Exhibit 10.24
THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED OR APPLICABLE STATE SECURITIES LAWS, AND NO
INTEREST MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING
SAID SECURITIES, (B) THE COMPANY RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE
HOLDER OF THE SECURITIES SATISFACTORY TO THE COMPANY STATING THAT SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION, OR (C) THE COMPANY OTHERWISE SATISFIES
ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.
ISSUED: October 20, 2000 WARRANT TO PURCHASE
Void After October 19, 2005 COMMON STOCK
EBIZ ENTERPRISES, INC.
WARRANT
THIS IS TO CERTIFY that, for good and valuable consideration and subject to
these terms and conditions, THE CANOPY GROUP, INC. or such person to whom this
Warrant is transferred (the "HOLDER"), is entitled to exercise this Warrant to
purchase 500,000 fully paid and nonassessable shares of EBIZ ENTERPRISES, INC.,
a Nevada corporation (the "COMPANY"), Common Stock (the "WARRANT STOCK") at a
price per share of $1.10 (the "EXERCISE PRICE") (such number of shares, type of
security and the Exercise Price being subject to adjustment as provided below).
1. METHOD OF EXERCISE
This Warrant may be exercised by the Holder, at any time after October 19,
2002, but not later than October 19, 2005 (the "EXERCISE PERIOD"), in whole or
in part, by delivering to the Company at Ebiz Enterprises, Inc., 15695 North
83rd Way, Scottsdale, Arizona 85260 (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at the address of
the Holder appearing on the books of the Company) (a) this Warrant certificate,
(b) a certified or cashier's check payable to the Company, or canceled
indebtedness of the Company to the Holder, in the amount of the Exercise Price
multiplied by the number of shares for which this Warrant is being exercised
(the "PURCHASE PRICE"), and (c) the Notice of Exercise attached as EXHIBIT A
duly completed and executed by the Holder. This Warrant may also be exercised by
the Holder at any time after the date issued, but not later than October 19,
2005, in whole or in part, by delivery as specified above, provided (a) the
closing bid price of the Common Stock as reported by the OTC Bulletin Board (or
NASDAQ, if applicable) on the trading day prior to the day on which the Warrant
is exercised is equal to or greater than $4.00 or (b) the occurrence of (i) any
merger, consolidation or corporate reorganization of the Company with or into
any corporation or entity and the Company is not the surviving entity of such
merger, consolidation or reorganization (ii) any transaction or series of
related transactions by the Company in which more than 50% of the voting equity
of the Company is transferred or (iii) a sale of all or substantially all of the
assets of the Company.
2. DELIVERY OF STOCK CERTIFICATES; NO FRACTIONAL SHARES
2.1 DELIVERY OF STOCK CERTIFICATES. Within 10 days after the payment of the
Purchase Price following the exercise of this Warrant (in whole or in part), the
Company at its expense shall issue in the name of and deliver to the Holder (a)
a certificate or certificates for the number of fully paid and nonassessable
Warrant Shares to which the Holder shall be entitled upon such exercise, and (b)
a new Warrant in substantially the same form to purchase up to that number of
Warrant Shares, if any, as to which this Warrant has not been exercised if this
Warrant has not expired. The Holder shall for all purposes be deemed to have
become the holder of record of such Warrant Shares on the date this Warrant was
exercised (the date the Holder has fully complied with the requirements of
Section 1), irrespective of the date of delivery of the certificate or
certificates representing the Warrant Shares; PROVIDED that, if the date such
exercise is made is a date when the stock transfer books of the Company are
closed, such person shall be deemed to have become the holder of record of such
Warrant Shares at the close of business on the next succeeding date on which the
stock transfer books are open.
2.2 NO FRACTIONAL SHARES. No fractional shares shall be issued upon the
exercise of this Warrant. In lieu of fractional shares, the Company shall pay
the Holder a sum in cash equal to the fair market value of the fractional shares
(as determined by the Company's Board of Directors) on the date of exercise.
3. COVENANTS AS TO WARRANT SHARES
The Company covenants that at all times during the Exercise Period there
shall be reserved for issuance and delivery upon exercise of this Warrant such
number of Warrant Shares as is necessary for exercise in full of this Warrant
and, from time to time, it will take all steps necessary to amend the Articles
of Incorporation to provide sufficient reserves of Warrant Shares.
4. ADJUSTMENTS; TERMINATION OF WARRANT UPON CERTAIN EVENTS
4.1 EFFECT OF REORGANIZATION.
(a) REORGANIZATION - NO CHANGE IN CONTROL
Upon a merger, consolidation, acquisition of all or substantially all of
the property or stock, liquidation or other reorganization of the Company
(collectively, a "REORGANIZATION") during the Exercise Period, as a result of
which the shareholders of the Company receive cash, stock or other property in
exchange for their Warrant Shares and the holders of the Company's voting equity
securities immediately prior to such Reorganization together own a majority
interest of the voting equity securities of the successor corporation following
such Reorganization, lawful provision shall be made so that the Holder shall
thereafter be entitled to receive, upon exercise of this Warrant, the number of
shares of securities of the successor corporation resulting from such
Reorganization (and cash and other property), to which a holder of the Warrant
2
Shares issuable upon exercise of this Warrant would have been entitled in such
Reorganization if this Warrant had been exercised immediately prior to such
Reorganization. In any such case, appropriate adjustment (as determined in good
faith by the Company's Board of Directors) shall be made in the application of
the provisions of this Warrant with respect to the rights and interest of the
Holder after the Reorganization to the end that the provisions of this Warrant
(including adjustments of the Exercise Price and the number and type of
securities purchasable pursuant to the terms of this Warrant) shall be
applicable after that event, as near as reasonably may be, in relation to any
shares deliverable after that event upon the exercise of this Warrant.
(b) REORGANIZATION - CHANGE IN CONTROL; TERMINATION OF WARRANT
Upon Reorganization during the Exercise Period, as a result of which the
shareholders of the Company receive cash, stock or other property in exchange
for their Warrant Shares and the holders of the Company's voting equity
securities immediately prior to such Reorganization together own less than a
majority interest of the voting equity securities of the successor corporation
following such Reorganization, the Holder shall be given notice of such proposed
action as provided in Section 7. The Holder may attend the meeting of the
Company's shareholders at which such action is considered and voted upon. If the
proposed action is approved according to applicable law by the shareholders of
all corporations or other entities that are parties to the proposed action, the
Holder shall be so notified in writing by the Company by registered or certified
mail at least 10 days before its effectiveness. Notwithstanding the period of
exercisability stated on the face of this Warrant, this Warrant shall become
forever null and void to the extent not exercised on or before 5:00 p.m.,
Pacific time, on the seventh day following the delivery of such notice; provided
that if the Reorganization does not close, this Warrant shall not terminate and
the Exercise Period shall continue as stated in this Warrant.
4.2 ADJUSTMENTS FOR STOCK SPLITS, DIVIDENDS.
If the Company shall subdivide the number of outstanding shares of the same
class as the Warrant Shares into a greater number of shares, then the Exercise
Price in effect before such dividend or subdivision shall be proportionately
reduced and the number of Warrant Shares at that time issuable pursuant to the
exercise of this Warrant shall be proportionately increased; and, conversely, if
the Company shall contract the number of outstanding shares of the same class as
the Warrant Shares by combining such shares into a smaller number of shares,
then the Exercise Price in effect before such combination shall be
proportionately increased and the number Warrant Shares at that time issuable
pursuant to the exercise or conversion of this Warrant shall be proportionately
decreased. Each adjustment in the number of Warrant Shares issuable shall be to
the nearest whole share.
4.3 CERTIFICATE AS TO ADJUSTMENTS.
In the case of any adjustment in the Exercise Price or number and type of
securities issuable upon exercise of this Warrant, the Company will promptly
give written notice to the Holder in the form of a certificate, certified and
confirmed by an officer of the Company, setting forth the adjustment in
reasonable detail.
3
5. SECURITIES LAWS RESTRICTIONS; LEGEND ON WARRANT SHARES
5.1 SECURITIES LAWS RESTRICTIONS. This Warrant and the securities issuable
upon exercise have not been registered under the Securities Act of 1933, as
amended, or applicable state securities laws, and no interest may be sold,
distributed, assigned, offered, pledged or otherwise transferred unless (a)
there is an effective registration statement under such Act and applicable state
securities laws covering any such transaction involving said securities, (b) the
Company receives an opinion of legal counsel for the holder of the securities
satisfactory to the Company stating that such transaction is exempt from
registration, or (c) the Company otherwise satisfies itself that such
transaction is exempt from registration.
5.2 LEGEND. A legend setting forth or referring to the above restrictions
shall be placed on this Warrant, any replacement and any certificate
representing the Warrant Shares, and a stop transfer order shall be placed on
the books of the Company and with any transfer agent until such securities may
be legally sold or otherwise transferred.
6. EXCHANGE OF WARRANT; LOST OR DAMAGED WARRANT CERTIFICATE
This Warrant is exchangeable upon its surrender by the Holder at the office
of the Company. Upon receipt by the Company of satisfactory evidence of the
loss, theft, destruction or damage of this Warrant and either (in the case of
loss, theft or destruction) reasonable indemnification or (in the case of
damage) the surrender of this Warrant for cancellation, the Company will execute
and deliver to the Holder, without charge, but with adequate indemnity, a new
Warrant of like denomination.
7. NOTICES OF RECORD DATE, ETC.
In the event of:
(a) any taking by the Company of a record of the holders of Warrant
Shares for the purpose of determining the holders who are entitled to receive
any dividend or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right;
(b) any reorganization of the Company, any reclassification or
recapitalization of the capital structure of the Company, or any transfer of all
or substantially all the assets of the Company to, or consolidation or merger
of, the Company with or into any person;
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
(d) any proposed issue or grant by the Company to the holders of
Warrant Shares of any shares of any class or any other securities, or any right
or warrant to subscribe for, purchase or otherwise acquire any units of any
class or any other securities;
(e) the initial public offering of the Company's shares; or
4
(f) any other event as to which the Company is required to give notice
to any holders of Warrant Shares,
then and in each such event the Company will mail to the Holder a notice
specifying (i) the date on which any such record is to be taken, (ii) the date
on which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as to which the holders of record of
Warrant Shares or securities into which the Warrant Shares are convertible shall
be entitled to exchange their shares for securities or other property
deliverable on such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up, (iii)
the amount and character of any stock or other securities, or rights or
warrants, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made, and (iv) in reasonable detail, the facts, including
the proposed date, concerning any other such event. Such notice shall be
delivered to the Holder at least 20 days prior to the date specified in the
notice.
8. INVESTMENT INTENT
By accepting this Warrant, the Holder represents that it is acquiring this
Warrant for investment and not with a view to, or for sale in connection with,
any distribution thereof.
9. MISCELLANEOUS
9.1 HOLDER AS OWNER.
The Company may deem and treat the holder of record of this Warrant as the
absolute owner for all purposes regardless of any notice to the contrary.
9.2 NO SHAREHOLDER RIGHTS.
This Warrant shall not entitle the Holder to any voting rights or any other
rights as a shareholder of the Company or to any other rights except the rights
stated herein; and no dividend or interest shall be payable or shall accrue in
respect of this Warrant or the Warrant Shares, until this Warrant is exercised.
9.3 NOTICES.
Unless otherwise provided, any notice under this Warrant shall be given in
writing and shall be deemed effectively given (a) upon personal delivery to the
party to be notified, (b) upon confirmation of receipt by fax by the party to be
notified, (c) one business day after deposit with a reputable overnight courier,
prepaid for overnight delivery and addressed as set forth in (d), or (d) three
days after deposit with the United States Post Office, postage prepaid,
registered or certified with return receipt requested and addressed to the party
to be notified at the address indicated below, or at such other address as such
party may designate by 10 days' advance written notice to the other party given
in the foregoing manner.
5
If to the Holder: To the address last furnished
in writing to the Company by
the Holder
If to the Company: Ebiz Enterprises, Inc.
15695 North 83rd Way
Scottsdale, Arizona 85260
Attn: President
Fax: (480) 778-1001
9.4 AMENDMENTS AND WAIVERS.
Any term of this Warrant may be amended and the observance of any term may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only with the written consent of the Company and the holders
of Warrants to purchase a majority of the Warrant Shares. Any amendment or
waiver effected in accordance with this Section 9.4 shall be binding on each
future Holder and the Company.
9.5 GOVERNING LAW; JURISDICTION; VENUE.
This Warrant shall be governed by and construed under the laws of the state
of Utah without regard to principles of conflict of laws.
9.6 SUCCESSORS AND ASSIGNS; TRANSFER.
The terms and conditions of this Warrant shall inure to the benefit of and
be binding on the respective successors and assigns of the parties. This Warrant
may not be transferred or assigned without the consent of the Company, which
shall not be unreasonably withheld.
IN WITNESS WHEREOF, the Company has executed this Warrant as of the date
first written above.
EBIZ ENTERPRISES, INC.
By: /s/ Stephen C. Herman
------------------------------------
Name: Stephen C. Herman
Title: Chief Operations Officer
6
EXHIBIT A
NOTICE OF EXERCISE
To: Ebiz Enterprises, Inc.
The undersigned hereby irrevocably elects to purchase ___________ shares of
Common Stock of Ebiz Enterprises, Inc. (the "COMPANY"), issuable upon the
exercise of the attached Warrant and requests that certificates for such shares
be issued in the name of and delivered to the address of the undersigned stated
below and, if said number of shares shall not be all the shares that may be
purchased pursuant to the attached Warrant, that a new Warrant evidencing the
right to purchase the balance of such shares be registered in the name of, and
delivered to, the undersigned at the address stated below. The undersigned
agrees with and represents to the Company that said shares are acquired for the
account of the undersigned for investment and not with a view to, or for sale in
connection with, any distribution or public offering within the meaning of the
Securities Act of 1933, as amended.
Payment enclosed in the amount of $___________.
Dated: ________________
Name of Holder of Warrant: ________________________________________________
(Please print)
Address: __________________________________________________________________
Signature: ________________________________________________________________
ASSIGNMENT
For value received the undersigned sells, assigns and transfers to the
transferee named below the attached Warrant, together with all right, title and
interest, and does irrevocably constitute and appoint the transfer agent of Ebiz
Enterprises, Inc. (the "COMPANY") as the undersigned's attorney, to transfer
said Warrant on the books of the Company, with full power of substitution in the
premises.
Dated: __________________________
Name of Holder of Warrant: ________________________________________________
(Please print)
Address: __________________________________________________________________
Signature: ________________________________________________________________
Name of transferee: _______________________________________________________
(Please print)
Address of transferee: ____________________________________________________