Contract
NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER
LOAN SECURED BY SUCH SECURITIES.
WARRANT
Warrant
No. ________
Date of
Issuance: __________, 2007
New
Design Cabinets, Inc., a Nevada corporation (the “Company”),
hereby certifies that, for value received, ____________ or its registered
assigns (the “Holder”),
is
entitled to purchase from the Company up to a total of ________1
shares
of common stock, $.001 par value (the “Common
Stock”),
of
the Company (each such share, a “Warrant
Share”
and
all
such shares, the “Warrant
Shares”)
at an
exercise price equal to $.75 per share (as adjusted from time to time as
provided in Section
8)
(the
“Exercise
Price”),
at
any time and from time to time from and after the date hereof and through and
including ____________, 2012 (the “Expiration
Date”),
and
subject to the following terms and conditions.
1. Registration
of Warrant.
The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant
Register”),
in
the name of the record Holder hereof from time to time. The Company may deem
and
treat the registered Holder of this Warrant as the absolute owner hereof for
the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.
1
For
every two (2) shares of Common Stock purchased by the Holder, the Holder shall
receive one (1) Warrant Share.
2. Registration
of Transfers.
The
Company shall register the transfer of any portion of this Warrant in the
Warrant Register, upon surrender of this Warrant, with the Form of Assignment
attached hereto duly completed and signed, to the Company at its address
specified herein. Upon any such registration or transfer, a new Warrant to
purchase Common Stock, in substantially the form of this Warrant (any such
new
Warrant, a “New
Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a holder
of a Warrant. Warrants and Warrant Shares may only be disposed of in compliance
with state and federal securities laws. In connection with any transfer of
Warrant Shares other than pursuant to an effective registration statement,
to
the Company, to an Affiliate of a Holder or in connection with a bona pledge
as
contemplated in this Section 2, the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor,
the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration under
the Securities Act. The Company acknowledges and agrees that a Holder may from
time to time pledge pursuant to a bona fide margin agreement or grant a security
interest in some or all of the Warrant and Warrant Shares and, if required
under
the terms of such arrangement, the Holder may transfer pledged or secured
Warrant and Warrant Shares to the pledgees or secured parties. Such a pledge
or
transfer is not subject to approval of the Company and no legal opinion of
the
pledgee, secured party or pledgor shall be required in connection therewith.
Further, no notice shall be required of such pledge.
3. Exercise
and Duration of Warrants.
This
Warrant shall be exercisable by the registered Holder, in whole or in part,
at
any time and from time to time on or after the date hereof to and including
the
Expiration Date. At 5:00 p.m., Las Vegas time on the Expiration Date, the
portion of this Warrant not exercised prior thereto shall be and become void
and
of no value.
4. Delivery
of Warrant Shares.
Upon
delivery of the Form of Election to Purchase to the Company (with the attached
Warrant Shares Exercise Log) at its address for notice set forth in Section
11
and upon payment of the Exercise Price multiplied by the number of Warrant
Shares that the Holder intends to purchase hereunder the Company shall promptly
issue and deliver to the Holder, a certificate for the Warrant Shares issuable
upon such exercise with the appropriate legend. Any Person so designated by
the
Holder to receive Warrant Shares shall be deemed to have become holder of record
of such Warrant Shares as of the Date of Exercise of this Warrant. As used
in
this Agreement, a “Date
of Exercise”
means
the date on which the Holder shall have delivered to the Company (i) the Form
of
Election to Purchase attached hereto (with the Warrant Exercise Log attached
to
it), appropriately completed and duly signed and (ii) payment of the Exercise
Price for the number of Warrant Shares so indicated by the Holder to be
purchased.
5. Charges,
Taxes and Expenses.
Issuance and delivery of certificates for shares of Common Stock upon exercise
of this Warrant shall be made without charge to the Holder for any issue or
transfer tax, withholding tax, transfer agent fee or other incidental tax or
expense in respect of the issuance of such certificates, all of which taxes
and
expenses shall be paid by the Company; provided, however, that the Company
shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the registration of any certificates for Warrant Shares or Warrants
in a name other than that of the Holder. The Holder shall be responsible for
all
other tax liability that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise hereof.
6. Replacement
of Warrant.
If this
Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity, if requested.
Applicants for a New Warrant under such circumstances shall also comply with
such other reasonable regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe.
7. Reservation
of Warrant Shares.
The
Company covenants that it will at all times reserve and keep available out
of
the aggregate of its authorized but unissued and otherwise unreserved Common
Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares which
are then issuable and deliverable upon the exercise of this entire Warrant,
free
from preemptive rights or any other contingent purchase rights of persons other
than the Holder (taking into account the adjustments and restrictions of
Section
8).
The
Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid
and
nonassessable.
8. Certain
Adjustments.
The
Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this
Section
8.
(a) Stock
Dividends and Splits.
If the
Company, at any time while this Warrant is outstanding, (i) pays a stock
dividend on its Common Stock or otherwise makes a distribution on any class
of
capital stock that is payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, or (iii)
combines outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a fraction
of
which the numerator shall be the number of shares of Common Stock outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution, and any adjustment pursuant to clause
(ii) or (iii) of this paragraph shall become effective immediately after the
effective date of such subdivision or combination. If any event requiring an
adjustment under this paragraph occurs during the period that an Exercise Price
is calculated hereunder, then the calculation of such Exercise Price shall
be
adjusted appropriately to reflect such event.
(b) Fundamental
Transactions.
If, at
any time while this Warrant is outstanding, (1) the Company effects any merger
or consolidation of the Company with or into another Person, (2) the Company
effects any sale of all or substantially all of its assets in one or a series
of
related transactions, (3) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (4) the Company effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(in any such case, a “Fundamental
Transaction”),
then
the Holder shall have the right thereafter to receive, upon exercise of this
Warrant, the same amount and kind of securities, cash or property as it would
have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant (the “Alternate
Consideration”).
For
purposes of any such exercise, the determination of the Exercise Price shall
be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration
it
receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder’s option and request, any successor to the Company or
surviving entity in such Fundamental Transaction shall, either (1) issue to
the
Holder a new warrant substantially in the form of this Warrant and consistent
with the foregoing provisions and evidencing the Holder’s right to purchase the
Alternate Consideration for the aggregate Exercise Price upon exercise thereof,
or (2) purchase the Warrant from the Holder for a purchase price, payable in
cash within five Trading Days after such request (or, if later, on the effective
date of the Fundamental Transaction), equal to the Black Scholes value of the
remaining unexercised portion of this Warrant on the date of such request.
The
terms of any agreement pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving entity to comply
with the provisions of this paragraph (c) and insuring that the Warrant (or
any
such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.
(c) Number
of Warrant Shares.
Simultaneously with any adjustment to the Exercise Price pursuant to paragraphs
(a) or (b) of this Section, the number of Warrant Shares that may be purchased
upon exercise of this Warrant shall be adjusted proportionately, so that after
such adjustment the aggregate Exercise Price payable hereunder for the adjusted
number of Warrant Shares shall be the same as the aggregate Exercise Price
in
effect immediately prior to such adjustment.
(d) Calculations.
All
calculations under this Section 8 shall be made to the nearest cent or the
nearest 1/100th of a share, as applicable. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or
for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.
(e) Notice
of Adjustments.
Upon
the occurrence of each adjustment pursuant to this Section
8,
the
Company at its expense will promptly compute such adjustment in accordance
with
the terms of this Warrant and prepare a certificate setting forth such
adjustment, including a statement of the adjusted Exercise Price and adjusted
number or type of Warrant Shares or other securities issuable upon exercise
of
this Warrant (as applicable), describing the transactions giving rise to such
adjustments and showing in detail the facts upon which such adjustment is based.
Upon written request, the Company will promptly deliver a copy of each such
certificate to the Holder.
(f) Notice
of Corporate Events.
If the
Company (i) declares a dividend or any other distribution of cash, securities
or
other property in respect of its Common Stock, including without limitation
any
granting of rights or warrants to subscribe for or purchase any capital stock
of
the Company or any Subsidiary, (ii) authorizes or approves, enters into any
agreement contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then the Company shall deliver to
the
Holder a notice describing the material terms and conditions of such
transaction, at least twenty (20) calendar days prior to the applicable record
or effective date on which a Person would need to hold Common Stock in order
to
participate in or vote with respect to such transaction, and the Company will
take all steps reasonably necessary in order to insure that the Holder is given
the practical opportunity to exercise this Warrant prior to such time so as
to
participate in or vote with respect to such transaction; provided, however,
that
the failure to deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such
notice.
9. Payment
of Exercise Price.
The
Holder may pay the Exercise Price in one of the following manners:
(a) Cash
Exercise.
The
Holder may deliver cash, certified or official bank check or checks or other
immediately available funds; or
(b) Cashless
Exercise.
The
Holder may surrender this Warrant to the Company together with a notice of
cashless exercise, in which event the Company shall issue to the Holder the
number of Warrant Shares determined as follows:
X
= Y
[(A-B)/A] where:
X
= the
number of Warrant Shares to be issued to the Holder.
Y
= the
number of Warrant Shares with respect to which this Warrant is being
exercised.
A
= the
average of the closing prices for Common Stock for the five Trading Days
immediately prior to (but not including) the Exercise Date.
B
= the
Exercise Price.
10. No
Fractional Shares.
No
fractional shares of Warrant Shares will be issued in connection with any
exercise of this Warrant. In lieu of any fractional shares which would,
otherwise be issuable, the Company shall pay cash equal to the product of such
fraction multiplied by the closing price of one Warrant Share on the date of
exercise.
11. Notices.
Any and
all notices or other communications or deliveries hereunder (including without
limitation any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice
or
communication is delivered via facsimile at the facsimile number specified
in
this Section prior to 5:00 p.m. (Las Vegas time) on a Trading Day, (ii) the
next
Trading Day after the date of transmission, if such notice or communication
is
delivered via facsimile at the facsimile number specified in this Section on
a
day that is not a Trading Day or later than 5:00 p.m. (Las Vegas time) on any
Trading Day, (iii) the Trading Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt
by
the party to whom such notice is required to be given. The addresses for such
communications shall be: (i) if to the Company, to New Design Cabinets, Inc.,
Facsimile No.: (000) 000-0000, Attn: Xxxxxxxxx Xxxxx, or (ii) if to the Holder
to the address or facsimile number appearing on the Warrant Register or such
other address or facsimile number as the Holder may provide to the Company
in
accordance with this Section.
12. Warrant
Agent.
The
Company shall serve as warrant agent under this Warrant. Upon thirty (30) days’
notice to the Holder, the Company may appoint a new warrant agent. Any
corporation into which the Company or any new warrant agent may be merged or
any
corporation resulting from any consolidation to which the Company or any new
warrant agent shall be a party or any corporation to which the Company or any
new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder’s last address as shown on
the Warrant Register.
13. Definitions.
(a) “Affiliate”
shall mean, with respect to any Person (i) a Person directly or indirectly
controlling, controlled by or under, control with such Person, (ii) a
Person owning or controlling 10% or more of the outstanding voting securities
of
such Person,
or
(iii) an officer, director, general partner, member or manager of such
Person, or
a
member of the immediate family of an officer, director, general partner, member
or manager of such Person.
When the
Affiliate is an officer, director, partner or manager of such Person
or
a
member of the immediate family of an officer, director, general partner, member
or manager of such Person,
any
other Person for which the Affiliate acts in that capacity shall also be
considered an Affiliate. For these purposes, control means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, as trustee or executor, by contract or otherwise.
(b) “Agreement”
shall mean this Warrant, including all exhibits and schedules thereto, as the
same may hereafter be amended, modified or supplemented from time to
time.
(c) “Black-Scholes” is
a
model of the varying price over time of financial instruments.
(d) “Person”
shall mean any entity, corporation, company, association, joint venture, joint
stock company, partnership, trust, organization, individual (including personal
representatives, executors and heirs of a deceased individual), nation, state,
government (including agencies, departments, bureaus, boards, divisions and
instrumentalities thereof), trustee, receiver or liquidator, as well as any
syndicate or group that would be deemed to be a Person under Section 13(d)(3)
of
the Securities Exchange Act of 1934, as amended.
(e) “Subsidiary”
of a Person shall mean each corporation or other entity of which (a) such Person
or any other Subsidiary of such Person is a general partner or a manager (b)
or
at least 50% of the securities or other ownership interests having by their
terms ordinary voting power to elect at least 50% of the board of directors
or
other Persons performing similar functions is directly or indirectly owned
or
controlled by such Person, by any one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries.
(f) “Trading
Day” means a day on which the purchase and sale of the Company’s Common Stock is
permitted.
14. Miscellaneous.
(a) This
Warrant shall be binding on and inure to the benefit of the parties hereto
and
their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than
the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by the
Company and the Holder and their successors and assigns.
(b) All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Nevada, without regard to the principles
of conflicts of law thereof. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced in the state and federal courts sitting in the City of Las
Vegas. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of Las Vegas
for the adjudication of any dispute hereunder or in connection herewith or
with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of this Agreement), and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is improper. Each party hereto (including its affiliates, agents,
officers, directors and employees) hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action
or
proceeding to enforce any provisions of this Agreement, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
(c) The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
(d) In
case
any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
[REMAINDER
OF XXXX INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its
authorized officer as of the date first indicated above.
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By:
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|
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Xxxx
Xxxxxxxx
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|
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President
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FORM
OF
ELECTION TO PURCHASE
In
accordance with the Warrant enclosed with this Form of Election to Purchase,
the
undersigned hereby irrevocably elects to purchase _______ shares of common
stock
(“Common Stock”), $0.001 par value per share, of New Design Cabinets, Inc. and,
if such Holder is not utilizing the cashless exercise provisions set forth
in
this Warrant, encloses herewith $______________ in cash, certified or official
bank check or checks or other immediately available funds, which sum represents
the aggregate Exercise Price (as defined in the Warrant) for the number of
shares of Common Stock to which this Form of Election to Purchase relates,
together with any applicable taxes payable by the undersigned pursuant to the
Warrant.
The
undersigned requests that certificates for the shares of Common Stock issuable
upon this exercise be issued in the name of
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PLEASE
INSERT SOCIAL SECURITY OR
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TAX
IDENTIFICATION NUMBER
|
(Please
print name and address)
FORM
OF
ASSIGNMENT
[To
be
completed and signed only upon transfer of Warrant]
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
__________________________________ the right represented by the within Warrant
to purchase ____________ shares of Common Stock of New Design Cabinets, Inc.
to
which the within Warrant relates and appoints _____________________ attorney
to
transfer said right on the books of New Design Cabinets, Inc. with full power
of
substitution in the premises.
Dated:
________________, _______
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(Signature
must conform in all respects to name
of holder as specified on the face of the
Warrant)
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Address
of Transferee
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Warrant
Shares Exercise Log
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Date
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Number of Warrant
Shares Available to
be Exercised
|
Number of Warrant
Shares Exercised
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Number of Warrant
Shares Remaining to
be Exercised
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