-------DRAFT -----
WARRANT AGREEMENT
ROTOBLOCK CORPORATION
AND
XXXXXXXX STOCK TRANSFER
Warrant Agent
________________________, 2004
1
THIS AGREEMENT (the "Agreement") is dated as of _______________,
2004, by and between ROTOBLOCK CORPORATION, a Nevada corporation (the
"Company") and XXXXXXXX STOCK TRANSFER (the "Warrant Agent").
WHEREAS, the Company will issue Warrant Certificates in connection
with a public offering of its securities. Pursuant to the terms of the
offering, there will be two one-half Stock Purchase Warrants (the
"Warrants")issued for each Unit purchased in the offering. Each one
whole Warrant will entitle the holder to purchse one share of the
Company's common stock at a price of $.50 for a period of two (2) years
from the date of the offering, or ________________, 200__.
WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing so to act, in connection
with the issuance, registration, transfer and exchange of the Warrant
Certificates and, thereafter, exercise of the Warrants.
NOW THEREFORE, in consideration of the promises and the mutual
agreements hereinafter set forth, it is agreed that:
1. Warrants/Warrant Certificates. Each one whole Warrant shall entitle
the holder (the "Registered Holder" or, in the aggregate the "Registered
Holders") in whose name the Warrant Certificate shall be registered on
the books maintained by the Warrant Agent to purchase one share of
Common Stock of the Company on exercise thereof, subject to modification
and adjustment as provided in Section 7. Warrant Certificates
representing the right to purchase Warrant Shares shall be executed by
the Company's President, attested to by the Company's Secretary, and
delivered to the Warrant Agent upon execution of this Agreement.
Subject to the provisions of Sections 3, 5 and 6, the Warrant Agent
shall deliver Warrant Certificates in the required whole number
denominations to the Registered Holders in connection with any transfer
or exchange permitted under this Agreement. Except as provided in
Section 6 hereof, no Warrant Certificates shall be issued except
i) Warrant Certificates initially issued hereunder, (ii) Warrant
Certificates issued on or after the initial issuance date, upon the
exercise of any Warrants, to evidence the unexercised Warrants held
by the exercising Registered Holder, and (iii) Warrant Certificates
issued after the initial issuance date, upon any transfer or exchange
of Warrant Certificates or replacements of lost or mutilated Warrant
Certificates.
2. Form and Execution of Warrant Certificates. The Warrant
Certificates shall be substantially in the form attached hereto as
Exhibit A. The Warrant Certificates shall be dated as of the date of
their issuance, whether on initial issuance, transfer or exchange or
in lieu of mutilated, lost, stolen or destroyed Warrant Certificates.
Each such Warrant Certificate shall be numbered serially in accordance
with the Common Stock initially attached thereto with the letter "W"
appearing on each Warrant Certificate. The Warrant Certificates may
2
immediately be detached. The Warrant Certificates shall be manually
countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. In the event any officer of the
Company who executed the Warrant Certificates shall cease to
be an officer of the Company before the date of issuance of the
Warrant Certificates or before countersignature and delivery by the
Warrant Agent, such Warrant Certificates may be countersigned, issued
and delivered by the Warrant Agent with the same force and effect as
though the person who signed such Warrant Certificates had not ceased
to be an officer of the Company.
3. Exercise. Subject to the provisions of Sections 4 and 7, the
Warrants, when evidenced by a Warrant Certificate, may be exercised
in whole or in part at any time during the period (the "Exercise
Period") commencing on _______________, 2000__ (the "Exercise Date")
until ________________, 200___ (the "Warrant Expiration Date", unless
extended by a majority vote of the Company's Board of Directors, but in
no event after such extended expiration date. The Company shall promptly
notify the Warrant Agent and the Registered Holders of any such extension
of the Exercise Period. A Warrant shall be deemed to have been exercise
immediately prior to the close of business on the date (the "Exercise
Date") of the surrender for exercise of the Warrant Certificate.
The exercise form shall be executed by the Registered Holder thereof or
his attorney duly authorized in writing and shall be delivered, together
with payment therefor, to the Company at its corporate offices located
at 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, X.X., Xxxxxx X0X 0X0 (the
"Corporate Office"), in cash or by official bank or certified check, in
an amount equal to the aggregate Exercise Price, in lawful money.
Unless Warrant Shares may not be issued as provided herein, the person
entitled to receive the number of Warrant Shares deliverable on such
exercise shall be treated for all purposes as the holder of such Warrant
Shares as of the close of business on the Exercise Date. In addition,
the Warrant Agent shall also, at such time, verify that all of the
conditions precedent to the issuance of Warrant Shares set forth in
Section 4 have been satisfied as of the Exercise Date. The Company shall
not be obligated to issue any fractional share interests in Warrant Shares
issuable or deliverable on the exercise of any Warrant, or scrip or cash
therefor, and such fractional shares shall be of no value whatsoever. If
more than one Warrant shall be exercised at one time by the same
Registered Holder, the number of full Shares which shall be issuable on
exercise thereof shall be computed on the basis of the aggregate number
of full Shares issuable on such exercise.
Within thirty (30) days after the Exercise Date and in any event prior to
the Expiration Date, the Warrant Agent shall cause to be issued and
delivered to the person or persons entitled to receive the same, a
ertificate or certificates for the number of Warrant Shares deliverable on
such exercise. No adjustment shall be made in respect of cash dividends,
if any, on Warrant Shares delivered on exercise of any Warrant.
The Company may deem and treat the Registered Holders of the Warrants as
he absolute owners thereof for all purposes, and the Company shall not be
affected by any notice to the contrary. The Warrants shall not entitle
the holders thereof to any of the rights of shareholders or to any
dividends declared on the Common Stock unless the Registered Holder shall
have exercised the Warrants and purchased Shares of Common Stock prior
to the record date fixed by the Board of Directors of the Company for the
3
determination of holders of Common Stock entitled to any such dividend
or other rights.
4. Reservation of Shares and Payment of Taxes. The Company covenants
that it will at all times reserve and have available from its authorized
Common Stock such number of shares as shall then be issuable upon the
exercise of all outstanding Warrant Certificates. The Company covenants
that all Warrant Shares which shall be so issuable shall be duly and
validly issued, fully paid, non-assessable, and free from all taxes,
liens and charges of whatsoever nature with respect to the issuance
thereof.
The Company and the Warrant Agent acknowledge that the Company will be
required, pursuant to the Securities Act of 1993, as amended (the "Act"),
that no Warrants may be exercised nor may Warrant Shares be issued by
the Warrant Agent unless, on the Exercise Date: the Company has an
effective registration statement covering the issuance of the Warrant
Shares under the Act or such issuance is exempt from registration under
the applicable state and federal securities laws, rules and regulations
of the state in which such Registered Holder resides.
If any Shares of Common Stock to be reserved for the purpose of exercise
of Warrant Certificates hereunder require any other registration with or
approval of any government authority under any federal or state law before
such shares may be validly issued or delivered, then the Company covenants
that it will, in good faith and as expeditiously as possible, endeavor to
secure such registration or approval, as the case may be. No Warrant
Shares shall be issued unless and until any such registration requirements
have been satisfied if and when required.
The Registered Holder shall pay all documentary, stamp, or similar taxes
and other government charges that may be imposed with respect of the
issuance of the Warrants, or the issuance, transfer or delivery of any
Warrant Shares on exercise of the Warrants. In the event the Warrant
Shares are to be delivered in a name other than the name of the
Registered Holder of the Warrant Certificate, no such delivery shall be
made unless the person requesting the same has paid to the Warrant Agent
the amount of any such taxes or charges incident thereto.
In the event the Warrant Agent ceases to also serve as the stock transfer
agent for the Company, the Warrant Agent is irrevocably authorized to
requisition the Company's new transfer agent from time to time for
Certificates of Warrant Shares required upon exercise of the Warrants,
and the Company will authorize such transfer agent to comply with all such
requisitions. The Company will file with the Warrant Agent a statement
setting forth the name and address of its new transfer agent for Shares of
Common Stock or other capital stock issuable upon exercise of the Warrants
and of each successor transfer agent appointed by the Company during the
term of this Agreement.
5. Registration of Transfer. The Warrant Certificates may be transferred
in whole or in part. Warrant Certificates to be exchanged shall be
surrendered to the Company at its Corporate Office. The Company shall
execute and the Warrant Agent shall countersign, issue and deliver in
exchange therefor the Warrant Certificate(s)which the Registered Holder
making the transfer shall be entitled to receive.
4
The Warrant Agent shall keep transfer records of all such transactions at its
corporate offices which shall register Warrant Certificates and any transfers
thereof. On due presentment for registration of transfer of any Warrant
Certificate, the Company shall execute and the Warrant Agent shall issue and
deliver to the transferee or transferees' a new Warrant Certificate(s)
representing an equal aggregate number of Warrants. All Warrant Certificates
presented for registration of transfer or exercise shall be duly endorsed or
accompanied by a written instrument or instruments or transfer in form
satisfactory to the Company and the Warrant Agent. Any reasonable fee for
any registration of transfer of Warrant Certificates shall be paid by the
Registered Holder. The Company may require payment of a sum sufficient to
cover any tax or other government charge that may be imposed in connection
therewith.
All Warrant Certificates so surrendered, or surrendered for exercise, or for
exchange in case of mutilated Warrant Certificates, shall be promptly canceled
by the Warrant Agent and thereafter retained by the Warrant Agent until
termination of the agency created by this Agreement. Prior to due presentment
for registration of transfer thereof, the Company and the Warrant Agent may
treat the Registered Holder of any Warrant Certificate as the absolute owner
thereof (notwithstanding any notations of ownership or writing thereon made by
anyone other than the Company or the Warrant Agent), and the parties hereto
shall not be affected by any notice to the contrary.
6. Loss or Mutilation. On receipt by the Company and the Warrant Agent of
evidence satisfactory as to the ownership of and the loss, theft, destruction
or mutilation of any Warrant Certificate, the Company shall execute, and the
Warrant Agent shall countersign and deliver in lieu thereof, a new Warrant
Certificate representing an equal aggregate number of Warrants. In the case
of loss, theft or destruction of any Warrant Certificate, the individual
requesting issuance of a new Warrant Certificate shall be required to
indemnify the Company and the Warrant Agent in an amount satisfactory to each
of them. In the event a Warrant Certificate is mutilated, such Certificate
shall be surrendered and canceled by the Warrant Agent prior to delivery of
a new Warrant Certificate. Applicants for a new Warrant Certificate shall
also comply with such other regulations and pay such other reasonable charges
as the Company may prescribe.
7. Adjustment of Exercise Price and Shares. In the event of any adjustment
of the Exercise Price pursuant to this Section 7, the number of Shares of
Common Stock purchasable on the exercise of each Warrant shall be the number
derived by dividing any such adjusted Exercise Price into the original
Exercise Price. The Exercise Price shall be subject to adjustment as
follows:
(a) In the event, prior to the expiration of the Warrants by exercise or
by their terms, the Company shall issue any Shares of its Common Stock as a
share dividend or shall subdivide the number of outstanding Shares of Common
Stock into a greater number of Shares, then, in either of such events, the
Exercise Price per Share of Common Stock purchasable pursuant to the Warrants
shall be increased proportionately. Conversely, in the event the Company
shall reduce the number of Shares of its outstanding Common Stock by
combining such Shares into a smaller number of Shares, then, in such event,
the Exercise Price per Share purchasable pursuant to the Warrants in effect
at the time of such action shall be increased proportionately and the
number of Shares of Common Stock at that time purchasable pursuant to the
Warrants shall be decreased proportionately. Any dividend paid or
distributed on the Common Stock in Shares of any other class of the
Company's securities, or in securities convertible into shares of Common
5
Stock of the Company, shall be treated as a dividend paid in Common Stock
to the extent that Shares of Common Stock are issuable on the
conversion thereof.
(b) In the event the Company, at any time while the Warrants shall remain
unexpired and unexercised, shall sell all or substantially all of its
property, or dissolves, liquidates or winds up its affairs, prompt,
proportionate, equitable, lawful and adequate provisions shall be made as
part of the terms of any such sale, dissolution, liquidation or winding up
such that the holder of a Warrant may thereafter receive, on exercise
thereof, in lieu of each Share of Common Stock of the Company which he/she/
it would have been entitled to receive, the same kind and amount of any
share, securities, or assets as may be issuable, distributable or payable
on any such sale, dissolution, liquidation or winding up with respect to
each Share of Common Stock of the Company; provided, however, that in the
event of any such sale, dissolution, liquidation or winding up, the right
to exercise a Warrant shall terminate on a date fixed by the Company, such
date to be not earlier than 5:00 p.m., Pacific Standard Time, on the 30th
day next succeeding the date on which notice of such termination of the
right to exercise the Warrants has been given by mail to the Registered
Holders thereof at such addresses as may appear on the records of the of
the Company and the Warrant Agent.
(c) Notwithstanding the provisions of this Section 7, no adjustment on
the Exercise Price shall be made whereby such Price is adjusted in an
amount less than $0.001, the par value of the Company's Common Stock, or
until the aggregate of such adjustments shall equal or exceed $0.001.
(d) In the event, prior to the expiration of the Warrant Certificates by
exercise or by their terms, the Company shall determine to take a record
of the Registered Holders of its Common Stock for the purpose of determining
shareholders entitled to receive any Share dividend or other right which will
cause any change or adjustment in the number, amount, price or nature of the
Shares of Common Stock or other securities or assets deliverable on exercise
of the Warrants pursuant to the foregoing provisions, the Company shall give
to the Registered Holders of the Warrants at the addresses as may appear on
the books of the Company at least 15 days prior written notice to the effect
that it intends to take such a record. Such notice shall specify the date as
of which such record is to be taken; the purpose for which such record is to
be taken; and the number, amount, price and nature of the Common Stock or
other Shares, securities or assets which will be deliverable on exercise of
the Warrants after the action for which such record will be taken has been
completed. Without limiting the obligation of the Company to provide notice
to the Registered Registered Holders of the Warrant Certificates of any
corporate action hereunder, the failure of the Company to give notice shall
not invalidate such corporate action of the Company.
(e) No adjustment of the Exercise Price shall be made as a result of or
in connection with (i) the issuance of Common Stock of the Company pursuant to
options, warrants and share purchase agreements outstanding or in effect on
the date hereof, (ii) the establishment of additional option plans of the
Company, the modification, renewal or extension of any plan now in effect or
hereafter created, or the issuance of Common Stock on exercise of any options
pursuant to such plans, or (iii) the issuance of Common Stock in connection
ith an acquisition or merger of any type (therefore, the anti-dilution
6
provisions of this Section 7 will not apply in the event a merger or
acquisition is undertaken by the Company), in connection with compensation
arrangements for officers, employees or agents of the Company or any
subsidiary, or the like.
(f) Before taking any action which would cause an adjustment reducing
the Exercise Price below the then par value of the Shares of Common Stock
issuable upon exercise of the Warrants, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that
the Company may validly and legally issue fully paid and non-assessable
Shares of such Common Stock at such adjusted Exercise Price.
Upon any adjustment of the Exercise Price required to be made pursuant to this
Section 7, the Company, within 30 days thereafter, shall (a) cause to be filed
with the Warrant Agent a certificate setting forth the Exercise Price after
such adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based, and (b) cause
to be mailed to each of the Registered Holders of the Warrant Certificates
written notice of such adjustment.
8. Duties, Compensation and Termination of Warrant Agent. The Warrant Agent
shall act hereunder as agent and in a ministerial capacity for the Company,
and its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not, by issuing and delivering Warrant Certificates or by
any other act hereunder, be deemed to make any representations as to the
validity, value or authorization of the Warrant Certificates or the Warrants
represented thereby or of the Common Stock or other property delivered on
exercise of any Warrant. The Warrant Agent shall not at any time be under
any duty or responsibility to any holder of the Warrant Certificates to make
or cause to be made any adjustment of the Exercise Price or to determine
whether any fact exists which may require any such adjustment.
The Warrant Agent shall not (i) be liable for any recital or statement of fact
contained herein or for any action taken or omitted by it in reliance on any
Warrant Certificate or other document or instrument believed by it in good
faith to be genuine and to have been signed or presented by the proper party
or parties, (ii) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this Agreement
except for its own negligence or willful misconduct.
The Company agrees to indemnify the Warrant Agent against any and all losses,
expenses and liabilities which the Warrant Agent may incur in connection with
the exercise of any Warrants as set forth in Section 4.
The Warrant Agent may at any time consult with counsel satisfactory to it
(which may be counsel for the Company) and shall incur no liability or
responsibility for any action taken or omitted by it in good faith in
accordance with the opinion or advice of such counsel. Any notice,
statement, instruction, request, direction, order or demand of the Company
shall be sufficiently evidenced by aninstrument signed by its President and
attested to by its Secretary or Assistant Secretary. The Warrant Agent
shall not be liable for any action taken or omitted by it in accordance with
such notice, statement, instruction, request, order or demand.
7
The Company agrees to pay the Warrant Agent reasonable compensation for its
services hereunder and to reimburse the Warrant Agent for its reasonable
expenses. The Company further agrees to indemnify the Warrant Agent against
any and all losses, expenses and liabilities arising as a result of the
Warrant Agent's negligence or willful misconduct.
The Warrant Agent may resign its duties or the Company may terminate the
Warrant Agent and the Warrant Agent shall be discharged from all further
duties and liabilities hereunder (except liabilities arising as a result of
the Warrant Agent's own negligence or willful misconduct), on thirty days'
prior written notice to the other party. At least fifteen days prior to the
date such resignation is to become effective, the Warrant Agent shall cause
a copy of such notice of resignation to be mailed to the Registered Holder
of each Warrant Certificate. On such resignation or termination, the
Company shall appoint a new Warrant Agent. If the Company shall fail to
make such appointment within a period of thirty days after it has been
notified in writing of the resignation by the Warrant Agent, then the
Registered Holder of any Warrant Certificate may apply to any court of
competent jurisdiction for the appointment of a new Warrant Agent.
After acceptance in writing of an appointment of a new Warrant Agent is
received by the Company, such new Warrant Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been
originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; provided, however, if it shall be
necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the
Company and shall be legally and validly executed. The Company shall
file a notice of appointment of a new Warrant Agent with the resigning
Warrant Agent and shall forthwith cause a copy of such notice to be
mailed to the Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new Warrant Agent
may be converted or merged, or any corporation resulting from any
consolidation to which the Warrant Agent or any new Warrant Agent shall
be a party, or any corporation succeeding to the corporate trust business
of the Warrant Agent shall be a successor to the Warrant Agent under the
provisions of the preceding paragraph. Any such successor Warrant Agent
shall promptly cause notice of its succession as Warrant Agent to be
mailed to the Company and to the Registered Holder of each Warrant
Certificate. No further action shall be required for establishment and
authorization of such successor Warrant Agent.
The Warrant Agent, its officers or directors and its subsidiaries or
affiliates may buy, hold or sell Warrants or other securities of the Company
and otherwise deal with the Company in the same manner and to the same extent
and with like effect as though it were not Warrant Agent. Nothing herein
shall preclude the Warrant Agent from acting in any other capacity for the
Company or for any other legal entity.
9. Modification of Agreement. The Warrant Agent and the Company may, by
supplemental agreement, make any changes or corrections in this Agreement (i)
that they shall deem appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or mistake or error herein contained; or
(ii) that they may deem necessary or desirable and which shall not adversely
8
affect the interests of the holders of Warrant Certificates; provided,
however, this Agreement shall not otherwise be modified, supplemented or
altered in any respect except with the consent in writing of the Registered
Holders of Warrant Certificates representing not less than 51% of the
Warrants outstanding. Additionally, except as provided in Section 7, no
change in the number or nature of the Warrant Shares purchasable on exercise
of a Warrant, the Exercise Price therefor, or the Expiration Date of a Warrant
shall be made without the consent in writing of the Registered Holder of the
Warrant Certificate representing such Warrant, other than such changes as are
specifically prescribed or allowed by this Agreement.
10. Notices. All notices, demands, elections, opinions or requests (however
characterized or described) required or authorized hereunder shall be deemed
given sufficiently if in writing and sent by registered or certified mail,
return receipt requested and postage prepaid, or by tested telex, telegram or
cable to, in the case of the Company:
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, X.X., Xxxxxx X0X 0X0
and in the case of the Warrant Agent:
Xxxxxxxx Stock Transfer
and if to the Registered Holder of a Warrant Certificate, at the address of
such holder as set forth on the records maintained by the Warrant Agent and
the Company.
11. Binding Agreement. This Agreement shall be binding upon and inure to the
benefit of the Company, the Warrant Agent and their respective successors and
assigns, and the Holders of the Warrant Certificates. Nothing in this
Agreement is intended or shall be construed to confer upon any other person
any fright, remedy or claim or to impose on any other person any duty,
liability or obligation.
12.Further Instruments. The parties shall execute and deliver any and all
such other instruments and shall take any and all other actions as may be
reasonably necessary to carry out the intention of this Agreement.
13. Severability. If any provision of this Agreement shall be held,
declared or pronounced void, voidable, invalid, unenforceable or
inoperative for any reason by any court of competent jurisdiction,
government authority or otherwise, such holding, declaration or
pronouncement shall not affect adversely any other provision of this
Agreement, which shall otherwise remain in full force and effect and be
enforced in accordance with its terms and the effect of such holding,
declaration or pronouncement shall be limited to the territory or
jurisdiction in which made.
14. Waiver. All the rights and remedies of either party under this
Agreement are cumulative and not exclusive of any other rights and
remedies as provided by law. No delay or failure on the part of either
9
party in the exercise of any right or remedy arising from a breach of this
Agreement shall operate as a waiver of any subsequent right or remedy
arising from a subsequent breach of this Agreement. The consent of any
party where required hereunder to act or occurrence shall not be deemed
to be a consent to any other action or occurrence.
15. General Provisions. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the state of Nevada. Except
as otherwise expressly stated herein, time is of the essence in performing
hereunder. This Agreement embodies the entire agreement and understanding
between the parties and supersedes all prior agreements and understandings
relating to the subject matter hereof, and this Agreement may not be
modified or amended or any term or provisions hereof waived or discharged
except in writing signed by the party against who such amendment,
modification, waiver or discharge is sought to be enforced. The headings
of this Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ROTOBLOCK CORPORATION
(Corporate Seal)
By: /s/ Xxxxx Xxxxxx, President
ATTEST:
/s/ Xxxxxx Xxxxxxx, Secretary
THE WARRANT AGENT:
XXXXXXXX STOCK TRANSFER
By:-------------------------------
Authorized Officer
Title:----------------------------
10
