NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY SUCH SECURITIES.
GREAT EXPECTATIONS AND ASSOCIATES, INC.
WARRANT
Warrant No. ________ Date of Original Issuance: November 12, 2004
Great Expectations and Associates, Inc., a Colorado corporation (the
"COMPANY"), hereby certifies that, for value received,
_____________________________ or his, her, or its registered assigns (the
"HOLDER"), is entitled to purchase from the Company up to a total of
________________ (_________) shares of common stock, par value $0.001 per share
(the "COMMON STOCK"), of the Company (each such share, a "WARRANT SHARE" and all
such shares, the "WARRANT SHARES") at an exercise price equal to $0.287 per
share (as adjusted from time to time as provided in Section 9, the "EXERCISE
PRICE"), at any time and from time to time from and after the date hereof and
through and including November 12, 2009 (the "EXPIRATION DATE"), and subject to
the following terms and conditions:
1. Definitions. This warrant (the "Warrant") is one of a series of similar
warrants issued pursuant to the Securities Purchase Agreement, among Great
Expectations, Inc. (the predecessor in interest to the Company) and the
purchasers named therein, dated as of September 14, 2004 (the "SECURITIES
PURCHASE AGREEMENT"). All such warrants are collectively referred to herein as
the "WARRANTS". Capitalized terms used and not otherwise defined herein have the
meanings as defined in the Securities Purchase Agreement.
2. Registration of Warrant; Transfers. The Company shall register this
Warrant, upon records to be maintained by the Company for that purpose (the
"WARRANT REGISTER"), in the name of the record Holder hereof from time to time.
The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, absent actual notice to the contrary.
The Holders are entitled to the benefits of the Securities Purchase Agreement,
which provides, among other things, for certain registration rights and certain
restrictions on the transfer of the Warrants and the Warrant Shares, and each
Holder, by acceptance of a Warrant, accepts the restrictions and other
provisions of the Securities Purchase Agreement.
3. Registration of Transfers. The Company shall register the transfer of
any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Company at its address specified herein. Upon any such registration or
transfer, a new Warrant to purchase Common Stock, in substantially the form of
this Warrant (any such new Warrant, a "NEW WARRANT"), evidencing the portion of
this Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance by such transferee of all
of the rights and obligations of a holder of a Warrant.
4. Exercise and Duration of Warrants.
(a) This Warrant shall be exercisable by the registered Holder at
any time and from time to time on or after the date hereof to and including the
Expiration Date.
(b) A Holder may exercise this Warrant by delivering to the Company
(i) an exercise notice, in the form attached hereto (the "EXERCISE NOTICE"), and
(ii) payment of the Exercise Price for the number of Warrant Shares as to which
this Warrant is being exercised (which may take the form of a "cashless
exercise" if so indicated in the Exercise Notice , and the date such items are
delivered to the Company (as determined in accordance with the notice provisions
hereof) is the "DATE OF EXERCISE."
The Company may not call or redeem all or any portion of this Warrant without
the prior written consent of the Holder.
5. Delivery of Warrant Shares.
(a) Upon exercise of this Warrant, the Company shall promptly (but
in no event later than three Trading Days after the Date of Exercise issue and
deliver to the Holder, a certificate for the Warrant Shares issuable upon such
exercise, which, unless otherwise required by the Securities Purchase Agreement,
shall be free of restrictive legends. The Company shall, upon request of the
Holder and subsequent to the date on which a registration statement covering the
resale of the Warrant Shares has been declared effective by the Securities and
Exchange Commission, use its best efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established
clearing corporation performing similar functions, if available, provided, that,
the Company may, but will not be required to change its transfer agent if its
current transfer agent cannot deliver Warrant Shares electronically through the
Depository Trust Corporation.
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(b) To effect exercises hereunder, the Holder shall be required to
physically surrender this Warrant or, if this Warrant has been lost, mutilated
or stolen, an affidavit of loss in respect thereof in form and substance
reasonably satisfactory to the Company. Execution and delivery of the Exercise
Notice shall have the same effect as cancellation of the original Warrant and
issuance of a New Warrant evidencing the right to purchase the remaining number
of Warrant Shares. This Warrant is exercisable, either in its entirety or, from
time to time, for a portion of the number of Warrant Shares. Upon surrender of
this Warrant following one or more partial exercises, the Company shall issue or
cause to be issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares.
(c) The Company's obligations to issue and deliver Warrant Shares in
accordance with the terms hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any violation or
alleged violation of law by the Holder or any other Person, and irrespective of
any other circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with the issuance of Warrant Shares. Nothing
herein shall limit a Holder's right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company's
failure to timely deliver certificates representing shares of Common Stock upon
exercise of the Warrant as required pursuant to the terms hereof.
6. Charges, Taxes and Expenses. Issuance and delivery of certificates for
shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, withholding tax, transfer
agent fee or other incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than that of the
Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity (which shall not include a surety bond), if requested.
Applicants for a New Warrant under such circumstances shall also comply with
such other reasonable regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe. If a New Warrant is requested as
a result of a mutilation of this Warrant, then the Holder shall deliver such
mutilated Warrant to the Company as a condition precedent to the Company's
obligation to issue the New Warrant.
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8. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and deliverable
upon the exercise of this entire Warrant, free from preemptive rights or any
other contingent purchase rights of persons other than the Holder (taking into
account the adjustments and restrictions of Section 9). The Company covenants
that all Warrant Shares so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof,
shall be duly and validly authorized, issued and fully paid and nonassessable.
9. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 9.
(a) Stock Dividends and Splits. If the Company, at any time while
this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, or (iii) combines outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this Section 9(a) occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.
(b) Fundamental Transactions. If, at any time while this Warrant is
outstanding, (1) the Company effects any merger or consolidation of the Company
with or into another Person, (2) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (3)
any tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (4) the Company
effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a
"FUNDAMENTAL TRANSACTION"), then the Holder shall have the right thereafter to
receive, upon exercise of this Warrant, the same amount and kind of securities,
4
cash or property as it would have been entitled to receive upon the occurrence
of such Fundamental Transaction if it had been, immediately prior to such
Fundamental Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the "ALTERNATE CONSIDERATION").
For purposes of any such exercise, the determination of the Exercise Price shall
be appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder's option and request, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder a new
warrant substantially in the form of this Warrant and consistent with the
foregoing provisions and evidencing the Holder's right to purchase the Alternate
Consideration for the aggregate Exercise Price upon exercise thereof. The terms
of any agreement pursuant to which a Fundamental Transaction is effected shall
include terms requiring any such successor or surviving entity to comply with
the provisions of this Section 9(b) and insuring that the Warrant (or any such
replacement security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction.
(c) In case the Company shall issue shares of Common Stock or
rights, options, warrants or other securities to subscribe for or purchase
Common Stock, or securities convertible or exercisable into or exchangeable for
Common Stock ("COMMON STOCK EQUIVALENTS") (excluding shares, rights, options,
warrants, or convertible or exchangeable securities, issued or issuable (i) in
any of the transactions with respect to which an adjustment of the Exercise
Price is provided pursuant to Sections 9(a) or 9(b) above, (ii) upon exercise of
the Warrants, (iii) pursuant to stock option plans, stock bonus plans, stock
incentive plans, programs or agreements providing for the grant of shares,
options for shares or stock appreciation rights to employees (including
officers), directors, consultants, advisors, agents, lessors, lenders,
customers, vendors and suppliers, or (iv) in connection with transactions which
are not for the principal purpose of raising money (ie, strategic alliance,
corporate partnering, licensing of technology, mergers, acquisition of assets)),
at a price per share lower than the the Base Price (as hereinafter defined) per
share of Common Stock in effect immediately prior to such issuance, then the
Exercise Price shall be reduced on the date of such issuance to a price
(calculated to the nearest cent) determined by multiplying the Exercise Price in
effect immediately prior to such issuance by a fraction, (1) the numerator of
which shall be an amount equal to the sum of (A) the number of shares of Common
Stock outstanding immediately prior to such issuance plus (B) the quotient
obtained by dividing the consideration received by the Company upon such
issuance by the Base Price, and (2) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such issuance.
For the purposes of such adjustments, the maximum number of shares which the
holders of any such Common Stock Equivalents, shall be entitled to subscribe for
or purchase or convert or exchange such securities into shall be deemed to be
issued and outstanding as of the date of such issuance (whether or not such
Common Stock Equivalent is then exercisable, convertible or exchangeable), and
the consideration received by the Company therefor shall be deemed to be the
consideration received by the Company for such Common Stock Equivalents, plus
the minimum aggregate consideration or premiums stated in such Common Stock
5
Equivalents, to be paid for the shares covered thereby. No further adjustment of
the Exercise Price shall be made as a result of the actual issuance of shares of
Common Stock on exercise of such Common Stock Equivalents. On the expiration or
the termination of such Common Stock Equivalents, or the termination of such
right to convert or exchange, the Exercise Price shall forthwith be readjusted
(but only with respect to that portion of the Warrants which has not yet been
exercised) to such Exercise Price as would have obtained had the adjustments
made upon the issuance of such Common Stock Equivalents, been made upon the
basis of the delivery of only the number of shares of Common Stock actually
delivered upon the exercise of such Common Stock Equivalents; and on any change
of the number of shares of Common Stock deliverable upon the exercise of any
such Common Stock Equivalents, or any change in the consideration to be received
by the Company upon such exercise, conversion, or exchange, including, but not
limited to, a change resulting from the anti-dilution provisions thereof, the
Exercise Price, as then in effect, shall forthwith be readjusted (but only with
respect to that portion of the Warrants which has not yet been exercised or
converted after such change) to such Exercise Price as would have been obtained
had an adjustment been made upon the issuance of such Common Stock Equivalents
not exercised prior to such change, or securities not converted or exchanged
prior to such change, on the basis of such change. In case the Company shall
issue shares of Common Stock or any such Common Stock Equivalents, for a
consideration consisting, in whole or in part, of property other than cash or
its equivalent, then the "price per share" and the "consideration received by
the Company" for purposes of the first sentence of this Section 9(c) shall be as
determined in good faith by the Board of Directors of the Company. Shares of
Common Stock owned by or held for the account of the Company or any
majority-owned subsidiary shall not be deemed outstanding for the purpose of any
such computation. For the purposes of this Agreement "BASE PRICE" shall mean
$0.287 (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like).
(d) Pro Rata Distributions. If the Company, at any time while this
Warrant is outstanding, distributes to holders of Common Stock (i) evidences of
its indebtedness, (ii) any security (other than a distribution of Common Stock
covered by Section 9(a)), (iii) rights or warrants to subscribe for or purchase
any security (other than Common Stock Equivalents which are covered by Section
9(c)), or (iv) any other asset (in each case, "DISTRIBUTED PROPERTY"), then in
each such case the Exercise Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution
shall be adjusted (effective on such record date) to equal the product of such
Exercise Price times a fraction of which the denominator shall be the average of
the Closing Prices (as defined below) for the five Trading Days immediately
prior to (but not including) such record date and of which the numerator shall
be such average less the then fair market value of the Distributed Property
distributed in respect of one outstanding share of Common Stock, as determined
by the Company's independent certified public accountants that regularly examine
the financial statements of the Company (an "APPRAISER"). In such event, the
Holder, after receipt of the determination by the Appraiser, shall have the
right to select an additional appraiser (which shall be a nationally recognized
accounting firm), in which case such fair market value shall be deemed to equal
the average of the values determined by each of the Appraiser and such
appraiser. As an alternative to the foregoing adjustment to the Exercise Price,
at the request of the Holder delivered before the 90th day after such record
date, the Company will deliver to such Holder, within five Trading Days after
such request (or, if later, on the effective date of such distribution), the
Distributed Property that such Holder would have been entitled to receive in
respect of the Warrant Shares for which this Warrant could have been exercised
immediately prior to such record date. If a Holder has elected to receive
Distributed Property and such Distributed Property is not delivered to a Holder
pursuant to the preceding sentence, then upon expiration of or any exercise of
the Warrant that occurs after such record date, such Holder shall remain
entitled to receive, in addition to the Warrant Shares otherwise issuable upon
such exercise (if applicable), such Distributed Property. This Section 9(d) is
only applicable if the Holder exercises the Warrant concurrently with the
distribution to the Holder of the Distributed Property.
6
(e) Number of Warrant Shares. Simultaneously with any adjustment to
the Exercise Price pursuant to Sections 9(a), 9(c) or 9(d), the number of
Warrant Shares that may be purchased upon exercise of this Warrant shall be
increased or decreased proportionately, so that after such adjustment the
aggregate Exercise Price payable hereunder for the adjusted number of Warrant
Shares shall be the same as the aggregate Exercise Price in effect immediately
prior to such adjustment.
(f) Calculations. All calculations under this Section 9 shall be
made to the nearest cent or the nearest 1/100th of a share, as applicable. The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition
of any such shares shall be considered an issue or sale of Common Stock.
(g) Notice of Adjustments. Upon the occurrence of each adjustment
pursuant to this Section 9, the Company at its expense will promptly compute
such adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment, including a statement of the adjusted
Exercise Price and adjusted number or type of Warrant Shares or other securities
issuable upon exercise of this Warrant (as applicable), describing the
transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company's Transfer Agent.
(h) Notices of Corporate Events. If the Company (i) declares a
dividend or any other distribution of cash, securities or other property in
respect of its Common Stock, including without limitation any granting of rights
or warrants to subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating
or solicits stockholder approval for any Fundamental Transaction or (iii)
authorizes a repurchase of Common Stock or the voluntary dissolution,
liquidation or winding up of the affairs of the Company, then the Company shall
deliver to the Holder a notice describing the material terms and conditions of
such transaction, at least 10 calendar days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will
take all steps reasonably necessary in order to insure that the Holder is given
the practical opportunity to exercise this Warrant prior to such time so as to
participate in or vote with respect to such transaction; provided, however, that
the failure to deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such notice.
7
(i) Successive Adjustments and Changes. The provisions of Section 9
shall similarly apply to successive dividends, subdivisions, combinations, and
distributions, to successive consolidations, mergers, sales, leases, or
conveyances, and to successive reclassifications, changes of shares of Common
Stock and issuances of Common Stock, warrants, options or other rights to
subscribe for or purchase Common Stock, or securities convertible into Common
Stock. If applicable, appropriate adjustment, as determined in good faith by the
Company's Board of Directors, shall be made in the application of the provisions
herein set forth with respect to the rights and interests of the Holder so that
the provisions of Section 9 shall thereafter be applicable, as nearly as
possible, in relation to any shares or other property thereafter deliverable
upon exercise of this Warrant.
10. Payment of Exercise Price. The Holder may pay the Exercise Price by
delivery of immediately available funds or, subject to the first sentence of the
immediately following paragraph, if the Holder so elects, the Holder may satisfy
its obligation to pay the Exercise Price through a "cashless exercise," in which
event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:
X = Y*((A-B)/A)
where:
X = the number of Warrant Shares to be issued to the Holder.
Y = the number of Warrant Shares with respect to which this
Warrant is being exercised.
A = the Common Stock Market Price.
B = the Exercise Price.
As used herein, the term "COMMON STOCK MARKET PRICE" means the greater of: (i)
the Closing Price of the Trading Day immediately preceding (but not including)
the Date of Exercise, (ii) the average of the Closing Prices for the 10 Trading
Days immediately preceding (but not including) the Date of Exercise, and (iii)
if applicable, the average of the Closing Prices for the 90 Trading Days
immediately following the date on which a Registration Statement covering the
resale of the Warrant Shares is declared effective (or, if the Date of Exercise
is less than 90 Trading Days following such effective date, then such shorter
period). For purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to have
commenced, on the date this Warrant was originally issued pursuant to the
Securities Purchase Agreement. As used herein, the term "CLOSING PRICE" means,
for any date, the price determined by the first of the following clauses that
applies: (A) if the Common Stock is then listed or quoted on New York Stock
Exchange, the American Stock Exchange, the Nasdaq National Market, the Nasdaq
Small Cap Market or the OTC Bulletin Board or any successor to any of the
foregoing, the closing price per share of the Common Stock for such date (or the
nearest preceding date) on the primary market or exchange on which the Common
Stock is then listed or quoted; (B) if prices for the Common Stock are then
reported in the "Pink Sheets" published by the National Quotation Bureau
Incorporated (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent closing bid price per share of the Common
Stock so reported; or (C) in all other cases, the fair market value of a share
of Common Stock as determined by an independent appraiser selected in good faith
by the Investors and the Company.
8
11. Limitations on Exercise.
(a) Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited to
the extent necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned by
such Holder and its Affiliates and any other Persons whose beneficial ownership
of Common Stock would be aggregated with the Holder's for purposes of Section
13(d) of the Exchange Act, does not exceed 4.999% (the "5% MAXIMUM PERCENTAGE")
of the total number of issued and outstanding shares of Common Stock (including
for such purpose the shares of Common Stock issuable upon such exercise). For
such purposes, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. The Company shall, instead of issuing shares of Common Stock in
excess of the limitation referred to in this Section 11(a), suspend its
obligation to issue shares in excess of the foregoing limitation until such
time, if any, as such shares of Common Stock may be issued in compliance with
such limitation. Additionally, by written notice to the Company, the Holder may
waive the provisions of this Section 11(a) or increase or decrease the 5%
Maximum Percentage to any other percentage specified in such notice; provided,
that (i) any such waiver or increase or decrease will not be effective until the
61st day after such notice is delivered to the Company, and (ii) any such waiver
or increase or decrease will apply only to the Holder and not to any other
holder of Warrants.
(b) Notwithstanding anything to the contrary contained herein and
regardless of whether the restrictions contained in Section 11(a) are waived as
provided therein, the number of shares of Common Stock that may be acquired by
the Holder upon any exercise of this Warrant (or otherwise in respect hereof)
shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its Affiliates and any other Persons whose
beneficial ownership of Common Stock would be aggregated with the Holder's for
purposes of Section 13(d) of the Exchange Act, does not exceed 9.999% (the "10%
MAXIMUM PERCENTAGE") of the total number of issued and outstanding shares of
Common Stock (including for such purpose the shares of Common Stock issuable
upon such exercise). For such purposes, beneficial ownership shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. The Company shall, instead of issuing shares
of Common Stock in excess of the limitation referred to in this Section 11(b),
suspend its obligation to issue shares in excess of the foregoing limitation
until such time, if any, as such shares of Common Stock may be issued in
compliance with such limitation. The provisions of this Section 11(b) may not be
waived.
9
(c) This Section 11 shall not restrict the number of shares of
Common Stock which a Holder may receive or beneficially own in order to
determine the amount of securities or other consideration that such Holder may
receive in the event of a Fundamental Transaction as contemplated in Section
9(b) this Warrant or the amount of Distributed Property to which the Holder may
become entitled pursuant to Section 9(d) of this Warrant. In addition, this
provision shall not in any way limit any other adjustment to be made pursuant to
Section 9 hereof.
12. No Fractional Shares. If any fraction of a Warrant Share would, except
for the provisions of this Section, be issuable upon exercise of this Warrant,
the number of Warrant Shares to be issued will be rounded up to the nearest
whole share.
13. Notices. Any and all notices or other communications or deliveries
hereunder (including, without limitation, any Exercise Notice) shall be in
writing and shall be deemed given and effective on the earliest of (i) the date
of transmission, if such notice or communication is delivered via confirmed
facsimile at the facsimile number specified in this Section prior to 4:00 p.m.
(New York City time) on a Trading Day, (ii) the next Trading Day after the date
of transmission, if such notice or communication is delivered via confirmed
facsimile at the facsimile number specified in this Section on a day that is not
a Trading Day or later than 4:00 p.m. (New York City time) on any Trading Day,
(iii) the Trading Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The addresses for such
communications shall be: (i) if to the Company, to Great Expectations and
Associates, Inc., 000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxxxx 00000,
Attention: Chief Executive Officer, or (ii) if to the Holder, to the address or
facsimile number appearing on the Warrant Register or such other address or
facsimile number as the Holder may provide to the Company in accordance with
this Section.
14. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon 10 days' notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.
15. Miscellaneous.
(a) Subject to the restrictions on transfer set forth on the first
page hereof, this Warrant may be assigned by the Holder upon delivery to the
Company of a properly completed notice of assignment, substantially in the form
attached hereto. This Warrant may not be assigned by the Company except to a
successor in the event of a Fundamental Transaction. This Warrant shall be
binding on and inure to the benefit of the parties hereto and their respective
successors and assigns. Subject to the preceding sentence, nothing in this
Warrant shall be construed to give to any Person other than the Company and the
Holder any legal or equitable right, remedy or cause of action under this
Warrant. This Warrant may be amended only in writing signed by the Company and
the Holder and their successors and assigns.
10
(b) All questions concerning the construction, validity, enforcement
and interpretation of this Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party agrees that all
legal proceedings concerning the interpretations, enforcement and defense of
this Warrant and the transactions herein contemplated ("PROCEEDINGS") (whether
brought against a party hereto or its respective Affiliates, employees or
agents) may be commenced non-exclusively in the state and federal courts sitting
in the City of New York, Borough of Manhattan (the "NEW YORK COURTS"). Each
party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the
New York Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim
that it is not personally subject to the jurisdiction of any New York Court, or
that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Warrant or the transactions contemplated
hereby. If either party shall commence a Proceeding to enforce any provisions of
this Warrant, then the prevailing party in such Proceeding shall be reimbursed
by the other party for its attorney's fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such Proceeding.
(c) The headings herein are for convenience only, do not constitute
a part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
(d) In case any one or more of the provisions of this Warrant shall
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to agree
upon a valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(e) The Company will not, by amendment of its governing documents 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 of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company (i) will not increase the par value of
any Warrant Shares above the amount payable therefor on such exercise, (ii) will
take all such action as may be reasonably necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable Warrant
Shares on the exercise of this Warrant, and (iii) will not close its stockholder
books or records in any manner which interferes with the timely exercise of this
Warrant.
11
(f) Registration Rights. For the avoidance of doubt, the Warrant
Shares issued or issuable upon exercise of this Warrant are the subject of
registration rights pursuant to the terms of that certain Registration Rights
Agreement, dated as of November 12, 2004, by and among the Company and the other
persons or entities signatory thereto.
[REMAINDER OF XXXX INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
12
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
GREAT EXPECTATIONS AND ASSOCIATES, INC.
By:
------------------------------------
Name: X. Xxxx Xxxxxx
Title: Chief Executive Officer
13
GREAT EXPECTATIONS AND ASSOCIATES, INC. -- EXERCISE NOTICE
Exercise Notice for Warrant No: ________
The undersigned hereby irrevocably elects to purchase ________________
shares of Common Stock of Great Expectations and Associates, Inc. (the
"COMPANY"), pursuant to the above captioned Warrant. Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to such
terms in the above captioned Warrant. The Holder intends that payment of the
Exercise Price shall be made as (check one):
____ "Cash Exercise" with respect to ____________ of shares
____ "Cashless Exercise" with respect to __________ of shares
If the holder has elected a Cash Exercise, the holder shall pay the sum of
$____________ to the Company in accordance with the terms of the Warrant.
Pursuant to this exercise, the Company shall deliver to the holder
_______________ Warrant Shares in accordance with the terms of the Warrant.
Following this exercise, the Warrant will reflect the right to purchase a total
of __________ Warrant Shares.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of:
------------------------------------
------------------------------------
-------------------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by within Warrant be registered in the name of, and delivered to,
the undersigned at the address stated below.
Dated: By:
-------------- ---------------------------------
Print Name
---------------------------------
Signature
Address:
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14
GREAT EXPECTATIONS AND ASSOCIATES, INC.
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
Warrant No: ____________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the above
captioned Warrant to purchase ____________ shares of Common Stock of Great
Expectations and Associates, Inc. to which such Warrant relates, and appoints
________________ attorney to transfer said right on the books of the Company
with full power of substitution in the premises.
Following the above described transfer and assignment, the undersigned
shall retain pursuant to the above captioned Warrant the right to purchase
____________ shares of Common Stock of Great Expectations and Associates, Inc.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings ascribed to such terms in the above captioned Warrant.
Dated:
------------, ----
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
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Address of Transferee
--------------------------------------------
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In the presence of:
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