WARRANT AGREEMENT
EXHIBIT
10.3
THIS
WARRANT AGREEMENT is made and entered into on this 6th
day of
July, 2006, by and between Quetzal Capital 1, Inc., a Florida corporation (the
“Issuer”) and Coast To Coast Equity Group, Inc., a Florida corporation
(hereinafter referred to variously as the “Holder” or “Consultant”).
Preamble:
WHEREAS,
the Issuer and Consultant entered into a certain consulting agreement dated
July
6, 2006 (hereinafter the “Consulting Agreement”), pursuant to which Consultant
is entitled to receive certain compensation, including among other things,
warrants (“Warrants”) to purchase shares of the Issuer’s common stock, $0.001
par value per share (“Common Stock”), upon and subject to the terms and
conditions of the Consulting Agreement; and
NOW,
THEREFORE, in consideration of the premises, the payment by the Holder to or
for
the benefit of the Issuer of FIVE ($5.00) DOLLARS, the agreements herein set
forth, and other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties hereto agree as follows:
Witnesseth:
1. Grant.
The
Holder is hereby granted the right to purchase shares of the Issuer’s Common
Stock in the following amounts for the following prices within the following
time frames:
(a) 1,000,000
shares at the exercise price of $1.00 per share when the per share market price
of the Issuer’s common stock closes at or above $1.00 at any time after closing
of the merger between Valley Forge Composite Technologies, Inc., a Pennsylvania
corporation and Quetzal Capital 1, Inc., a Florida corporation (the “Merger”)
and up to two (2) years from the effective date of the Registration Statement
filed pursuant to the Registration Rights Agreement of even date herewith,
or
such warrants will expire worthless;
(b) 1,000,000
shares at an exercise price of $1.50 per share when the per share market price
of the Issuer’s common stock closes at or above $1.50 at any time after the
Merger and up to two (2) years from the effective date of the Registration
Statement filed pursuant to the Registration Rights Agreement of even date
herewith, or such warrants will expire worthless;
(c) 1,000,000
shares at an exercise price of $2.00 per share when the per share market price
of the Issuer’s common stock closes at or above $2.00 at any time after the
Merger and up to two (2) years from the effective date of the Registration
Statement filed pursuant to the Registration Rights Agreement of even date
herewith or such warrants will expire worthless.
2. Warrant
Certificates.
The
warrant certificates (the “Warrant Certificates”) delivered and to be delivered
pursuant to this agreement shall be in the form set forth in Exhibit A attached
hereto and made a part hereof, with such appropriate insertions, omissions,
substitutions, and other variations as required or permitted by this
Agreement.
-1-
3. Exercise
of Warrant.
3.1 Method
of
Exercise.
The
Warrants initially are exercisable at an initial exercise price per share of
Common Stock set forth in Section 1 hereof payable by certified or official
bank
check in New York Clearing House funds, subject to adjustment as provided in
this Agreement.
(a) Upon
surrender of a Warrant Certificate with the annexed Form of Election to Purchase
duly executed, together with payment of the Exercise Price (as hereinafter
defined) for the shares of Common Stock purchased at the Issuer’s principal
offices, as reflected in the records of the Securities and Exchange Commission
maintained on its XXXXX Internet site, the registered holder of a Warrant
Certificate (“Holder” or “Holders’) shall be entitled to receive a certificate
or certificates for the shares of Common Stock so purchased.
(b) The
purchase rights represented by each Warrant Certificate are exercisable at
the
option of the Holder thereof, in whole or in part (but not as to fractional
shares of the Common Stock underlying the Warrants).
(c) Warrants
may be exercised to purchase all or part of the shares of Common Stock
represented thereby.
(d) In
the
case of the purchase of less than all the shares of Common Stock purchasable
under any Warrant Certificate, the Issuer shall cancel said Warrant Certificate
upon the surrender thereof and shall execute and deliver a new Warrant
Certificate of like tenor for the balance of the shares of Common
Stock.
3.2. Exercise
by Surrender of Warrant.
Notwithstanding
any provisions herein to the contrary, if the fair market value of one share
of
the Common Stock is greater than the Exercise Price (at the date of calculation
as set forth below), in lieu of exercising this Warrant by payment of cash,
the
Holder may elect to receive shares equal to the value (as determined below)
of
this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with the properly
endorsed Notice of Exercise in which event the Company shall issue to the Holder
a number of shares of Common Stock computed using the following
formula:
Where
X =
Y
*
(A-B)
A
X
= the
number of shares of Common Stock to be issued to the Holder
Y
= the
number of shares of Common Stock purchasable under the Warrant or, if only
a
portion of the Warrant is being exercised, the portion of the Warrant being
canceled (at the date of such calculation)
A
= the
fair market value of one share of the Common Stock (at the date of such
calculation)
B
=
Exercise Price (as adjusted to the date of such calculation)
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For
purposes of the above calculation, the fair market value of one share of Common
Stock shall be determined in good faith by the Issuer’s Board of Directors;
provided, however, that in the event that this Warrant is exercised pursuant
to
this Section at a time when the Common Stock is publicly traded, the fair market
value per share shall be the closing sale price of the Common Stock on the
last
business day preceding the date of exercise.
4. Issuance
of Certificates.
(a) Upon
the
exercise of the Warrant the issuance of certificates for shares of Common Stock
or other securities, properties or rights underlying such Warrants, shall be
made forthwith (and in any event such issuance shall be made within five (5)
business days thereafter) without charge to the Holder thereof including,
without limitations any tax which may be payable in respect of the issuance
thereof and such certificates shall be issued in the name of, or in such names
as may be directed by, the Holder thereof; provided, however, that the Issuer
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 such certificates in
a
name other than that of the Holder and the Issuer shall not be required to
issue
or deliver such certificates unless or until the person or persons requesting
the issuance thereof shall have paid to the Issuer the amount of such tax or
shall have established to the satisfaction of the Issuer that such tax has
been
paid.
(b) The
Warrant Certificates and the certificates representing the shares of Common
Stock (and/or other securities, property or rights issuable upon exercise of
the
Warrants) shall be executed on behalf of the Issuer by the manual or facsimile
signature of the then present Chairman or Vice Chairman of the Board of
Directors or President or Vice President of the Issuer under its corporate
seal
reproduced thereon, attested to by the manual or facsimile signature of the
then
present Secretary or Assistant Secretary of the Issuer.
(c) Warrant
Certificates shall be dated the date of execution by the Issuer upon initial
issuance, division, exchange, substitution or transfer.
5. Exercise
Price.
The
term
“Exercise Price” herein shall mean the initial exercise price or the adjusted
exercise price, depending upon the context.
6. Definition
of Common Stock.
For
the
purpose of this Agreement, the term “Common Stock” shall mean (i) the class of
stock designated as Common Stock in the Certificate of Incorporation of the
Issuer as may be amended as of the date hereof, or (ii) any other class of
stock
resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value,
or
from no par value to par value.
In
the
event that the Issuer shall after the date hereof issue securities with greater
or superior voting rights than the shares of Common Stock outstanding as of
the
date hereof, the Holder, at its option, may receive upon exercise of any Warrant
either shares of Common Stock or a like number of such securities with greater
or superior voting rights.
-3-
7. Merger
or
Consolidation.
In
case
of any consolidation of the Issuer with, or merger of the Issuer with, or merger
of the Issuer into, another corporation (other than a consolidation or merger
which does not result in any reclassification or change of the outstanding
Common Stock), the corporation formed by such consolidation or merger shall
execute and deliver to the Holder a supplemental warrant agreement providing
that the holder of each Warrant then outstanding or to be outstanding shall
have
the right thereafter (until the expiration of such Warrant) to receive upon
exercise of such warrant, the kind and amount of shares of stock and other
securities and property receivable upon such consolidation or merger, by a
holder of the number of shares of Common Stock of the Issuer for which such
warrant might have been exercised immediately prior to such consolidation,
merger, sale or transfer.
(a) Such
supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in this section.
(b) The
foregoing provision of this Subsection shall similarly apply to successive
consolidations or mergers.
8. Exchange
and Replacement of Warrant Certificates.
(a) Each
Warrant Certificate is exchangeable without expense, upon the surrender thereof
by the registered Holder at the principal executive office of the Issuer, for
a
new Warrant Certificate of like tenor and date representing in the aggregate
the
right to purchase the same number of Securities in such denominations as shall
be designated by the Holder thereof at the time of such surrender.
(b) Upon
by
the Issuer of evidence reasonably satisfactory to it of loss, theft, destruction
or mutilation of any Warrant Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and
reimbursement to the Issuer of all reasonable expenses incidental thereto,
and
upon surrender and cancellation of the Warrants if mutilated, the Issuer will
make and deliver a new Warrant Certificate of like tenor, in lieu
thereof.
9. Elimination
of Fractional Interests.
The
Issuer shall not be required to issue certificates representing fractions of
shares of Common Stock upon the exercise of the Warrants, nor shall it be
required to issue scrip or pay cash in lieu of fractional interests, it being
the intent of the parties that all fractional interests shall be eliminated
by
rounding any fraction up to the nearest whole number of shares of Common Stock
or other securities, properties or rights.
10. Reservation
and Listing or Quoting of Securities.
(a) The
Issuer shall at all times reserve and keep available out of its authorized
shares of Common Stock, solely for the purpose of issuance upon the exercise
of
the Warrants, such number of shares of Common Stock or other securities
properties or rights as shall be issuable upon the exercise
thereof.
(b) The
Issuer covenants and agrees that, upon exercise of the Warrants and payment
of
the Exercise Price therefor, all shares of Common Stock and other securities
issuable upon such exercise shall be duly and validly issued, fully paid,
non-assessable and not subject to the preemptive rights of any
stockholder.
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(c) As
long
as the Warrants shall be outstanding, the Issuer shall use its best efforts
to
cause all shares of Common Stock issuable upon the exercise of the Warrants
to
be listed (subject to official notice of issuance) on all securities exchanges
on which the Common Stock issued to the public in connection herewith may then
be listed and/or quoted, including, but not limited to, NASDAQ.
11. Notices.
(a) All
notices, consents, waivers, or other communications which are required or
permitted hereunder shall be in writing and deemed to have been duly given
if
delivered personally or by messenger, transmitted by telex or telegram, by
express courier, or sent by registered or certified mail, return receipt
requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:
|
If
to Quetzal Capital 1, Inc.:
|
If
to Coast To Coast Equity Group, Inc.:
|
|
Attention:
Xxxxx X. Brothers
|
Attention:
Xxxxxxx X. Xxxxxxx
|
|
000
Xxxxx Xxxxxx
|
0000
Xxxx Xxxxxx Xxxxxxx
|
|
Xxxx
xx Xxxxxxx, XX 00000
|
Xxxxxxxxx,
XX 00000
|
(b) For
purposes of notice, the address of each Party will be the address first set
forth above; provided, however, that each Party will have the right to change
its respective address for notices hereunder to another location by giving
ten
(10) days advance written notice to the other Party in the manner set forth
above.
(c) All
such
notices shall be deemed to have been given on the date delivered, transmitted,
or mailed in the manner provided above.
12. Supplements
and Amendments.
Except
as
otherwise expressly provided herein, the provisions of this Agreement may be
amended or waived at any time only by written agreement. Any waiver, permit,
consent or approval of kind or character on the part of each Company or the
Holder of any provisions or conditions of this Agreement must be made in writing
and shall be effective only in the extent specifically set forth in such
writing.
13. Successors
and Assigns.
All
the
covenants and provisions of this Agreement shall be binding upon and inure
to
the benefit of the Issuer, the Holder, and their respective successors and
assigns hereunder.
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14. Governing
Law; Submission to Jurisdiction.
This
Agreement and each Warrant Certificate issued hereunder shall be deemed to
be a
contract made under the laws of the State of Florida and for all the purposes
shall be construed in accordance with the laws of said State without giving
effect to the rules of said State governing the conflicts of laws.
15. Entire
Agreement Modification.
This
Agreement contains the entire understanding between the parties hereto with
respect to the subject matter hereof and may not be modified or amended except
by a writing duly signed by the party against whom enforcement of the
modification or amendment is sought.
16. Severability.
If
any
provision of this Agreement shall be held to be invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision of this
Agreement.
17. Captions.
The
caption headings of the Sections of this Agreement are for convenience of
reference only and are not intended, nor should they be construed as, a part
of
this Agreement and shall be given no substantive effect.
18. Benefits
of this Agreement.
Nothing
in this Agreement shall be construed to give to any person or corporation over
than the Issuer and the Holder any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the sole and exclusive
benefit of the Issuer and the Holder.
19. Counterparts.
This
Agreement may be executed in any number of counterparts and each of such
counterpart shall for all purposes be deemed to be an original, and, such
counterparts shall together constitute but one and the same
instrument.
-6-
In
Witness Whereof, the Parties have executed this Agreement, effective as of
the
last date set forth below.
Signed,
Sealed & Delivered In Our Presence
____________________________________
____________________________________
[CORPORATE
SEAL]
Quetzal
Capital 1, Inc.
Attest:
/s/ Xxxxx
X.
Brothers
Secretary,
Quetzal Capital 1, Inc.
a
Florida
corporation
By:
/s/ Xxxxx
X.
Brothers
Xxxxx
X.
Brothers, President
[CORPORATE
SEAL]
Coast
To
Coast Equity Group, Inc.
Attest:
/s/ Xxxxxxx Xxxxxxx
Secretary,
Coast To Coast Equity Group, Inc.
A
Florida
corporation
By:
/s/ Xxxxxxx Xxxxxxx
Xxxxxxx
Xxxxxxx, President
[THIS
SPACE IS INTENTIONALLY BLANK]
-7-
NOTICE
OF
EXERCISE OF WARRANT
TO: QUETZAL
CAPITAL 1, INC., and its Successors and Assigns:
000
Xxxxx
Xxxxxx
Xxxx
xx
Xxxxxxx, XX 00000
|
·
|
The
undersigned hereby elects to purchase _______________ shares of the
Common
Stock of Quetzal Capital 1, Inc. (the “Company”) pursuant to the terms of
the attached Warrant, and tenders herewith payment of the exercise
price
in full, together with all applicable transfer taxes, if
any.
|
|
·
|
The
undersigned hereby elects to purchase ________________ shares of
the
Common Stock of Quetzal Capital 1, Inc. (the “Company”) pursuant to the
terms of the net exercise provisions set forth in Section 3.2 Exercise
by
Surrender of Warrant — Cashless Exercise, of the attached Warrant, and
shall tender payment of all applicable transfer taxes, if
any.
|
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:
Name:_______________________________
Address:_______________________________
_______________________________
_______________________________
Signature
________________________
Print
Name _______________________
Tax
I.D.
Number: __________________
Date
_________________
[THIS
SPACE IS INTENTIONALLY BLANK]
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ASSIGNMENT
OF WARRANT FORM
(To
assign the foregoing Warrant, exercise this form and supply the required
information. Do not use this form to purchase shares.)
TO:
QUETZAL
CAPITAL 1, INC., and its Successors and Assigns:
000
Xxxxx
Xxxxxx
Xxxx
xx
Xxxxxxx, XX 00000
For
Value
Received, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to:
Name:
____________________________________________________________________
(Please
Print)
Address____________________________________________________________________
(Please
Print)
Dated:
_________________
Holder’s
Signature: _______________________________
Holder’s
Printed Name: ____________________________
Holder’s
Address: _______________________________
_______________________________
_______________________________
NOTE:
The
signature to this Assignment Form must correspond with the name as it appears
on
the face of the Warrant without alternation or enlargement or any change
whatever. Officers of corporations and those acting in a fiduciary or other
representative capacity should file proper evidence of authority to assign
the
foregoing Warrant.
[END
OF
DOCUMENT]
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