Contract
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THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS
WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO
THIS WARRANT OR SUCH SHARES OF COMMON STOCK, AS APPLICABLE, UNDER SAID ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO VENTURES-NATIONAL INCORPORATED D/B/A TITAN
GENERAL HOLDINGS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
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Right to Purchase 1,800,000 Shares of Common Stock of
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COMMON STOCK PURCHASE WARRANT |
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No. _________________ |
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Issue Date: June 29, 2004
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VENTURES-NATIONAL INCORPORATED D/B/A TITAN GENERAL HOLDINGS, INC. a corporation organized under the laws of the State of Utah, hereby certifies that, for value received, LAURUS MASTER FUND, LTD., or assigns (the "Holder"), is entitled, subject to the terms set forth below, to purchase from the Company (as defined herein) from and after the Issue Date of this Warrant and at any time or from time to time before 5:00 p.m., New York time, through the close of business June 29, 2011 (the "Expiration Date"), up to 1,800,000 fully paid and nonassessable shares of Common Stock (as hereinafter defined), $0.001 par value per share, at the applicable Exercise Price per share (as defined below). The number and character of such shares of Common Stock and the applicable Exercise Price per share are subject to adjustment as provided herein.
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As used herein the following terms, unless the context otherwise requires, have the following respective meanings:
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(a) The term "Company" shall include Ventures-National Incorporated d/b/a Titan General Holdings, Inc. and any corporation which shall succeed, or assume the obligations of, Ventures-National Incorporated d/b/a Titan General Holdings, Inc. hereunder.
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(b) The term "Common Stock" includes (i) the Company's Common Stock, par value $0.001 per share; and (ii) any other securities into which or for which any of the securities described in (a) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise. ------------------------------------------------------------------------------------------------------ |
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(c) The term "Other Securities" refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the holder of the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 4 or otherwise.
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(d) The "Exercise Price" applicable under this Warrant shall be as follows:
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(i) a price of $0.50 for all shares acquired hereunder.
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| 1. Exercise
of Warrant.
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| 1.1 Number
of Shares Issuable upon Exercise. From and after the date hereof
through and including the Expiration Date, the Holder shall be entitled to
receive, upon exercise of this Warrant in whole or in part, by delivery of
an original or fax copy of an exercise notice in the form attached hereto
as Exhibit A (the "Exercise Notice"), shares of Common Stock of
the Company, subject to adjustment pursuant to Section 4.
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| 1.2 Fair
Market Value. For purposes hereof, the "Fair Market Value"
of a share of Common Stock as of a particular date (the
"Determination Date") shall mean:
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| (a) If
the Company's Common Stock is traded on the American Stock Exchange or
another national exchange or is quoted on the National or SmallCap Market
of The Nasdaq Stock Market, Inc.("Nasdaq"), then the closing or
last sale price, respectively, reported for the last business day
immediately preceding the Determination Date.
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| (b) If
the Company's Common Stock is not traded on the American Stock Exchange
or another national exchange or on the Nasdaq but is traded on the NASD
OTC Bulletin Board, then the mean of the average of the closing bid and
asked prices reported for the last business day immediately preceding the
Determination Date.
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| (c) Except
as provided in clause (d) below, if the Company's Common Stock is not
publicly traded, then as the Holder and the Company agree or in the
absence of agreement by arbitration in accordance with the rules then in
effect of the American Arbitration Association, before a single arbitrator
to be chosen by the mutual agreement of the Company and the Holder from a
panel of persons qualified by education and training to pass on the matter
to be decided.
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| (d) If
the Determination Date is the date of a liquidation, dissolution or
winding up, or any event deemed to be a liquidation, dissolution or
winding up pursuant to the Company's charter, then all amounts to be
payable per share to holders of the Common Stock pursuant to the charter
in the event of such liquidation, dissolution or winding up, plus all
other amounts to be payable per share in respect of the Common Stock in
liquidation under the charter, assuming for the purposes of this clause
(d) that all of the shares of Common Stock then issuable upon exercise of
the Warrant are outstanding at the Determination Date.
2 ------------------------------------------------------------------------------------------------------ |
| 1.3 Company
Acknowledgment. The Company will, at the time of the exercise of the
Warrant, upon the request of the holder hereof acknowledge in writing its
continuing obligation to afford to such holder any rights to which such
holder shall continue to be entitled after such exercise in accordance
with the provisions of this Warrant. If the holder shall fail to make any
such request, such failure shall not affect the continuing obligation of
the Company to afford to such holder any such rights.
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| 1.4 Trustee
for Warrant Holders. In the event that a bank or trust company shall
have been appointed as trustee for the holders of the Warrant pursuant to
Subsection 3.2, such bank or trust company shall have all the powers and
duties of a warrant agent (as hereinafter described) and shall accept, in
its own name for the account of the Company or such successor person as
may be entitled thereto, all amounts otherwise payable to the Company or
such successor, as the case may be, on exercise of this Warrant pursuant
to this Section 1.
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| 2. Procedure
for Exercise.
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| 2.1 Delivery
of Stock Certificates, Etc., on Exercise. The Company agrees that the
shares of Common Stock purchased upon exercise of this Warrant shall be
deemed to be issued to the Holder as the record owner of such shares as of
the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares in accordance herewith unless
the stock transfer books of the Company shall then be closed (but, solely
as required by applicable securities law or the regulations of the market
on which the Company's Common Stock is traded), in which event such
shares of Common Stock shall be deemed outstanding on the first day
thereafter on which the stock transfer books of the Company shall then be
open. As soon as practicable after the exercise of this Warrant in full or
in part, and in any event within three (3) business days thereafter, the
Company at its expense (including the payment by it of any applicable
issue taxes) will cause to be issued in the name of and delivered to the
Holder, or as such Holder (upon payment by such Holder of any applicable
transfer taxes) may direct in compliance with applicable securities laws,
a certificate or certificates for the number of duly and validly issued,
fully paid and nonassessable shares of Common Stock (or Other Securities)
to which such Holder shall be entitled on such exercise, plus, in lieu of
any fractional share to which such holder would otherwise be entitled,
cash equal to such fraction multiplied by the then Fair Market Value of
one full share, together with any other stock or other securities and
property (including cash, where applicable) to which such Holder is
entitled upon such exercise pursuant to Section 1 or otherwise.
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| 2.2 Exercise.
Payment may be made either (i) in cash or by certified or official bank
check payable to the order of the Company equal to the applicable
aggregate Exercise Price, (ii) by delivery of the Warrant, or shares of
Common Stock and/or Common Stock receivable upon exercise of the Warrant
in accordance with Section (b) below, or (iii) by a combination of any of
the foregoing methods, for the number of Common Shares specified in such
Exercise Notice (as such exercise number shall be adjusted to reflect any
adjustment in the total number of shares of Common Stock issuable to the
Holder per the terms of this Warrant) and the Holder shall thereupon be
entitled to receive the number of duly authorized, validly issued,
fully-paid and non-assessable shares of Common Stock (or Other Securities)
determined as provided herein. Notwithstanding any provisions herein to
the contrary, if the Fair Market Value of one share of Common Stock is
greater than the Exercise Price (at the date of calculation as set forth
below), in lieu of exercising this Warrant for cash, the Holder may elect
to receive shares equal to the value (as determined below) of this Warrant
(or the portion thereof being exercised) by surrender of this Warrant at
the principal office of the Company together with the properly endorsed
Exercise Notice in which event the Company shall issue to the Holder a
number of shares of Common Stock computed using the following formula:
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X=Y |
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(A-B) |
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A
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Where X = the number of shares of Common Stock to be issued to the Holder |
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Y = the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such calculation) |
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A = the Fair Market Value of one share of the Company's Common Stock (at the date of such calculation) |
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B = Exercise Price (as adjusted to the date of such calculation)
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| 3. Effect
of Reorganization, Etc.; Adjustment of Exercise Price.
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| 3.1 Reorganization,
Consolidation, Merger, Etc. In case at any time or from time to time,
the Company shall (a) effect a reorganization, (b) consolidate with or
merge into any other person, or (c) transfer all or substantially all of
its properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, as
a condition to the consummation of such a transaction, proper and adequate
provision shall be made by the Company whereby the Holder of this Warrant,
on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the
effective date of such dissolution, as the case may be, shall receive, in
lieu of the Common Stock (or Other Securities) issuable on such exercise
prior to such consummation or such effective date, the stock and other
securities and property (including cash) to which such Holder would have
been entitled upon such consummation or in connection with such
dissolution, as the case may be, if such Holder had so exercised this
Warrant, immediately prior thereto, all subject to further adjustment
thereafter as provided in Section 4.
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| 3.2 Dissolution.
In the event of any dissolution of the Company following the transfer of
all or substantially all of its properties or assets, the Company,
concurrently with any distributions made to holders of its Common Stock,
shall at its expense deliver or cause to be delivered to the Holder the
stock and other securities and property (including cash, where applicable)
receivable by the Holder of the Warrant pursuant to Section 3.1, or, if
the Holder shall so instruct the Company, to a bank or trust company
specified by the Holder and having its principal office in New York, NY as
trustee for the Holder of the Warrant (the "Trustee").
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| 3.3 Continuation
of Terms. Upon any reorganization, consolidation, merger or transfer
(and any dissolution following any transfer) referred to in this Section
3, this Warrant shall continue in full force and effect and the terms
hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation
of such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including,
in the case of any such transfer, the person acquiring all or
substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 4. In the event this Warrant does not continue in full
force and effect after the consummation of the transactions described in
this Section 3, then the Company's securities and property (including
cash, where applicable) receivable by the Holders of the Warrant will be
delivered to Holder or the Trustee as contemplated by Section 3.2.
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| 4. Extraordinary
Events Regarding Common Stock. In the event that the Company shall (a)
issue additional shares of the Common Stock as a dividend or other
distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the
Common Stock into a smaller number of shares of the Common Stock, then, in
each such event, the Exercise Price shall, simultaneously with the
happening of such event, be adjusted by multiplying the then Exercise
Price by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event, and the product so obtained
shall thereafter be the Exercise Price then in effect. The Exercise Price,
as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein in this Section 4. The
number of shares of Common Stock that the holder of this Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be entitled
to receive shall be adjusted by multiplying the number of shares of Common
Stock that would otherwise (but for the provisions of this Section 4) be
issuable on such exercise by a fraction of which (a) the numerator is the
Exercise Price that would otherwise (but for the provisions of this
Section 4) be in effect, and (b) the denominator is the Exercise Price in
effect on the date of such exercise.
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| 5. Certificate
as to Adjustments. In each case of any adjustment or readjustment in
the shares of Common Stock (or Other Securities) issuable on the exercise
of the Warrant, the Company at its expense will promptly cause its Chief
Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or receivable by
the Company for any additional shares of Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold, (b) the
number of shares of Common Stock (or Other Securities) outstanding or
deemed to be outstanding, and (c) the Exercise Price and the number of
shares of Common Stock to be received upon exercise of this Warrant, in
effect immediately prior to such adjustment or readjustment and as
adjusted or readjusted as provided in this Warrant. The Company will
forthwith mail a copy of each such certificate to the holder of the
Warrant and any Warrant agent of the Company (appointed pursuant to
Section 11 hereof).
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| 6. Reservation
of Stock, Etc., Issuable on Exercise of Warrant. The Company will at
all times reserve and keep available, solely for issuance and delivery on
the exercise of the Warrant, shares of Common Stock (or Other Securities)
from time to time issuable on the exercise of the Warrant.
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| 7. Assignment;
Exchange of Warrant. Subject to compliance with applicable securities
laws, this Warrant, and the rights evidenced hereby, may be transferred by
any registered holder hereof (a "Transferor") in whole or in
part. On the surrender for exchange of this Warrant, with the Transferor's
endorsement in the form of Exhibit B attached hereto (the "Transferor
Endorsement Form") and together with evidence reasonably satisfactory
to the Company demonstrating compliance with applicable securities laws,
which shall include, without limitation, a legal opinion from the Company's
counsel that such transfer is exempt from the registration requirements of
applicable securities laws, the Company at its expense but with payment by
the Transferor of any applicable transfer taxes) will issue and deliver to
or on the order of the Transferor thereof a new Warrant of like tenor, in
the name of the Transferor and/or the transferee(s) specified in such
Transferor Endorsement Form (each a "Transferee"), calling in
the aggregate on the face or faces thereof for the number of shares of
Common Stock called for on the face or faces of the Warrant so surrendered
by the Transferor.
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| 8. Replacement
of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement or security reasonably satisfactory in
form and amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of this Warrant, the Company at its expense
will execute and deliver, in lieu thereof, a new Warrant of like tenor.
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| 9. Registration
Rights. The Holder of this Warrant has been granted certain
registration rights by the Company. These registration rights are set
forth in a Registration Rights Agreement entered into by the Company and
Purchaser dated as of even date of this Warrant.
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| 10. Maximum
Exercise. The Holder shall not be entitled to exercise this Warrant on
an exercise date, in connection with that number of shares of Common Stock
which would be in excess of the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates on an exercise
date, and (ii) the number of shares of Common Stock issuable upon the
exercise of this Warrant with respect to which the determination of this
proviso is being made on an exercise date, which would result in
beneficial ownership by the Holder and its affiliates of more than 4.99%
of the outstanding shares of Common Stock of the Company on such date. For
the purposes of the proviso to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3
thereunder. Notwithstanding the foregoing, the restriction described in
this paragraph may be revoked upon 75 days prior notice from the Holder to
the Company and is automatically null and void upon an Event of Default
under the Note.
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| 11. Warrant
Agent. The Company may, by written notice to the each Holder of the
Warrant, appoint an agent for the purpose of issuing Common Stock (or
Other Securities) on the exercise of this Warrant pursuant to Section 1,
exchanging this Warrant pursuant to Section 7, and replacing this Warrant
pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.
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| 12. Transfer
on the Company's Books. Until this Warrant is transferred on the
books of the Company, the Company may treat the registered holder hereof
as the absolute owner hereof for all purposes, notwithstanding any notice
to the contrary.
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| 13. Notices,
Etc. All notices and other communications from the Company to the
Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been
furnished to the Company in writing by such Holder or, until any such
Holder furnishes to the Company an address, then to, and at the address
of, the last Holder of this Warrant who has so furnished an address to the
Company.
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| 14. Voluntary
Adjustment by the Company. The Company may at any time during the term
of this Warrant reduce the then current Exercise Price to any amount and
for any period of time deemed appropriate by the Board of Directors of the
Company.
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| 15. No
Shorting. The Purchaser or any of its affiliates and investment
partners will not and will not cause any person or entity, directly or
indirectly, to engage in "short sales" or "short sales
against the box" of the Company's Common Stock or any other hedging
strategies.
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| 16. Miscellaneous.
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against
which enforcement of such change, waiver, discharge or termination is
sought. This Warrant shall be governed by and construed in accordance with
the laws of State of New York without regard to principles of conflicts of
laws. Any action brought concerning the transactions contemplated by this
Warrant shall be brought only in the state courts of New York or in the
federal courts located in the state of New York; provided, however, that
the Holder may choose to waive this provision and bring an action outside
the State of New York. The individuals executing this Warrant on behalf of
the Company agree to submit to the jurisdiction of such courts and waive
trial by jury. The prevailing party shall be entitled to recover from the
other party its reasonable attorney's fees and costs. In the event that
any provision of this Warrant is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be
deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of this
Warrant. The headings in this Warrant are for purposes of reference only,
and shall not limit or otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in no way
affect the validity or enforceability of any other provision. The Company
acknowledges that legal counsel participated in the preparation of this
Warrant and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be
applied in the interpretation of this Warrant to favor any party against
the other party.
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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above. |
| Ventures-National
Incorporated d/b/a Titan General Holdings, Inc. By: /s/ Xxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxx Title: Chief Financial Officer WITNESS: /s/ Xxxxxxx
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Exhibit A FORM OF SUBSCRIPTION TO: Ventures-National Incorporated d/b/a Titan General Holdings, Inc. Attention: Chief Financial Officer The undersigned, pursuant to the provisions set forth in the attached Warrant (No.____), hereby irrevocably elects to purchase (check applicable box):
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________ shares of the Common Stock covered by such Warrant; or |
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the maximum number of shares of Common Stock covered by such Warrant pursuant to the cashless exercise procedure set forth in Section 2. |
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| The undersigned herewith makes payment of the full Exercise Price for such shares at the price per share provided for in such Warrant, which is $___________. Such payment takes the form of (check applicable box or boxes): | ||
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$__________ in lawful money of the United States; and/or |
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the cancellation of such portion of the attached Warrant as is exercisable for a total of _______ shares of Common Stock (using a Fair Market Value of $_______ per share for purposes of this calculation); and/or |
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the cancellation of such number of shares of Common Stock as is necessary, in accordance with the formula set forth in Section 2.2, to exercise this Warrant with respect to the maximum number of shares of Common Stock purchasable pursuant to the cashless exercise procedure set forth in Section 2. |
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The undersigned requests that the certificates for such shares be issued in the name of, and delivered to ______________________________________________ whose address is ___________________________________________________________________________. The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock under the Securities Act of 1933, as amended (the "Securities Act") or pursuant to an exemption from registration under the Securities Act.
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Dated: |
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(Signature must conform to name of holder as specified on the face of the Warrant) |
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Address: |
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A-1 ----------------------------------------------------------------------------------------------------- |
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Exhibit B FORM OF TRANSFEROR ENDORSEMENT For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading "Transferees" the right represented by the within Warrant to purchase the percentage and number of shares of Common Stock of Ventures-National Incorporated d/b/a Titan General Holdings, Inc. into which the within Warrant relates specified under the headings "Percentage Transferred" and "Number Transferred," respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to transfer its respective right on the books of Ventures-National Incorporated d/b/a Titan General Holdings, Inc. with full power of substitution in the premises.
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Percentage |
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Dated: |
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(Signature must conform to name of holder as specified on the face of the Warrant) |
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Address: |
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SIGNED IN THE PRESENCE OF: |
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(Name) |
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ACCEPTED AND AGREED: |
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[TRANSFEREE] |
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(Name) |
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B - 1 |
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