SECURITIES PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE AGREEMENT, dated May 5, 2008 (the “Agreement”), by and
between FUTURE NOW GROUP, INC. (the “Company” or “Seller”), a Nevada
corporation, having an address at 00 Xxxxxxx Xx, Xxxxxxxxx, XX 00000 and Newport
Capital Corp, a Belize Corporation having an address at Xxxxxxx 00 XX-0000,
Xxxxxx Xxxxxxxxxxx (the “Buyer” or “Investor”).
WHEREAS,
the Seller desires to sell 428,572 shares of the Company’s Common Stock (the
“Common Stock”) and issued common stock purchase warrants (the “Warrants”) to
the Buyer and the Buyer desires to purchase said Common Stock and Warrants;
WHEREAS,
both the Buyer and the Seller desire to set forth in this Agreement all of
the
terms and provisions that will govern this transaction and their legal rights
hereunder; and
NOW,
THEREFORE, in consideration of the mutual promises made by each party to the
other, and for other good and valuable consideration more particularly defined
below, it is agreed as follows:
1.
Purchase
and Sale.
The
Seller hereby sells and the Buyer hereby purchases 428,572 newly
issued Common Stock of the Company. The consideration for the Common Stock
to be
issued to the Buyer includes the payment of $150,000 representing a purchase
price of $0.35 per share (whether by check or wire transfer, in either case,
in
immediately available funds). In addition to the 428,572 shares, upon receipt
of
the purchase price of $150,000 as provided herein, the Seller shall also issue
75,000 Warrants to purchase 75,000 shares of Common Stock. The Warrants expire
five years from their issuance date and shall have an exercise price of $0.50.
The Form of Warrant is provided under Exhibit A hereto.
The
Common Stock and Warrants of the Company being bought and sold pursuant to
this
Agreement, are sometimes hereinafter referred to as the “Security” or
“Securities”. The entire purchase price is due and payable upon the execution
and delivery of this Agreement, and shall be paid by certified check, or by
wire
transfer in immediately available funds, made payable to the order of the
Seller. Simultaneous with the execution and delivery of this Agreement and
upon
receipt of the purchase price therefore in readily available fund, the Seller
shall cause the certificates representing the Securities, together with fully
executed and duly endorsed stock powers, to be delivered to Buyer, Buyer’s
designated agent or to the Company’s transfer agent, as the Buyer shall
authorize and instruct. The date on which the Seller shall receive the purchase
price and the Buyer shall receive the Securities and all other conditions to
closing shall have occurred or been duly waived shall constitute the “Closing
Date.”
2.
Representations
of the Seller.
In
connection with the issuance of the Common Stock, the Company herein, warrants
and represents to the Buyer that, as of the Closing Date:
2.1 Issuance
of Common Stock.
When
issued hereunder, the Common Stock will be validly issued, fully paid and
non-assessable, and free and clear of all liens, encumbrances, and restrictions
on transfer or preemptive rights, charges and claims of every kind.
2.2 Organization
and Authority of the Company; Subsidiaries.
The
Company is a corporation duly organized, validly existing and in corporate
good
standing under the laws of the State of Nevada, and has the requisite power
and
authority to own all of its properties and assets and to carry on its business
as it is now being conducted.
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2.3 Authorization.
The
Company has taken or will take all corporate action required to make all the
obligations of the Company reflected in the provisions of this Agreement. Except
as otherwise indicated in the preceding sentence, the issuance of the Common
Stock will not require any further corporate action and will not be subject
to
preemptive rights of any present or future stockholders of the Company which
have not been waived in writing. This Agreement constitutes the valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforcement hereof may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and subject to the fact that equitable remedies are
discretionary and may not be granted by a court of competent
jurisdiction.
2.4 No
Default.
The
execution, delivery and performance of this Agreement, the Common Stock of
the
Company and the consummation by the Company of the transactions contemplated
hereby do not and will not constitute a default under any of the terms,
conditions or provisions of the Certificate of Incorporation or By Laws of
the
Company, each as amended or restated as of the date hereof, or any material
contract, agreement or arrangement to which the Company is a party or by which
it is bound.
2.5 Capital
Stock of Company.
The
authorized capital stock of the Company consists of 900,000,000 shares of Common
Stock, 50,000,000 shares of Preferred Stock, both $.001 par value per share,
of
which 71,242,191 Common Stock and no Preferred Stock shares
are currently issued and outstanding. All of the current outstanding shares
of
capital stock of the Company have been duly authorized, are validly issued
and
are fully paid and non assessable. Other than options, warrants and convertible
securities identified at Exhibit B, there are no outstanding options,
convertible securities, warrants, agreements, restrictions, preemptive rights
or
rights of first refusal, contracts, or commitments of any character which
entitle any person to acquire or otherwise relate to the issuance of any shares
of capital stock of the Company or which restrict or otherwise relate to or
provide for the transfer of any outstanding shares of capital stock of the
Company.
2.6 Compliance
with Laws.
The
Company holds all material licenses, approvals, certificates, permits and
authorizations necessary for the lawful conduct of its business and is in
material compliance with all applicable federal, state and local laws, rules,
regulations and ordinances. The Company has all franchises, permits, licenses,
and any similar authority necessary for the conduct of its business, the lack
of
which could materially and adversely affect the business, properties, prospects
or financial condition of the Company. The Company is not in default in any
material respect under any such franchise, permit, license or other similar
authority.
2.7 Litigation.
There
is no action, suit, proceeding at law or in equity, arbitration or
administrative or other proceeding by or before (or to the best knowledge,
information and belief of the Company any investigation by) any governmental
or
other instrumentality or agency, pending, or, to the Company’s knowledge,
information and belief, threatened against or affecting the Company, or any
of
its properties or rights which could materially and adversely affect the right
or ability of the Company to carry on its business as now conducted, or which
could materially and adversely affect the condition, whether financial or
otherwise, or properties of the Company.
2.8 Intellectual
Property.
The
Company’s intellectual property rights (“IP Rights”) are sufficient to carry on
the business of the Company as presently conducted or contemplated. The Company
has exclusive ownership of or exclusive license to use all of its IP Rights
and
it has obtained any licenses, releases or assignments necessary to use all
third
parties’ intellectual property rights in works embodied in its products or
services and material to the conduct of its business. The Company has taken
all
reasonable measures to protect and preserve the security, confidentiality and
value of its IP Rights. Neither the present nor contemplated business
activities, IP Rights or products of the Company infringe upon or misappropriate
any rights to the intellectual property of any third party. The Company has
not
received any notice or other claim from any person asserting that any of the
Company’s present or contemplated activities or IP Rights infringe,
misappropriates or may infringe or misappropriate any rights to a third party's
intellectual property. The Company is not aware of any infringement by or
misappropriation of others of its IP Rights in any of its products, technology
or services, or any violation of the confidentiality of any of its proprietary
information. To the Company’s knowledge, the Company is not making unlawful or
unauthorized use of any intellectual property of any past or present employees
or consultants of the Company.
2
2.9 No
Material Omissions.
Neither
this Agreement, the Common Stock, nor any information document or certificate
furnished to the Buyer by or on behalf of the Company contains any untrue
statement of a material fact, and none of this Agreement, or such other
documents and certificates omits to state a material fact necessary in order
to
make the statements contained herein or therein not misleading.
3.
Representations
of the Buyer.
The
Buyer, in order to induce the Seller to enter into this Agreement and consummate
the purchase contemplated herein, warrants and represents to the Seller as
follows:
(a) That,
except as may be expressly set forth in this Agreement, the Seller has made
no
representations or warranties to the Buyer, written or oral, upon which the
Buyer is relying in order to consummate the purchase of the Securities under
this Agreement.
(b) The
Buyer
acknowledges that the Buyer has independently investigated the Company's
business, financial conditions, current state of affairs, planned business
and
other matters necessary in order for the Buyer to make an informed decision
to
purchase of the Securities.
(c) The
Buyer
represents that the funds provided for this purchase are either separate
property of the Buyer, other property over which the Buyer has the right of
control, or are otherwise funds as to which the Buyer has the sole right of
management.
(d) This
Agreement and all representations, warranties and statements made herein are
true, complete and correct in all material respects.
(e) This
Agreement is a legally binding obligation of the Buyer in accordance with its
terms.
(f) The
Buyer
hereby expressly represents to the Seller that Buyer has relied upon his/her
own
legal counsel, accountant and other professionals to advise him/her in
connection with the purchase of the Securities and consummation of the
transactions contemplated under this Agreement.
(g) The
Buyer recognizes
that the purchase of Securities involves a high degree of risk and is suitable
only for persons of adequate financial means who have no need for liquidity
in
this investment in that (i) the Buyer may not be able to liquidate the
investment in the event of an emergency; (ii) transferability is limited; and
(iii) in the event of a disposition, the Buyer could sustain a complete loss
of
the entire investment.
(h) Limitations
on Disposition. The
Buyer
understands that there are substantial restrictions on the transferability
of
the Securities pursuant to the Securities Act; the Securities will not be,
and
the Buyer has no right to require that the Securities be registered under the
Securities Act; and, accordingly, the Buyer may have to hold the Securities
for
an indefinite period of time or until the Securities have been registered by
the
Company or are subject to an exemption from registration. The Buyer represents
that the Buyer can afford to hold the Securities for an indefinite period of
time. The Buyer further understands that an opinion of counsel and other
documents may be required to transfer the Securities. The Buyer acknowledges
that the Securities shall bear the following, or a substantially similar,
legend:
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"THE
SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY
BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S, OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT."
(i) Absence
of Official Evaluation. The
Buyer
understands that no federal or state agency has made any finding or
determination as to the fairness of the terms of an investment in the Company,
or any recommendation for or endorsement of the Securities sold
hereby.
(j) Additional
Financing.
The
Buyer further acknowledges that nothing here-under shall preclude the Company
from seeking and/or procuring additional equity and/or debt
financing.
(k) Authority
to Enter into Agreement. The
Buyer
has the full right, power, and authority to execute and deliver this Agreement
and perform the Buyer's obligations here-under.
(l) Entity
as a Subscriber.
If the
Buyer is a corporation, partnership, trust, or other entity, (i) the Buyer
is
authorized and qualified to become a shareholder of, and is authorized to,
make
its investment in the Company; (ii) the Buyer has not been formed for the
purpose of acquiring an interest in the Company; (iii) the Buyer has not been
in
existence for less than 90 days prior to the date hereof; and (iv) the person
signing this Agreement on behalf of such entity has been duly authorized by
such
entity to do so.
(m) Prohibitions
on Cancellation, Termination, Revocation, Transferability, and Assignment.
The
Buyer
hereby acknowledges and agrees that, except as may be specifically provided
herein or by applicable law, the Buyer is not entitled to cancel, terminate,
or
revoke this Agreement, and this Agreement shall survive the Buyer's death or
disability or any assignment of the Securities. The Buyer further agrees that
the Buyer may not transfer or assign the Buyer's rights under this Agreement,
(n) Obligation.
This
Agreement constitutes a valid and legally binding obligation of the Buyer and
neither the execution of this Agreement nor the consummation of the transactions
contemplated herein will constitute a violation of or default under, or conflict
with, any judgment, decree, statutes or regulation of any governmental authority
applicable to the Buyer, or any contract, commitment, agreement, or restriction
of any kind to which the Buyer is a party or by which the Buyer's assets are
bound. The execution and delivery of this Agreement does not, and the
consummation of the transactions described herein will not, violate applicable
laws, or any mortgage, lien, agreement, indenture, lease or understanding
(whether oral or written) of any kind outstanding relative to the
Buyer.
4
(q) Required
Approvals.
No
approval, authorization, consent, order, or other action of, or filing with,
any
person, firm or corporation or any court, administrative agency or other
governmental authority is required in connection with the execution and delivery
of this Agreement by the Buyer or the purchase of the Securities.
(r) No
General Solicitation.
The
Buyer is not buying the Securities because of or following any advertisement,
article, notice, or other communication published in any newspaper, magazine
or
similar media or broadcast over television or radio, or presented at any seminar
or meeting, or any solicitation or a subscription by a person other than an
authorized representative of the Company.
5. Miscellaneous
Provisions.
(a) Entire
Agreement. This Agreement sets forth the entire understanding of the parties
in
connection with the transactions described herein and supersedes any and all
prior oral or written contracts, agreements or understandings between the
parties.
(b) Modification
- Amendment. This Agreement may not be changed, modified, extended, terminated
or discharged orally, but only by an agreement in writing, which is signed
by
all of the parties to this Agreement.
(c) Further
Assurances. The parties agree to execute any and all such other and further
instruments and documents, and to take any and all such further actions
reasonably required to effectuate this Agreement and the intent and purposes
hereof.
(d) Governing
Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of Nevada.
(e) No
Assignment. Neither this Agreement nor any of the rights of the Buyer hereunder
may be transferred or assigned by the Buyer.
(Signatures
follow on next page)
5
IN
WITNESS WHEREOF,
the
Buyer and the Seller have executed this Agreement as of the day, month and
year
first above written.
|
SELLER:
FUTURE
NOW GROUP, INC.
/s/
Xxxxxxx Xxxxxxxxx
Xxxxxxx
Xxxxxxxxx
Chief
Executive Officer
|
|
|
BUYER:
NEWPORT
CAPITAL CORP.
By:
/s/ Xxxxxxxx Xxxx
Xxxxxxxx
Xxxx,
for
and on behalf of Naxos Limited, Director
Director
|
6
Exhibit
A to Common Stock and Warrant Purchase Agreement:
Form
of Warrant Agreement
COMMON
STOCK PURCHASE WARRANT
To
Purchase 75,000 Shares of Common Stock of
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”)
certifies that, for value received, Newport Capital Corporation (the
“Holder”),
is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof (the
“Initial
Exercise Date”)
and on
or prior to the close of business on the five year anniversary of the Initial
Exercise Date (the “Termination
Date”)
but
not thereafter, to subscribe for and purchase from Future Now Group Inc., a
Nevada corporation (the “Company”),
up to
75,000 shares (the “Warrant
Shares”)
of
Common Stock, par value $.001 per share, of the Company (the “Common
Stock”).
The
purchase price of one share of Common Stock under this Warrant shall be equal
to
the Exercise Price, as defined in Section 2(b).
Section
1. Definitions.
As
capitalized within the document.
Section
2. Exercise.
a) Exercise
of Warrant.
Subject
to compliance with the terms and condition of this Warrant, exercise of the
purchase rights represented by this Warrant may be made, in whole or in part,
at
any time or times on or after the Initial Exercise Date and on or before the
Termination Date by delivery to the Company of a duly executed facsimile copy
of
the Notice of Exercise Form annexed hereto (or such other office or agency
of
the Company as it may designate by notice in writing to the registered Holder
at
the address of such Holder appearing on the books of the Company); provided,
however,
within
5 Trading Days of the date said Notice of Exercise is delivered to the Company,
the Holder shall have surrendered this Warrant to the Company and the Company
shall have received payment of the aggregate Exercise Price of the shares
thereby purchased by wire transfer.
b) Exercise
Price.
The
exercise price of the Common Stock under this Warrant shall be $0.50,
subject to adjustment hereunder (the “Exercise
Price”).
c) Mechanics
of Exercise.
i. Authorization
of Warrant Shares.
The
Company covenants that all Warrant Shares which may be issued upon the exercise
of the purchase rights represented by this Warrant will, upon exercise of the
purchase rights represented by this Warrant, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and charges in
respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
ii. Delivery
of Certificates Upon Exercise.
Certificates for shares purchased hereunder shall be transmitted by the transfer
agent of the Company to the Holder by crediting the account of the Holder’s
prime broker with the Depository Trust Company through its Deposit Withdrawal
Agent Commission (“DWAC”)
system
if the Company is a participant in such system, and otherwise by physical
delivery to the address specified by the Holder in the Notice of Exercise within
3 Trading Days from the delivery to the Company of the Notice of Exercise Form,
surrender of this Warrant and payment of the aggregate Exercise Price as set
forth above (“Warrant
Share Delivery Date”).
This
Warrant shall be deemed to have been exercised on the date the Exercise Price
is
received by the Company. The Warrant Shares shall be deemed to have been issued,
and Holder or any other person so designated to be named therein shall be deemed
to have become a holder of record of such shares for all purposes, as of the
date the Warrant has been exercised by payment to the Company of the Exercise
Price and all taxes required to be paid by the Holder, if any, pursuant to
Section 2(c)(vii) prior to the issuance of such shares, have been paid.
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iii. Delivery
of New Warrants Upon Exercise.
If this
Warrant shall have been exercised in part, the Company shall, at the time of
delivery of the certificate or certificates representing Warrant Shares, deliver
to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
iv. Rescission
Rights.
If the
Company fails to cause its transfer agent to transmit to the Holder a
certificate or certificates representing the Warrant Shares pursuant to this
Section 2(c)(iv) by the Warrant Share Delivery Date, then the Holder will have
the right to rescind such exercise.
v. Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon
Exercise.
In
addition to any other rights available to the Holder, if the Company fails
to
cause its transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant Shares pursuant to an exercise on or before the Warrant
Share Delivery Date, and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the Warrant Shares which
the Holder anticipated receiving upon such exercise (a “Buy-In”),
then
the Company shall (1) pay in cash to the Holder the amount by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Warrant Shares that the Company was required
to
deliver to the Holder in connection with the exercise at issue times (B) the
price at which the sell order giving rise to such purchase obligation was
executed, and (2) at the option of the Holder, either reinstate the portion
of
the Warrant and equivalent number of Warrant Shares for which such exercise
was
not honored or deliver to the Holder the number of shares of Common Stock that
would have been issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect
to
an attempted exercise of shares of Common Stock with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause (1) of the
immediately preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In, together with applicable
confirmations and other evidence reasonably requested by the Company. Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver certificates representing shares of Common Stock
upon
exercise of the Warrant as required pursuant to the terms hereof.
8
vi. No
Fractional Shares or Scrip.
No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant. As to any fraction of a share which Holder would
otherwise be entitled to purchase upon such exercise, the Company shall pay
a
cash adjustment in respect of such final fraction in an amount equal to such
fraction multiplied by the Exercise Price.
vii. Charges,
Taxes and Expenses.
Issuance of certificates for Warrant Shares shall be made without charge to
the
Holder for any issue or transfer tax or other incidental expense in respect
of
the issuance of such certificate, all of which taxes and expenses shall be
paid
by the Company, and such certificates shall be issued in the name of the Holder
or in such name or names as may be directed by the Holder; provided,
however,
that in
the event certificates for Warrant Shares are to be issued in a name other
than
the name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder;
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
viii. Closing
of Books.
The
Company will not close its stockholder books or records in any manner which
prevents the timely exercise of this Warrant, pursuant to the terms
hereof.
Section
3. Certain Adjustments.
a) Stock
Dividends and Splits.
If the
Company, at any time while this Warrant is outstanding: (A) pays a stock
dividend or otherwise make a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company pursuant to this Warrant), (B)
subdivides outstanding shares of Common Stock into a larger number of shares,
(C) combines (including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (D) issues by reclassification
of shares of the Common Stock any shares of capital stock of the Company, then
in each case the Exercise Price shall be multiplied by a fraction of which
the
numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event and the number of shares issuable upon exercise
of
this Warrant shall be proportionately adjusted. Any adjustment made pursuant
to
this Section 3(a) shall become effective immediately after the record date
for
the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date
in
the case of a subdivision, combination or re-classification.
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b) Pro
Rata Distributions.
If the
Company, at any time prior to the Termination Date, shall distribute to all
holders of Common Stock (and not to Holders of the Warrants) evidences of its
indebtedness or assets (including cash and cash dividends) or rights or warrants
to subscribe for or purchase any security other than the Common Stock (which
shall be subject to Section 3(b)), then in each such case the Exercise Price
shall be adjusted by multiplying the Exercise Price in effect immediately prior
to the record date fixed for determination of stockholders entitled to receive
such distribution by a fraction of which the denominator shall be the VWAP
determined as of the record date mentioned above, and of which the numerator
shall be such VWAP on such record date less the then per share fair market
value
at such record date of the portion of such assets or evidence of indebtedness
so
distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors in good faith. In either case the
adjustments shall be described in a statement provided to the Holder of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
c) Fundamental
Transaction.
If, at
any time while this Warrant is outstanding, (A) the Company effects any merger
or consolidation of the Company with or into another Person, (B) the Company
effects any sale of all or substantially all of its assets in one or a series
of
related transactions, (C) 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 (D) 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,
upon any subsequent exercise of this Warrant, the Holder shall have the right
to
receive, for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, at the
option of the Holder, (a) upon exercise of this Warrant, the number of shares
of
Common Stock of the successor or acquiring corporation or of the Company, if
it
is the surviving corporation, and any additional consideration (the
“Alternate
Consideration”)
receivable upon or as a result of such reorganization, reclassification, merger,
consolidation or disposition of assets by a Holder of the number of shares
of
Common Stock for which this Warrant is exercisable immediately prior to such
event or (b) if the Company is acquired in an all cash transaction, cash equal
to the value of this Warrant as determined in accordance with the Black-Scholes
option pricing formula. 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. To the extent necessary to effectuate the foregoing provisions,
any
successor to the Company or surviving entity in such Fundamental Transaction
shall issue to the Holder a new warrant consistent with the foregoing provisions
and evidencing the Holder’s right to exercise such warrant into Alternate
Consideration. 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 Section 3(d) and insuring
that this Warrant (or any such replacement security) will be similarly adjusted
upon any subsequent transaction analogous to a Fundamental
Transaction.
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d) Calculations.
All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section
3,
the number of shares of Common Stock deemed to be issued and outstanding as
of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.
e) Voluntary
Adjustment By Company.
The
Company may at any time during the term of this Warrant reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate
by
the Board of Directors of the Company.
f) Notice
to Holders.
i. Adjustment
to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company
shall promptly mail to each Holder a notice setting forth the Exercise Price
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment. If the Company issues a variable rate security, despite the
prohibition thereon in the Purchase Agreement, the Company shall be deemed
to
have issued Common Stock or Common Stock Equivalents at the lowest possible
conversion or exercise price at which such securities may be converted or
exercised in the case of a Variable Rate Transaction (as defined in the Purchase
Agreement).
ii. Notice
to Allow Exercise by Holder.
If (A)
the Company shall declare a dividend (or any other distribution) on the Common
Stock; (B) the Company shall declare a special nonrecurring cash dividend on
or
a redemption of the Common Stock; (C) the Company shall authorize the granting
to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights; (D) the
approval of any stockholders of the Company shall be required in connection
with
any reclassification of the Common Stock, any consolidation or merger to which
the Company is a party, any sale or transfer of all or substantially all of
the
assets of the Company, of any compulsory share exchange whereby the Common
Stock
is converted into other securities, cash or property; (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding
up of
the affairs of the Company; then, in each case, the Company shall cause to
be
mailed to the Holder at its last address as it shall appear upon the Warrant
Register of the Company, at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date
on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date
as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined
or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record
shall
be entitled to exchange their shares of the Common Stock for securities, cash
or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided,
that
the failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. The Holder is entitled to exercise this Warrant during the
20-day period commencing on the date of such notice to the effective date of
the
event triggering such notice.
11
Section
4. Transfer
of Warrant.
a) Transferability.
Subject
to compliance with any applicable securities laws and the conditions set forth
in this Warrant and to the relevant provisions of the Purchase Agreement, this
Warrant and all rights hereunder are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of the Company, together
with
a written assignment of this Warrant substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to
pay
any transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion of this Warrant
not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned, may be exercised by a new holder for the purchase of Warrant
Shares without having a new Warrant issued.
b) New
Warrants.
This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with
Section 4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants
in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
c) Warrant
Register.
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.
d) Transfer
Restrictions.
If,
at the
time
of
the surrender of this Warrant in connection with any transfer of this Warrant,
the transfer of this Warrant shall not be registered pursuant to an effective
registration
statement under the Securities Act
and
under
applicable state securities or blue sky laws, the Company may require, as a
condition of allowing such transfer (i) that the Holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of counsel
(which opinion shall be in form, substance and scope customary for opinions
of
counsel in comparable transactions) to the effect that such transfer may be
made
without
registration under
the
Securities Act and under applicable state securities or blue sky laws, (ii)
that
the holder or transferee execute and deliver to the Company an investment letter
in form and substance acceptable to the Company and (iii) that the transferee
be
an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
promulgated under the Securities Act or a qualified institutional buyer as
defined in Rule 144A(a) under the Securities Act.
12
Section
5. Miscellaneous.
a) Title
to Warrant.
Prior
to the Termination Date and subject to compliance with applicable laws and
Section 4 of this Warrant, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by
the
Holder in person or by duly authorized attorney, upon surrender of this Warrant
together with the Assignment Form annexed hereto properly endorsed. The
transferee shall sign an investment letter in form and substance reasonably
satisfactory to the Company.
b) No
Rights as Shareholder Until Exercise.
This
Warrant does not entitle the Holder to any voting rights or other rights as
a
shareholder of the Company prior to the exercise hereof. Upon the surrender
of
this Warrant and the payment of the aggregate Exercise Price (or by means of
a
cashless exercise), the Warrant Shares so purchased shall be and be deemed
to be
issued to such Holder as the record owner of such shares as of the close of
business on the later of the date of such surrender or payment.
c) Loss,
Theft, Destruction or Mutilation of Warrant.
The
Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
or any stock certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it
(which, in the case of the Warrant, shall not include the posting of any bond),
and upon surrender and cancellation of such Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock certificate
of like tenor and dated as of such cancellation, in lieu of such Warrant or
stock certificate.
d) Saturdays,
Sundays, Holidays, etc.
If the
last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall be a Saturday, Sunday or a legal holiday,
then such action may be taken or such right may be exercised on the next
succeeding day not a Saturday, Sunday or legal holiday.
e) Authorized
Shares.
The
Company covenants that during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise
of
any purchase rights under this Warrant. The Company further covenants that
its
issuance of this Warrant shall constitute full authority to its officers who
are
charged with the duty of executing stock certificates to execute and issue
the
necessary certificates for the Warrant Shares upon the exercise of the purchase
rights under this Warrant. The Company will take all such reasonable action
as
may be necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of the Trading Market upon which the Common Stock may be listed.
Except
and to the extent as waived or consented to by the Holder, the Company shall
not
by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of
this
Warrant, but will at all times in good faith assist in the carrying out of
all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the Company will
(a) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value,
(b)
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable Warrant
Shares upon the exercise of this Warrant, and (c) use commercially reasonable
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Warrant.
13
Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
f) Jurisdiction.
All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.
g) Restrictions.
The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.
h) Nonwaiver
and Expenses.
No
course of dealing or any delay or failure to exercise any right hereunder on
the
part of Holder shall operate as a waiver of such right or otherwise prejudice
Holder’s rights, powers or remedies, notwithstanding the fact that all rights
hereunder terminate on the Termination Date. If the Company willfully and
knowingly fails to comply with any provision of this Warrant, which results
in
any material damages to the Holder, the Company shall pay to Holder such amounts
as shall be sufficient to cover any costs and expenses including, but not
limited to, reasonable attorneys’ fees, including those of appellate
proceedings, incurred by Holder in collecting any amounts due pursuant hereto
or
in otherwise enforcing any of its rights, powers or remedies
hereunder.
i) Notices.
Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.
j) Limitation
of Liability.
No
provision hereof, in the absence of any affirmative action by Holder to exercise
this Warrant or purchase Warrant Shares, and no enumeration herein of the rights
or privileges of Holder, shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the
Company.
k) Remedies.
Holder,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of
the
provisions of this Warrant and hereby agrees to waive the defense in any action
for specific performance that a remedy at law would be adequate.
14
l) Successors
and Assigns.
Subject
to applicable securities laws, this Warrant and the rights and obligations
evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of all Holders
from time to time of this Warrant and shall be enforceable by any such Holder
or
holder of Warrant Shares.
m) Amendment.
This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.
n) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
o) Headings.
The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.
********************
15
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized.
Dated:
May 5, 2008
|
By:
|
|
|
|
|
Name:
|
|
|
|
Title:
|
|
16
NOTICE
OF EXERCISE
TO: FUTURE
NOW GROUP, INC.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full),
and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.
(2) Payment
shall take the form of (check applicable box):
[
] a
bank wire in lawful money of the United States; or
[
] the
cancellation of such number of Warrant Shares as is necessary, in accordance
with the formula set forth in subsection 2(c), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection 2(c).
(3) Please
issue a certificate or certificates representing said Warrant Shares in the
name
of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following:
_______________________________
_______________________________
(4)
Accredited
Investor.
The
undersigned is an “accredited investor” as defined in Regulation D promulgated
under the Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name
of
Investing Entity:
__________________________________________________________________
Signature
of Authorized Signatory of Investing Entity:
____________________________________________
Name
of
Authorized Signatory:
_____________________________________________________________
Title
of
Signatory: _______________________ Date: _______________
ASSIGNMENT
FORM
(Note:
To assign the foregoing warrant, execute this form and supply required
information. Do not use this form to exercise the
warrant.)
FOR
VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to:
________________________________________________________________________whose
address is
__________________________________________________________________________________.
Dated:
______________, _______
Holder’s
Signature: _________________________________________
Holder’s
Address: _________________________________________
_________________________________________
Signature
Guaranteed: _______________________________________
NOTE:
The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing
Warrant.
Exhibit
B to Common Stock and Warrant Purchase Agreement:
Fully
Diluted Capitalization Table
