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EXHIBIT 10.5
LICENSE AGREEMENT WARRANT TO PURCHASE
COMMON STOCK OF XSUNX, INC.
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EXHIBIT 10.5
Warrant Grant # 01-2004 Warrant Grant # 02-2004
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS
AND UNTIL REGISTERED UNDER THE SECURITIES ACT OR UNLESS AN
EXEMPTION THEREFROM
IS AVAILABLE.
LICENSE AGREEMENT WARRANT TO PURCHASE
COMMON STOCK OF XSUNX, INC.
This License Agreement Warrant ("Warrant") is issued as
consideration
for the grant of License pursuant to that certain Technology
Sharing and License
Agreement effective September 17, 2004 as set forth at Paragraph
16 hereof .
This certifies that MVSystems, Inc. (the "Holder") for value
received,
is entitled to purchase from Xsunx, Inc. (the "Company") Five
Million
(5,000,000) shares of the Company's Common Stock (the "Common
Stock") for a per
share exercise price equal to $ .15 (the "Per Share Exercise
Price"). This right
may be exercised at any time from the date hereof up to and
including 5:00 p.m.
(Denver City time) on September 17, 2009 (the "Expiration
Date"), upon surrender
to the Company at its principal office (or at such other
location as the Company
may advise the Holder in writing) of this Warrant, properly
endorsed, with the
Notice of Exercise and Subscription Form attached hereto duly
filled in and
signed, if applicable, and upon payment in cash or other form of
good and
immediately available funds reasonably satisfactory to the
Company of the
aggregate Per Share Exercise Price for the full number of shares
for which this
Warrant is being exercised determined in accordance with the
provisions hereof.
1. ISSUANCE OF CERTIFICATES.
Certificates for the shares of Common Stock acquired upon
exercise of
this Warrant, together with any other securities or property to
which the Holder
is entitled upon such exercise, will be delivered to the Holder
by the Company
at the Company's expense within a reasonable time after this
Warrant has been so
exercised and payment of the full Per Share Exercise Price has
been delivered to
the Company as set forth above and such funds have been
confirmed to the account
of the Company. The Company will deliver authorization
instructions to its share
transfer agent for the issuance of the above referenced Common
Stock within
three (3) business days of satisfaction of the above
requirements.
Each stock certificate so delivered will be in such
denominations of
Common Stock as may be requested by the Holder and will be
registered in the
name of the Holder. In case of a purchase of less than all the
shares that may
be purchased under this Warrant, the Company will cancel this
Warrant and
execute and deliver a new Warrant or Warrants of like tenor for
the balance of
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the shares purchasable under this Warrant to the Holder within a
reasonable time
after surrender of this Warrant.
2. SHARES FULLY-PAID, NONASSESSABLE, ETC.
All shares of Common Stock issued upon exercise of this Warrant
will,
upon issuance, be duly authorized, validly issued, fully-paid
and nonassessable
and free of all taxes, liens and charges with respect to the
issue thereof. The
Company will use reasonable commercial efforts to reserve and
keep available out
of its authorized but unissued shares of Common Stock, solely
for the purpose of
effecting the exercise of this Warrant, such number of its
shares of Common
Stock as from time to time are sufficient to effect the full
exercise of this
Warrant. If at any time the number of authorized but unissued
shares of Common
Stock are not sufficient to effect the exercise of this Warrant,
the Company
will use reasonable commercial efforts to take such corporate
action as may, in
the opinion of its counsel, be reasonably necessary to increase
its authorized
but unissued shares of Common Stock to such number of shares as
are sufficient
for such purpose.
3. NET ISSUE EXERCISE.
Notwithstanding any provisions herein to the contrary, if the
fair
market value of one share of the Company's Common Stock is
greater than the Per
Share Exercise Price (at the date of calculation as set forth
below), in lieu of
exercising this Warrant for cash, the Holder may elect to
receive shares equal
to the value (as determined below) of this Warrant (or the
portion thereof being
canceled) by surrender of this Warrant at the principal office
of the Company,
together with the properly endorsed Notice of Exercise and
Subscription Form and
notice of such election, in which event the Company will issue
to the Holder a
number of shares of Common Stock computed using the following
formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to
the
Holder
Y = the number of shares of Common Stock purchasable under
this Warrant or, if only a portion of this Warrant is being
exercised, the
portion of this Warrant being canceled (at the date of such
calculation)
A = the fair market value of one share of the Company's
Common
Stock (at the date of such calculation)
B = Per Share Exercise Price (as adjusted to the date of
such
calculation)
For purposes of the above calculation, fair market value of one
share
of Common Stock will be the average of the closing bid prices of
the Company's
shares of Common Stock as quoted on the New York Stock Exchange
(the "NYSE") (or
on such other United States stock exchange or public trading
market on which the
shares of the Company trade if, at the time of the election,
they are not
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trading on the NYSE), for the five (5) consecutive trading days
immediately
preceding the date of the date the completed, executed Notice of
Exercise and
Subscription Form is received, or (ii) in the absence of an
established market
or public marketability for the Stock due to trading
restrictions, the fair
market value shall be determined in good faith by the
Administrator and such
determination shall be conclusive and binding on all
persons.
4. ADJUSTMENTS.
4.1 Adjustment for Stock Splits and Combinations. If the
Company
at any time or from time to time during the term of this Warrant
effects a sub-
division of the outstanding Common Stock, the Per Share Exercise
Price in effect
immediately before that subdivision will be proportionately
decreased and the
number of remaining shares that can be purchased under this
warrant shall be
proportionatly increased to effect the same subdivision of
warrants as with the
outstanding Common Stock. Conversely, if the Company at any time
or from time to
time during the term of this Warrant combines the outstanding
shares of Common
Stock into a smaller number of shares, the Per Share Exercise
Price in effect
immediately before the combination will be proportionately
increased and the
number of remaining shares that can be purchased under this
warrant shall be
proportionatly decreased to effect the same subdivision of
warrants as with the
outstanding Common Stock. Any adjustment under this Section 4.1
will become
effective at the close of business on the date the subdivision
or combination
becomes effective.
4.2 Adjustment for Reclassification, Exchange and Substitution.
If at
any time or from time to time during the term of this Warrant
the Common Stock
issuable upon the exercise of this Warrant is changed into the
same or a
different number of shares of any class or classes of stock,
whether by
recapitalization, reclassification or otherwise (other than a
recapitalization,
subdivision, combination, reclassification or exchange provided
for elsewhere in
this Section 4), the Holder will have the right thereafter to
exercise this
Warrant for the kind and amount of stock and other securities
and property
receivable upon such recapitalization, reclassification or other
change into
which the shares of Common Stock issuable upon exercise of this
Warrant
immediately prior to such recapitalization, reclassification or
change could
have been converted, all subject to further adjustment as
provided herein or
with respect to such other securities or property by the terms
thereof.
4.3 Reorganizations. If at any time or from time to time during
the
term of this Warrant there is a capital reorganization of the
Common Stock
(other than a recapitalization, subdivision, combination,
reclassification or
exchange provided for elsewhere in this Section 4), as a part of
such capital
reorganization, provision will be made so that the Holder will
thereafter be
entitled to receive upon exercise of this Warrant the number of
shares of stock
or other securities or property of the Company to which a holder
of the number
of shares of Common Stock deliverable upon exercise of this
Warrant would have
been entitled on such capitalization reorganization, subject to
adjustment in
respect of such stock or securities by the terms thereof.
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5. OBLIGATION TO SELL.
Notwithstanding anything herein to the contrary, if at any
time
following Holder's acquisition of Shares hereunder, stockholders
of the Company
owning 51% or more of the shares of the Company (on a fully
diluted basis) (the
"Control Sellers") enter into an agreement (including any
agreement in
principal) to transfer all of their shares to any person or
group of persons who
are not affiliat
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