Exhibit 4.11
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
EXCEPT AS OTHERWISE SET FORTH HEREIN OR IN A LETTER AGREEMENT DATED AS
OF MARCH 29, 2002, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR, AN
OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE, CUSTOMARY FOR
OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER
SUCH ACT.
Right to
Purchase
10,000
Shares of
Common
Stock, par
value $0.001
per share
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, __________________ or its registered
assigns, is entitled to purchase from e resources inc, a Utah corporation (the
"Company"), at any time or from time to time during the period specified in
Paragraph 2 hereof, Ten Thousand (10,000)1 fully paid and nonassessable shares
of the Company's Common Stock, par value $0.001 per share (the "Common Stock"),
at an exercise price per share equal to the lesser of (i) $.0028 and (ii) the
average of lowest three (3) Trading Prices (as defined below) during the twenty
(20) Trading Days (as defined below) immediately prior to exercise (the
"Exercise Price"). The term "Warrant Shares," as used herein, refers to the
shares of Common Stock purchasable hereunder. The Warrant Shares and the
Exercise Price are subject to adjustment as provided in Paragraph 4 hereof. The
term "Warrants" means this Warrant and the other warrants issued pursuant to
that certain Letter Agreement, dated March 29, 2002, by and among the Company
and the Buyers listed on the execution page thereof (the "Letter Agreement").
"Trading Price" means, for any security as of any date, the inter-day trading
price on the Over-the-Counter Bulletin Board (the
1 The number of shares of common stock covered by the Stock Purchase Warrant for
each of AJW Partners, LLC, New Millennium Capital Partners, LLC and Pegasus
Capital Partners, LLC is 10,000. The number of shares of common stock covered by
the Secured Convertible Debenture for New Millennium Offshore, Ltd. is 20,000.
"OTCBB") as reported by Bloomberg Financial Markets or an equivalent,
reliable reporting service mutually acceptable to and hereafter designated by
Holders of a majority in interest of the Debentures ("Bloomberg") or, if the
OTCBB is not the principal trading market for such security, the inter-day
trading price of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg or, if
no inter-day trading price of such security is available in any of the foregoing
manners, the average of the inter-day trading prices of any market makers for
such security that are listed in the "pink sheets" by the National Quotation
Bureau, Inc. If the Trading Price cannot be calculated for such security on such
date in the manner provided above, the Trading Price shall be the fair market
value as mutually determined by the Corporation and the holders of a majority in
interest of the Debentures being converted for which the calculation of the
Trading Price is required in order to determine the Conversion Price of such
Debentures. "Trading Day" shall mean any day on which the Common Sock is traded
for any period on the OTCBB, or on the principal securities exchange or other
securities market on which the Common Stock is then being traded.
This Warrant is subject to the following terms, provisions, and
conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for Shares. Subject to
the provisions hereof, this Warrant may be exercised by the holder hereof, in
whole or in part, by the surrender of this Warrant, together with a completed
exercise agreement in the form attached hereto (the "Exercise Agreement"), to
the Company during normal business hours on any business day at the Company's
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof), and upon (i) payment to the
Company in cash, by certified or official bank check or by wire transfer for the
account of the Company of the Exercise Price for the Warrant Shares specified in
the Exercise Agreement or (ii) if the resale of the Warrant Shares by the holder
is not then registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), delivery to the
Company of a written notice of an election to effect a "Cashless Exercise" (as
defined in Section 11(c) below) for the Warrant Shares specified in the Exercise
Agreement. The Warrant Shares so purchased shall be deemed to be issued to the
holder hereof or such holder's designee, as the record owner of such shares, as
of the close of business on the date on which this Warrant shall have been
surrendered, the completed Exercise Agreement shall have been delivered, and
payment shall have been made for such shares as set forth above. Certificates
for the Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time, not exceeding three (3) business days, after this
Warrant shall have been so exercised. The certificates so delivered shall be in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be designated
by such holder. If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Company shall, at its expense, at the time
of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised. In addition to all other available remedies at law or
in equity, if the Company fails to deliver certificates for the Warrant Shares
within three (3) business days after this Warrant is exercised, then the Company
shall pay to the holder in cash a penalty (the "Penalty") equal to 2% of the
number of Warrant Shares that the Holder is entitled to multiplied
2
by the Market Price for each day that the Company fails to deliver
certificates for the Warrant Shares. For example, if the Holder is entitled to
100,000 Warrant Shares and the Market Price is $2.00, then the Company shall pay
to the Holder $4,000 for each day that the Company fails to deliver certificates
for the Warrant Shares. The Penalty shall be paid to the Holder by the fifth day
of the month following the month in which it has accrued.
Notwithstanding anything in this Warrant to the contrary, in
no event shall the holder of this Warrant be entitled to exercise a number of
Warrants (or portions thereof) in excess of the number of Warrants (or portions
thereof) upon exercise of which the sum of (i) 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 the ownership of the
unexercised Warrants and the unexercised or unconverted portion of any other
securities of the Company (including the Debentures (as defined in the Letter
Agreement)) subject to a limitation on conversion or exercise analogous to the
limitation contained herein) and (ii) the number of shares of Common Stock
issuable upon exercise of the Warrants (or portions thereof) with respect to
which the determination described herein is being made, would result in
beneficial ownership by the holder and its affiliates of more than 4.9% of the
outstanding shares of Common Stock. For purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13D-G
thereunder, except as otherwise provided in clause (i) of the preceding
sentence. Notwithstanding anything to the contrary contained herein, the
limitation on exercise of this Warrant set forth herein may not be amended
without (i) the written consent of the holder hereof and the Company and (ii)
the approval of a majority of shareholders of the Company.
2. Period of Exercise. This Warrant is exercisable at any time or from time to
time on or after the date on which this Warrant is issued and delivered pursuant
to the terms of the Letter Agreement and before 5:00 p.m., New York City, New
York time, on the third (3rd) anniversary of the date of issuance (the "Exercise
Period").
3. Certain Agreements of the Company. The Company hereby covenants and
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully
paid, and nonassessable and free from all taxes, liens, and charges
with respect to the issue thereof.
(b) Reservation of Shares. During the Exercise Period, the Company shall
at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Common
Stock to provide for the exercise of this Warrant.
(c) Listing. The Company shall promptly secure the listing of the shares
of Common Stock issuable upon exercise of the Warrant upon each
national securities exchange or automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official
notice of issuance upon exercise of this Warrant) and shall maintain,
so long as any other shares of Common Stock shall be so listed, such
listing of all shares of Common Stock
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from time to time issuable upon the exercise of this Warrant; and the
Company shall so list on each national securities exchange or
automated quotation system, as the case may be, and shall maintain
such listing of, any other shares of capital stock of the Company
issuable upon the exercise of this Warrant if and so long as any
shares of the same class shall be listed on such national securities
exchange or automated quotation system.
(d) Certain Actions Prohibited. The Company will not, by amendment of its
charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed by it
hereunder, but will at all times in good faith assist in the carrying
out of all the provisions of this Warrant and in the taking of all
such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of
this Warrant against dilution or other impairment, consistent with the
tenor and purpose of this Warrant. Without limiting the generality of
the foregoing, the Company (i) will not increase the par value of any
shares of Common Stock receivable upon the exercise of this Warrant
above the Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
(e) Successors and Assigns. This Warrant will be binding upon any entity
succeeding to the Company by merger, consolidation, or acquisition of
all or substantially all the Company's assets.
4. Antidilution Provisions. During the Exercise Period, the
Exercise Price and the number of Warrant Shares shall be subject to
adjustment from time to time as provided in this Paragraph 4.
In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be rounded up
to the nearest cent.
(a) Adjustment of Exercise Price and Number of Shares upon Issuance of
Common Stock. Except as otherwise provided in Paragraphs 4(c) and 4(e)
hereof, if and whenever on or after the date of issuance of this
Warrant, the Company issues or sells, or in accordance with Paragraph
4(b) hereof is deemed to have issued or sold, any shares of Common
Stock for no consideration or for a consideration per share (before
deduction of reasonable expenses or commissions or underwriting
discounts or allowances in connection therewith) less than the Market
Price (as hereinafter defined) on the date of issuance (a "Dilutive
Issuance"), then immediately upon the Dilutive Issuance, the Exercise
Price will be reduced to a price determined by multiplying the
Exercise Price in effect immediately prior to the Dilutive Issuance by
a fraction, (i) the numerator of which is an amount equal to the sum
of (x) the number of shares of Common Stock actually outstanding
immediately prior to the Dilutive Issuance, plus (y) the quotient of
the aggregate consideration, calculated as set forth in Paragraph 4(b)
hereof, received by the Company upon such Dilutive Issuance divided by
the Market Price in effect immediately prior to the Dilutive Issuance,
and (ii) the denominator of which is the total number of shares of
Common Stock Deemed Outstanding (as defined below) immediately after
the Dilutive Issuance.
4
(b) Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Paragraph 4(a) hereof,
the following will be applicable:
(i) Issuance of Rights or Options. If the Company in any manner
issues or grants any warrants, rights or options, whether or not
immediately exercisable, to subscribe for or to purchase Common
Stock or other securities convertible into or exchangeable for
Common Stock ("Convertible Securities") (such warrants, rights
and options to purchase Common Stock or Convertible Securities
are hereinafter referred to as "Options") and the price per share
for which Common Stock is issuable upon the exercise of such
Options is less than the Market Price on the date of issuance or
grant of such Options, then the maximum total number of shares of
Common Stock issuable upon the exercise of all such Options will,
as of the date of the issuance or grant of such Options, be
deemed to be outstanding and to have been issued and sold by the
Company for such price per share. For purposes of the preceding
sentence, the "price per share for which Common Stock is issuable
upon the exercise of such Options" is determined by dividing (i)
the total amount, if any, received or receivable by the Company
as consideration for the issuance or granting of all such
Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise
of all such Options, plus, in the case of Convertible Securities
issuable upon the exercise of such Options, the minimum aggregate
amount of additional consideration payable upon the conversion or
exchange thereof at the time such Convertible Securities first
become convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the exercise of
all such Options (assuming full conversion of Convertible
Securities, if applicable). No further adjustment to the Exercise
Price will be made upon the actual issuance of such Common Stock
upon the exercise of such Options or upon the conversion or
exchange of Convertible Securities issuable upon exercise of such
Options.
(ii) Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities, whether or not
immediately convertible (other than where the same are issuable
upon the exercise of Options) and the price per share for which
Common Stock is issuable upon such conversion or exchange is less
than the Market Price on the date of issuance, then the maximum
total number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities will,
as of the date of the issuance of such Convertible Securities, be
deemed to be outstanding and to have been issued and sold by the
Company for such price per share. For the purposes of the
preceding sentence, the "price per share for which Common Stock
is issuable upon such conversion or exchange" is determined by
dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or sale of all such
Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof at the time such Convertible
Securities first become convertible or exchangeable, by (ii) the
maximum total number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities. No
further adjustment to the Exercise Price will be made upon the
actual issuance of such Common Stock upon conversion or exchange
of such Convertible Securities.
5
(iii)Change in Option Price or Conversion Rate. If there is a change
at any time in (i) the amount of additional consideration payable
to the Company upon the exercise of any Options; (ii) the amount
of additional consideration, if any, payable to the Company upon
the conversion or exchange of any Convertible Securities; or
(iii) the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock (other than
under or by reason of provisions designed to protect against
dilution), the Exercise Price in effect at the time of such
change will be readjusted to the Exercise Price which would have
been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed additional
consideration or changed conversion rate, as the case may be, at
the time initially granted, issued or sold.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. If, in any case, the total number of shares of Common
Stock issuable upon exercise of any Option or upon conversion or
exchange of any Convertible Securities is not, in fact, issued
and the rights to exercise such Option or to convert or exchange
such Convertible Securities shall have expired or terminated, the
Exercise Price then in effect will be readjusted to the Exercise
Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such
expiration or termination (other than in respect of the actual
number of shares of Common Stock issued upon exercise or
conversion thereof), never been issued.
(v) Calculation of Consideration Received. If any Common Stock,
Options or Convertible Securities are issued, granted or sold for
cash, the consideration received therefor for purposes of this
Warrant will be the amount received by the Company therefor,
before deduction of reasonable commissions, underwriting
discounts or allowances or other reasonable expenses paid or
incurred by the Company in connection with such issuance, grant
or sale. In case any Common Stock, Options or Convertible
Securities are issued or sold for a consideration part or all of
which shall be other than cash, the amount of the consideration
other than cash received by the Company will be the fair value of
such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by
the Company will be the Market Price thereof as of the date of
receipt. In case any Common Stock, Options or Convertible
Securities are issued in connection with any acquisition, merger
or consolidation in which the Company is the surviving
corporation, the amount of consideration therefor will be deemed
to be the fair value of such portion of the net assets and
business of the non-surviving corporation as is attributable to
such Common Stock, Options or Convertible Securities, as the case
may be. The fair value of any consideration other than cash or
securities will be determined in good faith by the Board of
Directors of the Company.
(vi) Exceptions to Adjustment of Exercise Price. No adjustment to the
Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities granted, issued and
outstanding on the date of issuance of this Warrant; (ii) upon
the grant or exercise of any stock or options which may hereafter
be granted or exercised under any employee benefit plan, stock
option plan or restricted stock plan of the Company now existing
or to be implemented in the future, so long as the issuance of
such stock or options is approved by a majority
6
of the independent members of the Board of Directors of the
Company or a majority of the members of a committee of
independent directors established for such purpose; or (iii) upon
the exercise of the Warrants.
(c) Subdivision or Combination of Common Stock. If the Company at any time
subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the shares of Common
Stock acquirable hereunder into a greater number of shares, then,
after the date of record for effecting such subdivision, the Exercise
Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company at any time combines (by
reverse stock split, recapitalization, reorganization,
reclassification or otherwise) the shares of Common Stock acquirable
hereunder into a smaller number of shares, then, after the date of
record for effecting such combination, the Exercise Price in effect
immediately prior to such combination will be proportionately
increased.
(d) Adjustment in Number of Shares. Upon each adjustment of the Exercise
Price pursuant to the provisions of this Paragraph 4, the number of
shares of Common Stock issuable upon exercise of this Warrant shall be
adjusted by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common
Stock issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product so obtained by the adjusted
Exercise Price.
(e) Consolidation, Merger or Sale. In case of any consolidation of the
Company with, or merger of the Company into any other corporation, or
in case of any sale or conveyance of all or substantially all of the
assets of the Company other than in connection with a plan of complete
liquidation of the Company, then as a condition of such consolidation,
merger or sale or conveyance, adequate provision will be made whereby
the holder of this Warrant will have the right to acquire and receive
upon exercise of this Warrant in lieu of the shares of Common Stock
immediately theretofore acquirable upon the exercise of this Warrant,
such shares of stock, securities or assets as may be issued or payable
with respect to or in exchange for the number of shares of Common
Stock immediately theretofore acquirable and receivable upon exercise
of this Warrant had such consolidation, merger or sale or conveyance
not taken place. In any such case, the Company will make appropriate
provision to insure that the provisions of this Paragraph 4 hereof
will thereafter be applicable as nearly as may be in relation to any
shares of stock or securities thereafter deliverable upon the exercise
of this Warrant. The Company will not effect any consolidation, merger
or sale or conveyance unless prior to the consummation thereof, the
successor corporation (if other than the Company) assumes by written
instrument the obligations under this Paragraph 4 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.
(f) Distribution of Assets. In case the Company shall declare or make any
distribution of its assets (including cash) to holders of Common Stock
as a partial liquidating dividend, by way of return of capital or
otherwise, then, after the date of record for determining stockholders
entitled to such distribution, but prior to the date of distribution,
the holder of this Warrant shall be entitled upon exercise of this
Warrant for the purchase of any or all of the shares of Common Stock
subject hereto, to receive the amount of such assets which would have
7
been payable to the holder had such holder been the holder of such
shares of Common Stock on the record date for the determination of
stockholders entitled to such distribution.
(g) Notice of Adjustment. Upon the occurrence of any event which requires
any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the holder of this Warrant, which
notice shall state the Exercise Price resulting from such adjustment
and the increase or decrease in the number of Warrant Shares
purchasable at such price upon exercise, setting forth in reasonable
detail the method of calculation and the facts upon which such
calculation is based. Such calculation shall be certified by the Chief
Financial Officer of the Company.
(h) Minimum Adjustment of Exercise Price. No adjustment of the Exercise
Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be
made, but any such lesser adjustment shall be carried forward and
shall be made at the time and together with the next subsequent
adjustment which, together with any adjustments so carried forward,
shall amount to not less than 1% of such Exercise Price.
(i) No Fractional Shares. No fractional shares of Common Stock are to be
issued upon the exercise of this Warrant, but the Company shall pay a
cash adjustment in respect of any fractional share which would
otherwise be issuable in an amount equal to the same fraction of the
Market Price of a share of Common Stock on the date of such exercise.
(j) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon the Common Stock
payable in shares of stock of any class or make any other
distribution (including dividends or distributions payable in
cash out of retained earnings) to the holders of the Common
Stock;
(ii) the Company shall offer for subscription pro rata to the holders
of the Common Stock any additional shares of stock of any class
or other rights;
(iii)there shall be any capital reorganization of the Company, or
reclassification of the Common Stock, or consolidation or merger
of the Company with or into, or sale of all or substantially all
its assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall be taken for determining the holders of Common Stock entitled to receive
any such dividend, distribution, or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice of
the date (or, if not then known, a reasonable
8
approximation thereof by the Company) when the same shall take place. Such
notice shall also specify the date on which the holders of Common Stock shall be
entitled to receive such dividend, distribution, or subscription rights or to
exchange their Common Stock for stock or other securities or property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, or winding-up, as the case may be. Such notice
shall be given at least 30 days prior to the record date or the date on which
the Company's books are closed in respect thereto. Failure to give any such
notice or any defect therein shall not affect the validity of the proceedings
referred to in clauses (i), (ii), (iii) and (iv) above.
(k) Certain Events. If any event occurs of the type contemplated by the
adjustment provisions of this Paragraph 4 but not expressly provided
for by such provisions, the Company will give notice of such event as
provided in Paragraph 4(g) hereof, and the Company's Board of
Directors will make an appropriate adjustment in the Exercise Price
and the number of shares of Common Stock acquirable upon exercise of
this Warrant so that the rights of the holder shall be neither
enhanced nor diminished by such event.
(l) Certain Definitions.
(i) "Common Stock Deemed Outstanding" shall mean the number of shares
of Common Stock actually outstanding (not including shares of
Common Stock held in the treasury of the Company), plus (x)
pursuant to Paragraph 4(b)(i) hereof, the maximum total number of
shares of Common Stock issuable upon the exercise of Options, as
of the date of such issuance or grant of such Options, if any,
and (y) pursuant to Paragraph 4(b)(ii) hereof, the maximum total
number of shares of Common Stock issuable upon conversion or
exchange of Convertible Securities, as of the date of issuance of
such Convertible Securities, if any.
(ii) "Market Price," as of any date, (i) means the average of the last
reported sale prices for the shares of Common Stock on the OTCBB
for the five (5) Trading Days immediately preceding such date as
reported by Bloomberg, or (ii) if the OTCBB is not the principal
trading market for the shares of Common Stock, the average of the
last reported sale prices on the principal trading market for the
Common Stock during the same period as reported by Bloomberg, or
(iii) if market value cannot be calculated as of such date on any
of the foregoing bases, the Market Price shall be the fair market
value as reasonably determined in good faith by (a) the Board of
Directors of the Corporation or, at the option of a
majority-in-interest of the holders of the outstanding Warrants
by (b) an independent investment bank of nationally recognized
standing in the valuation of businesses similar to the business
of the corporation. The manner of determining the Market Price of
the Common Stock set forth in the foregoing definition shall
apply with respect to any other security in respect of which a
determination as to market value must be made hereunder.
(iii)"Common Stock," for purposes of this Paragraph 4, includes the
Common Stock, par value $0.001 per share, and any additional
class of stock of the Company having no preference as to
dividends or distributions on liquidation, provided that the
shares purchasable pursuant to this Warrant shall include only
shares of Common Stock, par value $0.001 per share, in respect of
which this Warrant is exercisable, or shares resulting from any
subdivision or combination of such Common Stock, or in the case
of any reorganization,
9
reclassification, consolidation, merger, or sale of the character
referred to in Paragraph 4(e) hereof, the stock or other
securities or property provided for in such Paragraph.
5. Issue Tax. The issuance of certificates for Warrant Shares upon the exercise
of this Warrant shall be made without charge to the holder of this Warrant or
such shares for any issuance tax or other costs in respect thereof, provided
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any certificate
in a name other than the holder of this Warrant.
6. No Rights or Liabilities as a Shareholder. This Warrant shall not entitle the
holder hereof to any voting rights or other rights as a shareholder of the
Company. No provision of this Warrant, in the absence of affirmative action by
the holder hereof to purchase Warrant Shares, and no mere enumeration herein of
the rights or privileges of the holder hereof, shall give rise to any liability
of such holder for the Exercise Price or as a shareholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
7. Transfer, Exchange, and Replacement of Warrant.
(a) Restriction on Transfer. This Warrant and the rights granted to the
holder hereof are transferable, in whole or in part, upon surrender of
this Warrant, together with a properly executed assignment in the form
attached hereto, at the office or agency of the Company referred to in
Paragraph 7(e) below, provided, however, that any transfer or
assignment shall be subject to the conditions set forth in Paragraph
7(f) hereof and to the applicable provisions of the Letter Agreement.
Until due presentment for registration of transfer on the books of the
Company, the Company may treat the registered holder hereof as the
owner and holder hereof for all purposes, and the Company shall not be
affected by any notice to the contrary. Notwithstanding anything to
the contrary contained herein, the registration rights described in
Paragraph 8 are assignable only in accordance with the provisions of
that certain Registration Rights Agreement, dated as of May 8, 2001,
by and among the Company and the other signatories thereto (the
"Registration Rights Agreement").
(b) Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the
office or agency of the Company referred to in Paragraph 7(e) below,
for new Warrants of like tenor representing in the aggregate the right
to purchase the number of shares of Common Stock which may be
purchased hereunder, each of such new Warrants to represent the right
to purchase such number of shares as shall be designated by the holder
hereof at the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant and, in the case of any such loss, theft,
or destruction, upon delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company, or, in the case of any
such mutilation, upon surrender and cancellation of this Warrant, the
Company, at its expense, will execute and deliver, in lieu thereof, a
new Warrant of like tenor.
10
(d) Cancellation; Payment of Expenses. Upon the surrender of this Warrant
in connection with any transfer, exchange, or replacement as provided
in this Paragraph 7, this Warrant shall be promptly canceled by the
Company. The Company shall pay all taxes (other than securities
transfer taxes) and all other expenses (other than legal expenses, if
any, incurred by the holder or transferees) and charges payable in
connection with the preparation, execution, and delivery of Warrants
pursuant to this Paragraph 7.
(e) Register. The Company shall maintain, at its principal executive
offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this
Warrant, in which the Company shall record the name and address of the
person in whose name this Warrant has been issued, as well as the name
and address of each transferee and each prior owner of this Warrant.
(f) Exercise or Transfer Without Registration. If, at the time of the
surrender of this Warrant in connection with any exercise, transfer,
or exchange of this Warrant, this Warrant (or, in the case of any
exercise, the Warrant Shares issuable hereunder), shall not be
registered under the Securities Act of 1933, as amended (the
"Securities Act") and under applicable state securities or blue sky
laws, the Company may require, as a condition of allowing such
exercise, transfer, or exchange, (i) that the holder or transferee of
this Warrant, as the case may be, furnish to the Company a written
opinion of counsel, which opinion and counsel are acceptable to the
Company, to the effect that such exercise, transfer, or exchange may
be made without registration under said Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee
execute and deliver to the Company an investment letter in form and
substance acceptable to the Company and (iii) that the transferee be
an "accredited investor" as defined in Rule 501(a) promulgated under
the Securities Act; provided that no such opinion, letter or status as
an "accredited investor" shall be required in connection with a
transfer pursuant to Rule 144 under the Securities Act. The first
holder of this Warrant, by taking and holding the same, represents to
the Company that such holder is acquiring this Warrant for investment
and not with a view to the distribution thereof.
8. Registration Rights. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in Section 2 of the Registration
Rights Agreement.
9. Notices. All notices, requests, and other communications required or
permitted to be given or delivered hereunder to the holder of this Warrant shall
be in writing, and shall be personally delivered, or shall be sent by certified
or registered mail or by recognized overnight mail courier, postage prepaid and
addressed, to such holder at the address shown for such holder on the books of
the Company, or at such other address as shall have been furnished to the
Company by notice from such holder. All notices, requests, and other
communications required or permitted to be given or delivered hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed, to the office of the Company at 000 Xxxxx Xxxxxxx 000,
Xxxxxxx, Xxxxx 00000, Attention: Xxxxxxxxxxx X. Xxxxxx, Chief Executive Officer,
or at such other address as shall have been furnished to the holder of this
Warrant by notice from the Company. Any such notice, request, or other
communication may be sent by facsimile, but shall
11
in such case be subsequently confirmed by a writing personally delivered or
sent by certified or registered mail or by recognized overnight mail courier as
provided above. All notices, requests, and other communications shall be deemed
to have been given either at the time of the receipt thereof by the person
entitled to receive such notice at the address of such person for purposes of
this Paragraph 9, or, if mailed by registered or certified mail or with a
recognized overnight mail courier upon deposit with the United States Post
Office or such overnight mail courier, if postage is prepaid and the mailing is
properly addressed, as the case may be.
10. Governing Law. THIS WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITH SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK
WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS WARRANT, THE AGREEMENTS ENTERED
INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE
OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY
RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER
THIS WARRANT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH
DISPUTE.
11. Miscellaneous.
(a) Amendments. This Warrant and any provision hereof may only be amended
by an instrument in writing signed by the Company and the holder
hereof.
(b) Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for purposes of reference
only, and shall not affect the meaning or construction of any of the
provisions hereof.
(c) Cashless Exercise. Notwithstanding anything to the contrary contained
in this Warrant, if the resale of the Warrant Shares by the holder is
not then registered pursuant to an effective registration statement
under the Securities Act, this Warrant may be exercised by
presentation and surrender of this Warrant to the Company at its
principal executive offices with a written notice of the holder's
intention to effect a cashless exercise, including a calculation of
the number of shares of Common Stock to be issued upon such exercise
in accordance with the
12
terms hereof (a "Cashless Exercise"). In the event of a Cashless
Exercise, in lieu of paying the Exercise Price in cash, the holder
shall surrender this Warrant for that number of shares of Common Stock
determined by multiplying the number of Warrant Shares to which it
would otherwise be entitled by a fraction, the numerator of which
shall be the difference between the then current Market Price per
share of the Common Stock and the Exercise Price, and the denominator
of which shall be the then current Market Price per share of Common
Stock. For example, if the holder is exercising 100,000 Warrants with
a per Warrant exercise price of $0.75 per share through a cashless
exercise when the Common Stock's current Market Price per share is
$2.00 per share, then upon such Cashless Exercise the holder will
receive 62,500 shares of Common Stock.
(d) Remedies. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the holder, by
vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law
for a breach of its obligations under this Warrant will be inadequate
and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Warrant, that the holder shall be
entitled, in addition to all other available remedies at law or in
equity, and in addition to the penalties assessable herein, to an
injunction or injunctions restraining, preventing or curing any breach
of this Warrant and to enforce specifically the terms and provisions
thereof, without the necessity of showing economic loss and without
any bond or other security being required.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
13
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer.
e resources inc
By:
--------------------------
Xxxxxxxxxxx X. Xxxxxx
Chief Executive Officer
Dated as of March 29, 2002
14
FORM OF EXERCISE AGREEMENT
Dated: ________ __, 200_
To: e resources inc
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase ________ shares of Common Stock covered by
such Warrant, and makes payment herewith in full therefor at the price per share
provided by such Warrant in cash or by certified or official bank check in the
amount of, or, if the resale of such Common Stock by the undersigned is not
currently registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended, by surrender of securities issued by the
Company (including a portion of the Warrant) having a market value (in the case
of a portion of this Warrant, determined in accordance with Section 11(c) of the
Warrant) equal to $_________. Please issue a certificate or certificates for
such shares of Common Stock in the name of and pay any cash for any fractional
share to:
Name:
---------------------------------
Signature:
---------------------------------
Address:
-------------------------------
Note: The above signature should correspond
exactly with the name on the face of the within
Warrant, if applicable.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned covering the balance of the shares purchasable thereunder
less any fraction of a share paid in cash.
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all the rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:
Name of Assignee Address No. of Shares
and hereby irrevocably constitutes and appoints
___________________________________ as agent and attorney-in-fact to transfer
said Warrant on the books of the within-named corporation, with full power of
substitution in the premises.
Dated: ________ __, 200_
In the presence of:
-------------------------------------
Name:
-------------------------------------
Signature:
---------------------------------
Title of Signing Officer or Agent (if any):
Address:
----------------------------------
----------------------------------
----------------------------------
Note: The above signature should correspond
exactly with the name on the face of the
within Warrant, if applicable.
