WARRANT AGREEMENT
BIDVILLE, INC.
THIS WARRANT ("WARRANT") AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED
UPON THE EXERCISE OF THIS WARRANT HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE,
OFFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS.
THIS CERTIFIES THAT, for value received, Delmount International Ltd. (the
"Holder") is entitled to subscribe for and purchase 3,500,000 shares of the
fully paid and nonassessable Common Stock, $ .001 par value (the "Shares"), of
Bidville, Inc., a Nevada corporation (the "Company"), at the aggregate exercise
price of $0.60 per share (the "Exercise Price"), on or before March 31, 2010,
subject to the provisions and upon the terms and conditions hereinafter set
forth.
1. Vesting, Method of Exercise; Payment.
(a) Vesting. 2,500,000 warrants shall vest after Holder has purchased
2,500 shares of Bidville Series A Preferred Stock for $2,500,000. The
remaining 1,000,000 warrants shall vest pro rata upon the Holders exercise
of its option to purchase up to an additional 1,000 shares of Bidville
Series A Preferred Stock.
(b) Cash Exercise. Any purchase rights represented by this Warrant may be
exercised by the Holder, in whole or in part, by the surrender of this
Warrant (with the notice of exercise form attached hereto as Exhibit A,
duly executed) at the principal office of the Company, and by the payment
to the Company, by certified, cashier's or other check acceptable to the
Company or by wire transfer to an account designated by the Company, of an
amount equal to the aggregate Exercise Price of the Shares being
purchased.
(c) Stock Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the Shares so purchased
shall be delivered to the Holder within a reasonable time and, unless this
Warrant has been fully exercised or has expired, a new Warrant
representing the shares with respect to which this Warrant shall not have
been exercised shall also be issued to the Holder within such time.
2. Stock Fully Paid; Reservation of Shares.
All of the Shares issuable upon the exercise of the rights represented by this
Warrant will, upon issuance and receipt of the Exercise Price therefor, be fully
paid and nonassessable, and free from all taxes, liens and charges with respect
to the issue thereof. During the period within which the rights represented by
this Warrant may be exercised, the Company shall at all times have authorized
and reserved for issuance sufficient shares of its Common Stock to provide for
the exercise of the rights represented by this Warrant.
3. Adjustments.
Subject to the provisions of Section 11 hereof, the number and kind of
securities purchasable upon the exercise of this Warrant and the Exercise Price
therefor shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Reclassification. In the case of any reclassification or change of
securities issuable upon exercise of this Warrant (other than a change in
par value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or in case of any
merger of the Company with or into another corporation (other than a
merger with another corporation in which the Company is the acquiring and
the surviving corporation and which does not result in any
reclassification or change of outstanding securities issuable upon
exercise of this Warrant), or in case of any sale of all or substantially
all of the assets of the Company, the Company, or such successor or
purchasing corporation, as the case may be, shall duly execute and deliver
to the holder of this Warrant a new Warrant (in form and substance
reasonably satisfactory to the holder of this Warrant), or the Company
shall make appropriate provision without the issuance of a new Warrant, so
that the holder of this Warrant shall have the right to receive, at a
total purchase price not to exceed that payable upon the exercise of the
unexercised portion of this Warrant, and in lieu of the shares of Common
Stock theretofore issuable upon exercise of this Warrant, (i) the kind and
amount of shares of stock, other securities, money and property receivable
upon such reclassification, change, merger or sale by a holder of the
number of shares of Common Stock then purchasable under this Warrant, or
(ii) in the case of such a merger or sale in which the consideration paid
consists all or in part of assets other than securities of the successor
or purchasing corporation, at the option of the Holder of this Warrant,
the securities of the successor or purchasing corporation having a value
at the time of the transaction equivalent to the fair market value of the
Common Stock at the time of the transaction. The provisions of this
subparagraph (a) shall similarly apply to successive reclassifications,
changes, mergers and transfers.
(b) Stock Splits, Dividends and Combinations. In the event that the
Company shall at any time subdivide the outstanding shares of Common Stock
or shall issue a stock dividend on its outstanding shares of Common Stock
the number of Shares issuable upon exercise of this Warrant immediately
prior to such subdivision or to the issuance of such stock dividend shall
be proportionately increased, and the Exercise Price shall be
proportionately decreased, and in the event that the Company shall at any
time combine the outstanding shares of Common Stock the number of Shares
issuable upon exercise of this Warrant immediately prior to such
combination shall be proportionately decreased, and the Exercise Price
shall be proportionately increased, effective at the close of business on
the date of such subdivision, stock dividend or combination, as the case
may be.
(c) Mandatory Call. When the average closing bid price of the common stock
of the Company Inc. meets or exceeds 200% of the Exercise Price then in
effect for ten consecutive trading days, the Company has the right, but
not the obligation, to call all or part of the vested Warrants provided,
however, that the Company may not exercise the call feature unless a
registration statement registering the Shares has been declared effective
at least twenty (20) trading days earlier and is effective from the date
of delivery of the call notice until ten (10) business days later and the
shares underlying the warrants will be issued without restrictive legend.
The call price shall be subject to adjustment according to the adjustment
mechanisms set forth in Section 3 herein. In the event the Company elects
to exercise such right it shall provide written notice of its intention to
the Holder (the "Call Notice"). If the Warrants are not exercised within
ten (10) business days following the date the Company issues the Call
Notice, then the Company shall buy each Warrant for a consideration of
$0.001 per warrant and the Warrants and all rights appurtenant thereto
shall expire on the calendar day immediately following the date of the
Call Notice.
(d) Dilution Protection. If the Company, at any time after the Warrants
have vested as set forth above, issues shares of common stock, warrants or
instruments that are convertible into shares of the Company's Common Stock
at a price per share below the then current Exercise Price of the
outstanding Warrants then the exercise price of the vested Warrants shall
be adjusted to the price that the shares or warrants or instruments that
are convertible into common stock are issued. In addition, the Holder
shall be issued additional warrants according to the following formula:
amount of warrants * (old exercise price / new exercise price) - amount of
warrants. For example: The Company issues new shares at 30 cents, the
Holder has 10,000 vested Warrants: The Holder shall therefore be entitled
to receive 10,000 * ($0.60 / $0.30) - 10,000 = 10,000 additional warrants
and the exercise price on all 20,000 warrants will then be $0.30 versus
the original $0.60. If the Company issues any shares, warrants or
instruments that are convertible into shares of Company Common Stock at a
price less than 1 cent, then the dilution shall be calculated as if the
issuance had happened at a price of one cent ($0.01). Notwithstanding the
foregoing, there shall be no adjustment for any options to purchase shares
of Common Stock granted by the Company under any Company option plan then
in effect.
4. Notice of Adjustments. Whenever the number of Shares purchasable hereunder
or the Exercise Price thereof shall be adjusted pursuant to Section 3
hereof, the Company shall provide notice to the Holder setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the
number and class of shares which may be purchased thereafter and the
Exercise Price therefor after giving effect to such adjustment.
5. Fractional Shares. Notwithstanding any other language contained herein or
the terms of the Agreement, this Warrant may not be exercised for
fractional shares, and such portion of the Warrant and any fractional
shares subject thereto shall expire.
6. Representations of the Company. The Company represents that all corporate
actions on the part of the Company, its officers, directors and
shareholders necessary for the sale and issuance of the Shares pursuant
hereto and the performance of the Company's obligations hereunder were
taken prior to and are effective as of the effective date of this Warrant.
7. Representations and Warranties by the Holder. The Holder represents and
warrants to the Company as follows:
(a) This Warrant and the Shares issuable upon exercise thereof are being
acquired for its own account, for investment and not with a view to, or
for resale in connection with, any distribution or public offering thereof
within the meaning of the Securities Act of 1933, as amended (the "Act").
(b) The Holder understands that the Warrant and the Shares have not been
registered under the Act by reason of their issuance in a transaction
exempt from the registration and prospectus delivery requirements of the
Act pursuant to Section 4(2) thereof, and that they must be held by the
Holder indefinitely, and that the Holder must therefore bear the economic
risk of such investment indefinitely, unless a subsequent disposition
thereof is registered under the Act or is exempted from such registration.
The Holder further understands that the Shares have been qualified under
issuance in a transaction exempt from the registration requirements of
applicable state securities law, which exemptions depend upon, among other
things, the bona fide nature of the Holder's investment intent expressed
above.
(c) The Holder has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the
purchase of this Warrant and the Shares purchasable pursuant to the terms
of this Warrant and of protecting its interests in connection therewith.
(d) The Holder is able to bear the economic risk of the purchase of the
Shares pursuant to the terms of this Warrant.
8. Restrictive Legend.
The Shares (unless registered under the Act) shall be stamped or imprinted with
a legend in substantially the following form: THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES
AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
THE ACT.
9. Restrictions Upon Transfer and Removal of Legend.
(a) The Company need not register a transfer of this Warrant or Shares
bearing the restrictive legend set forth in Section 8 hereof, unless the
conditions specified in such legend are satisfied. The Company may also
instruct its transfer agent not to register the transfer of the Shares,
unless one of the conditions specified in the legend referred to in
Section 8 hereof is satisfied.
(b) Notwithstanding the provisions of paragraph (a) above, no opinion of
counsel shall be necessary for a transfer without consideration by any
holder (i) if such holder is a partnership, to a partner or retired
partner of such partnership who retires after the date hereof or to the
estate of any such partner or retired partner, or (ii) if such holder is a
corporation, to a shareholder of such corporation, or to any other
corporation under common control, direct or indirect, with such holder.
10. Rights of Shareholders.
No holder of this Warrant shall be entitled, as a Holder, to vote or receive
dividends or be deemed the holder of any Shares or any other securities of the
Company which may at any time be issuable on the exercise hereof for any
purpose, nor shall anything contained herein be construed to confer upon the
Holder of this Warrant, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until the Warrant shall have been
exercised and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein. The holder of this Warrant will not be entitled
to share in the assets of the Company in the event of a liquidation, dissolution
or the winding up of the Company.
11. Notices.
All notices and other communications required or permitted hereunder shall be in
writing, shall be effective when given, and shall in any event be deemed to be
given upon receipt or, if earlier,
(a) five (5) days after deposit with the U.S. Postal Service or other
applicable postal service, if delivered by first class mail, postage
prepaid,
(b) upon delivery, if delivered by hand,
(c) one business day after the business day of deposit with Federal
Express or similar overnight courier, freight prepaid or
(d) one business day after the business day of facsimile transmission, if
delivered by facsimile transmission with copy by first class mail, postage
prepaid, and shall be addressed
(i)if to the Holder, at the Holder's address as set forth on the
books of the Company, and
(ii) if to the Company, at the address of its principal corporate
offices (attention: Xxxxxxx Xxxxxxxx, President), at such address as
the Company may designate.
12. Registration Rights Agreement. The Company agrees to file a registration
statement covering the resale of 100% of the common shares underlying the
Warrants ("Underlying Shares") within 40 business days from the execution
of this Warrant Agreement. Upon a triggering of Section 3(d) hereof, the
Company shall, within 40 business days of such occurrence, file an
additional registration statement covering the resale of 200% of the
Underlying Shares of the newly issued warrants. The Company shall use
commercially reasonably best efforts to achieve and maintain the
effectiveness of the registration statement until the legends may be
removed from the Underlying Shares pursuant to Rule 144(k) under the
Securities Act of 1933, as amended, or until all the Underlying Shares
have been sold, whichever comes first.
13. Governing Law. This Warrant and all actions arising out of or in
connection with this Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to the
conflicts of law principles.
Issued this 9th day of May, 2005
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Xxxxxxx Xxxxxxxx
CEO
Bidville, Inc.
EXHIBIT A
NOTICE OF EXERCISE OF WARRANT
TO: Bidville, Inc.
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx
Xxxxxxx 00000
X.X.X.
Attention: President
1. The undersigned hereby irrevocably elects to purchase __________ Shares of
Bidville, Inc. pursuant to the terms of the attached Warrant (No.________).
2.__ The undersigned elects to exercise the attached Warrant by means of a cash
payment of $_______________, and tenders herewith or by concurrent wire transfer
payment in full for the purchase price of the shares being purchased, together
with all applicable transfer taxes, if any.
3. Please issue a certificate or certificates representing said Shares in the
name of the undersigned or in such other name as is specified below:
(Name)
---------------------------------
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(Address)
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4 The undersigned hereby represents and warrants that the aforesaid Shares are
being acquired for the account of the undersigned for investment and not with a
view to, or for resale, in connection with the distribution thereof, and that
the undersigned has no present intention of distributing or reselling such
shares and all representations and warranties of the undersigned set forth in
the Warrant Agreement and the Subscription Agreement executed therewith, are
true and correct as of the date hereof.
DATE:
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(Signature must conform to name of holder as specified on the face of the
Warrant)
Title:
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