THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
SERIES B WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
TOTAL LUXURY GROUP, INC.
Expires March 7, 2015
No.: W-B-01 Number of Shares: 140,000,000
Date of Issuance: March 7, 2008
FOR VALUE RECEIVED, the undersigned, TOTAL LUXURY GROUP, INC., an Indiana
corporation (together with its successors and assigns, the "Issuer"), hereby
certifies that XXXXXX XXXXX or its registered assigns is entitled to subscribe
for and purchase, during the Term (as hereinafter defined), up to 140,000,000
shares (subject to adjustment as hereinafter provided) of the duly authorized,
validly issued, fully paid and non-assessable Common Stock of the Issuer, at an
exercise price per share equal to the Warrant Price then in effect, subject,
however, to the provisions and upon the terms and conditions hereinafter set
forth. Capitalized terms used in this Warrant and not otherwise defined herein
shall have the respective meanings specified in Section 8 hereof.
1. Term. The term of this Warrant shall commence on March 7, 2008 (the
"Issuance Date") and shall expire at 6:00 p.m., Eastern Time, on March 7, 2015
(such period being the "Term").
2. Method of Exercise; Payment; Issuance of New Warrant; Transfer and
Exchange.
(a) Time of Exercise. The purchase rights represented by this Warrant
may be exercised as follows:
(i) 35,000,000 of the shares represented by this Warrant may be
exercised in whole or in part at any time during the Term (the
"Tranche 1 Warrants");
1
(ii) 35,000,000 of the shares represented by this Warrant may be
exercised on or after the first anniversary of the Issuance Date (the
"Tranche 2 Warrants");
(iii) 35,000,000 of the shares represented by this Warrant may be
exercised on or after the second anniversary of the Issuance Date (the
"Tranche 3 Warrants"); and
(iv) the remaining 35,000,000 of the shares represented by this
Warrant may be exercised on or after the second anniversary of the
Issuance Date (the "Tranche 4 Warrants").
(b) Method of Exercise. The Holder hereof may exercise this Warrant,
in whole or in part, by the surrender of this Warrant (with the exercise
form attached hereto duly executed) at the principal office of the Issuer,
and by the payment to the Issuer of an amount of consideration therefor
equal to the Warrant Price in effect on the date of such exercise
multiplied by the number of shares of Warrant Stock with respect to which
this Warrant is then being exercised, payable at such Holder's election (i)
by certified or official bank check or by wire transfer to an account
designated by the Issuer, (ii) by "cashless exercise" in accordance with
the provisions of subsection (c) of this Section 2, or (iii) by a
combination of the foregoing methods of payment selected by the Holder of
this Warrant.
(c) Cashless Exercise. Notwithstanding any provisions herein to the
contrary and commencing twelve (12) months following the Original Issue
Date if the (i) Registration Statement (as defined in the Registration
Rights Agreement) covering the Warrant Stock has not been declared
effective under the Securities Act and/or (ii) an effective Registration
Statement has been suspended by the Company for any or no reason, the
Holder may exercise this Warrant by a cashless exercise and shall receive
the number of shares of Common Stock equal to an amount (as determined
below) by surrender of this Warrant at the principal office of the Issuer
together with the properly endorsed Notice of Exercise in which event the
Issuer shall issue to the Holder a number of shares of Common Stock
computed using the following formula:
X = Y - (A)(Y)
------
B
Where X = the number of shares of Common Stock to be issued
to the Holder.
Y = the number of shares of Common Stock purchasable
upon exercise of all of the Warrant or, if only a
portion of the Warrant is being exercised, the
portion of the Warrant being exercised.
A = the Warrant Price.
B = the Per Share Market Value of one share of
Common Stock.
(d) Issuance of Stock Certificates. In the event of any exercise of
this Warrant in accordance with and subject to the terms and conditions
hereof, certificates for the shares of Warrant Stock so purchased shall be
dated the date of such exercise and delivered to the Holder hereof within a
reasonable time, not exceeding three (3) Trading Days after such exercise
(the "Delivery Date") or, at the request of the Holder (provided that a
2
registration statement under the Securities Act providing for the resale of
the Warrant Stock is then in effect), issued and delivered to the
Depository Trust Company ("DTC") account on the Holder's behalf via the
Deposit Withdrawal Agent Commission System ("DWAC") within a reasonable
time, not exceeding three (3) Trading Days after such exercise, and the
Holder hereof shall be deemed for all purposes to be the holder of the
shares of Warrant Stock so purchased as of the date of such exercise.
Notwithstanding the foregoing to the contrary, the Issuer or its transfer
agent shall only be obligated to issue and deliver the shares to the DTC on
a holder's behalf via DWAC if the Issuer and its transfer agent are
participating in DTC through the DWAC system. The Holder shall deliver this
original Warrant, or an indemnification undertaking with respect to such
Warrant in the case of its loss, theft or destruction, at such time that
this Warrant is fully exercised. With respect to partial exercises of this
Warrant, the Issuer shall keep written records for the Holder of the number
of shares of Warrant Stock exercised as of each date of exercise.
(e) Compensation for Buy-In on Failure to Timely Deliver Certificates
Upon Exercise. In addition to any other rights available to the Holder, if
the Issuer fails to cause its transfer agent to transmit to the Holder a
certificate or certificates representing the Warrant Stock pursuant to an
exercise on or before the Delivery Date, and if after such date the Holder
is required by its broker to purchase (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by
the Holder of the Warrant Stock which the Holder anticipated receiving upon
such exercise (a "Buy-In"), then the Issuer shall (1) pay in cash to the
Holder the amount by which (x) the Holder's total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (A) the number of shares of
Warrant Stock that the Issuer was required to deliver to the Holder in
connection with the exercise at issue times (B) the price at which the sell
order giving rise to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Warrant and
equivalent number of shares of Warrant Stock for which such exercise was
not honored or deliver to the Holder the number of shares of Common Stock
that would have been issued had the Issuer timely complied with its
exercise and delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of the Warrant for shares of
Common Stock with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (1) of the immediately preceding
sentence the Issuer shall be required to pay the Holder $1,000. The Holder
shall provide the Issuer written notice indicating the amounts payable to
the Holder in respect of the Buy-In, together with applicable confirmations
and other evidence reasonably requested by the Issuer. Nothing herein shall
limit a Xxxxxx's right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Issuer's
failure to timely deliver certificates representing shares of Common Stock
upon exercise of this Warrant as required pursuant to the terms hereof.
(f) Transferability/Exchangeability of Warrant. Subject to Section
2(h) hereof, this Warrant may not be transferred by a Holder, in whole or
in part, without the consent of the Issuer, which consent shall not be
unreasonably withheld. If transferred pursuant to this paragraph, this
Warrant may be transferred on the books of the Issuer by the Holder hereof
in person or by duly authorized attorney, upon surrender of this Warrant at
the principal office of the Issuer, properly endorsed (by the Holder
executing an assignment in the form attached hereto) and upon payment of
any necessary transfer tax or other governmental charge imposed upon such
transfer. This Warrant is exchangeable at the principal office of the
3
Issuer for Warrants to purchase the same aggregate number of shares of
Warrant Stock, each new Warrant to represent the right to purchase such
number of shares of Warrant Stock as the Holder hereof shall designate at
the time of such exchange. All Warrants issued on transfers or exchanges
shall be dated the Original Issue Date and shall be identical with this
Warrant except as to the number of shares of Warrant Stock issuable
pursuant thereto.
(g) Continuing Rights of Xxxxxx. The Issuer will, at the time of or at
any time after each exercise of this Warrant, upon the request of the
Holder hereof, acknowledge in writing the extent, if any, of its continuing
obligation to afford to such Holder all rights to which such Holder shall
continue to be entitled after such exercise in accordance with the terms of
this Warrant; provided that if any such Holder shall fail to make, or the
Issuer shall fail to honor, any such request, the failure shall not affect
the continuing obligation of the Issuer to afford such rights to such
Holder.
(h) Compliance with Securities Laws.
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Warrant Stock to be
issued upon exercise hereof are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration
statement, or an exemption from registration, under the Securities Act
and any applicable state securities laws.
(ii) Except as provided in paragraph (iii) below, this Warrant
and all certificates representing shares of Warrant Stock issued upon
exercise hereof shall be stamped or imprinted with a legend in
substantially the following form:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR
THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF
SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
(iii) The Issuer agrees to reissue this Warrant or certificates
representing any of the Warrant Stock, without the legend set forth
above if at such time, prior to making any transfer of any such
securities, the Holder shall give written notice to the Issuer
describing the manner and terms of such transfer. Such proposed
transfer will not be effected until: (a) either (i) the Issuer has
received an opinion of counsel reasonably satisfactory to the Issuer,
4
to the effect that the registration of such securities under the
Securities Act is not required in connection with such proposed
transfer, (ii) a registration statement under the Securities Act
covering such proposed disposition has been filed by the Issuer with
the Securities and Exchange Commission and has become effective under
the Securities Act, (iii) the Issuer has received other evidence
reasonably satisfactory to the Issuer that such registration and
qualification under the Securities Act and state securities laws are
not required, or (iv) the Holder provides the Issuer with reasonable
assurances that such security can be sold pursuant to Rule 144 under
the Securities Act; and (b) either (i) the Issuer has received an
opinion of counsel reasonably satisfactory to the Issuer, to the
effect that registration or qualification under the securities or
"blue sky" laws of any state is not required in connection with such
proposed disposition, or (ii) compliance with applicable state
securities or "blue sky" laws has been effected or a valid exemption
exists with respect thereto. The Issuer will respond to any such
notice from a holder within three (3) Trading Days. In the case of any
proposed transfer under this Section 2(h), the Issuer will pay the
expenses of and use reasonable efforts to comply with any such
applicable state securities or "blue sky" laws, but shall in no event
be required, (x) to qualify to do business in any state where it is
not then qualified, or (y) to take any action that would subject it to
tax or to the general service of process in any state where it is not
then subject. The restrictions on transfer contained in this Section
2(h) shall be in addition to, and not by way of limitation of, any
other restrictions on transfer contained in any other section of this
Warrant. Whenever a certificate representing the Warrant Stock is
required to be issued to a the Holder without a legend, at the request
of the Holder, in lieu of delivering physical certificates
representing the Warrant Stock, the Issuer shall cause its transfer
agent to electronically transmit the Warrant Stock to the Holder by
crediting the account of the Holder's Prime Broker with DTC through
its DWAC system (to the extent not inconsistent with any provisions of
this Warrant or the Purchase Agreement).
(iv) Accredited Investor Status. In no event may the Holder
exercise this Warrant in whole or in part unless the Holder is an
"accredited investor" as defined in Regulation D under the Securities
Act.
3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.
(a) Stock Fully Paid. The Issuer represents, warrants, covenants and
agrees that all shares of Warrant Stock which may be issued upon the
exercise of this Warrant or otherwise hereunder will, when issued in
accordance with the terms of this Warrant, be duly authorized, validly
issued, fully paid and non-assessable and free from all taxes, liens and
charges. The Issuer further covenants and agrees that during the period
within which this Warrant may be exercised, the Issuer will at all times
have authorized and reserved for the purpose of the issuance upon exercise
of this Warrant a number of authorized but unissued shares of Common Stock
equal to at least one hundred twenty percent (120%) of the number of shares
of Common Stock issuable upon exercise of this Warrant without regard to
any limitations on exercise.
(b) Reservation. If any shares of Common Stock required to be reserved
for issuance upon exercise of this Warrant or as otherwise provided
hereunder require registration or qualification with any Governmental
Authority under any federal or state law before such shares may be so
issued, the Issuer will in good faith use its best efforts as expeditiously
5
as possible at its expense to cause such shares to be duly registered or
qualified. If the Issuer shall list any shares of Common Stock on any
securities exchange or market it will, at its expense, list thereon, and
maintain and increase when necessary such listing of, all shares of Warrant
Stock from time to time issued upon exercise of this Warrant or as
otherwise provided hereunder (provided that such Warrant Stock has been
registered pursuant to a registration statement under the Securities Act
then in effect), and, to the extent permissible under the applicable
securities exchange rules, all unissued shares of Warrant Stock which are
at any time issuable hereunder, so long as any shares of Common Stock shall
be so listed. The Issuer will also so list on each securities exchange or
market, and will maintain such listing of, any other securities which the
Holder of this Warrant shall be entitled to receive upon the exercise of
this Warrant if at the time any securities of the same class shall be
listed on such securities exchange or market by the Issuer.
(c) Covenants. Except for the amendment of its Certificate of
Incorporation as contemplated by the Transaction Documents, the Issuer
shall not by any action including, without limitation, amending the
Certificate of Incorporation or the by-laws of the Issuer, or through any
reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in
the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting the
generality of the foregoing, the Issuer will (i) not permit the par value,
if any, of its Common Stock to exceed the then effective Warrant Price,
(ii) not amend or modify any provision of the Certificate of Incorporation
or by-laws of the Issuer in any manner that would materially and adversely
affect the rights of the Holders of the Warrants, (iii) take all such
action as may be reasonably necessary in order that the Issuer may validly
and legally issue fully paid and nonassessable shares of Common Stock, free
and clear of any liens, claims, encumbrances and restrictions (other than
as provided herein) upon the exercise of this Warrant, and (iv) use its
best efforts to obtain all such authorizations, exemptions or consents from
any public regulatory body having jurisdiction thereof as may be reasonably
necessary to enable the Issuer to perform its obligations under this
Warrant.
(d) Loss, Theft, Destruction, Mutilation of Warrants. Upon receipt of
evidence satisfactory to the Issuer of the ownership of and the loss,
theft, destruction or mutilation of any Warrant and, in the case of any
such loss, theft or destruction, upon receipt of indemnity or security
satisfactory to the Issuer or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Issuer will make and
deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a
new Warrant of like tenor and representing the right to purchase the same
number of shares of Common Stock.
(e) Payment of Taxes. The Issuer will pay any documentary stamp taxes
attributable to the initial issuance of the Warrant Stock issuable upon
exercise of this Warrant; provided, however, that the Issuer shall not be
required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issuance or delivery of any certificates
representing Warrant Stock in a name other than that of the Holder in
respect to which such shares are issued.
4. Adjustment of Warrant Price and Number of Shares Issuable Upon Exercise.
The Warrant Price and the number of shares of Warrant Stock that may be
purchased upon exercise of this Warrant shall be subject to adjustment from time
to time as set forth in this Section 4. The Issuer shall give the Holder notice
6
of any event described below which requires an adjustment pursuant to this
Section 4 in accordance with the notice provisions set forth in Section 5.
(a) Recapitalization, Reorganization, Reclassification, Consolidation,
Merger or Sale.
(i) In case the Issuer after the Original Issue Date shall do any
of the following (each, a "Triggering Event"): (a) consolidate or
merge with or into any other Person and the Issuer shall not be the
continuing or surviving Person of such consolidation or merger, or (b)
permit any other Person to consolidate with or merge into the Issuer
and the Issuer shall be the continuing or surviving Person but, in
connection with such consolidation or merger, any Capital Stock of the
Issuer 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 Warrant Price and the number of shares
of Warrant Stock 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 Warrant 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, provided, however, the
Holder at its option may elect to receive an amount in cash equal to
the value of this Warrant calculated in accordance with the
Black-Scholes formula. Immediately upon the occurrence of a Triggering
Event, the Issuer shall notify the Holder in writing of such
Triggering Event and provide the calculations in determining the
number of shares of Warrant Stock issuable upon exercise of the new
warrant and the adjusted Warrant Price. Upon the Holder's request, the
continuing or surviving Person 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 Stock and
the adjusted Warrant Price pursuant to the terms and provisions of
this Section 4(a)(i). Notwithstanding the foregoing to the contrary,
this Section 4(a)(i) shall only apply if the surviving entity pursuant
to any such Triggering Event 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 Issuer
pay to the Holder an amount in cash equal to the value of this Warrant
calculated in accordance with the Black-Scholes formula.
7
(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(a)(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 Issuer) which may be required to deliver any
shares of Warrant Stock (including all 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 Issuer under this
Warrant (and if the Issuer shall survive the consummation of such
Triggering Event, such assumption shall be in addition to, and shall
not release the Issuer from, any continuing obligations of the Issuer
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 (a), 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 Issuer, 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 (a))
shall be applicable to the shares Warrant Stock (including all
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.
(b) Stock Dividends, Subdivisions and Combinations. If at any time the
Issuer shall:
(i) make or issue or set a record date for the holders of the
Common Stock for the purpose of entitling them to receive a dividend
payable in, or other distribution of, shares of Common Stock,
(ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then (1) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (2) the Warrant Price then in
effect shall be adjusted to equal (A) the Warrant Price then in effect
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
8
shares of Common Stock for which this Warrant is exercisable immediately after
such adjustment.
(c) Certain Other Distributions. If at any time the Issuer shall make
or issue or set a record date for the holders of the Common Stock for the
purpose of entitling them to receive any dividend or other distribution of:
(i) cash,
(ii) any evidences of its indebtedness, any shares of stock of
any class or any other Securities or property of any nature whatsoever
(other than cash, Common Stock Equivalents or Additional Shares of
Common Stock), or
(iii) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of stock of any
class or any other securities or property of any nature whatsoever
(other than cash, Common Stock Equivalents or Additional Shares of
Common Stock), then (1) the number of shares of Common Stock for which
this Warrant is exercisable shall be adjusted to equal the product of
the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such adjustment multiplied by a
fraction (A) the numerator of which shall be the Per Share Market Value
of Common Stock at the date of taking such record and (B) the
denominator of which shall be such Per Share Market Value minus the
amount allocable to one share of Common Stock of any such cash so
distributable and of the fair value (as determined in good faith by the
Board of Directors of the Issuer and supported by an opinion from an
investment banking firm mutually agreed upon by the Issuer and the
Holder) of any and all such evidences of indebtedness, shares of stock,
other securities or property or warrants or other subscription or
purchase rights so distributable, and (2) the Warrant Price then in
effect shall be adjusted to equal (A) the Warrant Price then in effect
multiplied by the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to the adjustment divided by
(B) the number of shares of Common Stock for which this Warrant is
exercisable immediately after such adjustment. A reclassification of
the Common Stock (other than a change in par value, or from par value
to no par value or from no par value to par value) into shares of
Common Stock and shares of any other class of stock shall be deemed a
distribution by the Issuer to the holders of its Common Stock of such
shares of such other class of stock within the meaning of this Section
4(c) and, if the outstanding shares of Common Stock shall be changed
into a larger or smaller number of shares of Common Stock as a part of
such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of Common
Stock within the meaning of Section 4(b).
(d) Subsequent Common Stock and Common Stock Equivalents Issues. In
the event the Company, shall issue or sell any Additional Shares of Common
Stock or Common Stock Equivalents (otherwise than as provided in the
foregoing subsections (a) through (c) of this Section 4), at a price per
share less than the Warrant Price, or without consideration, the Warrant
Price then in effect upon each such issuance shall be adjusted to that
price (rounded to the nearest cent) determined by multiplying the Warrant
Price by a fraction: (1) the numerator of which shall be equal to the sum
of (A) the number of shares of Common Stock outstanding immediately prior
to the issuance of such Additional Shares of Common Stock plus (B) the
9
number of shares of Common Stock (rounded to the nearest whole share) which
the aggregate consideration for the total number of such Additional Shares
of Common Stock so issued would purchase at a price per share equal to the
then Warrant Price; and (2) the denominator of which shall be equal to the
number of shares of Common Stock outstanding immediately after the issuance
of such Additional Shares of Common Stock. No adjustment of the number of
shares of Common Stock shall be made upon the issuance of any Additional
Shares of Common Stock which are issued pursuant to the exercise of any
warrants or other subscription or purchase rights or pursuant to the
exercise of any conversion or exchange rights in any Common Stock
Equivalents if any such adjustment shall previously have been made upon the
issuance of such warrants or other rights or upon the issuance of such
Common Stock Equivalents (or upon the issuance of any warrant or other
rights therefore).
(e) Other Provisions applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of
the number of shares of Common Stock for which this Warrant is exercisable
and the Warrant Price then in effect provided for in this Section 4:
(i) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Common Stock Equivalents (or
any warrants or other rights therefor) shall be issued for cash
consideration, the consideration received by the Issuer therefor shall
be the amount of the cash received by the Issuer therefor, or, if such
Additional Shares of Common Stock or Common Stock Equivalents are
offered by the Issuer for subscription, the subscription price, or, if
such Additional Shares of Common Stock or Common Stock Equivalents are
sold to underwriters or dealers for public offering without a
subscription offering, the initial public offering price (in any such
case subtracting any amounts paid or receivable for accrued interest
or accrued dividends and without taking into account any compensation,
discounts or expenses paid or incurred by the Issuer for and in the
underwriting of, or otherwise in connection with, the issuance
thereof). In connection with any merger or consolidation in which the
Issuer is the surviving Person (other than any consolidation or merger
in which the previously outstanding shares of Common Stock of the
Issuer shall be changed to or exchanged for the stock or other
securities of another Person), the amount of consideration therefore
shall be, deemed to be the fair value, as determined reasonably and in
good faith by the Board, of such portion of the assets and business of
the nonsurviving Person as the Board may determine to be attributable
to such shares of Common Stock or Common Stock Equivalents, as the
case may be. The consideration for any Additional Shares of Common
Stock issuable pursuant to any warrants or other rights to subscribe
for or purchase the same shall be the consideration received by the
Issuer for issuing such warrants or other rights plus the additional
consideration payable to the Issuer upon exercise of such warrants or
other rights. The consideration for any Additional Shares of Common
Stock issuable pursuant to the terms of any Common Stock Equivalents
shall be the consideration received by the Issuer for issuing warrants
or other rights to subscribe for or purchase such Common Stock
Equivalents, plus the consideration paid or payable to the Issuer in
respect of the subscription for or purchase of such Common Stock
Equivalents, plus the additional consideration, if any, payable to the
Issuer upon the exercise of the right of conversion or exchange in
such Common Stock Equivalents. In the event of any consolidation or
merger of the Issuer in which the Issuer is not the surviving Person
or in which the previously outstanding shares of Common Stock of the
10
Issuer shall be changed into or exchanged for the stock or other
securities of another Person, or in the event of any sale of all or
substantially all of the assets of the Issuer for stock or other
securities of any Person, the Issuer shall be deemed to have issued a
number of shares of its Common Stock for stock or securities or other
property of the other Person computed on the basis of the actual
exchange ratio on which the transaction was predicated, and for a
consideration equal to the fair market value on the date of such
transaction of all such stock or securities or other property of the
other Person. In the event any consideration received by the Issuer
for any securities consists of property other than cash, the fair
market value thereof at the time of issuance or as otherwise
applicable shall be as determined in good faith by the Board. In the
event Common Stock is issued with other shares or securities or other
assets of the Issuer for consideration which covers both, the
consideration computed as provided in this Section 4(e)(i) shall be
allocated among such securities and assets as determined in good faith
by the Board.
(ii) When Adjustments to Be Made. The adjustments required by
this Section 4 shall be made whenever and as often as any specified
event requiring an adjustment shall occur, except that any adjustment
of the number of shares of Common Stock for which this Warrant is
exercisable that would otherwise be required may be postponed (except
in the case of a subdivision or combination of shares of the Common
Stock, as provided for in Section 4(b)) up to, but not beyond the date
of exercise if such adjustment either by itself or with other
adjustments not previously made adds or subtracts less than one
percent (1%) of the shares of Common Stock for which this Warrant is
exercisable immediately prior to the making of such adjustment. Any
adjustment representing a change of less than such minimum amount
(except as aforesaid) which is postponed shall be carried forward and
made (x) as soon as such adjustment, together with other adjustments
required by this Section 4 and not previously made, would result in a
minimum adjustment, or (y) on the date of exercise. For the purpose of
any adjustment, any specified event shall be deemed to have occurred
at the close of business on the date of its occurrence.
(iii) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into
account to the nearest one one-hundredth (1/100th) of a share.
(iv) When Adjustment Not Required. If the Issuer shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution to
stockholders thereof, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the taking of
such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.
(h) Form of Warrant after Adjustments. The form of this Warrant need
not be changed because of any adjustments in the Warrant Price or the
number and kind of Securities purchasable upon the exercise of this
Warrant.
(i) Escrow of Warrant Stock. If after any property becomes
11
distributable pursuant to this Section 4 by reason of the taking of any
record of the holders of Common Stock, but prior to the occurrence of the
event for which such record is taken, and the Holder exercises this
Warrant, any shares of Common Stock issuable upon exercise by reason of
such adjustment shall be deemed the last shares of Common Stock for which
this Warrant is exercised (notwithstanding any other provision to the
contrary herein) and such shares or other property shall be held in escrow
for the Holder by the Issuer to be issued to the Holder upon and to the
extent that the event actually takes place, upon payment of the current
Warrant Price. Notwithstanding any other provision to the contrary herein,
if the event for which such record was taken fails to occur or is
rescinded, then such escrowed shares shall be cancelled by the Issuer and
escrowed property returned.
(j) Adjustment for Failure to Amend Certificate of Incorporation. The
Holder has been informed by the Issuer that the Issuer does not have
sufficient shares of Common Stock authorized for which to enable the Holder
to exercise the purchase rights represented by this Warrant. The Issuer
undertakes to use its best efforts to become reporting under the federal
securities laws and seek to be re-listed for quotation on the OTC Bulletin
Board as soon as practical, seek to maintain such listing so long as the
Holder has purchase rights represented by this Warrant, and shall, as soon
as practical as thereafter possible, will take all required steps under
applicable state and federal law to increase the number of authorized
shares of Common Stock to enable the Holder to exercise the purchase rights
represented by this Warrant. In all events, the relisting process and the
amendment of the Maker's Certificate of Incorporation shall be accomplished
by no later than June 1, 2008 (the "Charter Amendment Date"). In this
regard, the terms and conditions of such increase in the number of
authorized Common Stock shall be subject to the Holder's prior consent.
In the event the Issuer does not comply with the provisions of this
subsection, then the number of shares of Warrant Stock subject to purchase
rights represented by this Warrant shall be increased by an amount equal to two
percent (2%) of the Warrant Share Number (as adjusted in accordance with the
terms hereof) for each calendar month or portion thereof thereafter from the
Charter Amendment Date until the applicable default hereunder has been cured.
5. Notice of Adjustments. Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "Adjustment"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the Adjustment, the amount of the Adjustment, the
method by which such Adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such Adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each Adjustment. Any dispute between the Issuer and the Holder of
this Warrant with respect to the matters set forth in such certificate may at
the option of the Holder of this Warrant be submitted to an Independent
Appraiser selected by the Holder; provided that the Issuer shall have ten (10)
days after receipt of notice from such Holder of its selection of such
Independent Appraiser to object thereto, in which case such Holder shall select
another such Independent Appraiser and the Issuer shall have no such right of
objection. The Independent Appraiser selected by the Holder of this Warrant as
provided in the preceding sentence shall be instructed to deliver a written
opinion as to such matters to the Issuer and such Holder within thirty (30) days
after submission to it of such dispute. Such opinion shall be final and binding
on the parties hereto. The costs and expenses of the initial firm selected as
12
Independent Appraiser shall be paid equally by the Issuer and the Holder and, in
the case of an objection by the Issuer, the costs and expenses of the subsequent
firm selected as Independent Appraiser shall be paid in full by the Issuer.
6. Fractional Shares. No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof, but in lieu of such fractional shares,
the Issuer shall round the number of shares to be issued upon exercise up to the
nearest whole number of shares.
7. 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 9.99% of the then issued and outstanding shares of Common Stock;
provided, however, that upon a holder of this Warrant providing the Issuer with
sixty-one (61) days notice (pursuant to Section 12 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 during the sixty-one
(61) day period prior to the Expiration Date of this Warrant the Holder may
waive this Section 7 upon providing the Waiver Notice at any time during such
sixty-one (61) day period; and provided, further, that any Waiver Notice during
the sixty-one (61) day period prior to the Expiration Date will not be effective
until the last date of the Term.
8. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:
"Additional Shares of Common Stock" means all shares of Common
Stock issued by the Issuer after the Original Issue Date, and all
shares of Other Common, if any, issued by the Issuer after the
Original Issue Date, except: (i) securities issued pursuant to the
conversion or exercise of convertible or exercisable securities issued
or outstanding on or prior to the date of the Purchase Agreement or
issued pursuant to the Purchase Agreement (so long as the conversion
or exercise price in such securities are not amended to lower such
price and/or adversely affect the Holders), (ii) the Warrant Stock,
(iii) Common Stock issued or the issuance or grants of options to
purchase Common Stock pursuant to the Company's stock option plans and
employee stock purchase plans that either (x) exist on the date of the
Purchase Agreement, or (y) do not exceed ten percent (10%) of the
outstanding Common Stock of the Company as of the date of the Purchase
Agreement, (iv) any shares of Common Stock issued upon conversion of
any note issued to the placement agent and its designees for the
transactions contemplated by the Purchase Agreement, and (v) any
shares of Common Stock issued upon the exercise of the warrant issued
to Xxxxxx Xxxxx for the transactions contemplated by the Purchase
Agreement.
"Board" shall mean the Board of Directors of the Issuer.
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"Capital Stock" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in
(however designated) corporate stock, including, without limitation,
shares of preferred or preference stock, (ii) all partnership
interests (whether general or limited) in any Person which is a
partnership, (iii) all membership interests or limited liability
company interests in any limited liability company, and (iv) all
equity or ownership interests in any Person of any other type.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Issuer as in effect on the Original Issue Date,
and as hereafter from time to time amended, modified, supplemented or
restated in accordance with the terms hereof and thereof and pursuant
to applicable law.
"Common Stock" means the Common Stock, $0.001 par value per
share, of the ssuer and any other Capital Stock into which such stock
may hereafter be changed.
"Common Stock Equivalent" means any Convertible Security or
warrant, option or other right to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Security.
"Convertible Securities" means evidences of Indebtedness, shares
of Capital Stock or other Securities which are or may be at any time
convertible into or exchangeable for Additional Shares of Common
Stock. The term "Convertible Security" means one of the Convertible
Securities.
"Delivery Date" shall be the date not exceeding three (3) Trading
Days after an exercise of this Warrant.
"DTC" means the Depository Trust Company.
"DWAC" means the Deposit Withdrawal Agent Commission System.
"Expiration Date" means March 7, 2015.
"Fundamental Transaction" means that the Company shall, directly
or indirectly, in one or more related transactions, (i) consolidate or
merge with or into (whether or not the Company is the surviving
corporation) another Person or Persons, if the holders of the Voting
Stock (not including any shares of Voting Stock held by the Person or
Persons making or party to, or associated or affiliated with the
Persons making or party to, such consolidation or merger) immediately
prior to such consolidation or merger shall hold or have the right to
direct the voting of less than 50% of the Voting Stock or such voting
securities of such other surviving Person immediately following such
transaction, or (ii) sell, assign, transfer, convey or otherwise
dispose of all or substantially all of the properties or assets of the
Company to another Person, or (iii) allow another Person to make a
purchase, tender or exchange offer that is accepted by the holders of
more than the 50% of the outstanding shares of Voting Stock (not
including any shares of Voting Stock held by the Person or Persons
making or party to, or associated or affiliated with the Persons
making or party to, such purchase, tender or exchange offer), or (iv)
consummate a stock purchase agreement or other business combination
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(including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such
other Person acquires more than the 50% of the outstanding shares of
Voting Stock (not including any shares of Voting Stock held by the
other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock
purchase agreement or other business combination), (v) reorganize,
recapitalize or reclassify its Common Stock or (vi) any "person" or
"group" (as these terms are used for purposes of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) is or shall
become the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended), directly or indirectly,
of 50% of the aggregate ordinary voting power represented by issued
and outstanding Common Stock.
"Governmental Authority" means any governmental, regulatory or
self-regulatory entity, department, body, official, authority,
commission, board, agency or instrumentality, whether federal, state
or local, and whether domestic or foreign.
"Holders" mean the Persons who shall from time to time own any
Warrant. The term "Holder" means one of the Holders.
"Independent Appraiser" means a nationally recognized or major
regional investment banking firm or firm of independent certified
public accountants of recognized standing (which may be the firm that
regularly examines the financial statements of the Issuer) that is
regularly engaged in the business of appraising the Capital Stock or
assets of corporations or other entities as going concerns, and which
is not affiliated with either the Issuer or the Holder of any Warrant.
"Issuer" means Total Luxury Group, Inc., an Indiana corporation,
and its successors.
"Majority Holders" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable
under the Warrants at the time outstanding.
"Original Issue Date" means March 7, 2008.
"OTC Bulletin Board" means the over-the-counter electronic
bulletin board.
"Other Common" means any other Capital Stock of the Issuer of any
class which shall be authorized at any time after the date of this
Warrant (other than Common Stock) and which shall have the right to
participate in the distribution of earnings and assets of the Issuer
without limitation as to amount.
"Outstanding Common Stock" means, at any given time, the
aggregate amount of outstanding shares of Common Stock, assuming full
exercise, conversion or exchange (as applicable) of all options,
warrants and other Securities which are convertible into or
exercisable or exchangeable for, and any right to subscribe for,
shares of Common Stock that are outstanding at such time.
15
"Person" means an individual, corporation, limited liability
company, partnership, joint stock company, trust, unincorporated
organization, joint venture, Governmental Authority or other entity of
whatever nature.
"Per Share Market Value" means on any particular date (a) the
last closing bid price per share of the Common Stock on such date on
the OTC Bulletin Board or another registered national stock exchange
on which the Common Stock is then listed, or if there is no such price
on such date, then the closing bid price on such exchange or quotation
system on the date nearest preceding such date, or (b) if the Common
Stock is not listed then on the OTC Bulletin Board or any registered
national stock exchange, the last closing bid price for a share of
Common Stock in the over-the-counter market, as reported by the OTC
Bulletin Board or in the National Quotation Bureau Incorporated or
similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (c) if the
Common Stock is not then reported by the OTC Bulletin Board or the
National Quotation Bureau Incorporated (or similar organization or
agency succeeding to its functions of reporting prices), then the
"Pink Sheet" quotes for the applicable Trading Days preceding such
date of determination, or (d) if the Common Stock is not then publicly
traded the fair market value of a share of Common Stock as determined
by an Independent Appraiser selected in good faith by the Majority
Holders; provided, however, that the Issuer, after receipt of the
determination by such Independent Appraiser, shall have the right to
select an additional Independent Appraiser, in which case, the fair
market value shall be equal to the average of the determinations by
each such Independent Appraiser; and provided, further that all
determinations of the Per Share Market Value shall be appropriately
adjusted for any stock dividends, stock splits or other similar
transactions during such period. The determination of fair market
value by an Independent Appraiser shall be based upon the fair market
value of the Issuer determined on a going concern basis as between a
willing buyer and a willing seller and taking into account all
relevant factors determinative of value, and shall be final and
binding on all parties. In determining the fair market value of any
shares of Common Stock, no consideration shall be given to any
restrictions on transfer of the Common Stock imposed by agreement or
by federal or state securities laws, or to the existence or absence
of, or any limitations on, voting rights.
"Purchase Agreement" means the Stock Purchase Agreement dated as
of March 7, 2008, among the Issuer and the Sellers.
"Sellers" means the sellers of the shares of Petals Decorative
Accents Inc. common stock, par value $0.00001 pursuant to the Purchase
Agreement.
"Securities" means any debt or equity securities of the Issuer,
whether now or hereafter authorized, any instrument convertible into
or exchangeable for Securities or a Security, and any option, warrant
or other right to purchase or acquire any Security. "Security" means
one of the Securities.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar federal statute then in effect.
16
"Subsidiary" means any corporation at least 50% of whose
outstanding Voting Stock shall at the time be owned directly or
indirectly by the Issuer or by one or more of its Subsidiaries, or by
the Issuer and one or more of its Subsidiaries.
"Term" has the meaning specified in Section 1 hereof.
"Trading Day" means (a) a day on which the Common Stock is traded
on the OTC Bulletin Board, or (b) if the Common Stock is not traded on
the OTC Bulletin Board, a day on which the Common Stock is quoted in
the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding
its functions of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in
(a) or (b) hereof, then Trading Day shall mean any day except
Saturday, Sunday and any day which shall be a legal holiday or a day
on which banking institutions in the State of New York are authorized
or required by law or other government action to close.
"Voting Stock" means, as applied to the Capital Stock of any
corporation, Capital Stock of any class or classes (however
designated) having ordinary voting power for the election of a
majority of the members of the Board of Directors (or other governing
body) of such corporation, other than Capital Stock having such power
only by reason of the happening of a contingency.
"Warrants" means the Warrants issued pursuant to the Purchase
Agreement, including, without limitation, this Warrant, and any other
warrants of like tenor issued in substitution or exchange for any
thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e)
hereof or of any of such other Warrants.
"Warrant Price" means:
(i) $0.01, with respect to the Tranche 1 Warrants (as such
price may be adjusted from time to time as shall result
from the adjustments specified in this Warrant,
including Section 4 hereto);
(ii) $0.10, with respect to the Tranche 2 Warrants (as such
price may be adjusted from time to time as shall result
from the adjustments specified in this Warrant,
including Section 4 hereto);
(iii) $0.25, with respect to the Tranche 3 Warrants (as such
price may be adjusted from time to time as shall result
from the adjustments specified in this Warrant,
including Section 4 hereto), provided, however, that in
the event of a Fundamental Transaction prior to
12/31/09, the exercise price shall be equal to twenty
percent (20%) discount to the price at which the Common
Stock is valued in such Fundamental Transaction; and
(iv) $0.50, with respect to the Trance 4 Warrants (as such
price may be adjusted from time to time as shall result
from the adjustments specified in this Warrant,
including Section 4 hereto), provided, however, that in
17
the event of a Fundamental Transaction prior to
12/31/09, the exercise price shall be equal to twenty
percent (20%) discount to the price at which the Common
Stock is valued in such Fundamental Transaction.
as such price may be adjusted from time to time as shall result
from the adjustments specified in this Warrant, including Section 4
hereto.
"Warrant Share Number" means at any time the aggregate number of
shares of Warrant Stock which may at such time be purchased upon
exercise of this Warrant, after giving effect to all prior adjustments
and increases to such number made or required to be made under the
terms hereof.
"Warrant Stock" means Common Stock issuable upon exercise of any
Warrant or Warrants or otherwise issuable pursuant to any Warrant or
Warrants and/or Securities, cash and property to which such Holder
would have been entitled upon the occurrence of certain events set
forth in Section 4.
9. Other Notices. In case at any time:
(A) the Issuer shall make any distributions to the holders
of Common Stock; or
(B) the Issuer shall authorize the granting to all holders
of its Common Stock of rights to subscribe for or
purchase any shares of Capital Stock of any class or
other rights; or
(C) there shall be any reclassification of the Capital
Stock of the Issuer; or
(D) there shall be any capital reorganization by the
Issuer; or
(E) there shall be any (i) consolidation or merger
involving the Issuer or (ii) sale, transfer or other
disposition of all or substantially all of the Issuer's
property, assets or business (except a merger or other
reorganization in which the Issuer shall be the
surviving corporation and its shares of Capital Stock
shall continue to be outstanding and unchanged and
except a consolidation, merger, sale, transfer or other
disposition involving a wholly-owned Subsidiary); or
(F) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Issuer or any partial
liquidation of the Issuer or distribution to holders of
Common Stock;
then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
18
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
(20) days prior to the action in question and not less than ten (10) days prior
to the record date or the date on which the Issuer's transfer books are closed
in respect thereto. This Warrant entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Common Stock.
10. Amendment and Waiver; Failure or Indulgence Not Waiver. Any term,
covenant, agreement or condition in this Warrant may be amended, or compliance
therewith may be waived (either generally or in a particular instance and either
retroactively or prospectively), by a written instrument or written instruments
executed by the Issuer and the Majority Holders; provided, however, that no such
amendment or waiver shall reduce the Warrant Share Number, increase the Warrant
Price, shorten the period during which this Warrant may be exercised or modify
any provision of this Section 10 without the consent of the Holder of this
Warrant. 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. No failure or
delay on the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege, nor shall any waiver
by the Holder of any such right or rights on any one occasion be deemed a waiver
of the same right or rights on any future occasion.
11. Governing Law; Jurisdiction. The parties acknowledge and agree that any
claim, controversy, dispute or action relating in any way to this agreement or
the subject matter of this agreement shall be governed solely by the laws of the
State of Delaware, without regard to any conflict of laws doctrines. The parties
irrevocably consent to being served with legal process issued from the state and
federal courts located in New York and irrevocably consent to the exclusive
personal jurisdiction of the federal and state courts situated in the State of
New York. The parties irrevocably waive any objections to the personal
jurisdiction of these courts. Said courts shall have sole and exclusive
jurisdiction over any and all claims, controversies, disputes and actions which
in any way relate to this agreement or the subject matter of this agreement. The
parties also irrevocably waive any objections that these courts constitute an
oppressive, unfair, or inconvenient forum and agree not to seek to change venue
on these grounds or any other grounds.
TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO
WAIVES TRIAL BY JURY WITH RESPECT TO ANY CLAIM, CONTROVERSY, DISPUTE OR ACTION
RELATING IN ANY WAY TO THIS AGREEMENT OR THE SUBJECT MATTER OF THIS AGREEMENT.
12. Notices. Any notice, demand, request, waiver or other communication
required or permitted to be given hereunder shall be in writing and shall be
effective (a) upon hand delivery by telecopy or facsimile at the address or
19
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
If to the Issuer: Total Luxury Group, Inc.
00000 Xxxxxxxx Xxxx Xxxxx #000
Xxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Tel. No.: 000-000-0000
Fax No.: 000-000-0000
If to any Holder: At the address of such Holder set forth on
Exhibit A to the Purchase
Agreement, with copies to:
Xxxxxxx Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Any party hereto may from time to time change its address for notices by
giving written notice of such changed address to the other party hereto.
13. Warrant Agent. The Issuer may, by written notice to each Holder of this
Warrant, appoint an agent having an office in New York, New York for the purpose
of issuing shares of Warrant Stock on the exercise of this Warrant pursuant to
Section 2(e) hereof, exchanging this Warrant pursuant to Section 2(e) hereof or
replacing this Warrant pursuant to Section 3(d) hereof, 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.
14. Remedies. The remedies provided in this Warrant shall be cumulative and
in addition to all other remedies available under this Warrant, at law or in
equity (including, without limitation, a decree of specific performance and/or
other injunctive relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit a Holder's right to pursue actual damages for any failure by the
Issuer to comply with the terms of this Warrant. Amounts set forth or provided
for herein with respect to payments, exercise and the like (and the computation
thereof) shall be the amounts to be received by the Holder hereof and shall not,
except as expressly provided herein, be subject to any other obligation of the
Issuer (or the performance thereof). The Issuer acknowledges that a breach by it
of its obligations hereunder will cause irreparable and material harm to the
Holder and that the remedy at law for any such breach may be inadequate.
Therefore the Issuer agrees that, in the event of any such breach or threatened
breach, the Holder shall be entitled, in addition to all other available rights
and remedies, at law or in equity, to seek and obtain such equitable relief,
20
including but not limited to an injunction restraining any such breach or
threatened breach, without the necessity of showing economic loss and without
any bond or other security being required.
15. Successors and Assigns. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and assigns of
the Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any such
Holder or Holder of Warrant Stock.
16. Construction. This Warrant shall be deemed to be jointly drafted by the
Company and all the Holders and shall not be construed against any person as the
drafter hereof.
17. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
18. Registration Rights. The Holder of this Warrant is entitled to the
benefit of certain registration rights with respect to the shares of Warrant
Stock issuable upon the exercise of this Warrant pursuant to the Registration
Rights Agreement and the registration rights with respect to the shares of
Warrant Stock issuable upon the exercise of this Warrant by any subsequent
Holder may only be assigned in accordance with the terms and provisions of the
Registrations Rights Agreement and Section 2(f) hereof.
19. Enforcement Expenses. The Issuer agrees to pay all costs and expenses
of the Holder incurred as a result of enforcement of this Warrant, including,
without limitation, reasonable attorneys' fees and expenses.
20. Binding Effect. The obligations of the Issuer and the Holder set forth
herein shall be binding upon the successors and assigns of each such party,
whether or not such successors or assigns are permitted by the terms hereof.
[Remainder of page intentionally left blank]
21
IN WITNESS WHEREOF, the Issuer has executed this Series B Warrant as of
the day and year first above written.
TOTAL LUXURY GROUP, INC.
By:
---------------------------
Name:
Title:
22
EXERCISE FORM
SERIES B WARRANT
TOTAL LUXURY GROUP, INC.
The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of Total Luxury
Group, Inc. covered by the within Warrant.
Dated: _________________ Signature__________________________________
Address ___________________________________
___________________________________
Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the date of Exercise: _________________________
The undersigned is an "accredited investor" as defined in Regulation D under the
Securities Act of 1933, as amended.
The undersigned intends that payment of the Warrant Price shall be made as
(check one):
Cash Exercise_______
Cashless Exercise_______
If the Holder has elected a Cash Exercise, the Holder shall pay the sum of
$________ by certified or official bank check (or via wire transfer) to the
Issuer in accordance with the terms of the Warrant.
If the Holder has elected a Cashless Exercise, a certificate shall be issued to
the Holder for the number of shares equal to the whole number portion of the
product of the calculation set forth below, which is ___________. The Company
shall pay a cash adjustment in respect of the fractional portion of the product
of the calculation set forth below in an amount equal to the product of the
fractional portion of such product and the Per Share Market Value on the date of
exercise, which product is ____________.
X = Y - (A)(Y)
------
B
Where:
The number of shares of Common Stock to be issued to the Holder
__________________("X").
The number of shares of Common Stock purchasable upon exercise of all of the
Warrant or, if only a portion of the Warrant is being exercised, the portion of
the Warrant being exercised ___________________________ ("Y"). The Warrant Price
______________ ("A").
The Per Share Market Value of one share of Common Stock__________________ ("B").
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ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated: _________________ Signature _________________________________
Address ___________________________________
___________________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.
Dated: _________________ Signature__________________________________
Address ___________________________________
___________________________________
FOR USE BY THE ISSUER ONLY:
This Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.
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