EXHIBIT 10.14
Law Offices of
FIRETAG, STOSS & DOWDELL, P.C.
1747 East Morten Avenue, Suite 107 Of Counsel:
JULES I. FIRETAG
Phoenix, Arizona 85020
STEPHEN T. MEADOW
(Deceased) JOHN L.
STOSS
Telephone (602) 279-9411
ROBERT M. FRISBEE
PAUL F. DOWDELL
Fax (602) 241-1260
SUSAN L. BOSTOCK
March 16, 2006
Via Federal Express
Mountainview Opportunistic Growth Fund, L.P.
Attention: Andrew Ecclestone
69 Lord Seaton Road
North York, Ontario Canada M2P 1K6
Re: Bestnet
Communications Corp.
Promissory Note and Warrant
Dear Mr. Ecclestone:
As counsel to Bestnet Communications Corp. (the "Company") and
pursuant to the Unit Purchase Agreement between the Company and
Mountainview
Opportunistic Growth Fund, L.P. (a copy of which is enclosed),
enclosed herewith
is the Company's originally executed Convertible Subordinated
Promissory Note in
the principal amount of US $350,000 and a Warrant to Purchase
200,000 Shares of
the Company's Common Stock.
If you have any questions or need additional information,
please
contact me.
Very truly yours,
FIRETAG, STOSS & DOWDELL, P.C.
/s/ JOHN L. STOSS
-----------------------------------
JOHN L. STOSS
JLS
Enclosures
cc: Michael
Kramarz (w/encl.)
<PAGE>
BestNet Promissory Note
NEITHER THIS CONVERTIBLE SUBORDINATED PROMISSORY NOTE NOR
THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE OR PROVINCIAL SECURITIES
LAWS, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, OR OTHERWISE DISPOSED OF UNLESS REGISTERED PURSUANT
TO THE PROVISIONS OF SUCH ACT AND BLUE SKY LAWS OR AN
EXEMPTION THEREFROM IS AVAILABLE AS ESTABLISHED BY A WRITTEN
OPINION OF COUNSEL ACCEPTABLE TO MAKER.
BESTNET COMMUNICATIONS CORP.
CONVERTIBLE SUBORDINATED PROMISSORY NOTE
$350,000
Phoenix, Arizona
March 13, 2006
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is
hereby
acknowledged, the undersigned, BestNet Communications Corp. a
Nevada corporation
(the "Maker"), promises to pay in lawful currency of the United
States of
America ("Currency") to Mountainview Opportunistic Growth Fund,
L.P., an Ontario
limited partnership (the "Payee"), fourteen (14) months from date,
the principal
sum of $350,000, plus interest on the unpaid principal balance at
the rate of 8%
per annum from the date hereof until paid in full.
At any time prior to maturity, Payee shall have the option to
convert all or
part of the unpaid principal balance of this Promissory Note into
that number of
Shares of the Common Stock, $.001 par value of the Maker (the
"Option") as shall
be equal to the unpaid principal balance of the Promissory Note
divided by $1.00
and any fractional Shares to be paid in Currency. To exercise the
Option, Payee
shall surrender this Promissory Note to the Maker, accompanied by
written notice
of Payee's intention to exercise the Option, which notice shall set
forth the
principal amount of this Promissory Note and such portion of the
unpaid
principal balance of the Promissory Note, if not the entire unpaid
principal
balance, to be converted into the Shares (the "Notice of
Conversion"). Maker
shall, within thirty (30) business days of Maker's receipt of the
Notice of
Conversion and Payee's surrender of this Promissory Note, deliver
the Shares or
cause them to be delivered, to the Payee, registered in the name of
the Payee.
Interest shall cease to accrue under this Promissory Note upon
Maker's receipt
of such Notice of Conversion.
When delivered, all Shares, including Shares issued and delivered
in payment of
interest due and payable hereunder, shall be duly authorized,
validly issued,
fully paid, and nonassessable. Maker shall take all action
necessary to maintain
the required authority to issue the Shares to Payee in payment of
interest due
and payable hereunder or in the event Payee exercises the
Option.
Prepayment of the principal of this Promissory Note is permitted,
in whole
or in part, without premium or penalty of any kind; provided Maker
provides
Payee with ten (10) business days' prior written notice of its
intention to
<PAGE>
BestNet Promissory Note
prepay the principal of this Promissory Note, in whole or in part,
during which
time Payee may exercise the Option by delivering to the Maker
Payee's Notice of
Conversion within ten (10) business days following Payee's receipt
of such
notice from the Maker. All partial prepayments shall first be
applied against
interest and then against principal.
This Promissory Note is given in consideration of a loan by Payee
to Maker in
the principal amount of this Promissory Note. This Promissory Note
may not be
changed orally, but only by an agreement in writing signed by the
parties
against whom enforcement of any waiver, change, modification, or
discharge is
sought.
The Maker promises to pay on demand all costs of collection,
including
reasonable attorneys' fees and court costs, paid or incurred by
Payee to enforce
this Promissory Note upon an Event of Default (as defined below)
hereunder.
The occurrence of any of the following shall constitute an "Event
of Default"
under this Promissory Note:
a.
The failure of Maker to make any payment of principal in
Currency when due under this Promissory Note (time is of the
essence), unless such failure is the result of payments of
principal in Currency required to be made with respect to any
Senior Debt (as defined below) of the Maker; and
b.
The institution of proceedings by or against the Maker under
any
state insolvency laws, federal bankruptcy law, or similar
debtor relief laws then in effect.
Upon an Event of Default that has not been cured within ten (10)
business days
from the date of written notice by Payee, Payee may, at Payee's
option and
without notice, declare all principal and interest due under this
Promissory
Note to be due and payable immediately. Payee may waive any default
before or
after it occurs and may restore this Promissory Note in full effect
without
impairing the right to declare it due for a subsequent default.
Payment of the
principal of this Promissory Note in Currency is subordinated in
right of
payment, to the prior payment of all Senior Debt of the Maker then
currently due
and payable. "Senior Debt" means all liabilities, contingent or
otherwise, of
the Maker (i) for borrowed money (but only if the recourse of the
lender is
secured by any assets of the Maker) and (ii) with respect to
letters of credit,
bankers acceptances, or similar instruments issued or accepted by
banks
("Indebtedness") incurred by the Maker prior to or after the date
of this
Promissory Note and any replacement, renewal, refinancing, and
extension
(whether direct or indirect) thereof; provided, however, that
notwithstanding
anything to the contrary in this Promissory Note, Senior Debt does
not include
(i) any Indebtedness of the Maker that by its terms or the terms of
the
instrument creating or evidencing it expressly provides that such
Indebtedness
is subordinate in right of payment to, or pari passu in right of
payment with,
this Promissory Note and (ii) any Indebtedness that ranks
subordinate in right
of payment to any other Indebtedness of the Maker; provided, that
the limitation
set forth in this clause (ii) shall not apply to distinctions
between categories
of Senior Debt that exist by reason of any liens arising or created
in respect
of some but not all Senior Debt.
THE PAYEE, BY ACCEPTING THIS PROMISSORY NOTE, AGREES TO SUCH
SUBORDINATION.
3
<PAGE>
IN WITNESS WHEREOF, the Maker has caused this Promissory Note to be
executed in
its corporate name by the signature of its duly authorized
officer.
BestNet Communications Corp.
By: /s/ Stanley L. Schloz
-------------------------------
Stanley L. Schloz
4
<PAGE>
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE
UPON
THE
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE OR PROVINCIAL
SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF UNLESS
REGISTERED
PURSUANT TO THE PROVISIONS OF SUCH ACT AND BLUE SKY LAWS OR AN
EXEMPTION THEREFROM IS AVAILABLE AS ESTABLISHED BY A WRITTEN
OPINION OF COUNSEL ACCEPTABLE TO MAKER.
WARRANT TO PURCHASE COMMON STOCK OF
BESTNET COMMUNICATIONS CORP.
This certifies that Mountainview Opportunistic Growth Fund, L.P.,
an Ontario
limited partnership ("Holder"), is entitled, subject to the terms
set forth
below, to purchase from BestNet Communications Corp., a Nevada
corporation, (the
"Company"), up to 200,000 shares of the Common Stock, $.001 par
value, of the
Company (the "Common Stock"), as constituted on the date hereof,
upon surrender
hereof at the principal office of the Company referred to below,
with the
subscription form attached hereto duly executed, and simultaneous
payment
therefor in lawful money of the United States or otherwise as
hereinafter
provided at the Exercise Price as set forth in Section 2 below. The
number,
character and Exercise Price of such shares of Common Stock are
subject to
adjustment as provided below. The term "Warrant" as used herein
shall include
this Warrant and any warrants delivered in substitution or exchange
therefor as
provided herein.
1. Term of Warrant. Subject to the terms and conditions set forth
herein, this
Warrant shall be exercisable, in whole or in part, during the term
commencing on
the date hereof and ending at on the second anniversary date hereof
and shall be
void thereafter.
2. Exercise Price. The exercise price at which this Warrant may be
exercised
shall be $0.35 per share of Common Stock, as adjusted from time to
time pursuant
to Section 8 hereof (the "Exercise Price").
3. Exercise of Warrant.
3.1. Method of Exercise. The purchase rights represented by this
Warrant are
exercisable by the Holder in whole or in part, but not for less
than 10,000
shares of Common Stock at a time (or such lesser number of shares
which may then
constitute the maximum number purchasable), at any time, or from
time to time,
during the term hereof as described in Section 1 above, by the
surrender of this
Warrant and the Notice of Exercise annexed hereto duly completed
and executed on
behalf of the Holder at the office of the Company (or such other
office or
agency of the Company as it may designate by notice in writing to
the Holder at
the address of the Holder appearing on the books of the Company),
upon payment
of the purchase price of the shares of Common Stock to be purchased
(i) in cash
or by check acceptable to the Company, (ii) by cancellation by the
Holder of
indebtedness of the Company to the Holder, or (iii) by a
combination of (i) and
(ii). No fractional shares or scrip representing fractional shares
shall be
issued upon the exercise of this Warrant. In lieu of any fractional
share to
which the Holder would otherwise be entitled, the Company shall
make a cash
payment in United States currency equal to the Exercise Price
multiplied by such
fraction.
3.2.
Issuance of Stock Certificates. This Warrant shall be deemed to
have
been
exercised immediately prior to the close of business on the date
of
its
surrender for
exercise as provided above, and the person entitled to receive the
shares of
Common Stock issuable upon such exercise shall be treated for all
purposes as
the Holder of record of such shares as of the close of business on
such date. As
<PAGE>
promptly as practicable on or after such date and in any event
within thirty
(30) days thereafter, the Company at its expense shall issue and
deliver to the
person or persons entitled to receive the same a certificate or
certificates for
the number of shares issuable upon such exercise. In the event that
this Warrant
is exercised in part, the Company at its expense will execute and
deliver a new
Warrant of like tenor exercisable for the number of remaining
shares of Common
Stock for which this Warrant may then be exercised.
4. Rights of Stockholders. This Warrant shall not entitle its
Holder to any of
the rights of a stockholder of the Company until, and except to the
extent that,
this Warrant is exercised.
5. Replacement of Warrant. One receipt of evidence reasonably
satisfactory to
the Company of the loss, theft, destruction or mutilation of this
Warrant and,
in the case of loss, theft or destruction, on delivery of an
indemnity agreement
or indemnity bond reasonably satisfactory in form and substance to
the Company
or, in the case of mutilation, on surrender and cancellation of
this Warrant,
the Company at its expense shall execute and deliver, at the
Holder's expense,
in lieu of this Warrant, a new warrant of like tenor and
amount.
6. Transfer of Warrant.
6.1. Transferability and Negotiability of Warrant. This Warrant may
not be
transferred or assigned in whole or in part except in compliance
with cognizant
securities laws.6.2. Warrant Register. The Company will maintain a
register (the
"Warrant Register")
containing the names and addresses of the Holder or Holders. Any
Holder of this
Warrant or any portion thereof may change its address as shown on
the Warrant
Register by written notice to the Company requesting such change.
Any notice or
written communication required or permitted to be given to the
Holder may be
delivered or given by mail to such Holder as shown on the Warrant
Register and
at the address shown on the Warrant Register. Until this Warrant is
transferred
on the Warrant Register of the Company, the Company may treat the
Holder as
shown on the Warrant Register as the absolute owner of this Warrant
for all
purposes, notwithstanding any notice to the Company.
6.3. Warrant Agent. The Company may, by written notice to the
Holder, appoint an
agent for the purpose of maintaining the Warrant Register, issuing
the Common
Stock or other securities then issuable upon the exercise of this
Warrant,
exchanging this Warrant, replacing this Warrant, or any or all of
the foregoing.
Thereafter, any such registration, issuance, exchange, or
replacement, as the
case may be, shall be made at the office of such agent.
6.4. Compliance with Securities Laws.
(a) The Holder of this Warrant, by acceptance hereof, acknowledges
that this
Warrant and the shares of Common Stock to be issued upon exercise
hereof or
conversion thereof are being acquired solely for the Holder's own
account and
not as a nominee for any other party, and not with a view to any
distribution
thereof by the Holder, and that the Holder will not offer, sell or
otherwise
dispose of this Warrant or any shares of Common Stock to be issued
upon exercise
hereof or conversion thereof except pursuant to an effective
registration
statement, or an exemption therefrom, under the Act and any
applicable state
securities laws. Upon exercise of this Warrant, the Holder shall,
if requested
by the
Company, confirm in writing, in a form satisfactory to the Company,
that the
shares of Common Stock or Common Stock so purchased are being
acquired solely
for the Holder's own account and not as a nominee for any other
party and not
with a view toward distribution.
(b) This Warrant and all shares of Common Stock issued upon
exercise hereof or
conversion thereof shall be stamped or imprinted with a legend in
substantially
the following form (in addition to any legend required by state
securities
laws):
"The
securities represented by this certificate have not been
registered under the Securities Act of 1933 or under the laws
of
any
state or province. The Securities may not be sold or offered
for
sale, in whole or in part, in the absence of an effective
registration statement covering them under said Act and
applicable state or provincial laws unless in the opinion of
counsel for the holder exemptions from such registration are
available, which opinion shall be subject to the approval of
the
Company and its counsel."
7. Reservation of Stock. The Company covenants that during the term
this Warrant
is exercisable, the Company will reserve from its authorized and
unissued Common
Stock a sufficient number of shares of Common Stock to provide for
the issuance
of Common Stock upon the exercise of this Warrant and, from time to
time, will
take all steps to amend its Articles of Incorporation to provide
sufficient
reserves of shares of Common Stock issuable upon exercise of the
Warrant. The
Company further covenants that all shares that may be issued upon
exercise of
the rights represented by this Warrant and payment of the Exercise
Price, all as
set forth herein, will be duly authorized, validly issued, fully
paid and
non-assessable and will be free from all taxes, liens and charges
in respect of
the issue thereof (other than taxes in respect of any transfer
occurring
contemporaneously or otherwise specified herein). The Company
agrees that its
issuance of this Warrant shall constitute full authority to its
officers who are
charged with the duty of executing stock certificates to execute
and issue the
necessary certificates for shares of Common Stock upon the exercise
of this
Warrant.
8. Adjustments. The Exercise Price and the number of shares of
Common Stock
purchasable hereunder are subject to adjustment from time to time
as follows:
8.1. Merger, Sale of Assets, etc. If at any time while this
Warrant, or any
portion thereof, is outstanding and unexpired there shall be (i)
a
reorganization (other than a combination, reclassification,
exchange or
subdivision of shares otherwise provided for herein), (ii) a merger
or
consolidation of the Company with or into another corporation in
which the
Company is not the surviving entity, or a reverse triangular merger
in which the
Company is the surviving entity but the shares of the Company's
capital stock
outstanding immediately prior to the merger are converted by virtue
of the
merger into other property, whether in the form of securities,
cash, or
otherwise, or (iii) a sale or transfer of the Company's properties
and assets
as, or substantially as, an entirety to any other person, then, as
a part of
such reorganization, merger, consolidation, sale or transfer,
lawful provision
shall be made so that the Holder of this Warrant shall thereafter
be entitled to
receive upon exercise of this Warrant, during the period specified
herein and
upon payment of the Exercise Price then in effect, the number of
shares of stock
or other securities or property of the successor corporation
resulting from such
reorganization, merger, consolidation, sale or transfer that a
Holder of the
shares deliverable upon exercise of this Warrant would have been
entitled to
receive in such reorganization, consolidation, merger, sale or
transfer if this
Warrant had been exercised immediately
before such reorganization, merger, consolidation, sale or
transfer, all subject
to further adjustment as provided in this Section 8. The foregoing
provisions of
this Section 8.1 shall similarly apply to successive
reorganizations,
consolidations, mergers, sales and transfers and to the stock or
securities of
any other corporation that are at the time receivable upon the
exercise of this
<PAGE>
Warrant. If the per share consideration payable to the Holder
hereof for shares
connection with any such transfer is in a form other than cash or
marketable
securities, then the value of such consideration shall be
determined in good
faith by the Company's Board of Directors. In all events,
appropriate adjustment
(as determined in good faith by the Company's Board of Directors)
shall be made
in the application of the provisions of this Warrant with respect
to the rights
and interests of the Holder after the transaction, to the end that
the
provisions of this Warrant shall be applicable after that event, as
near as
reasonably may be, in relation to any shares or other property
deliverable after
that event upon exercise of this Warrant.
8.2. Reclassification,
etc. If the Company, at any time while this Warrant, or
any portion thereof,
remains outstanding and unexpired by reclassification of
securities or
otherwise, shall change any of the securities as to which
purchase rights under
this Warrant exist into the same or a different number of
securities of any
other class or classes, this Warrant shall thereafter
represent the right to
acquire such number and kind of securities as would have
been issuable as the
result of such change with respect to the securities that
were subject to the
purchase rights under this Warrant immediately prior to
such reclassification
or other change and the Exercise Price therefore shall be
appropriately
adjusted, all subject to further adjustment as provided in this
Section 8.
8.3. Split, Subdivision or Combination of Shares. If the Company at
any time
while this Warrant, or any portion thereof, remains outstanding and
unexpired
shall split, subdivide or combine the securities as to which
purchase rights
under this Warrant exist into a different number of securities of
the same
class, the Exercise Price for such securities shall be
proportionately decreased
in the case of a split or subdivision or proportionately increased
in the case
of a combination.
8.4. Adjustments for Dividends in Stock or Other Securities or
Property. If
while this Warrant, or any portion hereof, remains outstanding and
unexpired the
holders of the securities as to which purchase rights under this
Warrant exist
at the time shall have received, or, on or after the record date
fixed for the
determination of eligible Stockholders, shall have become entitled
to receive,
without payment there for, other or additional stock or other
securities or
property (other than cash) of the Company by way of dividend, then
and in each
case, this Warrant shall represent the right to acquire, in
addition to the
number of shares of the security available upon exercise of this
Warrant, and
without payment of any additional consideration there for, the
amount of such
other or additional stock or other securities or Property (other
than cash) of
the Company that such Holder would have held on the date of such
exercise had it
been the Holder of record of the security receivable upon exercise
of this
Warrant on the date hereof and had thereafter, during the period
from the date
hereof to and including the date of such exercise, retained such
shares and/or
all other additional stock available by it as aforesaid during such
period,
giving effect to all adjustments called for during such period by
the provisions
of this Section 8.
8.5. Certificate as to Adjustments. Upon the occurrence of each
adjustment or
readjustment pursuant to this Section 8, the Company at its expense
shall
promptly compute such adjustment or readjustment in accordance with
the terms
hereof and furnish to the Holder of this Warrant a certificate
setting forth
such adjustment or readjustment and showing in detail the facts
upon which such
adjustment or readjustment is based.
The Company shall, upon the written request, at any time, of any
such Holder,
furnish or cause to be furnished to the Holder a like certificate
setting forth:
(i) such adjustments and readjustments; (ii) the Exercise Price at
the time in
effect; and (iii) the number of shares and the amount, if any, of
other property
that at the time would be received upon the exercise of this
Warrant.
<PAGE>
8.6. No Impairment. The Company will not, by any voluntary action,
avoid or seek
to avoid the observance or performance of any of the terms to be
observed or
performed hereunder by the Company, but will at all times in good
faith assist
in the carrying out of all the provisions of this Section 8 and in
the taking of
all such action as may be necessary or appropriate in order to
protect the
rights of the Holders of this Warrant against impairment.
9. Notices.
9.1. Notice Generally. Any notice, demand, request, consent,
approval,
declaration, delivery or communication hereunder to be made
pursuant to the
provisions of this Agreement shall be sufficiently given or made if
in writing
and shall be deemed to have been validly served, given or delivered
(i) three
(3) days after deposit in the United States mail, with proper
postage prepaid,
(ii) when sent after receipt of confirmation or answerback if sent
by telex or
telecopy or other similar facsimile transmission, (iii) one (1)
business day
after deposit with a reputable overnight courier with all charges
prepaid or
(iv) when delivered, if hand-delivered by messenger, all of which
shall be
properly addressed to the party to be notified and sent to the
address or number
indicated as follows:
(a)
If to the Holder, at its last known address appearing on the
books of the Company maintained for such purpose.
(b)
If to the Company at: 2850 Thornhills Ave SE, Ste 104 Grand
Rapids, Michigan 49546, with a copy to Stephen T. Meadow, Esq.,
c/o
Firetag, Stoss & Dowell, P.C., at 1747 East Morten Avenue,
Suite 107, Phoenix, AZ 85020,
or at such other address as may be substituted by notice given as
herein
provided. The giving of any notice required hereunder may be waived
in writing
by the party entitled to receive such notice.
9.2. Stock Distributions, Mergers, etc. In case:
(a) the Company shall take a record of the holders of its Common
Stock
(or other stock or securities at the time receivable upon the
exercise
of this Warrant) for the purpose of entitling them to receive
any
dividend or other distribution, or any right to subscribe for
company
shares of stock of any class or any other securities, or to
receive
any other right, or
(b) of any capital reorganization of the Company, any
reclassification
of the capital stock of the Company, and consolidation or merger
of
the Company with or into another corporation, or any conveyance of
all
or substantially all of the assets of the Company to another
corporation, or
(c) of any voluntary dissolution, liquidation or winding-up of
the Company, then, and in each such case, the Company will mail or
cause to be
mailed to the Holder a notice specifying, as the case may be, (A)
the date on
which a record is to be taken for the purpose of such dividend,
distribution or
right, and stating the amount and character of such dividend,
distribution or
right, or (B) the date on
which such
reorganization, reclassification, consolidation, merger,
conveyance,
dissolution,
liquidation or winding-up is to take place, and the time, if
any
is to be fixed, as of
which the holders of record of Common Stock (or such
stock or securities at
the time receivable upon the exercise of this Warrant)
shall be entitled to
exchange their of Common Stock (or such other stock or
securities) for
securities or other property deliverable upon such
<PAGE>
reorganization,
reclassification, consolidation, merger, conveyance,
dissolution,
liquidation or winding-up. Such notice shall be mailed at least
15
days prior to the date
therein specified.
10. Amendments. This Warrant and any term hereof may be changed,
waived,
discharged or terminated only by an instrument in writing signed by
the party
against which enforcement of such change, waiver, discharge or
termination is
sought. No waivers of, or exceptions to, any term, condition or
provision of
this Warrant, in any one or more instances, shall be deemed to be,
or construed
as, a further or continuing waiver of any such term, condition or
provision.
11. Registration Rights.
The Company covenants and agrees as follows:
11.1 Definitions. For purposes of this Section 11,
(a)
The term "Holder" means any person owning or having the right
to
acquire Registrable Securities (pursuant to the exercise of
the
Options).
(b)The term "1934 Act" shall mean the Securities Exchange Act
of
1934, as amended.
(c)The terms "register," "registered" and "registration" refer
to
a
registration effected by preparing and filing a registration
statement or similar document in compliance with the 1933 Act,
and
such registration statement or document becoming effective:
(d)
The term "Registrable Securities" means (i) the securities
issued or issuable upon the exercise of this Warrant and (ii)
any
Common Stock issued as (or issuable upon the conversion or
exercise of any Option, right or other security which is issued
as)
a dividend or other distribution with respect to, or in
exchange for or in replacement of securities referenced in (i)
above, but excluding in all cases, however, any Registrable
Securities sold by a person in a transaction in which his
rights
under this Section 11 of the Agreement are not assigned.
(e)The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of
Common Stock outstanding which have been, and the number of
shares of Common Stock issuable, pursuant to this Warrant.
(f)The term "SEC" means the United States Securities and
Exchange
Commission.
(g)
All other capitalized terms used in this Section 11 which are
not
defined herein shall have the meaning otherwise given in this
Agreement.
11.2 Request for Registration.
If the Company shall receive from the Holder at any time not
earlier than six
(6) months after the date of this Warrant or later than the earlier
of (i) one
year after the date of this Agreement or (ii) the effective date of
the first
registration statement filed by the Company covering an offering of
any of its
securities to the general public, a written request specifying that
it is made
pursuant to this Section 11.2 that the Company effect any
registration with
respect to all, but not less than all, of the Registrable
Securities, the
Company will:
<PAGE>
(a)
(i) promptly give written notice of the proposed registration
to
all other Holders; and
(ii)
as soon as practicable, use its diligent efforts to effect
such
registration (including, without limitation, filing
post-effective amendments, appropriate qualifications under
applicable blue sky or other state securities laws and
appropriate compliance with the Securities Act) as would permit
or
facilitate the sale and are specified in such request,
together with all or such portion of the Registrable Securities
of
any Holder or Holders joining in such request as are specified
in a
written request received by the Company within twenty (20)
days
after such written notice from the Company is effective.
The
Company shall not be obligated to effect, or to take any
action to effect, any such registration pursuant to this
Section
11.2:
(A)
In any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in
effecting such registration, qualification or compliance,
unless
the
Company is already subject to service in such jurisdiction
and
except as may be required by the Securities Act;
(B)
During the period starting with the date sixty (60) days
prior to the Company's good faith estimate
