EXHIBIT 10.2
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is made and
entered into as of April 23, 2007 by and between Signature Eyewear, Inc., a
California corporation (the "Company"), and Ashford Capital, LLC ("Buyer"), with
reference to the following facts:
A. The Company seeks to raise additional capital.
B. On the terms and subject to the conditions of this Agreement, the
Company is willing to issue and sell to Buyer, and Buyer is willing to purchase
from the Company: (i) 300,000 shares of the Company's Common Stock, par value
$0.001 per share, (ii) warrants to purchase up to 300,000 shares of the Common
Stock for $0.6875 per share; and (iii) a note in the amount of $125,000 bearing
interest at 8% per annum.
1. Purchase and Sale of Securities. On the terms and subject to the
conditions set forth in this Agreement, the Company hereby issues and sells to
Buyer, and Buyer hereby purchases from the Company, for a purchase price of
$331,250: (a) 300,000 shares of the Common Stock (the "Shares"); (b) 300,000
warrants (the "Warrants"), each Warrant representing the right to purchase one
share of the Common Stock for $0.6875 per share, subject to adjustment as
provided in the Warrants; and (c) a note (the "Note") in the amount of $125,000
bearing interest at the rate of 8% per annum and due and payable (principal and
interest) on May 15, 2010. Buyer has concurrently paid the purchase price by
wire transfer to the bank account designated by the Company.
2. Definitions
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
2.1 "Affiliate" shall mean, with respect to any Person, any Person
that, directly or indirectly, controls, is controlled by or is under common
control with such Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with") shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or voting equity
interests. Without limiting the generality of the foregoing, a Person shall be
deemed an Affiliate of another Person if any securities owned by such Person
would also be deemed to be beneficially owned by such other Person.
2.2 "Blackout Event" means any of the following: (a) the possession by
the Company of material information that is not ripe for disclosure in a
registration statement or prospectus, as determined reasonably and in good faith
by the Chief Executive Officer or the Board of Directors of the Company or that
disclosure of such information in the Registration Statement or the prospectus
constituting a part thereof would be materially detrimental to the business and
affairs of the Company; or (b) any material engagement or activity by the
Company which would, in the reasonable and good faith determination of the Chief
Executive Officer or the
Board of Directors of the Company, be materially adversely affected by
disclosure in a registration statement or prospectus at such time.
2.3 "Common Stock" shall mean the Common Stock, par value $.001 per
share, of the Company.
2.4 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.5 "Person" shall mean any individual, corporation, partnership, joint
venture,
limited liability company, estate, trust, unincorporated association or other
entity.
2.6 "Registrable Shares" shall mean the Warrant Shares, and any shares
issued in respect of the Warrant Shares as a result of a stock split or
dividend, provided, however, that Warrant Shares shall cease to be Registrable
Shares at such time as they can be sold pursuant to Rule 144 of the SEC.
2.7 "Registration" shall mean a registration of the Registrable Shares
under the Securities Act pursuant to Section 6.1 or 6.2 of this Agreement.
2.8 "Registration Period" with respect to any Registration Statement
the period commencing the effective date of the Registration Statement and
ending upon withdrawal or termination of the Registration Statement.
2.9 "Registration Statement" shall mean the registration statement, as
amended from time to time, filed with the SEC in connection with a Registration.
2.10 "SEC" shall mean the Securities and Exchange Commission.
2.11 "Securities Act" shall mean the Securities Act of 1933, as
amended.
2.12 "Securities" shall mean the Shares, the Warrants and the Note.
2.13 "Shares" shall have the meaning set forth above in Section 1 of
this Agreement.
2.14 "Transfer" shall mean sell, assign, transfer, pledge, grant a
security interest in, or otherwise dispose of, with or without consideration.
2.15 "Warrant Shares" shall mean the shares of Common Stock that have
been issued, or are issuable, upon exercise of the Warrants.
3. Representations and Warranties of the Company
The Company represents and warrants to Buyer that:
3.1 The Company was duly incorporated in the State of California and
has the corporate power and authority to enter into and perform the obligations
imposed by this Agreement. The execution and performance of this Agreement has
been duly authorized by all necessary corporate proceedings.
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3.2 The execution and delivery of this Agreement will not conflict
with, result in a breach of any provision of, or constitute a default (or an
event which would constitute a default upon the giving of any required notice or
upon a lapse of time) under the Company's Certificate of Incorporation, By-laws,
or the provisions of any agreement, contract or administrative order, consent
decree or other instrument to which the Company is a party.
3.3 This Agreement is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
3.4 Immediately prior to the issuance of the Shares and the Warrants,
there were 6,555,639 shares of the Company's Common Stock outstanding and
1,200,000 shares of the Company's Series A Preferred Stock outstanding.
3.5 The Shares have been duly authorized and are validly issued, fully
paid, and non-assessable. The Warrant Shares shall have been duly authorized,
validly issued, fully paid and non-assessable upon exercise of the Warrants.
3.6 The Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 2006 complied in all material respects with the requirements of the
Exchange Act, and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
4. Representations, Warranties and Agreements of Buyer
Buyer represents and warrants to, and agrees with, the Company as
follows:
4.1 Buyer has full right, power, authority and capacity to enter into
this Agreement and to consummate the transactions contemplated hereby and has
taken all necessary action to authorize the execution, delivery and performance
of this Agreement.
4.2 Buyer is acquiring the Securities for Buyer's own account, for
investment purposes only and not with a view to distribute the Securities in
violation of the Securities Act.
4.3 Buyer is an "accredited investor" as that term is defined in Rule
501(a) under Regulation D promulgated pursuant to the Securities Act.
4.4 Buyer is knowledgeable, sophisticated and experienced in making,
and is qualified to make decisions with respect to, investments in securities
presenting an investment decision like that involved in the purchase of the
Securities, including investments in securities issued by the Company and
investments in comparable companies, and has requested, received, reviewed and
considered all information it deemed relevant in making an informed decision to
purchase the Securities.
4.5 Buyer understands that the issuance and sale of the Securities to
Buyer has not been registered under the Securities Act or under any state
securities laws. Buyer is familiar with the provisions of the Securities Act and
Rule 144 thereunder and understands that the
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restrictions on Transfer of the Securities may result in Buyer being required to
hold the Securities for an indefinite period of time.
4.6 Buyer understands that an investment in the Securities involves a
high degree of risk, and Buyer has the financial ability to bear the economic
risk of this investment in the Securities, including a complete loss of such
investment.
5. Covenants of Buyer
5.1 15% Ownership Limitation. Buyer agrees that without the prior
written consent of the Company, which the Company may grant or withhold in its
sole and absolute discretion, that:
5.1.1 Buyer will not purchase or accept, or cause or permit any of
Buyer's Affiliates to purchase or accept, any securities of the Company if as a
result of such purchase or acceptance, Buyer would beneficially own, as defined
in Rule 13d-3 of the Exchange Act, more than 14.99% of the outstanding Common
Stock;
5.1.2 If for any reason other than a repurchase of shares of Common
Stock by the Company, Buyer shall beneficially own more than 14.99% of the
outstanding Common Stock of the Company, Buyer shall, and shall cause its
Affiliates to, Transfer, as promptly as practicable but in no event later than
30 days, such amount of securities of the Company that Buyer and its Affiliates
shall beneficially own in the aggregate less 15.00% of the outstanding Common
Stock.
For purposes the foregoing calculations, Buyer shall be deemed to
beneficially own the Warrant Shares even though the Warrants may not be
exercisable.
5.2 Transfer. Buyer agrees not to Transfer any of the Securities except pursuant
to an effective registration statement under the Securities Act or an exemption
from registration. As a further condition to any such Transfer, except in the
event that such Transfer is made pursuant to an effective registration statement
under the Securities Act, if in the reasonable opinion of counsel to the Company
any Transfer of the Securities by the contemplated transferee thereof would not
be exempt from the registration and prospectus delivery requirements of the
Securities Act, the Company may require the contemplated transferee to furnish
the Company with an investment letter setting forth such information and
agreements as may be reasonable requested by the Company to ensure compliance by
such transferee with the Securities Act. Buyer agrees that the Company may place
a legend or legends on any certificate evidencing any of the Shares to reflect
the restrictions on transfer under applicable law and this Agreement.
6. Registration Rights.
6.1 Demand Registration. Within 60 days of written request from Buyer
at any time after May 1, 2008, the Company shall prepare and file with the SEC a
Registration Statement for the purpose of registering the sale by Buyer of the
Registrable Shares under the Securities Act, and shall use its commercially
reasonable efforts to cause the Registration Statement to become effective
within 90 days of the date of filing. Buyer shall not submit more than one
demand request to the Company. Once effective, the Company shall prepare and
file with the SEC such
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amendments and supplements to the Registration Statement and the prospectus
forming a part thereof as may be necessary to keep the Registration Statement
effective until the earliest of: (a) the date upon which all the Registrable
Shares have been disposed of pursuant to the Registration Statement, (b) the
date upon which all of the Registrable Shares then held by Buyer may be sold
under the provisions of Rule 144; or (c) six months from the effective date of
the Registration Statement. Notwithstanding the foregoing: (i) the Company shall
not be obligated to file the Registration Statement if the number of Registrable
Shares is less than 200,000 shares (subject to adjustment for stock splits,
reverse stock splits and stock dividends after the date hereof); and (ii) the
Company may defer filing the Registration Statement for up to 60 additional days
if a Blackout Event exists at the time of the demand request or prior to the
filing of the Registration Statement.
6.2 Piggyback Registration. Unless the Registrable Shares are then
included in a Registration Statement, if the Company shall determine to register
any Common Stock under the Securities Act for sale in connection with a public
offering of Common Stock for cash (other than pursuant to an employee benefit
plan or a merger, acquisition or similar transaction), the Company will give
written notice to Buyer and will include in such Registration Statement any of
the Registrable Shares which Buyer may by written notice request be included
within 10 days after the notice given by the Company to Buyer; provided,
however, that if the public offering is to be firmly underwritten, and the
representative of the underwriters of the offering refuses in writing to include
in the offering all of the shares of Common Stock requested by the Company and
others, the shares to be included shall be allocated first to the Company and
any shareholder who initiated such Registration and then among the others based
on the respective number of shares of Common Stock held by such persons. If the
Company decides not to, and does not, file a Registration Statement with respect
to such Registration, or after filing determines to withdraw the same before the
effective date thereof, the Company will promptly so inform Buyer, and the
Company will not be obligated to complete the registration of the Registrable
Shares included therein.
6.3 Certain Covenants. In connection with any Registration:
6.3.1 The Company shall take all lawful action such that the
Registration Statement, any amendment thereto and the prospectus forming a part
thereof does not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading. Upon becoming aware of the occurrence of any event or the discovery
of any facts during the Registration Period that make any statement of a
material fact made in the Registration Statement or the related prospectus
untrue in any material respect or which material fact is omitted from the
Registration Statement or related prospectus that requires the making of any
changes in the Registration Statement or related prospectus so that it will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading (taking into account any prior amendments or
supplements), subject to Section 6.4, the Company shall file with the SEC a
supplement or post-effective amendment to the Registration Statement or the
related prospectus or file any other required document so that, as thereafter
delivered to a purchaser of the Registrable Shares from Buyer, such prospectus
will not contain any untrue
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statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
6.3.2 The Company shall promptly notify Buyer upon the occurrence of
any of the following events in respect of the Registration Statement or the
prospectus forming a part thereof: (a) the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose; or (b) the receipt of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose.
6.3.3 The Company shall furnish to Buyer with respect to the
Registrable Shares registered under the Registration Statement (and to each
underwriter, if any, of such Shares) such number of copies of prospectuses and
such other documents as Buyer may reasonably request, in order to facilitate the
public sale or other disposition of all or any of the Registrable Shares by
Buyer pursuant to the Registration Statement.
6.3.4 The Company shall bear and pay all expenses incurred by it in
connection with the registration of the Registrable Shares pursuant to the
Registration Statement, including without limitation filing and registration
fees, legal and accounting fees, and printing costs. Buyer shall be responsible
for all underwriting discounts and brokerage commissions in connection with the
sale of Registrable Shares pursuant to the Registration Statement.
6.3.5 As a condition to including Registrable Shares in a Registration
Statement, Buyer must provide to the Company such information regarding itself,
the Registrable Shares held by it and the intended method of distribution of
such Warrant Shares as shall be required to effect the registration of the
Registrable Shares and, if the offering is being underwritten, Buyer must
provide such powers of attorney, indemnities and other documents as may be
reasonably requested by the managing underwriter.
6.3.6 Following the effectiveness of the Registration Statement, upon
receipt from the Company of a notice that the Registration Statement contains an
untrue statement of material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances under which they were made, Buyer will immediately
discontinue disposition of Registrable Shares pursuant to the Registration
Statement until the Company notifies Buyer that it may resume sales of
Registrable Shares and, if necessary, provides to Buyer copies of the
supplemental or amended prospectus.
6.4 Blackout Event. The Company shall not be obligated to file a
post-effective amendment or supplement to the Registration Statement or the
prospectus constituting a part thereof during the continuance of a Blackout
Event; provided, however, that no Blackout Event may be deemed to exist for more
than 90 days.
6.5 Company Indemnification. The Company agrees to indemnify and hold
harmless Buyer, and its officers, directors and agents, and each person, if any,
who controls Buyer within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages and liabilities caused by (a) any violation or alleged
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violation by the Company of the Securities Act, Exchange Act, any state
securities laws or any rule or regulation promulgated under the Securities Act,
Exchange Act or any state securities laws, (b) any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or (c) caused by any
omission or alleged omission in the Registration Statement to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information furnished in writing to the Company by Buyer or on Buyer's
behalf expressly for use therein; provided, however, that the Company shall have
no indemnification obligation in connection with any sale by Buyer of
Registrable Shares pursuant to the Registration Statement in breach of Section
6.3.6 or if Buyer fails to deliver the then current prospectus in connection
with such sale or delivers a prospectus that had been amended, supplemented or
superseded.
6.6 Buyer Indemnification. Buyer agrees to indemnify and hold harmless
the Company, its officers, directors and agents and each person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to Buyer, but only with respect to information
furnished in writing by Buyer or on Buyer's behalf expressly for use in any
Registration Statement relating to the Registrable Shares, or any amendment or
supplement thereto, or any preliminary prospectus.
6.7 Indemnification Procedures. In case any proceeding (including any
governmental investigation) shall be instituted involving any person in respect
of which indemnity may be sought pursuant to this Section 6, such person (an
"Indemnified Party") shall promptly notify the person against whom such
indemnity may be sought (the "Indemnifying Party") in writing and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party, and shall assume the
payment of all fees and expenses; provided that the failure of any Indemnified
Party so to notify the Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder except to the extent (and only to the extent
that) that the Indemnifying Party is materially prejudiced by such failure to
notify. In any such proceeding, any Indemnified Party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (a) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or
(b) in the reasonable judgment of such Indemnified Party representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties (including in the case of Buyer, all of its
officers, directors and controlling persons) and that all such fees and expenses
shall be reimbursed as they are incurred. In the case of any such separate firm
for the Indemnified Parties, the Indemnified Parties shall designate such firm
in writing to the Indemnifying Party. The Indemnifying Party shall not be liable
for any settlement of any proceeding effected without its written consent (which
consent shall not be unreasonably withheld or delayed), but if settled
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with such consent, or if there be a final judgment for the plaintiff, the
Indemnifying Party shall indemnify and hold harmless such Indemnified Parties
from and against any loss or liability (to the extent stated above) by reason of
such settlement or judgment. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Party is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability arising out of such proceeding.
6.8 Contribution. To the extent any indemnification by an Indemnifying
Party is prohibited or limited by law, the Indemnifying Party agrees to make the
maximum contribution with respect to any amounts for which, he, she or it would
otherwise be liable under this Section 6 to the fullest extent permitted by law;
provided, however, that (a) no contribution shall be made under circumstances
where a party would not have been liable for indemnification under this Section
6 and (b) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning used in the Securities Act) shall be
entitled to contribution from any party who was not guilty of such fraudulent
misrepresentation.
7. Miscellaneous
7.1 Notices. All notices, requests, demands and other communications
(collectively, "Notices") given pursuant to this Agreement shall be in writing,
and shall be delivered by personal service, courier, facsimile transmission or
by Federal Express at the address set forth below. Any Notice shall be effective
when received. Any party may from time to time change its address for further
Notices hereunder by giving notice to the other party in the manner prescribed
in this Section.
7.2 If to the Company:
Signature Eyewear, Inc.
000 X. Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Fax: (000) 000-0000
7.3 If to Buyer:
Ashford Capital, LLC
00000 Xxx Xxxxxx Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxxxx
Fax: (000) 000-0000
7.4 Entire Agreement. This Agreement contains the sole and entire
agreement and understanding of the parties with respect to the entire subject
matter of this Agreement, and any and all prior discussions, negotiations,
commitments and understandings, whether oral or otherwise, related to the
subject matter of this Agreement are hereby merged herein.
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7.5 Successors. This Agreement shall be binding upon and inure to the
benefit of the parties to this Agreement and their respective successors, heirs
and personal representatives.
7.6 Waiver and Amendment. No provision of this Agreement may be waived
unless in writing signed by all the parties to this Agreement, and waiver of any
one provision of this Agreement shall not be deemed to be a waiver of any other
provision. This Agreement may be amended only by a written agreement executed by
all of the parties to this Agreement.
7.7 Governing Law. This Agreement shall be construed in accordance with
the laws of the State of California without giving effect to the principles of
conflicts of law thereof.
7.8 Captions. The various captions of this Agreement are for reference
only and shall not be considered or referred to in resolving questions of
interpretation of this Agreement.
7.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Buyer have duly executed this
Agreement as of the day and year first above written.
THE COMPANY BUYER
SIGNATURE EYEWEAR, INC. ASHFORD CAPITAL, LLC
By: /s/ Xxxxxxx Xxxxxx By: /s/ Xxxxx Xxxxxxxxx, Managing Director
------------------------ --------------------------------------
Xxxxxxx Xxxxxx
Chief Executive Officer Its: President
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NEITHER THESE WARRANTS NOR THE COMMON STOCK ISSUABLE UPON EXERCISE OF THESE
WARRANTS HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE ACT OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
300,000 Warrants April 23, 2007
SIGNATURE EYEWEAR, INC.
WARRANTS
SIGNATURE EYEWEAR, INC., a California corporation ("Signature"),
certifies that, for value received, Ashford Capital, LLC or registered assigns
(the "Holder"), is the owner of Three Hundred Thousand (300,000) Warrants (the
"Warrants"). Each Warrant entitles the Holder to purchase from Signature at any
time prior to the Expiration Date (as defined below) one share of common stock,
par value $0.001 per share, of Signature (the "Common Stock") for $0.6875 (the
"Exercise Price"), on the terms and conditions hereinafter provided. The
Exercise Price and the number of shares of Common Stock purchasable upon
exercise of each Warrant are subject to adjustment as provided in these
Warrants. These Warrants are issued pursuant to that certain Securities Purchase
Agreement (the "SPA") dated April 23, 2007 between Signature and Ashford
Capital, LLC.
1. Vesting; Expiration Date; Exercise
1.1 Vesting. The Warrants are vested and fully exercisable as of the
date hereof.
1.2 Expiration Date. The Warrants shall expire on May 15, 2010 (the
"Expiration Date").
1.3 Manner of Exercise. The Warrants are exercisable by delivery to
Signature of the following (the "Exercise Documents"): (a) this Certificate; (b)
a written notice of election to exercise the Warrants substantially in the form
of the Notice of Exercise set forth as Exhibit A; and (c) payment of the
Exercise Price by wire transfer, by certified or cashier's check, and/or by
cancellation of indebtedness of Signature to the Holder. Within 20 days
following receipt of the foregoing, Signature shall execute and deliver to the
Holder a certificate or certificates representing the aggregate number of shares
of Common Stock purchased by the Holder, and if less than all of the Warrants
evidenced by this Certificate are exercised, a new certificate evidencing the
Warrants not so exercised.
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1.4 Warrant Exercise Limitation. The Holder is limited in the amount of
this Warrant it may exercise. In no event shall the Holder be entitled to
exercise any amount of this Warrant in excess of that amount upon exercise of
which the sum of (1) the number of shares of Common Stock beneficially owned (as
such term is defined under Section 13(d) and Rule 13d-3 of the Securities
Exchange Act of 1934 (the "1934 Act")) by the Holder, and (2) the number of
Warrant Shares issuable upon the exercise of any Warrants then owned by Holder,
would result in beneficial ownership by the Holder of more than 9.9% of the
outstanding shares of Common Stock of Signature, as determined in accordance
with Rule13d-1(j). Furthermore, Signature shall not process any exercise that
would result in beneficial ownership by the Holder of more than 9.9% of the
outstanding shares of Common Stock of Signature.
1.5 Fractional Shares. Signature may, but shall not be required, to
issue a fraction of a Warrant Share upon the exercise of these Warrants. The
Holder may not exercise at one time fewer than the lesser of 1,000 Warrants or
the number of Warrants then held by the Holder. All concurrent exercises of the
Warrants by the Holder shall be aggregated for purposes of determining whether
any fractional share would be issuable. If Signature determines not to issue a
fractional share in connection with any exercise, then Signature shall make a
cash payment in respect of such fractional share in an amount equal to the same
fraction of the market price of a Warrant Share on the date of such exercise (as
determined by Signature in its reasonable discretion).
2. Adjustments of Exercise Price and Number and Kind of Conversion Shares
2.1 In the event that Signature shall at any time hereafter (a) pay a
dividend in Common Stock or securities exercisable for or convertible into
Common Stock ("Common Stock Equivalents"); (b) subdivide or split its
outstanding Common Stock; (c) combine its outstanding Common Stock into a
smaller number of shares; then the number of shares to be issued immediately
after the occurrence of any such event shall be adjusted so that the Holder
thereafter may receive the number of shares of Common Stock it would have owned
immediately following such action if it had exercised the Warrants immediately
prior to such action and the Exercise Price shall be adjusted to reflect such
proportionate increases or decreases in the number of shares.
2.2 In case of any reclassification of the outstanding shares of Common
Stock (other than a change covered by Section 2.1 hereof or a change which
solely affects the par value of such shares) or in the case of any merger or
consolidation in which Signature is not the continuing corporation and which
results in any reclassification or capital reorganization of the outstanding
shares), the Holder shall have the right thereafter (until the Expiration Date)
to receive upon the exercise hereof, for the same aggregate Exercise Price
payable hereunder immediately prior to such event, the kind and amount of shares
of stock or other securities or property receivable upon such reclassification,
capital reorganization, merger or consolidation, by a Holder of the number of
shares of Common Stock obtainable upon the exercise of the Warrants immediately
prior to such event; and if any reclassification also results in a change in
shares covered by Section 2.1, then such adjustment shall be made pursuant to
both this Section 2.2 and Section 2.1. The provisions of this Section 2.2 shall
similarly apply to successive reclassifications, capital reorganizations and
mergers or consolidations, sales or other transfers.
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2.3 If at any time while the Warrants are outstanding, and except for
Exempt Issuances, Signature shall issue any Common Stock for a purchase price
less than the Exercise Price at the date of issuance (such lower price, the
"Base Share Price"), or shall issue any Common Stock Equivalent at an effective
exercise or conversion price less than then Exercise Price at the date of
issuance (taking into account the price paid for such security) (any of such
issuances a "Dilutive Issuance"), then the Exercise Price shall be reduced by
Two Hundred Percent (200%) of the difference between the Base Share Price and
the then existing Exercise Price, and the number of Warrant Shares issuable
hereunder shall be increased such that the aggregate Exercise Price payable
hereunder, after taking into account the decrease in the Exercise Price, shall
be equal to the aggregate Exercise Price prior to such adjustment. Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued. An Exempt Issuance shall be: (a) the issuance of Common Stock upon
exercise of Common Stock Equivalents outstanding on the date hereof; (b) the
issuance of Common Stock or Common Stock Equivalents as a dividend on
Signature's Series A 2% Convertible Preferred Stock in accordance with the terms
of such stock as in effect on the date of the SPA; or (c) any issuance resulting
in adjustments under Section 2.1 or 2.2 of these Warrants. If any Common Stock
is issued for consideration other than cash, the purchase price for such Common
Stock shall be deemed to be the amount determined in good faith by the Board of
Directors as the fair value of the Common Stock issued but in no event lower
than the then current Exercise Price. Signature shall promptly notify the Holder
in writing of any Dilutive Issuance.
3. Transfer. Subject to compliance with applicable securities laws, the Warrants
are transferable on the books of Signature maintained for such purpose by
Signature in person, or by duly authorized attorney, upon surrender of this
Certificate properly endorsed and upon payment of any necessary transfer tax or
other governmental charge imposed upon such transfer. If less than all of the
Warrants evidenced by this Certificate are transferred, Signature will, upon
transfer, execute and deliver to the Holder a new certificate evidencing the
Warrants not so transferred.
4. Reservation of Shares. Signature shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, such number
of shares of Common Stock as shall from time to time be issuable upon exercise
of the Warrants. If at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to permit the exercise of the Warrants,
Signature shall promptly seek such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
5. Certificate as to Adjustments. In each case of any adjustment in the Exercise
Price, or number or type of shares issuable upon exercise of these Warrants, the
Chief Financial Officer of Signature shall compute such adjustment in accordance
with the terms of these Warrants and prepare a certificate setting forth such
adjustment and showing in detail the facts upon which such adjustment is based,
including a statement of the adjusted Exercise Price. Signature shall promptly
send (by facsimile and by either first class mail, postage prepaid or overnight
delivery) a copy of each such certificate to the Holder.
6. Loss or Mutilation. Upon receipt of evidence reasonably satisfactory to
Signature of the ownership of and the loss, theft, destruction or mutilation of
this Certificate, and of indemnity
3
reasonably satisfactory to it, and (in the case of mutilation) upon surrender
and cancellation of these Warrants, Signature will execute and deliver in lieu
thereof a new Certificate of like tenor as the lost, stolen, destroyed or
mutilated Certificate.
7. Notices. All notices, requests, consents and other communications
(collectively, "Notices") given pursuant to this Agreement shall be in writing,
and shall be delivered by personal service, courier, facsimile transmission or
by Federal Express at the address set forth below. Any Notice shall be effective
when received: if addressed to the Holder, at the last address of such Holder on
the books of Signature; and if addressed to Signature at 000 Xxxxx Xxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxx 00000, or such other address as Signature may notify
Holder in writing.
8. No Rights as Shareholder. The Holder shall have no rights as a shareholder of
Signature with respect to the shares issuable upon exercise of the Warrants
until the receipt by Signature of all of the Exercise Documents. Except as may
be provided by Section 2 of this Certificate, no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date Signature receives all of the Exercise Documents.
SIGNATURE EYEWEAR, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------
Xxxxxxx Xxxxxx
President and Chief Executive Officer
4
EXHIBIT "A"
NOTICE OF EXERCISE
(To be signed only upon exercise of the Warrants)
To: Signature Eyewear, Inc.
The undersigned hereby elects to purchase shares of Common Stock (the
"Warrant Shares") of Signature Eyewear, Inc. ("Signature"), pursuant to the
terms of the enclosed warrant certificate (the "Certificate"). The undersigned
tenders herewith payment of the exercise price pursuant to the terms of the
Certificate.
The undersigned hereby represents and warrants to, and agrees with,
Signature as follows:
1. The undersigned is acquiring the Warrant Shares for its own account,
for investment purposes only and not with a view to distribution of the
Securities in violation of the Securities Act of 1933, as amended (the
"Securities Act").
2. The undersigned is an "accredited investor" as that term is defined
in Rule 501(a) under Regulation D promulgated pursuant to the Securities Act.
3. The undersigned understands that an investment in the Warrant Shares
involves a high degree of risk, and the undersigned has the financial ability to
bear the economic risk of this investment in the Warrant Shares, including a
complete loss of such investment.
4. The undersigned has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
investment in the Warrant Shares and in protecting its own interest in
connection with this transaction.
5. The undersigned understands that issuance and sale of the Warrant
Shares have not been registered under the Securities Act or under any state
securities laws. The undersigned is familiar with the provisions of the
Securities Act and Rule 144 thereunder and understands that the restrictions on
transfer on the Warrant Shares may result in the undersigned being required to
hold the Warrant Shares for an indefinite period of time.
6. The undersigned is knowledgeable, sophisticated and experienced in
making, and is qualified to make decisions with respect to, investments in
securities presenting an investment decision like that involved in the purchase
of the Warrant Shares, including investments in securities issued by Signature
and investments in comparable companies, and has requested, received, reviewed
and considered all information it deemed relevant in making an informed decision
to purchase the Warrant Shares.
7. The undersigned agrees not to sell, transfer, assign, gift, create a
security interest in, or otherwise dispose of, with or without consideration
(collectively, "Transfer") any of the Warrant Shares except pursuant to an
effective registration statement under the Securities Act or an exemption from
registration. As a further condition to any such Transfer, except in the event
that such Transfer is made pursuant to an effective registration statement under
the Securities Act, if in the reasonable opinion of counsel to Signature any
Transfer of the Warrant Shares by the contemplated transferee thereof would not
be exempt from the registration and prospectus
5
delivery requirements of the Securities Act, Signature may require the
contemplated transferee to furnish Signature with an investment letter setting
forth such information and agreements as may be reasonable requested by
Signature to ensure compliance by such transferee with the Securities Act.
8. Each certificate evidencing the Warrant Shares will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
SUCH SECURITIES UNDER THE ACT OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
Number of Warrants Exercised: ______________
Dated:
------------------- ------------------------
[Name]
6
DO NOT DESTROY THIS NOTE: When paid, the original Note must be surrendered to
Borrower for cancellation and retention.
PROMISSORY NOTE
$125,000.00 Irvine, California
April 23, 2007
For value received, the undersigned, SIGNATURE EYEWEAR, INC, a public
California corporation ("Borrower"), promises to pay to the order of Ashford
Capital, LLC, a California limited liability company ("Lender"), at Irvine, CA,
or at such place as the holder of this Note may from time to time designate in
writing, the principal sum of One Hundred Twenty Five Thousand and 00/100
($125,000.00) or so much thereof as may be advanced, with interest thereon as
set forth herein.
1. Term. The term of this Secured Promissory Note (this "Note") shall
commence on the date hereof and shall terminate three years after the date on
May 15th, 2010 hereof (the "Maturity Date"), at which time the entire unpaid
principal balance of this Note, together with all unpaid interest thereon and
any other sums payable by Borrower to Lender under this Note, shall all be due
and payable. The obligations evidenced by this Note are referred to as the
"Loan".
2. Simple Interest. Provided that Borrower is not otherwise in default
hereunder and is not in default under any of the Loan Documents, interest shall
accrue on the unpaid principal balance of this Note at the rate of eight percent
(8.00%) annually, beginning on the date hereof, until Borrower has discharged
all of its obligations to Lender under this Note. Interest shall be calculated
on the basis of a 360-day year. Commencing on the execution date above hereof.
3. Repayment. Borrower shall make one payment of accrued simple
interest plus the principal of this Note on or before the Maturity Date at which
time the unpaid principal balance, plus any unpaid interest, plus any and all
other sums due hereunder shall all become immediately due and payable. Payments
shall be made in lawful money of the United States of America to Lender at the
address noted in section 11 hereof or at such other place as Lender may
hereinafter designate in writing.
4. Late Charge; Default Rate. If Borrower fails to make any payment
required under any Loan Document within five (5) calendar days after its due
date, then Borrower shall pay a late charge equal to five percent (5%) of such
overdue amount, and interest on such overdue amount shall accrue at a rate of
two percent (2.0%) per month until paid, but interest shall not at any time
exceed the highest rate permitted by law (the "Default Rate").
5. Prepayment of Interest and Principal.
a. Principal. Borrower shall have the right at any time to pay
off all or any portion of the unpaid balance of principal and accrued interest
on this Note. Borrower shall give Lender at least five (5) days' written notice
of Borrower's intent to prepay all or a portion of this Note, which notice shall
indicate the amount that Borrower wish to prepay. Borrower shall also pay all
other fees and costs due from Borrower to Lender, including any attorneys' fees
and disbursements incurred by Lender, as a result of any such prepayment.
Page 1 of 3
6. Application of Payments. All payments made by Borrower to Lender
shall be applied in the following order: first, to any costs or expenses
advanced by Lender under any Loan Document and to any collection costs incurred
by Lender in procuring or enforcing Borrower's performance thereunder; second,
to payment of interest accrued and outstanding on the principal balance
hereunder; and third, to reduction of the unpaid principal balance hereunder.
7. Collection Fees. In the event of any default by Borrower hereunder,
Borrower shall reimburse Lender for any reasonable costs and expenses incurred
by Lender in connection with the collection or enforcement of this Note and the
other Loan Documents, whether or not suit is filed, including (without
limitation) reasonable attorneys' fees and court costs.
8. This loan is subordinated to all Signature's secured borrowing
including but not limited to all Home Loan Investment Company and Bluebird
Finance Limited long and short term debt obligations.
9. Governing Law and Venue. This Note shall be governed by and
construed in accordance with the laws of the State of California. The venue for
resolution of any disputes shall be in the California Superior Court in and for
the County of Orange. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDINGS RELATING
TO THIS AGREEMENT ("PROCEEDING"), BORROWER IRREVOCABLY (a) SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE STATE COURTS IN ORANGE COUNTY, CALIFORNIA, AND
(B) WAIVE ANY OBJECTION WHICH THEY MAY HAVE AT ANY TIME TO THE LAYING OF VENUE
OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVE ANY CLAIM THAT ANY PROCEEDING
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVE THE RIGHT TO OBJECT,
WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER
BORROWER. NOTHING IN THIS AGREEMENT SHALL PRECLUDE LENDER FROM BRINGING A
PROCEEDING IN ANY OTHER JURISDICTION, NOR WILL THE BRINGING OF A PROCEEDING IN
ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER
JURISDICTION. BORROWER HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS AND
FURTHER AGREE AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF
PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY
PROCEEDING MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO BORROWER AT THE ADDRESS INDICATED HEREIN AND SERVICE SO
MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT THAT IF BORROWER SHALL REFUSE TO
ACCEPT DELIVERY, SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME
SHALL HAVE BEEN SO MAILED.
10. Severance or Unenforceable Provisions. Should any part, term or
provision of this Note be declared invalid, void or unenforceable, such
provision shall be severed from the remaining provisions hereof and/or thereof
and shall not invalidate such remaining provisions, and all such remaining
provisions shall remain in full force and effect, valid and enforceable.
11. Notice. All notices to be given under this Note shall be in writing
and shall be given either personally or by reputable private delivery service or
by regular first-class mail, or certified mail return receipt requested, or by
fax (and if by fax, sent concurrently by one of the other methods provided
herein), addressed to the parties at the addresses set forth below, or at any
other address designated in writing by one party to the other. All notices shall
be deemed to have been given upon delivery in the case of notices personally
delivered, or at the expiration of one business day following delivery to the
private delivery service with instructions to deliver the next business day, or
three business days
Page 2 of 3
following the deposit thereof in the United States mail, with postage prepaid,
or on the first business day of receipt during business hours in the case of
notices sent by fax.
To Borrower: Signature Eyewear, Inc.
000 Xxxxx Xxx Xxxxxx
Xxxxxxxxx XX
00000
Attention: Xxxxxxx Xxxxxx CEO
Facsimile: (000) 000-0000
To Lender: Fort Ashford Funds, LLC
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxx
Facsimile: (000) 000-0000
Borrower:
Signature Eyewear, Inc., a public California corporation
/s/ Xxxxxxx Xxxxxx
-------------------------
By: Xxxxxxx Xxxxxx, Chief Executive Officer
Page 3 of 3
