NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SHARES
OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT.
IN ADDITION, A PREFERRED STOCK PURCHASE AGREEMENT DATED AS OF JUNE 16,
2005 (THE "PURCHASE AGREEMENT"), A COPY OF WHICH MAY BE OBTAINED FROM
THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN
ADDITIONAL AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THIS WARRANT.
---------------------------------------
ADSOUTH PARTNERS, INC
COMMON STOCK PURCHASE WARRANT "--"
Number of Shares: x,xxx,xxx Holder: [Name of Purchaser]
Original Issue Date: June 17, 2005 Name of Contact
Address
Address
Expiration Date: June 16, 2010 Address
tel xxx-xxx-xxx
Exercise Price per Share: $x.xx fax xxx-xxx-xxx
Adsouth Partners, Inc, a company organized and existing under the laws of the
State of Nevada (the "Company" or "Adsouth"), hereby certifies that, for value
received, [Name of purchaser], or its registered assigns (the "Warrant Holder"),
is entitled to purchase from the Company up to [insert applicable number of
warrants (x,xxx,xxx)] shares (as adjusted from time to time as provided in
Section 7, the "Warrant Shares") of common stock, $.0001 par value (the "Common
Stock"), of the Company at a price per Warrant Share of [insert Exercise Price]
(as adjusted from time to time as provided in Section 7, the "Exercise Price"),
at any time and from time to time from and after the date thereof and through
and including 5:00 p.m. New York City time on the Expiration Date, such period
being referred to as the "Exercise Period."
1. Registration of Warrant. The Company shall register this Warrant upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Warrant Holder hereof from time to time.
The Company may deem and treat the registered Warrant Holder of this Warrant as
the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Warrant Holder, and for all other purposes, and the Company
shall not be affected by notice to the contrary.
2. Investment Representation. The Warrant Holder by accepting this Warrant
represents that the Warrant Holder is acquiring this Warrant for its own account
or the account of an affiliate that is an accredited investor which has been
identified to and approved by the Company (which approval shall not be
unreasonably withheld or delayed) for investment purposes and not with the view
to any offering or distribution and that the Warrant Holder will not sell or
otherwise dispose of this Warrant or the underlying Warrant Shares in violation
of applicable securities laws. The Warrant Holder acknowledges that the
certificates representing any Warrant Shares will bear a legend indicating that
they have not been registered under the 1933 Act and may not be sold by the
Warrant Holder except pursuant to an effective registration statement or
pursuant to an exemption from registration requirements of the 1933 Act and in
accordance with federal and state securities laws. If this Warrant was acquired
by the Warrant Holder pursuant to the exemption from the registration
requirements of the 1933 Act afforded by Regulation S thereunder, the Warrant
Holder acknowledges and covenants that this Warrant may not be exercised by or
on behalf of a Person during the one year distribution compliance period (as
defined in Regulation S) following the date hereof. "Person" means an
individual, partnership, firm, limited liability company, trust, joint venture,
association, corporation, or any other legal entity.
3. Validity of Warrant and Issue of Shares. The Company represents and
warrants that this Warrant has been duly authorized and validly issued and
warrants and agrees that all of Common Stock that may be issued upon the
exercise of the rights represented by this Warrant will, when issued upon such
exercise, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof, other
than those incurred by or as a result of conduct of the Holder. The Company
further warrants and agrees that during the Exercise Period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of Common Stock to
provide for the exercise of the rights represented by this Warrant.
4. Registration of Transfers and Exchange of Warrants.
a. Subject to compliance with federal and state securities laws, the
Company shall register the transfer of any portion of this Warrant in the
Warrant Register, upon surrender of this Warrant with the Form of Assignment
attached hereto duly completed and signed, to the Company at the office
specified in or pursuant to Section 9. Upon any such registration or transfer, a
new warrant to purchase Common Stock, in substantially the form of this Warrant
(any such new warrant, a "New Warrant"), evidencing the portion of this Warrant
so transferred shall be issued to the transferee and a New Warrant evidencing
the remaining portion of this Warrant not so transferred, if any, shall be
issued to the transferring Warrant Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance of such transferee of all
of the rights and obligations of a Warrant Holder of a Warrant.
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b. This Warrant is exchangeable, upon the surrender hereof by the
Warrant Holder to the office of the Company specified in or pursuant to Section
9 for one or more New Warrants, evidencing in the aggregate the right to
purchase the number of Warrant Shares which may then be purchased hereunder. Any
such New Warrant will be dated the date of such exchange.
5. Exercise of Warrants.
a. Upon surrender of this Warrant with the Form of Election to
Purchase attached hereto duly completed and signed to the Company, at its
address set forth in Section 9, and upon payment and delivery of the Exercise
Price per Warrant Share multiplied by the number of Warrant Shares that the
Warrant Holder intends to purchase hereunder, in lawful money of the United
States of America, by wire transfer or by certified or official bank check or
checks, to the Company, all as specified by the Warrant Holder in the Form of
Election to Purchase, the Company shall promptly (but in no event later than 7
business days after the Date of Exercise (as defined herein)) issue or cause to
be issued and cause to be delivered to or upon the written order of the Warrant
Holder and in such name or names as the Warrant Holder may designate (subject to
the restrictions on transfer described in the legend set forth on the face of
this Warrant), a certificate for the Warrant Shares issuable upon such exercise,
with such restrictive legend as required by the 1933 Act. Any person so
designated by the Warrant Holder to receive Warrant Shares shall be deemed to
have become holder of record of such Warrant Shares as of the Date of Exercise
of this Warrant.
b. A "Date of Exercise" means the date on which the Company shall
have received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the Warrant Holder to be
purchased.
c. This Warrant shall be exercisable at any time and from time to
time during the Exercise Period for such number of Warrant Shares as is
indicated in the attached Form of Election To Purchase. If less than all of the
Warrant Shares which may be purchased under this Warrant are exercised at any
time, the Company shall issue or cause to be issued, at its expense, a New
Warrant evidencing the right to purchase the remaining number of Warrant Shares
for which no exercise has been evidenced by this Warrant.
d. (i) Notwithstanding anything contained herein to the contrary, but
subject to Section 5(e) of this Warrant, the holder of this Warrant may, at its
election exercised in its sole discretion, exercise this Warrant in whole or in
part and, in lieu of making the cash payment otherwise contemplated to be made
to the Company upon such exercise in payment of the Aggregate Exercise Price,
elect instead to receive upon such exercise the "Net Number" of shares of Common
Stock determined according to the following formula (a "Cashless Exercise"):
Net Number = (A x (B - C))/B
(ii) For purposes of the foregoing formula:
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A= the total number shares with respect to which this Warrant is
then being exercised.
B= the last reported sale price (as reported by Bloomberg) of the
Common Stock on the trading day immediately preceding the date of
the Exercise Notice.
C= the Warrant Exercise Price then in effect at the time of such
exercise.
e. The Cashless Exercise provisions set forth in Section 5(d) of this
Warrant may not be exercised (i) for a period of six (6) months from the date of
this Warrant and (ii) thereafter, as long as the Warrant Shares are subject to
an effective registration statement under the 1933 Act.
6. Maximum Exercise. The Warrant Holder shall not be entitled to exercise
this Warrant on a Date of Exercise 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 Warrant Holder and its affiliates on such
Date of Exercise, and (ii) the number of shares of Common Stock issuable upon
the exercise of this Warrant with respect to which the determination of this
limitation is being made on a Date of Exercise, which would result in beneficial
ownership by the Warrant Holder and its affiliates of more than the Applicable
Percentage (The "Applicable Percentage" shall be defined as 4.9% for the Xxxxxx
Partners LP, Xxxxxx, Xxxxxxxx and their respective Affiliates) of the
outstanding shares of Common Stock on such date. For the purposes of this
Warrant 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. Subject to the foregoing, the Warrant Holder shall not be limited to
aggregate exercises which would result in the issuance of more than the
Applicable Percentage.
7. Adjustment of Exercise Price and Number of Shares. The character of the
shares of stock or other securities at the time issuable upon exercise of this
Warrant and the Exercise Price therefore, are subject to adjustment upon the
occurrence of the following events, and all such adjustments shall be
cumulative:
a. Adjustment for Stock Splits, Stock Dividends, Recapitalizations,
Etc. The Exercise Price of this Warrant and the number of shares of Common Stock
or other securities at the time issuable upon exercise of this Warrant shall be
appropriately adjusted to reflect any stock dividend, stock split, stock
distribution, combination of shares, reverse split, reclassification,
recapitalization or other similar event affecting the number of outstanding
shares of stock or securities.
b. Adjustment for Reorganization, Consolidation, Merger, Etc. In
case of any consolidation or merger of the Company with or into any other
corporation, entity or person, or any other corporate reorganization, in which
the Company shall not be the continuing or surviving entity of such
consolidation, merger or reorganization (any such transaction being hereinafter
referred to as a "Reorganization"), then, in each case, the holder of this
Warrant, on exercise hereof at any time after the consummation or effective date
of such Reorganization (the "Effective Date"), shall receive, in lieu of the
shares of stock or other securities at any time issuable upon the exercise
4
of the Warrant issuable on such exercise prior to the Effective Date, the stock
and other securities and property (including cash) to which such holder would
have been entitled upon the Effective Date if such holder had exercised this
Warrant immediately prior thereto (all subject to further adjustment as provided
in this Warrant).
c. Certificate as to Adjustments. In case of any adjustment or
readjustment in the price or kind of securities issuable on the exercise of this
Warrant, the Company will promptly give written notice thereof to the holder of
this Warrant in the form of a certificate, certified and confirmed by the Board
of Directors of the Company, setting forth such adjustment or readjustment and
showing in reasonable detail the facts upon which such adjustment or
readjustment is based.
d. Price Adjustment. In case the Company shall, when this Warrant is
outstanding, issue shares of its Common Stock or securities upon the conversion
or exercise of which or pursuant to the terms of which shares of Common Stock
may be issued (other than (A) Exempt Issuances, or (B) shares issued in any of
the transactions described in Sections 7(a) and 7(b) of this Warrant or (C)
shares issuable upon exercise or conversion of convertible securities for which
an adjustment has already been made pursuant to this Section 7(d)), for a
consideration per share or having a conversion or exercise price per share less
than the Exercise Price then in effect, the Exercise Price shall be adjusted
immediately thereafter so that it shall equal the price determined by
multiplying the Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to the issuance of such additional
shares and the number of shares of Common Stock which the aggregate
consideration received or receivable for the issuance of such additional shares
would purchase at the Exercise Price then in effect, and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after the issuance of such additional shares (including the exercise or
conversion of all options, warrants and other convertible securities). Such
adjustment shall be made successively whenever such an issuance is made. An
adjustment pursuant to this Section 7(d) shall not result in any change in the
number of shares of Common Stock issuable upon exercise of this Warrant.
8. Fractional Shares. The Company shall not be required to issue or cause
to be issued fractional Warrant Shares on the exercise of this Warrant. The
number of full Warrant Shares that shall be issuable upon the exercise of this
Warrant shall be computed on the basis of the aggregate number of Warrants
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 8, be issuable
on the exercise of this Warrant, the Company shall, at its option, (i) pay an
amount in cash equal to the Exercise Price multiplied by such fraction or (ii)
round the number of Warrant Shares issuable, up to the next whole number.
9. Sale or Merger of the Company.
a. In the event of a sale of all or substantially all of the assets
of the Company or the merger or consolidation of the Company in a transaction in
which the Company is not the surviving entity, the Applicable Percentage
restriction set forth in Section 6 of this Warrant will immediately be
terminated and the Warrant Holder will have the right to exercise the warrants
concurrent with the sale.
5
b. Notwithstanding any other provisions of this Warrant, in the event
of a Specified Merger, as hereinafter defined, this Warrant, if not exercised
prior to the effective time of the Specified Merger, shall, at the effective
time of the Specified Merger, without any action on the part of the holder,
become and be converted into the right to receive cash or securities having a
value equal to the amount determined by multiplying the number of shares of
Common Stock issuable upon exercise of this Warrant by the amount by which (i)
the consideration payable with respect to one share of Common Stock in the
Specified Merger exceeds (ii) the Exercise Price. A "Specified Merger" shall
mean the merger or consolidation of the Company into another corporation or
entity or the sale by the Company of all or substantially all of its business
and assets in a transaction in which the net proceeds or other consideration
from such sale are distributed to the Company's stockholders in liquidation of
their shares of Common Stock, if, and only if, the sole consideration to be
received by the holders of the Common Stock is cash, including any contingent
cash, and/or securities all of which are listed on the New York or American
Stock Exchange or the Nasdaq Stock Market or the OTC Bulletin Board or any other
exchange or market which is approved by the holders of warrants to purchase a
majority of the shares of Common Stock then subject to outstanding warrants.
Securities issued in the Specified Merger shall be valued at the average closing
price thereof on the principal stock exchange or market on which the securities
are listed for the five-day period ending the day prior to the effective date of
the Specified Merger. Payment to the holder of this Warrant with respect to any
such securities shall be payable in either cash or in such securities (valued as
herein provided), as the Company shall determine. If, in a Specified Merger, the
value of the consideration payable with respect to one share of Common Stock is
less than the Exercise Price, no payment shall be made to the holder of this
Warrant, and this Warrant shall terminate.
10. Intentionally Omitted.
11. Issuance of Substitute Warrant. In the event of a merger,
consolidation, recapitalization or reorganization of the Company or a
reclassification of Company shares of stock, which results in an adjustment to
the number of shares subject to this Warrant and/or the Exercise Price
hereunder, the Company may issue to the Warrant Holder a substitute Warrant
reflecting the adjusted number of shares and/or Exercise Price upon the
surrender of this Warrant to the Company. However, in the event that the Company
does not issue a substitute warrant, the number and class of Warrant Shares and
the Exercise Price shall be adjusted as provided in this Warrant, and this
Warrant shall relate the adjusted number of Warrant Shares and Exercise Price.
12. Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given (i) on the date they are
delivered if delivered in person; (ii) on the date initially received if
delivered by facsimile transmission followed by registered or certified mail
confirmation; (iii) on the date delivered by an overnight courier service; or
(iv) on the date of delivery if is mailed by registered or certified mail,
return receipt requested with postage and other fees prepaid as follows:
If to the Company:
-----------------
6
Adsouth Partners, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxx; Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxx Xxxxxxxx, CFO
Telephone: 000-000-0000
Fax: 000-000-0000
If to the Warrant Holder: at the address or
telecopier number and to the attention of the person shown on the
Company's warrant register.
13. Miscellaneous.
a. This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. This
Warrant may be amended only by a writing signed by the Company and the Warrant
Holder and assigned in the manner provided in this Warrant; provided, however,
that the Applicable Percentage limitation provided in Section 6 of this Warrant
may not be amended without the consent of the holders of a majority of the then
outstanding shares of Common Stock..
b. Nothing in this Warrant shall be construed to give to any person
or corporation other than the Company and the Warrant Holder any legal or
equitable right, remedy or cause of action under this Warrant; this Warrant
shall be for the sole and exclusive benefit of the Company and the Warrant
Holder.
c. This Warrant shall be governed by, construed and enforced in
accordance with the internal laws of the State of New York without regard to the
principles of conflicts of law thereof.
d. The headings herein are for convenience only, do not constitute a
part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
e. In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceablilty of the
remaining terms and provisions of this Warrant shall not in any way be affected
or impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonably
substitute therefore, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
f. The Warrant Holder shall not, by virtue hereof, be entitled to any
voting or other rights of a shareholder of the Company, either at law or equity,
and the rights of the Warrant Holder are limited to those expressed in this
Warrant.
[SIGNATURE ON FOLLOWING PAGE]
7
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by the authorized officer as of the date first above stated.
Adsouth Partners, Inc, a Nevada corporation
By:___________________________________________
Name: Xxxxx Xxx Xxxxxxxx
Title: Chief Financial Officer
8
FORM OF ELECTION TO PURCHASE
(To be executed by the Warrant Holder to exercise the right to purchase shares
of Common Stock under the foregoing Warrant)
To: Adsouth Partners, Inc.:
In accordance with the Warrant enclosed with this Form of Election to Purchase,
the undersigned hereby irrevocably elects to purchase five million shares of
Common Stock ("Common Stock"), $.001 par value, of Adsouth Partners Inc and
encloses the warrant and $x.xx for each Warrant Share being purchased or an
aggregate of $x,xxx,xxx in cash or certified or official bank check or checks,
which sum represents the aggregate Exercise Price (as defined in the Warrant)
together with any applicable taxes payable by the undersigned pursuant to the
Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of:
____________________________________________
____________________________________________
____________________________________________
(Please print name and address)
____________________________________________
(Please insert Social Security or Tax Identification Number)
If the number of shares of Common Stock issuable upon this exercise shall not be
all of the shares of Common Stock which the undersigned is entitled to purchase
in accordance with the enclosed Warrant, the undersigned requests that a New
Warrant (as defined in the Warrant) evidencing the right to purchase the shares
of Common Stock not issuable pursuant to the exercise evidenced hereby be issued
in the name of and delivered to:
____________________________________________
____________________________________________
____________________________________________
(Please print name and address)
Dated: ___________________ Name of Warrant Holder:
(Print)__________________________________
(By:)____________________________________
(Name:)__________________________________
(Title:)_________________________________
Signature must conform in all respects to
name of Warrant Holder as specified on the
face of the Warrant
9
