COMMON STOCK PURCHASE WARRANT OF ELEMENT 21 GOLF COMPANY
EXHBIT
4.5
Warrant
to Purchase
**1,081,081**
____________________
Shares
of
Common Stock
NEITHER
THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER
THIS
WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN EXEMPTION
FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION SHALL BE APPLICABLE,
THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
Void
after 5:00 P.M. Eastern Standard Time on the last day of the Termination Date,
as defined in the Warrant
COMMON
STOCK PURCHASE WARRANT
OF
ELEMENT
21 GOLF COMPANY
This
is
to certify that, FOR VALUE RECEIVED, ________________, or
his
assigns (“Holder”), is entitled to purchase, subject to the provisions of this
Warrant, from Element 21 Golf Company, a Delaware corporation (the “Company”),
at an exercise price per share equal to $0.17 subject to adjustment as provided
in this Warrant (such price as adjusted from time to time in accordance
herewith, the “Exercise Price”), One Million Eighty One Thousand and Eighty One
(1,081,081) shares of common stock, par value $0.01 per share (“Common Stock”),
of the Company. The shares of Common Stock deliverable upon such exercise,
and
as adjusted from time to time, are hereinafter sometimes referred to as “Warrant
Shares”.
1. DEFINED
TERMS.
Capitalized terms not otherwise defined in this Warrant shall have meaning
ascribed to such term in that certain Subscription Agreement dated as of the
date hereof between the Company and the Holder.
2. EXERCISE
OF WARRANT.
(a)
This
Warrant may be exercised in whole or in part at any time or from time to time
from and after the Initial Exercise Date and prior to the Termination Date.
by
presentation and surrender hereof to the Company at its principal office, or
at
the office of its stock transfer agent, if any, with the Purchase Form annexed
hereto duly executed and accompanied by payment of the Exercise Price for the
number of shares of Common Stock specified in such form. If this Warrant should
be exercised in part only, the Company shall, upon surrender of this Warrant
for
cancellation, execute and deliver a new Warrant evidencing the rights of the
Holder hereof to purchase the balance of the shares of Common Stock purchasable
hereunder. Upon receipt by the Company of this Warrant at its office, or by
the
stock transfer agent of the Company at its office, in proper form for exercise,
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.
As
used herein, the term “Initial Exercise Date” shall mean the date upon which the
Company consummates a financing transaction wherein the Company issues equity
securities in exchange for gross proceeds received by the Company of at least
$5,000,000 and the term “Termination Date” shall mean the [one/two/three]
year
anniversary of the Initial Exercise Date.
3. EXCHANGE,
TRANSFER, ASSIGNMENT OR LOSS OF WARRANT.
This
Warrant is exchangeable, without expense, at the option of the Holder, upon
presentation and surrender hereof to the Company or at the office of its stock
transfer agent, if any, for other Warrants of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Common Stock purchasable hereunder. Subject to the provisions of Section 8
of
this Warrant, 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. This Warrant may be divided or combined with other Warrants which
carry the same rights upon presentation hereof at the office of the Company
or
at the office of its stock transfer agent, if any, together with a written
notice specifying the names and denominations in which new Warrants are to
be
issued and signed by the Holder hereof. The term “Warrant” as used herein
includes any Warrants into which this Warrant may be divided or exchanged.
Upon
receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft
or
destruction) of reasonably satisfactory indemnification, and upon surrender
and
cancellation of this Warrant, if mutilated, the Company will execute and deliver
a new Warrant of like tenor. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall
be at
any time enforceable by anyone.
4. RIGHTS
OF THE HOLDER.
The
Holder shall not, by virtue of this Warrant, be entitled to any rights of a
stockholder in the Company, either at law or equity, and the rights of the
Holder are limited to those expressed in the Warrant and are not enforceable
against the Company except to the extent set forth herein.
5. ANTI-DILUTION
PROVISIONS.
The
Exercise Price in effect at any time and the number and kind of securities
purchasable upon exercise of each Warrant shall be subject to adjustment as
follows:
2
(a) In
case
the Company shall (1) pay a dividend or make a distribution on its shares of
Common Stock in shares of Common Stock (2) subdivide or reclassify its
outstanding Common Stock into a greater number of shares, or (3) combine or
reclassify its outstanding Common Stock into a smaller number of shares or
otherwise effect a reverse split, the Exercise Price in effect at the time
of
the record date for such dividend or distribution or of the effective date
of
such subdivision, combination or reclassification shall be proportionately
adjusted so that the Holder of this Warrant exercised after such date shall
be
entitled to receive the aggregate number and kind of shares which, if this
Warrant had been exercised immediately prior to such time, he would have owned
upon such exercise and been entitled to receive upon such dividend, subdivision,
combination or reclassification. Such adjustment shall be made successively
whenever any event listed in this Section 5(a) shall occur.
(b) In
case
the Company shall distribute to all holders of Common Stock evidences of its
indebtedness or assets (excluding cash dividends or distributions paid out
of
current earnings and dividends or distributions referred to in Section 7(a)
of
this Warrant or subscription rights or warrants), then in each such case the
Exercise Price in effect thereafter shall be determined by multiplying the
Exercise Price in effect immediately prior thereto by a fraction, of which
the
numerator shall be the total number of shares of Common Stock outstanding
multiplied by the Fair Market Value per share of Common Stock, less the fair
market value (as determined by the Company's Board of Directors) of said assets
or evidences of indebtedness so distributed or of such rights or warrants,
and
of which the denominator shall be the total number of shares of Common Stock
outstanding multiplied by the Fair Market Value per share of Common Stock.
Such
adjustment shall be made successively whenever such a record date is fixed.
Such
adjustment shall be made whenever any such distribution is made and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such distribution. For purposes of the
foregoing, “Fair Market Value” of a share of Common Stock as of a particular
date (the “Determination Date”) shall mean:
(i)
If
shares of Common Stock are traded on an exchange or are quoted on the Nasdaq
National Market or the Nasdaq SmallCap Market (“Nasdaq”), then the average of
the closing or last sale price, respectively, reported for the five trading
days
immediately preceding the Determination Date.
(ii)
If
shares of Common Stock are not traded on an exchange or on Nasdaq but are traded
in the over-the-counter market or other similar organization (including the
OTC
Bulletin Board), then the average of the closing bid and ask prices reported
for
the five trading days immediately preceding the Determination Date.
(iii)
If
shares of Common Stock are not traded as provided above, then the price
determined in good faith by the Board of Directors of the Company.
(iv)
If
the Determination Date is the date of a liquidation, dissolution or winding
up,
or any event deemed to be a liquidation, dissolution or winding up pursuant
to
the Company's certificate of incorporation, then all amounts to be payable
per
share to holders of the Company’s Common Stock pursuant to the Company’s
certificate of incorporation in the event of such liquidation, dissolution
or
winding up, plus all other amounts to be payable per share in respect of shares
of the Company’s Common Stock in liquidation under the certificate of
incorporation, assuming for the purposes of this clause (iv) that all shares
of
Common Stock issuable upon exercise of any then outstanding options, warrants
or
securities convertible into shares of Common Stock are outstanding at the
Determination Date.
3
(c) Whenever
the Exercise Price payable upon exercise of each Warrant is adjusted pursuant
to
Section 5(a) or 5(b) of this Warrant, the number of shares of Common Stock
purchasable upon exercise of each Warrant shall simultaneously be adjusted
by
multiplying the number of shares of Common Stock issuable upon exercise of
each
Warrant in effect on the date thereof prior to giving effect to any adjustment
by the Exercise Price in effect on the date thereof prior to giving effect
to
any adjustment and dividing the product so obtained by the Exercise Price,
as
adjusted. In no event shall the Exercise Price per share be less than the par
value per share, and, if any adjustment made pursuant to Section 5(a) or 5(b)
would result in an exercise price of less than the par value per share, then,
in
such event, the Exercise Price per share shall be the par value per
share.
(d) No
adjustment in the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least two cents ($0.02) in such price;
provided, however, that any adjustments which by reason of this Section 5(d)
are
not required to be made shall be carried forward and taken into account in
any
subsequent adjustment. All calculations under this Section 5 shall be made
to
the nearest cent or to the nearest one-hundredth of a share, as the case may
be.
Anything in this Section 5(d) to the contrary notwithstanding, the Company
shall
be entitled, but shall not be required, to make such changes in the Exercise
Price, in addition to those required by this Section 5(d), as it in its
discretion shall determine to be advisable in order that any dividend or
distribution in shares of Common Stock, subdivision, reclassification or
combination of Common Stock, issuance of warrants to purchase Common Stock
or
distribution of evidences of indebtedness or other assets (excluding cash
dividends) referred to hereinabove in this Section 5 (d) hereafter made by
the
Company to the holders of its Common Stock shall not result in any tax to the
holders of its Common Stock or securities convertible into Common
Stock.
(e) The
Company may retain a firm of independent public accountants of recognized
standing selected by the Board of Directors (who may be the regular accountants
employed by the Company) to make any computation required by this Section 5,
and
a certificate signed by such firm shall be conclusive evidence of the
correctness of such adjustment.
(f) In
the
event that at any time, as a result of an adjustment made pursuant to Section
5
of this Warrant, the Holder of any Warrant thereafter shall become entitled
to
receive any shares of the Company, other than Common Stock, thereafter the
number of such other shares so receivable upon exercise of any Warrant shall
be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in Sections 5(a) to 5(e), inclusive, of this Warrant.
4
(g) Irrespective
of any adjustments in the Exercise Price or the number or kind of shares
purchasable upon exercise of Warrants, Warrants theretofore or thereafter issued
may continue to express the same price and number and kind of shares as are
stated in this and similar Warrants initially issued by the
Company.
6. OFFICER'S
CERTIFICATE.
Whenever the Exercise Price shall be adjusted as required by the provisions
of
Section 5 of this Warrant, the Company shall forthwith file in the custody
of
its Secretary or an Assistant Secretary at its principal office and with its
stock transfer agent, if any, an officer's certificate showing the adjusted
Exercise Price and the adjusted number of shares of Common Stock issuable upon
exercise of each Warrant, determined as herein provided, setting forth in
reasonable detail the facts requiring such adjustment, including a statement
of
the number of additional shares of Common Stock, if any, and such other facts
as
shall be necessary to show the reason for and the manner of computing such
adjustment. Each such officer's certificate shall be made available at all
reasonable times for inspection by the Holder or any holder of a
Warrant.
7. NOTICES
TO WARRANT HOLDERS.
So long
as this Warrant shall be outstanding, (1) if the Company shall pay any dividend
or make any distribution upon Common Stock (other than a regular cash dividend
payable out of retained earnings) or (2) if the Company shall offer to the
holders of Common Stock for subscription or purchase by them any share of any
class or any other rights or (3) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger
of
the Company with or into another corporation, sale, lease or transfer of all
or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding
up
of the Company shall be effected, then in any such case, the Company shall
cause
to be mailed by certified mail to the Holder, at least ten days prior to the
date specified in clauses (i) and (ii), as the case may be, of this Section
7 a
notice containing a brief description of the proposed action and stating the
date on which (i) a record is to be taken for the purpose of such dividend,
distribution or rights, or (ii) such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding
up
is to take place and the date, if any is to be fixed, as of which the holders
of
Common Stock or other securities shall receive cash or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
8. TRANSFER
TO COMPLY WITH THE SECURITIES ACT OF 1933.
This
Warrant or the Warrant Shares or any other security issued or issuable upon
exercise of this Warrant may not be sold or otherwise disposed of except as
follows:
5
(1) To
a
person who, in the opinion of counsel for the Company, is a person to whom
this
Warrant or Warrant Shares may legally be transferred without registration and
without the delivery of a current prospectus under the Act with respect thereto
and then only against receipt of an agreement of such person to comply with
the
provisions of this Section 8 with respect to any resale or other disposition
of
such securities which agreement shall be satisfactory in form and substance
to
the Company and its counsel; or
(2) to
any
person upon delivery of a prospectus then meeting the requirements of the Act
relating to such securities and the offering thereof for such sale or
disposition.
9. GOVERNING
LAW.
This
Warrant shall be governed by and construed in accordance with the laws of the
State of Delaware without giving effect to the principles of conflicts of law
thereof.
| Dated as of February __, 2006 | ||
| ELEMENT 21 GOLF COMPANY | ||
| |
|
|
| By: | ||
|
Name: |
||
| Title: | ||
6
PURCHASE
FORM
Dated:
__________ ,
20__
The
undersigned hereby irrevocably elects to exercise the within Warrant to the
extent of purchasing
shares
of Common Stock and hereby makes payment of $
in
payment of the actual exercise price thereof.
_________________
INSTRUCTIONS
FOR REGISTRATION OF STOCK
| Name | ||
|
|
(Please
typewrite or print in block
letters)
|
|
| Signature | ||
| Social Security or Employer Identification No. |
ASSIGNMENT
FORM
|
FOR
VALUE RECEIVED,
|
||
| hereby sells, assigns and transfer unto | ||
| Name | ||
|
|
(Please
typewrite or print in block
letters)
|
|
| Address | ||
| Social Security or Employer Identification No. |
The
right
to purchase Common Stock represented by this Warrant to the extent of _______
shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint _____
attorney
to transfer the same on the books of the Company with full power of
substitution.
Dated:
___,
20___
Signature
_____________________
7
