Exhibit 4.1
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS
WARRANT AND THE COMMON SHARES 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 OR ANY
APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO GK INTELLIGENT SYSTEMS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
Right to Purchase 80,000 shares of Common Stock of
GK Intelligent Systems, Inc.
(subject to adjustment as provided herein)
FORM OF COMMON STOCK PURCHASE WARRANT
Issue Date: September 16, 2004
GK INTELLIGENT SYSTEMS, INC., a corporation organized under the laws of
the State of Delaware (the "Company"), hereby certifies that, for value
received, Xxxxxxxxxx Investor Relations, Inc., or its assigns (the "Holder"),
is entitled, subject to the terms set forth below, to purchase from the
Company at any time after the Issue Date until 5:00 p.m., E.S.T on the third
anniversary of the Issue Date (the "Expiration Date"), up to 80,000 fully
paid and nonassessable shares of the common stock of the Company (the "Common
Stock"), $0.001 par value per share, at a purchase price equivalent to $0.04
("Purchase Price"). The number and character of such shares of Common Stock
and the Purchase Price are subject to adjustment as provided herein. The
Company may reduce the Purchase Price without the consent of the Holder.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Company" shall include GK Intelligent Systems, Inc. and
any corporation which shall succeed or assume the obligations of GK
Intelligent Systems, Inc. hereunder.
(b) The term "Common Stock" includes (a) the Company's Common Stock,
$0.001 par value per share, and (b) any other securities into which or for
which any of the securities described in (a) 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 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 pursuant to Section 3 or otherwise.
1. Exercise of Warrant.
1.1. Number of Shares Issuable upon Exercise. From and after the Issue
Date through and including the Expiration Date, the Holder hereof shall be
entitled to receive, upon exercise of this Warrant in whole in accordance with
the terms of subsection 1.2 or upon exercise of this Warrant in part in
accordance with subsection 1.3, shares of Common Stock of the Company, subject
to adjustment pursuant to Section 3.
1.2. Full Exercise. This Warrant may be exercised in full by the Holder
hereof by delivery of an original or facsimile copy of the Form of Election to
Purchase attached as Exhibit A hereto duly executed by such Holder and
surrender of the original Warrant within seven (7) days of exercise, to the
Company at its principal office or at the office of its Warrant Agent (as
provided hereinafter), accompanied by payment, in cash, wire transfer 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 for which
this Warrant is then exercisable by the Purchase Price.
1.3. Partial Exercise. This Warrant may be exercised in part (but not
for a fractional share) by surrender of this Warrant in the manner and at the
place provided in subsection 1.2 except that the amount payable by the Holder
on such partial exercise shall be the amount obtained by multiplying (a) the
number of whole shares of Common Stock designated by the Holder in the
Subscription Form by (b) the Purchase Price. On any such partial exercise,
the Company, at its expense, will forthwith issue and deliver to or upon the
order of the Holder hereof a new Warrant of like tenor, in the name of the
Holder hereof or as such Holder (upon payment by such Holder of any applicable
transfer taxes) may request, the whole number of shares of Common Stock for
which such Warrant may still be exercised.
1.4. Fair Market Value. 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 New York Stock
Exchange, the American Stock Exchange or any other national exchange or is
quoted on the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ"), National Market System or the NASDAQ SmallCap Market,
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 New York Stock
Exchange, the American Stock Exchange or any other national exchange and is
not quoted on the NASDAQ National Market System or the NASDAQ SmallCap Market,
but is traded in the Over-the-Counter market, then the average of the closing
bid and ask 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 such an agreement, by arbitration in accordance with the rules
then standing 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; or
(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 all of the Warrants are outstanding at
the Determination Date.
1.5. Trustee for Warrant Holders. In the event that a bank or trust
company shall have been appointed as trustee for the Holder of the Warrants
pursuant to Subsection 2.2, 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.
1.6 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 hereof 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 as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within seven (7) 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 in
compliance with applicable 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 of Common Stock, 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. Adjustment for Reorganization, Consolidation, Merger, etc.
2.1. 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
of this Warrant, 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 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 3.
2.2. 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, prior to such dissolution, shall at its expense deliver
or cause to be delivered the stock and other securities and property
receivable by the Holder of the Warrants after the effective date of such
dissolution pursuant to this Section 2 to a bank or trust company (a
"Trustee"), as trustee for the Holder of the Warrants.
2.3. Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 2, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the 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 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. In the event this Warrant does not continue in full force and
effect after the consummation of the transaction described in this Section 2,
then only in such event will the Company's securities and property (including
cash, where applicable) receivable by the Holder of the Warrants be delivered
to the Trustee as contemplated by Section 2.2.
3. 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 Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase 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 Purchase Price then in effect.
The Purchase 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 3. The number of shares of Common Stock that the Holder of this
Warrant shall thereafter, on the exercise hereof as provided in Section 1, be
entitled to receive shall be adjusted to a number determined by multiplying
the number of shares of Common Stock that would otherwise (but for the
provisions of this Section 3) be issuable on such exercise by a fraction of
which (a) the numerator is the Purchase Price that would otherwise (but for
the provisions of this Section 3) be in effect, and (b) the denominator is the
Purchase Price in effect on the date of such exercise.
4. Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial
Statements. The Company will at all times reserve and keep available, solely
for issuance and delivery on the exercise of the Warrants, all shares of
Common Stock (or Other Securities) from time to time issuable on the exercise
of the Warrant.
5. 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"). On the
surrender for exchange of this Warrant, with the Transferor's endorsement
attached hereto (the "Transferor Endorsement Form") and together with an
opinion of counsel reasonably satisfactory to the Company that the transfer of
this Warrant will be in compliance with applicable securities laws, the
Company, twice, only, but 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 or Warrants 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.
6. 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 the
Holder's expense, twice only, will execute and deliver, in lieu thereof, a new
Warrant of like tenor.
7. Call. The Company shall have the option to "call" the Warrant in
accordance with and governed by the following:
(a) The Company shall exercise the Warrant Call by giving to the Warrant
Holder a written notice of call (the "Call Notice") during the period in which
the Warrant Call may be exercised. The effective date of each Call Notice
(the "Call Date") is the date on which notice is effective under the notice
provision of Section 10 of this Warrant.
(b) The Company's right to exercise the Warrant Call shall commence
thirty trading days after the effective date of a registration statement
covering the resale of the shares of Common Stock underlying this Warrant and
end thirty trading days prior to the Expiration Date.
(c) The number of shares of Common Stock to be issued upon exercise of
the Warrant which are subject to a Call Notice must be registered in a
registration statement effective from twenty-two trading days prior to the
Call Date and through the Delivery Date.
(d) A Call Notice may be given not sooner than thirty trading days after
the prior Call Date.
(e) A Call Notice may be given by the Company only within five trading
days after the Common Stock has had a closing price as reported for the
Principal Market of not less than two hundred percent (200%) of the Purchase
Price for ten (10) consecutive trading days ("Lookback Period").
(f) The Common Stock must be listed on the Principal Market for the
Lookback Period and through the Delivery Date.
(g) The Company shall not have received a notice from the Principal
Market during the ninety calendar days prior to the Call Date that the Company
or the Common Stock does not meet the requirements for continued quotation,
listing or trading on the Principal Market.
(h) The Company and the Common Stock shall meet the requirements for
continued quotation, listing or trading on the Principal Market for the
Lookback Period and through the Delivery Date.
(i) Unless otherwise agreed to by the Holder of this Warrant, a Call
Notice must be given to all Warrant Holders who receive Warrants similar to
this Warrant (in terms of exercise price and other principal terms) issued on
or about the same Issue Date as this Warrant, in proportion to the amounts of
Common Stock which may be purchased by the respective Warrant Holders in
accordance with the respective Warrants held by each.
(j) The Warrant Holder shall exercise his Warrant rights and purchase
the Called Common Stock and pay for same within thirty (30) days after the
Call Date. If the Warrant Holder fails to timely pay the amount required by
the Warrant Call, the Company's sole remedy shall be to cancel a corresponding
amount of this Warrant.
(k) The Company may not exercise the right to Call this Warrant after
the occurrence of a default by the Company of a material term of this Warrant.
8. Warrant Agent. The Company may, by written notice to the Holder of
the Warrant, appoint an agent (a "Warrant 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 5, and replacing this
Warrant pursuant to Section 6, 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 Warrant Agent.
9. 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.
10. Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed effective (a) upon
hand delivery or delivery by facsimile, with accurate confirmation generated
by the transmitting facsimile machine, at the address or number designated
below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
(i) if to the Company to:
GK Intelligent Systems, Inc.
0000 Xxxxxxxx Xxxxx,
Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxx, CEO
Phone: (000) 000-0000
Fax: (713)626-150
with a copy to:
Xxx Xxxxxxx,
0000 Xxxxxx Xxxxxx, Xxxxx 0,
Xxxxxx, Xxxxxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
(ii) if to the Holder, to the address and fax number listed on the first
paragraph of this Warrant, with a copy to:
Xxx Xxxxxxxxx
Xxxxxxxxxx Investor Relations, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
XX, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
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 shall be construed and enforced in
accordance with and governed by the laws of New York. Any dispute relating to
this Warrant shall be adjudicated in the State of New York. 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.
IN WITNESS WHEREOF, the Company has executed this Warrant as of the date
first written above.
GK Intelligent Systems, INC.
By:
Name:
Title:
Witness:
EXHIBIT A
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of
Common Stock under the foregoing Warrant)
To: GK Intelligent Systems, Inc.:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase
_____________ shares of Common Stock ("Common Stock"), of GK Intelligent
Systems, Inc., and, encloses herewith $________ in cash, certified or
official bank check or checks, which sum represents the aggregate Exercise
Price (as defined in the Warrant) for the number of shares of Common Stock
to which this Form of Election to Purchase relates, together with any
applicable taxes payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of:
__________________________________ (please print name and address).
Social Security or Tax Identification number: ____________________
If the number of shares of Common Stock issuable upon this exercise shall
not be all of the shares of Common Stock which the undersigned is entitled
to purchase in accordance with the enclosed Warrant, the undersigned requests
that a New Warrant (as defined in the Warrant) evidencing the right to
purchase the shares of Common Stock not issuable pursuant to the exercise
evidenced hereby be issued in the name of and delivered to: (Please print
name and address)
Dated: _________________ Name of Holder:___________________________
(By:)
(Name:)
(Title:)
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant)
