Exhibit 10.9
ANNEX V
TO
SECURITIES PURCHASE AGREEMENT
<PROTOTYPE FOR EACH ISSUANCE>
FORM OF WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
MOBILE REACH INTERNATIONAL, INC.
COMMON STOCK PURCHASE WARRANT
1. Issuance. In consideration of good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by MOBILE REACH
INTERNATIONAL, INC., a Delaware corporation (the "Company"),
_____________________________ or registered assigns (the "Holder") is hereby
granted the right to purchase at any time after the Commencement Date (as
defined below) until 5:00 P.M., New York City time, on _____________, 200__(1)
(the "Expiration Date"), _________________ Thousand __________ (____________)(2)
fully paid and nonassessable shares of the Company's Common Stock, $0.0001 par
value per share (the "Common Stock"), at an initial exercise price per share
(the "Exercise Price") of $0.32 per share, subject to further adjustment as set
forth herein. This Warrant is being issued pursuant to the terms of that certain
Securities Purchase Agreement, dated as of February 27, 2004 (the "Agreement"),
to which the Company and Holder (or Holder's predecessor in interest) are
parties. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Agreement. This Warrant was originally issued to the
Holder of the Holder's predecessor in interest on _____________, 2004(3) (the
"Issue Date").
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(1) Insert date which the last calendar of the month in which the second
anniversary of the Closing Date occurs.
(2) Insert number equal to 29,750 shares of Common Stock for each 100,000 Issue
Date Conversion Shares.
(3) Insert the Closing Date.
2. Exercise of Warrants.
2.1 General.
(a) This Warrant is exercisable in whole or in part at any
time and from time to time commencing on the Commencement Date and continuing
until and including the Expiration Date. Such exercise shall be effectuated by
submitting to the Company (either by delivery to the Company or by facsimile
transmission as provided in Section 8 hereof) a completed and duly executed
Notice of Exercise (substantially in the form attached to this Warrant
Certificate) as provided in this paragraph. The date such Notice of Exercise is
faxed to the Company shall be the "Exercise Date," provided that, if such
exercise represents the full exercise of the outstanding balance of the Warrant,
the Holder of this Warrant tenders this Warrant Certificate to the Company
within five (5) business days thereafter. The Notice of Exercise shall be
executed by the Holder of this Warrant and shall indicate (i) the number of
shares then being purchased pursuant to such exercise and (ii) if applicable,
whether the exercise is a cashless exercise. Upon surrender of this Warrant
Certificate, together with appropriate payment of the Exercise Price, if any,
for the shares of Common Stock purchased, the Holder shall be entitled to
receive a certificate or certificates for the shares of Common Stock so
purchased.
(b) If the Notice of Exercise form elects a "cashless"
exercise, the Holder shall thereby be entitled to receive a number of shares of
Common Stock equal to (w) the excess of the Current Market Value (as defined
below) over the total cash exercise price of the portion of the Warrant then
being exercised, divided by (x) the Market Price of the Common Stock as of the
Exercise Date. For the purposes of this Warrant, the terms (y) "Current Market
Value" shall be an amount equal to the Market Price of the Common Stock as of
the Exercise Date, multiplied by the number of shares of Common Stock specified
in such Notice of Exercise Form, and (z) "Market Price of the Common Stock"
shall be the average closing sale price per share of the Common Stock for the
five (5) Trading Days ending on the Trading Day immediately before the relevant
date, as reported by the Reporting Service for such dates.
(c) If the Notice of Exercise form elects a "cash" exercise,
the Exercise Price per share of Common Stock for the shares then being exercised
shall be payable in cash or by certified or official bank check.
(d) The Holder shall be deemed to be the holder of the shares
issuable to it in accordance with the provisions of this Section 2.1 (i) if a
cashless exercise was elected, on the Exercise Date, and (ii) if a cash exercise
was elected, on the date on which the Company receives the Exercise Price for
such shares.
(e) The term "Commencement Date" means the earlier of (i) the
date which is sixty-five (65) days after the Issue Date, or (ii) the Effective
Date.
2 2/19/04
2.2 Limitation on Exercise. Notwithstanding the provisions of
this Warrant, the Agreement or of the other Transaction Agreements, in no event
(except (i) as specifically provided in this Warrant as an exception to this
provision, (ii) during the forty-five (45) day period prior to the Expiration
Date, or (iii) while there is outstanding a tender offer for any or all of the
shares of the Company's Common Stock) shall the Holder be entitled to exercise
this Warrant, or shall the Company have the obligation to issue shares upon such
exercise of all or any portion of this Warrant to the extent that, after such
exercise the sum of (1) the number of shares of Common Stock beneficially owned
by the Holder and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unexercised portion of
the Warrants or other rights to purchase Common Stock or through the ownership
of the unconverted portion of the Debentures or other convertible securities),
and (2) the number of shares of Common Stock issuable upon the exercise of the
Warrants with respect to which the determination of this proviso is being made,
would result in beneficial ownership by the Holder and its affiliates of more
than 4.99% of the outstanding shares of Common Stock (after taking into account
the shares to be issued to the Holder upon such exercise). For purposes of the
proviso to the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), except as otherwise provided in clause (1) of
such sentence. The Holder, by its acceptance of this Warrant, further agrees
that if the Holder transfers or assigns any of the Warrants to a party who or
which would not be considered such an affiliate, such assignment shall be made
subject to the transferee's or assignee's specific agreement to be bound by the
provisions of this Section 2.2 as if such transferee or assignee were the
original Holder hereof.
3. Reservation of Shares. The Company hereby agrees that at all
times during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant one hundred ten percent (110%) of the number of shares
of its Common Stock as shall be required for issuance upon exercise of this
Warrant (the "Warrant Shares").
4. Mutilation or Loss of Warrant. 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) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.
3 2/19/04
6. Protection Against Dilution and Other Adjustments.
6.1 Adjustment Mechanism. If an adjustment of the Exercise
Price is required pursuant to this Section 6, the Holder shall be entitled to
purchase such number of shares of Common Stock as will cause (i) (x) the total
number of shares of Common Stock Holder is entitled to purchase pursuant to this
Warrant following such adjustment, multiplied by (y) the adjusted Exercise Price
per share, to equal the result of (ii) (x) the remaining total number of shares
of Common Stock Holder is entitled to purchase pursuant to this Warrant before
adjustment, multiplied by (y) the Exercise Price per share before adjustment.(4)
6.2 Capital Adjustments. In case of any stock split or reverse
stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation (where the Company is not the
surviving entity), the provisions of this Section 6 shall be applied as if such
capital adjustment event had occurred immediately prior to the date of this
Warrant and the original Exercise Price had been fairly allocated to the stock
resulting from such capital adjustment; and in other respects the provisions of
this Section shall be applied in a fair, equitable and reasonable manner so as
to give effect, as nearly as may be, to the purposes hereof. A rights offering
to stockholders shall be deemed a stock dividend to the extent of the bargain
purchase element of the rights.
6.3 Adjustment for Spin Off. If, for any reason, prior to the
exercise of this Warrant in full, the Company spins off or otherwise divests
itself of a part of its business or operations or disposes all or of a part of
its assets in a transaction (the "Spin Off") in which the Company does not
receive compensation for such business, operations or assets, but causes
securities of another entity (the "Spin Off Securities") to be issued to
security holders of the Company, then the Company shall cause (i) to be reserved
Spin Off Securities equal to the number thereof which would have been issued to
the Holder had all of the Holder's unexercised Warrants outstanding on the
record date (the "Record Date") for determining the amount and number of Spin
Off Securities to be issued to security holders of the Company (the "Outstanding
Warrants") been exercised as of the close of business on the Trading Day
immediately before the Record Date (the "Reserved Spin Off Shares"), and (ii) to
be issued to the Holder on the exercise of all or any of the Outstanding
Warrants, such amount of the Reserved Spin Off Shares equal to (x) the Reserved
Spin Off Shares, multiplied by (y) a fraction, of which (I) the numerator is the
amount of the Outstanding Warrants then being exercised, and (II) the
denominator is the amount of the Outstanding Warrants.
6.4 Adjustment for Certain Transactions. Reference is made to
the provisions of Section 4(g) of the Agreement, the terms of which are
incorporated herein by
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(4) Example: Assume 10,000 shares remain under Warrant at original stated
Exercise Price of $0.32. Total exercise price (clause (y) in text) is (i) 10,000
x (ii) $0.32, or $3,200. Company effects 2:1 stock split. Exercise Price is
adjusted to $0.16. Number of shares covered by Warrant is adjusted to 20,000,
because (applying clause (x) in text) (i) 20,000 x (ii) $0.16 = $3,200.
4 2/19/04
reference. The number of shares covered by this Warrant and the Exercise Price
shall be adjusted as provided in the applicable provisions of said Section 4(g)
of the Agreement.
7. Transfer to Comply with the Securities Act; Registration Rights.
7.1 Transfer. This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or issuable upon exercise of this Warrant
may be sold, transferred, pledged or hypothecated in the absence of an effective
registration statement under the Act relating to such security or an opinion of
counsel satisfactory to the Company that registration is not required under the
Act. Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
7.2 Registration Rights. (a) Reference is made to the
Registration Rights Agreement. The Company's obligations under the Registration
Rights Agreement and the other terms and conditions thereof with respect to the
Warrant Shares, including, but not necessarily limited to, the Company's
commitment to file a registration statement including the Warrant Shares, to
have the registration of the Warrant Shares completed and effective, and to
maintain such registration, are incorporated herein by reference.
(b) In addition to the registration rights referred to in the
preceding provisions of Section 7.2(a), effective after the expiration of the
effectiveness of the Registration Statement as contemplated by the Registration
Rights Agreement, the Holder shall have piggy-back registration rights with
respect to the Warrant Shares then held by the Holder or then subject to
issuance upon exercise of this Warrant (collectively, the "Remaining Warrant
Shares"), subject to the conditions set forth below. If, at any time after the
Registration Statement has ceased to be effective, the Company participates
(whether voluntarily or by reason of an obligation to a third party) in the
registration of any shares of the Company's stock (other than a registration on
Form S-8 or on Form S-4), the Company shall give written notice thereof to the
Holder and the Holder shall have the right, exercisable within ten (10) business
days after receipt of such notice, to demand inclusion of all or a portion of
the Holder's Remaining Warrant Shares in such registration statement,, subject,
in the event of an underwritten offering, to customary cutbacks and lock-ups
requested by the managing underwriter of all selling stockholders thereunder, on
a pro-rata basis with such other selling stockholders; it being understood that
if the Company is registering shares to be sold by the Company, such cutback may
be a complete cutback (but in any event shall be on a pro rata basis with any
other non-Company selling shareholders which are being or were to be included in
such registration statement). If the Holder exercises such election, the
Remaining Warrant Shares so designated shall be included in the registration
statement at no cost or expense to the Holder (other than any costs or
commissions which would be borne by the Holder under the terms of the
Registration Rights Agreement). The Holder's rights under this Section 7 shall
expire at such time
5 2/19/04
as the Holder can sell all of the Remaining Warrant Shares under Rule 144
without volume or other restrictions or limit. The Company shall have the right
to terminate or withdraw any registration initiated by it prior to the
effectiveness of such registration regardless of whether the Holder has elected
to include any of the Remaining Warrant Shares in such registration. In such
event, the provisions of this Section 7.2(b) shall continue to apply to all
Remaining Warrant Shares as provided above.
8. Notices. Any notice required or permitted hereunder shall be
given in manner provided in the Section headed "NOTICES" in the Agreement, the
terms of which are incorporated herein by reference.
9. Supplements and Amendments; Whole Agreement. This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
hereto. This Warrant contains the full understanding of the parties hereto with
respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.
10. Governing Law. This Warrant shall be deemed to be a contract
made under the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the exclusive
jurisdiction of the federal courts whose districts encompass any part of the
County of New York or the state courts of the State of New York sitting in the
County of New York in connection with any dispute arising under this Warrant and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions. To the extent determined by such court, the
Company shall reimburse the Holder for any reasonable legal fees and
disbursements incurred by the Buyer in enforcement of or protection of any of
its rights under any of the Transaction Agreements.
11. JURY TRIAL WAIVER. The Company and the Holder hereby waive a
trial by jury in any action, proceeding or counterclaim brought by either of the
Parties hereto against the other in respect of any matter arising out or in
connection with this Warrant.
12. Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
[Balance of page intentionally left blank]
6 2/19/04
13. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the ___th day of _____________________________, 200__.
MOBILE REACH INTERNATIONAL, INC.
By: _______________________________
___________________________________
(Print Name)
___________________________________
(Title)
NOTICE OF EXERCISE OF WARRANT
TO: MOBILE REACH INTERNATIONAL, INC. VIA FAX: (919) 465-9102
8000 Regency Parkway, Suite 660
Cary, North Carolina 27511
Attn: Michael Hewitt, CEO
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of ________________, 20___, to
purchase ___________ shares of the Common Stock, $0.0001 par value, of MOBILE
REACH INTERNATIONAL, INC. and tenders herewith payment in accordance with
Section 1 of said Common Stock Purchase Warrant.
|_| CASH:$ _____________________ = (Exercise Price x Exercise Shares)
Payment is being made by:
|_| enclosed check
|_| wire transfer
|_| other _______________________
|_| CASHLESS EXERCISE
Net number of Warrant Shares to be issued to Holder : _________*
* based on: Current Market Value - (Exercise Price x Exercise Shares)
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Market Price of Common Stock
where:
Market Price of Common Stock ["MP"] = $_______________
Current Market Value [MP x Exercise Shares] = $_______________
It is the intention of the Holder to comply with the provisions of Section
2.2 of the Warrant regarding certain limits on the Holder's right to exercise
thereunder. Based on the analysis on the attached Worksheet Schedule, the Holder
believe this exercise complies with the provisions of said Section 2.2.
Nonetheless, to the extent that, pursuant to the exercise effected hereby, the
Holder would have more shares than permitted under said Section, this notice
should be amended and revised, ab initio, to refer to the exercise which would
result in the issuance of shares consistent with such provision. Any exercise
above such amount is hereby deemed void and revoked.
2/19/04
As contemplated by the Warrant and the Securities Purchase Agreement, this
Notice of Conversion is being sent by facsimile to the telecopier number and
officer indicated above.
If this Notice of Exercise represents the full exercise of the outstanding
balance of the Warrant, the Holder either (1) has previously surrendered the
Warrant to the Company or (2) will surrender (or cause to be surrendered) the
Warrant to the Company at the address indicated above by express courier within
five (5) business days after delivery or facsimile transmission of this Notice
of Exercise.
The certificates representing the Warrant Shares should be transmitted by
the Company to the Holder via express courier or by electronic transfer after
receipt of this Notice of Exercise (by facsimile transmission or otherwise) to:
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
Dated: ______________________
____________________________
[Name of Holder]
By: _________________________
9 2/19/04
NOTICE OF EXERCISE OF WARRANT
WORKSHEET SCHEDULE
1. Current Common Stock holdings of Holder and Affiliates ___________
2. Shares to be issued on current exercise ___________
3. Other shares to be issued on other current exercise(s)
and other current conversion(s)(1) ___________
4. Other shares eligible to be acquired within next
60 days without restriction ___________
5. Total [sum of Lines 1 through 4] ___________
6. Outstanding shares of Common Stock(2) ___________
7. Adjustments to Outstanding
a. Shares known to Holder as previously issued
to Holder or others but not included in Line 6 ___________
b. Shares to be issued per Line(s) 2 and 3 ___________
c. Total Adjustments [Lines 7a and 7b] ___________
8. Total Adjusted Outstanding [Lines 6 plus 7c] ___________
9. Holder's Percentage [Line 5 divided by Line 8] ___________%
[Note: Line 9 not to be above 4.99%]
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(1) Includes shares issuable on conversion of convertible securities (including
assumed payment of interest or dividends) or exercise of other rights, including
other warrants or options
(2) Based on latest SEC filing by Company or information provided by executive
officer of Company, counsel to Company or transfer agent
2/19/04