EXHIBIT "A"
VENTURI TECHNOLOGIES, INC.
(A NEVADA CORPORATION)
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WARRANT TO PURCHASE
SHARES OF COMMON STOCK
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Effective June 3, 1999
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT (1) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (2) IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER
THE SECURITIES ACT, OR (3) PURSUANT TO AN EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), AND IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR OTHER JURISDICTION. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND
"UNITED STATES" HAVE THE MEANING GIVEN THEM BY
REGULATION S UNDER THE SECURITIES ACT.
THIS CERTIFIES THAT, for value received, GREENWICH, AG or registered
assigns ("Holder"), is entitled to purchase, subject to the conditions set
forth below, at any time or from time to time during the Exercise Period (as
defined in subsection 1.2, below), Twenty Two Thousand Eight Hundred Six
(22,806) shares ("Shares") of fully paid and non-assessable Common Stock,
$0.001 par value ("Common Stock"), of Venturi Technologies, Inc., a Nevada
corporation (the "Company"), at the per share purchase price (the "Warrant
Price") set forth in subsection 1.1, subject to the further provisions of
this Warrant. The term "Warrants" as used herein shall mean this Warrant and
all instruments issued by the Company which are substantially identical to
this Warrant (except for the name of the holder and the number of securities
purchasable by the holder).
1. EXERCISE OF WARRANT
The terms and conditions upon which this Warrant may be exercised,
and the Common Stock covered hereby may be purchased, are as follows:
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1.1 WARRANT PRICE. The Warrant Price shall be equal to $30.00 per
share, subject to adjustment as provided in Section 4, below.
1.2 METHOD OF EXERCISE.
(a) Voluntary Exercise of Warrant by Holder. The Holder may, at
any time beginning June 3, 1999, and prior to January 31, 2001, or such later
date as the Company may in its sole discretion determine (the "Exercise
Period"), exercise in whole or in part the purchase rights evidenced by this
Warrant. Such exercise shall be effected by:
(i) the surrender of the Warrant, together with a duly
executed copy of the form of subscription attached hereto, to the
Secretary of the Company at its principal offices;
(ii) the payment to the Company, by cash, check payable to
its order or wire transfer, of an amount equal to the aggregate Warrant
Price for the number of Shares for which the purchase rights hereunder
are being exercised; and
(iii) the delivery to the Company, if necessary, to assure
compliance with federal and state securities laws, of an instrument
executed by the holder certifying that the Shares are being acquired
for the sole account of the holder and not with a view to any resale or
distribution.
(b) Forced Exercise by Company. This Warrant may be callable by
the Company upon the following conditions:
(i) If, using generally accepted accounting principles,
the Company achieves net income for the fiscal year ending December 31,
1999 in an amount equal to, or greater than, the Net Income reflected
for 1999 on the Pro Forma Income Statements, attached hereto as EXHIBIT
"A", multiplied by a fraction, the numerator of which is the number of
days in the 1999 fiscal year after the Closing and the denominator of
which is 365, then the Company will be able to call 1/3 of the Warrant
and the Holder shall be obligated to purchase 7,602 shares of Common
Stock for which the Holder shall pay to the Company as paid in capital
USD $228,070.16;
(ii) If, using generally accepted accounting principles,
the Company achieves net income for the fiscal year ending December 31,
2000 in an amount equal to, or greater than the Net Income reflected
for 2000 on the attached Pro Forma Income Statements, then the Company
will be able to call 1/3 of the Warrant and the Holder shall be
obligated to purchase 7,602 shares of Common Stock for which the Holder
shall pay to the Company as paid in capital an additional USD
$228,070.16;
(iii) If, using generally accepted accounting principles,
the Company achieves net income for the fiscal year ending December 31,
2001 in an amount equal to, or greater than the Net Income reflected
for 2001 on the attached Pro Forma Income Statements, then the Company
will be able to call the remaining 1/3 of the Warrant and the Holder
shall be obligated to purchase 7,602 shares of Common Stock for which
the Holder shall pay to the Company as paid in capital an additional
USD $228,070.16.
The manner of exercise pursuant to this Section 1.2(b) shall be effected
according to the procedures set forth in Section 1.2(a)(i), (ii) and (iii)
above.
EXHIBIT "A" TO SECURITIES PURCHASE AGREEMENT
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1.3 SATISFACTION WITH REQUIREMENTS OF SECURITIES ACT OF 1933.
Notwithstanding the provisions of subsection 1.2(a)(iii) and Section 7, each
and every exercise of this Warrant is contingent upon the Company's
satisfaction that the issuance of Common Stock upon the exercise is exempt
from the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and all applicable state securities laws. The holder of
this Warrant agrees to execute any and all documents deemed necessary by the
Company to effect the exercise of this Warrant. Holder represents and
warrants that: (a) it is not a citizen or resident of the United States of
America, (b) it is not an entity organized under any laws of any state of the
United States of America, and (c) it does not have offices in the United
States of America.
1.4 ISSUANCE OF SHARES AND NEW WARRANT. In the event the
purchase rights evidenced by this Warrant are exercised in whole or in part,
one or more certificates for the purchased Shares shall be issued as soon as
practicable thereafter to the person exercising such rights. Such holder
shall also be issued at such time a new Warrant representing the number of
Shares (if any) for which the purchase rights under this Warrant remain
unexercised and continuing in force and effect.
2. TRANSFERS
2.1 TRANSFERS. Subject to Section 7 hereof, this Warrant and
all rights hereunder are transferable in whole or in part by the holder. The
transfer shall be recorded on the books of the Company upon the surrender of
this Warrant, properly endorsed, to the Secretary of the Company at its
principal offices and the payment to the Company of all transfer taxes and
other governmental charges imposed on such transfer. In the event of a
partial transfer, the Company shall issue to the several holders one or more
appropriate new Warrants.
2.2 REGISTERED HOLDER. Each holder agrees that until such time
as any transfer pursuant to subsection 2.1 is recorded on the books of the
Company, the Company may treat the registered holder of this Warrant as the
absolute owner; provided that nothing herein affects any requirement that
transfer of any Warrant or share of Common Stock issued or issuable upon the
exercise thereof be subject to compliance with the Securities Act and all
applicable state securities laws.
2.3 FORM OF NEW WARRANTS. All Warrants issued in connection
with transfers of this Warrant shall bear the same date as this Warrant and
shall be substantially identical in form and provision to this Warrant except
for the number of Shares purchasable thereunder.
3. FRACTIONAL SHARES
Notwithstanding that the number of Shares purchasable upon the
exercise of this Warrant may have been adjusted pursuant to the terms hereof,
the Company shall nonetheless not be required to issue fractions of Shares
upon exercise of this Warrant or to distribute certificates that evidence
fractional shares nor shall the Company be required to make any cash payments
in lieu thereof upon exercise of this Warrant. Holder hereby waives any right
to receive fractional Shares.
4. ANTIDILUTION PROVISIONS
4.1 STOCK SPLITS AND COMBINATIONS. If the Company shall at any
time subdivide or combine its outstanding shares of Common Stock, this Warrant
shall, after that subdivision or combination, evidence the right to purchase the
number of shares of Common Stock that would have been issuable as a result of
that change
EXHIBIT "A" TO SECURITIES PURCHASE AGREEMENT
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with respect to the Shares of Common Stock that were purchasable under this
Warrant immediately before that subdivision or combination. If the Company
shall at any time subdivide the outstanding shares of Common Stock, the
Warrant Price then in effect immediately before that subdivision shall be
proportionately decreased, and, if the Company shall at any time combine the
outstanding shares of Common Stock, the Warrant Price then in effect
immediately before that combination shall be proportionately increased. Any
adjustment under this section shall become effective at the close of business
on the date the subdivision or combination becomes effective.
4.2 RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the Common
Stock issuable upon exercise of this Warrant shall be changed into the same or a
different number of shares of any other class or classes of stock, whether by
capital reorganization, reclassification, or otherwise (other than a subdivision
or combination of shares provided for above), the holder of this Warrant shall,
on its exercise, be entitled to purchase for the same aggregate consideration,
in lieu of the Common Stock that the holder would have become entitled to
purchase but for such change, a number of shares of such other class or classes
of stock equivalent to the number of shares of Common Stock that would have been
subject to purchase by the holder on exercise of this Warrant immediately before
that change.
4.3 REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALE OF ASSETS. If
at any time there shall be a capital reorganization of the Company's Common
Stock (other than a stock split, combination, reclassification, exchange, or
subdivision of shares provided for elsewhere above) or merger or consolidation
of the Company with or into another corporation, or the sale of the Company's
properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such reorganization, merger, consolidation or sale, lawful
provision shall be made so that the holder of this Warrant shall thereafter be
entitled to receive upon exercise of this Warrant, during the period specified
in this Warrant and upon payment of the Warrant Price then in effect, the number
of shares of Common Stock or other securities or property of the Company, or of
the successor corporation resulting from such merger or consolidation, to which
a holder of the Common Stock deliverable upon exercise of this Warrant would
have been entitled in such capital reorganization, merger or consolidation or
sale if this Warrant had been exercised immediately before that capital
reorganization, merger or consolidation or sale. 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 interests of the holder of this Warrant after the
reorganization, merger, consolidation, or sale to the end that the provisions of
this Warrant (including adjustment of the Warrant Price then in effect and
number of Shares purchasable upon exercise of this Warrant) shall be applicable
after that event, as near as reasonably may be, in relation to any shares or
other property deliverable after that event upon exercise of this Warrant. The
Company shall, within thirty (30) days after making such adjustment, give
written notice (by first class mail, postage prepaid) to the registered holder
of this Warrant at the address of that holder shown on the Company's books. That
notice shall set forth, in reasonable detail, the event requiring the adjustment
and the method by which the adjustment was calculated and specify the Warrant
Price then in effect after the adjustment and the increased or decreased number
of Shares purchasable upon exercise of this Warrant. When appropriate, that
notice may be given in advance and be included as part of the notice required
under other provisions of this Warrant.
4.4 COMMON STOCK DIVIDENDS; DISTRIBUTIONS. In the event the
Company should at any time prior to the expiration of this Warrant fix a record
date for the determination of the holders of Common Stock entitled to receive a
dividend or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of
EXHIBIT "A" TO SECURITIES PURCHASE AGREEMENT
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Common Stock (hereinafter referred to as the "Common Stock Equivalents")
without payment of any consideration by such holder for the additional shares
of Common Stock or Common Stock Equivalents (including the additional shares
of Common Stock issuable upon conversion or exercise thereof), then, as of
such record date (or the date of such distribution, split or subdivision if
no record date is fixed), the Warrant Price shall be appropriately decreased
and the number of shares of Common Stock issuable upon exercise of the
Warrant shall be appropriately increased in proportion to such increase of
outstanding shares.
4.5 ADJUSTMENTS OF OTHER DISTRIBUTIONS. In the event the Company
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by the Company or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsection 4.4, then, in each
such case for the purpose of this subsection 4.5, upon exercise of this Warrant
the holder hereof shall be entitled to a proportionate share of any such
distribution as though such holder was the holder of the number of shares of
Common Stock of the Company into which this Warrant may be exercised as of the
record date fixed for the determination of the holders of Common Stock of the
Company entitled to receive such distribution.
4.6 CERTIFICATE AS TO ADJUSTMENTS. In the case of each adjustment
or readjustment of the Warrant Price pursuant to this Section 4, the Company
will promptly compute such adjustment or readjustment in accordance with the
terms hereof and cause a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based, to be delivered to the holder of this Warrant. The
Company will, upon the written request at any time of the holder of this
Warrant, furnish or cause to be furnished to such holder a certificate setting
forth:
(a) Such adjustments and readjustments;
(b) The purchase price at the time in effect; and
(c) The number of shares of Common Stock issuable upon exercise of
the Warrant and the amount, if any, of other property at the
time receivable upon the exercise of the Warrant.
4.7 RESERVATION OF STOCK ISSUABLE UPON EXERCISE. The Company shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the exercise of this
Warrant such number of its shares of Common Stock as shall from time to time be
sufficient to effect the exercise of this Warrant and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the exercise of this Warrant, in addition to such other remedies as shall
be available to the holder of this Warrant, the Company will use its best
efforts to take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes.
5. RIGHTS PRIOR TO EXERCISE OF WARRANT
This Warrant does not entitle the holder to any of the rights of a
stockholder of the Company, including without limitation, the right to receive
dividends or other distributions, to exercise any preemptive rights, to vote, or
to consent or to receive notice as a stockholder of the Company. If, however, at
any time prior to the expiration of this Warrant and prior to its exercise, any
of the following events shall occur:
(a) the Company shall declare any dividend payable in any
securities upon its shares of Common Stock or make any distribution (other than
a regular cash dividend) to the holders of its shares of Common Stock; or
EXHIBIT "A" TO SECURITIES PURCHASE AGREEMENT
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(b) the Company shall offer to the holders of its shares of Common
Stock any additional shares of Common Stock or securities convertible into or
exchangeable for shares of Common Stock or any right to subscribe for or
purchase any thereof; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger, sale, transfer or lease of all
or substantially all of its property, assets, and business as an entirety) shall
be proposed and action by the Company with respect thereto has been approved by
the Company's Board of Directors,
Then in any one or more of said events the Company shall give notice in writing
of such event to the holder at his last address as it shall appear on the
Company's records at least twenty (20) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividends, distribution, or subscription rights,
or for the determination of stockholders entitled to vote on such proposed
dissolution, liquidation or winding up. Such notice shall specify such record
date or the date of closing the transfer books, as the case may be. Failure to
publish, mail or receive such notice or any defect therein or in the publication
or mailing thereof shall not affect the validity of any action taken in
connection with such dividend, distribution or subscription rights, or such
proposed dissolution, liquidation or winding up. Each person in whose name any
certificate for shares of Common Stock is to be issued shall for all purposes be
deemed to have become the holder of record of such shares on the date on which
this instrument was surrendered and payment of the Warrant Price was made,
irrespective of the date of delivery of such stock certificate, except that, if
the date of such surrender and payment is a date when the stock transfer books
of the Company are closed, such person shall be deemed to have become the holder
of such shares of Common Stock at the close of business on the next succeeding
date on which the stock transfer books are open.
6. SUCCESSORS AND ASSIGNS
The terms and provisions of this Warrant shall inure to the benefit of,
and be binding upon, the Company and the holder thereof and their respective
successors and permitted assigns.
7. RESTRICTED SECURITIES
In order to enable the Company to comply with the Securities Act and
applicable state laws, the Company may require the holder as a condition of the
transfer or exercise of this Warrant, to give written assurance satisfactory to
the Company that the Warrant, or in the case of an exercise hereof the shares
subject to this Warrant, are being acquired for his own account, for investment
only, with no view to the distribution of the same, and that any disposition of
all or any portion of this Warrant or the Shares issuable upon the due exercise
of this Warrant shall not be made, unless and until:
(a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(b) (i) The holder has notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (ii) the holder has
furnished the Company with an opinion of counsel, reasonably satisfactory to the
Company, that such disposition will not require registration of such securities
under the Securities Act and applicable state law.
The holder acknowledges that this Warrant is, and each of the shares of
Common Stock issuable upon the due exercise hereof will be, a restricted
security, that he understands the provisions of Rule 144 of the
EXHIBIT "A" TO SECURITIES PURCHASE AGREEMENT
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Securities and Exchange Commission, and that the certificate or certificates
evidencing such shares of Common Stock will bear a legend substantially
similar to the following:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or under the securities
laws of any state. They may not be sold, transferred or otherwise
disposed of in the absence of an effective registration statement
covering these securities under the said Act or laws, or an opinion of
counsel satisfactory to the Company and its counsel that registration
is not required thereunder."
8. LOSS OR MUTILATION
Upon receipt by the Company of satisfactory evidence of the ownership
of and the loss, theft, destruction, or mutilation of any Warrant, and (i) in
the case of loss, theft, or destruction, upon receipt by the Company of
indemnity satisfactory to it, or (ii) in the case of mutilation, upon receipt of
such Warrant and upon surrender and cancellation of such Warrant, the Company
shall execute and deliver in lieu thereof a new Warrant representing the right
to purchase an equal number of shares of Common Stock.
9. NOTICES
All notices, requests, demands and other communications under this
Warrant shall be in writing and shall be deemed to have been duly given on the
date of service if served personally on the party to whom notice is to be given,
or on the date of mailing if mailed to the party to whom notice is to be given,
by first class mail, registered or certified, postage prepaid, and properly
addressed as follows: if to the holder, at his address as shown in the Company
records; and if to the Company, at its principal office. Any party may change
its address for purposes of this subsection by giving the other party written
notice of the new address in the manner set forth above.
10. GOVERNING LAW
This Warrant and any dispute, disagreement or issue of construction or
interpretation arising hereunder whether relating to its execution, its
validity, the obligations provided herein or performance shall be governed or
interpreted according to the laws of the State of Nevada without regard to
conflicts of law.
DATED AS OF JUNE ________, 1999.
VENTURI TECHNOLOGIES, INC.
By:
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GAYLORD KARREN, Chairman and CEO
EXHIBIT "A" TO SECURITIES PURCHASE AGREEMENT
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SUBSCRIPTION
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Gentlemen:
The undersigned, _____________________, hereby elects to purchase, pursuant
to the provisions to the foregoing Warrant held by the undersigned,
________________ shares of the Common Stock, $0.001 par value ("Common
Stock"), of ________________________________.
Payment of the purchase price per Share required under such Warrant
accompanies this subscription.
The undersigned hereby represents and warrants that absent an effective
registration statement covering the Warrants, the undersigned is acquiring
such stock for the account of the undersigned and not for resale or with a
view to distribution of such Common Stock or any part hereof; that the
undersigned is fully aware of the transfer restrictions affecting restricted
securities under the pertinent securities laws and the undersigned
understands that the shares purchased hereby are restricted securities and
that the certificate or certificates evidencing the same will bear a legend
to that effect.
DATED: ____________________, 199__.
Signature:
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Address:
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EXHIBIT "A" TO SECURITIES PURCHASE AGREEMENT
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