Contract
Exhibit
10.3
THIS
WARRANT AND ANY SHARES OF COMMON STOCK ISSUED UPON EXERCISE HEREOF HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE AFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
WARRANT
TO
PURCHASE
200,000
SHARES
OF
COMMON STOCK
(SUBJECT
TO
ADJUSTMENT)
(Void
after December 21, 2012)
Bridge
Warrant No:
1 December
21, 2007
This
certifies that for value, Sands Brothers Venture Capital III LLC, or registered
assigns (the ”Holder”),
is
entitled, subject to the terms set forth below, at any time from and after
December 21, 2007 (the “Original Issuance
Date”) and before 5:00 p.m., Eastern Time, on December 21,
2012 (the “Expiration
Date”), to purchase from XA, Inc., a
Nevada corporation
(the “Company”),
Two
Hundred Thousand (200,000)
shares (subject to
adjustment as described herein), of common stock, par
value $0.001 per share, of the Company (the “Common
Stock”), upon surrender hereof, at the principal office of the
Company referred to below, with a duly executed subscription form in the form
attached hereto as Exhibit A
and simultaneous payment therefor in lawful, immediately available money of
the
United States or otherwise as hereinafter provided, at an initial exercise
price
per share of $0.30 (the “Purchase
Price”). The Purchase Price is subject to further
adjustment as provided in Section
4
below. The term “Common
Stock”
shall include, unless the context otherwise requires, the stock
and other
securities and property at the time receivable upon the exercise of this
Warrant. The term “Warrant,”
as
used herein, shall mean this Warrant and any other Warrants delivered in
substitution or exchange therefor as provided herein.
This
Warrant is being issued by the Company together with an 11% Senior Secured
Convertible Promissory Note in the amount of $200,000 (the “Note”)
pursuant to the terms and conditions set forth in the Securities Purchase
Agreement dated the date hereof by and between the
Holder and the Company (the “SPA”),
in
connection with the sale by the Company of $600,000 in aggregate principal
amount of Notes (the “Second
Follow On
Notes”).
1. Exercise.
This
Warrant may be exercised at any time or from time to time from and after the
Original Issuance Date and before 5:00 p.m., Eastern Time, on December ___,
2012, unless such Warrant is terminated pursuant to Section
6,
below, on any business day, for the full number of shares of Common Stock called
for hereby, by surrendering it at the principal office of the Company, at 000
Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000, with the subscription
form
duly executed, together with payment in an amount equal to (a) the number
of shares of Common Stock called for on the face of this Warrant, multiplied
(b) by the Purchase Price. Payment of the Purchase Price may be made at
Holder’s choosing either: (1) by payment in immediately available funds; or (2)
in lieu of any cash payment, if this Warrant is exercised on a date when a
Registration Statement (as defined in the Registration Rights Agreement),
covering the resale of the shares of Common Stock issuable upon exercise of
this
Warrant has not been declared effective by the Securities and Exchange
Commission (the “Commission”),
or is no longer in effect, and the Fair Market Value (as defined below) is
equal
to or greater than the Purchase Price, in exchange for the number of shares
of
Common Stock equal to the product of (x) the number of shares to which the
Warrants are being exercised multiplied by (y) a fraction, the numerator of
which is the Purchase Price and the denominator of which is the Fair Market
Value (as defined below). This Warrant may be exercised for less than the full
number of shares of Common Stock at the time called for hereby, except that
the
number of shares receivable upon the exercise of this Warrant as a whole, and
the sum payable upon the exercise of this Warrant as a whole, shall be
proportionately reduced. Upon a partial exercise of this Warrant in accordance
with the terms hereof, this Warrant shall be surrendered, and a new Warrant
of
the same tenor and for the purchase of the number of such shares not purchased
upon such exercise shall be issued by the Company to Holder without any charge
therefor. A Warrant shall be deemed to have been exercised immediately prior
to
the close of business on the date of its surrender for exercise as provided
above, and the person entitled to receive the shares of Common Stock issuable
upon such exercise shall be treated for all purposes as the holder of such
shares of record as of the close of business on such date. Within two (2)
business days after such date, the Company shall issue and deliver to the person
or persons entitled to receive the same a certificate or certificates for the
number of full shares of Common Stock issuable upon such exercise, together
with
cash, in lieu of any fraction of a share, equal to such fraction of the then
Fair Market Value on the date of exercise of one full share of Common
Stock.
“Fair
Market
Value” shall mean, as of any date: (i) if shares of the
Common Stock are listed on a national securities exchange, the average of the
closing prices as reported for composite transactions during the ten (10)
consecutive trading days preceding the trading day immediately prior to such
date or, if no sale occurred on a trading day, then the mean between the closing
bid and asked prices on such exchange on such trading day; (ii) if shares
of the Common Stock are not so listed but are traded on the NASDAQ National
Market (“NNM”),
the
average of the closing prices as reported on the NNM during the ten (10)
consecutive trading days preceding the trading day immediately prior to such
date or, if no sale occurred on a trading day, then the mean between the highest
bid and lowest asked prices as of the close of business on such trading day,
as
reported on the NNM; or if applicable, the Nasdaq Capital Market (“NCM”),
(iii)
if not then included for quotation on the NNM or the NCM, the average of the
highest reported bid and lowest reported asked prices as reported by the OTC
Bulletin Board of the National Quotation Bureau, as the case may be; or
(iv) if the shares of the Common Stock are not then publicly traded, the
fair market price of the Common Stock as determined in good faith by the
independent members of the Board of Directors of the Company and the Holders
of
all Warrants.
2
2. Shares
Fully Paid; Payment
of Taxes. All shares of Common Stock issued upon the exercise of this
Warrant shall be validly issued, fully paid and non-assessable, and the Company
shall pay all taxes and other governmental charges (other than income taxes
to
the holder) that may be imposed in respect of the issue or delivery
thereof.
3. Transfer
and
Exchange. (a) Neither this Warrant nor the Common Stock to be
issued upon exercise hereof (the “Warrant
Shares”) have been registered under the Act or any state
securities laws (“Blue
Sky
Laws”). This Warrant has been acquired for investment purposes and
not with a view to distribution or resale and may not be sold or otherwise
transferred without: (i) an effective registration statement for such
Warrant under the Act and such applicable Blue Sky Laws; or (ii) an opinion
of
counsel reasonably satisfactory to the Company that registration is not required
under the Act or under any applicable Blue Sky Laws.
(b) Upon
compliance with applicable federal and state securities laws as set forth in
Section
3(a),
above, this Warrant and all rights hereunder are transferable, in whole or
in
part, on the books of the Company maintained for such purpose at its Principal
Office by the Holder in person or by duly authorized attorney, upon surrender
of
this Warrant together with a completed and executed assignment form in the
form
attached hereto as Exhibit B,
and payment of any necessary transfer tax or other governmental charge imposed
upon such transfer. Upon any partial transfer, the Company will issue and
deliver to the assignee a new Warrant with respect to the shares of Common
Stock
for which it is exercisable that have been transferred, and will deliver to
the
Holder a new Warrant or Warrants with respect to the shares of Common Stock
not
so transferred. A Warrant may be transferred only by the procedure set forth
herein. No transfer shall be effective until such transfer is recorded on the
books of the Company, provided that such transfer is recorded promptly by the
Company, and until such transfer on such books, the Company shall treat the
registered Holder hereof as the owner of the Warrant for all
purposes.
(c) This
Warrant is exchangeable at the Principal Office for two or more new Warrants,
each in the form of this Warrant, to purchase the same aggregate number of
shares of Common Stock, each new Warrant to represent the right to purchase
such
number of shares as the Holder shall designate at the time of such exchange,
but
which shall not exceed the total number of shares for which this Warrant may
be
from time to time exercisable.
(d) Transfer
of the Warrant Shares issued upon the exercise of this Warrant shall be
restricted in the same manner and to the same extent as the Warrant, and the
certificates representing such Warrant Shares shall bear substantially the
following legend, until such Warrant Shares have been registered under the
Act
or may be removed as otherwise permitted under the Act:
“THE
SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE
STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (i) A REGISTRATION
STATEMENT UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE
BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) IN THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY, REGISTRATION UNDER THE ACT OR SUCH APPLICABLE
STATE
SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED
TRANSFER.”
(e) The
Holder and the Company agree to execute such other documents and instruments
as
counsel to the Company deems necessary to effect the compliance of the issuance
of this Warrant and any Warrant Shares issued upon exercise hereof with
applicable federal and state securities laws, including compliance with
applicable exemptions from the registration requirements of such
laws.
3
4. Anti-Dilution
Provisions. The Purchase Price in effect at any time and the number and
kind of securities issuable upon conversion of this Warrant shall be subject
to
adjustment from time to time upon the happening of certain events as
follows:
A. Adjustment
for Stock Splits
and Combinations. If the Company at any time or from time to time on or
after the date of Warrant issuance (the “Original
Issuance
Date”) effects a subdivision of the outstanding Common Stock, the
Purchase Price then in effect immediately before that subdivision shall be
proportionately decreased, and conversely, if the Company at any time or from
time to time on or after the Original Issuance Date combines the outstanding
shares of Common Stock into a smaller number of shares, the Purchase Price
then
in effect immediately before the combination shall be proportionately increased.
Any adjustment under this Section
4(A) shall become effective at the close of business on the
date the subdivision or combination becomes effective.
B. Adjustment
for Certain
Dividends and Distributions. If the Company at any time or from time to
time on or after the Original Issuance Date makes or fixes a record date for
the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock, then and in
each such event the Purchase Price then in effect shall be decreased as of
the
time of such issuance or, in the event such record date is fixed, as of the
close of business on such record date, by multiplying the Purchase Price then
in
effect by a fraction (1) the numerator of which is the total number of shares
of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date and (2) the denominator
of
which shall be the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on
such
record date plus the number of shares of Common Stock issuable in payment of
such dividend or distribution; provided, however,
that if such
record date is fixed and such dividend is not fully paid or if such distribution
is not fully made on the date fixed therefor, the Purchase Price shall be
recomputed accordingly as of the close of business on such record date and
thereafter the Purchase Price shall be adjusted pursuant to this Section 4(B)
as of the time of actual payment of such dividends or
distributions.
4
C. Adjustments
for Other
Dividends and Distributions. In the event the Company at any time or from
time to time on or after the Original Issuance Date makes, or fixes a record
date for the determination of holders of Common Stock entitled to receive,
a
dividend or other distribution payable in securities of the Company other than
shares of Common Stock, then and in each such event provision shall be made
so
that the Holders of Warrants shall receive upon exercise thereof, in addition
to
the number of shares of Common Stock receivable thereupon, the amount of
securities of the Company which they would have received had their Warrants
been
exercised into Common Stock on the date of such event and had they thereafter,
during the period from the date of such event to and including the conversion
date, retained such securities receivable by them as aforesaid during such
period, subject to all other adjustments called for during such period under
this Section
4 with
respect to the rights of the Holders of the Warrants.
D. Adjustment
for
Reclassification, Exchange and Substitution. In the event that at any
time or from time to time on or after the Original Issuance Date, the Common
Stock issuable upon the exercise of the Warrants is changed into the same or
a
different number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend or a reorganization, merger,
consolidation or sale of assets, provided for elsewhere in this Section 4),
then and in any such event each Holder of Warrants shall have the right
thereafter to exercise such Warrant to receive the kind and amount of stock
and
other securities and property receivable upon such recapitalization,
reclassification or other change, by holders of the maximum number of shares
of
Common Stock for which such Warrants could have been exercised immediately
prior
to such recapitalization, reclassification or change, all subject to further
adjustment as provided herein.
E. Recapitalization,
Reorganization, Reclassification, Consolidation, Merger or
Sale.
(i) In
case the Company
after the Original Issuance Date shall do any of the following (each, a "Triggering
Event"): (a) consolidate or merge with or into any other
individual or entity (“Person”)and
the Company shall not be the continuing or surviving corporation of such
consolidation or merger, or (b) permit any other Person to consolidate with
or
merge into the Company and the Company shall be the continuing or surviving
Person but, in connection with such consolidation or merger, any common or
preferred stock (“Capital
Stock”) of the Company shall be changed into or exchanged for
Securities of any other Person or cash or any other property, or (c) transfer
all or substantially all of its properties or assets to any other Person, or
(d)
effect a capital reorganization or reclassification of its Capital Stock, then,
and in the case of each such Triggering Event, proper provision shall be made
to
the Exercise Price and the number of shares of Warrant Shares that may be
purchased upon exercise of this Warrant so that, upon the basis and the terms
and in the manner provided in this Warrant, the Holder of this Warrant shall
be
entitled upon the exercise hereof at any time after the consummation of such
Triggering Event, to the extent this Warrant is not exercised prior to such
Triggering Event, to receive at the Exercise Price as adjusted to take into
account the consummation of such Triggering Event, in lieu of the Common Stock
issuable upon such exercise of this Warrant prior to such Triggering Event,
the
Securities, cash and property to which such Holder would have been entitled
upon
the consummation of such Triggering Event if such Holder had exercised the
rights represented by this Warrant immediately prior thereto (including the
right of a shareholder to elect the type of consideration it will receive upon
a
Triggering Event), subject to adjustments (subsequent
to such corporate action) as nearly equivalent as possible to the adjustments
provided for elsewhere in this Section
4, and
the Exercise Price shall be adjusted to equal the product of (A) the closing
price of the common stock of the continuing or surviving corporation as a result
of such Triggering Event as of the date immediately preceding the date of the
consummation of such Triggering Event multiplied by (B) the quotient of (i)
the
Exercise Price divided by (ii) the per share Fair Market Value of the Common
Stock as of the date immediately preceding the Original Issuance Date; provided, however,
the Holder
at its option may elect to receive an amount in cash equal to the lesser of
(a)
the value of this Warrant calculated in accordance with the Black-Scholes
formula; and (b) $1.00 (subject to adjustment in the event the Company affects
a
stock split) per Warrant Share. Immediately upon the occurrence of a
Triggering Event, the Company shall notify the Holder in writing of such
Triggering Event and provide the calculations in determining the number of
shares of Warrant Shares issuable upon exercise of the new warrant and the
adjusted Exercise Price. Upon the Holder’s request, the continuing or
surviving corporation as a result of such Triggering Event shall issue to the
Holder a new warrant of like tenor evidencing the right to purchase the adjusted
number of shares of Warrant Shares and the adjusted Exercise Price pursuant
to
the terms and provisions of this Section
4(E)(i). Notwithstanding the foregoing to the contrary,
this Section
4(E)(i) shall only apply if the surviving entity pursuant to any
such Triggering Event is a company that has a class of equity securities
registered pursuant to the Securities Exchange Act of 1934, as amended, and
its
common stock is listed or quoted on a national securities exchange, national
automated quotation system or the OTC Bulletin Board. In the event
that the surviving entity pursuant to any such Triggering Event is not a public
company that is registered pursuant to the Securities Exchange Act of 1934,
as
amended, or its common stock is not listed or quoted on a national securities
exchange, national automated quotation system or the OTC Bulletin Board, then
the Holder shall have the right to demand that the Company pay to the Holder
an
amount in cash equal to the value of this Warrant calculated in accordance
with
the Black-Scholes formula.
(ii) In
the event that the Holder has elected not to exercise this Warrant prior to
the
consummation of a Triggering Event and has also elected not to receive an amount
in cash equal to the value of this Warrant calculated in accordance with the
Black-Scholes formula pursuant to the provisions of Section
4(E)(i) above (and subject to the limit described in Section
4(E)(i), above), so long as the surviving entity pursuant to any
Triggering Event is a company that has a class of equity securities registered
pursuant to the Securities Exchange Act of 1934, as amended, and its common
stock is listed or quoted on a national securities exchange, national automated
quotation system or the OTC Bulletin Board, the surviving entity and/or each
Person (other than the Company) which may be required to deliver any Securities,
cash or property upon the exercise of this Warrant as provided herein shall
assume, by written instrument delivered to, and reasonably satisfactory to,
the
Holder of this Warrant, (A) the obligations of the Company under this Warrant
(and if the Company shall survive the consummation of such Triggering Event,
such assumption shall be in addition to, and shall not release the Company
from,
any continuing obligations of the Company under this Warrant) and (B) the
obligation to deliver to such Holder such Securities, cash or property as,
in
accordance with the foregoing provisions of this subsection
(ii), such Holder shall be entitled to receive, and the surviving
entity and/or each such Person shall have similarly delivered to such Holder
an
opinion of counsel for the surviving entity and/or each such Person, which
counsel shall be reasonably satisfactory to such Holder, or in the alternative,
a written acknowledgement executed by the President or Chief Financial Officer
of the Company, stating that this Warrant shall thereafter continue in full
force and effect and the terms hereof (including, without limitation, all of
the
provisions of this subsection
(ii)) shall be applicable to the Securities, cash or property
which the surviving entity and/or each such Person may be required to deliver
upon any exercise of this Warrant or the exercise of any rights pursuant
hereto.
5
F. Sale
of Shares Below
Purchase Price:
(1)
If at any time or from time to time following the Original Issuance Date, the
Company issues or sells, or is deemed by the express provisions of this Section 4(F)
to have issued or sold, Additional Shares of Common Stock (as hereinafter
defined), other than as a dividend or other distribution on any class of stock
and other than upon a subdivision or combination of shares of Common Stock,
in
either case as provided in Section 4(A)
above, for an Effective Price (as hereinafter defined) less than the then
existing Purchase Price, then and in each such case the then existing Purchase
Price shall be reduced, as of the opening of business on the date of such issue
or sale, to a price equal to the Effective Price for such Additional Shares
of
Common Stock.
(2) For
the purpose of making any adjustment required under Section 4(F),
the consideration received by the Company for any issue or sale of securities
shall (I) to the extent it consists of cash be computed at the amount of
cash received by the Company, (II) to the extent it consists of property
other than cash, be computed at the fair value of that property as determined
in
good faith by the board of directors of the Company (the “Board”),
(III) if Additional Shares of Common Stock, Convertible Securities (as
hereinafter defined) or rights or options to purchase either Additional Shares
of Common Stock or Convertible Securities are issued or sold together with
other
stock or securities or other assets of the Company for a consideration which
covers both, be computed as the portion of the consideration so received that
may be reasonably determined in good faith by the Board to be allocable to
such
Additional Shares of Common Stock, Convertible Securities or rights or options,
and (IV) be computed after reduction for all expenses payable by the
Company in connection with such issue or sale.
(3) For
the purpose of the adjustment required under Section 4(F),
if the Company issues or sells any rights, warrants or options for the purchase
of, or stock or other securities convertible into or exchangeable for,
Additional Shares of Common Stock (such convertible or exchangeable stock or
securities being hereinafter referred to as “Convertible
Securities”) and if the Effective Price of such Additional Shares
of Common Stock is less than the Purchase Price then in effect, then in each
case the Company shall be deemed to have issued at the time of the issuance
of
such rights, warrants, options or Convertible Securities the maximum number
of
Additional Shares of Common Stock issuable upon exercise, conversion or exchange
thereof and to have received as consideration for the issuance of such shares
an
amount equal to the total amount of the consideration, if any, received by
the
Company for the issuance of such rights, warrants, options or Convertible
Securities, plus, in the case of such rights, warrants or options, the minimum
amounts of consideration, if any, payable to the Company upon the exercise
of
such rights, warrants or options, plus, in the case of Convertible Securities,
the minimum amounts of consideration, if any, payable to the Company (other
than
by cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion
or exchange thereof. No further adjustment of the Purchase Price, adjusted
upon
the issuance of such rights, warrants, options or Convertible Securities, shall
be made as a result of the actual issuance of Additional Shares of Common Stock
on the exercise of any such rights, warrants or options or the conversion or
exchange of any such Convertible Securities. If any such rights or options
or
the conversion or exchange privilege represented by any such Convertible
Securities shall expire without having been exercised, the Purchase Price
adjusted upon the issuance of such rights, warrants, options or Convertible
Securities shall be readjusted to the Purchase Price which would have been
in
effect had an adjustment been made on the basis that the only Additional Shares
of Common Stock so issued were the Additional Shares of Common Stock, if any,
actually issued or sold on the exercise of such rights, warrants, or options
or
rights of conversion or exchange of such Convertible Securities, and such
Additional Shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for the granting of
all
such rights, warrants, or options, whether or not exercised, plus the
consideration received for issuing or selling the Convertible Securities
actually converted or exchanged, plus the consideration, if any, actually
received by the Company (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the conversion or
exchange of such Convertible Securities.
6
(4) For
the purpose of the adjustment required under Section 4(F),
if the Company issues or sells, or is deemed by the express provisions of this
Section 4 to
have issued or sold, any rights or options for the purchase of Convertible
Securities and if the Effective Price of the Additional Shares of Common Stock
underlying such Convertible Securities is less than the Purchase Price then
in
effect, then in each such case the Company shall be deemed to have issued at
the
time of the issuance of such rights or options the maximum number of Additional
Shares of Common Stock issuable upon conversion or exchange of the total amount
of Convertible Securities covered by such rights or options and to have received
as consideration for the issuance of such Additional Shares of Common Stock
an
amount equal to the amount of consideration, if any, received by the Company
for
the issuance of such rights, warrants or options, plus the minimum amounts
of
consideration, if any, payable to the Company upon the exercise of such rights,
warrants or options, plus the minimum amount of consideration, if any, payable
to the Company (other than by cancellation of liabilities or obligations
evidenced by such Convertible Securities) upon the conversion or exchange of
such Convertible Securities. No further adjustment of the Purchase Price,
adjusted upon the issuance of such rights, warrants or options, shall be made
as
a result of the actual issuance of the Convertible Securities upon the exercise
of such rights, warrants or options or upon the actual issuance of Additional
Shares of Common Stock upon the conversion or exchange of such Convertible
Securities. The provisions of paragraph (3) above for the readjustment of
the Purchase Price upon the expiration of rights, warrants or options or the
rights of conversion or exchange of Convertible Securities shall apply mutatismutandis
to the
rights, warrants options and Convertible Securities referred to in this
paragraph (4).
(5) “Additional
Shares of Common
Stock” shall mean all shares of Common Stock (or any debt or
equity securities convertible or exercisable into Common Stock) issued by the
Company on or after the Original Issuance Date, whether or not subsequently
reacquired or retired by the Company, other than (I) the Warrant Shares,
(II) the shares of Common
Stock issuable upon conversion of the Note, (III) shares of
Common Stock issuable upon exercise of warrants, options and convertible
securities outstanding as of the Original Issuance Date (provided that the
terms
of such warrants, options and convertible securities are not modified after
the
Original Issuance Date to adjust the exercise price), and (IV) shares of
Common Stock issued pursuant to any event for which adjustment is made to the
Purchase Price under Section 4
hereof or to the exercise price under the anti-dilution provisions of any
securities outstanding as of the Original Issuance Date (including the Notes.
The “Effective
Price” of Additional Shares of Common Stock shall mean the
quotient determined by dividing the total number of Additional Shares of Common
Stock issued or sold, or deemed to have been issued or sold by the Company
under
this Section 4F,
into the aggregate consideration received, or deemed to have been received,
by
the Company for such issue under this Section 4F,
for such Additional Shares of Common Stock.
(6) Other
than a reduction pursuant to its applicable anti-dilution provisions, any
reduction in the conversion price of any Convertible Security, whether
outstanding on the Original Issuance Date or thereafter, or the price of any
option, warrant or right to purchase Common Stock or any Convertible Security
(whether such option, warrant or right is outstanding on the Original Issuance
Date or thereafter), to an Effective Price less than the current Purchase Price,
shall be deemed to be an issuance of such Convertible Security and all such
options, warrants or rights at such Effective Price, and the provisions of
Sections 4(F)(3),
(4)
and (5)
shall
apply thereto mutatismutandis.
(7) Any
time an adjustment is made to the Purchase Price pursuant to Section
4(F),
a corresponding proportionate change shall be made to the number of shares
of
Common Stock issuable upon conversion of this Warrant.
G. No
Adjustments in Certain
Circumstances. No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least one
($0.01) cent in such price; provided, however,
that any
adjustments which by reason of this Section 4(G)
are not required to be made shall be carried forward and taken into account
in
any subsequent adjustment required to be made hereunder. All calculations under
this Section 4(G)
shall be made to the nearest cent or to the nearest one-hundredth of a share,
as
the case may be.
7
5. Notices
of Record
Date. In case:
A. the
Company shall take a record of the holders of its Common Stock (or other stock
or securities at the time receivable upon the exercise of the Warrants) for
the
purpose of entitling them to receive any dividend or other distribution, or
any
right to subscribe for or purchase any shares of stock of any class or any
other
securities, or to receive any other right, or
B. of
any capital reorganization of the Company, any reclassification of the capital
stock of the Company, any consolidation or merger of the Company with or into
another corporation, or any conveyance of all or substantially all of the assets
of the Company to another corporation, or
C. of
any voluntary dissolution, liquidation or winding-up of the Company; then,
and
in each such case, the Company will mail or cause to be mailed to each holder
of
a Warrant at the
time
outstanding a notice specifying, as the case may be, (a) the date on which
a 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,
or
(b) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is expected to take
place, and the time, if any is to be fixed, as of which the holders of record
of
Common Stock (or such stock or securities at the time receivable upon the
exercise of the Warrants) shall be entitled to exchange their shares of Common
Stock (or such other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up, such notice shall be mailed
at least ten (10) days prior to the date therein specified.
6. [Intentionally
removed.]
7. Loss
or Mutilation.
Upon receipt by the Company of evidence satisfactory to it (in the exercise
of
reasonable discretion) of the ownership of and the loss, theft, destruction
or
mutilation of any Warrant and (in the case of loss, theft or destruction) of
indemnity satisfactory to it (in the exercise of reasonable discretion), and
(in
the case of mutilation) upon surrender and cancellation thereof, the Company
will execute and deliver in lieu thereof a new Warrant of like
tenor.
8. Reservation
of Common
Stock. The Company shall at all times reserve and keep available for
issue upon the exercise of Warrants such number of its authorized but unissued
shares of Common Stock as will be sufficient to permit the exercise in full
of
all outstanding Warrants. All of the shares of Commons Stock issuable upon
the
exercise of the rights represented by this Warrant will, upon issuance and
receipt of the Purchase Price therefor, be fully paid and nonassessable, and
free from all preemptive rights, rights of first refusal or first offer, taxes,
liens and charges of whatever nature, with respect to the issuance
thereof.
9. Registration
Rights
Agreement. The Holder of this Warrant is entitled to have a portion of
the Warrant Shares registered for resale under the Act, pursuant to and in
accordance with the Registration Rights Agreement dated as of the date hereof
by
and between the Holder and the Company.
10. No
Rights as Stockholder
Conferred by Warrants. The Warrant shall not entitle the
Holder hereof to any of the rights, either at law or in equity, of a stockholder
of the Company. The Holder shall, upon the exercise thereof, not be entitled
to
any dividend that may have accrued or which may previously have been paid with
respect to shares of stock issuable upon the exercise of the Warrant, except
as
may otherwise be provided in Section
4
hereof.
11. Notices.
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, and/or
a
nationally recognized overnight courier service to the address furnished to
the
Company in writing by the Holder.
12. Change;
Modifications;
Waiver. No terms of this Warrant may be amended, waived or modified
except by the express written consent of the Company and the holders of not
less
than 50.1% of the shares of Common Stock then issuable under outstanding
Warrants issued in connection
with the Company’s August, September, and October 2006 warrants, and June 2007
warrants; provided, however,
that no such
amendment or waiver shall reduce the Warrant Share Number, increase the Purchase
Price, shorten the period during which this Warrant may be exercised or modify
any provision of this Section
12
without the consent of the Holder of this Warrant. Notwithstanding
the foregoing sentence, the Purchase Price will be subject to adjustment in
the
event of a forward or reverse stock split. No consideration shall be
offered or paid to any person to amend or consent to a waiver or modification
of
any provision of this Warrant unless the same consideration is also offered
to
all holders of the Warrants.
8
13. Endorsement
of
Warrants. The Warrant when presented or surrendered for
exchange, transfer or registration shall be accompanied (if so required by
the
Company) by an assignment in the form attached hereto as Exhibit
B or
such other written instrument of transfer, in form satisfactory to the Company,
duly executed by the registered Holder or by his duly authorized
attorney.
14. Agreement
of Warrant
Holders. The Holder, and to the extent that portions of this
Warrant are assigned and there is more than one Holder of warrants exercisable
for the Warrant Shares, every holder of a Warrant, by accepting the same,
consents and agrees with the Company and with all other Warrant holders
that: (a) the Warrants are transferable only as permitted by Section
3
above; (b) the Warrants are transferable only on the registry books of the
Company as herein provided; and (c) the Company may deem and treat the person
in
whose name the Warrant certificate is registered as the absolute owner thereof
and of the Warrants evidenced thereby for all purposes whatsoever, and the
Company shall not be affected by any notice to the contrary.
15. Payment
of Taxes. The
Company will pay all stamp, transfer and other similar taxes payable in
connection with the original issuance of this Warrant and the shares of Common
Stock issuable upon exercise thereof, provided, however, that the Company shall
not be required to (i) pay any such tax which may be payable in respect of
any
transfer involving the transfer and delivery of this Warrant or the issuance
or
delivery of certificates for shares of Common Stock issuable upon exercise
thereof in a name other than that of the registered Holder of this Warrant
or
(ii) issue or deliver any certificate for shares of Common Stock upon the
exercise of this Warrant until any such tax required to be paid under clause
(i)
shall have been paid, all such tax being payable by the holder of this Warrant
at the time of surrender.
16. Ownership
Cap and Exercise
Restriction. Notwithstanding anything to the contrary set
forth in this Warrant, at no time may a Holder of this Warrant exercise this
Warrant if the number of shares of Common Stock to be issued pursuant to such
exercise would exceed, when aggregated with all other shares of Common Stock
owned by such Holder at such time, the number of shares of Common Stock which
would result in such Holder beneficially owning (as determined in accordance
with Section 13(d) of the Exchange Act and the rules thereunder) in
excess of 9.9% of the then issued and outstanding shares of Common Stock; provided, however,
that upon a
holder of this Warrant providing the Company with sixty-one (61) days notice
(pursuant to Section
13
hereof) (the "Waiver
Notice") that such Holder would like to waive this Section
7 with
regard to any or all shares of Common Stock issuable upon exercise of this
Warrant, this Section
7 will
be of no force or effect with regard to all or a portion of the Warrant
referenced in the Waiver Notice; provided, further,
that this
provision shall be of no further force or effect during the sixty-one (61)
days
immediately preceding the expiration of the term of this Warrant. The
Company agrees that this Section 16 of the Warrant shall replace and supersede
the Section 16 provided in the Follow On Warrants (as defined in the SPA) by
and
between the Holder and the Company, and shall apply equally to the Prior
Warrants by and between the Holder and the Company.
17. Fractional
Interest. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of this Warrant. If more
than
one Warrant shall be presented for exercise at the same time by the Holder,
the
number of full shares of Common Stock which shall be issuable upon such exercise
shall be computed on the basis of the aggregate number of shares of Common
Stock
acquirable on exercise of the Warrants so presented. If any fraction of a share
of Common Stock would, except for the provisions of this Section
17, be
issuable on the exercise of any Warrant (or specified portion thereof), the
Company shall pay an amount in cash calculated by it to be equal to the Purchase
Price per share multiplied by such fraction computed to the nearest whole cent.
The Holder by his acceptance of this Warrant expressly waives any and all rights
to receive any fraction of a share of Common Stock or a stock certificate
representing a fraction of a share of Common Stock.
18. Entire
Agreement. This Warrant constitutes the full and entire
understanding and agreement among the parties with regard to the subject matter
hereof and no party shall be liable or bound to any other party in any manner
by
any representations, warranties, covenants or agreements except as specifically
set forth herein.
19. Successors
and
Assigns. All covenants and provisions of this Warrant by or
for the benefit of the Company or the Holder of this Warrant shall bind and
inure to the benefit of their respective successors, permitted assigns, heirs
and personal representatives.
20. Termination. This
Warrant shall terminate at 5:00 p.m., Eastern Time, on the Expiration Date
or
upon such earlier date on which all of this Warrant has been exercised (the
“Termination
Date”).
21. Headings.
The
headings in this Warrant are for purposes of convenience in reference only,
and
shall not be deemed to constitute a part hereof.
22. Governing
Law, Etc.
This Agreement shall be governed by and construed exclusively in accordance
with
the internal laws of the State of New York without regard to the conflicts
of
laws principles thereof. The parties hereto hereby irrevocably agree that any
suit or proceeding arising directly and/or indirectly pursuant to or under
this
Agreement, shall be brought solely in a federal or state court located in the
City, County and State of New York. By its execution hereof, the parties hereby
covenant and irrevocably submit to the in personam
jurisdiction
of the federal and state courts located in the City, County and State of New
York and agree that any process in any such action may be served upon any of
them personally, or by certified mail or registered mail upon them or their
agent, return receipt requested, with the same full force and effect as if
personally served upon them in New York City. The parties hereto waive any
claim
that any such jurisdiction is not a convenient forum for any such suit or
proceeding and any defense or lack of inpersonam
jurisdiction
with respect thereto. In the event of any such action or proceeding, the party
prevailing therein shall be entitled to payment from the other party hereto
of
all of its reasonable legal fees and expenses.
Remainder
of Page Intentionally Left
Blank
9
WARRANT
SIGNATURE
PAGE
Dated:
December 21, 2007
By: /s/
Xxxxxx
Xxxxxx
Name:
Xxxxxx Xxxxxx
Title:
President &
CEO
200,000
Shares
10
EXHIBIT
A
SUBSCRIPTION
FORM
(To
be
executed only upon exercise of Warrant)
The
undersigned registered owner of this Warrant irrevocably exercises this Warrant
and purchases _______ shares of the Common Stock of XA, Inc., purchasable with
this Warrant, and herewith makes payment therefor (either in cash or pursuant
to
the cashless exercise provisions set forth in Section
1 of
the Warrant), all at the price and on the terms and conditions specified in
this
Warrant.
Dated:
(Signature
of Registered Owner
(Street
Address)
(City
/
State / Zip Code)
11
EXHIBIT
B
FORM
OF
ASSIGNMENT
FOR
VALUE RECEIVED the
undersigned registered owner of this Warrant hereby sells, assigns and transfers
unto the Assignee named below all of the rights of the undersigned under the
within Warrant, with respect to the number of shares of Common Stock set forth
below:
Name
of
Assignee Address Number
of
Shares
and
does
hereby irrevocably constitute and appoint __________________________ Attorney
to
make such transfer on the books of XA, Inc., maintained for the purpose, with
full power of substitution in the premises.
Dated:
(Signature)
(Witness)
The
undersigned Assignee of the Warrant
hereby makes to XA, Inc., as of the date hereof, with respect to the Assignee,
all of the representations and warranties made by the Holder, and the
undersigned Assignee agrees to be bound by all the terms and conditions of
the
Warrant and the XA, Inc. Registration Rights Agreement, dated as of ______
__,
2006, by and between XA, Inc. and the Holder.
Dated:
(Signature)
12
