Contract
EXHIBIT 10.4
THIS SECURITY HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY PORTION HEREOF OR INTEREST HEREIN MAY
BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE
SAME IS REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR UNLESS
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE CORPORATION SHALL HAVE RECEIVED, AT
THE EXPENSE OF THE HOLDER HEREOF, EVIDENCE OF SUCH EXEMPTION REASONABLY SATISFACTORY TO THE
CORPORATION (WHICH MAY INCLUDE, AMONG OTHER THINGS, AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION).
WARRANT TO PURCHASE SHARES OF COMMON STOCK OF
MBI FINANCIAL INC.
MBI FINANCIAL INC.
This is to Certify that, for value received, Xx. Xxxxxx Xxxxxxx
(the “Holder”), is entitled to purchase, subject to the provisions of this Warrant,
from MBI Financial, Inc., a Nevada corporation (the “Company”), at any time on or after date
hereof, and not later than 5:00 p.m. Eastern Standard Time, five years
after
June 30, 2006, 2,250,000 shares of the Common Stock, US$.0167 par value,
of the Company (the “Common Stock”) at a purchase price per share equal to US$1.00, subject to
adjustment as to the number of shares and purchase price as hereinafter set forth.
The shares of the Company’s Common Stock issuable upon the exercise of this Warrant
are called herein the “Warrant Stock.” The price per share of the Warrant Stock
as adjusted from time to time as hereinafter set forth is sometimes referred to as
the
“Exercise Price.” The Holder hereof may exercise this Warrant as to all or any portion of the
shares of the Warrant Stock which such Holder shall have the right to acquire
hereunder. This Warrant is the Warrant referred to in that certain Subscription Agreement
of even date herewith (the “Subscription Agreement”) between the Company and the
Holder.
(a) Exercise of Warrant. This Warrant may be exercised by presentation and
surrender hereof to the Company with the Exercise Notice attached hereto as Annex A.
The Warrant shall be deemed to have been exercised when (i) the Company has received this
Warrant, together with a completed Exercise Notice, and (ii) the Company has received
payment in the amount of the applicable Exercise Price, notwithstanding that
certificates representing such shares of Common Stock shall not then be actually
delivered to the Holder. If the stock transfer books of the Company shall be closed on the date
of receipt of this Warrant, the Exercise Notice and the Exercise Price as aforesaid, the Holder
shall be deemed to be the holder of such shares of Common Stock on the next succeeding day on
which the stock transfer books of the Company shall be opened. If
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this Warrant should be exercised in part only, the Company shall, upon surrender of this
Warrant for cancellation, execute and deliver a new Warrant evidencing the right of the Holder
to purchase the balance of the shares purchasable hereunder. In the event this
Warrant shall not be exercised on or before 5 (five) years after the date of
issue, this Warrant shall become void and all rights hereunder shall cease.
(1) Method of Payment. Holder may pay the applicable Exercise Price by cash, check
or cash equivalent.
(2) Expenses of Issuance. The Company shall issue the shares of Common
Stock upon exercise of this Warrant without charge to Holder for any issuance tax or other
cost incurred by the Company in connection with such exercise and the related
issuance of the shares of Common Stock. Each of the shares of Common Stock shall, upon payment
of the Exercise Price therefor, be fully paid and nonassessable and free from all liens and
charges with respect to the issuance thereof.
(3) Withholding Taxes. Holder shall satisfy any federal, state, local or foreign
withholding tax obligations arising from the exercise of the Warrant or the
subsequent disposition of the Shares.
(b) Reservation of Shares. The Company agrees that at all times there shall be
authorized and reserved for issuance upon exercise of this Warrant such number of shares
of its Common Stock as shall be required for issuance or delivery upon exercise of this
Warrant.
Warrant.
(c) Fractional Shares. This Warrant shall be exercisable in such manner as not
to require the issuance of fractional shares or scrip representing fractional shares. If, as a
result of adjustment in the Exercise Price or the number of shares of Common Stock to be
received upon exercise of this Warrant fractional shares would be issuable, no such
fractional shares shall be issued. In lieu thereof the Company shall pay the Holder
an amount in cash equal to such fraction multiplied by the current market value of one share
of Common Stock. The current value shall be an amount, not less than twice book value,
determined in such reasonable manner as may be prescribed by the Board of Directors of the
Company, such determination to be final and binding on the Holder.
(d) Exchange or Assignment of Warrant. Holder may not, directly
or indirectly, voluntarily or involuntarily, sell, assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of, voluntarily or involuntarily, directly
or indirectly
(each, a “Transfer”) this Warrant, except that Holder may transfer the Warrant to
Holder’s spouse and direct descendants of Holder, and the heirs, executors, administrators,
testamentary trustees, legatees or beneficiaries of Holder’s estate upon death (each, a
“Permitted Transferee”); provided, however, that (x) any such Permitted Transferee shall have
agreed in writing to be bound by the terms of this Agreement with respect to the Shares and
(y) any transfer to a Permitted Transferee shall not be in violation of applicable
federal or state securities laws.
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(e) Rights of the Holder; Limitation on Liability. The Holder shall
not, prior
to exercise of this Warrant, by virtue hereof, be entitled to any rights of a shareholder in
the Company, either at law or equity, and the rights of the Holder are limited to those
expressed in the Warrant. No provision hereof, in absence of an affirmative action by the
Holder to purchase the Warrant Stock, and no enumeration herein of rights or privileges
by the Holder, shall give rise to any liability of the Holder for the Exercise Price of the
Warrant Stock.
(f) Adjustment of Exercise Rights. The Exercise Price or the number of
shares of Common Stock to be received upon the exercise of this Warrant, or both shall
be subject to adjustment from time to time as follows:
(l) Dividends. In case any additional shares of Common Stock or any obligation or
stock convertible into or exchangeable for shares of Common Stock (such convertible or
exchangeable obligations or stock being hereinafter called “Convertible Securities”)
shall be issued as a dividend on any class of stock of the Company, such shares
or Convertible Securities, the Exercise Price then in effect shall be increased
proportionately and the number of shares of Warrant Stock then exercisable hereunder
shall be decreased proportionately. Anything herein to the contrary notwithstanding, the Company
shall not be required to make any adjustment in the Exercise Price in the case
of the issuance at any time or from time to time of any shares of Common Stock pursuant
to any exercise of this Warrant.
(2) Effect of “Split-ups” and “Split-down” and Certain Dividends. In
case at any time or from time to time the Company shall subdivide as a
whole, by reclassification, by the issuance of a stock dividend on the Common Stock
payable in Common Stock, or otherwise, the number of shares of Common Stock then outstanding
into a greater number of shares of Common Stock, with or without par value, the Exercise Price
then in effect shall be reduced proportionately, and the number of shares of Warrant
Stock then exercisable hereunder shall be increased proportionately. In case at any time or
from time to time the Company shall consolidate as a whole, by reclassification or
otherwise, the number of shares of Common Stock then outstanding into a lesser number of
shares of Common Stock, with or without par value, the Exercise Price then in effect shall
be increased proportionately and the number of shares of Warrant Stock then exercisable
hereunder shall be decreased proportionately.
(3) Statement of Adjusted Exercise Price. Whenever the Exercise Price is
adjusted pursuant to any of the foregoing provisions of this Section (f), the Company shall
forthwith prepare a written statement signed by the President or the Treasurer of the Company,
setting forth the adjusted Exercise Price and any adjustment in the number of shares purchasable
hereunder, determined as provided in this Section (f), and in reasonable detail the facts
requiring such adjustment. Such statement shall be filed among the permanent records of the
Company, shall be furnished to the Holder of each Warrant upon request, and shall be open
to inspection by the Holders of the Warrants during normal business hours.
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(4) Effect of Merger or Consolidation. In case the Company shall
enter into any consolidation with or merger into any other corporation wherein the Company is
not the surviving corporation, or sell or convey its property as an entirety or
substantially as an entirety and in connection with such consolidation, merger,
sale or conveyance shares of stock or other securities shall be issuable or deliverable in
exchange for the Common Stock of the Company, the Holder of any Warrant shall thereafter be
entitled to purchase pursuant to such Warrant (in lieu of the number of shares of
Common Stock which such Holder would have been entitled to purchase immediately prior
to such consolidation, merger, sale or conveyance) the shares of stock or other
securities to which such number of shares of Common Stock would have been entitled at the time
of such consolidation, merger sale or conveyance, at an aggregate Exercise Price equal to that
which would have been payable if such number of shares of Common Stock had been purchased
immediately prior thereto. In case of any such consolidation, merger, sale or conveyance,
appropriate provision (as determined by resolution of the Board of Directors of the Company with
the approval of the Holder) shall be made with respect to the rights and interests
thereafter of the Holders of Warrants, to the end that all the provisions of the
Warrants (including adjustment provisions) shall thereafter be applicable, as
nearly as reasonably practicable, in relation to such stock or other securities.
(5) Reorganization and Reclassification. In case of any capital
reorganization or any reclassification of the capital stock of the Company (except as
provided in Subsection (2) of this Section (f)); the Holder of any Warrant shall thereafter
be entitled to purchase pursuant to such Warrant (in lieu of the number of shares
of Common Stock which such Holder would have been entitled to purchase immediately
prior to such reorganization or reclassification) the shares of stock of any class or classes
or other securities or property to which the holder of such number of shares of Common
Stock would have been entitled at the time of such reorganization or reclassification, at
an aggregate Exercise Price equal to that which would have been payable if such number
of shares of Common Stock had been purchased immediately prior to such reorganization
or reclassification, appropriate provision (as determined by resolution of the Board
of Directors of the Company with the approval of the Holder) shall be made with respect to the
rights and interest thereafter of the Warrants (including adjustment provisions) shall
thereafter be applicable, as nearly as reasonably practicable, in relation to such stock or
other securities or property.
(6) Distributions. In case the Company shall make any distribution
of its assets to holders of its Common Stock as a liquidation or partial
liquidation dividend or by way of return of capital, or other than as a dividend payable out of
earnings or any surplus legally available for dividends under the laws of the State
of California, then the Holder of this Warrant who thereafter exercises the same as herein
provided after the date of record for the determination of those holders of Common Stock
entitled to such distribution of assets, shall be entitled to receive for the purchase price of
the shares of Common Stock stated in this Warrant, in addition to the Shares of Common Stock,
the amount of such assets (or at the option of the Company, a sum equal to the value thereof at
the time of such distribution to holders of Common Stock, as such value
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is determined by the Board of Directors of the Company in good faith), which
would have been payable to such Holder had he been the holder of record of such
shares of Common Stock on the record date for the determination of those entitled
to such distribution.
(7) Dissolution or Liquidation. In case the Company shall liquidate or
wind up its affairs, the Holder of this Warrant shall be entitled, upon the
exercise thereof, to receive, in lieu of the shares of Common Stock of the Company
which it would have been entitled to receive, the same kind and amount of assets
as would have been issued, distributed or paid to it upon any such dissolution, liquidation or
winding up with respect to such shares of Common Stock of the Company, had it been the holder
of record of such shares of Common Stock on the record date for the determination
of those entitled to receive any such liquidating distribution; provided, however,
that all rights under this Warrant shall terminate on a date fixed by the Company,
such date to be not earlier than the date of commencement of proceedings for dissolution,
liquidation or winding up and not later than 30 days after such
commencement date, unless the Holder shall have, prior to such termination date,
exercised this Warrant. Notice of such termination of rights under this Warrant shall be given
to the last registered Holder hereof, as the same shall appear on the books of the Company, by
mail at least 30 days prior to such termination date. In the event of such notice the Holder may
exercise this Warrant prior to the fifth anniversary hereof.
(g) Limitations on Transfer of Warrant Stock. The Warrant Stock issuable
pursuant hereto has not been registered under the Act. Accordingly, by acceptance hereof the
Holder agrees that:
(l) It will acquire the Warrant Stock issuable pursuant hereto to be held as an
investment and that it will not attempt to sell, distribute or dispose of the same except
pursuant to this agreement and:
(a) pursuant to a registration statement filed and rendered effective
under the Act; or
(b) pursuant to a specific exemption from registration under the Act.
(2) There shall appear on the certificate or certificates evidencing any
Warrant Stock issued pursuant hereto a legend as follows:
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THIS SECURITY HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY PORTION HEREOF OR INTEREST HEREIN MAY
BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE
SAME IS REGISTERED UNDER SAID ACT AND
ANY APPLICABLE STATE SECURITIES LAW, OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE AND THE CORPORATION SHALL HAVE RECEIVED, AT THE EXPENSE OF THE HOLDER HEREOF, EVIDENCE
OF SUCH EXEMPTION REASONABLY SATISFACTORY TO THE CORPORATION
(WHICH MAY INCLUDE, AMONG OTHER THINGS, AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION).
(h) Company shall cover all shares which may be issued to the Holder under the terms of this
Warrant in the registration statement to be filed by the Company.
(i) Notices. All notices, payments, requests and demands and other
communications required or permitted under this Warrant shall be deemed to have been duly given,
delivered and made if in writing and if served either by personal delivery to the party for
whom it is intended or by being deposited, postage prepaid, certified or registered
mail return receipt requested to the address shown below or such other address
as may be designated in writing hereafter by such party:
If to the Company:
With a copy to:
I. Xxxxx Xxxxxxxx, Esq.
Xxxxxx & Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Xxxxxx & Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
If to the Holder:
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With a copy to:
(i) Governing Law. This Warrant shall be construed and enforced
in
accordance with and governed by the laws of the State of New York.
(j) Controversy. In the event of any controversy, claim or dispute between the
parties hereto, arising out of or relating to this Warrant, the prevailing party
shall be entitled to recover from the non-prevailing party reasonable expenses, attorneys’
fees, and costs.
(k) Further Assurances. The parties agree to execute, acknowledge and deliver any
and all such other documents and to take any and all such of the action as may, in the
reasonable opinion of either of the parties hereto be necessary or convenient to efficiently
carry out any or all of the purposes of this Warrant.
(l) Severability. Each and all provisions of this Warrant deemed to be
prohibited by law or otherwise held invalid shall be ineffective only to the extent of such
prohibition or invalidity and shall not invalidate or otherwise render ineffective any or all
of the remaining provisions of this Warrant.
(m) Parties in Interest. Assignment. The Company may assign any and all of
its rights under this Agreement to its successors, and this Agreement shall inure to the benefit
of, and be binding on, the successors of the Company. Subject to the restrictions
on transfer herein set forth, this Agreement shall be binding upon the Holder and
his heirs, executors, administrators, successors and assigns.
(n) Entire Agreement. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and supercedes in its entirety all prior
undertakings and agreements of the Company and the Holder with respect to the subject matter
hereof, and may not be modified adversely to the Holder interest except by means
of a writing signed by the Company and the Holder.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Company has caused this instrument to be signed
as of the June 30, 2006.
| MBI FINANCIAL, INC. | ||||
By:
|
/s/ Xxxxxxx XxXxxxxx | |||
Its:
|
CEO, MBI Financial, Inc. | |||
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