THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR UNDER
APPLICABLE STATE SECURITIES LAWS. 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 AND UNDER APPLICABLE STATE SECURITIES LAWS OR AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO ICOA, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
Right to Purchase 4,000,000 Shares of Common
Stock of ICOA, Inc. (subject to adjustment as
provided herein)
COMMON STOCK PURCHASE WARRANT
No. 2001-1 Issue Date: May 14, 2001
ICOA, INC., a corporation organized under the laws of the State of Nevada
(the "Company"), hereby certifies that, for value received, LAURUS MASTER FUND
LTD., or assigns, is entitled, subject to the terms set forth below, to purchase
from the Company from and after the Issue Date of this Warrant and at any time
or from time to time before 5:00 p.m., New York time, through five (5) years
after such date (the "Expiration Date"), up to 4,000,000 fully paid and
nonassessable shares of Common Stock (as hereinafter defined), $.0001 par value
per share, of the Company, at a purchase price of $.072 per share (such purchase
price per share as adjusted from time to time as herein provided is referred to
herein as the "Purchase Price"). The number and character of such shares of
Common Stock and the Purchase Price are subject to adjustment as provided
herein.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
(a) The term "Company" shall include ICOA, Inc. and any corporation which
shall succeed or assume the obligations of ICOA, Inc. hereunder.
(b) The term "Common Stock" includes (a) the Company's Common Stock, $.0001
par value per share, as authorized on the date of the Subscription Agreement
referred to in Section 9 hereof, (b) any other capital stock of any class or
classes (however designated) of the Company, authorized on or after such date,
the holders of which shall have the right, without limitation as to amount,
either to all or to a share of the balance of current dividends and liquidating
dividends after the payment of dividends and distributions on any shares
entitled to preference, and the holders of which shall ordinarily, in the
absence of contingencies, be entitled to vote for the election of a majority of
directors of the Company (even if the right so to vote has been suspended by the
happening of such a contingency) 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) 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 4 or otherwise.
1. Exercise of Warrant.
1.1. Number of Shares Issuable upon Exercise. From and after the
date hereof 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 4.
1.2. Full Exercise. This Warrant may be exercised in full by the
holder hereof by delivery of an original or fax copy of the form of subscription
attached as Exhibit A hereto (the "Subscription Form") duly executed by such
holder and surrender of the original Warrant within seven days of exercise, to
the Company at its principal office or at the office of its Warrant agent (as
provided hereinafter), accompanied at the time of exercise 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
(as hereinafter defined) then in effect.
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 shares of Common Stock designated by the holder in the
Subscription Form by (b) the Purchase Price then in effect. 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 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 the Fair Market
Value of a share of the Company's Common Stock. Fair Market Value of a share of
Common Stock as of a Determination Date shall mean:
(a) If the Company's Common Stock is traded on an 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 an exchange
or on the NASDAQ National Market System or the NASDAQ SmallCap Market but is
traded in the over-the-counter market, then the mean of the closing bid and
asked 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 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.
(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
2
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. Company Acknowledgment. The Company will, at the time of the
exercise of the Warrant, upon the request of the holder hereof acknowledge in
writing its continuing obligation to afford to such holder any rights to which
such holder shall continue to be entitled after such exercise in accordance with
the provisions of this Warrant. If the holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such holder any such rights.
1.6. Trustee for Warrant Holders. In the event that a bank or trust
company shall have been appointed as trustee for the holders of the Warrants
pursuant to Subsection 3.2, 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.
2. 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 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, 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 Reorganization, Consolidation, Merger, etc.
3.1. 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
(including cash) 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 4.
3.2. 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
3
expense deliver or cause to be delivered the stock and other securities and
property (including cash, where applicable) receivable by the holders of the
Warrants after the effective date of such dissolution pursuant to this Section 3
to a bank or trust company having its principal office in New York, NY, as
trustee for the holder or holders of the Warrants only to the extent that the
value of such cash and property exceeds the Purchase Price.
3.3. Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 3, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 4. In the
event this Warrant does not continue in full force and effect after the
consummation of the transaction described in this Section 3, then only in such
event will the Company's securities and property (including cash, where
applicable) receivable by the holders of the Warrants be delivered to the
Trustee as contemplated by Section 3.2.
3.4. Share Issuance. Except for the Excepted Issuances as described
in Section 11 of the Subscription Agreement, if the Company at any time shall
issue any shares of Common Stock prior to the complete exercise of this Warrant
for a consideration less than the Purchase Price that would be in effect at the
time of such issue, then, and thereafter successively upon each such issue, the
Purchase Price shall be reduced as follows: (i) the number of shares of Common
Stock outstanding immediately prior to such issue (calculated on a fully-diluted
basis, as if all convertible securities were converted and all outstanding
warrants and options were exercised) shall be multiplied by the Purchase Price
in effect at the time of such issue and the product shall be added to the
aggregate consideration, if any, received by the Company upon such issue of
additional shares of Common Stock; and (ii) the sum so obtained shall be divided
by the number of shares of Common Stock outstanding immediately after such
issue. The resulting quotient shall be the adjusted Purchase Price. For purposes
of this adjustment, the issuance of any security of the Company carrying the
right to convert such security into shares of Common Stock or of any warrant,
right or option to purchase Common Stock shall result in an adjustment to the
Purchase Price upon the issuance of shares of Common Stock upon exercise of such
conversion or purchase rights.
4. 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 4.
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 increased to a number determined by multiplying the number of
shares of Common Stock that would otherwise (but for the provisions of this
Section 4) 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 4) be in effect, and (b) the denominator is the Purchase Price in effect
on the date of such
4
exercise.
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 the Warrants, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the 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 adjustment or readjustment and as
adjusted or readjusted as provided in this Warrant. The Company will forthwith
mail a copy of each such certificate to the holder of the Warrant and any
Warrant agent of the Company (appointed pursuant to Section 11 hereof).
6. 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. This Warrant entitles the holder hereof to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Company's Common Stock.
7. 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") with respect to any
or all of the Shares. On the surrender for exchange of this Warrant, with the
Transferor's endorsement in the form of Exhibit B attached hereto (the
Transferor Endorsement Form") and together with evidence reasonably satisfactory
to the Company demonstrating compliance with applicable Securities Laws, the
Company at its expense (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.
8. 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.
9. Subscription Agreement. This Warrant is issued pursuant to a
Subscription Agreement entered into by the Company and Subscribers of the
Company's 9% Convertible Notes at or prior to the issue date of this Warrant.
The terms of the Subscription Agreement are incorporated herein by this
reference.
10. Maximum Exercise. The Holder shall not be entitled to exercise this
Warrant on an exercise date, in connection with that number of shares of Common
Stock which would be in excess of the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates on an exercise date,
and (ii) the number of shares of Common Stock issuable upon the exercise of this
Warrant with respect to which the determination of this proviso is being made on
an exercise date, which would result in beneficial ownership by the Holder and
its affiliates of more than 9.99% of the outstanding shares of Common Stock of
the Company on such date. For the purposes of the proviso to the immediately
preceding sentence,
5
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.
Subject to the foregoing, the Holder shall not be limited to aggregate exercises
which would result in the issuance of more than 9.99%. The restriction described
in this paragraph may be revoked upon 75 days prior notice from the Holder to
the Company. The Holder may allocate which of the equity of the Company deemed
beneficially owned by the Subscriber shall be included in the 9.99% amount
described above and which shall be allocated to the excess above 9.99%.
11. Warrant Agent. The Company may, by written notice to the each holder of
the Warrant, appoint an 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 7, and replacing this Warrant pursuant to
Section 8, 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.
12. 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.
13. 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 an address, then to, and at the address of, the last holder of this
Warrant who has so furnished an address to the Company.
14. 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 without regard to principles of conflicts or
choice of law that would defer to the substantive laws of another jurisdiction.
Any dispute relating to this Warrant shall be adjudicated in New York State. 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.
[THIS SPACE INTENTIONALLY LEFT BLANK]
6
IN WITNESS WHEREOF, the Company has executed this Warrant under seal as of
the date first written above.
ICOA, INC.
By: /s/ XXXXXX XXXXXXXXXXXXXX
--------------------------------------
Xxxxxx Xxxxxxxxxxxxxx
Chief Executive Officer & President
Witness:
/s/ WITNESS
------------------------------
7
Exhibit A
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO: ICOA, Inc.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, _____ shares of
Common Stock (the "Shares") of ICOA, Inc., a Nevada corporation (the "Company")
and herewith makes payment of $________ therefor, and requests that the
certificates for such Shares be issued in the name of, and delivered to
___________ whose address is _____________________ .
The undersigned hereby represents and warrants to and agrees with the
Company that:
The undersigned has been furnished with either the Company's Form SB-2
registration statement under file number 333-51028 (the "Registration
Statement") which was declared effective April 5, 2001 by the Securities and
Exchange Commission (the "Commission") or the subsequently filed Form 10-K or
Form 10-KSB, as applicable (the "Form 10-K"), together with all Forms 10-Q or
Forms 10-QSB, as applicable, filed subsequently to the later of the filing dates
of the Registration Statement or the Form 10-K filed subsequently thereto, and
other publicly available filings made with the Commission (hereinafter referred
to as the "Reports"). In addition, the undersigned has received from the Company
such other written information concerning its operations, financial condition
and other matters as the undersigned has requested, and considered all factors
the undersigned deems material in deciding on the advisability of investing in
the Shares.
The undersigned is an "accredited investor", as such term is defined in
Regulation D promulgated by the Commission under the Securities Act of 1933, as
amended (the "1933 Act"), is experienced in investments and business matters,
has made investments of a speculative nature and has purchased securities of
United States publicly-owned companies in private placements in the past and,
with its representatives, has such knowledge and experience in financial, tax
and other business matters as to enable the undersigned to utilize the
information made available by the Company to evaluate the merits and risks of
and to make an informed investment decision with respect to the proposed
purchase of the Shares, which represents a speculative investment. The
undersigned has the authority and is duly and legally qualified to purchase and
own the Shares. The undersigned is able to bear the risk of such investment for
an indefinite period and to afford a complete loss thereof.
The undersigned purchases the Shares for its own account and not with a
view to any distribution thereof.
The undersigned understands and agrees that the Shares have not been
registered under the 1933 Act, by reason of their issuance in a transaction that
does not require registration under the 1933 Act (based in part on the accuracy
of the representations and warranties of undersigned contained herein), and that
such Shares must be held unless a subsequent disposition is registered under the
1933 Act or is exempt from such registration.
The Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED OR UNDER APPLICABLE STATE
SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN
8
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
SECURITIES ACT AND UNDER APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO ICOA, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED."
The offer to sell the Shares was directly communicated to the undersigned.
At no time was the undersigned presented with or solicited by any leaflet,
newspaper or magazine article, radio or television advertisement, or any other
form of general advertising or solicited or invited to attend a promotional
meeting otherwise than in connection and concurrently with such communicated
offer.
The undersigned represents and warrants that all offers and sales by the
undersigned of the Shares shall be made pursuant to registration of the Common
Stock under the 1933 Act or pursuant to an exemption from registration under the
1933 Act.
The undersigned represents that the foregoing representations and
warranties are true and correct as of the date hereof. The foregoing
representations and warranties shall survive the date hereof.
Dated:___________________
___________________________________________
(Signature must conform to name of holder
as specified on the face of the Warrant)
___________________________________________
(Address)
9
Exhibit B
FORM OF TRANSFEROR ENDORSEMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and
transfers unto the person(s) named below under the heading "Transferees" the
right represented by the within Warrant to purchase the percentage and number of
shares of Common Stock of ICOA, Inc. to which the within Warrant relates
specified under the headings "Percentage Transferred" and "Number Transferred,"
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of ICOA, Inc. with
full power of substitution in the premises.
================================================================================
Transferees Percentage Number
----------- Transferred Transferred
----------- -----------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
Dated: __________________,_____ ___________________________________________
(Signature must conform to name of holder
as specified on the face of the warrant)
Signed in the presence of:
------------------------------- ------------------------------
(Name) (address)
------------------------------
ACCEPTED AND AGREED: (address)
[TRANSFEREE]
---------------------------------
(Name)
10
