FORM OF COMMON STOCK PURCHASE WARRANT
FORM
OF COMMON STOCK PURCHASE WARRANT
THIS
COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”). THE HOLDER HEREOF, BY
PURCHASING THIS COMMON STOCK PURCHASE WARRANT, AGREES FOR THE BENEFIT OF THE
COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
ONLY
(A) TO THE COMPANY, (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT, OR (C) IF REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS. IN ADDITION, A SECURITIES PURCHASE AGREEMENT
(“PURCHASE AGREEMENT”), DATED THE DATE HEREOF, A COPY OF WHICH MAY BE OBTAINED
FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL
AGREEMENTS AMONG THE PARTIES, INCLUDING, WITHOUT LIMITATION, PROVISIONS WHICH
LIMIT THE EXERCISE RIGHTS OF THE HOLDER AND SPECIFY MANDATORY REDEMPTION
OBLIGATIONS OF THE COMPANY.
_______________________________________
ROYAL
SPRING WATER, INC.
|
No.
1
|
|||
|
Number
of shares
|
100,000
|
Holder:
|
GCA
Strategic Investment
|
|
Fund
Limited
|
|||
|
Expiration
Date:
|
December___,
0000
|
Xxxxxxxxx
Xxxxxxxx
|
|
|
00
Xxxxxx Xxxxxx
|
|||
|
Purchase
Price Per Share:
|
$2.00
|
Xxxxxxxx,
Bermuda HM11
|
For
identification only. The governing terms of this Warrant are set
forth below.
Royal
Spring Water, Inc., a Nevada corporation (the “Company”), hereby
certifies that, for value received, GCA Strategic Investment Fund Limited or
its
assigns (the “Holder”), is entitled, subject to the terms set forth
below, to purchase from the Company at any time or from time to time after
the
date hereof and prior to the fifth anniversary hereof (the “Exercise
Period”), at the Purchase Price hereinafter set forth, One Hundred Thousand
(100,000) shares of the fully paid and nonassessable shares of common stock
of
the Company, $0.001 par value per share (the “Common Stock”). The
number and character of such shares of Common Stock and the Purchase Price
are
subject to adjustment as provided herein.
The
purchase price per share of Common Stock issuable upon exercise of this Warrant
(the “Purchase Price”) shall initially be equal to $2.00;
provided, however, that the Purchase Price shall be adjusted
from time to time as provided herein.
2
Capitalized
terms used herein not otherwise defined shall have the meanings ascribed thereto
in the Purchase Agreement. As used herein the following terms, unless
the context otherwise requires, have the following respective
meanings:
(a) The
term “Company” shall include Royal Spring Water, Inc. and any
corporation that shall succeed or assume the obligations of such corporation
hereunder.
(b) The
term “Common Stock” includes (a) the Company’s common stock, par value
$0.001 per share, (b) any other capital stock of any class or classes (however
designated) of the Company, authorized on or after the date hereof, the holders
of which shares shall have the right, without limitation as to amount, to share
ratably in the balance of current dividends and liquidating dividends after
the
payment of dividends and distributions on any shares entitled to preference,
and
all the holders of shares that are entitled to vote for the election of the
directors of the Company and (c) any other securities into which or for which
any of the securities described in (a) or (b) 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)
that the Holder of this Warrant at any time shall be entitled to receive, or
shall have received, on the exercise of this Warrant, in lieu of or in addition
to Common Stock, or that at any time shall be issuable or shall have been issued
in exchange for or in replacement of Common Stock or Other Securities pursuant
to Section 4 or otherwise.
1. Exercise
of Warrant.
1.1 Method
of Exercise.
(a) This
Warrant may be exercised in whole or in part (but not as to a fractional share
of Common Stock), at any time and from time to time during the Exercise Period
by the Holder hereof by delivery of a notice of exercise (a “Notice of
Exercise”) substantially in the form attached hereto as Exhibit A
via facsimile to the Company. Promptly thereafter the Holder shall
surrender this Warrant (if the entire amount of the Warrant is subject to the
Notice of Exercise) to the Company at its principal office via overnight
delivery service, accompanied by payment of the Purchase Price multiplied by
the
number of shares of Common Stock for which this Warrant is being exercised
(the
“Exercise Price”). Payment of the Exercise Price shall be
made, at the option of the Holder, (i) by check or bank draft payable to the
order of the Company, or (ii) by wire transfer to the account of the
Company. Upon exercise, the Holder shall be entitled to receive
within three Trading Days after the Exercise Date (as defined herein), one
or
more certificates, issued in the Holder’s name or in such name or names as the
Holder may direct, subject to the limitations on transfer contained herein,
for
the number of shares of Common Stock so purchased. The shares of
Common Stock so purchased shall be deemed to be issued as of the close of
business on the date on which the Company shall have received from the Holder
payment in full of the Exercise Price (the “Exercise
Date”).
3
(b) Upon
exercise of a portion of this Warrant in accordance with the terms hereof,
records showing the amount so exercised and the date of exercise shall be
maintained on a ledger substantially in the form of Annex B attached
hereto (an originally signed and executed copy of which shall be delivered
to
the Company with each Notice of Exercise). The Company shall maintain
the originally signed and executed ledger and the Holder shall maintain a copy
thereof. Upon execution of the exercise of the Warrants contemplated
by the Notice of Exercise, the Company shall deliver to the Holder a copy of
Annex B signed and executed by the Company, and the Holder shall deliver
to the Company a copy of Annex B signed by the Holder. It is specifically
contemplated that the Company shall act as the calculation agent for all
exercises of this Warrant. The Holder and any assignee, by acceptance
of this Warrant, acknowledges and agrees that, by reason of the provisions
of
this paragraph, following an exercise of a portion of this Warrant, the number
of shares of Common Stock represented by this Warrant will be the amount
indicated on Annex B attached hereto (which may be less than the amount
stated on the face hereof).
(c) In
the event there is a dispute as to the number of shares of Common Stock the
Holder is entitled to receive upon exercise of this Warrant, the Company shall
issue to the Holder the number of shares not in dispute and the Company and
the
Holder will use their best efforts to resolve such dispute within one Business
Day following the receipt of a Notice of Exercise. If such dispute
cannot be resolved within such one-day period, the Company and the Holder shall
submit the dispute to an independent accountant mutually agreed upon by the
Company and the Holder to make a final and binding determination of the number
of shares owed to the Holder. The Company shall issue shares of
Common Stock owed to Holder as a result of the resolution of the dispute within
two Business Days following the receipt of the accountant’s independent
determination.
1.2 Regulation
D Restrictions. The Holder hereof represents and warrants to
the Company that it has acquired this Warrant and anticipates acquiring the
shares of Common Stock issuable upon exercise of the Warrant solely for its
own
account for investment purposes and not with a view to or for resale of such
securities unless such resale has been registered with the Commission or an
applicable exemption is available therefor and provided that the Holder shall
have furnished to the Company an opinion of counsel in form and substance
reasonably satisfactory to the Company, to the effect that such transfer is
exempt from the registration requirements of the Securities Act and any
applicable state securities laws.
1.3 Company
Acknowledgment. The Company will, at the time of the
exercise of this Warrant, upon request of the Holder hereof, acknowledge in
writing its continuing obligation to afford to such Holder the registration
rights to which such Holder shall continue to be entitled after such exercise
in
accordance with the provisions of a Registration Rights Agreement dated the
date
hereof (the “Registration Rights Agreement”).
1.4 Limitation
on Exercise. Notwithstanding the rights of the Holder to
exercise all or a portion of this Warrant as described herein, such exercise
rights shall be limited, solely to the extent set forth in the Purchase
Agreement as if such provisions were specifically set forth
herein. In addition, the number of shares of Common Stock issuable
upon exercise of this Warrant is subject to reduction as specified in Section
10.3 of the Purchase Agreement.
4
2. Delivery
of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant, and in any event within three
(3) Business Days thereafter, the Company at its expense (including the payment
by it of any applicable issue, stamp or transfer taxes) will cause to be issued
in the name of and delivered to the Holder thereof, or, to the extent
permissible hereunder, to such other person as such Holder may direct, a
certificate or certificates for the number of 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 applicable Purchase Price, 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.
3. Adjustment
for Extraordinary Events. The Purchase Price to be paid by
the Holder upon exercise of this Warrant, and the consideration to be received
upon exercise of this Warrant, shall be adjusted in case at any time or from
time to time pursuant to Article 11 of the Purchase Agreement as if such
provisions were specifically set forth herein.
4. No
Impairment. The Company will not, by amendment of its
Certificate 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 of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may
be
necessary or appropriate in order to protect the rights of the Holder of this
Warrant against impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any shares of
stock receivable on the exercise of this Warrant above the amount payable
therefor on such exercise, (b) will take all such action as may be necessary
or
appropriate in order that the Company may validly and legally issue fully paid
and unassessable shares of stock on the exercise of this Warrant, and (c) will
not transfer all or substantially all of its properties and assets to any other
person (corporate or otherwise), or consolidate with or merge into any other
person or permit any such person to consolidate with or merge into the Company
(if the Company is not the surviving person), unless such other person shall
expressly assume in writing and will be bound by all the terms of this
Warrant.
5. Certificate
as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable on the exercise of this Warrant, the Company will promptly cause its
principal financial officer to compute such adjustment or readjustment in
accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon
which
such adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares
of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such issue or sale and as adjusted and readjusted
as provided in this Warrant.
5
The
Company will forthwith mail a copy of each such certificate to the Holder of
this Warrant, and will, on the written request at any time of the Holder of
this
Warrant, furnish to such Holder a like certificate setting forth the Purchase
Price at the time in effect and showing how it was calculated.
6. Notices
of Record Date, etc.
In
the event of
(a) any
taking by the Company of a record of the Holders of any class of securities
for
the purpose of determining the Holders thereof who are entitled to receive
any
dividend or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities
or
property, or to receive any other right, or
(b) any
capital reorganization of the Company, any reclassification or recapitalization
of the capital stock of the Company or any transfer of all or substantially
all
the assets of the Company to or consolidation or merger of the Company with
or
into any other Person, or
(c) any
voluntary or involuntary dissolution, liquidation or winding-up of the
Company,
then
and
in each such event the Company will mail or cause to be mailed to the Holder
of
this Warrant a notice specifying (i) the date on which any such record is to
be
taken for the purpose of such dividend, distribution or right, and stating
the
amount and character of such dividend, distribution or right, and (ii) the
date
on which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any, as of which the Holders of record of Common Stock (or
Other Securities) shall be entitled to exchange their shares of Common Stock
(or
Other Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up. Such notice shall be
mailed at least 20 days prior to the date specified in such notice on which
any
action is to be taken.
7. Reservation
of Stock, etc. Issuable on Exercise of
Warrant. The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of this Warrant,
all
shares of Common Stock (or Other Securities) from time to time issuable on
the
exercise of this Warrant.
6
8. Exchange
of Warrant. On surrender for exchange of this Warrant,
properly endorsed and in compliance with the restrictions on transfer set forth
in the legend on the face of this Warrant, to the Company, the Company at its
expense will issue and deliver to or on the order of the Holder thereof a new
Warrant of like tenor, in the name of such Holder or as such Holder (on payment
by such Holder of 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 so surrendered or for such lesser number
of shares of Common Stock as may be reflected on the Warrant Exercise Ledger
attached as Annex B.
9. Replacement
of Warrant. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
10. Remedies. The
Company stipulates that the remedies at law of the Holder of this Warrant in
the
event of any default or threatened default by the Company in the performance
of
or compliance with any of the terms of this Warrant are not and will not be
adequate, and that such terms may be specifically enforced by a decree for
the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
11. 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) 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; and
(b) this
Warrant may not be sold, transferred or assigned except pursuant to an effective
registration statement under the Securities Act or pursuant to an applicable
exemption therefrom.
12. Registration
Rights. The Company is obligated to
register the shares of Common Stock issuable upon exercise of this Warrant
in
accordance with the terms of the Registration Rights Agreement.
13. Warrant
Redemption. Upon occurrence of the events described in
Sections 3.4 and 10.4(c) of the Purchase Agreement, the Company, at the request
of Holder, shall redeem all outstanding Warrants that remain unexercised at
a
redemption price equal to the greater of (x) an appraised value of the Warrants,
as determined by Black Scholes, on the date they are called for
redemption and (y) the number of Warrants being redeemed multiplied by the
excess of (A) the average Closing Bid Price of the Common Stock for the five
trading days immediately prior to the date that the Warrants are called for
redemption over (B) the exercise price of the Warrants.
7
14. Notices,
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 any address, then to, and at the address of, the last Holder of this
Warrant who has so furnished an address to the Company.
15. 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
internal laws of the State of California. The headings in this
Warrant are for the 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.
[Signature
Page Follows]
8
DATED
as
of December ___, 2006
ROYAL
SPRING WATER, INC.
By: /s/
Xxxx Xxxxx
Name: Xxxx
Xxxxx
Title: President
[Corporate
Seal]
Attest:
By: __________________________
_______________,
Secretary
9
EXHIBIT
A
FORM
OF NOTICE EXERCISE - WARRANT
(To
be
executed only upon exercise
of
the
Warrant in whole or in part)
To
____________________________________________
The
undersigned registered Holder of the accompanying Warrant, hereby exercises
such
Warrant or portion thereof for, and purchases thereunder, __________1 shares of Common Stock (as defined
in such
Warrant) and herewith makes payment therefor in the amount and manner set forth
below, as of the date written below. The undersigned requests that
the certificates for such shares of Common Stock be issued in the name of,
and
delivered to, whose address is .
The
Exercise Price is paid as follows:
o Certified
Bank draft payable to the Company in the amount of $_____________.
o Wire
transfer to the account of the Company in the amount of
$___________.
Upon
exercise pursuant to this Notice of Exercise, the Holder will be in compliance
with the Limitation on Exercise (as defined in the Securities Purchase Agreement
pursuant to which this Warrant was issued).
The
Holder of the shares of Common Stock received upon exercise of the Warrant
(the
“Common Shares”), covenants and agrees that the Common Shares are being acquired
as an investment and not with a view to the distribution thereof in violation
of
the Securities Act and that the Common Shares may not be transferred, sold,
assigned, hypothecated or otherwise disposed of, in whole or in part except
as
provided in the legend on the first page of this Warrant and provided that
the
Holder shall have furnished the Company an opinion of counsel in form and
substance reasonably acceptable to the Company to the effect that such transfer
is exempt from the registration requirements of the Securities Act and any
applicable state securities laws.*
Date: ___________________________ _______________________________________
(Name
must conform to name of Holder as
specified
on the face of the Warrant)
By: ____________________________________
Name: _______________________________
Title: ________________________________
Address
of
Holder: ______________________
_______________________________________
_______________________________________
Date
of
exercise: ___________________________________
____________________________
10
ANNEX
B
WARRANT
EXERCISE LEDGER
|
Date
|
Original
Number of Warrants
|
Warrants
Exercised
|
Exercise
Price
Paid
|
New
Balance
of
Warrants
|
Issuer
Initials
|
Holder
Initials
|
ROYAL
SPRING WATER,
INC.
HOLDER:
By: ______________________________ By:
_________________________
Name: ______________________________
Name:_______________________
Title: ______________________________ Title:________________________
