UNIT PURCHASE AGREEMENT
RAPIDTRON, INC.
THIS AGREEMENT is made effective as of the 1st day of April, 2004 (the
"EFFECTIVE DATE") by and among:
RAPIDTRON, INC., a Nevada corporation, of 0000 Xxxxxx Xxx., Xxxx. X, Xxxxx
Xxxx, XX 00000 (the "COMPANY"); and
GENERATION CAPITAL ASSOCIATES, a New York limited partnership, 0000
Xxxxxxxxx Xxxxx, Xxxxxxx, XX 00000 (the "INVESTOR")
The Company and the Investor are collectively referred to as the "PARTIES."
WHEREAS:
A. The Company is offering to sell to the Investor units (the "UNITS") at
$1.25 per Unit, and each Unit consists of one share of the Company's
common stock (a "COMMON SHARE") with a par value of $0.001 and one
non-transferable share purchase warrant (a "WARRANT"). Each Warrant
will entitle the Investor to subscribe for one additional Common Share
at a price of $1.46 per share at any time up to 5:00 p.m. local time
in Costa Mesa, California on the fifth anniversary of the date of
issuance. The Units, the Common Shares, and the Warrants are referred
to in this Agreement as the "SECURITIES." All dollar amounts set forth
in this Agreement are in United States dollars.
B. The Investor agrees to purchase 160,00 Units subject to the terms and
conditions set forth in this Agreement.
C. The Company is offering the Securities only to qualified investors who
satisfy the criteria for "ACCREDITED INVESTORS" as defined under Rule
501(a) of the Securities Act of 1933, as amended (the "SECURITIES
ACT"). The Company is offering the Securities pursuant to an exemption
from registration promulgated under Rule 506 of Regulation D of the
Securities Act.
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the mutual
covenants and agreements herein contained, the receipt of which is acknowledged,
the Parties covenant and agree with each other as follows:
1. SUBSCRIPTION
1.1 Subscription. Subject to the terms and subject to the conditions of this
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Agreement, the Investor agrees to purchase 160,000 Units at the Purchase
Price (as such term is defined in Section 1.3) at the Closing (as defined
in Section 1.2 herein).
1.2 Security Offered. Each Unit shall consists of one Common Share and one
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non-transferable Warrant. Each Warrant will entitle the Investor to
subscribe for one additional Common Share at
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a price of $1.46 per share at any time up to 5:00 p.m. local time in Costa
Mesa, California on the fifth anniversary of the date of issuance. The
Warrants will be evidenced by a Warrant Certificate, in the form attached
as Schedule B to be issued to the Investor on the date of the Closing ( the
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"CLOSING DATE").
1.3 Purchase Price. On the Closing Date, the Investor shall pay to the Company
--------------
the Purchase Price of Units by wire transfer to Rapidtron, Inc. (pursuant
to the wire transfer instructions provided in advance of such Closing
Date).The "Purchase Price" of each Unit shall be $1.25 per Unit.
1.4 Delivery of Certificates. Promptly upon receipt of the Purchase Price at
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the Closing, the Company shall deliver to the Investor certificates
representing the number of Common Shares and Warrants underlying the Units
purchased, registered in the name of the Investor. The Investor agrees to
execute and deliver such other documents as may be reasonably requested by
the Company in connection with the certificate delivery.
1.5 Reserved.
1.6 By signing this Agreement, the Investor acknowledges that the Company is
relying on the accuracy and completeness of the representations contained
in this Agreement in complying with its obligations under applicable
securities laws.
2. CLOSING, CLOSING CONDITIONS AND DELIVERIES
2.1 The Closing of the transaction contemplated by Section 1.1 shall take place
at the offices of the Company, on the Effective Date or at such other place
or different time or day as may be mutually acceptable to the Investor and
the Company.
2.2 The Closing of the transaction contemplated by Section 1.1 is subject to
the fulfillment of the following conditions (the " CLOSING CONDITIONS")
which are for the benefit of the Investor:
(a) all relevant documentation and approvals as may be required, by
applicable securities statutes, regulations, policy statements and
interpretation notes, by applicable securities regulatory authorities
and by applicable rules and guidelines of any stock exchange on which
the Common Shares are listed, shall have been obtained and, where
applicable, executed by or on behalf of the Investor;
(b) the Company's board of directors shall have authorized and approved
the execution and delivery of this Agreement, the issuance and
delivery of the Units, the allotment and issuance of the Common
Shares, the allotment and issuance of the Warrants, and the allotment
and issuance of the Common Shares acquired upon exercise of the
Warrants (the "WARRANT SHARES");
(c) the representations and warranties of the Company set forth in this
Agreement shall be true and correct as of the Closing Date, and the
Company shall have delivered a certificate of a senior officer of the
Company (acting without personal liability) to that effect to the
Investors;
(d) no action or proceeding at law or in equity shall be pending or
threatened by any person, including any government, governmental
authority, regulatory body or agency to enjoin,
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restrict or prohibit the purchase and issuance of the Securities or
the transactions contemplated hereby;
(e) the Company shall have delivered a copy of resolutions of the Board of
Directors of the Company certified by the secretary of the Company
authorizing and approving the execution, delivery and performance of
this Agreement;
2.3 Reserved.
2.4 The Closing Conditions may be waived in writing in whole or in part by the
Investor before Closing upon such terms as it may consider appropriate.
3. INVESTOR REPRESENTATIONS, WARRANTIES, AND COVENANTS
3.1 The Investor makes the following representations and warranties to the
Company.
(a) The Investor is purchasing the Units, consisting of the Common Shares
and the Warrants, for its own account for investment purposes only and
not with a view to resale or distribution and, in particular, it has
no intention to distribute either directly or indirectly any of the
Common Shares issued in connection with the purchase of the Units, or
upon exercise of the Warrants; provided, however, that the Purchaser
may sell or otherwise dispose of any of the Common Shares pursuant to
registration thereof under the Securities Act and any applicable state
securities laws or under an exemption from such registration
requirements.
(b) The Investor recognizes that investment in the Securities involves
substantial risks and has taken full cognizance of and understands all
of the risks related to the purchase of the Securities, including
without limitation those set forth under the caption "Risk Factors" in
the Company's reports on Form 10-KSB, 10-QSB and 8-K and the
Registration Statement on Form SB-2 filed on February 5, 2004, in
substantially the form made available to the Investor (collectively,
the "SEC REPORTS") filed with the United States Securities and
Exchange Commission (the "SEC") pursuant to the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT") and the Securities Act.
(c) In making its decision to invest in the Units, the Investor has
carefully reviewed and is familiar with the Company's SEC Reports, and
the Investor has relied on the information contained therein and the
documents and materials delivered therewith, and on the Investor's own
independent investigations and/or those of the Investor's own
professional tax and other advisors. The Investor and the Investor's
advisors (including the Investor's representative, if any) have been
given the opportunity to obtain information and to examine all
documents relating to the Company, and to ask questions of and to
receive answers from the officers of the Company concerning the
Company, the officers and directors, and the terms and conditions of
this investment, and to obtain any additional information, to the
extent the Company possesses that information or could acquire it
without unreasonable effort or expense, to verify the accuracy of any
information previously furnished. All questions have been answered to
the full satisfaction of the Investor, and all information and
documents, records and books pertaining to this investment that the
Investor has requested have been made available to the Investor.
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(d) The Investor believes that it, either alone or with the assistance of
its advisor(s) (including the Investor's representative, if any), has
such knowledge and experience in financial and business matters that
the Investor is capable of reading and interpreting disclosure
materials, such as the SEC Reports and the Company's financial
statements, and of evaluating the merits and risks of the prospective
investment in the Securities. The Investor has obtained sufficient
information to evaluate the merits and risks of an investment in the
Company and has the net worth to undertake those risks.
(e) The Investor has obtained, to the extent the Investor deems necessary,
the Investor's own personal, professional advice with respect to the
risks inherent in the investment in the Company and the suitability of
the investment in the Securities in light of the Investor's financial
condition and investment needs.
(f) The Investor believes that investment in the Securities is suitable
for the Investor based on the Investor's investment objectives and
financial needs, and the Investor has adequate means for providing for
the Investor's current financial needs and personal contingencies and
has no need for liquidity of investment with respect to the
Securities.
(g) The Investor is able to (i) hold the Common Shares and, if the
Warrants are exercised, the Common Shares underlying the Warrants, for
an indefinite period of time, (ii) bear the economic risk of the
Investor's investment, and (iii) withstand a complete loss of the
investment.
(h) The Investor has not purchased the Securities as a result of any form
of general solicitation or general advertising, including
advertisements, articles, notices, or other communications published
in any newspaper, magazine, or similar media, or broadcast over radio
or television, or any seminar or meeting whose attendees have been
invited by general solicitation or general advertising.
(i) The Investor:
(i) acknowledges that the Units, consisting of the Common Shares
and the Warrants, have not been registered under the
Securities Act, and the Investor undertakes and agrees that
it will not offer or sell the Common Shares unless the
Common Shares are registered under the Securities Act and
the securities laws of all applicable states of the United
States, or such Common Shares are sold pursuant to an
available exemption from such registration requirements;
(ii) represents that it is an "ACCREDITED INVESTOR" as such term
is defined under Rule 501(a) of Regulation D of the
Securities Act, by satisfying one or more of the criteria
set forth on Schedule F, attached hereto;
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(iii) The Investor understands that the Common Shares issuable
upon purchase of the Units and the Common Shares issuable on
the exercise of the Warrants are "restricted securities," as
such term is defined under Rule 144 of the Securities Act,
and may not be offered, sold, transferred, pledged, or
hypothecated to any person in the absence of registration
under the Securities Act or an opinion of counsel
satisfactory to the Company that registration is not
required. Even if an
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exemption is available, the assignability and transfer of
the Securities is subject to limitations imposed by this
Agreement.
(iv) The Investor further understands that a legend in
substantially the following form will be placed on all
documents evidencing the Common Shares and the Common Shares
issuable upon exercise of the Warrants and that similar
notations may be made on the Company records as a means of
preventing the disposition of the Common Shares other than
in accordance with this Agreement and applicable law:
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 any state, 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, or valid exception thereto, (ii) to the
extent applicable, in accordance with Rule 144 under the ACT (or any
similar rule under the ACT relating to the disposition of securities),
and (iii) an opinion of counsel, reasonably satisfactory to counsel to
the issuer, that registration is not required or an exemption from
registration under the ACT and applicable state law is available and
such transfer is made in accordance with Rule 144.
(vi) If a partnership, trust, corporation, or other entity: (i)
the Investor has the power and authority to sign and comply
with the terms of this Agreement and the person signing this
Agreement on its behalf has the necessary power to do so;
(ii) the Investor's principal place of business and
principal office are located within the jurisdiction set
forth in its address below.
(vii) The Investor understands and agrees that there may be
material tax consequences to the Investor of an acquisition
or disposition of the Securities. The Company gives no
opinion and makes no representation with respect to the tax
consequences to the Investor under United States, state,
local or foreign tax law of the Investor's acquisition or
disposition of the Securities.
(vii) The Investor confirms that neither the officers of the
Company nor any of its affiliates or agents have made any
representations or warranties or statements, except as
explicitly set forth in this Agreement, concerning the
Investor's investment in the Units, including but not
limited to any representations or warranties concerning tax
consequences that may arise in connection with the
Investor's investment in the Securities or the anticipated
financial results of the operations of the Company.
(viii) The Investor acknowledges that in making its decision to
invest in the Securities, it is not relying on any other
person, firm or company.
(j) No person, firm or corporation has or will have, as a result of an act
or mission of the Investor, any right, interest or valid claim against
the company or the Investor for any commission, fee for other
compensation as a finder or broker in connection with the transactions
contemplated by this agreement. The Investor will indemnify and hold
the company harmless against any and all liability with respect to any
such commission, fee
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or other compensation which may be payable or determined to be payable
in connection with the transactions contemplated by this agreement.
3.2 The Investor agrees as follows:
(a) If the Investor decides to offer, sell or otherwise transfer any of
the Common Shares or Warrants, it will not offer, sell or otherwise
transfer any of such securities directly or indirectly, unless:
(i) the sale is to the Company or in a transaction that is
registered under the Securities Act and in accordance with
any applicable state securities or "Blue Sky" laws;
(ii) the sale is made in compliance with the exemption from the
registration requirements under the Securities Act and in
accordance with Rule 144 thereunder, if applicable, and in
accordance with any applicable state securities or "Blue
Sky" laws; or
(iii) the securities are sold in a transaction that does not
require registration under the Securities Act or any
applicable U.S. state laws and regulations governing the
offer and sale of securities; and
(iv) with respect to subparagraphs (ii) and (iii) hereof, it has
prior to such sale furnished to the Company an opinion of
counsel reasonably satisfactory to the Company.
3.3 Investor acknowledges and agrees as follows:
(a) the Warrants are non-transferrable, except as otherwise required by
law; provided however, the holder of the Warrants may transfer the
Warrant to a family trust, family member or corporation controlled by
the shareholder, or if a corporation, its shareholders.
(b) the Investor acknowledges that any person who exercises a Warrant will
be required to provide to the Company either:
(i) a representation that the Warrant is being exercised by the
original purchaser of the Units and the representations and
warranties made in connection with such purchase remain true
and correct as of the date of the exercise; or
(ii) a written opinion of counsel or other evidence satisfactory
to the Company to the effect that the Warrants and the
Warrant Shares have been registered under the Securities Act
and applicable state securities laws or are exempt from
registration thereunder.
4. COMPANY REPRESENTATIONS, WARRANTIES, AND COVENANTS
4.1 In order to induce the Investor to enter into this Agreement and to
purchase the number of Units set forth after its name on Schedule A, the
----------
Company hereby represents and warrants to the Investor, except as disclosed
in the attached Company Disclosure Schedule, that:
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(a) Organization, Standing, Etc. The Company is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the
state of Nevada, and has the requisite corporate power and authority
to own its properties and to carry on its business in all material
respects as it is now being conducted. The Company has the requisite
corporate power and authority to issue the Securities and to otherwise
perform its obligations under this agreement.
(b) Governing Instruments. The Company has filed in its SEC Reports true,
---------------------
accurate and correct copies of the articles of incorporation and
bylaws of the Company and such articles of incorporation and bylaws
are the duly and legally adopted articles of incorporation and bylaws
of the Company in effect as of the date of this Agreement.
(c) Subsidiaries, etc. Except as otherwise described in its SEC Reports,
-----------------
the Company does not have any direct or indirect ownership interest in
any corporation, partnership, joint venture, association or other
business enterprise. If any entity is described in the Company's SEC
Reports and the Company owns a controlling interest in such entity,
each of the representations and warranties set forth in this article
4.1 are being hereby restated with respect to such entity (modified as
appropriate to the nature of such entity).
(d) Qualification. The Company is duly qualified, licensed or domesticated
-------------
as a foreign corporation in good standing in each jurisdiction wherein
the nature of its activities or the properties owned or leased by it
makes such qualification, licensing or domestication necessary and in
which failure to so qualify or be licensed or domesticated would have
a material adverse impact upon its business.
(e) Financial Statements. The Company's most recent financial statements
--------------------
contained in the Company's SEC Reports (i) are in accordance with the
books and records of the Company, (ii) present fairly the financial
condition of the Company at the balance sheets dates and the results
of its operations for the periods therein specified, and (iii) have,
in all material respects, been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with
prior accounting periods. Without limiting the generality of the
foregoing, the balance sheets or notes thereto disclose all of the
debts, liabilities and obligations of any nature (whether absolute,
accrued or contingent and whether due or to become due) as of the date
of the Company's most recent financial statements contained in the
Company's SEC Reports, which, individually or in the aggregate, are
material and which in accordance with generally accepted accounting
principles would be required to be disclosed in such balance sheets,
and includes appropriate reserves for all taxes and other liabilities
accrued as of such dates but not yet payable.
(f) Tax Returns and Audits. All required federal, state and local tax
----------------------
returns or appropriate extension requests of the Company have been
filed, and all federal, state and local taxes required to be paid with
respect to such returns have been paid or provision for the payment
thereof has been made. The Company is not delinquent in the payment of
any such tax or in the payment of any assessment or governmental
charge. The Company has not received notice of any tax deficiency
proposed or assessed against it, and it has not executed any waiver of
any statute of limitations on the assessment or collection of any tax.
None of the Company's tax returns have been audited by governmental
authorities in a manner to bring such audits to the Company's
attention. The Company does not
-7-
have any tax liabilities except those incurred in the ordinary course
of business since January 1, 2003.
(g) Changes, Dividends, Etc. Except for the transactions contemplated by
-----------------------
this Agreement, since the date of the Company's most recent financial
statements contained in the Company's SEC Reports , the Company has
not: (i) incurred any debts, obligations or liabilities, absolute,
accrued or contingent and whether due or to become due, except current
liabilities incurred in the ordinary course of business which will not
materially and adversely affect the business, properties or prospects
of the Company; (ii) paid any obligation or liability other than, or
discharged or satisfied any liens or encumbrances other than those
securing, current liabilities, in each case in the ordinary course of
business; (iii) declared or made any payment to or distribution to its
shareholders as such, or purchased or redeemed any of its shares of
capital stock, or obligated itself to do so; (iv) mortgaged, pledged
or subjected to lien, charge, security interest or other encumbrance
any of its assets, tangible or intangible, except in the ordinary
course of business; (v) sold, transferred or leased any of its assets
except in the ordinary course of business; (vi) suffered any physical
damage, destruction or loss (whether or not covered by insurance)
materially and adversely affecting the properties, business or
prospects of the Company; (vii) entered into any transaction other
than in the ordinary course of business; (viii) encountered any labor
difficulties or labor union organizing activities; (ix) issued or sold
any shares of capital stock or other securities or granted any
options, warrants, or other purchase rights with respect thereto other
than pursuant to this agreement; (x) made any acquisition or
disposition of any material assets or became involved in any other
material transaction, other than for fair value in the ordinary course
of business; (xi) increased the compensation payable, or to become
payable, to any of its directors or employees, or made any bonus
payment or similar arrangement with any of its directors or employees
or increased the scope or nature of any fringe benefits provided for
its directors or employees; or (xii) agreed to do any of the foregoing
other than pursuant hereto. There has been no material adverse change
in the financial condition, operations, results of operations or
business of the Company since the date of the Company's most recent
financial statements contained in the Company's SEC Reports.
(h) Title to Properties and Encumbrances. The Company has good and
------------------------------------
marketable title to all of its properties and assets, including
without limitation the properties and assets reflected on Company's
most recent financial statements contained in the Company's SEC
Reports and the properties and assets used in the conduct of its
business, except for property disposed of in the ordinary course of
business since the date of the Company's most recent financial
statements contained in the Company's SEC Reports, which properties
and assets are not subject to any mortgage, pledge, lease, lien,
charge, security interest, encumbrance or restriction, except (a)
those which are shown and described on the Company Disclosure Schedule
or the notes to the financial statements attached to the Company's
latest SEC Reports, (b) liens for taxes and assessments or
governmental charges or levies not at the time due or in respect of
which the validity thereof shall currently be contested in good faith
by appropriate proceedings, or (c) those which do not materially
affect the value of or interfere with the use made of such properties
and assets.
(i) Conditions of Properties. The plant, offices and equipment of the
------------------------
Company have been kept in good condition and repair in the ordinary
course of business.
-8-
(j) Litigation; Governmental Proceedings. There are no legal actions,
------------------------------------
suits, arbitrations or other legal, administrative or governmental
proceedings or, to the knowledge of the Company, threatened against
the Company, or its properties or business, and the Company is not
aware of any pending investigations or facts which are likely to
result in or form the basis for any such action, suit or other
proceeding. The Company is not in default with respect to any
judgment, order or decree of any court or any governmental agency or
instrumentality. The Company has not been threatened with any action
or proceeding under any business or zoning ordinance, law or
regulation.
(k) Compliance With Applicable Laws and Other Instruments. To the best of
-----------------------------------------------------
the Company's knowledge, the business and operations of the Company
have been and are being conducted in all material respects in
accordance with all applicable laws, rules and regulations of all
governmental authorities. Neither the execution nor delivery of, nor
the performance of or compliance with, this agreement nor the
consummation of the transactions contemplated hereby will, with or
without the giving of notice or passage of time, result in any breach
of, or constitute a default under, or result in the imposition of any
lien or encumbrance upon any asset or property of the Company pursuant
to, any agreement or other instrument to which the Company is a party
or by which it or any of its properties, assets or rights is bound or
affected, and will not violate the articles of incorporation or bylaws
of the Company. The Company is not in violation of its articles of
incorporation or bylaws nor in material violation of, or in material
default under, any lien, indenture, mortgage, lease, agreement,
instrument, commitment or arrangement in any material respect. The
Company is not subject to any restriction which would prohibit it from
entering into or performing its obligations under this agreement.
(l) Units, Warrants and Common Shares. The Units and the underlying Common
---------------------------------
Shares, when issued and paid for pursuant to the terms of this
Agreement or upon the exercise of the Warrants, will be duly
authorized, validly issued and outstanding, fully paid, nonassessable
shares and shall be free and clear of all pledges, liens, encumbrances
and restrictions created by the Company. The Warrants, when issued
pursuant to the terms of this agreement will be binding obligations of
the Company in accordance with their terms. The Common Shares have
been reserved for issuance and when issued upon exercise of the
Warrants will be duly authorized, validly issued and outstanding,
fully paid, nonassessable and free and clear of all pledges, liens,
encumbrances and restrictions.
(m) Securities Laws. Based in part upon the representations of the
---------------
Investor in Section 3, no consent, authorization, approval, permit or
order of or filing with any governmental or regulatory authority is
required under current laws and regulations in connection with the
execution and delivery of this agreement or the offer, issuance, sale
or delivery of the Securities, other than the qualification thereof,
if required, under applicable state securities laws, which
qualification has been or will be effected as a condition of these
sales except applicable notices of exemption, such as a Form D. The
Company has not, directly or through an agent, offered the Securities
or any similar securities for sale to, or solicited any offers to
acquire such securities from, persons other than the Investors and
other accredited investors, except prior to the date of this
Agreement, which offers have or will be terminated prior to the
Closing Date. To the best of the Company's knowledge, under the
circumstances contemplated by this agreement and assuming the accuracy
of the representations of the Investor in article 3, the offer,
issuance, sale and
-9-
delivery of the Securities will not, under current laws and
regulations, require compliance with the prospectus delivery or
registration requirements of the federal Securities Act.
(n) Patents and Other Intangible Rights. To the best of the Company's
-----------------------------------
knowledge, the Company (a) owns or has the exclusive right to use,
free and clear of all material liens, claims and restrictions, all
patents, trademarks, service marks, trade names, copyrights, licenses
and rights with respect to the foregoing, used in the conduct of its
business as now conducted without infringing upon or otherwise acting
adversely to the right or claimed right of any person under or with
respect to any of the foregoing, (b) is not obligated or under any
liability whatsoever to make any payments of a material nature by way
of royalties, fees or otherwise to any owner of, licensor of, or other
claimant to, any patent, trademark, trade name, copyright or other
intangible asset, with respect to the use thereof or in connection
with the conduct of its business or otherwise, (c) owns or has the
unrestricted right to use all trade secrets, including know-how,
customer lists, inventions, designs, processes, computer programs and
technical data necessary to develop operation and sale of all products
and services sold or proposed to be sold by it, free and clear of any
rights, liens, or claims of others, and (d) is not using any
confidential information or trade secrets of others.
(o) Capital Stock. The authorized capital stock of the Company consists of
-------------
100,000,000 common shares, $0.001 par value, of which 20,372,848
shares are issued and outstanding as of the Effective Date, and
5,000,0000 shares of preferred stock, $0.001 par value, of which no
shares are issued and outstanding. All of the outstanding shares of
the Company were duly authorized and validly issued and are fully paid
and nonassessable. There are no outstanding subscriptions, options,
warrants, calls, contracts, demands, commitments, convertible
securities or other agreements or arrangements of any character or
nature whatever, other than this Agreement, under which the Company is
obligated to issue any securities of any kind representing an
ownership interest in the Company. Neither the offer nor the issuance
or sale of the Units, the Common Shares or the Warrants constitutes an
event, under any anti-dilution provisions of any securities issued or
issuable by the Company or any agreements with respect to the issuance
of securities by the Company, which will either increase the number of
shares issuable pursuant to such provisions or decrease the
consideration per share to be received by the Company pursuant to such
provisions. No holder of any security of the Company is entitled to
any pre-emptive or similar rights to purchase any securities of the
Company from the Company; provided, however, that nothing in this
section 4.1(o) shall affect, alter or diminish any right granted to
the Investor in this Agreement.
(p) All securities issued by the Company after May 8, 2003, have been
issued in full compliance with an exemption or exemptions from the
registration and prospectus delivery requirements of the Securities
Act and from the registration and qualification requirements of all
applicable state securities laws.
(q) Outstanding Debt. The Company does not have any material indebtedness
----------------
incurred as the result of a direct borrowing of money, including, but
not limited to, indebtedness with respect to trade accounts, except as
set forth in the Company's most recent financial statements contained
in the Company's SEC Reports or the notes thereto. The Company is not
in default in the payment of the principal of or interest or premium
on any such indebtedness, and no event has occurred or is continuing
under the provisions of any
-10-
instrument, document or agreement evidencing or relating to any such
indebtedness which with the lapse of time or the giving of notice, or
both, would constitute an event of default thereunder.
(r) Assets and Contracts. The Company has filed all material agreements
--------------------
required to be filed or submitted with its SEC Reports under the rules
and regulations of the SEC. The Company has in all material respects
substantially performed all obligations required to be performed by it
to date and is not in default in any material respect under any of the
contracts, agreements, leases, documents, commitments or other
arrangements to which it is a party or by which it is otherwise bound.
All instruments material to the Company's business or otherwise
described in this section are in effect and enforceable according to
their respective terms, and there is not under any of such instruments
any existing material default or event of default or event which, with
notice or lapse of time or both, would constitute an event of default
thereunder. All parties having material contractual arrangements with
the Company are in substantial compliance therewith and none are in
material default in any respect thereunder.
(s) Corporate Acts and Proceedings. This Agreement has been duly
------------------------------
authorized by all necessary corporate action on behalf of the Company,
has been duly executed and delivered by authorized officers of the
Company, and is a valid and binding agreement on the part of the
Company that is enforceable against the Company in accordance with its
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and to
judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies. All corporate action
necessary to the authorization, creation, reservation, issuance and
delivery of the Units, Common Shares, the Warrants and the Common
Shares acquirable upon exercise of the Warrants has been taken by the
Company, or will be taken by the Company on or prior to the Closing
Date.
(t) Accounts Receivable. To the extent that they exceed the reserves for
-------------------
doubtful accounts set forth in the most recent financial statements
contained in the Company's SEC Reports, the accounts receivable which
are reflected in such financial statements and all accounts receivable
of the Company which have arisen since the latest date of the balance
sheet contained in such financial statements (except such accounts
receivable as have been collected) are valid and enforceable claims,
and the goods and services sold and delivered which gave rise to such
accounts were sold and delivered in conformity with the applicable
purchase orders, agreements and specifications. To the best of the
Company's knowledge, such accounts receivable are subject to no valid
defense or offsets except routine customer complaints or warranty
demands of an immaterial nature. The reserve for doubtful accounts
that is included in the most recent financial statements contained in
the Company's SEC Reports is adequate.
(u) Inventories. The inventories of the Company which are reflected in the
-----------
most recent financial statements contained in the Company's SEC
Reports and all inventory items which have been acquired since the
latest date of the balance sheet contained in such financial
statements consist of raw materials, supplies, work-in-process and
finished goods of such quality and quantities as are currently usable
or salable in the ordinary course of its business.
-11-
(v) Purchase Commitments and Outstanding Bids. No material purchase
-----------------------------------------
commitment of the Company is in excess of normal, ordinary and usual
requirements of its business, or was made at any price in excess of
the then current market price, or contains terms and conditions more
onerous than those usual and customary in the industry.
(w) There is no outstanding material bid, sales proposal, contract or
unfilled order of the Company which (a) will, or could if accepted,
require the Company to supply goods or services at a cost to the
Company in excess of the revenues to be received therefrom, or (b)
quotes prices which do not include a xxxx-up over reasonably estimated
costs consistent with past xxxx-ups on similar business or market
conditions current at the time.
(x) Insurance Coverage. There are in full force policies of insurance
------------------
issued by insurers of recognized responsibility insuring the Company
and its properties and business against such losses and risks, and in
such amounts, as in the Company's best judgment, after advice from its
insurance broker, are acceptable for the nature and extent of such
business and its resources.
(y) No Brokers or Finders. No person, firm or corporation has or will
---------------------
have, as a result of any act or omission of the Company, any right,
interest or valid claim against the Company or the Investor for any
commission, fee or other compensation as a finder or broker in
connection with the transactions contemplated by this Agreement. The
Company will indemnify and hold the Investor harmless against any and
all liability with respect to any such commission, fee or other
compensation which may be payable or determined to be payable in
connection with the transactions contemplated by this Agreement.
(z) Conflicts of Interest. No officer, director or shareholder of the
---------------------
Company or any affiliate (as such term is defined in Rule 405 under
the Securities Act) of any such person has any direct or indirect
interest (a) in any entity which does business in excess of $10,000
with the Company, (b) in any property, asset or right with a value in
excess of $10,000 which is used by the Company in the conduct of its
business, or (c) in any contractual relationship with the Company
other than as an employee, the proceeds of which will exceed $10,000.
For the purpose of this section 4.1(z), there shall be disregarded any
interest which arises solely from the ownership of less than a 5%
equity interest in a corporation whose stock is regularly traded on
any national securities exchange or in the over-the-counter market.
Notwithstanding the foregoing, the Company makes no representation or
warranty regarding the direct or indirect interests of Xxxxxxxx
Xxxxxxxx other than those required to have been disclosed in the
Company's SEC Reports.
(aa) Licenses. The Company possesses from the appropriate agency,
--------
commission, board and government body and authority, whether state,
local or federal, all licenses, permits, authorizations, approvals,
franchises and rights which are (a) necessary for it to engage in the
business currently conducted by it, and (b) if not possessed by the
Company would have an adverse impact on the Company's business. The
Company has no knowledge that would lead it to believe that it will
not be able to obtain all licenses, permits, authorizations,
approvals, franchises and rights that may be required for any business
the Company proposes to conduct.
-12-
(bb) Disclosure. The Company has not knowingly withheld from the Investor
----------
any material facts known to the Company and relating to the assets,
business, operations, financial condition or prospects of the Company.
No representation or warranty in this Agreement or in any certificate,
schedule, statement or other document furnished or to be furnished to
any Investor pursuant hereto or in connection with the transactions
contemplated hereby contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact
required to be stated herein or therein or necessary to make the
statements herein or therein not misleading.
(cc) Registration Rights. Other than as contemplated under this Agreement,
-------------------
the Registration Rights Agreement dated as of November 12, 2003, or as
may be registered on Form S-8 pursuant to the 2003 Stock Plan, the
Company is not obligated to register any of its authorized or
outstanding securities under the Securities Act, not otherwise subject
to a registration statement previously filed with the SEC.
(dd) Retirement Plans. The Company does not have any retirement plan in
----------------
which any employees of the Company participates that is subject to any
provisions of the Employee Retirement Income Security Act of 1974 and
of the regulations adopted pursuant thereto ("ERISA").
(ee) Environmental and Safety Laws. The Company has not received any notice
-----------------------------
that it is in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to
the best of the Company's knowledge no material expenditures are or
will be required in order to comply with any such existing statute,
law or regulation.
(ff) Employees. To the best of the Company's knowledge, no officer of the
---------
Company or employee of the Company (whose annual compensation is in
excess of $20,000) has any plans to terminate his or her employment
with the Company. Except for the accrual of salaries disclosed in the
Company's Disclosure Statement, the Company has complied in all
material respects with all laws relating to the employment of labor,
including provisions relating to wages, hours, equal opportunity,
collective bargaining and payment of Social Security and other taxes,
and the Company has not encountered any material labor difficulties.
The Company does not have any worker's compensation liabilities.
(gg) Absence of Restrictive Agreements. To the best of the Company's
---------------------------------
knowledge, no employee of the Company is subject to any secrecy or
non-competition agreement or any agreement or restriction of any kind
that would impede in any way the ability of such employee to carry out
fully all activities of such employee in furtherance of the business
of the Company. To the best of the Company's knowledge, no employer or
former employer of any employee of the Company has any claim of any
kind whatsoever in respect of any of such rights.
4.2 Reserved.
4.3 Reserved.
-13-
5. GENERAL
5.1 The parties will sign and deliver all further documents and instruments and
do all things that may, either before or after the signing of this
Agreement, be reasonably required to carry out the full intent and meaning
of this Agreement.
5.2 This Agreement may not be assigned by either party hereto.
5.3 All notices, requests, consents and other communications required or
permitted hereunder shall be in writing and shall be delivered, or mailed
first-class postage prepaid, registered or certified mail, overnight
courier, hand delivery, by facsimile or email, if to the Investor or any
holder of Warrants addressed to such holder at its address as shown on the
books of the Company, or at such other address as such holder may specify
by written notice to the Company, or if to the Company at the address set
forth above, Attention: President; or at such other address as the Company
may specify by written notice to the Investors; and such notices and other
communications shall for all purposes of this agreement be treated as being
effective or having been given if delivered personally, or, if sent by
mail, overnight courier, hand delivery, by facsimile or email, when
received.
5.4 All representations and warranties contained herein shall survive the
execution and delivery of this agreement, any investigation at any time
made by the Investor or on its behalf, and the sale and purchase of the
Units and payment therefor. All statements contained in any certificate,
instrument or other writing delivered by or on behalf of the Company
pursuant to this Agreement or in connection with or in contemplation of the
transactions herein contemplated shall constitute representations and
warranties by the Company hereunder.
5.5 This Agreement and the agreements contemplated herein contains the entire
understanding of the parties with respect to the transactions contemplated
in this Agreement and the terms of this Agreement expressly replace and
supersede any prior oral or written communication, understanding or
agreement among the parties and this Agreement may be amended only by
agreement in writing executed by the parties.
5.6 Each Party acknowledges that it has been advised by the other to seek
independent legal and financial (including tax) advice with respect to this
Agreement and that it has not relied on the other party for any advice,
whether legal or otherwise, with respect to this Agreement.
5.7 This Agreement shall be interpreted neutrally and no construction against
the drafter shall be permitted.
5.8 It is the intention of the parties hereto that this Agreement and the
performance hereunder shall be interpreted and construed in accordance with
and pursuant to the laws of the State of California.
5.9 This Agreement may be signed by the parties in as many counterparts as may
be deemed necessary, each of which so signed will be deemed to be an
original, and all counterparts together will constitute one and the same
instrument. A copy of this Agreement transmitted by facsimile will be
treated and relied on for all purposes by any person as an originally
signed copy.
5.10 In the event any legal action is instituted by any party to this Agreement
for the purpose of enforcing or interpreting any provision of this
Agreement or any other agreement arising under or
-14-
relating to this Agreement, the prevailing party in such action shall be
entitled to recover its reasonable attorneys' and expert witness fees and
costs.
5.11 If prior to the date which is 24 months from the Closing, the Company shall
file a new registration statement with the SEC, excluding any amendments to
or refilings of registration statements currently on file with the SEC,
registering the sale or resale of any of the Company's debt or equity
securities, then the Company shall also include Investor's resale of the
Common Shares in such registration statement on the same terms and
conditions as provided to the other selling security holders; provided (a)
the Investor will cooperate with the Company in all respects in connection
with the registration, including timely supplying all information
reasonably requested by the Company (which shall include all information
regarding the Investor and proposed manner of sale of the Common Shares
required to be disclosed in any registration statement) and executing and
returning all documents reasonably requested in connection with the
registration and sale of the Common Shares and entering into and performing
their obligations under any underwriting agreement, if the offering is an
underwritten offering, in usual and customary form, with the managing
underwriter or underwriters of such underwritten offering, and (b) the
Company shall have no obligation to include in such registration statement
any Common Shares that are permitted to be resold to the public without
registration under the Securities Act.
-15-
TO BE COMPLETED BY THE INVESTOR
A. REGISTRATION INSTRUCTIONS The name and address of the person in whose name
the Securities are to be registered is as follows
Generation Capital Associates
-------------------------------
Name
0000 Xxxxxxxxx Xxxxx
----------------------
Address
Xxxxxxx, XX 00000
-------------------
City, State Zip Code
Attn: Xxxxx X. Xxxx, General Partner
-----------------------------------------
Telephone: 000 000-0000
-------------------------
Fax: 000 000 0000
--------------------
Tax I.D. # 00-0000000
------------------------
With Copy to:
---------------
Xxxxx X. Xxxxxxxx, General Counsel
--------------------------------------
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
----------------------------------------
Xxxxxxx, XX 00000
-------------------
Telephone: 000 00000000
-------------------------
Fax: 000 000-0000
-------------------
Email: xxxxxxxxx@xxxxxxx.xxx
-----------------------------
B. DELIVERY INSTRUCTIONS. The name and address of the person to whom the
certificates representing the Investor's Securities referred to in
paragraph A above are to be delivered is as follows
Xxxxx X. Xxxxxxxx
-------------------
Name
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
----------------------------------------
Address
Xxxxxxx, XX 00000
-------------------
City, State Zip Code
-16-
C. SUBSCRIPTION AMOUNT:
Subscription Funds: US$ 200,000.00
Number of Units: 160,000 Units (where each Unit consists of one
share and one half of one purchase warrant. Each
whole warrant will entitle the Investor to
subscribe for one additional common share of the
Company on the terms set forth in this Agreement).
TO BE COMPLETED AND SIGNED BY THE INVESTOR:
-------------------------------------------
The Investor has signed this Agreement as of the ____ day of March, 2004
Generation Capital Associates
-------------------------------
Name of the Investor - use the name inserted in paragraph A above.
Signature of Investor
Title (if applicable)
ACCEPTANCE
Signed and Accepted this ____ day of March, 2004
RAPIDTRON, INC.
By:
------------------------------------------
Xxxx Xxxxx, President
-17-
SCHEDULE A
INVESTOR NAME AND ADDRESS NUMBER OF UNITS AMOUNT OF INVESTMENT
------------------------- --------------- --------------------
Generation Capital Associates 160,000 $200,000
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
-18-
SCHEDULE B
FORM OF WARRANT CERTIFICATE
THIS WARRANT IS NON-TRANSFERABLE, SUBJECT TO LIMITED EXCEPTIONS. THIS WARRANT
AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") OR
THE SECURITIES LAWS OF ANY STATE. THIS WARRANT AND THE COMMON STOCK THAT MAY BE
ISSUED UPON EXERCISE OF THIS WARRANT MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (A) TO THE COMPANY, (B) IF THE TRANSACTION HAS BEEN REGISTERED
IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS UNDER THE 1933 ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (C) IN A TRANSACTION THAT
DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE LAWS
AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AND THE HOLDER HAS,
PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION OF COUNSEL, OF
RECOGNIZED STANDING, OR OTHER EVIDENCE OF EXEMPTION, REASONABLY SATISFACTORY TO
THE COMPANY.
RAPIDTRON, INC.
NON-TRANSFERABLE WARRANT
TO PURCHASE
SHARES OF COMMON STOCK
For value received and subject to the terms and conditions of this warrant,
GENERATION CAPITAL ASSOCIATES, a New York limited partnership, its successors or
permitted assigns ("Holder"), is entitled to purchase from Rapidtron, Inc. at
0000 Xxxxxx Xxx., Xxxx. X, Xxxxx Xxxx, XX 00000, a Nevada corporation (the
"Company"), up to one hundred sixty thousand (160,000) fully paid and
nonassessable shares of the Company's common stock (the "Common Stock") or such
greater or lesser number of such shares as may be determined by application of
the anti-dilution provisions of this warrant, at the price of One and 46/100
Dollars ($1.46) per share until 5:00 p.m. (California time) on March 31, 2009
(the "Warrant Exercise Price").
This warrant is subject to the following terms and conditions:
1. Exercise. (a) The rights represented by this warrant may be
--------
exercised by the Holder, in whole or in part, by written election, in the form
set forth below, by the surrender of this warrant (properly endorsed if
required) at the principal office of the Company, by payment to it by cash,
certified check or bank draft of the Warrant Exercise Price for the shares to be
purchased and by delivery of a subscription agreement, an investment letter
and/or similar documents acceptable to the Company demonstrating that the sale
of the shares to be purchased is exempt from registration under the Securities
Act of 1933, as amended (the "Securities Act"), and any state securities law.
The shares so purchased shall be deemed to be issued as of the close of business
on the date on which this warrant has been exercised by payment to the Company
of the Warrant Exercise Price. Certificates for the shares of stock so
purchased, bearing an appropriate restrictive legend, shall be delivered to the
Holder within 10 days after the rights represented by this warrant shall have
been so exercised, and, unless this warrant has expired, a new warrant
representing the number of shares, if any, with respect to which this warrant
has not been exercised shall also be delivered to the Holder hereof within such
time. No fractional shares shall be issued upon the exercise of this warrant.
-19-
(b) If, at the time of an exercise which occurs after [one
year after vesting date] there is no effective registration statement covering
the resale of the Common Stock subject to this Warrant, with current prospectus
available, and if the Market Value of one share of Common Stock at such time is
greater than the Exercise Price (at the date of calculation as set forth below),
in lieu of exercising this Warrant for cash, the Investor may make a "cashless
exercise" by completing the Warrant Exercise Form attached hereto and delivering
such form to the Company by USPS mail, overnight courier, or facsimile and
delivering this Warrant to the Company within five days of such exercise. The
Holder shall receive that number of Common Shares equal to the total number of
Common Shares the Investor would have otherwise been entitled to receive upon
exercise of the Warrants, less the total number of Common Shares with a "Fair
Market Value" (defined below) equal to the total Exercise Price that would have
otherwise been paid upon exercise of the Warrants. As used herein "Fair Market
Value" means the average of the highest 4:00 PM New York Time closing bid price
of the Company's common stock (as reported on the Bloomberg Quotation System)
for the ten (10) trading days immediately preceding the date the Cashless
Exercise Form is received by the Company. If the Cashless Exercise Form is
received by the Company after 4:00 PM New York Time on a trading day, such day
shall be considered the tenth trading day of such period. No fractional shares
shall be issued upon a cashless exercise of the Warrants and the total number of
Common Shares to be issued shall be rounded down to the nearest whole share.
(c) Certificates for the shares of stock so purchased,
bearing an appropriate restrictive legend, shall be delivered to the Holder
within 5 business days after the rights represented by this warrant shall have
been so exercised, and, unless this warrant has expired, a new warrant
representing the number of shares, if any, with respect to which this warrant
has not been exercised shall also be delivered to the Holder hereof within such
time. No fractional shares shall be issued upon the exercise of this warrant.
(d) No Holder of this warrant shall be permitted to exercise
the warrant to the extent that such exercise would cause such Holder to be the
beneficial owner of more than 5% of the Company's then outstanding common stock,
at that given time. This limitation shall not be deemed to prevent any Holder
from acquiring an aggregate of more than 5% of the Company's common stock, so
long as such Holder does not beneficially own more than 5% of the Company's
common stock, at any given time.
2. Shares. All shares that may be issued upon the exercise of the
------
rights represented by this warrant shall, upon issuance, be duly authorized and
issued, fully paid and nonassessable shares. During the period within which the
rights represented by this warrant may be exercised, the Company shall at all
times have authorized and reserved for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this warrant a sufficient
number of shares of its common stock to provide for the exercise of the rights
represented by this warrant.
THE SHARES OF COMMON STOCK TO BE ISSUED TO THE HOLDER UPON EXERCISE OF THE
RIGHTS REPRESENTED BY THIS WARRANT SHALL BE ISSUED PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE SECURITIES LAW. AS SUCH,
THE SHARES WILL BE "RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144 OF THE
SECURITIES ACT, AND THE SHARE CERTIFICATES REPRESENTING THE SHARES ARE TO BE
LEGENDED AS FOLLOWS:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT")
OR THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) IF THE
TRANSACTION HAS BEEN REGISTERED IN COMPLIANCE WITH THE REGISTRATION
REQUIREMENTS UNDER THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS, OR (C) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION
UNDER THE 1933 ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING
THE OFFER AND SALE OF SECURITIES, AND THE HOLDER HAS, PRIOR TO SUCH SALE,
FURNISHED TO THE COMPANY AN OPINION OF COUNSEL, OF RECOGNIZED STANDING, OR
OTHER EVIDENCE OF EXEMPTION, REASONABLY SATISFACTORY TO THE COMPANY.
-20-
3. Adjustment. The Warrant Exercise Price and the number of shares of
----------
Common Stock shall be subject to adjustment from time to time as hereinafter
provided in this Section 3:
(a) If the Company at any time divides the outstanding shares of
its common stock into a greater number of shares (whether pursuant to
a stock split, stock dividend or otherwise), and conversely, if the
outstanding shares of its common stock are combined into a smaller
number of shares, the Warrant Exercise Price in effect immediately
prior to such division or combination shall be proportionately
adjusted to reflect the reduction or increase in the value of each
such common share.
(b) Upon each adjustment of the Warrant Exercise Price, the Holder
shall thereafter be entitled to purchase, at the Warrant Exercise Price
resulting from such adjustment, the number of shares obtained by
multiplying the Warrant Exercise Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately
prior to such adjustment and dividing the product thereof by the Warrant
Exercise Price resulting from such adjustment.
(c) Upon any adjustment of the Warrant Exercise Price, the Company
shall give written notice thereof to the Holder stating the Warrant
Exercise Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares purchasable at such price
upon the exercise of this warrant, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is
based.
4. No Rights as Shareholder. This warrant shall not entitle the Holder
------------------------
to any rights as a shareholder of the Company.
5. Transfer. This warrant and all rights hereunder are
--------
non-transferable, except as otherwise required by law; provided however, the
holder of the warrant may transfer the warrant to a family trust, family member
or corporation controlled by the shareholder, or if a corporation, partnership,
or limited liability company, its shareholders, partners, or members, as the
case may be.
6. NEITHER THE WARRANTS NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE THEREOF HAVE BEEN OR WILL BE REGISTERED UNDER THE SECURITIES ACT OR
UNDER THE LAWS OF ANY STATE OF THE UNITED STATES. THE WARRANTS AND THE SHARES
OF COMMON STOCK ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN RECOMMENDED BY ANY
U.S. OR FOREIGN SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR CONFIRMED THE ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Warrants represented by this Warrant Certificate may only be exercised by or
on behalf of a Holder who, at the time of exercise, either:
(a) provides written confirmation that it was the original purchaser in
the Company's private placement of the Units under which the Warrants
were issued and the representations and warranties made to the Company
in connection with the acquisition of the Units remain true and
correct on the date of exercise; or
(b) provides a written opinion of counsel, in a form acceptable to the
Company, acting reasonably, that the shares of Common Stock to be
delivered upon exercise of the Warrants are exempt from the
registration requirements under the Securities Act and the securities
laws of all applicable states of the United States.
7. Notices. All demands and notices to be given hereunder shall be
-------
delivered or sent by first class USPS mail, postage prepaid, overnight courier
or facsimile: in the case of the Company, addressed to its corporate
headquarters, 0000 Xxxxxx Xxx., Xxxx. X, Xxxxx Xxxx, XX 00000, until a new
address shall have been substituted by like notice; and in the case of Holder,
addressed to Holder at the address written below, until a new address shall have
been substituted by like notice.
-21-
IN WITNESS WHEREOF, the Company has caused this warrant to be executed and
delivered by a duly authorized officer.
Dated: April 1, 2004
RAPIDTRON, INC.
By:
--------------------------------------
Xxxx Xxxxx, President
GENERATION CAPITAL ASSOCIATES
(Warrant Holder)
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Tel: 000 000-0000
Fax: 000 000-0000
copy to:
Xxxxx X. Xxxxxxxx, EVP & General Manager
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
xxxxxxxxx@xxxxxxx.xxx
-22-
WARRANT EXERCISE
(To be signed only upon exercise of this warrant)
The undersigned, the Holder of the foregoing warrant, hereby irrevocably elects
to exercise the purchase right represented by such warrant for, and to purchase
thereunder, __________ shares of Common Stock of Rapidtron, Inc., to which such
warrant relates; and (please check one)
herewith makes payment of $__________ therefor in cash, certified check or
bank draft, or
herewith requests a cashless exercise pursuant to Section 1(b) of the
warrant; and
herewith makes payment of $__________ therefor in cash, certified check or bank
draft and requests that the certificates for such shares be issued in the name
of, and be delivered to ___________________, whose address is set forth below
the signature of the undersigned.
In connection with this exercise: (check one):
[ ] 1. The undersigned was the original purchaser in the Company's
private placement of the Units under which the Warrants were
issued, and the representations and warranties made to the
Corporation in connection with the acquisition of the Units
remain true and correct on the Exercise Date.
[ ] 2. The undersigned is delivering a written opinion of U.S. Counsel
to the effect that the Warrants and the shares of Common Stock to
be delivered upon exercise hereof are exempt from the
registration requirements under the United States Securities Act
of 1933, as amended, and the securities laws of all applicable
states of the United States.
Dated:
--------------------------
Signature
Social Security or other Tax Identification
Holder: No.
-------------------------------- --------------------------------------------
--------------------------------
--------------------------------
--------------------------------
Please print present name and address
-23-
SCHEDULE C
OMITTED
-24-
SCHEDULE D
OMITTED
-25-
SCHEDULE E
OMITTED
-26-
SCHEDULE F
DEFINITION OF ACCREDITED INVESTOR
"Accredited Investor" has the meaning ascribed to it in Rule 501 of Regulation
D, promulgated by the Securities and Exchange Commission pursuant to the
Securities Act of 1933.
-27-
SCHEDULE G
OMITTED
-28-
