WARRANT AGREEMENT
TO PURCHASE COMMON STOCK OF
GOLFGEAR INTERNATIONAL, INC.
(Expiring March 1, 2001)
This Agreement, dated as of March 2, 1998, is between GolfGear
International, Inc., a Nevada corporation (the "Company"), and
Yeon Park (the "Warrantholder").
The Company hereby grants a Warrant to purchase up to 217,000
shares of its Common Stock, $0.001 par value, at any time after
March 2, 1998, (hereinafter called the "Commencement Date"), at
the purchase price of $2.00 per share (hereinafter called the
"Purchase Price"), subject to adjustment as to the number of
shares of Common Stock, and to exercise the other appurtenant
rights, powers and privileges, all on the terms and conditions
hereinafter provided.
Section 1. Certain Definitions.
For all purposes of this Warrant, unless the context otherwise
requires:
"Commission" shall mean the Securities and Exchange Commission,
or any other Federal agency then administering the Securities
Act.
"Common Stock" shall mean and include the Company's authorized
Common Stock as the same existed on March 2, 1998.
"Company" shall mean GolfGear International, Inc. and any other
corporation assuming the obligations under the Warrant.
"Warrantholder" shall mean the person(s) to whom this Warrant or
the Warrant Stock is originally issued or is transferred in
accordance with Section 4.
"Securities Act" shall mean the Securities Act of 1933, or any
similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.
"Transfer", as used in Section 4, shall include any disposition
of this Warrant or the Warrant Stock, or of any interest in
either thereof, which would constitute a sale thereof within the
meaning of the Securities Act.
"Warrant" shall mean this Warrant evidencing the rights to
purchase 217,000 shares of Common Stock.
"Warrant Stock" and/or "Shares" shall mean the shares of Common
Stock purchaseable or purchased by the holder of this Warrant
upon the exercise thereof pursuant to Section 2.
Section 2. Exercise and Redemption of Warrant.
Unless the Warrants have been redeemed as provided in this
Section 2, the holder of this Warrant may, at any time after the
Commencement Date and not later than 5 P.M. Los Angeles time, on
the Expiration Date, exercise this Warrant in whole or in part
(but not as to a fractional share of Common Stock) at any time
for the purchase of the 217,000 shares of Common Stock at the
Purchase Price specified in the first sentence of this Warrant.
In order to exercise this Warrant, the holder hereof shall
deliver to the Company (i) a written notice of such holder's
election to exercise this Warrant, which notice shall be in
substantially the form of the Purchase Form appearing at the end
of the Warrant Certificate attached to this Warrant as Exhibit A,
and (ii) shall make payment of the aggregate purchase price of
the shares of Common Stock being purchased, such payment to be
made by the delivery to the Company of a certified check or
checks payable to the Company in an amount equal to such Purchase
Price. The Company shall, as promptly as practicable, and in any
event within 30 days thereafter, execute and deliver or cause to
be executed and delivered, in accordance with said notice, a
certificate or certificates representing the aggregate number of
shares of Common Stock as relate to the Warrant Stock so
purchased upon the exercise of this Warrant. The stock
certificate or certificates so delivered shall be in the
denomination of 1,000 shares of each or such greater denomination
as may be specified in said notice and shall be registered in the
name of such holder or in such other name as shall be designated
in such notice. Such certificate of certificates shall be deemed
to have been issued and such holder or any other person so
designated to be named therein shall be deemed for all purposes
to have become a holder of record of such shares as of the date
said notice is received by the Company as aforesaid. The Company
shall pay all expenses, taxes and other charges payable in
connection with the preparation, issuance and delivery of stock
certificates under this Section.
All Shares of Common Stock issued upon the exercise of this
Warrant shall be validly issued, fully paid and nonassessable.
The Company shall not be required upon any exercise of this
Warrant to issue a certificate representing any fraction of a
share of Common Stock, but, in lieu thereof, shall pay to the
holder of this Warrant cash in an amount equal to a fraction
corresponding to the fraction of a share involved (calculated to
the nearest 1/100 of a share) of the current market price of one
share of Common Stock as of the date of receipt by the Company of
notice of exercise of this Warrant.
The Warrants outstanding at the time of a redemption may be
redeemed at the option of the Company, on 30 days' prior written
notice, in whole or in part, at any time commencing two years
from the Commencement Date or on such earlier date as the closing
bid price of the Common Stock as quoted in the over-the-counter
market or on NASDAQ or any other Stock Exchange, equals or
exceeds 200% of the Purchase Price of the shares for five
consecutive trading days, at a price equal to $0.50 per Warrant
(the "Redemption Price"); provided, however, that the Company
shall have no right to redeem the outstanding Warrants unless
there is on file with the Securities and Exchange Commission a
current registration statement with respect to the Warrants that
enables the holders thereof to exercise the Warrants during the
redemption notice period specified in subsection D, below. Such
redemption right shall also be subject to the additional
requirement that the Company expend reasonable efforts to qualify
the exercise of the Warrants in the State of California. On the
redemption date of the holder of record of redeemed Warrants
shall be entitled to payment of the Redemption Price upon
surrender of such redeemed Warrants to the Company at its
principal office.
Notice of redemption of Warrants shall be given at least 30 days
prior to the redemption date by mailing a copy of such notice to
all of the holders of record of Warrants at their respective
addresses appearing on the books or transfer records of the
Company.
From and after the redemption date, all rights of the
Warrantholders (except the right to receive the Redemption Price)
shall terminate, but only if (i) no later than one day prior to
the redemption date the Company shall have irrevocably deposited
in a special account a sufficient amount to pay on the redemption
date the Redemption Price for all Warrants called for redemption,
and (ii) the notice of redemptions shall have stated the
intention of the Company to deposit such amount in a special
account no later than one day prior to the redemption date.
The Company shall pay to the holders of record of redeemed
Warrants all monies received by the Company for the redemption of
Warrants to which the holders of record of such redeemed Warrants
who shall have surrendered their Warrants are entitled.
Any amounts deposited in the special account that are not
required for redemption of Warrants may be withdrawn by the
Company after six months after the redemption date. The Company
shall be entitled to the interest, if any, on funds deposited in
the special account and the holders of redeemed Warrants shall
have no right to any such interest.
Section 3. Transfer, Division and Combination.
This Warrant and all rights hereunder are transferable. Any such
permitted transfer shall be entered on the books of the Company
to be maintained for such purpose, upon surrender of this Warrant
at the principal office of the Company, together with a written
assignment of this Warrant duly executed by the holder hereof or
his agent or attorney and funds sufficient to pay any stock
transfer taxes payable upon the making of such transfer. Upon
such surrender and payment the Company shall execute and deliver
a new Warrant or Warrants, dated as of the date of issuance
thereof, in the name of the assignee or assignees and in the
denominations specified in such instrument of assignment, and
this Warrant shall promptly be cancelled.
The Company shall pay all expenses, taxes (other than stock
transfer taxes) and other charges payable in connection with the
preparation, issue and delivery of Warrants under this section.
The Company agrees to maintain at its principal office books for
the registration and transfer of the Warrants.
Section 4. Compliance with Securities Act; Registration
Thereunder.
A. No Transfer in Violation of Securities Act. The holder of
the Warrant agrees not to transfer the related Warrant Stock in
any manner which would result in a violation of the registration
provisions of the Securities Act, and the Company shall not be
required to take any action hereunder which would result in a
violation of such provisions.
Representations and Covenants of the Holder. The Holder
represents and warrants to the Company that the Warrant and the
Warrant Stock will be acquired by the Holder for its own account
for investment and not with a view to the distribution thereof,
except that this sentence shall not be deemed to prohibit or
restrict transactions not in violation of this Agreement. As a
condition to transfer of the Warrant or exercise of it the Holder
will be required to acknowledge that this Warrant and the Warrant
Stock are being issued by the Company without registration under
the Securities Act of 1933, as amended (the "Securities Act"),
and may not be offered or sold unless registered or exempt from
registration under the Securities Act. The Holder will be
required to covenant and agree that no Warrants or Warrant Stock
will be offered or sold by or for the account of the Holder
except (i) pursuant to an exemption from registration under the
Securities Act (which exemption is confirmed in a written opinion
of the Holder's counsel addressed to the Company and satisfactory
in form and substance to the Company's counsel) or (ii) pursuant
to an effective registration statement under the Securities Act.
Each certificate representing shares shall bear a legend making
appropriate reference to the foregoing restrictions.
Unless and until removed as provided below, each Warrant
Certificate and the certificates evidencing Warrant Stock shall
bear a legend in substantially the following form:
"The Securities have not been registered under the Securities Act
of 1933, as amended, and may not be sold, pledged or otherwise
transferred unless (A) covered by an effective registration
statement under the Securities Act of 1933, as amended, (B) in
compliance with Rule 144 under such Act, or (C) the Company has
been furnished with an opinion of counsel reasonably acceptable
to the Company to the effect that no registration is required by
such transfer."
The Company shall issue a new certificate which does not contain
such legend if (i) the shares represented by such certificate are
sold pursuant to a registration statement (including a current
Prospectus) which has become and is effective under the
Securities Act, or (ii) the staff of the Securities and Exchange
Commission (or any other Federal agency at the time administering
the Securities Act) (the "Commission") shall have issued a "no
action" letter, reasonably satisfactory to counsel for the
Company, to the effect that such shares may be freely sold and
thereafter traded publicly without registration under the
Securities Act, or (iii) counsel acceptable to the Company shall
have rendered an opinion satisfactory to the Company to the
effect that such shares may be freely sold and thereafter traded
publicly without registration under the Securities Act.
Section 5. Adjustments.
The number of shares of Warrant Stock shall be subject to
adjustment from time to time as follows:
A. Adjustment of Exercise Price in the Event of Stock
Dividends, Stock Splits and Reverse Stock Splits. Anything in
this Section to the contrary notwithstanding, in case the Company
shall at any time issue Common Stock or Convertible Securities by
way of dividend or other distribution on any stock of the Company
of effect a stock split or reverse stock split of the outstanding
shares of Common Stock, the Exercise Price shall be
proportionately decreased in the case of such stock split or
increased in the case of such reversed stock split (on the date
that such stock split or reverse stock split shall become
effective), by multiplying the Exercise Price in effect
immediately prior to the stock dividend, stock split or reverse
stock split by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately prior to such
stock dividend, stock split or reverse stock split, and the
denominator of which is the number of shares of Common Stock
outstanding immediately after such stock dividend, stock split or
reverse stock split.
B. No Adjustment for Small Amounts. Anything in this
Section to the contrary notwithstanding, the Company shall not be
required to give effect to any adjustment in the Exercise Price
unless and until the net effect of one or more adjustments,
determined as above provided, shall have required a change of the
Exercise Price by at least $.05, but when the cumulative net
effect of more than one adjustment so determined shall be to
change the actual Exercise Price by at least %.05, such change in
the Exercise Price shall thereupon be given effect.
C. Number of shares Adjusted. Upon any adjustment of the
Exercise Price, the Holder shall thereafter (until another such
adjustment) be entitled to purchase, at the new Exercise Price,
the number of shares, calculated to the nearest full share,
obtained by multiplying the number of shares of Warrant Stock
initially issuable upon exercise of any of the Warrants by the
Exercise Price in effect on the date hereof and dividing the
product so obtained by the new Exercise Price.
D. Statement on Warrants. Irrespective of any adjustments in
the Exercise Price or the number of kind of shares purchasable
upon the exercise of the Warrants, the Warrant Certificates
theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
Section 6. Officer's Certificate.
Whenever the Exercise Price shall be adjusted as required by the
provision of Section 5 hereof, 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 and setting forth in
reasonable detail the facts requiring such adjustment. Each such
officer's certificate shall be made available at all reasonable
times for inspection by the Holders and the Company shall,
forthwith after each such adjustment, deliver a copy of such
certificate to each of the Holders. Such certificate shall be
conclusive as to the correctness of such adjustment.
Section 7. Notices to Warrantholders.
So long as any Warrant shall be outstanding and unexercised (a)
if the Company shall pay any dividend or make any distribution
upon the Common Stock or (b) if the Company shall offer to the
holders of Common Stock for subscription or purchase by them any
shares of stock of any class or any other rights or (c) if any
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
delivered to the Holders, at lease 30 days prior to the date
specified in (i) or (ii) below, as the case may be, a notice
containing a brief description of the proposed action and stating
the date on which (i) a record is to be taken for the purpose of
such dividend, distribution or rights, or (ii) such
reclassification, reorganization, consolidation, merger,
conveyance, lease, dissolution, liquidation or winding up is to
take place and the date, if any as of which the holders of Common
Stock for securities or other property deliverable upon
reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
Section 8. Closing of Transfer Books.
The Company will not at any time (except on dissolution,
liquidation or winding up of the Company) close its transfer
books against the transfer of any shares of Common Stock issued
or issuable upon exercise of the Warrant in any manner which
interferes with the timely exercise of the Warrant.
Section 9. Transfer of Warrant; Warrant Ledger.
Subject to the provisions of this Agreement, the Warrant and all
rights hereunder are transferable, in whole or in part (but not
as to a fractional share of Common Stock), by written assignment
with appropriate notice to the Company of any such transfer.
The Company shall at all times maintain a ledger indicating the
ownership of the Warrant and the number of shares of Common Stock
as to which the Warrant has been exercised and the date of such
exercise (the "Warrant Ledger"). Upon any transfer of any
interest in the Warrant by the Holder or by a transferee of the
Holder as provided in this Section 9, the Company shall (i) note
such transfer on the Warrant Ledger, (ii) issue and deliver a new
Warrant Certificate (substantially in the form of Exhibit A with
the blanks appropriately completed) evidencing such transferee's
interest in the Warrant and (iii) if the Warrant Certificate
surrendered in connection with such transfer evidenced the right
to acquire a greater number of shares of Common Stock than the
interest which was transferred, issue a new Warrant Certificate
(substantially in the form of Exhibit A with the blanks
appropriately completed) evidencing the right to acquire share of
Common Stock which was not transferred.
Section 10. Payment of Taxes.
The Company will pay all documentary stamp taxes, if any,
attributable to the initial issuance of the shares of Warrant
Stock upon the exercise of Warrants; provided, however, that the
Company shall not be required to pay any tax or taxes which may
be payable in respect of any transfer involved in the issue or
delivery of the Warrant Certificates of the certificates for the
shares of Warrant Stock in a name other than that of the
registered Warrantholder in respect of which such Warrants or
shares of Warrant Stock are issued.
Section 11. Mutilated or Missing Warrant Certificates.
In case any Warrant Certificate shall be mutilated, lost, stolen
or destroyed, the Company shall, at the request of the holder of
such certificate, issue and deliver, in exchange and substitution
for and upon cancellation of the mutilated certificate or
certificates lost, stolen or destroyed, a new Warrant Certificate
or Certificates of like tenor and representing an equivalent
right or interest; but only upon receipt of evidence satisfactory
to the Company of such loss, theft or destruction of such Warrant
Certificate or Certificates, and indemnity, if requested, also
satisfactory (as to form and amount) to the Company. An
application for such a substitute Warrant Certificate or
Certificates shall also comply with such other reasonable
regulation and pay such other reasonable charges as the Company
may prescribe.
Section 12. Reservation of Shares of Warrant Stock.
There has been reserved, and the Company shall at all times keep
reserved so long as any of the Warrants remain outstanding, out
of its authorized Common Stock a number of shares of Common Stock
sufficient to provide for the exercise of the rights of purchase
represented by the outstanding Warrants. The transfer agent for
the Common Stock and every subsequent transfer agent for any
shares of the Company'' capital stock issuable upon the exercise
of any of the rights of purchase aforesaid will be irrevocably
authorized and directed at all times to reserve such number of
authorized as shall be requisite for such purpose. The Company
will keep a copy of this Agreement on file with the transfer
agent for any shares of the Company's capital stock issuable upon
the exercise of the rights of purchase represented by the
Warrants. The Company will supply such transfer agent with duly
executed stock certificates for such purpose and will provide or
otherwise make available any cash which may be payable as
provided in Section 13 hereof. All Warrant Certificates
surrendered in exercise of the rights thereby evidenced shall be
cancelled by the Company.
Section 13. Fractional Shares.
No fractional shares or scrip representing fractional shares
shall be issued upon the exercise of the Warrants. With respect
to any fraction of a share called for upon the exercise of any
Warrant, the Company shall pay to the Warrantholder an amount in
cash equal to such fraction multiplied by the current market
value of such fractional share, determined as follows:
If the Common Stock is listed on a national securities exchange
or admitted to unlisted trading privileges on such exchange, the
current value shall be the last reported sale price of the Common
Stock on such exchange on the last business day prior to the date
of exercise of the Warrant or if no such sale is made on such
day, the average closing bid and asked prices for such day on
such exchange; or
If the Common Stock is not so listed or admitted to unlisted
trading privileges, the current value shall be the mean of the
last reported bid and asked prices reported by the National
Association of Securities Dealers Quotation System ("NASDAQ"),
(or, if not so quoted by NASDAQ, by the National Quotation
Bureau, Inc.) on the last business day prior to the date of the
exercise of the Warrant; or
If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported,
the current value shall be an amount, not less than the book
value, determined in such reasonable manner as may be prescribed
by the board of directors of the Company, such determination to
be final and binding on the Warrantholder.
Section 14. Applicable Law.
This Agreement and each Warrant Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State
of California and for all purposes shall be construed in
accordance with the laws of said state.
Section 15. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any
person or corporation other than the Company and the Holder any
legal or equitable right, remedy or claim under this Agreement
and this Agreement shall be for the sole and exclusive benefit of
such persons, the Company and Holder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first
above-written.
GOLFGEAR INTERNATIONAL, INC.
ATTEST:
/s/ Xxxxxx X. Xxxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxxxx, Xxxxxx X. Xxxxxxxx,
Secretary President
/s/ Yeon Park
Yeon Park
Warrantholder
