Exhibit 4.2
COMMON STOCK WARRANT
USA XXXXX.XXX, INC.
COMMON STOCK WARRANT
The Transferability of This Warrant is
Restricted as Provided in Section 1.
Void after 5:00 p.m., Pacific Standard time, Right to Purchase 750,000
___________________, 2003 shares of Common Stock
(subject to adjustment)
No. W-_____
PREAMBLE
USA XXXXX.XXX, INC. (the "Company"), a Nevada corporation, hereby
certifies that, for value received, XXXXXX X. XXXXXX & ASSOCIATES (the
"Holder"), is entitled, subject to the terms set forth below, to purchase
from the Company at any time or from time to time, before 5:00 P.M.
California time, on ______________, 2003 (the "Termination Date"), 750,000
fully paid and nonassessable shares of Common Stock, $0.001 par value, of the
Company ("Common Stock"), at the purchase price per share (the "Purchase
Price") set forth in Section 3.2 (the "Purchase Price"). The number and
character of such shares of Common Stock and the Purchase Price are subject
to adjustment as provided herein.
This Warrant is the Common Stock Purchase Warrant (the "Warrant"),
evidencing the right to purchase an aggregate of 750,000 shares of Common Stock
of the Company (the "Warrant Shares"), issued pursuant to a certain Consulting
Services & Fee Agreement (the "Agreement"), dated as of October 28, 1998,
between the Company and the Holder.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
(a) The term "Company" includes any corporation which shall succeed
to or assume the obligations of the Company hereunder.
(b) The term "Common Stock" includes all stock of any class or
classes (however designated) of the Company, authorized on or after the
date hereof, the holders of which shall have the right, without limitation
as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and the holders of
which shall ordinarily, in the absence of contingencies, be entitled to
vote for the election of a majority of directors of the Company (even
though the right so to vote has been suspended by the happening of such a
contingency).
(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 of the Warrant 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.
(d) The term "Warrant Shares" means the Common Stock issued or
issuable upon exercise of the Warrant.
(e) The term "Securities Act" means the Securities Act of 1933, or
any successor federal statute, and the rules and regulations of the
Securities and Exchange Commission thereunder, all as the same shall be in
effect at the time.
1. Restricted Securities. This Warrant has not been registered under the
Securities Act, nor pursuant to the provisions of the securities or other laws
of any other applicable jurisdictions, in reliance upon certain exemptions under
applicable state and federal laws. This Warrant is issued to the Holder in
reliance upon such fact based on the Holder's representations, warranties and
agreements. If, at the time of any transfer or exchange (other than a transfer
or exchange not involving a change in the beneficial ownership of such Warrant
or Warrant Shares) of a Warrant or Warrant Shares, such Warrant or Warrant
Shares shall not be registered under the Securities Act, the Company may
require, as a condition of allowing such transfer or exchange, that the Holder
or transferee of such Warrant or Warrant Shares, as the case may be, furnish to
the Company an opinion of counsel reasonably acceptable to the Company to the
effect that such transfer or exchange may be made without registration under the
Securities Act. In the case of such transfer or exchange and in the case of an
exercise of a Warrant if the Warrant Shares to be issued thereupon are not
registered pursuant to the Securities Act, the Company may require a written
statement that such Warrant or Warrant Shares, as the case may be, are being
acquired for investment and not with a view to the distribution thereof. The
certificates evidencing the Warrant Shares issued on the exercise of the Warrant
shall, if such Warrant Shares are being sold or transferred without registration
under the Securities Act, bear a legend to the effect that the Warrant Shares
evidenced by such certificates have not been so registered. The Company shall
expend its best efforts to register the Warrant Shares under the Securities Act
pursuant to a Registration Statement on Form S-8.
2. Transfer of Warrant. This Warrant and all rights hereunder shall not
be transferred to any entity without the prior written consent of the Company,
which consent may be withheld at its sole discretion.
3. Exercise of Warrant and Warrant Price.
3.1 Exercise of Warrant
This Warrant may only be exercised in full. The holder of this
Warrant may exercise it by surrendering this Warrant, with the exercise notice
at the end hereof duly executed by such holder, to the Company at its principal
office. The surrendered Warrant shall be accompanied by payment, in cash or by
certified or official bank check payable to the order of the Company, in the
amount obtained by multiplying the number of shares of Common Stock called for
on the face of this Warrant (giving effect to any adjustment therein) by the
Purchase Price.
3.2 Purchase Price. The Purchase Price shall be $0.06 per share of
Common Stock,
subject to adjustment as provided in Section 5.
4. Delivery of Stock Certificates, Etc., on Exercise. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within 10 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 hereof, or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of fully paid and nonassessable Warrant Shares 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 current Fair Market Value of one full
Share. "Fair Market Value" shall mean (i) the closing price per share of the
Common Stock on the date of exercise of this Warrant (the "Exercise Date"), but
if no shares were traded on such date, then on the last previous date on which a
share was so traded if such date is no more than 30 days prior to the Exercise
Date, or, if shares are not traded, (ii) the average of the bid and asked
closing prices for one share of Common Stock on the over-the-counter market if
such prices are available as of a date that is no more than 30 days prior to the
Exercise Date, or, if such information is not available, (iii) the price per
share of Common Stock at which shares of Common Stock were sold by the Company
in private transactions as of a date that is no more than 30 days prior to the
Exercise Date, or, if none of the above is applicable, (iv) the fair market
value of a share of Common Stock as established by the Board of Directors of the
Company as of the Exercise Date using any reasonable method of valuation.
5. Adjustment of Purchase Price and Number of Warrant Shares.
5.1 The Purchase Price hereof shall be subject to adjustment from
time to time as follows:
(a) In case the Company shall, prior to the Termination Date, (i)
pay a dividend on its Common Stock in Common Stock, (ii) subdivide its
outstanding shares of Common Stock, or (iii) combine its outstanding shares
of Common Stock into a small number of shares, then, in such an event, the
Purchase Price in effect immediately prior thereto shall be adjusted
proportionately so that the adjusted Purchase Price will bear the same
relation to the Purchase Price in effect immediately prior to any such event
as the total number of shares of Common Stock outstanding immediately prior
to any such event shall bear to the total number of shares of Common Stock
outstanding immediately after such event. An adjustment made pursuant to this
subdivision (a), (i) shall become effective retroactively immediately after
the record date in the case of a dividend and (ii) shall become effective
immediately after the effective date in the case of a subdivision or
combination. The Purchase Price, as so adjusted, shall be readjusted in the
same manner upon the happening of any successive event or events described
herein.
(b) Upon each adjustment of the Purchase Price pursuant to
subdivision (a) of Subsection 5.1, the number of shares of Common Stock
purchasable upon exercise of this Warrant Certificate shall be adjusted to the
number of shares of Common Stock, calculated to the nearest one hundredth of a
share, obtained by multiplying the number of shares of Common Stock purchasable
immediately prior to such adjustment upon the exercise of this Warrant
Certificate by the Purchase Price in effect prior to such adjustment and
dividing the product so obtained by the new Purchase Price.
5.2 In case of any capital reorganization of the Company, or of any
reclassification of the Common Stock, this Warrant Certificate shall be
exercisable after such capital reorganization or reclassification upon the terms
and conditions specified in this Warrant Certificate, for the number of
shares of stock or other securities which the Common Stock issuable at the
time of such capital reorganization or reclassification upon exercise of this
Warrant Certificate would have been entitled to receive upon such capital
reorganization or reclassification if such exercise had taken place
immediately prior to such action. The subdivision or combination of shares
of Common Stock at any time outstanding into a greater or lesser number of
shares of Common Stock shall not be deemed to be a reclassification of the
Common Stock of the Company for the purposes of this Subsection 5.2.
5.3 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 within 24 months from the date of such transfer (any such transaction
being hereinafter sometimes referred to as a "Reorganization") then, in each
such case, the holder of this Warrant, on the exercise hereof as provided in
Section 3 at any time after the consummation or effective date of such
Reorganization (the "Effective Date"), shall receive, in lieu of the Warrant
Shares 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, if such holder had so
exercised this Warrant, immediately prior thereto (all subject to further
adjustment thereafter as provided in Section 5).
5.4 Continuation of Terms. Except as otherwise expressly provided in
Subsection 5.3, upon any reorganization, consolidation, merger or transfer (and
any dissolution following any transfer) referred to in this Section 5, 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.
6. Exchange of Warrants. On surrender for exchange of any Warrant,
properly endorsed, to the Company, the Company at its expense will issue and
deliver to or (subject to Section 2) on the order of the holder thereof a new
Warrant or Warrants of like tenor, in the name of such holder or as such holder
(on payment by such holder or any applicable transfer taxes) may direct, calling
in the aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face of the Warrant or Warrants so surrendered.
7. Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any 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 such Warrant, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
8. Negotiability, Etc. This Warrant is issued upon the following terms,
to all of which each holder or owner hereof by the taking hereof consents and
agrees:
(a) This Warrant is not negotiable and may not be transferred by
the holder hereof; and
(b) This Warrant issued pursuant to the terms of the Agreement
and is subject
to the terms thereof.
9. THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE'S SECURITIES ACTS, AND
MAY NOT BE TRANSFERRED OR HYPOTHECATED WITHOUT PRIOR REGISTRATION OR
QUALIFICATION UNDER SAID ACTS OR AN EXEMPTION THEREFROM ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
10. Notice, Etc. All notices and other communications from the Company to
the holder of this Warrant 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 of this
Warrant who has so furnished an address to the Company.
11. 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 is being delivered in the State of California and shall
be construed and enforced in accordance with and governed by its laws. The
headings in this Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. All nouns and pronouns used
herein shall be deemed to refer to the masculine, feminine or neuter, as the
identity of the person or persons to whom reference is made herein may require.
12. Expiration. The right to exercise this Warrant shall expire at 5:00
P.M., Pacific Standard time, on ________________, 2003.
Dated: USA XXXXX.XXX, INC.
By:
-----------------------------------
Its: President
Attest:
---------------------------
Secretary
NOTICE OF EXERCISE
The undersigned registered holder of the within Warrant irrevocably
exercises the within Warrant for and purchases _________________ shares of
Common Stock of USA Xxxxx.xxx, Inc., a Nevada corporation, the amount of
$_____________, all at the price and on the terms and conditions specified in
the within Warrant and requests that a certificate for the shares of Common
Stock hereby purchased be issued in the name of and delivered to the
undersigned, whose address is ____________________________________________.
Dated: _______________, _________
XXXXXX X. XXXXXX & ASSOCIATES
By:
Its:
