THIS WARRANT HAS NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR APPLICABLE BLUE SKY LAWS, AND IS SUBJECT TO CERTAIN
INVESTMENT REPRESENTATIONS. THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE ACT, AND THE
APPLICABLE BLUE SKY LAWS OR AN EXEMPTION THEREFROM.
Warrant to Purchase February 19, 2003
Common Stock
HARTVILLE GROUP, INC.
COMMON STOCK WARRANT
FOR VALUE RECEIVED, Hartville Group, Inc., a Nevada corporation (the
"COMPANY"), hereby certifies, that, for value received, Samir Financial II,
L.L.C., an Illinois limited liability company ("SAMIR") or its registered
assigns is entitled, subject to the terms set forth below, to purchase from the
Company, on or before February 19, 2007, 300,000 shares of the Company's Common
Stock at a price of $0.83 per share, subject to adjustment as set forth below.
1. Exercise of Warrant; Partial Exercise. This Warrant may be
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exercised in full or in part by the holder hereof by surrender of this Warrant,
with the form of subscription attached hereto duly executed by such holder, to
the Company at its principal office, accompanied by payment, in cash or by
certified or official bank check payable to the order of the Company, of the
purchase price of the shares to be purchased hereunder. For any partial
exercise hereof, the holder shall designate in the subscription the number of
shares of Common Stock that the holder wishes to purchase. Samir agrees and
acknowledges that if Samir exercises this Warrant and obtains shares of the
Company's Common Stock, Samir will not sell more than 50,000 shares of said
stock during any ninety (90) day period.
2. When Exercise Effective. The exercise of this Warrant shall be
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deemed to have been effected immediately prior to the close of business on the
business day on which this Warrant is surrendered to the Company as provided in
Section 1.
3. Delivery on Exercise. As soon as practicable after the exercise of
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this Warrant in full or in part, 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 may direct, a
certificate or certificates for the number of fully paid and nonassessable
shares of Common stock to which such holder shall be entitled on such exercise.
4. Adjustment of Purchase Price and Number of Shares. The character of
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the shares of stock or other securities at the time issuable upon exercise of
this Warrant and the purchase price therefor, are subject to adjustment upon the
occurrence of the following events:
(a) ADJUSTMENT FOR STOCK SPLITS, STOCK DIVIDENDS, RECAPITALIZATIONS,
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ETC. The exercise price of this Warrant and the number of shares of stock or
--
other securities at the time issuable upon exercise of this Warrant shall be
appropriately adjusted to reflect any stock dividend, stock split, combination
of shares, reclassification, recapitalization or other similar event affecting
the number of outstanding shares of stock or securities.
(b) ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case
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of any consolidation or merger of the Company with or into any other
corporation, entity or person, or any other corporate reorganization, in which
the Company shall not be the continuing or surviving entity of such
consolidation, merger or reorganization (any such transaction being hereinafter
referred to as a "REORGANIZATION"), then, in each case, the holder of this
Warrant, on exercise hereof at any time after the consummation or effective date
of such Reorganization (the "EFFECTIVE DATE"), shall receive, in lieu of the
shares of stock or other securities at any time issuable upon the exercise of
the Warrant issuable on such exercise prior to the Effective Date, the stock and
other securities and property (including cash) to which such holder would have
been entitled upon the Effective Date if such holder had exercised this Warrant
immediately prior thereto (all subject to further adjustment as provided in this
Warrant).
(c) CERTIFICATE AS TO ADJUSTMENTS. In case of any adjustment or
--------------------------------
readjustment in the price or kind of securities issuable on the exercise of this
Warrant, the Company will promptly give written notice thereof to the holder of
this Warrant in the form of a certificate, certified and confirmed by the Board
of Directors of the Company, setting forth such adjustment or readjustment and
showing in reasonable detail the facts upon which such adjustment or
readjustment is based.
5. Notices of Record Date, Etc. In the event of:
--------------------------------
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
other securities or property,
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, or any transfer of all or
substantially all the assets of the Company to or consolidation or merger of the
Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or winding-up
of the Company,
then and in each such event the Company will mail to the holder hereof a notice
specifying (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and stating the amount and character of
such dividend, distribution or right and (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of shares of stock or
other securities at the time issuable upon the exercise of this Warrant shall be
entitled to exchange their shares for securities or other property deliverable
on such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up. Such notice
shall be mailed at least twenty (20) days prior to the date therein specified.
6. Exchange of Warrants. Subject to the transfer condition referred to
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in the legend endorsed hereon, on surrender for exchange of this Warrant,
properly endorsed, to the Company, the Company at its expense will issue and
deliver to or on the order of the holder thereof a new Warrant of like tenor, in
the name of such holder or as such holder may direct, calling in the aggregate
on the face thereof for the number of share of Common Stock called for on the
face of the Warrant so surrendered.
7. Replacement of Warrants. On receipt by the Company of evidence
-------------------------
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of Warrant and, in the case of any such loss, theft or destruction of
this Warrant, on delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of such Warrant, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
8. Investment Intent. Unless a current registration statement under
------------------
the Securities Act of 1933, as amended, shall be in effect with respect to the
securities to be issued upon exercise of this Warrant, the holder thereof, by
accepting this Warrant, covenants and agrees that, at the time of exercise
hereof, and at the time of any proposed transfer of securities acquired upon
exercise hereof, such holder will deliver to the Company a written statement
that the securities acquired by the holder upon exercise hereof are for the own
account of the holder for investment and are not acquired with a view to, or for
sale in connection with, any distribution thereof (or any portion thereof) and
with no present intention (at any such time) offering and distributing such
securities (or any portion thereof).
9. Reservation of Common Stock. The Company covenants that it will at
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all times reserve and keep available out of its authorized but unissued capital
stock such number of shares of Common Stock as are necessary to deliver upon the
exercise of this Warrant.
10. Restrictions on Transferability. This Warrant and the Common Stock
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issuable upon exercise shall be a "restricted security" as defined in the rules
under the Act. This Warrant may be transferred only with the prior written
consent of the Company and in accordance with (i) applicable law, and only on
the same basis as a restricted security would be transferable thereunder, (ii)
any transfer restrictions applicable to shares of the Company's capital stock
generally, and (iii) the conditions set forth in this Section. The holder
hereof, by acceptance hereof, agrees to give written notice to the Company at
least fifteen (15) days before any requested transfer of this Warrant, of such
holder's intent to do so, describing briefly the manner of the proposed transfer
and setting forth information concerning the proposed transferee. Promptly upon
receiving such written notice, the Company shall present copies thereof to
counsel for the Company. If, in the opinion of counsel satisfactory in form and
substance to the Company, the proposed transfer may be effected without
violation of the applicable federal and state securities laws, the holder hereof
shall be entitled to transfer this Warrant, if consented to by the Company, in
the manner contemplated in the above-referenced notice to the Company; provided,
that an appropriate legend may be endorsed on this Warrant respecting
restrictions on transfer thereof necessary or advisable in the opinion of
counsel and satisfactory in form and substance to the Company to prevent further
transfers that would be in violation of the securities laws or adversely affect
the exemptions relied upon by the Company. The Company acknowledges that the
holder may assign all or a portion of the Warrant to affiliates of the holder,
who shall also be accredited investors, and, subject to compliance with the
other provisions of this Section 10, the Company will consent to such
assignment. To such effect, the Company may request that the intended
transferee execute an investment and representation letter satisfactory in form
and substance to the Company. Upon transfer of this Warrant, the transferee, by
acceptance of this Warrant, agrees to be bound by the provisions, terms,
conditions and limitations of this Warrant and the investment and representation
letter, if any, required by the Company. Similar restrictions should be
applicable to any shares of Common Stock issued upon exercise hereof.
11. No Rights or Liability as a Shareholder. This Warrant does not
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entitle the holder hereof to any voting rights as a shareholder of the Company.
No provisions hereof, in the absence of affirmative action by the holder hereof
to purchase Common Stock, and no enumeration herein of the rights or privileges
of the holder hereof shall give rise to any liability of such holder as a
shareholder of the Company.
12. Notices. All notices referred to in this Warrant shall be in
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writing and shall be delivered personally or by certified or registered mail,
return receipt requested, postage prepaid and will be deemed to have been given
when so delivered or mailed (i) to the Company, at its principal executive
offices and (ii) to the holder of this Warrant, at such holder's address as it
appears in the records of the Company (unless otherwise indicated by such
holder).
13. Miscellaneous. This Warrant and any term hereof may be changed,
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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 is being delivered in the State of Illinois and shall
be governed by and construed and enforced in accordance with the internal laws
of the State of Illinois (without reference to any principles of the conflicts
of laws). The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof.
14. Net Exercise Provision. At its option, without payment by the
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holder of cash or any other consideration, holder may request that Company
convert a particular number of shares subject to the Warrant (the "Converted
Warrant Shares") into that number of shares of Common Stock equal to the
quotient obtained by dividing the aggregate Net Value (as hereinafter defined)
of the Converted Warrant Shares by the Fair Market Value (as determined (i) by
reference to the current Market Price based upon the last sales price, or bid
price if there was not sale, if the Common Stock is publicly traded or (ii) by
the Board of Directors acting in good faith if the Common Stock is not publicly
traded) of a single share of Common Stock, determined in each case as of the
close of business on the date of conversion of the Warrant. The "Net Value" of
the Converted Warrant Shares shall be determined by subtracting the aggregate
exercise price of the Converted Warrant Shares from the aggregate Fair Market
Value of the Converted Warrant Shares. All other provisions of this Warrant
shall be apply to any conversion of this Warrant pursuant to the terms of this
Section 14.
Dated: February 19, 2003.
HARTVILLE GROUP, INC.
By: /s/ W. Xxxxxxx Xxxxx III
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Name: W. Xxxxxxx Xxxxx III
Title: President
ATTACHMENT A TO WARRANT
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
To: HARTVILLE GROUP, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase rights represented by such Warrant for, and to
purchase thereunder, * shares of Common Stock of Inmold, Inc., and
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herewith makes payment of $ therefor, and requests that a certificate
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for such shares be issued in the name of, and delivered to Samir Financial II,
L.L.C. whose address is set forth below:
SAMIR FINANCIAL, L.L.C.
By:
Its:
(Address)
Dated: ,
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* Insert here the number of shares as to which the Warrant is being
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exercised.
