WARRANT
Exhibit
10.9
WARRANT
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE
BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION
OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL
BE
REASONABLY ACCEPTABLE TO THE COMPANY. NOTWITHSTANDING THE FOREGOING, THIS
WARRANT MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT.
Warrant
To Purchase Common Stock
|
Warrant
No.: TC - 1
|
Number
of Shares: 500,000
|
Date
of
Issuance: June 29, 2007
Buckeye
Ventures, Inc., a Michigan corporation (the “Company”), hereby certifies
that, for Ten United States Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Trafalgar Capital Specialized Investment Fund, Luxembourg, (“Trafalgar”),
the registered holder hereof or its permitted assigns, is entitled, subject
to
the terms set forth below, to purchase from the Company upon surrender of
this
Warrant, at any time or times on or after the date hereof, but not after
11:59
P.M. Eastern Time on the Expiration Date (as defined herein) five hundred
thousand (500,000) fully paid and nonassessable shares of Common Stock (as
defined herein) of the Company (the “WarrantShares”) at the
Warrant Exercise Price (as defined herein); provided, however, that in no
event
shall the holder be entitled to exercise this Warrant for a number of Warrant
Shares in excess of that number of Warrant Shares which, upon giving effect
to
such exercise, would cause the aggregate number of shares of Common Stock
beneficially owned by the holder and its affiliates to exceed 4.99% of the
outstanding shares of the Common Stock following such exercise except within
sixty (60) days preceding the Expiration Date. To the extent that the limitation
contained in this paragraph applies, the determination of whether this Warrant
is exercisable (in relation to other securities owned by the holder) and
of
which a portion of this Warrant is exercisable shall be in the sole discretion
of the holder, and the submission of an Exercise Notice (as defined herein)
shall be deemed to be the holder’s determination of whether this Warrant is
exercisable and of which portion of this Warrant is exercisable, in each
case
subject to such aggregate
1
percentage
limitation, and the Company shall have no obligation to verify or confirm
the
accuracy of such determination. For purposes of the foregoing proviso, the
aggregate number of shares of Common Stock beneficially owned by the holder
and
its affiliates shall include the number of shares of Common Stock issuable
upon
exercise of this Warrant with respect to which the determination of such
proviso
is being made, but shall exclude shares of Common Stock which would be issuable
upon (i) exercise of the remaining, unexercised Warrants beneficially owned
by
the holder and its affiliates and (ii) exercise or conversion of the unexercised
or unconverted portion of any other securities of the Company beneficially
owned
by the holder and its affiliates (including, without limitation, any convertible
notes or preferred stock) subject to a limitation on conversion or exercise
analogous to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial ownership
shall
be calculated in accordance with Section 13(d) of the Securities Exchange
Act of
1934, as amended (the “Exchange Act”). For purposes of this Warrant, in
determining the number of outstanding shares of Common Stock, a holder may
rely
on the number of outstanding shares of Common Stock as reflected in (1) the
Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be, (2) a more
recent public announcement by the Company or (3) any other notice by the
Company
or its transfer agent setting forth the number of shares of Common Stock
outstanding. Upon the written request of any holder, the Company shall promptly,
but in no event later than one (1) Business Day following the receipt of
such
notice, confirm in writing to any such holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding shares of
Common
Stock shall be determined after giving effect to the exercise of Warrants
(as
defined below) by such holder and its affiliates since the date as of which
such
number of outstanding shares of Common Stock was reported.
Section
1.
(a) This
Warrant is the common stock purchase warrant (the “Warrant”) issued
pursuant to a Securities Purchase Agreement dated June 29, 2007 by and between
the Company and Trafalgar (the “Purchase Agreement”).
(b) Definitions.
The following words and terms as used in this Warrant shall have the following
meanings:
(i) “Approved
Stock Plan” means any employee benefit plan which has been approved by the
Board of Directors of the Company, pursuant to which the Company’s securities
may be issued to any employee, officer or director for services provided
to the
Company.
(ii) “Business
Day” means any day other than Saturday, Sunday or other day on which
commercial banks in the City of New York are authorized or required by law
to
remain closed.
(iii) “Closing
Bid Price” means the closing bid price of Common Stock as quoted on the
Principal Market (as reported by Bloomberg Financial Markets
(“Bloomberg”) through its “Volume at Price” function).
2
(iv) “Common
Stock” means (i) the Company’s common stock, par value $.001 per share, and
(ii) any capital stock into which such Common Stock shall have been changed
or
any capital stock resulting from a reclassification of such Common
Stock.
(v) “Excluded
Securities” means, provided such security is issued at a price which is
greater than or equal to the arithmetic average of the Closing Bid Prices
of the
Common Stock for the ten (10) consecutive trading days immediately preceding
the
date of issuance, any of the following: (a) any issuance by the Company of
securities in connection with a strategic partnership or a joint venture
(the
primary purpose of which is not to raise equity capital), (b) any issuance
by
the Company of securities as consideration for a merger or consolidation
or the
acquisition of a business, product, license, or other assets of another person
or entity, (c) any securities pledged by the Company pursuant to the Pledge
Agreement by and among the Company, Trafalgar and certain shareholders of
the
Company and (d) options to purchase shares of Common Stock, provided (I)
such
options are issued after the date of this Warrant to (x) directors of the
Company or (y) employees of the Company within thirty (30) days of such
employee’s starting his employment with the Company, and (II) the exercise price
of such options is not less than the Closing Bid Price of the Common Stock
on
the date of issuance of such option.
(vi) “Expiration
Date” means the date five (5) years from the Issuance Date of this Warrant
or, if such date falls on a Saturday, Sunday or other day on which banks
are
required or authorized to be closed in the City of New York or the State
of New
York or on which trading does not take place on the Principal Market or
automated quotation system on which the Common Stock is traded (a
“Holiday”), the next date that is not a Holiday.
(vii) “Issuance
Date” means the date hereof.
(viii) “Options”
means any rights, warrants or options to subscribe for or purchase Common
Stock
or securities convertible into Common Stock.
(ix) “Other
Securities” means (i) those options and warrants of the Company issued prior
to, and outstanding on, the Issuance Date, (ii) the shares of Common Stock
issuable on exercise of such options and warrants, provided such options
and
warrants are not amended after the Issuance Date and (iii) the shares of
Common
Stock issuable upon exercise of this Warrant.
(x) “Person”
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
(xi) “Principal
Market” means the New York Stock Exchange, the American Stock Exchange, the
Nasdaq National Market, the Nasdaq SmallCap Market, whichever is at the time
the
principal trading exchange or market for such security, or the over-the-counter
market on the electronic bulletin board for such security as reported by
Bloomberg or, if no bid or sale information is reported for such security
by
Bloomberg, then the average of the bid prices of each of the market makers
for
such security as reported in the “pink sheets” by the National Quotation Bureau,
Inc.
(xii) “Securities
Act” means the Securities Act of 1933, as amended.
3
(xiii) “Warrant”
means this Warrant and all Warrants issued in exchange, transfer or replacement
thereof.
(xiv) “Warrant
Exercise Price” shall be $0.001 per share as may be subsequently adjusted as
provided in Section 8 hereof.
(xv) “Warrant
Shares” means the shares of Common Stock issuable at any time upon exercise
of this Warrant.
(c)Other
Definitional
Provisions.
(i) Except
as
otherwise specified herein, all references herein (A) to the Company shall
be
deemed to include the Company’s successors and (B) to any applicable law defined
or referred to herein shall be deemed references to such applicable law as
the
same may have been or may be amended or supplemented from time to
time.
(ii) When
used
in this Warrant, the words “herein”,“hereof”, and
“hereunder” and words of similar import, shall refer to this
Warrant as a
whole and not to any provision of this Warrant, and the words
“Section”,“Schedule”, and “Exhibit” shall refer to Sections
of, and Schedules and Exhibits to, this Warrant unless otherwise
specified.
(iii) Whenever
the context so requires, the neuter gender includes the masculine or feminine,
and the singular number includes the plural, and vice versa.
Section
2.Exercise of
Warrant.
(a)
Subject to the terms and conditions hereof, this Warrant may be exercised
by the
holder hereof then registered on the books of the Company, pro rata as
hereinafter provided, at any time on any Business Day on or after the opening
of
business on such Business Day, commencing with the first day after the date
hereof, and prior to 11:59 P.M. Eastern Time on the Expiration Date, by (i)
delivery of a written notice, in the form of the subscription notice attached
as
Exhibit A hereto (the “Exercise Notice”), of such holder’s
election to exercise this Warrant, which notice shall specify the number
of
Warrant Shares to be purchased, (ii) payment to the Company of an amount
equal
to the Warrant Exercise Price(s) applicable to the Warrant Shares being
purchased, multiplied by the number of Warrant Shares (at the applicable
Warrant
Exercise Price) as to which this Warrant is being exercised (plus any applicable
issue or transfer taxes) (the “Aggregate Exercise Price”): (A) in cash or
wire transfer of immediately available funds, (B) using shares of Common
Stock
of the Company having a Fair Market Value (as defined below) equal to the
Aggregate Exercise Price, or (C) by delivery of a written notice of Net
Exercise, as defined in Section 2(b) and (iii) the surrender of this Warrant
(or
an indemnification undertaking with respect to this Warrant in the case of
its
loss, theft or destruction in accordance with Section 10 hereof) to a common
carrier for overnight delivery to the Company as soon as practicable following
such date. For the purpose of a cashless exercise, the “Fair Market Value” per
Warrant Share on any date of reference shall be the Closing Bid Price of
the
Common Stock on the Business Day immediately preceding such date. In the
event
of any exercise of the rights represented by this Warrant in compliance with
this Section 2(a), the Company shall on the fifth (5th) Business Day following
the date of receipt of the Exercise Notice, the Aggregate Exercise Price
and
this Warrant (or an indemnification undertaking with
4
respect
to this Warrant in the case of its loss, theft or destruction in accordance
with
Section 10 hereof) and the receipt of the representations of the holder
specified in Section 6 hereof, if requested by the Company (the “Exercise
Delivery Documents”), and if the Common Stock is DTC eligible credit such
aggregate number of shares of Common Stock to which the holder shall be entitled
to the holder’s or its designee’s balance account with The Depository Trust
Company; provided, however, if the holder who submitted the Exercise Notice
requested physical delivery of any or all of the Warrant Shares, or, if the
Common Stock is not DTC eligible , then the Company shall, on or before the
fifth (5th)
Business Day following receipt of the Exercise Delivery Documents, issue
and
surrender to a common carrier for overnight delivery to the address specified
in
the Exercise Notice, a certificate, registered in the name of the holder,
for
the number of shares of Common Stock to which the holder shall be entitled
pursuant to such request. Upon delivery of the Exercise Notice and Aggregate
Exercise Price referred to in clause (ii) above, the holder of this Warrant
shall be deemed for all corporate purposes to have become the holder of record
of the Warrant Shares with respect to which this Warrant has been exercised.
In
the case of a dispute as to the determination of the Warrant Exercise Price,
the
Closing Bid Price or the arithmetic calculation of the Warrant Shares, the
Company shall promptly issue to the holder the number of Warrant Shares that
is
not disputed and shall submit the disputed determinations or arithmetic
calculations to the holder via facsimile within one (1) Business Day of receipt
of the holder’s Exercise Notice. If the holder and the Company are unable to
agree upon the determination of the Warrant Exercise Price or arithmetic
calculation of the Warrant Shares within one (1) Business Day of such disputed
determination or arithmetic calculation being submitted to the holder, then
the
Company shall immediately submit via facsimile (i) the disputed determination
of
the Warrant Exercise Price or the Closing Bid Price to an independent, reputable
investment banking firm or (ii) the disputed arithmetic calculation of the
Warrant Shares to its independent, outside accountant. The Company shall
cause
the investment banking firm or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the holder
of the
results no later than forty-eight (48) hours from the time it receives the
disputed determinations or calculations. Such investment banking firm’s or
accountant’s determination or calculation, as the case may be, shall be deemed
conclusive absent manifest error.
(b)
In
lieu of exercising this Warrant via cash payment or delivery of shares as
set
forth above in Section 2(a), holder may elect to receive shares equal to
the
value of this Warrant (or portion thereof being exercised) by surrender of
this
Warrant at the principal office of the Company together with notice of election
to exercise by means of a Net Exercise in which event the Company shall issue
to
holder a number of shares of the Company computed using the following
formula:
5
|
|
X=
|
Y(A-B)
A
|
Where
X
= the number of shares of Common Stock to be issued to the
holder
|
Y
=
|
the
number of shares of Common Stock purchasable under this Warrant
or, if
only a portion of this Warrant is being exercised, the portion
of this
Warrant being exercised (at the date of such
calculation)
|
|
A
=
|
the
Fair Market Value of one share of the Company’s Common Stock (at the date
of such calculation)
|
|
B
=
|
the
Exercise Price per share (as adjusted to the date of such
calculation).
|
(c) Unless
the rights represented by this Warrant shall have expired or shall have been
fully exercised, the Company shall, as soon as practicable and in no event
later
than five (5) Business Days after any exercise and at its own expense, issue
a
new Warrant identical in all respects to this Warrant exercised except it
shall
represent rights to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant exercised, less the
number
of Warrant Shares with respect to which such Warrant is exercised.
(d) No
fractional Warrant Shares are to be issued upon any pro rata exercise of
this
Warrant, but rather the number of Warrant Shares issued upon such exercise
of
this Warrant shall be rounded up or down to the nearest whole
number.
(e) If
the
Company or its Transfer Agent shall fail for any reason or for no reason
to
issue to the holder within ten (10) days of receipt of the Exercise Delivery
Documents, a certificate for the number of Warrant Shares to which the holder
is
entitled or to credit the holder’s balance account with The Depository Trust
Company for such number of Warrant Shares to which the holder is entitled
upon
the holder’s exercise of this Warrant, the Company shall, in addition to any
other remedies under this Warrant or otherwise available to such holder,
pay as
additional damages in cash to such holder on each day the issuance of such
certificate for Warrant Shares is not timely effected an amount equal to
0.02 5%
of the product of (A) the sum of the number of Warrant Shares not issued
to the
holder on a timely basis and to which the holder is entitled, and (B) the
Closing Bid Price of the Common Stock for the trading day immediately preceding
the last possible date which the Company could have issued such Common Stock
to
the holder without violating this Section 2.
(f) If
within
ten (10) days after the Company’s receipt of the Exercise Delivery Documents,
the Company fails to deliver a new Warrant to the holder for the number of
Warrant Shares to which such holder is entitled pursuant to Section 2 hereof,
then, in addition to any other available remedies under this Warrant or the
Placement Agent Agreement, or otherwise available to such holder, the Company
shall pay as additional damages in cash to such holder on each day after
such
tenth (10th)
day that such delivery of such new Warrant is not timely effected in an amount
equal to 0.25% of the product of (A) the number of Warrant Shares represented
by
the portion of this Warrant which is not being exercised and (B) the Closing
Bid
Price of the Common Stock for the trading day immediately preceding the last
possible date which
the
Company could have issued such Warrant to the holder without violating this
Section 2.
6
Section
3.Covenants as to Common Stock. The Company hereby covenants and agrees
as follows:
(a) This
Warrant is, and any Warrants issued in substitution for or replacement of
this
Warrant will upon issuance be, duly authorized and validly issued.
(b) All
Warrant Shares which may be issued upon the exercise of the rights represented
by this Warrant will, upon issuance, be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to
the
issue thereof.
(c) During
the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized and reserved at least one hundred
percent (100%) of the number of shares of Common Stock needed to provide
for the
exercise of the rights then represented by this Warrant and the par value
of
said shares will at all times be less than or equal to the applicable Warrant
Exercise Price. If at any time the Company does not have a sufficient number
of
shares of Common Stock authorized and available, then the Company shall call
and
hold a special meeting of its stockholders within sixty (60) days of that
time
for the sole purpose of increasing the number of authorized shares of Common
Stock.
(d) If
at any time after the date hereof the Company shall file a Registration
Statement under the Securities Act (other than a registration statement on
Form
S-8, S-4 or comparable form), the Company shall include the Warrant Shares
issuable to the holder, pursuant to the terms of this Warrant and shall
maintain, so long as any other shares of Common Stock shall be so listed
on its
Principal Market, such listing of all Warrant Shares from time to time issuable
upon the exercise of this Warrant; and the Company shall so list on such
Principal Market, and shall maintain such listing of, any other shares of
capital stock of the Company issuable upon the exercise of this Warrant if
and
so long as any shares of the same class shall be listed on such
Principal Market.
(e) The
Company will not, by amendment of its Articles of Incorporation or through
any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or
sale of securities, or any other voluntary action, avoid or seek to avoid
the
observance or performance of any of the terms to be observed or performed
by it
hereunder, but will at all times in good faith assist in the carrying out
of all
the provisions of this Warrant and in the taking of all such action as may
reasonably be requested by the holder of this Warrant in order to protect
the
exercise privilege of the holder of this Warrant against dilution or other
impairment, consistent with the tenor and purpose of this Warrant. The Company
will not increase the par value of any shares of Common Stock receivable
upon
the exercise of this Warrant above the Warrant Exercise Price then in effect,
and (ii) will take all such actions as may be necessary or appropriate in
order
that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant.
(f) This
Warrant will be binding upon any entity succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company’s
assets.
7
Section
4. Taxes. The Company shall pay any and all taxes, except any applicable
withholding, which may be payable with respect to the issuance and delivery
of
Warrant Shares upon exercise of this Warrant.
Section
5. Warrant Holder Not Deemed a Stockholder. Except as otherwise
specifically provided herein, no holder, as such, of this Warrant shall be
entitled to vote or receive dividends or be deemed the holder of shares of
capital stock of the Company for any purpose, nor shall anything contained
in
this Warrant be construed to confer upon the holder hereof, as such, any
of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise
of this
Warrant. In addition, nothing contained in this Warrant shall be construed
as
imposing any liabilities on such holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 5, the Company will provide the holder
of
this Warrant with copies of the same notices and other information given
to the
stockholders of the Company generally, contemporaneously with the giving
thereof
to the stockholders.
Section
6. Representations of Holder. The holder of this Warrant, by the
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment only and not with a view towards,
or
for resale in connection with, the public sale or distribution of this Warrant
or the Warrant Shares, except pursuant to sales registered or exempted under
the
Securities Act; provided, however, that by making the representations herein,
the holder does not agree to hold this Warrant or any of the Warrant Shares
for
any minimum or other specific term and reserves the right to dispose of this
Warrant and the Warrant Shares at any time in accordance with or pursuant
to a
registration statement or an exemption under the Securities Act. The holder
of
this Warrant further represents, by acceptance hereof, that, as of this date,
such holder is an “accredited investor” as such term is defined in Rule 501
(a)(3) promulgated under the Securities Act (an “Accredited Investor”).
Upon exercise of this Warrant the holder shall, if requested by the Company,
confirm in writing, in a form satisfactory to the Company, that the Warrant
Shares so purchased are being acquired solely for the holder’s own account and
not as a nominee for any other party, for investment, and not with a view
toward
distribution or resale and that such holder is an Accredited Investor. If
such
holder cannot make such representations because they would be factually
incorrect, it shall be a condition to such holder’s exercise of this Warrant
that the Company receive such other representations as the Company considers
reasonably necessary to assure the Company that the issuance of its securities
upon exercise of this Warrant shall not violate any United States or state
securities laws.
Section
7. Ownership and Transfer.
The
Company shall maintain at its principal executive offices (or such other
office
or agency of the Company as it may designate by notice to the holder hereof),
a
register for this Warrant, in which the Company shall record the name and
address of the person in whose name this Warrant has been issued, as well
as the
name and address of each transferee. The Company may treat the person in
whose
name any Warrant is registered on the register as the owner and holder thereof
for all purposes, notwithstanding any notice to the contrary, but in all
events
recognizing any transfers made in accordance with the terms of this
Warrant.
8
Section
8. Adjustment of Warrant Exercise Price and Number of Shares. Other than
as set forth on Schedule 8 attached hereto, the Warrant Exercise Price
and the number of shares of Common Stock issuable upon exercise of this Warrant
shall be adjusted from time to time as follows:
(a) Adjustment
of Warrant Exercise Price and Number of Shares upon Issuanceof Common
Stock. If and whenever on or after the Issuance Date of this Warrant, the
Company issues or sells, or is deemed to have issued or sold, any shares
of
Common Stock (other than (i) Excluded Securities and (ii) shares of Common
Stock
which are issued or deemed to have been issued by the Company in connection
with
an Approved Stock Plan or upon exercise or conversion of the Other Securities)
for a consideration per share less than a price (the “Applicable Price”)
equal to the Warrant Exercise Price in effect immediately prior to such issuance
or sale, then immediately after such issue or sale the Warrant Exercise Price
then in effect shall be reduced to an amount equal to such consideration
per
share. Upon each such adjustment of the Warrant Exercise Price hereunder,
the
number of Warrant Shares issuable upon exercise of this Warrant shall be
adjusted to the number of shares determined by multiplying the Warrant Exercise
Price in effect immediately prior to such adjustment by the number of Warrant
Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Warrant Exercise Price
resulting from such adjustment.
(b) Effect
on Warrant Exercise Price of Certain Events. For purposes of determining the
adjusted Warrant Exercise Price under Section 8(a) above, the following shall
be
applicable:
(i) Issuance
of Options. If after the date hereof, the Company in any manner grants any
Options (other than Excluded Securities) and the lowest price per share for
which one share of Common Stock is issuable upon the exercise of any such
Option
or upon conversion or exchange of any convertible securities issuable upon
exercise of any such Option is less than the Applicable Price, then such
share
of Common Stock shall be deemed to be outstanding and to have been issued
and
sold by the Company at the time of the granting or sale of such Option for
such
price per share. For purposes of this Section 8(b)(i), the lowest price per
share for which one share of Common Stock is issuable upon exercise of such
Options or upon conversion or exchange of such Convertible Securities shall
be
equal to the sum of the lowest amounts of consideration (if any) received
or
receivable by the Company with respect to any one share of Common Stock upon
the
granting or sale of the Option, upon exercise of the Option or upon conversion
or exchange of any convertible security issuable upon exercise of such Option.
No further adjustment of the Warrant Exercise Price shall be made upon the
actual issuance of such Common Stock or of such convertible securities upon
the
exercise of such Options or upon the actual issuance of such Common Stock
upon
conversion or exchange of such convertible securities.
(ii) Issuance
of Convertible Securities. If the Company in any manner issues or sells any
convertible securities (other than Excluded Securities) and the lowest price
per
share for which one share of Common Stock is issuable upon the conversion
or
exchange thereof is less than the Applicable Price, then such share of Common
Stock shall be deemed to be outstanding and to have been issued and sold
by the
Company at the time of the issuance or sale of such convertible securities
for
such price per share. For the purposes of this Section 8(b)(ii), the lowest
price per share for which one share of Common Stock is issuable upon such
conversion or exchange shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect
to one
share of Common Stock upon the issuance or sale of the convertible security
and
upon conversion or exchange
of such convertible security. No further adjustment of the Warrant Exercise
Price shall be made upon the actual issuance of such Common Stock upon
conversion or exchange of such convertible securities, and if any such issue
or
sale of such convertible securities is made upon exercise of any Options
for
which adjustment of the Warrant Exercise Price had been or are to be made
pursuant to other provisions of this Section 8(b), no further adjustment
of the
Warrant Exercise Price shall be made by reason of such issue or
sale.
9
(iii)
Change in Option Price or Rate of Conversion. If the purchase price
provided for in any Options (other than Excluded Securities), the additional
consideration, if any, payable upon the issue, conversion or exchange of
any
convertible (other than Excluded Securities), or the rate at which any
convertible securities (other than Excluded Securities) are convertible into
or
exchangeable for Common Stock changes at any time, the Warrant Exercise Price
in
effect at the time of such change shall be adjusted to the Warrant Exercise
Price which would have been in effect at such time had such Options or
convertible securities provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold and the number of Warrant Shares issuable
upon
exercise of this Warrant shall be correspondingly readjusted. For purposes
of
this Section 8(b)(iii), if the terms of any Option or convertible security
that
was outstanding as of the Issuance Date are changed in the manner described
in
the immediately preceding sentence, then such Option or convertible security
and
the Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such change. No adjustment
pursuant to this Section 8(b)(iii) shall be made if such adjustment would
result
in an increase of the Warrant Exercise Price then in effect.
(c)
Effect on Warrant Exercise Price of Certain Events. For purposes of
determining the adjusted Warrant Exercise Price under Sections 8(a) and 8(b),
the following shall be applicable:
(i)
Calculation of Consideration Received. If any Common Stock, Options or
convertible securities are issued or sold or deemed to have been issued or
sold
for cash, the consideration received therefore will be deemed to be the net
amount received by the Company therefore. If any Common Stock, Options or
convertible securities are issued or sold for a consideration other than
cash,
the amount of such consideration received by the Company will be the fair
value
of such consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by the Company
will be the market price of such securities on the date of receipt of such
securities. If any Common Stock, Options or convertible securities are issued
to
the owners of the non-surviving entity in connection with any merger in which
the Company is the surviving entity, the amount of consideration therefore
will
be deemed to be the fair value of such portion of the net assets and business
of
the non-surviving entity as is attributable to such Common Stock, Options
or
convertible securities, as the case may be. The fair value of any consideration
other than cash or securities will be determined jointly by the Company and
the
holders of Warrants representing at least two-thirds (2/3) of the Warrant
Shares
issuable upon exercise of the Warrants then outstanding. If such parties
are
unable to reach agreement within ten (10) days after the occurrence of an
event
requiring valuation (the “Valuation Event”), the fair value of such
consideration will be determined within five (5) Business Days after the
tenth
(10th) day
following the Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the holders of Warrants representing at least
two-thirds (2/3) of the Warrant Shares issuable upon exercise of the Warrants
then outstanding.
The determination of such appraiser shall be final and binding upon all parties
and the fees and expenses of such appraiser shall be borne jointly by the
Company and the holders of Warrants.
10
(ii) Integrated
Transactions. In case any Option is issued in connection with the issue or
sale of other securities of the Company, together comprising one integrated
transaction in which no specific consideration is allocated to such Options
by
the parties thereto, the Options will be deemed to have been issued for a
consideration of $.01.
(iii) Treasury
Shares. The number of shares of Common Stock outstanding at any given time
does not include shares owned or held by or for the account of the Company,
and
the disposition of any shares so owned or held will be considered an issue
or
sale of Common Stock.
(iv) Record
Date. If the Company takes a record of the holders of Common Stock for the
purpose of entitling them (1) to receive a dividend or other distribution
payable in Common Stock, Options or in convertible securities or (2) to
subscribe for or purchase Common Stock, Options or convertible securities,
then
such record date will be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of
the
granting of such right of subscription or purchase, as the case may
be.
(d) Adjustment
of Warrant Exercise Price upon Subdivision or Combination ofCommon
Stock. If the Company at any time after the date of issuance of this Warrant
subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into a greater
number of shares, any Warrant Exercise Price in effect immediately prior
to such
subdivision will be proportionately reduced and the number of shares of Common
Stock obtainable upon exercise of this Warrant will be proportionately
increased. If the Company at any time after the date of issuance of this
Warrant
combines (by combination, reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of shares,
any
Warrant Exercise Price in effect immediately prior to such combination will
be
proportionately increased and the number of Warrant Shares issuable upon
exercise of this Warrant will be proportionately decreased. Any adjustment
under
this Section 8(d) shall become effective at the close of business on the
date
the subdivision or combination becomes effective.
(e) Distribution
of Assets. If the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of
Common Stock, by way of return of capital or otherwise (including, without
limitation, any distribution of cash, stock or other securities, property
or
options by way of a dividend, spin off, reclassification, corporate
rearrangement or other similar transaction) (a “Distribution”), at any
time after the issuance of this Warrant, then, in each such case:
(i)
any
Warrant Exercise Price in effect immediately prior to the close of business
on
the record date fixed for the determination of holders of Common Stock entitled
to receive the Distribution shall be reduced, effective as of the close of
business on such record date, to a price determined by multiplying such Warrant
Exercise Price by a fraction of which (A) the numerator shall be the Closing
Bid
Price on the trading day immediately preceding such record date minus the
value
of the Distribution (as determined in good faith by the Company’s Board of
Directors) applicable to
one
share of Common Stock, and (B) the denominator shall be the Closing Bid Price
on
the trading day immediately preceding such record date; and
11
(ii)
either (A) the number of Warrant Shares obtainable upon exercise of this
Warrant
shall be increased to a number of shares equal to the number of shares of
Common
Stock obtainable immediately prior to the close of business on the record
date
fixed for the determination of holders of Common Stock entitled to receive
the
Distribution multiplied by the reciprocal of the fraction set forth in the
immediately preceding clause (i), or (B) in the event that the Distribution
is
of common stock of a company whose common stock is traded on a national
securities exchange or a national automated quotation system, then the holder
of
this Warrant shall receive an additional warrant to purchase Common Stock,
the
terms of which shall be identical to those of this Warrant, except that such
warrant shall be exercisable into the amount of the assets that would have
been
payable to the holder of this Warrant pursuant to the Distribution had the
holder exercised this Warrant immediately prior to such record date and with
an
exercise price equal to the amount by which the exercise price of this Warrant
was decreased with respect to the Distribution pursuant to the terms of the
immediately preceding clause (i).
(f) Certain
Events. If any event occurs of the type contemplated by the provisions of
this Section 8 but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights, phantom stock
rights or other rights with equity features), then the Company’s Board of
Directors will make an appropriate adjustment in the Warrant Exercise Price
and
the number of shares of Common Stock obtainable upon exercise of this Warrant
so
as to protect the rights of the holders of the Warrants; provided, except
as set
forth in Section 8(d), that no such adjustment pursuant to this Section 8(f)
will increase the Warrant Exercise Price or decrease the number of shares
of
Common Stock obtainable as otherwise determined pursuant to this Section
8.
(g) Notices.
(i) Immediately
upon any adjustment of the Warrant Exercise Price, the Company will give
written
notice thereof to the holder of this Warrant, setting forth in reasonable
detail, and certifying, the calculation of such adjustment.
(ii) The
Company will give written notice to the holder of this Warrant at least ten
(10)
days prior to the date on which the Company closes its books or takes a record
(A) with respect to any dividend or distribution upon the Common Stock, (B)
with
respect to any pro rata subscription offer to holders of Common Stock or
(C) for
determining rights to vote with respect to any Organic Change (as defined
below), dissolution or liquidation, provided that such information shall
be made
known to the public prior to or in conjunction with such notice being provided
to such holder.
(iii) The
Company will also give written notice to the holder of this Warrant at least
ten
(10) days prior to the date on which any Organic Change, dissolution or
liquidation will take place, provided that such information shall be made
known
to the public prior to or in conjunction with such notice being provided
to such
holder.
12
Section
9. Purchase Rights; Reorganization, Reclassification, Consolidation,
Merger or Sale.
(a)
In addition to any adjustments pursuant to Section 8 above, if at any time
the
Company
grants, issues or sells any Options, convertible securities or rights to
purchase stock, warrants, securities
or other property pro rata to the record holders of any class of Common Stock
(the “PurchaseRights”), then the holder of this Warrant will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such holder could have acquired if such holder
had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant immediately before the date on which a record is taken for
the
grant, issuance or sale of such Purchase Rights, or, if no such record is
taken,
the date as of which the record holders of Common Stock are to be determined
for
the grant, issue or sale of such Purchase Rights.
(b)
Any
recapitalization, reorganization, reclassification, consolidation, merger,
sale
of all or substantially all of the Company’s assets to another Person or other
transaction in each case which is effected in such a way that holders of
Common
Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common Stock
is
referred to herein as an “Organic Change.” Prior to the consummation of
any (i) sale of all or substantially all of the Company’s assets to an acquiring
Person or (ii) other Organic Change following which the Company is not a
surviving entity, the Company will secure from the Person purchasing such
assets
or the successor resulting from such Organic Change (in each case, the
“Acquiring Entity”) a written agreement (in form and substance
satisfactory to the holders of Warrants representing at least two-thirds
of the
Warrant Shares issuable upon exercise of the Warrants then outstanding) to
deliver to each holder of Warrants in exchange for such Warrants, a security
of
the Acquiring Entity evidenced by a written instrument substantially similar
in
form and substance to this Warrant and satisfactory to the holders of the
Warrants (including an adjusted warrant exercise price equal to the value
for
the Common Stock reflected by the terms of such consolidation, merger or
sale,
and exercisable for a corresponding number of shares of Common Stock acquirable
and receivable upon exercise of the Warrants without regard to any limitations
on exercise, if the value so reflected is less than any Applicable Warrant
Exercise Price immediately prior to such consolidation, merger or sale).
Prior
to the consummation of any other Organic Change, the Company shall make
appropriate provision (in form and substance satisfactory to the holders
of
Warrants representing a majority of the Warrant Shares issuable upon exercise
of
the Warrants then outstanding) to insure that each of the holders of the
Warrants will thereafter have the right to acquire and receive in lieu of
or in
addition to (as the case may be) the Warrant Shares immediately theretofore
issuable and receivable upon the exercise of such holder’s Warrants (without
regard to any limitations on exercise), such shares of stock, securities
or
assets that would have been issued or payable in such Organic Change with
respect to or in exchange for the number of Warrant Shares which would have
been
issuable and receivable upon the exercise of such holder’s Warrant as of the
date of such Organic Change (without taking into account any limitations
or
restrictions on the exercisability of this Warrant).
13
Section
10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is
lost, stolen, mutilated or destroyed, the Company shall promptly, on receipt
of
an indemnification undertaking (or, in the case of a mutilated Warrant, the
Warrant) reasonably satisfactory to it, issue a new Warrant of like denomination
and tenor as this Warrant so lost, stolen, mutilated or destroyed.
Section
11. Notice. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Warrant must be
in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of receipt is received by the sending party transmission is
mechanically or electronically generated and kept on file by the sending
party);
or (iii) one Business Day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive
the
same. The addresses and facsimile numbers for such communications shall
be:
|
If
to Trafalgar:
|
Trafalgar
Capital Specialized Investment Fund 0-00 Xxx Xxxxxxx
Xxxxx
|
|
|
BP
3023
|
||
|
L-1030
Luxembourg
|
||
|
Attention:
|
Xxxxxx
Xxxxx, Chairman of the Board of Trafalgar Capital Sarl, General
Partner
|
|
|
Facsimile:
|
011-44-207-405-0161
and
|
|
|
001-786-323-165
1
|
||
|
With
Copy to:
|
Xxxxx
X. Xxxxxxx XX, P.A.
|
|
|
0000
Xxxxxxxx Xxx
|
||
|
Boca
Raton, FL 33496
|
||
|
Attention:
|
Xxxxx
Xxxxxxx, Esq.
|
|
|
Telephone:
|
(000)
000-0000
|
|
|
Facsimile:
|
(000)
000-0000
|
|
|
If
to the Company, to:
|
||
|
0000
Xxxxxx Xxxxxx, Xxxxx 0
|
||
|
San
Diego, CA 92109
|
||
|
Attention:
|
Xxxxx
Xxxxxxxxx
|
|
|
Telephone:
|
(000)
000-0000
|
|
|
Facsimile:
|
(000)
000-0000
|
|
|
With
a copy to:
|
Xxxx
X. Xxxxxx, Esq.
|
|
|
Xxxxx
& Berne LLP
|
||
|
0000
Xxxx Xxxxxx Xx., Xxx. 0000
|
||
|
Cleveland,
Ohio 00000-0000
|
||
|
Telephone:
|
(000)
000-0000
|
|
|
Facsimile:
|
(000)
000-0000
|
|
If
to a
holder of this Warrant, to it at the address and facsimile number set forth
on
Exhibit C hereto, with copies to such holder’s representatives as set
forth on Exhibit C, or at such other address and facsimile as shall be
delivered to the Company upon the issuance or transfer of this
14
Warrant.
Each party shall provide five days’ prior written notice to the other party of
any change in address or facsimile number. Written confirmation of receipt
(A)
given by the recipient of such notice, consent, facsimile, waiver or other
communication, (or (B) provided by a nationally recognized overnight delivery
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
Section
12. Date. The date of this Warrant is set forth on page 1 hereof. This
Warrant, in all events, shall be wholly void and of no effect after the close
of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 8(b) shall continue in full
force
and effect after such date as to any Warrant Shares or other securities issued
upon the exercise of this Warrant.
Section
13. Amendment and Waiver. Except as otherwise provided herein, the
provisions of the Warrants may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed
by
it, only if the Company has obtained the writt en consent of the holders
of
Warrants representing at least two-thirds of the Warrant Shares issuable
upon
exercise of the Warrants then outstanding; provided that, except for Section
8(d), no such action may increase the Warrant Exercise Price or decrease
the
number of shares or class of stock obtainable upon exercise of any Warrant
without the written consent of the holder of such Warrant.
Section
14. Descriptive Headings; Governing Law. The descriptive headings of the
several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. The corporate laws of
the
State of Michigan shall govern all issues concerning the relative rights
of the
Company and its stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by
the internal laws of the State of Florida without giving effect to any choice
of
law or conflict of law provision or rule (whether of the State of Florida
or any
other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Florida. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state courts sitting in Broward
County, Florida and the United States District Court for the Southern District
of Florida for the adjudication of any dispute hereunder or in connection
herewith or therewith, or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding
is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be
deemed
to limit in any way any right to serve process in any manner permitted by
law.
15
Section
15. Waiver of Jury Xxxxx.XX A MATERIAL INDUCEMENT FOR EACH PARTY
HERETO TO ENTER INTO THIS WARRANT, THE PARTIES HERETO HEREBY WAIVE ANY RIGHT
TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS WARRANT
AND/OR
ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS
TRANSACTION.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed as of
the date first set forth above.
| BUCKEYE VENTURES, INC. | |||
|
|
By:
|
/s/ | |
| Name: | |||
| Title: | |||
16
EXHIBIT
A TO WARRANT
EXERCISE
NOTICE
TO
BE EXECUTED
BY
THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
The
undersigned holder hereby exercises the right to purchaseof the shares
of
Common Stock (“Warrant Shares”) of Buckeye Ventures, Inc., a Michigan
corporation (the “Company”), evidenced by the attached Warrant (the
“Warrant”). Capitalized terms used herein and not otherwise defined
shall
have the respective meanings set forth in the Warrant.
1. Form
of Warrant Exercise Price. The Holder intends that payment of the Warrant
Exercise
Price shall be made as a “Cash Exercise” with respect
toWarrant
Shares.
2. Payment
of Warrant Exercise Price. The holder shall pay the sum of $____________ to
the Company in accordance with the terms of the Warrant.
3. Delivery
of Warrant Shares. The Company shall deliver to the holder Warrant Shares in
accordance with the terms of the Warrant.
Date:
Name
of
Registered Holder
By:
Name:
Title:
A-1
EXHIBIT
B TO WARRANT
FORM
OF WARRANT POWER
FOR
VALUE RECEIVED, the undersigned does hereby assign and transfer to
______________,
Federal
Identification No. _____________, a warrant to purchase
_________ shares
of
the capital stock of Buckeye Ventures, Inc., a __________ corporation,
represented
by warrant certificate no._________, standing in the name of the undersigned
on
the books
of
said corporation. The undersigned does hereby irrevocably constitute and
appoint
______________,
attorney to transfer the warrants of said corporation, with full power of
substitution in the premises.
Dated:
By:
______________________
Name: ____________________
Title: _____________________
B-1
Schedule
8 to Buckeye Ventures, Inc. Warrant No. TC-1, dated June 29,
2007
There
shall be no adjustment in (i) the number of shares to be issued upon the
exercise of this Warrant or (ii) the exercise price of this Warrant, arising
out
of, or in connection with, the issuance by the Company of any shares (A)
pledged
to Trafalgar or any affiliate of Trafalgar under that certain Pledge Agreement,
dated as of June 29, 2007, by and between the Company, Trafalgar and certain
of
the Company’s shareholders or (B) referenced in Schedule 3.1(c) to the
Securities Purchase Agreement, dated as of June 29, 2007, by and between
the
Company and Trafalgar.
B-2
