Contract
THIS
WARRANT AND THE SECURITIES PURCHASABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT
OR SUCH APPLICABLE STATE SECURITIES LAWS, UNLESS THE PROPOSED TRANSFER MAY
BE
EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR REGISTRATION OR
QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.
WARRANT
|
No.
_____
|
April
30, 2008
|
THIS
CERTIFIES that, for value received, _____, or its assigns (the “Holder”),
shall
be entitled to subscribe for and purchase from INFOSMART GROUP, INC., a
California Company (the “Company”),
_____
(_____) shares (subject to adjustment as provided herein and in the Debenture,
the “Warrant
Shares”)
of the
Company’s Common Stock at the exercise price determined below (the "Exercise
Price"
or the
"Exercise
Price Per Share")
for
each Warrant Share, during the Exercise Period (as defined in Section 1),
pursuant to the terms and subject to the conditions of this Warrant. Certain
terms used in this Warrant are defined in Section 4. The Company represents
and
warrants that the Warrant Shares, if issued on the date of this Warrant, would
represent __% of the Company’s issued and outstanding Common Stock. The Exercise
Price or the Exercise Price Per Share shall be the lesser of (i) $0.262 or
(ii)
the New Transaction Price, in all events subject to further adjustment as
provided herein. "New Transaction Price" means the lowest per share price at
which the Company sells Common Stock, or is obligated to issue Common Stock
pursuant to any Convertible Securities, in any transaction (other than an
Excluded Transaction, defined below) in which the Company engages after the
date
hereof, and before the exercise hereof, and if no such price is designated
or
otherwise ascertainable under the terms of a written agreement, such price
shall
be deemed $.01. In the event that the Company does not elect to Restructure
(as
defined in the Securities Purchase Agreement), the Exercise Price shall
automatically adjust to $0.01 per share.
As
used
herein, the term “Common Stock” shall mean (i) the class of stock designated
above or (ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value or from no par value to par value.
In
the event the Company shall, after the date hereof, issue securities of greater
or superior voting rights than the shares of Common Stock outstanding as of
the
date hereof, the Holder, at its option, may receive upon exercise of any Warrant
either Common Stock or a like number of such securities with greater or superior
voting rights.
Notwithstanding
the provisions of this Warrant, in no event (except (i) as specifically provided
in the Warrant as an exception to this provision, (ii) during the forty-five
(45) day period prior to the expiration of the Exercise Period, or (iii) 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 to issue shares upon such exercise of all
or
any portion of this Warrant to the extent that, after such exercise the sum
of:
(1) the number of shares of Common Stock beneficially owned by the Holder and
its Affiliates (other than shares of Common Stock which may be deemed
beneficially owned through ownership of the unexercised portion of the Warrants
or other right to purchase Common Stock or through the ownership of the
unconverted portion of convertible securities), and (2) the number of shares
of
Common Stock issuable upon the exercise of the Warrants 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 4.99% of the outstanding
shares of Common Stock (after taking into account the shares to be issued to
the
Holder upon such exercise). 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 except as
otherwise provided in clause (1) of such sentence.
Section
1. Exercise
Period.
This
Warrant may be exercised in whole or in part by the Holder at any time after
the
date hereof until 5:00 p.m. Eastern Time on the last day of the month in which
occurs the fifth anniversary of the effective date of a registration statement
filed under the Securities Act of 1933, as amended, covering the Common Stock
issuable upon exercise of this Warrant, provided that if a registration
statement does not become effective for any reason, the term of exercise shall
expire on the sixth anniversary of the issue date (such period being herein
referred to as the “Exercise
Period”).
Section
2. Exercise
of Warrant.
(a) The
rights represented by this Warrant may be exercised, in whole or in any part
(but not as to a fractional share of Common Stock), by (i) the surrender of
this
Warrant (properly endorsed) at the principal office of the Company at
5th
Floor,
QPL Industrial Building, 000-000 Xxxxxx Xxxx, Xxxxx Xxx, Xxxx Xxxx (or at such
other agency or office of the Company in the United States of America as it
may
designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company), (ii) delivery to the Company, with
a
copy to its legal counsel, of a notice of election to exercise in the form
of
Exhibit
A,
and
(iii) either (a) payment to the Company by cash, wire transfer funds or check
in
an amount equal to the then applicable Exercise Price Per Share multiplied
by
the number of Warrant Shares then being purchased, or, (b) alternatively,
on
or
after the 181st
day of
issuance of this Warrant, the Holder may exercise its right to receive Common
Stock on a net basis such that, without any payment of funds by the
Holder,
the
Holder receives that number of shares of Common Stock equal to: (A) the Warrant
Shares; multiplied by: (B) the ratio of (i) the Market Price less the Exercise
Price Per Share; divided by (ii) the Market Price.
(b) Each
date
on which this Warrant is surrendered and on which payment of the Exercise Price
is made in accordance with Section 2(a) above is referred to as an “Exercise
Date.” Simultaneously with each exercise, the Company shall issue and cause its
Transfer Agent to issue and deliver a certificate or certificates for the
Warrant Shares being purchased pursuant to such exercise, registered in the
name
of the Holder or the Holder’s designee, to such Holder or designee, as the case
may be. If such exercise shall not have been for the full number of the Warrant
Shares, then the Company shall issue and deliver to the Holder a new Warrant,
registered in the name of the Holder, of like tenor to this Warrant, for the
balance of the Warrant Shares.
(c) The
person in whose name any certificate for shares of Common Stock is issued or
issuable upon any exercise shall for all purposes be deemed to have become
the
holder of record of such shares as of the Exercise Date. The Company shall
pay
all documentary, stamp or other transactional taxes attributable to the issuance
or delivery of shares of Common Stock upon exercise of all or any part of this
Warrant; provided, however, that the Company shall not be required to pay taxes
which may be payable in respect of any transfer involved in the issuance or
delivery of any certificate for such shares in a name other than that of the
Holder to the extent such taxes would exceed the taxes otherwise payable if
such
certificate had been issued to the Holder.
No
fractional shares of Common Stock will be issued in connection with any exercise
hereunder, but in lieu of such fractional shares, the Company shall make a
cash
payment therefor equal in amount to the product of the applicable fraction
multiplied by the current Market Price per share of Common Stock.
(d) This
Warrant and the Warrant Shares are covered by and are entitled to the benefits
of that certain Registration Rights Agreement dated the date hereof between
the
Company and the Holder
-2-
(e) This
class of Warrants and, specifically, this Warrant shall become a publicly
trading warrant trading on an exchange similar to the Company’s common stock. If
the Warrants are not quoted on the OTC Bulletin Board or a similar exchange
acceptable to the Holder within 180 days from the date of the issuance of
this
Warrant, the Company shall pay to the Holder the equivalent of 1.5% of the
total
amount of the purchase price paid by the Holder per month not to exceed a
total
amount of 18%.
Section
3.Antidilution
Provisions.
The
number of shares of Common Stock purchasable on exercise of this Warrant and
payment of the Exercise Price shall be subject to adjustment from time to time
as provided in this Section 3.
(b) Treatment
of Options and Convertible Securities.
If the
Company, at any time or from time to time after the date of this Warrant, shall
issue, sell, grant or assume, or shall fix a record date for the determination
of holders of any class of securities entitled to receive, any Options (defined
below) or Convertible Securities (defined below), then, and in each such case,
the maximum number of shares of Common Stock (as set forth in the instrument
relating thereto, without regard to any provisions contained therein for a
subsequent adjustment of such number and whether or not the right to convert
or
exchange or exercise is immediate or conditioned upon the passage of time,
the
occurrence or non-occurrence of some event or otherwise) issuable upon the
exercise of such Options or, in the case of Convertible Securities and options
therefor, the conversion or exchange of such Convertible Securities, shall
be
deemed to be shares of Common Stock issued and consequently give rise to
adjustment as, and to the extent, provided in paragraph (a) as of the time
of
such issue, sale, grant or assumption or, in case such a record date shall
have
been fixed, as of the close of business on such record date; provided
that, in
each such case no further adjustment to the Exercise Price shall be made upon
the subsequent issue or sale of shares of Common Stock upon the exercise of
such
Options or the conversion or exchange of such Convertible Securities.
(c) Change
in Capital Stock.
If the
Company (i) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock, (ii) subdivides its outstanding shares of Common
Stock into a greater number of shares, (iii) combines its outstanding shares
of
Common Stock into a smaller number of shares, or (iv) issues by reclassification
of its Common Stock any shares of its capital stock, then in each case the
Exercise Price in effect immediately prior to such action shall be
proportionately adjusted so that the Holder of any Warrant exercised thereafter
may receive the aggregate number and kind of shares of capital stock of the
Company which he would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action.
The
adjustment as provided in this paragraph (c) shall become effective immediately
after the record date in the case of a dividend or distribution and immediately
after the effective date in the case of a subdivision, combination or
reclassification. If after an adjustment, a Holder of a Warrant, upon its
exercise, may receive shares of two or more classes of capital stock of the
Company, the Company shall determine the allocation of the adjusted Exercise
Price between the classes of capital stock. After such allocation, the exercise
privilege and the exercise price of each such class of capital stock shall
thereafter be subject to adjustment on terms comparable to those applicable
to
Common Stock in this Section 3.
-3-
(d) Dilution
in Case of Other Securities.
In case
any Other Securities (as defined in Section 4) shall be issued or sold or shall
become subject to issue or sale upon the conversion or exchange of any
securities of the Company or to subscription, purchase or other acquisition
pursuant to any Options issued or granted by the Company such as to dilute,
on a
basis to which the standards established in the other provisions of this Section
3 are applicable, then, and in each such case, the computations, adjustments
and
readjustments provided for in this Section 3 shall be made as nearly as possible
in the manner so provided and applied to determine the amount of Other
Securities from time to time receivable upon the exercise of the Warrants,
so as
to protect the Holder against the effect of such dilution.
(e) Other
Changes in Common Stock.
If the
Company shall be a party to any Significant Corporate Event (as defined in
section 4) in which the previously outstanding shares of Common Stock shall
be
changed into or exchanged for different securities of the Company or common
stock or other securities of another Company or interests in a noncorporate
entity or other property (including cash) or any combination of any of the
foregoing, as a condition of the consummation of such Significant Corporate
Event, lawful and adequate provisions shall be made so that (1) the Holder,
upon
the exercise hereof at any time on or after the date such a Significant
Corporate Event is consummated (the “Consummation
Date”)
(but
during the Exercise Period), shall be entitled to receive, and this Warrant
shall thereafter represent the right to receive, in lieu of the Warrant Shares
issuable upon such exercise prior to the Consummation Date, the amount of
securities or other property to which the Holder would actually have been
entitled as a holder of Common Stock upon the consummation of such a Significant
Corporate Event if the Holder had exercised this Warrant immediately prior
thereto (subject to adjustments from and after the Consummation Date as nearly
equivalent as possible to the adjustments provided for in this Section 3),
or
(2) in the case of a Significant Corporate Event in which the Company is not
the
survivor, if so elected by the Holder, the Holder shall be entitled to receive
on the Consummation Date in cancellation of this Warrant, the amount of
securities or other property to which the Holder would actually have been
entitled as a holder of Common Stock upon consummation of such Significant
Corporate Event if the Holder had exercised this Warrant to acquire a number
of
shares of Common Stock on a net basis without any payment of funds on the basis
described in Section 2(a), immediately prior thereto.
Notwithstanding
anything contained herein to the contrary, unless the Holder makes an election
under clause (2) above, the Company shall not effect any Significant Corporate
Event unless prior to the consummation thereof each acquiring Company or other
person which may be required to deliver any securities or other property upon
the exercise of this Warrant shall assume, by written instrument delivered
to
the Holder, the obligation to deliver to the Holder such securities or other
property to which, in accordance with the foregoing provisions, the Holder
may
be entitled and an opinion of counsel reasonably satisfactory, which opinion
shall state that this Warrant, including, without limitation, the exercise
and
anti-dilution provisions applicable to this Warrant, if any, shall thereafter
continue in full force and effect and shall be enforceable against such
acquiring Company or other person in accordance with the terms
hereof.
(f) Other
Dividends or Other Distributions.
If the
Company declares a dividend or other distribution upon its capital stock, other
than a dividend payable in shares of Common Stock, then the Company shall pay
to
the Holder, on the dividend payment date, the cash, stock or Other Securities
and other property which the Holder would have received if the Holder had
exercised this Warrant in full and had been the record holder of the Warrant
Shares represented by this Warrant on the date on which a record is taken for
the purpose of such dividend, or, if a record is not taken, the date as of
which
the holders of such capital stock of record entitled to such dividend are to
be
determined, provided that,
in the
case of a dividend consisting of stock or securities (other than shares of
Common Stock, Options or Convertible Securities) or other property (except
cash), the Holder may, at its option, elect that instead, lawful and adequate
provisions shall be made (including without limitation any necessary reduction
in the Exercise Price) whereby the Holder shall thereafter have the right to
receive, upon exercise of this Warrant on the terms and conditions specified
in
this Warrant and in addition to the Warrant Shares issuable upon such exercise,
such shares of stock, securities or property.
-4-
(g) Adjustment
of Number of Shares.
Upon
each adjustment in the Exercise Price, the number of Warrant Shares purchasable
hereunder shall be adjusted to the nearest whole share to the product obtained
by multiplying the number of Warrant Shares purchasable immediately prior to
such adjustment in the Exercise Price by a fraction, the numerator of which
shall be the Exercise Price immediately prior to such adjustment and the
denominator of which shall be the Exercise Price immediately
thereafter.
(h) Notice
of Adjustment.
Whenever the Exercise Price or the number of Warrant Shares for which this
Warrant is exercisable shall be adjusted pursuant to this Section 3, the Company
shall deliver a certificate signed by its chief financial officer to the Holder
setting forth, in reasonable detail, the event requiring the adjustment, the
method by which adjustment was calculated specifying the number of Warrant
Shares for which this Warrant is now exercisable, and any change in the Exercise
Price.
(i) Notice
of Certain Corporate Action.
In case
the Company shall propose to (1) pay any dividend or make any other distribution
to the holders of its capital stock, (2) offer to the holders of its capital
stock rights to subscribe for or to purchase shares of Common Stock or shares
of
any other class of securities, rights or options, (3) effect any
reclassification of its capital stock, (4) effect any reorganization, or (5)
effect any Significant Corporate Event, then, in each such case, the Company
shall give to the Holder a notice of such proposed action, which shall specify
the date on which a record is to be taken for the purposes of such dividend,
distribution rights or vote, or the date on which such reclassification,
reorganization, or Significant Corporate Event is to take place and the date
of
participation therein by the holders of capital stock, if any such date is
to be
fixed and shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action on the capital stock,
if any, and the number and kind of any other shares of capital stock which
will
comprise the Warrant Shares, and the Exercise Price, after giving effect to
any
adjustment, if any, which will be required by this Section 3 as a result of
such
action. Such notice shall be so given in the case of any action covered by
clause (1) or (2) above at least 20 days prior to the record date for
determining holders of the capital stock for purposes of such action, and in
the
case of any other such action, at least 30 days prior to the date of the taking
of such proposed action or the date of participation therein by the holders
of
capital stock, whichever shall be the earlier.
(j) Certain
Events.
If any
event occurs as to which, in the good faith judgment of the Board of Directors
of the Company, the other provisions of this Section 3 are not strictly
applicable or if strictly applicable would not fairly protect the exercise
rights of the Holder in accordance with the essential intent and principles
of
this Section 3, then the Board of Directors of the Company in the good faith,
reasonable exercise of its business judgment may decrease the Exercise Price
and/or increase the number of Warrant Shares issuable upon exercise hereof,
in
accordance with such essential intent and principles so as to protect such
exercise rights as aforesaid.
(k) Purchase
of Common Stock by Company.
If the
Company at any time while this Warrant is outstanding, directly or indirectly,
through an affiliate or otherwise, purchases, redeems or acquires any shares
of
Common Stock at a price per share in excess of the then current Market Price
per
share for Common Stock then the Exercise Price shall be adjusted to that price
determined by multiplying such Exercise Price by a fraction, (i) the numerator
of which is the number of outstanding shares of Common Stock prior to such
purchase, redemption or other acquisition minus the number of shares of Common
Stock which the aggregate consideration for the total number of such shares
of
Common Stock so purchased, redeemed or acquired would have purchased at the
current Market Price and (ii) the denominator of which is the number of
outstanding shares of Common Stock after giving effect to such purchase,
redemption or acquisition.
-5-
(l) Computation
of Consideration.
For the
purposes of this Section 3:
(1) the
consideration for any shares of Common Stock or any Options or Convertible
Securities, irrespective of the accounting treatment of such
consideration,
(i) insofar
as it consists of cash, shall be computed as the amount of cash received by
the
Company, and insofar as it consists of securities, the Market Price therefor
or
insofar as it consists of other property, the Fair Market Value thereof, as
of
the date immediately preceding such issue, sale, grant, or the record date
therefor, in each case without deducting any expenses paid or incurred by the
Company, any commissions or compensation paid or concessions or discounts
allowed to underwriters, dealers or others performing similar services, and
any
accrued interest or dividends in connection with such issue or sale,
and
(ii) in
case
shares of Common Stock or Options or Convertible Securities are or are to be
issued, sold or granted together with other stock or securities or other assets
of the Company for a consideration which covers both, shall be the proportion
of
such consideration so received, computed as provided in subdivision (i) above,
allocable to such shares of Common Stock or Options or Convertible Securities,
as the case may be, all as determined by the Board of Directors of the Company
in the good faith reasonable exercise of its business judgment; and
(2) shares
of
Common Stock deemed to have been issued upon the issue, sale, or grant of
Options or Convertible Securities pursuant to Section 3(b), shall be deemed
to
have been issued for a consideration per share of Common Stock determined by
dividing
(i) the
total
amount, if any, received and receivable (or, pursuant to this Section 3(l),
deemed to have been received) by the Company as consideration for the issue,
sale, or grant of the Options or Convertible Securities in question, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration) payable to the Company upon
the exercise in full of such Options or the conversion or exchange of such
Convertible Securities or, in the case of Options for Convertible Securities,
the exercise of such Options for Convertible Securities and the conversion
or
exchange of such Convertible Securities, in each case comprising such
consideration as provided in the foregoing subdivision (1), by
(ii) the
maximum number of shares of Common Stock (as set forth in the instruments
relating thereto, without regard to any provision contained therein for a
subsequent adjustment of such number) issuable upon the exercise of such Options
or the conversion or exchange of such Convertible Securities.
Section
4. Certain
Defined Terms.
“Affiliate”
means
any Company, partnership, limited liability company, joint venture, trust,
unincorporated organization or other person which, directly or indirectly,
controls or is controlled by or is under common control with the Holder.
“Convertible
Securities”
means
any evidences of indebtedness, shares of stock, or securities directly or
indirectly convertible into or exchangeable by their terms for shares of Common
Stock.
-6-
"Excluded
Transaction"
means
in addition to issuances excluded from the definition of Dilutive Issuance,
any
issuances of shares of Common Stock pursuant to options or other convertible
securities issued to employees, officers or directors, as approved by the
Company’s Board of Directors, so long as such shares are subject to a lock-up
agreement generally applicable to all officers and directors of the
Company.
“Fair
Market Value”
means,
on any relevant date, as to any property, the fair market value as reasonably
determined by the Board of Directors of the Company and reasonably acceptable
to
the Holder, but if the Holder has not so accepted such determination of fair
market value within 10 business days of the date notice of such determination
by
the Board of Directors is delivered to the Holder, then as determined by an
independent investment banking firm selected by the Holder and reasonably
acceptable to the Company. If the Fair Market Value as determined by such
investment banking firm exceeds the Fair Market Value as determined by the
Board
of Directors by 10% or more, the cost of the engagement of the investment
banking firm will be borne by the Company.
“Market
Price”
means,
as to any security on any relevant date, the Fair Market Value per share of
such
security, or if there shall be a public market for such security, the average
of
the daily closing prices for the ten (10) consecutive trading days before such
date excluding any trades which are not bona fide arm’s length transactions. The
closing price for each day shall be (a) if such security is listed or admitted
for trading on any national securities exchange, the last sale price of such
security, regular way, or the mean of the closing bid and asked prices thereof
if no such sale occurred, in each case as officially reported on the principal
securities exchange on which such security are listed, or (b) if quoted on
NASDAQ or any similar system of automated dissemination of quotations of
securities prices then in common use the mean between the closing high bid
and
low asked quotations of such security in the over-the-counter market as shown
by
NASDAQ or such similar system of automated dissemination of quotations of
securities prices, as reported by any member firm of the New York Stock Exchange
selected by the Company, (c) if not quoted as described in clause (b), the
mean
between the high bid and low asked quotations for the Warrant Shares as reported
by NASDAQ or any similar successor organization, as reported by any member
firm
of the New York Stock Exchange selected by the Company. If such security is
quoted on a national securities or central market system in lieu of a market
or
quotation system described above, the closing price shall be determined in
the
manner set forth in clause (a) of the preceding sentence if bid and asked
quotations are reported but actual transactions are not, and in the manner
set
forth in clause (b) of the preceding sentence if actual transactions are
reported.
“Options”
means
rights, options or warrants to subscribe for, purchase or otherwise acquire
either Common Stock or Convertible Securities.
“Other
Securities”
means
any capital stock (other than Common Stock) and any other securities of the
Company or any other person (corporate or otherwise) which the Holder at any
time shall be entitled to receive, or shall have received, upon the exercise
or
partial exercise of this Warrant, in lieu of or in addition to shares of Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of shares of Common Stock or Other Securities
pursuant to Section 3 or otherwise.
“Significant
Corporate Event”
means
any sale, transfer or lease of all or substantially all of the Company’s assets,
a merger or consolidation involving the Company, the repurchase by the Company
of more than 10% of the Company’s capital stock, liquidation or dissolution of
the Company.
-7-
Section
5. Representations,
Warranties and Covenants as to Stock.
The
Company represents and warrants to the Holder that (i) all shares of Common
Stock which may be issued upon the exercise of this Warrant will, upon issuance,
be duly authorized, validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, and free from all taxes,
liens and charges with respect to the issuance thereof (ii) the Company is
duly
organized, validly existing and in good standing under the laws of the State
of
California, has all requisite power to carry on its business as presently being
conducted, and is qualified to do business and is in good standing in every
jurisdiction in which the failure so to qualify or to be in good standing could
have a material adverse effect on the Company, (iii) the Company has all
requisite power and authority to execute and deliver this Warrant and to perform
its obligations hereunder, (iv) this Warrant has been duly authorized by all
necessary corporate action on the part of the Company, has been duly executed
and delivered by the Company and constitutes the valid and legally binding
obligation of the Company enforceable in accordance with its terms, (v) the
execution, delivery and performance of this Warrant by the Company have not
violated and shall not violate any law, rule or regulation to which the Company
is subject, the Articles of Incorporation or by-laws of the Company or any
material agreement to which the Company is a party or by which it is bound,
(vi)
the authorized capital stock of the Company consists of 300,000,000 shares
of
common stock and (vii) except as set forth on Schedule
5
hereto,
there are no outstanding warrants, options, agreements, convertible securities
or other commitments pursuant to which the Company is or may become obligated
to
issue or sell any shares of its capital stock or other securities, and no
preemptive rights or similar rights to purchase or otherwise acquire shares
of
the capital stock or other securities of the Company exist. The Company
covenants to the Holder that it will (a) from time to time take all such action
as may be required to assure that the stated or par value per share of the
Common Stock is at all times no greater than the then effective Exercise Price
and (b) not amend or modify any provision of its Articles of Incorporation
or
by-laws in any manner that would adversely affect in any way the powers,
preferences or relative participating, optional or other special rights of
the
Common Stock or the rights of the Holder of any Warrants. The Company further
covenants and agrees that the Company will take all such action as may be
required to assure that the Company shall at all times have authorized and
reserved, free from preemptive rights, a sufficient number of shares of its
Common Stock to provide for the exercise of this Warrant in full. If any shares
of Common Stock reserved for the purpose of issuance upon the exercise of this
Warrant require registration with or approval of any governmental authority
under any federal or state law before such shares may be validly issued or
delivered upon exercise, then the Company shall at its expense in good faith
and
as expeditiously as possible endeavor to secure such registration or approval,
as the case may be.
Section
6. Purchase
Rights.
If at
any time the Company grants, issues or sells any Options, Convertible
Securities, Other Securities or any shares of any capital stock, or rights
to
purchase stock, warrants, securities or other property pro rata to the record
holders of Common Stock (the "Purchase
Rights"),
then
the Holder shall be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant immediately before the date on which
a
record is taken for the grant, issuance or sale of such Purchase Rights, or,
if
no such record is taken, the date as of which the person or the record holders
of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights. For the avoidance of doubt, the foregoing is intended to
include, without limitation, a preemption right in favor of the Holder with
respect to any issuance of equity securities by the Company by which the Holder
will have the right, but not the obligation, to maintain its respective
proportionate share of ownership interest in the Company through the purchase
of
additional shares in the new issuance on the terms and conditions in such
issuance. The terms of this Section 6 shall expire at the end of the Exercise
Period.
Section
7. No
Shareholder Rights.
This
Warrant shall not entitle the Holder to any voting rights or other rights as
a
shareholder of the Company.
Section
8. Restrictions
on Transfer.
Subject
to applicable securities laws this Warrant, the Warrant Shares and all rights
hereunder are transferable to any Affiliate of the Holder, in whole or in part,
and from time to time, upon (i) surrender of this Warrant properly endorsed,
and
(ii) delivery of a notice of transfer in the form of Exhibit
B
by the
Holder or its duly authorized representative at the office of the Company,
the
Company will at its expense issue to or upon the order of the Holder a new
Warrant or Warrants of like tenor in the name of such Holder or as such Holder
may direct. Each transferee and holder of this Warrant, by accepting or holding
the same, consents that this Warrant, when endorsed, in blank, shall be deemed
negotiable, and, when so endorsed, the holder hereof shall be treated by the
Company and all other persons dealing with this Warrant as the absolute owner
hereof for any purposes and as the person entitled to exercise the rights
represented by this Warrant, or to the transfer hereof on the books of the
Company, any notice to the contrary notwithstanding; provided, however, that
until each such transfer is recorded on such books, the Company may treat the
registered holder hereof as the owner hereof for all purposes. Until such time
as it is no longer required under the Act, the certificates representing the
Warrant Shares shall bear the following legend:
-8-
“This
Warrant and the shares of Stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the “Securities Act”),
and may not be sold or transferred in the absence of an effective registration
statement under the Securities Act or an opinion of counsel in form satisfactory
to the Company that such registration is not required under the Securities
Act.”
Section
9. Lost,
Stolen, Mutilated or Destroyed Warrant.
If this
Warrant is lost, stolen, mutilated or destroyed, the Company shall at its
expense (upon delivery of an indemnity agreement reasonably satisfactory in
the
Company and, in the case of a mutilated Warrant, surrender thereof), issue
a new
Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated
or destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.
Section
10. Notices.
All
notices or other communications which are required or permitted hereunder shall
be in writing and sufficient if delivered personally or sent by recognized
overnight courier, prepaid, addressed as follows:
If
to the
Company, to;
5th
Floor,
QPL Industrial Building
000-000
Xxxxxx Xxxx
Xxxxx
Xxx, Xxxx Xxxx
With
a
copy to:
Xxxxxxxxxx
& Xxxxx, LLP
Attn:
Xxxxx Xxxxx
Xxxxxxx
Plaza
00000
Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Tel:
(000) 000-0000
Fax:
(000) 000-0000
If
to the
Holder, at:
_____
With
a
copy to:
Xxxxxx
& Jaclin, LLP
Attn:
Xxxx Xxxxx
000
Xxxxx
0 Xxxxx, Xxxxx 000
Xxxxxxxxx,
Xxx Xxxxxx 00000
Tel:
(000) 000-0000
Fax:
(000) 000-0000
or
to
such other address as the party to whom notice is to be given may have furnished
to the other party in writing in accordance herewith.
-9-
Section
11. Remedies.
The
Company stipulates that the remedies at law of the Holder of this Warrant in
the
event of a 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.
Section
12. Successors
and Assigns.
This
Warrant and the rights evidenced hereby shall inure to the benefit of and be
binding upon the successors and assigns of the Company, the Holder hereof and
(to the extent provided herein) the holders of Warrant Shares issued pursuant
hereto, and shall be enforceable by any such Holder or holders.
Section
13. Modification
and Severability.
If, in
any action before any court or agency legally empowered to enforce any provision
contained herein, any provision hereof is found to be unenforceable, then such
provision shall be deemed modified to the extent necessary to make it
enforceable by such court or agency. If any such provision is not enforceable
as
set forth in the preceding sentence, the unenforceability of such provision
shall not affect the other provisions of this Warrant, but this Warrant shall
be
construed as if such unenforceable provision had never been contained
herein.
Section
14. Governing
Law.
The
construction, validity, interpretation and enforcement of this Warrant shall
be
governed by the laws of the State of New York (without giving effect to any
laws
or rules relating to conflicts of laws that would cause the application of
the
laws of any jurisdiction other than the State of New York).
Section
15. Headings.
The
headings of the various sections contained in this Warrant have been inserted
for convenience of reference only and should not be deemed to be a part of
this
Warrant.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
duly
authorized officer as of the date first written above.
|
By:
|
||
|
Name:
Xxxxxx Xxxx
|
||
|
Title:
Chief Executive Officer
|
||
-10-
EXHIBIT
A
FORM
OF
NOTICE OF ELECTION TO EXERCISE
[To
be
executed only upon exercise
of
the
Warrant to which this form is attached]
The
undersigned, the holder of the Warrant to which this form is attached, hereby
irrevocably elects to exercise the right represented by such Warrant to purchase
shares
of Common Stock of INFOSMART GROUP, INC., and herewith either [circle (a) or
(b)]: (a) tenders the aggregate payment of $_________ in the form of cash,
wire
transfer funds, check or (b) elects to exercise its right to acquire the Common
Stock without any payment of funds as provided in Section 2(a) of the Warrant.
The undersigned requests that a certificate for such shares be issued in the
name of ,
whose
address is __________________, and that such certificate be delivered to
______________________, whose address is
________________________________________.
If
such
number of shares is less than all of the shares purchasable under the Warrant,
the undersigned requests that a new Warrant, of like tenor as the Warrant to
which this form is attached, representing the right to purchase the remaining
balance of the shares purchasable under such current Warrant be registered
in
the name of __________________, whose address is
_____________________________________, and that such new Warrant be delivered
to
__________________, whose address is
__________________________________________.
|
Signature:
|
||||
|
(Signature
must conform in all respects to the name of the holder of the Warrant
as
specified on the face of the Warrant)
|
||||
|
Date:
|
||||
-11-
EXHIBIT
B
FORM
OF
NOTICE OF TRANSFER
[To
be
executed only upon transfer
of
the
Warrant to which this form is attached]
For
value
received, the undersigned hereby sells, assigns and transfers unto
____________________________ all of the rights represented by the Warrant to
which this form is attached to purchase _________________________ shares of
Common Stock of INFOSMART GROUP, INC. (the “Company”),
to
which such Warrant relates, and appoints _________________________ as its
attorney to transfer such right on the books of the Company, with full power
of
substitution in the premises.
|
Signature:
|
|||
|
(Signature
must conform in all respects to the name of the holder of the Warrant
as
specified on the face of the Warrant)
|
|||
|
Address:
|
|||
|
Date:
|
Signed
in
the presence of:
-12-
SCHEDULE
5
Obligations
to Issue Equity Securities
The
Company currently has approximately 514,006 shares of Series B Convertible
Preferred Stock outstanding that are convertible into approximately 13,785,601
shares of its Common Stock, and warrants outstanding that are convertible into
approximately 28,510,347 shares of its Common Stock.
-13-
