Contract
EXHIBIT
B
NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE
OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
SECURED BY SUCH SECURITIES WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” AS DEFINED IN RULE 501(A) UNDER THE SECURITIES ACT.
WARRANT
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Warrant No. [ ]
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Original Issue Date: December 21, 2010
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CFO Consultants, Inc., a
Nevada corporation (the "Company"), hereby certifies
that, for value received, [ ] or its
registered assigns (the "Holder"), is entitled to
purchase from the Company up to a total of [
]1 shares of Common
Stock (each such share, a "Warrant Share" and all such
shares, the "Warrant
Shares"), at any time and from time to time from and after the Authorized
Increase Date and through and including the three year anniversary of the
Authorized Increase Date (the "Expiration Date"), and
subject to the following terms and conditions:
1. Definitions. As
used in this Warrant, the following terms shall have the respective definitions
set forth in this Section 1. Capitalized terms that are used and not
defined in this Warrant that are defined in the Purchase Agreement (as defined
below) shall have the respective definitions set forth in the Purchase
Agreement.
“Authorized Increase Date”
means the date on which the increase in authorized shares of Common Stock of the
Company referred to in Section 4.13 of the Purchase Agreement becomes
effective.
“Business Day” means any day
except Saturday, Sunday and any day that is a federal legal holiday or a day on
which banking institutions in the State of New York are authorized or required
by law or other governmental action to close.
“Common Stock” means the
common stock of the Company, $0.001 par value per share, and any securities into
which such common stock may hereafter be reclassified.
"Exercise Price" means $0.325,
subject to adjustment in accordance with Section 9.
"Fundamental Transaction"
means any of the following: (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.
“Original Issue Date” means
the Original Issue Date first set forth on the first page of this
Warrant.
“New York Courts” means the
state and federal courts sitting in the City of New York, Borough of
Manhattan.
"Purchase Agreement" means the
Securities Purchase Agreement, dated December 21, 2010, to which the Company and
the original Holder are parties.
“Trading Day” means (i) a day
on which the Common Stock is traded on a Trading Market (other than the OTC
Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market
(other than the OTC Bulletin Board), a day on which the Common Stock is traded
in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii)
if the Common Stock is not quoted on any Trading Market, a day on which the
Common Stock is quoted in the over-the-counter market as reported by the Pink
OTC Markets (or any similar organization or agency succeeding to its functions
of reporting prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day
shall mean a Business Day.
2. Registration of
Warrant. 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.
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3. Registration of
Transfers. Subject to the transfer restrictions set forth in
the Purchase Agreement and referred to above, 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 from and after the Authorized Increase Date and through and including
the Expiration Date. At 6:30 p.m., New York City time on the
Expiration Date, the portion of this Warrant not exercised prior thereto shall
be and become void and of no value. The Company may not call or
redeem any portion of this Warrant except in accordance with Section
4(b).
(b)
Subject to the provisions of this Section 4(b), if at any time following the
Original Issue Date: (i) the closing price of the Common Stock for each of 20
consecutive Trading Days each following the Authorized Increase Date is greater
than 200% of the Per Unit Purchase Price (subject to adjustment in accordance
with Section 9), (ii) the Warrant Shares are either registered for resale
pursuant to an effective registration statement naming the Holder as a selling
stockholder thereunder (and the prospectus thereunder is available for use by
the Holder as to all Warrant Shares) or freely transferable without volume
restrictions pursuant to Rule 144 promulgated under the Securities Act, as
determined by counsel to the Company pursuant to a written opinion letter
addressed and in form and substance reasonably acceptable to the Holder and the
transfer agent for the Common Stock, during the entire 20 Trading Day period
referenced in (i) above , (iii) the average daily trading volume of the Common
Stock is equal to or greater than 20,000 shares during the such 20 Trading Day
period, then, subject to the conditions set forth in this Section, the Company
may, in its sole discretion, elect to require the exercise of all of the then
unexercised portion of this Warrant, on the date that is the thirtieth day after
written notice thereof (a “Call
Notice”) is received by the Holder (such thirtieth day shall be known as
the “Call Date”) at the
address last shown on the records of the Company for the Holder or given by the
Holder to the Company for the purpose of notice. The Company
covenants and agrees that it will honor all Exercise Notices tendered through
5:30 p.m. (New York City time) on the Call Date. Warrants which are
not exercised shall expire at 5:31pm (New York City time) on the Call
Date.
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5. Delivery of Warrant
Shares.
(a) To
effect exercises hereunder, the Holder shall not be required to physically
surrender this Warrant unless the aggregate Warrant Shares represented by this
Warrant is being exercised. Upon delivery of the Exercise Notice (in
the form attached hereto) to the Company with the then
current Warrant Shares Exercise Log attached at its address for
notice set forth herein and upon payment of the Exercise Price multiplied by the
number of Warrant Shares that the Holder intends to purchase hereunder, the
Company shall promptly (but in no event later than three Trading Days after the
Date of Exercise (as defined herein)) issue and deliver to the Holder, a
certificate for the Warrant Shares issuable upon such exercise, which, unless
otherwise required by the Purchase Agreement or pursuant to applicable law,
shall be free of restrictive legends, together with a revised Warrant Shares
Exercise Log. 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 reasonable 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. A "Date of Exercise" means the
date on which the Holder shall have delivered to the Company: (i) the Exercise
Notice (with the then current Warrant Exercise Log attached to it),
appropriately completed and duly signed and (ii) if such Holder is not utilizing
cashless exercise to the extent permitted by this Warrant, payment of the
Exercise Price for the number of Warrant Shares so indicated by the Holder to be
purchased.
(b) If
by the third Trading Day after a Date of Exercise the Company fails to deliver
the required number of Warrant Shares in the manner required pursuant to Section
5(a), then the Holder will have the right to rescind such exercise.
(c) If
by the third Trading Day after a Date of Exercise the Company fails to deliver
the required number of Warrant Shares in the manner required pursuant to Section
5(a), and if after such third Trading Day and prior to the receipt of such
Warrant Shares, the Holder is required by its broker to purchase (in an open
market transaction or otherwise) or the Holder’s brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving upon such
exercise (a "Buy-In"),
then the Company shall (1) pay in cash to the Holder the amount by which (x) the
Holder's total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue by (B) the price
at which the sell order giving rise to such purchase obligation was executed and
(2) at the option of the Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was not honored or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and delivery
obligations hereunder. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the
Buy-In. For example, if the Investor purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of this Warrant with respect to which the actual sale price of the
Warrant Shares (including any brokerage commissions) giving rise to such
purchase obligation was a total of $10,000 under clause (1) of the immediately
preceding sentence, the Company shall be required to pay the Investor
$1,000. Nothing herein shall limit an Investor’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 this Warrant as required pursuant to the
terms hereof.
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(d) 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 Xxxxxx'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 Warrant Shares upon exercise
of the Warrant as required pursuant to the terms hereof.
6. Charges, Taxes and
Expenses. Issuance and delivery of Warrant Shares 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, 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.
8. Reservation of Warrant
Shares. The Company covenants that it will at all times
following the Authorized Increase Date 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, be duly and validly authorized, issued and fully paid and
nonassessable.
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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.
(b) Subsequent Equity
Sales.
(i) If
at any time while this Warrant is outstanding, the Company or any subsidiary
thereof, as applicable, shall issue or enter into any agreement or understanding
to issue shares of Common Stock or securities or rights convertible or
exchangeable into shares of Common Stock (“Common Stock
Equivalents”) entitling any Person to acquire shares of Common Stock,
at a price per share less than the Exercise Price (if the holder of the Common
Stock or Common Stock Equivalent so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise, or due to warrants, options or rights
issued in connection with such issuance, be entitled to receive shares of Common
Stock at a price less than the Exercise Price, such issuance shall be deemed to
have occurred for less than the Exercise Price), then, the Exercise Price shall
be multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to the issuance of such
shares of Common Stock or such Common Stock Equivalents plus the number of
shares of Common Stock which the offering price for such shares of Common Stock
or Common Stock Equivalents would purchase at the Exercise Price, and the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding immediately prior to such issuance plus the number of shares of
Common Stock so issued or issuable. Such adjustment shall be made
whenever such Common Stock or Common Stock Equivalents are
issued. The Company shall notify the Holder in writing, no later than
the 10th Trading
Day following the issuance of any Common Stock or Common Stock Equivalent
subject to this section, indicating therein the applicable issuance price, or of
applicable reset price, exchange price, conversion price and other pricing
terms, but failure to provide such notice will not delay or affect the reduction
of the Exercise Price.
(ii) For
purposes of this subsection 9(c), the following subsections (c)(ii)(l) to
(c)(ii)(6) shall also be applicable:
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(1) Issuance of Rights or
Options. If at any time the Company shall in any manner grant
(directly and not by assumption in a merger or otherwise) any warrants or other
rights to subscribe for or to purchase, or any options for the purchase of,
Common Stock or any stock or security convertible into or exchangeable for
Common Stock (such warrants, rights or options being called “Options” and such convertible
or exchangeable stock or securities being called “Convertible Securities”)
whether or not such Options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per share for
which Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by dividing
(i) the sum (which sum shall constitute the applicable consideration) of (x) the
total amount, if any, received or receivable by the Company as consideration for
the granting of such Options, plus (y) the aggregate amount of additional
consideration payable to the Company upon the exercise of all such Options, plus
(z), in the case of such Options which relate to Convertible Securities, the
aggregate amount of additional consideration, if any, payable upon the issue or
sale of such Convertible Securities and upon the conversion or exchange thereof,
by (ii) the total maximum number of shares of Common Stock issuable upon the
exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be less
than the Exercise Price in effect immediately prior to the time of the granting
of such Options, then the total number of shares of Common Stock issuable upon
the exercise of such Options or upon conversion or exchange of the total amount
of such Convertible Securities issuable upon the exercise of such Options shall
be deemed to have been issued for such price per share as of the date of
granting of such Options or the issuance of such Convertible Securities and
thereafter shall be deemed to be outstanding for purposes of adjusting the
Exercise Price. Except as otherwise provided in subsection
9(c)(ii)(3), no adjustment of the Exercise Price shall be made upon the actual
issue of such Common Stock or of such Convertible Securities upon exercise of
such Options or upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.
(2) Issuance of Convertible
Securities. If the Company shall in any manner issue (directly
and not by assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert any such
Convertible Securities are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange (determined by
dividing (i) the sum (which sum shall constitute the applicable consideration)
of (x) the total amount received or receivable by the Company as consideration
for the issue or sale of such Convertible Securities, plus (y) the aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total number of shares of Common
Stock issuable upon the conversion or exchange of all such Convertible
Securities) shall be less than the Exercise Price in effect immediately prior to
the time of such issue or sale, then the total maximum number of shares of
Common Stock issuable upon conversion or exchange of all such Convertible
Securities shall be deemed to have been issued for such price per share as of
the date of the issue or sale of such Convertible Securities and thereafter
shall be deemed to be outstanding for purposes of adjusting the Exercise Price,
provided that (a) except as otherwise provided in subsection 9(c)(ii)(3), no
adjustment of the Exercise Price shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible Securities and (b)
no further adjustment of the Exercise Price shall be made by reason of the issue
or sale of Convertible Securities upon exercise of any Options to purchase any
such Convertible Securities for which adjustments of the Exercise Price have
been made pursuant to the other provisions of subsection 9(c).
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(3) Change in Option Price or
Conversion Rate. Upon the happening of any of the following
events, namely, if the purchase price provided for in any Option referred to in
subsection 9(c)(ii)(l) hereof, the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities referred to in
subsections 9(c)(ii)(l) or 9(c)(ii)(2), or the rate at which Convertible
Securities referred to in subsections 9(c)(ii)(l) or 9(c)(ii)(2) are convertible
into or exchangeable for Common Stock shall change at any time (including, but
not limited to, changes under or by reason of provisions designed to protect
against dilution), the Exercise Price in effect at the time of such event shall
forthwith 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 purchase price, additional consideration or conversion rate, as
the case may be, at the time initially granted, issued or sold. On
the termination of any Option for which any adjustment was made pursuant to this
subsection 9(c) or any right to convert or exchange Convertible Securities for
which any adjustment was made pursuant to this subsection 9(c) (including
without limitation upon the redemption or purchase for consideration of such
Convertible Securities by the Company), the Exercise Price then in effect
hereunder shall forthwith be changed to the Exercise Price which would have been
in effect at the time of such termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such termination,
never been issued.
(4) Stock
Dividends. Subject to the provisions of this Section 9(c), if
the Company shall declare a dividend or make any other distribution upon any
stock of the Company (other than the Common Stock) payable in Common Stock,
Options or Convertible Securities, then any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
(5) Consideration for
Stock. If any shares of Common Stock, Options or Convertible
Securities shall be issued or sold for cash, the consideration received therefor
shall be deemed to be the gross amount received by the Company therefor, before
deduction therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Company in connection
therewith. If any shares of Common Stock, Options or Convertible
Securities shall be issued or sold for a consideration other than cash, the
amount of the consideration other than cash received by the Company shall be
deemed to be the fair value of such consideration as determined in good faith by
the Board of Directors of the Company, after deduction of any expenses incurred
or any underwriting commissions or concessions paid or allowed by the Company in
connection therewith. If any Options shall be issued in connection
with the issue and sale of other securities of the Company, together comprising
one integral transaction in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be deemed to have been issued
for such consideration as determined in good faith by the Board of Directors of
the Company. If Common Stock, Options or Convertible Securities shall
be issued or sold by the Company and, in connection therewith, other Options or
Convertible Securities (the “Additional Rights”) are
issued, then the consideration received or deemed to be received by the Company
shall be reduced by the fair market value of the Additional Rights (as
determined using the Black-Scholes option pricing model or another method
mutually agreed to by the Company and the Holder). The Board of
Directors of the Company shall respond promptly, in writing, to an inquiry by
the Holders as to the fair market value of the Additional Rights. In
the event that the Board of Directors of the Company and the Holders are unable
to agree upon the fair market value of the Additional Rights, the Company and
the Holders shall jointly select an appraiser, who is experienced in such
matters. The decision of such appraiser shall be final and
conclusive, and the cost of such appraiser shall be borne evenly by the Company
and the Holder.
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(6) Record
Date. If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them (i) to receive a dividend or
other distribution payable in Common Stock, Options or Convertible Securities or
(ii) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
(iii) Notwithstanding
the foregoing, no adjustment will be made under this paragraph (c) in respect
of: (i) the issuance of securities upon the exercise or conversion of any Common
Stock or Common Stock Equivalents issued by the Company prior to the date hereof
(but will apply to any amendments, modifications and reissuances thereof if such
would increase the number of securities issuable or decrease the price at which
they are issuable) or pursuant to any obligations of the Company as of the Issue
Date described in its reports filed with the Securities and Exchange Commission,
or (ii) the grant of options or warrants, or the issuance of additional
securities, under any duly authorized Company stock option, stock incentive
plan, restricted stock plan or stock purchase plan whether now existing or
hereafter approved by the Company and its stockholders (as applicable) in the
future (but not as to any amendments or other modifications to the exercise
price set forth therein) and the issuance of Common Stock in respect
thereof.
(c) Number of Warrant
Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to this Section 9, 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.
(d) 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.
(e) 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.
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(f) Notice 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 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 (but only to the extent such disclosure
would not result in the dissemination of material, non-public information to the
Holder) 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.
10. Payment
of Exercise Price. The Holder may
pay the Exercise Price in one of the following manners:
(a) Cash
Exercise. The Holder may deliver immediately available funds;
or
(b) Cashless
Exercise. If an Exercise Notice is delivered at a time
subsequent to October 22, 2011 when a registration statement permitting the
Holder to resell the Warrant Shares is not then effective or the prospectus
forming a part thereof is not then available to the Holder for the resale of the
Warrant Shares, then the Holder may notify the Company in an Exercise Notice of
its election to utilize 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
average of the daily volume weighted average price for the five Trading Days
immediately prior to (but not including) the Exercise Date.
B = the
Exercise Price.
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.
10
11. Limitations on
Exercise. Notwithstanding anything to the contrary contained
herein, the number of Warrant Shares 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 9.99% 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 purposes of this
Section 11, in determining the number of outstanding shares of Common Stock, a
Holder may rely on the number of outstanding shares of Common Stock as reflected
in (A) the Company’s most recent periodic or annual report, as the case may be,
(B) a more recent public announcement by the Company or (C) any other notice by
the Company or the Transfer Agent setting forth the number of shares of Common
Stock outstanding. 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, it being acknowledged by the
Holder that the Company is not representing to the Holder that such calculation
is in compliance with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance
therewith. This restriction may not be waived, and notwithstanding
anything to the contrary in any Transaction Document, may not be amended by
agreement of the parties if the effect of such amendment would adversely affect
any such party. Notwithstanding anything to the contrary contained in
this Warrant or in any other Transaction Document, (a) no term of this Section
may be waived by any party, nor amended such that the threshold percentage of
ownership would be directly or indirectly increased, (b) no amendment or
modification to any Transaction Document may be made such that it would have the
effect of modifying or waiving any term of this Section in violation of this
restriction, (c) this restriction runs with the Warrant and may not be modified
or waived by any subsequent holder hereof and (d) any attempted waiver,
modification or amendment of this Section will be void ab initio, if in any
such case the effect of such amendment, modification or waiver would adversely
affect any such party.
12. No Fractional
Shares. No fractional shares of Warrant Shares will be issued
in connection with any exercise of this Warrant. In lieu of any
fractional shares which would, otherwise be issuable, the Company shall pay cash
equal to the product of such fraction multiplied by the closing price of one
Warrant Share as reported by the applicable Trading Market on the date of
exercise.
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 facsimile or e-mail (followed by
facsimile) at the facsimile number or e-mail address specified in this Section
prior to 5:30 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 facsimile or e-mail (followed by facsimile) at the facsimile number or
e-mail address specified in this Section on a day that is not a Trading Day or
later than 5:30 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 Rm. 2102 F & G, Xxx Xxxx Centre, 000-000 Xxxxxx
Xxxx Xx., Xxxxx Xxx, X.X., Xxxx Xxxx, Facsimile: 000-0000 0000, attention: Chief
Financial Officer, (ii) if to the Holder, to the address, e-mail address, or
facsimile number appearing on the Warrant Register or such other address, e-mail
address, or facsimile number as the Holder may provide to the Company in
accordance with this Section or the Purchase Agreement.
11
14. Warrant
Agent. The Company shall either serve as warrant agent under
this Warrant or 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) 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.
(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) shall be commenced exclusively in the New York Courts. Each
party hereto hereby irrevocably submits to the 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.
12
(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 shall have the option at any time following the Authorized Increase Date
any prior to the Expiration Date to reduce the then effective Exercise Price to
any amount for up to 100% of all outstanding Warrants.
(f) Prior
to exercise of this Warrant, the Holder hereof shall not, by reason of being a
Holder, be entitled to any rights of a stockholder with respect to the Warrant
Shares.
[REMAINDER
OF XXXX INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
13
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its
authorized officer as of the date first indicated above.
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By:
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Name:
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Title:
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14
EXERCISE
NOTICE
WARRANT
DATED DECEMBER 21, 2010
The
undersigned Holder hereby irrevocably elects to
purchase _____________ shares of Common Stock pursuant to the above
referenced Warrant. Capitalized terms used herein and not otherwise
defined have the respective meanings set forth in the Warrant.
(1) The
undersigned Holder hereby exercises its right to purchase _________________
Warrant Shares pursuant to the Warrant.
(2) The
Holder intends that payment of the Exercise Price shall be made as (check
one):
____ “Cash
Exercise” under Section 10
____ “Cashless
Exercise” under Section 10
(3) 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.
(4) Pursuant
to this Exercise Notice, the Company shall deliver to the holder _______________
Warrant Shares in accordance with the terms of the Warrant.
(5) By
its delivery of this Exercise Notice, the undersigned represents and warrants to
the Company that (i) in giving effect to the exercise evidenced hereby the
Holder will not beneficially own in excess of the number of shares of Common
Stock (determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934) permitted to be owned under Section 11 of this Warrant to which
this notice relates and (ii) it is an “accredited investor” as defined in Rule
501(a) under the Securities Act.
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Dated:
______________, _____
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Name
of Holder:
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(Print)
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By:
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Name:
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Title:
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(Signature
must conform in all respects to name of holder as specified on the face of
the
Warrant)
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15
Warrant Shares Exercise
Log
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Date
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Number of Warrant
Shares Available to be
Exercised
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Number of Warrant Shares
Exercised
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Number of
Warrant Shares
Remaining to
be Exercised
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16
WARRANT
ORIGINALLY ISSUED DECEMBER 21, 2010
WARRANT
NO. [ ]
FORM OF
ASSIGNMENT
[To be
completed and signed only upon transfer of Warrant]
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 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.
Dated: _______________,
____
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(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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SIGNATURE GUARANTEED:
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17
