EXHIBIT 10.5
FORM OF WARRANT
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD
OR OFFERED
FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE
SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE
TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
SUPERCLICK, INC.
COMMON STOCK PURCHASE WARRANT
("CATCH-UP WARRANT")
1.
Issuance. In
consideration
of good and valuable
consideration,
the
receipt and sufficiency of which is hereby
acknowledged by
SUPERCLICK, INC.,
a
Washington corporation (the "Company"), CHICAGO VENTURE PARTNERS, L.P., an
Illinois limited partnership, or registered assigns (the "Holder") is
hereby
granted the right to purchase, at any time, on or after the occurrence of a
Prepayment Event (as defined below) until 5:00 P.M., Chicago time, on the
Expiration Date (as defined below), a number of fully paid and
nonassessable
shares of the Company's Common Stock, par value $.0006 per share (the
"Common
Stock") equal to the Exercisable Shares (as defined below), at an initial
exercise price per share (the "Exercise
Price") of $.0006,
subject to further
adjustment as set forth herein.
As used herein:
(i) "Prepayment Event" shall
mean the payment, prior to the Maturity Date, of all or a portion of the
outstanding principal of the Convertible Debentures; and (ii) "Exercisable
Shares" shall mean the aggregate number of
shares of Common Stock into which the
Convertible Debenture that is the subject of the Prepayment Event is
convertible, calculated as the Relevant Conversion Shares minus the Relevant
Payment Shares, where "Relevant Conversion
Shares" equals the amount of any such
prepayment divided by the then-current
Conversion Price, and
"Relevant Payment
Shares" equals the amount of any such
prepayment divided by the closing price of
the Common Stock on the last Trading Day
preceding the
Prepayment Event.
This
Warrant is being issued pursuant to the terms of that certain Securities
Purchase Agreement, dated as of August 1, 2005 (the
"Agreement"), to which
the
Company and Holder (or Holder's predecessor in interest) are parties.
Capitalized terms not otherwise defined herein
shall have the meanings ascribed
to them in the Agreement. This Warrant was originally issued to the Holder or
the Holder's predecessor in interest on
August 1, 2005 (the "Issue Date").
<PAGE>
2.
Exercise of Warrants.
2.1
General.
(a) This Warrant is
exercisable in whole or in part at any time and
from time to time commencing on a
Prepayment Date (as defined below), subject to
Section 1 hereof. Such exercise shall be effectuated by submitting to the
Company (either by delivery to the Company or by facsimile transmission as
provided in Section 8 hereof) a completed
and duly executed
Notice of Exercise
(substantially in the form attached to this
Warrant Certificate)
as provided in
the Notice of Exercise (or revised by notice given by the Company as
contemplated by the Section headed
"NOTICES" in the
Agreement).
The date such
Notice of Exercise is faxed to the Company
shall be the
"Exercise Date". The
Notice of Exercise shall be executed by the Holder of this Warrant and shall
indicate (i) the number of shares then
being purchased pursuant to such exercise
and (ii) if applicable (as provided
below), whether the exercise is a
cashless
exercise.
(b) If the Notice of Exercise form elects a "cashless" exercise,
the
Holder shall thereby be entitled to receive a
number of shares of Common Stock
equal to (w) the excess of the Current
Market Value (as
defined below) over the
total cash exercise price of the portion of the
Warrant then being
exercised,
divided by (x) the Market Price of the Common Stock. For the purposes of this
Warrant, the terms (y) "Current Market
Value" shall mean an amount equal to the
Market Price of the Common Stock, multiplied by the number of shares
of Common
Stock specified in such Notice of
Exercise Form,
and (z) "Market Price
of the
Common Stock" shall mean the Closing
Price of the Common
Stock on the Exercise
Date.
(c) If the Notice of Exercise form elects a "cash" exercise (or if
the cashless exercise referred to in the
immediately preceding
paragraph (b) is
not available in accordance with its terms), the Exercise Price per share of
Common Stock for the shares then being exercised shall be payable, at the
election of the Holder, in cash or by certified or official bank check or by
wire transfer in accordance with instructions provided by the Company at the
request of the Holder.
(d) Upon the appropriate payment, if any, of the Exercise
Price for
the shares of Common Stock purchased, together with the surrender of this
Warrant Certificate (if required), the Holder shall be entitled to
receive a
certificate or certificates for the shares of Common Stock so
purchased. The
Company shall deliver such certificates representing the Warrant Shares in
accordance with the instructions of the Holder as provided in the Notice of
Exercise (the certificates delivered in such manner, the "Warrant Share
Certificates") within three (3) Trading
Days (such third Trading Day, a "Warrant
Share Delivery Date") of (i) with respect
to a "cashless exercise," the Exercise
Date or, (ii) with respect to a "cash"
exercise, the later of
the Exercise Date
or the date the payment of the Exercise
Price for the relevant Warrant Shares is
received by the Company.
<PAGE>
(e) The Holder
shall be deemed to be the holder of the shares
issuable to it in accordance with the provisions of this Section 2.1 on the
Exercise Date.
(f) The Holder
may elect to
exercise a portion of this Warrant
without electing to redeem the balance of
this Warrant.
2.2 Limitation on Exercise. Notwithstanding the provisions of this
Warrant, the Agreement or of the other Transaction Agreements, in no event
(except (i) as specifically provided in this Warrant as an exception to this
provision, (ii) during the forty-five (45) day period prior to the
Expiration
Date, or (iii) while there is
outstanding a tender
offer for any or all of the
shares of the Company's Common Stock) shall the Holder be
entitled to exercise
this Warrant, or shall the Company have the
obligation to issue shares upon such
exercise of all or any portion of this
Warrant to the extent
that, after such
exercise the sum of (1) the number of
shares of Common Stock
beneficially owned
by the Holder and its affiliates (other
than shares of Common Stock which may be
deemed beneficially owned through the ownership of the
unexercised portion
of
the Warrants or other rights to purchase
Common Stock or
through the
ownership
of the unconverted portion of convertible
securities),
and (2) the number
of
shares of Common Stock issuable upon the exercise of the Warrants
with respect
to which the determination of this proviso is being made, would result in
beneficial ownership by the Holder and its
affiliates of more than 4.99% of the
outstanding shares of Common Stock (after
taking into account
the shares to be
issued to the Holder upon such exercise). For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended
(the "1934 Act"), except as otherwise provided in clause (1) of such
sentence.
The Holder, by its acceptance of this
Warrant, further agrees that if the Holder
transfers or assigns any of the Warrants to a party who or which
would not be
considered such an affiliate, such assignment shall be made subject to the
transferee's or assignee's specific agreement to be bound by the
provisions of
this Section 2.2 as if such transferee or assignee were the original Holder
hereof.
2.3 Certain Definitions. As used herein, each of the following
terms
has the meaning set forth below, unless the
context otherwise requires:
(a) "Expiration
Date" means the date on which the Convertible
Debentures have been paid in full by the
Company.
(b) "Prepayment
Date" means the date
on which a Prepayment
Event
occurs.
3.
Reservation
of Shares.
The Company
hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant, the Reservation
Percentage of the
number of shares of
its Common Stock as shall be required for
issuance of the Warrant Shares for the
then unexercised portion of this Warrant.
For the purposes of such calculations,
the Company should assume that the outstanding portion of this Warrants were
exercisable in full at any time,
without regard to any
restrictions which might
limit the Holder's right to exercise any portion of this Warrant held by the
Holder.
<PAGE>
4.
Mutilation or Loss of Warrant. Upon receipt by the Company of
evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or
destruction) receipt
of reasonably
satisfactory indemnification, and (in the
case of mutilation) upon surrender and
cancellation of this Warrant, the Company
will execute and deliver a new Warrant
of like tenor and date and any such lost,
stolen, destroyed or mutilated Warrant
shall thereupon become void.
5. Rights
of the Holder. Except as set forth in this Section 5, the
Holder
shall not, by virtue hereof, be entitled to any rights of a
stockholder in the
Company, either at law or equity,
and the rights of the
Holder are limited
to
those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.
Notwithstanding
the provisions of this
Warrant, the Agreement or of the other
Transaction
Agreements, if the
Company
shall declare a dividend upon the Common
Stock (whether payable
out of earnings
or earned surplus or otherwise), then the Company shall pay to the Holder an
amount equal to the dividend payment which would have been paid to the
Holder
had all of the Holder's unexercised Warrants outstanding
on the record date for
determining the amount of dividend
payments to be paid to
security holders
of
the Company been exercised as of the close of business on the Trading Day
immediately before such record date.
6.
Protection Against Dilution and Other Adjustments.
6.1 Adjustment Mechanism. If an adjustment of the Exercise
Price is
required pursuant to this Section 6 (other
than pursuant to Section 6.4), the
Holder shall be entitled to purchase
such number of shares
of Common Stock as
will cause (i) (x) the total n
