Contract
Exhibit
10.05
THIS
WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS OTHERWISE
SET
FORTH HEREIN OR IN A SECURITIES PURCHASE AGREEMENT DATED AS OF NOVEMBER 16,
2007, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD, TRANSFERRED
OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND
SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
144
OR REGULATION S UNDER SUCH ACT.
Right
to
Purchase 14,010,000 Shares of Common Stock, par value $.001 per
share
STOCK
PURCHASE WARRANT
THIS
CERTIFIES THAT,
for
value received, AJW Master Fund, Ltd. or its registered assigns, is entitled
to
purchase from Motivnation,
Inc.,
a Nevada
corporation (the “Company”), at any time or from time to time during the period
specified in Paragraph 2 hereof, 14,010,000 fully paid and nonassessable
shares of the Company’s Common Stock, par value $.001 per share (the “Common
Stock”), at an exercise price per share equal to $.002 (the “Exercise Price”).
The term “Warrant Shares,” as used herein, refers to the shares of Common Stock
purchasable hereunder. The Warrant Shares and the Exercise Price are subject
to
adjustment as provided in Paragraph 4 hereof. The term “Warrants” means this
Warrant and the other warrants issued pursuant to that certain Securities
Purchase Agreement, dated November 16, 2007, by and among the Company and the
Buyers listed on the execution page thereof (the “Securities Purchase
Agreement”).
This
Warrant is subject to the following terms, provisions, and conditions:
1
Manner
of Exercise; Issuance of Certificates; Payment for Shares. Subject to
the provisions hereof, this Warrant may be exercised by the holder hereof,
in
whole or in part, by the surrender of this Warrant, together with a completed
exercise agreement in the form attached hereto (the “Exercise Agreement”), to
the Company during normal business hours on any business day at the Company’s
principal executive offices (or such other office or agency of the Company
as it
may designate by notice to the holder hereof), and upon (i) payment to the
Company in cash, by certified or official bank check or by wire transfer for
the
account of the Company of the Exercise Price for the Warrant Shares specified
in
the Exercise Agreement or (ii) if the resale of the Warrant Shares by the holder
is not then registered pursuant to an effective registration statement under
the
Securities Act of 1933, as amended (the “Securities Act”), delivery to the
Company of a written notice of an election to effect a “Cashless Exercise” (as
defined in Section 11(c) below) for the Warrant Shares specified in the Exercise
Agreement. The Warrant Shares so purchased shall be deemed to be issued to
the
holder hereof or such holder’s designee, as the record owner of such shares, as
of the close of business on the date on which this Warrant shall have been
surrendered, the completed Exercise Agreement shall have been delivered, and
payment shall have been made for such shares as set forth above. Certificates
for the Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time, not exceeding five (5) business days, after this
Warrant shall have been so exercised. The certificates so delivered shall be
in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be designated
by such holder. If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Company shall, at its expense, at the
time
of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall
not
then have been exercised. In addition to all other available remedies at law
or
in equity, if the Company fails to deliver certificates for the Warrant Shares
within five (5) business days after this Warrant is exercised, then the Company
shall pay to the holder in cash a penalty (the “Penalty”) equal to 2% of the
number of Warrant Shares that the holder is entitled to multiplied by the Market
Price (as hereinafter defined) for each day that the Company fails to deliver
certificates for the Warrant Shares. For example, if the holder is entitled
to
100,000 Warrant Shares and the Market Price is $2.00, then the Company shall
pay
to the holder $4,000 for each day that the Company fails to deliver certificates
for the Warrant Shares. The Penalty shall be paid to the holder by the fifth
day
of the month following the month in which it has accrued.
Notwithstanding
anything in this Warrant to the contrary, in no event shall the holder of this
Warrant be entitled to exercise a number of Warrants (or portions thereof)
in
excess of the number of Warrants (or portions thereof) upon exercise of which
the sum of (i) the number of shares of Common Stock beneficially owned by the
holder and its affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unexercised Warrants and the
unexercised or unconverted portion of any other securities of the Company
(including the Notes (as defined in the Securities Purchase Agreement)) subject
to a limitation on conversion or exercise analogous to the limitation contained
herein) and (ii) the number of shares of Common Stock issuable upon exercise
of
the Warrants (or portions thereof) with respect to which the determination
described herein is being made, would result in beneficial ownership by the
holder and its affiliates of more than 4.9% of the outstanding shares of Common
Stock. For purposes of the immediately preceding sentence, beneficial ownership
shall be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended, and Regulation 13D-G thereunder, except as otherwise
provided in clause (i) of the preceding sentence. Notwithstanding anything
to
the contrary contained herein, the limitation on exercise of this Warrant set
forth herein may not be amended without (i) the written consent of the holder
hereof and the Company and (ii) the approval of a majority of shareholders
of
the Company.
Period
of
Exercise. This
Warrant is exercisable at any time or from time to time on or after the date
on
which this Warrant is issued and delivered pursuant to the terms of the
Securities Purchase Agreement and before 6:00 p.m., New York, New York time
on
the seventh (7th)
anniversary of the date of issuance (the “Exercise Period”).
2
Certain
Agreements of the Company. The Company hereby covenants and agrees as
follows:
Shares
to be Fully Paid.
All Warrant Shares will, upon issuance in accordance with the terms of this
Warrant, be validly issued, fully paid, and nonassessable and free from all
taxes, liens, and charges with respect to the issue
thereof.
Reservation
of Shares.
During the Exercise Period, the Company shall at all times have authorized,
and
reserved for the purpose of issuance upon exercise of this Warrant, a sufficient
number of shares of Common Stock to provide for the exercise of this
Warrant.
Listing.
The Company shall promptly secure the listing of the shares of Common Stock
issuable upon exercise of the Warrant upon each national securities exchange
or
automated quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance upon exercise of this Warrant)
and shall maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all shares of Common Stock from time to time issuable
upon the exercise of this Warrant; and the Company shall so list on each
national securities exchange or automated quotation system, as the case may
be,
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 national securities exchange or
automated quotation system.
Certain
Actions Prohibited.
The Company will not, by amendment of its charter 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. Without
limiting the generality of the foregoing, the Company (i) will not increase
the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the 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.
Successors
and Assigns.
This Warrant will be binding upon any entity succeeding to the Company by
merger, consolidation, or acquisition of all or substantially all the Company’s
assets.
Antidilution
Provisions. During the Exercise Period, the Exercise Price and the
number of Warrant Shares shall be subject to adjustment from time to time as
provided in this Paragraph 4.
3
In
the
event that any adjustment of the Exercise Price as required herein results
in a
fraction of a cent, such Exercise Price shall be rounded up to the nearest
cent.
Adjustment
of Exercise Price and Number of Shares upon Issuance of Common
Stock.
Except as otherwise provided in Paragraphs 4(c) and 4(e) hereof, if and whenever
on or after the date of issuance of this Warrant, the Company issues or sells,
or in accordance with Paragraph 4(b) hereof is deemed to have issued or sold,
any shares of Common Stock for no consideration or for a consideration per
share
(before deduction of reasonable expenses or commissions or underwriting
discounts or allowances in connection therewith) less than the Market Price
on
the date of issuance (a “Dilutive Issuance”), then immediately upon the Dilutive
Issuance, the Exercise Price will be reduced to a price determined by
multiplying the Exercise Price in effect immediately prior to the Dilutive
Issuance by a fraction, (i) the numerator of which is an amount equal to the
sum
of (x) the number of shares of Common Stock actually outstanding immediately
prior to the Dilutive Issuance, plus (y) the quotient of the aggregate
consideration, calculated as set forth in Paragraph 4(b) hereof, received by
the
Company upon such Dilutive Issuance divided by the Market Price in effect
immediately prior to the Dilutive Issuance, and (ii) the denominator of which
is
the total number of shares of Common Stock Deemed Outstanding (as defined below)
immediately after the Dilutive Issuance.
Effect
on Exercise Price of Certain Events.
For purposes of determining the adjusted Exercise Price under Paragraph 4(a)
hereof, the following will be applicable:
Issuance
of Rights or Options.
If the
Company in any manner issues or grants any warrants, rights or options, whether
or not immediately exercisable, to subscribe for or to purchase Common Stock
or
other securities convertible into or exchangeable for Common Stock (“Convertible
Securities”) (such warrants, rights and options to purchase Common Stock or
Convertible Securities are hereinafter referred to as “Options”) and the price
per share for which Common Stock is issuable upon the exercise of such Options
is less than the Market Price on the date of issuance or grant of such Options,
then the maximum total number of shares of Common Stock issuable upon the
exercise of all such Options will, as of the date of the issuance or grant
of
such Options, be deemed to be outstanding and to have been issued and sold
by
the Company for such price per share. For purposes of the preceding sentence,
the “price per share for which Common Stock is issuable upon the exercise of
such Options” is determined by dividing (i) the total amount, if any, received
or receivable by the Company as consideration for the issuance or granting
of
all such Options, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the exercise of all such Options, plus,
in
the case of Convertible Securities issuable upon the exercise of such Options,
the minimum aggregate amount of additional consideration payable upon the
conversion or exchange thereof at the time such Convertible Securities first
become convertible or exchangeable, by (ii) the maximum total number of shares
of Common Stock issuable upon the exercise of all such Options (assuming full
conversion of Convertible Securities, if applicable). No further adjustment
to
the Exercise Price will be made upon the actual issuance of such Common Stock
upon the exercise of such Options or upon the conversion or exchange of
Convertible Securities issuable upon exercise of such Options.
4
Issuance
of Convertible Securities.
If the
Company in any manner issues or sells any Convertible Securities, whether or
not
immediately convertible (other than where the same are issuable upon the
exercise of Options) and the price per share for which Common Stock is issuable
upon such conversion or exchange is less than the Market Price on the date
of
issuance, then the maximum total number of shares of Common Stock issuable
upon
the conversion or exchange of all such Convertible Securities will, as of the
date of the issuance of such Convertible Securities, be deemed to be outstanding
and to have been issued and sold by the Company for such price per share. For
the purposes of the preceding sentence, the “price per share for which Common
Stock is issuable upon such conversion or exchange” is determined by dividing
(i) the total amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such Convertible Securities,
plus
the minimum aggregate amount of additional consideration, if any, payable to
the
Company upon the conversion or exchange thereof at the time such Convertible
Securities first become convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the conversion or exchange of
all
such Convertible Securities. No further adjustment to the Exercise Price will
be
made upon the actual issuance of such Common Stock upon conversion or exchange
of such Convertible Securities.
Change
in Option Price or Conversion Rate.
If there
is a change at any time in (i) the amount of additional consideration payable
to
the Company upon the exercise of any Options; (ii) the amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
of
any Convertible Securities; or (iii) the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock (other than
under or by reason of provisions designed to protect against dilution), the
Exercise Price in effect at the time of such change will be readjusted to the
Exercise Price which would have been in effect at such time had such Options
or
Convertible Securities still outstanding provided for such changed additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold.
Treatment
of Expired Options and Unexercised Convertible
Securities.
If, in
any case, the total number of shares of Common Stock issuable upon exercise
of
any Option or upon conversion or exchange of any Convertible Securities is
not,
in fact, issued and the rights to exercise such Option or to convert or exchange
such Convertible Securities shall have expired or terminated, the Exercise
Price
then in effect will be readjusted to the Exercise Price which would have been
in
effect at the time of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding immediately prior to such
expiration or termination (other than in respect of the actual number of shares
of Common Stock issued upon exercise or conversion thereof), never been
issued.
Calculation
of Consideration Received.
If any
Common Stock, Options or Convertible Securities are issued, granted or sold
for
cash, the consideration received therefor for purposes of this Warrant will
be
the amount received by the Company therefor, before deduction of reasonable
commissions, underwriting discounts or allowances or other reasonable expenses
paid or incurred by the Company in connection with such issuance, grant or
sale.
In case any Common Stock, Options or Convertible Securities are issued or sold
for a consideration part or all of which shall be other than cash, the amount
of
the consideration other than cash received by the Company will be the fair
value
of such consideration, except where such consideration consists of securities,
in which case the amount of consideration received by the Company will be the
Market Price thereof as of the date of receipt. In case any Common Stock,
Options or Convertible Securities are issued in connection with any acquisition,
merger or consolidation in which the Company is the surviving corporation,
the
amount of consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving corporation 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 in good faith by the Board of Directors of the
Company.
5
Exceptions
to Adjustment of Exercise Price.
No
adjustment to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities granted, issued and outstanding
on
the date of issuance of this Warrant; (ii) upon the grant or exercise of any
stock or options which may hereafter be granted or exercised under any employee
benefit plan, stock option plan or restricted stock plan of the Company now
existing or to be implemented in the future, so long as the issuance of such
stock or options is approved by a majority of the independent members of the
Board of Directors of the Company or a majority of the members of a committee
of
independent directors established for such purpose; or (iii) upon the exercise
of the Warrants.
Subdivision
or Combination of Common Stock.
If the Company at any time subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) the shares
of
Common Stock acquirable hereunder into a greater number of shares, then, after
the date of record for effecting such subdivision, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced. If the
Company at any time combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a smaller number of shares, then, after the date
of
record for effecting such combination, the Exercise Price in effect immediately
prior to such combination will be proportionately
increased.
Adjustment
in Number of Shares.
Upon each adjustment of the Exercise Price pursuant to the provisions of this
Paragraph 4, the number of shares of Common Stock issuable upon exercise of
this
Warrant shall be adjusted by multiplying a number equal to the Exercise Price
in
effect immediately prior to such adjustment by the number of shares of Common
Stock issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise
Price.
Consolidation,
Merger or Sale.
In case of any consolidation of the Company with, or merger of the Company
into
any other corporation, or in case of any sale or conveyance of all or
substantially all of the assets of the Company other than in connection with
a
plan of complete liquidation of the Company, then as a condition of such
consolidation, merger or sale or conveyance, adequate provision will be made
whereby the holder of this Warrant will have the right to acquire and receive
upon exercise of this Warrant in lieu of the shares of Common Stock immediately
theretofore acquirable upon the exercise of this Warrant, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for the number of shares of Common Stock immediately theretofore acquirable
and
receivable upon exercise of this Warrant had such consolidation, merger or
sale
or conveyance not taken place. In any such case, the Company will make
appropriate provision to insure that the provisions of this Paragraph 4 hereof
will thereafter be applicable as nearly as may be in relation to any shares
of
stock or securities thereafter deliverable upon the exercise of this Warrant.
The Company will not effect any consolidation, merger or sale or conveyance
unless prior to the consummation thereof, the successor corporation (if other
than the Company) assumes by written instrument the obligations under this
Paragraph 4 and the obligations to deliver to the holder of this Warrant such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, the holder may be entitled to acquire.
6
Distribution
of Assets.
In case the Company shall declare or make any distribution of its assets
(including cash) to holders of Common Stock as a partial liquidating dividend,
by way of return of capital or otherwise, then, after the date of record for
determining shareholders entitled to such distribution, but prior to the date
of
distribution, the holder of this Warrant shall be entitled upon exercise of
this
Warrant for the purchase of any or all of the shares of Common Stock subject
hereto, to receive the amount of such assets which would have been payable
to
the holder had such holder been the holder of such shares of Common Stock on
the
record date for the determination of shareholders entitled to such
distribution.
Notice
of Adjustment.
Upon the occurrence of any event which requires any adjustment of the Exercise
Price, then, and in each such case, the Company shall give notice thereof to
the
holder of this Warrant, which notice shall state the Exercise Price resulting
from such adjustment and the increase or decrease in the number of Warrant
Shares purchasable at such price upon exercise, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation
is
based. Such calculation shall be certified by the Chief Financial Officer of
the
Company.
Minimum
Adjustment of Exercise Price.
No adjustment of the Exercise Price shall be made in an amount of less than
1%
of the Exercise Price in effect at the time such adjustment is otherwise
required to be made, but any such lesser adjustment shall be carried forward
and
shall be made at the time and together with the next subsequent adjustment
which, together with any adjustments so carried forward, shall amount to not
less than 1% of such Exercise Price.
No
Fractional Shares.
No fractional shares of Common Stock are to be issued upon the exercise of
this
Warrant, but the Company shall pay a cash adjustment in respect of any
fractional share which would otherwise be issuable in an amount equal to the
same fraction of the Market Price of a share of Common Stock on the date of
such
exercise.
Other
Notices.
In case at any time:
the
Company shall declare any dividend upon the Common Stock payable in shares
of
stock of any class or make any other distribution (including dividends or
distributions payable in cash out of retained earnings) to the holders of the
Common Stock;
the
Company shall offer for subscription pro rata to the holders of the Common
Stock
any additional shares of stock of any class or other rights;
there
shall be any capital reorganization of the Company, or reclassification of
the
Common Stock, or consolidation or merger of the Company with or into, or sale
of
all or substantially all its assets to, another corporation or entity;
or
there
shall be a voluntary or involuntary dissolution, liquidation or winding up
of
the Company;
7
then,
in
each such case, the Company shall give to the holder of this Warrant (a) notice
of the date on which the books of the Company shall close or a record shall
be
taken for determining the holders of Common Stock entitled to receive any such
dividend, distribution, or subscription rights or for determining the holders
of
Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice
of
the date (or, if not then known, a reasonable approximation thereof by the
Company) when the same shall take place. Such notice shall also specify the
date
on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for
stock
or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least 30 days
prior to the record date or the date on which the Company’s books are closed in
respect thereto. Failure to give any such notice or any defect therein shall
not
affect the validity of the proceedings referred to in clauses (i), (ii), (iii)
and (iv) above.
Certain
Events.
If any event occurs of the type contemplated by the adjustment provisions of
this Paragraph 4 but not expressly provided for by such provisions, the Company
will give notice of such event as provided in Paragraph 4(g) hereof, and the
Company’s Board of Directors will make an appropriate adjustment in the Exercise
Price and the number of shares of Common Stock acquirable upon exercise of
this
Warrant so that the rights of the holder shall be neither enhanced nor
diminished by such event.
Certain
Definitions.
“Common
Stock Deemed Outstanding”
shall
mean the number of shares of Common Stock actually outstanding (not including
shares of Common Stock held in the treasury of the Company), plus (x) pursuant
to Paragraph 4(b)(i) hereof, the maximum total number of shares of Common Stock
issuable upon the exercise of Options, as of the date of such issuance or grant
of such Options, if any, and (y) pursuant to Paragraph 4(b)(ii) hereof, the
maximum total number of shares of Common Stock issuable upon conversion or
exchange of Convertible Securities, as of the date of issuance of such
Convertible Securities, if any.
“Market
Price,”
as of
any date, (i) means the average of the last reported sale prices for the shares
of Common Stock on the OTCBB for the five (5) Trading Days immediately preceding
such date as reported by Bloomberg, or (ii) if the OTCBB is not the principal
trading market for the shares of Common Stock, the average of the last reported
sale prices on the principal trading market for the Common Stock during the
same
period as reported by Bloomberg, or (iii) if market value cannot be calculated
as of such date on any of the foregoing bases, the Market Price shall be the
fair market value as reasonably determined in good faith by (a) the Board of
Directors of the Company or, at the option of a majority-in-interest of the
holders of the outstanding Warrants by (b) an independent investment bank of
nationally recognized standing in the valuation of businesses similar to the
business of the corporation. The manner of determining the Market Price of
the
Common Stock set forth in the foregoing definition shall apply with respect
to
any other security in respect of which a determination as to market value must
be made hereunder.
8
“Common
Stock,”
for
purposes of this Paragraph 4, includes the Common Stock, par value $.001 per
share, and any additional class of stock of the Company having no preference
as
to dividends or distributions on liquidation, provided that the shares
purchasable pursuant to this Warrant shall include only shares of Common Stock,
par value $.001 per share, in respect of which this Warrant is exercisable,
or
shares resulting from any subdivision or combination of such Common Stock,
or in
the case of any reorganization, reclassification, consolidation, merger, or
sale
of the character referred to in Paragraph 4(e) hereof, the stock or other
securities or property provided for in such Paragraph.
Issue
Tax. The issuance of certificates for Warrant Shares upon the exercise
of this Warrant shall be made without charge to the holder of this Warrant
or
such shares for any issuance tax or other costs in respect thereof, provided
that the Company shall not be required to pay any tax which may be payable
in
respect of any transfer involved in the issuance and delivery of any certificate
in a name other than the holder of this Warrant.
No
Rights or Liabilities as a Shareholder. This Warrant shall not entitle
the holder hereof to any voting rights or other rights as a shareholder of
the
Company. No provision of this Warrant, in the absence of affirmative action
by
the holder hereof to purchase Warrant Shares, and no mere enumeration herein
of
the rights or privileges of the holder hereof, shall give rise to any liability
of such holder for the Exercise Price or as a shareholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
Transfer,
Exchange, and Replacement of Warrant.
Restriction
on Transfer.
This Warrant and the rights granted to the holder hereof are transferable,
in
whole or in part, upon surrender of this Warrant, together with a properly
executed assignment in the form attached hereto, at the office or agency of
the
Company referred to in Paragraph 7(e) below, provided, however, that any
transfer or assignment shall be subject to the conditions set forth in Paragraph
7(f) hereof and to the applicable provisions of the Securities Purchase
Agreement. Until due presentment for registration of transfer on the books
of
the Company, the Company may treat the registered holder hereof as the owner
and
holder hereof for all purposes, and the Company shall not be affected by any
notice to the contrary. Notwithstanding anything to the contrary contained
herein, the registration rights described in Paragraph 8 are assignable only
in
accordance with the provisions of that certain Registration Rights Agreement,
dated November 16, 2007, by and among the Company and the other signatories
thereto (the “Registration Rights Agreement”).
Warrant
Exchangeable for Different Denominations.
This Warrant is exchangeable, upon the surrender hereof by the holder hereof
at
the office or agency of the Company referred to in Paragraph 7(e) below, for
new
Warrants of like tenor representing in the aggregate the right to purchase
the
number of shares of Common Stock which may be purchased hereunder, each of
such
new Warrants to represent the right to purchase such number of shares as shall
be designated by the holder hereof at the time of such
surrender.
Replacement
of Warrant.
Upon receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction, or mutilation of this Warrant and, in the case of any such
loss, theft, or destruction, upon delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company, or, in the case of any such
mutilation, upon surrender and cancellation of this Warrant, the Company, at
its
expense, will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
9
Cancellation;
Payment of Expenses.
Upon the surrender of this Warrant in connection with any transfer, exchange,
or
replacement as provided in this Paragraph 7, this Warrant shall be promptly
canceled by the Company. The Company shall pay all taxes (other than securities
transfer taxes) and all other expenses (other than legal expenses, if any,
incurred by the holder or transferees) and charges payable in connection with
the preparation, execution, and delivery of Warrants pursuant to this Paragraph
7.
Register.
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 and each prior owner of this
Warrant.
Exercise
or Transfer Without Registration.
If, at the time of the surrender of this Warrant in connection with any
exercise, transfer, or exchange of this Warrant, this Warrant (or, in the case
of any exercise, the Warrant Shares issuable hereunder), shall not be registered
under the Securities Act of 1933, as amended (the “Securities Act”) and under
applicable state securities or blue sky laws, the Company may require, as a
condition of allowing such exercise, transfer, or exchange, (i) that the holder
or transferee of this Warrant, as the case may be, furnish to the Company a
written opinion of counsel, which opinion and counsel are acceptable to the
Company, to the effect that such exercise, transfer, or exchange may be made
without registration under said Act and under applicable state securities or
blue sky laws, (ii) that the holder or transferee execute and deliver to the
Company an investment letter in form and substance acceptable to the Company
and
(iii) that the transferee be an “accredited investor” as defined in Rule 501(a)
promulgated under the Securities Act; provided that no such opinion, letter
or
status as an “accredited investor” shall be required in connection with a
transfer pursuant to Rule 144 under the Securities Act. The first holder of
this
Warrant, by taking and holding the same, represents to the Company that such
holder is acquiring this Warrant for investment and not with a view to the
distribution thereof.
Registration
Rights. The initial holder of this Warrant (and certain assignees
thereof) is entitled to the benefit of such registration rights in respect
of
the Warrant Shares as are set forth in Section 2 of the Registration Rights
Agreement.
Notices.
All notices, requests, and other communications required or permitted to be
given or delivered hereunder to the holder of this Warrant shall be in writing,
and shall be personally delivered, or shall be sent by certified or registered
mail or by recognized overnight mail courier, postage prepaid and addressed,
to
such holder at the address shown for such holder on the books of the Company,
or
at such other address as shall have been furnished to the Company by notice
from
such holder. All notices, requests, and other communications required or
permitted to be given or delivered hereunder to the Company shall be in writing,
and shall be personally delivered, or shall be sent by certified or registered
mail or by recognized overnight mail courier, postage prepaid and addressed,
to
the office of the Company at 00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, XX
00000, Attention: Chief Executive Officer, or at such other address as shall
have been furnished to the holder of this Warrant by notice from the Company.
Any such notice, request, or other communication may be sent by facsimile,
but
shall in such case be subsequently confirmed by a writing personally delivered
or sent by certified or registered mail or by recognized overnight mail courier
as provided above. All notices, requests, and other communications shall be
deemed to have been given either at the time of the receipt thereof by the
person entitled to receive such notice at the address of such person for
purposes of this Paragraph 9, or, if mailed by registered or certified mail
or
with a recognized overnight mail courier upon deposit with the United States
Post Office or such overnight mail courier, if postage is prepaid and the
mailing is properly addressed, as the case may be.
10
Governing
Law. THIS WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK
WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS WARRANT, THE AGREEMENTS ENTERED
INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE
OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY
RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE
AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER
THIS WARRANT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH
DISPUTE.
Miscellaneous.
Amendments.
This Warrant and any provision hereof may only be amended by an instrument
in
writing signed by the Company and the holder hereof.
Descriptive
Headings.
The descriptive headings of the several paragraphs of this Warrant are inserted
for purposes of reference only, and shall not affect the meaning or construction
of any of the provisions hereof.
11
Cashless
Exercise.
Notwithstanding anything to the contrary contained in this Warrant, if the
resale of the Warrant Shares by the holder is not then registered pursuant
to an
effective registration statement under the Securities Act, this Warrant may
be
exercised by presentation and surrender of this Warrant to the Company at
its
principal executive offices with a written notice of the holder’s intention to
effect a cashless exercise, including a calculation of the number of shares
of
Common Stock to be issued upon such exercise in accordance with the terms
hereof
(a “Cashless Exercise”). In the event of a Cashless Exercise, in lieu of paying
the Exercise Price in cash, the holder shall surrender this Warrant for that
number of shares of Common Stock determined by multiplying the number of
Warrant
Shares to which it would otherwise be entitled by a fraction, the numerator
of
which shall be the difference between the then current Market Price per share
of
the Common Stock and the Exercise Price, and the denominator of which shall
be
the then current Market Price per share of Common Stock. For example, if
the
holder is exercising 100,000 Warrants with a per Warrant exercise price of
$0.75
per share through a cashless exercise when the Common Stock’s current Market
Price per share is $2.00 per share, then upon such Cashless Exercise the
holder
will receive 62,500 shares of Common Stock.
Remedies.
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the holder, by vitiating the intent and purpose of
the
transaction contemplated hereby. Accordingly, the Company acknowledges that
the
remedy at law for a breach of its obligations under this Warrant will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Warrant, that the holder shall be entitled,
in
addition to all other available remedies at law or in equity, and in addition
to
the penalties assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Warrant and to enforce specifically
the
terms and provisions thereof, without the necessity of showing economic loss
and
without any bond or other security being required.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
12
IN
WITNESS WHEREOF,
the
Company has caused this Warrant to be signed by its duly authorized
officer.
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By:
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|
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Xxxxxx
Xxxxxxx
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|
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Chief
Executive Officer
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Dated
as
of November 16, 2007
13
FORM
OF EXERCISE AGREEMENT
Dated:
________ __, 200_
To: ______________________
The
undersigned, pursuant to the provisions set forth in the within Warrant, hereby
agrees to purchase ________ shares of Common Stock covered by such Warrant,
and
makes payment herewith in full therefor at the price per share provided by
such
Warrant in cash or by certified or official bank check in the amount of, or,
if
the resale of such Common Stock by the undersigned is not currently registered
pursuant to an effective registration statement under the Securities Act of
1933, as amended, by surrender of securities issued by the Company (including
a
portion of the Warrant) having a market value (in the case of a portion of
this
Warrant, determined in accordance with Section 11(c) of the Warrant) equal
to
$_________. Please issue a certificate or certificates for such shares of Common
Stock in the name of and pay any cash for any fractional share to:
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Name:
|
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Signature:
|
|
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Address:
|
|
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Note:
|
The
above signature should correspond exactly with the name on the face
of the
within Warrant, if applicable.
|
and,
if
said number of shares of Common Stock shall not be all the shares purchasable
under the within Warrant, a new Warrant is to be issued in the name of said
undersigned covering the balance of the shares purchasable thereunder less
any
fraction of a share paid in cash.
14
FORM
OF ASSIGNMENT
FOR
VALUE RECEIVED,
the
undersigned hereby sells, assigns, and transfers all the rights of the
undersigned under the within Warrant, with respect to the number of shares
of
Common Stock covered thereby set forth hereinbelow, to:
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Name
of Assignee
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Address
|
No
of Shares
|
,
and
hereby irrevocably constitutes and appoints ___________________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the
premises.
Dated: ________
__, 200_
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In
the presence of:
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||
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Name:
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Signature:
|
||
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Title
of Signing Officer or Agent (if
any):
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||
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Address:
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The
above signature should correspond exactly with the name on the face
of the
within Warrant, if applicable.
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15
