WARRANT TO PURCHASE COMMON STOCK of VIEWCAST.COM, INC. Void after December 11, 2013
EXHIBIT 10.3
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT
OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
WARRANT TO PURCHASE COMMON STOCK
of XXXXXXXX.XXX, INC.
of XXXXXXXX.XXX, INC.
Void after December 11, 2013
This Warrant is issued to the Xxxxxxxx Family Partnership, Ltd. (“Holder”) by XxxxXxxx.xxx,
Inc., a Delaware corporation (the “Company”), on December 11, 2006 (the “Warrant Issue Date”).
This Warrant is issued pursuant to the terms of that certain Exchange Agreement dated December 11,
2006, by and between the Company and the Holder (the “Exchange Agreement”).
1. Purchase Shares. Subject to the terms and conditions hereinafter set forth, the
Holder is entitled, upon surrender of this Warrant at the principal office of the Company (or at
such other place as the Company shall notify the holder hereof in writing), to purchase from the
Company up to Two Million Five Hundred Thousand (2,500,000) fully paid and nonassessable shares of
Common Stock, par value $0.0001, of the Company, as constituted on the Warrant Issue Date (the
“Common Stock”). The number of shares of Common Stock issuable pursuant to this Section 1 (the
“Shares”) shall be subject to adjustment pursuant to Section 9 hereof.
2. Exercise Price. The purchase price for the Shares shall be $0.48 per share which
is 110% of the average closing sale price of the Common Stock on the Over-The-Counter Bulletin
Board during the five (5) trading days ending on the date immediately prior to the closing of
transactions contemplated by the Exchange Agreement, as adjusted from time to time pursuant to
Section 9 hereof (the “Exercise Price”).
3. Exercise Period. This Warrant shall be exercisable commencing on the Warrant Issue
Date and shall expire and be of no further force or effect at 4:30 pm (Dallas time) on December 11,
2013 (the “Expiration Date”).
4. Method of Exercise. While this Warrant remains outstanding and exercisable in
accordance with Section 3 above, the Holder may exercise, in whole or in part, the purchase rights
evidenced hereby. Such exercise shall be effected by:
(a) the surrender of the Warrant, together with a duly executed copy of the form of Notice of
Election attached hereto, to the Secretary of the Company at its principal office; and
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(b) the payment to the Company of an amount equal to the aggregate Exercise Price for the
number of Shares being purchased by either, at Holder’s option, (i) certified check or bank draft
or (ii) cancellation of principal or interest owed to Holder by the Company.
5. Accredited Investor. On the date hereof, the Holder is an “accredited investor” as
defined in Rule 501(a) under the Securities Act of 1933, as amended (the “Securities Act”).
Immediately prior to any exercise of the Warrant pursuant to Section 4, the Holder shall provide
the Company with a representation that it is still an “accredited investor” as defined in Rule
501(a) under the Securities Act.
6. Investment Representation. Unless the Shares are issued to the Holder in a
transaction registered under applicable federal and state securities laws, by its execution hereof,
the Holder represents and warrants to the Company that all Shares which may be purchased hereunder
will be acquired by the Holder for investment purposes for its own account and not with any present
intent for resale or distribution in violation of federal or state securities laws. Unless the
Shares are issued to the Holder in a transaction registered under the applicable federal and state
securities laws, all certificates issued with respect to the Shares shall bear the appropriate
restrictive investment legend (such legend to be in substantially the same form as set forth in
that certain Exchange Agreement, dated as the hereof, by and between the Company and the Holder)
and shall be held indefinitely, unless they are subsequently registered under the applicable
federal and state securities laws or the Holder obtains an opinion of counsel, in form and
substance satisfactory to the Company and its counsel, that such registration is not required.
7. Certificates for Shares. Upon the exercise of the purchase rights evidenced by
Section 4 of this Warrant, one or more certificates for the number of Shares so purchased shall be
issued as soon as practicable thereafter (with appropriate restrictive legends, if applicable), and
in any event within ten (10) days of the delivery of the Notice of Election.
8. Issuance of Shares. The Company covenants that the Shares, when issued pursuant to
the exercise of this Warrant under Section 4, will be duly and validly issued, fully paid and
nonassessable.
9. Adjustment of Exercise Price and Number of Shares. The number of and kind of
securities purchasable upon exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time as follows:
(a) Mandatory Reduction in Exercise Price. If, after the date of this Warrant, the
Company authorizes or issues additional shares of its Common Stock, other than pursuant to any
employee stock purchase plan, to any of Xxxxxx Xxxxx, Xxxx Xxxxxx or Xxxxxx Xxxxxx (each, an
“Excluded Executive”) or to any other person that is not an employee, consultant or outside
director of the Company (a “Third Party”) at a purchase price less than the Exercise Price per
share (or with regard to any shares of Common Stock that are granted but not paid for, when the
average closing sale price of the Common Stock during the five (5) trading days ending on the date
immediately prior to such grant), or grants any warrants or options for the purchase of Common
Stock to any Excluded Executive or Third Party with an exercise price less than the Exercise Price
per share, or grants or issues any stock or securities convertible into or exchangeable for Common
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Stock with a conversion price of less than the Exercise Price per share to any Excluded
Executive or Third Party, then the Exercise Price shall be reduced to equal the lowest of any such
price.
(b) Subdivisions, Combinations and Other Issuances. If the Company shall at any time
prior to the expiration of this Warrant subdivide its Common Stock, by split-up or otherwise, or
combine its Common Stock, or issue additional shares of its Common Stock as a dividend or
distribution with respect to any shares of its Common Stock, the number of Shares issuable on the
exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision
or stock dividend or distribution, or proportionately decreased in the case of a combination.
Appropriate adjustments shall also be made to the purchase price payable per share, but the
aggregate purchase price payable for the total number of Shares purchasable under this Warrant (as
adjusted under this Section 9(b)) shall remain the same. Any adjustment under this Section 9(b)
shall become effective at the close of business on the date the subdivision or combination becomes
effective, or as of the record date of such dividend or distribution, or in the event that no
record date is fixed, upon the making of such dividend or distribution.
(c) Reclassification, Reorganization and Consolidation. In case of any
reclassification, capital reorganization, or change in the Common Stock of the Company (other than
as a result of a subdivision, combination, or stock dividend provided for in Section 9(b) above),
then, as a condition of such reclassification, reorganization, or change, lawful provision shall be
made, and duly executed documents evidencing the same from the Company or its successor shall be
delivered to the Holder, so that the Holder shall have the right at any time prior to the
expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of
this Warrant, the kind and amount of shares of stock and other securities and property receivable
in connection with such reclassification, reorganization, or change by a holder of the same number
of shares of Common Stock as were purchasable by the Holder immediately prior to such
reclassification, reorganization, or change. In any such case appropriate provisions shall be made
with respect to the rights and interest of the Holder so that the provisions hereof shall
thereafter be applicable with respect to any shares of stock or other securities and property
deliverable upon exercise hereof, and appropriate adjustments shall be made to the purchase price
per share payable hereunder, provided the aggregate purchase price shall remain the same.
(d) Carry Over of Adjustments. No adjustment of the Exercise Price shall be made if
the amount of such adjustment shall be less than 1% of the Exercise Price in effect immediately
prior to the event giving rise to the adjustment, provided, however, that in such case any
adjustment that would otherwise be required then to be made shall be carried forward and shall be
made at the time of and together with the next subsequent adjustment which, together with any
adjustment so carried forward, shall amount to at least 1% of the Exercise Price.
(e) Discretionary Reduction in Exercise Price. The Company may at any time or from
time to time reduce the Exercise Price of the Warrant.
(f) Notice of Adjustment. Upon any adjustment of the number of Shares and upon any
adjustment of the Exercise Price, then and in each such case the Company shall give written notice
thereof to the Holder, which notice shall state the Exercise Price and the number of Shares or
other securities subject to the unexercised Warrant resulting from such adjustment, and
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shall set forth in reasonable detail the method of calculation and the facts upon which such
calculation is based.
(f) Other Notices. In case at any time prior to the Expiration Date:
| (i) | the Company shall declare any dividend or distribution upon its shares of Common Stock payable in shares; | ||
| (ii) | the Company shall offer for subscription pro rata to the holders of its shares of Common Stock any additional shares of any class or other rights; | ||
| (iii) | there shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation, amalgamation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation; or | ||
| (iv) | there shall be a voluntary dissolution, liquidation or winding-up of the Company, |
then, in any one or more of such cases, the Company shall give to the Holder (A) at least 10 days’
prior written notice of the date on which a record date shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, amalgamation, sale, dissolution,
liquidation or winding-up and (B) in the case of any such reorganization, reclassification,
consolidation, merger, amalgamation, sale, dissolution, liquidation or winding-up, at least 10
days’ prior written notice of the date when the same shall take place. Such notice in accordance
with the foregoing clause (A) shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of shares of Common Stock shall be entitled
thereto, and such notice in accordance with the foregoing clause (B) shall also specify the date on
which the holders of shares of Common Stock shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such reorganization, reclassification,
consolidation, merger, amalgamation, sale, dissolution, liquidation or winding-up, as the case may
be.
(g) Shares to be Reserved. The Company will at all times keep available, and reserve
out of its authorized shares of Common Stock, solely for the purpose of issue upon the exercise of
the Warrant, such number of Shares as shall then be issuable upon the exercise of the Warrant. The
Company will take all such actions as are within its power to ensure that all such Shares may be so
issued without violation of any applicable law.
10. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant, but in lieu of such fractional
shares the Company shall make a cash payment therefor on the basis of the Exercise Price then in
effect.
11. No Stockholder Rights. Prior to exercise of this Warrant, the Holder shall not be
entitled to any rights of a stockholder with respect to the Shares, including (without limitation)
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the right to vote such Shares, receive dividends or other distributions thereon, exercise
preemptive rights or be notified of stockholder meetings, and such holder shall not be entitled to
any notice or other communication concerning the business or affairs of the Company. However,
nothing in this Section 11 shall limit the right of the Holder to be provided the Notices required
under this Warrant. Notwithstanding the foregoing, the Holder shall be deemed a stockholder and
shall be entitled to all of the rights of a stockholder with respect to the Shares immediately upon
satisfying all of Section 4.
12. Participation in Rights Distribution. If at any time, while this Warrant, or any
portion thereof, is outstanding and unexpired, the Company shall issue to all holders of its Common
Stock rights (the “Rights”) entitling the holders thereof to purchase any shares of capital stock,
the Company also shall issue to the Holder identical Rights, with such number of Rights to be
issued to the Holder being based on the number of shares of Common Stock which Holder would then be
entitled to receive if this Warrant had been exercised in full immediately prior to the issuance of
the Rights. Prior to issuing the Rights, the Company shall provide notice to the Holder as set
forth in Section 9(f). In connection with issuing the Rights, the Company will take all necessary
corporate action to at all times keep available and reserve out of its authorized shares of Common
Stock the number of shares of Common Stock issuable upon exercise of the Rights.
13. Transfers of Warrant. The Holder of the Warrants may transfer this Warrant
without restriction to an Affiliate of X.X. Xxxxxxxx (as defined under Rule 405 promulgated
pursuant to the Securities Act) or a family member of X.X. Xxxxxxxx and in compliance with all
applicable federal and state securities laws. Any other transfer of this Warrant must be for the
right to acquire upon exercise at least 200,000 Shares (subject to adjustment for any reverse stock
split or share combination) and in compliance with all applicable federal and state securities
laws. In order for a transferee of this Warrant to receive any of the benefits of such Warrant,
the Company must have received notice of such transfer, pursuant to Section 17 hereof, in the form
of assignment attached hereto, accompanied by an opinion of counsel, which opinion shall be
reasonably acceptable to the Company, that an exemption from registration of this Warrant under the
Securities Act and under any applicable state securities law is available.
14. Replacement. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant or, in the case of mutilation, upon surrender of
this Warrant, the Company will issue to the Holder a replacement warrant (containing the same terms
and conditions as this Warrant).
15. Successors and Assigns. The terms and provisions of this Warrant shall inure to
the benefit of, and be binding upon, the Company and the Holder hereof and their respective
successors and permitted assigns as set forth in Section 13.
16. Amendments and Waivers. Any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived (either generally or in a particular instance
and either retroactively or prospectively), with the written consent of the Company and the Holder.
17. Notices. All notices required under this Warrant shall be deemed to have been
given or made for all purposes (i) upon personal delivery, (ii) upon confirmation receipt that the
communication was successfully sent to the applicable number if sent by facsimile; (iii) one
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business day after being sent, when sent by professional overnight courier service, or (iv) five
days after posting when sent by registered or certified mail. Notices to the Company shall be sent to
the principal office of the Company (or at such other place as the Company shall notify the Holder
hereof in writing). Notices to the Holder shall be sent to the address of the Holder on the books
of the Company (or at such other place as the Holder shall notify the Company hereof in writing).
18. Captions. The section and subsection headings of this Warrant are inserted for
convenience only and shall not constitute a part of this Warrant in construing or interpreting any
provision hereof.
19. Governing Law. This Warrant shall be governed by the laws of the State of
Delaware.
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IN WITNESS WHEREOF, XxxxXxxx.xxx, Inc. caused this Warrant to be executed by an officer
thereunto duly authorized.
| XXXXXXXX.XXX, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Xxxxxx X. Xxxxxx | ||||
| Chief Financial Officer | ||||
| Agreed to and Acknowledged by: | ||||
| XXXXXXXX FAMILY PARTNERSHIP, LTD. | ||||
By:
|
/s/ X.X. Xxxxxxxx, Xx. | |||
| X.X. Xxxxxxxx, Xx. | ||||
| General Partner | ||||
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FORM OF ELECTION TO EXERCISE
The undersigned hereby irrevocably elects to exercise the number of Warrants of XXXXXXXX.XXX,
INC. set out below for the number of Shares (or other property or securities subject thereto) as
set forth below:
(a)
|
Number of Shares to be Acquired: | |||||
(b)
|
Exercise Price per Share: | |||||
(c)
|
Aggregate Purchase Price [(a) multiplied by (b)]: | |||||
and hereby tenders a certified check, bank draft or cash for such aggregate purchase price, and
directs such Shares to be registered and a certificate therefore to be issued as directed below.
DATED this day of , ___.
Per:
Direction as to Registration |
||||
Name of Registered Holder: |
||||
Address of Registered Holder:
|
||||
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FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Warrant.)
desires to transfer the Warrant.)
FOR VALUE RECEIVED hereby sells, assigns
and transfers unto
.
(Please print name and address of transferee)
this Warrant, together with all right, title and interest therein, and does hereby irrevocably
constitute and appoint Attorney, to transfer the within Warrant on
the books of the within-named Company, with full power of substitution.
Dated: , 200_
| Signature | ||||||
| (Signature must conform in all respect to name of holder as specified on the face of the Warrant.) | ||||||
| (Insert Social Security or Other Identifying Number of Holder) | ||||||
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