FORM OF WARRANT
FORM
OF WARRANT
THIS
WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT AND
THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO DRINKS
AMERICAS HOLDINGS, LTD. THAT SUCH REGISTRATION IS NOT REQUIRED.
No.
________
SERIES A
COMMON STOCK PURCHASE WARRANT
1. Issuance. In
consideration of good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by Drinks Americas Holdings, Ltd., a Delaware
corporation (the “Company”), St. Xxxxxx
Investments, LLC or
registered assigns (the “Holder”) is hereby granted the
right to purchase at any time, on or after the Issue Date (as defined below)
until 5:00 P.M., New York City time, on the date which the last calendar day of
the month in which the fifth anniversary of the Issue Date occurs (the “Expiration Date”), two million
five hundred thousand (2,500,000) fully paid and nonassessable shares of the
Company’s Common Stock, $.001 par value per share (the “Common Stock”), at an initial
exercise price per share (the “Exercise Price”) of $0.35 per
share, subject to further adjustment as set forth herein. This
Warrant is being issued pursuant to the terms of that certain Securities
Purchase Agreement, dated as of June 18, 2009 (the “Securities Purchase
Agreement”), to which the Company and Holder (or Holder’s predecessor in
interest) are parties.
Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Securities Purchase Agreement.
This
Warrant was originally issued to the Holder or the Holder’s predecessor in
interest on June 18, 2009 (the “Issue Date”).
2. Exercise of
Warrants.
2.1 General.
(a) This
Warrant is exercisable in whole or in part at any time and from time to time
commencing on the Issue Date. Such exercise shall be effectuated by
submitting to the Company (either by delivery to the Company or by facsimile
transmission) a completed and duly executed Notice of Exercise (substantially in
the form attached to this Warrant Certificate). The date such Notice
of Exercise is either faxed, emailed or delivered to the Company shall be the
“Exercise Date,” provided that, if such exercise represents the full exercise of
the outstanding balance of the Warrant, the Holder of this Warrant shall tender
this Warrant Certificate to the Company within five (5) Trading Days (as defined
below) thereafter. The Notice of Exercise shall be executed by the
Holder of this Warrant and shall indicate (i) the number of shares then being
purchased pursuant to such exercise and (ii) if applicable (as provided below),
whether the exercise is a cashless exercise.
For purposes of this Warrant, the term
“Trading Day” means any day during which the Principal Market shall be open for
business.
(b) Notwithstanding any other
provision contained herein to the contrary, from the period beginning on the
date hereof and ending on the second anniversary hereof, if the shares of Common
Stock underlying this Warrant are not registered for resale in an effective
Registration Statement, the Holder may elect a “cashless” exercise of this
Warrant for any Warrant Shares not registered in an effective Registration
Statement. Whereby, the Holder shall be entitled to receive a number
of shares of Common Stock equal to (w) the excess of the Current Market Value
(as defined below) over the total cash exercise price of the portion of the
Warrant then being exercised, divided by (x) the Market Price of the Common
Stock.
For the
purposes of this Warrant, the following terms shall have the following
meanings:
“Current
Market Value” shall mean an amount equal to the Market Price of the Common
Stock, multiplied by the number of shares of Common Stock specified in the
applicable Notice of Exercise.
“Market
Price of the Common Stock” shall mean the lower of: (i) the closing price of the
Company’s common stock on the OTC Bulletin Board for the prior business day; or
(ii) the volume weighted average sales prices of the Company’s common stock on
such market for the prior ten (10) business days, in each case as recorded by
Bloomberg, L.P.
“Closing
Price” means the 4:00 P.M. closing bid price of the Common Stock on the
Principal Market on the relevant trading day(s), as reported by Bloomberg LP (or
if that service is not then reporting the relevant information regarding the
Common Stock, a comparable reporting service of national reputation selected by
the Holder and reasonably acceptable to the Company) for the relevant
date.
(c) If the Notice of
Exercise form elects a “cash” exercise (or if the cashless exercise referred to
in the immediately preceding paragraph (b) is not available in accordance with
the terms hereof), the Exercise Price per share of Common Stock for the shares
then being exercised shall be payable, at the election of the Holder, in cash or
by certified or official bank check or by wire transfer in accordance with
instructions provided by the Company at the request of the Holder.
(d) Upon the appropriate
payment, if any, of the Exercise Price for the shares of Common Stock purchased,
together with the surrender of this Warrant Certificate (if required), the
Holder shall be entitled to receive a certificate or certificates for the shares
of Common Stock so purchased. The Company shall deliver such
certificates representing the Warrant Shares in accordance with the instructions
of the Holder as provided in the Notice of Exercise (the certificates delivered
in such manner, the “Warrant
Share Certificates”) within five (5) Trading Days (such third Trading
Day, a “Delivery Date”)
of (i) with respect to a “cashless exercise,” the Exercise Date as the case may
be, or, (ii) with respect to a “cash” exercise, the later of the Exercise Date
or the date the payment of the Exercise Price for the relevant Warrant Shares is
received by the Company.
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(e) The Company understands
that a delay in the delivery of the Warrant Share Certificates by the Delivery
Date could result in economic loss to the Holder. As compensation to
the Holder for such loss, the Company agrees to pay late payment fees (as
liquidated damages and not as a penalty) to the Holder for late delivery of
Warrant Share Certificates in the amount of $100 per Trading Day after the
Delivery Date for each $10,000 of Exercise Price of the Warrant Shares subject
to the delivery default. The Company shall pay any payments incurred
under this Section in immediately available funds upon demand. Furthermore, in
addition to any other remedies which may be available to the Holder, in the
event that the Company fails for any reason to effect delivery of the Warrant
Share Certificates by the Delivery Date, the Holder may revoke all or part of
the relevant Warrant exercise by delivery of a notice to such effect to the
Company, whereupon the Company and the Holder shall each be restored to their
respective positions immediately prior to the exercise of the relevant portion
of this Warrant, except that the liquidated damages described above shall be
payable through the date notice of revocation or rescission is given to the
Company.
(f) In
addition to any other rights available to the Holder, if the Company fails to
deliver the Warrant Share Certificates within ten (10) Trading Days after the
Delivery Date and the Holder purchases (in an open market transaction or
otherwise) shares of common stock (the “Bought Shares”) to deliver in
satisfaction of a sale by the Holder of the shares of Common Stock which the
Holder was entitled to receive from the Company on exercise of this Warrant (a
“Buy-In”), then the
Company shall pay cash to the Holder (in addition to any remedies available to
or elected by the Holder) the amount by which (A) the Holder’s total purchase
price (including brokerage commissions, if any) for the Bought Shares exceeds
(B) the Exercise Price for such Warrant Shares, together with interest thereon
at a rate of 15% per annum, accruing until such amount and any accrued interest
thereon is paid in full (which amount shall be paid as liquidated damages and
not as a penalty). In such case, the subject Warrant Share Certificates will be
treated as delivered on the date such payment is made. For example,
if the Holder purchases shares of Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to $10,000 (based on the Exercise Price)
of Warrant Shares, the Company shall be required to pay the Subscriber $1,000,
plus interest. The Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In.
(g) The
Holder shall be deemed to be the holder of the shares issuable to it in
accordance with the provisions of this Section 2.1 on the Exercise
Date.
2.2 Limitation on
Exercise. Notwithstanding the provisions of this Warrant, in no event
(except as specifically provided in the Debenture as an exception to this
provision), (i) during the forty-five (45) day period prior to the Expiration
Date, or (ii) while there is outstanding a tender offer for any or all of the
shares of the Company's Common Stock) shall the Holder be entitled to exercise
this Warrant, or the Company have the obligation or option to issue shares upon
such request or in lieu of cash payments hereunder, to the extent that, after
such payment of common stock or issuance the sum of (1) the number of shares of
Common Stock beneficially owned by the Holder and its affiliates, and (2) the
number of shares of Common Stock issuable upon the exercise of the Warrant with
respect to which the determination of the proviso is being made, would result in
beneficial ownership by the Holder and its affiliates of more than 9.99% (the
“Percentage
Cap”) of the outstanding shares of Common Stock (after taking into
account the shares to be issued to the Holder upon such
repayment). For purposes of the proviso to the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
12(d) of the Securities Exchange Act of 1934, as amended.
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2.3 Trustee for Warrant
Holders. In the event that a qualified bank or trust company
shall have been appointed as trustee for the Holder of the Warrants pursuant to
Subsection 6.3, such bank or trust company shall have all the powers and duties
of a warrant agent (as hereinafter described) and shall accept, in its own name
for the account of the Company or such successor person as may be entitled
thereto, all amounts otherwise payable to the Company or such successor, as the
case may be, on exercise of this Warrant pursuant to Section 2.1.
3. Reservation of
Shares. The Company hereby agrees that, at all times during
the term of this Warrant, there shall be reserved for issuance upon exercise of
this Warrant, one hundred percent (120%) of the number of shares of its Common
Stock as shall be required for issuance of the Warrant Shares for the then
unexercised portion of this Warrant. For the purposes of such
calculations, the Company should assume that the outstanding portion of this
Warrant was exercisable in full at any time, without regard to any restrictions
which might limit the Holder’s right to exercise all or any portion of this
Warrant held by the Holder.
4. Mutilation or Loss of
Warrant. 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) receipt of reasonably satisfactory
indemnification, and (in the case of mutilation) upon surrender and cancellation
of this Warrant, the Company will execute and deliver a new Warrant of like
tenor and date and any such lost, stolen, destroyed or mutilated Warrant shall
thereupon become void.
5. 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 equity, and the
rights of the Holder are limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent set forth
herein.
6. Protection Against Dilution
and Other Adjustments.
6.1 Capital
Adjustments. In case of any stock split or reverse stock
split, stock dividend, reclassification of the Common Stock, recapitalization,
merger or consolidation (where the Company is not the surviving entity), the
provisions of this Section 6 shall be applied as if such capital adjustment
event had occurred immediately prior to the date of this Warrant and the
original Exercise Price had been fairly allocated to the stock resulting from
such capital adjustment; and in other respects the provisions of this Section
shall be applied in a fair, equitable and reasonable manner so as to give
effect, as nearly as may be, to the purposes hereof. A rights
offering to stockholders shall be deemed a stock dividend to the extent of the
bargain purchase element of the rights, if any. The Company will not
effect any consolidation or merger, unless prior to the
consummation thereof, the successor or acquiring entity (if other than the
Company) and, if an entity different from the successor or acquiring entity, the
entity whose capital stock or assets the holders of the Common Stock of the
Company are entitled to receive as a result of such consolidation
or merger assumes by written instrument the obligations under this
Warrant (including under this Section 6) and the obligations to deliver to the
holder of this Warrant such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the holder may be entitled to
acquire.
6.2 Dissolution. In
the event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, prior to such
dissolution, shall at its expense deliver or cause to be delivered the stock and
other securities and property (including cash, where applicable) receivable in
accordance with Section 6.2 by the Holder upon their exercise after the
effective date of such dissolution pursuant to this Section 6.3 to a bank or
trust company (a “Trustee”), as trustee for the
Holder.
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6.3 Adjustment for Spin
Off. If, for any reason, prior to the exercise of this
Warrant in full, the Company spins off or otherwise divests itself of a part of
its business or operations or disposes all or of a part of its assets in a
transaction (the “Spin
Off”) in which the Company does not receive compensation for such
business, operations or assets, but causes securities of another entity (the
“Spin Off Securities”)
to be issued to security holders of the Company, then the Company shall cause
(i) to be reserved Spin Off Securities equal to the number thereof which would
have been issued to the Holder had all of the Holder’s unexercised Warrants
outstanding on the record date (the “Record Date”) for determining
the amount and number of Spin Off Securities to be issued to security holders of
the Company (the “Outstanding
Warrants”) been exercised as of the close of business on the Trading Day
immediately before the Record Date (the “Reserved Spin Off Shares”),
and (ii) to be issued to the Holder on the exercise of all or any of the
Outstanding Warrants, such amount of the Reserved Spin Off Shares equal to (x)
the Reserved Spin Off Shares, multiplied by (y) a fraction, of which (I) the
numerator is the amount of the Outstanding Warrants then being exercised, and
(II) the denominator is the amount of the Outstanding Warrants.
6.4 Continuation of
Terms. Upon any reorganization, consolidation, merger or transfer (and
any dissolution following any transfer) referred to in this Section 6, this
Warrant shall continue in full force and effect and the terms hereof shall be
applicable to the Other Securities (as defined below) and property receivable on
the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any Other
Securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant as
provided elsewhere in this Section 6. In the event this Warrant does not
continue in full force and effect after the consummation of the transaction
described in this Section 6, then only in such event will the Company’s
securities and property (including cash, where applicable) receivable by the
Holder of the Warrants be delivered to the Trustee as contemplated by Section
6.3. 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) which the Holder of the Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of the Warrant, in lieu of or
in addition to Common Stock, or which 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 7 or otherwise.
6.5 Issuance of Additional
Shares of Common Stock. Commencing on the Issue Date and
continuing until this Warrant is either exercised in full or expires, in the
event the Issuer shall issue any additional shares of Common Stock (otherwise
than as provided in the foregoing subsections 6.1 through 6.4 of this Section 6
or pursuant to the provision of the Drinks Debenture issued to the initial
Holder on the Issue Date), at a price per share less than the Exercise Price
then in effect or without consideration, then the Exercise Price upon each such
issuance shall be adjusted to the price equal to the consideration per share
paid for such additional shares of Common Stock.
7. Certificate as to
Adjustments. In each case of any adjustment or readjustment in
the shares of Common Stock issuable on the exercise of the Warrants, the Company
at its expense will promptly cause its Chief Financial Officer or other
appropriate designee to compute such adjustment or readjustment in accordance
with the terms of the Warrant and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock issued or sold or deemed to have been issued or sold, (b) the
number of shares of Common Stock outstanding or deemed to be outstanding, and
(c) the Exercise Price and the number of shares of Common Stock to be received
upon exercise of this Warrant, in effect immediately prior to such adjustment or
readjustment and as adjusted or readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to the Holder of the
Warrant and any Warrant Agent of the Company (appointed pursuant to Section 9
hereof).
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8. Transfer to Comply with the
Securities Act. This Warrant has not been registered under the
1933 Act and has been issued to the Holder for investment and not with a view to
the distribution of either the Warrant or the Warrant Shares. Neither this
Warrant nor any of the Warrant Shares or any other security issued or issuable
upon exercise of this Warrant may be sold, transferred, pledged or
hypothecated without (i) an effective
registration statement under the Act relating to such security or (ii) an
opinion of counsel satisfactory to the Company that registration is not required
under the Act. Each certificate for the Warrant, the Warrant Shares
and any other security issued or issuable upon exercise of this Warrant shall
contain a legend on the face thereof, in form and substance satisfactory to
counsel for the Company, setting forth the restrictions on transfer contained in
this Section. Any such transfer shall be accompanied by a transferor
assignment substantially in the form of Exhibit B, executed by the transferor
and the transferee and submitted to the Company.
9. Warrant
Agent. The Company may, by written notice to the Holder of the
Warrant, appoint an agent (a “Warrant Agent”) for the
purpose of issuing Common Stock on the exercise of this Warrant pursuant hereto,
exchanging this Warrant pursuant hereto, and replacing this Warrant pursuant
hereto, or any of the foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by such Warrant
Agent.
10. Transfer on the Company’s
Books. 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.
11. Notices. Any
notice required or permitted hereunder shall be given in manner provided in the
subsection headed “Notices” in the Subscription Agreement, the terms of which
are incorporated herein by reference.
12. Supplements and Amendments;
Whole Agreement. This Warrant may be amended or supplemented
only by an instrument in writing signed by the parties hereto. This
Warrant contains the full understanding of the parties hereto with respect to
the subject matter hereof and thereof and there are no representations,
warranties, agreements or understandings other than expressly contained herein
and therein.
6
13. Governing
Law. This Warrant shall be governed by, and construed in
accordance with, the internal laws of the State of Illinois, without reference
to the choice of law provisions thereof. The Company and, by
accepting this Warrant, the Holder, each irrevocably submits to the exclusive
jurisdiction of the courts of the State of Illinois located in Cook County and
any United States District Court for the Northern District of Illinois for the
purpose of any suit, action, proceeding or judgment relating to or arising out
of this Warrant and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served on
each party hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Warrant. The Company and, by
accepting this Warrant, the Holder, each irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to the
laying of venue in such court. The Company and, by accepting this
Warrant, the Holder, each irrevocably waives any objection to the laying of
venue of any such suit, action or proceeding brought in such courts and
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum. EACH OF THE COMPANY AND, BY ITS
ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY
IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS
BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
14. 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, to the fullest extent permitted by law, 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.
15. Counterparts. This
Warrant may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
16. Descriptive
Headings. Descriptive headings of the several Sections of this
Warrant are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
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[SIGNATURE
PAGE TO WARRANT]
IN WITNESS WHEREOF, the
Company has caused this instrument to be duly executed by an officer thereunto
duly authorized.
Dated:
June 18, 2009
|
By:
________________________________
___________________________________
(Print
Name)
___________________________________
(Title)
|
8
Exhibit
A
NOTICE OF
EXERCISE OF WARRANT
|
TO:
|
VIA TELECOPIER TO:
( ) -
|
The undersigned hereby irrevocably
elects to exercise the right, represented by the Common Stock Purchase Warrant
No. _____________, dated as of _____________________, 20___, to purchase
___________ shares of the Common Stock, $0.001 par value (“Common Stock”), of Drinks Americas Holdings, Ltd.
and tenders herewith payment in accordance with Section 2 of said Common Stock
Purchase Warrant, as follows:
_____ CASH:
$________________ = (Exercise Price x Exercise Shares)
Payment is being made by:
_____ enclosed
check
_____ wire
transfer
_____ other
_____ CASHLESS
EXERCISE [if available pursuant to Section 2.1(b)]:
Net number of Warrant Shares to be
issued to Holder: _________*
* based
on: Current Market Value -
(Exercise Price x Exercise Shares)
Market Price of Common
Stock
Where:
Market Price of Common Stock [“MP”] = $_______________
Current Market Value [MP x Exercise
Shares] = $_______________
It is the intention of the Holder to
comply with the provisions of Section 2.3 of the Warrant regarding certain
limits on the Holder's right to exercise thereunder. The Holder
believes this exercise complies with the provisions of said Section 2.3.
Nonetheless, to the extent that, pursuant to the exercise effected hereby, the
Holder would have more shares than permitted under said Section, this notice
should be amended and revised, ab initio, to refer to the exercise which would
result in the issuance of shares consistent with such provision. Any exercise
above such amount is hereby deemed void and revoked.
As contemplated by the Warrant, this
Notice of Exercise is being sent by facsimile to the telecopier number and
officer indicated above.
If this Notice of Exercise represents
the full exercise of the outstanding balance of the Warrant, the Holder either
(1) has previously surrendered the Warrant to the Company or (2) will surrender
(or cause to be surrendered) the Warrant to the Company at the address indicated
above by express courier within five (5) Trading Days after delivery or
facsimile transmission of this Notice of Exercise.
9
The certificates representing the
Warrant Shares should be transmitted by the Company to the Holder
_____ via express
courier, or
_____ by electronic
transfer
after
receipt of this Notice of Exercise (by facsimile transmission or otherwise)
to:
_____________________________________
_____________________________________
_____________________________________
Dated:
______________________
____________________________
[Name of
Xxxxxx]
By:
_________________________
10
Exhibit
B
FORM OF
TRANSFEROR ENDORSEMENT
(To be
signed only on transfer of Warrant)
For value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferees” the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of DRINKS AMERICAS HOLDINGS, LTD. to which the within Warrant relates
specified under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of DRINKS AMERICAS
HOLDINGS, LTD. with full power of substitution in the premises.
|
Transferees
|
Percentage
Transferred Number
Transferred
|
| Dated: ______________, ___________ | |
|
________________________________
[Transferor
– Name must conform to
the name of
Holder as specified on face of
Warrant]
By:
_____________________________
Name:
___________________________
|
Signed in
the presence of:
________________________
(Name)
ACCEPTED
AND AGREED:
______________________________
[TRANSFEREE]
By:
__________________________
Name:
_______________________
THE
FOREGOING TRANSFER IS CONSENTED TO:
By_____________________________
