RE-TRACK USA, INC.
SETTLEMENT AGREEMENT
CONSISTING OF
CONVERTABLE UNITS, CONSISTING OF $10,000.00 UNSECURED
PROMISSORY NOTE, WARRANT TO PURCHASE SHARES OF COMMON
STOCK, ADDITIONAL COMMON STOCK
AND
INVESTMENT REPRESENTATION AGREEMENT
THIS AGREEMENT: is made effective this ___day of February 1999, between Re-
Track USA, Inc. a Delaware Corporation (the "Company") and ___________
("________").
WITNESSETH
WHEREAS, the parties acknowledge and agree that the Company and/or its
subsidiaries and affiliates have certain obligations outstanding in favor of the
____________ and/or its successors, assigns and designees (any reference to the
____________ herein shall include all such successors, assigns and designees of
the ____________) consisting of cash and other commitments, as defined in the
June ___, 1996 agreement (collectively the "Obligations"); and
WHEREAS, the parties agree that the obligations as defined in the June
___, 1996 agreement are past due thus rendering the agreement in default.
WHEREAS, the Company desires to satisfy the obligations and default as
defined in the June ___, 1996 agreement by issuing and executing this agreement
effective February ___ 1999.
WHEREAS, ____________ is willing to accept this agreement effective
February ___, 1999 and the terms therein in full satisfaction of all obligations
contained in the June ____, 1996 agreement.
In consideration of the mutual promises contained herein, and other good and
valuable consideration, the parties hereto agree as follows:
1. CONSIDERATION AND AGREEMENT OF PURCHASE AND SALE: The company agrees to sell
to ____________, and ____________ agrees to purchase from the Company ____ Units
(the "Units") at a per Unit purchase price of $10,000.00 for an aggregate
purchase price of $_______. Each Unit will consist of (i) a $10,000.00 unsecured
promissory note in the form of Exhibit A hereto (the "Note") convertible under
certain conditions into shares of Common Stock of the Company (the "Common
Stock") and (ii) a Warrant (the "Warrant") in the form of Exhibit B hereto for
the purchase of certain shares of the Company's Common Stock. Payment for the
units is tendered by the execution of this agreement as and in full and final
satisfaction of all obligations due to ____________ under the terms and
conditions of the June ____, 1996 agreement. As consideration and as an
additional inducement to ____________ entering into this agreement the Company
agrees to issue _____ shares of the Company's common stock, ("the additional
common stock"), which when issued will be fully paid and non assessable.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY: In consideration of
____________ subscription for the Units, the Company represents and warrants to
the ____________ as follows:
(a) ORGANIZATION: The Company is a duly organized and existing corporation under
the laws of the state of Delaware.
(b) GOOD STANDING: The Company is in good standing under the laws of the state
of Delaware, and there are on proceedings or actions pending to limit or impair
any of its powers, rights, and privileges, or to dissolve it.
(c) CORPORATE AUTHORIZATION: The execution and delivery of this agreement and
the consummation of the transactions contemplated have been duly authorized by
proper corporate action of the Company.
3. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER: In consideration of the
Company's offer to sell the Units, ____________ hereby represents and warrants
to the Company as follows:
(a) INFORMATION ABOUT THE COMPANY: ____________ had the opportunity to ask
questions of and receive answers from the Company, or an agent or a
representative of the Company, concerning the terms and conditions of the
investment and the business and affairs of the Company and to obtain any
additional information necessary to verify such information and the ____________
has received such additional information concerning the Company the ____________
considers necessary or advisable in order to form a decision concerning an
investment in the Company.
(b) HIGH DEGREE OF RISK: ____________ realizes that the Units involve a high
degree of risk including the risks of receiving no return on the investment and
of losing the investment in the Company, ____________ also has paid particular
attention to and understands the following specific risk factors.
(i) LACK OF SALES AND PROFITS AND UNCERTAINTY OF A GOING CONCERN: The Company
has generated no sales and since inception has incurred considerable operating
losses. The Company's cash with which to conduct operations has been depleted
and its ability to continue as a going concern cannot be assured. No assurance
can be given that the Company will ever be profitable.
(ii) NEED FOR ADDITIONAL FINANCING: The Company's ability to continue as a going
concern is dependent upon its obtaining additional financing to support the
Company's operations and contemplated growth. The Units offered hereby, will not
generate any cash for the Company and are being offered only in satisfaction of
current obligations. The Company is currently requires additional equity capital
or debt financing to enable further expansion or to sustain operations. No
assurance can be given that the Company will be able to locate additional
capital on terms acceptable to it or at all.
2
(iii) PRODUCTS MAY Not BE COMMERCIALLY ACCEPTED: The Company has acquired a
disposable, retractable, safety syringe and certain other medical products, none
of which have been introduced to customers. There is no assurance that the
Company's intended customers will commercially accept the Company's products.
(iv) PATENT PROTECTION MAY BE INSUFFICIENT: Although the Company has certain
U.S. and foreign patents covering its disposable, retractable, safety syringe
and certain of the other medical products as acquired by the Company, there can
be no assurance that these patents sufficiently protect the Company's
intellectual property, that such patents will not be infringed by others or that
others will not develop substantially equivalent non-infringing technology.
(v) COMPETITION: The medical products industry and in particular that for
syringe products is highly competitive. Several firms, including Sherwood
Medical and BectonDickenson, offer disposable, safety syringes directly
competitive with the Company's products. These firms are better known and better
capitalized and have significantly greater financial resources, more experienced
organizations, and a greater number of employees than the Company.
(vi) GOVERNMENT REGULATION: The manufacturing and marketing of medical products
in the United States is regulated by the U.S. Food and Drug Administration (the
"FDA"). Although the Company has received 510k approval from the FDA for the
marketing of its disposable, retractable, safety syringe, it has not received
any such approval with respect to any of its other medical products. Compliance
with FDA regulations is time consuming and expensive and there can be no
assurance that the Company will ever receive additional approvals to market its
various medical products.
(vii) RELIANCE ON KEY PERSON: The Company is highly dependent upon the services
of ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, the Company's President, CEO and founder. The loss of ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇'▇ services could have a materially adverse effect on the Company.
(viii) NEED FOR ADDITIONAL PERSONNEL: ▇▇. ▇▇▇▇▇ has no substantial experience in
the manufacturing or marketing of medical products. The Company intends to seek
additional qualified personnel. There is no assurance that the Company can
attract or retain any such new personnel.
(ix) PRODUCT LIABILITY CLAIMS: There can be no assurance that the Company will
not be named in a product liability lawsuit, nor that the Company will not be
held partially or fully liable in the event of such a lawsuit. The Company
currently has no product liability insurance, although it intends to seek
coverage when it commences commercial marketing of its products and if cash flow
permits. There is a risk of claims against the Company, based on product
liability or other legal theories for personal injury due to the failure of the
Company's products among other matters. Furthermore, even if the Company is
found not liable as to any such claims, it could, nevertheless expend a
considerable sum in defending itself against such claims.
3
(x) CONTROL BY MANAGEMENT: ▇▇. ▇▇▇▇▇ continues to own the majority of the
Company's Common Stock and will be in a position to control the affairs of the
Company, including the election of directors.
(xi) NO ESCROW OF PLACEMENT PROCEEDS: There is on requirement for an escrow in
connection with this agreement as there are no cash proceeds. This agreement is
in full satisfaction of all obligations due under the June ____, 1996 agreement.
(xii) NO ASSURANCE OF REPAYMENT ON NOTE OR ABILITY TO CONVERT NOTE OR EXERCISE
WARRANT: The notes included as part of the Units offered hereby are not secured
by any of the Company's assets. There is no assurance that the notes will be
repaid, when mature, or that, in the event of any bankruptcy proceeding or
liquidation of the Company investors will receive any payment on such notes. The
notes may not be converted into Common Stock, and the Warrants may not be
exercised unless and until the Company completes an initial public offering of
its common stock. The Company has no commitment form any investment banking firm
for such an offering and there is no assurance that the Company will ever
conduct a public offering.
(xiii) PATENTS AND TECHNOLOGY: The Company has acquired its technology from Safe
Tech Medical Products Inc. and ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ , the inventor. (subject to a
$200,000 loan and security interest in favor of one of the Company's
shareholders). The Company has no outstanding obligations to Safe Tech Medical
Products Inc. and or Inventor, ▇▇. ▇. ▇▇▇▇▇▇▇ whatsoever.
(xiv) POSSIBLE COMMISSIONS ON SALES OF UNITS: The Company is not required to pay
any commissions in connection with this agreement.
(xv) DILUTION: Purchases of the Units offered hereby will experience an
immediate substantial dilution in net tangible book value per share of common
stock from the placement price hereunder.
(xvi) NO DIVIDENDS: No Dividends have been paid on the Common Stock of the
Company. It is anticipated that profits, if any, received from operations will
be devoted to the Company's future operations.
The Company does not anticipate the payment of cash dividends on its Common
Stock in the foreseeable future, and any decision to pay dividends will depend
upon the Company's profitability at the time, cash available therefor, and other
factors. Investors who anticipate a need for immediate income from their
investment should not purchase Units offered hereby.
(c) ABILITY TO BEAR THE RISK: ____________ is able to bear the economic risk of
an investment in the Units, including the total loss of such investment.
(d) APPROPRIATE INVESTMENT: ____________ believes, in light of the information
provided herein and pursuant to paragraph 3 (a) above, that subscribing for the
Units pursuant to the terms of this agreement is an appropriate and suitable
investment for ____________.
4
(e) BUSINESS SOPHISTICATION: ____________ is experienced and knowledgeable in
financial and business matters, capable of evaluating the merits and risks of
purchasing securities of the Company.
(f) RESIDENCY: ____________ is a resident of the State of ______.
(g) STATUS AS AN "ACCREDITED INVESTOR": ____________ is (check all that apply):
___(1) A natural person whose individual net worth, or joint net
worth with his or her spouse, exceeds $1,000,000.
___(2) A natural person whose individual income was in excess of
$200,000, or whose joint income with his or her spouse was in
excess of $300,000, in each of the two most recent years, and
who has a reasonable expectation of reaching the same income
level for the current year.
___(3) A bank, insurance company, registered investment company,
business development company, small business investment
company or employee benefit plan.
___(4) A savings and loan association, credit union, or similar
financial institution or a registered broker or dealer.
___(5) A Private business development company
___(6) An organization described in Section 501 (c)(3) of the
Internal Revenue Code with assets in excess of $5,000,000.
___(7) A corporation, Massachusetts or similar business trust, or
partnership with assets in excess of $5,000,000.
___(8) A trust with assets in excess of $5,000,000.
___(9) A director or executive officer of the Company.
___(10) None of the above.
(If your status as an "Accredited Investor" is based upon other than 1,2, or 9
above, we will contact you to obtain more specific information.)
4. INVESTMENT PURPOSE IN ACQUIRING THE UNITS: ____________ and the Company
acknowledge that the Units, including the Notes, the Warrants, and the Common
Stock underlying the Warrants, have not been registered under the Securities Act
of 1933, as amended (the "Act"), or applicable state securities laws and that
such securities will be issued to Subscriber in reliance on exemptions from the
registration requirements of the Act and applicable state securities laws and in
reliance on ____________ and the Company's representations and agreements
contained herein. ____________ is subscribing to acquire the Units for the
5
account of ____________, for Investment purposes only and not with a view to
their resale or distribution. ____________ have no present intention to divide
his, her, or its participation with others or to resell or otherwise dispose of
all or any part of the Units. In making these representations, ____________
understands that, in the view of the Securities and Exchange Commission (the
"Commission"), exemption of the Units from the registration requirements of the
Act would not be available if not withstanding the representations of
____________ have in mind merely acquiring the Units for resale.
5. COMPLIANCE WITH SECURITIES ACT: ____________ agree that if the Units, the
Notes, the Warrants, the Common stock underlying the Warrants, or any part of
the foregoing are sold or distributed in the future, ____________ shall sell or
distribute them pursuant to the requirements of the Act and applicable state
securities laws. ____________ agree that ____________ will not transfer any part
of the Units without (1) obtaining a No Action letter from the Commission and
applicable state securities commissions, (2) obtaining an opinion of counsel
satisfactory in form and substance to the Company to the effect that such
transfer is exempt from the registration requirements under the Act and
applicable state securities laws, or (3) such registration.
6. RESTRICTIVE LEGEND: ____________ agree that the Company may place a
restrictive legend on the documents representing the Units, the Notes and the
Warrants.
7. STOP TRANSFER ORDER: ____________ agree that the Company may place a stop
transfer order with its registrar and stock transfer agent (if any) covering all
documents, or certificates representing the Units, the Notes, the Common Stock
or the Common Stock Underlying the Warrants.
8. KNOWLEDGE OF RESTRICTIONS UPON TRANSFER OF THE UNITS: ____________
understands that the Units, including the Notes, the Warrants the Common Stock
and any Common Stock issuable upon the exercise of the Warrants, are not freely
transferable and may in fact be prohibited from sale for an extended period of
time and that, as a consequence thereof, the undersigned must bear the economic
risk of an investment in the Units for an indefinite period of time and may have
extremely limited opportunities to dispose of the same. ____________ understands
the Rule 144 of the Commission permits the transfer of "restricted securities"
of the type herein involved only under certain conditions, after and including a
minimum two year holding period, (which with respect to the converted shares of
common stock and the common stock underlying the warrants, will not begin to run
until the exercise of the convertible option and the exercise of the warrants)
and the availability to the public or certain information concerning the
Company.
9. ADDITIONAL COMMON STOCK: The Company agrees to issue the additional common
stock and agrees that:
6
1. ISSUANCE OF STOCK: Upon the receipt by the Company of an executed
copy of this agreement, in full satisfaction of all debts, promises, commitments
and any and all other obligations of whatsoever nature which the Company may owe
to the ____________ giving particular importance to the June ____, 1996
agreement, the Company will cause the issuance of ____ shares of its common
stock. ____________ agrees that in the event the Company attempts to complete an
initial public offering, existing shareholders may be required to enter into an
agreement with the underwriter and the Company for a further restrictive period
on the sale of such shares. ____________ agrees to any such requirement without
any form of objection.
2. PROVISIONS GOVERNING THE SHARES: The following provisions are
applicable to the Shares:
(a) The Shares will not have been registered under the
Securities Act of 1933, as amended (the "1933 Act"), or registered or qualified
under any state securities laws and as such, the Shares are and will be
restricted securities as such term is defined under the Securities Act of 1933
(the 1933 Act") and the Shares will be issued in a transaction exempt from the
registration requirements of the 1933 Act and the registration or qualification
requirements of applicable state securities laws. The Shares will be and will
have been acquired by ____________ for investment purposes only and not with a
view to distribution or resale and may not be made subject to a security
interest, pledged, hypothecated, sold or otherwise transferred unless such
Shares are subsequently registered under the 1933 Act and qualified or
registered under applicable state securities laws or an exemption from
registration and qualification is available, and that, except as otherwise
provided in this Agreement, the Company is under no obligation to register or
qualify the Shares. The Company may require an opinion of counsel from
____________ prior to authorizing the registration of any transfer of the Shares
in reliance on an exemption from registration or qualification to the effect
that the transfer is exempt from such registration or qualification.
Certificates evidencing the Shares shall bear a standard form of Securities and
Exchange Commission restrictive legend and any such other legends as required by
applicable federal and state laws and the transfer agent for the Company class
of Common Stock shall be instructed to place a stop transfer order on the stock
books of the Company restricting the transfer of the Shares.
(b) ____________ and the Company agree to execute such other
documents and instruments as counsel for the Company reasonably deems necessary
to effect the compliance of the issuance of the Shares with federal and state
laws.
(c) the Company covenants and agrees that the Shares shall,
upon issuance, in accordance with the terms hereof, be legally and validly
issued and outstanding and fully-paid and non-assessable shares of Common Stock
of the Company.
10. ADDITIONAL DOCUMENTS: ____________ and the Company agree to execute such
other documents and instruments as counsel for the Company reasonably deems
necessary to effect the compliance of the issuance of the Units, Notes, Warrants
and Shares with federal and state laws.
11. RELEASE: Upon execution of this agreement the parties hereto and their
respective heirs, executors, administrators, successors, affiliates,
subsidiaries, designees, agents, representatives and assigns hereby release and
forever discharge the other party(ies) hereto and their respective present or
former subsidiaries, corporate parents, affiliates, officers, directors, agents,
employees, successors, representatives and assigns from any and all claims,
7
liabilities, actions, causes of action, suits, debts, agreements, controversies,
promises, damages and demands whatsoever (including, without limitation, any
that are contingent), in law or in equity, whether known or unknown, which the
parties, or any of them ever had, now have or hereafter may have against the
other party arising out of, or in connection with any act, omission,
transaction, event, agreement, whether oral or written, or for, upon, or by
reason of, any matter, cause or thing whatsoever from the beginning of the world
to the date of this Agreement.
12. BINDING EFFECT: Neither this agreement nor any interest herein shall be
assignable by ____________ without the prior written consent of the Company. The
provisions of this agreement shall be binding upon and inure to the benefit of
the parties hereto, and their respective heirs, legal representatives,
successors, and assigns.
13. REPRESENTATIONS TO SURVIVE DELIVERY: The representations, warranties, and
agreements of the Company and ____________ contained in this agreement will
remain operative and in full force and effect and will survive the payment of
the purchase price pursuant to Section 1 above and the delivery of documents
representing the Units.
14. GOVERNING LAW: This agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, exclusive of its conflict of
laws rules.
IN WITNESS WHEREOF, the undersigned has hereunto affixed his, her, or its
signature.
In the Presence of:
________________________________ Mr. __________________
--------------------------------
BY:
Address:
-----------------------
-----------------------
The Company hereby accepts the subscription evidenced by this Subscription and
Investment Representation Agreement.
In the Presence of: Re-Track USA, Inc.
---------------------------- -------------------------
BY: ▇▇▇▇▇▇ ▇▇▇▇▇, President
8
MR. __________________ INFORMATION
----------------------------------------------------------------
(Please print name(s) in which the Units are to be issued)
------------------------------
Taxpayer I.D. No.
Address: ___________________________________________________________________
City: ______________________________________________________________________
Telephone Number _______________________
Check One:
____ Individual Ownership ____ Tenants in Common
____ Other ____ Joint Tenants
9
CONVERTIBLE PROMISSORY NOTE
EXHIBIT A
$_______ FEBRUARY ___, 1999
FOR VALUE RECEIVED, Re-Track USA Inc. a Delaware corporation (the
"Maker"), hereby agrees and promises to pay to the order of
______________________ (the "Holder") the principal sum of
___________________($_______) Dollars on February ____, 2001 (Two years from the
date of this Note above), together with interest on the unpaid principal balance
hereof at the rate of seven (7%) percent per annum.
If a default occurs in the payment of principal or interest when due in
accordance with the terms and conditions of this Note, the Maker agrees to pay
the costs of collection, including reasonable attorneys' fees. This Note may be
prepaid at any time in any amount, without penalty or premium. All prepayments
or payments shall be applied against any unpaid interest and then against
principal.
Without affecting the liability of the Maker, the Holder may, without
notice, renew or extend the time for payment or accept partial payments. No
delay or omission on the part of the Holder in exercising any right hereunder
shall operate as a waiver of such right or of any other remedy under this Note.
The Maker hereby waives presentment for payment, protest and notice of
non-payment.
At any time during the six (6) months following the effective date of a
Registration Statement (if any) filed by the Maker with the Securities and
Exchange Commission respecting an initial public offering for cash of the
Maker's Common Stock (an "IPO"), the Holder may elect to convert all, but not
less than all, of the outstanding principal and accrued interest of this Note
into Common Stock of the Maker. The number of such shares issuable upon
conversion of this Note shall be computed by dividing (x) the outstanding
principal and interest of this Note at the time written notice as described
below is received by the Maker by (y) a conversion price computed as 2/3 of the
initial public offering price on the cover page of the Maker's Prospectus for
the IPO, rounded up to the next nearest $. 10. Any fractional share so computed
shall not be issued. The Holder may exercise the conversion rights hereunder by
giving written notice to the Maker at its principal executive offices, which
notice must be received by 5:00 PM on or prior to the date of expiration of
these conversion rights.
IN WITNESS WHEREOF, the undersigned has hereunto affixed its signature.
Re-Track USA, Inc.
___________________________ By:__________________________
Notary Public ▇▇▇▇▇▇ ▇▇▇▇▇, President
10
WARRANT
EXHIBIT B
TO PURCHASE SHARES OF
COMMON STOCK OF
RE-TRACK USA, INC.
February ___1999
This Certifies that, in consideration of having provided certain
private financing to Re-Track USA, Inc. a Delaware corporation (the "Company"),
Mr. ____________, (the "Warrant holder") is entitled to subscribe for and
purchase from the Company, at any time commencing on the Company's IPO Date, if
any (as defined below), and ending on or before 5:00 PM Central Time, on the
date which is two (2) years following the IPO Date, the number of shares of the
Company's Common Stock as computed below at the Purchase Price set forth herein,
subject to adjustment as hereinafter set forth.
1. DEFINITIONS For all purposes of this Warrant the following terms shall have
the following meanings:
"COMMISSIONS" shall mean the Securities and Exchange Commission, or any
other federal agency then administering the Securities Act.
"COMPANY" shall mean Re-Track USA, Inc. a Delaware corporation, and any
corporation which shall succeed to, or assume, the obligations of said
corporation hereunder.
"COMMON STOCK" shall mean the shares of Common Stock of the Company.
"IPO" shall mean an initial public offering for cash of the Company's
Common Stock conducted pursuant to a registration statement filed under the
Securities Act with the Commission.
"IPO DATE" shall mean the effective date of the registration statement
filed by the Company with the Commission respecting an IPO.
"NUMBER" shall mean the number of shares of Common Stock purchasable
upon exercise of this Warrant. The Number shall be computed by dividing (x)
$____________ (representing the aggregate purchase price by the initial Warrant
holder hereunder for Units of the Company issued in a private placement
conducted in 1996) by (y) a conversion price computed as 2/3 of the initial
public offering price on the cover page of the Company's Prospectus for the IPO,
rounded up to the next nearest $. 10. Any fractional portion of the Number as so
computed shall be disregarded. The Number is subject to adjustment as
hereinafter provided.
"OTHER SECURITIES" shall mean any stock (other than Common Stock) or
other securities of the Company or any other person (corporate or otherwise)
which the Warrant holder at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities.
11
"PURCHASE PRICE" shall mean 120% of the initial public offering price
on the cover page of the Company's Prospectus for an IPO. The Purchase Price is
subject to adjustment as hereinafter provided.
"SECURITIES ACT" shall mean the Securities Act of 1993, as amended, and
the rules and regulations of the Commission thereunder, as in effect at the
time.
"SUBSCRIPTION FORM" shall mean the subscription forms attached hereto.
"TRANSFER" shall mean any sale, assignment, pledge, or other
disposition of any Warrants and/or Warrant Shares, or of any interest in either
thereof which would constitute a sale thereof within the meaning of Section 2(3)
of the Securities Act.
"WARRANT SHARES" shall mean the shares of Common Stock purchased or
purchasable by the Warrant holder upon the exercise of the Warrants pursuant to
Section 2 hereof.
"WARRANT HOLDER" shall mean the holder or holders of the Warrants or
any related Warrant Shares.
"WARRANTS" shall mean the Warrants (including this Warrant), identical
as to terms and conditions and date, except as to the number of shares of Common
Stock for which they may be exercised, evidencing the right to purchase
initially an aggregate of ________ shares of Common Stock, and all Warrants
issued in exchange, transfer or replacement thereof
All terms used in this Warrant which are not defined in Section 1 hereof have
the meanings respectively set forth elsewhere in this Warrant.
2. EXERCISE OF WARRANT, ISSUANCE OF CERTIFICATE, AND PAYMENT FOR WARRANT SHARES.
This Warrant may not be exercised unless and until the Company completes an IPO.
The rights represented by this Warrant may be exercised at any time on or after
the IPO Date and from time to time, prior to expiration hereof, by the Warrant
holder, in whole or in part (but not as to any fractional share of Common
Stock), by: (a) delivery to the Company of a completed Subscription Form, (b)
surrender to the Company of this Warrant properly endorsed and signature
guaranteed, and (c) delivery to the Company of a certified or cashier's check
made payable to the Company in an amount equal to the aggregate Purchase Price
for the Number of shares of Common Stock being purchased, at its principal
office or agency (or such other office or agency of the Company as the Company
may designate by notice in writing to the holder hereof). The Company agrees and
acknowledges that the shares of Common Stock so purchased shall be deemed to be
issued to the holder hereof as the record owner of such shares as of the close
12
of business on the date on which this Warrant, properly endorsed, and the
Subscription Form shall have been surrendered and payment made for such shares
as aforesaid. Upon receipt thereof, the Company shall, as promptly as
practicable, and in any event within 15 days thereafter, execute or cause to be
executed and deliver to the Warrant holder a certificate or certificates
representing the aggregate number of shares of Common Stock specified in said
Subscription Form. Each stock certificate so delivered shall be in such
denomination as may be requested by the Warrant holder and shall be registered
in the name of the Warrant holder or such other name as shall be designated by
the Warrant holder. If this shall have been exercised only in part, the Company
shall, at the time of delivery of said stock certificate or certificates,
deliver to the Warrant holder a new Warrant evidencing the rights of such holder
to purchase the remaining shares of Common Stock covered by this Warrant. The
Company shall pay all expenses, taxes, and other charges payable in connection
with the preparation, execution, and delivery of stock certificates pursuant to
this Section 2, except that, in case any such stock certificate or certificates
shall be registered in a name or names other than the name of the Warrant
holder, funds sufficient to pay all stock transfer taxes which shall be payable
upon the execution and delivery of such stock certificate or certificates shall
be paid by the Warrant holder to the Company at the time of delivering this
Warrant to the Company as mentioned above.
3. OWNERSHIP OF THIS WARRANT. The Company may deem and treat the registered
Warrant holder as the holder and owner hereof (notwithstanding any notations of
ownership or writing made hereon by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for transfer as provided herein and then only if
such transfer meets the requirements of Section 5 hereof
4. EXCHANGE, TRANSFER AND REPLACEMENT. Subject to Section 5 hereof, this Warrant
is exchangeable upon the surrender hereof by the Warrant holder to the Company
at its office or agency described in Section2 hereof for new Warrants of like
tenor and date representing in the aggregate the right to purchase the Number of
shares purchasable hereunder, each of such new Warrants to represent the right
to purchase such number of shares (not to exceed the aggregate total Number
purchasable hereunder) as shall be designated by the Warrant holder at the time
of such surrender. Subject to Section 5 hereof, this Warrant and all rights
hereunder are transferable, in whole or in part, upon the books of the Company
by the Warrant holder in person or by duly authorized attorney, and a new
Warrant of the same tenor and date as this Warrant, but registered in the name
of the transferee, shall be executed and delivered by the Company upon surrender
of this Warrant, duly endorsed, at such office or agency of the Company. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction, or mutilation of this Warrant, and in the case of loss,
theft, or destruction, of indemnity or security reasonable satisfactory to it,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
will make and deliver a new Warrant of like tenor, in lieu of this Warrant. This
Warrant shall be promptly canceled by the Company upon the surrender hereof in
connection with any exchange, transfer, or replacement. The Company shall pay
all expenses, taxes (other than stock transfer taxes), and other charges payable
in connection with the preparation, execution and delivery of Warrants pursuant
to this Section 4.
13
5. RESTRICTIONS ON TRANSFER. Notwithstanding any provisions contained in this
Warrant to the contrary, neither this Warrant nor the Warrant shares shall be
transferable except upon the conditions specified in this Section 5, which
conditions are intended, among other things, to ensure compliance with the
provisions of the Securities Act in respect of the transfer of this Warrant or
such Warrant Shares. The holder of this WARRANT AGREES THAT SUCH HOLDER WILL NOT
TRANSFER this Warrant or the related Warrant Shares (a) prior to delivery to the
Company of an opinion of counsel selected by the Warrant holder and reasonably
satisfactory to the Company, stating that such transfer is exempt from
registration under the Securities Act or (b) until registration of such Warrants
and/or Warrant Shares under the Securities Act has become effective and
continues to be effective at the time of such transfer. An appropriate legend
may be endorsed on the Warrants and the certificates of the Warrant Shares
evidencing these restrictions.
6. ANTIDILUTION PROVISIONS. The rights granted hereunder are subject to the
following:
(a) STOCK SPLITS AND REVERSE SPLITS. In case at any time after the IPO Date, the
Company shall subdivide its outstanding shares of Common Stock into a greater
number of shares (including upon a dividend made in Common Stock), the Purchase
Price in effect immediately prior to such subdivision shall be proportionately
reduced and the number of Warrant Shares purchasable pursuant to this Warrant
immediately prior to such subdivision shall be proportionately increased, and
conversely, in case at any time after the 1PO Date, the Company shall combine
its outstanding shares of Common Stock into smaller number of shares, the
Purchase Price in effect immediately prior to such combination shall be
proportionately increased and the number of Warrant Shares purchasable upon the
exercise of this Warrant immediately prior to such combination shall be
proportionately reduced. Except as provided in this paragraph (a), no adjustment
in the purchase price and no change in the number of Warrants Shares so
purchasable shall be made pursuant to this section 6 as a result of or by any
such subdivision or combination.
(b) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER, OR SALE. If any
capital reorganization or reclassification or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation, shall be effected in such a way that holders of shares of Common
Stock shall be entitled to receive Common Stock, Other Securities or assets with
respect to or in exchange for shares of Common Stock, then, as a condition of
such reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the Warrant holder shall thereafter
have the right to purchase and receive upon the basis and upon the terms and
conditions specified in the Warrants and in lieu of the shares of Common Stock
of the Company immediately there to for purchasable and receivable upon the
exercise of the Warrants such shares of Common Stock, Other Securities or assets
as may be issued or payable with respect to or in exchange for a number of
outstanding shares of Common stock equal to the number of shares of Common Stock
immediately thereto for purchasable and receivable upon the exercise of the
Warrants had such reorganization, reclassification, consolidation, merger or
sale not taken place, and in any such case appropriate provision shall be made
with respect to the rights and interests of the Warrant holder so that the
provisions of the Warrants (including, without limitation, provisions for
adjustment of the Purchase Price and of the number of shares purchasable upon
the exercise of the Warrants) shall thereafter be applicable, as nearly as may
be, in relation to any shares of Common Stock, Other Securities or assets,
thereafter deliverable upon the exercise of the Warrants.
14
7. NOTICES. Any notice or other document required or permitted to be given or
delivered to the Warrant holder shall be delivered or sent by certified mail to
the Warrant holder at last address shown on the books of the Company maintained
for the registry and transfer of the Warrants. Any notice or other document
required or permitted to be given or delivered to the Company shall be delivered
or sent by certified or registered mail to the principal office of the Company.
8. NO RIGHTS AS SHAREHOLDERS: LIMITATION OF LIABILITY. This Warrant shall not
entitle any holder hereof to any of the rights of a shareholder of the Company.
No provision hereof, in the absence of affirmative action by the holder hereof
to purchase shares of Common Stock, and no mere enumeration herein of the rights
or privileges of the holder hereof, shall give rise to any liability of such
holder for the Purchase Price or as a shareholder of the Company whether such
liability is asserted by the Company or by creditors of the Company.
9. GOVERNING LAW. This Warrant shall be governed by, and construed and enforced
in accordance with, the laws of the State of Delaware, exclusive of its conflict
of laws rules.
10. MISCELLANEOUS. This Warrant and any provision hereof may be changed, waived,
discharged, or terminated only by an instrument in writing signed by the party
(or any predecessor in interest thereof) against which enforcement of the same
is sought. The headings in this Warrant are for purposes of reference only and
shall not affect the meaning or construction of any of the provisions hereof
IN WITNESS WHEREOF, the Company has this Warrant to be signed by a duly
authorized officer, and to be dated as of the ____ day of February, 1999.
Re-Track USA, Inc.
___________________________ By:__________________________
Notary Public ▇▇▇▇▇▇ ▇▇▇▇▇, President
"THIS SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1993 (THE "1993 ACT") OR UNDER THE SECURITIES LAWS OF ANY
OTHER STATE AND MAY NOT BE TRANSFERRED WITHOUT (i) THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT
REGISTRATION UNDER THE 1993 ACT OR THE SECURITIES LAWS OF ANY APPLICATION STATE;
OR (ii) SUCH REGISTRATION."
15
FULL SUBSCRIPTION FORM
To be Executed By the Registered Warrant holder if
He Desires to Exercise in Full the Within Warrant
The undersigned hereby exercises the right to purchase the __________________
shares of Common Stock covered by the within Warrant at the date of this
subscription and herewith makes payment of the sum of $_________ representing
the Purchase Price of $ ___________________ per share in effect at that date.
Certificates for such shares shall be issued in the name of and delivered to the
undersigned, unless otherwise specified by written instructions, signed by the
undersigned and accompanying this subscription.
Dated:____________________
Signature: _____________________
Address: _____________________
_____________________
16
PARTIAL SUBSCRIPTION FORM
To Be Executed by the Registered Warrant holder if He
Desires to Exercise in Part Only the Within Warrant
The undersigned hereby exercises the right to purchase ______________ shares of
the total shares of Common Stock covered by the within Warrant at the date of
this subscription and herewith makes payment of the sum of $_________________
representing the Purchase Price of $_______ per share in effect at this date.
Certificates for such shares and a new Warrant of like tenor and date for the
balance of the shares not subscribed for (if any) shall be issued in the name of
and delivered to the undersigned, unless otherwise specified by written
instructions, signed by the undersigned and accompanying this subscription.
[The following paragraph need be completed only if the Purchase Price and number
of shares of Common Stock specified in the within Warrant have been adjusted
pursuant to Section 6.]
The shares hereby subscribed for constitute __________ shares of Common Stock
(to the nearest whole share) resulting form adjustment of __________ shares of
the total of ________ shares of Common Stock covered by the within Warrant, as
said shares were constituted at the date of the Warrant.
Dated: ______________________
Signature: _____________________
Address: _____________________
_____________________
17