Contract
This
Warrant and the shares purchasable hereunder have been acquired for investment
and have not been registered under the securities act of 1933. Neither this
warrant nor such shares may be sold or transferred in the absence of such
registration in effect under such act unless the company receives an opinion
of
counsel or other evidence reasonably acceptable to it demonstrating that such
sale or transfer is exempt from the registration and prospectus delivery
requirements of said act or unless sold pursuant to rule 144 of such act.
Second
Amended and Restated
To
Purchase Shares of Common Stock of
Barnabus
Energy, Inc.
As
of February 13, 2006
FOR
VALUE
RECEIVED, Barnabus Energy, Inc., a Nevada corporation (the “Company”
or
the
“Corporation”),
hereby grants to Bank Xxx. Xxxxxxxxx jr. & Cie. (Schweiz) AG on behalf of
fully managed accounts (together with its permitted successors and assigns,
the
“Registered
Holder”),
the
right to purchase at any time up to and including January 31, 2011 (the
“Termination
Date”),
672,646 shares of fully paid and nonassessable Common Stock of the Company,
$0.001 par value per share (the “Common
Stock”,
and
those shares of Common Stock purchasable under this Warrant being the
“Warrant
Shares”).
This
Warrant is being issued pursuant to that certain Investment Agreement of even
date herewith among the Company, the initial Registered Holder and the other
purchasers listed on the signature page thereof (the “Investment Agreement).
Capitalized terms used and not otherwise defined herein shall have the meanings
given to such terms in the Investment Agreement.
1. EXERCISE.
(a) This
Warrant may be exercised by the Registered Holder on or before the Termination
Date, in whole or in part, by surrendering this Warrant, with the purchase
form
appended hereto as Exhibit
I
duly
executed by the Registered Holder at the principal executive offices of the
Company, or at such other office or agency as the Company may designate,
accompanied by payment in full, in lawful money of the United States, of the
Warrant Price payable in respect of the number of Warrant Shares purchased
upon
such exercise. The "Warrant Price" shall initially be $2.23 and from time to
time shall be such amount adjusted in accordance with Section 2 hereof;
provided,
however,
that
the Warrant Price shall never be less than $0.05 (the “Warrant
Price Floor”).
(b) Each
exercise of this Warrant shall be deemed to have been effected immediately
prior
to the close of business on the day on which this Warrant shall have been
surrendered to the Company as provided in subsection 1(a) above (the
“Exercise Date”). At such time, the person or persons in whose name or
names any certificates for Warrant Shares shall be issuable upon such exercise
as provided in subsection 1(d) below shall be deemed to have become the
holder or holders of record of the Warrant Shares represented by such
certificates.
(c) As
soon
as practicable after the exercise of this Warrant in full or in part, and in
any
event within twenty (20) days thereafter, the Company, at its expense, will
cause to be issued in the name of, and delivered to, the Registered Holder,
or
as such Holder (upon payment by such Holder of any applicable transfer taxes)
may direct:
(i) a
certificate or certificates for the number of Warrant Shares to which the
Registered Holder shall be entitled upon such exercise; and
(ii) in
case
such exercise is in part only, a new warrant or warrants (dated the date hereof)
of like tenor, calling in the aggregate on the face or faces thereof for the
number of Warrant Shares equal (without giving effect to any adjustment therein)
to the number of such shares called for on the face of this Warrant minus the
number of such shares purchased by the Registered Holder upon such
exercise.
2. ADJUSTMENTS.
Provided
that the Warrant Price shall never be less than the Warrant Price Floor, the
Warrant Price shall be subject to adjustment as follows:
(a) Adjustment
for Stock Splits and Combinations.
If the
Company shall at any time or from time to time after the date on which this
Warrant was first issued (the “Original
Issue Date”)
effect
a subdivision of the outstanding Common Stock, the Warrant Price shall be
proportionately decreased. If the Company shall at any time or from time to
time
after the Original Issue Date combine the outstanding shares of Common Stock,
the Warrant Price shall be proportionately increased. Any adjustment under
this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(b) Adjustments
for Other Dividends and Distributions.
In the
event the Company at any time or from time to time after the Original Issue
Date
shall make or issue, or fix a record date for the determination of holders
of
Common Stock entitled to receive, a dividend or other distribution payable
in
securities of the Company or in cash or other property, then and in each such
event the Registered Holder shall receive upon exercise hereof, in addition
to
the Warrant Shares, the kind and amount of securities of the Company and/or
cash
and other property which the Registered Holder would have been entitled to
receive had this Warrant been exercised on the date of such event.
(c) Adjustment
for Mergers or Reorganizations, etc.
If
there shall occur any reclassification, reorganization, recapitalization,
consolidation, sale of all or substantially all assets or merger involving
the
Company in which the Common Stock is converted into or exchanged for securities,
cash or other property (other than a transaction covered by subsection 2(b)
above), then, following any such reclassification, reorganization,
recapitalization, consolidation, sale of all or substantially all assets or
merger, and without payment of any additional consideration thereof, the
Registered Holder shall receive upon exercise hereof the kind and amount of
securities, cash or other property which the Registered Holder would have been
entitled to receive if, immediately prior to such reclassification,
reorganization, recapitalization, consolidation or merger, sale of all or
substantially all assets, the Registered Holder had held the Warrant Shares,
giving application to all adjustments called for during such period under this
Section 2.
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The
foregoing provisions of this Section 2(c) shall similarly apply to
successive reorganizations, consolidations, mergers, sales and transfers and
to
the stock or securities of any other corporation that are at the time receivable
upon the exercise of this Warrant. If the per share consideration payable to
the
holder hereof for Warrant Shares in connection with any such transaction is
in a
form other than cash or marketable securities, then the value of such
consideration shall be determined in good faith by the Company’s Board of
Directors. In all events, appropriate adjustment (as determined in good faith
by
the Company’s Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant
shall be applicable after that event, as near as reasonably may be, in relation
to any shares or other property deliverable after that event upon exercise
of
this Warrant.
(d) Subsequent
Issuances.
Except
for Excluded Issuances, if and whenever the Corporation shall issue or sell
any
shares of Common Stock for a consideration per share less than the Warrant
Price
in effect immediately prior to the time of such issue or sale, then and in
each
such case (a “Trigger
Issuance”)
the
then-existing Warrant Price shall be reduced, as of the close of business on
the
effective date of the Trigger Issuance, to the lowest per share price at which
such Additional Shares of Common Stock were issued or sold.
If
any
time the Corporation shall in any manner grant (directly and not by assumption
in a merger or otherwise) any warrants or other rights to subscribe for or
to
purchase, or any options for the purchase of, Common Stock, or any stock or
security convertible into or exchangeable for Common Stock (such warrants,
rights or options being called “Options” and such convertible or
exchangeable stock or securities being called
“ConvertibleSecurities”), whether or not such Options or the right
to convert or exchange any such Convertible Securities are immediately
exercisable, no adjustment of the Warrant Price shall be made at the time of
such grant. Rather, at the time of the conversion, exercise or exchange of
such
Options or Convertible Securities, if the price per share at which Common Stock
is issued upon the exercise of such Options or upon the conversion or exchange
of such Convertible Securities (determined by dividing (A) the sum of (x) the
total amount, if any, received by the Corporation as consideration for the
granting of such Options or Convertible Securities, plus (y) the aggregate
amount of additional consideration paid to the Corporation upon the exercise
of
such Options or the aggregate amount of additional consideration, if any, paid
upon the conversion or exchange of such Convertible Securities, by (B) the
number of shares of Common Stock being issued upon the exercise of such Options
or upon the conversion or exchange of all such Convertible Securities) shall
be
less than the Warrant Price in effect immediately prior to the time of such
conversion, exercise or exchange, then the Warrant Price shall be adjusted
to
equal the price at which Common Stock is issued upon such exercise or conversion
or exchange.
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If
any
shares of Common Stock, Options or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor plus the amount, if any, to be
received upon exercise or conversion thereof, without deduction therefrom of
any
expenses incurred or any underwriting commissions or concessions paid or allowed
by the Corporation in connection therewith. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for a consideration
other than cash or for a consideration including cash and such other
consideration, the amount of the consideration other than cash received by
the
Corporation shall be deemed to be the fair value of such consideration as
determined in good faith by the Board, without deduction of any expenses
incurred or any underwriting commissions or concessions paid or allowed by
the
Corporation in connection therewith. In case any Options shall be issued in
connection with the issue and sale of other securities of the Corporation,
together comprising one integral transaction in which no specific consideration
is allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued for such consideration as determined in good faith
by
the Board. This determination of the fair value of consideration (or the
allocation thereof) need not be the amount recorded in the books and records
of
the Corporation if the Board determines that the determination of different
amounts for different contexts is in the best interest of the Corporation and
its stockholders and creditors as a whole.
As
used
herein, “Excluded
Issuances”
shall
mean any issuance of Common Stock (A) to directors, officers, employees or
consultants of the Corporation, (B) upon the conversion or exercise of Options
or Convertible Securities issued prior to the date hereof, unless such
securities have been amended or modified in any manner after the date hereof,
(C) pursuant to the Investment Agreement and other agreements in effect on
the
date hereof and securities issued upon the exercise or conversion of those
securities, (D) by reason of a dividend, stock split or other distribution
on
shares of Common Stock; (E) to Xxxxx Xxxxxxx or Xxxxxx Xxxxxxxx pursuant to
the
terms of their employment agreements; (F) in connection with the acquisition
of
a business or technology, the formation of a joint venture or a strategic
investment; and (G) at or above a price of $1.50 per share (which per share
amount shall be adjusted pro rata in the case of any split, dividend,
combination or other event affecting the number of outstanding shares of Common
Stock).
(e) Milestone
Adjustments.
The
Warrant Price shall be adjusted as, when and to the extent provided in
this
paragraph (e); provided,
however,
no
further adjustments to the Warrant Price shall be made pursuant to this
paragraph (e) with respect to any fiscal quarter ended after November 30, 2006
if: (x) there was no Milestone Failure with respect to the fiscal quarter ended
November 30, 2006; and (y) the VWAP for any twenty (20) consecutive Trading
Days
after the Milestone Announcement Date with respect to the fiscal quarter ended
November 30, 2006 is at least $4.00 per share (which per share amount shall
be
adjusted pro rata in the case of any split, dividend, combination or other
event
affecting the number of outstanding shares of Common Stock). Upon each Milestone
Failure Date, the Warrant Price in effect on such Milestone Failure Date shall,
at the election of the Registered Holder, be decreased to 115% of the VWAP
for
the five (5) Trading Days immediately following such Milestone Failure Date.
With
respect to each fiscal quarter ended after a Milestone Failure Date, if the
cumulative Net Sales through such fiscal quarter ended exceed the cumulative
Milestones such fiscal quarter, then
all
prior adjustments made pursuant to this paragraph (e) shall be reversed. For
purposes of this Warrant, the following terms shall have the following
meanings:
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(i) “Milestone”
means, with respect to a given fiscal quarter, the dollar amount of Net Sales
for such fiscal quarter, as set forth in the table immediately
below:
Milestones
|
|
||
Fiscal Quarter
Ended |
|
Milestone Threshold |
|
February
28, 2006
|
$100,000
|
||
May
31, 2006
|
$1,400,000
|
||
August
31, 2006
|
|
$4,500,000
|
|
November
30, 2006
|
|
$8,000,000
|
|
February
28, 2007
|
|
$9,000,000
|
|
May
31, 2007
|
|
$12,000,000
|
|
August
31, 2007
|
|
$15,000,000
|
|
November
30, 2007
|
|
$18,000,000
|
|
(ii) “Milestone
Announcement Date” shall mean, with respect to each fiscal quarter ended
during 2006 and 2007, the date on which the Corporation files the Periodic
Report applicable to such quarter; it being understood if the Corporation amends
any such Periodic Report after its initial filing, then all calculations,
determinations and adjustments, if any, under this Debenture with respect to
the
fiscal quarter for which such Periodic Report was filed shall, upon the filing
of such amendment, be re-calculated, re-determined and re-adjusted, if
applicable, as though the information contained in such amendment were contained
in the original filing.
(iii) “Milestone
Failure” shall be deemed to occur, with respect to a fiscal quarter
specified in the table contained in the definition of the term “Milestone”, if
the Net Sales for such fiscal quarter do not exceed the Milestone for such
fiscal quarter, as reported in the applicable Periodic Report.
(iv) “Milestone
Failure Date” shall mean a Milestone Announcement Date on which a Milestone
Failure is deemed to occur.
(v) “Net
Sales” means the revenues generated in the ordinary course of business by
the Corporation, determined in accordance with GAAP, as reported in the
Corporation’s applicable Periodic Report.
(vi) “Periodic
Report” shall mean the quarterly report on Form 10-Q, 10-QSB or such other
form the Corporation is then eiligible to use, or, in the case of the fourth
fiscal quarter of a given fiscal year, the annual report on Form 10-K, 10-KSB
or
such other form the Corporation is then eligible to use, in each case, filed
by
the Corporation with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act.
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(vii) “Trading
Day” shall mean a day, other than a Saturday or Sunday, on which The New
York Stock Exchange, Inc. is open for trading.
(viii) “VWAP”
means, with respect to a period of specified Trading Days,
the
volume weighted average price per share of the Common Stock measured over each
of the days during such period, which shall be equal to the average of the
quotient(s) for each Trading Day during such period of (x) the aggregate dollar
amount of Common Stock traded (i.e., the sale prices multiplied by the number
of
shares traded) for such Trading Day, divided by (y) the total number of shares
of Common Stock traded during such Trading Day.
(f) Certificate
as to Adjustments.
Upon
the occurrence of each adjustment or readjustment pursuant to this
Section 2, the Company at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish
to
the Registered Holder a certificate setting forth such adjustment or
readjustment (including the kind and amount of securities, cash or other
property for which this Warrant shall be exercisable, the Warrant Price and
the
method of calculation of each) and showing in detail the facts upon which such
adjustment or readjustment is based.
3. FRACTIONAL
SHARES.
The
Company shall not be required upon the exercise of this Warrant to issue any
fractional shares, and shall round any fractional shares to the next highest
whole number of shares. If a fractional share interest arises upon any exercise
or conversion of the Warrant, the Company shall eliminate such fractional share
interest by paying the Registered Holder an amount computed by multiplying
the
fractional interest by the Fair Market Value of a full share of common
Stock.
The
“Fair
Market Value” per share of Common Stock shall be:
(i) if
the
Common Stock is listed on a national securities exchange, the NASDAQ Small
Cap
Market, the NASDAQ National Market, the OTCBB or another nationally recognized
trading system as of the Exercise Date, the average of the high and low reported
sale prices per share of Common Stock thereon on the trading day immediately
preceding the Exercise Date (provided that if no such price is reported on
such
day, the Fair Market Value per share of Common Stock shall be determined
pursuant to clause (ii)).
(ii) In
all
other cases, the Fair Market Value per share of Common Stock shall be deemed
to
be the amount most recently determined by the Board of Directors to represent
the fair market value per share of the Common Stock. Notwithstanding the
foregoing, if the Board of Directors has not made such a determination within
the three-month period prior to the Exercise Date, then (A) the Board of
Directors shall make a determination of the Fair Market Value per share of
the
Common Stock within 20 days of a request by the Registered Holder that it do
so,
and (B) the exercise of this Warrant pursuant to this subsection 1(b) shall
be delayed until such determination is made.
4. REPRESENTATIONS
AND WARRANTIES BY THE REGISTERED HOLDER.
The
Registered Holder represents and warrants to the Company that upon
each
exercise hereof, the Registered Holder affirms to the Company that the
representations and warranties contained in Sections 4.01 and 4.04 through
4.08
of the Investment Agreement are true and correct as if made by the Registered
Holder on the date of exercise.
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5.
REQUIREMENTS
FOR TRANSFER.
(a) This
Warrant and the Warrant Shares shall not be sold or transferred unless either
(i) they first shall have been registered under the Act and under applicable
state securities or blue sky laws, or (ii) the Company first shall have been
furnished with an opinion of legal counsel, reasonably satisfactory to the
Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Act.
(b) Each
certificate representing Warrant Shares shall bear a legend substantially in
the
following form:
“The
shares represented by this certificate have been acquired for investment and
have not been registered under the securities act of 1933. Such shares may
not
be sold or transferred in the absence of such registration in effect under
such
act unless the company receives an opinion of counsel or other evidence
reasonably acceptable to it demonstrating that such sale or transfer is exempt
from the registration and prospectus delivery requirements of said act or unless
sold pursuant to rule 144 of such act.
The
foregoing legend shall be removed from the certificates representing any Warrant
Shares, at the request of the holder thereof, at such time as (i) they
become eligible for resale pursuant to an effective registration statement
or
Rule 144(k) under the Act or (ii) the Company shall have received either an
opinion of counsel or a “no-action” letter from the SEC to the effect that any
transfer of the Warrant Shares represented by such certificates will not violate
the Act and applicable state securities laws.
6. NO
IMPAIRMENT.
The
Company will not, by amendment of its charter through reorganization, transfer
of assets, consolidation, merger, dissolution, issuance 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 action
as
may be necessary or appropriate in order to protect the rights of the holder
of
this Warrant against impairment.
7. NOTICES
OF RECORD DATE, ETC.
In the
event:
(a) that
the
Company shall take a record of the holders of its Common Stock (or other stock
or securities at the time deliverable upon the exercise of this Warrant) for
the
purpose of entitling or enabling them to receive any dividend or other
distribution, or to receive any right to subscribe for or purchase any shares
of
stock of any class or any other securities, or to receive any other right;
or
(b) of
any
capital reorganization of the Company, any reclassification of the Common Stock
of the Company, any consolidation or merger of the Company with or into another
corporation (other than a consolidation or merger in which the Company is the
surviving entity and its Common Stock is not converted into or exchanged for
any
other securities or property), or any transfer of all or substantially all
of
the assets of the Company; or
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(c) of
the
voluntary or involuntary dissolution, liquidation or winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to
the
Registered Holder a notice specifying, as the case may be, (i) the record date
for such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, or (ii) the effective date on which such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or such other stock or
securities at the time deliverable upon the exercise of this Warrant) shall
be
entitled to exchange their shares of Common Stock (or such other stock or
securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up. Such notice shall be mailed at least ten days prior
to the record date or effective date for the event specified in such
notice.
8. STOCK
FULLY PAID, RESERVATION OF STOCK.
All
of
the Warrant Shares issuable upon the exercise of the rights represented by
this
Warrant will, upon issuance and receipt of the purchase price therefor, be
validly issued, fully paid and nonassessable, and free from all taxes, liens
and
charges except for restrictions on transfer provided for herein or under
applicable federal and state securities laws. The Company will at all times
reserve and keep available, solely for issuance and delivery upon the exercise
of this Warrant, such number of shares of Common Stock and other securities,
cash and/or property, as from time to time shall be issuable upon the exercise
of this Warrant.
9. REPLACEMENT
OF WARRANTS.
Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and (in the case of loss, theft or
destruction) upon delivery of an indemnity agreement (without any obligation
for
a surety or other security therefor) in an amount reasonably satisfactory to
the
Company, or (in the case of mutilation) upon surrender and cancellation of
this
Warrant, the Company will issue, in lieu thereof, a new Warrant of like
tenor.
10. TRANSFERS,
ETC.
(a) The
Company will maintain a register containing the name and address of the
Registered Holder of this Warrant. The Registered Holder may change its or
his
address as shown on the warrant register by written notice to the Company
requesting such change.
(b) This
Warrant and all rights hereunder are transferable, in whole or in part, upon
surrender of this Warrant with a properly executed assignment in a form
reasonably acceptable to the Company at the principal executive offices of
the
Company.
(c) Until
any
transfer of this Warrant is made in the Warrant register, the Company may treat
the Registered Holder as the absolute owner hereof for all purposes;
provided,
however,
that if
and when this Warrant is properly assigned in blank, the Company may (but shall
not be obligated to) treat the bearer hereof as the absolute owner hereof for
all purposes, notwithstanding any notice to the contrary.
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11. MAILING
OF NOTICES, ETC.
All
notices and other communications from the Company to the Registered Holder
shall
be mailed by first-class certified or registered mail, postage prepaid, to
the
address last furnished to the Company in writing by the Registered Holder.
All
notices and other communications from the Registered Holder or in connection
herewith to the Company shall be mailed by first-class certified or registered
mail, postage prepaid, to the Company at its principal executive office. If
the
Company should at any time change the location of its principal executive office
to a place other than as set forth below, it shall give prompt written notice
to
the Registered Holder and thereafter all references in this Warrant to the
location of its principal executive office at the particular time shall be
as so
specified in such notice.
12. NO
RIGHTS AS STOCKHOLDER.
Until
the
exercise of this Warrant, the Registered Holder shall not have or exercise
any
rights by virtue hereof as a stockholder of the Company.
13. CHANGE
OR WAIVER.
Any
term
of this Warrant may be amended or waived upon the written consent of the Company
and the Registered Holder.
14. SECTION HEADINGS.
The
Section headings in this Warrant are for the convenience of the parties and
in
no way alter, modify, amend, limit or restrict the contractual obligations
of
the parties.
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15. GOVERNING
LAW.
This
Warrant will be governed by and construed in accordance with the internal laws
of the State of Nevada without giving effect to the conflict or choice of law
provision thereof that would give rise the application of the domestic
substantive law of any other jurisdiction.
16. AMENDMENT
AND RESTATEMENT.
This
Warrant amends and restates in its entirety the Common Stock Purchase Warrant
of
the Company issued to the Registered Holder as of the date hereof (the
“Original
Warrant”)
and
the Amended and Restated Common Stock Purchase Warrant of the Company issued
to
the Registered Holder as of the date hereof (the “Amended
Warrant”).
The
Original Warrant and the Amended Warrant shall be null and void and shall have
no further force or effect.
EXECUTED
as of the Date of Issuance indicated above.
BARNABUS ENERGY, INC. | ||
|
|
|
By: | /s/ Xxxxx Xxxxxxx | |
Name:
Xxxxx Xxxxxxx
Title:
President
|
||
Agreed
to
the foregoing:
Bank
Xxx.
Xxxxxxxxx jr. & Cie. (Schweiz) AG
By:
/s/ X.
Xxxxxxxxxx
Name:
X. Xxxxxxxxxx
Title:
Vice President
|
By:
/s/ X.
Xxxxxxx
Name:
X. Xxxxxxx
Title:
Sen. V.P.
|
EXHIBIT
I
PURCHASE
FORM
To: Barnabus Energy, Inc. (the
“Company”)
|
Dated:
____________
|
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.
The
undersigned herewith makes payment of the full Warrant Price for such shares
at
the price per share provided for in such Warrant, which is $____. Such payment
takes the form of lawful money of the United States.
Please
issue a certificate representing said shares of Common Stock in the name of
the
undersigned or in such other name as is specified below:
The
undersigned affirms the representation and warranties contained in Sections
4.01
and 4.04 through 4.08 of that certain Investment Agreement dated the same date
as the attached Warrant, among the Company, the initial holder of the attached
Warrant and the other purchasers listed on the signature page
thereof.
Name
of Entity:
____________________________________
Signature
of
Authorized
Person: ____________________________________
Address:
__________________________________________
__________________________________________
Date:
__________________________________________
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