Contract
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER
ANY OTHER SECURITIES LAWS, STATE OR FEDERAL. THIS WARRANT AND THE SHARES
OF
COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED
FOR
SALE, PLEDGED, HYPOTHECATED ASSIGNED OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO STRATEGY INTERNATIONAL INSURANCE GROUP, INC.
(THE
“COMPANY”) IN FORM, SCOPE AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
STRATEGY
INTERNATIONAL INSURANCE GROUP, INC.
Issue
Date:
December 14,
2005
STRATEGY
INTERNATIONAL INSURANCE GROUP, INC., a corporation organized under the laws
of
the State of Texas (the “Company”), hereby certifies that, for value received,
Grupo Lakas S.A., a Panamanian corporation, or its assigns (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company
at
any time after the date (the “Increase Date”) on which the Company shall have
effected an increase of its authorized shares of common stock by at least
6,950,000, to provide for an authorized number of shares adequate to issue
the
Warrant Shares (defined below), until 5:00 p.m., E.S.T on the second anniversary
of the Increase Date (the “Expiration Date”), subject to the limitations
specified herein, up to 6,944,009 (the “Warrant Shares”) of voting, fully paid
and nonassessed shares of the common stock of the Company, par value $0.001
per
share (the “Common Stock”) at a per share purchase price of $1.75. The $1.75
purchase
price
per
share, as adjusted from time to time as herein provided, is referred to herein
as the “Purchase Price.”
The
number of shares of Common Stock issuable upon exercise of the Warrant and
the
Purchase Price are subject to adjustment as provided herein.
|
1.
|
Definition.
|
As
used
herein the following terms, unless the context otherwise expressly requires,
have the following respective meanings:
(a) The
term
“Affiliate” of any Person (the “First Person”)
shall
mean any
other
Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with the First
Person.
(b) The
term
“Business Day” shall mean any day excluding Saturday, Sunday, and any day which
is a legal holiday under the laws of New York, or is a day on which banking
institutions located in such state are required or authorized by law or other
governmental action to close.
(c) The
term
“Common Stock” includes (a) the Company's Common Stock, $.001 par value per
share, and
(b)
any other securities into which or for which any of the securities described
in
(a) may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
(d) The
term
“Other Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) which
the
Holder of this Warrant at any time shall he entitled to receive, or shall
have
received, on the exercise of this Warrant, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant
to
Section 4 hereof or otherwise.
(e) The
term
“Person” shall mean any natural person, corporation, general partnership,
limited partnership, limited liability company, sole proprietorship, trust,
union, association, enterprise, authority or other form of business
organization.
2. Exercise
of Warrant.
2.1 Number
of Shares Issuable upon Exercise.
From
and after the Increase Date through and including the Expiration Date, the
Holder hereof shall be entitled to receive, upon exercise of this Warrant
in
whole, in accordance with the terms of Section 2.2 hereof, or in part, in
accordance with Section 2.3 hereof, shares of Common Stock of the Company,
subject to adjustment pursuant to Section
4
hereof.
2.2 Full
Exercise.
This
Warrant may be exercised in full by the Holder hereof by delivery of an original
or facsimile copy of the form of warrant exercise attached hereto as Exhibit
A
hereto (the “Exercise Form”) duly executed by such Holder and surrender of the
original Warrant within three (3) days of exercise, to the Company at its
principal office or at the office of its Warrant Agent (as provided hereinafter,
if applicable), accompanied by payment, in cash, wire transfer or by certified
or official bank check payable to the order of the Company, in the amount
obtained by multiplying the number of shares of Common Stock for which this
Warrant is then exercisable by the Purchase Price then in effect.
2.3 Partial
Exercise.
This
Warrant may be exercised in part (but not for a fractional share) by surrender
of this Warrant in the manner and at the place provided in Section 2.2
hereof,
except that the amount payable by the Holder on such partial exercise shall
be
the amount obtained by multiplying (a) the number of whole shares of Common
Stock designated by the Holder in the Exercise Form by (b) the Purchase Price
then in effect. On any such partial exercise, the Company, at its expense,
will
issue and deliver to or upon the order of the Holder hereof a new warrant
of
like tenor, in the name of
the
Holder or as the Holder (upon payment by the Holder of any applicable transfer
taxes) may request, the whole number of shares of Common Stock for which
this
Warrant may still be exercised.
2.4 Fair
Market Value.
Fair
Market Value of a share of Common Stock as of a particular date (the
“Determination Date”) shall mean:
(a) If
the
Company’s Common Stock is traded on an exchange or is quoted on the National
Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”), National
Market System, the NASDAQ SmallCap Market or the American Stock Exchange,
LLC,
then, the closing or last sale price, respectively, reported for the last
business day immediately preceding the Determination Date;
2
(b) If
the
Company's Common Stock is not traded on an exchange or on the NASDAQ National
Market System, the NASDAQ SmallCap Market or the American Stock Exchange,
inc.,
but is traded in the over-the-counter market, then the average of the closing
bid and ask prices reported for the last business day immediately preceding
the
Determination Date;
(c) Except
as
provided in Section 2.4(d),
if
the Company’s Common Stock is not publicly traded, then as determined
by the independent members of the Company’s Board of Directors; provided that if
the Holder objects to the determination made by the independent members of
the
Company’s Board of Directors, the “Fair Market Value” shall be determined, by
arbitration in accordance with the rules then standing of the American
Arbitration Association, before a single arbitrator to be chosen from a panel
of
persons qualified by education and training to pass on the matter to be
decided;
or
(d) If
the
Determination Date is the date of a liquidation, dissolution or winding up
of
the Company, or any event deemed to be a liquidation, dissolution or winding
up
pursuant to the Company's charter, then all amounts to be payable per share
to
holders of the Common Stock pursuant to the Company’s certificate of
incorporation in the event of such liquidation, dissolution or winding up,
plus
all other amounts to be payable per share in respect of
the
Common Stock in liquidation under the Company’s certificate of incorporation,
assuming for the purposes of this Section 2.4(d)
that
all of the shares of Common Stock then issuable upon exercise of this Warrant
are
outstanding at the Determination Date.
2.5 Company
Acknowledgment.
The
Company will, at the time of the exercise of this Warrant, upon the request
of
the Holder hereof, acknowledge in writing its continuing obligation to afford
to
this Holder any rights to which the Holder shall continue to be entitled
after
such exercise in accordance with the provisions of this Warrant. If the Holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to the Holder any such
rights.
2.6 Trustee
Appointment.
In the
event that a bank or trust company shall have been appointed as trustee for
the
Holder of this Warrant and any other securities of the Company pursuant to
Section 3.2 hereof, such bank or trust company shall have all the powers
and
duties of a warrant agent and shall accept, in its own name for the account
of
the Company or such successor person as may be entitled thereto, all amounts
otherwise payable to the Company or such successor, as the case may be, upon
the
exercise of this Warrant.
2.7 Delivery
of Stock Certificates, etc. upon Exercise.
The
Company agrees that the shares of Common Stock issuable and purchased upon
exercise of this Warrant shall be deemed to be issued to the Holder hereof
as
the record owner of such shares as of the close of business on the date on
which
this Warrant shall have been surrendered and payment made for such shares
as
provided for herein. As soon as practicable after the exercise of this Warrant
in full or in part, and in any event within three (3) Business Days thereafter,
the Company at its expense (including the payment by it of any applicable
issue
taxes) will cause to be issued in the name of and delivered to the Holder
hereof, or as the Holder (upon payment by the Holder of any applicable transfer
taxes) may direct in compliance with applicable securities laws, a certificate
or certificates for the number of duly and validly issued, fully paid and
nonassessable shares of Common Stock (or Other Securities) to which the Holder
shall be entitled on such exercise, plus, in lieu of any fractional share
to
which the Holder would otherwise be entitled, cash equal to such fraction
multiplied by the then Fair Market Value of one full share of Common Stock,
together with any other stock or other securities and property (including
cash,
where applicable) to which such Holder is entitled to upon the exercise of
this
Warrant.
3
3. Adjustment
for Reorganization,
Consolidation, Merger, etc.
3.1 Reorganization,
Consolidation, Merger, etc.
In case
at any time or from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other Person or (c) transfer all or
substantially all of its properties or assets to any other Person under any
plan
or arrangement contemplating the dissolution of the Company, then, in each
such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof, at any time after the consummation of such
reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock
(or
Other Securities) issuable on such exercise prior to such consummation or
such
effective date, the stock and other securities and property (including cash)
to
which the Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had
so
exercised this Warrant, immediately prior thereto.
3.2 Dissolution.
In the
event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, prior to such
dissolution, shall at its expense, deliver or cause to be delivered the stock
and other securities and property (including cash, where applicable) receivable
by the Holder of this Warrant after the effective date of such dissolution
pursuant to this Section 3 to a bank or trust company (a “Trustee”) having its
principal office in New York, New York, as trustee for the Holder of the
Warrants.
3.3 Continuation
of Terms.
Upon
any reorganization, consolidation, merger or transfer (and any dissolution
following any transfer) referred to in this Section 3, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable
to
the Other Securities and property receivable on the exercise off this Warrant
after the consummation of such reorganization, consolidation or merger or
the
effective date of dissolution following any such transfer, as the case may
be,
and shall be binding upon the issuer of any Other Securities, including,
in the
case of any such transfer, the Person acquiring all or substantially all
of the
properties or assets of the Company, whether or not such Person shall have
expressly assumed the terms of this Warrant. In the event this Warrant does
not
continue in full force and effect after the consummation of the transaction
described in this Section 3, then only in such event will the Company's
securities and property (including cash, where applicable) receivable by
the
Holder of this Warrant be delivered to the Trustee as contemplated by Section
3.2.
4
4. Extraordinary
Events Regarding Common Stock.
In the
event that the Company shall (a) subdivide its outstanding shares of Common
Stock, or (b) combine its outstanding shares of the Common Stock into a smaller
number of shares of the Common Stock, (but not in the event that the Company
shall issue additional shares of the Common Stock as a dividend or other
distribution on outstanding Common Stock) then, in each such event, the Purchase
Price shall, simultaneously with the happening of such event, be adjusted
by
multiplying the then Purchase Price by a fraction, the numerator of which
shall
be the number of shares of Common Stock outstanding immediately prior to
such
event and the denominator of which shall be the number of shares of Common
Stock
outstanding immediately after such event, and the product so obtained shall
thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon
the
happening of any successive event or events described herein in this Section
4.
The
number of shares of Common Stock
that the
Holder of this Warrant shall thereafter, on the exercise hereof as provided
in
Section
1, be entitled to receive shall be adjusted to a number determined by
multiplying the number of shares of Common Stock that would otherwise (but
for
the provisions of this Section 4) be issuable on such exercise by a fraction
of
which (a) the numerator is the Purchase Price that would otherwise (but
for the
provisions of this Section 4)
be
in
effect, and (b)
the
denominator is the Purchase Price in effect on the date of such exercise.
Holder
hereby acknowledges and agrees that, without limitation, any reorganization,
consolidation, merger or other similar event whereby the holders of Common
stock
receive the same number of shares of Common Stock as a result thereof as
are
held thereby immediately prior to such event shall not result in and any
adjustment to the Number of Warrant Shares hereunder.
5. Certificate
as to Adjustments.
In each
case of any adjustment or readjustment in the shares of Common Stock (or
Other
Securities) issuable on the exercise of this Warrant, the Company will promptly
cause its Chief Financial Officer or other appropriate designee to compute
such
adjustment or readjustment in accordance with the terms of this Warrant and
prepare a certificate (which the Company shall be promptly sent to the Holder)
setting forth such adjustment or readjustment and showing in reasonable detail
the facts upon which such adjustment or readjustment is based.
6. Reservation
of Stock, etc. Issuable on Exercise of Warrant.
The
Company will take such actions as shall be required to at all times after
the
one year anniversary of this Warrant reserve and keep available, solely
for
issuance
and delivery on the exercise of this Warrant, such number of shares of Common
Stock from time to time issuable on the exercise of the Warrant.
7. Assignment;
Exchange of Warrant.
Subject
to compliance with all applicable securities laws and regulations, this Warrant,
and the right
evidenced hereby,
may be
transferred by the Holder only to an Affiliate of the Holder. On the surrender
for exchange of this Warrant, with the Holder’s endorsement in the form of
Exhibit B attached hereto (the “Transferor Form”) and together with an opinion
of counsel from counsel reasonably satisfactory to the Company, which opinion
shall be in form, substance and scope reasonably acceptable to the Company,
and
to the effect that the transfer of this Warrant will be in compliance with
applicable securities laws, the Company at its expense, twice, only, but
with
payment by the transferor of any applicable transfer taxes, will issue and
deliver to or on the order of the transferor thereof a new Warrant or Warrants
of like tenor, in the name of the transferor and/or the transferee(s) specified
in such Transferor Form, calling in the aggregate on the face or faces thereof
for the number of shares of Common Stock called for on the face or faces
of the
Warrant so surrendered by the Transferor. No such transfers shall result
in a
public distribution of this Warrant. Any attempted transfer not expressly
permitted by this Section 7 shall be null and void ab initio.
5
8. Replacement
of Warrant.
On
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, on delivery of an indemnity agreement
and /
or security reasonably satisfactory in form and substance and amount, as
applicable, to the Company or, in the case of any such mutilation, on surrender
and cancellation of this Warrant, the Company at its expense, twice only,
will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
9. Transfer
on the Company's Books.
Until
this Warrant is transferred on the books of the Company (subject to the
limitations set forth herein), the Company may treat the registered holder
hereof as the absolute owner of this warrant for all purposes, notwithstanding
any notice to the contrary.
10. Notices.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall he (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any
notice or other communication required or permitted to be given hereunder
shall
be deemed effective (a) upon hand delivery or delivery by facsimile in each
case
if delivered during regular business hours), with, in the case of facsimile
transaction, accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or
the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the business day following the date of mailing by overnight express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be: (i) if to the Company to: Strategy
International Insurance Group, Inc., 000 Xxxxxxxx Xxxx., Xxxxx 000, Xxxxxxx,
Xxxxxxx, Xxxxxx X0X 0X0, Attn: Xxxx Xxxxxxx, Esq., facsimile number:
_______________, with a copy to Xxxxx & XxXxxxxx LLP, 0000 Xxxxxx xx Xxx
Xxxxxxxx, Xxx Xxxx, XX 00000, Attn: Xxxxxx Xxxx Xxxxxxxx, Esq., facsimile
number: (000) 000-0000 and (ii) if
to the
Holder, to Grupo Lakas S.A., Av. De la Xxxxxxxx/000, Xxxx 0 Xxx Xxxxx, Xxxx,
Xxxx, Attn: X. Xxxx Xxxxxxxx Xxxxx R.,
provided that either
party may change the address to which notices and other communications shall
be
sent to it by delivering a written notice as aforesaid to the other
party.
11. Governing
Law.
This
Warrant shall be governed by and construed in accordance with the laws of
the
State of New York, applicable to agreements made and performed in the State
of
New York, without regard to any of its conflicts of law principles which
would
result in the application of the laws of another jurisdiction.
12. Miscellaneous.
This
Warrant and any term hereof may not be amended, modified, waived, or terminated
only by an instrument in writing signed by the Holder and the Company. This
Warrant and its terms and provisions shall inure to the benefit of and be
binding upon the Company and its successors and assigns and the Holder and
its
successors and permitted assigns. The section headings in this Warrant are
for
purposes of reference only, and shall not limit or otherwise affect any of
the
terms hereof or the construction or interpretation of this Warrant. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
[The
Remainder of This Page Has Been Intentionally Left Blank]
6
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by one
of
its duly authorized officers as of the date first written above.
STRATEGY
INTERNATIONAL INSURANCE GROUP, INC.
By:
/s/ Xxxxx Xxxxxxxx
Name:
Xxxxx Xxxxxxxx
Title:
Chief Financial Officer
7
Exhibit
A
FORM
OF
EXERCISE
(to
be
signed only on exercise of Warrant)
TO:
STRATEGY INTERNATIONAL INSURANCE GROUP, INC.
The
undersigned, pursuant to the provisions set forth in the attached Warrant
hereby
irrevocably elects to purchase:
______________
shares of the Common Stock covered by such Warrant; or
The
undersigned herewith makes payment of the full purchase price for such shares
at
the price per share provided for in such Warrant, which is
$______________.
The
undersigned requests that the certificates for such shares be issued in the
name
of, and delivered to ______________________________________ whose address
is
________________________________________________________________________________________________________________________
The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of the Common Stock under the Securities Act of
1933,
as amended (the “Securities Act”), or pursuant to an exemption from registration
under the Securities Act and other applicable securities laws.
|
Dated:_____________________
|
_____________________________
(Signature
must conform to name of
holder as specified on the face of the Warrant) |
|
______________________________
______________________________
(Address)
|
8
Exhibit
B
FORM
OF
TRANSFEROR ENDORSEMENT
(To
be
signed only on transfer of Warrant)
For
value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferees” the right represented by
the within Warrant to purchase the percentage and number of share of common
stock of STRATEGY INTERNATIONAL INSURANCE GROUP, INC. to which the within
Warrant relates specified under the headings “Percentage Transferred” and
“Number Transferred” respectively, opposite the name(s) of such person(s) and
appoints each such person Attorney to transfer its respective right on the
books
of STRATEGY INTERNATIONAL INSURANCE GROUP, INC. with full power of substitution
in the premises.
|
Transferees
|
Percentage
Transferred
|
Number
Transferred
|
|
Dated:_____________________________
|
______________________________________
(Signature
must conform to name of holder
as specified on the face of the warrant) |
|
Signed
in the presence of:
|
|
|
_____________________________________
(Name)
|
______________________________________
______________________________________
(address)
|
|
ACCEPTED
AND AGREED:
[TRANSFEREE]
|
______________________________________
______________________________________
(address)
|
|
_____________________________________
(Name)
|
9
