Exhibit 10.4
Form of
Series A Warrant
FORM OF WARRANT
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR
AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
COMMON STOCK PURCHASE WARRANT
1. Issuance. In consideration of good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged by XXXX XXXXX GROUP, INC., a
Nevada corporation (the "Company"), _______________________, 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., San Diego time, on the
Expiration Date (as defined below), ___________________ Thousand
___________________ (________) fully paid and nonassessable shares of the
Company's Common Stock, par value $.001 per share (the "Common Stock"), at an
exercise price per share (the "Exercise Price") of $1.50. This Warrant is being
issued pursuant to the terms of that the terms of the Private Placement
Memorandum and Subscription Agreement, dated as of September 12, 2005 (the
"Agreement"), to which the Company and Holder (or Xxxxxx's predecessor in
interest) are parties. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Agreement. This Warrant was originally
issued to the Holder or the Holder's predecessor on __________________, 2005
(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 as provided in Section 8 hereof) a completed and duly
executed Notice of Exercise (substantially in the form attached to this Warrant
Certificate) as provided in the Notice of Exercise (or revised by notice given
by the Company as contemplated by the Section headed "NOTICES" in the
Agreement). The date such Notice of Exercise is faxed 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
tenders this Warrant Certificate to the Company within five (5) Trading Days
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.
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(b) 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.
(c) Upon the appropriate payment of the Exercise Price for the
shares of Common Stock purchased, together with the surrender of this Warrant
Certificate, 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
three (3) Trading Days (such third Trading Day, a "Warrant Share Delivery Date")
of the date the payment of the Exercise Price for the relevant Warrant Shares is
received by the Company.
(d) 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.
(e) The Holder may elect to exercise a portion of this Warrant
without electing to redeem the balance of this Warrant, unless if (i) the
stock's bid price closes above the "A" warrant exercise price, or $1.50, for
more than 10 consecutive trading days, and (ii) its cumulative trading volume
within that 10 day period is at least 2 times the number of cumulative warrant
shares in this series which are outstanding and unexercised during that period,
then warrant holders must exercise remaining balance of Warrant in its entirety
within 60 days from the first day immediately after the last day of the 10
consecutive trading day period (the "Mandatory Warrant Exercise").
2.2 Certain Definitions. As used herein, each of the following terms has
the meaning set forth below, unless the context otherwise requires:
(a) "Expiration Date" means the date on which the last calendar of
the month in which the fifth anniversary of the Effective Date occurs.
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, the Reservation Percentage 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 Warrants were exercisable in
full at any time, without regard to any restrictions which might limit the
Holder's right to exercise 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.
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5. Rights of the Holder. Except as set forth in this Section 5, 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. Notwithstanding the provisions of this
Warrant, the Agreement or of the other Transaction Agreements, if the Company
shall declare a dividend upon the Common Stock (whether payable out of earnings
or earned surplus or otherwise), then the Company shall pay to the Holder an
amount equal to the dividend payment which would have been paid to the Holder
had all of the Holder's unexercised Warrants outstanding on the record date for
determining the amount of dividend payments to be paid to security holders of
the Company been exercised as of the close of business on the Trading Day
immediately before such record date.
6. Protection Against Dilution and Other Adjustments.
6.1 Adjustment Mechanism. If an adjustment of the Exercise Price is
required pursuant to this Section 6 (other than pursuant to Section 6.4), the
Holder shall be entitled to purchase such number of shares of Common Stock as
will cause (i) (x) the total number of shares of Common Stock Holder is entitled
to purchase pursuant to this Warrant following such adjustment, multiplied by
(y) the adjusted Exercise Price per share, to equal the result of (ii) (x) the
dollar amount of the total number of shares of Common Stock Holder is entitled
to purchase before adjustment, multiplied by (y) the total Exercise Price before
adjustment.
6.2 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. 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.
6.3 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.
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7.1 Transfer to Comply with the Securities Act; Registration Rights.
7.1 Transfer. This Warrant has not been registered under the Securities
Act of 1933, as amended, (the "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 in the absence of an effective registration
statement under the Act relating to such security or 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.
7.2 Registration Rights. Reference is made to the Registration Rights
Agreement. The Company's obligations under the Registration Rights Agreement and
the other terms and conditions thereof with respect to the Warrant Shares,
including, but not necessarily limited to, the Company's commitment to file a
registration statement including the Warrant Shares, to have the registration of
the Warrant Shares completed and effective, and to maintain such registration,
are incorporated herein by reference.
8. Notices. Any notice required or permitted hereunder shall be given in manner
provided herein:
If to Company at: 0000 Xxxxxxx Xxxx
Xxxxx 000-000
Xxx Xxxxx XX 00000
If to Holder at: _______________________
_______________________
_______________________
_______________________
9. 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.
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10. Governing Law. This Warrant shall be deemed to be a contract made under the
laws of the State of California for contracts to be wholly performed in such
state and without giving effect to the principles thereof regarding the conflict
of laws. Each of the parties consents to the jurisdiction of the federal courts
whose districts encompass any part of the County of San Diego or the state
courts of the State of California sitting in the County of San Diego in
connection with any dispute arising under this Warrant and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Buyer in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
11. JURY TRIAL WAIVER. The Company and the Holder hereby waive a trial by jury
in any action, proceeding or counterclaim brought by either of the Parties
hereto against the other in respect of any matter arising out or in connection
with this Warrant.
12. 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.
13. 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.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the ___th day of September, 2005.
MANU FORTI GROUP, INC.
By:
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(Print Name)
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(Title)
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NOTICE OF EXERCISE OF WARRANT
TO: XXXX XXXXX, INC. VIA FAX: (000) 000-0000
0000 Xxxxxxx Xxxx
Xxxxx 000-000
Xxx Xxxxx, XX 00000
AND TO: XXXX X. XXXXXXX VIA FAX (000) 000-0000
0000 Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn: Chairman
The undersigned hereby irrevocably elects to exercise the right,
represented by the Common Stock Purchase Warrant, dated as of
________________________, 20__, to purchase __________ shares of the Common
Stock, par value $0.001 per share ("Common Stock"), of MANU FORTI GROUP, INC.
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
It is the intention of the Holder to comply with the provisions of Section
2.2 of the Warrant regarding certain limits on the Holder's right to exercise
thereunder. Based on the analysis on the attached Worksheet Schedule, the Holder
believes this exercise complies with the provisions of said Section 2.2.
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 Conversion 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.
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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:
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[Name of Holder]
By:
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