THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, ASSIGNED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
XXXXXXX.XXX INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
Right to Purchase Shares of Common Stock of
T XXXXXXX.XXX INC.
COMMON STOCK PURCHASE WARRANT
No. W-84 Issue Date: December 22, 2006
XXXXXXX.XXX INC., a Delaware corporation, hereby certifies
that, for value received, , or his permitted assigns (the
"Holder"), is entitled, subject to the terms set forth below, to purchase from
the Company (as defined herein) from and after the date hereof and, at any time
or from time to time before 5:00 p.m., New York time, through the close of
business (New York time) on December 31, 2013 (the "Expiration Date"), up to
fully paid and nonassessable shares of Common Stock of the Company,
par value $0.001 per share ("Common Stock") at an exercise price of $0.001 per
share, subject to adjustment hereunder (such exercise price, as adjusted from
time to time, the "Exercise Price").
As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) The term "Company" shall include XXXXXXX.XXX INC. and any
corporation which shall succeed, or assume the obligations of, XXXXXXX.XXX INC.
hereunder.
(b) The term "Common Stock" includes (a) the Company's Common
Stock, par value $0.001 per share, and (b) any other securities into which or
for which any of the securities described in (a) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.
(c) The term "Warrant Price" means an amount equal to the number
of shares of Common Stock being purchased upon exercise of this Warrant
multiplied by Exercise Price.
1. EXERCISE OF WARRANT. From and after the date hereof through
and including the Expiration Date, the Holder shall be entitled to receive, upon
exercise of this Warrant in whole or in part, by delivery of an original or fax
copy of an exercise notice in the form attached hereto as
Exhibit A (the "Exercise Notice"), up to 1,000,000 shares of Common Stock of the
Company, subject to adjustment pursuant to Section 4 (such number of shares of
Common Stock, as adjusted from time to time, the "Warrant Shares Number").
2. PROCEDURE FOR EXERCISE.
2.1 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 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 in accordance herewith. As
soon as practicable after the exercise of this Warrant in full or in part, and
in any event within three (3) business 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 (upon payment by such
Holder of any applicable transfer taxes), a certificate or certificates for the
number of duly and validly issued, fully paid and nonassessable shares of Common
Stock to which such Holder shall be entitled on such exercise.
2.2 EXERCISE. Payment of the Warrant Price may be made at
the option of the Holder by: (i) certified or official bank check payable to the
order of the Company, (ii) wire transfer of immediately available funds to the
account of the Company or (iii) the surrender and cancellation of a portion of
shares Common Stock issuable upon such exercise of this Warrant, which shall be
valued and credited toward the total Warrant Price due the Company for the
exercise of the Warrant based upon the Fair Market Value thereof. All shares of
Common Stock issuable upon the exercise of this Warrant pursuant to the terms
hereof shall be validly issued and, upon payment of the Warrant Price, shall be
fully paid and nonassessable shares of Common Stock determined as provided
herein. For purposes hereof, the "Fair Market Value" of a share of Common Stock
as of a particular date (the "Determination Date") shall mean:
(a) If the Company's Common Stock is traded on
the American Stock Exchange or another national exchange or is quoted
on the Global Select, Global or Capital Market of The Nasdaq Stock
Market, Inc. ("Nasdaq"), then the average closing or last sale price,
respectively, reported for the last 20 business days immediately
preceding the Determination Date.
(b) If the Company's Common Stock is not traded
on the American Stock Exchange or another national exchange or on the
Nasdaq but is traded on the NASD Over the Counter Bulletin Board or the
Pink Sheets(R), then the average of the closing bid and asked prices
reported for the last 20 business days 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 in effect 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.
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(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 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 the Warrant are outstanding
at the Determination Date.
The Company shall not be required to issue a fractional share of Common
Stock upon exercise of any Warrant. As to any fraction of a share which the
Holder of one or more Warrants, the rights under which are exercised in the same
transaction, would otherwise be entitled to purchase upon such exercise, the
Company shall pay an amount in cash equal to the Fair Market Value per share of
Common Stock on the date of exercise multiplied by such fraction.
2.3 RESTRICTIONS ON EXERCISE AMOUNT. Unless the Holder
delivers to the Company irrevocable written notice prior to the date of issuance
hereof or sixty-one (61) days prior to the effective date of such notice that
this Section 2.3 shall not apply to the Holder, the Holder may not acquire a
number of shares of Common Stock to the extent that, upon such exercise, the
number of shares of Common Stock then beneficially owned by the Holder and his
affiliates and any other persons or entities whose beneficial ownership of
Common Stock would be aggregated with the Holder's for purposes of Section 13(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(including shares held by any "group" of which the holder is a member, but
excluding shares beneficially owned by virtue of the ownership of securities or
rights to acquire securities that have limitations on the right to convert,
exercise or purchase similar to the limitation set forth herein) exceeds 4.99%
of the total number of shares of Common Stock of the Company then issued and
outstanding. For purposes hereof, "group" has the meaning set forth in Section
13(d) of the Exchange Act and applicable regulations of the Securities and
Exchange Commission (the "Commission"), and the percentage held by the Holder
shall be determined in a manner consistent with the provisions of Section 13(d)
of the Exchange Act. Each delivery of a notice of exercise by a Holder will
constitute a representation by such Holder that it has evaluated the limitation
set forth in this paragraph and determined, based on the most recent public
filings by the Company with the Commission, that the issuance of the full number
of shares of Common Stock requested in such notice of exercise is permitted
under this paragraph.
3. EFFECT OF REORGANIZATION, ETC.; ADJUSTMENT OF EXERCISE PRICE.
3.1 REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case
that at any time or from time to time, the Company shall (a) effect a capital
reorganization, recapitalization, subdivision or reclassification of Common
Stock (other than a subdivision or combination of the outstanding Common Stock,
or a change in par value, or from par value to no par value or from no par value
to par value), (b) effect an exchange or conversion of the Common Stock for or
into securities of another corporation or other entity, (c) effect a
consolidation or merger of the Company with or into any other person (other than
a merger that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock),
-3-
or (d) effect a sale, lease or other conveyance of all or substantially all of
the assets of the Company, in any such case in a way that upon such transaction
holders of Common Stock would be entitled to receive stock, securities, cash
and/or other property with respect to or in exchange for their shares of Common
Stock, then, in each such case: (x) as a condition to the consummation of such a
transaction, 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 transaction, shall receive, in lieu of the Common Stock
issuable hereunder, the stock and/or other securities and property (including
cash) to which such Holder would have been entitled upon such transaction
("Transaction Consideration"), if such Holder had so exercised this Warrant,
immediately prior thereto, all subject to further adjustment thereafter as
provided in Sections 4 and 5 and (y) from and after the closing of such
transaction, the holder of this Warrant shall only have the right to receive the
Transaction Consideration upon exercise of this Warrant in accordance with its
terms.
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, concurrently with any distributions made to holders of its
Common Stock, shall at its expense deliver or cause to be delivered to the
Holder the stock and other securities and property (including cash, where
applicable) receivable by the Holder of the Warrant pursuant to Section 3.1.
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. In the event this Warrant does not
continue in full force and effect after the consummation of the transactions
described in this Section 3, then the Company's securities and property
(including cash, where applicable) receivable by Holder of the Warrant will be
delivered to Holder.
4. EXTRAORDINARY EVENTS REGARDING COMMON STOCK. If the Company
shall, while this Warrant is outstanding, (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 case, the Exercise Price shall, simultaneously
with the happening of such event, be adjusted by multiplying the then effective
Exercise 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 Exercise Price then in effect. The Exercise 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. In the event that the Exercise Price
is adjusted pursuant to this Section 4, the Warrant Shares Number shall be
increased or decreased to a number determined by multiplying the number of
shares of Common Stock that would otherwise (but for
-4-
the provisions of this Section 4) be issuable on such exercise by a fraction of
which (a) the numerator is the Exercise Price that would otherwise (but for the
provisions of this Section 4) be in effect, and (b) the denominator is the
Exercise Price as so adjusted pursuant to this Section 4.
5. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment
or readjustment in the shares of Common Stock issuable on the exercise of the
Warrant, 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. 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 9 hereof).
6. RESERVATION OF STOCK, ETC. ISSUABLE ON EXERCISE OF WARRANT.
The Company will at all times reserve and keep available, solely for issuance
and delivery on the exercise of the Warrant, shares of Common Stock from time to
time issuable on the exercise of the Warrant.
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") in whole or in
part. 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, which shall
include, without limitation, the provision of a legal opinion from the
Transferor's counsel (at the Company's expense) that such transfer is exempt
from the registration requirements of 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 of like tenor, in the name of the Transferor and/or the transferee(s)
specified in such Transferor Endorsement Form, 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. WARRANT AGENT. The Company may, by written notice to the
Holder of the Warrant, appoint an agent for the purpose of issuing Common Stock
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.
-5-
10. 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.
11. REGISTRATION RIGHTS. The resale of any Common Stock issued or
issuable upon exercise of this Warrant shall be registered in accordance with
the terms and conditions contained in that certain Registration Rights Agreement
dated of even date hereof, among the Holder, the Company and the other parties
named therein (the "Registration Rights Agreement"). The Company agrees that any
permitted transferee of this Warrant and the rights evidenced hereby pursuant to
Section 7 will be entitled to the rights of an "Investor" under the Registration
Rights Agreement on the terms and conditions set forth therein.
12. 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.
13. 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 governed by and construed in
accordance with the laws of State of New York without regard to principles of
conflicts of laws. In the event that any provision of this Warrant is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of this Warrant.
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.
[Signature page to follow]
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IN WITNESS WHEREOF, the Company and the Holder have executed
this Warrant as of the date first written above.
The Company: XXXXXXX.XXX INC.
By:
-------------------------------------
Name:
Title:
The Holder:
------------------------------
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EXHIBIT A
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO: XXXXXXX.XXX INC.
Attention: ____________________
The undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable box):
___ ________ shares of the Common Stock covered by such Warrant (subject to
reduction, if necessary and applicable, to utilize the cashless exercise
procedure set forth in the Warrant).
The undersigned herewith makes payment of the full Exercise Price for such
shares at the price per share provided for in such Warrant, which is
$___________. Such payment takes the form of (check applicable box):
___ $__________ in lawful money of the United States; or
___ the cancellation of such number of shares of Common Stock as is necessary to
exercise this Warrant pursuant to the cashless exercise procedure set forth in
the Warrant.
The undersigned requests that the certificates for such shares be
issued in the name of, and delivered to ____________________________________
whose address is ______________________________________________________________.
The undersigned represents and warrants that all offers and sales by
the undersigned of the securities issuable upon exercise of the within Warrant
shall be made pursuant to registration of the Common Stock under the Securities
Act of 1933, as amended (the "Securities Act") or pursuant to an exemption from
registration under the Securities Act.
Dated:
------------------- -----------------------------------------
(Signature must conform to name of holder
as specified on the face of the Warrant)
----------------------------------------
(Address)
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 XXXXXXX.XXX INC. 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 XXXXXXX.XXX
INC. with full power of substitution in the premises.
---------------------------- ---------------------------- ---------------------------- ----------------------------
Transferees Address Percentage Transferred Number 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:
--------------------------------------
[TRANSFEREE] (address)
-----------------------------
(Name)
