Exhibit 10.3 - Warrant
ANNEX I
TO
SECURITIES PURCHASE AGREEMENT
PROTOTYPE FOR EACH ISSUANCE
FORM OF WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
SATELLITE ENTERPRISES CORP.
COMMON STOCK PURCHASE WARRANT
1. Issuance. In consideration of good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by SATELLITE ENTERPRISES
CORP., a Nevada corporation (the "Company"), _____________________________ or
registered assigns (the "Holder") is hereby granted the right to purchase at any
time until 5:00 P.M., New York City time, on ___________, 20091 (the "Expiration
Date"), __________________________ (____________)2 fully paid and nonassessable
shares of the Company's Common Shares, par value $0.001 (the "Common Stock"), at
an initial exercise price per share (the "Exercise Price") of US$1.50 per share,
subject to further adjustment as set forth herein. This Warrant is being issued
pursuant to the terms of that certain Securities Purchase Agreement, dated as of
May 19, 2004 (the "Agreement"), to which the Company and Holder (or Holder's
predecessor in interest) are parties. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Agreement. This Warrant
was originally issued to the Holder or the Holder's predecessor in interest on
_____________, 200_3 (the "Issue Date").
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1 Insert date which is the last calendar day of the month in which the fifth
anniversary of the Closing Date occurs. 2 Insert number equal to 100% of the
number of the Purchased Shares for the Closing Date.
3 Insert the Closing Date.
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2. Exercise of Warrants.
2.1 General.
(a) This Warrant is exercisable in whole or in part at any time and
from time to time commencing on the Commencement Date (as defined
below). Such exercise shall be effectuated by submitting to the
Company (either by delivery to the Company or by facsimile
transmission as provided in Section 8 hereof) a completed and
duly executed Notice of Exercise (substantially in the form
attached to this Warrant Certificate) as provided in the Notice
of Exercise (or revised by notice given by the Company as
contemplated by the Section headed "NOTICES" in the Agreement).
The date such Notice of Exercise is faxed to the Company shall be
the "Exercise Date," provided that, if such exercise represents
the full exercise of the outstanding balance of the Warrant, the
Holder of this Warrant tenders this Warrant Certificate to the
Company within five (5) business days thereafter. The Notice of
Exercise shall be executed by the Holder of this Warrant and
shall indicate (i) the number of shares then being purchased
pursuant to such exercise and (ii) if applicable (as provided
below), whether the exercise is a cashless exercise.
(b) The provisions of this Section 2.1(b) shall only be applicable
(i) on or after the first anniversary of the Issue Date, and (ii)
if, and only if, on the Exercise Date there is no effective
Registration Statement covering the Warrant Shares (other than
during a Permitted Suspension Period, as defined in the
Registration Rights Agreement). If the Notice of Exercise form
elects a "cashless" exercise, the Holder shall thereby be
entitled to receive a number of shares of Common Stock equal to
(A) the excess of the Current Market Value (as defined below)
over the total cash exercise price of the portion of the Warrant
then being exercised, divided by (B) the Market Price of the
Common Stock as of the Trading Day immediately prior to the
Exercise Date. For the purposes of this Warrant, the terms (x)
"Current Market Value" shall mean an amount equal to the Market
Price of the Common Stock as of the Trading Day immediately prior
to the Exercise Date, multiplied by the number of shares of
Common Stock specified in such Notice of Exercise Form, and (y)
"Market Price of the Common Stock" shall mean the Closing Price
for the relevant date.
(c) If the Notice of Exercise form elects a "cash" exercise (or if
the cashless exercise referred to in the immediately preceding
paragraph (b) is not available in accordance with its terms), the
Exercise Price per share of Common Stock for the shares then
being exercised shall be payable to the Company in cash or by
certified or official bank check or by wire transfer in
accordance with instructions provided by the Company at the
request of the Holder.
(d) Upon the appropriate payment, if any, of the Exercise Price for
the shares of Common Stock purchased, together with the surrender
of this Warrant Certificate (if required), the Holder shall be
entitled to receive a certificate or certificates for the shares
of Common Stock so purchased. The Company shall deliver such
certificates representing the Warrant Shares in accordance with
the instructions of the Holder as provided in the Notice of
Exercise within three Trading Days of the later of the Exercise
Date or, if the exercise is a "cash" exercise, the date the
payment of the Exercise Price for the relevant Warrant Shares is
received by the Company.
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(e) The Holder shall be deemed to be the holder of the shares
issuable to it in accordance with the provisions of this Section
2.1 on the Exercise Date.
2.2 Limitation on Exercise. Notwithstanding the provisions of this
Warrant, the Agreement or of the other Transaction Agreements, in no event
(except (i) as specifically provided in this Warrant as an exception to
this provision, (ii) during the forty-five (45) day period prior to the
Expiration Date, or (iii) while there is outstanding a tender offer for any
or all of the shares of the Company's Common Stock) shall the Holder be
entitled to exercise this Warrant, or shall the Company have the obligation
to issue shares upon such exercise of all or any portion of this Warrant to
the extent that, after such exercise the sum of (1) the number of shares of
Common Stock beneficially owned by the Holder and its affiliates (other
than shares of Common Stock which may be deemed beneficially owned through
the ownership of the unexercised portion of the Warrants or other rights to
purchase Common Stock or through the ownership of the unconverted portion
of convertible securities), and (2) the number of shares of Common Stock
issuable upon the exercise of the Warrants with respect to which the
determination of this proviso is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of the
outstanding shares of Common Stock (after taking into account the shares to
be issued to the Holder upon such exercise). For 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 (the "1934 Act"), except as otherwise provided in
clause (1) of such sentence. The Holder, by its acceptance of this Warrant,
further agrees that if the Holder transfers or assigns any of the Warrants
to a party who or which would not be considered such an affiliate, such
assignment shall be made subject to the transferee's or assignee's specific
agreement to be bound by the provisions of this Section 2.2 as if such
transferee or assignee were the original Holder hereof.
2.3 Commencement Date. The term "Commencement Date" means the earlier
of (i) the date which is sixty-five (65) days after the Issue Date, or (ii)
the Effective Date.
3. Reservation of Shares. The Company hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant one hundred ten percent (110%) of the Warrant Shares.
4. Mutilation or Loss of Warrant. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) receipt of reasonably
satisfactory indemnification, and (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will execute and deliver a new Warrant
of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant
shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.
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6. Protection Against Dilution and Other Adjustments.
6.1 Adjustment Mechanism. If an adjustment of the Exercise Price is
required pursuant to this Section 6, the Holder shall be entitled to
purchase such number of shares of Common Stock as will cause (i) (x) the
total number of shares of Common Stock Holder is entitled to purchase
pursuant to this Warrant following such adjustment, multiplied by (y) the
adjusted Exercise Price per share, to equal the result of (ii) (x) the
dollar amount of the total number of shares of Common Stock Holder is
entitled to purchase before adjustment, multiplied by (y) the total
Exercise Price before adjustment.4
6.2 Capital Adjustments. In case of any stock split or reverse stock
split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation (where the Company is not the
surviving entity), the provisions of this Section 6 shall be applied as if
such capital adjustment event had occurred immediately prior to the date of
this Warrant and the original Exercise Price had been fairly allocated to
the stock resulting from such capital adjustment; and in other respects the
provisions of this Section shall be applied in a fair, equitable and
reasonable manner so as to give effect, as nearly as may be, to the
purposes hereof. A rights offering to stockholders shall be deemed a stock
dividend to the extent of the bargain purchase element of the rights.
6.3 Adjustment for Spin Off. If, for any reason, prior to the exercise
of this Warrant in full, the Company spins off or otherwise divests itself
of a material part of its business or operations or disposes all or of a
part of its assets in a transaction (the "Spin Off") in which the Company
does not receive compensation for such business, operations or assets, but
causes securities of another entity (the "Spin Off Securities") to be
issued to security holders of the Company, then the Company shall cause (i)
to be reserved Spin Off Securities equal to the number thereof which would
have been issued to the Holder had all of the Holder's unexercised Warrants
outstanding on the record date (the "Record Date") for determining the
amount and number of Spin Off Securities to be issued to security holders
of the Company (the "Outstanding Warrants") been exercised as of the close
of business on the Trading Day immediately before the Record Date (the
"Reserved Spin Off Shares"), and (ii) to be issued to the Holder on the
exercise of all or any of the Outstanding Warrants, such amount of the
Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares,
multiplied by (y) a fraction, of which (I) the numerator is the amount of
the Outstanding Warrants then being exercised, and (II) the denominator is
the amount of the Outstanding Warrants.
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4 Example: Assume 10,000 shares remain under Warrant at an assumed original
stated Exercise Price of US$1.50. Total exercise price (clause (y) in text) is
(i) 10,000 x (ii) US$1.50, or US$15,000. Company effects 2:1 stock split.
Exercise Price is adjusted to US$0.75. Number of shares covered by Warrant is
adjusted to 20,000, because (applying clause (x) in text) (i) 20,000 x (ii)
US$0.75 = US$15,000.
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6.4 Adjustment for Certain Transactions. Reference is made to the
provisions of Section 4(g) of the Agreement, the terms of which are
incorporated herein by reference. The number of shares covered by this
Warrant and the Exercise Price shall be adjusted as provided in the
applicable provisions of said Section 4(g) of the Agreement.
7. Transfer to Comply with the Securities Act; Registration Rights.
7.1 Transfer. This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or issuable upon exercise of this
Warrant may be sold, transferred, pledged or hypothecated in the absence of
an effective registration statement under the Act relating to such security
or an opinion of counsel satisfactory to the Company that registration is
not required under the Act. Each certificate for the Warrant, the Warrant
Shares and any other security issued or issuable upon exercise of this
Warrant shall contain a legend on the face thereof, in form and substance
satisfactory to counsel for the Company, setting forth the restrictions on
transfer contained in this Section.
7.2 Registration Rights. (a) Reference is made to the Registration
Rights Agreement. The Company's obligations under the Registration Rights
Agreement and the other terms and conditions thereof with respect to the
Warrant Shares, including, but not necessarily limited to, the Company's
commitment to file a registration statement including the Warrant Shares,
to have the registration of the Warrant Shares completed and effective, and
to maintain such registration, are incorporated herein by reference.
(b) In addition to the registration rights referred to in the
preceding provisions of Section 7.2(a), effective after the expiration of
the effectiveness of the Registration Statement as contemplated by the
Registration Rights Agreement, the Holder shall have piggy-back
registration rights with respect to the Warrant Shares then held by the
Holder or then subject to issuance upon exercise of this Warrant
(collectively, the "Remaining Warrant Shares"), subject to the conditions
set forth below. If, at any time after the Registration Statement has
ceased to be effective, the Company participates (whether voluntarily or by
reason of an obligation to a third party) in the registration of any shares
of the Company's stock (other than a registration on Form S-8 or on Form
S-4), the Company shall give written notice thereof to the Holder and the
Holder shall have the right, exercisable within ten (10) business days
after receipt of such notice, to demand inclusion of all or a portion of
the Holder's Remaining Warrant Shares in such registration statement. If
the Holder exercises such election, the Remaining Warrant Shares so
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designated shall be included in the registration statement at no cost or
expense to the Holder (other than any costs or commissions which would be
borne by the Holder under the terms of the Registration Rights Agreement).
The Holder's rights under this Section 7 shall expire at such time as the
Holder can sell all of the Remaining Warrant Shares under Rule 144 without
volume or other restrictions or limit.
8. Notices. Any notice required or permitted hereunder shall be given in
manner provided in the Section headed "NOTICES" in the Agreement, the terms of
which are incorporated herein by reference.
9. Supplements and Amendments; Whole Agreement. This Warrant may be amended
or supplemented only by an instrument in writing signed by the parties hereto.
This Warrant contains the full understanding of the parties hereto with respect
to the subject matter hereof and thereof and there are no representations,
warranties, agreements or understandings other than expressly contained herein
and therein.
10. Governing Law. This Warrant shall be deemed to be a contract made under
the laws of the State of New York for contracts to be wholly performed in such
state and without giving effect to the principles thereof regarding the conflict
of laws. Each of the parties consents to the jurisdiction of the federal courts
whose districts encompass any part of the County of New York or the state courts
of the State of New York sitting in the County of New York in connection with
any dispute arising under this Warrant and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
conveniens, to the bringing of any such proceeding in such jurisdictions. To the
extent determined by such court, the Company shall reimburse the Holder for any
reasonable legal fees and disbursements incurred by the Buyer in enforcement of
or protection of any of its rights under any of the Transaction Agreements.
11. JURY TRIAL WAIVER. The Company and the Holder hereby waive a trial by
jury in any action, proceeding or counterclaim brought by either of the Parties
hereto against the other in respect of any matter arising out or in connection
with this Warrant.
12. Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
[Balance of page intentionally left blank]
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13. Descriptive Headings. Descriptive headings of the several Sections of
this Warrant are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the day of , 200 .
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SATELLITE ENTERPRISES CORP.
By:
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(Print Name)
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(Title)
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NOTICE OF EXERCISE OF WARRANT
TO: SATELLITE ENTERPRISES CORP. VIA FAX: (203) -
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: President
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of ________________, 20___ , to
purchase ___________ shares of the Common S hares, par value $0.01 each ("Common
Stock"), of SATELLITE ENTERPRISES CORP. and tenders herewith payment in
accordance with Section 1 of said Common Stock Purchase Warrant.
CASH: US$ = (Exercise Price x Exercise Shares)
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Payment is being made by:
_ enclosed check
_ wire transfer
_ other
CASHLESS EXERCISE [if available pursuant to Section 2.1(b)]:
Net number of Warrant Shares to be issued to Holder : *
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* based on: Current Market Value - (Exercise Price x Exercise Shares)
Market Price of Common Stock
where:
Market Price of Common Stock ["MP"] = US$
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Current Market Value [MP x Exercise Shares] = US$
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It is the intention of the Holder to comply with the provisions of Section
2.2 of the Warrant regarding certain limits on the Holder's right to exercise
thereunder. Based on the analysis on the attached Worksheet Schedule, the Holder
believe this exercise complies with the provisions of said Section 2.2.
Nonetheless, to the extent that, pursuant to the exercise effected hereby, the
Holder would have more shares than permitted under said Section, this notice
should be amended and revised, ab initio, to refer to the exercise which would
result in the issuance of shares consistent with such provision. Any exercise
above such amount is hereby deemed void and revoked.
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As contemplated by the Warrant, this Notice of Conversion is being sent by
facsimile to the telecopier number and officer indicated above.
If this Notice of Exercise represents the full exercise of the outstanding
balance of the Warrant, the Holder either (1) has previously surrendered the
Warrant to the Company or (2) will surrender (or cause to be surrendered) the
Warrant to the Company at the address indicated above by express courier within
five (5) business days after delivery or facsimile transmission of this Notice
of Exercise.
The certificates representing the Warrant Shares should be transmitted by
the Company to the Holder
via express courier, or
by electronic transfer
after receipt of this Notice of Exercise (by facsimile transmission or
otherwise) to:
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Dated:
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[Name of Holder]
By:
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NOTICE OF EXERCISE OF WARRANT
WORKSHEET SCHEDULE
1. Current Common Stock holdings of Holder and Affiliates
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2. Shares to be issued on current exercise
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3. Other shares to be issued on other current exercise(s) and other
current conversion(s)5
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4. Other shares eligible to be acquired within next 60 days without
restriction
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5. Total [sum of Lines 1 through 4]
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6. Outstanding shares of Common Stock6
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7. Adjustments to Outstanding
a. Shares known to Holder as previously issued to Holder or others but
not included in Line 6
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b. Shares to be issued per Line(s) 2 and 3
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c. Total Adjustments [Lines 7a and 7b]
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8. Total Adjusted Outstanding [Lines 6 plus 7c]
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9. Holder's Percentage [Line 5 divided by Line 8] % [Note: Line 9 not to be
above 4.99%] -----------
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5 Includes shares issuable on conversion of convertible securities (including
assumed payment of interest or dividends) or exercise of other rights, including
other warrants or options
6 Based on latest SEC filing by Company or information provided by executive
officer of Company, counsel to Company or transfer agent
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