WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "Agreement") is made and entered into as of
January 21st, 2000, between XXXXXXXXXXXXXXXX.XXX, INC., a Delaware corporation
(the "Company") and __________________ ("Holder").
R E C I T A L S
WHEREAS, the Company proposes to issue to Holder _______ warrants (the
"Warrants"), each such Warrant entitling the holder thereof to purchase one
share of Common Stock of the Company (the "Exercise Shares," "Shares," or the
"Common Stock"); and
WHEREAS, the Warrants which are the subject of this Agreement will be
issued by the Company to Holder as part of consideration payable to Holder in
connection with an investment by the Holder pursuant to the concurrent private
offering of the Company (the "Offering").
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
A G R E E M E N T
1. Warrant Certificates. The warrant certificates to be delivered pursuant
to this Agreement (the "Warrant Certificates") shall be in the form set forth in
Exhibit A, attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Warrant Agreement.
2. Right to Exercise Warrants. Each Warrant may be exercised from the date
of this Agreement until 11:59 P.M. (Pacific time) on the date that is two years
after the date of this Agreement (the "Expiration Date"). Each Warrant not
exercised on or before the Expiration Date shall expire.
Each Warrant shall entitle its holder to purchase from the Company one
share of Common Stock at an exercise price of $ (MP-30%) per share, subject to
adjustment as set forth below ("Exercise Price").
The Company shall not be required to issue fractional shares of capital
stock upon the exercise of this Warrant or to deliver Warrant Certificates which
evidence fractional shares of capital stock. In the event that a fraction of an
Exercise Share would, except for the provisions of this paragraph 2, be issuable
upon the exercise of this Warrant, the Company shall pay to the Holder
exercising the Warrant an amount in cash equal to such fraction multiplied by
the current market value of the Exercise Share. For purposes of this Agreement,
the current market value shall be determined as follows:
(a) if the Exercise Shares are traded in the over-the-counter market
and not on any national securities exchange and not in the NASDAQ Reporting
System, the average of the mean between the last bid and asked prices per share,
as reported by the National Quotation Bureau, Inc., or an equivalent generally
accepted reporting service, for the last business day prior
to the date on which this Warrant is exercised, or, if not so reported, the
average of the closing bid and asked prices for an Exercise Share as furnished
to the Company by any member of the National Association of Securities Dealers,
Inc., selected by the Company for that purpose.
(b) if the Exercise Shares are listed or traded on a national
securities exchange or in the NASDAQ Reporting System, the closing price on the
principal national securities exchange on which they are so listed or traded or
in the NASDAQ Reporting System, as the case may be, on the last business day
prior to the date of the exercise of this Warrant. The closing price referred to
in this Clause (b) shall be the last reported sales price or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices, in either case on the national securities exchange on which
the Exercise Shares are then listed or in the NASDAQ Reporting System; or
(c) if no such closing price or closing bid and asked prices are
available, as determined in any reasonable manner as may be prescribed by the
Board of Directors of the Company.
3. Mutilated or Missing Warrant Certificates. In case any of the Warrant
Certificates shall be mutilated, lost, stolen or destroyed prior to its
expiration date, the Company shall issue and deliver, in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate, or
in lieu of and in substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent right or interest.
4. Reservation of Shares. The Company will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Shares or its authorized and issued Shares held in its treasury for
the purpose of enabling it to satisfy its obligation to issue Shares upon
exercise of Warrants, the full number of Shares deliverable upon the exercise of
all outstanding Warrants.
The Company covenants that all Shares which may be issued upon exercise of
Warrants will be validly issued, fully paid and nonassessable outstanding Shares
of the Company.
5. Rights of Holder. The Holder shall not, by virtue of anything contained
in this Warrant Agreement or otherwise, prior to exercise of this Warrant, be
entitled to any right whatsoever, either in law or equity, of a stockholder of
the Company, including without limitation, the right to receive dividends or to
vote or to consent or to receive notice as a shareholder in respect of the
meetings of shareholders or the election of directors of the Company of any
other matter.
6. Investment Intent. Holder represents and warrants to the Company that
Holder is acquiring the Warrants for investment and with no present intention of
distributing or reselling any of the Warrants.
7. Certificates to Bear Language. The Warrants and the certificate or
certificates therefor shall bear the following legend by which each holder shall
be bound:
"THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF
COMMON STOCK (OR OTHER SECURITIES) ISSUABLE UPON EXERCISE THEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN OPINION OF COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH
ACT IS AVAILABLE."
The Shares and the certificate or certificates evidencing any such
Shares shall bear the following legend:
"THE SHARES (OR OTHER SECURITIES) REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL THAT AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE."
Certificates for Warrants without such legend shall be issued if such
warrants or shares are sold pursuant to an effective registration statement
under the Securities Act of 1933 (the "Act") or if the Company has received an
opinion from counsel reasonably satisfactory to counsel for the Company, that
such legend is no longer required under the Act.
8. Piggyback Registration Rights. If the Company at any time proposes to
register any of its securities under the Act, including under an SB-2
Registration Statement or otherwise, the Company will use its best efforts to
cause all of the shares of common stock underlying the Warrants owned by Holder
to be registered under the Act (with the securities which the Company at the
time propose to register), all to the extent requisite to permit the sale or
other disposition by the Holder; provided, however, that the Company may, as a
condition precedent to its effecting such registration, require the Holder to
agree with the Company and the managing underwriter or underwriters of the
offering to be made by the Company in connection with such registration that the
Holder will not sell any securities of the same class or convertible into the
same class as those registered by the Company (including any class into which
the securities registered by the Company are convertible) for such reasonable
period after such registration becomes effective as shall then be specified in
writing by such underwriter or underwriters if in the opinion of such
underwriter or underwriters the Company's offering would be materially adversely
affected in the absence of such an agreement. All expenses incurred by the
Company in complying with this Section, including without limitation all
registration and filing fees, listing fees, printing expenses, fees and
disbursements of all independent accounts, or counsel for the Company and or
counsel for the Holder and the expense of any special audits incident to or
required by any such registration and the expenses of complying with the
securities or
blue sky laws of any jurisdiction shall be paid by the Company. Notwithstanding
the foregoing, Holder shall pay all underwriting discounts or commissions with
respect to any securities sold by the Holder.
(a) Indemnification.
(i) In the event of any registration of any of its securities
under the Act pursuant to this Section, the Company hereby indemnifies and holds
harmless the Holder (which phrase shall include any underwriters of such
securities), their respective directors and officers, and each other person who
participates, in the offering of such securities and each other person, if any,
who controls the Holder, or such participating persons within the meaning of the
Act, against any losses, claims, damages or liabilities, joint or several, to
which each the Holder or any such director or officer or participating person or
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained, on the effective date thereof, in any
registration statement under which such securities were registered under the
Act, any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon any omission
or alleged omission to state therein an material fact required to be stated
therein or necessary to make the statements therein not misleading; and will
reimburse each the Holder and each director, officer or participating or
controlling person for any legal or any other expenses reasonably incurred by
the Holder or such director, officer or participating or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, preliminary
prospectus or prospectus or amendment or supplement in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by the Holder specifically stating that it is for use
therein. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Holder or such directors, officer or
participating or controlling person, and shall survive the transfer of such
securities by the Holder.
(ii) The Holder shall by acceptance thereof, indemnify and
hold harmless the Company and its directors and officers, and each person, if
any who controls the Company, against any losses, claims, damages or
liabilities, joint or several, to which the Company or any director or officer
or any such person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained, on the effective date thereof, in any
registration statement under which securities were registered under the Act at
the request of such holder, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in such registration statement, preliminary
prospectus, prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by or on behalf of such holder specifically stating
that it is for use therein; and will reimburse the Company or such director,
officer or person for any legal or any other expense reasonably incurred in
connection with investigation or defending any such loss, claim, damage,
liability or action.
(b) Rule 144. If the Company shall be subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Company will use its best efforts timely to file all reports required
to be filed from time to time with the SEC (including but not limited to the
reports under Section 13 and 15(d) of the 1934 Act referred to in subparagraph
(c)(1) of Rule 144 adopted by the SEC under the Act). If there is a public
market for any securities of the Company at any time that the Company is not
subject to the reporting requirements of either of said Section 13 or 15(d), the
Company will, upon the request of Holder, use its best efforts to make publicly
available the information concerning the Company referred to in subparagraph
(c)(2) of said Rule 144. The Company will furnish to Holder, promptly upon
request, (i) a written statement of the Company's compliance with the
requirements of subparagraphs (c)(1) or (c)(2), as the case may be, of said Rule
144, and (ii) written information concerning the Company sufficient to enable
Holder to complete any Form 144 required to be filed with the SEC pursuant to
said Rule 144.
9. Adjustment of Number of Shares and Class of Capital Stock Purchasable.
The Number of Shares and Class of Capital Stock purchasable under this Warrant
Agreement are subject to adjustment from time to time as set forth in this
Section.
(a) Adjustment for Change in Capital Stock. If the Company:
(i) pays a dividend or makes a distribution on its Common
Stock, in each case, in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(iii) combines its outstanding shares of Common Stock into a
smaller number of shares;
(iv) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or
(v) issues by reclassification of its shares of Common Stock
any shares of its capital stock;
then the number and classes of shares purchasable upon exercise of each Warrant
in effect immediately prior to such action shall be adjusted so that the holder
of any Warrant thereafter exercised may receive the number and classes of shares
of capital stock of the Company which such holder would have owned immediately
following such action if such holder had exercised the Warrant immediately prior
to such action.
For a dividend or distribution the adjustment shall become effective
immediately after the record date for the dividend or distribution. For a
subdivision, combination or reclassification, the adjustment shall become
effective immediately after the effective date of the subdivision, combination
or reclassification.
If after an adjustment the holder of a Warrant upon exercise of it
may receive shares of two or more classes of capital stock of the Company, the
Board of Directors of the Company shall in good faith determine the allocation
of the adjusted Exercise Price between or among the classes of capital stock.
After such allocation, that portion of the Exercise Price applicable to each
share of each such class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Agreement. Notwithstanding the allocation of the Exercise Price between or among
shares of capital stock as provided by this Section 9(a), a Warrant may only be
exercised in full by payment of the entire Exercise Price currently in effect.
(b) Consolidation, Merger or Sale of the Company. If the Company is
a party to a consolidation, merger or transfer of assets which reclassifies or
changes its outstanding Common Stock, the successor corporation (or corporation
controlling the successor corporation or the Company, as the case may be) shall
by operation of law assume the Company's obligations under this Warrant
Agreement. Upon consummation of such transaction the Warrants shall
automatically become exercisable for the kind and amount of securities, cash or
other assets which the holder of a Warrant would have owned immediately after
the consolidation, merger or transfer if the holder had exercised the Warrant
immediately before the effective date of such transaction. As a condition to the
consummation of such transaction, the Company shall arrange for the person or
entity obligated to issue securities or deliver cash or other assets upon
exercise of the Warrant to, concurrently with the consummation of such
transaction, assume the Company's obligations hereunder by executing an
instrument so providing and further providing for adjustments which shall be as
nearly equivalent as may be practical to the adjustments provided for in this
Section 9.
10. Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company or Holder shall bind and inure to the benefit of
their respective successor and assigns hereunder.
11. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all proposes be deemed to
be an original, and such counterparts shall together constitute by one and the
same instrument.
12. Notices. Any notice, request, instruction, or other document required
by the terms of this Agreement, or deemed by any of the parties hereto to be
desirable, to be given to any other party hereto shall be in writing and shall
be given by facsimile, personal
delivery, overnight delivery, or mailed by registered or certified mail, postage
prepaid, with return receipt requested, to the following addresses:
TO SELLER: xxxxxxxxxxxxxxxx.xxx, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Mr. Xxx Xxxxxxxx, Secretary/Treasurer
TO PURCHASER: ____________________________________________
____________________________________________
Fax: (___) _________________________________
Attn:_______________________________________
WITH COPY TO: XXXXXXX & BEAM
Xxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxx Xxxxxx, Esq.
The persons and addresses set forth above may be changed from time to time by a
notice sent as aforesaid. If notice is given by facsimile, personal delivery, or
overnight delivery in accordance with the provisions of this Section, said
notice shall be conclusively deemed given at the time of such delivery. If
notice is given by mail in accordance with the provisions of this Section, such
notice shall be conclusively deemed given seven days after deposit thereof in
the United States mail.
13. Supplements and Amendments. The Company may from time to time
supplement or amend this Warrant Agreement without the approval of any Holders
of Warrants in order to cure any ambiguity or to be correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provision, or to make any other provisions in regard to matters or questions
herein arising hereunder which the Company may deem necessary or desirable and
which shall not materially adversely affect the interest of the Holder.
14. Severability. If for any reason any provision, paragraph or term of
this Warrant Agreement is held to be invalid or unenforceable, all other valid
provisions herein shall remain in full force and effect and all terms,
provisions and paragraphs of this Warrant shall be deemed to be severable.
15. Governing Law and Venue. This Warrant shall be deemed to be a contract
made under the laws of the State of California and for all purposes shall be
governed and construed in accordance with the laws of said State. Any proceeding
arising under this Warrant Agreement shall be instituted in the County of
Orange, State of California.
16. Headings. Paragraphs and subparagraph headings, used herein are
included herein for convenience of reference only and shall not affect the
construction of this Warrant Agreement nor constitute a part of this Warrant
Agreement for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the date and year first above written.
"COMPANY" "HOLDER"
XXXXXXXXXXXXXXXX.XXX, INC. ________________________________________
_________________________________ ________________________________________
BY: Xxx Xxxxxxxx By:_____________________________________
ITS: Secretary/Treasurer Its:____________________________________
EXHIBIT A
NUMBER __ WARRANT
Warrant to Purchase
Shares
XXXXXXXXXXXXXXXX.XXX, INC. see reverse for
COMMON STOCK PURCHASE WARRANT certain definitions
will be void if not exercised prior to 11:59 P.M. Pacific Time on ________, ____
This Certifies that for value received,
the registered holder or assigns ("Holder"),
is entitled to purchase from xxxxxxxxxxxxxxxx.xxx, Inc., a Delaware corporation
(the "Company") at any time after 9:00 A.M. Pacific Time on _Month/Day, 2001 at
the purchase price per share of $ (MP-30%) (the "Warrant Price"), the number of
shares of Common Stock of the Company set forth above (the "Shares"). The number
of shares purchasable upon exercise of each warrant evidenced hereby and the
Warrant Price per Share shall be subject to adjustment from time to time as set
forth in the Warrant Agreement referred to below. The Warrants expire on
Month/Day, 2002. Holders will not have any rights or privileges of shareholders
of the Company prior to exercise of the Warrants. Holders of the Warrants
evidenced hereby and the shares of Common Stock issuable upon exercise hereof
have certain rights with respect to registration with the Securities and
Exchange Commission of the Warrants and Common Stock issuable upon exercise
hereof. These registration rights are set forth in that certain Warrant
Agreement of even date herewith pursuant to which this Warrant Certificate has
been issued. The Warrant evidenced hereby may be exercised in whole or in part
by presentation of this Warrant certificate with the Purchase Form on the
reverse side hereof fully executed (with a signature guarantee as provided on
the reverse side hereof) and simultaneous payment of the Warrant Price (subject
to adjustment) at the principal office of the Company. Payment of such price
shall be made at the option of the Holder in cash or by certified check or bank
draft. The Warrants evidenced hereby are part of a duly authorized issue of
Common Stock Purchase Warrants with rights to purchase an aggregate of up to
5,000,000 shares of Common Stock of the Company. Upon any partial exercise of
the Warrant evidenced hereby, there shall be countersigned and issued to the
Holder a new Warrant Certificate in respect of the Shares as to which the
Warrants evidenced hereby shall not have been exercised. This Warrant
Certificate may be exchanged at the office of the Company by surrender of this
Warrant Certificate properly endorsed with a signature guarantee either
separately or in combination with one or more other Warrants for one or more new
Warrants to purchase the same aggregate number of Shares as evidenced by the
Warrant or Warrants exchanged. No fractional Shares will be issued upon the
exercise of rights to purchase hereunder, but the Company shall pay the cash
value of any fraction upon the exercise of one or more Warrants. The Holder
hereof may be treated by the Company and all other persons dealing with this
Warrant Certificate as the absolute owner hereof for all purposes and as the
person entitled to exercise the rights represented hereby, any notice to the
contrary notwithstanding, and until such transfer is on such books, the Company
may treat the Holder as the owner for all purposes.
Dated: __________, ____ XXXXXXXXXXXXXXXX.XXX, INC.
Secretary Chief Executive Officer
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
CERTAIN STATES, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT
APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
CERTAIN STATES, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT
APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.
ELECTION TO PURCHASE
The undersigned hereby elects irrevocably to exercise the within Warrant
and to purchase _______________________ shares of Common Stock of
xxxxxxxxxxxxxxxx.xxx, Inc. and hereby makes payment of $_________ (at the rate
of $________ per share) in payment of the Exercise Price pursuant hereto. Please
issue the shares as to which this Warrant is exercised in accordance with the
instructions given below.
The undersigned represents and warrants that the exercise of the within
Warrant was solicited by the member firm of the National Association of
Securities Dealers, Inc. ("NASD") listed below. If not solicited by an NASD
member, please write "unsolicited" in the space below.
______________________________________________________
(Insert Name of NASD Member or "Unsolicited")
Dated: ________________________ Signature:__________________________________
INSTRUCTIONS FOR REGISTRATION OF SHARES
Name (print) __________________________________________________________________
Address (print) ________________________________________________________________
ASSIGNMENT
FOR VALUE RECEIVED, ____________________________________ does hereby sell,
assign and transfer unto ___________________________________________________,
the right to purchase ________________shares of Common Stock of
xxxxxxxxxxxxxxxx.xxx, Inc. , evidenced by the within Warrant, and does hereby
irrevocably constitute and appoint __________________________________________
attorney to transfer such right on the books of xxxxxxxxxxxxxxxx.xxx, Inc., with
full power of substitution on the premises.
Dated: ________________, 19______
Signature: _____________________________________________
Notice: The signature of Election to Purchase or Assignment must correspond with
the name as written upon the face of the within Warrant in every particular
without alteration or enlargement or any change whatsoever. The signature(s)
must by guaranteed by an eligible guarantor institution (Banks, Stockbrokers,
Savings and Loan Associations and Credit Unions with membership in an approved
signature guarantee Medallion Program), pursuant to S.E.C. Rule 17Ad-15.
_________________________________
Signature Guarantee
