Exhibit 10.7
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE AND IS BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND
SUCH LAWS. NEITHER THIS WARRANT NOR THE SHARES ISSUABLE ON THE EXERCISE HEREOF
MAY BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
COMMON STOCK PURCHASE WARRANT
To Purchase 438,040 Shares Of Common Stock Of
ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
This is to certify, that FOR VALUE RECEIVED,
KEVIN P. REGAN, SEPARATE PROPERTY
(the "Holder")
is entitled to purchase, subject to the provisions of this Warrant from
Entertainment Technologies & Programs, Inc. (the "Company"), a Delaware
corporation, at any time up to and including August 8, 2006 ("Expiration Date"),
up to an aggregate of Four Hundred Thirty-Eight Thousand and Forty (438,040)
registered shares of the Company's common stock, ("Common Stock") at a purchase
price per share of Nine Cents (US$.09) in currency of the United States of
America. The number of shares of Common Stock to be received upon the exercise
of this Warrant and the price to be paid for a share of Common Stock may be
adjusted from time to time as hereinafter set forth. The shares of the Common
Stock deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Shares," and the exercise price of
a share of Common Stock in effect at any time and as adjusted from time to time
is hereinafter sometimes referred to as the "Exercise Price." This Warrant
represents the Warrants referred to in the Consulting Agreement (the "Consulting
Agreement") entered into between the Company and Genesis Financial Group, L.L.C.
effective as of August 8, 2000.
1. EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part
at any time and from time to time up to and including the Expiration Date.
If the date on which the Holder's right to purchase Common Stock expires is
a day on which national banks in the United States of America are authorized by
law to close, then that right shall expire on the next succeeding day that is
not such a day. The Holder shall exercise all rights to purchase Common Stock by
presenting and surrendering this Warrant to the Company, at 17300 Saturn Lane,
Suite 111, Houston, Texas 77058, with the Purchase Form annexed hereto duly
executed and accompanied by payment of the Exercise Price for the number of
shares specified in such form. If this Warrant should be exercised in part only,
, the Company shall, upon surrender of this Warrant for cancellation, execute
and deliver a new Warrant evidencing the right of the Holder to purchase the
balance of the shares purchasable hereunder. Upon receipt by the Company of this
Warrant, in proper form for exercise, with the Purchase Form annexed hereto duly
executed and accompanied by payment of the Exercise Price for the number of
shares specified in such form, the Holder shall be deemed to be the holder of
record of the shares of Common Stock issuable upon such exercise,
notwithstanding that certificates representing such shares of Common Stock shall
not then be actually delivered to the Holder. As soon as practicable after each
exercise of this Warrant, the Company will deliver the shares issuable upon such
exercise to the Holder.
2. RELINQUISHMENT OF OPTIONS.
(a) The Warrantholder in lieu of purchasing the entire number of
shares subject to purchase hereunder, shall have the right to relinquish
all or any part of the then unexercised portion of this Warrant (to the
extent then exercisable) for a number of shares of Common Stock to be
determined in accordance with the following provisions of this clause (a):
(i) The number of shares of Common Stock, if any, issuable
pursuant to such relinquishment shall be the number of such shares,
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Common Stock Purchase Warrant
rounded to the next greater number of full shares, as shall be equal
to the quotient obtained by dividing (A) the Appreciated Value by (B)
the purchase price per share of Common Stock specified in this
Warrant;
(ii) For the purpose of this clause (a), "Appreciated Value"
means the excess of (x) the aggregate current market value of the
shares of Common Stock covered by the option or the portion thereof to
be relinquished over (y) the aggregate purchase price for such shares
specified in this Warrant;
(b) Such right of relinquishment may be exercised only upon receipt by
the Company of a written notice of such relinquishment which shall be dated
the date of election to make such relinquishment; and that, for the
purposes of this Warrant, such date of election shall be deemed to be the
date when such notice is sent by registered or certified mail, or when
receipt is acknowledged by the Company, if mailed by other than registered
or certified mail or if delivered by hand or by any telegraphic
communications equipment of the sender or otherwise delivered; provided,
that, in the event the method just described for determining such date of
election shall not be or remain consistent with the provisions of Section
16(b) of the Exchange Act or the rules and regulations adopted by the
Commission thereunder, as presently existing or as may be hereafter
amended, which regulations exempt from the operation of Section 16(b) of
the Exchange Act in whole or in part any such relinquishment transaction,
then such date of election shall be determined by such other method
consistent with Section 16(b) of the Exchange Act or the rules and
regulations thereunder as the Company shall in its discretion select and
apply;
(c) The "current market value" of a share of Common Stock on a
particular date shall be deemed to be its fair market value on that date as
determined in accordance with Paragraph 4; and
(d) The Warrant, or any portion thereof, may be relinquished only to
the extent that it is exercisable on the date written notice of
relinquishment is received by the Company.
(e) If a Warrant is relinquished, such Warrant shall be deemed to have
been exercised to the extent of the number of shares of Common Stock
covered by the Warrant or part thereof which is relinquished, and no
further Warrants will be isssued covering such shares of Common Stock.
3. ISSUANCE AND DELIVERY OF SHARES. The Company hereby represents,
warrants and agrees that at all times there shall be reserved for issuance and
delivered to the Holder the number of shares of Common Stock as shall be
required for issuance or delivery upon exercise of this Warrant.
4. FRACTIONAL SHARES. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of such fractional share, determined as
follows:
(a) If the Common Stock is listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange, the current value
shall be the last reported sales price of the Common Stock on such exchange
on the last business day prior to the date of exercise of this Warrant or
if no such sale is made on such day, the average of the closing bid and
asked prices for such day on such exchange; or
(b) If the Common Stock is not so listed or admitted to unlisted
trading privileges, the current value shall be the mean of the last
reported bid and asked prices reported by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), or if not so
quoted on NASDAQ then by the National Quotation Bureau, LLC, New York, New
York, on the last business day prior to the date of the exercise of this
Warrant; or
(c) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the
current value shall be an amount, not less than book value, determined in
such reasonable manner as may be prescribed by the Company's board of
directors, and supported by the written fairness opinion of an independent,
nationally-recognized stock valuation expert.
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Common Stock Purchase Warrant
5. TRANSFER, ASSIGNMENT OR LOSS OF WARRANT.
(a) The Holder may assign this Warrant, in whole or in part, or any
interest herein. This Warrant and the Warrant Shares have not been filed or
registered with the United States Securities and Exchange Commission or
with the securities regulatory authority of any state. This Warrant and the
Warrant Shares are subject to restrictions imposed by federal and state
securities laws and regulations on transferability and resale, and may not
be transferred assigned or resold except as permitted under the Securities
Act of 1933, as amended (the "Act"), and the applicable state securities
laws, pursuant to registration thereunder or exemption therefrom. Upon
receipt by the Company of evidence satisfactory to it that this Warrant or
any portion hereof, has been legally and validly transferred or assigned,
the Company will, at the request of the Holder, upon presentation and
surrender hereof to the Company or at the office of its stock transfer
agent, if any, exchange this Warrant for one or more Warrants, in such
denominations as the Holder shall specify, registered in such name or names
as the Holder shall designate. If, at the time of such transfer or
assignment, this Warrant has not been registered under the Act, then each
such transferee and assignee shall furnish the Company with evidence
satisfactory to it that such transferee or assignee is acquiring such
Warrant for his, her or its own account, for investment purposes, and not
with a view towards a distribution thereof or of the Warrant Shares
issuable upon its exercise. The term "Warrant," as used herein, includes
any Warrants issued in substitution for or replacement of this Warrant, or
into which this Warrant may be divided or exchanged.
(b) Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and in the case of
loss, theft or destruction of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant in the case of mutilation,
the Company will execute and deliver a new Warrant of like tenor and date.
Any such new Warrant executed and delivered shall constitute an additional
contractual obligation on the part of the Company, whether or not this
Warrant so lost, stolen, destroyed or mutilated shall be at any time
enforceable by anyone.
(c) The Company may cause any legend required under the Act and
applicable state securities laws, or advisable in the opinion of its legal
counsel, to be set forth on each Warrant.
6. 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 as the Holder of this Warrant are limited to those
expressed in this Warrant and the Consulting Agreement.
7. OFFICER'S CERTIFICATE. Whenever the Company shall determine the fair
market value of the Common Stock pursuant to Paragraph 4 hereof, the Company
shall forthwith file in the custody of its secretary at its principal office,
with its stock transfer agent and with the Holder, an officer's certificate
showing the such fair market value and the date as of which it was determined,
and setting forth in reasonable detail the facts requiring such determination
and the facts, assumptions, methodology and calculations employed in determining
such value. The Company shall forthwith deliver a copy of each such officer's
certificate to the Holder, and the Company shall make all such officer's
certificates available at all reasonable times for inspection by and copying by
the Holder.
8. NOTICES TO WARRANTHOLDERS. So long as this Warrant shall be
outstanding and any portion of it shall be unexercised, (i) if the Company shall
pay any dividend or make any distribution upon the Common Stock or (ii) if the
Company shall offer to the holders of Common Stock for subscription or purchase
by them any shares of stock of any class or any other rights or (iii) if any
capital reorganization of the Company, reclassification of the Company's capital
stock, consolidation or merger of the Company with or into another corporation,
sale, lease or transfer of all or substantially all of the Company's property
and assets to another corporation, or voluntary or involuntary dissolution,
liquidation or winding up of the Company shall be effected, then in any such
case, the Company shall cause to be delivered to the Holder, at least ten days
prior to the date specified in (x) or (y) below, as the case may be, a notice
containing a brief description of the proposed action and stating the date on
which (x) a record is to be taken for the purpose of such dividend, distribution
or rights, or (y) such reclassification, reorganization, consolidation, merger,
conveyance, lease, dissolution, liquidation or winding up is to take place and
the date, if any is to be fixed, as of which the holders of record of Common
Stock shall be entitled to exchange their shares of Common Stock for securities
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Common Stock Purchase Warrant
or other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up.
9. RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of an
issuance of Common Stock by way of dividend or other distribution or of a
subdivision or combination), or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
in which merger the Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon exercise of this
Warrant) or in case of any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially as an entirety, the
Company shall cause effective provision to be made so that the Holder shall have
the right thereafter, by exercising this Warrant, to purchase the kind and
amount of shares of stock and other securities and property receivable upon such
classification, capital reorganization or other change, consolidation, merger,
sale or conveyance. Any such provision shall include provision for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. The foregoing provisions of this Paragraph 10
shall similarly apply to successive reclassifications, capital reorganizations
and changes of shares of Common Stock and to successive consolidations, mergers,
sales or conveyances. In the event that in any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional shares
of Common Stock shall be issued in exchange, conversion, substitution or
payment, in whole or in part, for or of a security of the Company other than
Common Stock, any such issue shall be treated as an issue of Common Stock
covered by the provisions of 6 hereof with the amount of the consideration
received upon the issue thereof being determined by the Company's board of
directors, such determination to be final and binding on the Holder.
10. SPIN-OFFS. In the event the Company spins-off a subsidiary by
distributing to the Company's stockholders as a dividend or otherwise the stock
of the subsidiary, the Company shall reserve for the life of the Warrant shares
of the subsidiary to be delivered to the holders of the Warrants upon exercise
to the same extent as if they were owners of record of the Warrant Shares on the
record date for payment of the shares of the subsidiary.
11. MISCELLANEOUS. All notices given under this Warrant shall be in
writing, addressed to the parties as set forth below, and shall be effective on
the earliest of (i) the date received, or (ii) if given by facsimile transmittal
on the date given if transmitted before 5:00 p.m. the recipients time, otherwise
it is effective the next day, or (iii) on the second business day after delivery
to a major international air delivery or air courier service (such as Federal
Express or Network Couriers):
If to the Holder: If to the Company:
Kevin P. Regan Entertainment Technologies & Programs, Inc.
2356 Bolsover 17300 Saturn Lane, Suite 111
Houston, TX 77005 Houston, Texas 77058
Facsimile No. 713-520-9458 Attention: James Douglas Butcher, CEO
Telephone: (281) 486-6115
With a copy (that does not constitute Facsimile: (281) 486-6155
notice) to:
Cotham, Harwell & Evans With a copy (that does not constitute
West Memorial Park notice) to:
8550 Katy Freeway; Suite 128 Sonfield & Sonfield
Houston, TX 77024Attention: Kirk W. Evans Attorneys at Law
Facsimile No. (713) 647-7512 770 Post Oak Lane
Houston, Texas 77056
Attention: Robert L. Sonfield, Jr.
Facsimile No. (713) 877-1547
13. This Warrant is binding on and, except for the limitations on transfer
and assignment contained in Paragraph 4, shall inure to the benefit of the
successors in interest of the Company and the Holder, respectively.
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Common Stock Purchase Warrant
14. This Warrant shall be governed by and interpreted in accordance with
the laws of the State of Delaware; provided, however, that if any provision of
this Warrant is unenforceable under the laws of the State of Delaware, but is
enforceable under Delaware law, then such provision shall be governed by and
interpreted in accordance with Delaware law. The parties agree that the courts
of the State of Texas, Harris County, shall have exclusive jurisdiction and
venue for the adjudication of any civil action between them arising out of or
relating to this Agreement, and hereby irrevocably consent to such jurisdiction
and venue.
Dated as of July 26, 2001:
ATTEST: Entertainment Technologies & Programs, Inc.
By By
------------------------------ ----------------------------
George C. Woods, President and James Douglas Butcher, CEO
Chief Financial Officer
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Common Stock Purchase Warrant
PURCHASE FORM
Date:
--------------------
To: Entertainment Technologies & Programs Inc.
Attn: Doug Butcher, Chairman & CEO
17300 Saturn Lane
Suite 111
Houston, TX 77058
The undersigned hereby irrevocably elects to exercise the within Warrant to the
extent of purchasing ___________ shares of Common Stock, and hereby makes
payment of US$_____________ in payment of the Exercise Price thereof.
- -------------------------------
Kevin P. Regan
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
---------------------------------
Address:
------------------------------
City, State, Zip Code:
----------------
Signature:
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Common Stock Purchase Warrant