THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 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 1933 ACT, OR (C) IF REGISTERED UNDER THE 1933 ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
---------------------------------------
a21, Inc.
FORM OF
COMMON STOCK PURCHASE WARRANT
Number of shares: ________
Holder: _________
Expiration Date: February __, 2007
Exercise Price per Share: [$0.45] [$0.225]
a21, Inc., a company organized and existing under the laws of the State of Texas
(the "Company"), hereby certifies that, for value received,_______________, or
its registered assigns (the "Warrant Holder"), is entitled, subject to the terms
set forth below, to purchase from the Company _______ shares (the "Warrant
Shares") of common stock, $0.001 par value (the "Common Stock"), of the Company
(each such share, a "Warrant Share" and all such shares, the "Warrant Shares")
in exchange for (a) one (1) Warrant and (b) [$0.45] [$0.225] per share (as
adjusted from time to time as provided in Section 7, per Warrant Share (the
"Exercise Price"), at any time and from time to time from and after the date
thereof and through and including 5:00 p.m. New York City time on February __,
2007 (the "Expiration Date"), and subject to the following terms and conditions:
1. 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 Warrant Holder hereof from time to time.
The Company may deem and treat the registered Warrant Holder of this Warrant as
the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Warrant Holder, and for all other purposes, and the Company
shall not be affected by notice to the contrary.
1
2. Investment Representation. The Warrant Holder by accepting this Warrant
represents that the Warrant Holder is acquiring this Warrant for its own account
or the account of an affiliate for investment purposes and not with the view to
any offering or distribution and that the Warrant Holder will not sell or
otherwise dispose of this Warrant or the underlying Warrant Shares in violation
of applicable securities laws. The Warrant Holder acknowledges that the
certificates representing any Warrant Shares will bear a legend indicating that
they have not been registered under the 1933 Act and may not be sold by the
Warrant Holder except pursuant to an effective registration statement or
pursuant to an exemption from registration requirements of the 1933 Act and in
accordance with federal and state securities laws. If this Warrant was acquired
by the Warrant Holder pursuant to the exemption from the registration
requirements of the 1933 Act afforded by Regulation S thereunder, the Warrant
Holder acknowledges and covenants that this Warrant may not be exercised by or
on behalf of a Person during the one year distribution compliance period (as
defined in Regulation S) following the date hereof. "Person" means an
individual, partnership, firm, limited liability company, trust, joint venture,
association, corporation, or any other legal entity.
3. Validity of Warrant and Issue of Shares. The Company represents and
warrants that this Warrant has been duly authorized and validly issued and
warrants and agrees that all of Common Stock that may be issued upon the
exercise of the rights represented by this Warrant will, when issued upon such
exercise, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof. The
Company further warrants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of Common Stock to
provide for the exercise of the rights represented by this Warrant.
4. Registration of Transfers and Exchange of Warrants.
a. Subject to compliance with the legend set forth on the face of
this Warrant, the Company shall register the transfer of any portion of this
Warrant in the 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 the office specified in or pursuant to Section 10. 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 Warrant Holder.
The acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance of such transferee of all of the rights and obligations of a Warrant
Holder of a Warrant.
b. This Warrant is exchangeable, upon the surrender hereof by the
Warrant Holder to the office of the Company specified in or pursuant to Section
10 for one or more New Warrants, evidencing in the aggregate the right to
purchase the number of Warrant Shares which may then be purchased hereunder. Any
such New Warrant will be dated the date of such exchange.
2
5. Exercise of Warrants.
a. Upon surrender of this Warrant with the Form of Election to
Purchase attached hereto duly completed and signed to the Company, at its
address set forth in Section 10, and upon payment and delivery of the Exercise
Price per Warrant Share multiplied by the number of Warrant Shares that the
Warrant Holder intends to purchase hereunder, in lawful money of the United
States of America, in cash or by certified or official bank check or checks, to
the Company, all as specified by the Warrant Holder in the Form of Election to
Purchase, the Company shall promptly (but in no event later than 7 business days
after the Date of Exercise [as defined herein]) issue or cause to be issued and
cause to be delivered to or upon the written order of the Warrant Holder and in
such name or names as the Warrant Holder may designate (subject to the
restrictions on transfer described in the legend set forth on the face of this
Warrant), a certificate for the Warrant Shares issuable upon such exercise, with
such restrictive legend as required by the 1933 Act. Any person so designated by
the Warrant Holder to receive Warrant Shares shall be deemed to have become
holder of record of such Warrant Shares as of the Date of Exercise of this
Warrant.
b. A "Date of Exercise" means the date on which the Company shall
have received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the Warrant Holder to be
purchased.
c. This Warrant shall be exercisable at any time and from time to
time for such number of Warrant Shares as is indicated in the attached Form of
Election To Purchase. If less than all of the Warrant Shares which may be
purchased under this Warrant are exercised at any time, the Company shall issue
or cause to be issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares for which no exercise has been
evidenced by this Warrant.
d. (i) Notwithstanding anything contained herein to the contrary,
the holder of this Warrant may, at its election exercised in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the "Net Number" of shares of Common Stock determined according to the
following formula (a "Cashless Exercise"):
Net Number = (A x (B - C))/B
(ii) For purposes of the foregoing formula:
A= the total number shares with respect to which this
Warrant is then being exercised.
B= the average of the last reported sale prices (as
reported by Bloomberg) of the Common Stock on each of 20
trading days immediately preceding the date of the
Exercise Notice.
3
C= the Warrant Exercise Price then in effect at the time
of such exercise.
6. Call of Warrant(s) by Company. In the event that the Registration
Statement required to be filed pursuant to Section 9 hereof is then effective
and the average of the last reported sale price of the Common Stock of the
Company as listed on a nationally public securities market is 200% of the
Exercise Price for a period of twenty consecutive trading days the Company may
call the Warrant with 10 days notice and pay to the Warrant Holder $0.001 per
Warrant. The Warrant Holder may exercise the Warrant prior to the end of the
foregoing ten day notice period. The Company's right to call the Warrant expires
30 days after the foregoing condition is satisfied. The provisions of Section
5.d. hereof, permitting a Cashless Exercise, shall apply as if restated in this
Section 6.
7. Adjustment of Exercise Price and Number of Shares. The character of the
shares of stock or other securities at the time issuable upon exercise of this
Warrant and the Exercise Price therefore, are subject to adjustment upon the
occurrence of the following events:
a. Adjustment for Stock Splits, Stock Dividends, Recapitalizations,
Etc. The Exercise Price of this Warrant and the number of shares of Common Stock
or other securities at the time issuable upon exercise of this Warrant shall be
appropriately adjusted to reflect any stock dividend, stock split, combination
of shares, reclassification, recapitalization or other similar event affecting
the number of outstanding shares of stock or securities.
b. Adjustment for Reorganization, Consolidation, Merger, Etc. In
case of any consolidation or merger of the Company with or into any other
corporation, entity or person, or any other corporate reorganization, in which
the Company shall not be the continuing or surviving entity of such
consolidation, merger or reorganization (any such transaction being hereinafter
referred to as a "Reorganization"), then, in each case, the holder of this
Warrant, on exercise hereof at any time after the consummation or effective date
of such Reorganization (the "Effective Date"), shall receive, in lieu of the
shares of stock or other securities at any time issuable upon the exercise of
the Warrant issuable on such exercise prior to the Effective Date, the stock and
other securities and property (including cash) to which such holder would have
been entitled upon the Effective Date if such holder had exercised this Warrant
immediately prior thereto (all subject to further adjustment as provided in this
Warrant).
c. Full Ratchet Anti Dilution for Additional Financings. In case of
any additional financings of the Company in which the Company shall issue Common
Stock, warrants or other securities convertible into Common Stock at a purchase
or an exercise price, as the case may be, less than the Exercise Price, the
Exercise Price shall equal the price determined by multiplying the Exercise
Price by a fraction, the denominator of which shall be the number of shares of
Common Stock outstanding after giving effect to such financings, and the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such financings. Additional financings for the purposes
hereof shall not include shares of Common Stock, warrants or other securities
convertible into Common Stock issued to officers, directors, employees of and
consultants to the Company and/or its subsidiaries pursuant to stock option,
stock purchase or similar plans, or shares of Common Stock issued in connection
with any event for which adjustment is required to be made pursuant to another
provision of this Warrant.
4
d. Certificate as to Adjustments. In case of any adjustment or
readjustment in the price or kind of securities issuable on the exercise of this
Warrant, the Company will promptly give written notice thereof to the holder of
this Warrant in the form of a certificate, certified and confirmed by the Board
of Directors of the Company, setting forth such adjustment or readjustment and
showing in reasonable detail the facts upon which such adjustment or
readjustment is based.
8. Fractional Shares. The Company shall not be required to issue or cause
to be issued fractional Warrant Shares on the exercise of this Warrant. The
number of full Warrant Shares that shall be issuable upon the exercise of this
Warrant shall be computed on the basis of the aggregate number of Warrants
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 8, be issuable
on the exercise of this Warrant, the Company shall, at its option, (i) pay an
amount in cash equal to the Exercise Price multiplied by such fraction or (ii)
round the number of Warrant Shares issuable, up to the next whole number.
9. Registration of Registrable Securities. The Company shall prepare and
file within one hundred and sixty five (165) days following the date hereof (the
"Filing Date") a registration statement (the "Registration Statement") covering
the resale of the Common Stock into which this Warrant is exchangeable (the
"Registrable Securities"). The Company shall use its best efforts to cause the
Registration Statement to be declared effective by the Securities Exchange
Commission ("SEC") on the earlier of (i) 180 days following the issuance of this
Warrant, (ii) ten (10) days following the receipt of a "No Review" or similar
letter from the SEC, or (iii) the first day following the day the SEC determines
the Registration Statement eligible to be declared effective (the "Required
Effectiveness Date"). The Required Effectiveness Date shall automatically be
extended for all purposes of this Agreement until thirty (30) days after the
Company is required to file its Form 10-KSB including applicable extension if
the SEC determines that the Company's current financial statements cannot be
used for purposes of the Registration Statement (or a determination having a
comparable effect). Nothing contained herein shall be deemed to limit the number
of Registrable Securities to be registered by the Company hereunder. As a
result, should the Registration Statement not relate to the maximum number of
Registrable Securities acquired by (or potentially acquirable by) the Lender,
the Company shall be required to promptly file a separate registration statement
(utilizing Rule 462 promulgated under the Securities Exchange Act of 1934, as
amended, where applicable) relating to such Registrable Securities which then
remain unregistered. The provisions of this Agreement shall relate to any such
separate registration statement as if it were an amendment to the Registration
Statement.
10. Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given (i) on the date they are
delivered if delivered in person; (ii) on the date initially received if
delivered by facsimile transmission followed by registered or certified mail
confirmation; (iii) on the date delivered by an overnight courier service; or
(iv) on the third business day after it is mailed by registered or certified
mail, return receipt requested with postage and other fees prepaid as follows:
5
If to the Company:
a21, Inc.
Attention: President
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Direct Dial:
Facsimile:
If to the Warrant Holder:
To the address in this Warrant or to the address provided to
the Company by an Investor with a copy to:
11. Miscellaneous.
a. This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. This
Warrant may be amended only in writing and signed by the Company and the Warrant
Holder.
b. Nothing in this Warrant shall be construed to give to any person
or corporation other than the Company and the Warrant Holder any legal or
equitable right, remedy or cause of action under this Warrant; this Warrant
shall be for the sole and exclusive benefit of the Company and the Warrant
Holder.
c. This Warrant shall be governed by, 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.
d. 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.
e. 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 reasonably
substitute therefore, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
f. The Warrant Holder shall not, by virtue hereof, be entitled to
any voting or other rights of a shareholder of the Company, either at law or
equity, and the rights of the Warrant Holder are limited to those expressed in
this Warrant.
6
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by the authorized officer as of the date first above stated.
a21, Inc.
By:
--------------------------------------------
Name: Xxxxxx Xxxxx
Title: President
FORM OF ELECTION TO PURCHASE
(To be executed by the Warrant Holder to exercise the right to purchase shares
of Common Stock under the foregoing Warrant)
To: a21, Inc.:
In accordance with the Warrant enclosed with this Form of Election to Purchase,
the undersigned hereby irrevocably elects to purchase ______________ shares of
Common Stock ("Common Stock"), $0.001 par value, of a21, Inc. and encloses one
warrant and [$0.45] [$0.225] for each Warrant Share being purchased or an
aggregate of $________________ in cash or certified or official bank check or
checks, which sum represents the aggregate Exercise Price (as defined in the
Warrant) together with any applicable taxes payable by the undersigned pursuant
to the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of:
_____________________________________
_____________________________________
_____________________________________
(Please print name and address)
_____________________________________
(Please insert Social Security or Tax Identification Number)
If the number of shares of Common Stock issuable upon this exercise shall not be
all of the shares of Common Stock which the undersigned is entitled to purchase
in accordance with the enclosed Warrant, the undersigned requests that a New
Warrant (as defined in the Warrant) evidencing the right to purchase the shares
of Common Stock not issuable pursuant to the exercise evidenced hereby be issued
in the name of and delivered to:
_____________________________________
_____________________________________
_____________________________________
(Please print name and address)
Dated:______________________________ Name of Warrant Holder:
(Print)_________________________________
(By:)___________________________________
(Name:)_________________________________
(Title:)________________________________
Signature must conform in all respects
to name of Warrant Holder as specified
on the face of the Warrant
