Exhibit 4.2
WA-1 Warrant to Purchase
** **
Shares of Common Stock
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON SUCH EXERCISE MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND SUCH STATE SECURITIES LAWS, AND THE INVESTOR SHALL HAVE DELIVERED TO THE
ISSUING COMPANY AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUING
COUNSEL AS TO THE AVAILABILITY OF SUCH EXEMPTION.
Void after 5:30 P.M. New York City time on January 25, 2011
SERIES A(1) REDEEMABLE COMMON STOCK PURCHASE WARRANT
OF
XXXXXXXX CONSULTING GROUP, INC.
This Warrant is Subject to Redemption as provided in Section 10 of this Warrant
This is to certify that, FOR VALUE RECEIVED, , or
registered assigns ("Holder"), is entitled to purchase, on the terms and subject
to the provisions of this Warrant, from Xxxxxxxx Consulting Group, Inc., a
Delaware corporation (the "Company"), at an exercise price (the "Exercise
Price") of one and 10/100 dollars ($1.10) per share, ( )
shares of common stock, par value $.0001 per share ("Common Stock"), of the
Company at any time during the period (the "Exercise Period") commencing on the
Commencement Date, as hereinafter defined, and ending at 5:30 P.M. New York City
time, on January 25, 2011; provided, however, that if such date is a day on
which banking institutions in the State of New York are authorized by law to
close, then on the next succeeding day which such banks are not authorized to
close. The Commencement Date shall mean the date of the filing of a certificate
of amendment to the Company's certificate of incorporation which increases the
Company's authorized capital stock to 10,000,000 shares of preferred stock and
50,000,000 shares of Common Stock. The number of shares of Common Stock to be
issued upon the exercise or conversion of this Warrant and the price to be paid
for a share of Common Stock may be adjusted from time to time in the manner set
forth in this Warrant. The shares of Common Stock deliverable upon such exercise
or conversion, and as adjusted from time to time, are hereinafter sometimes
referred to as "Warrant Shares," and the exercise price for the purchase of a
share of Common Stock pursuant to this Warrant in effect at any time, as the
same may be adjusted from time to time, is hereinafter sometimes referred to as
the "Exercise Price."
---------------------------------
(1) The Series B Common Stock Purchase Warrant is the same as the Series A
Common Stock Purchase Warrant except that the warrants are numbered WB and
the exercise price is $1.65 per share.
This Warrant was issued pursuant to a subscription agreement (the "Subscription
Agreement") between the Company and the initial holder of this Warrant. The
Holder shall have the registration rights with respect to the Warrant Shares as
set forth in the Registration Rights Provisions to the Subscription Agreement.
1. Exercise of Warrant. This Warrant may be exercised in whole at any time
or in part from time to time during the Exercise Period by presentation and
surrender hereof to the Company at its principal office, or at the office of its
stock transfer agent, if any, with the Purchase Form annexed hereto duly
executed and accompanied by payment of the Exercise Price for the number of
shares of Common Stock specified in such form. Payment of the Exercise Price may
be made either by check (subject to collection) or wire transfer in the amount
of the Exercise Price. If this Warrant should be exercised in part only, the
Company shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder hereof to purchase the
balance of the shares of Common Stock purchasable hereunder. Upon receipt by the
Company of this Warrant at its office, or by the stock transfer agent of the
Company at its office, in proper form for exercise, or upon delivery of the
notice of conversion or exercise without delivery of this Warrant as provided in
the Purchase Agreement, the Holder shall be deemed to be the holder of record of
the shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder.
2. Reservation of Shares. The Company hereby agrees that at all times
there shall be reserved for issuance upon exercise of this Warrant such number
of shares of Common Stock as shall be required for issuance and delivery upon
exercise or conversion of this Warrant and that it shall not increase the par
value of the Common Stock.
3. Fractional Shares. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise or conversion of
this Warrant, the Company shall round the number of shares of Common Stock to be
issued to the next higher integral number of shares
4. Exchange, Transfer, Assignment or Loss of Warrant. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. Subject to the provisions of Section 11 of this
Warrant, upon surrender of this Warrant to the Company or at the office of its
stock transfer agent, if any, with the Assignment Form annexed hereto duly
executed and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant in the name of the assignee
named in such instrument of assignment and this Warrant shall promptly be
canceled. This Warrant may be divided or combined with other Warrants which
carry the same rights upon presentation hereof at the office of the Company or
at the office of its stock transfer agent, if any, together with a written
notice specifying the names and denominations in which new Warrants are to be
issued and signed by the Holder hereof. The term "Warrant" as used herein
includes any Warrants into which this Warrant may be divided or exchanged. Upon
receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will execute and deliver
a new Warrant of like tenor. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.
-2-
5. Rights of the Holder. The Holder shall not, by virtue of this Warrant,
be entitled to any rights of a stockholder in the Company, either at law or
equity, and the rights of the Holder are limited to those expressed in the
Warrant, the Purchase Agreement and the Registration Rights Agreement and are
not enforceable against the Company except to the extent set forth herein and
therein.
6. Adjustments To Exercise Price. The Exercise Price in effect at any time
and the number and kind of securities purchasable upon exercise of each Warrant
shall be subject to adjustment as follows:
(a) In case the Company shall, subsequent to the effectiveness of a
two-for-one stock distribution on or about the date of the closing pursuant to
the Subscription Agreement whereby the Company issued one additional share of
Common Stock for each share of Common Stock outstanding on the record date, (i)
pay a dividend or make a distribution on its shares of Common Stock in shares of
Common Stock, (ii) subdivide or reclassify its outstanding Common Stock into a
greater number of shares or otherwise effect a stock split or distribution, or
(iii) combine or reclassify its outstanding Common Stock into a smaller number
of shares or otherwise effect a reverse split, the Exercise Price in effect at
the time of the record date for such dividend or distribution or of the
effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the Holder of this Warrant exercised after such
date shall be entitled to receive the aggregate number and kind of shares which,
if this Warrant had been exercised immediately prior to such time, he would have
owned upon such exercise and been entitled to receive upon such dividend,
subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed in this Section 6(a) shall occur.
(b) Whenever the Exercise Price payable upon exercise of each Warrant is
adjusted pursuant to this Section 6, the number of shares of Common Stock
issuable upon exercise or conversion of this Warrant shall simultaneously be
adjusted by multiplying the number of shares of Common Stock issuable upon
exercise of each Warrant in effect on immediately prior to the adjustment by the
Exercise Price then in effect and dividing the product so obtained by the
Exercise Price, as adjusted. In no event shall the Exercise Price per share be
less than the par value per share, and, if any adjustment made pursuant to said
Section 6 would result in an Exercise Price which would be less than the par
value per share, then, in such event, the Exercise Price per share shall be the
par value per share; provided, however, that the limitation contained in this
sentence shall not affect the number of shares of Common Stock issuable upon
exercise or conversion of this Warrant.
(c) In the event that at any time, as a result of an adjustment made
pursuant to this Section 6, the Holder of any Warrant thereafter shall become
entitled to receive any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in this Sections 6.
(d) Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon exercise of Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in this and similar Warrants initially issued by the
Company.
-3-
7. Officer's Certificate. Whenever the Exercise Price shall be adjusted as
required by the provisions of Section 6 of this Warrant, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at its
principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price and the adjusted number of
shares of Common Stock issuable upon exercise of each Warrant, determined as
herein provided, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of additional shares of Common
Stock, if any, and such other facts as shall be necessary to show the reason for
and the manner of computing such adjustment. Each such officer's certificate
shall be made available at all reasonable times for inspection by the Holder,
and the Company shall, forthwith after each such adjustment, mail, by certified
mail, return receipt requested and by telecopier and e-mail, a copy of such
certificate to the Holder at the Holder's address set forth in the Company's
Warrant Register.
8. Notices To Warrant Holders. So long as this Warrant shall be
outstanding, (a) if the Company shall pay any dividend or make any distribution
upon Common Stock (other than a regular cash dividend payable out of retained
earnings) or (b) if the Company shall offer to the holders of Common Stock for
subscription or purchase by them any share of any class or any other rights or
(c) if any capital reorganization of the Company, reclassification of the
capital stock of the Company, consolidation or merger of the Company with or
into another corporation, sale, lease or transfer of all or substantially all of
the property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall be
effected, then in any such case, the Company shall cause to be mailed by
certified mail, return receipt requested, to the Holder, at least fifteen days
prior to the date specified in clauses (i) and (ii), as the case may be, of this
Section 8 a notice containing a brief description of the proposed action and
stating the date on which (i) a record is to be taken for the purpose of such
dividend, distribution or rights, or (ii) such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding up
is to take place and the date, if any is to be fixed, as of which the holders of
Common Stock or other securities shall receive cash or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
9. Reclassification, Reorganization or Merger. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger in which the
Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Warrant) or in case
of any sale, lease or conveyance to another corporation of the property of the
Company as an entirety, the Company shall, as a condition precedent to such
transaction, cause effective provisions to be made so that the Holder shall have
the right thereafter by exercising this Warrant, to purchase the kind and amount
of shares of stock and other securities and property receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
which might have been purchased upon exercise of this Warrant immediately prior
to such reclassification, change, consolidation, merger, sale or conveyance. Any
such provision shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Warrant. The foregoing provisions of this Section 9 shall similarly apply to
successive reclassifications, capital reorganizations and changes of shares of
Common Stock and to successive consolidations, mergers, sales or conveyances.
Notwithstanding the foregoing, in the event that, as a result of any merger,
consolidation, sale of assets or similar transaction, all of the holders of
Common Stock receive and are entitled to receive no consideration other than
cash in respect of their shares of Common Stock, then, at the
-4-
effective time of the transaction, the rights to purchase Common Stock pursuant
to the Warrants shall terminate, and the holders of the Warrants shall,
notwithstanding any other provisions of this Warrant, receive in respect of each
Warrant to purchase one (1) share of Common Stock, upon presentation of the
Warrant Certificate, the amount by which the consideration per share of Common
Stock payable to the holders of Common Stock at such effective time exceeds the
Exercise Price in effect on such effective date, without giving effect to the
transaction. In the event that, in such a transaction, the value of the
consideration to be received per share of Common Stock is equal to or less than
the Exercise Price, the Warrants shall automatically terminate and no
consideration will be paid with respect thereof.
10. Right of Redemption.
(a) (i) Commencing July 1, 2006, the Company shall have the right at any
time, on not less than thirty (30) days written notice given prior to the
Redemption Date, to redeem the then outstanding Warrants at the Redemption Price
of one cent ($.01) per share of Common Stock issuable upon exercise of the
Warrants, provided the Market Price of the Common Stock shall equal or exceed
the "Target Price" and the "Trading Volume" shall equal or exceed the "Target
Volume" on each trading day in the twenty (20) trading days prior to the date
that the Company calls the Warrants for redemption. Notice of redemption shall
be mailed by first class mail, postage prepaid, and sent by telecopier and
e-mail not later than five (5) business days after the date the Warrants are
called for redemption. All Warrants must be redeemed if any Warrants are
redeemed.
(ii) As used in this Section 10, the following terms shall have the
meanings set forth below:
(A) "Redemption Date" shall mean the date on which the Warrants are to be
redeemed as set forth in the notice of redemption from the Company to the
Holders of the Warrants, as the same may be extended pursuant to Section
10(b)(ii) of this Warrant.
(B) "Market Price" shall mean the closing bid price of the Common Stock,
as reported by the principal stock exchange or market if the Common Stock is
traded on the New York or American Stock Exchange or the Nasdaq Stock Market,
otherwise as reported by Bloomberg L.P.
(C) "Target Price" shall mean two hundred percent (200%) of the Exercise
Price of the Warrants.
(D) "Trading Volume" shall mean the daily trading volume in the Common
Stock. as reported by the principal stock exchange or market if the Common Stock
is traded on the New York or American Stock Exchange or the Nasdaq Stock Market,
otherwise as reported by Bloomberg L.P..
(E) "Target Volume" shall mean one hundred thousand (100,000) shares.
(F) The date on which the Warrants are called for redemption is the date
on which the Company's board of directors takes action to call the Warrants for
redemption.
(b) Notwithstanding any other provision of this Section 10:
-5-
(i) The Company shall not call the Warrants for redemption unless there
is, at the time the Warrants are called for redemption and at all times from the
date that the Warrants are called for redemption until the Redemption Date, a
current and effective registration statement or a post-effective amendment to
the registration statement covering the issuance and sale of the Warrant Shares.
In the event that, at any time subsequent to the date on which the Warrants are
called for redemption, the shares of Common Stock issuable upon exercise or
conversion of the Warrants are not subject to a current and effective
registration statement, the Company's right to call the Warrants for redemption
shall terminate with respect to all Warrants that have not then been exercised
or converted. Nothing in the preceding sentence shall be construed to prohibit
or restrict the Company from thereafter calling the Warrants for redemption in
the manner provided for, and subject to the provisions of, this Section 10.
(ii) If, during the period between the date the Warrants are called for
redemption and the Redemption Date (whether such date is determined pursuant to
Section 10(a) of this Warrant or as extended pursuant to this Section
10(b)(ii)), the Market Price is less than the Target Price for more than five
(5) consecutive trading days, the Redemption Date shall be postponed for two (2)
trading days for each trading day after such five (5) day period that the Market
Price is less than the Target Price.
(c) The notice of redemption shall specify (i) the Redemption Price, (ii)
the date fixed for redemption of the Warrants (the "Redemption Date"), (iii) the
place where the Warrant Certificates shall be delivered and the Redemption Price
shall be paid, and (iv) that the right to exercise the Warrants shall terminate
at 5:30 p.m. (New York City time) on the trading day immediately preceding the
Redemption Date. No failure to mail such notice nor any defect therein or in the
mailing thereof shall affect the validity of the proceedings for such redemption
except as to a Holder (x) to whom notice was not mailed or (y) whose notice was
defective. An affidavit of the Chief Financial Officer of the Company that
notice of redemption has been mailed shall, in the absence of fraud, be prima
facie evidence of the facts stated therein.
(d) Any right to exercise or convert a Warrant shall terminate at 5:30
p.m. (New York City time) on the trading day immediately preceding the
Redemption Date. After such time, Holders of the Warrants shall have no further
rights except to receive, upon surrender of the Warrant, the Redemption Price
without interest, subject to the provisions of applicable laws relating to the
treatment of abandoned property.
11. Transfer to Company with the Securities Act Of 1933. Neither this
Warrant or the Warrant Shares nor any other security issued or issuable upon
exercise of this Warrant may be sold or otherwise disposed of except pursuant to
an effective registration statement under the Securities Act of 1933, as
amended, or an exemption from the registration requirements of such Act.
Dated as of January 25, 2006 XXXXXXXX CONSULTING GROUP, INC.
By:
--------------------------------
Xxxxxxxxx Xxxxx, CEO
-6-
PURCHASE FORM
Dated: , 20__
The undersigned hereby irrevocably exercises this Warrant to the extent of
purchasing _______ shares of Common Stock and hereby makes payment of
$____________ in payment of the Exercise Price therefor.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:_________________________________________________________________
(Please typewrite or print in block letters)
Signature:____________________________________________________________
Social Security or Employer Identification No.________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED,___________________________________________________
hereby sells, assigns and transfer unto
Name__________________________________________________________________
(Please typewrite or print in block letters)
Address_______________________________________________________________
Social Security or Employer Identification No.________________________
The right to purchase Common Stock represented by this Warrant to the extent of
_________shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint __________________ attorney to transfer the
same on the books of the Company with full power of substitution.
Dated: , 20
Signature_________________________________________
Signature Medallion Guaranteed:
__________________________________________________
-7-
