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THIS CONVERTIBLE NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR ANY STATE SECURITIES LAWS. THIS NOTE CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR
OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE
SECURITIES LAWS AND WILL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH
SUCH LAWS.
CONVERTIBLE NOTE
THIS NOTE IS NON-NEGOTIABLE AND SUBJECT TO RESTRICTIONS
ON TRANSFER AS DESCRIBED IN SECTION 15.
$___________ Hudson, Ohio
______, 1997
FOR VALUE RECEIVED, Zaxis International Inc., a Delaware corporation
(the "Company"), hereby promises to ______________________________ ("Payee"),
the principal sum of ______________________________ Dollars ($___,000), together
with interest thereon at the rate hereinafter specified.
1. REPAYMENT. On December 31, 1999 (the "Maturity Date"), the
outstanding principal balance, and accrued and unpaid interest thereon, shall be
due and payable in full.
2. INTEREST. The Company shall pay interest at the Maturity Date on the
unpaid principal amount of this Note at an annual rate equal to Nine and
One-Half per cent (9 1/2%) per annum, calculated on a 360 day year.
Interest shall be payable quarterly, commencing January 1, 1998.
3. PAYMENT. Amounts due under this Note are payable in lawful money of
the United States of America at Payee's address set forth above or at such other
location as may be designated by payee.
4. PREPAYMENT. The Company shall have the right, upon five (5) days
written notice to Payee, to prepay any amount of interest or principal due under
this Note at any time without penalty or premium. Any such prepayment shall
first be applied to the amount of interest accrued to the date of such
prepayment, then to the principal amount of this Note.
5. EVENTS OF DEFAULT. In the event of any one of the following:
(a) The Company shall default in the payment of any
amount under this Note when the same becomes due;
(b) The Company shall (i) apply for or consent to the
appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of
creditors, (iii) commence a voluntary case under any
state or federal bankruptcy laws (as now or hereafter
in effect),
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(iv) acquiesce to or fail to have dismissed, within
thirty (30) days, any petition filed against it in
any involuntary case under such bankruptcy laws, or
(v) take any action for the purpose of effecting any
of the foregoing; or
(c) The Company shall admit in writing its inability to
pay its debts as they become due or cease operations
of its present business;
then, at the option of Xxxxx, the entire amount of the principal of and interest
on this Note shall at once become due and payable, without presentment, demand,
protest or notice of protest of any kind, all of which are expressly waived by
the Company. In addition, upon any such event of default, Payee may exercise any
of the remedies provided by law.
6. CONVERSION. The Payee has the right, at its option, at any time
prior to maturity, to convert all, but not part of, the unpaid principal amount
hereof into fully paid and nonassessable $.01 par value shares of Common Stock
of the Company ("Common Stock"), as such shares shall be constituted at the date
of conversion, at the original conversion price of $3.24 principal amount of
this Note for one share of Common Stock, or at the adjusted conversion price in
effect at the time of conversion, determined as provided in Section 10 hereof,
upon surrender of the Note, at the office of the Company accompanied by written
notice of conversion and written evidence of transfer in form acceptable to
Company. Issuance of such shares shall satisfy all of Company's obligations
under this Note. No adjustment in respect of interest or dividends will be made
upon any conversion.
7. WARRANTS. If Payee converts this Note as provided in Section 6, then
as additional consideration for the loan of funds evidenced by this Note and the
conversion onto Common Stock, the Company will issue to Payee a Class Z 1
Warrant granting Payee the right to purchase one share of Common Stock of
Company for each share of Common Stock issued upon such conversion and a Class Z
2 Warrant granting Payee the right to purchase one share of Common Stock of
Company for each share of Common Stock issued upon such conversion. The Class Z
1 and Class Z 2 Warrants shall be subject to the Class Z Warrant Agreement.
8. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes,
if any, attributable to the initial issuance of shares of Common Stock upon the
conversion of this Note, 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 any shares in a name other than that of the
Payee.
9. RESERVATION OF COMMON STOCK. There have been reserved (or will be
reserved in the future, if necessary) out of the authorized and unissued shares
of Common Stock, a number of shares sufficient to provide for the exercise of
the rights of conversion represented by this Note, and the transfer agent for
the Common Stock and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the conversion
rights aforesaid are hereby irrevocably authorized and directed at all times
until after the Maturity Date to reserve such number of authorized and unissued
shares as shall be requisite for such purpose.
10. ADJUSTMENT OF CONVERSION PRICE AND NUMBER OF SHARES. The number and
kind of securities purchasable upon conversion and the conversion price shall be
subject to adjustment from time to time upon the happening of certain events, as
hereinafter defined.
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10.1 MECHANICAL ADJUSTMENTS. The number of shares purchasable
upon conversion and the conversion price shall be subject to adjustment
as follows:
(a) In case the Company shall at any time after the
date of this Note (i) declare a dividend on the Common Stock
payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, (iii) combine the outstanding Common
Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the
Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company
is the continuing corporation), the conversion price in effect
at the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and/or the number and kind of shares or
other securities issuable upon conversion on such date shall
be proportionately adjusted so that after such time the Payee
shall be entitled to receive the aggregate number and kind of
shares or other securities which, if such conversion has taken
place immediately prior to such date and at a time when the
Common Stock transfer books of the Company were open, he would
have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or
reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) No adjustment in the conversion price shall be
required unless such adjustment would require an increase or
decrease of at least $.25 in such price; provided, however,
that any adjustments which by reason of this Section 10.1(b)
are not required to be made shall be carried forward and and
taken into account in any subsequent adjustment. All
calculations under this Section 10.1 shall be made to the
nearest cent and to the nearest one-hundredth of a share, as
the case may be.
(c) Shares of Common Stock at any time owned by the
Company shall not be deemed to be outstanding for purposes of
any computation under this Section 10.1.
10.2 NO ADJUSTMENTS UPON CERTAIN EVENTS. The
conversion price will not be adjusted on the (a) conversion of this
Note, (b) issuance or sale of Common Stock upon the exercise of any
rights, warrants, or options to subscribe for or purchase Common Stock,
or (c) amendment to or change in the terms of any rights, warrants or
options to subscribe for or purchase Common Stock.
10.3 NO ADJUSTMENT FOR DIVIDENDS. Except as provided
in Section 10.1,no adjustment in respect of any dividends shall be made
prior to the Maturity Date or upon conversion of this Note.
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10.4 FRACTIONAL SHARES. If the number of shares of
Common Stock purchasable upon conversion is adjusted pursuant to this
Section 10, the Company shall nevertheless not be required to issue
fractions of shares upon conversion or upon exercise of the Class Z
Warrants. With respect to any fraction of a share called for upon
conversion, the Company shall pay to the Payee an amount in cash equal
to such fraction multiplied by the market price of such fractional
share.
11. NO RIGHTS AS STOCKHOLDERS; NOTICES TO HOLDERS. Nothing contained in
this Note shall be construed as conferring upon the Payee the right to vote or
to receive dividends or to consent to or receive notice as shareholders in
respect of any meeting of shareholders for the election of directors of the
Company or on any other matter, or any rights whatsoever as a shareholder of the
Company as a result of being a holder of this Note.
12. NOTICES. All notices, requests, demands and other communication
under this Agreement must be in writing and will be deemed duly given, unless
otherwise expressly indicated to the contrary in this Agreement, (a) when
personally delivered, (b) upon receipt of a telephonic facsimile transmission
with a confirmed telephonic transmission answer back, (c) one (1) business day
after having been dispatched by an internationally recognized overnight courier
service, or (d) three (3) days after being deposited in the United States mail,
postage prepaid, addressed to the record holder of this Note as set forth in the
records of the Company and to the Company at its principal executive office, as
the case may be.
13. Supplements and Amendments.
---------------------------
(a) MUTUAL MODIFICATIONS. The Company and the Payee may from
time to time supplement or amend this Note in order to cure any
ambiguity or to correct or supplement any provision contained herein,
or to make any other provisions in regard to matters or questions
arising hereunder which the Company and the Payee may deem necessary or
desirable.
(b) COMPANY'S DISCRETION. Upon prior written notice to Payee,
the Company may, in its sole and absolute discretion, (a) decrease the
conversion price, or (b) increase the
number of shares to be received upon conversion.
14. SUCCESSORS. All the covenants and provisions of this Note by or for
the benefit of the Company or the Payee shall bind and inure to the benefit of
their respective successors and permitted assigns hereunder.
15. NON-NEGOTIABILITY; RESTRICTIONS ON TRANSFER; BENEFITS OF THIS
AGREEMENT. This Note is not negotiable and not transferable; PROVIDED, HOWEVER,
this Note may be transferred to persons who are "accredited investors" within
the meaning of Rule 501 promulgated under the Securities Act of 1933 upon the
prior written consent of the Company, which consent will not be unreasonable
withheld. Nothing in this Note shall be construed to give to any person or
corporation other than the Company and the Payee any legal or equitable right,
remedy or claim under this Note. This Note shall be for the sole and exclusive
benefit of the Company and the Payee.
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16. CAPTIONS. The captions of the sections and subsections of this Note
have been inserted for convenience only and shall have no substantive effect.
17. Miscellaneous.
--------------
(a) No waiver, consent or other binding agreement shall
deemed to have been made by Payee or be binding upon
Payee unless specifically granted in writing, which
writing shall be strictly construed. This Note
evidences the absolute and unconditional obligation
of the Company to pay the principal of, and interest
on, this Note. This Note is non-negotiable.
(b) This Note is made in Hudson, Ohio, and shall be
governed by, and shall be interpreted and construed
in accordance with, the laws of the State of Ohio
applicable to contracts and agreements to be
performed solely within the State of Ohio by
residents of the State of Ohio, i.e., without regard
to choice of law principles. Company and Payee each
irrevocably submits to the jurisdiction of any
federal or Ohio court sitting in the vicinity of
Hudson, Ohio over any suit, action or proceeding
arising out of or relating to this Note. Company and
Payee each irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or
hereafter have the laying of the venue of any such
suit, action or proceeding brought in such court and
any claim that any suit, action or proceeding brought
in such a court has been brought in an inconvenient
forum.
IN WITNESS WHEREOF, the Company has executed this convertible Note as
of the date first above written.
ZAXIS INTERNATIONAL INC.
By
-----------------------------------
Xxxxxx Xxxxxx, President
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Name of Investor
ZAXIS INTERNATIONAL INC.
CLASS Z 1 WARRANT AGREEMENT
THE WARRANTS, INCLUDING THE UNDERLYING SHARES OF COMMON STOCK, OFFERED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THE WARRANTS, INCLUDING THE UNDERLYING SHARES OF COMMON STOCK,
CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE RESTRICTIONS ON TRANSFERABILITY CONTAINED IN THIS AGREEMENT
AND APPLICABLE FEDERAL AND STATE SECURITIES LAWS AND WILL NOT BE TRANSFERRED OF
RECORD EXCEPT IN COMPLIANCE WITH SUCH AGREEMENT AND SUCH LAWS.
1. Issuance of Warrants; Form of Warrants. Pursuant to the terms and
conditions of this Warrant Agreement, Zaxis International Inc., a Delaware
corporation (the "Company") hereby agrees to issue and deliver Class Z 1
Warrants (the "Warrants") to purchase _______ shares of Common Stock, $.01 par
value (the "Common Stock") of the Company. The text of the Warrant and of the
form of election to purchase shares shall be substantially as set forth in
EXHIBIT A attached hereto. The Warrants are not transferable; provided, however,
the Warrants may be transferred to persons who are "accredited investors" within
the meaning of Rule 501 promulgated under the Securities Act of 1933 upon the
prior written consent of the Company, which consent will not be unreasonably
withheld.
2. Registration. The Warrants shall be registered on the books of the
Company(the "Warrant Register"). The Company shall be entitled to treat the
Investor as the owner in fact thereof for all purposes and shall not be bound to
recognize any equitable or other claim to or interest in such Warrant on the
part of any other person, and shall not be liable for any registration or
transfer of Warrants which are registered or to be registered in the name of a
fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting such
registration or transfer, or with knowledge of such facts that its participation
therein amounts to bad faith.
3. Term of Warrants; Exercise of Warrants. Subject to the provisions of
this Agreement, the Warrants will be exercisable by the Investor from and after
the date hereof until 5:00 p.m. Cleveland, Ohio local time, on _____________,
1998 (the "Term") and after such time period will no longer be exercisable.
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(a) Each Warrant entitles the Investor to purchase one (1)
share of Common Stock at a purchase price of $2.50 per share of Common
Stock, subject to adjustment (the "Warrant Price").
(b) Subject to the provisions of this Agreement, the Investor
shall have the right to purchase from the Company (and the Company
shall issue and sell to the Investor) the number of fully paid and
nonassessable shares of Common Stock specified in such Warrants, upon
surrender to the Company, or its duly authorized agent, of such
Warrants, with the form of election to purchase duly filled in and
signed, and upon payment to the Company of the Warrant Price, for the
number of shares of Common Stock in respect of which such Warrants are
then exercised. The date of exercise of any Warrant shall be deemed to
be the date of its receipt by the Company duly filled in and signed and
accompanied by proper payment as hereinafter provided. Payment of such
Warrant Price may be made in cash, by personal, certified or official
bank check.
(c) Upon surrender of Warrants, and payment of the Warrant
Price as aforesaid, the Company shall issue and cause to be delivered
with all reasonable dispatch to the Investor a certificate or
certificates for the number of shares of Common Stock so purchased upon
the exercise of such Warrants.
(d) On any partial exercise, the Company shall promptly issue
and deliver to the holder of the Warrant a new Warrant in the name of
that holder providing for the right to purchase the number of shares of
Common Stock as to which the Warrant has not been exercised.
4. Payment of Taxes. The Company will pay all documentary stamp taxes,
if any, attributable to the initial issuance of shares of Common 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 any shares in a name other than that of the
Investor.
5. Reservation of Common Stock. There have been reserved (or will be
reserved in the future, if necessary) out of the authorized and unissued shares
of Common Stock, a number of shares sufficient to provide for the exercise of
the rights of purchase represented by the Warrants, and the transfer agent for
the Common Stock and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid are hereby irrevocably authorized and directed at all times
until after the expiration of the Term to reserve such number of authorized and
unissued shares as shall be requisite for such purpose.
6. Adjustment of Warrant Price and Number of Warrant Shares. The number
and kind of securities purchasable upon the exercise of each Warrant and the
Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events, as hereinafter defined.
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6.1 Mechanical Adjustments. The number of shares purchasable
upon the exercise of each Warrant and the Warrant Price shall be
subject to adjustment as follows:
(a) In case the Company shall at any time after the date of
this Agreement (i) declare a dividend on the Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock,
(iii) combine the outstanding Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), the Warrant Price in effect
at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and/or the
number and kind of shares or other securities issuable upon exercise of
the Warrants on such date shall be proportionately adjusted so that
after such time the Investor shall be entitled to receive the aggregate
number and kind of shares or other securities which, if such Warrant
had been exercised immediately prior to such date and at a time when
the Common Stock transfer books of the Company were open, he would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) No adjustment in the Warrant Price shall be required
unless such adjustment would require an increase or decrease of at
least $.25 in such price; provided, however, that any adjustments which
by reason of this Section 6.1(b) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 6.1 shall be made to the nearest
cent and to the nearest one-hundredth of a share, as the case may be.
(c) Shares of Common Stock at any time owned by the Company
shall not be deemed to be outstanding for purposes of any computation
under this Section 6.1.
6.2 No Adjustments Upon Certain Events. The exercise price
will not be adjusted on the (a) exercise of the Warrants, (b) issuance or sale
of Common Stock upon the exercise of any rights, warrants, or options to
subscribe for or purchase Common Stock, or (c) amendment to or change in the
terms of any rights, warrants or options to subscribe for or purchase Common
Stock.
6.3 No Adjustment for Dividends. Except as provided in Section
6.1, no adjustment in respect of any dividends shall be made during the term of
a Warrant or upon the exercise or conversion of a Warrant.
6.4 Fractional Shares. If the number of shares of Common Stock
purchasable upon the exercise of each Warrant is adjusted pursuant to this
Section 6, the Company shall nevertheless not be required to issue fractions of
shares upon exercise of the Warrants. With respect to any fraction of a share
called for upon any exercise of a Warrant, the Company shall pay to the Investor
an amount in cash equal to such fraction multiplied by the market price of such
fractional share.
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7. No Rights as Stockholders; Notices to Holders. Nothing contained in
this Agreement or in any of the Warrants shall be construed as conferring upon
the Investor the right to vote or to receive dividends or to consent to or
receive notice as shareholders in respect of any meeting of shareholders for the
election of directors of the Company or on any other matter, or any rights
whatsoever as a shareholder of the Company as a result of being a holder of
Warrants.
8. Notices. All notices, requests, demands and other communication
under this Agreement must be in writing and will be deemed duly given, unless
otherwise expressly indicated to the contrary in this Agreement, (a) when
personally delivered, (b) upon receipt of a telephonic facsimile transmission
with a confirmed telephonic transmission answer back, (c) one (1) business day
after having been dispatched by an internationally recognized overnight courier
service, or (d) three (3) days after being deposited in the United States mail,
postage prepaid, addressed to the record holder of the Warrant as set forth in
the Warrant Register and to the Company at its principal executive office, as
the case may be.
9. Supplements and Amendments.
(a) Mutual Modifications. The Company and the Investor may from time to
time supplement or amend this Agreement in order to cure any ambiguity
or to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision herein, or to make
any other provisions in regard to matters or questions arising
hereunder which the Company and the Investor may deem necessary or
desirable and which shall not be inconsistent with the provisions of
the Warrants.
(b) Company's Discretion. Upon prior written notice to Investor, the
Company may, in its sole and absolute discretion, (a) decrease the
Warrant Price, (b) extend the Term, or (c) increase the number of
shares to be received upon exercise of the Warrants.
10. Successors. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Investor shall bind and inure to the
benefit of their respective successors and permitted assigns hereunder.
11. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Investor, any legal or equitable right, remedy or claim under this Agreement.
This Agreement shall be for the sole and exclusive benefit of the Company and
the Investor.
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12. Captions. The captions of the sections and subsections of this
Agreement have been inserted for convenience only and shall have no substantive
effect.
IN WITNESS WHEREOF, the undersigned has executed this Warrant Agreement
this ______ day of __________, 1997.
(Check One)
--------------------------------
_____ Individually Signature of Investor
_____ Joint tenants with
right of survivorship --------------------------------
Investor's Name-please print
_____ Tenants-in-common
(each must sign) --------------------------------
Title (if applicable)
_____ In partnership*
--------------------------------
--------------------------------
_____ As trustee**
--------------------------------
Investor's Daytime Telephone Number
_____ In corporation***
--------------------------------
Social Security of Federal
Identification No.
---------------------------------
Signature of Additional Investor
(i.e., joint tenant or tenant-in-
common)
---------------------------------
Additional Investor's Name-please
print (i.e., joint tenant or
tenant-in-common)
----------------------------------
Title (if applicable)
* Please include a copy of partnership agreement or other document
authorizing investment and signature.
** Please include trust, agency or other agreement or document
authorizing investment and signature.
*** Please Include certified corporate resolution or other document
authorizing investment and signature.
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ACCEPTANCE
On behalf of Zaxis International Inc., the undersigned hereby
accepts the foregoing Warrant Agreement this _____ day of ___________,
1997.
ZAXIS INTERNATIONAL INC.
By:
-----------------------
Its:
-----------------------
Class Z 1 War Agmt D4
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-------------------
Name of Investor
ZAXIS INTERNATIONAL INC.
CLASS Z 2 WARRANT AGREEMENT
THE WARRANTS, INCLUDING THE UNDERLYING SHARES OF COMMON STOCK, OFFERED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THE WARRANTS, INCLUDING THE UNDERLYING SHARES OF COMMON STOCK,
CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE RESTRICTIONS ON TRANSFERABILITY CONTAINED IN THIS AGREEMENT
AND APPLICABLE FEDERAL AND STATE SECURITIES LAWS AND WILL NOT BE TRANSFERRED OF
RECORD EXCEPT IN COMPLIANCE WITH SUCH AGREEMENT AND SUCH LAWS.
1. Issuance of Warrants; Form of Warrants. Pursuant to the terms and
conditions of this Warrant Agreement, Zaxis International Inc., a
Delaware corporation (the "Company") hereby agrees to issue and deliver
Class Z 2 Warrants (the "Warrants") to purchase _______ shares of
Common Stock, $.01 par value (the "Common Stock") of the Company. The
text of the Warrant and of the form of election to purchase shares
shall be substantially as set forth in EXHIBIT A attached hereto. The
Warrants are not transferable; provided, however, the Warrants may be
transferred to persons who are "accredited investors" within the
meaning of Rule 501 promulgated under the Securities Act of 1933 upon
the prior written consent of the Company, which consent will not be
unreasonably withheld.
2. Registration. The Warrants shall be registered on the books of the
Company (the "Warrant Register"). The Company shall be entitled to treat the
Investor as the owner in fact thereof for all purposes and shall not be bound to
recognize any equitable or other claim to or interest in such Warrant on the
part of any other person, and shall not be liable for any registration or
transfer of Warrants which are registered or to be registered in the name of a
fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting such
registration or transfer, or with knowledge of such facts that its participation
therein amounts to bad faith.
3. Term of Warrants; Exercise of Warrants. Subject to the provisions of
this Agreement, the Warrants will be exercisable by the Investor from and after
the date hereof until 5:00 p.m. Cleveland, Ohio local time, on _____________,
1999 (the "Term") and after such time period will no longer be exercisable.
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(a) Each Warrant entitles the Investor to purchase one (1)
share of Common Stock at a purchase price of $4.00 per share of Common
Stock, subject to adjustment (the "Warrant Price").
(b) Subject to the provisions of this Agreement, the Investor
shall have the right to purchase from the Company (and the Company
shall issue and sell to the Investor) the number of fully paid and
nonassessable shares of Common Stock specified in such Warrants, upon
surrender to the Company, or its duly authorized agent, of such
Warrants, with the form of election to purchase duly filled in and
signed, and upon payment to the Company of the Warrant Price, for the
number of shares of Common Stock in respect of which such Warrants are
then exercised. The date of exercise of any Warrant shall be deemed to
be the date of its receipt by the Company duly filled in and signed and
accompanied by proper payment as hereinafter provided. Payment of such
Warrant Price may be made in cash, by personal, certified or official
bank check.
(c) Upon surrender of Warrants, and payment of the Warrant
Price as aforesaid, the Company shall issue and cause to be delivered
with all reasonable dispatch to the Investor a certificate or
certificates for the number of shares of Common Stock so purchased upon
the exercise of such Warrants.
(d) On any partial exercise, the Company shall promptly issue
and deliver to the holder of the Warrant a new Warrant in the name of
that holder providing for the right to purchase the number of shares of
Common Stock as to which the Warrant has not been exercised.
4. Payment of Taxes. The Company will pay all documentary stamp taxes,
if any, attributable to the initial issuance of shares of Common 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 any shares in a name other than that of the
Investor.
5. Reservation of Common Stock. There have been reserved (or will be
reserved in the future, if necessary) out of the authorized and unissued shares
of Common Stock, a number of shares sufficient to provide for the exercise of
the rights of purchase represented by the Warrants, and the transfer agent for
the Common Stock and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid are hereby irrevocably authorized and directed at all times
until after the expiration of the Term to reserve such number of authorized and
unissued shares as shall be requisite for such purpose.
6. Adjustment of Warrant Price and Number of Warrant Shares. The number
and kind of securities purchasable upon the exercise of each Warrant and the
Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events, as hereinafter defined.
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6.1 Mechanical Adjustments. The number of shares purchasable
upon the exercise of each Warrant and the Warrant Price shall be
subject to adjustment as follows:
(a) In case the Company shall at any time after the date of
this Agreement (i) declare a dividend on the Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock,
(iii) combine the outstanding Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), the Warrant Price in effect
at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and/or the
number and kind of shares or other securities issuable upon exercise of
the Warrants on such date shall be proportionately adjusted so that
after such time the Investor shall be entitled to receive the aggregate
number and kind of shares or other securities which, if such Warrant
had been exercised immediately prior to such date and at a time when
the Common Stock transfer books of the Company were open, he would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) No adjustment in the Warrant Price shall be required
unless such adjustment would require an increase or decrease of at
least $.25 in such price; provided, however, that any adjustments which
by reason of this Section 6.1(b) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 6.1 shall be made to the nearest
cent and to the nearest one-hundredth of a share, as the case may be.
(c) Shares of Common Stock at any time owned by the Company
shall not be deemed to be outstanding for purposes of any computation
under this Section 6.1.
6.2 No Adjustments Upon Certain Events. The exercise price
will not be adjusted on the (a) exercise of the Warrants, (b) issuance or sale
of Common Stock upon the exercise of any rights, warrants, or options to
subscribe for or purchase Common Stock, or (c) amendment to or change in the
terms of any rights, warrants or options to subscribe for or purchase Common
Stock.
6.3 No Adjustment for Dividends. Except as provided in Section 6.1, no
adjustment in respect of any dividends shall be made during the term of a
Warrant or upon the exercise or conversion of a Warrant.
6.4 Fractional Shares. If the number of shares of Common Stock
purchasable upon the exercise of each Warrant is adjusted pursuant to this
Section 6, the Company shall nevertheless not be required to issue fractions of
shares upon exercise of the Warrants. With respect to any fraction of a share
called for upon any exercise of a Warrant, the Company shall pay to the Investor
an amount in cash equal to such fraction multiplied by the market price of such
fractional share.
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7. No Rights as Stockholders; Notices to Holders. Nothing contained in
this Agreement or in any of the Warrants shall be construed as conferring upon
the Investor the right to vote or to receive dividends or to consent to or
receive notice as shareholders in respect of any meeting of shareholders for the
election of directors of the Company or on any other matter, or any rights
whatsoever as a shareholder of the Company as a result of being a holder of
Warrants.
8. Notices. All notices, requests, demands and other communication
under this Agreement must be in writing and will be deemed duly given, unless
otherwise expressly indicated to the contrary in this Agreement, (a) when
personally delivered, (b) upon receipt of a telephonic facsimile transmission
with a confirmed telephonic transmission answer back, (c) one (1) business day
after having been dispatched by an internationally recognized overnight courier
service, or (d) three (3) days after being deposited in the United States mail,
postage prepaid, addressed to the record holder of the Warrant as set forth in
the Warrant Register and to the Company at its principal executive office, as
the case may be.
9. Supplements and Amendments.
(a) Mutual Modifications. The Company and the Investor may from time to
time supplement or amend this Agreement in order to cure any ambiguity
or to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision herein, or to make
any other provisions in regard to matters or questions arising
hereunder which the Company and the Investor may deem necessary or
desirable and which shall not be inconsistent with the provisions of
the Warrants.
(b) Company's Discretion. Upon prior written notice to Investor, the
Company may, in its sole and absolute discretion, (a) decrease the
Warrant Price, (b) extend the Term, or (c) increase the number of
shares to be received upon exercise of the Warrants.
10. Successors. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Investor shall bind and inure to the
benefit of their respective successors and permitted assigns hereunder.
11. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Investor, any legal or equitable right, remedy or claim under this Agreement.
This Agreement shall be for the sole and exclusive benefit of the Company and
the Investor.
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12. Captions. The captions of the sections and subsections of this
Agreement have been inserted for convenience only and shall have no substantive
effect.
IN WITNESS WHEREOF, the undersigned has executed this Warrant Agreement
this ______ day of __________, 1997.
(Check One)
--------------------------------
_____ Individually Signature of Investor
_____ Joint tenants with
right of survivorship --------------------------------
Investor's Name-please print
_____ Tenants-in-common
(each must sign) --------------------------------
Title (if applicable)
_____ In partnership*
--------------------------------
--------------------------------
_____ As trustee**
--------------------------------
Investor's Daytime Telephone Number
_____ In corporation***
--------------------------------
Social Security of Federal
Identification No.
---------------------------------
Signature of Additional Investor
(i.e., joint tenant or tenant-in-
common)
---------------------------------
Additional Investor's Name-please
print (i.e., joint tenant or
tenant-in-common)
----------------------------------
Title (if applicable)
* Please include a copy of partnership agreement or other document
authorizing investment and signature.
** Please include trust, agency or other agreement or document
authorizing investment and signature.
*** Please Include certified corporate resolution or other document
authorizing investment and signature.
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ACCEPTANCE
On behalf of Zaxis International Inc., the undersigned hereby
accepts the foregoing Warrant Agreement this _____ day of ___________,
1997.
ZAXIS INTERNATIONAL INC.
By:
-------------------------
Its:
-------------------------
Class Z 2 War Agmt D4
6
