDE THE UNITED STATES AND THE WARRANT SHARES UNDERLYING
THE WARRANTS ARE TO BE DELIVERED OUTSIDE THE UNITED STATES. IF THE ABOVE CANNOT
BE COMPLIED WITH, THEN THE WARRANT CAN BE EXERCISED ONLY IF A WRITTEN OPINION OF
COUNSEL, THE FORM AND SUBSTANCE OF WHICH IS ACCEPTABLE TO THE COMPANY, IS
DELIVERED TO THE COMPANY PRIOR TO EXERCISE OF THE WARRANTS BEING EXERCISED THAT
REGISTRATION IS NOT REQUIRED, OR THE UNDERLYING SECURITIES DELIVERED UPON
EXERCISE HAVE BEEN REGISTERED UNDER THE ACT.
B. RESERVATION OF SHARES AND COVENANTS OF THE COMPANY
The Company shall at all times have allotted and reserved for issuance,
and deposited with the Escrow Holder for delivery upon exercise of this Warrant
such number of shares of its Common Stock as shall be required for issuance and
delivery upon exercise of the Warrant.
The Company covenants with the Holder that so long as any Warrants
remain outstanding and may be exercised:
1. it will cause the shares of Common Stock and the certificates
representing the Common Stock subscribed and paid for pursuant
to the exercise of the Warrants to be duly issued and
deposited with the Escrow Holder for delivery in accordance
herewith and the terms hereof;
2. all shares of Common Stock that shall be issued upon exercise
of the right to purchase provided for herein, upon payment of
the prevailing Exercise Price herein provided, shall be fully
paid and non-assessable;
3. it will use its best efforts to maintain its corporate
existence; and
4. generally, it will well and truly perform and carry out all of
the acts or things to be done by it as provided herein.
C. FRACTIONAL SHARES
3
No fractional shares or script 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 a share, determined as follows:
1. If the Common Stock is listed on a National Securities
Exchange or admitted to unlisted trading privileges on such
exchange or listed for trading on the NASDAQ system, the
current market value shall be the last reported sale price of
the Common Stock on such exchange or system on the last
business day prior to the date of exercise of this Warrant or,
if no such sale is made (or reported) on such day, the average
closing bid and asked prices for such day on such exchange or
system; or
2. If the Common Stock is not so listed or admitted to unlisted
trading privileges, the current market value shall be the mean
to the last reported bid and ask prices reported by the
Electronic Bulletin Board or National Quotation Bureau, Inc.
on the last business day prior to the date of the exercise of
this Warrant; or
3. If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and ask prices are not so reported,
the current market value shall be an amount, not less than
book value thereof as at the end of the most recent fiscal
year of the Company ending prior to the date of the exercise
of the Warrant, determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
D. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT
This Warrant is exchangeable, without expense, at the option of the
Holder, upon presentation and surrender hereof to the Company for other warrants
of different denominations entitling the holder thereof to purchase in the
aggregate the same number of shares of Common Stock purchasable hereunder. Upon
surrender of this Warrant to the Company at its principal office, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay any
applicable transfer tax, the Company shall, without charge, execute and deliver
a new Warrant in the name of the assignee named in such Assignment Form and this
Warrant shall promptly be canceled. This Warrant may be divided or combined with
other warrants that carry the same rights upon presentation hereof at the
principal office of the Company, together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed by the
Holder hereof. The term "Warrant" as used herein includes any Warrants into
which this Warrant may be divided or exchanged. Upon receipt of 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) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed or mutilated shall be at
any time enforceable by anyone.
This Warrant and the Common Stock issuable upon exercise of this
Warrant were issued under Regulation S under the Act and may be transferred only
in accordance therewith and as provided in the legends set forth in this
Warrant.
4
E. RIGHTS OF THE HOLDER
The Holder shall not, by virtue hereof, be entitled to any rights of a
shareholder in the Company, either at law or equity, and the rights of the
Holder are limited to those expressed in the Warrant and are not enforceable
against the Company except to the extent set forth herein.
F. ANTI-DILUTION PROVISIONS
The respective Exercise Price in effect at any time and the number and
kind of securities purchasable upon the exercise of the Warrant shall be subject
to adjustment from time to time upon the happening of certain events are
follows:
1. In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in
shares of Common Stock, (ii) subdivide or reclassify its
outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify its outstanding shares
of Common Stock into a smaller number of shares, the
respective Exercise Price in effect at the time of the record
date for such dividend or distribution or of the effective
date of such subdivision, combination or reclassification
shall be adjusted so that it shall equal the price determined
by multiplying the respective Exercise Price by a fraction,
the denominator of which shall be the number of shares of
Common Stock outstanding after giving effect to such action,
and the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such action.
Such adjustment shall be made successively whenever any event
listed above shall occur.
2. Whenever the respective Exercise Price payable upon exercise
of each Warrant is adjusted pursuant to Subsection (1) above,
the number of Shares purchasable upon exercise of this Warrant
shall simultaneously be adjusted by multiplying the respective
number of Shares initially issuable upon exercise of this
Warrant by a fraction, the denominator of which shall be the
Exercise Price after giving effect to such action and the
numerator of which shall be the Exercise Price in effect
immediately prior to such action.
5
3. No adjustment in the respective Exercise Price shall be
required unless such adjustment would require an increase or
decrease of at least one cent ($0.01) in such price; provided,
however, that any adjustment that by reason of this Subsection
(3) is not required to be made shall be carried forward and
taken into account in any subsequent adjustment required to be
made hereunder. All calculations under this Section (F) shall
be made to the nearest cent or to the nearest one-hundredth of
a share, as the case may be. Anything in this Section (F) to
the contrary notwithstanding, the Company shall be entitled,
but shall not be required, to make such changes in the
respective Exercise Price, in addition to those required by
this Section (F), as it shall determine, in its sole
discretion, to be advisable in order that any dividend or
distribution in shares of Common Stock, or any subdivision,
reclassification or combination of Common Stock, hereafter
made by the Company shall not result in any federal income tax
liability to the holders of Common Stock or securities
convertible into Common Stock (including the Warrants).
4. In the event that at any time, as a result of an adjustment
made pursuant to Subsection (1) above, the Holder of this
Warrant thereafter shall become entitled to receive any shares
of the Company, other than Common Stock, thereafter the number
of such other shares so receivable upon exercise of this
Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in
Subsections (1) to (3) inclusive above.
5. Irrespective of any adjustments in the respective Exercise
Price or the related number or kind of shares purchasable upon
exercise of this Warrant, Warrants theretofore or thereafter
issued may continue to express the same price and number and
kind of shares as are stated in the similar Warrants initially
issuable pursuant to this Warrant.
G. OFFICER'S CERTIFICATE
Whenever the respective Exercise Price shall be adjusted as required by
the provisions of the foregoing Section (F), the Company shall forthwith file in
the custody of its Secretary or an Assistant Secretary at its principal office,
an officer's certificate showing the adjusted Exercise Price determined as
herein provided, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of related additional shares of
Common Stock, if any, and such other facts as shall be necessary to show the
reason for and the manner of computing such adjustment. Each such officer's
certificate shall be made available at all reasonable times for inspection by
the holder or any holder of a Warrant executed and delivered pursuant to Section
(A) and the Company shall, forthwith after each such adjustment, mail a copy by
certified mail of such certificate to the Holder or any such holder.
6
H. NOTICES TO WARRANT HOLDERS
So long as this Warrant shall be outstanding, (i) if the Company shall
pay any dividend or make any distribution upon the Common Stock or (ii) if the
Company shall offer to the holders of Common Stock for subscription or purchase
by them any share of any class or any other rights, options or warrants (other
than this Warrant) or (iii) if a capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, at least fifteen (15) days prior
to the date specified, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which a record date
is to be determined for the purpose of such dividend, distribution or issue of
rights, options, or warrants or such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding up
is to take place and the date, if any is to be fixed as of which the holders of
Common Stock or other securities shall receive cash or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up. The failure to give such
notice shall not otherwise affect the action take by the Company.
I. RECLASSIFICATION, REORGANIZATION OR MERGER
In case of any reclassification, capital reorganization or other change
of outstanding shares Common Stock of the Company, or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger with a subsidiary in which merger the Company is the continuing
corporation and that does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
class issuable upon exercise of this Warrant) or in case of any sale, lease or
conveyance to another corporation of the property of the Company as an entirety,
the Company shall, as a condition precedent to such transaction, cause effective
provisions to be made so that the Holder shall have the right thereafter, by
exercising this Warrant at any time prior to the expiration of the Warrant, to
purchase the kind and amount of shares of stock an other securities and property
receivable upon such reclassification, capital reorganization and other change,
consolidation, merger, sale or conveyance by a holder of such number of shares
of Common Stock that might have been purchased upon exercise of this Warrant
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance. Any such provision shall include provision for adjustments that
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Warrant. The foregoing provisions of this Section (I) shall
similarly apply to successive reclassifications, capital reorganizations and
changes of shares of Common Stock and to successive consolidations, mergers,
sales or conveyances. In the event that in connection with any such capital
reorganization or reclassification, consolidation, merger, sale or conveyance,
additional shares of Common Stock shall be issued in exchange, conversion,
substitution or payment, in whole or in part, for a security of the Company
other than Common Stock, any such issue shall be treated as an issue of Common
Stock covered by the provisions of Subsection (1) of Section (F) hereof.
7
J. WARRANTS TO RANK PARI PASSU
All Warrants shall rank pari passu, whatever may be the actual date of
issue of the same.
K. GOVERNING LAW; JURISDICTION AND VENUE
This Warrant shall be governed by and interpreted in accordance with
the laws of the State of Florida; provided, however, that if any provision of
this Agreement is unenforceable under the laws of the State of Florida, but is
enforceable under the laws of ____, then such provision shall be governed by and
interpreted in accordance with the laws of the ______.
The parties agree that the courts of the _______, shall have exclusive
jurisdiction and venue for the adjudication of any civil action between them
arising out of relating to this Agreement, and hereby irrevocably consent to
such jurisdiction and venue.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by the undersigned, each being duly authorized, as of the date
below.
xxxxxxxxxxxx.xxx, Inc.
By:_____________________________
Its:____________________________
DATED: December 22, 1999
ATTEST:
-----------------------
-----------------------
8
FORM OF NOTICE OF EXERCISE
THIS WARRANT MAY BE EXERCISED ONLY (i) BY A PERSON WHO IS NOT A U.S. PERSON (AS
DEFINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED), (ii) IF NOT EXERCISED ON BEHALF OF A U.S. PERSON, (iii) IF NO U.S.
PERSON HAS ANY INTEREST IN THE WARRANTS BEING EXERCISED OR THE UNDERLYING
SECURITIES TO BE ISSUED UPON EXERCISE, AND (iv) OUTSIDE THE UNITED STATES AND
THE WARRANT SHARES UNDERLYING THE WARRANTS ARE TO BE DELIVERED OUTSIDE THE
UNITED STATES. IF THE ABOVE CANNOT BE COMPLIED WITH, THEN THE WARRANT CAN BE
EXERCISED ONLY IF A WRITTEN OPINION OF COUNSEL, THE FORM AND SUBSTANCE OF WHICH
IS ACCEPTABLE TO THE COMPANY, IS DELIVERED TO THE COMPANY PRIOR TO EXERCISE OF
THE WARRANTS BEING EXERCISED THAT REGISTRATION IS NOT REQUIRED, OR THE
UNDERLYING SECURITIES DELIVERED UPON EXERCISE HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933.
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing __________ shares of Common Stock at the
Exercise Price of US$ ______ per share, for a total of US$
_________________.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name_________________________________________
(Please typewrite or print in block letters)
Address______________________________________
______________________________________
______________________________________
The undersigned represents and warrants to xxxxxxxxxxxx.xxx, Inc. that the
conditions for exercise of the within Warrant set forth in the first sentence of
the first paragraph above have been fully complied with and no U.S.
Person has any interest in the Warrant or the Warrant Shares.
Signature____________________________________________________________________
(Sign exactly as your name appears on the first page of this Warrant)
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED,
_________________________________________________________
hereby sells, assigns and transfers unto
Name
_________________________________________________________
(Please typewrite or print in block letters)
Address
_________________________________________________________
_________________________________________________________
the right to purchase shares of Common Stock of Xxxxxxxxxxxx.xxx, Inc.,
represented by this Warrant as to which such right is exercisable and does
hereby irrevocably constitute and appoint__________________________ Attorney, to
transfer the same on the books of Xxxxxxxxxxxx.xxx, Inc., with full power of
substitution in the premises.
Date: __________________________
Signature: ___________________________________________________________________
(sign exactly as your name appears on the first page of this Warrant)
Note: The Warrant and the Common Stock issuable upon exercise of the Warrant
were issued under Regulation S under the Securities Act of 1933, as amended, and
may be transferred only in accordance therewith and as provided in the legends
set forth in the Warrant.
AGENTS' CONTINGENT WARRANT
Warrant No. 61
Void after 5:00 p.m. Toronto, Ontario time, on December 22, 0000
Xxxxxxx to Purchase Shares of Common Stock
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THE SECURITIES
ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE
SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES
OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S PROMULGATED UNDER
THE ACT) UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, PURSUANT TO
REGULATION S OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT AND THE SELLER WILL BE PROVIDED WITH OPINION OF COUNSEL
OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
EXEMPTIONS ARE AVAILABLE. FURTHER HEDGING TRANSACTIONS INVOLVING THE SECURITIES
MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH THE ACT.
-------------------------------------------------------------
CONTINGENT WARRANT TO PURCHASE 150,000 SHARES OF COMMON STOCK
OF
XXXXXXXXXXXX.XXX, INC.
----------------------------------------------------------------
This it to certify that, FOR VALUE RECEIVED, limited or assigns
("Holder") is entitled to purchase, subject to the provisions of this Warrant,
from XXXXXXXXXXXX.XXX, INC., an Idaho corporation (the "Company"), the fully
paid, validly issued and non-assessable shares of Common Stock, $0.02 par value,
of the Company ("Common Stock") at any time or from time to time during the
period from the date hereof, through and including June 30, 2005, but not later
than 5:00 p.m. time, on June 30, 2005 (the "Exercise Period"), at the price of
US$ 2.50 per share (the "Exercise Price"). The total number of shares of Common
Stock to be issued upon exercise of this Warrant shall be shares. The price to
be paid for each share of Common Stock may be adjusted from time to time as
hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant Shares" and the respective exercise price of a share of Common
Stock in effect at any time and as adjusted from time to time is hereinafter
sometimes referred to as the "Exercise Price."
This warrant is exercisable if, and only if, an any time during the
Exercise Period, the closing bid price of the Common Stock shall be less than
US$ 1.26 for 20 consecutive trading days. Upon the happening of such event, this
warrant shall be and remain fully exercisable until the expiration of the
Exercise Period.
The Company has agreed to register the issuance and resale of the
Common Stock issuable upon exercise of this Warrant under the U.S. Securities
Act of 1933, as amended (the "Securities Act"), pursuant to a Registration
Rights Agreement between the Company and the Holder of even date herewith.
In addition, as an alternative to payment of the aggregate exercise
price in accordance with the preceding paragraphs, but only in the event that
the issuance and resale of the Warrant Shares are not subject to a current
effective registration statement under the Securities Act, then the Holder may
elect to effect a cashless exercise by so indicating on the Exercise Form and
including a calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless Exercise").
In the event of a Cashless Exercise, the Holder shall surrender this Warrant for
that number of Common Shares determined by multiplying the number of Warrant
Shares for which this warrant is being exercised by the result obtained from
subtracting the exercise price in effect at such time from the closing price for
the Common Stock on the principal market for the Common Stock on the date
preceding the date of exercise.
A. EXERCISE OF WARRANT
2
This Warrant may be exercised in whole or in part at any time or from
time to time during the Exercise Period; provided, however, that (i) if the last
day of the Exercise Period is a day on which banking institutions in the City of
Toronto are authorized by law to close, then the Exercise Period shall terminate
on the next succeeding day that shall not be such a day, and during such period
the Holder shall have the right to exercise this Warrant into the kind and
amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of shares of Common Stock into which this
Warrant might have been exercisable immediately prior thereto. This Warrant may
be exercised by presentation and surrender hereof to the Company at its
principal office, with the Exercise Form annexed hereto duly executed and
accompanied by payment of the Exercise Price for the number of Warrant Shares
specified in such form. As soon as practicable after each such exercise of the
Warrants, but not later than seven (7) days from the date of such exercise, the
Escrow Holder shall, to the extent that the Company has deposited shares of
Common Stock with the Escrow Holder for that purpose, issue and deliver to the
Holder a certificate or certificates for the designee. If this Warrant should be
exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the rights of the
Holder thereof to purchase the balance of Warrant Shares purchasable thereunder.
Upon receipt by the Company of this Warrant at its principal office, or by the
stock transfer agent of the Company at its office, in proper form for exercise,
the Holder shall be deemed to be holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such shares
of Common Stock shall not then be physically delivered to the Holder.
THIS WARRANT MAY BE EXERCISED ONLY (i) BY A PERSON WHO IS NOT A U.S.
PERSON (AS DEFINED IN REGULATION S PROMULGATED UNDER THE ACT), (ii) IF NOT
EXERCISED ON BEHALF OF A U.S. PERSON, (iii) IF NO U.S. PERSON HAS ANY INTEREST
IN THE WARRANTS BEING EXERCISED OR THE UNDERLYING SECURITIES TO BE ISSUED UPON
EXERCISE, AND (iv) OUTSIDE THE UNITED STATES AND THE WARRANT SHARES UNDERLYING
THE WARRANTS ARE TO BE DELIVERED OUTSIDE THE UNITED STATES. IF THE ABOVE CANNOT
BE COMPLIED WITH, THEN THE WARRANT CAN BE EXERCISED ONLY IF A WRITTEN OPINION OF
COUNSEL, THE FORM AND SUBSTANCE OF WHICH IS ACCEPTABLE TO THE COMPANY, IS
DELIVERED TO THE COMPANY PRIOR TO EXERCISE OF THE WARRANTS BEING EXERCISED THAT
REGISTRATION IS NOT REQUIRED, OR THE UNDERLYING SECURITIES DELIVERED UPON
EXERCISE HAVE BEEN REGISTERED UNDER THE ACT.
B. RESERVATION OF SHARES AND COVENANTS OF THE COMPANY
The Company shall at all times have allotted and reserved for issuance,
and deposited with the Escrow Holder for delivery upon exercise of this Warrant
such number of shares of its Common Stock as shall be required for issuance and
delivery upon exercise of the Warrant.
The Company covenants with the Holder that so long as any Warrants
remain outstanding and may be exercised:
1. it will cause the shares of Common Stock and the certificates
representing the Common Stock subscribed and paid for pursuant
to the exercise of the Warrants to be duly issued and
deposited with the Escrow Holder for delivery in accordance
herewith and the terms hereof;
2. all shares of Common Stock that shall be issued upon exercise
of the right to purchase provided for herein, upon payment of
the prevailing Exercise Price herein provided, shall be fully
paid and non-assessable;
3. it will use its best efforts to maintain its corporate
existence; and
4. generally, it will well and truly perform and carry out all of
the acts or things to be done by it as provided herein.
C. FRACTIONAL SHARES
3
No fractional shares or script 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 a share, determined as follows:
1. If the Common Stock is listed on a National Securities
Exchange or admitted to unlisted trading privileges on such
exchange or listed for trading on the NASDAQ system, the
current market value shall be the last reported sale price of
the Common Stock on such exchange or system on the last
business day prior to the date of exercise of this Warrant or,
if no such sale is made (or reported) on such day, the average
closing bid and asked prices for such day on such exchange or
system; or
2. If the Common Stock is not so listed or admitted to unlisted
trading privileges, the current market value shall be the mean
to the last reported bid and ask prices reported by the
Electronic Bulletin Board or National Quotation Bureau, Inc.
on the last business day prior to the date of the exercise of
this Warrant; or
3. If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and ask prices are not so reported,
the current market value shall be an amount, not less than
book value thereof as at the end of the most recent fiscal
year of the Company ending prior to the date of the exercise
of the Warrant, determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
D. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT
This Warrant is exchangeable, without expense, at the option of the
Holder, upon presentation and surrender hereof to the Company for other warrants
of different denominations entitling the holder thereof to purchase in the
aggregate the same number of shares of Common Stock purchasable hereunder. Upon
surrender of this Warrant to the Company at its principal office, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay any
applicable transfer tax, the Company shall, without charge, execute and deliver
a new Warrant in the name of the assignee named in such Assignment Form and this
Warrant shall promptly be canceled. This Warrant may be divided or combined with
other warrants that carry the same rights upon presentation hereof at the
principal office of the Company, together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed by the
Holder hereof. The term "Warrant" as used herein includes any Warrants into
which this Warrant may be divided or exchanged. Upon receipt of 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) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed or mutilated shall be at
any time enforceable by anyone.
This Warrant and the Common Stock issuable upon exercise of this
Warrant were issued under Regulation S under the Act and may be transferred only
in accordance therewith and as provided in the legends set forth in this
Warrant.
4
E. RIGHTS OF THE HOLDER
The Holder shall not, by virtue hereof, be entitled to any rights of a
shareholder in the Company, either at law or equity, and the rights of the
Holder are limited to those expressed in the Warrant and are not enforceable
against the Company except to the extent set forth herein.
F. ANTI-DILUTION PROVISIONS
The respective Exercise Price in effect at any time and the number and
kind of securities purchasable upon the exercise of the Warrant shall be subject
to adjustment from time to time upon the happening of certain events are
follows:
1. In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in
shares of Common Stock, (ii) subdivide or reclassify its
outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify its outstanding shares
of Common Stock into a smaller number of shares, the
respective Exercise Price in effect at the time of the record
date for such dividend or distribution or of the effective
date of such subdivision, combination or reclassification
shall be adjusted so that it shall equal the price determined
by multiplying the respective Exercise Price by a fraction,
the denominator of which shall be the number of shares of
Common Stock outstanding after giving effect to such action,
and the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such action.
Such adjustment shall be made successively whenever any event
listed above shall occur.
2. Whenever the respective Exercise Price payable upon exercise
of each Warrant is adjusted pursuant to Subsection (1) above,
the number of Shares purchasable upon exercise of this Warrant
shall simultaneously be adjusted by multiplying the respective
number of Shares initially issuable upon exercise of this
Warrant by a fraction, the denominator of which shall be the
Exercise Price after giving effect to such action and the
numerator of which shall be the Exercise Price in effect
immediately prior to such action.
5
3. No adjustment in the respective Exercise Price shall be
required unless such adjustment would require an increase or
decrease of at least one cent ($0.01) in such price; provided,
however, that any adjustment that by reason of this Subsection
(3) is not required to be made shall be carried forward and
taken into account in any subsequent adjustment required to be
made hereunder. All calculations under this Section (F) shall
be made to the nearest cent or to the nearest one-hundredth of
a share, as the case may be. Anything in this Section (F) to
the contrary notwithstanding, the Company shall be entitled,
but shall not be required, to make such changes in the
respective Exercise Price, in addition to those required by
this Section (F), as it shall determine, in its sole
discretion, to be advisable in order that any dividend or
distribution in shares of Common Stock, or any subdivision,
reclassification or combination of Common Stock, hereafter
made by the Company shall not result in any federal income tax
liability to the holders of Common Stock or securities
convertible into Common Stock (including the Warrants).
4. In the event that at any time, as a result of an adjustment
made pursuant to Subsection (1) above, the Holder of this
Warrant thereafter shall become entitled to receive any shares
of the Company, other than Common Stock, thereafter the number
of such other shares so receivable upon exercise of this
Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in
Subsections (1) to (3) inclusive above.
5. Irrespective of any adjustments in the respective Exercise
Price or the related number or kind of shares purchasable upon
exercise of this Warrant, Warrants theretofore or thereafter
issued may continue to express the same price and number and
kind of shares as are stated in the similar Warrants initially
issuable pursuant to this Warrant.
G. OFFICER'S CERTIFICATE
Whenever the respective Exercise Price shall be adjusted as required by
the provisions of the foregoing Section (F), the Company shall forthwith file in
the custody of its Secretary or an Assistant Secretary at its principal office,
an officer's certificate showing the adjusted Exercise Price determined as
herein provided, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of related additional shares of
Common Stock, if any, and such other facts as shall be necessary to show the
reason for and the manner of computing such adjustment. Each such officer's
certificate shall be made available at all reasonable times for inspection by
the holder or any holder of a Warrant executed and delivered pursuant to Section
(A) and the Company shall, forthwith after each such adjustment, mail a copy by
certified mail of such certificate to the Holder or any such holder.
6
H. NOTICES TO WARRANT HOLDERS
So long as this Warrant shall be outstanding, (i) if the Company shall
pay any dividend or make any distribution upon the Common Stock or (ii) if the
Company shall offer to the holders of Common Stock for subscription or purchase
by them any share of any class or any other rights, options or warrants (other
than this Warrant) or (iii) if a capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, at least fifteen (15) days prior
to the date specified, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which a record date
is to be determined for the purpose of such dividend, distribution or issue of
rights, options, or warrants or such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding up
is to take place and the date, if any is to be fixed as of which the holders of
Common Stock or other securities shall receive cash or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up. The failure to give such
notice shall not otherwise affect the action take by the Company.
I. RECLASSIFICATION, REORGANIZATION OR MERGER
In case of any reclassification, capital reorganization or other change
of outstanding shares Common Stock of the Company, or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger with a subsidiary in which merger the Company is the continuing
corporation and that does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
class issuable upon exercise of this Warrant) or in case of any sale, lease or
conveyance to another corporation of the property of the Company as an entirety,
the Company shall, as a condition precedent to such transaction, cause effective
provisions to be made so that the Holder shall have the right thereafter, by
exercising this Warrant at any time prior to the expiration of the Warrant, to
purchase the kind and amount of shares of stock an other securities and property
receivable upon such reclassification, capital reorganization and other change,
consolidation, merger, sale or conveyance by a holder of such number of shares
of Common Stock that might have been purchased upon exercise of this Warrant
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance. Any such provision shall include provision for adjustments that
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Warrant. The foregoing provisions of this Section (I) shall
similarly apply to successive reclassifications, capital reorganizations and
changes of shares of Common Stock and to successive consolidations, mergers,
sales or conveyances. In the event that in connection with any such capital
reorganization or reclassification, consolidation, merger, sale or conveyance,
additional shares of Common Stock shall be issued in exchange, conversion,
substitution or payment, in whole or in part, for a security of the Company
other than Common Stock, any such issue shall be treated as an issue of Common
Stock covered by the provisions of Subsection (1) of Section (F) hereof.
7
J. WARRANTS TO RANK PARI PASSU
All Warrants shall rank pari passu, whatever may be the actual date of
issue of the same.
K. GOVERNING LAW; JURISDICTION AND VENUE
This Warrant shall be governed by and interpreted in accordance with
the laws of the State of Florida; provided, however, that if any provision of
this Agreement is unenforceable under the laws of the State of Florida, but is
enforceable under the laws of ____, then such provision shall be governed by and
interpreted in accordance with the laws of the ______.
The parties agree that the courts of the _______, shall have exclusive
jurisdiction and venue for the adjudication of any civil action between them
arising out of relating to this Agreement, and hereby irrevocably consent to
such jurisdiction and venue.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by the undersigned, each being duly authorized, as of the date
below.
xxxxxxxxxxxx.xxx, Inc.
By:_____________________________
Its:____________________________
DATED: December 22, 1999
ATTEST:
-----------------------
-----------------------
8
FORM OF NOTICE OF EXERCISE
THIS WARRANT MAY BE EXERCISED ONLY (i) BY A PERSON WHO IS NOT A U.S. PERSON (AS
DEFINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED), (ii) IF NOT EXERCISED ON BEHALF OF A U.S. PERSON, (iii) IF NO U.S.
PERSON HAS ANY INTEREST IN THE WARRANTS BEING EXERCISED OR THE UNDERLYING
SECURITIES TO BE ISSUED UPON EXERCISE, AND (iv) OUTSIDE THE UNITED STATES AND
THE WARRANT SHARES UNDERLYING THE WARRANTS ARE TO BE DELIVERED OUTSIDE THE
UNITED STATES. IF THE ABOVE CANNOT BE COMPLIED WITH, THEN THE WARRANT CAN BE
EXERCISED ONLY IF A WRITTEN OPINION OF COUNSEL, THE FORM AND SUBSTANCE OF WHICH
IS ACCEPTABLE TO THE COMPANY, IS DELIVERED TO THE COMPANY PRIOR TO EXERCISE OF
THE WARRANTS BEING EXERCISED THAT REGISTRATION IS NOT REQUIRED, OR THE
UNDERLYING SECURITIES DELIVERED UPON EXERCISE HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933.
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing __________ shares of Common Stock at the
Exercise Price of US$ ______ per share, for a total of US$
_________________.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name_________________________________________
(Please typewrite or print in block letters)
Address________________________________________
________________________________________
________________________________________
The undersigned represents and warrants to xxxxxxxxxxxx.xxx, Inc. that the
conditions for exercise of the within Warrant set forth in the first sentence of
the first paragraph above have been fully complied with and no U.S.
Person has any interest in the Warrant or the Warrant Shares.
Signature____________________________________________________________________
(Sign exactly as your name appears on the first page of this Warrant)
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED,
_________________________________________________________
hereby sells, assigns and transfers unto
Name
_________________________________________________________
(Please typewrite or print in block letters)
Address
_________________________________________________________
_________________________________________________________
the right to purchase shares of Common Stock of xxxxxxxxxxxx.xxx, Inc.,
represented by this Warrant as to which such right is exercisable and does
hereby irrevocably constitute and appoint_____________________________ Attorney,
to transfer the same on the books of xxxxxxxxxxxx.xxx, Inc., with full power of
substitution in the premises.
Date: __________________________
Signature: ___________________________________________________________________
(sign exactly as your name appears on the first page of this Warrant)
Note: The Warrant and the Common Stock issuable upon exercise of the Warrant
were issued under Regulation S under the Securities Act of 1933, as amended, and
may be transferred only in accordance therewith and as provided in the legends
set forth in the Warrant.
PLEDGE AND EXCHANGE AGREEMENT
December 22, 1999
Thomson Kernaghan & Co. Limited
000 Xxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0, Xxxxxx
Reference: Xxxxxxxxxxxx.xxx
Ladies and gentlemen:
Xxxxxxxxxxxx.xxx (the "Company") is offering eight point six-six (8.66) units
(the "Units") in a private placement. Each Unit consists of one 8% Convertible
Promissory Note (each a "Note" and collectively the "Notes") in the principal
amount of $120,150 due April 30, 2000, which is convertible into 95,000 shares
of the Company's common stock ("Common Stock"), and which is secured by the
pledge of 650,000 shares of Common Stock, all as set forth in the term sheet
delivered to you on December 15, 1999, and the transaction documents dated
December 22, 1999, which include a Subscription Agreement, the Notes, a
Registration Rights Agreement, and Warrants (the "Transaction Documents").
In order to induce Thomson Kernaghan & Co. Limited ("Thomson Kernaghan") to
purchase six and 2/3 (6.66) Units, which will be evidenced by the Company's 8%
Convertible Secured Promissory Note (the "Thomson Kernaghan Note")in the
principal amount of $801,000 (which includes the purchase price of the Units and
Thomson Kernaghan's agents fee) and due on April 30, 2000, and in consideration
of your doing so, we, the undersigned hereby jointly and severally represent,
warrant and agree with you as follows:
1. We are the registered and beneficial owners of 650,000 shares of Common
Stock (the "Pledged Shares"). The Pledged Shares have been duly and validly
issued, are fully paid and non-assessable. We have good and marketable
title to the Pledged Shares, free and clear of any liens or claims, with
full power and authority to sell, assign, transfer and deliver the same
(subject to the restrictions set forth in paragraph 2 below).
2. The Shares are restricted securities. On April 6, 2000, (a) one year shall
have elapsed from the date on which each of us acquired and paid the
consideration given for the Shares, (b) our holding period for the Shares
set forth in SEC Rule 144(d) shall have expired, and (c) the Shares shall
be eligible for resale pursuant to SEC Rule 144, provided that there is
then current public information available with respect to the company as
required by SEC Rule 144(c).
Thomson Kernaghan & Co. Limited
December 3, 1999
Page 2
Reference: Xxxxxxxxxxxx.xxx
3. We hereby pledge the Shares to Thomson Kernaghan, and xxxxx Xxxxxxx
Xxxxxxxxx a security interest in the Shares, all pursuant to the Uniform
Commercial Code as in effect in Florida (the "Code"), as collateral for the
prompt and full performance of the Company's obligations under the
Transaction Documents (the "Obligations")including without limitation, the
prompt and full payment of the Thomson Kernaghan Note when due. If the
Company shall for any reason default in its performance or observance of
any of the Obligations, then Thomson Kernaghan shall have and may exercise
all of the remedies of a pledgee and secured party under the Code or as
otherwise provided by applicable law. These remedies are in addition to any
and all remedies provided in the Transaction Documents. Thomson Kernaghan's
remedies shall be cumulative, and the exercise of one shall not preclude
the exercise of any other.
4. The pledge of the Pledged Shares by each of us is a bona fide pledge within
the meaning of SEC Rule 144(d)(iv), and in the event of a default in the
obligation secured by the pledge, the Pledged Shares shall be deemed to
have been acquired by Thomson Kernaghan when they were acquired by each of
us respectively
5. Until the Thomson Kernaghan Note has been paid or converted in full, and
until the Company has fully performed and discharged all of the
Obligations, each of us agrees not to sell, assign or transfer any shares
of the Company's Common Stock without Thomson Kernaghan's prior written
consent.
6. If, for any reason, (a) on April 30, 2000, a registration statement filed
under the Securities Act of 1933, as amended (a "Registration Statement"),
shall not be in effect with respect to the Common Stock into which the
Notes are convertible and the Common Stock underlying the Warrants, or (b)
on or after April 30, 2000, the Company refuses or fails to deliver Common
Stock pursuant to an effective Registration Statement to Thomson Kernaghan
upon conversion of any of the Notes or exercise of any Warrant, then, in
any such event, upon the demand of Thomson Kernaghan, the undersigned shall
promptly deliver to Thomson Kernaghan the number of Shares equal to the
number of shares of Common Stock into which the Notes are convertible, and
the number of shares of Common Stock underlying the Warrants, in exchange
for the Notes and the Warrants or such interest therein as may be
represented by the aggregate number of the Shares, all as Thomson Kernaghan
shall specify.
7. The undersigned hereby irrevocably appoint First Level Capital, Inc., (the
"Custodian"), whose address is 0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxx
Xxxxx, Xxxxxxx 00000, as custodian of the Shares for the benefit of Thomson
Kernaghan, and hereby agree that delivery of the Shares to the Custodian
shall be valid and effective delivery for the account of Xxxxxx Xxxxxxxxx
for the purposes of perfecting the security interest and rights of Thomson
Kernaghan under this agreement.
8. The undersigned have delivered the Shares to the Custodian, and hereby
irrevocably instruct the Custodian to hold the Shares for the benefit of
Thomson Kernaghan. Upon execution of this agreement, the undersigned agree
to execute blank stock powers with respect to the Shares, with their
signatures Medallion guarantied, and to deliver the stock powers to the
Custodian. The undersigned hereby irrevocably instruct the Custodian to
hold and deliver the stock powers together with the certificates for the
Shares to which they relate.
9. The undersigned hereby further irrevocably instruct the Custodian that at
any time on or after April 30, 2000, upon the receipt of a written
statement from Thomson Kernaghan that the Company has defaulted its
performance or observance of the Obligations, the Custodian shall deliver
to Thomson Kernaghan the number of Shares specified in the statement,
together with the executed stock powers related thereto, in exchange for
any Note or Notes, and any Warrants, or any interest in any of the
foregoing, tendered by Thomson Kernaghan with the statement.
10. This agreement shall terminate when the Company shall have fulfilled all of
its Obligations, and a Registration Statement with respect to the Common
Stock underlying the Notes and the Warrants shall continuously have been in
effect for at least 90 trading days.
Thomson Kernaghan & Co. Limited
December 3, 1999
Page 3
Reference: Xxxxxxxxxxxx.xxx
11. This agreement shall be governed by and construed in accordance with the
laws of the state of Florida. The parties hereby consent to the
jurisdiction and venue of the courts of Ontario, Canada, to hear and
determine any action to enforce or construe this agreement. The prevailing
party in any such action shall be entitled to recover reasonable attorney's
fees.
Very truly yours,
------------------------------------ ------------------------------------
Signature Signature
------------------------------------ ------------------------------------
Name Name
------------------------------------ ------------------------------------
Address Address
------------------------------------ ------------------------------------
City, State, Zip Code City, State, Zip Code
------------------------------------ ------------------------------------
Number of Shares Number of Shares
Thomson Kernaghan & Co. Limited
December 3, 1999
Page 4
Reference: Xxxxxxxxxxxx.xxx
The undersigned, First Level Capital, Inc., hereby accepts the appointment as
Custodian of the Shares pursuant to this agreement, and hereby agrees to be
bound as a party hereto and to perform all of its duties hereunder.
First Level Capital, Inc.
By _________________________________
Name _______________________________
Title ______________________________
Date signed ________________________
