EXHIBIT 4.13
XXXXXXXX.XXX
WARRANT AGREEMENT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS AN EXEMPTION THEREFROM IS AVAILABLE.
This Warrant Agreement (this "Agreement") is entered into as of 20th day of
August, 1998 by and between, XXXXXXXX.XXX, a California corporation (the
"Company"), and Xxxxxxx Xxxxxx & Co., Inc. FBO Xxxxxx Xxxxxxx Xxxxx Plan 1463-
1994 (the "Holder").
RECITALS
--------
WHEREAS, the Company has agreed to grant to Holder warrants to purchase
50,000 shares of Company Common Stock in exchange and in consideration for good
and valuable goods and services.
NOW, THEREFORE, BE IT RESOLVED, the parties agree hereto as follows:
1. DESCRIPTION; EXECUTION.
----------------------
(a) The Company agrees to issue to the Holder and the Holder agrees to
accept the Warrant Certificate evidencing the right to purchase shares of the
Company common stock at an initial purchase price of Three Dollars and Thirty
Cents ($3.30) per Share as to which the Warrant is exercisable. The Warrant
Certificate shall be substantially in the form annexed hereto as Exhibit A.
(b) This Agreement shall be executed on behalf of the Company by its
President. Upon delivery of this Warrant to the Holder, this Agreement shall be
binding upon the Company, and the Holder shall be entitled to all the benefits
set forth herein.
2. TERM OF WARRANT. The Warrant shall become exercisable at any time after
---------------
the date hereof, and remain exercisable, subject to the conditions set forth in
Section 3 until the close of business on August 20, 2001 (the "Expiration
Date").
3. EXERCISE OF WARRANT.
-------------------
(a) Subject to (b) below, at any time until the Expiration Date, the Holder
shall have the right to purchase from the Company (and the Company shall
promptly issue to the Holder) one fully-paid and nonassessable share of Common
Stock at the Exercise Price (as defined below) for each Warrant, by surrendering
the appropriate Warrant Certificate and the Subscription Form attached hereto to
the Company at its executive offices and paying the
-1-
aggregate Exercise Price for the shares to be purchased, in cash, by check or by
cancellation of indebtedness.
(b) The Warrant may be exercised in whole and in part but not in increments
of less than 100 shares. In case of a partial exercise, the Warrant Certificate
shall be surrendered and a new Warrant Certificate of the same tenor and for the
purchase of the number of shares not purchased upon such partial exercise shall
be issued by the Company to the Holder hereof. The Warrants shall be deemed to
have been exercised immediately prior to the close of business on the date of
their surrender for exercise as provided above, and the person or entity
entitled to receive the shares of Common Stock issuable upon the exercise shall
be treated for all purposes as the holder of such shares of record as of the
close of business on such date. Prior to any such exercise, neither the Holder
nor any person entitled to receive shares issuable upon exercise shall be or
have any of the rights of a shareholder of the Company. No adjustment shall be
made for dividends or other stockholder rights for which the record date is
prior to the date of exercise. As soon as practicable on or after such date, the
Company shall issue in the name of, and deliver to the person or persons
entitled to receive, a certificate or certificates for the full number of shares
of Common Stock issuable upon such exercise.
4. EXERCISE PRICE. The initial Exercise Price for each share of Common Stock
--------------
issuable pursuant to the Warrant shall be Three Dollars and Thirty Cents ($3.30)
per Share, adjusted as provided below. The Exercise Price may be paid, in cash,
cashier's check or by cancellation of indebtedness from the Company to the
Holder.
5. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES OF COMMON STOCK. The
----------------------------------------------------------------
number and kind of securities purchasable upon the exercise of the Warrants and
the Exercise Price shall be subject to adjustment from time to time upon the
happening of certain events, as follows:
5.1 Adjustments. The Exercise Price of the Warrant shall be subject to
-----------
adjustment as follows:
(a) In case the Company shall issue rights, options, warrants or
convertible securities to all or substantially all holders of its Common
Stock, without any charge to such holders, entitling the holder thereof to
subscribe for or purchase Stock at a price per share which is lower at the
date of issuance of such rights, options, warrants or securities than the
then Current Fair Market Value (as defined in Section 7 hereof), the price
of shares of Stock thereafter purchasable upon the exercise of the Warrant
shall be reduced to a price equal to an amount which would entitle the
Holder to receive the same number of shares of Common Stock and other
securities that he would have received had he exercised the Warrants
immediately prior to such issuance.
(b) For the purpose of this Section 5, the term "Common Stock" shall
mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Agreement, or (ii) any other class of stock resulting
from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value.
-2-
5.2 No Adjustment for Dividends. Except as provided in Section 5.1
---------------------------
hereof, no adjustment in respect of any dividends or distributions out of
earnings shall be made during the term of a Warrant or upon the exercise of a
Warrant.
5.3 No Adjustment in Certain Cases. No adjustments shall be made pursuant
------------------------------
to Section 5 hereof in connection with the grant or exercise of presently
authorized or outstanding options to purchase Common Stock under the Company's
existing stock option plan or the exercise of presently outstanding warrants to
purchase Common Stock.
5.4 Preservation of Purchase Rights upon Reclassification, Consolidation,
---------------------------------------------------------------------
etc. In case of any consolidation of the Company with or merger of the Company
----
into another corporation or in case of any sale or conveyance to another
corporation of the property, assets or business of the Company as an entirety or
substantially as an entirety, the Company or such successor or purchasing
corporation, as the case may be, shall execute with the Holder an agreement that
the Holder shall have the right thereafter, upon payment of the Exercise Price
in effect immediately prior to such action, to purchase, upon exercise of each
Warrant, the kind and amount of shares and other securities and property which
it would have owned or have been entitled to receive after the occurrence of
such consolidation, merger, sale or conveyance had each Warrant been exercised
immediately prior to such action. In the event of a merger described in Section
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended, in which the
Company is the surviving corporation, the right to purchase shares of Common
Stock under the Warrant shall terminate on the date of such merger and thereupon
the Warrant shall become null and void, but only if the controlling corporation
shall agree to substitute for the Warrant its warrant which entitle the holders
thereof to purchase upon their exercise the kind and amount of shares and other
securities and property which they would have owned or been entitled to receive
had the Warrant been exercised immediately prior to such merger. Any such
agreements referred to in this Subsection 5.4 shall provide for adjustments,
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in Section 5 hereof. The provisions of this Subsection 5.4 shall
similarly apply to successive consolidations, mergers, sales or conveyances.
6. REGISTRATION RIGHTS.
-------------------
6.1 Definitions.
-----------
(a) "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act of
1933, as amended (the "Securities Act").
(b) "Registrable Securities" shall mean (x) shares of Common Stock
issuable upon exercise of the Warrants and (y) any Common Stock issued as a
dividend or other distribution with respect to or in exchange for or in
replacement of the shares referenced in (x) above, provided, however, that
Registrable Securities shall not include any shares of Common Stock which
have previously been registered or which have been sold to the public.
-3-
(c) The terms "register," "registered" and "registration" shall refer
to a registration effected by preparing and filing a registration statement
in compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
(d) "Registration Expenses" shall mean all expenses incurred in
effecting any registration pursuant to this Agreement, including, without
limitation, all registration, qualification, and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company,
blue sky fees and expenses of any regular or special audits incident to or
required by any such registration, but shall not include selling expenses
and fees and disbursements of counsel for the Holder.
(e) "Rule 144" shall mean Rule 144 as promulgated by the Commission
under the Securities Act, as such Rule may be amended from time to time, or
any similar successor rule that may be promulgated by the Commission.
(f) "Rule 145" shall mean Rule 145 as promulgated by the Commission
under the Securities Act, as such Rule may be amended from time to time, or
any similar successor rule that may be promulgated by the Commission.
6.2 "Piggyback" Registration. If the Company shall determine to register
------------------------
any of its shares of Common Stock in a firm commitment public offering for its
own account, other than a registration relating solely to employee benefit
plans, or a registration relating solely to a Rule 145 transaction on Form S-4,
or a registration on any registration form that does not permit secondary sales,
the Company will:
(a) promptly give to Holder written notice thereof;
(b) use its best efforts to include in such registration (and any
related qualification under the blue sky laws or other compliance), except
as set forth in Section 6.3 below, and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made by Holder within Twenty (20) days after the written notice
from the Company described in clause 6.2(a) above is given. Such written
request may specify all or a part of Holder's Registrable Securities; and
(c) pay all Registration Expenses, other than the selling expenses of
Holder's Registrable Securities.
6.3 Underwriting. If the registration of which the Company gives notice
------------
is for a registered public offering involving an underwriting, the Company shall
so advise the Holder as a part of the written notice. In such event, the right
of the Holder to registration pursuant to this Section 6 shall be conditioned
upon Holder's participation in such underwriting and the inclusion of the
Holder's Registrable Securities in the underwriting to the extent provided
herein. The Holder shall (together with the Company) enter into an underwriting
agreement in customary form with the representative of the underwriter of
underwriters selected by the Company.
-4-
6.4 Exclusion of Registrable Securities. Notwithstanding any other
-----------------------------------
provisions of this Section 6, if the representative of the underwriters advises
the Company that marketing factors require a limitation on the number of shares
to be underwritten, the representative may (subject to the limitations set forth
below) exclude all Registrable Securities from, or limit the number of
Registrable Securities to be included in, the registration and underwriting.
The Company shall so advise the Holder, and the number of shares of securities
that are entitled to be included in the registration and underwriting shall be
allocated first to the Company for securities being sold for its own account and
thereafter to the Holder, pro rata with any other holders of Common Stock having
registration rights. If the Holder does not agree to the terms of any such
underwriting, he shall be excluded therefrom by written notice from the Company
or the underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
If shares are so withdrawn from the registration or if the number of shares
of Registrable Securities to be included in such registration was previously
reduced as a result of marketing factors, the Company shall then offer to all
persons who have retained the right to include securities in the registration
the right to include additional securities in the registration in an aggregate
amount equal to the number of shares so withdrawn, with such shares to be
allocated among the persons requesting additional inclusion pro rata amongst
those persons requesting inclusion.
6.5 Registration Procedures. In the case of each registration effected by
-----------------------
the Company pursuant to Section 6, the Company will keep Holder advised in
writing as to the initiation of each registration and as to the completion
thereof, at its expense, the Company will use its best efforts to:
(a) Keep such registration effective for a period of one hundred
twenty (120) days or until the Holder has completed the distribution
described in the registration statement relating thereto, whichever first
occurs; provided, however, that (x) such 120-days period shall be extended
for a period of time equal to the period the Holder refrains from selling
any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) of the Company; and (y)
in the case of any registration of Registrable Securities on Form S-3 which
are intended to be offered on a continuous or delayed basis, such 120-day
period shall be extended, if necessary, to keep the registration statement
effective until all such Registrable Securities are sold, provided that
Rule 145, or any successor rule under the Securities Act, permits an
offering on a continuous or delayed basis, and provided further that
applicable rules under the Securities Act governing the obligation to file
a post-effective amendment permit, in lieu of filing a post-effective
amendment that (I) includes any prospectus required by Section 10(a)(3) of
the Securities Act or (II) reflects facts or events representing a material
or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be
included in (I) and (II) above to be contained in periodic reports filed
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 in
the registration statement.
-5-
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement;
(c) Furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as the
Holder from time to time may reasonably request;
(d) Notify the Holder at any time when a prospectus relating thereto
is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or incomplete in
the light of the circumstances then existing, and at the request of Holder,
prepare and furnish to the Holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such shares, such
prospectus shall not include 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 not misleading or incomplete in the light of the
circumstances then existing;
(e) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed;
(f) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP
number for all such Registrable Securities, in each case not later than the
effective date of such registration; and
(g) Otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months, but not more than eighteen months,
beginning with the first month after the effective date of the Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act.
7. FRACTIONAL SHARES; ISSUANCE OF SHARES; LEGENDS.
----------------------------------------------
7.1 Fractional Shares. The Company shall not be required to issue
-----------------
fractional shares of Company Common Stock on the exercise of a Warrant. If any
fraction of a share of Stock would, except for the provisions of this Section 6,
be issuable on the exercise of a Warrant (or specified portion thereof), the
Company shall in lieu thereof pay an amount in cash equal to the then Current
Fair Market Value, multiplied by such fraction. For purposes of this Agreement,
the term "Current Fair Market Value" shall mean (i) if the Common Stock is
traded in the over-the-counter market and not in the NASDAQ Small Cap Market or
the National Market nor
-6-
on any national securities exchange, the average of the per share closing bid
prices of the Common Stock on the 10 consecutive trading days immediately
preceding the date in question, as reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common Stock is traded in the NASDAQ
Small Cap Market or the National Market or on a national securities exchange,
the average for the 10 consecutive trading days immediately preceding the date
in question of the daily per share closing prices of the Common Stock in the
NASDAQ Small Cap Market or the National Market or on the principal stock
exchange on which it is listed, as the case may be. or (iii) if the class of
Stock is not publicly traded or quoted, the fair market value as determined by
the Board of Directors of the Company based on (with appropriate adjustments)
the most recent purchases of the Company's Stock and/or other relevant factors
including the Company's income and assets or evaluation reports received by the
Company.
7.2 Issuance of Shares. All shares of Stock issued upon exercise of a
------------------
Warrant will be duly authorized, validly issued, fully paid and nonassessable.
7.3 Legends. If the Stock to be issued upon exercise of this Warrant has
-------
not been registered under the Securities Act of 1933, as amended, then the stock
certificates representing such shares of Common Stock shall bear a legend
substantially in the following form:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE
SECURITIES LAWS AND ARE RESTRICTED SECURITIES. SUCH SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER THE ACT AND STATE SECURITIES LAWS.
8. TRANSFERABILITY. The Warrant or the Shares of Company Common Stock
---------------
underlying the Warrant shall not be transferred, and the Company shall not be
required to register any transfer on the books of the Company, unless the
Company shall have been provided with an opinion of counsel satisfactory to it
prior to such transfer that registration under the Securities Act and applicable
state securities laws is not required in connection with the transaction
resulting in such transfer. Each new Warrant or Company Common Stock
certificate issued upon any transfer as above provided shall bear an appropriate
investment legend, except that such Warrant or Company Common Stock certificate
shall not bear such restrictive legend if the opinion of counsel referred to
above is to further effect that such legend is not required in order to
establish compliance with the provisions of the Securities Act or if such
transfer is made in accordance with the provisions of Rule 144(k) promulgated
under the Securities Act. The Warrant may also be transferred by will or devise
and by the laws of descent.
Any attempt to transfer, sell or otherwise dispose of this Warrant (except
as provided above) shall be void and shall not convey any rights or privileges
to the transferee.
-7-
9. MISCELLANEOUS.
-------------
9.1 Notices. All notices, requests, demands and other communications
-------
required or permitted to be given hereunder shall be deemed to have been duly
given if in writing and delivered personally, given by prepaid telegram, or
mailed first class, postage prepaid, registered or certified mail, return
receipt requested, to the following addresses:
If to the Company: XXXXXXXX.XXX
0000 X. Xxxxx Xxx., Xxxxxx Xxxxx
Xxxxxx xxx Xxx, Xxxxxxxxxx 00000
Attention: Mr. Xxxxxx Xxxxxxxx
With a copy to: Jeffers, Wilson, Xxxxx & Xxxx, LLP
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
If to the Holder: Xxxxxxx Xxxxxx & Co., Inc.
FBO Xxxxxx Xxxxxxx Xxxxx Plan 1463-1994
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Any party may change the address to which such communications are to
be directed to it by giving written notice to the other party. Except as
otherwise provided in this Warrant, all notices shall be deemed to be given when
delivered in person, or if placed in the mail as aforesaid, then two (2) days
thereafter.
9.2 Modifications. The parties may, by mutual consent, amend, modify,
-------------
supplement and waive any right under this Warrant in any manner agreed by them
in writing at any time.
9.3 Entire Agreement. This Agreement, and any documents, instruments or
----------------
agreements specifically referred to herein, set forth the entire agreement and
understanding of the parties with respect to the transactions contemplated
hereby and supersede all prior agreements, arrangements and understandings
relating to the subject matter hereof.
9.4 Headings. The section and paragraph headings contained in this
--------
Agreement are for convenient reference only, and shall not in any way affect the
meaning or interpretation hereof.
9.5 Governing Law; Arbitration. This Agreement shall be governed by and
--------------------------
construed in accordance with the laws of the State of California, without any
regard to the choice of law provisions thereof. Any dispute arising under this
Agreement shall be resolved by binding arbitration under the rules of commercial
arbitration of the American Arbitration Association in Orange County,
California.
-8-
9.6 Severability. If any provision of this Agreement shall be held to be
------------
invalid, illegal or unenforceable, it shall be deemed severable from the
remaining provisions of this Agreement which shall remain in full force and
effect.
9.7 Waiver. No waiver of any provision of this Agreement or any breach
------
thereof shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar) or any other breach hereunder nor shall such
waiver constitute a continuing waiver. Either party may waive performance of
any provision of this Agreement, the non-performance of which would otherwise
constitute a breach of this Agreement, including but not limited to the non-
performance of any condition precedent to such party's performance, without
affecting the enforceability of this Agreement or the provisions contained
herein.
9.8 Heirs; Successors and Assigns. The terms and conditions of this
-----------------------------
Agreement shall inure to the benefit of and be binding upon the respective
heirs, successors and assigns of the parties hereto. Holders may transfer and
assign the Warrants only as provided in Section 7 and any assignment in
violation of the foregoing shall be void.
9.9 Attorneys' Fees. If any legal action is instituted to enforce or
---------------
interpret the terms of this Agreement, the prevailing party in such action shall
be entitled to actual attorneys' fees in addition to any other relief to which
the party is entitled.
IN WITNESS WHEREOF, the parties have executed this instrument as of the
date first written above.
XXXXXXXX.XXX, a California corporation
By: /s/ Xxxxx X. Xxxxx
----------------------
"HOLDER"
/s/ Xxxxxx Xxxxxxx
----------------------
Xxxxxxx Xxxxxx & Co., Inc.
FBO Xxxxxx Xxxxxxx Xxxxx Plan 1463-1994
-9-