Exhibit 4.2 - COMMON STOCK PURCHASE WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT AND
THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO IT&E INTERNATIONAL GROUP, INC.
THAT SUCH REGISTRATION IS NOT REQUIRED.
Right to Purchase up to 1,924,000 Shares of Common Stock of
IT&E International Group, Inc.
(subject to adjustment as provided herein)
COMMON STOCK PURCHASE WARRANT
No. _________________Issue Date: October 18, 2004
IT&E INTERNATIONAL GROUP, INC., a corporation organized under the laws of
the State of Nevada ("IT&E International Group, Inc."), hereby certifies that,
for value received, LAURUS MASTER FUND, LTD., or assigns (the "Holder"), is
entitled, subject to the terms set forth below, to purchase from the Company
(as defined herein) from and after the Issue Date of this Warrant and at any
time or from time to time before 5:00 p.m., New York time, through the close of
business October 18, 2011 (the "Expiration Date"), up to 1,924,000 fully paid
and nonassessable shares of Common Stock (as hereinafter defined), $0.01 par
value per share, at the applicable Exercise Price per share (as defined below).
The number and character of such shares of Common Stock and the applicable
Exercise Price per share are subject to adjustment as provided herein.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Company" shall include IT&E International Group,
Inc. and any corporation which shall succeed, or assume the obligations
of, IT&E International Group, Inc. hereunder.
(b) The term "Common Stock" includes (i) the Company's Common
Stock, par value $0.01 per share; and (ii) any other securities into
which or for which any of the securities described in (i) may be
converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other person
(corporate or otherwise) which the Holder at any time shall be entitled
to receive, or shall have received, on the exercise of the Warrant, in
lieu of or in addition to Common Stock, or which at any time shall be
issuable or shall have been issued in exchange for or in replacement of
Common Stock or Other Securities pursuant to Section 4 or otherwise.
(d) The "Exercise Price" applicable under this Warrant shall be
as follows:
(i) a price of $.94 ,125% of the Fixed Conversion Price (as
defined in the Note) for the first 962,000 shares acquired
hereunder; and
(ii) a price of $1.12 ,150% of the Fixed Conversion Price or
the next 962,000 shares acquired hereunder
1. Exercise of Warrant.
1.1 Number of Shares Issuable upon Exercise. From and after the date
hereof through and including the Expiration Date, the Holder shall
be entitled to receive, upon exercise of this Warrant in whole or
in part, by delivery of an original or fax copy of an exercise
notice in the form attached hereto as Exhibit A (the "Exercise
Notice"), shares of Common Stock of the Company, subject to
adjustment pursuant to Section 4.
1.2 Fair Market Value. For purposes hereof, the "Fair Market Value" of
a share of Common Stock as of a particular date (the "Determination
Date") shall mean:
(a) If the Company's Common Stock is traded on the American Stock
Exchange or another national exchange or is quoted on the
National or SmallCap Market of The Nasdaq Stock Market,
Inc.("Nasdaq"), then the closing or last sale price,
respectively, reported for the last business day immediately
preceding the Determination Date.
(b) If the Company's Common Stock is not traded on the American
Stock Exchange or another national exchange or on the Nasdaq
but is traded on the NASD OTC Bulletin Board, then the mean
of the average of the closing bid and asked prices reported
for the last business day immediately preceding the
Determination Date.
(c) Except as provided in clause (d) below, if the Company's
Common Stock is not publicly traded, then as the Holder and
the Company agree or in the absence of agreement by
arbitration in accordance with the rules then in effect of
the American Arbitration Association, before a single
arbitrator to be chosen from a panel of persons qualified by
education and training to pass on the matter to be decided.
(d) If the Determination Date is the date of a liquidation,
dissolution or winding up, or any event deemed to be a
liquidation, dissolution or winding up pursuant to the
Company's charter, then all amounts to be payable per share
to holders of the Common Stock pursuant to the charter in the
event of such liquidation, dissolution or winding up, plus
all other amounts to be payable per share in respect of the
Common Stock in liquidation under the charter, assuming for
the purposes of this clause (d) that all of the shares of
Common Stock then issuable upon exercise of the Warrant are
outstanding at the Determination Date.
1.3 Company Acknowledgment. The Company will, at the time of the
exercise of the Warrant, upon the request of the Holder hereof
acknowledge in writing its continuing obligation to afford to such
Holder any rights to which such Holder shall continue to be
entitled after such exercise in accordance with the provisions of
this Warrant. If the Holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the
Company to afford to such Holder any such rights.
1.4 Trustee for Warrant Holders. In the event that a bank or trust
company shall have been appointed as trustee for the Holders
pursuant to Subsection 3.2, such bank or trust company shall have
all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the
Company or such successor person as may be entitled thereto, all
amounts otherwise payable to the Company or such successor, as the
case may be, on exercise of this Warrant pursuant to this Section
1.
2. Procedure for Exercise.
2.1 Delivery of Stock Certificates, Etc., on Exercise. The Company
agrees that the shares of Common Stock purchased upon exercise of
this Warrant shall be deemed to be issued to the Holder as the
record owner of such shares as of the close of business on the date
on which this Warrant shall have been surrendered and payment made
for such shares in accordance herewith. As soon as practicable
after the exercise of this Warrant in full or in part, and in any
event within three (3) business days thereafter, the Company at its
expense (including the payment by it of any applicable issue taxes)
will cause to be issued in the name of and delivered to the Holder,
or as such Holder (upon payment by such Holder of any applicable
transfer taxes) may direct in compliance with applicable federal
and state securities laws, a certificate or certificates for the
number of duly and validly issued, fully paid and nonassessable
shares of Common Stock (or Other Securities) to which such Holder
shall be entitled on such exercise, plus, in lieu of any fractional
share to which such Holder would otherwise be entitled, cash equal
to such fraction multiplied by the then Fair Market Value of one
full share, together with any other stock or other securities and
property (including cash, where applicable) to which such Holder is
entitled upon such exercise pursuant to Section 1 or otherwise.
2.2 Exercise. Payment may be made either in cash or by certified or
official bank check payable to the order of the Company equal to
the applicable aggregate Exercise Price, for the number of shares
of Common Stock specified in such Exercise Notice (as such exercise
number shall be adjusted to reflect any adjustment in the total
number of shares of Common Stock issuable to the Holder per the
terms of this Warrant) and the Holder shall thereupon be entitled
to receive the number of duly authorized, validly issued, fully-
paid and non-assessable shares of Common Stock (or Other
Securities) determined as provided herein.
3. Effect of Reorganization, Etc.; Adjustment of Exercise Price.
3.1 Reorganization, Consolidation, Merger, Etc. In case at any time or
from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person, or (c)
transfer all or substantially all of its properties or assets to
any other person under any plan or arrangement contemplating the
dissolution of the Company, then, in each such case, as a condition
to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder, on the
exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the
effective date of such dissolution, as the case may be, shall
receive, in lieu of the Common Stock (or Other Securities) issuable
on such exercise prior to such consummation or such effective date,
the stock and other securities and property (including cash) to
which such Holder would have been entitled upon such consummation
or in connection with such dissolution, as the case may be, if such
Holder had so exercised this Warrant, immediately prior thereto,
all subject to further adjustment thereafter as provided in Section
4.
3.2 Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its
properties or assets, the Company, concurrently with any
distributions made to holders of its Common Stock, shall at its
expense deliver or cause to be delivered to the Holder the stock
and other securities and property (including cash, where
applicable) receivable by the Holder pursuant to Section 3.1, or,
if the Holder shall so instruct the Company, to a bank or trust
company specified by the Holder and having its principal office in
New York, NY as trustee for the Holder (the "Trustee").
3.3 Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer)
referred to in this Section 3, this Warrant shall continue in full
force and effect and the terms hereof shall be applicable to the
shares of stock and other securities and property receivable on the
exercise of this Warrant after the consummation of such
reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and
shall be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person
acquiring all or substantially all of the properties or assets of
the Company, whether or not such person shall have expressly
assumed the terms of this Warrant as provided in Section 4. In the
event this Warrant does not continue in full force and effect after
the consummation of the transactions described in this Section 3,
then the Company's securities and property (including cash, where
applicable) receivable by the Holders will be delivered to Holder
or the Trustee as contemplated by Section 3.2.
4. Extraordinary Events Regarding Common Stock. In the event that the Company
shall (a) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (b) subdivide its
outstanding shares of Common Stock, or (c) combine its outstanding shares
of the Common Stock into a smaller number of shares of the Common Stock,
then, in each such event, the Exercise Price shall, simultaneously with
the happening of such event, be adjusted by multiplying the then Exercise
Price by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event, and the product so obtained
shall thereafter be the Exercise Price then in effect. The Exercise
Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this
Section 4. The number of shares of Common Stock that the Holder shall
thereafter, on the exercise hereof as provided in Section 1, be entitled
to receive shall be increased to a number determined by multiplying the
number of shares of Common Stock that would otherwise (but for the
provisions of this Section 4) be issuable on such exercise by a fraction
of which (a) the numerator is the Exercise Price that would otherwise
(but for the provisions of this Section 4) be in effect, and (b) the
denominator is the Exercise Price in effect on the date of such exercise.
5. Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable
on the exercise of the Warrant, the Company at its expense will promptly
cause its Chief Financial Officer or other appropriate designee to
compute such adjustment or readjustment in accordance with the terms of
the Warrant and prepare a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment
or readjustment is based, including a statement of (a) the consideration
received or receivable by the Company for any additional shares of Common
Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Exercise Price and
the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment
and as adjusted or readjusted as provided in this Warrant. The Company
will forthwith mail a copy of each such certificate to the Holder and any
Warrant agent of the Company (appointed pursuant to Section 11 hereof).
6. Reservation of Stock, Etc., Issuable on Exercise of Warrant. The Company
will at all times reserve and keep available, solely for issuance and
delivery on the exercise of the Warrant, shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of the Warrant.
7. Assignment; Exchange of Warrant. Subject to compliance with applicable
securities laws, this Warrant, and the rights evidenced hereby, may be
transferred by any registered Holder hereof (a "Transferor") in whole or
in part. On the surrender for exchange of this Warrant, with the
Transferor's endorsement in the form of Exhibit B attached hereto (the
"Transferor Endorsement Form") and together with evidence reasonably
satisfactory to the Company demonstrating compliance with applicable
securities laws, which shall include, without limitation, the provision
of a legal opinion from the Transferor's counsel (at the Company's
expense) that such transfer is exempt from the registration requirements
of applicable securities laws, and with payment by the Transferor of any
applicable transfer taxes) will issue and deliver to or on the order of
the Transferor thereof a new Warrant of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Transferor
Endorsement Form (each a "Transferee"), calling in the aggregate on the
face or faces thereof for the number of shares of Common Stock called for
on the face or faces of the Warrant so surrendered by the Transferor.
8. Replacement of Warrant. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any such loss, theft or destruction of this Warrant,
on delivery of an indemnity agreement or security reasonably satisfactory
in form and amount to the Company or, in the case of any such mutilation,
on surrender and cancellation of this Warrant, the Company at its expense
will execute and deliver, in lieu thereof, a new Warrant of like tenor.
9. Registration Rights. The Holder has been granted certain registration
rights by the Company. These registration rights are set forth in a
Registration Rights Agreement entered into by the Company and Holder
dated as of even date of this Warrant.
10.Maximum Exercise. [The Holder shall not be entitled to exercise this
Warrant on an exercise date, in connection with that number of shares of
Common Stock which would be in excess of the sum of (i) the number of
shares of Common Stock beneficially owned by the Holder and its
affiliates on an exercise date, and (ii) the number of shares of Common
Stock issuable upon the exercise of this Warrant with respect to which
the determination of this proviso is being made on an exercise date,
which would result in beneficial ownership by the Holder and its
affiliates of more than 4.99% of the outstanding shares of Common Stock
of the Company on such date. For the purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined
in accordance with Section 13(d) of the Securities Exchange Act of 1934,
as amended, and Regulation 13d-3 thereunder. Notwithstanding the
foregoing, the restriction described in this paragraph may be revoked
upon 75 days prior notice from the Holder to the Company and is
automatically null and void upon an Event of Default under the Note made
by the Company to the Holder dated the date hereof (as amended, modified
or supplemented from time to time, the "Note").
11.Warrant Agent. The Company may, by written notice to the Holder, appoint an
agent for the purpose of issuing Common Stock (or Other Securities) on
the exercise of this Warrant pursuant to Section 1, exchanging this
Warrant pursuant to Section 7, and replacing this Warrant pursuant to
Section 8, or any of the foregoing, and thereafter any such issuance,
exchange or replacement, as the case may be, shall be made at such office
by such agent.
12.Transfer on the Company's Books. Until this Warrant is transferred on the
books of the Company, the Company may treat the registered Holder hereof
as the absolute owner hereof for all purposes, notwithstanding any notice
to the contrary.
13.Notices, Etc. All notices and other communications from the Company to the
Holder shall be mailed by first class registered or certified mail,
postage prepaid, at such address as may have been furnished to the
Company in writing by such Holder or, until any such Holder furnishes to
the Company an address, then to, and at the address of, the last Holder
who has so furnished an address to the Company.
14.Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant shall be governed by and construed in
accordance with the laws of State of New York without regard to
principles of conflicts of laws. Any action brought concerning the
transactions contemplated by this Warrant shall be brought only in the
state courts of New York or in the federal courts located in the state of
New York; provided, however, that the Holder may choose to waive this
provision and bring an action outside the state of New York. The
individuals executing this Warrant on behalf of the Company agree to
submit to the jurisdiction of such courts and waive trial by jury. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of
this Warrant is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision of this Warrant. The
headings in this Warrant are for purposes of reference only, and shall
not limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the
validity or enforceability of any other provision hereof. The Company
acknowledges that legal counsel participated in the preparation of this
Warrant and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be
applied in the interpretation of this Warrant to favor any party against
the other party.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS.]
IN WITNESS WHEREOF, the Company has executed this Warrant as of the date
first written above.
IT&E INTERNATIONAL GROUP, INC.
WITNESS:
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer
EXHIBIT A
FORM OF SUBSCRIPTION
(To Be Signed Only On Exercise Of Warrant)
TO: IT&E International Group, Inc.
Attention: Chief Financial Officer
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No.____), hereby irrevocably elects to purchase (check applicable
box):
________ shares of the Common Stock covered by such Warrant; or
the maximum number of shares of Common Stock covered by such Warrant pursuant
to the cashless exercise procedure set forth in Section 2.
The undersigned herewith makes payment in lawful money of the United
States of the full Exercise Price for such shares at the price per share
provided for in such Warrant, which is $___________.
The undersigned requests that the certificates for such shares be issued
in the name of, and delivered to ______________________________________________
whose address is
___________________________________________________________________________.
The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant
shall be made pursuant to registration of the Common Stock under the Securities
Act of 1933, as amended (the "Securities Act") or pursuant to an exemption from
registration under the Securities Act and any applicable state securities laws.
Dated:
(Signature must conform to name of Xxxxxx as specified on the face of
the Warrant)
Address:
A-#
EXHIBIT B
FORM OF TRANSFEROR ENDORSEMENT
(To Be Signed Only On Transfer Of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
unto the person(s) named below under the heading "Transferees" the right
represented by the within Warrant to purchase the percentage and number of
shares of Common Stock of IT&E International Group, Inc. into which the within
Warrant relates specified under the headings "Percentage Transferred" and
"Number Transferred," respectively, opposite the name(s) of such person(s) and
appoints each such person Attorney to transfer its respective right on the
books of IT&E International Group, Inc. with full power of substitution in the
premises.
Percentage Number Transferred Transferees Address Transferred
Dated:
(Signature must conform to name of Xxxxxx as specified on the face of
the Warrant)
Address:
SIGNED IN THE PRESENCE OF:
(Name)
ACCEPTED AND AGREED:
[TRANSFEREE]
(Name)
B-#
