Exhibit 10.2
FORM OF WARRANT
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT
AS OTHERWISE SET FORTH HEREIN OR IN A SECURITIES PURCHASE AGREEMENT DATED
AS OF NOVEMBER 4, 2005, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN
FORM, SUBSTANCE AND SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE
TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS
SOLD PURSUANT TO RULE 144 OR REGULATION S UNDER SUCH ACT.
Right to Purchase _______ Shares of Common Stock, par value $.001 per share
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, [New Millennium Capital
Partners II, LLC] or its registered assigns, is entitled to purchase from
Monarch Staffing, Inc., a Nevada corporation (the "Company"), at any time
or from time to time during the period specified in Paragraph 2 hereof,
_______ fully paid and nonassessable shares of the Company's Common Stock,
par value $.001 per share (the "Common Stock"), at an exercise price per
share equal to $4.50 (the "Exercise Price"). The term "Warrant Shares," as
used herein, refers to the shares of Common Stock purchasable hereunder.
The Warrant Shares and the Exercise Price are subject to adjustment as
provided in Paragraph 4 hereof. The term "Warrants" means this Warrant and
the other warrants issued pursuant to that certain Securities Purchase
Agreement, dated November 4, 2005, by and among the Company and the Buyers
listed on the execution page thereof (the "Securities Purchase Agreement"),
including any additional warrants issuable pursuant to Section 4(l)
thereof.
This Warrant is subject to the following terms, provisions, and
conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for Shares.
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Subject to the provisions hereof, this Warrant may be exercised
by the holder hereof, in whole or in part, by the surrender of this
Warrant, together with a completed exercise agreement in the form attached
hereto (the "Exercise Agreement"), to the Company during normal business
hours on any business day at the Company's principal executive offices (or
such other office or agency of the Company as it may designate by notice to
the holder hereof), and upon (i) payment to the Company in cash, by
certified or official bank check or by wire transfer for the account of
the Company of the Exercise Price for the Warrant Shares specified in the
Exercise Agreement or (ii) if the resale of the Warrant Shares by the
holder is not then registered pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), delivery to the Company of a written notice of an election to effect
a "Cashless Exercise" (as defined in Section 11(c) below) for the Warrant
Shares specified in the Exercise Agreement. The Warrant Shares so
purchased shall be deemed to be issued to the holder hereof or such
holder's designee, as the record owner
of such shares, as of the close of business on the date on which this
Warrant shall have been surrendered, the completed Exercise Agreement shall
have been delivered, and payment shall have been made for such shares as
set forth above. Certificates for the Warrant Shares so purchased,
representing the aggregate number of shares specified in the Exercise
Agreement, shall be delivered to the holder hereof within a reasonable
time, not exceeding three (3) business days, after this Warrant shall have
been so exercised. The certificates so delivered shall be in such
denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be
designated by such holder. If this Warrant shall have been exercised only
in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of such certificates, deliver to the
holder a new Warrant representing the number of shares with respect to
which this Warrant shall not then have been exercised. In addition to all
other available remedies at law or in equity, if the Company fails to
deliver certificates for the Warrant Shares within three (3) business days
after this Warrant is exercised, then the Company shall pay to the holder
in cash a penalty (the "Penalty") equal to 2% of the number of Warrant
Shares that the holder is entitled to multiplied by the Market Price (as
hereinafter defined) for each day that the Company fails to deliver
certificates for the Warrant Shares. For example, if the holder is
entitled to 100,000 Warrant Shares and the Market Price is $2.00, then the
Company shall pay to the holder $4,000 for each day that the Company fails
to deliver certificates for the Warrant Shares. The Penalty shall be paid
to the holder by the fifth day of the month following the month in which it
has accrued.
Notwithstanding anything in this Warrant to the contrary, in no
event shall the holder of this Warrant be entitled to exercise a number of
Warrants (or portions thereof) in excess of the number of Warrants (or
portions thereof) upon exercise of which the sum of (i) the number of
shares of Common Stock beneficially owned by the holder and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned
through the ownership of the unexercised Warrants and the unexercised or
unconverted portion of any other securities of the Company (including the
Notes (as defined in the Securities Purchase Agreement)) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein) and (ii) the number of shares of Common Stock issuable upon
exercise of the Warrants (or portions thereof) with respect to which the
determination described herein is being made, would result in beneficial
ownership by the holder and its affiliates of more than 4.9% of the
outstanding shares of Common Stock. For purposes of the immediately
preceding sentence, beneficial ownership shall be determined in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13D-G thereunder, except as otherwise provided in clause (i) of
the preceding sentence. Notwithstanding anything to the contrary contained
herein, the limitation on exercise of this Warrant set forth herein may not
be amended without (i) the written consent of the holder hereof and the
Company and (ii) the approval of a majority of shareholders of the Company.
6. Period of Exercise.
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This Warrant is exercisable at any time or from time to time on
or after the date on which this Warrant is issued and delivered pursuant to
the terms of the Securities Purchase Agreement and before 6:00 p.m., New
York, New York time on the fifth (5th) anniversary of the date of issuance
(the "Exercise Period").
7. Certain Agreements of the Company.
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The Company hereby covenants and agrees as follows:
(a) Shares to be Fully Paid.
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Subject to Stockholder Approval (as such term is defined in
the Securities Purchase Agreement), all Warrant Shares will, upon issuance
in accordance with the terms of this Warrant, be validly issued, fully
paid, and nonassessable and free from all taxes, liens, and charges with
respect to the issue thereof.
(b) Reservation of Shares.
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Subject to Stockholder Approval (as such term is defined in
the Securities Purchase Agreement), during the Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of
Common Stock to provide for the exercise of this Warrant.
(c) Listing.
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The Company shall promptly secure the listing of the shares
of Common Stock issuable upon exercise of the Warrant upon each national
securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed (subject to official notice of
issuance upon exercise of this Warrant) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all shares
of Common Stock from time to time issuable upon the exercise of this
Warrant; and the Company shall so list on each national securities exchange
or automated quotation system, as the case may be, and shall maintain such
listing of, any other shares of capital stock of the Company issuable upon
the exercise of this Warrant if and so long as any shares of the same class
shall be listed on such national securities exchange or automated quotation
system.
(d) Certain Actions Prohibited.
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The Company will not, by amendment of its charter or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms to be observed
or performed by it hereunder, but will at all times in good faith assist in
the carrying out of all the provisions of this Warrant and in the taking of
all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this
Warrant against dilution or other impairment, consistent with the tenor and
purpose of this Warrant. Without limiting the generality of the foregoing,
the Company (i) will not increase the par value of any shares of Common
Stock receivable upon the exercise of this Warrant above the Exercise Price
then in effect, and (ii) will take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of Common Stock upon the exercise of this
Warrant.
(e) Successors and Assigns.
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This Warrant will be binding upon any entity succeeding to the
Company by merger, consolidation, or acquisition of all or substantially
all the Company's assets.
8. Antidilution Provisions.
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During the Exercise Period, the Exercise Price and the number of
Warrant Shares shall be subject to adjustment from time to time as provided
in this Paragraph 4.
In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be
rounded up to the nearest cent.
(a) Adjustment of Exercise Price and Number of Shares upon
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Issuance of Common Stock.
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Except as otherwise provided in Paragraphs 4(c) and 4(e) hereof,
if and whenever on or after the date of issuance of this Warrant, the
Company issues or sells, or in accordance with Paragraph 4(b) hereof is
deemed to have issued or sold, any shares of Common Stock for no
consideration or for a consideration per share (before deduction of
reasonable expenses or commissions or underwriting discounts or allowances
in connection therewith) less than the Market Price on the date of issuance
(a "Dilutive Issuance"), then immediately upon the Dilutive Issuance, the
Exercise Price will be reduced to a price determined by multiplying the
Exercise Price in effect immediately prior to the Dilutive Issuance by a
fraction, (i) the numerator of which is an amount equal to the sum of (x)
the number of shares of Common Stock actually outstanding immediately prior
to the Dilutive Issuance, plus (y) the quotient of the aggregate
consideration, calculated as set forth in Paragraph 4(b) hereof, received
by the Company upon such Dilutive Issuance divided by the Market Price in
effect immediately prior to the Dilutive Issuance, and (ii) the denominator
of which is the total number of shares of Common Stock Deemed Outstanding
(as defined below) immediately after the Dilutive Issuance.
(b) Effect on Exercise Price of Certain Events.
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For purposes of determining the adjusted Exercise Price under
Paragraph 4(a) hereof, the following will be applicable:
(i) Issuance of Rights or Options.
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If the Company in any manner issues or grants any warrants,
rights or options, whether or not immediately exercisable, to subscribe for
or to purchase Common Stock or other securities convertible into or
exchangeable for Common Stock ("Convertible Securities") (such warrants,
rights and options to purchase Common Stock or Convertible Securities are
hereinafter referred to as "Options") and the price per share for which
Common Stock is issuable upon the exercise of such Options is less than the
Market Price on the date of issuance or grant of such Options, then the
maximum total number of shares of Common Stock issuable upon the exercise
of all such Options will, as of the date of the issuance or grant of such
Options, be deemed to be outstanding and to have been issued and sold by
the Company for such price per share. For purposes of the preceding
sentence, the "price per share for which Common Stock is issuable upon the
exercise of such Options" is determined by dividing (i) the total amount,
if any, received or receivable by the Company as consideration for the
issuance or granting of all such Options, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the
exercise of all such Options, plus, in the case of Convertible Securities
issuable upon the exercise of such Options, the minimum aggregate amount of
additional consideration payable upon the conversion or exchange thereof at
the time such Convertible Securities first become convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise of all such Options (assuming full conversion of
Convertible Securities, if applicable). No further adjustment to the
Exercise Price will be made upon the actual issuance of such Common Stock
upon the exercise of such Options or upon the conversion or exchange of
Convertible Securities issuable upon exercise of such Options.
(ii) Issuance of Convertible Securities.
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If the Company in any manner issues or sells any Convertible
Securities, whether or not immediately convertible (other than where the
same are issuable upon the exercise of Options) and the price per share for
which Common Stock is issuable upon such conversion or exchange is less
than the Market Price on the date of issuance, then the maximum total
number of shares of Common Stock issuable upon the conversion or exchange
of all such Convertible Securities will, as of the date of the issuance of
such Convertible Securities, be deemed to be outstanding and to have been
issued and sold by the Company for such price per share. For the purposes
of the preceding sentence, the "price per share for which Common Stock is
issuable upon such conversion or exchange" is determined by dividing (i)
the total amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange thereof at the time
such Convertible Securities first become convertible or exchangeable, by
(ii) the maximum total number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities. No further
adjustment to the Exercise Price will be made upon the actual issuance of
such Common Stock upon conversion or exchange of such Convertible
Securities.
(iii) Change in Option Price or Conversion Rate.
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If there is a change at any time in (i) the amount of
additional consideration payable to the Company upon the exercise of any
Options; (ii) the amount of additional consideration, if any, payable to
the Company upon the conversion or exchange of any Convertible Securities;
or (iii) the rate at which any Convertible Securities are convertible into
or exchangeable for Common Stock (other than under or by reason of
provisions designed to protect against dilution), the Exercise Price in
effect at the time of such change will be readjusted to the Exercise Price
which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
additional consideration or changed conversion rate, as the case may be, at
the time initially granted, issued or sold.
(iv) Treatment of Expired Options and Unexercised
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Convertible Securities.
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If, in any case, the total number of shares of Common Stock
issuable upon exercise of any Option or upon conversion or exchange of any
Convertible Securities is not, in fact, issued and the rights to exercise
such Option or to convert or exchange such Convertible Securities shall
have expired or terminated, the Exercise Price then in effect will be
readjusted to the Exercise Price which would have been in effect at the
time of such expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such expiration
or termination (other than in respect of the actual number of shares of
Common Stock issued upon exercise or conversion thereof), never been
issued.
(v) Calculation of Consideration Received.
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If any Common Stock, Options or Convertible Securities are
issued, granted or sold for cash, the consideration received therefor for
purposes of this Warrant will be the amount received by the Company
therefor, before deduction of reasonable commissions, underwriting
discounts or allowances or other reasonable expenses paid or incurred by
the Company in connection with such issuance, grant or sale. In case any
Common Stock, Options or Convertible Securities are issued or sold for a
consideration part or all of which shall be other than cash, the amount of
the consideration other than cash received by the Company will be the fair
value of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the
Company will be the Market Price thereof as of the date of receipt. In
case any Common Stock, Options or Convertible Securities are issued in
connection with any acquisition, merger or consolidation in which the
Company is the surviving corporation, the amount of consideration therefor
will be deemed to be the fair value of such portion of the net assets and
business of the non-surviving corporation as is attributable to such Common
Stock, Options or Convertible Securities, as the case may be. The fair
value of any consideration other than cash or securities will be determined
in good faith by the Board of Directors of the Company.
(vi) Exceptions to Adjustment of Exercise Price.
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No adjustment to the Exercise Price will be made (i) upon
the exercise of any warrants, options or convertible securities granted,
issued and outstanding on the date of issuance of this Warrant; (ii) upon
the grant or exercise of any stock or options which may hereafter be
granted or exercised under any employee benefit plan, stock option plan or
restricted stock plan of the Company now existing or to be implemented in
the future, so long as the issuance of such stock or options is approved by
a majority of the independent members of the Board of Directors of the
Company or a majority of the members of a committee of independent
directors established for such purpose; or (iii) upon the exercise of the
Warrants.
(c) Subdivision or Combination of Common Stock.
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If the Company at any time subdivides (by any stock split, stock
dividend, recapitalization, reorganization, reclassification or otherwise)
the shares of Common Stock acquirable hereunder into a greater number of
shares, then, after the date of record for effecting such subdivision, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company at any time combines (by reverse
stock split, recapitalization, reorganization, reclassification or
otherwise) the shares of Common Stock acquirable hereunder into a smaller
number of shares, then, after the date of record for effecting such
combination, the Exercise Price in effect immediately prior to such
combination will be proportionately increased.
(d) Adjustment in Number of Shares.
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Upon each adjustment of the Exercise Price pursuant to the
provisions of this Paragraph 4, the number of shares of Common Stock
issuable upon exercise of this Warrant shall be adjusted by multiplying a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Common Stock issuable upon exercise
of this Warrant immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
(e) Consolidation, Merger or Sale.
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In case of any consolidation of the Company with, or merger of
the Company into any other corporation, or in case of any sale or
conveyance of all or substantially all of the assets of the Company other
than in connection with a plan of complete liquidation of the Company, then
as a condition of such consolidation, merger or sale or conveyance,
adequate provision will be made whereby the holder of this Warrant will
have the right to acquire and receive upon exercise of this Warrant in lieu
of the shares of Common Stock immediately theretofore acquirable upon the
exercise of this Warrant, such shares of stock, securities or assets as may
be issued or payable with respect to or in exchange for the number of
shares of Common Stock immediately theretofore acquirable and receivable
upon exercise of this Warrant had such consolidation, merger or sale or
conveyance not taken place. In any such case, the Company will make
appropriate provision to insure that the provisions of this Paragraph 4
hereof will thereafter be applicable as nearly as may be in relation to any
shares of stock or securities thereafter deliverable upon the exercise of
this Warrant. The Company will not effect any consolidation, merger or
sale or conveyance unless prior to the consummation thereof, the successor
corporation (if other than the Company) assumes by written instrument the
obligations under this Paragraph 4 and the obligations to deliver to the
holder of this Warrant such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the holder may be entitled to
acquire.
(f) Distribution of Assets.
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In case the Company shall declare or make any distribution of its
assets (including cash) to holders of Common Stock as a partial liquidating
dividend, by way of return of capital or otherwise, then, after the date of
record for determining shareholders entitled to such distribution, but
prior to the date of distribution, the holder of this Warrant shall be
entitled upon exercise of this Warrant for the purchase of any or all of
the shares of Common Stock subject hereto, to receive the amount of such
assets which would have been payable to the holder had such holder been the
holder of such shares of Common Stock on the record date for the
determination of shareholders entitled to such distribution.
(g) Notice of Adjustment.
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Upon the occurrence of any event which requires any adjustment of
the Exercise Price, then, and in each such case, the Company shall give
notice thereof to the holder of this Warrant, which notice shall state the
Exercise Price resulting from such adjustment and the increase or decrease
in the number of Warrant Shares purchasable at such price upon exercise,
setting forth in reasonable detail the method of calculation and the facts
upon which such calculation is based. Such calculation shall be certified
by the Chief Financial Officer of the Company.
(h) Minimum Adjustment of Exercise Price.
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No adjustment of the Exercise Price shall be made in an amount of
less than 1% of the Exercise Price in effect at the time such adjustment is
otherwise required to be made, but any such lesser adjustment shall be
carried forward and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustments so carried
forward, shall amount to not less than 1% of such Exercise Price.
(i) No Fractional Shares.
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No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but the Company shall pay a cash adjustment in
respect of any fractional share which would otherwise be issuable in an
amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.
(j) Other Notices. In case at any time:
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(i) the Company shall declare any dividend upon the Common
Stock payable in shares of stock of any class or make any other
distribution (including dividends or distributions payable in cash out of
retained earnings) to the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to
the holders of the Common Stock any additional shares of stock of any class
or other rights;
(iii) there shall be any capital reorganization of the
Company, or reclassification of the Common Stock, or consolidation or
merger of the Company with or into, or sale of all or substantially all
its assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company; then, in each such case, the
Company shall give to the holder of this Warrant (a) notice of the date on
which the books of the Company shall close or a record shall be taken for
determining the holders of Common Stock entitled to receive any such
dividend, distribution, or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable
approximation thereof by the Company) when the same shall take place. Such
notice shall also specify the date on which the holders of Common Stock
shall be entitled to receive such dividend, distribution, or subscription
rights or to exchange their Common Stock for stock or other securities or
property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or winding-up, as
the case may be. Such notice shall be given at least thirty (30) days
prior to the record date or the date on which the Company's books are
closed in respect thereto. Failure to give any such notice or any defect
therein shall not affect the validity of the proceedings referred to in
clauses (i), (ii), (iii) and (iv) above.
(k) Certain Events.
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If any event occurs of the type contemplated by the adjustment
provisions of this Paragraph 4 but not expressly provided for by such
provisions, the Company will give notice of such event as provided in
Paragraph 4(g) hereof, and the Company's Board of Directors will make an
appropriate adjustment in the Exercise Price and the number of shares of
Common Stock acquirable upon exercise of this Warrant so that the rights of
the holder shall be neither enhanced nor diminished by such event.
(l) Certain Definitions.
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(i) "Common Stock Deemed Outstanding"
---------------------------------
shall mean the number of shares of Common Stock actually
outstanding (not including shares of Common Stock held in the treasury of
the Company), plus (x) pursuant to Paragraph 4(b)(i) hereof, the maximum
total number of shares of Common Stock issuable upon the exercise of
Options, as of the date of such issuance or grant of such Options, if any,
and (y) pursuant to Paragraph 4(b)(ii) hereof, the maximum total number of
shares of Common Stock issuable upon conversion or exchange of Convertible
Securities, as of the date of issuance of such Convertible Securities, if
any.
(ii) "Market Price,"
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as of any date, (i) means the average of the last reported
sale prices for the shares of Common Stock on the OTCBB for the five (5)
Trading Days immediately preceding such date as reported by Bloomberg, or
(ii) if the OTCBB is not the principal trading market for the shares of
Common Stock, the average of the last reported sale prices on the principal
trading market for the Common Stock during the same period as reported by
Bloomberg, or (iii) if market value cannot be calculated as of such date on
any of the foregoing bases, the Market Price shall be the fair market value
as reasonably determined in good faith by (a) the Board of Directors of the
Company or, at the option of a majority-in-interest of the holders of the
outstanding Warrants by (b) an independent investment bank of nationally
recognized standing in the valuation of businesses similar to the business
of the corporation. The manner of determining the Market Price of the
Common Stock set forth in the foregoing definition shall apply with respect
to any other security in respect of which a determination as to market
value must be made hereunder.
(iii) "Common Stock,"
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for purposes of this Paragraph 4, includes the Common Stock,
par value $.001 per share, and any additional class of stock of the Company
having no preference as to dividends or distributions on liquidation,
provided that the shares purchasable pursuant to this Warrant shall include
only shares of Common Stock, par value $.001 per share, in respect of which
this Warrant is exercisable, or shares resulting from any subdivision or
combination of such Common Stock, or in the case of any reorganization,
reclassification, consolidation, merger, or sale of the character referred
to in Paragraph 4(e) hereof, the stock or other securities or property
provided for in such Paragraph.
9. Issue Tax.
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The issuance of certificates for Warrant Shares upon the exercise
of this Warrant shall be made without charge to the holder of this Warrant
or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of
any certificate in a name other than the holder of this Warrant.
10. No Rights or Liabilities as a Shareholder.
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This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a shareholder of the Company. No provision of
this Warrant, in the absence of affirmative action by the holder hereof to
purchase Warrant Shares, and no mere enumeration herein of the rights or
privileges of the holder hereof, shall give rise to any liability of such
holder for the Exercise Price or as a shareholder of the Company, whether
such liability is asserted by the Company or by creditors of the Company.
11. Transfer, Exchange, and Replacement of Warrant.
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(a) Restriction on Transfer.
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This Warrant and the rights granted to the holder hereof are
transferable, in whole or in part, upon surrender of this Warrant, together
with a properly executed assignment in the form attached hereto, at the
office or agency of the Company referred to in Paragraph 7(e) below,
provided, however, that any transfer or assignment shall be subject to the
conditions set forth in Paragraph 7(f) hereof and to the applicable
provisions of the Securities Purchase Agreement. Until due presentment for
registration of transfer on the books of the Company, the Company may treat
the registered holder hereof as the owner and holder hereof for all
purposes, and the Company shall not be affected by any notice to the
contrary. Notwithstanding anything to the contrary contained herein, the
registration rights described in Paragraph 8 are assignable only in
accordance with the provisions of that certain Registration Rights
Agreement, dated November 4, 2005, by and among the Company and the other
signatories thereto (the "Registration Rights Agreement").
(b) Warrant Exchangeable for Different Denominations.
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This Warrant is exchangeable, upon the surrender hereof by the
holder hereof at the office or agency of the Company referred to in
Paragraph 7(e) below, for new Warrants of like tenor representing in the
aggregate the right to purchase the number of shares of Common Stock which
may be purchased hereunder, each of such new Warrants to represent the
right to purchase such number of shares as shall be designated by the
holder hereof at the time of such surrender.
(c) Replacement of Warrant.
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Upon 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, upon delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company, or, in
the case of any such mutilation, upon surrender and cancellation of this
Warrant, the Company, at its expense, will execute and deliver, in lieu
thereof, a new Warrant of like tenor.
(d) Cancellation; Payment of Expenses.
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Upon the surrender of this Warrant in connection with any
transfer, exchange, or replacement as provided in this Paragraph 7, this
Warrant shall be promptly canceled by the Company. The Company shall pay
all taxes (other than securities transfer taxes) and all other expenses
(other than legal expenses, if any, incurred by the holder or transferees)
and charges payable in connection with the preparation, execution, and
delivery of Warrants pursuant to this Paragraph 7.
(e) Register.
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The Company shall maintain, at its principal executive offices
(or such other office or agency of the Company as it may designate by
notice to the holder hereof), a register for this Warrant, in which the
Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee
and each prior owner of this Warrant.
(f) Exercise or Transfer Without Registration.
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If, at the time of the surrender of this Warrant in connection
with any exercise, transfer, or exchange of this Warrant, this Warrant (or,
in the case of any exercise, the Warrant Shares issuable hereunder), shall
not be registered under the Securities Act of 1933, as amended (the
"Securities Act") and under applicable state securities or blue sky laws,
the Company may require, as a condition of allowing such exercise,
transfer, or exchange, (i) that the holder or transferee of this Warrant,
as the case may be, furnish to the Company a written opinion of counsel,
which opinion and counsel are acceptable to the Company, to the effect that
such exercise, transfer, or exchange may be made without registration under
said Act and under applicable state securities or blue sky laws, (ii) that
the holder or transferee execute and deliver to the Company an investment
letter in form and substance acceptable to the Company and (iii) that the
transferee be an "accredited investor" as defined in Rule 501(a)
promulgated under the Securities Act; provided that no such opinion, letter
or status as an "accredited investor" shall be required in connection with
a transfer pursuant to Rule 144 under the Securities Act. The first holder
of this Warrant, by taking and holding the same, represents to the Company
that such holder is acquiring this Warrant for investment and not with a
view to the distribution thereof.
12. Registration Rights.
--------------------
The initial holder of this Warrant (and certain assignees thereof) is
entitled to the benefit of such registration rights in respect of the
Warrant Shares as are set forth in Section 2 of the Registration Rights
Agreement.
13. Notices.
--------
All notices, requests, and other communications required or permitted
to be given or delivered hereunder to the holder of this Warrant shall be
in writing, and shall be personally delivered, or shall be sent by
certified or registered mail or by recognized overnight mail courier,
postage prepaid and addressed, to such holder at the address shown for such
holder on the books of the Company, or at such other address as shall have
been furnished to the Company by notice from such holder. All notices,
requests, and other communications required or permitted to be given or
delivered hereunder to the Company shall be in writing, and shall be
personally delivered, or shall be sent by certified or registered mail or
by recognized overnight mail courier, postage prepaid and addressed, to the
office of the Company at 00000 Xxxxxx Xxxxx Xx #000, Xxx Xxxx Xxxxxxxxxx,
XX 00000, Attention: Chairman, or at such other address as shall have been
furnished to the holder of this Warrant by notice from the Company. Any
such notice, request, or other communication may be sent by facsimile, but
shall in such case be subsequently confirmed by a writing personally
delivered or sent by certified or registered mail or by recognized
overnight mail courier as provided above. All notices, requests, and other
communications shall be deemed to have been given either at the time of the
receipt thereof by the person entitled to receive such notice at the
address of such person for purposes of this Paragraph 9, or, if mailed by
registered or certified mail or with a recognized overnight mail courier
upon deposit with the United States Post Office or such overnight mail
courier, if postage is prepaid and the mailing is properly addressed, as
the case may be.
14. Governing Law.
--------------
THIS WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW
YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS WARRANT, THE
AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.
BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY
FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN
SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT
IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER.
THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER THIS WARRANT
SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING ATTORNEYS' FEES,
INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH DISPUTE.
15. Miscellaneous.
--------------
(a) Amendments.
-----------
This Warrant and any provision hereof may only be amended by an
instrument in writing signed by the Company and the holder hereof.
(b) Descriptive Headings.
---------------------
The descriptive headings of the several paragraphs of this
Warrant are inserted for purposes of reference only, and shall not affect
the meaning or construction of any of the provisions hereof.
(c) Cashless Exercise.
------------------
Notwithstanding anything to the contrary contained in this
Warrant, if the resale of the Warrant Shares by the holder is not then
registered pursuant to an effective registration statement under the
Securities Act, this Warrant may be exercised, at any time after the 90th
day following the Closing Date (as defined in the Securities Purchase
Agreement), by presentation and surrender of this Warrant to the Company at
its principal executive offices with a written notice of the holder's
intention to effect a cashless exercise, including a calculation of the
number of shares of Common Stock to be issued upon such exercise in
accordance with the terms hereof (a "Cashless Exercise"). In the event of
a Cashless Exercise, in lieu of paying the Exercise Price in cash, the
holder shall surrender this Warrant for that number of shares of Common
Stock determined by multiplying the number of Warrant Shares to which it
would otherwise be entitled by a fraction, the numerator of which shall be
the difference between the then current Market Price per share of the
Common Stock and the Exercise Price, and the denominator of which shall be
the then current Market Price per share of Common Stock. For example, if
the holder is exercising 100,000 Warrants with a per Warrant exercise price
of $0.75 per share through a cashless exercise when the Common Stock's
current Market Price per share is $2.00 per share, then upon such Cashless
Exercise the holder will receive 62,500 shares of Common Stock.
(d) Remedies.
---------
The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the holder, by vitiating the
intent and purpose of the transaction contemplated hereby. Accordingly,
the Company acknowledges that the remedy at law for a breach of its
obligations under this Warrant will be inadequate and agrees, in the event
of a breach or threatened breach by the Company of the provisions of this
Warrant, that the holder shall be entitled, in addition to all other
available remedies at law or in equity, and in addition to the penalties
assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Warrant and to enforce specifically the terms
and provisions thereof, without the necessity of showing economic loss and
without any bond or other security being required.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer.
MONARCH STAFFING, INC.
By: _______________________________
Xxxxx Xxxxxxx
Chairman
Dated as of November _, 2006
FORM OF EXERCISE AGREEMENT
Dated: ________ __, 200_
To: ______________________
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase ________ shares of Common Stock covered
by such Warrant, and makes payment herewith in full therefor at the price
per share provided by such Warrant in cash or by certified or official bank
check in the amount of, or, if the resale of such Common Stock by the
undersigned is not currently registered pursuant to an effective
registration statement under the Securities Act of 1933, as amended, by
surrender of securities issued by the Company (including a portion of the
Warrant) having a market value (in the case of a portion of this Warrant,
determined in accordance with Section 11(c) of the Warrant) equal to
$_________. Please issue a certificate or certificates for such shares of
Common Stock in the name of and pay any cash for any fractional share to:
Name: ______________________________
Signature:
Address:____________________________
_____________________________
Note: The above signature should correspond exactly with the name on
the face of the within Warrant, if applicable.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the
name of said undersigned covering the balance of the shares purchasable
thereunder less any fraction of a share paid in cash.
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all the rights of the undersigned under the within Warrant, with respect to
the number of shares of Common Stock covered thereby set forth hereinbelow,
to:
Name of Assignee Address No of Shares
---------------- ---------------------------- -------------
, and hereby irrevocably constitutes and appoints
___________________________________ as agent and attorney-in-fact to
transfer said Warrant on the books of the within-named corporation, with
full power of substitution in the premises.
Dated: ________ __, 200_
In the presence of: ______________________________
Name:______________________________
Signature:_________________________
Title of Signing Officer or Agent (if any):
______________________________
Address: ______________________________
______________________________
Note: The above signature should correspond exactly with the name on
the face of the within Warrant, if applicable.
