THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE
HOLDER HEREOF, BY PURCHASING THIS COMMON STOCK PURCHASE WARRANT,
AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT,
OR (C) IF REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS. IN ADDITION, A SECURITIES PURCHASE
AGREEMENT, DATED THE DATE HEREOF, A COPY OF WHICH MAY BE OBTAINED
FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN
ADDITIONAL AGREEMENTS AMONG THE PARTIES, INCLUDING, WITHOUT
LIMITATION, PROVISIONS WHICH LIMIT THE EXERCISE RIGHTS OF THE HOLDER.
LAKOTA TECHNOLOGIES, INC.
COMMON STOCK PURCHASE WARRANT
No. 1 Warrant to Purchase 1,000,000 Shares
LAKOTA TECHNOLOGIES, INC., a Colorado corporation (the
"Company"), hereby certifies that, for value received, Y.L. Xxxxxx
or assigns, is entitled, subject to the terms set forth below, to
purchase from the Company at any time or from time to time during
the period commencing September 1, 1999 and ending August 31, 2001
(the "Exercise Period"), at the Purchase Price(as hereinafter
defined), one million (1,000,000) shares of the fully paid and
nonassessable shares of Common Stock of the Company. The number and
character of such shares of Common Stock and the Purchase Price are
subject to adjustment as provided herein.
This Warrant (this "Warrant"; such term to include any
warrants issued in substitution therefor) is one of a series of five
warrants issued in connection with that certain Securities Purchase
Agreement (the "Agreement") dated of even date herewith among the
initial Holder hereof, the Company and certain other parties thereto.
Capitalized terms used herein not otherwise defined shall
have the meanings ascribed thereto in the Agreement. As used herein
the following terms, unless the context otherwise requires, have the
following respective meanings:
(a) The term "Agreement" refers to that certain Securities Purchase
Agreement dated the date herewith among the initial Holder hereof,
the Company and certain other parties hereto.
(b) The term "Company" shall include Lakota Technologies, Inc. and
any corporation that shall succeed or assume the obligations of such
corporation hereunder.
(c) The term "Common Stock" includes (a) the Company's common
stock, no par value per share, (b) any other capital stock of any
class or classes (however designated) of the Company, authorized on
or after such date, the Holders of which shall have the right,
without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to
preference, and the Holders of which shall ordinarily, in the
absence of contingencies, be entitled to vote for the election of a
majority of directors of the Company (even though the right so to
vote has been suspended by the happening of such a contingency) and
(c) any other securities into which or for which any of the
securities described in (a) or (b) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.
(d) The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other
person (corporate or otherwise) that the Holder of this Warrant at
any time shall be entitled to receive, or shall have received, on
the exercise of this Warrant, in lieu of or in addition to Common
Stock, or that at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 3 or otherwise.
(e) The term "Purchase Price" means 50% of the lower of (i) the
closing bid price of a share of Common Stock as reported by the
National Association of Securities Dealers Electronic Bulletin Board
("OTC Bulletin Board") for the trading day immediately preceding the
date of receipt by the Company of Notice of Exercise, or (ii) the
closing bid price of the Common Stock as reported by the OTC
Bulletin Board on the trading day immediately preceding the date of
the Agreement subject, in each case, to equitable adjustments for
Capital Reorganizations as provided in the Agreements. If on any
trading date relevant to the determination of the Purchase Price the
Common Stock is not listed or traded on the OTC Bulletin Board, the
Purchase Price shall be determined by reference to the Nasdaq Stock
Market or the principal securities exchange or trading market where
such security is listed or traded as reported by Bloomberg, L.P., or
the average of the bid prices of any market makers for such security
as reported in the "pink sheets" by the National Quotation Bureau,
Inc. If the closing bid price cannot be calculated for such
security on such date on any of the foregoing bases, the closing bid
price of such security on such date shall be the fair market value
as mutually determined by the Company and the Holders of a majority
in interest of Warrants being exercised for which the calculation of
the closing bid price is required in order to determine the Purchase
Price of such Warrants.
(f) The term "Registration Rights Agreement" refers to that certain
Registration Rights Agreement dated the date herewith among the
initial Holder hereof, the Company and certain other parties hereto.
1. Exercise of Warrant.
1.1. Method of Exercise.
(a) This Warrant may be exercised in whole or in part (but not as to
a fractional share of Common Stock), at any time and from time to
time during the Exercise Period by the Holder hereof by delivery of
a notice of exercise (a "Notice of Exercise") in the form attached
hereto as Exhibit A via facsimile to the Company. Promptly
thereafter the Holder shall surrender this Warrant to the Company at
its principal office, accompanied by payment of the Purchase Price
multiplied by the number of shares of Common Stock for which this
Warrant is being exercised (the "Exercise Price"). Payment of the
Exercise Price shall be made by wire transfer to the account of the
Company. Upon exercise, the Holder shall be entitled to receive,
one or more certificates, issued in the Holder's name or in such
name or names as the Holder may direct, subject to the limitations
on transfer contained herein, for the number of shares of Common
Stock so purchased. The shares of Common Stock so purchased shall be
deemed to be issued as of the close of business on the date on which
the Company shall have received from the Holder payment of the
Exercise Price (the "Exercise Date").
(b) Notwithstanding anything to the contrary set forth herein, upon
exercise of all or a portion of this Warrant in accordance with the
terms hereof, the Holder shall not be required to physically
surrender this Warrant to the Company. Rather, records showing the
amount so exercised and the date of exercise shall be maintained on
a ledger in the form of Annex B attached hereto (a copy of which
shall be delivered to the Company or transfer agent with each Notice
of Exercise). It is specifically contemplated that the Company
hereof shall act as the calculation agent for all exercises of this
Warrant. In the event of any dispute or discrepancies, such records
maintained by the Company shall be controlling and determinative in
the absence of manifest error. The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason of
the provisions of this paragraph, following an exercise of a portion
of this Warrant, the number of shares of Common Stock represented by
this Warrant will be the amount indicated on Annex B attached hereto
(which may be less than the amount stated on the face hereof).
1.2. Regulation D Restrictions. The Holder hereof represents and
warrants to the Company that it has acquired this Warrant and
anticipates acquiring the shares of Common Stock issuable upon
exercise of the Warrant solely for its own account for investment
purposes and not with a view to or for resale of such securities
unless such resale has been registered with the Commission or an
applicable exemption is available therefor. At the time this Warrant
is exercised, the Company may require the Holder to state in the
Notice of Exercise such representations concerning the Holder as are
necessary or appropriate to assure compliance by the Holder with the
Securities Act.
1.3. Limitation on Exercise. Notwithstanding the rights of the
Holder to exercise all or a portion of this Warrant as described
herein, such exercise rights shall be limited, solely to the extent
set forth in the Agreement as if such provisions were specifically
set forth
herein. Specifically, the rights of the Holder to
exercise all or a portion of this Warrant are subject to the
limitation on exercise provisions specified in Section 10.1 of the
Agreement.
2. Delivery of Stock Certificates on Exercise. Within 5 business
days after the exercise of this Warrant, the Company at its expense
(including the payment by it of any applicable issue, stamp or
transfer taxes) will cause to be issued in the name of and delivered
to the Holder thereof, or, to the extent permissible hereunder, to
such other person as such Holder may direct, a certificate or
certificates for the number of fully paid and nonassessable shares
of Common Stock (or Other Securities) to which such Holder shall be
entitled on such exercise, plus, in lieu of any fractional share to
which such Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then applicable Purchase Price, together
with any other stock or other securities and property (including
cash, where applicable) to which such Holder is entitled upon such
exercise pursuant to Section 1 or otherwise which certificate or
certificates shall be without restrictive legend of any nature
provided that a registration statement has been declared effective
in accordance with the Registration Rights Agreement, and if a
registration statement has not been declared effective, then in
accordance with Rule 144.
3. Adjustment of Purchase Price In Certain Events. The
Purchase Price to be paid by the Holder upon exercise of this
Warrant, and the consideration to be received upon exercise of this
Warrant, shall be adjusted in case at any time or from time to time
for Capital Reorganizations as provided in the Agreement as if such
provisions were specifically set forth herein.
4. No Impairment. The Company will not, by amendment of
its Articles of Incorporation 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 of this Warrant against impairment. Without limiting the
generality of the foregoing, the Company (a) will not increase the
par value of any shares of stock receivable on the exercise of this
Warrant above the amount payable therefor on such exercise, (b) will
take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and
nonassessable shares of stock on the exercise of this Warrant, and
(c) will not transfer all or substantially all of its properties and
assets to any other person (corporate or otherwise), or consolidate
with or merge into any other person or permit any such person to
consolidate with or merge into the Company (if the Company is not
the surviving person), unless such other person shall expressly
assume in writing and will be bound by all the terms of this Warrant.
5. Intentionally Left Blank.
6. Notices of Record Date. In the event of
(a) any taking by the Company of a record of the Holders of any
class or securities for the purpose of determining the Holders
thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any
transfer of all or substantially all the assets of the Company to or
consolidation or merger of the Company with or into any other
person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be
mailed to the Holder of this Warrant a notice specifying (i) the
date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, and (ii) the date
on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up is to take place, and the time, if any, as
of which the Holders of record of Common Stock (or Other Securities)
shall be entitled to exchange their shares of Common Stock (or Other
Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 20 days prior to the date specified
in such notice on which any action is to be taken.
7. Reservation of Stock Issuable on Exercise of Warrant.
The Company will at all times reserve and keep available, solely for
issuance and delivery on the exercise of this Warrant, all shares of
Common Stock (or Other Securities) from time to time issuable on the
exercise of this Warrant.
8. Exchange of Warrant. On surrender for exchange of
this Warrant, properly endorsed and in compliance with the
restrictions on transfer set forth in the legend on the face of this
Warrant, to the Company, the Company at its expense will issue and
deliver to or on the order of the Holder thereof a new Warrant of
like tenor, in the name of such Holder or as such Holder (on payment
by such Holder of any applicable transfer taxes) may direct, calling
in the aggregate on the face or faces thereof for the number of
shares of Common Stock called for on the face of the Warrant so
surrendered.
9. Replacement of Warrant. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any
such loss, theft or destruction of this Warrant, on delivery of an
indemnity agreement or security reasonably satisfactory in form and
amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of
like tenor.
10. Remedies. The Company stipulates that the remedies at
law of the Holder of this Warrant in the event of any default or
threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant are not and will
not be adequate, and that such terms may be specifically enforced by
a decree for the specific performance of any agreement contained
herein or by an injunction against a violation of any of the terms
hereof or otherwise.
11. Negotiability, etc. This Warrant is issued upon the
following terms, to all of which each Holder or owner hereof by the
taking hereof consents and agrees:
(a) title to this Warrant may be transferred by endorsement and
delivery in the same manner as in the case of a negotiable
instrument transferable by endorsement and delivery.
(b) any person in possession of this Warrant properly endorsed is
authorized to represent himself as absolute owner hereof and is
empowered to transfer absolute title hereto by endorsement and
delivery hereof to a bona fide purchaser hereof for value; each
prior taker or owner waives and renounces all of his equities or
rights in this Warrant in favor of each such bona fide purchaser,
and each such bona fide purchaser shall acquire absolute title
hereto and to all rights represented hereby;
(c) until this Warrant is transferred on the books of the Company,
the Company may treat the registered Holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the
contrary; and
(d) notwithstanding the foregoing, this Warrant may not be sold,
transferred or assigned except pursuant to an effective registration
statement under the Securities Act or pursuant to an applicable
exemption therefrom.
12. Registration Rights. The Company is obligated to
register the shares of Common Stock issuable upon exercise of this
Warrant in accordance with the terms of the Registration Rights
Agreement.
13. Notices. All notices and other communications from
the Company to the Holder of this Warrant shall be mailed by first
class registered or certified mail, postage prepaid, at such address
as may have been furnished to the Company in writing by such Holder
or, until any such Holder furnishes to the Company an address, then
to, and at the address of, the last Holder of this Warrant who has
so furnished an address to the Company.
14. Miscellaneous. This Warrant and any term hereof may
be changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. This Warrant
shall be construed and enforced in accordance with and governed by
the internal laws of the State of New York. The headings in this
Warrant are for purposes of reference only, and shall not limit or
otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the
validity or enforceability of any other provision.
[Signature Page Follows]
DATED as of August 24, 1999.
LAKOTA TECHNOLOGIES, INC.
/s/Xxx Xxxxxxxx
[Corporate Seal]
Attest:
By:/s/Xxxxxx Xxxxxx
Secretary
EXHIBIT A
FORM OF NOTICE OF EXERCISE - WARRANT
To be executed only upon exercise
of the Warrant in whole or in part)
To: LAKOTA TECHNOLOGIES, INC.
The undersigned registered Holder of the accompanying Warrant
hereby exercises such Warrant or portion thereof for, and purchases
thereunder, 1 shares of Common Stock (as defined in
such Warrant) and herewith makes payment therefor in the amount and
manner set forth below, as of the date written below. The
undersigned requests that the certificates for such shares of Common
Stock be issued in the name of, and delivered to,
whose address is
The Exercise Price is paid by check or wire transfer to the
account of the Company in the amount of $ .
Upon exercise pursuant to this Notice of Exercise, the
Holder will be in compliance with the Limitation on Exercise (as
defined in the Securities Purchase Agreement pursuant to which this
Warrant was issued).
Dated:
(Name must conform to name of Holder as
specified on the face of the Warrant)
By:
Name:
Title:
Address of Holder:
Date of exercise:
1 Insert the number of shares of Common Stock as to which the accompanying
Warrant is being exercised. In the case of a partial exercise, a new
Warrant or Warrants will be issued and delivered, representing the
unexercised portion of the accompanying Warrant, to the holder surrendiering
the same.
