Exhibit 10.14
Note: This warrant represents rights to acquire 47,059 shares of common stock at
$3.19 as a result of the 1 for 4.25 reverse stock split effective subsequent to
the original date of issuance of this warrant.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT IS ISSUABLE PURSUANT TO THE NOVEMBER 3, 1998 OFFERING
CONSULTING AGREEMENT BETWEEN DURASWITCH AND ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
No. W98-004 Warrant to Purchase 200,000 Shares of
Common Stock (subject to adjustment)
WARRANT TO PURCHASE COMMON STOCK
of
DURASWITCH INDUSTRIES, INC.
Void after November 20, 2003
This certifies that ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (the "Holder"), or assigns, for value
received, is entitled to purchase from DuraSwitch Industries, Inc., a Nevada
corporation (the "Company"), having a place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, 200,000 shares of Common Stock of the Company at the Stock
Purchase Price as set forth in Section 1. The term "Common Stock" means the
common stock of the Company.
This Warrant is subject to the following terms and conditions:
1. Determination of Stock Purchase Price. The exercise price per share of this
Warrant is $0.75 per share, as adjusted pursuant to Section 4 (the "Stock
Purchase Price").
2. Exercise; Issuance of Certificates; Payment for Shares. This Warrant is
exercisable at the option of the Holder, at any time or from time to time,
before 5:00 p.m. Mountain Standard Time on November 20, 2003 (the
"Expiration Date") upon surrender to the Company, at its principal office
or such other place as Company may designate, of this Warrant properly
endorsed with the Form of Subscription (attached hereto) fully filled in,
signed and, if applicable, payment, by cashless exercise notice (closing
price on the date of notice shall govern net issue of shares), cashier's
check or wire transfer, of the Stock Purchase Price. The Holder must
exercise this Warrant in full by November 20, 2003. The Company agrees that
the shares of Common Stock purchased under this Warrant shall be and are
deemed to be issued to the Holder as the record owner of such shares as of
the close of business on the date on which this Warrant shall have been
surrendered, properly endorsed, the completed, executed Form of
Subscription (attached to this Warrant) delivered and payment made by
cashless exercise notice (net shares to be issued), cashier's check or wire
transfer for such shares. Certificates for the shares of Common Stock so
purchased, together with any other securities or property to which the
Holder is entitled upon such exercise, shall be delivered
to the Holder by the Company at the Company's expense within a reasonable
time after the rights represented by this Warrant have been so exercised.
In case of a purchase of less than all the shares which may be purchased
under this Warrant, the Company shall cancel this Warrant and execute and
deliver a new Warrant or Warrants of like tenor for the balance of the
shares purchasable under the Warrant surrendered upon such purchase to the
Holder hereof within a reasonable time.
3. Reservation of Shares. The Company covenants and agrees that all shares of
Common Stock which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be free of all taxes,
liens and charges with respect to the issuance thereof (other than income
taxes and taxes in respect of any transfer occurring contemporaneously or
otherwise specified herein). The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may
be exercised, the Company will at all times have authorized and reserved,
for the purpose of issue or transfer upon exercise of the subscription
rights evidenced by this Warrant, a sufficient number of shares of
authorized but unissued Common Stock, or other securities and property,
when and as required to provide for the exercise of the rights represented
by this Warrant.
4. Adjustment of Stock Purchase Price and Number of Shares. The Stock Purchase
Price and the number of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events described in this Section 4.
4.1 Subdivision or Combination of Stock. If the Company at any time while
this Warrant or any portion of it remains outstanding and unexpired
shall subdivide its outstanding shares of Common Stock into a greater
number of shares, the Stock Purchase Price in effect immediately prior
to such subdivision shall be proportionately reduced, and conversely,
in case the outstanding shares of Common Stock of the Company shall be
combined into a smaller number of shares, the Stock Purchase Price in
effect immediately prior to such combination shall be proportionately
increased.
4.2 Dividends in Common Stock, Other Stock, Property, Reclassification. If
while this Warrant or any portion of it remains outstanding and
unexpired the holders of Common Stock (or any shares of stock or other
securities at the time receivable upon the exercise of this Warrant)
shall have received or become entitled to receive, without payment
therefor other or additional stock or other securities or property
(other than cash) of the Company by way of dividend (other than (i)
shares of Common Stock) issued as a stock split, adjustments in
respect of which shall be covered by the terms of Section 4.1 above or
(ii) an event for which adjustment is otherwise made pursuant to
Section 4.4 below), then and in each such case, the Holder shall, upon
the exercise of this Warrant, be entitled to receive, in addition to
the number of shares of Common Stock receivable thereupon, and without
payment of any additional consideration therefor, the amount of stock
or other securities or property (other than cash) of the Company which
such Holder would hold on the date
2
of such exercise had he been the holder of record of such Common Stock
as of the date on which holders of Common Stock received or became
entitled to receive such shares or all other additional stock and
other securities.
4.3 Reorganization, Reclassification, Consolidation, Merger or Sale. If
while this Warrant or any portion of it remains outstanding and
unexpired any capital reorganization or reclassification of the
capital stock of the Company, or any consolidation 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 Common Stock shall be entitled to receive stock,
securities, or other assets or property, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale,
lawful provisions shall be made so that the Holder shall thereafter
have the right to purchase and receive upon exercise of this Warrant
such shares of stock, securities or other assets or property of the
successor corporation resulting from such consolidation, merger,
reorganization, reclassification, sale or transfer that the Holder
would have been entitled to receive in such consolidation, merger,
reorganization, reclassification, sale or transfer if this Warrant had
been exercised immediately before such consolidation, merger,
reorganization, reclassification, sale or transfer, all subject to
further adjustment pursuant to this Section 4. In the event the value
of the stock, securities or other assets or property (if not in cash
or marketable securities, then the value will be determined in good
faith by the Board of Directors of the Company) issuable or payable
with respect to one share of the Common Stock of the Company
immediately before such consolidation, merger, reorganization,
reclassification, sale or transfer purchasable and receivable upon the
exercise of the rights represented by this Warrant is in excess of the
Stock Purchase Price effective at the time of such consolidation,
merger, reorganization, reclassification, sale or transfer, or
securities received in such consolidation, merger, reorganization,
reclassification, sale or transfer, if any, are publicly traded, then
this Warrant shall expire unless exercised prior to such
consolidation, merger, reorganization, reclassification, sale or
transfer. In any such consolidation, merger, reorganization,
reclassification, sale or transfer described above, appropriate
provision shall be made with respect to the rights and interests of
the Holder so that the provision hereof (including, without
limitation, provisions for adjustments of the Stock Purchase Price and
of the number of shares purchasable and receivable upon the exercise
of this Warrant) shall thereafter be applicable, as nearly as may be,
in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof.
4.4 Notice of Adjustment. Upon any determination or adjustment of the
Stock Purchase Price or in the conversion ratio of the Common Stock or
any increase or decrease in the number of shares purchasable upon the
exercise of this Warrant, the Company shall give written notice
thereof, by first class mail, postage prepaid, addressed to the
registered Holder of this Warrant at the address of such Holder as
shown on the books of the Company. The notice shall be signed by the
Company's chief financial officer and shall state the Stock Purchase
Price resulting from such adjustment and
3
the increase and decrease, if any, in the number of shares purchasable
at such price upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which
such calculation is based.
4.5 Other Notices. If at any time:
(A) the Company shall declare any cash dividend upon its Common
Stock;
(B) the Company shall declare any dividend upon its Common Stock
payable in stock or make any special dividend or other
distribution to the holders of its Common Stock;
(C) the Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class
or other rights;
(D) there shall be any capital reorganization or reclassification of
the capital stock of the Company; or consolidation or merger of
the Company with, or sale of all or substantially all of its
assets to another corporation;
(E) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(F) there shall be an initial public offering of Company securities;
then, in any one or more of said cases, the Company shall give, by
first class mail, postage prepaid, addressed to the Holder of this
Warrant at the address of such Holder as shown on the books of the
Company, (a) at least 15 days' prior written notice of the date on
which the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, winding-up or public offering, at least 15
days' prior written notice of the date when the same shall take place;
provided, however, that the Holder shall make a best efforts attempt
to respond to such notice as early as possible after the receipt
thereof. Any notice given in accordance with the foregoing clause (a)
shall also specify, in the case of any such dividend, distribution or
subscription rights,-the date on which the holders of Common Stock
shall be entitled thereto. Any notice given in accordance with the
foregoing clause (b) shall also specify the date on which the holders
of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale dissolution,
liquidation, winding-up, conversion or public offering, as the case
may be.
4
4.6 Rights Offering. In the event the Company offers to its stockholders
the right to purchase Common Stock on a pro rata basis, the Holder
will be entitled, at its option, to elect to participate in each and
every such offering as though this Warrant has been exercised and the
Holder were, at the time of any such rights offering, then a Holder of
that number of shares of Common Stock to which the Holder is then
entitled on the exercise hereof.
5. No Voting or Dividend Rights; Limitation of Liability. Nothing contained in
this Warrant shall be construed as conferring upon the holder hereof the
right to vote or to consent or to receive notice as a shareholder of the
Company or any other matters or any rights whatsoever as a shareholder of
the Company. No dividends or interest shall be payable or accrued in
respect of this Warrant or the interest represented hereby or the shares
purchasable hereunder until, and only to the extent that, this Warrant
shall have been exercised. No provisions hereof, in the absence of
affirmative action by the holder 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 Stock Purchase
Price or as a shareholder of the Company, whether such liability is
asserted by the Company or by its creditors.
6. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
7. Notices. Any notice, request or other document required or permitted to be
given or delivered to the Holder or the Company shall be delivered
personally, sent by registered mail, postage prepaid, or by confirmed fax
with copy by first-class mail, to the Holder at its address as shown on the
books of the Company or to the Company at the address indicated therefor in
the first paragraph of this Warrant or such other address as either may
from time to time provide to the other in the manner described in this
Section.
8. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets. All of the obligations
of the Company relating to the Common Stock issuable upon the exercise of
this Warrant shall survive the exercise and termination of this Warrant.
All of the covenants and agreements of the Company shall inure to the
benefit of the successors and assigns of the Holder.
9. Descriptive Headings and Governing Law. The description headings of the
several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. This Warrant
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of Arizona.
10. Lost Warrants. The Company represents and warrants to the Holder that upon
receipt of evidence satisfactory to the Company of the loss, theft,
destruction, or mutilation of this
5
Warrant and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the
case of any such mutilation upon surrender and cancellation of such
Warrant, the Company, at its expense, will make and deliver a new Warrant,
or like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant.
11. Fractional Shares. No fractional shares shall be issued upon exercise of
this Warrant. The Company shall, in lieu of issuing any fractional share,
pay the holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Stock Purchase Price.
12. Registration.
(a) Piggyback Registration. If the Company at any time proposes to file a
registration statement with respect to any class of equity securities,
whether for its own account (other than a registration statement on
Form S-4 or S-8, or any successor or substantially similar form or a
registration statement covering (i) an employee stock option, stock
purchase or compensation plan or securities issued or issuable
pursuant to any such plan or (ii) a dividend reinvestment plan) or for
the account of a holder of securities of the Company pursuant to
registration rights granted by the Company (a "Requesting
Securityholder"), then the Company shall in each case give written
notice of such proposed filing to Holder at least 20 Business Days
before the anticipated filing date of any such registration statement
by the Company, and such notice shall offer to Holder the opportunity
to have any or all of the Registrable Securities held by Holder
included in such registration statement. If Holder desires to have the
Registrable Securities registered under this Section 3, Holder must so
advise the Company in writing within 10 Business Days after the date
of receipt of such notice (which request shall set forth the amount of
Registrable Securities for which registration is requested), and the
Company shall include in such Registration Statement all the
Registrable Securities so requested to be included therein; provided,
however, that if such Registration Statement is for an Underwritten
Offering, Holder shall join in the underwriting on the same terms and
conditions as the Company or the Requesting Securityholders and shall
execute any underwriting agreement, "lock-up" letters or other
customary agreements or documents executed by the Company or the
Requesting Securityholders in connection therewith, except Holder
shall not be required to give any representations and warranties
relating to the Company. Company shall pay all Registration Expenses
with respect to any registration pursuant to this Section 3(a).
(b) Demand Registration. (i) Upon the written request of Holder, and
provided that there is then no Registration Statement in effect with
respect to the Registrable Securities, the Company will effect, in
accordance with the terms of this Agreement,
6
the registration under the Securities Act of the Registrable
Securities held by Holder which the Company has been so requested to
register by Holder, subject to Section 3(c); provided that the number
of securities requested to be so registered shall be not less than 50%
of the Registrable Securities held by Holder. Holder cannot request
such registration earlier than one year after the date of this
Agreement. In addition, Holder cannot request such registration during
the 90-day period following the completion of any Underwritten
Offering. The Company shall not be obligated to effect more than two
demand registrations pursuant to this Section 3(b), provided that the
Company shall not be required to effect more than one registration on
a form other than S-3 (or any successor to such form). Holder shall
pay all Registration Expenses with respect to any registration
pursuant to this Section 3(b).
(c) No Obligation. Neither the giving of notice by the Company nor any
request by Holder to register Registrable Securities pursuant to
Section 3(a) shall in any way obligate the Company to file any such
Registration Statement. The Company may, at any time prior to the
effective date thereof, determine not to offer the securities to which
Registration Statement relates and/or withdraw the Registration
Statement from the SEC, without liability of the Company to the
Holders.
13. Registration Procedures and Other Agreements.
(a) General. In connection with the Company's registration obligations
pursuant to Section 3, the Company will:
(i) prepare and file with the SEC a new Registration Statement or
such amendments and post-effective amendments to an existing
Offering Registration Statement as may be necessary to keep
such Registration Statement effective; provided, however, that
no Registration Statement shall be required to remain in
effect after all Registrable Securities covered by such
Registration Statement have been sold and distributed as
contemplated by such Registration Statement;
(ii) furnish to each selling Holder, without charge, at least one
manually signed or "Edgarized" copy and as many conformed
copies as may reasonable be requested, of the then effective
Registration Statement and any post-effective amendment
thereto, and one copy of all financial statements and
schedules, all documents incorporated therein by reference and
all exhibits thereto (including those incorporated by
reference);
(iii) deliver to each selling Holder, without charge, as many copies
of the then effective Prospectus (including each prospectus
subject to completion)and any
7
amendments or supplements thereto as such Holder may reasonably
request; and
(iv) cooperate and assist in any filings required to be made with the
National Association of Securities Dealers, Inc.
(b) Each selling Holder must furnish to the Company, upon request, in
writing such information and documents as, in the opinion of counsel
to the Company may be reasonably required to prepare properly and file
such Registration Statement in accordance with the applicable
provisions of the Securities Act.
14. Registration Expenses. "Registration Expenses" include without limitation
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
one counsel in connection with blue sky qualifications or registrations (or
the obtaining of exemptions therefrom) of the Registrable Securities,
printing expenses (including expenses of printing Prospectuses), messenger
and delivery expenses, internal expenses (including all salaries and
expenses of its officers and employees performing legal or accounting
duties), fees and disbursements of its counsel and its independent
certified public accountants (including the expenses of any special audit
or "comfort" letters required by or incident to such performance or
compliance), securities acts liability insurance (if the Company elects to
obtain such insurance), fees and expenses of any special experts retained
by the Company in connection with any registration hereunder and the fees
and expenses of any other Person retained by the Company.
DATED 11/20/98
HOLDER: COMPANY:
▇▇▇▇▇▇ ▇. Brilton DURASWITCH INDUSTRIES, INC.,
a Nevada corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By /s/ R. ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------- --------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ R. ▇▇▇▇▇▇ ▇▇▇▇▇▇,
Chief Executive Officer
8