Contract
Exhibit
10.5
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE
SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER
THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
SERIES A
WARRANT TO PURCHASE
SHARES OF
COMMON STOCK
OF
Expires
April 22, 2013
| No.: ______ | Number of Shares: [__________] |
| Date of Issuance: April 22, 2010 |
FOR VALUE
RECEIVED, the undersigned, Silver Pearl Enterprises, Inc., a Nevada corporation
(together with its successors and assigns, the “Issuer” or the “Company”), hereby certifies that
[____________________] or its registered assigns is entitled to subscribe for
and purchase, during the Term (as hereinafter defined), up to
[__________________________] ([_______]) shares (subject to adjustment as
hereinafter provided) of the duly authorized, validly issued, fully paid and
non-assessable Common Stock of the Issuer, at an exercise price per share equal
to the Warrant Price then in effect, subject, however, to the provisions and
upon the terms and conditions hereinafter set forth. Capitalized terms used in
this Warrant and not otherwise defined herein shall have the respective meanings
specified in Section
8 hereof.
1.
Term. The
term of this Warrant shall commence on April 22, 2010 and shall expire at 6:00
p.m., Eastern Time, on April 22, 2013 (such period being the “Term”).
2.
Method of Exercise; Payment;
Issuance of New Warrant; Transfer and Exchange.
(a) Time of Exercise. The
purchase rights represented by this Warrant may be exercised in whole or in part
during the Term.
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(b) Method of Exercise.
The Holder hereof may exercise this Warrant, in whole or in part, by delivery to
the Company (or such other office or agency of the Issuer as it may designate by
notice in writing to the Holder at the address of the Holder appearing on the
books of the Issuers) of a duly executed facsimile copy of the Notice of
Exercise Form annexed hereto (“Notice of Exercise Form”); and, within three (3)
Trading Days of the date said Notice of Exercise Form is delivered to the
Company, the Company shall have received payment of an amount of consideration
therefor equal to the Warrant Price in effect on the date of such exercise
multiplied by the number of shares of Warrant Stock with respect to which this
Warrant is then being exercised, payable at such Holder’s election (i) by
certified or official bank check or by wire transfer to an account designated by
the Issuer, (ii) by “cashless exercise” in accordance with the provisions of
subsection (c) of this Section
2, but only when a registration statement under the Securities Act
providing for the resale of the Warrant Stock and the Common Stock underlying
the preferred stock issued pursuant to the Purchase Agreement is not then in
effect as required under the Registration Rights Agreement (as defined below),
or (iii) by a combination of the foregoing methods of payment selected by the
Holder of this Warrant. Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available hereunder and
the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant, or an indemnification reasonably acceptable to the
Issuer undertaking with respect to such Warrant in the case of its loss, theft
or destruction, to the Company for cancellation within three (3) Trading Days of
the date the final Notice of Exercise Form is delivered to the
Company. Partial exercises of this Warrant resulting in purchases of
a portion of the total number of Warrant Shares available hereunder shall have
the effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares
purchased. The Holder and the Company shall maintain records showing
the number of Warrant Shares purchased and the date of such
purchases. The Company shall deliver any objection to any Notice of
Exercise Form within one (1) Business Day of receipt of such
notice. In the event of any dispute or discrepancy, the records of
the Company shall be controlling and determinative in the absence of manifest
error.
(c) Cashless Exercise.
Notwithstanding any provision herein to the contrary, but subject to Section
2(b)(ii) hereof, and commencing twelve (12) months following the Original
Issue Date, if the Per Share Market Value of one share of Common Stock is
greater than the Warrant Price (at the date of calculation as set forth below),
in lieu of exercising this Warrant by payment of cash, the Holder may exercise
this Warrant by a cashless exercise (“Cashless
Exercise”) by
surrender of this Warrant at the principal office of the Issuer together with
the properly endorsed Notice of Exercise, in which event the Issuer shall issue
to the Holder a number of shares of Common Stock computed using the following
formula:
X = Y - (A)(Y)
B
|
Where
|
X
=
|
the
number of shares of Common Stock to be issued to the
Holder.
|
|
|
Y
=
|
the
number of shares of Common Stock purchasable upon exercise of all of the
Warrant or, if only a portion of the Warrant is being exercised, the
portion of the Warrant being
exercised.
|
|
|
A
=
|
the
Warrant Price.
|
|
|
B =
|
the
Per Share Market Value of one share of Common
Stock.
|
2
If at any
time after the effective date of the registration statement, there is not an
effective registration statement covering the resale of the shares underlying
the Warrant, the Holder may exercise this Warrant by Cashless Exercise; provided, however, that the
Holder may not exercise this Warrant by Cashless Exercise if at any time the
registration statement is not effective for any of the reasons set forth in
Section 3(n) of the Registration Rights Agreement (as defined in the Purchase
Agreement).
(d) Issuance of Stock
Certificates. In the event of any exercise of this Warrant in accordance
with and subject to the terms and conditions hereof, certificates for the shares
of Warrant Stock so purchased shall be dated the date of such exercise and
delivered to the Holder’s Prime Broker as specified in the Holder’s exercise
form within a reasonable time, not exceeding five (5) Trading Days after such
exercise (the “Delivery
Date”) or, at the request of the Holder (provided that a registration
statement under the Securities Act providing for the resale of the Warrant Stock
is then in effect or that the shares of Warrant Stock are otherwise exempt from
registration), issued and delivered to the Depository Trust Company (“DTC”)
account on the Holder’s behalf via the Deposit Withdrawal Agent Commission
System (“DWAC”)
within a reasonable time, not exceeding five (5) Trading Days after such
exercise, and the Holder hereof shall be deemed for all purposes to be the
holder of the shares of Warrant Stock so purchased as of the date of such
exercise. Notwithstanding the foregoing to the contrary, the Issuer or its
transfer agent shall only be obligated to issue and deliver the shares to the
DTC on a holder’s behalf via DWAC if such exercise is in connection with sale in
reliance upon an effective Registration Statement or other exemption from
registration by which the shares may be issued without a restrictive legend and
the Issuer and its transfer agent are participating in DTC through the DWAC
system.
(e) Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise. In addition to any
other rights available to the Holder, if the Issuer fails to cause its transfer
agent to transmit to the Holder a certificate or certificates representing the
Warrant Stock pursuant to an exercise on or before the second business day
following the 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
Stock which the Holder anticipated receiving upon such exercise (a “Buy-In”),
then the Issuer 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 shares of Warrant Stock that the Issuer 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 shares of Warrant Stock 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 Issuer 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 Issuer shall be required to
pay the Holder $1,000. The Holder shall provide the Issuer 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
Issuer. 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
Issuer’s failure to timely deliver certificates representing shares of Common
Stock upon exercise of this Warrant as required pursuant to the terms
hereof.
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(f) Transferability of
Warrant. Subject to Section
2(h) hereof, this Warrant may be transferred by a Holder, in whole or in
part, without the consent of the Issuer. If transferred pursuant to this
paragraph, this Warrant may be transferred on the books of the Issuer by the
Holder upon surrender of this Warrant at the principal office of the Issuer or
its designated agent, properly endorsed (by the Holder executing an assignment
in the form attached hereto) and upon payment of any necessary transfer tax or
other governmental charge imposed upon such transfer. This Warrant is
exchangeable for Warrants to purchase the same aggregate number of shares of
Warrant Stock, each new Warrant to represent the right to purchase such number
of shares of Warrant Stock as the Holder hereof shall designate at the time of
such exchange. All Warrants issued on transfers or exchanges shall be dated the
Original Issue Date and shall be identical with this Warrant except as to the
number of shares of Warrant Stock issuable pursuant thereto.
(g) Continuing Rights of
Holder. The Issuer shall, at the time of or at any time after each
exercise of this Warrant, upon the request of the Holder hereof, acknowledge in
writing the extent, if any, of its continuing obligation to afford to such
Holder all rights to which such Holder shall continue to be entitled after such
exercise in accordance with the terms of this Warrant, provided
that if any such Holder shall fail to make any such request, the failure shall
not affect the continuing obligation of the Issuer to afford such rights to such
Holder.
(h) Compliance with Securities
Laws.
(i) The
Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and
the shares of Warrant Stock to be issued upon exercise hereof are being acquired
solely for the Holder’s own account and not as a nominee for any other party,
and for investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued upon
exercise hereof except pursuant to an effective registration statement, or an
exemption from registration, under the Securities Act and any applicable state
securities laws.
(ii) Except
as provided in paragraph (iii) below, this Warrant and all certificates
representing shares of Warrant Stock issued upon exercise hereof shall be
stamped or imprinted with a legend in substantially the following
form:
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THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
(iii) The
Issuer agrees to reissue this Warrant or certificates representing any of the
Warrant Stock, without the legend set forth above, if at such time, prior to
making any transfer of any such securities, the Holder shall give written notice
to the Issuer describing the manner and terms of such transfer and demonstrating
that the following conditions are satisfied. Such proposed transfer will not be
effected until: (a) either (i) the Issuer has received an opinion of counsel
reasonably satisfactory to the Issuer, to the effect that the registration of
such securities under the Securities Act is not required in connection with such
proposed transfer, or (ii) a registration statement under the Securities Act
covering such proposed disposition has been filed by the Issuer with the
Securities and Exchange Commission and has become and remains effective under
the Securities Act, or (b) either (i) the Issuer has received an opinion of
counsel reasonably satisfactory to the Issuer, to the effect that registration
or qualification under the securities or “blue sky” laws of any state is not
required in connection with such proposed disposition, or (ii) compliance with
applicable state securities or “blue sky” laws has been effected or a valid
exemption exists with respect thereto. The Issuer shall respond to any such
notice from a holder within three (3) Trading Days. In the case of any proposed
transfer under this Section
2(h), the Issuer shall use reasonable efforts to comply with any such
applicable state securities or “blue sky” laws, but shall in no event be
required, (x) to qualify to do business in any state where it is not then
qualified, (y) to take any action that would subject it to tax or to the general
service of process in any state where it is not then subject, or (z) to comply
with state securities or “blue sky” laws of any state for which registration by
coordination is unavailable to the Issuer. Whenever a certificate representing
the Warrant Stock is required to be issued to the Holder without a legend, in
lieu of delivering physical certificates representing the Warrant Stock, the
Issuer shall cause its transfer agent to electronically transmit the Warrant
Stock to the Holder by crediting the account of the Holder or Holder’s Prime
Broker with DTC through its DWAC system (to the extent not inconsistent with any
provisions of this Warrant or the Purchase Agreement).
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(i) Accredited Investor
Status. At the time of the exercise of this Warrant, the Holder (1) shall
be an “accredited investor” as defined in Regulation D under the Securities Act,
or (2) shall exercise this Warrant by means of a Cashless Exercise as provided
for in Section
2(c), subject to any applicable restrictions.
3.
Adjustment
of Warrant Price. The Warrant Price shall be subject to adjustment from
time to time as set forth in this Section
3. The Issuer shall give the Holder written notice of any event described
below which requires an adjustment pursuant to this Section
3 in accordance with the notice provisions set forth in Section
12.
(a) Adjustments for Stock
Splits, Combinations, Certain Dividends and Distributions. If
the Issuer shall, at any time or from time to time after the Original Issue
Date, effect a split of the outstanding Common Stock (or any other subdivision
of its shares of Common Stock into a larger number of shares of Common Stock),
combine the outstanding shares of Common Stock into a smaller number of shares
of Common Stock, or make or issue or set a record date for the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in shares of Common Stock, then, in each event (i) the number of shares
of Common Stock for which this Warrant shall be exercisable immediately after
the occurrence of any such event shall be adjusted to equal the number of shares
of Common Stock that a record holder of the same number of shares of Common
Stock for which this Warrant is exercisable immediately prior to the occurrence
of such event would own or be entitled to receive after the happening of such
event, and (ii) the Warrant Price then in effect shall be adjusted to equal (A)
the Warrant Price then in effect multiplied by the number of shares of Common
Stock for which this Warrant is exercisable immediately prior to the adjustment
divided by (B) the number of shares of Common Stock for which this Warrant is
exercisable immediately after such adjustment.
(b) Adjustment for Other
Dividends and Distributions. If the Issuer shall, at any time or from
time to time after the Original Issue Date, make or issue or set a record date
for the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in (i) cash, (ii) any evidences of indebtedness,
or any other securities of the Company or any property of any nature whatsoever,
other than, in each case, shares of Common Stock; or (iii) any warrants or other
rights to subscribe for or purchase any evidences of indebtedness, or any other
securities of the Company or any property of any nature whatsoever, other than,
in each case, shares of Common Stock, then, and in each event, (A) the number of
shares of Common Stock for which this Warrant shall be exercisable shall be
adjusted to equal the product of the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to such adjustment multiplied by a
fraction (1) the numerator of which shall be the Per Share Market Value of
Common Stock at the date of taking such record and (2) the denominator of which
shall be such Per Share Market Value minus the amount allocable to one share of
Common Stock of any such cash so distributable and of the fair value (as
determined in good faith by the Board and supported by an opinion from an
investment banking firm mutually agreed upon by the Issuer and the Holder) of
any and all such evidences of indebtedness, shares of stock, other securities or
property or warrants or other subscription or purchase rights so distributable,
and (B) the Warrant Price then in effect shall be adjusted to equal (1) the
Warrant Price then in effect multiplied by the number of shares of Common Stock
for which this Warrant is exercisable immediately prior to the adjustment
divided by (2) the number of shares of Common Stock for which this Warrant is
exercisable immediately after such adjustment. A reclassification of the Common
Stock (other than a change in par value, or from par value to no par value or
from no par value to par value) into shares of Common Stock and shares of any
other class of stock shall be deemed a distribution by the Issuer to the holders
of its Common Stock of such shares of such other class of stock within the
meaning of this Section
3(b) and, if the outstanding shares of Common Stock shall be changed into
a larger or smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination, as
the case may be, of the outstanding shares of Common Stock within the meaning of
Section
3(a).
6
(c) Adjustments for
Reclassification, Exchange or Substitution. If the Common Stock for which
this Warrant is exercisable at any time or from time to time after the Original
Issue Date shall be changed to the same or different number of shares of any
class or classes of stock, whether by reclassification, exchange, substitution
or otherwise (other than by way of a stock split or combination of shares or
stock dividends provided for in Section
3(a), Section
3(b), or a reorganization, merger, consolidation, or sale of assets
provided for in Section
3(d)), then, and in each event, an appropriate revision to the Warrant
Price shall be made and provisions shall be made (by adjustments of the Warrant
Price or otherwise) so that, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, in lieu of Warrant Stock, the kind and
amount of shares of stock and other securities receivable upon reclassification,
exchange, substitution or other change, by holders of the number of shares of
Common Stock for which this Warrant was exercisable immediately prior to such
reclassification, exchange, substitution or other change, all subject to further
adjustment as provided herein.
(d) Adjustments for
Reorganization, Merger, Consolidation or Sales of Assets. If at any time
or from time to time after the Original Issue Date there shall be (i) a capital
reorganization of the Issuer (other than by way of a stock split or combination
of shares or stock dividends or distributions provided for in Section
3(a), and Section
3(b), or a reclassification, exchange or substitution of shares provided
for in Section
3(c)), or (ii) a merger or consolidation of the Issuer with or into
another corporation, where the holders of the Issuer’s outstanding voting
securities prior to such merger or consolidation do not own over 50% of the
outstanding voting securities of the merged or consolidated entity, immediately
after such merger or consolidation, or (iii) the sale of all or substantially
all of the Issuer’s properties or assets to any other person (an “Organic
Change”), then, as a part of such Organic Change an appropriate revision
to the Warrant Price shall be made if necessary and provision shall be made if
necessary (by adjustments of the Warrant Price or otherwise) so that, upon any
subsequent exercise of this Warrant, the Holder shall have the right to receive,
in lieu of Warrant Stock, the kind and amount of shares of stock and other
securities or property of the Issuer or any successor corporation resulting from
the Organic Change. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section
3(d) with respect to the rights of the Holder after the Organic Change to
the end that the provisions of this Section
3(d) (including any adjustment in the Warrant Price then in effect and
the number of shares of stock or other securities deliverable upon exercise of
this Warrant) shall be applied after that event in as nearly an equivalent
manner as may be practicable. In any such case, the resulting or
surviving corporation (if not the Issuer) shall expressly assume the obligations
to deliver, upon the exercise of this Warrant, such securities or property as
the Holder shall be entitled to receive pursuant to the provisions hereof, and
to make provisions for the protection of the rights of the Holder as provided
above.
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(e) Record Date. In case
the Issuer shall take record of the holders of its Common Stock or any other
preferred stock for the purpose of entitling them to subscribe for or purchase
Common Stock or securities convertible into or exchangeable for, directly or
indirectly, Common Stock, then the date of the issue or sale of the shares of
Common Stock shall be deemed to be such record date.
(f) No Impairment. The
Issuer shall not, by amendment of its Articles 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 to be observed or performed
hereunder, but shall at all times in good faith assist in the carrying out of
all the provisions of this Section
3 and in the taking of all such action as may be necessary or appropriate
in order to protect against impairment the right of the Holder to exercise this
Warrant. In the event the Holder shall elect to exercise this Warrant, in whole
or in part, as provided herein, the Issuer cannot refuse exercise based on any
claim that the Holder or anyone associated or affiliated with such holder has
been engaged in any violation of law, unless (i) the Issuer receives an order
from the Securities and Exchange Commission prohibiting such exercise or (ii) an
injunction from a court, on notice, restraining and/or adjoining exercise of
this Warrant.
(g) Certificates as to
Adjustments. Upon occurrence of each adjustment or readjustment of the
Warrant Price or number of shares of Common Stock for which this Warrant is
exercisable pursuant to this Section
3, the Issuer at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to the Holder a
certificate setting forth such adjustment and readjustment, showing in detail
the facts upon which such adjustment or readjustment is based. The Issuer shall,
upon written request of the Holder, at any time, furnish or cause to be
furnished to the Holder a like certificate setting forth such adjustments and
readjustments, the Warrant Price in effect at the time, and the number of shares
of Common Stock and the amount, if any, of other securities or property which at
the time would be received upon the exercise of this Warrant. Notwithstanding
the foregoing, the Issuer shall not be obligated to deliver a certificate unless
such certificate would reflect an increase or decrease of at least one percent
of such adjusted amount; if the Issuer so postpones delivering a certificate,
such prior adjustment shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Section
3 and not previously made, would result in an adjustment of one percent
or more.
(h) Issue Taxes. The
Issuer shall pay any and all issue and other taxes, excluding federal, state or
local income taxes, that may be payable in respect of any issue or delivery of
shares of Common Stock on exercise of this Warrant; provided, however, that the
Issuer shall not be obligated to pay any transfer taxes resulting from any
transfer requested by any holder in connection with any such
conversion.
8
(i) Fractional Shares. No
fractional shares of Common Stock shall be issued upon exercise of this Warrant.
In lieu of any fractional shares to which the Holder would otherwise be
entitled, the Holder shall round the number of shares to be issued upon exercise
up to the nearest whole number of shares.
(j) Reservation of Common
Stock. The Issuer shall, during the period within which this Warrant may
be exercised, reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of effecting the exercise of this Warrant,
such number of shares of Common Stock equal to at least one hundred ten percent
(110%) of the aggregate number of shares of Common Stock as shall from time to
time be sufficient to effect the exercise of this Warrant.
(k) Retirement of this
Warrant. Exercise of this Warrant shall be deemed to have been effected
on the date of exercise hereof. Upon exercise of this Warrant only in part, the
Issuer shall issue and deliver to the Holder, at the expense of the Issuer, a
new Warrant covering the unexercised balance of the Warrant Shares.
(l) Regulatory
Compliance. If any shares of Common Stock to be reserved for the purpose
of exercise of this Warrant require registration or listing with or approval of
any governmental authority, stock exchange or other regulatory body under any
federal or state law or regulation or otherwise before such shares may be
validly issued or delivered upon conversion, the Issuer shall, at its sole cost
and expense, in good faith and as expeditiously as possible, endeavor to secure
such registration, listing or approval, as the case may be.
4.
No Preemptive Rights.
The Holder shall not be entitled to rights to subscribe for, purchase or receive
any part of any new or additional shares of any class, whether now or
hereinafter authorized, or of bonds or debentures, or other evidences of
indebtedness convertible into or exchangeable for shares of any class, but all
such new or additional shares of any class, or any bond, debentures or other
evidences of indebtedness convertible into or exchangeable for shares, may be
issued and disposed of by the Board on such terms and for such consideration (to
the extent permitted by law), and to such person or persons as the Board in its
absolute discretion may deem advisable.
5.
Exercise
Restriction. Notwithstanding anything to the contrary set forth in this
Warrant, at no time may the Holder exercise this Warrant, in whole or in part,
if the number of shares of Common Stock to be issued pursuant to such exercise
would cause the number of shares of Common Stock beneficially owned by the
Holder and its affiliates at such time, when aggregated with all other shares of
Common Stock beneficially owned by the Holder and its affiliates at such time,
result in the Holder beneficially owning (as determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules
thereunder) in excess of 9.99% of the then issued and outstanding shares of
Common Stock outstanding at such time; provided, however, that upon
the Holder providing the Issuer with sixty-one (61) days notice (pursuant to
Section
12 hereof) (the “Waiver
Notice”) that the Holder would like to waive Section
5 of this Warrant with regard to any or all shares of Common Stock for
which this Warrant is exercisable, this Section
5 shall be of no force or effect with regard to those shares referenced
in the Waiver Notice.
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6. Registration
Rights. The Holder of this Warrant is entitled to the benefit
of certain registration rights with respect to the shares of Warrant Stock
issuable upon the exercise of this Warrant, pursuant to that certain
Registration Rights Agreement, of even date herewith, by and among the Issuer
and Persons listed on Schedule I thereto (the “Registration
Rights Agreement”) and the registration rights with respect to the shares
of Warrant Stock issuable upon the exercise of this Warrant by any subsequent
Holder may only be assigned in accordance with the terms and provisions of the
Registrations Rights Agreement.
7.
Call. Notwithstanding
anything herein to the contrary, the Issuer, at its option, may call up to one
hundred percent (100%) of this Warrant by providing the Holder written notice
pursuant to Section 12 (the “Call
Notice”) if (A) the Per Share Market Value of the Common Stock is equal
to or greater than $9.00 (as may be adjusted for any stock splits or
combinations of the Common Stock) for a period of fifteen (15) consecutive
Trading Days and (B) the average daily trading volume for the Common Stock
exceeds 75,000 shares for a period of fifteen (15) consecutive Trading Days;
provided, that (i) a
registration statement under the Securities Act as required under the
Registration Rights Agreement is then in effect, (ii) trading in the Common
Stock shall not have been suspended by the Securities and Exchange Commission,
or the OTC Bulletin Board or a registered national stock exchange where the
Common Stock is traded, and (iii) the Issuer is in material compliance with the
terms and conditions of this Warrant and the other Transaction Documents (as
defined in the Purchase Agreement); provided, further, that a
registration statement under the Securities Act providing for the resale of the
Warrant Stock is in effect from the date of delivery of the Call Notice until
the date which is the later of (A) the date the Holder exercises the Warrant
pursuant to the Call Notice and (B) the 10th
Trading Day after the Holder receives the Call Notice (the “Early
Termination Date”). The rights and privileges granted pursuant
to this Warrant with respect to the shares of Warrant Stock subject to the Call
Notice (the “Called
Warrant Shares”) shall expire on the Early Termination Date if this
Warrant is not exercised with respect to such Called Warrant Shares prior to
such Early Termination Date. In the event this Warrant is not
exercised with respect to the Called Warrant Shares, the Issuer shall remit to
the Holder of this Warrant (1) $0.01 per Called Warrant Share and (2) a new
Warrant representing the number of shares of Warrant Stock, if any, which shall
not have been subject to the Call Notice upon the Holder tendering to the Issuer
the applicable Warrant certificate.
8.
Definitions. For the
purposes of this Warrant, the following terms have the following
meanings:
“Board”
shall mean the Board of Directors of the Issuer.
10
“Capital
Stock” means and includes (i) any and all shares, interests,
participations or other equivalents of or interests in (however designated)
corporate stock, including, without limitation, shares of preferred or
preference stock, (ii) all partnership interests (whether general or limited) in
any Person which is a partnership, (iii) all membership interests or limited
liability company interests in any limited liability company, and (iv) all
equity or ownership interests in any Person of any other type.
“Articles
of Incorporation” means the Articles of Incorporation of the Issuer, as
amended, as in effect on the Original Issue Date, and as hereafter from time to
time amended, modified, supplemented or restated in accordance with the terms
hereof and thereof and pursuant to applicable law.
“Common
Stock” means the Common Stock, $0.001 par value per share, of the Issuer
and any other Capital Stock into which such stock may hereafter be
changed.
“Governmental
Authority” means any governmental, regulatory or self-regulatory entity,
department, body, official, authority, commission, board, agency or
instrumentality, whether federal, state or local, and whether domestic or
foreign.
“Holders”
mean the Persons who shall from time to time own any Warrant. The term “Holder”
means one of the Holders.
“Independent
Appraiser” means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing (which may be the firm that regularly examines the financial statements
of the Issuer) that is regularly engaged in the business of appraising the
Capital Stock or assets of corporations or other entities as going concerns, and
which is not affiliated with either the Issuer or the Holder of any
Warrant.
“Issuer”
means Silver Pearl Enterprises, Inc., a Nevada corporation, and its
successors.
“Original
Issue Date” means April 22, 2010.
“OTC
Bulletin Board” means the over-the-counter electronic bulletin
board.
“Other
Common” means any other Capital Stock of the Issuer of any class which
shall be authorized at any time after the date of this Warrant (other than
Common Stock) and which shall have the right to participate in the distribution
of earnings and assets of the Issuer without limitation as to
amount.
“Outstanding
Common Stock” means, at any given time, the aggregate amount of
outstanding shares of Common Stock, assuming full exercise, conversion or
exchange (as applicable) of all right, warrants or options to purchase shares of
Common Stock that are outstanding at such time.
11
“Person”
means an individual, corporation, limited liability company, partnership, joint
stock company, trust, unincorporated organization, joint venture, Governmental
Authority or other entity of whatever nature.
“Per Share
Market Value” means on any particular date (a) the last closing bid price
per share of the Common Stock on such date on the OTC Bulletin Board or any
registered national stock exchange on which the Common Stock is then listed, or
if there is no such price on such date, then the closing bid price on such
exchange or quotation system on the date nearest preceding such date, or (b) if
the Common Stock is not listed then on the OTC Bulletin Board or any registered
national stock exchange, the last closing bid price for a share of Common Stock
in the over-the-counter market, as reported by the OTC Bulletin Board or by Pink
OTC Markets Inc. or similar organization or agency succeeding to its functions
of reporting prices) at the close of business on such date, or (c) if the Common
Stock is not then reported by the OTC Bulletin Board or by Pink OTC Markets Inc.
(or similar organization or agency succeeding to its functions of reporting
prices), then the average of the “Pink Sheet” quotes for the five (5) Trading
Days preceding such date of determination, or (d) if the Common Stock is not
then publicly traded the fair market value of a share of Common Stock as
determined by the Board.
“Purchase
Agreement” means the Securities Purchase Agreement dated as of April 22,
2010, among the Issuer and the Purchasers.
“Purchasers”
means the purchasers of the Series A Preferred Stock and the Warrants issued by
the Issuer pursuant to the Purchase Agreement.
“Securities”
means any debt or equity securities of the Issuer, whether now or hereafter
authorized, any instrument convertible into or exchangeable for Securities or a
Security, and any option, warrant or other right to purchase or acquire any
Security. “Security” means one of the Securities.
“Securities
Act” means the Securities Act of 1933, as amended.
“Series A
Preferred Stock” means shares of the Company’s Series A Convertible
Preferred Stock issued to the Purchasers pursuant to the Purchase
Agreement.
“Subsidiary”
means any corporation at least 50% of whose outstanding Voting Stock shall at
the time be owned directly or indirectly by the Issuer or by one or more of its
Subsidiaries, or by the Issuer and one or more of its Subsidiaries.
“Term”
has the meaning specified in Section
1 hereof.
12
“Trading
Day” means (a) a day on which the Common Stock is traded on the OTC
Bulletin Board or a registered national stock exchange, or (b) if the Common
Stock is not traded on the OTC Bulletin Board or a registered national stock
exchange, a day on which the Common Stock is quoted in the over-the-counter
market as reported by Pink OTC Markets Inc. (or any similar organization or
agency succeeding its functions of reporting prices); provided,
however,
that in the event that the Common Stock is not listed or quoted as set forth in
(a) or (b) hereof, then Trading Day shall mean any day except Saturday, Sunday
and any day which shall be a legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or other
government action to close.
“Voting
Stock” means, as applied to the Capital Stock of any corporation, Capital
Stock of any class or classes (however designated) having ordinary voting power
for the election of a majority of the members of the Board (or other governing
body) of such corporation, other than Capital Stock having such power only by
reason of the happening of a contingency.
“Warrants”
means the Warrants issued and sold pursuant to the Purchase Agreement,
including, without limitation, this Warrant and the Series B Warrants (as
defined in the Purchase Agreement), and any other warrants of like tenor issued
in substitution or exchange for any thereof pursuant to the provisions of Section
2(d), 2(e)
or 2(f)
hereof or of any of such other Warrants.
“Warrant
Price” initially means $4.50, as such price may be adjusted from time to
time as shall result from the adjustments specified in this Warrant, including
Section
3 hereto.
“Warrant
Share Number” means at any time the aggregate number of shares of Warrant
Stock which may at such time be purchased upon exercise of a Warrant, after
giving effect to all prior adjustments and increases to such number made or
required to be made under the terms hereof.
“Warrant
Stock” means Common Stock issuable upon exercise of any Warrant or
Warrants or otherwise issuable pursuant to any Warrant or Warrants.
9.
Other
Notices. In case at any time:
(i) the
Issuer shall make any distributions to the holders of Common Stock;
or
(ii) the
Issuer shall authorize the granting to all holders of its Common Stock of rights
to subscribe for or purchase any shares of Capital Stock of any class or other
rights; or
(iii) there
shall be any reclassification of the Capital Stock of the Issuer;
or
(iv) there
shall be any capital reorganization by the Issuer; or
13
(v) there
shall be any (i) consolidation or merger involving the Issuer or (ii) sale,
transfer or other disposition of all or substantially all of the Issuer’s
property, assets or business (except a merger or other reorganization in which
the Issuer shall be the surviving corporation and its shares of Capital Stock
shall continue to be outstanding and unchanged and except a consolidation,
merger, sale, transfer or other disposition involving a wholly-owned
Subsidiary); or
(vi) there
shall be a voluntary or involuntary dissolution, liquidation or winding-up of
the Issuer or any partial liquidation of the Issuer or distribution to holders
of Common Stock;
then, in
each of such cases, the Issuer shall give written notice to the Holder of the
date on which (i) the books of the Issuer shall close or a record shall be taken
for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
(20) days prior to the action in question and not less than ten (10) days prior
to the record date or the date on which the Issuer’s transfer books are closed
in respect thereto. This Warrant entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Common Stock.
10. Amendment and Waiver.
Any term, covenant, agreement or condition in this Warrant may be amended, or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), by a written instrument or written
instruments executed by (a) the Issuer and (b) the Holders of a majority of the
Warrants then outstanding; provided,
however,
that no such amendment or waiver shall reduce the Warrant Share Number, increase
the Warrant Price, shorten the period during which this Warrant may be exercised
or modify any provision of this Section
10 without the consent of the Holder of this Warrant. No consideration
shall be offered or paid to any person to amend or consent to a waiver or
modification of any provision of this Warrant unless the same consideration is
also offered to all holders of the Warrants.
11. Governing Law;
Jurisdiction. This Warrant shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction. This Warrant shall
not be interpreted or construed with any presumption against the party causing
this Warrant to be drafted. The Issuer and the Holder agree that venue for any
dispute arising under this Warrant will lie exclusively in the state or federal
courts located in New York County, New York, and the parties irrevocably waive
any right to raise forum non
conveniens or any other argument that New York is not the proper venue.
The Issuer and the Holder irrevocably consent to personal jurisdiction in the
state and federal courts of the state of New York. The Issuer and the Holder
consent to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this Section
11 shall affect or limit any right to serve process in any other manner
permitted by law. The Issuer and the Holder hereby agree that the prevailing
party in any suit, action or proceeding arising out of or relating to this
Warrant or the Purchase Agreement, shall be entitled to reimbursement for
reasonable legal fees from the non-prevailing party. The parties hereby waive
all rights to a trial by jury.
14
12. Notices. All notices
and other communications hereunder shall be in writing and shall be deemed given
if delivered personally or by facsimile or three (3) business days following
being mailed by certified or registered mail, postage prepaid, return-receipt
requested, addressed to the holder of record at its address appearing on the
books of the Issuer. The Issuer shall give written notice to the Holder at least
twenty (20) calendar days prior to the date on which the Issuer closes its books
or takes a record (I) with respect to any dividend or distribution upon the
Common Stock, (II) with respect to any pro rata subscription offer to holders of
Common Stock or (III) for determining rights to vote with respect to any Organic
Change, dissolution, liquidation or winding-up and in no event shall such notice
be provided to such holder prior to such information being made known to the
public. The Issuer shall also give written notice to the Holder at least twenty
(20) days prior to the date on which any Organic Change, dissolution,
liquidation or winding-up will take place and in no event shall such notice be
provided to such holder prior to such information being made known to the
public. The addresses for such communications shall be:
If to the
Issuer:
Silver Pearl Enterprises, Inc.
c/o
Keyuan Plastics Co., Ltd.
Qingshi
Industrial Park
Ninbo
Economic & Technological Development Zone
Ningbo,
Zhejiang Province, P.R. China 315803
Attention:
Chief Executive Officer
Telephone
No.: (00) 000-0000-0000
Facsimile
No.: (00) 000-0000-0000
with
copies (which copies shall not constitute notice) to:
Xxxxxx
& Xxxxxx, LLP
000 Xxxxx
0 Xxxxx, Xxxxx 000
Xxxxxxxxx,
XX 00000
Attn:
Xxxx X. Xxxxx, Esq.
Tel. No:
(000) 000-0000
Fax No:
(000) 000-0000
|
If
to any Holder:
|
At
the address of such Holder set forth on Exhibit A to
this Agreement, with copies to Holder’s counsel as set forth on Exhibit A or as
specified in writing by such Holder
|
Any party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other party hereto.
15
13. Warrant Agent. The
Issuer may, by written notice to each Holder of this Warrant, appoint an agent
having an office in New York, New York for the purpose of issuing shares of
Warrant Stock on the exercise of this Warrant pursuant to subsection (b) of
Section
2 hereof, exchanging this Warrant pursuant to subsection (d) of Section
2 hereof or replacing this Warrant pursuant to Section
14 hereof, 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.
14. Lost or Stolen
Warrant. Upon receipt by the Company of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and, in
the case of loss, theft or destruction, of any indemnification undertaking by
the Holder to the Company and, in the case of mutilation, upon surrender and
cancellation of this Warrant, the Company shall execute and deliver new Warrant
of like tenor and date; provided, however, that the
Company shall not be obligated to re-issue warrant(s) if the Holder
contemporaneously exercise this Warrant to purchase shares of Common
Stock.
15. Remedies, Characterizations,
Other Obligations, Breaches and Injunctive Relief. The remedies provided
in this Warrant shall be cumulative and in addition to all other remedies
available under this Warrant, at law or in equity (including a decree of
specific performance and/or other injunctive relief), no remedy contained herein
shall be deemed a waiver of compliance with the provisions giving rise to such
remedy and nothing herein shall limit a Holder’s right to pursue actual damages
for any failure by the Company to comply with the terms of this Warrant. Amounts
set forth or provided for herein with respect to payments, conversion and the
like (and the computation thereof) shall be the amounts to be received by the
Holder thereof and shall not, except as expressly provided herein, be subject to
any other obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach
may be inadequate. The Company therefore agrees that, in the event of any such
breach or threatened breach, the Holder shall be entitled, in addition to all
other available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required.
16. Specific Shall Not Limit
General; Construction. No specific provision contained in this Warrant
shall limit or modify any more general provision contained herein. This Warrant
shall be deemed to be jointly drafted by the Company and all initial purchasers
of the Warrant and shall not be construed against any person as the drafter
hereof.
17. Successors and
Assigns. This Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors and assigns of the Issuer, the
Holder hereof and (to the extent provided herein) the Holders of Warrant Stock
issued pursuant hereto, and shall be enforceable by any such Holder or Holder of
Warrant Stock.
18. Modification and
Severability. If, in any action before any court or agency legally
empowered to enforce any provision contained herein, any provision hereof is
found to be unenforceable, then such provision shall be deemed modified to the
extent necessary to make it enforceable by such court or agency. If any such
provision is not enforceable as set forth in the preceding sentence, the
unenforceability of such provision shall not affect the other provisions of this
Warrant, but this Warrant shall be construed as if such unenforceable provision
had never been contained herein.
16
19. Headings. The
headings of the Sections of this Warrant are for convenience of reference only
and shall not, for any purpose, be deemed a part of this Warrant.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
17
IN
WITNESS WHEREOF, the Issuer has executed this Series A Warrant as of the day and
year first above written.
By: /s/
Xxxxxxxx
Xxx
Name:
Xxxxxxxx Xxx
Title:
Chief Executive Officer
18
EXERCISE
FORM
SERIES A
WARRANT
The
undersigned _______________, pursuant to the provisions of the accompanying
Series A Warrant, hereby elects to purchase _____ shares of Common Stock (the
“Warrant Shares”) of Silver Pearl Enterprises, Inc. covered by the accompanying
Series A Warrant.
| Dated: _________________ |
Signature _____________________
Address _____________________
_____________________
|
Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the date of Exercise: _______________________
The
undersigned is an “accredited investor” as defined in Regulation D under the
Securities Act of 1933, as amended. o Yes
o No
The
undersigned is a not a U.S. person and certifies that the warrant is not being
exercised on behalf of a U.S. person. o Yes
o No
The
undersigned intends that payment of the Warrant Price shall be made as (check
one):
Cash
Exercise_______
Cashless
Exercise_______
If the
Holder has elected a Cash Exercise, the Holder shall pay the sum of $________ by
certified or official bank check (or via wire transfer) to the Issuer in
accordance with the terms of the Warrant.
If the
Holder has elected a Cashless Exercise, a certificate shall be issued to the
Holder for the number of shares equal to the whole number portion of the product
of the calculation set forth below, which is ___________. The Issuer shall pay a
cash adjustment in respect of the fractional portion of the product of the
calculation set forth below in an amount equal to the product of the fractional
portion of such product and the Per Share Market Value on the date of exercise,
which product is ____________.
X = Y -
(A)(Y)
B
Where:
The
number of shares of Common Stock to be issued to the Holder is
(“X”).
The
number of shares of Common Stock purchasable upon exercise of all of the Warrant
or, if only a portion of the Warrant is being exercised, the portion of the
Warrant being exercised is (“Y”).
The
Warrant Price is (“A”).
19
The Per Share Market Value of one share
of Common Stock is (“B”).
The
certificate(s) representing the Warrant Shares shall be delivered
by
|
(a)
|
certified
mail to the above address, or
|
|
(b)
|
certified
mail to the prime broker of the Holder
at
|
Name:
_____________________________________
Address:____________________________________
Attention:
__________________________________
Tel. No.:
___________________________________
|
(c)
|
electronically
(DWAC Instructions: ____________________),
or
|
|
(d)
|
other
(specify)
_____________________________________
|
If the
number of Warrant Shares shall not be all the Warrant Shares purchasable upon
exercise of the Warrant, that a new Warrant for the balance of the Warrant
Shares purchasable upon exercise of this Warrant be registered in the name of
the undersigned Warrantholder or the undersigned’s Assignee as below indicated
and delivered to the address stated below.
| Dated:
_________________
Note: The
signature must correspond with
the
name of the Holder as written
on
the first page of the Warrant in every
particular,
without alteration or enlargement
or
any change whatever, unless the Warrant
has
been assigned.
|
Signature:______________________
______________________________
Name
(please print)
______________________________
______________________________
Address
______________________________
Email
______________________________
Federal
Identification or SSN.
Assignee:
Signature:______________________ ____________________________
Name
(please print)
______________________________
______________________________
Address
______________________________
Email
______________________________
Federal
Identification or SSN
|
20
ASSIGNMENT
FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the accompanying Series A Warrant and all rights evidenced
thereby and does irrevocably constitute and appoint _____________, attorney, to
transfer said Series A Warrant on the books of the corporation named
therein.
| Dated: _________________ |
Signature _____________________
Address _____________________
_____________________
|
21
PARTIAL
ASSIGNMENT
FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the accompanying Series A Warrant together with all rights therein,
and does irrevocably constitute and appoint ___________________, attorney, to
transfer that part of said Series A Warrant on the books of the corporation
named therein.
| Dated: _________________ |
Signature _____________________
Address _____________________
_____________________
|
22
FOR USE
BY THE ISSUER ONLY:
This
Warrant No. ________ canceled (or transferred or exchanged) this _____ day of
___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. ________ issued for ____ shares of Common Stock in
the name of _______________.
23
EXHIBIT
A
|
Holder’s
Name
|
Holder’s
Address
|
Name
and Address of Holder’s Counsel
|
24
