EMPOWERED PRODUCTS, INC. COMMON STOCK PURCHASE WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER, THE “SECURITIES ACT”), OR ANY STATE OR OTHER SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF WITHIN THE UNITED STATES (AS THAT TERM IS DEFINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT) OR TO A U.S. PERSON (AS THAT TERM IS DEFINED IN REGULATION S) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. HEDGING TRANSACTIONS INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. ANY PERSON ACCEPTING ANY INTEREST IN THE SECURITIES REPRESENTS THAT IT IS NOT A U.S. PERSON AND IS ACQUIRING SUCH SECURITIES IN AN OFFSHORE TRANSACTION PURSUANT TO RULE 903 OR 904 OF REGULATION S.
COMMON STOCK PURCHASE WARRANT
July 7, 2011
THIS CERTIFIES THAT, for value received, New Xxxxxx Limited (the “Investor”), or Investor’s assigns (Investor and Investor’s assigns being the “Holder”), is entitled, subject to the terms and conditions of this Warrant, to subscribe for and purchase at any time during the Exercise Period from Empowered Products, Inc., a Nevada corporation, with an office located at 0000 Xxxx Xxxxxxx Xxxx, Xxx Xxxxx, Xxxxxx 00000 (the “Company”), 2,000,000 shares of Common Stock at a per share price equal to $1.25 (“the Exercise Price”). Both the number of Exercise Shares purchasable upon exercise of this Warrant and the Exercise Price are subject to adjustment and change as provided herein. This Warrant is issued in conjunction with the shares of the Company’s Common Stock issued pursuant to the Subscription Agreement dated as of June 30, 2011, by and between the Company and the Investor.
1. Definitions. As used herein, the following terms shall have the following respective meanings:
(a) “Common Stock” shall mean the common stock of the Company, $0.001 par value per share, and any other securities at any time receivable or issuable upon exercise of this Warrant.
(b) “Exercise Period” shall mean the period commencing on July 7, 2011, and ending on July 7, 2016.
(c) “Exercise Shares” shall mean any Common Stock acquired upon exercise of this Warrant.
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(a) The rights represented by this Warrant may be exercised as a whole or in part at any time during the Exercise Period, by delivery of the following to the Company at its address set forth above (or at such other address as it may designate by notice in writing to the Holder):
(i) An executed Notice of Exercise in the form attached hereto;
(ii) Payment in cash or by check of an amount equal to the product obtained by multiplying the number of Exercise Shares being purchased upon such exercise by the then effective Exercise Price (the “Exercise Amount”); and
(iii) This Warrant.
(b) Upon the exercise of the rights represented by this Warrant, a certificate or certificates for the Exercise Shares so purchased, registered in the name of the Holder or persons affiliated with the Holder, if the Holder so designates (and such designation is in compliance with applicable securities laws and any stockholders, investor rights or similar agreement), shall be issued and delivered to the Holder as promptly as practicable after the rights represented by this Warrant shall have been so exercised.
(c) The person in whose name any certificate or certificates for Exercise Shares are to be issued upon exercise of this Warrant shall be deemed to have become the holder of record of such shares on the date on which this Warrant was surrendered and payment of the Exercise Amount was made, irrespective of the date of delivery of such certificate or certificates, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open.
(a) In lieu of paying the Exercise Amount in cash or by check as provided in Section 2.1, the Holder may elect a “Net Issue Exercise” pursuant to which the Holder will receive a number of Exercise Shares equal to the value (as determined below) of this Warrant (or the portion thereof being exercised) by surrender of this Warrant at the principal office of the Company together with an executed Notice of Exercise in the form attached hereto in which event the Company shall issue to the Holder a number of Exercise Shares computed using the following formula:
X = Y (A-B)
A
Where:
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X = the number of Exercise Shares to be issued to the Holder;
Y = the number of Exercise Shares purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (as adjusted to the date of such exercise);
A = the Fair Market Value of one share of the Company’s Common Stock (at the date of such exercise); and
B = the Exercise Price (as adjusted to the date of such exercise).
(b) For purposes of the above calculation, “Fair Market Value” shall be determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a national market system, including, without limitation, The Nasdaq Stock Market’s Global Select or Global Market, the Fair Market Value of a share of Common Stock will be the average closing sales price for such stock (or the closing bid, if no sales are reported) as quoted on that system or exchange (or the system or exchange with the greatest volume of trading in Common Stock), over the five (5) trading day period ending on the trading day immediately preceding the day the Warrant is being exercised, as reported in the Wall Street Journal or any other source the Company considers reliable.
(ii) If the Common Stock is quoted on The Nasdaq Stock Market ( but not on The Nasdaq Stock Market’s Global Select or Global Market) or is regularly quoted elsewhere by recognized securities dealers but selling prices are not reported, the Fair Market Value of a share of Common Stock will be the average mean between the high bid and low asked prices for the Common Stock over the five (5) trading day period ending on the trading day immediately preceding the day the Warrant is being exercised, as reported in the Wall Street Journal or any other source the Company considers reliable.
(iii) If the Common Stock is not traded as set forth above, the Fair Market Value will be determined in good faith by the Board of Directors of the Company.
(c) If this Warrant is not exercised in full by a Net Issue Exercise, then, the number of shares purchasable pursuant to this Warrant in effect immediately after such partial exercise shall be appropriately adjusted to take into account the effect of the Net Issue Exercise.
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(a) The Holder understands that the Warrant and the Exercise Shares have not been registered under the Securities Act, on the basis that no distribution or public offering of the stock of the Company is to be effected, or registered or qualified under any applicable state securities laws. The Holder realizes that the basis for the exemption may not be present if, notwithstanding its representations, the Holder has a present intention of acquiring the securities for a fixed or determinable period and, in the future, selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the securities. The Holder has no such present intention.
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(b) By acceptance of this Warrant, the Holder hereby represents, warrants and covenants that any shares of stock purchased upon exercise of this Warrant shall be acquired for investment only and not with a view to, or for sale in connection with, any distribution thereof; that the Holder has had such opportunity as such Holder has deemed adequate to obtain from representatives of the Company such information as is necessary to permit the Holder to evaluate the merits and risks of its investment in the Company; and that the Holder understands that the Exercise Shares acquired pursuant to the exercise of this Warrant will be “restricted securities” within the meaning of Rule 144 under the Securities Act.
(c) The Holder recognizes that the Warrant and the Exercise Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. The Company has no obligation to register the Warrant or the Exercise Shares of the Company, or to comply with any exemption from such registration.
(d) The Holder is aware that neither the Warrant nor the Exercise Shares may be sold except (i) in an offshore transaction meeting the requirements of Rule 903 or Rule 904 of Regulation S or (ii) pursuant to Rule 144 adopted under the Securities Act provided that the conditions of Rule 144 are met.
(e) The Holder is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding its investment in the Company. The Holder is experienced in making investments of this type and has such knowledge and background in financial and business matters that the Holder is capable of evaluating the merits and risks of this investment and protecting its own interests. The Holder has had an opportunity to ask questions of, and receive answers from, the Company and its officers and employees regarding the business, financial affairs and other aspects of the Company, and has further had the opportunity to obtain information (to the extent the Company possesses or can acquire such information without unreasonable effort or expense) which the Holder deems necessary to evaluate an investment in the Company and to verify the accuracy of information otherwise provided to the Holder.
(a) Except for transfers by the Holder in compliance with all applicable securities laws, the Holder further agrees not to make any disposition of all or any part of the Warrant or Exercise Shares in any event unless and until:
(i) The Company shall have received a letter secured by the Holder from the Securities and Exchange Commission stating that no action will be recommended to the Commission with respect to the proposed disposition; or
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(ii) There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement; or
(iii) The Holder shall have shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, for the Holder to the effect that such disposition will not require registration of such Warrant or Exercise Shares under the Securities Act or any applicable state securities laws.
(b) The Holder understands and agrees that all certificates evidencing the Exercise Shares to be issued to the Holder may bear the following legend (in addition to any legend required under applicable state securities laws, the Company’s Bylaws, or as provided elsewhere in this Warrant):
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER, THE “SECURITIES ACT”), OR ANY STATE OR OTHER SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF WITHIN THE UNITED STATES (AS THAT TERM IS DEFINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT) OR TO A U.S. PERSON (AS THAT TERM IS DEFINED IN REGULATION S) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. HEDGING TRANSACTIONS INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. ANY PERSON ACCEPTING ANY INTEREST IN THE SECURITIES REPRESENTS THAT IT IS NOT A U.S. PERSON AND IS ACQUIRING SUCH SECURITIES IN AN OFFSHORE TRANSACTION PURSUANT TO RULE 903 OR 904 OF REGULATION S.”.
5. Adjustments and Notices. The Exercise Price and the number of Exercise Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time in accordance with this Section 5.
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5.4 In each case of an adjustment or readjustment of the Exercise Price pursuant to this Section 5, the Company, at its expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to the Holder at the Holder’s address as shown in the Company’s books. The certificate shall set forth such adjustment or readjustment, showing in reasonable detail the facts upon which such adjustment or readjustment is based, including a statement of, if applicable, the type and amount, if any, of other property which at the time would be received upon exercise of this Warrant.
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6. Fractional Shares. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Exercise Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. No payments shall be made by the Company in respect of any fractional shares otherwise issuable pursuant to this Warrant.
7. No Stockholder Rights. This Warrant in and of itself shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company.
8. Transfer of Warrant. Subject to compliance with applicable laws, the restriction on transfer set forth on the first page of this Warrant and in Section 4.4 and the terms of any applicable stockholders, investor rights, or similar agreements, this Warrant and all rights hereunder are transferable, by the Holder in person or by duly authorized attorney, upon delivery of this Warrant and the form of assignment attached hereto to any transferee designated by Holder, provided that the transferee shall have signed an investment letter in form and substance satisfactory to the Company and agreed to be bound by the provisions of this Warrant. Notwithstanding anything to the contrary, no partial transfer of this Warrant shall be permitted.
9. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated, or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any time enforceable by anyone.
10. Notices, Etc. All notices and other communications required or permitted hereunder shall be in writing and shall be sent by express mail or other form of rapid communications, if possible, and if not then such notice or communication shall be mailed by first-class mail, postage prepaid, addressed in each case to the party entitled thereto at the following addresses: (a) if to the Company, to Empowered Products, Inc., Attention: President, 0000 Xxxx Xxxxxxx Xxxx, Xxx Xxxxx, Xxxxxx 00000, and (b) if to the Holder, to such address as originally furnished to the Company by the Holder, or at such other address as one party may furnish to the other in writing. Notice shall be deemed effective on the date dispatched if by personal delivery, two days after mailing if by express mail, or three days after mailing if by first-class mail.
11. Amendment. This Warrant may be amended or otherwise modified only by a writing signed by the Company and the Holder.
12. Acceptance. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.
13. Governing Law; Forum. This Warrant and all rights, obligations, and liabilities hereunder shall be governed by the internal laws of the State of Nevada and any actions related hereto shall be brought in a court of competent jurisdiction located in the County of Xxxxx, State of Nevada.
[NEXT PAGE IS SIGNATURE PAGE]
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a Nevada corporation
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By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
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Title: President
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Name of Holder: | New Xxxxxx Limited | |
Address: | ||
Telephone: | ||
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NOTICE OF EXERCISE
To: On Time Filings, Inc.
1. The undersigned hereby elects to purchase ________ shares of the Common Stock of Empowered Products, Inc. (the “Company”) pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full pursuant to the terms of Section 2.1 of the attached Warrant, or by net issue exercise pursuant to the terms of Section 2.2 of the attached Warrant, together with all applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:
________________________
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(Name)
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________________________
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(Address)
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3. The undersigned represents that (i) the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment purposes only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares; (ii) the undersigned is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding its investment in the Company; (iii) the undersigned is experienced in making investments of this type and has such knowledge and background in financial and business matters that the undersigned is capable of evaluating the merits and risks of this investment and protecting the undersigned’s own interests; (iv) the undersigned is an “accredited investor” as defined in Rule 501 under the Securities Act of 1933, as amended (the “ Securities Act ”) and/or is not a “U.S. Person” as such term is defined in Rule 902 of Regulation S promulgated under the Securities Act; (v) the undersigned understands that the shares of Common Stock issuable upon exercise of this Warrant have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, which exemption depends upon, among other things, the bona fide nature of the investment intent as expressed herein, and, because such securities have not been registered under the Securities Act, they must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available; (vi) the undersigned is aware that the aforesaid shares of Common Stock may not be sold pursuant to Rule 144 adopted under the Securities Act unless certain conditions are met and until the undersigned has held the shares for the number of years prescribed by Rule 144; (vii) the undersigned acknowledges that the shares may be sold in an offshore transaction meeting the requirements of Rule 903 or Rule 904 of Regulation S; and (viii) the undersigned agrees not to make any disposition of all or any part of the aforesaid shares of Common Stock unless and until there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement, or the undersigned has provided the Company with an opinion of counsel satisfactory to the Company, stating that such registration is not required.
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(Signature)
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(Print name)
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