Exhibit 10.32
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT ("AGREEMENT") is entered into as of
April 21, 2004 between Redline Performance Products, Inc., a Minnesota
corporation (the "COMPANY"), and the purchaser who is a signatory hereto
("PURCHASER").
1.) Purchase and Sale of Common Stock.
(a) Sale to Purchasers. Subject to the terms and conditions hereof, the
Company will issue and sell to Purchaser that number of shares of the Company's
Common Stock set forth on the Purchaser Signature Page (such shares and any
securities which may be issued to Purchaser with respect to such shares, such as
pursuant to a stock split or stock dividend, are referred to herein as the
"SHARES") at a per share price equal to One and 60/100 Dollars ($1.60) (the
"PURCHASE PRICE")
(b) Payment of Purchase Price. Upon execution of this Agreement, Purchaser
will pay the Purchase Price to the Company in immediately available funds.
2.) Delivery of Stock Certificates. Upon execution of this Agreement by
Purchaser and the Company and upon payment of the Purchase Price by Purchaser,
the Company will promptly issue the Shares to Purchaser either in the form of a
certificate registered in the name of Purchaser or by recording such issuance on
the Company's electronic stock records, as may be directed by the Company to its
transfer agent and registrar.
3.) Definitions. The following terms shall have the meanings set forth herein:
(a) "COMMISSION" shall mean the Securities and Exchange Commission of the
United States or any other U.S. federal agency at the time administering the
Securities Act.
(b) "COMMON STOCK" shall mean the Company's $0.01 par value per share common
stock.
(c) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
or any similar United States federal statute and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
(d) "HOLDER" shall mean a holder of Registrable Securities.
(e) "REGISTRATION EXPENSES" shall mean all expenses, except as otherwise
stated below, incurred by the Company in complying with Section 6(c) hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration.
(f) "REGISTRABLE SECURITIES" shall mean (i) the Shares, and (ii) any shares of
Common Stock issued or issuable in respect of such Shares upon any stock split,
stock dividend, recapitalization or similar event. Shares of Common Stock or
other securities shall not be treated as Registrable Securities if (A) they have
been sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction; or (B) they have been sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act so that all transfer restrictions and restrictive legends
with respect thereto are removed upon the consummation of such sale; or (C) with
respect to which the registration rights of the holder thereof have expired
pursuant to Section 6(c)(9) hereof.
(g) The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement by the Commission.
(h) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or any
similar United States federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
(i) "SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions, stock transfer taxes and fees of counsel to holders of Registrable
Securities applicable to the securities registered by such.
4.) Purchaser Representations and Warranties. Purchaser represents and
warrants to the Company, its directors, officers, employees and agents as
follows (by execution hereof, Purchaser acknowledges that the Company is relying
upon the accuracy and completeness of the representations contained herein in
complying with its obligations under applicable securities laws):
(a) Purchaser has been advised that (i) the sale of the Shares to Purchaser
has not been registered under the Securities Act on the grounds, among others,
that it will be exempt from registration under Section 4(2) of the Securities
Act as a transaction not involving a public offering; (ii) reliance upon such
exemption or other exemptions is predicated in part on Purchaser's
representation that Purchaser is acquiring such Shares for investment for the
Purchaser's own account with no present intention of dividing Purchaser's
participation with others or reselling or otherwise distributing the same, and
Purchaser alone shall have the full legal and equitable right, title and
interest in the Shares; and (iii) Purchaser's representations, including the
foregoing, are essential to the reliance of the Company upon exemptions from
registration or qualification of this transaction or the Shares under applicable
state securities laws.
(b) Purchaser understands that this transaction has not been scrutinized by
the Commission or by any state securities or other authority and, because of the
small number of persons purchasing Shares and the private nature of the
placement, that all documents, records, and books pertaining to this investment
have been made available to Purchaser and Purchaser's representatives, such as
attorneys, accountants and/or purchaser representatives.
(c) Purchaser is purchasing the Shares for the account of Purchaser for
investment purposes only and not with a view to their resale or distribution.
Purchaser has no present intention to divide his, her or its participation with
others or to resell or otherwise dispose of all or any part of the Shares. In
making these representations, Purchaser understands that, in the view of the
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Commission, the exemption of the sale of the Shares from the registration
requirements of the Securities Act would not be available if, notwithstanding
the representations of Purchaser, Purchaser has in mind merely acquiring the
Shares for resale upon the occurrence or non-occurrence of some predetermined
event.
(d) Purchaser understands that the subsequent transfer of the Shares will be
restricted, and that the effect of the restrictions on the transfer of the
Shares include the facts, among others, that (i) Purchaser will not have
liquidity with respect to the Shares for an indefinite period of time and in no
event less than one year from the date of purchase, and (ii) Purchaser will be
unable to sell, encumber or otherwise transfer the Shares unless there is an
effective registration statement covering such disposition under the Securities
Act, and effective registrations and qualifications under applicable state law,
or exemptions from such registrations or qualifications under the Securities Act
and state law are applicable.
(e) At such time as Purchaser determines to dispose of all or any part of the
Shares, Purchaser understands that Purchaser must first notify the Company, and
that the Company may require an opinion of its attorney, of Purchaser's
attorney, or both, that such disposition will not negate Purchaser's intent as
expressed herein, and that, in view of the exemption claimed, such disposition
will be permissible.
(f) Purchaser recognizes that an investment in the Shares involves a high
degree of risk and that the purchase of the Shares is a long-term investment.
Purchaser has a financial net worth or anticipated income such that a sale of
the Shares need not be made in the foreseeable future to satisfy any financial
obligation of which Purchaser is or contemplates Purchaser will become subject.
(g) Purchaser understands that exemptions from the registration and
qualification requirements may not be available to Purchaser, and, except as
provided in this Agreement, the Company will have no obligation to assist
Purchaser in registering or qualifying a disposition of the Shares or in
obtaining or establishing an exemption from such registration or qualification
requirements.
(h) The Purchaser understands that any certificate representing the Shares
will bear legends stating in effect that the issuance or sale of the Shares has
not been registered under the Securities Act or any applicable state securities
laws and such legends may refer to the restrictions on transfers and sales
contained in this Agreement. Purchaser further understands that a stop-transfer
restriction will be placed in the books and records of the Company with respect
to the Shares.
(i) Purchaser's purchase of the Shares is not the result of any general
solicitation or general advertising, including, but not limited to: (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio; and
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
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(j) Purchaser is an "Accredited Investor" as defined in Rule 501(a) of
Regulation D under the Securities Act.
(k) Purchaser has such knowledge and experience in financial and business
matters that Purchaser is capable of evaluating the merits and risks of the
investment in the Shares.
(l) Purchaser has obtained and reviewed all information regarding the Company
and the purchase of the Shares as Purchaser believes necessary or appropriate
with respect to the purchase of the Shares. Purchaser has been given access to
full and complete information regarding the Company and has utilized such access
to its satisfaction for the purpose of obtaining information; and particularly,
Purchaser has been given the opportunity to meet with representatives of the
Company for the purpose of asking questions of, and receiving answers from, such
representatives concerning the Company and the Shares and to obtain any
additional information, to the extent reasonably available. Purchaser
acknowledges that it has been provided all of the Company's publicly available
reports and documents filed with the Commission through the date of this
Agreement including, but not limited to, the Company's (1) Annual Report on Form
10-KSB for the fiscal year ended March 31, 2003; (2) Annual Report to
Shareholders for the fiscal year ended March 31, 2003; (3) Quarterly Reports on
Form 10-QSB for the quarters ended June 30, 2003, September 30, 2003 and
December 31, 2003; and (4) proxy statement dated July 31, 2003. Purchaser has
reviewed, or has had the opportunity to review, all such filings, to the extent
deemed appropriate by the Purchaser.
(m) Purchaser acknowledges and understands that any information provided about
the Company's future plans and prospects is uncertain and subject to all of the
uncertainties inherent in future predictions.
(n) Purchaser understands that nothing in this Agreement or any other material
presented to Purchaser in connection with the purchase and sale of the Shares
constitutes legal, tax or investment advice. Purchaser has obtained, to the
extent Purchaser deems necessary, personal and professional advice with respect
to the risks inherent in the investment in the Shares in light of Purchaser's
financial condition and investment needs.
(o) Purchaser understands that: (i) the Company has engaged legal counsel to
represent the Company in connection with the offer and sale of securities
contemplated herein; (ii) legal counsel engaged by the Company does not
represent Purchaser or Purchaser's interests; and (iii) Purchaser is not relying
on legal counsel engaged by the Company. Purchaser has had the opportunity to
engage, and obtain advice from, Purchaser's own legal counsel with respect to
the investment contemplated herein.
(p) Purchaser certifies, under penalty of perjury, that Purchaser is not
subject to the backup withholding provisions of the Internal Revenue Code of
1986, as amended. (Note: Purchaser is subject to backup withholding if: (i)
Purchaser fails to furnish its Social Security Number or Taxpayer Identification
Number herein; (ii) the Internal Revenue Service notifies the Company that
Purchaser furnished an incorrect Social Security Number or Taxpayer
Identification Number; (iii) Purchaser is notified that it is subject to backup
withholding; or (iv) Purchaser fails to certify
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that it is not subject to backup withholding or Purchaser fails to certify the
Purchaser's Social Security Number or Taxpayer Identification Number.)
(q) Purchaser's principal executive offices are located (if an entity), or
Purchaser is a resident of the state (if an individual), as set forth on the
Purchaser Signature Page hereto.
(r) If Purchaser is an entity, the individual signing on behalf of Purchaser
agrees and certifies that this Agreement has been duly authorized by all
necessary action on the part of Purchaser, has been duly executed by an
authorized representative of Purchaser, and is a legal, valid, and binding
obligation of Purchaser enforceable in accordance with its terms.
(s) During the period from the date Purchaser was first contacted with respect
to the potential purchase of the Shares through the date of the execution of
this Agreement by Purchaser, Purchaser did not, directly or indirectly, execute
or effect or cause to be executed or effected any short sale, option or equity
swap transaction in or with respect to the Common Stock or any other derivative
security transaction the purpose or effect of which is to hedge or transfer to a
third party all or any part of the risk of loss associated with the ownership of
the Shares by Purchaser.
(t) Upon the consummation of the sale of Shares contemplated by this
Agreement, no agent, broker, investment banker or other person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
from Purchaser in connection with any of the transactions contemplated hereby.
Purchaser understands that GunnAllen Financial, Inc. ("AGENT") is acting as
placement agent in connection with the sale of Shares. Agent will receive from
the Company a commission equal to 5% of the aggregate Purchase Price and a
warrant to purchase 2,000 shares of Common Stock of the Company for every
$50,000 in aggregate Purchase Price hereunder.
5.) Lack of Availability of Rule 144 Under the Securities Act. Purchaser
understands and acknowledges that, except as set forth in Section 6(c), the
Company has no obligation to undertake or complete a public sale of the Shares
and that the Shares purchased hereby will remain subject to the restrictions on
transferability described in this Agreement. Purchaser further understands and
acknowledges that although the Company currently files periodic reports with the
Commission pursuant to the requirements of Sections 13 or 15(d) of the Exchange
Act it may not be obligated to file such reports at any time in the future.
Purchaser also understands that the Company has not agreed to supply such other
information as would be required to enable routine sales of the Company's common
stock to be made under the provisions of certain rules respecting "restricted
securities", including Rule 144 promulgated under the Securities Act by the
Commission. Thus, Purchaser has been informed that the Company is not obligated
to make publicly available or to provide Purchaser with the information required
by Rule 144.
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6.) Covenants of the Company.
(a) The Shares. The Shares to be issued under this Agreement, when paid for
and issued in accordance with the terms hereof, shall be duly and validly issued
and outstanding, fully paid and non-assessable.
(b) AMEX Listing. Promptly following the execution of this Agreement and
payment of the Purchase Price, the Company will use its commercially reasonable
efforts to cause the Shares to be listed on the American Stock Exchange.
(c) Piggyback Registration Rights. The Purchaser shall have the registration
rights set forth herein:
(1) Notice of Registration. If at any time or from time to time
the Company shall determine to register any of its shares of
Common Stock, either for its own account or the account of a
security holder or holders (other than: (i) a registration
statement relating to any employee benefit plan of the
Company, including but not limited to, Form S-8 under the
Securities Act as in effect on the date hereof or any
successor or similar registration form under the Securities
Act subsequently adopted by the Commission; (ii) a
registration statement of the Company relating to any
corporate reorganization or other transaction under Rule 145,
including any registration statements related to the issuance
or resale of securities issued in such a transaction, (iii) a
registration statement related to the offer and sale of debt
securities; or (iv) a registration statement relating to any
sale or merger of the Company, including but not limited to,
Form S-4 under the Securities Act as in effect on the date
hereof or any successor or similar registration form under the
Securities Act subsequently adopted by the Commission), the
Company shall;
a. promptly give to each Holder written notice thereof; and
b. subject to Section 6(c)(2), include in such registration
(and any related qualification under blue sky laws or
other compliance), and in any underwriting involved
therein, all of the Registrable Securities specified in
a written request or requests, made by any Holder within
twenty (20) days after receipt of such written notice
from the Company. If any Holder decides not to include
all of its Registrable Securities in such registration,
such holder of Registrable Securities shall nevertheless
continue to have the right to include any Registrable
Securities in any subsequent registration statements as
may be filed by the Company with respect to offerings of
its Common Stock, all upon the terms and conditions set
forth herein. Such notice sent by the Holder shall state
the intended method of disposition of the Registrable
Securities by the Holder.
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(2) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holder as a part
of the written notice given pursuant to Section 6(c)(1). In
such event, the right of any Holder to registration pursuant
to this Section 6(c) shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of
Registrable Securities in the underwriting to the extent
provided herein. All Holders proposing to distribute their
securities through such underwriting shall, together with the
Company, enter into an underwriting agreement in customary
form with the managing underwriter selected for such
underwriting by the Company. Notwithstanding any other
provision of this Section 6(c), if the managing underwriter
determines that marketing factors require a limitation of the
number of shares to be underwritten, the managing underwriter
may limit on a pro rata basis (based on the total number of
securities entitled to registration which are held by the
Holders and by third parties) the number of Registrable
Securities to be included in such registration or prohibit any
Registrable Securities from being included in such
underwriting; provided that no such reduction shall be made
with respect to securities being offered by the Company for
its own account. The Company shall advise all Holders
proposing to distribute their securities through such
underwriting of any such limitations, and the number of shares
of Registrable Securities that may be included in the
registration. To facilitate the allocation of shares in
accordance with the above provisions, the Company may round
the number of shares allocated to any Holder proposing to
distribute their securities through such underwriting to the
nearest one hundred (100) shares. If any Holder proposing to
distribute their securities through such underwriting
disapproves of the terms of any such underwriting, he may
elect, unless otherwise agreed in writing by such Holder, to
withdraw therefrom by written notice to the Company and the
managing underwriter. Any securities excluded or withdrawn
from such underwriting shall be withdrawn from such
registration.
(3) Registration Expenses. The Company shall bear all Registration
Expenses incurred in connection with all registrations
pursuant to Section 6(c) hereof. All Selling Expenses relating
to securities registered on behalf of a Holder pursuant to
Section 6(c) shall be borne by the Holder pro rata on the
basis of the number of shares so registered.
(4) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by
it under this Section 6(c), whether or not any Holder has
elected to include securities in such registration.
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(5) Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant
to Section 6(c), the Company will:
a. Keep each Holder advised as to the initiation of each
registration, qualification and compliance and as to the
completion thereof;
b. Prepare and, as soon as practicable, file with the
Commission a registration statement with respect to such
securities and use its commercially reasonable efforts
to cause such registration statement to become and
remain effective until the earlier of the sale of the
Registrable Securities so registered or ninety (90) days
subsequent to the effective date of such registration;
c. Prepare and file with the Commission such amendments and
supplements to such registration statement and the
prospectus used in connection therewith as may be
necessary to make and to keep such registration
statement effective and to comply with the provisions of
the Securities Act with respect to the sale or other
disposition of all securities proposed to be registered
in such registration statement until the earlier of the
sale of the Registrable Securities so registered or (90)
days subsequent to the effective date of such
registration statement;
d. Furnish to the Holders participating in such
registration and to the underwriters of the securities
being registered such reasonable number of copies of the
registration statement, preliminary prospectus, final
prospectus and such other documents as such parties may
reasonably request in order to facilitate the public
offering of such securities; and
e. Use its commercially reasonable efforts to register or
qualify the Registrable Securities covered by such
registration statement under the securities or blue sky
laws of such states as the Holders shall reasonably
request, maintain any such registration or qualification
current until the earlier of the sale of the Registrable
Securities so registered or (90) days subsequent to the
effective date of the registration statement, and take
any and all other actions either necessary or advisable
to enable the Holders to consummate the public sale or
other disposition of the Registrable Securities in
jurisdictions where the Holders desire to effect such
sales or other disposition (but the Company shall not be
required to take any action that would subject it to the
general jurisdiction of the courts of any jurisdiction
in which it is not so subject or to qualify as a foreign
corporation in any jurisdiction where the Company is not
so qualified).
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(6) Indemnification.
a. By the Company. For each registration effected pursuant
to Section 6(c) in which the Holder's Registrable
Securities are included in such registration, the
Company will indemnify each Holder, and each person
controlling such Holder within the meaning of Section 15
of the Securities Act, and each underwriter, if any, and
each person who controls any underwriter within the
meaning of Section 15 of the Securities Act, with
respect to each registration, qualification or
compliance which has been effected pursuant to this
Agreement, against all expenses, losses, damages or
liabilities (or actions in respect thereof), including
any of the foregoing incurred in settlement of any
litigation arising out of or based on any untrue
statement (or alleged untrue statement) of a material
fact contained in any registration statement,
prospectus, or any amendment or supplement thereto,
incident to any such registration, qualification or
compliance, or based on any omission (or alleged
omission) to state therein a material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances in which they
were made, not misleading, in connection with any such
registration, qualification or compliance, and the
Company will reimburse each such Holder and each person
who controls any underwriter within the meaning of
Section 15 of the Securities Act, for any legal and any
other expenses reasonably incurred in connection with
defending any such claim, loss, damage, liability or
action, provided that the Company will not be liable in
any such case to the extent that any such loss, damage,
liability or expense arises out of or is based on any
untrue statement or omission or alleged untrue statement
or omission, made in reliance upon and in conformity
with information furnished to the Company expressly for
use in connection with such registration by such Holder,
controlling person or underwriter. It is agreed that the
indemnity agreement contained in this Section 6(c)(6)
shall not apply to amounts paid in settlement of any
such litigation if such settlement is effected without
the consent of the Company (which consent shall not be
unreasonably withheld).
b. By the Holder. The Holder will, if Registrable
Securities held by such Holder are included in the
securities as to which such registration, qualification
or compliance is being effected, indemnify the Company,
each of its directors and officers and its legal counsel
and independent accountants, each underwriter, if any,
of the Company's securities covered by such a
registration statement, each person who controls the
Company or such underwriter within the meaning of
Section 15 of the Securities Act, and each other holder
of securities included in any registration
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effected pursuant to Section 6(c), each of their
officers and directors and each person controlling such
holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out
of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such
registration statement, prospectus, or other document,
or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary
to make the statements therein, in light of the
circumstances in which they were made, not misleading,
and will reimburse the Company, such holders, such
directors, officers, legal counsel, independent
accountants, persons, underwriters or controlling
persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such
registration statement, prospectus or other document in
reliance upon and in conformity with information
furnished to the Company expressly for use in connection
with such registration by such Holder.
c. Procedures. Each party entitled to indemnification under
this Section 6(c) (the "INDEMNIFIED PARTY") shall give
notice to the party required to provide indemnification
(the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as
to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall
be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld), and the Indemnified
Party may participate in such defense at its own
expense; provided, however, that the failure of any
Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its
obligations under this Agreement unless the failure to
give such notice is prejudicial to an Indemnifying
Party's ability to defend such action. No Indemnifying
Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into
any settlement which does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.
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d. Contributions. If the indemnification provided for in
this Section 6(c)(6) is held by a court of competent
jurisdiction to be unavailable to an Indemnified Party
with respect to any losses, claims, damages or
liabilities referred to herein, the Indemnifying Party,
in lieu of indemnifying such Indemnified Party
thereunder, shall to the extent permitted by applicable
law contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim,
damage or liability in such proportion as is appropriate
to reflect the relative fault of the Indemnifying Party
on the one hand and of the Indemnified Party on the
other in connection with that which resulted in such
loss, claim, damage or liability, as well as any other
relevant equitable considerations. The relative fault of
the Indemnifying Party and of the Indemnified Party
shall be determined by a court of law by reference to,
among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a
material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the
parties' relative intent.
(7) Information by Holder. Each Holder of Registrable Securities
included in any registration shall furnish to the Company such
information, including information regarding such Holder, the
Registrable Securities held by them and the distribution
proposed, as the Company may request in writing to enable the
Company to comply with the provisions hereof in connection
with any registration, qualification or compliance referred to
in this Agreement.
(8) Market Stand-Off Agreement. Each Holder agrees that if, in
connection with any public offering of securities by the
Company, the Company or the underwriters managing the offering
so request, the Holder shall not offer to sell, sell, make any
short sale of, loan, grant any option for the purchase of,
pledge, hypothecate or otherwise dispose of any Registrable
Securities (other than those included in the registration)
without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not
to exceed one hundred eighty (180) days from the date of the
final prospectus for such offering), as may be requested by
the Company or the underwriters. This paragraph shall be
binding on all transferees or assignees of Registrable
Securities, whether or not such persons are entitled to
registration rights pursuant to Section 6(c) hereof.
(9) Termination of Registration Rights. All rights granted and
obligations imposed pursuant to Section 6(c) of this Agreement
shall terminate as to each Holder at such time as such Holder
can sell all of such Holder's Registrable Securities pursuant
to Rule 144 under the Securities Act within any three (3)
month period or immediately pursuant to Rule 144(k).
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7.) Confidentiality. Purchaser agrees that, except as provided in this
paragraph, all information disclosed by the Company to Purchaser in connection
with the sale of Shares is material non-public information and shall be
considered "CONFIDENTIAL INFORMATION." Purchaser agrees to maintain the
confidential nature of the Confidential Information and to prevent its
unauthorized disclosure or dissemination, and agrees not to use the Confidential
Information for any purpose other than evaluating the purchase of Shares
hereunder. Confidential Information shall not, however, include information that
is now or subsequently becomes generally known or available as the result of the
Company's publication or filing of such information with the Commission. This
Agreement and the provisions hereof shall be Confidential Information, provided
that the Company may disclose this Agreement and the terms of this Agreement to
the extent reasonably required to comply with the Company's disclosure
obligations under the Exchange Act.
8.) Restriction on Transactions in Company Securities. Purchaser will
not, without the prior written consent of the Company, during the "Lockup
Period" as defined in this paragraph: (i) sell, transfer or otherwise dispose
of, or agree to sell, transfer or otherwise dispose of any of the Shares or any
other securities issued by the Company which are beneficially held by Purchaser;
(ii) sell, transfer or otherwise dispose of, or agree to sell, transfer or
otherwise dispose of any options, rights or warrants to purchase any of the
Shares or any other securities issued by the Company which are beneficially held
by the undersigned; or (iii) sell or grant, or agree to sell or grant, options,
rights or warrants with respect to any of the Shares or any other securities
issued by the Company which are beneficially held by the undersigned. The
foregoing does not prohibit gifts to donees or transfers by will or the laws of
descent to heirs or beneficiaries provided that such donees, heirs and
beneficiaries shall be bound by the restrictions set forth herein. The term
"LOCKUP PERIOD" shall mean the period beginning on the date of this Agreement
and ending on August 16, 2004.
9.) Miscellaneous Provisions.
(a) Representations Survive Delivery. The representations, warranties
and agreements of the Company and of the Purchaser contained in this Agreement
will remain operative and in full force and effect and will survive the receipt
of the Purchase Price by the Company, and the issuance to the Purchaser of the
Shares.
(b) Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and supercedes all
prior and contemporaneous arrangements or understandings with respect thereto.
(c) Correctness of Information; Changes. All of the foregoing
information which Purchaser has provided concerning Purchaser, Purchaser's
financial position and Purchaser's knowledge of financial and business matters,
is correct and complete as of the date set forth herein.
(d) Indemnification. Purchaser severally agrees to indemnify the Company
against and to hold the Company harmless from any damage, loss, liability, claim
or expense including, without limitation, reasonable attorneys' fees resulting
from or arising out of the inaccuracy or alleged inaccuracy of any of the
representations, warranties or statements of the investor contained in this
12
Agreement, including without limitation any violation or alleged violation of
the registration requirements of the Securities Act or applicable state law in
connection with any subsequent sale of the Shares by Purchaser.
(e) Additional Information. Purchaser shall supply such additional
information and documentation relating to Purchaser and any persons who have any
rights or interest in Purchaser as may be requested by the Company in order to
ensure compliance by the Company with applicable laws.
(f) Arbitration. Purchaser further agrees that any dispute regarding
this Agreement or Purchaser's purchase of the Shares (including without
limitation claims pursuant to federal or state securities laws), including any
claim which is made against any placement agent or broker-dealer involved in the
offer or sale of the Shares, shall be resolved by arbitration which shall be the
sole forum for resolution of any such disputes. Unless otherwise agreed by the
parties, any such proceedings shall be brought in the State of Minnesota,
Hennepin County, pursuant to the Rules and Code of Arbitration of the America
Arbitration Association, except that if a bona fide claim is made against the
Company, and a placement agent or broker-dealer is named in connection with such
claim, then such claim shall be brought pursuant to the Rules and Code of
Arbitration of the National Association of Securities Dealers, Inc. The
foregoing notwithstanding, any party may seek equitable relief from a court of
competent jurisdiction.
(g) Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Minnesota without
reference to Minnesota conflicts of law provisions. Actions or proceedings
litigated in connection with this Agreement, if any, shall be venued exclusively
in the state and federal courts located in the County of Hennepin, State of
Minnesota.
(h) Assignment. This Agreement may not be pledged, assigned or otherwise
transferred by Purchaser except by operation of law but all the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforced by the successors in interest of the parties hereto.
(i) Successors and Assigns. The representations and warranties made by
the Purchaser in this Agreement are binding on the Purchaser's successors and
assigns and are made for the benefit of the Company and any other person who may
become liable for violations of applicable securities laws as a result of the
inaccuracy or falsity of any of the Purchaser's representations or warranties.
(j) Notice. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or sent by telecopy, nationally
recognized overnight courier or first class registered or certified mail, return
receipt requested, postage prepaid, addressed to such party at the address set
forth below or such other address as may hereafter be designated in writing by
such party to the other party:
If to the Company, to:
Redline Performance Products, Inc.
13
0000 Xxxxxxxx Xxx
Xxxxx, Xxxxxxxxxx 00000
Attention: CFO
If to a Purchaser, to:
the address set forth on the signature page of this Agreement
(k) Amendments. No amendment, modification, waiver, discharge or
termination of any provision of this Agreement nor consent to any departure by a
Purchaser or the Company therefrom shall in any event be effective unless the
same shall be in writing and signed by the party to be charged with enforcement,
and then shall be effective only in the specific instance and for the purpose
for which given.
(l) Counterparts; Execution. This Agreement may be executed by the
Company and by Purchaser in separate and several counterparts, each of which
shall be deemed an original. Any signature delivered by facsimile transmission
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile signature page were an original thereof.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
[SIGNATURE PAGES FOLLOW ]
14
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have caused this Common Stock Purchase
Agreement to be duly executed and delivered by their proper and duly authorized
representatives as of the day and year first above written.
REDLINE PERFORMANCE PRODUCTS, INC.
/s/ Xxxx X. Xxxxx
----------------------------------
Xxxx X. Xxxxx, President
15
PURCHASER SIGNATURE PAGE
The undersigned Purchaser hereby executes the Common Stock Purchase
Agreement with Redline Performance Products, Inc. (the "COMPANY") and hereby
authorizes this signature page to be attached to a counterpart of such document
executed by a duly authorized officer of the Company.
Purchaser:
Signature: By: __________________________
Its: _________________________
Number of Shares of Common Stock Purchased: ______________________________
Cash Consideration: ______________________________
Name in which shares of Common Stock
are to be registered: ______________________________
Address of registered holder: ______________________________
Social Security or Tax ID No. of registered
holder: ______________________________
Contact name and telephone number regarding
settlement and registration: ______________________________
Name
______________________________
Telephone Number
16
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND ANY SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION THEREOF MAY BE
MADE ONLY (I) IN A REGISTRATION OR QUALIFICATION OR (II) IF AN EXEMPTION FROM
REGISTRATION OR QUALIFICATION IS AVAILABLE AND THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL TO THAT EFFECT REASONABLY SATISFACTORY TO THE COMPANY.
Void After 5:00 p.m. Minneapolis, Minnesota time on May 14, 2009
REDLINE PERFORMANCE PRODUCTS, INC.
COMMON STOCK PURCHASE WARRANT
Warrant No. _____ Shares: ________
THIS CERTIFIES that, subject to the terms and conditions herein set forth,
________________________, or its registered assigns (the "HOLDER") is entitled
to purchase from REDLINE PERFORMANCE PRODUCTS, INC., a Minnesota corporation
(the "COMPANY"), at any time or from time to time prior to the time and date set
forth above, ____________________________(_______) fully paid and non-assessable
shares of common stock of the Company (such class of stock being referred to as
the "COMMON STOCK" and such shares of Common Stock which may be acquired upon
exercise of this Warrant being referred to as the "SHARES"). This warrant
("WARRANT") is being issued in connection with a private placement by the
Company of shares of Common Stock and warrants to purchase Common Stock intended
to raise $750,000 pursuant to a Common Stock Purchase Agreement dated April 21,
2004, as amended May 14, 2004.
This Warrant is subject to the following terms and conditions:
1.) Purchase Price. Subject to adjustment as hereinafter provided, the
purchase price of one Share shall be One and NO/100 Dollars ($1.00). The
purchase price of one Share is referred to herein as the "WARRANT PRICE."
2.) Adjustment of Warrant Price and Number of Shares. The number and
kind of securities issuable upon the exercise of this Warrant shall be subject
to adjustment from time to time upon the happening of certain events as follows:
(a) Adjustment for Stock Dividends, Splits and Consolidations. In case
the Company shall at any time subdivide the outstanding Common Stock into
a greater number of shares of Common Stock or declare a dividend payable
in Common Stock, the Warrant Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of
Common Stock purchasable pursuant to this Warrant shall be proportionately
increased, and conversely, in case the outstanding Common Stock shall
be combined into a smaller number of shares of Common Stock, the Warrant
Price in effect immediately prior to such combination shall be
proportionately increased and the number of shares of Common Stock
purchasable upon the exercise of this Warrant shall be proportionately
reduced, in each case by the ratio which the total number of shares of
Common Stock to be outstanding immediately after such event bears to the
total number of shares of Common Stock outstanding immediately prior to
such event.
(b) Adjustment for Reorganizations or Consolidations. If any capital
reorganization or reclassification of the capital stock of the Company, or
consolidation or merger of the Company with another corporation, or the
sale of all or substantially all of its assets to another corporation
shall be effected in such a way that holders of Common Stock shall be
entitled to receive stock, securities or assets ("SUBSTITUTED PROPERTY")
with respect to or in exchange for such Common Stock, then, as a condition
of such reorganization, reclassification, consolidation, merger or sale,
the Holder shall have the right to purchase and receive upon the basis and
upon the terms and conditions specified in this Warrant and in lieu of the
Common Stock of the Company immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby, such
substituted property as would have been issued or delivered to the Holder
if it had exercised this Warrant and had received upon exercise of this
Warrant the Shares prior to such reorganization, reclassification,
consolidation, merger or sale.
3.) No Fractional Shares. No fractional Shares of Common Stock will be
issued in connection with any exercise of this Warrant. In lieu of any
fractional Shares which would otherwise be issuable, the Company shall pay cash
equal to the product of such fraction multiplied by the fair market value of one
share of Common Stock on the date of exercise, as determined in good faith by
the Company.
4.) Covenants of the Company. The Company covenants that during the
period this Warrant is exercisable, the Company will reserve from its authorized
and unissued Common Stock a sufficient number of shares of Common Stock to
provide for the issuance of Shares upon the exercise of this Warrant. The
Company further covenants that all Shares that may be issued upon the exercise
of this Warrant will, upon payment and issuance, be duly authorized and issued,
fully paid and nonassessable shares of Common Stock.
5.) Exercise of Warrant. This Warrant may be exercised by the registered
Holder, in whole or in part, by the surrender of this Warrant at the principal
office of the Company, together with the form of exercise hereof duly executed,
accompanied by payment in full of the amount of the aggregate Warrant Price in
cash, cashier's check, bank draft or another type of payment acceptable to the
Company. Upon partial exercise hereof, a new warrant or warrants containing the
same date and provisions as this Warrant shall be issued by the Company to the
registered Holder for the number of Shares of Common Stock with respect to which
this Warrant shall not have been exercised. Upon each exercise of this Warrant
the Holder shall exercise this Warrant and purchase the lesser of 500 Shares and
the balance of Shares available for issuance under the Warrant. A Warrant shall
be deemed to have been exercised immediately prior to the close of business on
the date the Company is in receipt of this Warrant, written notice of exercise,
and
2.
payment for the number of Shares being acquired upon exercise of this Warrant.
The person entitled to receive the Shares issuable upon such exercise shall be
treated for all purposes as the Holder of such Shares of record as of the close
of business on such date. As promptly as practicable on or after such date, the
Company will issue the Shares to Holder either in the form of a certificate
registered in the name of Holder or by recording such issuance on the Company's
electronic stock records, as may be directed by the Company to its transfer
agent and registrar, together with cash in lieu of any fraction of a Share, as
provided above.
6.) Compliance with Securities Laws and Other Transfer Restrictions. The
Holder of this Warrant, by acceptance hereof, agrees, represents and warrants
that this Warrant and the Shares which may be issued upon exercise hereof are
being acquired for investment, that the Holder has no present intention to
resell or otherwise dispose of all or any part of this Warrant or any Shares,
and that the Holder will not offer, sell or otherwise dispose of all or any part
of this Warrant or any Shares except under circumstances which will not result
in a violation of the Securities Act of 1933, as amended (the "SECURITIES ACT")
or applicable state securities laws.
7.) Restrictive Legend. The Holder agrees that the Company may place one
or more restrictive legends on any certificates evidencing the Shares containing
substantially the following language:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and have
not been registered under any state securities law, and are subject
to a subscription and investment representation agreement. They may
not be sold, offered for sale, or transferred in the absence of
either an effective registration under the Securities Act of 1933,
as amended, and under the applicable state securities laws, or an
exemption from registration under the Securities Act of 1933, as
amended, and under the applicable state securities laws.
8.) Subdivision of Warrant. At the request of the Holder of this Warrant
in connection with a transfer or exercise of a portion of the Warrant, upon
surrender of such Warrant for such purpose to the Company, the Company at its
expense will issue and exchange therefore warrants of like tenor and date
representing in the aggregate the right to purchase such number of Shares of
such Common Stock as shall be designated by such Holder at the time of such
surrender; provided, however, that the Company's obligations to subdivide
securities under this Section shall be subject to and conditioned upon the
compliance of any such subdivision with applicable state securities laws and
with the Securities Act.
9.) Delay in Exercise. Notwithstanding anything herein to the contrary,
the Company shall have the right to delay any exercise for a period of up to one
hundred eighty (180) days for the purpose of: (a) ensuring the availability of
an exemption under applicable securities laws for the issuance of the Shares to
the Holder in light of the transactions by the Company in its securities; and/or
(ii) facilitating a distribution of the Company's securities. In either case, if
the Company elects to delay any such exercise, the Company shall inform the
Holder, in writing, of such delay and the terms of such delay. Any such delay
shall not lead to any change in the Warrant Price or the terms of the Warrant
and shall not extend the term of any Warrant unless
3.
such delay would extend past the expiration date of such Warrant. In such case,
the expiration date shall be extended to thirty (30) days after the end of such
delay.
10.) Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dates as of such cancellation,
in lieu of this Warrant.
11.) Registration Rights. The Holder shall have the registration rights
set forth herein:
(a) Notice of Registration. If at any time or from time to time the
Company shall determine to register any of its shares of Common Stock,
either for its own account or the account of a security holder or holders
(other than: (i) a registration statement relating to any employee benefit
plan of the Company, including but not limited to, Form S-8 under the
Securities Act as in effect on the date hereof or any successor or similar
registration form under the Securities Act subsequently adopted by the
Securities and Exchange Commission (the "COMMISSION"); (ii) a registration
statement of the Company relating to any corporate reorganization or other
transaction under Rule 145, including any registration statements related
to the issuance or resale of securities issued in such a transaction,
(iii) a registration statement related to the offer and sale of debt
securities; and (iv) a registration statement relating to any sale or
merger of the Company including, but not limited to, Form S-4 under the
Securities Act as in effect on the date hereof or any successor or similar
registration form under the Securities Act subsequently adopted by the
Commission), the Company shall;
(1) promptly give written notice thereof to the Holder; and
(2) subject to Section 11(b), include in such registration (and
any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all of
the Shares specified in a written request or requests, made by
any Holder within twenty (20) days after receipt of such
written notice from the Company. If any Holder decides not to
include all of its Shares in such registration, such holder of
Shares shall nevertheless continue to have the right to
include any Shares in any subsequent registration statements
as may be filed by the Company with respect to offerings of
its Common Stock, all upon the terms and conditions set forth
herein. Such notice sent by the Holder shall state the
intended method of disposition of the Shares by the Holder.
(b) Underwriting. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company
shall so advise the Holder as a part of the written notice given pursuant
to Section 11(a)(1). In such event, the right of any Holder to
registration pursuant to this Section 11 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of Shares in
the
4.
underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall, together with
the Company, enter into an underwriting agreement in customary form with
the managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 11(b), if the managing
underwriter determines that marketing factors require a limitation of the
number of shares to be underwritten, the managing underwriter may limit on
a pro rata basis (based on the total number of securities entitled to
registration which are held by the Holder and by third parties) the number
of Shares to be included in such registration or prohibit any Shares from
being included in such underwriting; provided that no such reduction shall
be made with respect to securities being offered by the Company for its
own account. The Company shall advise all Holders proposing to distribute
their Shares through such underwriting of any such limitations, and the
number of Shares that may be included in the registration. To facilitate
the allocation of shares in accordance with the above provisions, the
Company may round the number of Shares allocated to any Holder proposing
to distribute their securities through such underwriting to the nearest
one hundred (100) shares. If any Holder proposing to distribute their
securities through such underwriting disapproves of the terms of any such
underwriting, he may elect, unless otherwise agreed in writing by such
Holder, to withdraw therefrom by written notice to the Company and the
managing underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
(c) Registration Expenses. Except as expressly provided in this
paragraph, the Company shall bear all expenses incurred in connection with
each registration pursuant to Section 11, including all registration fees,
printing expenses, fees and disbursements of counsel for the Company, blue
sky fees and expenses and the expense of any special audits incident to or
required by any such registration. The Holder shall bear all underwriting
discounts, selling commissions, stock transfer taxes and fees of counsel
to holders of Shares applicable to the securities included in a
registration under Section 11, which expenses shall be borne by the Holder
pro rata on the basis of the number of shares so registered.
(d) Right to Terminate Registration. Notwithstanding any provision
herein to the contrary, the Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 11, whether
or not any Holder has elected to include securities in such registration.
(e) Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to Section
11, the Company will:
(1) Keep each Holder advised as to the initiation of each
registration, qualification and compliance and as to the
completion thereof;
(2) Prepare and, as soon as practicable, file with the Commission
a registration statement with respect to such securities and
use its commercially reasonable efforts to cause such
registration statement to become and remain effective until
the earlier of the sale of the Shares so
5.
registered or ninety (90) days subsequent to the effective
date of such registration;
(3) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to make and
to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the
sale or other disposition of all securities proposed to be
registered in such registration statement until the earlier of
the sale of the Shares so registered or (90) days subsequent
to the effective date of such registration statement;
(4) Furnish to the Holders participating in such registration and
to the underwriters of the securities being registered such
reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other
documents as such parties may reasonably request in order to
facilitate the public offering of such securities; and
(5) Use its commercially reasonable efforts to register or qualify
the Shares covered by such registration statement under the
securities or blue sky laws of such states as the Holders
shall reasonably request, maintain any such registration or
qualification current until the earlier of the sale of the
Shares so registered or (90) days subsequent to the effective
date of the registration statement, and take any and all other
actions either necessary or advisable to enable the Holders to
consummate the public sale or other disposition of the Shares
in jurisdictions where the Holders desire to effect such sales
or other disposition (but the Company shall not be required to
take any action that would subject it to the general
jurisdiction of the courts of any jurisdiction in which it is
not so subject or to qualify as a foreign corporation in any
jurisdiction where the Company is not so qualified).
(f) Indemnification.
(1) By the Company. For each registration effected pursuant to
Section 11 in which the Holder's Shares are included in such
registration, the Company will indemnify each Holder, and each
person controlling such Holder within the meaning of Section
15 of the Securities Act, and each underwriter, if any, and
each person who controls any underwriter within the meaning of
Section 15 of the Securities Act, with respect to each
registration, qualification or compliance which has been
effected pursuant to this Agreement, against all expenses,
losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in
settlement of any litigation arising out of or based on any
untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, or
any amendment or supplement
6.
thereto, incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in
connection with any such registration, qualification or
compliance, and the Company will reimburse each such Holder
and each person who controls any underwriter within the
meaning of Section 15 of the Securities Act, for any legal and
any other expenses reasonably incurred in connection with
defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case
to the extent that any such loss, damage, liability or expense
arises out of or is based on any untrue statement or omission
or alleged untrue statement or omission, made in reliance upon
and in conformity with information furnished to the Company
expressly for use in connection with such registration by such
Holder, controlling person or underwriter. It is agreed that
the indemnity agreement contained in this Section 11(f)(1)
shall not apply to amounts paid in settlement of any such
litigation if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably
withheld).
(2) By the Holder. The Holder will, if Shares held by such Holder
are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the
Company, each of its directors and officers and its legal
counsel and independent accountants, each underwriter, if any,
of the Company's securities covered by such a registration
statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities
Act, and each other holder of securities included in any
registration effected pursuant to Section 11(a), each of their
officers and directors and each person controlling such holder
within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus,
or other document, or any omission (or alleged omission) to
state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, and
will reimburse the Company, such holders, such directors,
officers, legal counsel, independent accountants, persons,
underwriters or controlling persons for any legal or any other
expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration
statement, prospectus or other document in reliance upon and
in conformity with information furnished
7.
to the Company expressly for use in connection with such
registration by such Holder.
(3) Procedures. Each party entitled to indemnification under this
Section 11(f) (the "INDEMNIFIED PARTY") shall give notice to
the party required to provide indemnification (the
"INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at its own expense; provided,
however, that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying
Party of its obligations under this Agreement unless the
failure to give such notice is prejudicial to an Indemnifying
Party's ability to defend such action. No Indemnifying Party,
in the defense of any such claim or litigation, shall, except
with the consent of each Indemnified Party, consent to entry
of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release
from all liability in respect to such claim or litigation.
(4) Contributions. If the indemnification provided for in this
Section 11(f) is held by a court of competent jurisdiction to
be unavailable to an Indemnified Party with respect to any
losses, claims, damages or liabilities referred to herein, the
Indemnifying Party, in lieu of indemnifying such Indemnified
Party thereunder, shall to the extent permitted by applicable
law contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and
of the Indemnified Party on the other in connection with that
which resulted in such loss, claim, damage or liability, as
well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by a court of law by
reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the
parties' relative intent.
(g) Information by Holder. Each Holder of Shares included in any
registration shall furnish to the Company such information, including
information regarding such Holder, the Shares held by them and the
distribution proposed, as the Company may request in
8.
writing to enable the Company to comply with the provisions hereof in
connection with any registration, qualification or compliance referred to
in this Agreement.
(h) Market Stand-Off Agreement. Each Holder agrees that if, in
connection with any public offering of securities by the Company, the
Company or the underwriters managing the offering so request, the Holder
shall not offer to sell, sell, make any short sale of, loan, grant any
option for the purchase of, pledge, hypothecate or otherwise dispose of
any Shares (other than those included in the registration) without the
prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed one hundred eighty (180) days
from the date of the final prospectus for such offering), as may be
requested by the Company or the underwriters. This paragraph shall be
binding on all transferees or assignees of Shares, whether or not such
persons are entitled to registration rights pursuant to Section 11 hereof.
(i) Termination of Registration Rights. All rights granted and
obligations imposed pursuant to Section 11 of this Agreement shall
terminate with respect to all Shares that have been sold to or through a
broker or dealer or underwriter in a public distribution or a public
securities transaction, and as to each Holder, at such time as such Holder
may sell all of such Holder's Shares which have not been sold as provided
above, pursuant to Rule 144 under the Securities Act within any three (3)
month period or immediately pursuant to Rule 144(k).
12.) Call Provision. During any period in which the Company is a
reporting company under the Securities Exchange Act of 1934, as amended, and the
reported closing price of the Company's Common Stock for not less than thirty
(30) consecutive trading days was not less than five (5) times the Warrant
Price, the Company shall have the right to call and terminate the Warrant,
without paying any additional consideration for the Warrant, and shall deliver
written notice to the Holder ("CALL NOTICE") of the effectiveness of the call
right. The Holder shall have thirty (30) days from the date of the Call Notice
("CALL PERIOD") during which the Holder may exercise the Warrant. If the Warrant
is not exercised during the Call Period, the Holder shall deliver the Warrant to
the Company for cancellation. Cancellation of the Warrant shall be effective on
the Company's books and records notwithstanding the Holder's failure to deliver
the Warrant to the Company for cancellation.
13.) No Shareholder Rights. This Warrant shall not entitle the Holder to
any of the rights of a shareholder of the Company prior to exercise of this
Warrant.
14.) No Limitation on Corporate Action. No provisions of the Warrant and
no right or option granted or conferred hereunder shall in any way limit,
affect, or abridge the exercise by the Company of any of its corporate rights or
powers to recapitalize, amend its Articles of Incorporation, reorganize or merge
with or into another corporation, or to transfer all or any part of its property
or assets, or the exercise of any other of its corporate rights and powers.
15.) Miscellaneous. This Warrant shall be governed by the laws of the
State of Minnesota without reference to such state's choice of laws provisions.
The headings in this Warrant are for purposes of convenience and reference only,
and shall not be deemed to
9.
constitute a part hereof. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the Company and the registered Holder hereof. All notices and
other communications from the Company to the Holder of this Warrant shall be by
certified mail, return receipt requested, or by overnight delivery service to
the address furnished to the Company in writing by the last Holder of this
Warrant who shall have furnished an address to the Company in writing.
ISSUED this 14th day of May, 2004.
REDLINE PERFORMANCE PRODUCTS, INC.
_______________________________________
Xxxx X. Xxxxx
President and CFO
10.
EXERCISE FORM
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
Redline Performance Products, Inc.
The undersigned, the holder of the within warrant, hereby irrevocably
elects to exercise the purchase right represented by such warrant for, and to
purchase thereunder ____________ shares of the Common Stock, $.01 par value, of
Redline Performance Products, Inc. and herewith makes payment of $___________
therefor, and requests that the certificates for such shares be issued in the
name of ____________________________ and be delivered to _______________________
whose address is: _____________________________________.
Dated: _____________, 20___
_______________________________________
Warrant Holder
_______________________________________
Signature
_______________________________________
Name Typed or Printed
_______________________________________
Residence Address
_______________________________________
City, State and Zip Code
_______________________________________
Mailing Address
_______________________________________
City, State and Zip Code
_______________________________________
Telephone Number
_______________________________________
Facsimile Number
_______________________________________
Tax Identification Number
or Social Security Number
ASSIGNMENT FORM
(TO BE SIGNED ONLY UPON TRANSFER OF THE WARRANT)
For value received, the undersigned hereby sells, assigns and transfer
unto __________________________________________ the right represented by the
within Warrant to purchase __________ of the shares of common stock, $0.01 par
value, of Redline Performance Products, Inc. to which the within Warrant
relates, and appoints _______________________ attorney to transfer said right on
the books of Redline Performance Products, Inc., with full power of substitution
in the premises.
Dated: _____________________________ _______________________________
(Signature must conform in all
respects to the name of holder
as specified on the face of the
warrant)
______________________________________________________________________ (Address)
___________________________________________________________ (City - State - Zip)
In the presence of:
