EXHIBIT 10.7. WARRANT SIDE AGREEMENT ISSUED IN CONNECTION WITH INVESTMENT
AGREEMENT BETWEEN US AND SWARTZ
AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of June 26, 2000,
by and among COSMOZ.COM, INC., a corporation duly organized and existing under
the laws of the State of Delaware (the "Company") and Swartz Private Equity, LLC
(hereinafter referred to as "Swartz").
RECITALS:
WHEREAS, pursuant to the Company's offering ("Equity Line") of up to
Twenty Million Dollars ($20,000,000), excluding any funds paid upon exercise of
the Warrants, of Common Stock of the Company pursuant to that certain Investment
Agreement (the "Investment Agreement") between the Company and Swartz dated on
or about June 26, 2000, the Company has agreed to sell and Swartz has agreed to
purchase, from time to time as provided in the Investment Agreement, shares of
the Company's Common Stock for a maximum aggregate offering amount of Twenty
Million Dollars ($20,000,000); and
WHEREAS, pursuant to the terms of the Investment Agreement, the Company
has agreed, among other things, to issue to the Subscriber Commitment Warrants,
as defined in the Investment Agreement, to purchase a number of shares of Common
Stock, exercisable for five (5) years from their respective dates of issuance.
TERMS:
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in Agreement and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Issuance of Commitment Warrants. As compensation for entering into the
Equity Line, Swartz received a warrant convertible into 2,400,000 shares of the
Company's Common Stock, in the form attached hereto as Exhibit A (the
"Commitment Warrants").
2. Issuance of Additional Warrants. If the Company shall at any time
effect a recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a smaller number of shares (a "Reverse Stock Split"), then on
the date of such Reverse Stock Split, and on each one year anniversary (each, an
"Anniversary Date") of the Reverse Stock Split thereafter throughout the term of
the Commitment Warrants, the Company shall issue to Swartz additional warrants
(the "Additional Warrants"), in the form of Exhibit A, to purchase a number of
shares of Common Stock, if necessary, such that the sum of the number of
Warrants and the number of Additional Warrants issued to Swartz shall equal at
least 4.0% of the number of fully diluted shares of Common Stock of the Company
that are outstanding immediately following the Reverse Stock Split or
Anniversary Date, as applicable. The Additional Warrants shall be exerciseable
at the same price as the Commitment Warrants, shall have the same reset
provisions as the Commitment Warrants, shall have piggyback registration rights
and shall have a 5-year term.
3. Opinion of Counsel. Concurrently with the issuance and delivery of the
Commitment Opinion (as defined in the Investment Agreement) to the Investor, or
on the date that is six (6) months after the date of this Agreement, whichever
is sooner, the Company shall deliver to the Investor an Opinion of Counsel
(signed by the Company's independent counsel) covering the issuance of the
Commitment Warrants and the Additional Warrants, and the issuance and resale of
the Common Stock issuable upon exercise of the Warrants and the Additional
Warrants.
4. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia applicable to agreements made
in and wholly to be performed in that jurisdiction, except for matters arising
under the Act or the Securities Exchange Act of 1934, which matters shall be
construed and interpreted in accordance with such laws.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
this 26th day of June, 2000.
COSMOZ.COM, INC.
By: /s/ Wilfred Shaw
--------------------------------
Wilfred Shaw, Chairman & CEO
Cosmoz.com, Inc.
1515 S. El Camino Road, Suite 100
San Mateo, CA 94402
Telephone (650) 358-1188
Facsimile (650) 358-0188
SUBSCRIBER:
SWARTZ PRIVATE EQUITY, LLC.
By: /s/ Eric S. Swartz
---------------------------
Eric S. Swartz, Manager
1080 Holcomb Bridge Road
Bldg. 200, Suite 285
Roswell, GA 30076
Telephone: (770) 640-8130
Facsimile: (770) 640-7150
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