Exhibit 99.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of, by and between
Network Installation Corp., a Nevada Corporation., ("Company"), and Jeffrey R.
Hultman, an individual ("Executive").
RECITALS
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A. Company is engaged in the business of providing networking and
telecommunication services (the "Business") and has need for personnel with
experience in said Business.
B. Executive is experienced in matters of operation related to Business.
C. The parties are willing to enter into this Agreement with respect to
Executive's employment and services upon the terms and conditions
hereinafter set forth.
AGREEMENT
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In consideration of the foregoing recitals and the premises herein contained,
the parties agree as follows:
I. TERM
Subject to the provisions of Section IV hereof, Company hereby employs Executive
and Executive hereby accepts employment with Company beginning on or about
the date of March 7, 2005 ("Employment Date") and it shall continue in
effect for a period of two years. Thereafter, the agreement shall be
renewed upon mutual agreement of Executive and Company. This agreement and
Executive's employment maybe terminated at Company's discretion during the
initial term, provided that Company shall pay to Executive an amount equal
to payment at Executive's base salary rate for six months. (The "Employment
Term").
II. DUTIES
SECTION II.O General Duties. Executive shall serve as President Chief Executive
Officer of Network Installation Corp. during the Employment Term.
Executive, during the Employment Term, subject to the policies and
directives of the Board of Directors of Company ("Board"), shall be
responsible for the daily operations of Network Installation Corp.
SECTION II. 1 Devotion of Time to Company's Business. Executive agrees during
the Employment Term, to devote his best efforts, and all of his business
time exclusively, to his employment with Company, and to perform such
duties as are specified in Section 2.01 and such other duties consistent
with Section 2.01 as shall be reasonably requested by the Board. Executive
shall not, during Executive's employment, unless otherwise agreed to in
advance and in writing by Company, seek or accept other employment, become
self-employed in any other capacity, or engage in any activities that are
detrimental to the business of Company.III.
COMPENSATION AND BENEFITS
As compensation for his services hereunder, during the Employment Term,
Executive shall receive compensation and benefits (see below) payable in
cash at the times and in the installments consistent with Company's payroll
practices.
Gross Base Salary $ 16,000.00 per month
Auto Allowance $ 500 per month
MedicalCompany paid as is at present time
Life Insurance $ 400.00 per month
Holidays Company policy and procedures
Vacation Twenty One (21) days per year
Pension and Profit sharing Company policy and procedures
Stock Bonus Plan A Warrant to purchase 2,500,000 shares of the Company's common
stock ("Shares") at a price often cents ($.10) per share ("Exhibit A"
attached herein). The Shares shall be eligible for resale in 12 months
provided either; (i) the Company achieves $9.5 million in gross revenue for
fiscal year ended December 31, 2005 or (ii) the Share price is trading
above $2.50. If neither scenario is realized, then the Shares shall be
eligible for resale after 24 months. However, at all times, selling of the
Shares shall be limited to provisions of a mutually acceptable "Leak-Out"
agreement ("Exhibit B" attached herein) between the Executive and the
Board. Terms of the Leak-Out agreement shall be pari passu with the terms
limiting the resale of Shares by the Company's current directors.
IV.
TERMINATION
SECTION IV. Employment At-Will. This is an at-will employment agreement. Either
------------------- party may terminate the employment relationship
at any time with or without cause. You understand and agree that no company
policy or procedure, nor anything in the employee handbook, nor your length
of service, nor your outstanding job performance, nor any oral statement by
anyone employed by employer can change either party's right to terminate
the employment relationship at anytime and for any reason. No manager,
supervisor, employee or consultant of Employer has any authority to bind
Employer to any agreement for employment for any specified period of time
or to make any agreement other than at-will. Only Employer's Board of
Directors, has the authority to make such an agreement, and then only in
writing.
SECTION IV. 2 Termination for Death or Disability. This Agreement and
Executive's employment hereunder shall terminate automatically upon (1)
Executive's death or (2) the date of determination by the Board that
Executive has a disability. As used herein, "disability" shall mean any
condition that qualifies as a disability under Company's long-term
disability plan as in effect on the date of determination or which renders
Executive incapable of performing substantially all of Executive's
managerial and Executive services hereunder for ninety (90) days or more in
the aggregate during any one (1) year period, and which at any time after
such ninety (90) days the Board shall determine continues to render
Executive incapable of performing Executive's managerial and Executive
services hereunder. If this Agreement is terminated because of Executive's
death or disability pursuant to this Section, Company shall have no further
obligation or liability to Executive.
SECTION IV. 3 No Additional Payments. Upon termination of Executive's employment
hereunder, Executive shall not be entitled to any severance payments or
severance benefits from Company or any payments by Company on account of
any claim for wrongful termination, including but not limited to claims
under any federal, state or local human and civil rights or labor laws,
except for any benefits which maybe due to Executive in the normal course
under any Executive benefit plan or program of Company which provides for
benefits after termination of employment. Executive's right to receive
payments or benefits under this Agreement upon termination of employment
will cease if Executive breaches any provision of Section V below.
V. RESTRICTIVE COVENANTS
SECTION V.I Confidential and Proprietary Information. As an Executive of
Company, Executive shall have access to certain Confidential and
Proprietary Information (as defined below) concerning Company and its
Affiliates (as defined below). Executive agrees that he will not, either
directly or indirectly, disclose to any person or use any of the
Confidential and Proprietary Information in any way during the Employment
Term (except as required in the course of the performance of his duties to
Company) or after the expiration of the Employment Term.
For purposes of this Agreement, "Confidential and Proprietary Information"
means any of the following information relating to the business of C ompany
that is not generally known to competitors, suppliers and customers of
Company: (i) any business or technical information, design, process,
procedure, formula, improvement, or any portion or phase thereof, that is
owned by or has, at the time of determination, been used by Company; (ii)
any information related to the development of products and production
processes; (iii) any information concerning proposed new processes; (iv)
any information concerning customer lists and other customer information,
vendor lists and information, price data, cost data, profit plans, capital
plans and proposed or existing marketing techniques or plans; and (v) any
other information which would constitute a "Trade Secret" under the Uniform
Trade Secrets Act as in force and effect in the State of California.
For purposes of this Agreement, "Affiliate" means any corporation, company,
partnership, joint venture, firm and/or other entity which controls, is
controlled by or is under common control with the person with respect to
which the term "Affiliate" is used. For purposes of this Agreement,
"Person" means an individual, corporation, partnership, limited liability
company, trust or unincorporated organization, or a government or any
agency or political subdivision thereof. "Control" means (a) in the case of
corporate entities, direct or indirect ownership of at least fifty percent
(50%) of the stock or participating shares entitled to vote for the
election of directors; and (b) in the case of non-corporate entities (such
as limited liability companies, partnerships or limited partnerships),
either (x) direct or indirect ownership of at least fifty percent (50%) of
the equity interest, or (y) the power to direct the management and policies
of the noncorporate entity.
SECTION V.2 Inventions and Improvements. Executive agrees that he will assign to
Company, without further consideration, the exclusive rights and title to
all inventions, discoveries, ideas, improvements, and other intellectual
property made or acquired by Executive during the Employment Term, whether
alone or jointly with others. Executive further agrees to execute any and
all documents that are required in order to transfer or assign such
property rights to Company.
SECTION V.3 Equitable Relief. Executive acknowledges and agrees that his
services are of a special, unique and extraordinary value to Company and
its Affiliates and that damages alone maybe an inadequate remedy for any
breach of this Agreement. Accordingly, in the event of the breach by
Executive of any of the provisions o f this Agreement, Company may, in
addition and supplementary to other rights and remedies existing in its
favor, apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce,
or prevent any violations of, the provisions of this Agreement.
VI. MISCELLANEOUS
SECTION VII. I Severability. Every provision of this Agreement is intended to be
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severable. If any term or provision hereof is declared by a court of
competent jurisdiction to be illegal or invalid, such illegal or invalid
term or provision shall not affect the balance of the terms and provisions
hereof, which terms and provisions shall remain binding and enforceable.
SECTION VII.2 Notice. Any notice or communication required to be given hereunder
may be delivered by hand, deposited with an overnight courier, sent by
confirmed facsimile, or mailed by registered or certified mail, if to
Company, to 312 Stuart St., 3rd Floor, Boston 02116, ATT: Michael Novielli,
and if to Executive, to his office. Notice shall be deemed received on the
date sent if sent by facsimile or personal delivery; three days after the
date sent if sent by registered or certified mail; and one day after the
day it is sent if sent by overnight courier.
SECTION VII.3 Entire Agreement; Modification. This Agreement contains the entire
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and complete understanding between the parties concerning its subject
matter and all representations, agreements, arrangements and understandings
between or among the parties, whether oral or written, have been fully
merged herein and are superseded thereby.
SECTION VII.4 Law Governing Agreement. This Agreement shall be governed by
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and construed in accordance with the law of the State of California.
SECTION VII. 5 Arbitration. If a dispute arises relating to the terms and
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provisions of this Agreement or involves any claim for breach of any
contract or covenant (express or implied), tort claims, claims for
discrimination (including, but not limited to race, sex, religion, national
origin, age, handicap or disability), claims for compensation or claims for
violations of any federal, state, foreign or other governmental law,
statute, regulation or ordinance, then either party may initiate
arbitration proceedings in accordance with the Rules of the American
Arbitration Association ("AAA"). Arbitration proceedings shall be held in
any Orange County, California office of AAA. Both parties hereby consent to
such arbitration, and any arbitration award shall be final and binding.
Neither party shall disclose the existence of any dispute or the terms of
any arbitration decision to any third party, other than their legal
counsel, accountants, and financial advisors or as required by law.
SECTION VII.6 Representation by Counsel. EXECUTIVE ACKNOWLEDGES THAT HE HAS
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BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THIS AGREEMENT AND HAS
CONSULTED WITH SUCH LEGAL COUNSEL.
SECTION VII. 7 Counterparts. This Agreement may be executed in counterparts, all
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of which taken together will constitute one instrument.
SECTION VII.8 Waiver. Either party's failure to enforce any provision or
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provisions of this Agreement shall not in any way be construed as a waiver
of any such provision or provisions, nor prevent that party thereafter from
enforcing each and every other provision of this Agreement. The rights
granted both parties herein are cumulative and shall not constitute a
waiver of either party's right to assert all other legal remedies available
to it under the circumstances.
SECTION Vn.9 Binding Effect. Except as otherwise provided in this Agreement,
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this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, heirs, and assigns.
Executive shall not assign, convey, or otherwise transfer, voluntarily or
by operation of law, to any person or entity, this Agreement or any
interest herein without the prior written consent of Company. Any attempt
to do so without such consent shall be null and void.
(Signature page follows) (Signature page to Employment Agreement)
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first above written.
"Company"
/s/ Michael Novielli
Network Installation Corp., A NEVADA CORPORATION,
Name: Michael A. Novielli Title: Chairman of the Board
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/s/ Jeffrey R. Hultman
Name: Jeffrey R. HultmanTitle: An Individual Executive"
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EXHIBIT B
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO THE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH
A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT
IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501 (a) UNDER THE SECURITIES
ACT.
COMMON STOCK PURCHASE WARRANT
To Purchase 2,500.000 Shares of Common Stock of Network Installation Corp.
THIS COMMON STOCK PURCHASE WARRANT (the "Warrant")
CERTIFIES that, for value received, Jeffrey R. Hultman (the "Holder"), are
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date of the
Purchase Agreement (the "Initial Exercise Date") and on or prior to the
fifth anniversary of the Initial Exercise Date (the "Termination Date") but
not thereafter, to subscribe for and purchase from Network Installation
Corporation, a Nevada corporation (the "Company"), up to 2,500,000 shares
(the "Warrant Shares") of Common Stock, par value $0.001 per share, of the
Company (the "Common Stock""). The purchase price of one share of Common
Stock (the "Exercise Price"! under this Warrant shall be $ .10, subject to
adjustment hereunder. The Exercise Price and the number of Warrant Shares
for which the Warrant is exercisable shall be subject to adjustment as
provided herein.
1. Title to Warrant. Prior to the Termination Date and subject to compliance
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with applicable laws and Section 7 of this Warrant, this Warrant and all
rights hereunder are transferable, in whole or in part, at the office or
agency of the Company by the Holder in person or by duly authorized
attorney, upon surrender of this Warrant together with the Assignment Form
annexed hereto properly endorsed. The transferee shall sign an investment
letter in form and substance reasonably satisfactory to the Company.
2. Authorization of Shares. The Company covenants that all Warrant Shares
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which may be issued upon the exercise of the purchase rights represented by
this Warrant will, upon exercise of the purchase rights represented by this
Warrant, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously
with such issue).
3. Exercise of Warrant.
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(a). Vesting. This Warrant shall not be eligible for fuli or partial exercise by
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Wan-ant holder until such time as the Warrant is vested. Vesting will take
place after 12 months from -warrant issuance, provided that either; (i) the
Company achieves $9.5 million in gross revenue for the fiscal year ended
December 31, 2005 or (ii) the Share price is trading above S2.50 at the end
of the 12 month after warrant issuance. If neither scenario is realized,
then the Shares shall be eligible for exercise after 24 months.
(b) Leak-Out Agreement, Further, the timing and amount which can be exercised
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is restricted to the terms and conditions of the attached "Leak-Out
Agreement".
(c) Exercise of the purchase rights represented by this Warrant may be made at
any time or times on or after the Initial Exercise Date and on or before
the Termination Date by delivery to the Company of a duly executed
facsimile copy of trie Notice of Exercise Form annexed hereto (or such
other office or agency of the Company as it may designate by notice in
writing to the registered Holder at the address of such Holder appearing on
the books of the Company); provided, however, within 5 Trading Days of the
date said Notice of Exercise is delivered to the Company, the Holder shall
have surrendered this Warrant to the Company and the Company shall have
received payment of the aggregate Exercise Price of the shares thereby
purchased by wire transfer or cashier's check drawn on a United States
bank. Certificates for shares purchased hereunder shall be delivered to the
Holder within 3 Trading Days from the delivery to the Company of the Notice
of Exercise Form, surrender of this Warrant and payment of the aggregate
Exercise Price as set forth above ("Warrant Share Delivery Date"). This
Warrant shall be deemed to have been exercised on the date the Exercise
Price is received by the Company. The Warrant Shares shall be deemed to
have been issued, and Holder or any other person so designated to be named
therein shall be deemed to have become a Holder of record of such shares
for all purposes, as of the date the Warrant has been exercised by payment
to the Company of the Exercise Price and all taxes required to be paid by
the Holder, if any, pursuant to Section 5 prior to the issuance of such
shares, have been paid. If the Company fails to deliver to the Holder a
certificate or certificates representing the Warrant Shares pursuant to
this Section 3 (a) by the Warrant Share Delivery Date, then the Holder will
have the right to rescind such exercise. In addition to any other rights
available to the Holder, if the Company fails to deliver to the Holder a
certificate or certificates representing the Warrant Shares pursuant to an
exercise by the Warrant Share Delivery Date, and if after such day the
Holder is required by its broker to purchase (in an open market transaction
or otherwise) shares of Common Stock to deliver in satisfaction of a sale
by the Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a "Buy-In"), then the Company shall (1) pay in cash to
the Holder the amount by which (x) the Holder' total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A) the number of
Warrant Shares that the Company was required to deliver to the Holder in
connection with the exercise at issue times (B) the price at which the sell
order giving nse to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was not honored
or deliver to the Holder the number of shares of Common Stock that would
have been issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder purchase Common
Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to an attempted exercise of shares of Common Stock with an
aggregate sale price giving rise to such purchase obligation of $10,000,
under clause (1) of the immediately preceding sentence the Company shall be
required to pay the Holder Si,000. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of
the Buy-In, together with applicable confirmations and other evidence
reasonably requested by the Company. Nothing herein shall limit the Holder'
right to pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company's failure to timely
deliver certificates representing shares of Common Stock upon exercise of
the Warrant as required pursuant to the terms hereof.
(d) If this Warrant shall have been exercised in part, the Company shall,
Formatted; Bullets and Numbering^ ] at the time of delivery of the
certificate or certificates representing Warrant Shares, deliver to Holder
a new Warrant evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall in all
other respects be identical with this Warrant.
(e) The Holder shall not have the right to exercise any portion of this
Warrant, pursuant to Section 3(a) or otherwise, to the extent that after
giving effect to such issuance after exercise, the Holder (together with
the Holder' affiliates), as set forth on the applicable Notice of Exercise,
would beneficially own in excess of 4.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to such issuance.
For purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by the Holder and its affiliates shall include the
number of shares of Common Stock issuable upon exercise of this Warrant
with respect to which the determination of such sentence is being made, but
shall exclude the number of shares of Common Stock which would be issuable
upon (A) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of itsaffiliates and (B) exercise
or conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other
Warrants) subject to a limitation on conversion or exercise analogous to
the limitation contained herein beneficially owned by the Holder or any of
its affiliates. Except as set forth in the preceding sentence, for purposes
of this Section 3(c), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act, it being acknowledged by
Holder that the Company is not representing to Holder that such calculation
is in compliance with Section 13(d) of the Exchange Act and Holder are
solely responsible for any schedules required to be filed in accordance
therewith. To the extent that the limitation contained in this Section 3(c)
applies, the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder) and of which a portion of
this Warrant is exercisable shall be in the sole discretion of such Holder,
and the submission of a Notice of Exercise shall be deemed to be such
Holder' determination of whether this Warrant is exercisable (in relation
to other securities owned by such Holder) and of which portion of this
Warrant is exercisable, in each case subject to such aggregate percentage
limitation, and the Company shall have no obligation to verify or confirm
the accuracy of such determination. For purposes of this Section 3(c), in
determining the number of outstanding shares of Common Stock, the Holder
may rely on the number of outstanding shares of Common Stock as reflected
in (x) the Company's most recent Form 10-QSB or Form 10-KSB, as the case
may be, (y) a more recent public announcement by the Company or (z) any
other notice by the Company or the Company's Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the written or oral
request of the Holder, the Company shall within two Trading Days confirm
orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise
of securities of the Company, including this Warrant, by the Holder or its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.
4. No Fractional Shares or Scrip. No fractional shares or scrip representing
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fractional shares shall be issued upon the exercise of this Warrant. As to
any fraction of a share which Holder would otherwise be entitled to
purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price.
5. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares
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shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of such certificate,
all of which taxes and expenses shall be paid by the Company, and such
certificates shall be issued in the name of the Holder or in such name or
names as may be directed by the Holder; provided, however, that in the
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event certificates for Warrant Shares are to be issued in a name other than
the name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the
Holder; and the Company may require, as a condition thereto, the payment of
a sum sufficient to reimburse it for any transfer tax incidental thereto.
6. Closing of Books. The Company will not close its stockholder books or
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records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
7. Transfer. Division and Combination.
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(a) Subject to compliance with any applicable securities laws and the
conditions set forth in Sections 1 and 7(e) hereof and to the provisions of
Section 4.1 of the Purchase Agreement, this Warrant and all rights
hereunder are transferable, in whole or in part, upon surrender of this
Warrant at the principal office of the Company, together with a written
assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or their agent or attorney and funds sufficient to
pay any transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be
cancelled. A Warrant, if properly assigned, may be exercised by a new
holder for the purchase of Warrant Shares without having a new Warrant
issued.
(b) This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants
are to be issued, signed by the Holder or their agent or attorney. Subject
to compliance with Section 7(a), as to any transfer which may be involved
in such division or combination, the Company shall execute and deliver a
new Warrant or Warrants in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice.
(c) The Company shall prepare, issue and deliver at its own expense (other than
transfer taxes) the new Warrant or Warrants under this Section 7.
(d) The Company agrees to maintain, at its aforesaid office, books for the
registration and the registration of transfer of the Warrants.
(e) If, at the time of the surrender of this Warrant in connection with any
transfer of this Warrant, the transfer of this Warrant shall not be
registered pursuant to an effective registration statement under the
Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such transfer (i) that the
Holder or transferee of this Warrant, as the case may be, furnish to the
Company a written opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such transfer may be made without
registration under the Securities Act and under applicable state securities
or blue sky laws, (ii) that the Holder or transferee execute and deliver to
the Company an investment letter in form and substance acceptable to the
Company and (iii) that the transferee be an "accredited investor" as
defined in Rule 501(a)(l), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated
under the Securities Act or a qualified institutional buyer as defined in
Rule 144A(a) under the Securities Act.
8. No Rights as Shareholder until Exercise. This Warrant does not entitle the
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Holder to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof. Upon the surrender of this Warrant and the
payment of the aggregate Exercise Price (or by means of a cashless
exercise), the Warrant Shares so purchased shall be and be deemed to be
issued to such Holder as the record owner of such shares as of the close of
business on the later of the date of such surrender or payment,
9. Loss. Theft. Destruction or Mutilation of Warrant. The Company covenants
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that upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which,
in the case of the Warrant, shall not include the posting of any bond), and
upon surrender and cancellation of such Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in lieu of
such Warrant or stock certificate.
10. Saturdays. Sundays. Holidays, etc. If the last or appointed day for tbe
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taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may
be taken or such right may be exercised on the next succeeding day not a
Saturday, Sunday or legal holiday.
11. Adjustments of Exercise Price and Number of Warrant Shares.
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(A) Stock Splits, etc. The number and kind of securities purchasable upon the
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exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time upon the happening of any of the following. In
case the Company shall (i) pay a dividend in shares of Common Stock or make
a distribution in shares of Common Stock to Holder of its outstanding
Common Stock, (ii) subdivide its outstanding shares of Common Stock into a
greater number of shares, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock, or (iv) issue any
shares of its capital stock in a reclassifi cation of the Common Stock,
then the number of Warrant Shares purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder shall be
entitled to receive the kind and number of Warrant Shares or other
securities of the Company which it would have owned or have been entitled
to receive had such Warrant been exercised in advance thereof. Upon each
such adjustment of the kind and number of Warrant Shares or other
securities of the Company which, are purchasable hereunder, the Holder
shall thereafter be entitled to purchase the number of Warrant Shares or
other securities resulting from such adjustment at an Exercise Price per
Warrant Share or other security obtained by multiplying the Exercise Price
in effect immediately prior to such adjustment by the number of Warrant
Shares purchasable pursuant hereto immediately prior to such adjustment and
dividing by the number of Warrant Shares or other securities of the Company
that are purchasable pursuant hereto immediately after such adjustment. An
adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event (B) Change in Option
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Price or Conversion Rate. If there is a change at any time in (i) the
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amount of additional consideration payable to the Company upon the exercise
of any Options; (ii) the amount of additional consideration, if any,
payable to the Company upon the exercise, conversion or exchange of any
Common Stock Equivalents; or (iii) the rate at which any Common Stock
Equivalents are convertible into or exchangeable for Common Stock (in each
such case, other than under or by reason of provisions designed to protect
against dilution), the Exercise Price in effect at the time of such change
will be readjusted to the Exercise Price which would have been in effect at
such time had such Options or Common Stock Equivalents still outstanding
provided for such changed additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold.
(C) Calculation of Consideration Received. If any Common Stock, Options or
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Common Stock Equivalents are issued, granted or sold for cash, the
consideration received therefor for purposes of this Warrant will be the
amount received by the Company therefor, before deduction of reasonable
commissions, underwriting discounts or allowances or other reasonable
expenses paid or incurred by the Company in connection with such issuance,
grant or sale. In case any Common Stock, Options or Common Stock
Equivalents are issued or sold for a consideration part or all of which
shall be other than cash, the amount of the consideration other than cash
received by the Company will be the fair market value of such
consideration, except where such consideration consists of securities, in
which case the amount of consideration received by the Company will be the
fair market value (closing bid price, if traded on any market) thereof as
of the date of receipt. In case any Common Stock, Options or Common Stock
Equivalents are issued in connection with arty merger or consolidation in
which the Company is the surviving corporation, the amount of consideration
therefor will be deemed to be the fair market value of such portion of the
net assets and business of the non-surviving corporation as is attributable
to such Common Stock, Options or Common Stock Equivalents, as the case may
be. The fair market value of any consideration other than cash or
securities will be determined in good faith by an investment banker or
other appropriate expert of national reputation selected by the Company and
reasonably acceptable to the Holder hereof, with the costs of such
appraisal to be borne by the Company.
(D) Exceptions to Adjustment of Exercise Price. Notwithstanding the foregoing,
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no adjustment will be made under this Section 1 l(b) in respect of an
Exempt Issuance.
(iii) Minimum Adjustment of Exercise Price. No adjustment of the Exercise Price
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shall be made in an amount of less than 1% of the Exercise Price in effect
at the time such adjustment is otherwise required to be made, but any such
lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any.