Exhibit 10.11
THIS WARRANT AND THE SECURITIES ISSUEABLE UPON ANY EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED BY ANY PERSON, INCLUDING A PLEDGEE, UNLESS (1) EITHER (A) A
REGISTRATION WITH RESPECT THERETO SHALL BE EFFECTIVE UNDER THE SECURITIES ACT,
OR (B) THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS
AVAILABLE, AND (2) THERE SHALL HAVE BEEN COMPLIANCE WITH ALL APPLICABLE STATE
SECURITIES LAWS OR "BLUE SKY" LAWS.
WARRANT TO PURCHASE 266,667 SHARES
OF
COMMON STOCK
OF
RONCO CORPORATION
Void after June 30, 2010
This Warrant is issued to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc., or its registered
assigns (the "Holder"), by Ronco Corporation., a Delaware corporation (the
"Company"), on June ___, 2005 (the "Warrant Issue Date"). This Warrant is issued
pursuant to the terms of a Placement Agent Agreement, dated May 26, 2005 (the
"Placement Agent Agreement"), by and among the Company and the Holder. All
capitalized terms not otherwise defined herein shall have the meaning ascribed
thereto in the Placement Agent Agreement.
1. Number of Shares Subject to Warrant; Exercise Price. Subject to the
terms and conditions hereinafter set forth, the Holder is entitled, upon
surrender of this Warrant at the principal office of the Company, to purchase
from the Company, at a per share price equal to the Exercise Price, the Warrant
Stock.
For purposes of this Warrant: (A) "Warrant Stock" shall mean the number of
Shares purchasable upon exercise of this Warrant, as reflected on the face of
this Warrant, subject to adjustment as described in Section 7 below; (B)
"Shares" shall mean fully paid and non-assessable Common Stock of the Company;
and (C) "Exercise Price" means $3.75 per share, subject to change as described
in Section 7 below.
2. Exercise Period. Except as otherwise provided for herein, this Warrant
shall be exercisable, in whole or in part, at any time and from time to time
after the Warrant Issue Date and ending at 5:00 p.m. eastern time on the fifth
(5th) anniversary of the Warrant Issue Date (the "Expiration Date").
Notwithstanding the foregoing, if this Warrant is outstanding and exercisable
for any Shares as of the time of a Sale (as defined below), unless otherwise
agreed to in writing by the Holder, this Warrant shall be deemed automatically
exercised immediately prior to such Sale in accordance with the net exercise
provisions of this Warrant set forth in Section 4(b) below.
3. Notice of Sale. The Company shall provide written notice to the Holder
not less than ten (10) days prior to the consummation of a Sale. A "Sale" shall
mean a sale of all or substantially all of the assets or shares of the Company
or a merger, reorganization or consolidation of the Company in which the owners
of the outstanding voting power of the Company, immediately prior to such
transaction own, directly or indirectly, less than 51% of the voting power of
the resulting or surviving entity immediately upon completion of such
transaction.
4. Method of Exercise.
(a) Cash Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 2 hereof, the purchase rights hereby
represented may be exercised in whole or in part, at the election of the Holder,
by the tender of the Notice of Exercise in substantially the form attached
hereto as Exhibit A and the surrender of this Warrant at the principal office of
the Company and by the payment to the Company in cash, by check, cancellation of
indebtedness or other form of payment acceptable to the Company, of an amount
equal to the then applicable Exercise Price multiplied by the number of Shares
then being purchased.
(b) Net Exercise. In lieu of exercising this Warrant pursuant to
Section 4(a), the Holder may elect to receive, without the payment by the Holder
of any additional consideration, Shares equal to the value of this Warrant (or
the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with an executed Notice of Exercise, in
substantially the form attached hereto, in which event the Company shall issue
to the holder hereof a number of Shares computed using the following formula:
Y (A - B)
---------
X = A
Where: X = The number of Shares to be issued to the Holder pursuant
to this net exercise;
Y = The number of Shares in respect of which the net exercise
election under this Section 4(b) is made;
A = The fair market value of one Share at the time the net
exercise election is made; and
B = The Exercise Price.
For purposes of this Section 4(b), the fair market value of a Share as of a
particular date shall be the closing sale price of the Shares on the trading
date immediately prior to the date of exercise as quoted on the Nasdaq National
Market or any United States automated quotation system or national securities
exchange on which the Shares are then quoted or traded, as applicable; provided,
that if the Shares are not then so quoted or traded, the fair market value of
the Shares shall be determined by the Board of Directors of the Company in its
reasonable good faith discretion.
5. Certificates for Shares. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, as applicable). In the event of a partial exercise of the
Warrant, a new warrant or warrants (dated the date hereof) of like tenor shall
be issued, calling in the aggregate on the face or faces thereof for the number
of Shares equal (without giving effect to any adjustment therein) to the number
of Shares called for on the face of this Warrant minus the number of such Shares
purchased by the Holder upon such exercise as provided in subsections 4(a) and
4(b) above.
6. Issuance of Shares. The Company hereby covenants that it will take all
necessary actions to duly and validly reserve the necessary number of Shares for
issuance hereunder. The Company covenants that the Shares, when issued pursuant
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to the exercise of this Warrant, will be duly and validly issued, fully paid and
non-assessable and free from all taxes, liens and charges with respect to the
issuance thereof.
7. Adjustment of Exercise Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If the Company
shall at any time after the date hereof and prior to the exercise or expiration
of this Warrant subdivide the Shares by split-up or otherwise, or combine or
issue additional Shares as a dividend with respect to its Shares, the number of
Shares issueable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination. Appropriate adjustments
shall also be made to the Exercise Price, provided that the aggregate exercise
price payable hereunder for the total number of Shares purchasable under this
Warrant (as adjusted) shall remain the same. Any adjustment under this Section
7(a) shall become effective at the close of business on the date the subdivision
or combination becomes effective, or as of the record date of such dividend, or
in the event that no record date is fixed, upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In the event
of any corporate reclassification, capital reorganization, consolidation,
spin-off or change in the Shares of the Company, other than as a result of a
subdivision, combination or dividend provided for in Section 7(a) above, then,
as a condition of such event, lawful provision shall be made, and duly executed
documents evidencing the same from the Company or its successor shall be
delivered, to the Holder, so that the Holder shall have the right at any time
prior to the expiration of this Warrant to purchase, at a total price equal to
that payable upon the exercise of this Warrant, the kind and amount of shares of
stock and/or other securities and property receivable in connection with such
event by a holder holding the same number of shares for which this Warrant could
have been exercised immediately prior to such event. In any such case
appropriate provisions shall be made with respect to the rights and interest of
the Holder so that the provisions hereof shall thereafter be applicable with
respect to any shares of stock or other securities and property deliverable upon
exercise hereof, and appropriate adjustments shall be made to the Exercise
Price, provided that the aggregate exercise price payable hereunder for the
total number of Shares purchasable under this Warrant (as adjusted) shall remain
the same.
(c) Notice of Adjustment. When any adjustment is required to be made
to the Exercise Price or in the number or kind of Shares purchasable upon
exercise of the Warrant, the Company shall promptly notify the Holder of such
event and of the adjusted Exercise Price or number of Shares or other securities
or property thereafter purchasable upon exercise of this Warrant.
8. Assumption of Warrant. If at any time while this Warrant, or any
portion thereof, is outstanding and unexpired there shall be a merger,
reorganization or consolidation of the Company or any other similar transaction
that does not constitute a Sale, then, as a part of such transaction, lawful
provision shall be made so that the Holder shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the aggregate Exercise Price then in effect, the number of
shares of stock or other securities or property of the successor corporation
resulting from such transaction which a holder holding the Shares deliverable
upon exercise of this Warrant would have been entitled to receive in such
transaction if this Warrant had been exercised immediately before such
transaction.
9. No Fractional Shares. No fractional Shares shall be issued upon the
exercise of this Warrant, but in lieu of such fractional Shares the Company
shall make a cash payment therefor on the basis of the fair market value of a
Share determined in accordance with Section 4.
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10. No Stockholder Rights. Prior to exercise of this Warrant, the Holder
shall not be entitled to any rights of a stockholder with respect to the Shares,
including (without limitation) the right to vote such Shares, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of
stockholder meetings, and such Holder shall not be entitled to any notice or
other communication concerning the business or affairs of the Company. However,
nothing in this Section 10 shall limit the right of the Holder to be provided
the notices required under this Warrant.
11. Compliance With Securities Act; Transferability of Warrant or Shares.
(a) Compliance With Securities Act. The Holder, by acceptance
hereof, agrees that this Warrant, and the Shares issueable upon exercise of this
Warrant, are being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Warrant, or any Shares issueable upon exercise
of this Warrant, except under circumstances which will not result in a violation
of the United States Securities Act of 1933, as amended (the "Securities Act"),
or any applicable state securities laws. This Warrant and all Shares issued upon
exercise of this Warrant (unless registered under the Securities Act and any
applicable state securities laws) shall be stamped or imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED BY ANY PERSON, INCLUDING A PLEDGEE, UNLESS (1) EITHER (A) A
REGISTRATION WITH RESPECT THERETO SHALL BE EFFECTIVE UNDER THE SECURITIES
ACT, OR (B) THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT IS AVAILABLE, AND (2) THERE SHALL HAVE BEEN COMPLIANCE WITH
ALL APPLICABLE STATE SECURITIES LAWS OR "BLUE SKY" LAWS."
(b) Transferability. Subject to compliance with applicable federal
and state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, properly endorsed for transfer
by delivery of an Assignment Form in substantially the form attached hereto as
Exhibit B, to the Company at the address set forth in Section 15 hereof, 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 holders one or more appropriate new warrants.
12. Restricted Securities. The Holder understands that this Warrant, and
the Shares issueable upon exercise of this Warrant, will not be registered at
the time of their issuance under the Securities Act for the reason that the sale
provided for in this Agreement is exempt pursuant to Section 4(2) of the
Securities Act based on the representations of the Holder set forth herein. The
Holder represents that it is experienced in evaluating companies such as the
Company, has such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of its investment, and has the
ability to suffer the total loss of the investment. The Holder further
represents that it has had the opportunity to ask questions of and receive
answers from the Company concerning the terms and conditions of this Warrant,
the business of the Company, and to obtain additional information to such
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Holder's satisfaction. The Holder further represents that it is an "accredited
investor" within the meaning of Regulation D under the Securities Act as
presently in effect. The Holder further represents that this Warrant is being
acquired for the account of the Holder for investment only and not with a view
to, or with any intention of, a distribution or resale thereof, in whole or in
part, or the grant of any participation therein.
13. 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 hereof
and their respective successors and assigns, except as limited herein.
14. Amendments and Waivers. Any term of this Warrant may be amended, and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively), upon the
written consent of the Company and the Holder.
15. Notices. All notices required under this Warrant shall be deemed to
have been given or made for all purposes (i) upon personal delivery, (ii) upon
confirmation receipt that the communication was successfully sent to the
applicable number if sent by facsimile, (iii) one day after being sent, when
sent by professional overnight courier service, or (iv) five days after posting
when sent by registered or certified mail. Notices to the Company shall be sent
to the address of the Company set forth below (or at such other place as the
Company shall notify the Holder hereof in writing) and notices to the Holder
shall be sent to the address of the Holder set forth on the signature page
hereto (or at such other place as the Holder shall notify the Company hereof in
writing):
To the Company: Ronco Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
President and Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
16. Captions. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
17. Governing Law. This Warrant shall be governed by the laws of the state
of Delaware, without regard to the choice or conflict of laws principles
thereof.
[Signature page follows]
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IN WITNESS WHEREOF, the undersigned have caused this Warrant to be duly
executed as of the date first set forth above.
COMPANY
RONCO CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
HOLDER
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By: /s/ A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
Address:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Syndicate Associate
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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EXHIBIT A
NOTICE OF EXERCISE
To: Ronco Corporation
The undersigned hereby elects to [check applicable subsection]:
(a) Purchase Shares (as defined in the attached Warrant) pursuant to the
terms of the attached Warrant and payment of the Exercise Price per
Share required under such Warrant accompanies this notice;
OR
(b) Exercise the attached Warrant for all of the Shares in whole but not
in part purchasable under the Warrant pursuant to the net exercise
provisions of Section 4 of such Warrant.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
for resale or with a view to distribution of such shares or any part thereof.
Date:_______________________ HOLDER:
----------------------------------
By:
-------------------------------
Name:
Title:
Address:
Name in which Shares should be registered: __________________________________
EXHIBIT B
ASSIGNMENT FORM
TO: Ronco Corporation
The undersigned hereby assigns and transfers unto _____________________________
of (Please typewrite or print in block letters) the right to purchase
____________ Shares (as defined in the attached Warrant) subject to the Warrant,
dated as of June ___ 2005, by and between Ronco Corporation and the undersigned
(the "Warrant").
This assignment complies with the provisions of Section 11 of the Warrant and is
accompanied by funds sufficient to pay all applicable transfer taxes.
Date:_______________________ ______________________________
By:
---------------------------
------------------------------
(Print Name of Signatory)
------------------------------
(Title of Signatory)