Void after 5:00 p.m., New York Time on May ____, 2009
Warrant to Purchase 1,000,000 Shares of Common Stock
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WARRANT TO PURCHASE COMMON STOCK
OF
xXXXXXXXXXX.XXX, INC.
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THIS WARRANT AND THE SHARES OF COMMON STOCK
ISSUABLE PURSUANT TO THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"),
AND ARE BEING OFFERED AND SOLD PURSUANT
TO RULE 506 OF REGULATION D
FOR VALUE RECEIVED, xXxxxxxxxxx.xxx, Inc., a Nevada corporation (the
"Company"), grants the following rights to XXXXXXXXXXX XXXXX ("Holder"):
ARTICLE 1. DEFINITIONS.
As used herein, the following terms shall have the following meanings, unless
the context shall otherwise require:
(a) "Common Stock" shall mean the common stock, par value $0.001
per share, of the Company.
(b) "Corporate Office" shall mean the office of the Company (or its
successor) at which at any particular time its principal business shall be
administered.
(c) "Closing" shall have mean the date the Company receives funds
from the Units as described in the Confidential Private Offering Term Sheet and
Subscription Agreement.
(d) "Exercise Date" shall mean any date upon which the Holder shall
give the Company a Notice of Exercise.
(e) "Exercise Price" shall mean the price to be paid to the Company
for each share of Common Stock to be purchased upon exercise of this Warrant in
accordance with the terms hereof. The Exercise Price is $0.315 per Share,
subject to the anti-dilution provisions of Section 2.6.
(f) "Expiration Date" shall mean 5:00 p.m. (New York time) on May
__, 2009.
(g) "SEC" shall mean the United States Securities and Exchange
Commission.
(h) ""Underlying Shares" shall mean the shares of the Common Stock
issuable upon exercise of the Warrant.
ARTICLE 2. EXERCISE AND AGREEMENTS.
2.1 Exercise of Warrant. This Warrant shall entitle Holder to purchase
up to one million (1,000,000) shares of Common Stock (the "Shares") at the
Exercise Price. This Warrant shall be exercisable at any time and from time to
time prior to the Expiration Date (the "Exercise Period"). This Warrant and the
right to purchase Shares hereunder shall expire and become void at the
Expiration Date.
2.2 Manner of Exercise.
(a) Holder may exercise this Warrant at any time, starting at the
time of closing and from time to time during the Exercise Period, in whole or in
part (but not in denominations of fewer than 10,000 Shares, except upon an
exercise of this Warrant with respect to the remaining balance of Shares
purchasable hereunder at the time of exercise), by delivering to the Company)
(i) a duly executed Notice of Exercise in substantially the form attached as
Appendix 1 hereto, and (ii) a wire transfer or check for the aggregate Exercise
Price of the Shares being purchased.
(b) From time to time upon exercise of this Warrant, in whole or
part, in accordance with its terms, the Company will instruct its transfer agent
to will deliver stock certificates to the Holder representing the number of
Shares being purchased pursuant to such exercise, subject to adjustment as
described herein.
(c) Promptly following any exercise of this Warrant, if the Warrant
has not been fully exercised and has not expired, the Company will deliver to
the Holder a new Warrant for the balance of the Shares covered hereby.
2.3 Termination. All rights of the Holder in this Warrant, to the
extent they have not been exercised, shall terminate on the Expiration Date.
2.4 No Rights Prior to Exercise. Prior to its exercise pursuant to
Section 2.2 above, this Warrant shall not entitle the Holder to any voting or
other rights as holder of Shares.
2.5 Adjustments.
(a) Dilutive Issuances. The Warrant is subject to "full ratchet"
anti-dilution protection relating to the issuance of any future equity
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securities or common stock equivalents that contain a purchase, conversion or
exercise price below the Warrant exercise price of $0.315 per Share
(collectively "Dilutive Issuance"). If the Company issues any equity securities
or common stock equivalents that equate to a Dilutive Issuance because the
issuance, conversion or exercise price of such security is less than the
Exercise Price, then the Exercise Price shall be immediately adjusted downward
to equal the price in the Dilutive Issuance.
(b) Reclassification. In case of any reclassification, stock split,
or reverse stock split, capital reorganization, stock dividend or other change
of outstanding shares of Common Stock, the Company shall cause effective
provision to be made so that the Holder shall have the right thereafter, by
exercising this Warrant, to purchase the kind and number of shares of stock or
other securities or property (including cash) receivable upon such capital
reorganization, stock dividend, stock split, or reverse stock split, as the
Holder would have been entitled to receive had the Holder exercised this Warrant
in full immediately before such reclassification, capital reorganization, stock
dividend, stock split, or reverse stock split, or conveyance. Any such provision
shall include provision for adjustments that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 2.5. The
foregoing provisions shall similarly apply to successive reclassifications,
capital reorganizations, stock dividends, stock split, or reverse stock split,
and other changes of outstanding shares of Common Stock.
(c) Merger. In the case of any consolidation or merger of the
Company with or into another corporation (other than a consolidation or merger
in which the Company is the continuing corporation and which does not result in
any reclassification, capital reorganization, stock dividend or other change of
outstanding change of outstanding common stock), or in the case of any sale or
conveyance to another corporation of the property of the corporation as, or
substantially as, an entirety (collectively "Sale of the Business") the Company
shall give the warrant holder at least twenty (20) business days advance notice
of the material terms and conditions of the Sale of Business transaction. The
Warrant Holder shall notify the Company within five (5) business days of the
expected closing date of the Sale of Business as disclosed in the notification
by the Company to the Warrant Holder of the Warrant Holder's intent to exercise
this Warrant, which exercise shall include the notice of exercise and a bank
cashier's or certified check for the aggregate Exercise Price of the underlying
Shares being purchased. If the Warrant Holder does not timely elect to exercise
the Warrant in accordance with these provisions the Warrant shall terminate and
be null and void.
2.6 Fractional Shares. No fractional Shares shall be issuable upon
exercise of this Warrant and the number of Shares to be issued shall be rounded
up to the nearest whole Share. If a fractional Share interest arises upon any
exercise of the Warrant, the Company shall eliminate such fractional Share
interest by issuing Holder an additional full Share.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company hereby represents and
warrants to the Holder as follows:
(a) All Shares which may be issued upon the exercise of the
purchase right represented by this Warrant shall, upon issuance, be duly
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authorized, validly issued, fully-paid and nonassessable, and free of any liens
and encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws, and not subject to any
pre-emptive rights.
(b) The Company is a corporation duly organized and validly
existing under the laws of the State of Nevada, and has the full power and
authority to issue this Warrant and to comply with the terms hereof. The
execution, delivery and performance by the Company of its obligations under this
Warrant, including, without limitation, the issuance of the Shares upon any
exercise of the Warrant have been duly authorized by all necessary corporate
action. This Warrant has been duly executed and delivered by the Company and is
a valid and binding obligation of the Company, enforceable in accordance with
its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting enforceability of
creditors' rights generally and except as the availability of the remedy of
specific enforcement, injunctive relief or other equitable relief is subject to
the discretion of the court before which any proceeding therefor may be brought.
(c) The Company is not subject to or bound by any provision of any
certificate or articles of incorporation or by-laws, mortgage, deed of trust,
lease, note, bond, indenture, other instrument or agreement, license, permit,
trust, custodianship, other restriction or any applicable provision of any law,
statute, rule, regulation, judgment, order, writ, injunction or decree of any
court, governmental body, administrative agency or arbitrator which could
prevent or be violated by or under which there would be a default (or right of
termination) as a result of the execution, delivery and performance by the
Company of this Warrant.
(d) The Company is subject to the reporting requirements of Section
13 or Section 15d of the Securities Exchange Act of 1934, as amended. The
Company is eligible to issue the Warrants and the Underlying Shares pursuant to
Rule 506 of Regulation D promulgated under the Securities Act.
ARTICLE 4. REDEMPTION OF WARRANTS
4. Redemption of Warrants. The Warrants are not redeemable for one (1)
year from the Closing. Therefore the Company, at its option, may redeem all or
any portion on a pro rata basis, of the outstanding Warrants at a price of $.01
per Warrant, upon at least 10 days' notice to the registered Holders of
Warrants, provided that the average closing price per share of Common Stock
(determined as hereinafter provided) shall have been $.50 or greater than the
applicable Exercise Price for a period of 20 consecutive business days ended
immediately prior to the date of such notice. For the purpose of determining
whether the Company may redeem the Warrants pursuant to this Section 4, the
closing price per share of Common Stock for each day shall be the last reported
sales price, regular way, or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices, regular way, in
either case, on any exchange (NASDAQ or OTC:BB) on which the Common Stock is
listed or admitted to trading, or, if there is no such representative closing
bid on NASDAQ or XXX.XX on such day, a price determined in any reasonable manner
approved by the Board of Directors of the Company.
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If the Company shall elect to redeem the Warrants pursuant to this
Section 4, notice of redemption shall be given to the Holders of all outstanding
Warrants at least 10 days prior to the date fixed for redemption, to their last
addresses as they shall appear on the warrant register, but failure to give such
notice by mail to the Holder of any Warrant, or any defect therein, shall not
affect the validity of the proceedings for the redemption of any other Warrants.
The notice shall state that the Company is redeeming the Warrant pursuant to the
Section 4 at the redemption price of $.01 per Warrant, and the date fixed for
redemption; shall state that payment of the redemption price of the Warrants
will be made at the corporate offices of the Company upon presentation and
surrender of such Warrants; shall state that the right to exercise the Warrants
will terminate as provided in this Agreement (stating the date of such
termination); and shall state the Exercise Price. The date of redemption for the
Warrants pursuant to this Section 4 shall be any date chosen by the Company
which complies with the notice requirement set forth in this Section 4. Warrant
Holders shall have the right to exercise the Warrants during this ten (10) day
notice period by complying with the manner of exercise provisions of Section
2.2. If a Warrant Holder does not elect to exercise during this ten (10) day
redemption notice period, the Warrants shall be considered redeemed and
cancelled. If the giving of notice of redemption shall have been completed as
provided above, and if funds sufficient for the redemption of the Warrants
pursuant to this Section 4 shall have been deposited into a separate bank
account for such purpose, the right to exercise the Warrants shall terminate,
provided the Warrant holder does not exercise during the ten (10) day redemption
notice period, at the close of business on the business day preceding the date
fixed for redemption, and the Holder of each Warrant shall thereafter be
entitled upon surrender of his Warrant, only to receive $.01 per Warrant,
without interest.
ARTICLE 5. MISCELLANEOUS.
5.1 Transfer. This Warrant may not be transferred or assigned, in whole
or in part, at any time, except in compliance with applicable federal and state
securities laws by the transferor and the transferee (including, without
limitation, the delivery of an investment representation letter and a legal
opinion reasonably satisfactory to the Company), provided that this Warrant may
not be transferred or assigned such that either the Holder or any transferee
will, following such transfer or assignment, hold a Warrant for the right to
purchase fewer than 10,000 Shares.
5.2 Transfer Procedure. Subject to the provisions of Section 5.1,
Holder may transfer or assign this Warrant by giving the Company notice setting
forth the name, address and taxpayer identification number of the transferee or
assignee, if applicable (the "Transferee") and surrendering this Warrant to the
Company for reissuance to the Transferee (and the Holder, in the event of a
transfer or assignment of this Warrant in part). (Each of the persons or
entities in whose name any such new Warrant shall be issued are herein referred
to as a Holder").
5.3 Loss, Theft, Destruction or Mutilation. If this Warrant shall
become mutilated or defaced or be destroyed, lost or stolen, the Company shall
execute and deliver a new Warrant in exchange for and upon surrender and
cancellation of such mutilated or defaced Warrant or, in lieu of and in
substitution for such Warrant so destroyed, lost or stolen, upon the Holder
filing with the Company evidence satisfactory to it that such Warrant has been
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so mutilated, defaced, destroyed, lost or stolen. However, the Company shall be
entitled, as a condition to the execution and delivery of such new Warrant, to
demand indemnity satisfactory to it and payment of the expenses and charges
incurred in connection with the delivery of such new Warrant. Any Warrant so
surrendered to the Company shall be canceled.
5.4 Notices. All notices and other communications from the Company to
the Holder or vice versa shall be deemed delivered and effective when given
personally, by facsimile transmission and confirmed in writing or mailed by
first-class registered or certified mail, postage prepaid at such address and/or
facsimile number as may have been furnished to the Company or the Holder, as the
case may be, in writing by the Company or the Holder from time to time.
5.5 Waiver. This Warrant and any term hereof may be changed, waived, or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
5.6 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Florida, without giving effect to its
principles regarding conflicts of law.
Dated: May __, 2004 xXXXXXXXXXX.XXX, INC.
Attest: ____________________ By:
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Xxxx Xxxxxx, President
HOLDER:
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Xxxxxxxxxxx Xxxxx
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APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase __________ shares
of the Common Stock of xXxxxxxxxxx.xxx, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
2. Please issue a certificate or certificates representing
said shares in the name of the undersigned or in such other name as is specified
below:
3. The undersigned represents he is acquiring the shares
solely for his own account and not with a view toward the resale or distribution
thereof except in compliance with applicable securities laws.
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Xxxxxxxxxxx Xxxxx
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(Date)
MTC/as/319116
