WARRANT AGENCY AGREEMENT
THIS WARRANT AGENCY AGREEMENT (the "Agreement") is dated as of the 12th.
day of May, 2004, between Panoshan Marketing Corp., an Alberta corporation,
(hereinafter called the "Company") and Interwest Transfer Co., Inc.,
(hereinafter called "Warrant Agent").
W I T N E S S E T H
WHEREAS, the Company proposes to register 5,400,000 Warrants (the "Warrants"). Each Warrant shall be
redeemable within one year of the date of issuance to purchase one share of
common stock at a price of $.05 per share. The Warrants are subject to certain
limitations and restrictions as set forth in this agreement;
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, exchange and exercise of the Warrants;
NOW THEREFORE, in consideration of the premises and mutual agreements
contained herein, it is agreed as follows:
SECTION 1. Appointment of Warrant Agent.
The Company hereby appoints the Warrant Agent to act as agent for the
Company in connection and accordance with this Agreement, and the Warrant Agent
hereby accepts the appointment.
SECTION 2. Form of Warrant.
The text of the Warrants and the form of election to purchase shares to be
printed on the reverse thereof shall be substantially as set forth respectively
in Exhibit A hereto. The number of shares issuable upon exercise of the
Warrants is subject to adjustment on the occurrence of certain events, as
described herein. The Warrants shall be executed on behalf of the Company by a
manual or facsimile signature of the present or future president, chief
executive officer or vice president of the Company, under its corporate seal
affixed or in facsimile, and attested to by the secretary or an assistant
secretary.
Warrants shall be dated as of the date they are issued (the "Effective
Date") or as of the date of any exchange by the warrant holder.
SECTION 3. Countersignature and Registration.
The Warrant Agent shall maintain books for the transfer and registration
of Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall
issue and register the Warrants in the names of the respective holders thereof.
The Warrants shall be countersigned manually or by facsimile by the Warrant
Agent (or by any successor to the Warrant Agent then serving under this
Agreement), and shall not be valid for any purpose unless so countersigned.
Warrants may be so countersigned, however, by the Warrant Agent, notwithstanding
that the person whose manual or facsimile signature appears thereon as the
proper officers of the Company have ceased to be such officers at the time of
such countersignature and delivery.
SECTION 4. Transfers and Exchanges.
The Warrant Agent shall not permit the transfer of any Warrant unless
authorized in writing by the Company. Warrants which have been canceled shall
be delivered upon request by the Warrant Agent to the Company. Warrants may be
exchanged at the option of the holder thereof, when surrendered at the office of
the Warrant Agent, for another Warrant or Warrants of different denominations,
of like tenor, and representing in the aggregate the right to purchase a like
number of shares of Common Stock.
SECTION 5. Exercise of Warrants.
Subject to the provisions of this Agreement, each registered holder of
Warrants shall have the right to purchase from the Company, and the Company
shall issue and sell to such registered holder, the number of fully paid and
nonassessable shares of Common Stock of the Company specified in the Warrants,
upon surrender to the Company at the office of the Warrant Agent of such
Warrants, with the form of election to purchase the Warrants filled out and
signed, and upon payment to the Company of the Warrant Price, as specified
herein. Any Warrant may be exercised in whole or in part. In the event of
exercise in part, the Warrant Agent shall issue and deliver to the Warrant
Holder another Warrant of like tenor representing the unexercised number of
shares. Payment for the shares upon exercise of Warrants shall be in cash or by
certified check to the order of the Company. The Warrants may be exercised for
a period of one year from the date of issuance. No adjustment shall be made
for any dividends on any Common Stock issuable upon exercise of any Warrant.
Subject to Section 5, hereof, upon surrender of Warrants and payment of the
Warrant Price, the Company shall issue and cause to be delivered with all
reasonable dispatch to, or upon the written order of the registered holder of
Warrants exercised, and in such name or names as the holder shall designate, a
certificate or certificates representing the shares so purchased, together with
cash, as provided in Section 11, hereof, in respect of any fraction of a share
of Common Stock otherwise issuable upon surrender. Such certificate or
certificates shall be deemed to have been issued, and any person so designated
to be named therein shall be deemed to have become a holder of record of such
shares as of the date of surrender of the Warrants, and the payment of the
Warrant Price; provided, however, that if, at the date of surrender of such
Warrants and the payment of such Warrant Price, the transfer books for the
Common Stock or other class of stock purchasable upon the exercise of such
Warrants shall be closed, the certificates for the shares in respect of which
such Warrants are then exercised shall be issuable as of the date of which such
books shall be opened, whether before, on or after 5:00 P.M., Utah time, on the
respective dates of expiration of the Warrants, and until such date, the Company
shall have no obligation or duty to deliver any certificate for such shares;
provided, further, however, that the transfer books, unless otherwise required
by law or applicable rule of any national securities exchange, or bylaw of the
Company, shall not be closed at any one time for a period in excess of 20 days.
The Company, whenever requested by the Warrant Agent, will supply the Warrant
Agent with Warrants duly executed on behalf of the Company for such purpose.
The Company shall pay all taxes and other governmental charges (other than
income tax) that may be imposed in respect of the issue or delivery of the
shares issued upon the exercise of any Warrants. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of the any certificate for shares in any name
other than that of the Warrant Holder surrendered in connection with the
purchase of such shares, and in such case neither the Company nor the Warrant
Agent shall be required to issue or deliver any stock certificate until such tax
or other charge has been paid or it has been established to the Company's
satisfaction that no tax or charge is due.
SECTION 6. Redemption.
The Company shall have the right to redeem the Warrants at any time prior
to their conversion upon not fewer than sixty (60) days written notice to the
Warrant holder. The Company may call either the Warrants in whole or in part,
or may call varying parts of each class at any one time. If a call is made in
part with respect to any class, the Warrants called shall be determined by lot.
The redemption price for the Warrants shall be $.0001 for each Warrant. The
Warrants may only be redeemed by the Company at any time after the Common Stock
of the Company publicly trades at a bid price above $.06 for a period of ten
consecutive trading days. The Company shall request the Warrant Agent to provide
written notice to the registered holders of the Warrants selected for
redemption, giving the dates as of which such Warrants shall be deemed. The
Warrants called for redemption shall not be exercisable after the redemption
date. Payment of the Warrant price shall be made by check payable to the
registered holder, thereof, on the books of the Warrant Agent. All notices of
redemption shall be effected in accordance with the provisions on notice
described in Section 12 hereof.
SECTION 7. Replacement of Warrant.
Upon receipt of evidence reasonably satisfactory to the Company of the
ownership of and the loss, theft, destruction or mutilation of a Warrant and (in
the case of loss, theft or destruction) upon delivery of an indemnity agreement
in an amount reasonably satisfactory to the Company, or (in the case of
mutilation) upon surrender and cancellation of the mutilated Warrant, the
Company will execute and the Transfer Agent will countersign and deliver, in
lieu thereof, a new Warrant of like tenor.
SECTION 8. Reservation of Common Stock.
The Company has reserved and shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock, solely for the
purpose of issuance upon the exercise of this Warrant, such number of shares of
Common Stock as shall be issuable upon the exercise hereof. The Company
covenants and agrees that, upon exercise of this Warrant and payment of the
purchase price therefor, all shares of Common Stock issuable upon such exercise
shall be duly and validly issued, fully paid and nonassessable. The Company
will keep a copy of this Agreement on file with the Transfer Agent for the
Common Stock and with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Warrant Agent is hereby irrevocably authorized
to requisition from time to time such Transfer Agent for stock certificates
required to honor outstanding Warrants. The Company will supply such Transfer
Agent with duly executed stock certificates for such purpose and will itself
provide or otherwise make available any cash which may be required to be paid if
the Company elects not to issue fractional shares under Section 11 hereof. Any
Warrant certificates surrendered in the exercise of the rights thereby evidenced
shall be canceled by the Warrant Agent and shall thereafter be delivered to the
Company, and such canceled Warrants shall constitute sufficient evidence of the
number of shares of Common Stock which have been issued upon the exercise of
such Warrants. Promptly after the date of expiration of the Warrants, the
Warrant Agent shall certify to the Company the total aggregate amount of
Warrants then outstanding.
SECTION 9. Warrant Price
The Warrant price at which Common Stock shall be purchasable shall be $.05
per share at any time during the period commencing from the date of issuance
until one year thereafter.
SECTION 10. Protection Against Dilution.
a. Adjustment for Subdivisions, Combinations of Dividends.
In case the Company shall at any time, or from time to time, after the
Effective Date subdivide or combine the outstanding shares of Common Stock or
declare a dividend payable in Common Stock, the exercise price of the Warrants
in effect immediately prior to the subdivision, combination or record date for
such dividend payable in Common Stock shall forthwith be proportionately
increased, in the case of combination, or decreased, in the case of subdivision
or dividend payable in Common Stock, and each share of Common Stock purchasable
upon exercise of each Warrant shall be change to the number determined by
dividing the then current exercise price by the exercise price as adjusted after
the subdivision, combination or dividend payable in Common Stock.
b. Adjustment for Certain Dividends and Distributions.
In the event the Company at any time, or from time to time, after the
Effective Date makes or fixes a record date for the determination of holders of
Common Stock entitled to receive a dividend or other distribution payable in
securities of the Company other than shares of Common Stock, then and in each
such event provisions shall be made so that each Warrant Holder (the "Holder")
shall receive upon exercise of the Warrant, in addition to the number of shares
of Common Stock receivable thereupon, the amount of securities of the Company
which the Holder would have received had its Warrant been exercised into Common
Stock on the date of such event and had it thereafter, during the period from
the date of such event to and including the date of exercise, retained such
securities receivable by it as aforesaid during such period, subject to all
other adjustments called for during such period under this Section 10 with
respect to the rights of the Holder of the Warrant.
c. Adjustment for Reclassification, Exchange and Substitution.
If the Common Stock issuable upon the exercise of the Warrants is changed
into the same or a different number of shares of any class or classes of stock,
whether by recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or a reorganization,
merger, consolidation or sale of assets, provided for elsewhere in this Section
10), then and in any such event the Holder shall have the right thereafter, upon
exercise of the Warrant, to receive the kind and amount of stock and other
securities and property receivable upon such recapitalization, reclassification
or other change, in an amount equal to the amount that the Holder would have
been entitled to have the Holder exercised the Warrant immediately prior to such
recapitalization, reclassification or the change, but only to the extent the
Warrant is actually exercised, all subject to further adjustment as provided
herein.
d. Reorganization, Mergers, Consolidations of Sales of Assets.
If at any time, or from time to time, there is a capital reorganization of
the Common Stock (other than a recapitalization, subdivision, combination,
reclassification or exchange of the Common Stock provided for elsewhere in this
Section 10) or merger or consolidation of the Company with or into another
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corporation, or the sale of all or substantially all of the Company's properties
and assets to any other person then, as a part of such reorganization, merger,
consolidation or sale, provision shall be made so that the Holder of each
Warrant shall thereafter be entitled to receive, upon exercise of each Warrant
(and only to the extent such Warrant is exercised), the number of shares of
stock or other securities or property of the Company, or of the successor
corporation resulting from such merger or consolidation or sale, to which a
Holder of Common Stock, or other securities, deliverable upon the exercise of
the Warrant would otherwise have been entitled on such capital reorganization,
merger, consolidation, or sale.
SECTION 11. Fractional Interest.
The Company shall not be required to issue fractions of Common Stock on
the exercise of Warrants. If any fraction of a common share would, except for
the provisions of this Section, be issuable on the exercise of any Warrant (or
specified portions thereof), the Company shall purchase such fraction for an
amount in cash equal to the current market value of such fraction based upon the
current market price of the common share determined in the manner set forth
below. For purposes of this Section, the current market price on each day shall
be the last reported sales price, regular way, in either case on any national
securities exchange on which the Common Stock are listed or admitted to trading,
or, if the Common Stock are not listed or admitted to trading on any such
exchange, the average of the bid and asked prices on such day as reported on
NASDAQ, or if such shares are not then listed on NASDAQ, as furnished by
National Quotation Bureau Incorporated or any similar organization selected from
time to time by the Company for the purpose. All calculations under this
Section shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
SECTION 12. Notices of Warrant Holders.
Nothing contained in this Warrant shall be construed as conferring upon
any Warrant Holder hereto the right to vote or to consent or to receive notice
as a shareholder in respect of any meetings of shareholders for the election of
directors or any other matter or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrant and prior to its exercise, any of the following events shall occur:
a. The Company shall fix a record date of the Holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution; or
b. The Company shall offer to the Holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option
(except for options to be granted to Company's employees pursuant to a stock
option plan approved by the Company's Board of Directors), right or warrant, to
subscribe therefor; or
c. The Company shall call any of the Warrants for redemption; or
d. A merger, consolidation, dissolution, liquidation or winding up of
the Company or a sale of all or substantially all of its property, assets and
business as an entirety shall be proposed;
The Company shall give written notice of such event to the Warrant Holder
at least thirty (30) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled
to received such dividend, distribution, convertible or exchangeable securities
or subscription rights, entitled to vote on such proposed dissolution,
liquidation, winding up or sale, or in the case where Warrants have been called
for redemption, the Company shall give written notice of such event to the
Warrant Holder at least sixty (60) days prior to the date fixed as a record
date. Such notice shall specify such record date, the date of closing the
transfer books, or the redemption date, as the case may be. Failure to give
such notice or any defect therein shall not affect the validity of any action
taken in connection with the declaration or payment of any such dividends of the
issuance of any convertible or exchangeable securities, or subscription rights,
options or warrants or any proposed dissolution, liquidation, winding up, sale
or redemption.
All notices, requests, consents and other communications hereunder shall
be in writing and shall be deemed to have been duly made when delivered, or
mailed by U.S. mail, postage prepaid:
a. If to any Warrant Holder, to the address of such Holder as shown on
the books of the Company; or
b. If to the Company, to the address of the Company on the records of
the Warrant Agent.
The Company shall cause copies of all financial statements and reports,
proxy statements and other documents it shall send to its shareholders to be
sent by U.S. mail, postage prepaid, on the date of mailing to such shareholder,
to each registered Warrant Holder at his address appearing on the Warrant
register as of the record date for the determination of the shareholders
entitled to such documents.
SECTION 13. Disposition of Proceeds on Exercise of Warrants.
a. The Warrant Agent shall account promptly to the Company with respect
to Warrants exercised and concurrently deposit in a special account in a bank
designated by the Company for the benefit of the Company all moneys received by
the Warrant Agent for the purchase of common Stock through the exercise of such
Warrants.
b. The Warrant Agent shall keep copies of this Agreement available for
inspection by holders of Warrants during normal business hours.
SECTION 14. Merger or Consolidation or Change of Name of Warrant Agent.
Any corporation or company which may succeed to the business of the
Warrant Agent by any merger or consolidation or otherwise to which the Warrant
Agent shall be a party, or any corporation or Company succeeding to the
corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Warrant Agent under
the provisions of Section 1 of this Agreement. In case at the time any of the
Warrants shall not have been countersigned, any successor to the Warrant Agent
may countersign such Warrants either in the name of the predecessor Warrant
Agent or in the name of the successor Warrant Agent; and in all such cases such
Warrant shall have the full force provided in the Warrant and in this Agreement.
SECTION 15. Duties of Warrant Agent.
The Warrant Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the Warrant Holders, by their acceptance thereof, shall be bound:
a. The statements of fact and recitals contained herein and in the
Warrants shall be taken as statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
described in the Warrant Agent or action taken or to be taken by it. The
Warrant Agent assumes no responsibility with respect to the distribution of the
Warrants except as herein expressly provided.
b. The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrants to be complied with by the Company.
c. The Warrant Agent may consult at any time with counsel satisfactory
to it (who may be counsel for the Company) and the Warrant Agent shall incur no
liability or responsibility to the Company or to any holder of any Warrant in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with the opinion or the advice of such counsel. The Company
shall be responsible for any reasonable attorney's fees incurred by such action.
d. The Warrant Agent shall incur no liability or responsibility to the
Company or to any holder of any Warrant for any action taken in reliance on any
notice, resolution, waiver, consent, order, certificate, or other paper,
document or instrument believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties.
e. The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the execution of
this Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution of this Agreement and to indemnify the Warrant
Agent and save it harmless against any and all liabilities, including
judgments, costs and reasonable counsel fees, for anything done or omitted by
the Warrant Agent in the execution of this Agreement except as a result of the
Warrant Agent's gross negligence, willful misconduct, or bad faith.
f. The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more registered holders of Warrants shall
furnish the Warrant Agent with reasonable security and indemnity for any costs
and expenses which may be incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as the Warrant Agent may consider
proper, whether with or without any such security or indemnity. All rights of
action under this Agreement or under any of the Warrants may be enforced by the
Warrant Agent without the possession of any of the Warrants or the production
thereof any trial or other proceeding relating thereto, and any such action,
suit or proceeding instituted by the Warrant Agent shall be brought in its name
as Warrant Agent, and any recovery of judgment shall be for the ratable benefit
of the registered holders of the Warrants, as their respective rights or
interests may appear.
g. The Warrant Agent and any shareholder, director, officer, partner or
employee of the Warrant Agent may buy, sell or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend
money to or otherwise act as fully and freely as though it were not Warrant
Agent under this Agreement. Nothing herein shall preclude the Warrant Agent
from acting in any other capacity for the Company or for any other legal entity.
h. The Warrant Agent shall act hereunder solely as agent and not in a
ministerial capacity, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything which it
may do or refrain from doing in connection with this Agreement except for its
own gross negligence, willful misconduct or bad faith.
i. The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees, and the Warrant Agent shall not be
answerable or accountable for any act, default, neglect or misconduct, provided
reasonable care had been exercised in the selection and continued employment
thereof.
j. Any request, direction, election, order or demand of the Company
shall be sufficiently evidenced by an instrument signed in the name of the
Company by its President or a Vice President or its Secretary or an Assistant
Secretary or its Treasurer or an Assistant Treasurer (unless other evidence in
respect thereof be herein specifically prescribed); and any resolution of the
Board of Directors may be evidenced to the Warrant Agent by a copy thereof
certified by the Secretary or an Assistant Secretary of the Company.
k. In the event any dispute arises between the Company, Warrant Holder
and/or the Warrant Agent, the Warrant Agent shall have the right, in its sole
discretion, to file an action in interpleader in the state courts of Utah at the
expense of the Company.
SECTION 16. Change of Warrant Agent.
The Warrant Agent may resign and be discharged from its duties under this
Agreement by giving to the Company notice in writing, and to the holders of the
Warrants notice by mailing such notice to holders at the addresses appearing on
the Warrant register, of such resignation, specifying a date when such
resignation shall take effect. The Warrant Agent may be removed by like notice
to the Warrant Agent from the Company and by like mailing of notice to the
holders of the Warrants. If the Warrant Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall appoint a
successor to the Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after the removal or after it has been
notified in writing of the resignation or incapacity by the resigning or
incapacitated Warrant Agent, the registered holder of any Warrant may apply to
any court of competent jurisdiction for the appointment of a successor to the
Warrant Agent. After appointment, the successor warrant agent shall be vested
with the same powers, right, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed; but the former
Warrant Agent shall deliver and transfer to the successor warrant agent all
canceled Warrants, records and property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Failure to file or mail any notice provided for in this Section,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of the successor
warrant agent, as the case may be.
SECTION 17. Indemnity of Transfer Agent.
Forthwith upon the appointment of any Transfer Agent for the Common Stock
or of any subsequent transfer agent for Common Stock or other shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants, the Company will file with the Warrant Agent a
statement setting forth the name and address of such Transfer Agent.
SECTION 18. Supplements and Amendments.
The Company and the Warrant Agent may, from time to time, supplement or
amend this Agreement without the approval of any holders of Warrants in order to
cure any ambiguity or to correct or supplement any provisions contained herein
which may be defective or inconsistent with any other provisions in regard to
matters or questions arising thereunder which the Company and the Warrant Agent
may deem necessary or desirable and which shall not be inconsistent with the
provisions of the Warrants and which shall not adversely affect the interests of
the holders of Warrants.
SECTION 19. Successors.
All the covenants, agreements, representations and warranties contained in
this Agreement shall bind the parties hereto and their respective heirs,
executors, administrators, distributes, successors and assigns.
SECTION 20. Change; Waiver.
Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
SECTION 21. Headings.
The section headings in this Agreement are inserted for the purpose of
convenience only and shall have no substantive effect.
SECTION 22. Law Governing.
This Agreement shall for all purposes be construed and enforced in
accordance with, and governed by, the internal laws of the State of Utah,
without giving effect to principles of conflict of laws.
The parties hereto have caused this Agreement to be signed as of the date
first above written.
PANOSHAN MARKETING CORP. INTERWEST TRANSFER CO., INC.
By: /s/ Xxxxxxxx Xxxxxx
By: /s/ Xxxxxx X. Xxxxxx
________________________________
Name: Xxxxxxxx Xxxxxx
Name: Xxxxxx X. Xxxxxx
________________________________
Title: President
Title: Vice President
________________________________
