THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, PLEDGED
OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH
ACT OR PURSUANT TO RULE 144 UNDER THE ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
WARRANT TO PURCHASE
COMMON STOCK
OF
CRYSTALIX GROUP INTERNATIONAL, INC.
This Warrant is issued to XXXXXXXXX.XXX, or his registered assigns
("Holder") by Crystalix Group International, Inc., a Nevada corporation (the
"Company"), as of September 23, 2004 (the "Warrant Issue Date"). This Warrant is
issued in connection with the Company's issuance to the Holder of a Convertible
Promissory Note dated as of September 23, 2004 (the "Note"), for the principal
amount of Two Million and 00/100 Dollars ($2,000,000).
1. PURCHASE SHARES. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
holder hereof in writing), to purchase from the Company up to Two Million Five
Hundred Thousand (2,500,000) fully paid and nonassessable shares of Common Stock
of the Company, as constituted on the Warrant Issue Date (the "Common Stock").
The number of shares of Common Stock issuable pursuant to this Section 1 (the
"Shares") shall be subject to adjustment pursuant to Section 8 hereof.
2. EXERCISE PRICE. The purchase price for the Shares shall be the
lesser of (i) the average closing price of the Common Stock for the five (5)
business days immediately prior to Holder's delivery of Notice of Exercise of
this Warrant, or (ii) $0.08.
3. EXERCISE PERIOD. This Warrant shall be exercisable, in whole or in
part, during the term commencing on the Warrant Issue Date and ending at 5:00
p.m. on September 23, 2011.
4. METHOD OF EXERCISE. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed
copy of the form of Notice of Exercise attached hereto, to the
Secretary of the Company at its principal offices; and
(b) the payment to the Company of an amount equal to the
aggregate Exercise Price for the number of Shares being
purchased.
5. NET EXERCISE. In lieu of exercising this Warrant pursuant to Section
4, the Holder may elect to receive, without the payment by the Holder of any
additional consideration, shares of Common Stock equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with notice of such election, in
which event the Company shall issue to the holder hereof a number of shares of
Common Stock computed using the following formula:
99999.9SBY\YOKENS\LAS\65109.3
Y (A - B)
---------
X = A
Where: X = the number of shares of Common Stock to be issued to the Holder
pursuant to this net exercise;
Y = the number of Shares in respect of which the net issue election
is made
A = the fair market value of one share of the Common Stock at the
time the net issue election is made;
B = the Exercise Price (as adjusted to the date of the net issuance).
For purposes of this Section 5, the fair market value of one share of Common
Stock (or, to the extent all such Common Stock has been converted into the
Company's Common Stock) as of a particular date shall be determined as follows:
(i) if traded on a securities exchange or through the Nasdaq National Market,
the value shall be deemed to be the average of the closing prices of the
securities on such exchange over the thirty (30) day period ending three (3)
days prior to the net exercise election; (ii) if traded over-the-counter, the
value shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the thirty (30) day period ending three (3) days
prior to the net exercise; and (iii) if there is no active public market, the
value shall be the fair market value thereof, as determined in good faith by the
Board of Directors of the Company.
6. CERTIFICATES FOR SHARES. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, if applicable), and in any event within thirty (30) days of
the delivery of the subscription notice.
7. ISSUANCE OF SHARES. The Company covenants that the Shares, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
8. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The number of and
kind of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:
(a) SUBDIVISIONS, COMBINATIONS AND OTHER ISSUANCES. If the
Company shall at any time prior to the expiration of this
Warrant subdivide its Common Stock, by split-up or otherwise, or
combine its Common Stock, or issue additional shares of its
Common Stock or Common Stock as a dividend with respect to any
shares of its Common Stock, the number of Shares issuable on the
exercise of this Warrant shall forthwith be proportionately
increased in the case of a subdivision or stock dividend, or
proportionately decreased in the case of a combination.
Appropriate adjustments shall also be made to the purchase price
payable per share, but the aggregate purchase price payable for
the total number of Shares purchasable under this Warrant (as
adjusted) shall remain the same. Any adjustment under this
Section 8(a) shall become effective at the close of business on
the date the subdivision or combination becomes effective, or as
of the record date of such dividend, or in the event that no
record date is fixed, upon the making of such dividend.
99999.9SBY\YOKENS\LAS\65109.3 2
(b) RECLASSIFICATION, REORGANIZATION AND CONSOLIDATION. In case
of any reclassification, capital reorganization, or change in
the Common Stock of the Company (other than as a result of a
subdivision, combination, or stock dividend provided for in
Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision
shall be made, and duly executed documents evidencing the same
from the Company or its successor shall be delivered to the
Holder, so that the Holder shall have the right at any time
prior to the expiration of this Warrant to purchase, at a total
price equal to that payable upon the exercise of this Warrant,
the kind and amount of shares of stock and other securities and
property receivable in connection with such reclassification,
reorganization, or change by a holder of the same number of
shares of Common Stock as were purchasable by the Holder
immediately prior to such reclassification, reorganization, or
change. In any such case appropriate provisions shall be made
with respect to the rights and interest of the Holder so that
the provisions hereof shall thereafter be applicable with
respect to any shares of stock or other securities and property
deliverable upon exercise hereof, and appropriate adjustments
shall be made to the purchase price per share payable hereunder,
provided the aggregate purchase price shall remain the same.
(c) NOTICE OF ADJUSTMENT. When any adjustment is required to be
made in the number or kind of shares purchasable upon exercise
of the Warrant, or in the Warrant Price, the Company shall
promptly notify the holder of such event and of the number of
shares of Common Stock or other securities or property
thereafter purchasable upon exercise of this Warrant.
9. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
10. NO STOCKHOLDER RIGHTS. Prior to exercise of this Warrant, the
Holder shall not be entitled to any rights of a stockholder with respect to the
Shares, including (without limitation) the right to vote such Shares, receive
dividends or other distributions thereon, exercise preemptive rights or be
notified of stockholder meetings, and such holder shall not be entitled to any
notice or other communication concerning the business or affairs of the Company.
However, nothing in this Section 10 shall limit the right of the Holder to be
provided the Notices required under this Warrant.
11. LEGENDS. This Warrant and the Shares (or any other securities
issuable upon exercise or conversion of this Warrant) will be imprinted with all
legends required by applicable federal and state securities laws, including a
legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 UNDER SUCH
ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
12. COMPLIANCE WITH SECURITIES LAWS ON TRANSFER. The Holder, by
acceptance of this Warrant, represents and warrants that Holder is an
"accredited investor" as such term is defined under Rule 501 of Regulation D of
the Act and that this Warrant and the Shares or other securities issuable upon
exercise or conversion of this Warrant are being acquired solely for the
Holder's own account, for investment, and not as a nominee for any other party
and not with a view toward distribution or resale. Holder further acknowledges
and agrees that this Warrant and the Shares or other securities issuable upon
exercise of this Warrant may not be
99999.9SBY\YOKENS\LAS\65109.3 3
transferred or assigned in whole or in part unless in compliance with all
applicable federal and state securities laws by the transferor and the
transferee (including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company). The Company will not require the Holder to provide an opinion of
counsel if there is no material question as to the availability of current
information as required by Rule 144(c) of the Act, the Holder represents that it
has complied with Rule 144(d) and (e) in reasonable detail, the selling broker
represents that it has complied with Rule 144(f), and the Company is provided
with a copy of the Holder's notice of proposed sale.
13. COMPLIANCE WITH SECURITIES DISCLOSURE AND REPORTING OBLIGATIONS.
The Holder represents and warrants that Holder understands that the Company is
subject to disclosure and reporting obligations under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and that Holder may have
disclosure and reporting obligations under the Exchange Act depending on its
beneficial ownership of the Shares. The Holder acknowledges and agrees that
Holder is solely responsible for complying with any and all of Holder's
disclosure and reporting obligations under the Exchange Act and all related
costs and expenses.
14. REGULATION FD. The Holder covenants and agrees that it will
maintain in confidence all material, nonpublic information disclosed by the
Company.
15. MARKET STAND-OFF. The Holder, by acceptance of this Warrant and any
Shares or other securities issuable upon exercise or conversion of this Warrant,
may not offer, sell, transfer or otherwise dispose or agree to dispose of this
Warrant, the Shares or any securities of the Company, during any period
requested by the Company in connection with the public offering of the Company's
securities.
16. SUCCESSORS AND ASSIGNS. The terms and provisions of this Warrant
and the Purchase Agreement shall inure to the benefit of, and be binding upon,
the Company and the Holders hereof and their respective successors and assigns.
17. AMENDMENTS AND WAIVERS. Any term of this Warrant may be amended and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder.
18. ASSUMPTION OF WARRANT. If at any time, while this Warrant, or any
portion thereof, is outstanding and unexpired there shall be (i) an acquisition
of the Company by another entity by means of a merger, consolidation, or other
transaction or series of related transactions resulting in the exchange of the
outstanding shares of the Company's Capital Stock such that stockholders of the
Company prior to such transaction own, directly or indirectly, less than 50% of
the voting power of the surviving entity, or (ii) a sale or transfer of all or
substantially all of the Company's assets to any other person, then, as a part
of such acquisition, sale or transfer, lawful provision shall be made so that
the Holder shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the Exercise
Price then in effect, the number of shares of stock or other securities or
property of the successor corporation resulting from such acquisition, sale or
transfer which a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such acquisition, sale or transfer if
this Warrant had been exercised immediately before such acquisition, sale or
transfer, all subject to further adjustment as provided in this Section ; and,
in any such case, appropriate adjustment (as determined by the Company's Board
of Directors) shall be made in the application of the provisions herein set
forth with respect to the rights and interests thereafter of the Holder to the
end that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the number of Warrant Shares of the Holder
is entitled to purchase) shall thereafter by applicable, as nearly as
99999.9SBY\YOKENS\LAS\65109.3 4
possible, in relation to any shares of Common Stock or other securities or other
property thereafter deliverable upon the exercise of this Warrant.
19. NOTICES. All notices required under this Warrant and shall be
deemed to have been given or made for all purposes (i) upon personal delivery,
(ii) upon confirmation receipt that the communication was successfully sent to
the applicable number if sent by facsimile; (iii) one day after being sent, when
sent by professional overnight courier service, or (iv) five days after posting
when sent by registered or certified mail. Notices to the Company shall be sent
to the principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing). Notices to the Holder shall be sent
to the address of the Holder on the books of the Company (or at such other place
as the Holder shall notify the Company hereof in writing).
20. ATTORNEYS' FEES. If any action of law or equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
21. REGISTRATION RIGHTS. The Holder will have registration rights as
provided in a separate Registration Rights Agreement of even date herewith.
22. CAPTIONS. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
23. GOVERNING LAW. This Warrant shall be governed by the laws of the
State of Nevada as applied to agreements among residents made and to be
performed entirely within the State of Nevada.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by an officer thereunto duly authorized.
Crystalix Group International, Inc.
By: /s/ XXXXX X. XXXX
--------------------------------------------
Xxxxx X. Xxxx, President
By: /s/ XXXXX XXXX
--------------------------------------------
Xxxxx Xxxx, Secretary
99999.9SBY\YOKENS\LAS\65109.3 5
