EXHIBIT 10.6
WARRANT AGREEMENT WITH ELITE FINANCIAL
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
EXCHANGED OR TRANSFERRED IN ANY MANNER IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE
COMPANY THAT NO SUCH REGISTRATION IS REQUIRED.
WARRANT CERTIFICATE
NEW VISUAL CORPORATION
No. WR-EFCG-1 300,000 Warrants
Date: February 8, 2002
THIS CERTIFIES THAT, for value received, ELITE FINANCIAL COMMUNICATIONS
GROUP, or its registered assigns, is entitled to purchase from NEW VISUAL
CORPORATION, a Utah corporation (the "Company"), at any time or from time to
time during the period specified in Paragraph 2, THREE HUNDRED THOUSAND fully
paid and nonassessable shares of the Company's Common Stock, par value $0.001
per share (the "Common Stock"), at an exercise price per share (the "Exercise
Price") as follows:
o 50,000 warrants shall have an Exercise Price of $0.75 per share;
o 50,000 warrants shall have an Exercise Price of $1.25 per share;
o 100,000 warrants shall have an Exercise Price of $1.75 per share;
and
o 100,000 warrants shall have an Exercise Price of $2.25 per share.
The term "Warrant Shares," as used herein, refers to the shares of
Common Stock purchasable hereunder. The Warrant Shares and the Exercise Price
are subject to adjustment as provided in Paragraph 4.
This Warrant is subject to the following terms, provisions, and
conditions:
1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES. Subject to
the provisions of this Warrant Certificate, this Warrant may be exercised by the
holder of this Warrant and/or any permitted transferee specified in Section 7
below (the "holder"), in whole or in part, by the surrender of this Warrant
together with a completed exercise agreement in the form attached to this
Warrant Certificate (the "Exercise Agreement"), to the Company during normal
business hours on any business day at the Company's principal executive offices
(or such other office or agency of the Company as it may designate by notice to
the holder), and upon payment of the Exercise Price. At the option of the
holder, the Exercise Price may be paid to the Company in cash, by certified or
official bank check or by wire transfer for the account of the Company. The
Warrant Shares so purchased shall be deemed to be issued to the holder or such
holder's designee, as the record owner of such shares, as of the close of
business on the date on which this Warrant shall have been surrendered, the
completed Exercise Agreement shall have been delivered, and payment shall have
been made for such shares as set forth above. Certificates for the Warrant
Shares so purchased shall be delivered to the holder within a reasonable time
after this Warrant shall have been so exercised. The certificates so delivered
shall be in such denominations as may be requested by the holder and shall be
registered in the name of the holder or such other name as shall be designated
by such holder.
2. PERIOD OF EXERCISE. This Warrant may be exercised, at the option of
the holder, in whole or in part, at any time from the date of the execution of
this Warrant and ending at 5:00 p.m., Eastern time, the earlier of (i) February
8, 2005 or (ii) 24 months from the date a registration statement registering the
Warrant Shares is deemed effective (the "Exercise Period").
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly
issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof.
(b) RESERVATION OF SHARES. During the Exercise Period, the
Company shall at all times have authorized, and reserved for the
purpose of issuance upon exercise of this Warrant, a sufficient number
of shares of Common Stock to provide for the exercise of this Warrant.
(c) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon
any entity succeeding to the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets.
4. ANTIDILUTION PROVISIONS. During the Exercise Period, the Exercise
Price and the number of Warrant Shares shall be subject to adjustment from time
to time as provided in this Paragraph 4. In the event that any adjustment of the
Exercise Price as required herein results in a fraction of a cent, such Exercise
Price shall be rounded up to the nearest cent.
(a) SUBDIVISION OR COMBINATION OF COMMON STOCK. During the
Exercise Period, if the Company subdivides (by any stock split, stock
dividend, recapitalization, reorganization, reclassification or
otherwise) any shares of Common Stock into a greater number of shares,
then, after the date of record for effecting such subdivision, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced. During the Exercise Period, if the Company
combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) any shares of Common Stock into a
smaller number of shares, then, after the date of record for effecting
such combination, the Exercise Price in effect immediately prior to
such combination will be proportionately increased.
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(b) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Paragraph 4, the
number of shares of Common Stock issuable upon exercise of this Warrant
shall be adjusted by multiplying a number equal to the Exercise Price
in effect immediately prior to such adjustment by the number of shares
of Common Stock issuable upon exercise of this Warrant immediately
prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Price.
(c) CONSOLIDATION, MERGER OR SALE. During the Exercise Period,
in case of any consolidation of the Company with, or merger of the
Company into any other corporation, or in case of any sale or
conveyance of all or substantially all of the assets of the Company
other than in connection with a plan of complete liquidation of the
Company, then as a condition of such consolidation, merger or sale or
conveyance, adequate provision will be made whereby the holder of this
Warrant will have the right to acquire and receive upon exercise of
this Warrant in lieu of the shares of Common Stock immediately
theretofore acquirable upon the exercise of this Warrant, such shares
of stock, securities or assets as may be issued or payable with respect
to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon exercise of this Warrant had
such consolidation, merger or sale or conveyance taken place. In any
such case, the Company will make appropriate provision to insure that
the provisions of this Paragraph 4 will thereafter be applicable as
nearly as may be in relation to any shares of stock or securities
thereafter deliverable upon the exercise of this Warrant.
(d) NOTICE OF ADJUSTMENT. Upon the occurrence of any event
that requires any adjustment of the Exercise Price, then, and in each
such case, the Company shall give notice thereof to the holder, which
notice shall state the Exercise Price resulting from such adjustment
and the increase or decrease in the number of Warrant Shares
purchasable at such price upon exercise, setting forth in reasonable
detail the method of calculation and the facts upon which such
calculation is based. Such calculation shall be certified by
independent public accountants then engaged by the Company.
(e) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the
Exercise Price in effect at the time such adjustment is otherwise
required to be made, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustments so carried
forward, shall amount to not less than 1% of such Exercise Price.
(f) NO FRACTIONAL SHARES. No fractional shares of Common Stock
are to be issued upon the exercise of this Warrant, but the Company
shall pay a cash adjustment in respect of any fractional shares which
would otherwise be issuable in an amount equal to the same fraction of
the Market Price (as defined herein) of a share of Common Stock on the
date of such exercise.
(g) OTHER NOTICES. In case:
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(i) the Company shall declare any dividend upon the
Common Stock payable in shares of stock of any class or make
any other distribution (including dividends or distributions
payable in cash out of retained earnings) to the holders of
the Common Stock;
(ii) the Company shall offer for subscription pro
rata to the holders of the Common Stock any additional shares
of stock of any class or other rights;
(iii) there shall be any capital reorganization of
the Company, or reclassification of the Common Stock, or
consolidation or merger of the Company with or into or sale of
all or substantially all its assets to, another corporation or
entity; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder (a)
notice of the date on which the books of the Company shall close or a
record shall be taken for determining the holders of Common Stock
entitled to receive any such dividend, distribution, or subscription
rights or for determining the legal holders of Common Stock entitled to
vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up and
(b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up,
notice of the date (or, if not then known, a reasonable approximation
thereof by the Company) when the same shall take place. Such notice
shall also specify the date on which the holders of Common Stock shall
be entitled to receive such dividend, distribution, or subscription
rights or to exchange their Common Stock for stock or other securities
or property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or winding-up,
as the case may be. Such notice shall be given at least 30 days prior
to the record date or the date on which the Company's books are closed
in respect thereto. Failure to give any such notice or any defect
therein shall not affect the validity of the proceedings referred to in
clauses (i), (ii), (iii) and (iv) above.
(h) CERTAIN DEFINITIONS:
(i) "Market Price" as of any date, means (a) the average of
the last reported sale prices on the principal trading market for the
Common Stock for the five trading days immediately preceding the date
of any such determination, or (b) if market value cannot be calculated
as of such date on the foregoing basis, Market Price shall be the fair
market value as reasonably determined in good faith by the Board of
Directors of the Company. The manner of determining the Market Price of
the Common Stock sets forth in the foregoing definition shall apply
with respect to any other security in respect of which a determination
as to market value must be made hereunder.
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(ii) "Common Stock" for the purposes of this Paragraph 4,
includes the Common Stock, par value $0.001 per share, or shares
resulting from any subdivision or combination of such Common Stock, or
in the case of any reorganization, reclassification, consolidation, or
sale of the character referred to in Paragraph 4(c), the stock or other
securities or property provided for in such Paragraph.
5. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder or such
shares for any issuance tax or other costs in respect thereof, provided that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than the holder of this Warrant.
6. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall not
entitle the holder to any voting rights or other rights as a shareholder of the
Company. No provision of this Warrant, in the absence of affirmative action by
the holder to purchase Warrant Shares, and no mere enumeration herein of the
rights or privileges of the holder, shall give rise to any liability of such
holder for the Exercise Price or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
7. TRANSFER AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights
granted to the holder are transferable, in whole or in part, upon
surrender of this Warrant, together with a properly executed assignment
in the form attached hereto, at the office of the Company referred to
in Paragraph 7(d) below, PROVIDED, HOWEVER, that any transfer or
assignment shall be subject to the conditions set forth in Paragraph
7(e). Until due presentment for registration of transfer on the books
of the Company, the Company may treat the registered holder as the
owner and holder of this Warrant for all purposes, and the Company
shall not be affected by any notice to the contrary.
(b) REPLACEMENT OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction,
or mutilation of this Warrant and, in the case of any such loss, theft,
or destruction, upon delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company, or, in the case of any
such mutilation, upon surrender and cancellation of this Warrant, the
Company, at its expense, will execute and deliver, in lieu thereof, a
new Warrant of like tenor.
(c) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of
this Warrant in connection with any transfer or replacement as provided
in this Paragraph 7, this Warrant shall be promptly canceled by the
Company. The Company shall pay all taxes (other than securities
transfer taxes) and all other expenses (other than legal expenses, if
any, incurred by the Holder) in connection with the preparation,
execution, and delivery of Warrants pursuant to this Paragraph 7.
(d) REGISTER. The Company shall maintain, at its principal
executive offices (or such other office of the Company as it may
designate by notice to the holder), a register for this Warrant, in
which the Company shall record the name and address of the person in
whose name this Warrant has been issued, as well as the name and
address of each transferee and each prior owner of this Warrant.
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(e) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at the time
of the surrender of this Warrant in connection with any exercise,
transfer, or exchange of this Warrant, this Warrant (or in the case of
any exercise, the Warrant Shares issuable hereunder) shall not be
registered under the Securities Act and under applicable state
securities or blue sky laws, the Company may require, as a condition of
allowing such exercise, transfer, or exchange (i) that the holder or
transferee of this Warrant, as the case may be, furnish to the Company
a written opinion of counsel, which opinion and counsel are reasonably
acceptable to the Company, to the effect that such exercise, transfer
or exchange may be made without registration under said Act and under
applicable state securities or blue sky laws, and (ii) that the holder
or transferee execute and deliver to the Company an investment letter
in form and substance acceptable to the Company. The first holder of
this Warrant, by taking and holding the same, represents to the Company
that such holder is acquiring this Warrant for investment and not with
a view to the distribution thereof.
8. NOTICES. All notices, requests and other communications required or
permitted to be given or delivered hereunder to the holder of this Warrant shall
be in writing, and shall be personally delivered, or shall be sent by certified
or registered mail or by recognized overnight mail courier, postage prepaid and
addressed, to such holder at the address shown for such holder on the books of
the Company, or at such other address as shall have been furnished to the
Company by notice from such holder. All notices, requests, and other
communications required or permitted to be given or delivered hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed to the office of the Company at 0000 Xxxxxx Xxxx, Xxxxx
000, Xxx Xxxxx, Xxxxxxxxxx 00000 Attention: Chief Executive Officer, or at such
other address as shall have been furnished to the holder of this Warrant by
notice from the Company. Any such notice, request or other communication may be
sent by facsimile, but shall in such case be subsequently confirmed by a writing
personally delivered or sent by certified or registered mail or by recognized
overnight mail courier as provided above. All notices, requests and other
communications shall be deemed to have been given either at the time of the
receipt thereof by the person entitled to receive such notice at the address of
such person for purposes of this Paragraph 8 or, if mailed by registered or
certified mail or with a recognized overnight mail courier upon deposit with the
United States Post Office or such overnight mail courier, if postage is prepaid
and the mailing is properly addressed, as the case may be.
9. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF UTAH WITHOUT
REGARD TO THE BODY OF LAW CONTROLLING CONFLICTS OF LAW.
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10. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision it may only be
amended by an instrument signed by the Company and the holder.
(b) DESCRIPTIVE HEADINGS. The descriptive headings of the
several paragraphs of this Warrant are inserted for purposes of
reference only, and shall not affect the meaning or construction of any
of the provisions of this Warrant.
(c) SEVERABILITY AND SAVINGS CLAUSE. If any one or more of the
provisions contained in this Agreement is for any reason (i) objected
to, contested or challenged by any court, government authority, agency,
department, commission or instrumentality of the United States or any
state or political subdivision thereof, or any securities industry
self-regulatory organization (collectively, "Governmental Authority"),
or (ii) held to be invalid, illegal or unenforceable in any respect,
the Company and the holder agree to negotiate in good faith to modify
such objected to, contested, challenged, invalid, illegal or
unenforceable provision. It is the intention of Company and the holder
that there shall be substituted for such objected to, contested,
challenged, invalid, illegal or unenforceable provision a provision as
similar to such provision as may be possible and yet be acceptable to
any objecting Governmental Authority and be valid, legal and
enforceable. Further, should any provisions of this Agreement ever be
reformed or rewritten by a judicial body, those provisions as rewritten
will be binding, but only in that jurisdiction, on the holder and the
Company as if contained in the original Agreement. The invalidity,
illegality or unenforceability of any one or more provisions of this
Warrant will not affect the validity and enforceability of any other
provisions of this Warrant.
WITNESS the signature of a proper officer of the Company as of the date
first above written.
NEW VISUAL CORPORATION
By:/s/ Xxx Xxxxxxxxxx, Xx.
Name: Xxx Xxxxxxxxxx, Xx.
Title: CEO
ATTEST:
/s/ X. Xxxx Xxxxxx XXX
Secretary
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[FORM OF ASSIGNMENT]
(TO BE EXECUTED BY THE REGISTERED HOLDER IF
SUCH HOLDER DESIRES TO TRANSFER THE WARRANT CERTIFICATE)
FOR VALUE RECEIVED, _______________________________________ hereby
sells, assigns and transfers unto
________________________________________________________________________________
(Please print name, address and taxpayer identification number or social
security number of transferee.)
the accompanying Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint:
________________________________________________________________________________
attorney, to transfer the accompanying Warrant Certificate on the books of the
Company, with full power of substitution. The transferee's tax identification or
social security number is _____________________.
Dated: ________________, ______.
[HOLDER]
By: _______________________________
Name: _____________________________
Title: ____________________________
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of the accompanying Warrant Certificate or any prior
assignment thereof in every particular, without alteration or enlargement or any
change whatsoever.
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[FORM OF ELECTION TO PURCHASE]
(TO BE EXECUTED BY THE REGISTERED HOLDER IF
SUCH HOLDER DESIRES TO EXERCISE THE WARRANT CERTIFICATE)
To: ____________________________:
The undersigned hereby irrevocably elects to exercise ____________ of the
Warrants represented by the accompanying Warrant Certificate to purchase the
shares of Common Stock issuable upon the exercise of such Warrants and requests
that certificates for such shares be issued in the name of:
________________________________________________________________________________
(Please print name and address.)
________________________________________________________________________________
(Please insert social security or other identifying number.)
The undersigned represents that it is acquiring the shares of Common Stock for
its own account and not with a view to distribution, and it will not sell these
shares unless they have been registered under the Securities Act of 1933 or an
exemption from such registration requirement is available.
If such number of Warrants shall not be all the Warrants evidenced by the
accompanying Warrant Certificate, a new Warrant Certificate for the balance
remaining of such Warrants shall be registered in the name of and delivered to:
________________________________________________________________________________
(Please print name and address.)
________________________________________________________________________________
(Please insert social security or other identifying number.)
Dated: ________________, ____.
___________________________________
Holder
By: _______________________________
Name:______________________________
Title: ____________________________
NOTICE
The signature to the foregoing Election to Purchase must correspond to
the name as written upon the face of the accompanying Warrant Certificate or any
prior assignment thereof in every particular, without alteration or enlargement
or any change whatsoever.
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