EXHIBIT 10.32
BUSINESS CONSULTANT SERVICES AGREEMENT
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This Agreement (this "Agreement") is entered into and effective as of
May 2, 2006 (the "Effective Date") by and between BigString Corporation, a
corporation incorporated under the laws of the State of Delaware, having its
principal office at 0 Xxxxxxx Xxxx, Xxxxx X, Xxx Xxxx, Xxx Xxxxxx 00000 (the
"Company"), and Lifeline Industries, Inc., having its principal place of
business at 0000 Xxxxxxxx Xxxxxx, Xxxxx X, Xxxx Xxx, Xxx Xxxxxx 00000 (the
"Consultant").
RECITALS:
WHEREAS, the parties are entering into this Agreement to set forth and
confirm their respective rights and obligations with respect to the retention of
the Consultant by the Company;
NOW, THEREFORE, in consideration of the mutual covenants herein
described, the parties hereto mutually agree as follows:
1. SCOPE OF SERVICES TO BE PROVIDED. The Company hereby retains the
Consultant to provide from its office at the address specified above, or such
other location as is chosen by the Consultant, general business consulting
services regarding all aspects of the Company's business, including, but not
limited to, management, accounting, product development, product enhancement,
marketing, sales, advertising, employment of others, day-to-day operations,
business development, business growth, and general business and administrative
procedures and processes (the "Services"). The Consultant has advised the
Company that tax and/or legal advice is specifically excluded from the scope of
the Services the Consultant will provide to the Company under this Agreement.
The Consultant will not, without specific approval of the Company's President
and Chief Executive Officer, contractually obligate the Company to do or refrain
from any act.
2. DUTIES. The Consultant hereby agrees to devote sufficient business
time, attention, skills and efforts to the provision of the Services to be
provided hereunder as may be mutually agreed upon by the parties from time to
time. Notwithstanding the foregoing, the Company acknowledges that the
Consultant has other business interests and hereby consents to the continuation
of those interests and relationships.
3. TERM. The term of this Agreement will commence on the Effective Date
and continue for a period of three (3) years from the Effective Date.
4. COMPENSATION.
4.1 Issuance of the Company's Common Stock and Warrants to Purchase
Shares of the Company's Common Stock. Contemporaneously with the execution of
this Agreement by the parties hereto, the Company shall issue to the Consultant
1,250,000 shares (the "Shares") of the Company's common stock, par value $.0001
per share ("Common Stock"), and grant to the Consultant a fully-vested Warrant
to purchase 225,000 shares of Common Stock at an exercise price of $.48 per
share ("Warrant 1"). A copy of the form of Warrant 1 is annexed hereto as
Appendix A. In addition, contemporaneously with the execution of this Agreement
by the parties hereto, the Company shall grant to the Consultant a fully-vested
Warrant to purchase 225,000 shares of Common Stock at an exercise price of $1.00
per share ("Warrant 2"). A copy
of the form of Warrant 2 is annexed hereto as Appendix B. Warrant 1 and Warrant
2 are sometimes collectively referred to herein as the "Warrants."
4.2 Other Business Services. This Agreement covers a vast array of
management and other business advisory services. In the event that the
Consultant introduces the Company to one or more persons or entities that result
in increased revenues, decreased expenses and/or other benefits to the Company,
the parties will mutually agree upon the consideration to be paid to the
Consultant pursuant to a separate agreement.
5. INVESTMENT.
5.1 Accredited Investor. The Consultant hereby represents that it is
an "accredited investor" (as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities
Act")).
5.2 Investor Intent. The Consultant is acquiring the Shares and the
Warrants for its own account, for investment and not with a view to, or for
resale in connection with, any distribution thereof, nor with any present
intention of distributing or reselling the same or any part thereof in any
transactions that would be in violation of the Securities Act of or any state
securities or "blue-sky" laws.
5.3 Restricted Securities. The Consultant understands that (a)
neither the Shares nor the Warrants currently are registered under the
Securities Act or any state securities or "blue-sky" laws and have been issued
in a transaction exempt from the registration requirements of the Securities Act
or any state securities or "blue-sky" laws, (b) the Shares and the Warrants must
be held indefinitely unless a subsequent disposition thereof is registered under
the Securities Act or any state securities or "blue-sky" laws or is exempt from
such registration, and (c) the certificate(s) evidencing the Shares and the
Warrants will be imprinted with a legend that prohibits the transfer unless they
are registered or such registration is not required.
5.4 Rule 144. The Consultant understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to such
person) promulgated under the Securities Act ("Rule 144") depends on the
satisfaction of various conditions and that, if applicable, Rule 144 may only
afford the basis for sales under certain circumstances and only in limited
amounts.
5.5 Access to Information; Experience. The Consultant has been
furnished with or has had access during the course of this transaction and prior
to the issuance of the Shares and the Warrants to all information necessary to
enable the Consultant to evaluate the merits and risks of a prospective
investment in the Company and the Consultant has had an opportunity to discuss
with representatives of the Company the business and financial affairs of the
Company and the terms and conditions of the investment and to obtain such
additional information, to the extent that the Company possesses such
information or could acquire it without unreasonable effort or expense,
necessary to verify the accuracy of the information to which the Consultant has
had access and all questions raised by the Consultant have been answered to the
full satisfaction of the Consultant. The Consultant has conducted its own
investigation and analysis of the Company's business. The Consultant has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to
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the Company so that it is capable of evaluating the merits and the risks of its
investment in the Company and has the capacity to protect its own interests in
making its investment in the Company.
5.6 Speculative Investment. The Consultant understands that the
Company has a limited financial and operating history, that the Shares and the
Warrants are speculative investments which involve a high degree of financial
risk, and that there is no assurance of any economic, income or tax benefit from
such investments.
6. TRANSFER OF SECURITIES.
6.1 Restrictions on Transfer. The Consultant acknowledges that the
Shares received hereunder have not been registered under the Securities Act,
that such shares are being or will be issued pursuant to an exemption from
registration under the Securities Act and that such shares constitute
"restricted securities" under Rule 144. Accordingly, the Shares held by the
Consultant shall not be sold, transferred, assigned, pledged, encumbered or
otherwise disposed of (each, a "Transfer") except upon the conditions specified
in this Section 6.1 or Section 6.4 (which provides for certain additional
restrictions on transfer), which conditions are intended to ensure compliance
with the provisions of the Securities Act and this Agreement.
6.2 Restrictive Legend. Each certificate for the Shares held by the
Consultant and each certificate for any such securities issued to subsequent
transferees of any such certificate shall (unless otherwise permitted by the
provisions of Sections 6.3 and 6.4) be stamped or otherwise imprinted with a
legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS, AND
MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT, (II) TO THE EXTENT APPLICABLE, RULE 144
UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (III) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
6.3 Notice of Transfer. The Consultant agrees, prior to any Transfer
of the Shares to give written notice to the Company of the Consultant's
intention to effect such Transfer and to comply in all other respects with the
provisions of this Section 6. Each such notice shall describe the manner and
circumstances of the proposed Transfer and shall be accompanied by the written
opinion, addressed to the Company, of counsel for the holder of such shares,
stating that in the opinion of such counsel (which opinion and counsel shall be
reasonably satisfactory to the Company), the proposed Transfer does not involve
any transaction requiring registration or
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qualification of such shares under the Securities Act or the securities or blue
sky laws of any relevant state of the United States. The Consultant shall
thereupon be entitled to Transfer such shares in accordance with the terms of
the notice delivered by it to the Company. Each certificate or other instrument
evidencing the securities issued upon the Transfer of any Shares (and each
certificate or other instrument evidencing any untransferred balance of such
Shares) shall bear the legend set forth in Section 6.2 unless, (i) in the
opinion of counsel to the holder of such Common Stock, registration of any
future Transfer is not required by the applicable provisions of the Securities
Act and applicable state securities laws, or (ii) the Company shall have waived
the requirement of such legends. The Consultant shall not Transfer any Shares
until such opinion of counsel has been given (unless waived by the Company or
unless such opinion is not required in accordance with the provisions of this
Section 6).
6.4 Removal of Legends, Etc. Notwithstanding the foregoing
provisions of this Section 6, the restrictions imposed by this Section 6 upon
the transferability of any Shares held by the Consultant shall cease and
terminate when (a) any such Shares are sold or otherwise disposed of pursuant to
an effective registration statement under the Securities Act or as otherwise
contemplated by Section 6.3 and, pursuant to Section 6.3, the securities so
transferred are not required to bear the legend set forth in Section 6.2, or (b)
the holder of such Shares has received an opinion of counsel stating that such
holder has met the requirements for Transfer of the Common Stock pursuant to
subparagraph (k) of Rule 144. Whenever the restrictions imposed by this Section
6 shall terminate, as herein provided, the Consultant shall be entitled to
receive from the Company, without expense, a new certificate not bearing the
restrictive legend set forth in Section 6.2 and not containing any other
reference to the restrictions imposed by this Section 6.
7. REGISTRATION RIGHTS. The Company will include for registration the
Shares and the shares of Common Stock underlying the Warrants in the first
registration statement filed by the Company with the Securities and Exchange
Commission after the date of this Agreement which is filed for use by other
investors in the Company, other than a registration statement on Form S-8.
8. EXPENSES. The Company will promptly reimburse the Consultant in
accordance with the Company's policies and practices for all expenses reasonably
incurred by the Consultant in performance of the Consultant's duties under this
Agreement. All expenses shall be pre-approved in writing by the Company.
9. TERMINATION. The Company may terminate this Agreement at anytime
with five (5) days prior written notice. If terminated, the Consultant shall
retain the Shares and Warrants 1 and 2, and all reimbursable expenses shall be
paid immediately by the Company.
10. PRESERVATION OF CERTAIN PROVISIONS. Notwithstanding any of the
other provisions of this Agreement to the contrary, Sections 5 through 16 hereof
shall survive the termination of this Agreement as necessary to give full
enforcement of all of the provisions of this Agreement.
11. AGENCY. It is understood and agreed that the Consultant is an
independent contractor in respect to the Consultant's relationship to the
Company, and that neither the Consultant nor any of its representatives should
be considered an agent or employee of the
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Company for any purpose. The Consultant agrees not to represent itself as an
agent or employee of the Company at any time.
Nothing in this Agreement will be construed or implied to create a
relationship of partners, agency, joint venturers, or of employer and employee
between the Consultant, or any of its representatives, and the Company.
12. INDEPENDENT CONTRACTOR STATUS. The Consultant will have full
control and discretion as to the ways and means of performing any and all of the
Services to be provided under this Agreement. It is understood by the parties
that in the performance of this Agreement, none of the representatives of the
Consultant is in any way acting as an employee of the Company and at all times
shall be acting as an independent contractor. The Company shall not pay any
contribution to social security, unemployment insurance or federal or state
withholding taxes, nor provide any other contributions or benefits which might
be expected in an employer/employee relationship. The Consultant agrees to
report and pay any contributions for taxes, unemployment insurance, social
security and any other costs applicable to it or its representatives.
As an independent contractor, the Consultant agrees that the Company
has no obligation under the state or federal laws regarding employee liability,
and that the Company's total commitment and liability under this arrangement is
limited to the performance and the compensation described herein.
13. CONFIDENTIAL INFORMATION. The Consultant recognizes and
acknowledges it will have access to certain information of the Company which is
confidential, including, but not limited to, financial, personnel, sales,
scientific, technical and other information regarding formulas, patterns,
compilations, programs, devices, methods, techniques, operations, trade secrets,
plans and processes that are owned by or licensed to the Company, and that such
information constitutes the Company's "Confidential Information."
The Consultant agrees that the Company has a legitimate interest in
protecting the Confidential Information. The parties agree that the Company is
entitled to protection of its interests and the Consultant shall at no time,
either during or subsequent to the term of this Agreement, disclose to others
any Confidential Information without the prior consent of the Company, and the
Consultant agrees to execute a Confidentiality/Non-Disclosure Agreement if so
requested by the Company.
The Company will own any and all Confidential Information, inventions
or other proprietary rights created or discovered by the Consultant in
connection with the Consultant's performance of its duties under this Agreement.
The Consultant agrees to cooperate with Company in executing any documents
necessary to convey or establish title in such Confidential Information,
inventions or other proprietary rights to the Company.
The Consultant specifically agrees that it will not misuse,
misappropriate, or disclose in writing, orally, or by electronic means, any
trade secrets, directly or indirectly, to any other person or use them in any
way, either during the term of this Agreement, or at any other time thereafter,
except as is (a) required in the course of the Consultant's engagement, and (b)
pre-approved by the Company.
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The Consultant acknowledges and agrees that the sale or unauthorized
use or disclosure in writing, orally or by electronic means, of any of the
Company's trade secrets obtained by the Consultant during the course of the
Consultant's engagement under this Agreement, including information concerning
the Company's actual or potential work, services or products, or that any such
work, services or products are planned, under consideration or in production, as
well as any descriptions thereof, constitute unfair competition. The Consultant
promises and agrees not to engage in any unfair competition with the Company,
either during the term of this Agreement or at any time thereafter.
The restrictions against disclosure and/or use of Confidential
Information does not apply to information which the Consultant can demonstrate
was at the time of the execution of this Agreement:
(a) in the public domain; or
(b) part of the Consultant's prior knowledge; or
(c) learned from a third party without the breach of a
confidential relationship between the third party and the
Company.
The Consultant agrees that all files, records, documents, drawings,
specifications, equipment, software and similar items, whether maintained in
hard copy or in electronic form, relating to the Company's business, whether
prepared by the Consultant or others, are and will remain exclusively the
property of the Company and that they will not be removed from the Company's
premises or, if kept in electronic form, from the Company's computer systems,
without the express prior written consent of the Company's President and Chief
Executive Officer.
14. DELIVERY OF DOCUMENTS UPON TERMINATION. The Consultant shall
deliver to the Company at the termination of its services copies of all of the
Company documents, materials and information in its possession at time of
termination.
15. INDEMNIFICATION. The Company shall indemnify, defend and hold
harmless the Consultant and its officers, directors, employees and
representatives from and against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties, reasonable attorney's fees and
costs, that the Consultant or any of its officers, directors, employees or
representatives shall incur or suffer, which arise out of, result from, or
relate to the performance by the Consultant of the Services to be provided
hereunder or in any way relate to this Agreement; provided, however, that the
Company shall not be required to indemnify the Consultant or any of its
officers, directors, employees or representatives for any damages suffered by
the Consultant or any such officer, director, employee or representative as a
result of the Consultant's gross negligence or unlawful or fraudulent conduct in
performing the Services to be provided hereunder.
The Consultant agrees to indemnify the Company against all federal,
state, and local tax liability (including penalties and interest) which may
result from any federal, state, or local tax audit (including, but not limited
to, income, social security, disability, and unemployment taxes)
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that deems the Consultant, or any representative thereof, to be an employee
rather than an independent contractor of the Company.
16. AGREEMENT BINDING ON SUCCESSORS. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company
to expressly assume and agree in writing to perform this Agreement in the manner
and to the same extent that the Company would be required to perform if no such
succession had taken place. As used in the Agreement, "Company" shall mean the
Company herein before defined and any successor to its business or assets
aforementioned which assumes and agrees to perform this Agreement by operation
of law, or otherwise.
17. ASSIGNMENT. The Company may not assign this Agreement, except to
the acquiror of all or substantially all of the business assets of the Company;
provided that such acquiror expressly assumes and agrees in writing to perform
this Agreement as provided in Section 13 of this Agreement. The Consultant may
not assign its rights or delegate its duties or obligations under this
Agreement.
18. NOTICE. Any notices or other communication required hereunder shall
be in writing and shall be deemed to have been delivered or given (a) when hand
delivered, (b) one (1) business day after being sent by fax (confirmed by mail)
or sent by overnight courier, and (c) five (5) days after being mailed by
registered or certified mail, postage prepaid, return receipt requested, to the
party to whom such communication was given at the address set forth on page 1,
which address may be changed by notice given in accordance with this Section.
19. MISCELLANEOUS.
19.1 Severability. If any provision of the Agreement shall be held
to be invalid or unenforceable, in whole or in part, such invalid or
unenforceability shall not affect the remaining provisions of this Agreement,
which shall remain in full force and effect.
19.2 No Oral Modification, Waiver, or Discharge. No provision to
this Agreement may be modified, waived or discharged orally, but only by waiver,
modification or discharge in writing signed by the Consultant and such officer
as may be designated by the Board of Directors of the Company to execute such a
waiver, modification or discharge.
19.3 Invalid Provisions. Should any portion of this Agreement be
adjudged or held to be invalid, unenforceable or void, the parties hereby agree
that the portion deemed invalid, enforceable or void shall, if possible, be
reduced in scope, or otherwise be stricken from this Agreement to the extent
required for the purpose of validity and enforcement thereof.
19.4 Entire Agreement. This Agreement represents the entire
agreement of the parties with respect to the subject matter hereof and shall
supersede all previous contracts, arrangements or understandings, express or
implied, between the Consultant and the Company with respect to the subject
matter hereof.
19.5 Execution in Counterparts. The parties may sign this Agreement
in counterparts, all of which shall be considered one and the same instrument.
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19.6 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New Jersey
without application of its conflict of laws rules. The parties hereby submit to
the exclusive jurisdiction and venue of the courts of the State of New Jersey or
the United States District Court for the District of New Jersey for purposes of
any legal action.
19.7 Headings. The section headings herein are for convenience only
and shall not affect the interpretation or construction of this Agreement.
19.8 Further Assurances. Each party shall cooperate with and take
such action as may be reasonably requested by the other party in order to carry
out the provisions and purposes of this Agreement.
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The parties hereby execute this Agreement as of the Effective Date.
COMPANY: CONSULTANT:
BIGSTRING CORPORATION LIFELINE INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxx Xxxx
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Name: Xxxxx X. Xxxxx Name: Xxxx Xxxx
Title: President and Chief Executive Officer Title: President
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Appendix A
WARRANT NO. 1
Dated May 2, 2006
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT"), OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD,
PLEDGED, ASSIGNED, HYPOTHECATED OR TRANSFERRED EXCEPT PURSUANT TO (I) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR (II) AN OPINION OF
COUNSEL, REASONABLY ACCEPTABLE TO THE COMPANY AND ITS COUNSEL, THAT AN EXEMPTION
FROM REGISTRATION UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE.
WARRANT TO PURCHASE 225,000 SHARES
OF THE COMMON STOCK OF
BigString Corporation
(Void after May 2, 2011)
This certifies that Lifeline Industries, Inc., or its assigns (each,
individually, the "Holder"), for value received, shall be entitled to purchase
from BIGSTRING CORPORATION, a Delaware corporation (the "Company"), having its
principal place of business at 0 Xxxxxxx Xxxx, Xxxxx X, Xxx Xxxx, Xxx Xxxxxx
00000, a maximum of 225,000 fully paid and non-assessable shares of the
Company's common stock, par value $.0001 per share ("Common Stock"), for a
purchase price equal to $0.48 per share (the "Exercise Price"), at any time, or
from time to time, up to and including the earlier of (x) 5:00 p.m. Eastern time
on May 2, 2011 and (y) immediately prior to any Organic Change (as defined in
Section 4.3) (the "Expiration Date"), upon the surrender to the Company at its
principal place of business (or at such other location as the Company may advise
the Holder in writing) of this Warrant, issued on May 2, 2006, and a properly
endorsed form of subscription, substantially in the form attached hereto as
Exhibit A (the "Subscription Form"), duly completed and signed, and, if
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applicable, upon payment in cash or by check of the aggregate Exercise Price for
the number of shares for which this Warrant is being exercised determined in
accordance with the provisions hereof. The Exercise Price and the number of
shares of Common Stock purchasable hereunder are subject to adjustment as
provided in Section 4 of this Warrant.
This Warrant is subject to the following terms and conditions:
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1 General. This Warrant is exercisable at the option of the Holder
at any time, or from time to time, up to the Expiration Date for all or any part
of the shares of Common Stock (but not for a fraction of a share) which may be
purchased hereunder. The Company agrees that the shares of Common Stock
purchased under this Warrant shall be and are deemed to be issued to the Holder
hereof as the record owner of such shares as of the close of business on the
date on which (a) this Warrant shall have been surrendered, properly endorsed,
(b) the
completed, executed Subscription Form is delivered, and (c) payment is made for
such shares. Certificates for the shares of Common Stock so purchased, together
with any other securities or property to which the Holder is entitled upon
exercise, shall be delivered to the Holder by the Company at the Company's
expense within a reasonable time after the rights represented by this Warrant
have been so exercised, and in any event, within fifteen (15) days of such
exercise. In the event of a purchase of less than all of the shares which may be
purchased under this Warrant, the Company shall cancel this Warrant and execute
and deliver a new Warrant or Warrants of like tenor for the balance of the
shares purchasable under the Warrant surrendered upon such purchase to the
Holder hereof within a reasonable time. Each stock certificate so delivered
shall be in such denominations of Common Stock as may be requested by the Holder
hereof and shall be registered in the name(s) designated by such Holder.
1.2 Net Issue Exercise. Notwithstanding any provisions herein to the
contrary, if the Market Price (as defined below) of one share of the Company's
Common Stock is greater than the Exercise Price (at the date of calculation as
set forth below), in lieu of exercising this Warrant for cash, the Holder may
elect to receive shares equal to the value (as determined below) of this Warrant
(or the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Subscription
Form and notice of such election in which event the Company shall issue to the
Holder a number of shares of Common Stock computed using the following formula:
X = Y (A-B)
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A
Where X = the number of shares of Common Stock to be issued to the
Holder
Y = the number of shares of Common Stock
purchasable under the Warrant or, if only a
portion of the Warrant is being exercised,
the portion of the Warrant being canceled
(at the date of such calculation)
A = the Market Price of one share of the
Company's Common Stock (at the date of such
calculation)
B = Exercise Price (as adjusted to the date
of such calculation).
For purposes of the above calculation, "Market Price" means, as to the Common
Stock, the average of the closing prices of such security's sales on all
domestic securities markets on which such security may at the time be listed,
or, if there have been no sales on any such securities market on any day, the
average of the highest bid and lowest asked prices on all such securities
markets at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted on the OTC
Bulletin Board as of 4:00 P.M., New York time, on such day, or, if on any day
such security is not quoted on the OTC Bulletin Board, the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization; in each such case averaged over a period of 20
trading days immediately
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preceding the day as of which "Market Price" is being determined. If at any time
such security is not listed on any domestic securities exchange or quoted on the
OTC Bulletin Board or other domestic over-the-counter market, the "Market Price"
shall be the fair value thereof as determined in good faith by a majority of the
Company's Board of Directors (determined without giving effect to any discount
for minority interest, any restrictions on transferability or any lack of
liquidity of the Common Stock or to the fact that the Company has no class of
equity registered under the Securities Act of 1933, as amended (the "Securities
Act")), such fair value to be determined by reference to the price that would be
paid between a fully informed buyer and seller under no compulsion to buy or
sell.
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company
covenants and agrees that all shares of Common Stock which may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
duly authorized, validly issued, fully paid and non-assessable and free from all
preemptive rights of any shareholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees
that, during the period within which the rights represented by this Warrant may
be exercised, the Company will at all times have authorized and reserved, for
the purpose of issue or transfer upon exercise of the subscription rights
evidenced by this Warrant, a sufficient number of shares of authorized but
unissued Common Stock, or other securities and property, when and as required to
provide for the exercise of the rights represented by this Warrant. The Company
will take all such action as may be necessary to assure that such shares of
Common Stock may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of any domestic securities
exchange upon which the Common Stock may be listed. The Company will not take
any action which would result in any adjustment of the Exercise Price (as set
forth in Section 4 hereof) if the total number of shares of Common Stock
issuable after such action upon exercise of all outstanding warrants, together
with all shares of Common Stock then outstanding and all shares of Common Stock
then issuable upon exercise of all options and upon the conversion of all
convertible securities then outstanding, would exceed the total number of shares
of Common Stock then authorized by the Company's Certificate of Incorporation,
as may be amended from time to time (the "Company Charter").
3. RESTRICTIVE LEGEND. Each certificate evidencing shares of Common
Stock issued to the Holder following the exercise of this Warrant shall bear the
following restrictive legend until such time as the transfer of such security is
not restricted under the federal securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS, AND
MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT, (II) TO THE EXTENT APPLICABLE, RULE 144
UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (III) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO
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COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE.
4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise
Price and the number of shares purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the occurrence of certain
events described in this Section 4. Upon each adjustment of the Exercise Price,
the Holder of this Warrant shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment, and dividing the product thereof by the Exercise Price resulting
from such adjustment.
4.1 Subdivision or Combination of Stock. In the event that the
Company shall at any time subdivide its outstanding shares of Common Stock into
a greater number of shares, the Exercise Price in effect immediately prior to
such subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased.
4.2 Dividends in Common Stock, Other Stock, Property,
Reclassification. If at any time, or from time to time, the holders of Common
Stock (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefor,
(a) Common Stock or any shares of stock or other securities which
are at any time directly or indirectly convertible into or exchangeable for
Common Stock, or any rights or options to subscribe for, purchase or otherwise
acquire any of the foregoing by way of dividend or other distribution,
(b) any cash paid or payable otherwise than as a cash dividend,
or
(c) Common Stock or additional stock or other securities or
property (including cash) by way of spinoff, split-up, reclassification,
combination of shares or similar corporate rearrangement, (other than shares of
Common Stock issued as a stock split or adjustments in respect of which shall be
covered by the terms of Section 4.1 above), then and in each such case, the
Holder hereof shall, upon the exercise of this Warrant, be entitled to receive,
in addition to the number of shares of Common Stock receivable thereupon, and
without payment of any additional consideration therefor, the amount of stock
and other securities and property (including cash in the cases referred to in
clause (b) above and this clause (c)) which such Holder would hold on the date
of such exercise had he or she been the holder of record of such Common Stock as
of the date on which holders of Common Stock received or became entitled to
receive such shares or all other additional stock and other securities and
property.
4.3 Notices of Change.
(a) Immediately upon any adjustment in the number or class of
shares subject to this Warrant and of the Exercise Price, the Company shall give
written notice thereof to the Holder, setting forth in reasonable detail and
certifying the calculation of such adjustment.
4
(b) The Company shall give written notice to the Holder at least
five (5) Business Days (as hereinafter defined) prior to the date on which the
Company closes its books or takes a record for determining rights to receive any
dividends or distributions. "Business Day" means any day except Saturday, Sunday
and any day which shall be a legal holiday or a day on which banking
institutions in the State of New Jersey generally are authorized or required by
law or other government actions to close.
(c) The Company shall give written notice to the Holder at least
fifteen (15) Business Days prior to the date on which the Company shall propose
to effect any recapitalization, reclassification or reorganization of its
capital stock, or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets, or other
similar transaction (an "Organic Change").
5. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon the exercise of this Warrant shall be made without charge to the Holder of
this Warrant for any issue tax (other than any applicable income taxes) in
respect thereof; provided, however, 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 upon this Warrant being exercised in a
name other than that of the then Holder of this Warrant.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a shareholder of
the Company or any other matters or any rights whatsoever as a shareholder of
the Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by the
Holder to purchase shares of Common Stock as provided for herein, 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 its
creditors.
7. ASSIGNMENT. This Warrant may be sold, transferred, assigned or
hypothecated by the Holder at any time, in whole or in part, subject to
compliance with federal and state securities laws; provided, however, that if
required by the Company, the Holder shall provide an opinion of counsel, which
opinion shall be reasonably satisfactory to counsel to the Company, that the
transfer, assignment or hypothecation qualifies for an exemption from
registration under the Securities Act. Any division or assignment permitted of
this Warrant shall be made by surrender by the Holder of this Warrant to the
Company at its principal office with the Assignment Form attached as Exhibit B
---------
hereto duly executed, together with funds sufficient to pay any transfer tax. In
such event, the Company shall, without charge, execute and deliver one or more
new Warrants in the name of the assignees named in such instrument of assignment
and the surrendered Warrant shall promptly be canceled; provided, however, that
if less than all of the shares of Common Stock underlying this Warrant are
assigned, the remainder of this Warrant will be evidenced by a new Warrant.
5
8. FURTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
(a) Charter and By-laws. The Company has made available to Holder
true, complete and correct copies of the Company Charter and By-laws, as amended
through the date hereof.
(b) Due Authority. The execution and delivery by the Company of
this Warrant and the performance of all obligations of the Company hereunder,
including the issuance to Holder of the right to acquire the shares of Common
Stock, have been duly authorized by all necessary corporate action on the part
of the Company, and this Warrant is not inconsistent with the Company Charter or
By-laws and constitutes a legal, valid and binding agreement of the Company,
enforceable in accordance with its terms, except as otherwise limited by
bankruptcy, insolvency, reorganization and other laws affecting creditors rights
generally, and except that the remedy of specific performance or other equitable
relief is available only at the discretion of the court before which enforcement
is sought.
(c) Consents and Approvals. No consent or approval of, giving of
notice to, registration with, or taking of any other action in respect of any
state, federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant, except for any filing required by applicable
federal and state securities laws, which filing will be effective by the time
required thereby.
9. MODIFICATION AND WAIVER. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
10. NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Warrant must be in
writing and will be deemed to have been delivered (a) upon receipt, when
delivered personally; (b) upon receipt, when sent by facsimile (provided a
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (c) one day after deposit with a
nationally recognized overnight delivery service, to the Holder at its, his or
her address as shown on the books of the Company or to the Company at the
address indicated therefor in the first paragraph of this Warrant or such other
address as either may from time to time provide to the other.
11. BINDING EFFECT ON SUCCESSORS. All of the covenants and agreements
of the Company shall inure to the benefit of the successors and assigns of the
Holder hereof.
12. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of New Jersey.
6
13. LOST WARRANTS. The Company represents and warrants to the Holder
hereof that 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 receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of this Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
14. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the Holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Exercise Price.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by a duly authorized officer.
BIGSTRING CORPORATION
a Delaware corporation
By:
-------------------------------------
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
7
EXHIBIT A
SUBSCRIPTION FORM
Date: ________________, 20__
BigString Corporation
0 Xxxxxxx Xxxx, Xxxxx X
Xxx Xxxx, Xxx Xxxxxx 00000
Attn: President
Ladies and Gentlemen:
|_| The undersigned hereby elects to exercise the warrant dated May 2, 2006
(the "Warrant") issued to it, him or her by BigString Corporation (the
"Company"), and to purchase thereunder
__________________________________ shares of the common stock, par
value $.0001 per share, of the Company (the "Shares") at a purchase
price of ___________________________________________ Dollars
($__________) per Share or an aggregate purchase price of
__________________________________ Dollars ($__________) (the "Exercise
Price").
|_| The undersigned hereby elects to convert _______________________
percent (____%) of the value of the Warrant pursuant to the provisions
of Section 1.2 of the Warrant.
Pursuant to the terms of the Warrant the undersigned has delivered the
Exercise Price herewith in full in cash or by certified check or wire transfer.
Very truly yours,
--------------------------------
(Signature)
--------------------------------
(Print Name)
EXHIBIT B
ASSIGNMENT FORM
For value received, the undersigned hereby sells, assigns and transfers
unto ____________, whose address is _________________ and social security or
other identifying number is _______________, the warrant dated May 2, 2006 (the
"Warrant") issued to it, him or her by BigString Corporation (the "Company")
with respect to __________________ shares of BigString Corporation common stock,
par value $.0001 per share ("Common Stock"), and hereby irrevocably constitutes
and appoints the Secretary of BigString Corporation as its, his or her
attorney-in-fact to transfer the same on the books of the Company with full
power of substitution and re-substitution. If said number of shares is less than
all of the shares of Common Stock purchasable under the Warrant so assigned, the
undersigned requests that a new Warrant representing the remaining shares
underlying the Warrant be registered in the name of ________________, whose
address is ___________________ and social security or other identifying number
is __________________, and that such new Warrant be delivered to
_____________________, whose address is _____________________.
Date:
------------------------ ---------------------------------
(Signature)
---------------------------------
(Print Name)
Appendix B
WARRANT NO. 2
Dated May 2, 2006
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT"), OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD,
PLEDGED, ASSIGNED, HYPOTHECATED OR TRANSFERRED EXCEPT PURSUANT TO (I) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR (II) AN OPINION OF
COUNSEL, REASONABLY ACCEPTABLE TO THE COMPANY AND ITS COUNSEL, THAT AN EXEMPTION
FROM REGISTRATION UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE.
WARRANT TO PURCHASE 225,000 SHARES
OF THE COMMON STOCK OF
BigString Corporation
(Void after May 2, 2011)
This certifies that Lifeline Industries, Inc., or its assigns (each,
individually, the "Holder"), for value received, shall be entitled to purchase
from BIGSTRING CORPORATION, a Delaware corporation (the "Company"), having its
principal place of business at 0 Xxxxxxx Xxxx, Xxxxx X, Xxx Xxxx, Xxx Xxxxxx
00000, a maximum of 225,000 fully paid and non-assessable shares of the
Company's common stock, par value $.0001 per share ("Common Stock"), for a
purchase price equal to $1.00 per share (the "Exercise Price"), at any time, or
from time to time, up to and including the earlier of (x) 5:00 p.m. Eastern time
on May 2, 2011 and (y) immediately prior to any Organic Change (as defined in
Section 4.3) (the "Expiration Date"), upon the surrender to the Company at its
principal place of business (or at such other location as the Company may advise
the Holder in writing) of this Warrant, issued on May 2, 2006, and a properly
endorsed form of subscription, substantially in the form attached hereto as
Exhibit A (the "Subscription Form"), duly completed and signed, and, if
----------
applicable, upon payment in cash or by check of the aggregate Exercise Price for
the number of shares for which this Warrant is being exercised determined in
accordance with the provisions hereof. The Exercise Price and the number of
shares of Common Stock purchasable hereunder are subject to adjustment as
provided in Section 4 of this Warrant.
This Warrant is subject to the following terms and conditions:
1. Exercise; Issuance of Certificates; Payment for Shares.
1.1 General. This Warrant is exercisable at the option of the Holder
at any time, or from time to time, up to the Expiration Date for all or any part
of the shares of Common Stock (but not for a fraction of a share) which may be
purchased hereunder. The Company agrees that the shares of Common Stock
purchased under this Warrant shall be and are deemed to be issued to the Holder
hereof as the record owner of such shares as of the close of business on the
date on which (a) this Warrant shall have been surrendered, properly endorsed,
(b) the completed, executed Subscription Form is delivered, and (c) payment is
made for such shares.
Certificates for the shares of Common Stock so purchased, together with any
other securities or property to which the Holder is entitled upon exercise,
shall be delivered to the Holder by the Company at the Company's expense within
a reasonable time after the rights represented by this Warrant have been so
exercised, and in any event, within fifteen (15) days of such exercise. In the
event of a purchase of less than all of the shares which may be purchased under
this Warrant, the Company shall cancel this Warrant and execute and deliver a
new Warrant or Warrants of like tenor for the balance of the shares purchasable
under the Warrant surrendered upon such purchase to the Holder hereof within a
reasonable time. Each stock certificate so delivered shall be in such
denominations of Common Stock as may be requested by the Holder hereof and shall
be registered in the name(s) designated by such Holder.
1.2 Net Issue Exercise. Notwithstanding any provisions herein to the
contrary, if the Market Price (as defined below) of one share of the Company's
Common Stock is greater than the Exercise Price (at the date of calculation as
set forth below), in lieu of exercising this Warrant for cash, the Holder may
elect to receive shares equal to the value (as determined below) of this Warrant
(or the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Subscription
Form and notice of such election in which event the Company shall issue to the
Holder a number of shares of Common Stock computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to the
Holder
Y = the number of shares of Common Stock
purchasable under the Warrant or, if only a
portion of the Warrant is being exercised,
the portion of the Warrant being canceled
(at the date of such calculation)
A = the Market Price of one share of the
Company's Common Stock (at the date of such
calculation)
B = Exercise Price (as adjusted to the date
of such calculation).
For purposes of the above calculation, "Market Price" means, as to the Common
Stock, the average of the closing prices of such security's sales on all
domestic securities markets on which such security may at the time be listed,
or, if there have been no sales on any such securities market on any day, the
average of the highest bid and lowest asked prices on all such securities
markets at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted on the OTC
Bulletin Board as of 4:00 P.M., New York time, on such day, or, if on any day
such security is not quoted on the OTC Bulletin Board, the average of the
highest bid and lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization; in each such case averaged over a period of 20
trading days immediately preceding the day as of which "Market Price" is being
determined. If at any time such security is not listed on any domestic
securities exchange or quoted on the OTC Bulletin Board or other
2
domestic over-the-counter market, the "Market Price" shall be the fair value
thereof as determined in good faith by a majority of the Company's Board of
Directors (determined without giving effect to any discount for minority
interest, any restrictions on transferability or any lack of liquidity of the
Common Stock or to the fact that the Company has no class of equity registered
under the Securities Act of 1933, as amended (the "Securities Act")), such fair
value to be determined by reference to the price that would be paid between a
fully informed buyer and seller under no compulsion to buy or sell.
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company
covenants and agrees that all shares of Common Stock which may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
duly authorized, validly issued, fully paid and non-assessable and free from all
preemptive rights of any shareholder and free of all taxes, liens and charges
with respect to the issue thereof. The Company further covenants and agrees
that, during the period within which the rights represented by this Warrant may
be exercised, the Company will at all times have authorized and reserved, for
the purpose of issue or transfer upon exercise of the subscription rights
evidenced by this Warrant, a sufficient number of shares of authorized but
unissued Common Stock, or other securities and property, when and as required to
provide for the exercise of the rights represented by this Warrant. The Company
will take all such action as may be necessary to assure that such shares of
Common Stock may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of any domestic securities
exchange upon which the Common Stock may be listed. The Company will not take
any action which would result in any adjustment of the Exercise Price (as set
forth in Section 4 hereof) if the total number of shares of Common Stock
issuable after such action upon exercise of all outstanding warrants, together
with all shares of Common Stock then outstanding and all shares of Common Stock
then issuable upon exercise of all options and upon the conversion of all
convertible securities then outstanding, would exceed the total number of shares
of Common Stock then authorized by the Company's Certificate of Incorporation,
as may be amended from time to time (the "Company Charter").
3. RESTRICTIVE LEGEND. Each certificate evidencing shares of Common
Stock issued to the Holder following the exercise of this Warrant shall bear the
following restrictive legend until such time as the transfer of such security is
not restricted under the federal securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, (II) TO THE EXTENT APPLICABLE, RULE
144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (III) AN OPINION OF
COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT IS AVAILABLE.
3
4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise
Price and the number of shares purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the occurrence of certain
events described in this Section 4. Upon each adjustment of the Exercise Price,
the Holder of this Warrant shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior to such
adjustment, and dividing the product thereof by the Exercise Price resulting
from such adjustment.
4.1 Subdivision or Combination of Stock. In the event that the
Company shall at any time subdivide its outstanding shares of Common Stock into
a greater number of shares, the Exercise Price in effect immediately prior to
such subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased.
4.2 Dividends in Common Stock, Other Stock, Property,
Reclassification. If at any time, or from time to time, the holders of Common
Stock (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefor,
(a) Common Stock or any shares of stock or other securities which
are at any time directly or indirectly convertible into or exchangeable for
Common Stock, or any rights or options to subscribe for, purchase or otherwise
acquire any of the foregoing by way of dividend or other distribution,
(b) any cash paid or payable otherwise than as a cash dividend,
or
(c) Common Stock or additional stock or other securities or
property (including cash) by way of spinoff, split-up, reclassification,
combination of shares or similar corporate rearrangement, (other than shares of
Common Stock issued as a stock split or adjustments in respect of which shall be
covered by the terms of Section 4.1 above), then and in each such case, the
Holder hereof shall, upon the exercise of this Warrant, be entitled to receive,
in addition to the number of shares of Common Stock receivable thereupon, and
without payment of any additional consideration therefor, the amount of stock
and other securities and property (including cash in the cases referred to in
clause (b) above and this clause (c)) which such Holder would hold on the date
of such exercise had he or she been the holder of record of such Common Stock as
of the date on which holders of Common Stock received or became entitled to
receive such shares or all other additional stock and other securities and
property.
4.3 Notices of Change.
(a) Immediately upon any adjustment in the number or class of
shares subject to this Warrant and of the Exercise Price, the Company shall give
written notice thereof to the Holder, setting forth in reasonable detail and
certifying the calculation of such adjustment.
(b) The Company shall give written notice to the Holder at least
five (5) Business Days (as hereinafter defined) prior to the date on which the
Company closes its books or takes a record for determining rights to receive any
dividends or distributions.
4
"Business Day" means any day except Saturday, Sunday and any day which shall be
a legal holiday or a day on which banking institutions in the State of New
Jersey generally are authorized or required by law or other government actions
to close.
(c) The Company shall give written notice to the Holder at least
fifteen (15) Business Days prior to the date on which the Company shall propose
to effect any recapitalization, reclassification or reorganization of its
capital stock, or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets, or other
similar transaction (an "Organic Change").
5. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon the exercise of this Warrant shall be made without charge to the Holder of
this Warrant for any issue tax (other than any applicable income taxes) in
respect thereof; provided, however, 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 upon this Warrant being exercised in a
name other than that of the then Holder of this Warrant.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a shareholder of
the Company or any other matters or any rights whatsoever as a shareholder of
the Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by the
Holder to purchase shares of Common Stock as provided for herein, 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 its
creditors.
7. ASSIGNMENT. This Warrant may be sold, transferred, assigned or
hypothecated by the Holder at any time, in whole or in part, subject to
compliance with federal and state securities laws; provided, however, that if
required by the Company, the Holder shall provide an opinion of counsel, which
opinion shall be reasonably satisfactory to counsel to the Company, that the
transfer, assignment or hypothecation qualifies for an exemption from
registration under the Securities Act. Any division or assignment permitted of
this Warrant shall be made by surrender by the Holder of this Warrant to the
Company at its principal office with the Assignment Form attached as Exhibit B
---------
hereto duly executed, together with funds sufficient to pay any transfer tax. In
such event, the Company shall, without charge, execute and deliver one or more
new Warrants in the name of the assignees named in such instrument of assignment
and the surrendered Warrant shall promptly be canceled; provided, however, that
if less than all of the shares of Common Stock underlying this Warrant are
assigned, the remainder of this Warrant will be evidenced by a new Warrant.
5
8. FURTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
(a) Charter and By-laws. The Company has made available to Holder
true, complete and correct copies of the Company Charter and By-laws, as amended
through the date hereof.
(b) Due Authority. The execution and delivery by the Company of
this Warrant and the performance of all obligations of the Company hereunder,
including the issuance to Holder of the right to acquire the shares of Common
Stock, have been duly authorized by all necessary corporate action on the part
of the Company, and this Warrant is not inconsistent with the Company Charter or
By-laws and constitutes a legal, valid and binding agreement of the Company,
enforceable in accordance with its terms, except as otherwise limited by
bankruptcy, insolvency, reorganization and other laws affecting creditors rights
generally, and except that the remedy of specific performance or other equitable
relief is available only at the discretion of the court before which enforcement
is sought.
(c) Consents and Approvals. No consent or approval of, giving of
notice to, registration with, or taking of any other action in respect of any
state, federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant, except for any filing required by applicable
federal and state securities laws, which filing will be effective by the time
required thereby.
9. MODIFICATION AND WAIVER. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
10. NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Warrant must be in
writing and will be deemed to have been delivered (a) upon receipt, when
delivered personally; (b) upon receipt, when sent by facsimile (provided a
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (c) one day after deposit with a
nationally recognized overnight delivery service, to the Holder at its, his or
her address as shown on the books of the Company or to the Company at the
address indicated therefor in the first paragraph of this Warrant or such other
address as either may from time to time provide to the other.
11. BINDING EFFECT ON SUCCESSORS. All of the covenants and agreements
of the Company shall inure to the benefit of the successors and assigns of the
Holder hereof.
12. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of New Jersey.
13. LOST WARRANTS. The Company represents and warrants to the Holder
hereof that 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 receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such
6
mutilation upon surrender and cancellation of this Warrant, the Company, at its
expense, will make and deliver a new Warrant, of like tenor, in lieu of the
lost, stolen, destroyed or mutilated Warrant.
14. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the Holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Exercise Price.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by a duly authorized officer.
BIGSTRING CORPORATION
a Delaware corporation
By:
-------------------------------------
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
7
EXHIBIT A
SUBSCRIPTION FORM
Date: _________________, 20__
BigString Corporation
0 Xxxxxxx Xxxx, Xxxxx X
Xxx Xxxx, Xxx Xxxxxx 00000
Attn: President
Ladies and Gentlemen:
|_| The undersigned hereby elects to exercise the warrant dated May 2, 2006
(the "Warrant") issued to it, him or her by BigString Corporation (the
"Company"), and to purchase thereunder
__________________________________ shares of the common stock, par
value $.0001 per share, of the Company (the "Shares") at a purchase
price of ___________________________________________ Dollars
($__________) per Share or an aggregate purchase price of
__________________________________ Dollars ($__________) (the "Exercise
Price").
|_| The undersigned hereby elects to convert _______________________
percent (____%) of the value of the Warrant pursuant to the provisions
of Section 1.2 of the Warrant.
Pursuant to the terms of the Warrant the undersigned has delivered the
Exercise Price herewith in full in cash or by certified check or wire transfer.
Very truly yours,
--------------------------------
(Signature)
--------------------------------
(Print Name)
EXHIBIT B
ASSIGNMENT FORM
For value received, the undersigned hereby sells, assigns and transfers
unto ____________, whose address is _________________ and social security or
other identifying number is _______________, the warrant dated May 2, 2006 (the
"Warrant") issued to it, him or her by BigString Corporation (the "Company")
with respect to __________________ shares of BigString Corporation common stock,
par value $.0001 per share ("Common Stock"), and hereby irrevocably constitutes
and appoints the Secretary of BigString Corporation as its his or her
attorney-in-fact to transfer the same on the books of the Company with full
power of substitution and re-substitution. If said number of shares is less than
all of the shares of Common Stock purchasable under the Warrant so assigned, the
undersigned requests that a new Warrant representing the remaining shares
underlying the Warrant be registered in the name of ________________, whose
address is ___________________ and social security or other identifying number
is __________________, and that such new Warrant be delivered to
_____________________, whose address is _____________________.
Date:
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(Signature)
---------------------------------
(Print Name)
