WARRANT AGREEMENT
This Warrant agreement (this "Agreement") is made as of April 23, 1998
by and between Xxxxxx Natural Corporation, a Delaware corporation (the
"Company"), and Xxxx Xxxx (the "Holder").
Preliminary Recitals
A Xxxx Xxxx is an international radio personality and talk show host
and has been appointed to be an endorser of and a spokesman for the products of
the Xxxxxx Beverage Company, ("HBC"), the Company's wholly-owned subsidiary (the
"Products"), pursuant to a certain written letter agreement entered into between
the Xxxxxx Beverage Company and the Holder (the "Representation Agreement").
B. As compensation to the Holder for the services to be rendered by him
for and on behalf of the Company and to actively represent, promote and develop
the Xxxxxx'x brand and products over the period of the Agreement, the Company
desires to grant to the Holder a warrant to purchase up to 150,000 shares of
common stock, par value $.005 per share, of the Company ("Common Stock"), on the
terms and subject to the conditions set forth below.
NOW, THEREFORE, the Company and Holder agree as follows:
1. Grant of Warrant The Company hereby grants to Holder a warrant to
purchase up to 150,000 shares of Common Stock at a purchase price of $2.50 per
share.
2. Exercise Period The Warrant shall be exercisable during the period
(the "Exercise Period") commencing on the respective dates provided for in
Section 3 below and expiring on the earlier to occur of:
(x) one (1) year after the expiration or termination of the
Representation Agreement and
(y) December 14, 2000.
3. Exercise of Warrant
(a) Subject to the other terms of this Agreement regarding the
exercisability of the Warrant, the Warrant may be exercised during the Exercise
Period in respect of the number of shares of Common Stock listed in Column A
from and after the exercise dates listed opposite such number in Column B:
A B
Number of Shares Exercise Date
8,333 July 15, 1998
8,333 August 15, 1998
8,333 September 15, 1998
8,333 October 15, 1998
8,333 November 15, 1998
8,333 December 15, 1998
8,333 January 15, 1999
8,333 February 15, 1999
8,333 March 15, 1999
8,333 April 15, 1999
8,333 May, 15, 1999
8,333 June 15, 1999
8,333 July 15, 1999
8,333 August 15, 1999
8,333 September 15, 1999
8,333 October 15, 1999
8,333 November 15, 1999
8,339 December 15, 1999
(b) The Warrant vesting schedule set forth in paragraph (a) above shall
in respect of each exercise date be subject to the Holder having actively
promoted the Xxxxxx'x brand and products up to and including that date in
accordance with the Representation Agreement.
(c) This Warrant may be exercised, to the extent exercisable by its
terms, from time to time, in whole or in part, at any time prior to the
expiration thereof. Any exercise shall be accompanied by written notice to the
Company specifying the number of shares as to which this Warrant is being
exercised, in the form attached to the Warrant Certificate. Notations of any
partial exercise or installment exercise, shall be made by the Company and
attached as a schedule hereto.
(d) The Company shall issue the Warrant Certificate or certificates
evidencing the Warrant Shares within fifteen (15) days after receipt of such
notice and payment as hereinafter provided.
4. Payment of Purchase Price Upon Exercise. At the time of any exercise
of the Warrant the purchase price for the Warrant Shares shall be paid in full
to the Company in either or any combination of the following ways:
(a) by check or other immediately available funds; or
(b) with property consisting of shares of Common Stock or by
relinquishing a portion of the Warrant that is at that time exercisable, equal
in value (determined as set forth below) to the exercise price for the Warrant
Shares then purchased. The shares of Common Stock or the portion of the Warrant
that Holder relinquishes shall be valued as of the date of exercise of the
Warrant by the Holder, at the closing price, in the case of consideration
consisting of shares, or at the excess of the closing price over $2.50
multiplied by number of shares subject to that portion of the Warrant that is
being relinquished, in the case of a portion of the Warrant being relinquished.
For example, if a Holder exercises the Warrant for 300 shares for a total
exercise price of $750.00 and the closing price is $5.00, the Holder may pay for
the 300 Warrant Shares by delivering 150 shares of Common Stock to the Company
or by relinquishing his right to exercise the Warrant for an additional 300
shares that are subject to the Warrant and are then exercisable.
For the purpose of this Agreement, the term "closing price"
means, with respect to the Company's Common Stock, the last sale price regular
way or, in case no such sales take place on such date, the average of the
closing and asked prices regular way on the principal national securities
exchange on which the Common Stock is listed or admitted to trading; or if the
Common Stock is not then listed or admitted to trading on any national
securities exchange, the last sale price of the Common Stock on the consolidated
transaction reporting system of the National Association of Securities Dealers
Inc. ("NASD"), if such last sale information is reported on such system or, if
not so reported, the average of the closing bid and asked prices of the Common
Stock on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or any comparable system or, if the securities are not listed
on NASDAQ or a comparable system, the average of the closing bid and asked
prices as furnished by two members of the NASD selected from time to time by the
Company for that purpose.
5. Purchase for Investment; Resale Restrictions. (a) The Holder hereby
represents, and each assignee of Holder as a condition to transfer shall
represent, that he is acquiring or will acquire the Warrant and the Warrant
Shares for his own account, for investment only with no present intention of
distributing or reselling such securities or any part thereof. Unless at the
time of the acquisition of the Warrant or the exercise of the Warrant, as the
case may be, there shall be, in the opinion of counsel for the Company, a valid
and effective registration statement under the Securities Xxx 0000 ("1933 Act")
and appropriate qualification and registration under applicable state securities
laws relating to the Warrant or the Warrant Shares, as the case may be, the
Holder shall, prior to the assignment of the Warrant or upon exercise of the
Warrant or any portion thereof, as the case may be, give a representation that
he is acquiring such Warrant or Warrant Shares, as the case may be, for his own
account, only for investment and not with the view to the resale or distribution
of any of such securities. In the absence of such registration statement, the
Holder shall execute a written affirmation, in form reasonably satisfactory to
the Company, of such investment intent. The Holder further agrees that he will
not sell or transfer the Warrant or any Warrant Shares, as the case may be,
until he requests and receives an opinion from the Company's counsel, or other
counsel reasonably satisfactory to the Company, to the effect that such proposed
sale or transfer will not result in a violation of the 1933 Act or a
registration statement covering the sale or transfer of the Warrant or Warrant
Shares, as the case may be, has been declared effective by the Securities and
Exchange Commission ("SEC"), or he obtains a no action letter from the SEC with
respect to the proposed transfer. There shall be stamped on the certificate(s)
representing the Warrant or Warrant Shares, as the case may be, an appropriate
legend giving notice of the acquisition of such Warrant or Warrant Shares, as
the case may be, for investment and the restriction on their transfer by reason
thereof.
6. Adjustments. In the event of any change in the outstanding Common
Stock of the Company by reason of any stock recapitalization, merger,
consolidation, combination or exchange of shares, the kind of shares subject to
the Warrant and/or their purchase price per share and/or the number of shares
shall be appropriately adjusted consistent with such change in such manner as
the Board of Directors of the Company may deem equitable in their reasonable
discretion. In the event of a stock dividend or stock split, the kind of shares,
the purchase price per share and number of shares shall be appropriately
adjusted, consistent with such change in such manner as the Board of Directors
may deem equitable in their reasonable discretion.
7. No Rights of Stockholder. The Holder shall have no rights as a
stockholder with respect to any Warrant Shares prior to the date of purchase
thereof and issuance to him of a certificate or certificates for such shares.
8. No Right to Continue Representation Agreement. This Agreement shall
not confer on the Holder or Licensee any rights with respect to continuance of
the Representation Agreement nor shall it interfere in any way with the rights
of any of the parties to terminate the Representation Agreement at any time.
9. Compliance With Law and Regulations. This Agreement and the
obligation of the Company to sell and deliver the Warrant and the Warrant Shares
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
If, at any time, the Board of Directors of the Company shall determine that (a)
the listing, registration or qualification of the Warrant Shares upon any
securities exchange or under any state or federal law or (b) the consent or
approval of any government regulatory body, is necessary or desirable as a
condition to, or in connection with, the offer, sale and issuance of the Warrant
Shares, the Warrant shall not be exercised by the Holder in whole or in part
unless such listing, registration, qualification, consent, approval or agreement
shall have been effected or obtained, free of any conditions not acceptable to
the Board of Directors of the Company, acting reasonably.
10. Tax Withholding Requirements. The Company shall have the right to
require the Holder to remit to the Company an amount sufficient to satisfy any
federal, state or local withholding or other tax requirements applicable to the
sale of the Warrant or the issuance and sale of the Warrant Shares prior to the
delivery of any Warrant Certificate or Certificates for the Warrant Shares.
11. Change of Control. Notwithstanding anything herein to the contrary
upon the occurrence of a change in control then provided that Holder is not in
breach of any of the provisions of the Representation Agreement and the
Representation Agreement is of full force and effect at that time, Holder shall
have the right to elect to terminate the Representation Agreement and in that
event fifty percent (50%) of the remaining shares subject to this Warrant which
have not yet vested in the Holder in terms of 3(a) above shall thereupon
immediately vest in him and the balance shall fall way and the Exercise Period
shall expire one (1) year after the date of such election. Consequently, at any
time prior to the expiration of the Exercise Period Holder shall be entitled to
exercise this Warrant in respect of that number of Warrant Shares that shall
have vested in the Holder prior thereto together with that number of Warrant
Shares that shall automatically vest in him upon such termination, in accordance
with the provisions of this agreement. In exercising his right to elect to
terminate the Representation Agreement in terms of this paragraph, Holder shall
be obliged to act reasonably in the circumstances existing at that time. For the
purposes of this agreement "change in control" means
A. The acquisition of "beneficial ownership" by any person (as
defined in rule 13(d) - 3 under the Securities Exchange Act 1934), corporation
or other entity other than Xxxxxx or a wholly owned subsidiary of Xxxxxx of
forty percent (40%) or more of the outstanding stock,
B. the sale or disposition of substantially all of the assets
of Xxxxxx.
12. Fractional Shares. Notwithstanding any other provision of this
Agreement, no fractional shares of stock shall be issued upon the exercise of
this Warrant and the company shall not be under any obligation to compensate the
Holder in any way for such fractional shares.
13. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
14. Counterparts. This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all of such counterparts taken together will constitute one and the
same Agreement.
15. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this Agreement
and shall not be used in the interpretation hereof.
16. Successors and Assigns. This Agreement shall be binding upon any
and all successors and assigns of the parties.
17. Amendments. This Agreement may not be modified, amended, altered,
or supplemented except upon the execution and delivery of a written agreement
executed by Holder and the Company.
18. Governing Law. This Agreement shall be construed according to the
laws of the State of Delaware without giving effect to the conflict of law
provisions thereof, and all provisions hereof shall be administered according to
and its validity shall be determined under, the laws of such state, except where
preempted by federal laws.
19. Notices. Any notice or other required or permitted communication
hereunder shall be in writing directed as follows:
(a) If to the Company to:
Xxxxxx Natural Corporation
0000 Xxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention, Chairman
with copies to:
Xxxxxxx Breed Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention, Xxxxxxxx X. Xxxx, Esq.
(b) If to the Holder;
c/o Xxxxxx Xxxxx
Xxxxxx Xxxxx & Company, LLP
00000 Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
All notices shall be deemed duly given and received on the
date of actual receipt if delivered in person or by facsimile and on the fifth
day next succeeding the date of mailing if sent by U.S. mail.
20. No Third Party Beneficiaries. The rights, benefits, releases and
obligations set forth herein are solely for the benefit of the parties and,
except as expressly provided herein, no third party shall have any rights
hereunder.
21. If, at any time prior to the expiration of a period of one (1) year
after the date on which this option is exercised by Holder the Company proposes
to file a registration statement under the 1933 Act with respect to an offering
by the Company for its own account of its shares of common stock (other than a
registration statement on Form S4 or S8 (or any substitute form that may be
adopted by the SEC) or a registration statement filed in connection with an
exchange offering of securities solely to the Company's existing security
holders), then the Company shall give written notice of such proposed filing to
Holder as soon as practicable (but in no event less than 20 days before the
anticipated filing date) and such notice shall offer the Holder the opportunity
to register the Warrant and/or the Warrant Shares, as the case may be, provided
the Holder requests such registration within 10 days of receipt of such notice
(which request shall specify the Warrant and/or number of Warrant Shares
intended to be disposed of by Holder and the intended method of distribution
thereof) (a "Piggy Back" Registration). The Company shall, or in an underwritten
offering shall use its best efforts to cause the managing Underwriter or
Underwriters of a proposed underwritten offering to permit the Warrant and/or
the Warrant Shares requested to be included in a Piggy Back Registration to be
included on the same terms and conditions as any similar securities of the
Company included therein and to permit the sale or other disposition of such
Warrant and/or Warrant Shares in accordance with the intended method of
distribution thereof as specified by the Holder by written notice given in
accordance with the terms hereof. The Company may withdraw a Piggy Back
Registration at any time prior to the time it becomes effective. Notwithstanding
anything contained herein, if the managing Underwriter or Underwriters of an
offering described above determines, in good faith, that the size of the
offering that the Company, the Holder and any other persons intend to make is
such that the success of the offering would be adversely affected by the
inclusion of the Warrant and/or Warrant Shares requested to be included, then,
if securities are being offered for the account of other persons as well as the
Company, the securities the Company seeks to include shall have priority however
securities sought to be included by any other person (including the Holder) and,
with respect to the securities intended to be offered by Holder, the proportion
by which the amount of such class of securities intended to be offered by Holder
is reduced shall not exceed the proportion by which the amount of such class of
securities intended to be offered by such other persons is reduced (it being
understood that with respect to the Holder and third parties such reduction may
be all of such class of securities). The Holder undertakes to do all such things
and sign all such documents and provide all such information as may be required
by the Company to prepare the appropriate Registration Statement and Prospectus
and which may be reasonably required to facilitate the disposition of the
Warrant and/or Warrant Shares.
22. This Agreement is conditional upon and subject to the Board of
Directors of the Company ratifying this Agreement on or before June 20, 1998.
23. The Company represents and warrants that it is not aware of any
existing federal or state law or governmental or regulatory agency requirement
that would limit the ability of the Company to issue the Warrants contemplated
herein in terms of this Agreement or the Holders ability to exercise such
warrants. The Company undertakes to take reasonable steps to ensure that it
remains in compliance with any and all such federal and state rules, regulations
and laws.
24. Any disagreement, dispute or claim arising out of or relating to
this agreement or the breach or termination hereof shall be settled by
arbitration in accordance with the rules of the American Arbitration Association
and judgement on the award rendered by the arbitrator may be entered in any
court having jurisdiction. The parties agree that in rendering an award the
arbitrator shall have no jurisdiction to consider evidence with respect to or to
render any award or judgement for punitive or exemplary damages or any other
amount awarded for the purposes of imposing a penalty. The parties specifically
waive any claims for punitive or exemplary damages or any other amount awarded
for the purposes of imposing a penalty, that arise out of or are related to this
Agreement or the conduct of the parties in connection with this Agreement. The
arbitrator shall have the power to award reasonable attorney's fees.
IN WITNESS WHEREOF the parties have executed this Agreement as the date
first written above.
XXXXXX NATURAL CORPORATION
By:
Name: Xxxxxx X. Xxxxx
Title: Chairman and Chief
Executive Officer
HOLDER
By:
Name:
RCS-2946.Doc
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAW OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
XXXXXX NATURAL CORPORATION
WARRANT TO PURCHASE SHARES OF COMMON STOCK
The Transferability of this Warrant is restricted as set forth in the
related Warrant Agreement, a copy of which may be obtained from the
Company at its principal office.
No. DIP-_______ Up to 150,000 SHARES
THIS CERTIFIES THAT for value received Xxxx Xxxx (the
"Holder") or registered assigns is the owner of a Warrant to purchase during the
period expiring no later than 5:00 p.m. New York time on December 14, 2000
(subject to earlier expiration as provided in the Warrant Agreement between the
Company and the Holder, the "Warrant Agreement"), the number of fully paid and
non-assessable shares of Common Stock, $.005 par value per share, of Xxxxxx
Natural Corporation, a Delaware corporation (hereinafter called the "Company"),
specified above upon payment of the Warrant Price (as defined below); provided,
however, that, as set forth in the Warrant Agreement, the right to purchase the
number of shares of the Company's Common Stock set forth above shall vest and
become exercisable only in accordance with the schedule set forth in the Warrant
Agreement and may in addition be reduced in the circumstances described therein.
In addition to the foregoing, as provided in the Warrant
Agreement, certain adjustments may be made in the discretion of the Board of
Directors of the Company in the number of shares of Common Stock issuable upon
exercise of this Warrant in the event of the change in the number of shares of
Common Stock of the Company outstanding by reason a stock split, combination of
stock or stock dividend in such manner as the Board of Directors may deem
equitable.
The warrant price per share (hereinafter called the "Warrant
Price") shall be $2.50. As provided in the Warrant Agreement, the Warrant Price
is payable upon the exercise of this Warrant, either in cash by check or other
immediately available funds or in shares of Common Stock or by relinquishing a
portion of this Warrant.
Upon the exercise of this Warrant, the form of election to
purchase attached hereto must be properly completed and executed and surrendered
to the Company or its transfer agent. In the event that this Warrant is
exercised in respect of fewer than all of such shares, a new Warrant for the
remaining number of such shares, substantially in the form hereof, will be
issued on such surrender.
This Warrant is issued under, and the rights represented
hereby are subject to, the terms and provisions contained in the Warrant
Agreement. By acceptance of an assignment of this Warrant any assignee agrees
and assents to all the terms and provisions of the Warrant Agreement. Reference
is hereby made to terms and conditions of the Warrant Agreement for a more
complete statement of the rights and limitations of rights of the registered
holder hereof and the rights and obligations of the Company thereunder, which
terms and conditions are incorporated herein by reference. Copies of the Warrant
Agreement are on file at the principal office of the Company.
The Company shall not be required upon the exercise of this
Warrant to issue fractions of shares.
This Warrant is transferable at the office of the Company (or
of its transfer agent) by the registered holder hereof in person or by attorney
duly authorized in writing, but only in the manner and subject to the
limitations provided in the Warrant Agreement, and upon surrender of this
Warrant and the payment of any transfer taxes. Upon any such transfer, a new
Warrant, or new Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of shares of
Common Stock will be issued to the transferee in exchange for this Warrant.
This Warrant when surrendered at the office of the Company (or
of its transfer agent) by the registered holder hereof, in person or by attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement for another Warrant, or other
Warrants of different denominations, of like tenor and representing in the
aggregate the right to purchase a like number of shares of Common Stock.
If this Warrant shall be surrendered for exercise within any
period during which the transfer books for shares of the Common Stock of the
Company or other securities purchasable upon the exercise of this Warrant are
closed for any purpose, the Company shall not be required to make delivery of
certificates for the securities purchasable upon such exercise until the date of
the reopening of said transfer books.
The Holder this Warrant shall not be entitled to any of the
rights of a stockholder of the Company prior to the exercise hereof.
PURCHASE FORM
Dated _______________, 19__
The undersigned hereby irrevocably elects to exercise the
within Warrant to the extent of purchasing __________ shares of Common Stock and
hereby makes payment by [check or other immediately available funds totaling
$_______] [delivery of shares of Common Stock having a value (as calculated
pursuant to paragraph 4(b) of the Warrant Agreement) of [$__________]]
[relinquishing a portion of the within Warrant having a value calculated in
accordance with paragraph 4(b) of the Warrant Agreement of $ ___________]
(delete inapplicable phrase) in payment of the actual exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name________________________________________________________
(Please typewrite or print in block letters)
Address_____________________________________________________
Signature________________________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
Name________________________________________________________
(Please typewrite or print in block letters)
Address_____________________________________________________
the right to purchase Common Stock represented by this Warrant to the extent of
________ shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint _______________, Attorney, to transfer the
same on the books of the Company with full power of substitution in the
premises.
Date________________, 19__
Signature___________________________________________________
