Exhibit 4.2
Warrant
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933 (THE "ACT") OR
APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS") AND SHALL NOT BE SOLD,
PLEDGED, HYPOTHECATED, DONATED, OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR
CONSIDERATION) BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE COMPANY OF A
FAVORABLE OPINION OF COUNSEL OR SUBMISSION TO THE COMPANY OF SUCH EVIDENCE AS
MAY BE SATISFACTORY TO COUNSEL TO THE COMPANY, IN EACH SUCH CASE, TO THE EFFECT
THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT AND THE STATE ACTS.
WARRANT TO PURCHASE ONE MILLION (1,000,000) SHARES OF COMMON STOCK
▇▇▇▇▇▇▇ INTERNATIONAL INC.
(a Nevada Corporation)
Not Transferable or Exercisable Except
upon Conditions Herein Specified
Void after 5:00 P.M.,
Atlantic Standard Time, on the March 31, 2007
▇▇▇▇▇▇▇ International Inc., a Nevada corporation (the "Company") hereby
certifies that, QUADRANGLE HOLDINGS LTD., as the registered holder hereof (the
"Holder"), for value received, is entitled to purchase from the Company the
number of fully paid and non-assessable shares of Common Stock of the Company
(the "Shares"), stated above at the purchase price of $0.08 per Share (the
"Exercise Price") (the number of Shares and Exercise Price being subject to
adjustment as hereinafter provided) upon the terms and conditions herein
provided.
1. Activation of Exercise Rights and Exercise of Warrants.
(a) Subject to subsection (c) of this Section 1 and Section 11 below, after
sixty-one days written notice by the Holder to the Company of its election to
activate the Exercise Rights set forth herein and upon presentation and
surrender of this Warrant Certificate, with the attached Purchase Form duly
executed, at the principal office of the Company at ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ or at such other place as the Company may
designate by notice to the Holder hereof, together with in the event of a cash
exercise, a certified or bank cashier's check payable to the order of the
Company in the amount of the Exercise Price times the number of Shares being
purchased, the Company shall deliver to the Holder hereof, as promptly as
practicable, certificates representing the Shares being purchased. This Warrant
may be exercised in whole or in part; and, in case of exercise hereof in part
only, the Company, upon surrender hereof, will deliver to the Holder a new
Warrant Certificate or Warrant Certificates of like tenor entitling the Holder
to purchase the number of Shares as to which this Warrant has not been
exercised.
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(b) In the alternative, provided that at the time of exercise the Company's
common stock is publicly traded with an average daily trading volume of 5,000
shares and closing prices quoted daily for at least the past twenty trading
days, payment of the exercise price per share may be made by delivery of this
Warrant with a Net Exercise Notice (the form of which is attached hereto as
Exhibit B) (a "Net Exercise").
(c) This Warrant may be exercised in whole or in part at any time prior to
5:00 o'clock P.M., Atlantic Standard Time, on March 31, 2007.
2. Exchange and Transfer of Warrant. This Warrant (a) at any time prior to
the exercise hereof, upon presentation and surrender to the Company, may be
exchanged, alone or with other Warrants of like tenor registered in the name of
the Holder, for another Warrant or other Warrants of like tenor in the name of
such Holder exercisable for the same aggregate number of Shares as the Warrant
or Warrants surrendered, (b) may not be sold, transferred, hypothecated, or
assigned, in whole or in part, without the prior written consent of the Company,
which shall not be unreasonably withheld.
3. Rights and Obligations of Warrant Holder.
(a) The Holder of this Warrant Certificate shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or in
equity; provided, however, in the event that any certificate representing the
Shares is issued to the Holder hereof upon exercise of this Warrant, such Holder
shall, for all purposes, be deemed to have become the holder of record of such
Shares on the date on which this Warrant Certificate, together with a duly
executed Purchase Form, was surrendered and payment of the Exercise Price was
made, irrespective of the date of delivery of such Share certificate. The rights
of the Holder of this Warrant are limited to those expressed herein and the
Holder of this Warrant, by its acceptance hereof, consents to and agrees to be
bound by and to comply with all the provisions of this Warrant Certificate,
including, without limitation, all the obligations imposed upon the Holder
hereof by Sections 2 and 5 hereof. In addition, the Holder of this Warrant
Certificate, by accepting the same, agrees that the Company may deem and treat
the person in whose name this Warrant Certificate is registered on the books of
the Company maintained for such purpose as the absolute, true and lawful owner
for all purposes whatsoever, notwithstanding any notation of ownership or other
writing thereon, and the Company shall not be affected by any notice to the
contrary.
(b) No Holder of this Warrant Certificate, as such, shall be entitled to
vote or receive distributions or to be deemed the holder of Shares for any
purpose, nor shall anything contained in this Warrant Certificate be construed
to confer upon any Holder of this Warrant Certificate, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any action by the Company, whether upon any recapitalization, issue
of stock, reclassification of stock, merger, conveyance or otherwise, receive
notice of meetings or other action affecting stockholders (except for notices
provided for herein), receive distributions, subscription rights, or otherwise,
until this Warrant shall have been exercised and the Shares purchasable upon the
exercise thereof shall have become deliverable as provided herein; provided,
however, that any such exercise on any date when the stock transfer books of the
Company shall be closed shall constitute the person or persons in whose name or
names the certificate or certificates for those Shares are to be issued as the
record holder or holders thereof for all purposes at the opening of business on
the next succeeding day on which such stock transfer books are open, and the
Warrant surrendered shall not be deemed to have been exercised, in whole or in
part as the case may be, until the next succeeding day on which stock transfer
books are open for the purpose of determining entitlement to distributions on
the Company's common stock.
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4. Shares Underlying Warrants. The Company covenants and agrees that all
Shares delivered upon exercise of this Warrant shall, upon delivery and payment
therefor, be duly and validly authorized and issued, fully-paid and
non-assessable, and free from all stamp taxes, liens, and charges with respect
to the purchase thereof In addition, the Company agrees at all times to reserve
and keep available an authorized number of Shares sufficient to permit the
exercise in full of this Warrant.
5. Disposition of Warrants or Shares.
(a) The holder of this Warrant Certificate and any transferee hereof or of
the Shares issuable upon the exercise of the Warrant Certificate, by their
acceptance hereof, hereby understand and agree that the Warrant, and the Shares
issuable upon the exercise hereof, have not been registered under either the
Securities Act of 1933 (the "Act") or applicable state securities laws (the
"State Acts") and shall not be sold, pledged, hypothecated, donated, or
otherwise transferred (whether or not for consideration) except upon the
issuance to the Company of a favorable opinion of counsel or submission to the
Company of such evidence as may be satisfactory to counsel to the Company, in
each such case, to the effect that any such transfer shall not be in violation
of the Act and the State Acts. It shall be a condition to the transfer of this
Warrant that any transferee thereof deliver to the Company its written agreement
to accept and be bound by all of the terms and conditions of this Warrant
Certificate.
(b) Unless and until there is an effective registration statement filed
with the U.S. Securities and Exchange Commission for the Common Stock underlying
the Warrant, the stock certificates of the Company that will evidence the shares
of Common Stock with respect to which this Warrant may be exercisable will be
imprinted with conspicuous legend in substantially the following form:
"The securities represented by this certificate have not been
registered under either the Securities Act of 1933 (the "Act") or
applicable state securities laws (the "State Acts") and shall not be sold,
pledged, hypothecated, donated or otherwise transferred (whether or not for
consideration) by the holder except upon the issuance to the Company of a
favorable opinion of its counsel or submission to the company of such other
evidence as may be satisfactory to counsel of the Company, in each such
case, to the effect that any such transfer shall not be in violation of the
Act and the State Acts."
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6. Adjustments. The number of Shares purchasable upon the exercise of each
Warrant is subject to adjustment from time to time upon the occurrence of any of
the events enumerated below. (a) In case the Company shall: (i) pay a dividend
in Shares, (ii) subdivide its outstanding Shares into a greater number of
Shares, (iii) combine its outstanding Shares into a smaller number of Shares, or
(iv) issue, by reclassification of its Shares, any shares of its capital stock,
the amount of Shares purchasable upon the exercise of each Warrant immediately
prior thereto shall be adjusted so that the Holder shall be entitled to receive
upon exercise of the Warrant that number of Shares which such Holder would have
owned or would have been entitled to receive after the happening of such event
had such Holder exercised the Warrant immediately prior to the record date, in
the case of such dividend, or the effective date, in the case of any such
subdivision, combination or reclassification. An adjustment made pursuant to
this subsection (a) shall be made whenever any of such events shall occur, but
shall become effective retroactively after such record date or such effective
date, as the case may be, as to Warrants exercised between such record date or
effective date and the date of happening of any such event.
(b) In case the Company shall issue rights or warrants to all holders of
its Shares entitling them to subscribe for or to purchase Shares at a price per
Share which, when added to the amount of consideration received or receivable by
the Company for such rights or warrants, is less than the Current Market Price
(as hereinafter defined) per Share at the record date, the number of Shares
purchasable upon the exercise of this Warrant shall be adjusted so that
thereafter, until further adjusted, each Warrant shall entitle the Holder to
purchase that number of Shares determined by multiplying the number of Shares
purchasable hereunder by a fraction, the numerator of which shall be the number
of additional Shares issuable upon the exercise of such rights or warrants, and
the denominator of which shall be the number of Shares which an amount equal to
the sum of (i) the aggregate exercise price of the total number of Shares
issuable upon the exercise of such rights or warrants, and (ii) the aggregate
amount of consideration, if any, received, or receivable by the Company for such
rights or warrants, would purchase at such Current Market Price. Such adjustment
shall be made whenever such rights or warrants are issued, but shall also be
effective retroactively as to Warrants exercised between the record date for the
determination of stockholders entitled to receive such rights or warrants and
the date such rights or warrants are issued.
(c) For the purpose of any computation under subsection (b) above, the
Current Market Price per Share at any date shall be: (i) if the Shares are
listed on any national securities exchange, the average of the daily closing
prices for the 15 consecutive business days commencing 20 business days before
the day in question (the "Trading Period"); (ii) if the Shares are not listed on
any national securities exchange but are quoted on the Nasdaq SmallCap Market,
the average of the high and low bids as reported by NASDAQ for the Trading
Period; and (iii) if the Shares are neither listed on any national securities
exchange nor quoted on NASDAQ, the higher of (x) the exercise price then in
effect, or (y) the tangible book value per Share as of the end of the Company's
immediately preceding fiscal year.
(d) No adjustment shall be required unless such adjustment would require an
increase or decrease of at least 1% in the number of Shares purchasable
hereunder; provided, however, that any adjustments which by reason of this
subsection (d) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section 6
shall be made to the nearest one-hundredth of a Share.
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(e) No adjustment shall be made in any of the following cases:
(i) Upon the grant or exercise of stock options now or hereafter
granted, or under any employee stock option or stock purchase plan now or
hereafter authorized, to the extent that the aggregate of the number of
Shares which may be purchased under such options and the number of Shares
issued under such employee stock purchase plan is less than or equal to 10%
of the number of Shares outstanding on January 1 of the year of the grant
or exercise;
(ii) Shares issued upon the conversion of any of the Company's
convertible or exchangeable securities;
(iii) Shares issued in connection with the acquisition by the Company
or by any subsidiary of the Company of 80% or more of the assets of another
corporation or entity, and Shares issued in connection with the acquisition
by the Company or by any subsidiary of the Company of 80% or more of the
voting shares of another corporation (including Shares issued in connection
with such acquisition of voting shares of such other corporation subsequent
to the acquisition of an aggregate of 80% of such voting shares), Shares
issued in a merger of the Company or a subsidiary of the Company with
another corporation in which the Company or the Company's subsidiary is the
surviving corporation, and Shares issued upon the conversion of other
securities issued in connection with any such acquisition or in any such
merger; and
(iv) Shares issued pursuant to this Warrant and pursuant to all stock
options and warrants outstanding on the date hereof.
(f) Notice to Warrant Holders of Adjustment. Whenever the number of Shares
purchasable hereunder is adjusted as herein provided, the Company shall cause to
be mailed to the Holder in accordance with the provisions of this Section 6 a
notice (i) stating that the number of Shares purchasable upon exercise of this
Warrant have been adjusted, (ii) setting forth the adjusted number of Shares
purchasable upon the exercise of a Warrant, and (iii) showing in reasonable
detail the computations and the facts, including the amount of consideration
received or deemed to have been received by the Company, upon which such
adjustments are based.
7. Fractional Shares. The Company shall not be required to issue any
fraction of a Share upon the exercise of Warrants. If more than one Warrant
shall be surrendered for exercise at one time by the same Holder, the number of
full Shares which shall be issuable upon exercise thereof shall be computed on
the basis of the aggregate number of Shares with respect to which this Warrant
is exercised. If any fractional interest in a Share shall be deliverable upon
the exercise of this Warrant, the Company shall make an adjustment therefor in
cash equal to such fraction multiplied by the Current Market Price of the Shares
on the business day next preceding the day of exercise.
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8. Loss or Destruction. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant
Certificate and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement or bond satisfactory in form, substance and
amount to the Company or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant Certificate, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant Certificate of like tenor.
9. Survival. The various rights and obligations of the Holder hereof as set
forth herein shall survive the exercise of the Warrants represented hereby and
the surrender of this Warrant Certificate.
10. Notices. Whenever any notice, payment of any purchase price, or other
communication is required to be given or delivered under the terms of this
Warrant, it shall be in writing and delivered by hand delivery or United States
registered or certified mail, return receipt requested, postage prepaid, and
will be deemed to have been given or delivered on the date such notice, purchase
price or other communication is so delivered or posted, as the case may be; and,
if to the Company, it will be addressed to the address specified in Section 1
hereof, and if to the Holder, it will be addressed to the registered Holder at
its, his or her address as it appears on the books of the Company.
▇▇▇▇▇▇▇ INTERNATIONAL INC.
By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
March 27, 2006
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PURCHASE FORM
DATE:
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TO: ▇▇▇▇▇▇▇ INTERNATIONAL INC.
The undersigned hereby irrevocably elects to exercise the attached Warrant
Certificate to the extent of ____ shares of the Common Stock, of ▇▇▇▇▇▇▇
INTERNATIONAL INC., and hereby makes payment of $_______ ($0.08 x # OF WARRANTS
EXERCISED) in accordance with the provisions of Section 1 of the Warrant
Certificate in payment of the purchase price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
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Please typewrite or print in block letters)
Address:
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By:
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Signature of Record Holder
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NET EXERCISE
PURCHASE FORM
DATE:
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TO: ▇▇▇▇▇▇▇ INTERNATIONAL INC.
The undersigned hereby irrevocably elects to exercise the attached Warrant
Certificate to the extent of ____ shares of the Common Stock, of ▇▇▇▇▇▇▇
INTERNATIONAL INC. by the net exercise as permitted by the warrant.
The Fair Market Value of the Shares as of this date is: $______ per share
calculated as the 20 trading day average closing price for the period ending the
trading day prior to the date of this Notice).
Calculation of Net Exercise:
1. # Warrants Exercised [_______] multiplied by Exercise Price of $0.08 per
share equals
Total Exercise price $
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2. Total Exercise Price [$______] divided by FMV
[$_____ per share] equals
Total Exercise Price in Shares at FMV [ _______ shares]
3. # of Warrants exercised [ ______] minus Total Exercise Price in Shares
at FMV [ _______ shares] equals Net # of Shares to be issued [________
Shares]
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
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Please typewrite or print in block letters)
Address:
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By:
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Signature of Record Holder
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