Contract
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 SUBSCRIPTION AGREEMENT DATED AS OF MAY __, 2008, 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 OR REGULATION S
UNDER SUCH ACT.
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Right
to Purchase ________ Shares of Common Stock, par value $.001 per
share
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STOCK
PURCHASE WARRANT
THIS
CERTIFIES THAT,
for
value received, _________ or its registered assigns, is entitled to purchase
from EMVELCO
CORP.,a
Delaware corporation (the “Company”), at any time or from time to time during
the period specified in Paragraph 2 hereof, ____________ fully paid and
nonassessable shares of the Company’s Common Stock, par value $.001 per share
(the “Common Stock”), at an exercise price per share equal to
$1.00 (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 Subscription Agreement, dated May __, 2008, by and among the
Company and the Buyers listed on the execution page thereof (the “Subscription
Agreement”).
This
Warrant is subject to the following terms, provisions, and conditions:
1. Manner
of Exercise; Issuance of Certificates; Payment for Shares.
Subject
to there being 30,000,000 of the Company issued and outstanding, , 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 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. 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. 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.
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 Notes (as defined in the Subscription 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
Subscription Agreement and before 6:00 p.m., New York, New York time on the
second (2nd) anniversary
of the date of issuance (the “Exercise Period”). Notwithstanding the foregoing,
on any given date, the maximum number of Warrant Shares issuable upon exercise
of this Warrant on such date shall equal (i) half of such number of shares
of
common stock issued on or prior to such date upon conversion of the Convertible
Note issued to the holder pursuant to the Subscription Agreement, less (ii)
such
number of Warrant Shares exercised hereunder prior to such date.
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.
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(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) 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) 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.
(b) 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.
Further, if the number of shares issuable upon conversion of the Convertible
Note (the “Note”) issued to the holder as of the date hereof is adjusted as a
result of an adjustment to the Conversion Price, as defined in the Note, in
accordance with Section 1.2 of the Note, then the number of Warrant Shares
issuable upon exercise of this Warrant shall be adjusted to equal the number
of
shares issuable upon conversion of the Note multiplied by .5.
(c) 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.
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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,
provided, however, that any transfer or assignment shall be subject to the
conditions set forth in this Section 7 and to the applicable provisions of
the
Subscription 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.
(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, 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.
(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.
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(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. In no event shall the Holder be permitted to assign the
Warrant unless provided with express written consent by the
Company.
8. [Intentionally
Omitted]
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 the address
set
forth in the Subscription Agreement, 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
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.
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10. Governing
Law. THIS
WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS
OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN 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 LOS ANGELES, CALIFORNIA 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.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
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IN
WITNESS WHEREOF,
the
Company has caused this Warrant to be signed by its duly authorized
officer.
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By:
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Xxxxx
Xxxxx
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Chief
Executive Officer
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Dated
as
of May __, 2008
FORM
OF EXERCISE AGREEMENT
Dated:
________ __, 20__
To: ______________________
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 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:
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Name:
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Signature:
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Address:
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Note:
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The
above signature should correspond exactly with the name on the face
of the
within Warrant, if applicable.
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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:
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Name
of Assignee
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Address
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No
of Shares
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,
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: ________
__, 20__
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In
the presence of:
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Name:
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Signature:
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Title
of Signing Officer or Agent (if
any):
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Address:
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The
above signature should correspond exactly with the name on the face
of the
within Warrant, if applicable.
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