EXHIBIT 10.3
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER ANY STATE SECURITIES LAWS. THIS WARRANT AND SAID SHARES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND NEITHER THIS WARRANT, SAID SHARES
OR ANY INTEREST THEREIN MAY BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
THERETO UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER HEREOF THAT ANY PROPOSED TRANSFER
OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
Void after 5:00 p.m., Pacific Time
on April 16____________________, 2009.
CIMETRIX INCORPORATED
COMMON STOCK PURCHASE WARRANT
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This certifies that as of April 16, 2004 (the "Grant Date"), for value
received, Dennis P. Gauger (the "Purchaser") or registered assigns (the
Purchaser or such assignee, as applicable, being referred to herein as the
"Holder"), is hereby granted this warrant entitling the Holder to purchase
35,000 shares of Common Stock, par value $.0001 per share (the "Common Stock"),
of Cimetrix Incorporated, a Nevada corporation (the "Company") (this certificate
and the warrant evidenced hereby being, collectively, this "Warrant") at $0.35
per share of Common Stock (the "Exercise Price") on the terms and conditions set
forth below. The number of shares of Common Stock to be received upon the
exercise of this Warrant (the "Warrant Shares") and the Exercise Price may be
adjusted from time to time as hereinafter set forth. This Warrant is issued
pursuant to, and in substitution for the incentive stock option described in
Exhibit A to that certain Independent Contractor Agreement, dated as of the
Grant Date, between the Company and the Purchaser (the "Independent Contractor
Agreement"). All terms used but not defined herein shall have the meaning
ascribed thereto in the Independent Contractor Agreement.
1. Exercise of Warrant. Subject to the provisions of Sections 2 and 3
below, this Warrant may be exercised at any time or from time to time on or
after the Grant Date, but in any event no later than the first to occur of: (i)
5:00 p.m., Mountain time, on April 16, 2009 or if such date is a day on which
federal or state-chartered banking institutions in Utah are authorized by law to
close, then on the next succeeding day which shall not be such a day; or (ii)
one year after the Purchaser ceases for any reason
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(whether voluntarily or involuntarily) to be an employee or independent
contractor for the Company. Such exercise shall be effective upon presentation
and surrender to the Company at its principal office or at the office of its
stock transfer agent, if any, of this Warrant with the duly executed Notice of
Exercise form set forth on Exhibit A (attached hereto and made a part hereof by
this reference) (the "Notice of Exercise"). The Notice of Exercise must be
accompanied by payment, in cash or by certified or official bank check, payable
to the order of the Company, in the amount of the Exercise Price for the number
of the Warrant Shares with respect to which such Notice of Exercise is being
delivered, together with all taxes applicable upon such exercise and all
expenses of the Company, if any, required to be reimbursed by the Holder
pursuant to Section 6(a) below. The number of Warrant Shares that may be
purchased upon exercise of this Warrant may be adjusted, if at all, in
accordance with Section 8 below. The Company may require the Holder to execute
such further documents and make certain representations and warranties as the
Company deems necessary to ensure compliance with exemptions from applicable
federal and state securities laws as required by Section 3 below.
2. Exercisability Period. Notwithstanding Section 1 above and any other
provision herein to the contrary, this Warrant shall become exercisable in
serial increments equal to 25% of the Warrant Shares every calendar quarter,
commencing July 16, 2004, as follows provided the Purchaser is still employed by
the Company or engaged by the Company as an independent contractor on the
applicable quarterly vesting date:
Percent Exercisable
Quarterly Exercisability Date Per Quarter Cumulatively
- ---------------------------------- ------------------- ------------
July 16, 2004 25% 25%
Oct. 16, 2004 25% 50%
Jan. 16, 2005 25% 75%
Apr. 16, 2005 25% 100%
In addition, the Warrant will become fully and immediately exercisable and
vested upon the occurrence of a "Change in Control," as defined in the Cimetrix
Incorporated 1998 Incentive Stock Option Plan, if the Change in Control occurs
after September 16, 2004. If the Holder ceases to be an employee of or
independent contractor for the Company prior to April 16, 2005, then other than
in the case of a Change in Control occurring after September 16, 2004, the
portion of this Warrant that has not become exercisable under the above schedule
as of the date of the Purchaser's termination of service shall automatically
lapse and terminate and shall not longer be exercisable. For example, if the
Purchaser ceases to be an employee of or independent contractor for the Company
effective December 31, 2004, this Warrant would be exercisable only as to 50% of
the Warrant Shares (the remaining portion of the Warrant would lapse).
3. Compliance with Securities Laws. This Warrant may not be exercised by
the Holder unless at the time of exercise (i) a registration statement
registering the Warrant Shares upon such exercise is effective under the
Securities Act of 1933, as amended (and together with the rules and regulations
promulgated thereunder, collectively, the "Securities Act"), or the transaction
in which such Warrant Shares are to be issued is exempted from the application
of the registration requirements of the Securities Act and applicable state
securities laws, and (ii) the Warrant Shares have been registered or qualified
under any applicable state securities laws or an exemption from registration or
qualification is available under such laws. This Warrant may not be exercised so
long as the Holder is in default under the representations, warranties or
covenants of this Warrant or the Services Agreement.
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4. Stock Fully Paid; Reservation of Shares. All Warrant Shares that may be
issued upon the exercise of this Warrant shall, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable, and free from all
taxes, liens and charges with respect to the issue thereof. The Company hereby
covenants and agrees that at all times during the period this Warrant is
exercisable it shall reserve from its authorized and unissued Common Stock for
issuance and delivery upon exercise of this Warrant such number of shares of its
Common Stock as shall be required for issuance and delivery upon exercise of
this Warrant. The Company agrees that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
shares of Common Stock upon the exercise of this Warrant.
5. Fractional Shares. No fractional shares or stock representing fractional
shares shall be issued upon the exercise of this Warrant. In lieu of any
fractional shares which would otherwise be issuable, the Company shall, in its
sole discretion, either (i) pay cash equal to the product of such fraction
multiplied by the value of one share of Common Stock on the date of exercise, as
determined in good faith by the Company's Board of Directors, or (ii) issue the
number of Warrant Shares rounded to the nearest whole number.
6. Transfer, Exchange, Assignment or Loss of Warrant or Certificates.
(a) This Warrant may not be assigned or transferred except as provided
herein and in accordance with and subject to the provisions of the Securities
Act and any applicable state securities laws. Any purported transfer or
assignment made other than in accordance with this Section 6 and Section 9
hereof shall be null and void and of no force and effect.
(b) This Warrant shall be transferable only upon the receipt of an opinion
of counsel satisfactory to the Company to the effect that (i) the transferee is
a person to whom the Warrant may be legally transferred without registration
under the Securities Act or any state securities laws; and (ii) such transfer
will not violate any applicable law or governmental rule or regulation
including, without limitation, any applicable federal or state securities law.
Prior to any transfer or assignment of this Warrant, the assignor or transferor
shall reimburse the Company for its reasonable expenses, including attorneys'
fees, incurred in connection with the transfer or assignment.
(c) Any assignment permitted hereunder shall be made by surrender of this
Warrant to the Company at its principal office with the duly executed Assignment
Form set forth on Exhibit B attached hereto and made a part hereof by this
reference and funds sufficient to pay any transfer tax. In such event, the
Company shall, upon reimbursement of the Company's expenses in accordance with
Section 6(a) above, execute and deliver a new Warrant in the name of the
assignee named in such Assignment Form, and this Warrant shall promptly be
cancelled. This Warrant may be divided or combined with other Warrants which
carry the same rights upon presentation thereof at the principal office of the
Company together with a written notice signed by the Holder thereof, specifying
the names and denominations in which new Warrants are to be issued. The terms
"Warrant" and "Warrants" as used herein include any Warrants in substitution for
or replacement of this Warrant, or into which this Warrant may be divided or
exchanged.
(d) Upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate
representing Warrant Shares issued upon the exercise hereof and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, and, in the case of any such mutilation, upon
surrender and cancellation of this Warrant or such stock certificate, the
Company will execute and deliver a new Warrant or stock certificate of like
tenor and date, and any such lost, stolen, destroyed or mutilated Warrant or
stock certificate shall thereupon become void.
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(e) Each of the Holders of this Warrant, the Warrant Shares or any other
security issued or issuable upon exercise of this Warrant shall indemnify and
hold harmless the Company, 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 such director, officer or any such
person may become subject under the Securities Act or any statute or common law,
insofar as such losses, claims, damages or liabilities, or actions in respect
thereof, arise out of or are based upon the disposition by such Holder of the
Warrant, the Warrant Shares or other such securities in violation of the terms
of this Warrant.
7. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder by virtue hereof are limited to those expressed in
this Warrant and are not enforceable against the Company except to the extent
set forth herein.
8. Adjustment of Exercise Price and Number of Shares. The number and kind
of securities issuable upon the exercise of this Warrant and the Exercise Price
of such securities shall be subject to adjustment from time to time upon the
happening of any of the following events after the Grant Date:
(a) Subdivision or Combination of Common Stock. If the Company at any time
subdivides (by any stock split, stock dividend or otherwise) one or more classes
of its outstanding shares of Common Stock into a greater number of shares, or
combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the number
of Warrant Shares purchasable upon exercise of this Warrant immediately prior
thereto shall be adjusted so that the Holder of this Warrant shall be entitled
to receive the kind and number of Warrant Shares or other securities of the
Company which it would have owned or have been entitled to receive after the
happening of any of the events described above had this Warrant been exercised
immediately prior to the happening of such event or any record date with respect
thereto. If the Holder is entitled to receive shares of two or more classes of
capital stock of the Company pursuant to the foregoing upon exercise of the
Warrant, the Company shall determine the allocation of the adjusted Exercise
Price between the classes of capital stock. After such allocation, the exercise
privilege and the Exercise Price of each class of capital stock shall thereafter
be subject to adjustment on terms comparable to those applicable to Common Stock
in this Section. An adjustment made pursuant to this paragraph (a) shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event. Such adjustment shall be made successively
whenever such a subdivision, combination or reclassification is made.
(b) Adjustment in Exercise Price. Whenever the number of Warrant Shares
purchasable upon the exercise of each Warrant is adjusted as provided in this
Section, the Exercise Price payable upon exercise of each Warrant shall be
adjusted by multiplying such Exercise Price immediately prior to such adjustment
by a fraction, of which the numerator shall be the number of Warrant Shares
purchasable upon the exercise of each Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of Warrant Shares
purchasable immediately thereafter.
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9. Transfer to Comply with the Securities Act and State Securities Laws.
(a) Neither this Warrant, the Warrant Shares, any other security issued or
issuable upon exercise of this Warrant, nor any interest therein may be sold,
transferred or otherwise disposed of except to a person who, in the opinion of
counsel to the Holder reasonably satisfactory to the Company, is a person to
whom this Warrant or such Warrant Shares may legally be transferred pursuant to
Section 6 hereof without registration and without the delivery of a current
prospectus under the Securities Act with respect thereto or in reliance upon a
valid exemption from the registration requirements of applicable securities laws
and then only upon compliance by the Holder and such purchaser with the
requirements of Section 6 and against receipt of an agreement of such person to
comply with the provisions of this Warrant with respect to any resale or other
disposition of this Warrant and/or such securities, as applicable.
(b) The Holder, by acceptance of this Warrant, agrees that the Warrant
Shares to be issued upon exercise hereof are being acquired for the account of
the Holder for investment and not with a view to, or for resale in connection
with, the distribution thereof and that the Holder will not offer, sell or
otherwise dispose of such Warrant Shares except under circumstances which will
not result in a violation of the Securities Act and all applicable state
securities laws. The Holder represents that the Holder has no present intention
of distributing or reselling the Warrant Shares.
(c) The Company may cause the following legend, or one of similar
substance, to be set forth on each certificate representing Warrant Shares or
any other security issued or issuable upon exercise of this Warrant, unless the
Holder delivers an opinion of counsel satisfactory to the Company that such
legend is unnecessary:
THE SECURITIES OF THE COMPANY EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND VARIOUS
APPLICABLE STATE SECURITIES LAWS. NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED, ASSIGNED OR ENCUMBERED BY A
SECURITY INTEREST, UNLESS THE PURCHASE, TRANSFER, ASSIGNMENT, PLEDGE OR
GRANT OF SUCH SECURITY INTEREST COMPLIES WITH ALL STATE, FEDERAL AND OTHER
APPLICABLE SECURITIES LAWS AND UNLESS THE SELLER, TRANSFEROR, ASSIGNOR,
PLEDGOR OR GRANTOR OF SUCH SECURITY INTEREST PROVIDES AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT THE TRANSACTION CONTEMPLATED
WOULD NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
OTHER APPLICABLE SECURITIES LAWS. THE SECURITIES ARE ALSO SUBJECT TO THE
TERMS AND CONDITIONS OF A WARRANT, DATED AS OF ________________________,
2004, ISSUED BY CIMETRIX INCORPORATED TO THE HOLDER THEREOF.
TRANSFERABILITY OF THE SECURITIES IS THEREFORE LIMITED AND INVESTORS MUST
BEAR THE ECONOMIC RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF
TIME.
10. Governing Law. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Utah applicable to contracts entered
into and to be performed wholly within Utah, without the application of any
conflicts of laws principles of any state. Each of the Company and the Holder
submits itself or himself to the exclusive jurisdiction of the federal and state
courts of the State of Utah.
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11. Modification and Waiver. This Warrant and any provision hereof may be
modified, amended, waived or discharged only by an instrument in writing signed
by the party against which enforcement of the same is sought.
12. Notice. Notices and other communications to be given to the Holder
shall be delivered by hand or mailed, postage prepaid, to such address as the
Holder shall have designated by written notice to the Company as provided in
this Section. Notices or other communications to the Company shall be deemed to
have been sufficiently given if delivered by hand or mailed postage prepaid to
the Company at 6979 South High Tech Drive, Salt Lake City, Utah 84047, or such
other address as the Company shall have designated by written notice to the
Holder as provided in this Section. Notice by mail shall be deemed given when
deposited in the United States mail, postage prepaid, as herein provided.
13. Construction. The descriptive headings of the several paragraphs and
sections of this Warrant are inserted for convenience only and do not constitute
a part of this Warrant. Unless otherwise indicated, references to sections shall
be construed as references to the corresponding Sections of this Warrant.
14. Attorneys' Fees. The party to this Warrant that prevails in any dispute
or claim between the parties to this Warrant, to the extent such dispute or
claim arises out of this Warrant, shall be entitled to recover reasonable costs
and attorneys' fees relating to such dispute or claim.
[remainder of page intentionally left blank; signature page follows]
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IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Warrant effective as of the Grant Date.
COMPANY:
CIMETRIX INCORPORATED
a Nevada corporation
July 30, 2004
By:/S/ Robert H. Reback
-----------------------
Name: Robert H. Reback
Title: President and Chief Executive Officer
PURCHASER:
By:/S/ Dennis P. Gauger
-----------------------
Name: Dennis P. Gauger, an individual
resident of the State of Utah
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EXHIBIT A
NOTICE OF EXERCISE
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TO: CIMETRIX INCORPORATED (the "Company"):
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1. The undersigned holder of the attached warrant (the "Warrant") hereby
elects to purchase _____________________ Warrant Shares (as defined in the
Warrant).
2. Please issue a certificate or certificates representing such Warrant
Shares in the name of the undersigned.
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(DATE)
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(SIGNATURE)
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(PRINT OR TYPE NAME)
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EXHIBIT B
ASSIGNMENT FORM
Dated: ____________________
FOR VALUE RECEIVED, _____________________ hereby sells, assigns, and
transfers unto ______________________ (please type or print)
______________________________ (address) the right to purchase Common Stock
represented by the warrant attached hereto to the extent of _____________ shares
as to which such right is exercisable and does hereby irrevocably constitute and
appoint Cimetrix Incorporated (the "Company") and/or its transfer agent as
attorney to transfer the same on the books of the Company with full power of
substitution in the premises.
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(SIGNATURE)
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