Exhibit 4.13
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933,AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD,TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS SUCH SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS IN
ACCORDANCE WITH SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
February 23, 2001 Warrant No. ______
WARRANT
to Purchase Common Stock of
iExalt, Inc.
a Nevada corporation
This Warrant certifies that Woodcrest Capital II Limited Partnership, a
Texas Limited Partnership ("Purchaser"), is entitled to purchase from iExalt,
Inc., a Nevada corporation (the "Company"), the Shares (as defined herein) in
the amounts and at the Exercise Price (as defined herein), all on the terms and
conditions hereinafter provided.
Section 1. Certain Definitions. As used in this Warrant, unless the
context otherwise requires:
"Affiliate" shall mean: (i) any Person directly or indirectly controlling,
controlled by, or under common control with, another Person; (ii) any Person
owning or controlling ten (10%) percent or more of the outstanding voting
securities of another Person; (iii) any officer, director or partner of a
Person; and (iv) if a Person is an officer, director or partner, any such
company for which such Person acts in such capacity.
"Articles" shall mean the Certificate of Incorporation of the Company, as
in effect from time to time.
"Common Stock" shall mean the Company's authorized common stock, $0.001
par value per share.
"Exercise Price" shall mean the exercise price per share of Common Stock
as determined as follows, as adjusted from time to time pursuant to Section 3
hereof:
if Warrants are issued after the Company has (i) drawn funds under the
Loan Agreement exceeding $1,000,000, but aggregating less than $2,000,000,
then the Warrant exercise price for the affected shares will be $.16 per
share; (iii) drawn funds under the Loan Agreement exceeding $2,000,000 but
aggregating less than $3,000,000, then the Warrant exercise price for the
affected shares will be $.25 per share ; (iii) drawn funds under the Loan
Agreement
exceeding $3,000,000 but aggregating less than $4,000,000, then the
Warrant exercise price for the affected shares will be $.50 per share;
(iv) drawn funds under the Loan Agreement exceeding $4,000,000 but
aggregating less than $5,000,000, then the Warrant exercise price for the
affected shares will be $.75 per share; and (v) drawn funds under the Loan
Agreement exceeding $5,000,000 up to $6,000,000, then the Warrant exercise
price for the affected shares will be $ 1.00 per share.
The Company shall provide written information and documentation to
the Purchaser regarding the transactions set forth above to enable the
Purchaser to determine and verify the Exercise Price. The principal amount
of the Loans shall be counted toward determining whether any of the
amounts contemplated in said clauses have been attained or exceeded.
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"Expiration Date" shall mean five (5) years from the date of Closing.
"Loan Agreement" shall mean that certain Loan Agreement dated as of the
same date hereof between the Company and certain lenders set forth therein.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares" shall mean the number of shares of the Company's common stock.
"Warrant" shall mean this Warrant and all additional or new warrants
issued upon division or combination of, or in substitution for, this Warrant.
All such additional or new warrants shall at all times be identical as to terms
and conditions and date, except as to the number of shares of Common Stock for
which they may be exercised.
"Warrant Stock" shall mean the shares of Common Stock purchasable by the
holder of this Warrant upon the exercise of such Warrant.
"Warrantholder" shall mean Purchaser, as the initial holder of this
Warrant, and its nominees, successors or assigns, including any subsequent
holder of this Warrant to whom it has been legally transferred.
Section 2. Amount of Shares and Exercise of Warrant.
(a) Upon signing this Warrant Agreement, the Company has issued
separate warrants to (i) Purchaser, entitling Purchaser to purchase
7,812,500 shares of Company common stock, and (ii) Woodcrest Capital,
L.L.C. ("WC"), entitling WC to purchase 3,000,000 shares of Company common
stock. The warrants issued this date to Purchaser and WC are each fully
vested and earned.
(a.1) At any time after the date hereof through and including the
Expiration Date, Purchaser may at any time and from time to time exercise
this Warrant, in whole or in part.
(b) Purchaser shall receive a Warrant to purchase 5 shares of the
Company's common stock for every one dollar ($1.00) drawn by the Company
in Loan Proceeds, after the initial one million dollars ($1,000,000) of
Loan proceeds.
(c) Warrantholder may exercise this Warrant by means of delivering
to the Company at its principal office: (i) a written notice of exercise,
including the number of Shares of Warrant Stock to be delivered pursuant
to such exercise and identifying whether the exercise is being made by
cash purchase or conversion of shares of common stock; (ii) this Warrant;
and (iii) if applicable, payment equal to the Exercise Price multiplied by
the number of shares exercised. In the event that any exercise shall not
be for all Shares of Warrant Stock purchasable hereunder, the Company
shall deliver to Warrantholder a new Warrant registered in the name of
Warrantholder, of like tenor to this Warrant and for the remaining shares
of Warrant Stock purchasable hereunder, within ten (10) days of any such
exercise. The notice of exercise described in clause (i) shall be in the
Subscription Form set out at the end of this Warrant.
Warrantholder may elect to pay the Exercise Price to the
Company either:
(1) by cash, certified check or wire transfer: (2) by converting the Warrant
into Common Stock ("Warrant Conversion"); or (3) any combination of the
foregoing. Such election of the form of payment of the Exercise Price shall be
specified in the Subscription Form. If Warrantholder elects to pay the Exercise
Price through Warrant Conversion, the Company shall deliver to Warrantholder
(without payment by Warrantholder of any cash or other consideration) that
number of shares of Common Stock equal to the difference of: (I) the total
number of shares of Common Stock issuable upon exercise of this Warrant minus
(II) that number of Shares of Common Stock having an aggregate "Value" (as
defined herein) equal to the aggregate Exercise Price. For purposes of this
Section 2, "Value" per share of Common Stock shall be the difference, as of the
date of exercise, between the Exercise Price and the Fair Market Value (as
determined either by the average closing price of the Company for the 5 trading
days immediately preceding the conversion as reported in The Wall Street Journal
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(Southwest Edition) or, if the Company is no longer public (through de-listing,
change of control or otherwise), the Fair Market Value as determined by mutual
agreement of the Company and Purchaser (including appropriate discounts for
illiquidity, minority and lack of marketability), and if such cannot be mutually
agreed, then as determined by an independent appraiser expert in the industry,
the cost of which would be shared equally by the Company and the Warrantholder.
Notwithstanding the foregoing, Purchaser may utilize Warrant Conversion to pay
the Exercise Price only for a maximum of 50% of the total Warrant Stock. Each
transaction involving payment of the Exercise Price will be made (1) 50%
"cashless" warrant conversion, and (2) 50% cash.
(d) Upon exercise of this Warrant and delivery of the Subscription
Form with proper payment relating thereto, the Company shall cause to be
executed and delivered to Warrantholder as soon as possible, and in no
event later than five business days thereafter, a certificate or
certificates representing the aggregate number of fully-paid and
nonassessable shares of Common Stock issuable upon such exercise.
(e) The stock certificate or certificates for Warrant Stock to be
delivered in accordance with this Section 2 shall be in such denominations
as may be specified in the Subscription Form, and shall be registered in
the name of Warrantholder or such other name or names as shall be
designated in said Subscription Form. Such certificate or certificates
shall be deemed to have been issued, and Warrantholder or any other person
so designated to be named therein shall be deemed to have become the
holder of record of such shares, including to the extent permitted by law
the right to vote such shares or to consent or to receive notice as
stockholders, as of the time said Subscription Form is delivered to the
Company as aforesaid.
(f) The Company shall pay all expenses payable in connection with
the preparation, issue and delivery of stock certificates under this
Section 2; provided, however, that Warrantholder shall pay any transfer
taxes resulting from the exercise of the Warrant and the issuance of
Warrant Stock hereunder.
(g) All shares of Warrant Stock issuable upon the exercise of this
Warrant in accordance with the terms hereof shall be validly issued, fully
paid and nonassessable, and free from all liens and other encumbrances
thereon, other than liens or other encumbrances created by Warrantholder.
(h) In no event shall any fractional share of Common Stock of the
Company be issued upon any exercise of this Warrant. If, upon any exercise
of this Warrant, Warrantholder would, except as provided in this
paragraph, be entitled to receive a fractional share of Common Stock, then
the Company shall deliver in cash to such holder an amount equal to such
fractional interest.
Section 3. Adjustment of Exercise Price and Warrant Stock.
(a) If, at any time prior to the Expiration Date, the number of
outstanding shares of Common Stock is: (i) increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up of
shares of Common Stock; or (ii) decreased by a combination of shares of
Common Stock, then, following the dividend or effective date of such stock
dividend, subdivision, split-up, or combination, the Exercise Price shall
be adjusted to a new amount equal to the product of (I) the Exercise Price
in effect on such record date, and (II) the quotient obtained by dividing
(x) the number of shares of Common Stock outstanding on such record date
(without giving effect to the event referred to in the foregoing clause
(i) or (ii)), by (y) the number of shares of Common Stock which would be
outstanding immediately after the
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event referred to in the foregoing clause (i) or (ii), if such event had
occurred immediately following such record date.
(b) If, after the date of Closing, and at any time prior to the Expiration Date,
the Company issues or sells shares of its Common Stock or any other shares of
its Common Stock or any other securities convertible into or exchangeable for
Common Stock ("Convertible Securities"), or in any manner grants or reprices any
warrants, options or other rights (collectively, "Options") to purchase shares
of Common Stock or Convertible Securities, after the date hereof, which entitles
the subscriber, or the holder of such Option or Convertible Security, to
purchase any shares of Common Stock at less than the then current Exercise Price
(or the Exercise Price as ultimately determined pursuant to the definition of
Exercise Price), then the Exercise Price in effect immediately prior to such
action by the Company shall be adjusted to equal the price at which any such
subscriber or holder shall be entitled to purchase any such shares of Common
Stock.
(c) In the event that either of the events described in Section 3(a) or Section
3(b) shall occur prior to the determination of the Exercise Price (pursuant to
the definition of such term), then immediately upon the occurrence of the event
that shall cause the determination of the Exercise Price pursuant to such
definition, such Exercise Price shall immediately be adjusted in accordance with
this Section 3.
(d) Upon each adjustment of the Exercise Price as provided in
Section 3(a) or Section 3(b), Warrantholder shall thereafter be entitled
to subscribe for and purchase, at the Exercise Price resulting from such
adjustment, the number of shares of Warrant Stock equal to the product of:
(i) the number of shares of Warrant Stock existing prior to such
adjustment; and (ii) the quotient obtained by dividing (I) the Exercise
Price existing prior to such adjustment by (II) the new Exercise Price
resulting from such adjustment.
(e) If, at any time prior to the Expiration Date, there occurs an
event which would cause the automatic conversion ("Automatic Conversion")
of the Warrant Stock into shares of the Company's common stock ("Common
Stock") in accordance with the Articles, then any Warrant shall thereafter
be exercisable, prior to the Expiration Date, into the number of shares of
Common Stock into which the Warrant Stock would have been convertible
pursuant to the Articles if the Automatic Conversion had not taken place.
Section 4. Division and Combination. This Warrant may be divided or
combined with other Warrants upon presentation at the office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by Warrantholder or its agent or attorney.
The Company shall pay all expenses in connection with the preparation, issue and
delivery of Warrants under this Section 4, including any transfer taxes
resulting from the division or combination hereunder. The Company agrees to
maintain at its office books for the registration of the Warrants.
Section 5. Reclassification, Etc. In case of any reclassification or
change of the outstanding Common Stock of the Company (other than as a result of
a subdivision, combination or stock dividend), or in case of any consolidation
of the Company with, or merger of the Company into, another corporation or other
business organization (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification
or change of the outstanding Common Stock of the Company), at any time prior to
the Expiration Date, then, as a condition of such reclassification,
reorganization, change, consolidation or merger, lawful provision shall be made,
and duly executed documents evidencing the same from the Company or its
successor shall be delivered to Warrantholder, so that Warrantholder shall have
the right prior to the Expiration Date to purchase, at a total price not to
exceed that payable upon the exercise of this Warrant, the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, reorganization, change, consolidation or merger by a holder of
the number of shares of Common Stock of the Company which might have been
purchased by Warrantholder immediately prior to such reclassification,
reorganization, change, consolidation or merger, and in any such case
appropriate provisions shall be made with respect to the rights and interest of
Warrantholder to the end that the provisions hereof (including provisions for
the adjustment of the Exercise Price and of the number of shares purchasable
upon exercise of this Warrant) shall thereafter be applicable in relation to any
shares of stock and other securities and property thereafter deliverable upon
the exercise of this Warrant.
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Section 6. Reservation and Authorization of Capital Stock. The Company
shall at all times reserve and keep available for issuance such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants.
Section 7. Stock and Warrant Books. The Company will not at any time,
except upon dissolution, liquidation or winding up, close its stock books or
Warrant books so as to result in preventing or delaying the exercise of any
Warrant.
Section 8. Limitation of Liability. No provisions hereof, in the absence
of affirmative action by Warrantholder to purchase Warrant Stock hereunder,
shall give rise to any liability of Warrantholder to pay the Exercise Price or
as a stockholder of the Company (whether such liability is asserted by the
Company or creditors of the Company).
Section 9. Registration Rights. The Warrant Stock issuable upon exercise
of this Warrant is subject to the provisions of a certain Registration Rights
Agreement, dated the same date as this Warrant, by and among the Company,
Purchaser and the other Lenders.
Section 10. Transfer. Subject to compliance with the Securities Act and
the applicable rules and regulations promulgated thereunder, this Warrant and
all rights hereunder shall be transferable in whole or in part. Any such
transfer shall be made at the offices of the Company at which this Warrant is
exercisable by Warrantholder or its duly authorized attorney upon surrender of
this Warrant together with an assignment hereof properly endorsed. Promptly
thereafter a new warrant shall be issued and delivered by the Company,
registered in the name of the assignee. Until registration of the transfer of
this Warrant on the books of the Company, the Company may treat Purchaser as the
owner hereof for all purposes.
Section 11. Investment Representations; Restrictions on Transfer of
Warrant Stock. Unless a current registration statement under the Securities Act
shall be in effect with respect to the Warrant Stock to be issued upon exercise
of this Warrant, Warrantholder, by accepting this Warrant, covenants and agrees
that, at the time of exercise hereof, and at the time of any proposed transfer
of Warrant Stock acquired upon exercise hereof, Warrantholder will deliver to
the Company a written statement that the Warrant Stock acquired by Warrantholder
upon exercise hereof is for the account of Warrantholder (or is being held by
Warrantholder as trustee, investment manager, investment advisor or as any other
fiduciary for the account of the beneficial owner or owners) for investment, and
is not being acquired with a view to, or for sale in connection with, any
distribution thereof (or any portion thereof), and with no present intention (at
any such time), of offering and distributing such Warrant Stock (or any portion
thereof). The Warrant Stock may contain a standard securities law restrictive
legend reasonably required by the Secretary of the Company.
Section 12. Loss, Destruction of Warrant. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon receipt of
indemnity and/or security reasonably satisfactory to the Company or, in the case
of any such mutilation, upon surrender and cancellation of such Warrant, the
Company will make and deliver, in lieu of such lost, stolen, destroyed or
mutilated Warrant, a new Warrant of identical tenor and representing the right
to purchase the same aggregate number of shares of Common Stock.
Section 13. Amendments. The terms of this Warrant may be amended, and the
observance of any term herein may be waived, but only with the written consent
of the Company and Warrantholder.
Section 14. Notices Generally. Any notice, request, consent, other
communication or delivery pursuant to the provisions hereof shall be in writing
and shall be sent by one of the following means: (i) by registered or certified
first class mail, postage prepaid, return receipt requested; (ii) by facsimile
transmission with confirmation of receipt; (iii) by nationally recognized
courier service guaranteeing overnight delivery; or (iv) by personal delivery;
and shall be properly addressed to Warrantholder at the last known address or
facsimile number appearing on the books of the Company, or, except as herein
otherwise expressly provided, to the Company at its
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principal executive office, or such other address or facsimile number as shall
have been furnished to the party giving or making such notice, demand or
delivery.
Section 15. Successors and Assigns. This Warrant shall bind and inure to
the benefit of and be enforceable by the parties hereto and their respective
permitted successors and assigns which shall be limited to Affiliates of the
holder hereof.
Section 16. Governing Law. In all respects, including all matters of
construction, validity and performance, this Warrant and the obligations arising
hereunder shall be governed by, and construed and enforced in accordance with,
the laws of the State of texas applicable to contracts made and performed in
such State, except with respect to the validity of this Warrant, the issuance of
Warrant Stock upon exercise hereof and the rights and duties of the Company with
respect to registration of transfer, which shall be governed by the General
Corporation Law of the State of Texas, in each case without reference to the
conflicts of laws principles of the State of Texas.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name by a duly authorized officer.
Dated: February 21, 2001
iEXALT, INC., a Nevada corporation
By: /s/ Donald W. Sapaugh
-------------------------------
Donald W. Sapaugh, CEO
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SUBSCRIPTION FORM
(to be executed only upon exercise of Warrant)
To: iExalt, Inc.
12000 Aerospace Avenue, Suite 375
Houston, Texas 77034
[Choose one or both of the paragraphs, as applicable]
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. __ ), hereby irrevocably elects to purchase __________ shares of
the Common Stock covered by such Warrant and herewith makes payment of
$__________, representing the full purchase price for such shares at the price
per share provided for in such Warrant. The undersigned, pursuant to the
provisions set forth in the attached Warrant (No. __ ), hereby irrevocably
elects to exercise the right of conversion represented by the attached Warrant
for ____ shares of Common Stock, and as payment therefor hereby directs iExalt,
Inc. to withhold that number of shares of Common Stock that the undersigned
would otherwise be entitled thereunder.
Dated: Name:
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Signature:
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Address:
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