Contract
Exhibit
10.4
THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED OR OTHERWISE
DISPOSED OF, UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF THE SECURITIES
ACT
OR AN OPINION OF COUNSEL IS OBTAINED STATING THAT SUCH DISPOSITION IS IN
COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION.
July
10,
2006
XXXXXXXX.XXX,
INCORPORATED
Warrant
for the Purchase of Shares of Common Stock
For
value
received, this Warrant is hereby issued by Xxxxxxxx.xxx, Incorporated, a Nevada
corporation (the “Company”), to 55 SOUTH INVESTMENTS (the “Holder”). Subject to
the provisions of this Warrant, the Company hereby grants to the Holder the
right to purchase from the Company up to two million shares of common stock
of
the Company (2,000,000) fully paid and non-assessable shares of Common Stock,
at
an aggregate price of $2,000,000 (or $1.00 per share) (the “Exercise
Price”).
The
term
“Common Stock” means the Common Stock, par value $0.001 per share, of the
Company. The number of shares of Common Stock to be received upon the exercise
of this Warrant may be adjusted from time to time as hereinafter set forth.
The
shares of Common Stock deliverable upon such exercise, and as adjusted from
time
to time, are hereinafter referred to as “Warrant Stock.”
The
Holder agrees with the Company that this Warrant is issued, and all the rights
hereunder shall be held, subject to all of the conditions, limitations and
provisions set forth herein.
1. Exercise
of Warrant.
(a)
Subject to the terms and conditions set forth herein, this Warrant may be
exercised in whole or in part, pursuant to the procedures provided below, at
any
time on or before the earlier of (i) 5:00 p.m., Pacific time, on the day
occurring five (5) years from the warrant issuance date (the “Expiration Date”)
or, if such day is a day on which banking institutions in California are
authorized by law to close, then on the next succeeding day that shall not
be
such a day. The Warrant shall only be exercisable on a cash basis. To exercise
this Warrant the Holder shall present and surrender this Warrant to the Company
at its principal office, with the Warrant Exercise Form attached hereto duly
executed by the Holder and accompanied by payment in cash, wire transfer or
by
check, payable to the order of the Company, of the aggregate Exercise Price
for
the total aggregate number of shares for which this Warrant is exercised. Upon
receipt by the Company of this Warrant, together with the executed Warrant
Exercise Form and payment of the Exercise Price for the shares to be acquired,
in proper form for exercise, and subject to the Holder’s compliance with all
requirements of this Warrant for the exercise hereof, the Holder shall be deemed
to be the holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of the Company shall
then be closed or that certificates representing such shares of Common Stock
shall not then be actually delivered to the Holder; provided,
however,
that no
exercise of this Warrant shall be effective, and the Company shall have no
obligation to issue any Common Stock to the Holder upon any attempted exercise
of this Warrant, unless the Holder shall have first delivered to the Company,
in
form and substance reasonably satisfactory to the Company, appropriate
representations so as to provide the Company reasonable assurances that the
securities issuable upon exercise may be issued without violation of the
registration requirements of the Securities Act and applicable state securities
laws, including without limitation representations that the Holder is familiar
with the Company and its business and financial condition and has had an
opportunity to ask questions and receive documents relating thereto to his
reasonable satisfaction.
2. Reservation
of Shares.
The
Company will at all times reserve for issuance and delivery upon exercise of
this Warrant all shares of Common Stock from time to time receivable upon
exercise of this Warrant. All such shares shall be duly authorized and, when
issued upon such exercise, shall be validly issued, fully paid and
non-assessable and free of all preemptive rights.
3. Fractional
Shares.
No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant, but the Company shall pay the Holder an amount
equal to the Fair Market Value (as defined below) of such fractional share
of
Common Stock in lieu of each fraction of a share otherwise called for upon
any
exercise of this Warrant.
4. Redemption
at Option of Company.
None.
5. Registration
Rights. The
Holder shall have certain piggyback registration rights with respect to the
registration of one million of the Warrant Shares as provided in that certain
Registration Rights Agreement by and between the Company and the parties
thereto. Should 500,000 of the Warrant be exercised within twelve (12) months
of
the Closing Date, then 500,000 of the Warrant Shares upon such exercise shall
carry piggyback registration rights for the first registration statement filed
subsequent to any registration statement filed in connection with that certain
Swap as defined in the Promissory Note of same date entered by and between
the
parties and occurring no earlier than six (6) months after the Closing Date
as
defined therein such Promissory Note. The remainder of 500,000 of the Warrant
Shares that are subject to registration may be exercised by the Holder any
time
after July 10, 2007 and up to expiration and shall carry piggyback registration
rights for the period of exercise through such expiration.
6. Assignment
or Loss of Warrant.
Subject
to the transfer restrictions herein (including Section 9), upon surrender of
this Warrant to the Company or at the office of its stock transfer agent, if
any, with the Assignment Form annexed hereto duly executed and funds sufficient
to pay any transfer tax, the Company shall, without charge, execute and deliver
a new Warrant in the name of the assignee named in such instrument of assignment
and this Warrant shall promptly be canceled. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and of reasonably satisfactory indemnification
by
the Holder, and upon surrender and cancellation of this Warrant, if mutilated,
the Company shall execute and deliver a replacement Warrant of like tenor and
date.
7. Rights
of the Holder.
The
Holder shall not, by virtue hereof, be entitled to any rights of a stockholder
in the Company, either at law or in equity, and the rights of the Holder are
limited to those expressed in this Warrant.
8. Adjustments.
8.1 Adjustment
for Recapitalization.
If the
Company shall at any time after the date hereof subdivide its outstanding shares
of Common Stock by recapitalization, reclassification or split-up thereof,
the
number of shares of Common Stock subject to this Warrant immediately prior
to
such subdivision shall be proportionately increased, and if the Company shall
at
any time after the date hereof combine the outstanding shares of Common Stock
by
recapitalization, reclassification or combination thereof, the number of shares
of Common Stock subject to this Warrant immediately prior to such combination
shall be proportionately decreased. Any such adjustment and adjustment to the
Exercise Price pursuant to this Section 8.1 shall be effective at the close
of business on the effective date of such subdivision or
combination.
Whenever
the number of shares of Common Stock purchasable upon the exercise of this
Warrant is adjusted, as provided in this Section 8.1, the Exercise Price
shall be adjusted to the nearest cent by multiplying such Exercise Price
immediately prior to such adjustment by a fraction (x) the numerator of which
shall be the number of shares of Common Stock purchasable upon the exercise
immediately prior to such adjustment, and (y) the denominator of which shall
be
the number of shares of Common Stock so purchasable immediately
thereafter.
8.2 Adjustment
for Reorganization, Consolidation, Merger.
In case
of any reorganization of the Company after the date hereof or in case after
such
date the Company shall consolidate with or merge into another corporation or
convey all or substantially all of its assets to another corporation, then,
and
in each such case, the Holder of this Warrant upon the exercise thereof as
provided in Section 1 at any time after the consummation of such reorganization,
consolidation, merger or conveyance, shall be entitled to receive, in lieu
of
the securities and property receivable upon the exercise of this Warrant prior
to such consummation, the securities or property to which such Holder would
have
been entitled upon such consummation if such Holder had exercised this Warrant
immediately prior thereto; in each such case, the terms of this Warrant shall
be
applicable to the securities or property receivable upon the exercise of this
Warrant after such consummation.
8.3 Certificate
as to Adjustments.
The
adjustments provided in this Section 8 shall be interpreted and applied by
the Company in such a fashion so as to reasonably preserve the applicability
and
benefits of this Warrant (but not to increase or diminish the benefits
hereunder). In each case of an adjustment in the number of shares of Common
Stock receivable on the exercise of the Warrant, the Company at its expense
will
promptly compute such adjustment in accordance with the terms of the Warrant
and
prepare a certificate executed by two executive officers of the Company setting
forth such adjustment and showing in detail the facts upon which such adjustment
is based. The Company will forthwith mail a copy of each such certificate to
each Holder.
8.4 Notices
of Record Date, Etc.
In the
event that:
(a) the
Company authorizes the granting to Common Stock holders of any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class
or
any other securities; or
(b) the
Company authorizes any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of
all
or substantially all of the assets of the Company to another corporation or
entity; or
(c) the
Company authorizes any voluntary or involuntary dissolution, liquidation or
winding up of the Company,
then,
and
in each such case, the Company shall mail or cause to be mailed to the holder
of
this Warrant at the time outstanding a notice specifying, as the case may be,
(i) the date on which a record is to be taken for the purpose of such right,
and
stating the amount and character of such right, or (ii) the date on which such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding up is to take place, and the time, if any
is
to be fixed, as to which the holders of record of Common Stock shall be entitled
to exchange their shares of Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding up. Such notice shall be mailed
at least twenty (20) days prior to the date therein specified.
8.5 No
Impairment.
The
Company will not, by any voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by
the
Company, but will at all times in good faith assist in the carrying out of
all
the provisions of this Section 10 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.
9. Transfer
to Comply with the Securities Act.
This
Warrant and any Warrant Stock may not be sold, transferred, pledged,
hypothecated or otherwise disposed of except as follows: (a) to a person who,
in
the opinion of counsel to the Company, is a person to whom this Warrant or
the
Warrant Stock may legally be transferred without registration and without the
delivery of a current prospectus under the Securities Act with respect thereto
and then only against receipt of an agreement of such person to comply with
the
provisions of this Section 9 with respect to any resale or other
disposition of such securities; or (b) to any person upon delivery of a
prospectus then meeting the requirements of the Securities Act relating to
such
securities and the offering thereof for such sale or disposition, and thereafter
to all successive assignees.
10. Legend.
Unless
the shares of Warrant Stock have been registered under the Securities Act,
upon
exercise of any of the Warrants and the issuance of any of the shares of Warrant
Stock, all certificates representing shares shall bear on the face thereof
substantially the following legend:
The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended, and may not be sold, offered for sale,
assigned, transferred or otherwise disposed of, unless registered pursuant
to
the provisions of that Act or unless an opinion of counsel to the Corporation is
obtained stating that such disposition is in compliance with an available
exemption from such registration.
11. Notices.
All
notices required hereunder shall be in writing and shall be deemed given when
telegraphed, delivered personally or within two days after mailing when mailed
by certified or registered mail, return receipt requested, to the Company or
the
Holder, as the case may be, for whom such notice is intended, if to the Holder,
at the address of such party shown on the books of the Company, or if to the
Company, at the address set forth on the signature page hereof, Attn: President,
or at such other address of which the Company or the Holder has been advised
by
notice hereunder.
12. Applicable
Law.
The
Warrant is issued under and shall for all purposes be governed by and construed
in accordance with the laws of the State of Nevada, without regard to the
conflict of laws provisions of such State.
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of page left intentionally blank]
IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed on its behalf,
in its corporate name, by its duly authorized officer, all as of the day and
year first above written.
| XXXXXXXX.XXX, INCORPORATED | ||
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| By: | ||
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Name: Xxxx Xxxxxxxx |
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| Title: Chief Executive Officer and President | ||
WARRANT
EXERCISE FORM
The
undersigned hereby irrevocably elects to (i) exercise the within Warrant to
purchase __________ shares of the Common Stock of Xxxxxxxx.xxx, Incorporated,
a
Nevada corporation, pursuant to the provisions of Section 1 of the attached
Warrant, and hereby makes payment of $__________ in payment therefore. The
undersigned’s execution of this form constitutes the undersigned’s agreement to
all the terms of the Warrant and to comply therewith.
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Signature
Print
Name:
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Signature,
if jointly held
Print
Name:
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Date
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ASSIGNMENT
FORM
FOR
VALUE
RECEIVED_____________________________ (“Assignor”) hereby sells, assigns and
transfers unto _______________________________ (“Assignee”) all of Assignor’s
right, title and interest in, to and under this Warrant issued by Xxxxxxxx.xxx,
Incorporated dated ______________.
DATED: _________________
| ASSIGNOR: | |||
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Signature
Print
Name:
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Signature,
if jointly held
Print
Name:
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| ASSIGNEE: | |||
| The undersigned agrees to all of the terms of the Warrant and to comply therewith. | |||
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Signature
Print
Name:
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Signature,
if jointly held
Print
Name:
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